Summer 2018 Postal Update: Reform Appears On Hold Until Task Force Issues Report Later This Summer

The last few weeks have been busy for postal nerds like me. While postal issues may not get the press other topics in Washington do, there is certainly a lot going on behind the scenes—including factors impacting postal reform—to continue to keep people like me busy over the summer. Let’s take a look at what’s happening in the postal world.

Presidential Task Force

In April, President Trump appointed a Task Force to review the U.S. Postal Service’s business model. The Task Force has been instructed to examine several core elements of the USPS’s model, including:

1. Expansion and pricing of package delivery and the USPS’s role in competitive markets;
2. Mail volume decline and its implications for the USPS’s self-financing and monopolies over letter delivery and mailboxes;
3. The definition of the “universal service obligation” in light of changes in technology, e-commerce, marketing practices, and customer needs;
4. The USPS’s role in the U.S. economy, especially in rural areas, communities, and small towns;
5. The state of the USPS’s business model, workforce, operations costs, and pricing.

The Task Force has been busy meeting with postal stakeholders, including USPS management, representatives of the mailing industry, and postal unions. Industry delegates report being impressed by how well-informed and serious members of the Task Force have been. However, a recent report issued by the Trump administration (Delivering Government Solutions in the 21st Century) calling for privatization of the Postal Service has raised concerns by many stakeholders that the administration is not waiting for the conclusions of its own Task Force.

The Task Force is expected to issue its report to the President and Congress in early August.

Postal Regulatory Commission (PRC) Rate and Regulatory Review

After issuing preliminary recommendations late last year and conducting two rounds of comments earlier this year, the PRC seems to have paused its 10-year rate and regulatory review until the Presidential Task Force issues its report. The preliminary recommendations met stiff industry opposition because they focused solely on raising rates as a solution to the Postal Service’s financial struggles without considering the impact this may have on mail volumes or demanding productivity improvements from the agency.

Postal Reform Legislation

There have been encouraging signs of activity recently in the effort to craft postal reform legislation to strengthen USPS finances. A bipartisan bill was introduced in the Senate (S. 2629) that largely follows the model of H.R. 576 passed by the House Oversight and Government Reform Committee last year. The Senate bill takes a slightly different approach to Medicare integration for postal retirees that will lessen the impact of this change on the Medicare Trust Fund. It also adds requirements to strengthen the delivery of postal services in rural areas.

In addition, Reps. Mark Meadows (R-NC) and Gerry Connolly (D-VA) have reintroduced the House version of the postal reform bill as H.R. 6076 to reinvigorate postal reform in the House. However, it looks like both the House and the Senate are also waiting for the report of the Presidential Task Force before moving forward with their respective versions of postal reform legislation.

USPS Governance and Oversight

The USPS Board of Governors functions like a board of directors for a private company. It should consist of the Postmaster General, the Deputy Postmaster General, and nine presidentially appointed Governors. The term of the last serving presidentially appointed Governor ended in December 2016, and the Postal Service has been without outside leadership since then.

This is important because postal law reserves several actions for presidentially appointed Governors, such as approving price changes (including promotions). In addition, as PostCom President Michael Plunkett has observed, “The lack of Governors creates all kinds of harm to the postal system … One of the less obvious effects is that it appears to foster risk intolerance at USPS as management lacks the backing and air cover that a well-constructed Board can provide.”

Progress is slowly being made in reconstituting the Board. President Trump has nominated three individuals, two of whom (former USPS Inspector General David Williams and former Republican National Committee chairman Robert Duncan) were moved forward by the Homeland Security and Governmental Affairs Committee for confirmation by the full Senate. Currently Sen. Lisa Murkowski (R-AK) has placed a hold on Williams’ confirmation, citing disagreements over a 2011 Office of Inspector General report on the Alaska Bypass Mail program that ships goods to rural villages in Alaska. We are hopeful this issue can be resolved quickly, and at least these two nominees can begin the process of rebuilding the Board of Governors.

The Postal Regulatory Commission has also been functioning with only four of its full complement of five commissioners since November 2015. Not having a full complement has complicated some of the commission’s oversight work because of the possibility of tie votes on controversial dockets, such as the 10-year rate and regulatory review. Earlier this month, the President nominated Michael Kubayanda to fill the open seat. His nomination is currently awaiting a hearing in the Senate Homeland Security and Governmental Affairs Committee.

As you can see, it’s going to be a busy summer for us postal nerds. Keep reading SpeakingDIRECT to stay on top of all the postal changes happening in Washington and across the country.