[Congressional Record Volume 146, Number 126 (Wednesday, October 11, 2000)]
[House]
[Pages H9801-H9803]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




          MODIFYING RATES RELATING TO REDUCED RATE MAIL MATTER

  Mr. McHUGH. Mr. Speaker, I ask unanimous consent to take from the 
Speaker's table the Senate bill (S. 2686) to amend chapter 36 of title 
39, United States Code, to modify rates relating to reduced rate mail 
matter, and for other purposes, and ask for its immediate consideration 
in the House.
  The Clerk read the title of the Senate bill.
  The SPEAKER pro tempore. Is there objection to the request of the 
gentleman from New York?
  Mr. DAVIS of Illinois. Mr. Speaker, reserving the right to object, I 
yield to the gentleman from New York (Mr. McHugh) to explain his 
request.
  Mr. McHUGH. Mr. Speaker, I thank the gentleman for yielding to me.
  Mr. Speaker, I will try to be very brief, but I do think it is 
important to put out for the Record a few comments about this bill. It 
is a privilege. The Senate passed this legislation on October 6, and it 
was sponsored in the other body by the chairman of the Subcommittee on 
International Security Proliferation and Federal Services, the 
gentleman from Mississippi (Mr. Cochran), and cosponsored by all 
members of that subcommittee.
  I would also note, Mr. Speaker, that an exact similar provision was 
introduced in this body, in the House, by the gentleman from 
Pennsylvania (Mr. Fattah), the ranking member on the Subcommittee on 
Postal Service, a cosponsorship of which was also entered by many 
Members of this body. So although we are proposing tonight to adopt 
under unanimous consent the Senate bill, I want it very clearly noted 
that it in no way represents a lack of interest or activity in this 
House. Simply put, this is an extremely important piece of legislation 
to ensure the financial viability and survivability of nonprofit 
mailers, the kinds of nonprofit mailers that all of us have and enjoy 
in our communities, churches, charitable organizations, educational 
publications, and so many others.
  This is based on a very technical concern that arises out of a recent 
rate case for the United States Postal Service. Simply put, through the 
evolution of rates-setting for not-for-profit mailers who have 
historically enjoyed a somewhat lesser rate for mailings, for very good 
reasons, in my judgment, than, say, commercial mailers, this rate case 
produced some aberrations and some unusual circumstances that, if 
enacted and if allowed to go forward, would have had a very serious 
impact on the profitability of not-for-profits, also on the ability of 
those very important organizations to reach out to their membership to 
disseminate important information with respect to their activities, 
and, of course, to engage in fund-raising that is vital to their 
continued existence.
  This bill, the Senate bill, S. 2686, provides relief to the category 
of mail that provides for these kinds of materials, also for 
educational magazines, for students in kindergarten through high 
school.
  I think they are the type of publications even someone of my rather 
advanced years remembers from my days in grammar school and through 
high school and continue today in their importance in education 
purposes in our schools.
  This legislation provides that both nonprofit mailers and classroom 
publications receive the same treatment and thereby ensuring that 
future rate increases for both of these important mailers are 
predictable.
  I want to note that I certainly strongly support the recommendation 
in the report language attendant to the Senate bill that the rates 
coming out of this step would be monitored to evaluate the impact 
postal rates have on the general economic capability of these mailers 
to determine if there might not be some future and more fundamental 
resolution to the concerns of particularly classroom publishers.
  The postal service, in my view, and in the view of the language 
attendant thereto, must certainly work to help examine alternatives to 
ensure that those postal rates for the invaluable classroom periodicals 
and teachers' guides remain at a price that ensure their availability 
and affordability to all classrooms.
  It is also important to note, lastly, Mr. Speaker, that this bill 
contains a provision that would alleviate the potential impact deriving 
from the changes herein on regular rate payers, the folks that use the 
mails each and every day for their important business, for their 
correspondence in rate cases before the postal rate commission.
  Simply put, the provisions in the bill provide that the estimated 
reduction in postal revenue from nonprofit categories caused by this 
legislation on the new rate-making rules is to be treated as reasonably 
assignable costs of the postal service, and that simply means that 
those costs should be apportioned among all of the various classes of 
mail and types of postal services in accordance with the existing 
provisions as they are contained in the United States Code title 39.
  It is a very technical way of saying, Mr. Speaker, that this cost in 
providing assistance for not-for-profit and educational materials will 
not be exclusively borne by the folks out there buying the 33 cent 
stamp into the future. If we did not do this and if we did not take 
this step, Mr. Speaker, we would simply find that rates for nonprofits 
would have of necessity and under the pending rate case soar up to 35 
percent and more in some cases. Obviously, as I mentioned earlier, that 
kind of increase would make the essential viability, the primary 
existence of these invaluable services, really bring it into question.
  Mr. Speaker, I think the Senate has done good work here. As I 
mentioned, because of the hard work of the gentleman from Pennsylvania 
(Mr. Fattah) and so many others in the House, we have an exact similar 
provision, and I think it is wholly appropriate that we through this 
process of unanimous consent accept the Senate language tonight. I 
thank the gentleman from Illinois (Mr. Davis), a very valuable Member 
of the House Subcommittee on the Postal Service, for yielding to me.
  Mr. Speaker, it is my privilege to speak in support of S. 2686. The 
Senate passed this legislation on October 6. It is sponsored by the 
chairman of the Subcommittee on International Security, Proliferation, 
and Federal Services, and cosponsored by all members of that 
subcommittee.
  This is legislation is extremely important for the financial 
viability and survival of nonprofit mailers, such as churches, 
charitable organizations, education publications and others. It 
addresses technical problems in the setting orates for nonprofit 
mailers. Essentially, it locks in the current rate relationship between 
nonprofit and commercial rate mail.
  The history of special rates for nonprofit mail rates dates back 
prior to the Postal Reorganization Act of 1970. They were known as 
``preferred'' categories and included Nonprofit and Classroom 
Periodicals; Nonprofit Standard (A) Mail; Library and Educational 
Matter; and In-county Publications. These categories were entitled to 
reduced rates of postage under those postal laws, and the Postal 
Reorganization Act continued the preferred rates for these categories. 
After a certain period of time, these categories of mail were required 
to cover their attributable costs, but they were not required to cover 
any institutional costs, as required of other categories of mail. 
Congress made annual appropriations to reimburse the Postal Service for 
the ``revenue forgone'' reimbursement which was the difference between 
the revenue received from preferred mailers and the revenue that would 
have been received if the reduced rate provisions had not been enacted. 
However, in 1993, Congress enacted the Revenue Forgone Reform Act as a 
deficit reduction measure, ending the annual federal (taxpayer) subsidy 
for preferred rates of postage and providing for a more equitable 
apportionment of institutional cost among regular- and reduced-rate 
mailers. It was designed to gradually phase in the increases for 
reduced-rate mailers, ending in 1998. At the end of the process, the 
institutional cost for preferred rate was to equal half of the 
institutional cost of the comparable commercial rate, thereby ensuring 
that reduced-rate mailers continued to contribute to institutional 
costs.
  The application of this new formula had some problematic effects and 
there were significant rate swings because of underlying costs. The 
``one-half mark up rule'' as it was known, made it difficult for the 
Postal Service and the Postal Rate Commission to alleviate the price 
effects of cost changes for reduced-

[[Page H9802]]

rate mailers. If costs for a nonprofit subclass changed significantly, 
the rates also followed suit because the mark up could not be reduced 
to lessen the impact of the cost, as it available to prevent rate 
changes in commercial subclasses. Therefore, cost changes translated 
into rate changes.
  An aberration occurred for Nonprofit and Classroom Periodicals 
because the complexity of the rate structure and the low markup for 
commercial subclass could yield rates that were lower for a commercial 
publication than for a similar nonprofit publication. The provision 
enacted to help nonprofit mailers, the one-half mark up rule, made it 
difficult to create a remedy.
  S. 2686 provides relief to the category of mail that provides 
educational magazines for students in kindergarten though high school. 
Undoubtedly this type of publication is essential and important in 
classrooms. The legislation provides that nonprofit periodicals and 
classroom publications receive the same treatment. Therefore, it would 
ensure that future rate increases for both categories are predictable. 
I support the strong recommendation in the report language, which 
accompanied S. 2686, that the rates be monitored to evaluate the impact 
postal rates have on the economic capability of these mailers and to 
determine if there is a need for more fundamental resolution to the 
rate concerns of classroom publishers. Additionally, I agree that the 
Postal Service must examine alternatives to help ensure those postal 
rates for classroom periodicals and teacher guides remain at that price 
that ensures their availability and affordability to all classrooms.
  Discrepancies were found for Standard (B) publications. The 
classification for Library and Educational Matter overlaps with the 
classification known as Special Standard Mail. Both classifications 
contain books and sound recordings but Special Standard Mail does not 
require either the mailer or the recipient to be a library, educational 
institution, museum, herbarium, or nonprofit institution. The 
relatively small volumes in the Library and Educational matter category 
make it difficult to collect adequate ratemaking data.
  These problems are addressed in S. 2686 by locking in the current 
rate relationship between nonprofit and commercial rate mail. This is 
accomplished by setting Nonprofit Standard (A) rates to equal, as 
nearly as possible, 60% of the estimated average revenue per piece from 
the corresponding regular-rate subclass. Nonprofit and Classroom 
Periodicals would be set so that postage on each mailing would be, as 
nearly as practicable, 5% lower than the postage for a corresponding 
regular-rate mailing. But, this discount would not be available to the 
advertising portion of a mailing if it exceeded 10% of the publication. 
Library and Educational Material rates would be set so that the postage 
on each mailing would be, as nearly as possible 5% lower than the 
postage for a corresponding regular-rate mailing.
  Additionally, this legislation contains a provision to alleviate the 
impact of the changes on regular-rate payers in the postal rate case 
before the Postal Rate Commission. Under this provision, the estimated 
reduction in postal revenue from Nonprofit Standard (A) mail caused by 
the enactment of the new ratemaking rules is to be treated as a 
reasonably assignable cost of the Postal Service to be apportioned 
among the various classes of mail and types of postal service in 
accordance with existing provisions in title 39 of the United States 
Code.
  Should this legislation not be enacted we would find that rates for 
nonprofit mail would of necessity, under current law and under the 
pending R-2000-1 case before the Postal Rate Commission, soar up to 35% 
and more in some cases. These recommendations would cause some 
nonprofit rates to be higher than commercial rates in that category. 
The passing of S. 2686 would affect positively all those nonprofit and 
educational organizations that we all care about so deeply. It would 
bring relief to nonprofit mailers and would protect them from double-
digit increases in postal rates. I urge all our colleagues to support 
this very important legislation.
  Mr. DAVIS of Illinois. Mr. Speaker, further reserving the right to 
object, I join in this unanimous consent request and would like to 
thank the gentleman from New York (Chairman McHugh) and his staff, 
Robert Taub and Heea Vazirani-Fales, for their hard work in ensuring 
the compromise on this matter, also Ed Gleiman for his efforts to keep 
Congress focused on fixing the problem, Neil Denton of the alliance for 
keeping the coalition together and on track. And even in the face of 
last minute challenges, the postal service for being proactive, and 
Nanci Langley, deputy minority staff director for the Senate 
Subcommittee on International Security Proliferation and Federal 
Services for all of her help and support.
  Mr. Speaker, I also commend and thank the gentleman from Illinois 
(Mr. Burton), chairman of the Committee on Government Reform, for 
keeping all of the parties together for the good of the nonprofit 
community.
  As was indicated, this legislation was approved by the Senate on 
October 6. It is identical to H.R. 4636, of which I am also pleased to 
be an original cosponsor.
  Of course, this legislation would change the way that postal rates 
are set for nonprofit periodicals, Standard A and library rates. 
Essentially, it would lock in the current rate relationship between 
nonprofit rates and their commercial rate counterparts.
  For nonprofit periodicals, this would mean a 5 percent discount off 
the nonadvertising portion of the commercial rate. For nonprofit 
Standard A, rates would be calculated to reflect the roughly 40 percent 
discount. Library rates would enjoy a set 5 percent discount off the 
special standard rates.

                              {time}  1915

  The bill is obviously good. It is necessary, because the formula 
passed in 1993 has become ineffective. In fact, the U.S. Postal Service 
has difficulty measuring the costs attributed directly to nonprofit 
mail, so the costs have been steadily rising.
  This year, the U.S. Postal Service admitted that its data did not 
adequately represent certain categories of nonprofit mail's real costs. 
The legislation would positively change the approach to setting 
nonprofit rates. If passed, nonprofit rates would be a percentage of 
the commercial rates, therefore ending the reliance of inaccurate 
costing figures.
  Nonprofit and noncommercial mail costs would always be compiled and 
counted together, greatly improving the accuracy and reliability of the 
Postal Service data and stabilizing nonprofit rates.
  As was indicated, the legislation is supported by the U.S. Postal 
Service, the Alliance of Nonprofit Mailers, the Magazine Publishers of 
America, the Direct Marketing Association, the Association for Postal 
Commerce and numerous other organizations.
  I am pleased and delighted that we have been able to work together in 
such a nonpartisan way under the leadership of the gentleman from New 
York (Mr. McHugh) and the gentleman from Pennsylvania (Mr. Fattah), the 
ranking member. I thank both of them for the leadership that they have 
provided to the Subcommittee on Postal Service this past session and 
certainly wish them well as we get ready to close and look forward to 
working with them again next year.
  Mr. Speaker, I withdraw my reservation of objection.
  The SPEAKER pro tempore (Mr. Tancredo). Is there objection to the 
request of the gentleman from New York.
  There was no objection.
  The Clerk read the Senate bill, as follows:

                                S. 2686

       Be it enacted by the Senate and House of Representatives of 
     the United States of America in Congress assembled,

     SECTION 1. SPECIAL RATEMAKING PROVISIONS.

       (a) Establishment of Regular Rates for Mail Classes With 
     Certain Preferred Subclasses.--Section 3622 of title 39, 
     United States Code, is amended--
       (1) by redesignating subsection (c) as subsection (d); and
       (2) by inserting after subsection (b) the following:
       ``(c) Regular rates for each class or subclass of mail that 
     includes 1 or more special rate categories for mail under 
     former section 4358 (d) or (e), 4452 (b) or (c), or 4554 (b) 
     or (c) of this title shall be established by applying the 
     policies of this title, including the factors of section 
     3622(b) of this title, to the costs attributable to the 
     regular rate mail in each class or subclass combined with the 
     mail in the corresponding special rate categories authorized 
     by former section 4358 (d) or (e), 4452 (b) or (c), or 4554 
     (b) or (c) of this title.''.
       (b) Residual Rule for Preferred Periodical Mail.--Section 
     3626(a)(3)(A) of title 39, United States Code, is amended to 
     read as follows:
       ``(3)(A) Except as provided in paragraph (4) or (5), rates 
     of postage for a class of mail or kind of mailer under former 
     section 4358 of this title shall be established in a manner 
     such that the estimated revenues to be received by the Postal 
     Service from such class of mail or kind of mailer shall be 
     equal to the sum of--
       ``(i) the estimated costs attributable to such class of 
     mail or kind of mailer; and
       ``(ii) the product derived by multiplying the estimated 
     costs referred to in clause (i) by the applicable percentage 
     under subparagraph (B).''.

[[Page H9803]]

       (c) Special Rule for Nonprofit and Classroom Periodicals.--
     Section 3626(a)(4) of title 39, United States Code, is 
     amended to read as follows:
       ``(4)(A) Except as specified in subparagraph (B), rates of 
     postage for a class of mail or kind of mailer under former 
     section 4358 (d) or (e) of this title shall be established so 
     that postage on each mailing of such mail shall be as nearly 
     as practicable 5 percent lower than the postage for a 
     corresponding regular-rate category mailing.
       ``(B) With respect to the postage for the advertising pound 
     portion of any mail matter under former section 4358 (d) or 
     (e) of this title, the 5-percent discount specified in 
     subparagraph (A) shall not apply if the advertising portion 
     exceeds 10 percent of the publication involved.''.
       (d) Special Rule for Nonprofit Standard (A) Mail.--Section 
     3626(a) of title 39, United States Code, is amended by adding 
     at the end the following:
       ``(6) The rates for mail matter under former sections 4452 
     (b) and (c) of this title shall be established as follows:
       ``(A) The estimated average revenue per piece to be 
     received by the Postal Service from each subclass of mail 
     under former sections 4452 (b) and (c) of this title shall be 
     equal, as nearly as practicable, to 60 percent of the 
     estimated average revenue per piece to be received from the 
     most closely corresponding regular-rate subclass of mail.
       ``(B) For purposes of subparagraph (A), the estimated 
     average revenue per piece of each regular-rate subclass shall 
     be calculated on the basis of expected volumes and mix of 
     mail for such subclass at current rates in the test year of 
     the proceeding.
       ``(C) Rate differentials within each subclass of mail 
     matter under former sections 4452 (b) and (c) shall reflect 
     the policies of this title, including the factors set forth 
     in section 3622(b) of this title.''.
       (e) Special Rule for Library and Educational Matter.--
     Section 3626(a) of title 39, United States Code, as amended 
     by subsection (d) of this section, is amended by adding at 
     the end the following:
       ``(7) The rates for mail matter under former sections 4554 
     (b) and (c) of this title shall be established so that 
     postage on each mailing of such mail shall be as nearly as 
     practicable 5 percent lower than the postage for a 
     corresponding regular-rate mailing.''.

     SEC. 2. TRANSITIONAL AND TECHNICAL PROVISIONS.

       (a) Transitional Provision for Nonprofit Standard (A) 
     Mail.--In any proceeding in which rates are to be established 
     under chapter 36 of title 39, United States Code, for mail 
     matter under former sections 4452 (b) and (c) of that title, 
     pending as of the date of enactment of section 1 of this Act, 
     the estimated reduction in postal revenue from such mail 
     matter caused by the enactment of section 3626(a)(6)(A) of 
     that title, if any, shall be treated as a reasonably 
     assignable cost of the Postal Service under section 
     3622(b)(3) of that title.
       (b) Technical Amendment.--Section 3626(a)(1) of title 39, 
     United States Code, is amended by striking ``4454(b), or 
     4454(c)'' and inserting ``4554(b), or 4554(c)''.

  The Senate bill was ordered to be read a third time, was read the 
third time, and passed, and a motion to reconsider was laid on the 
table.

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