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June 18, 2003                 
Bill Ghent 224-2441

    Carper Introduces Postal Reform Legislation
                         
                         
WASHINGTON, DC (June 18, 2003) - Looking to stabilize mailing
rates while maintaining a commitment to universal service,
Sen. Tom Carper, D-DE, today introduced legislation that
would modernize the U.S. Postal Service for the 21st century. 

The legislation, the Postal Accountability and Enhancement
Act of 2003, would force the Postal Service to concentrate
solely on what it does best - processing and delivering mail
to all Americans. It would begin the process of developing a
modern rate system for pricing Postal Service products, while
also creating a strong regulatory body to ensure that the
Postal Service competes fairly with other national mail
carriers. The bill further aims to strengthen existing
service standards for the Postal Service's many products. 

"My bill does not attempt to reform the Postal Service by
rolling back universal service or taking pay, benefits or
collective-bargaining rights away from employees," said
Carper. "The bill gives the Postal Service the flexibility it
needs to compete in the 21st century."

The Postal Service is in a period of transition. When it was
created in 1971, nobody had access to fax machines, cell
phones and pagers and nobody imagined the convenience of
email and other electronic services. After nearly three
decades of success, these new inventions have caught up with
the agency.

By 2002, mail volume was falling and revenues were poor. To
help scale back mounting debt, the Postal Service has been
forced to raise rates three times in less than two years.
Thanks to various cost-cutting measures, the agency's
financial outlook has improved, but there is only so much the
Postal Service can do its own.

The Carper legislation would seek to strengthen the Postal
Service's standing and long-term viability by:

Preserving Universal Service, While Protecting Employees: The
bill maintains the current requirement that the Postal
Service continue delivering to every address in the country
in a non-discriminatory way.  The bill also preserves
employee collective-bargaining rights.

Creating a Strong Regulator: The bill would rename the Postal
Rate Commission the Postal Regulatory Commission, strengthen
qualifications for Commission members and give the Commission
the authority to create a new system of rates and service
standards for most of the Postal Service's products. The
Commission could also subpoena Postal Service employees and
records and punish or fine the Postal Service for violating
any rate or service regulation it issues.

Creating a Modern Rate System: The bill requires that the
Postal Regulatory Commission in two years create a new system
for pricing and classifying the Postal Service's Market
Dominant products, such as First Class Mail and others that
are part of the postal monopoly. The new system should give
the agency more pricing flexibility, allowing them to use
rates to encourage safer, sender-identified and easily
traceable mail and to encourage people to mail during
non-peak periods. The Postal Regulatory Commission could also
institute emergency price increases during certain times,
such as a national fuel crisis, that threaten the agency's
ability to fulfill its universal service mandate. In
addition, the bill requires mailers, the Postal Service and
the Commission to agree to a schedule of rate increases over
a period of time to make them more predictable and less
frequent. Most importantly, the bill authorizes the Postal
Service to negotiate with mailers service agreements aimed at
increasing volume and better tailoring services to mailer
needs.

Establishing Modern Service Standards: The bill authorizes
the Commission to create within two years a set of service
standards for its Market Dominant products. The bill also
requires the Postal Service to realign its operations in
order to meet those new service standards. This could include
closing or consolidating some facilities no longer needed to
meet the new standards.

Ensuring Fair Competition: The bill would ensure that the
Postal Service competes fairly with companies like the United
Parcel Service and FedEx by preventing the agency from using
revenue from its monopoly products, such as First Class Mail,
to underwrite expenses for its competitive products, like
Priority Mail. The Postal Service is also prohibited from
issuing regulations that would give the agency an unfair
advantage over private sector companies, and the agency would
have to pay an assumed federal income tax on products that
private firms also offer.

The legislation is being introduced just about a month before
the President's Commission on the United States Postal
Service is set to issue its recommendations for postal
reform. Senator Carper said he hopes the legislation would
help guide the Commission as it completes its work. "I
commend President Bush for his leadership in putting the
Commission together," said Carper. "I urge those on the
Commission to take careful consideration of the work Congress
has done on postal reform over the past decade, including the
bill I am introducing today. I hope they can look to the
Postal Accountability and Enhancement Act as a touchstone as
they complete their work."

The Carper legislation is based on a bill introduced last
year in the House by Congressman John McHugh (R-N.Y.) that
enjoyed the support of most of the mailing community and
nearly all organization representing Postal Service
employees.  The Postal Service's Board of Governors also
endorsed it.

"I applaud Senator Carper for his efforts on postal reform,"
said Bill Young, President of the National Association of
Letter Carriers. "Ensuring that the Postal Service has the
flexibility to thrive in the 21st century is of vital
importance to my members and the public we serve. Senator
Carper's bill is an important step in that it aims to improve
service nationwide and preserves the protections and benefits
letter carriers depend on. We look forward to working with
Senator Carper to get comprehensive postal reform legislation
passed into law."

"The issue of postal reform is critical to the country,
magazine readers and the entire mailing industry," said Ann
Moore, chairman and CEO of Time, Inc. "Senator Carper's bill
provides the Postal Service with much-needed flexibility that
allows it to operate in a more business-like manner, which is
important to any reform bill. We appreciate his leadership,
and we look forward to continuing to work with him and
[Governmental Affairs Chairwoman] Susan Collins."

Last month, the president signed into law another bill
sponsored by Sen. Carper that would keep postal rates flat
until at least 2006. That legislation, which Carper
co-authored with Collins, corrects a funding mechanism
problem that could have caused the U.S. Postal Service to
over-fund its contributions to the Civil Service Retirement
Fund by $78 billion.


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