Nonprofit Postal Rate Relief Legislation
OVERVIEW

On June 7, 2000 Senator Thad Cochran (R-MS) and Senator Daniel K. Akaka (D-HI) introduced S. 2686. On June 12, 2000 Rep. Chaka Fattah (D-PA) introduced a similar measure in the House, HR 4636. On October 6, 2000 the United States Senate approved passage of S. 2686 . The bill then moved to the House where it passed on October 11.  On October 27, 2000 President Clinton signed S. 2686 into law.  (This makes it all look too easy.  For a timeline of the legislation's passage, please visit our updates page.)

Please read on for a full explanation of the legislation and its implications.

1. What does the legislation do?

S. 2686 and HR 4636 change the way that postal rates are set for nonprofit Periodicals, Standard A and Library rates. Essentially, the legislation locks in the current rate relationship between nonprofit rates and their commercial rate counterparts. For nonprofit Periodicals, this would mean a 5% discount off the non-advertising portion of the commercial rate. For nonprofit Standard A, rates would be calculated to reflect a roughly 40% discount. Library rates would enjoy a set 5% discount off of Special Standard rates. (For details on rate setting, see # 7.)

2. Why was a new law necessary?

Since the most recent (until S. 2686) nonprofit ratesetting law was passed in 1993, the formula used to derive nonprofit rates has become more and more ineffective. The US Postal Service (USPS) has difficulty measuring the costs attributed directly to nonprofit mail, so costs have been steadily rising. This year, the USPS admitted that its data did not adequately represent certain categories of nonprofit mail's real costs.

This new legislation changes the approach to setting nonprofit rates. Nonprofit rates are now a percentage of commercial rates, therefore ending our reliance on inaccurate costing figures. Nonprofit and commercial mail costs will always be compiled and counted together, greatly improving the accuracy and reliability of USPS data, and stabilizing nonprofit rates.

3. What would have happened if it did not pass?

If legislation had not passed by the time the Postal Rate Commission (PRC) needed to make a final recommendation on the current rate case, then we could have expected the following nightmares:

• Nonprofit Periodicals rates would all but disappear, as they would meet or exceed the commercial rates.
  
• Nonprofit Standard A Enhanced Carrier Route (ECR) rates would increase by 40%.
  
• Library Rates would meet or exceed the commercial counterpart rate, making them irrelevant.

Plus, if this problem is not fixed now, the future stability of all nonprofit rates is at stake.

4. What is the "rate case" and how does it affect the bill?

In order to change any domestic postal rates, the USPS must file what is called a rate case before the five-member Postal Rate Commission, an independent body tasked with overseeing the Postal Service's rates. The commissioners are supported by staff members who help pour over the USPS data, listen to intervenors' testimony, and eventually recommend any changes to the case. Any party with an interest in the rate case may file to become a partial or full intervenor. The Alliance has been a full intervenor in every rate case since 1980.

This process must be completed by law in 10 months. The R-2000-1 rate case was filed on January 12, 2000; the USPS wanted to implement new rates in the first quarter of 2001. When compiling a request for higher rates, postal economists must follow current ratesetting law. However, in this case, the USPS presented some nonprofit rates that assume that legislation will be passed in time...or the rates proposed would be illegal.

For more information on the rate case process, click here.

5. Who was in favor of the bill?

The USPS presented the idea of amending the 1993 law when they filed the current rate case this January. The Alliance has long wanted nonprofit rates to be set as a percentage of commercial rates, and so was supportive of revisiting the 1993 law. Postal officials, nonprofit representatives from the Alliance of Nonprofit Mailers and other groups, and several large commercial interest groups all sat down in March to come to agreement on a fix to the nonprofit rate problem.

This bill was strongly supported by the Alliance, USPS, PostCom, the Direct Marketing Association, Magazine Publishers of America, and by members of Congress who know something needs to be done to fix the nonprofit postal rate problem.

6. What was the tight timeline?

Legislation had to be passed in time to provide the PRC with a new way to set nonprofit rates before they had to release their recommended decision on the current rate case, R2000-1. This meant as soon as possible, but realistically no later than September.

Congress traditionally adjourns for most of August, so June and July were critical months for getting this bill passed through both the House and Senate, and headed for the President's desk for signature into law.

7. Exactly how will rates be set under this bill? I want the technical details!

Nonprofit Periodicals would simply look up the counterpart commercial Periodicals rate, take 5% off the non-advertising portion rate, and compute as is usually done for Periodicals. Nonprofit Periodicals with less than 10% advertising will still be able to claim the zero percentage rate.

For nonprofit Standard A rates, the calculation is not as simple, but the approach of locking in of the rate relationship remains the same. Instead of taking 40% off each individual rate, the nonprofit Standard A rates must as a sum contribute 60% of what commercial Standard A generates, as measured in revenue per piece. When the USPS sets the rates then, individual nonprofit rates would generally come out to about 40% off their commercial counterpart. Taking the 40% discount off the revenue per piece number may seem like an extra step, but is necessary to preserve the worksharing discounts for nonprofits who automate their mail and to prevent future rate anomalies.

Library rates are set like Periodicals: a straight 5% discount off the Special Standard rate.

8. How can I tell if I would be affected?

If you mail at any class of nonprofit mail, this legislation affects you. If passed, it would greatly help stabilize and preserve the nonprofit postal rates for years to come.

If you mail nonprofit Periodicals, this bill is absolutely critical to your budget! Without the passage of this bill, your discounted rate will all but disappear come winter 2001. To project this scary scenario, use your current volumes and plug in the commercial rate to measure the impact this would have on your budget.

If you mail at the nonprofit Standard A ECR rate, this legislation will prevent the 40% increases in price that USPS data claims to show you deserve next year.

To see a rate chart, click here.

9. What can I do to help?

Update: If your Representative or Senator is listed below as a co-sponsor of S. 2686 or HR 4636, please take the time to send them a quick thank you note, just to let them know how valuable their work was to your organization in this instance.

Original text: Please write to your members of Congress immediately . We need to educate every Senator and Representative if we are to get this bill passed by both chambers in the next few months. Please send a copy of your letter to the leadership of the authorizing committees listed below. (If any of your elected officials sit on the following key committees, consider taking extra steps like phone calls or personal visits.)

Tips on forming your letter:
1. Give a brief overview of your organization's mission, programs, and how you contribute to your district and/or state.

2. Clearly explain how your organization will be affected if S. 2686/HR 4636 does not pass.

For example: "My charity would have to spend $10,000 more in postage next year, or a 20% increase, if this bill does not pass. This is money taken from our programs to serve the community."

3. Ask for their support in getting S. 2686/HR 4636 passed as soon as possible.

For example: "I ask for your support on this critical measure to preserve the nonprofit postal rates. Please vote in favor of S. 2686/HR 4636 when it comes before you."

Addresses
SENATE: The Honorable Jane Doe; Dear Senator Doe
US Senate, Washington, DC 20510

HOUSE: The Honorable John Doe; Dear Representative Doe
US House of Representatives, Washington, DC 20515


Senate Governmental Affairs Committee
(*Members of the Subcommittee that governs the Postal Service are noted with an asterisk.*)

Fred Thompson, R-TN, Chair
William Roth, R-DE
*Ted Stevens, R-AK   Co-Sponsor
*Susan Collins, R-ME
George Voinovich, R-OH
*Pete Domenici, R-NM
*Thad Cochran, R-MS (Chair of Subcommittee)   Co-Sponsor
*Arlen Specter, R-PA
*Judd Gregg, R-NH

Joseph Lieberman, D-CT, Ranking Minority Member   Co-Sponsor
*Carl Levin, D-MI   Co-Sponsor
*Daniel Akaka, D-HI (RMM of Subcommittee)   Co-Sponsor
Richard Durbin, D-IL   Co-Sponsor
*Robert Torricelli, D-NJ
*Max Cleland, D-GA   Co-Sponsor
*John Edwards, D-NC

House Committee on Government Affairs
(*Members of the Subcommittee that governs the Postal Service are noted with an asterisk.*)

Dan Burton, R-IN, Chair
*Benjamin Gilman, R-NY
Connie Morella, R-MD
Christopher Shays, R-CT
Ileana Ros-Lehtinen, R-FL
*John McHugh, R-NY (Chair of Subcommittee) (Deserves our thanks as well, was instrumental in moving the bill on the House floor.)
Steve Horn, R-CA
John Mica, R-FL
Thomas Davis, R-VA
David McIntosh, R-IN
Mark Souder, R-IN
Joe Scarborough, R-FL
*Steven LaTourette, R-OH
*Mark Sanford, Jr., R-SC
Bob Barr, R-GA
Dan Miller, R-FL
Asa Hutchinson, R-AR
Lee Terry, R-NE
Judy Biggert, R-IL
Greg Walden, R-OR
Doug Ose, R-CA
Paul Ryan, R-WI
John Doolittle, R-CA
Helen Chenoweth, R-ID

Henry Waxman, D-CA, Ranking Minority Member   Co-Sponsor
Tom Lantos, D-CA
Robert Wise, Jr., D-WV
*Major Owens, D-NY    Co-Sponsor
Edolphus Towns, D-NY
Paul Kanjorski, D-PA
Gary Condit, D-CA
Patsy Mink, D-HI
Carolyn Maloney, D-NY
Eleanor Holmes Norton, Del.-DC
*Chaka Fattah, D-PA, (RMM of Subcommittee)   Co-Sponsor
Elijah Cummings, D-MD
Dennis Kucinich, D-OH
Rod Blagojevich, D-IL   Co-Sponsor
*Danny Davis, D-IL    Co-Sponsor
John Tierney, D-MA
Jim Turner, D-TX
Thomas Allen, D-ME
Harold Ford, Jr., D-TN

Bernard Sanders, I-VT

• Click here for a directory of elected officials.