Industry Updates

PRC Approves USPS Petition to use Internal Measurement System

Postal Regulatory Commission issued a ruling in PI2015-1 that grants the Postal Service’s petition to use internal measurement systems to measure service performance on its products.

This will replace the External First-Class (EXFC) measurement system used to measure delivery performance. The internal measurement system includes a greater volume of mail than the sampling method.

It was on January 29, 2015, that the Commission established Docket No. PI2015-1 to consider a Postal Service proposal concerning new internal service performance measurement systems for several of its market dominant products, including products within domestic First-Class Mail, Periodicals, Marketing Mail and Package Services. Over the duration of this docket, the Postal Service has progressed from presenting an “idea” for new measurement systems, to developing and implementing systems that report service performance for a variety of market dominant products.

Over that time, the Postal Service proceeded with the development and implementation of these new measurement systems for its own internal purposes. The Postal Service did not base its proposals on costs. However, the increase in costs due to implementing and operating the internal service performance measurement system will be offset by the retirement of the legacy EXFC measurement system. This includes the EXFC end-to-end measurement system applicable to First-Class Mail, single-piece letters and flats. It also includes the use of EXFC reporters for generating Last Mile data for other mail products.

In the docket, the Postal Service asks the Commission to consider whether or not the Commission would accept data generated by these systems for the purpose of service performance measurement reporting as required by regulation and statute. 39 U.S.C. § 3652 requires that the Postal Service provide an annual report to the Commission analyzing the quality of service “for each market dominant product provided in such year” by providing “(B) measures of the quality of service afforded by the Postal Service in connection with such product, including— (i) the level of service (described in terms of speed of delivery and reliability) provided; and (ii) the degree of customer satisfaction with the service provided.”

 


Important Web Event for Catalog Mailers – Life After Quill

ACMA’s Attorneys To Explain Ramifications of Supreme Court Ruling in S.D. v. Wayfair 

No doubt, there’s been plenty of confusion since the Supreme Court’s June 21st decision in South Dakota v. Wayfair overruled the Quill physical presence standard of sales tax collection requirements​. Although there’s still not complete clarity on what to do next, ACMA’s attorneys from Brann & Isaacson, who defended Wayfair in the Supreme Court case, will lead an industry conference call on Tuesday, July 10th at 1:00 pm E.T.

There is no charge to dial in and the call is open to both ACMA members and non-members. Our attorneys will attempt to answer the following questions:

  • When will the SCOTUS ruling take effect? When is the decision final?
  • What will happen next?
    • What are the states doing?
    • What is the industry doing (ACMA/NetChoice, Brann & Isaacson)
    • What is Congress doing?
    • What can you do to support a workable outcome?
  • When should catalogers & remote retailers start collecting sales taxes from customers?
  • Should catalogers change their order forms in their next catalogs? Click here to register. This is an off-the-record event and no press will be allowed.

Registration Required

Click here to register. This is an off-the-record event and no press will be allowed.

The Lineup

Come armed with your questions for Brann & Isaacson’s partners George Isaacson and Martin Eisenstein. They will be joined by ACMA President & Executive Director Hamilton Davison and NetChoice Executive Director Steve DelBianco, who will explain what becomes of the lawsuits the tandem of associations has taken over the past year against several states, and what is needed to ensure that the SCOTUS ruling doesn’t turn remote commerce into complete chaos.

A note from ACMA Leadership

ACMA continues to work diligently following the June 21st Supreme Court ruling in South Dakota v. Wayfair, Inc., which overturned the Quill physical presence standard of sales tax collection requirements.

 

Among other actions, we are putting together the following:

  • an urgent national legislative strategy, recognizing it will be Congress that ultimately resolves this matter;
  • an aggressive public relations strategy, taking advantage of the issue’s visibility in the news cycle to correct widespread myths and half-truths being spread about the so-called “ease” of collection;
  • a review of the current status and strategy of all our lawsuits underway to determine relevance or value in light of the SCOTUS decision; and
  • the options for considering “test case” litigation to back up overly aggressive state actions given the many unresolved issues surfaced by this change and to hopefully set some bumper rails as new requirements and laws come onto the books.Our AskWe are also hearing of a number of threatening letters sent to members by states demanding collection of sales taxes from their customers. While you can and should share these with your tax attorney, it would be most helpful for you to also share these with the ACMA (in confidence, of course).

You can feel free to redact your company name and address if you wish prior to sending us anything. We will handle such items sensitively in any case.How To Handle This
Keeping us apprised of developments in this rather frenetic period will be of great value. Please email details to action@catalogmailers.org or feel free to reach out via phone on 1-800-509-9514 to speak with us live. Again, anything you submit will be treated as confidential.Sincerely,

The fight is far from over. Rather, it has intensified with a new sense of resolve. There is a misperception that it is “game, set and match” concerning remote sales taxes, when in fact nothing has changed until the remanded Wayfair case is finalized in the South Dakota Supreme Court. This is not stopping some jurisdictions from jumping into the deep end of the pool given this apparent opening. It may well be that their bad behavior is exactly the motivation that forces congressional resolution of this longstanding dispute. Help us make sure we are armed with the facts. Thank you.

We will be most effective if we maintain a real-time list of the states and the types of demands they’re making so we can show members of Congress why they must pass a bill now to spare our industry from significant harm. To help spur members of Congress to action, we must show them examples of what states are doing that is unreasonable, overly complex or simply not conducive to good governance.

To do the best job for you, we need to stay well informed about what you are experiencing from states or specific jurisdictions, what challenges or problems you have already identified or encountered as you consider how to respond to this development, and what you are hearing from your customers, attorneys, accountants, investors, etc.

An op-ed we contributed to The Hill last week outlines the many questions raised by the court’s decision and the uncertainty we are now dealing with. Many of the specifics it contains were items our members have shared with us. Things are moving quickly. Our ability to properly communicate on this subject depends on what we’re hearing about the current situation on the ground – the realities you are facing each day.

Hamilton Davison

President & Executive Director

American Catalog Mailers Association

hdavison@catalogmailers.org


Enterprise Payment System (EPS) Informational Series

The United Stated Postal Service has announced a series of informational sessions on EPS and the migration process.

o   Call-in toll-free number (US): 1-855-860-7461

  • Conference Code: 358 251 5082

EPS will replace the current product-centric payment with a centralized account processing system enabling customers to pay and manage their service online using a single account.

EPS allows customers to pay for Postal products and services through a single account, called the Enterprise Payment Account (EPA). EPS supports commercial, domestic and international products and services which includes First-Class Mail, USPS Marketing Mail, Periodicals, Electronic PO Boxes Online (EPOBOL) and Address Quality Products.
  • Trust Account: Allows you to directly deposit funds to your USPS payment account for transactions.
    • Trust Accounts can be funded through:
      • Check, cash, or money order deposited at designated retail units (https://postalpro.usps.com/EPS/RetailLocations). You are no longer restricted to deposit at the Zip Code where your permit/publication is held. Note: As an EPS customer, you must provide your 10-digit EPA number, not your permit/publication number, to make a deposit to your Trust Account.
      • Fedwire Transfer -a service provided by the Federal Reserve bank to electronically deposit funds into your account
      • ACH Credit – electronic method to deposit funds into your account directly from your banking institution.
  • ACH Debit: Allows USPS to withdraw payment transactions directly from your bank account.

The USPS has posted a Fact Sheet that walks the user through how to enroll, create an account, migrate CAPS Account, setup payment methods and link account. To keep up to date on the latest regarding EPS, visit the USPS Enterprise Payment System site on PostalPro.

USPS representatives are also reaching out to mailers to help them through the upgrade process. For CAPS users, the Postal Service has announced the retirement of CAPS on April 1, 2019.


Restructure the Postal Service? Privatization?

The White House has released their Reform Plan and Reorganization Recommendations for Delivering Government Solutions in the 21st Century.

This Reform Plan is an annual report that started based on an Executive Order (EO) 13781, entitled “Comprehensive Plan for Reorganizing the Executive Branch”. It highlights the need to evaluate the organizational constructs that support today’s mission delivery objectives. Building on a history of bipartisan Government reform initiatives, the EO focuses specifically on the role of organizational alignment in reducing “duplication and redundancy,” and improving “efficiency, effectiveness, and accountability of the executive branch.”

The report outlines the Administration’s analysis and recommendations for structural realignment of the Executive Branch to better serve the mission, service, and stewardship needs of the American people. While some of the recommendations identified in this volume can be achieved via Executive administrative action, more significant changes will require legislative action as well.

The section on changes to the United Stated Postal Service begins on page 68 and contains the following:

United States Postal Service
Summary of Proposal: This proposal would restructure the United States Postal System to return it to a sustainable business model or prepare it for future conversion from a Government agency into a privately-held corporation. Like many European nations, the United States could privatize its postal operator while maintaining strong regulatory oversight to ensure fair competition and reasonable prices for customers. The President’s Task Force on the United States Postal System will make recommendations on reforms towards this goal in August 2018.

Again, the report is a group of recommendations that are based on the Administration’s analysis. Recommendations that are significant in nature typically require legislative action. The chances of seeing a privatized Postal Service in the near future are extremely low.


Supreme Court Rules Against Wayfair in Online Sales Tax Battle

In a 5-4 decision, the Supreme Court ruled in favor of South Dakota on South Dakota vs Wayfair.  South Dakota was seeking to upend the 1992 Quill ruling which prevented states from imposing sales taxes on companies that did not maintain a physical presence within their borders.

Consequently catalog shippers and others may now be required to collect tax on shipments irrespective of where they are located physically. As the United State has a number of different local and tax regimes, this ruling could have important cost implications for catalog mailers.

The following was provided by the American Catalog Mailers Association. It provides additional insight into the fact that it is not about avoiding tax, but rather the complexity of its management:

“Small catalog and online retailers with little or no presence beyond their headquarters will be hurt the most – some will be forced out of business,” said ACMA President & Executive Director Hamilton Davison. “Rural Americans, shut ins and older consumers will be particularly hard hit by this decision.”

By ruling against remote sellers and customers all across America, the High Court’s decision means companies who sell only 100 orders a year must now collect sales taxes for every South Dakota order. “This is a ridiculously small threshold,” Davison said. “A merchant might sell only 100 $20 orders and now be forced to comply with laws well outside its capacity and be subject to horrendous complexity.”

This opens the door to more than 12,000 separate taxing jurisdictions who are now free to impose virtually any requirement on businesses nationwide. Gone too are the protections from unreasonable and countless compliance burdens on companies without a physical presence; in fact there may be no end to what politicos attempt to impose on those who do not vote for them. “The dizzying array of differing state and local tax laws presents an impossible array of complexity for both remote sellers like catalog companies and their customers,” Davison added.

Congress must now work quickly to clarify exactly what burdens are acceptable to interstate commerce before things devolve into chaos unleashed by this decision. “Given the lack of restraint historically shown by regulators and tax administrators willing to impose virtually any burden on companies outside their borders,” Davison said, “the Court’s decision is sobering and troubling.”

Adding to the absurdity of the High Court’s decision, a recent Government Accounting Office report found that forcing all remote sellers to collect sales tax adds only 2%-3% new revenue but would impose significant additional costs to collect. In essence, it will take only a small drop to employment and corporate profitability to offset any new sales tax revenues this generates.

Other information provided by ACMA stated that “Based on our analysis of nearly 1,000 Internet retail companies, we estimate that about 80 percent of the potential revenue from requiring all Internet retailers to collect is already collectible. Many of the largest Internet sellers are established retail chains or consumer brands with a physical presence, such as retail stores, in all, or nearly all, of the 45 states (plus the District of Columbia) that have a statewide sales tax. As noted earlier, under current law, if a remote seller has a substantial presence (referred to as nexus) in a state, the seller is required to collect.”


USPS Pricing – Planning for 2019

Postal Service leaders have publicly stated at association meetings that they are preparing a CPI based rate increase for early 2019. At this time there is no Board of Governors to approve a rate increase. However, the Postal Service is hopeful that the two candidates will be confirmed in time to file in October.

Over the last few years, the cycle of filing in October, based on August CPI, with a January implementation has become the typical timeline. As a point of reference, CPI in March was 2.051%, 2.073% in April and increased by .2% in May. Note that the rate authority is not necessarily applied as a flat charge across rate cells, instead some rates may be greater than CPI and others lower.

In addition to the anticipated CPI increase, there are factors to consider when planning for 2019. See the Fairrington Newsletter for a summary of the latest postal landscape.


House has Reintroduced the Postal Reform Bill

The United States House or Representatives has reintroduced the postal reform bill it first introduced early last year.

It is called the Postal Reform Act of 2018. The bill’s new number is HR 6076, and can be found here. Watch for updates at CONGRESS.GOV. It was introduced by Rep. Mark Meadows (R-NC-11th) and cosponsored by Reps. Steve Russell (R-OK-6th), Dennis Ross (R-FL-15th), Elijah Cummings (D-MD-7th), Gerry Connolly (D-VA-11th), and Stephen Lynch (D-MA-8th).

The bill requires the USPS to come up with a plan to manage its debt, taking into account “projected changes in mail volume, projected changes in the number of employees needed to carry out the responsibilities of the Postal Service, the long-term capital needs of the Postal Service, including the need to maintain, repair and replace facilities and equipment and the distinctions between market-dominant and competitive products.” The goal is to stabilize the USPS as an integral part of domestic and international supply chains.

It is unknown if this will move forward or if it will hold until the Presidential Task Force work is complete.


Kubayanda Nominated by White House for PRC Position

Michael Kubayanda has been under consideration to fill the vacant Postal Regulatory Commissioner position. On June 6, 2018 the President has now formally nominated Mr. Kubayanda to fill that position for the remainder of a six-year term expiring November 22, 2020.

Mr. Kubayanda serves as a board member and privacy officer for a digital health startup.   Michael previously worked with the Office of Inspector General (OIG) of the U.S. Postal Service, ending as director of government relations, in which he worked with OIG officials to support the work of inspectors general in data analytics.  In the OIG’s research group, he oversaw research on technical issues and wrote reports addressing postal economics and price regulation, intellectual property, and public-private partnerships, while serving as an advisor to colleagues on issues such as privacy, knowledge management, and innovation.  Prior to the OIG, he served on the staff of the House Committee on Oversight and Government Reform.  Michael holds degrees from Georgetown University, Northwestern University, The Ohio State University, and studied at the Graduate Institute in Geneva, Switzerland.


ACS Industry Alert – Billing Issue

The United States Postal Service has issued the following Industry Alert:

(Note June 5 phone number correction. Original USPS communication had the incorrect phone number).

June 2, 2018

ACS Industry Alert

ACS customers please be advised that USPS has identified a discrepancy in the invoices that were produced for the April and May billing cycles.  We are requesting that you DO NOT pay the invoices for either month at this time.

The National Customer Support Center is reviewing the ACS billing process to determine if any adjustments to assessed charges are required.  After completing this review, any refunds or credit to customer accounts will be made as necessary and new invoices will be issued to all ACS customers covering the April and May billing cycles.

We will update you upon finalization of our analysis.  Please contact the NCSC at 877-640-0724 (Option 1) or by email at acs@usps.gov with any questions.


New Ballot Service Type IDs – Effective August 20, 2018

The USPS has provided the below information concerning new STIDs for ballot mail.  MLOCR vendors and others should be aware of this change and take the necessary actions to support it.

 

New Ballot Service Type IDs  –  Effective August 20, 2018

 

The United States Postal Service® remains steadfast in its commitment to the democratic process and the election community. As states and localities increasingly use mail in the election process, the Postal Service remains ready to support the growth in vote-by-mail initiatives. The USPS and Election Community Partners identified the need to increase official ballot mail visibility within the automation environment which has led to solutions to include the use of:

•   Matching Serial Numbers in the Intelligent Mail barcode (IMb) for outgoing and returning ballots, allowing the mailer to track and identify the recipient on both outgoing and incoming ballot mail.

•   New Service Type Identifiers (STID)s in the IMb to distinguish ballot mail in the mail flow effective August 20, 2018.

The ballot mail solution led to the assignment of 23 STIDs to enable tracking of outgoing ballot mail and one unique STID for all returning ballots (votes). These STIDs are available on PostalPro at: https://postalpro.usps.com/mailing/service-type-identifiers

Questions may be directed to:  IV Help Desk at InformedVisibility@usps.gov or call 800.238.3150, Option 2.


The U.S. doesn’t have enough truckers, and it’s starting to cause prices of about everything to rise

A recent Washington Post Article, cited pay increases of 15 – 20% for drivers:

Joyce Brenny, chief executive of Brenny Transportation in Minnesota, gave her truck drivers a 15 percent raise this year, but she still can’t find enough workers for a job that now pays $80,000 a year.

Amazon, for example, just implemented a 20 percent hike for its Prime program that delivers goods to customers in two days.

The article goes on to state the United States has had a truck driver shortage for years, but experts say it’s hitting a crisis level this year. There’s even more demand for truckers now as just about every sector of the economy is expanding and online sales continue to soar. On top of that, the federal government imposed a new rule in December that requires drivers to be on the road for no more than 11 hours at a time and track their time by an electronic device so they can’t cheat.

Joyce Brenny was quoted as stating “A year ago, when customers would call Brenny, she could almost always get their goods loaded on a truck and moving within a day or two. Now she’s warning customers it could take two weeks to find an available truck and driver.”

According to DAT Solutions, as driver pay rises quickly and diesel fuel costs tick up, shipping companies are charging higher and higher rates to move goods. It now costs more than $1.85 a mile to ship a “dry good” that doesn’t require refrigeration or special accommodation, a nearly 40 percent increase from the price a year ago.

It is a tight market with no short-term relief in sight. Advanced planning and working closely with a logistics provider is more critical than ever for success.

 


U.S. Postal Service’s First Scratch-and-Sniff Stamps Evoke a Sweet Summer Scent

WASHINGTON — The U.S. Postal Service’s first scratch-and-sniff stamps will add the sweet scent of summer to letters of love, friendship, party invitations and other mailings when the Postal Service introduces the Frozen Treats Forever stamps June 20 in Austin, TX.

The stamps can be pre-ordered at this link soon for delivery shortly after the June 20 issuance.

More…


USPS Reports Financials for FY2018 Q2

On May 11, 2018, the Postal Service hosted a media call to review the financial results from FY2018 Q2. They have also posted the associated press release and supporting documentation.

They reported total revenue of $17.5 billion for the second quarter of 2018 (January 1, 2018 – March 31, 2018), an increase of $235 million, or 1.4 percent, compared to the same quarter last year. Reported a net loss of $1.3 billion, with slight revenue increases offset by cost increases, particularly in transportation and salaries and benefits.

Shipping and Packages revenue grew by $445 million, or 9.5 percent, while First-Class and Marketing Mail revenue fell by a combined $181 million.

To date this year, USPS has lost $1.9 billion.

  • First Class: For the three months ended March 31, 2018, First-Class Mail revenue decreased $166 million, or 2.5%, and volume declined 521 million pieces, or 3.4%, compared to the same period last year. For the six months ended March 31, 2018, First-Class Mail revenue decreased $475 million, or 3.5%, and volume declined nearly 1.2 billion pieces, or 3.7%, compared to the same period last year.
  • Marketing Mail: For the three months ended March 31, 2018, Marketing Mail revenue decreased $15 million, or 0.4%, and volume declined by 179 million pieces, or 1.0%, compared to the same period last year. For the six months ended March 31, 2018, Marketing Mail revenue decreased $263 million, or 3.0%, and volume declined by 1.5 billion pieces, or 3.6%, compared to the same period last year.

After the presentation by PMG Brennan and VP Luke Grossman, USPS fielded questions from media where they reiterated their hope that immediate legislative and regulatory relief will be in the offing irrespective of the ongoing efforts of the President’s Task Force.


USPS Board of Governors: Two move past Committee (waiting for floor vote)

The Senate Homeland Security and Government Affairs Committee approved, by voice vote, the nominations of David C. Williams and Robert M. “Mike” Duncan to be Postal Service Governors.

The third nominated governor, Calvin R. Tucker, withdrew his nomination.

At this time, no floor vote has been scheduled.

If the two nominees were approved by the senate, the USPS could consider seeking their approval to file rate changes and promotions with the Postal Regulatory Commission, PRC.

Additional Background:

The term of the last Governor expired on December 8, 2016. By law, the USPS must notify the PRC of any changes to rates, fees or basic classification rules. Such filings require the prior approval of the Postal Service’s Board of Governors. The Board normally consists of up to nine governors appointed by the President of the United States with the advice and consent of the Senate. Currently, the Board of Governors now consists of only the Postmaster General and Deputy Postmaster General.  With no politically appointed members they do not have the authority to approve rate changes or basic classification changes; this include promotions.

On October 26, 2017, the White House announced nominations for three individuals to be postal governors. The Senate has not confirmed the nominations.

  • David C. Williams of Illinois, for the remainder of a seven-year term expiring December 8, 2019. Williams was sworn in as the second independent Inspector General (IG) for the U.S. Postal Service on August 20, 2003.
  • Robert M. Duncan of Kentucky, for the remainder of a seven-year term expiring December 8, 2018, and an additional term expiring December 8, 2025. A 40-year political strategist and veteran of Republican politics, served as the 60th chairman of the Republican National Committee (RNC) from 2007-2009.
  • Calvin R. Tucker of Pennsylvania, for the remainder of a term expiring December 8, 2023. President and CEO, Eagles Capital Advisors, LLC, a financial, management & Economic Development Consultant firm.

USPS Continues Rollout of Enterprise Payment System: Centralized System to Pay and Manage Services

The Postal Service has been developing a new Enterprise Payment System (EPS) to replace the current product-centric payment with a centralized account processing system enabling customers to pay and manage their service online using a single account.

The Enterprise Payment System (EPS) allows customers to pay for Postal products and services through a single account, called the Enterprise Payment Account (EPA). EPS supports commercial, domestic and international products and services which includes First-Class Mail, USPS Marketing Mail, Periodicals, Electronic PO Boxes Online (EPOBOL) and Address Quality Products.
  • Trust Account: Allows you to directly deposit funds to your USPS payment account for transactions.
    • Trust Accounts can be funded through:
      • Check, cash, or money order deposited at designated retail units (https://postalpro.usps.com/EPS/RetailLocations). You are no longer restricted to deposit at the Zip Code where your permit/publication is held. Note: As an EPS customer, you must provide your 10-digit EPA number, not your permit/publication number, to make a deposit to your Trust Account.
      • Fedwire Transfer -a service provided by the Federal Reserve bank to electronically deposit funds into your account
      • ACH Credit – electronic method to deposit funds into your account directly from your banking institution.
  • ACH Debit: Allows USPS to withdraw payment transactions directly from your bank account.

The USPS has posted a Fact Sheet that walks the user through how to enroll, create an account, migrate CAPS Account, setup payment methods and link account. To keep up to date on the latest regarding EPS, visit the USPS Enterprise Payment System site on PostalPro.

USPS representatives are also reaching out to mailers to help them through the upgrade process. For CAPS users, the USPS expects to retire that system in about a year.

 


White House Issues Executive Order on Postal Service

President Trump has signed an Executive Order establishing a Task Force on the United States Postal Service which is assigned the responsibility of coming up with structural changes for the Postal Service.  It’s required to report back in 120 days.  Stakeholders are mentioned in paragraph 4. Neither postal agency is represented on the Task Force, but both the PMG and PRC Chair are to be consulted.

It will be Task Force will be composed of the following department and agency heads, or their designees:

  • The Director of the Office of Management and Budget
  • The Director of the Office of Personnel Management
  • Any other department and agency head the Chair may designate

The order instructs that the Task Team will conduct a thorough evaluation of the operations and finances of the USPS, including:

  • The expansion and pricing of the package delivery market and the USPS’s role in competitive markets
  • The decline in mail volume and its implications for USPS self-financing and the USPS monopoly over letter delivery and mailboxes
  • The definition of the “universal service obligation” in light of changes in technology, e-commerce, marketing practices, and customer needs
  • The USPS role in the U.S. economy and in rural areas, communities, and small towns
  • The state of the USPS business model, workforce, operations, costs, and pricing

Below is the full Exertive Order:

EXECUTIVE ORDER

– – – – – – –

TASK FORCE ON THE UNITED STATES POSTAL SYSTEM

By the authority vested in me as President by the Constitution and the laws of the United States of America, I hereby order the following:

Section 1. Policy. (a) The United States Postal Service (USPS) accounts for almost half of global mail volume and is regularly cited as the Federal agency with the highest public approval rating. However, a number of factors, including the steep decline in First-Class Mail volume, coupled with legal mandates that compel the USPS to incur substantial and inflexible costs, have resulted in a structural deficit where revenues are no longer sufficient to fund the pension liabilities and retiree health obligations owed to current employees. The USPS is on an unsustainable financial path and must be restructured to prevent a taxpayer-funded bailout. This finding is supported by the following considerations, among others:

(i) the USPS has incurred $65 billion of cumulative losses since the 2007-2009 recession;

(ii) the USPS has been unable to make payments required by law for its retiree health benefit obligations, which totaled more than $38 billion at the end of fiscal year 2017; and

(iii) the Government Accountability Office has had the USPS on its high-risk list since 2009 because of a serious financial situation that puts the USPS mission of providing prompt, reliable, and efficient universal mail services at risk. 2

(b) It shall be the policy of my Administration that the United States postal system operate under a sustainable business model to provide necessary mail services to citizens and businesses, and to compete fairly in commercial markets.

Sec. 2. Establishment. (a) There is hereby established a Task Force on the United States Postal Service (Task Force), to be chaired by the Secretary of the Treasury, as Secretary and as Chairman of the Federal Financing Bank, or his designee, to evaluate the operations and finances of the USPS. In addition to the Chair of the Task Force (Chair), the Task Force shall be composed of the following department and agency heads, or their designees:

(i) the Director of the Office of Management and Budget;

(ii) the Director of the Office of Personnel Management; and

(iii) any other department and agency head the Chair may designate.

(b) The Task Force shall consult with the Postmaster General and the Chairman of the Postal Regulatory Commission.

(c) The Task Force shall also engage:

(i) the Attorney General, on issues relating to government monopolies operating in the commercial marketplace;

(ii) the Secretary of Labor, on issues related to workers compensation programs; and

(iii) State, local, and tribal officials as determined by the Chair of the Task Force with input from the Task Force members.

(d) The Task Force shall meet as required by the Chair and, unless extended by the Chair, shall be dissolved once it 3

has accomplished the objectives set forth in sections 3 and 4, as determined by the Chair, and completed the report described in section 5 of this order.

Sec. 3. Evaluation. The Task Force shall conduct a thorough evaluation of the operations and finances of the USPS, including:

(i) the expansion and pricing of the package delivery market and the USPS’s role in competitive markets;

(ii) the decline in mail volume and its implications for USPS self-financing and the USPS monopoly over letter delivery and mailboxes;

(iii) the definition of the “universal service obligation” in light of changes in technology, e-commerce, marketing practices, and customer needs;

(iv) the USPS role in the U.S. economy and in rural areas, communities, and small towns; and

(v) the state of the USPS business model, workforce, operations, costs, and pricing.

Sec. 4. Recommendations for Reform. The Task Force shall develop recommendations for administrative and legislative reforms to the United States postal system.

(a) Such recommendations shall promote our Nation’s commerce and communication without shifting additional costs to taxpayers. The recommendations shall be developed in a manner that is consistent with the proposed plan to reorganize the executive branch as required by Executive Order 13781 of March 13, 2017.

(b) Such recommendations shall also consider the views of the USPS workforce; commercial, non-profit, and residential users of the USPS services; and competitors in the marketplace. 4

Sec. 5. Report. The Task Force, acting through the Chair and the Director of the Office of Management and Budget, shall submit a report to the President, in coordination with the Directors of the Domestic Policy and National Economic Councils, not later than 120 days after the date of this order. In its report, the Task Force shall summarize its findings and recommendations under sections 3 and 4 of this order.

Sec. 6. Administration. The Federal Financing Bank shall provide administrative support and funding for the Task Force.

Sec. 7. General Provisions. (a) Nothing in this order shall be construed to impair or otherwise affect:

(i) the authority granted by law to an executive department or agency, or the head thereof; or

(ii) the functions of the Director of the Office of Management and Budget relating to budgetary, administrative, or legislative proposals.

(b) This order shall be implemented consistent with applicable law and subject to the availability of appropriations.

(c) This order is not intended to, and does not, create any right or benefit, substantive or procedural, enforceable at law or in equity by any party against the United States, its departments, agencies, or entities, its officers, employees, or agents, or any other person.

THE WHITE HOUSE


USPS Board of Governors Hearings Scheduled

The Senate Committee on Homeland Security and Government Affairs has scheduled hearings Wednesday, April 18 to examine the nominations of David Williams, of Illinois, Robert M. Duncan, of Kentucky, and Calvin R. Tucker, of Pennsylvania, each to be a Governor of the United States Postal Service. Information about the hearing can be found here: https://www.senate.gov/committees/committee_hearings.htm.

Without a BOG, the USPS is not able to move promotions, rate changes or basic classification changes forward. This means we may see some promotions in 2018. If the candidates are confirmed, the promotions will still need to be brought before them and then approved by the PRC.

The term of the last Governor (out of nine) expired on December 8, 2016. By law, the USPS must notify the PRC of any changes to rates, fees or basic classification rules. Such filings require the prior approval of the Postal Service’s Board of Governors.  The Board of Governors now consists of only the Postmaster General and Deputy Postmaster General.  With no politically appointed members they do not have the authority to approve rate changes or basic classification changes.

Additional Background:
On October 26, 2017, the White House announced nominations for three individuals to be postal governors. The Senate has not confirmed the nominations.

  • Calvin R. Tucker of Pennsylvania, for the remainder of a term expiring December 8, 2023. President and CEO, Eagles Capital Advisors, LLC, a financial, management & Economic Development Consultant firm.
  • Robert M. Duncan of Kentucky, for the remainder of a seven-year term expiring December 8, 2018, and an additional term expiring December 8, 2025. A 40-year political strategist and veteran of Republican politics, served as the 60th chairman of the Republican National Committee (RNC) from 2007-2009.
  • David C. Williams of Illinois, for the remainder of a seven-year term expiring December 8, 2019. Williams was sworn in as the second independent Inspector General (IG) for the U.S. Postal Service on August 20, 2003.

 


PRC Directs USPS to Address Compliance Issues

On March 29, 2018, the Postal Regulatory Commission, PRC, issued their 2017 Annual Compliance Determination, ACD. The PRC as directed by statute, must prepare the ACD was prepared after a 90-day evaluation of the Postal Service’s Annual Compliance Report, ACR.

PRC Directs USPS to Address Compliance Issues in FY 2017 Annual Compliance Determination 
Report shows progress in some areas and continued challenges in others

Washington, DC – The Postal Regulatory Commission (Commission) today issued its Annual Compliance Determination (ACD), a mandated assessment of the U.S. Postal Service’s (Postal Service) compliance with pricing and service performance requirements in fiscal year 2017 (FY 2017). While the Commission acknowledges some areas of improvement, it identifies several compliance issues related to workshare discounts, noncompensatory Market Dominant products, Competitive products, service performance, and continued cost and service problems with flat-shaped mail (flats).

Workshare Discounts: The Commission identified 42 workshare discounts with compliance issues. Out of the 42, 20 of the discounts did not comply with section 3622(e). No action by the Commission was required for 7 of the 20 workshare discounts because price changes aligned the discounts with avoided costs or the Postal Service eliminated the discount. Thirteen workshare discounts remained out of compliance prompting the Commission to direct the Postal Service to either align workshare discounts with avoided costs in the next Market Dominant price adjustment or specify an applicable statutory exception. The Postal Service did address the Commission’s FY 2016 ACD directive to report on the cost and contribution impact of worksharing and progress in improving pricing efficiency. The Commission directs the Postal Service to continue reporting on Periodicals pricing issues in its FY 2018 Annual Compliance Report (ACR).

Noncompensatory Market Dominant Products: The Commission identified10 Market Dominant products that were Noncompensatory in FY 2017. For Periodicals In-County, Periodicals Outside County, and Standard Mail Flats, the Commission finds that additional transparency is necessary to hold the Postal Service accountable. For the Special Services product Money Orders, the Commission directs the Postal Service to investigate the accuracy of the costing methods. Regarding Inbound Letter Post, the Commission recommends that the Postal Service continue to pursue compensatory Universal Postal Union (UPU) terminal dues and pursue bilateral agreements with foreign postal operators that result in an improved financial position for the Postal Service. The Commission further directs the Postal Service to provide an update on its collection of accurate shape-based costing data. Additionally, the Commission found that the PHI NSA did not meet the criteria of section 3633(c)(10)(A) in contract year 2, prompting the Postal Service to suspend the agreement during contract year 3. If an amended contract is not in effect by June 30, 2018, the PHI NSA will remain suspended. For the remaining noncompensatory products, the Commission finds that the Postal Service is taking appropriate steps to improve cost coverage.

Competitive Products Revenues: Seven Competitive products identified by the Commission did not cover attributable costs and, were found to be out of compliance with section 3633(a)(2). The Competitive products that did not cover attributable costs include four domestic NSAs, International Money Transfer Service—Outbound (IMTS—Outbound), International Money Transfer Service—Inbound (IMTS—Inbound), and International Ancillary Services. The Commission directs the Postal Service to take corrective action, including reporting on an investigation of cost estimates, reporting on the status of contract negotiations, and seeking authority to terminate or re-negotiate agreements.

Service Performance: Despite improvements in service performance results in FY 2017 over FY 2016 for a majority of products, most products failed to meet their service performance targets in FY 2017. In particular, service performance targets were not met for all First-Class Mail products, both Periodicals products, USPS Marketing Mail High Density and Saturation Flats/Parcels, USPS Marketing Mail Flats, USPS Marketing Mail Every Door Direct Mail—Retail, Bound Printed Matter Flats, and Post Office Box Service. In response to a Commission directive in the FY 2016 ACD to provide specific information on First-Class Mail Single-Piece Letters/Postcards metrics as part of its FY 2017 ACR, the Postal Service provided data and narrative responses that improve visibility into service performance and the Postal Service’s remediation strategy. The Commission directs the Postal Service to continue reporting specific information on First-Class Mail Single-Piece Letters/Postcards metrics within 90 days of the issuance of this report and as part of its FY 2018 ACR.

Cost and Service Problems with Flat-Shaped Mail: The Commission continued to identify cost and service performance issues with flats, noting that the Postal Service does not have a comprehensive plan to measure, track, and report flats cost and service issues. As a result, the Commission finds that additional transparency is necessary in these areas to hold the Postal Service accountable. Further, the Commission initiated a strategic rulemaking to develop proposed reporting requirements related to flats operational cost and service issues. From this data, the Commission will develop potential data enhancements and consistent reporting requirements that will be used to develop metrics to measure, track, and report the cost and service performance issues associated with flats.

As directed by statute, the ACD was prepared after a 90-day evaluation of the Postal Service’s ACR and supplemental material, and evaluation of public comments. The full report, including an executive summary, is available on the Commission’s website, www.prc.gov, along with related documents under Docket No. ACR2017.


Senate: Postal Reform Legislation Introduced Today

This afternoon, a bipartisan group of Senators introduced reform legislation: The Postal Service Reform Act of 2018: Improving Postal Operations, Service, and Transparency to stabilize, preserve and improve the Postal Service – an essential part of our nation’s infrastructure and economy.

It is unknown if it will move forward, but it keep the conversation alive.

The bill has much in common with HR756 which was introduced in the House of Representatives last year. It includes the 2.15% exigent increase as well as a provision that PRC will take it into account for the10-Year Review Process.

It was accompanied by the following statement:

FOR RELEASE: March 22, 2018

CONTACT:

Meghan Pennington(Carper) 202-224-2441

Tom Brandt(Moran) 202-224-6521

Abigail McDonough(Heitkamp) 202-224-8898

Laura Epstein(McCaskill) 202-228-4595

Senators Carper, Moran, Heitkamp & McCaskill Introduce Bipartisan Bill to Stabilize & Improve Postal Service

WASHINGTON – Today, U.S. Senators Tom Carper (D-Del.), Jerry Moran (R-KS), Heidi Heitkamp (D-ND), and Claire McCaskill (D-MO) introduced The Postal Service Reform Act of 2018: Improving Postal Operations, Service, and Transparency to stabilize, preserve and improve the Postal Service – an essential part of our nation’s infrastructure and economy.

The financial condition of the Postal Service, which operates at the center of a $1.4 trillion industry and employs more than 7 million people, has been deteriorating for years. Despite the Postal Service setting a record on Dec. 18, 2017, when more than 37 million packages were delivered, the most packages delivered in a single day in their over 200-year history, the Postal Service saw a net loss for the first quarter totaling $540 million. In addition to reporting net losses for the 11thyear in a row and defaulting on their legally mandated multi-billion-dollar retiree health prefunding payments yet again, the Postal Service also, for the first time, missed payments they owe to the federal retirement system in 2017  ̶  for a combined total of $6.9 billion. For years now, the onerous prefunding schedule for future retiree healthcare obligations has put the Postal Service in a place where it must cut costs  ̶  often at the price of service  ̶  and ultimately prevents them from investing in the infrastructure they so desperately need. While the situation is one that is dire, it is also one that can be fixed through needed legislative reforms.

The Postal Service Reform Act of 2018 includes a comprehensive package of reforms that would put the Postal Service on firm financial footing, stabilize and improve service performance, allow for the development of new products and services, and enhance transparency.

“Nearly two and a half centuries after its founding, the Postal Service remains an important part of our everyday lives and plays a vital role in our economy,” said Senator Carper. “But it continues to lose money at a record pace. Our economy still depends on a healthy and robust Postal Service. It’s our duty in Congress to pave a fiscally sustainable path that will enable this American institution to thrive”

“The U.S. Postal Service has a significant history in Kansas – dating back to the Pony Express – and it continues to play a vital role in the American economy, especially in Kansas’ rural communities,”said Senator Moran. “Rural America depends on a reliable Postal Service. USPS’s deteriorating financial condition threatens its future and the well-being of the communities it serves. In order to provide certainty for rural America and protect taxpayers, Congress must act to put the Postal Service on a more sustainable path. This bipartisan legislation would provide some much needed stability, preserving and improving mail services across Kansas and the country.”

“There is no substitute for the Postal Service in rural America,”said Senator Heitkamp.“From receiving daily newspapers and prescriptions, to shipping products around the nation, families and businesses across the country rely on getting their mail on time in an accessible, affordable manner. Congress needs to act now to stabilize the Postal Service and give it the tools it needs to thrive – otherwise it will go insolvent, taking this critical service away from rural communities that need it. Across North Dakota, I’ve heard about problems with mail delivery and service and I’ve pushed for changes from the Postal Service through my Fix My Mail initiative. Now, our bipartisan, comprehensive bill would reform the Postal Service, put it on firmer financial footing, and help improve mail delivery and service in rural communities. Far too often, rural America gets the short end of the stick, and Congress needs to step up and pass our bill so the Postal Service can fully function and remain the great equalizer that enables Americans no matter where they live to get reliable, affordable mail delivery.”

“Post office access and efficient service are issues that families and businesses in rural Missouri care about, and we’ve got to do what it takes to ensure the service they’ve relied on for generations stays intact,”said Senator McCaskill.“This is an issue where we can and should continue to work together across the aisle and I’m committed to doing exactly that.”

Stakeholders in the industry also support the bill:

“It is vital that Congress act promptly to pass legislation that will ensure affordable, reliable mail service six days a week,” said Don Hall, CEO of Hallmark Cards, Inc. “I applaud the leadership of Senators Carper, Moran, Heitkamp and McCaskill in crafting legislation to achieve that goal and respond to the concerns of leaders in the House of Representatives.”

“The Association of Magazine Media commends Senators Carper, Moran, Heitkamp, and McCaskill for their leadership,” said Linda Thomas Brooks, president and CEO.“The introduction of this bill is an important first step toward securing the future of the American postal system and the many industries that rely on it to do business – including our own.”

“The very broad business mailing community represented by the Coalition for a 21st Century Postal Service endorses the Postal Reform Act of 2018 and appreciates the hard work by the bipartisan sponsors to get to this point. The extreme financial challenges overhanging the Postal Service have been evident and building for a number of years, with a day of real reckoning coming later this year. The industry and other stakeholders have sought help only Congress can give throughout this time to no avail. Now is the time for Congress to act before it must bail out the system with taxpayer dollars or radically shrink it.”

“The United Postmasters and Managers of America (UPMA) applauds the efforts of Senators Carper, Moran, Heitkamp and McCaskill in introducing bipartisan legislation to further the goal of providing financial relief to the U.S Postal Service, helping safeguard a universal postal system, and encouraging innovation,” said UPMA co-presidents Tony Leonardi and Sean Acord. “UPMA looks forward to continue working with these Senators and other members of Congress to sustain the U.S. Postal Service, a proven national treasure.”

“NNA supports the hard work these bill sponsors have done to ensure a reliable and affordable mail service,” saidSusan Rowell, publisher of the Lancaster (SC) News, and president of the National Newspaper Association. “Congress has lingered far too long over the needed corrections in postal policy, and as a result the continuation of this service is ever more seriously at risk. Our elected officials know the Postal Service must have a better set of laws for its operation, and they ignore this need at the peril of all of us who rely upon the mail. We strongly urge the Senate to take up this bill and give this proposal, which has bipartisan support, an opportunity to pass this year.”

For the last several sessions of Congress, Senator Carper, Senator Heitkamp, Senator Moran, and Senator McCaskill have held numerous briefings, roundtables, and meetings with members on both sides of the aisle and postal stakeholders to assess the hurdles facing the Postal Service, identify the tools the Postal Service needs to innovate and thrive in the 21st century, and find a way forward on postal reform.

Specifically, the bill:

Increases Sustainability

The Postal Service Reform Act eliminates the existing statutory payment schedule, cancels any outstanding payments, and amortizes payments over 40 years.  The bill would also create a new Postal Service Health Benefits Program (PSHBP) within FEHBP, implemented and administered by OPM, for all postal employees and annuitants and require all Medicare-eligible postal annuitants and employees enrolled in the PSHBP to also enroll in Medicare, including parts A, B and D. This is essential for protecting the American taxpayer from a future bailout and for protecting the employees’ benefits in retirement.

Improves and Stabilizes Postal Service and Operations

The price of postage is decreased pursuant to federal court orders last Congress, eliminating the positive revenue stream from the exigent rate case in 2014.  As the result of a compromise among the postal community, the bill restores the half of the temporary rate increase while freezing any further rate increases until a new rate system can be finalized by the Postal Regulatory Commission.

Prioritizes the Postal Customer with Service Improvements & Protections

The bill includes strong service reforms that put the postal customer first by improving mail service performance across the country—especially in rural America—while also requiring transparency and enforcement to ensure the Postal Service’s accountability.  Service performance would also be stabilized by preserving current service standards for at least 2-years.

Innovates and Modernizes Existing Postal Business Model and Increases Transparency

The bill also allows the Postal Service to introduce new non-postal products and services, ship beer, wine and distilled spirits, and partner with state and local governments in offering government services.

The Postal Service Reform Act also increases transparency of Postal Service delivery results and would require that all delivery and retail performance results are posted in a transparent and user-friendly way.


Quinn Expected to Bring Significant Impact to Northeast

Weather.com has announced that winter storm Quinn is expected have a significant impact. “Ahead of the storm, emergencies were declared in Pennsylvania and New Jersey. As Quinn arrived, more than 100,000 homes and businesses in New York, New Jersey and Pennsylvania were still without power from Winter Storm Riley.”

The Postal Service has also sent Service Alerts noting closed office locations.

As always, we let clients know if they are directly impacted.

 

 

 


More than 150 organizations have submitted PRC 10-Year Review Comments

More than 150 organizations have submitted PRC 10-Year Review Comments

More than 150 organizations have submitted comments to the Postal Regulatory Commission, PRC, regarding their 10 Year Review proposal. Most comments were unfavorable about the proposal. A variety of mail-dependent businesses and non-profits are challenging the PRC’s claim that it can enact the rate hikes without Congressional approval.

LSC Communications joined the effort, submitting comments directly to the PRC as well as signing on to the American Mail Alliance comments.

The American Mail Alliance is an unprecedented coalition of more than 50 leading associations, companies, nonprofits, magazines, newspapers and other stakeholders that have come together to advocate for a common sense approach to setting new postal rates, promoting the long-term health and success of the United States Postal Service (USPS), and opposing the radical postal rate increases proposed by the Postal Regulatory Commission (PRC), the independent regulatory agency tasked with USPS postage rate oversight.

For more information visit:

 


Acting Senior Vice President of Sales and Customer Relations – Dennis R. Nicoski

The Postmaster General and Chief Executive Officer, Megan J. Brennan, announced internally that Dennis R. Nicoski will be detailed to the position of Senior Vice President of Sales and Customer Relations, effective March 3.  Here is an excerpt of the announcement:

Dennis began his postal career in Minneapolis in 1984.  Since then he has developed functional expertise in marketing, sales, customer service, retail, and operations support that will serve him well in this challenging assignment.

Dennis currently serves as the Director of Field Sales Strategy and Contracts, where he oversees the development of customized mailing and shipping solutions for our largest mailers and shippers, and coordinates Postal Regulatory Commission approval of Negotiated Service Agreements.

Dennis replaces Cliff Rucker, who announced his retirement effective March 2, 2018.


PRC 10-Year Review: Comments Due March 1

Comments are due no later than March 1, 2018. Reply comments are due no later than March 30, 2018.

The Postal Regulatory Commission’s proposal would maintain a price-cap system, but with authority above CPI:

  • 2% Over CPI: Proposes a 2% rate authority over the CPI cap for five years
  • 1% Performance-Based Authority: Proposes an additional 1% performance-based rate authority. The PRC divided the 1% point of performance-based rate authority between an operational efficiency-based standard (0.75 percentage points), and service quality-related criteria (0.25 percentage points).
  • 2% Non-Compensatory: For products that do not cover costs, the PRC proposes price increases that are 2% higher than other elements of the class. That 30 days could extend longer. If it did move forward, there is an anticipated 45 – 90 day implementation period. This is a very fluid situation. It could be as early as June or push into 2019. Most expect the proposal will change and we won’t see implementation in 2018. Associations have shared templates to use as a starting point. If you would like a copy, contact Paula Stoskopf.

Visit the PRC website to create an account for comment submission.

Associations have shared templates to use as a starting point. If you would like a copy, contact Paula Stoskopf.

For more information visit:


Oliver Storms Through the Midwest

The Weather Channel posted that “Authorities warned drivers in the Plains and Midwest to drive slowly amid the snow and ice dumped by Winter Storm Oliver, as at least six people have died on ice-covered roads.”

At this time, we are not seeing major over the road delays, but rail has been impacted by both weather and capacity issues. As always, we let clients know if they are directly impacted.

 


Move Update Census Based Assessments – New Date, April 2018

After January 2018, USPS will be changing the method for measuring Move Update compliance to a Census based approach.  The Census Method utilizes Mail Processing scans to determine compliance.  Results from the census verification method are displayed on the Electronic Verification tab of the Mailer Scorecard.  As a reminder, mailers have been encouraged to review their Move Update compliance since May 2017 after the reports were tested, validated, and declared ready for use by an Industry Task Team.

On Jan 9, 2018 USPS filed a proposed Federal Register Notice (FRN) to introduce the new Green & Secure Alternative Move Update Method. The Green and Secure alternative method aims to reduce the handling cost of undeliverable-as-addressed (UAA) mail by minimizing volume of return-to-sender mail. For Mailers participating in Green & Secure Alternative Method, qualifying UAA mailpieces bearing an ACS Change Service Requested STID (First-Class Mail and USPS Marketing Mail) or a Secure Destruction STID (First-Class Mail only) will be displayed as warnings and not be included in the error threshold.

To allow the Industry additional time to respond to the proposed FRN and enroll in Green & Secure the USPS has delayed the Move Update Census assessments until April 2018.

Census based assessments will commence in April 2018, based on March data, for mailpieces determined to be over the established threshold for the calendar month.  Mailers are encouraged to review their results to ensure compliance with Move Update standards.