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Episode 30 – Industry Corner Podcast

IN THIS EPISODE: An update from the Postal Regulatory Commission, a recent decision from the D.C. District Court regarding the $.05 price increase earlier this year, an alert from the Postal Service regarding the Informed Delivery Promotion

Links to the resources mentioned in the podcast.

PostalPro!
H.R. 756
H.R. 2382

Transcript

Chris: 00:00 Hi, this is Chris Lien

Anita: 00:01 And I’m Anita Pursley. Welcome to Industry Corner, a podcast where we share postal industry news to help you stay informed.

Chris: 00:11 On today’s podcast, we discuss an update from the Postal Regulatory Commission, the recent decision from the DC district court regarding the 5-cent price increase earlier this year, and an alert from the Postal Service regarding the Informed Delivery Promotion. So let’s get into it. Welcome to the podcast, hi Anita.

Anita: 00:28 Hi Chris.

Chris: 00:29 How’s it going today?

Anita: 00:30 It’s great. It’s nice and hot. We, we had a record temperature of 97 this week.

Chris: 00:36 Summer’s still kind of holding out a little bit here in Rochester, but you know we’re in September and this is the time of year where we ramp up for the trade show season – that fall mailing season of course is in full swing, but we’re also getting ready for Postal Customer Council week, which is coming up soon. I know Anita, you’re going to be covering sort of coast to coast, right? A couple of different events that you’ll be at.

Anita: 00:53 Exactly. I’m going to be in Fairchild, California at the Northern California PCC event and then in Jacksonville later in the week at the Northeast Florida event.

Chris: 01:03 Of course, I’ll be in familiar territory in the twin cities of Minneapolis – Saint Paul speaking at the Midwest Mailers Forum, so a lot of coverage from a Postal Customer Council event aspect. And then of course we’ve got a couple of print shows coming up in October, so it’s a very busy time of year. But you’ve also recently attended the National Postal Policy Council meeting where Commissioner Kubayanda had some comments regarding the Postal Regulatory Commission. Is that correct?

Anita: 01:25 Correct. He gave a really great update on the priorities of the PRC, but before that I want to announce that our next WILDS event, Women and Logistics and Delivery Services, you know, we try to have a speaker during MTAC week and we’re really excited because Vice Chairman Michael Kubayanda is going to be our guest speaker.

Chris: 01:44 Oh, excellent. Excellent. Okay.

Anita: 01:45 What’s even nicer is that it’s going to be held in the PRC hearing room. So a lot of people who haven’t been to the commission before, we’ll see the offices and the hearing room is really an exciting place. But that’s Thursday, October 31st. And also also I wanted to mention that both of the new commissioners, Ashley Poling and Ann Fisher have joined as members.

Chris: 02:06 Excellent. So what did Commissioner Kubayanda have to share at the National Postal Policy Council meeting?

Anita: 02:11 Well, he talked a little bit about the UPU situation, which we covered in great detail on the last podcast. He said that the PRC has an advisory role to the State Department on certain issues. So they’re involved in that and they’re watching it very, very closely. And I’m sure we’re going to hear relatively soon. He talked about the 10 year rate review, which of course, you know everybody’s now beginning to be on pins and needles because he mentioned it. And also Robert Todd mentioned that we would likely hear something before the end of the year. And the funny thing was he said, you know, kind of jokingly that everybody’s calling it either the 12 or 13 year review –

Chris: 02:47 Because it’s been dragging on so long?

Anita: 02:47 Right, exactly, exactly. So he was confirmed in January of this year and it was right before the government shutdown. But anyways, so he calls it the seven or eight month review in his case. But he said, everybody’s getting up to speed and they’re making progress on it. And again, said that hopefully we’ll hear something relatively soon. He said that was the top priority of the Commission. And then he said that the next thing on their minds is the Universal Service Obligation, the USO. And he mentioned that the last time that they visited the USO was back in 2008 or 2009, I can’t remember, but he said that the Commission did a report which identified seven elements of the USO. And so he thought that that would be a good place to start. And again, look at those seven elements and do they still have importance in this eCommerce world that we live in? So again, they’ll probably play an advisory role to the Congress because any change in the USO would be required by legislation.

Chris: 03:52 Right. That’s fundamental to the mission of the US Postal Service and sounds like a topic for a good future podcast, a deep dive into USO and what those seven hour and what that potential future means. But it’s good to hear that the Postal Regulatory Commission is coming up to speed very quickly. We hope that the Board of Governors are doing likewise. And you’re absolutely correct, we’re are all on pins and needles regarding this 10 year strategic plan for the Postal Service to ameliorate the $125 billion projected loss, um, over the next 10 years. So, glad to hear that they’re getting started with that.

Anita: 04:22 You know what he didn’t mention was the recent announcement from the DC Court of Appeals, and of course it hadn’t happened at the time.

Chris: 04:29 Yeah, no, I was going to pivot into that because one of the things that the PRC is responsible for of course, is making sure that the Postal Service is comporting with the law chiefly Title 39. And that was a recent decision from a DC district court, uh, regarding specifically the 5-cent increase in consumer facing First-Class stamps. Because as we discussed before in prior podcasts, and I know a lot of folks in the industry were sort of caught off guard by the Postal Service’s decision to do that. And I know a lot of it stems from the Board of Governors decision, consumer faced priced products were going to be done in nickel increments and there was a lawsuit. Um, and I didn’t even realize that this had been filed, well kind of shame on me for not keeping an eye on it, but by a Mr. Carlson challenging this a increase, right?

Anita: 05:12 Right. Let me tell you why you haven’t heard anything about it. I mean it’s been mentioned casually but Douglas F. Carlson, okay? Of course I did a Google search cause I’ve heard his name before, but he is a San Francisco attorney. He has a passion for the Postal Service. And if you go to the PRC website actually and do a search, you’ll find 108 results dating back to 2009. So he gets involved, he intervenes in a lot of the Postal Service’s rate cases and you know, other issues before the Commission. So after the 5-cent increase went into effect, he filed a petition for review with the DC Court of Appeals. And then back in may they had oral arguments. But I think the reason we haven’t heard much about it is because he has been so active. The courts have never ruled in his favor. And so this is a really, really big surprise to everybody.

Chris: 06:06 I wasn’t aware of that. I mean, well first of all, I love postal passion. You know, I do. That’s a big part of it, right? Maybe a little bit of a different postal passion than Mr. Carlson, but, but that’s interesting. And I didn’t realize he had that long history. So this decision came out that the 5-cent increase may not comport with Title 39 and so what does that mean? Are they going to reverse things? What do you think is the result of all of this?

Anita: 06:31 Well that’s the big question of the day. You know, they did find in favor of Carlson and it was that they violated the Administrative Procedures Act. So it wasn’t necessarily saying the 5-cent increase was unlawful. What they’re saying is that they didn’t give the proper consideration to Carlson’s argument and that they didn’t take enough time to properly review it. And that is something that’s required in the PAEA. The PRC who is represented by the Department of Justice will appeal and they have to do that within 45 days. So it’s not the end by any means. They could possibly roll back rates. Who knows?

Chris: 07:10 Well, you know, well I’ll tell you why this, this, this ruling came out on Friday the 13th so you know, from a superstition aspect.

Anita: 07:17 Yeh, what does that say about it?

Chris: 07:17 Right, yeh possibly. But so it’s 45 days for Department of Justice to look at that on behalf of the Postal Regulatory Commission. And, and I’m glad that you clarified it Anita – so really it stems, or the core of the argument from Mr. Carlson, is that there wasn’t enough, I guess, conversation or oversight or visibility, right – transparency into the process. Not necessarily that 5-cents from a monetary aspect is the issue, it’s the transparency and the oversight with it. Right?

Anita: 07:46 Right. And as I understand it, after the DOJ appeals it, then the court has one week to respond. So things are gonna happen pretty quickly, but probably not before the Board votes on the next postage increase in January. So we have to watch this closely.

Chris: 08:03 Right, exactly. You know, speaking of keeping an eye on things too, let’s talk a little bit about legislative update. I know you said that there was, uh, some, uh, conversation and activity with that. Right?

Anita: 08:13 Exactly. In fact, this is something I recently learned. I did not know that there was anything going on on the Hill, but sometime this summer there was a meeting between, I think we’ll call it the Big Six, for lack of a better term, but three of the House members who are committee heads – Meadows, Cummings of course, and Connolly – and then three Senators who are Carper, Senator Peters, and Senator Moran. And so they have been talking about coming up with a plan to support H.R.756 okay. And that was the bill that was introduced back in 2017 I think it was the 114th Congress, but nevertheless, it hasn’t been reintroduced, but they wanted to meet again in July before the August recess. But that did not happen. But they’re still planning to approach this from a bipartisan approach and we’ll have to watch that as well. But the Coalition for a 21st Century Postal Service is still 100% committed to this bill or this concept, I should say, since it’s not introduced yet, but it’s the one that we’ve talked about before. It’s the Medicare integration. It’s the 2.15% increase in postage rates. It requires the Postal Regulatory Commission to consider the impact of this bill on the 10 year rate review. Now, if that doesn’t go anywhere, there’s another bill that’s really hot. Okay. And the unions are pushing it. It’s H.R. 2382 and I have mentioned this before, it’s the simple 10 word bill, that does nothing but repeal the pre-funding requirement and that bill has 246 cosponsors at this point. Just last week, there are only 233 and that includes Republicans too. I think there’s 30 something Republicans, but it’s mostly a Democrat supported bill at this point in time, but if they get up to 290 then they can get the bill to the floor without having to go to committee.

Chris: 10:04 Oh, okay.

Anita: 10:04 Yeah, so we have two options right now.

Chris: 10:06 Okay. It seems to make sense, and I know we’ve talked about this before, that H.R. 2382 the simplistic bill that just really resolves the primary burden for the Postal Service on that pre-funded retirement healthcare requirement that was put into 2006 with PAEA. So that’s interesting to know that it’s that close to the total number of sponsors just to get it directly onto the floor without having to go through the committee and everything else.

Anita: 10:29 Right. And we’ll have to get a companion bill in the Senate and then hopefully we can get that passed. So quite frankly, I’m, I’m in favor of the bill that just repeals it because you know, the other bill is very comprehensive, but the longer that that bill lingers, the less impactful it will be.

Chris: 10:46 Well, the other problem with a larger bill like that is the timing of it, right? So if they’re going to reintroduce the bill from back in 2017 with all of its multitudes of changes and corrections and things like that with it, the timing of that, now that we’ve got, you know, the anticipation of the 10 year plan coming out here, uh, within the next four, six weeks or whatever, you’ve got the pricing adjustment for 2020, you have to decide what’s going to happen with this ruling for Mr. Carlson. So it just seems like this convergence of all these different topics and just the history seemed to indicate that meaningful comprehensive postage legislation being introduced in the wake of all of that has very little chance of progressing forward in a timely manner. So, so I agree with you. I think H.R. 2382, the more simplistic bill, makes a lot of sense.

Anita: 11:29 Right? And of course we’re into the Informed Delivery Promotion.

Chris: 11:34 Yeah, the Informed Delivery Promotion is in full swing! And you know, one of the things that the industry and our customers and our listeners have been concerned about is: Is the Postal Service ready for this? Do we have the systems? Is PostalOne! ready? Is everything in place? And it sounds like from an industry alert that there is indeed a problem with PostalOne!. They had to do some emergency implementations or upgrades to be able to rectify some errors in postage statements.

Anita: 11:59 Right. They had an industry alert, correct?

Chris: 12:01 That’s right. That’s right. It came out with some very specific steps. And in looking at it, it looks to me like it’s a combination of potentially not receiving the promotion discounts when you should have been eligible for it and possibly the opposite, right. Getting discounts that you shouldn’t have been getting. And so it looks like there’s this upgrade that was implemented very quickly from the Postal Service on a Sunday to correct that. But I know that, this industry alert has some very specific procedures that mailers are supposed to follow if the Informed Delivery promotion discount is not successfully claimed.

Anita: 12:33 There are about 250 statements that were affected. So it’s a big enough problem I think. But I did hear yesterday that there are 2,700 statements that have received the discount properly. But you’re right, there’s a procedure to follow if you’re not getting the discount. And there’s also tips on what to, you know, what are the things that are making campaigns fail? And so there’s some good documentation on the PostalPro website about the Informed Delivery promotion.

Chris: 12:59 No, exactly. And as a reminder to our listeners, PostalPro is the place to go if you want to, there’s a tag there, right. Uh, to, to make sure that you stay informed as what’s going on with, you know, I, really everything in the industry but more importantly for Informed Delivery. So please do take a look at that and um, and see if that applies to you. All right. So, we talked about a lot of different things here Anita. I guess as we’re kind of beginning to wrap up the Consumer Price Index, the urban CPI that’s calculated by the Postal Regulatory Commission, that just recently was published for August, right?

Anita: 13:29 Exactly. And it is 1.9 so they didn’t even get the 2% rate increase that we expected, but it’s good for the industry.

Chris: 13:38 Right. And so 1.9 as we talked about before, there’s not a lot of additional or or, um –

Anita: 13:43 – banked authority, yeh.

Chris: 13:43 Right, the banked authority to be able to add to that 1.9. So I would say barring any other oddities relative to the pricing adjustments for next year, you know, in the wake of this decision by the DC District Court and other things, we should probably plan as an industry about that 1.9 to 2% increase depending on, you know, the class of mail and the sub-classes and so forth around that. So we’re anxious to see what the Postal Service is going to put forward. Of course, the Board of Governors has to approve anything. Um, and they’re not scheduled to meet until October 2nd and 3rd. Uh, so I have to look at that and then hopefully they’ll get that to the software community so we can get started on the price adjustments for next year’s releases.

Anita: 14:21 That’s right. And then they’ll probably file mid-October. My guess is the 13th. That’s my guess.

Chris: 14:28 Another 13. All right, well, hopefully this, uh, the October 13th isn’t as scary or whatever as September 13th turned out to be with that surprise decision. All right, well, Anita, thanks. Uh, anything else to add?

Anita: 14:39 No, I don’t think so. I think we covered a lot.

Chris: 14:42 Alright, well, thanks again, Anita. Thank you all for listening. As always, if you have any questions or concerns, visit us at bccsoftware.com or give us a phone call. As always, we’d like to know – how can we help? Thanks and have a great day.

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