On October 12, the House Oversight and Government Reform Committee approved an amended version of HR 2309 intended to restore financial solvency to the USPS and other matters. The bill passed primarily on party lines with one Republican and all Democrats on the committee voting against final approval in the committee.

The key features of the bill include:

• Creation of a control board to manage the USPS in event of a default on its obligations
• Allowing the USPS to eliminate Saturday delivery
• Creation of a commission to make decisions on post office closings
• Increase of certain postage rates
• Extension of USPS borrowing authority, and
• Transfer of excess payment to one of the federal retirement accounts (FERS) to provide incentives to reduce postal employment by early retirement.

While the normal course of legislation would have the bill go next to the full House of Representatives for consideration, it seems that this is not a normal year. Next up is the Senate Homeland Security Committee which will consider its version of postal reform in the next month. The bills likely will be very different.

Significantly, the House bill as well and the proposal from the Obama Administration call for rate increases above the consumer price index to address postal solvency. Industry representatives have repeatedly told elected officials that rate increases will decrease volume.

In HR 2309, particular aim was focused on periodicals, catalogs, non-profit and political mail. These types of mail are considered “underwater” (cost more to deliver than they generate in postage). Industry experts have long disagreed with the concept of underwater both from a pure cost standpoint and that they tend to generate significantly more business for the USPS. Periodicals and non-profits were treated somewhat better in that a delay of two years was approved before rates can go up and the amount of increase is limited.