Inside the Beltway : July 2010

USPS Proposes Postal Rate Increase for 2011
ABM takes leadership role in opposition, calls for dismissal of USPS request

The United States Postal Service requested earlier this month that the Postal Regulatory Commission (PRC) grant it a rate increase that would impact most mail by approximately 5%, and Periodicals by 8%. If approved, new prices would go into effect on January 2, 2011.

The fact that the Postal Service announced its rate increase proposal when and in the amount that ABM predicted doesn’t make it any easier to swallow. ABM is taking a leadership role, as it has in the past, in opposing the proposed rate increase.

ABM, along with its partners in the Affordable Mail Alliance, on Monday filed a preemptive salvo at the Postal Service's request for approval of the "exigent" rate increase. Although the case before the PRC is in its early stages, with a decision expected by October 4, the Alliance submitted a 72-page Motion to Dismiss the Postal Service's request, contending that the USPS has not satisfied the 2006 postal reform law's provisions governing rate increases above the CPI. "The law permits exigent rate increases only in 'unusual or extraordinary circumstances,'" explained ABM President and CEO Clark Pettit, "yet the Postal Service has known for years that it would suffer the type of volume losses that it now claims justify the increase."
 
In addition, the law provides that exigent increases may be implemented only when necessary to permit the continuation of postal services under "honest, efficient and economical management." The Alliance motion shows that the Postal Service has lagged far behind its competitors, UPS and FedEx, and American industry in general in responding to the economic downturn and that it has permitted both the size and compensation levels of its workforce to exceed efficient levels. While commending postal management for recent cost reductions, the motion asserts that these cost-cutting initiatives "represent progress only by comparison with the Postal Service's own past record" and that without far more effective cost control, the Postal Service "will lurch from one financial crisis to another."
 
The motion asks the PRC to reject the Postal Service's rate increase request while, at the same time, suggesting that Congress should correct the Postal Service's overpayment of pension costs to the U.S. Treasury, a step that would make the proposed increase unnecessary. According to Pettit, "Virtually all businesses, and ABM members in particular, are making difficult decisions to reduce costs due to the Internet's impact on business models, and the economic downturn; the USPS needs to do the same rather than increase rates well above inflation. Although the case's outcome is uncertain, as this is the first time the exigent rate increase provision has been invoked, ABM is confident in its position and hopes that the legal process allows for sincere consideration of the proposed increase's negative effect on our members."

New Proposed Privacy Legislation Introduced

The winding road to federal privacy legislation took an unexpected turn last week, as Rep. Bobby Rush (D-IL) introduced his own proposal for omnibus federal privacy legislation. HR 5777, the Best Practices Act, is similar to the legislation Rep. Rick Boucher (D-VA) has been working on, but is a completely separate bill.
 
While Boucher's bill has been anticipated for more than a year, was released in draft form in May, and has been subjected to comments and suggestions from all sides, Rush has taken a much different approach. He released the bill last Monday, neither solicited nor entertained comments, and scheduled an initial hearing for Thursday, at a time when many interested parties would still be studying the bill and examining its differences with the better-understood Boucher proposal.
 
ABM's lobbyists and consultants are currently reviewing the Rush bill, and will provide full reports to the ABM membership as soon as possible. At first glance, Rush's bill appears to have been based on the Boucher bill, but modified to create more stringent privacy protections, as favored by some consumer groups.
 
Among other things, in comparison to the Boucher bill, the Rush bill appears to:

• Create more barriers to sharing of information with third parties. It even classifies sister companies and business units as third parties to one another if they operate separately and do not appear related to consumers. 
• Define more categories of information as "sensitive," including social security numbers and biometric data, thereby limiting their use absent specific opt-in consumer consent.
• Allow private litigation based on violations of the bill's provisions. Boucher's bill would limit enforcement powers primarily to the Federal Trade Commission.
• Delegate many issues to the FTC, including regulations on information accuracy and security, and approval of industry self-regulatory programs.

Although Rush's bill was the first to be filed, the introduction of Boucher's bill is still expected either this week or after the August recess and will still play an important role, especially since it has received the benefit of significant review and comments by both industry and public interest lobbyists. Also, the fact that Thursday's hearing examined both bills indicates that there may be less of a turf battle brewing between Rep. Boucher and Rep. Rush than first thought. Rush and Boucher are both Chairman of House Energy & Commerce subcommittees that share jurisdiction on this issue - the Subcommittee on Commerce, Trade and Consumer Protection and the Subcommittee on Communications, Technology and the Internet, respectively. 
 
ABM's lobbyist Tom Carpenter of Wexler & Walker and counsel Mark Sableman of Thompson Coburn LLP will continue to keep ABM members informed regarding legislative activity on both of these privacy bills as updates are warranted, so stay tuned to Inside the Beltway. 

How Changes to USPS Periodical Content Rules Affect Publishers

ABM's ongoing effort to represent members' best interests in Washington has included aggressively pursuing changes in Periodicals content rules regarding supplements to periodicals, product samples in periodicals, and so-called "novelty pages." ABM is pleased to present the new rules as they affect publishers.

“These rules result from a too-long battle to obtain a loosening of these content standards in order to permit publishers to obtain additional, innovative advertising,” says David Straus, ABM’s Washington counsel and postal expert. He especially thanked Howard Schwartz (Advance) for his tireless leadership on this issue. 

Changes to the standards in this final rule concentrate on the four areas of pages, supplements, products, and mailpiece construction.

Pages
In response to a 1995 Postal Service ruling allowing publishers to fasten printed pages with grommets, string, and rubber bands – as well as with staples, saddle stitching, or spiral binding – while maintaining the USPS Periodicals mailing rate, publishers have argued that the rules “unduly limit creativity in designing publications that appeal to their readers and advertisers.” Citing technological advancements, publishers took issue with the fact that neither private shipping companies nor newsstands restrict sound devices or video components within a printed page, for example, while the USPS does.

The Postal Service agreed, and the recent rule change modified the rule's first sentence to permit “non-paper,” so that non-paper materials, in addition to fastening materials, would be accepted at the Periodicals rate; the language “Not all elements that make up a multilayer page must be printed” was inserted.

Supplements
ABM is pleased to announce that the longstanding rule requiring that a supplement to a periodical contain 25 percent non-advertising material has been dropped (except for separately-addressed, loose supplements mailed with the host publication outside a wrapper or polybag). This change will provide much greater flexibility in the design and selling of supplements, especially those with “single sponsors” that have been the subject of careful USPS scrutiny in the past. Under the new rule, the 25% non-advertising rule will apply to the combined host piece and supplement. “With the elimination of this requirement, your advertising sales people ought to be able to sell more supplements and bring in significant new revenue,” says Straus.

Product Samples
While the Postal Service continues to exclude products such as stationery, cassettes, floppy disks, DVDs, and CDs from mailing at Periodicals rates, it will now allow product samples in de minimis form to be included as part of a printed sheet.

Further revised language includes (but is not limited to):

• Product samples may not be included in a Periodicals publication mailed at letter-sized prices.
• The combined weight of product samples in an issue of a Periodicals publication cannot exceed 3.3 ounces.
• Any product sample that is a “packet” is limited to a weight of no more than one ounce with a burst strength minimum of 3,000 pounds per square inch.

Mailpiece Construction
The Postal Service rules on mailings without wrappers will be amended to allow a single sheet prepared as an attachment to be securely attached along the bound edge on the outside of an unwrapped publication, as long as the sheet does not exceed the dimensions of the cover, and allowing a ¾-inch clearance of any open edge.

Unwrapped pieces must have a cover page or protective cover that must cover both the front and back of the host publication and extend to within at least ¾ inch of any open edge.

Take Advantage Now
Although the new rules are to be made effective on September 7, publishers may actually take advantage of them immediately by asking for an exception from the USPS's Pricing and Classification Service Center, according to Straus.

PRC Report Finds $50 Billion Discrepancy
ABM urges support for HR 5746 to relieve USPS financial crisis 

The Postal Regulatory Commission (PRC) recently released and sent to Congress a report of the independent actuary it retained to examine the issue of Civil Service Retirement System (CSRS) overpayments.

According to the PRC’s news release (here), the Commission found that an adjustment of $50-$55 billion in favor of the Postal Service would be equitable, recommending that Congress reallocate some of this money to fund the future retiree health care costs that now must be paid out of the Postal Service's budget (and that are responsible for the annual Postal Service deficit).

Earlier this month, Rep. Stephen Lynch (D-MA) introduced HR 5746, which directs the recalculation of CSRS pension benefits to the advantage of the USPS. The bill would direct the Office of Personal Management (OPM) to use the more modern methodology suggested by the PRC’s commissioned actuary report to allocate CSRS retirement benefit liabilities between the United States Postal Service and the Federal government. The bill gives OPM six months to recalculate or redetermine the Postal CSRS surplus or liability utilizing the new methodology. After the redetermination, the bill would give OPM 90 days to develop a process via regulations to carry out the transfer of any surplus to the USPS in a manner that it deems appropriate.

ABM is leveraging its Executive Committee membership in the Coalition for a 21st Century Postal Service to help get this legislation passed. Stay tuned.

Congress Moves to Protect Free Speech

On Tuesday Congress passed and sent to President Obama legislation that would protect American authors, journalists and publishers from foreign libel judgments that undermine the U.S. guarantee of free speech. 

The Securing the Protection of our Enduring and Established Constitutional Heritage Act, or SPEECH Act (S. 3518 ), targets the growing phenomenon of libel tourism, an issue monitored by ABM’s Information Policy Committee (IPC), in which plaintiffs file libel suits in claimant-friendly jurisdictions, such as the United Kingdom, and, after obtaining a favorable verdict, seek enforcement of the judgment in the United States. Claimants in these cases have included international businessmen, and some technical and trade publications have been targeted.

Under the bill, U.S. federal courts would be prevented from recognizing or enforcing a foreign judgment for defamation that is inconsistent with the free speech guarantee in the Constitution. Click here for more on the bill and the libel tourism issue.

ABM Celebrates Victory Concerning Access to Government Information
Supreme Court decides Doe v. Reed

The U.S. Supreme Court recently rejected an attempt to cut back on the public’s right to obtain access to government documents and data – an issue of importance to companies that frequently collect and use such data. In Doe v. Reed, the plaintiff claimed that public record information (in this case, signatures on a referendum petition) should be withheld from public disclosure on the theory that disclosure would invade the privacy of individuals identified in the records.
 
ABM responded, along with like-minded business information users, by filing a brief arguing against any court-imposed privacy exception to state public records acts. ABM is pleased to report that on June 24 the Supreme Court agreed with its position, by upholding the lower court's decision, stating that “disclosure [of information] does not as a general matter violate the First Amendment, and we therefore affirm the judgment of the Court of Appeals.”
 
The parties seeking to limit information disclosure had based their claim partly on the First Amendment, claiming that disclosure of their referendum signatures could inhibit their electoral activities. The Court ruled that while the compelled disclosure of referendum signatures implicated First Amendment interests, the state has a strong interest in electoral integrity, which includes rooting out fraud and error and promoting transparency, and this governmental interest overrode the plaintiffs' First Amendment interests. For an attack on disclosure of this nature to succeed, the Court suggested that there would need to be evidence showing a reasonable probability that the plaintiffs faced threats, harassment or reprisals if their names were disclosed.
 
This decision is a victory for ABM’s position in protecting freedom of access to government information. Read the full decision here.

FEATURED RESOURCE:
ABM's July Government Policy Brief

Late last year ABM developed its quarterly Government Policy Brief, which outlines and prioritizes the key pocketbook issues in Washington and their relevance to the membership. ABM continues to monitor and work on these issues on your behalf. Click here to download the latest brief.
 

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