September 12, 2018
On August 23, 2018, the U.S. Postal Service said this to its customers in a Federal Register Notice:
This proposed change would limit all USPS Marketing Mail, regular and nonprofit, letter-size and flat-size, to content that is only paper-based/printed matter; no merchandise or goods will be allowed of any type regardless of “value.”
First, the proposal violates 39 U.S.C. §§ 3626(a) and (m), which entitle nonprofit mailers to mail certain kinds of goods at nonprofit Marketing Mail rates. Neither the Postal Service nor the Commission may abrogate this statutory right.
Second, excluding merchandise from Marketing Mail would make both a classification change and a change in the market-dominant list of products. The Postal Service may not propose such changes without the authorization of the Governors, and may not implement such changes without the approval of the Commission. Because neither body has approved the proposal, the Postal Service could not adopt it even if it could somehow be reconciled with 39 U.S.C. §§ 3626(a) and (m).
Third, the proposed content restriction would also violate 39 U.S.C. § 403(c) by discriminating unduly against marketing mail that includes goods (particularly front-end or back-end premiums or periodical publications), and discriminating in favor of marketing mail that lacks these contents.
We sent our legal comments to USPS on September 4, and also posted them on our website here.
The Postal Service has worked with nonprofit mailers for years to ensure that the front-end and back-end premiums, membership materials, magazines and newsletters are mailable as Marketing Mail (formerly Standard Mail, formerly Second Class Mail). No one understands why this surprise attack occurred. None of the supposed rationale given in the FRN apply to nonprofit mail.
In addition to the confusion about the overall rationale, the nonprofit world has been confused about the reference to “paper-based/printed matter.” Most assumed that this meant that paper-based membership, premium, and newsletter materials would not be banned. But the Postal Service soon clarified for the Alliance that all merchandise, including paper-based, would be ruled out of Marketing Mail.
And speaking of confusing, what is merchandise? Merriam-Webster defines it as: “1. archaic: the occupation of a merchant: trade; 2: the commodities or goods that are bought and sold in business: wares–sells a variety of spring merchandise.” And how about goods? Of course, it does not refer to all the good works performed by nonprofits. The likely most relevant Merriam-Webster definition is: “a: something that has economic utility or satisfies an economic want; b: goods plural: personal property having intrinsic value but usually excluding money, securities, and negotiable instruments; c: goods plural: cloth; d: goods plural: something manufactured or produced for sale: wares, merchandise canned goods; e: goods plural, British: freight.”
By including “all USPS Marketing Mail, regular and nonprofit, letter-size and flat-size,” the FRN basically threatens virtually all Marketing Mail. Did they really intent to do this or are they expecting customers to break it down for them, and perhaps give them the answers they are looking for?
Attempts by postal officials to explain this FRN have used the terms “trial balloon” and “market research.” If that is what this is, then there are much better ways to research customers than to threaten them with a potential rule that would put some out of business and severely cripple others.
The Postal Service has a ready-made vehicle to research and plan potential changes such as content rules around Marketing Mail. It describes MTAC as: “The Postmaster General’s Mailers Technical Advisory Committee (MTAC) is a venue for the United States Postal Service to share technical information with mailers, and to receive their advice and recommendations on matters concerning mail-related products and services, in order to enhance customer value and expand the use of these products and services for the mutual benefit of mailing industry stakeholders and the Postal Service.”
Yet we can find no one involved in MTAC who even knew this bombshell was coming. MTAC would be the place to vet something like this before springing it on the whole customer base. MTAC members, including those representing the Alliance, travel to D.C. quarterly at their own organization’s expense, stay in pricey hotels, sit through hours of PowerPoint-heavy presentations, and serve on many workgroups evaluating and shaping change. They are a great resource for USPS management to evaluate trial balloons with customers and service providers. Yet MTAC was left out in the cold on this one.
In the big picture, USPS leadership is constantly telling everyone that their main problem is that the agency’s business model is broken. They say their main need is for Congress and the regulator to give them a new business model. If they get a new business model to their liking, postal managers will right the ship and return USPS to profitability, they say.
Well, if an organization wants to be perceived and allowed to operate as a business, then it needs to act like one. Show you can make excellent business decisions with the tools you have.
Would a business such as Apple put out a surprise proposed rule that all consumers would be allowed to use only the iPhone X to send texts? And customers would have to pay much higher monthly data charges to send those messages. And they invite customers to send in comments to tell them why this idea might need enhancing. Would Apple’s competition respond?
Mailers and the mailing industry already are facing some of the highest uncertainty and anxiety about the future of mail. We are waiting for the two big Whack-A-Moles to show their faces again: the PRC ten-year rate review and the President’s task force. Either or both of these could put many of us out of business, or perhaps save the future of mail.
Why would the Postal Service put this surprise attack on top of what already is threatening, or maybe saving, the future of mail? Is it really necessary? This way? Now?
The Postal Service has so many initiatives to enhance the value of mail, to increase volume, to promote the advantages of hard-copy over digital, this proposal sticks out like a sore thumb. The initiatives that run counter to banning merchandise include: