Inside the Beltway : June 2011

 

New Postal Reform Bill Could Spell Rate Increase for Members

Rep. Darrell Issa (R-CA), Chairman of the House Committee with jurisdiction over postal matters, last Thursday introduced legislation that would implement sweeping, structural reforms of the United States Postal Service. ABM immediately obtained and reviewed the bill in detail; while it includes some provisions ABM has advocated for, it also includes a potentially-damaging provision for ABM members.

As written, the legislation would require an annual 5% increase for all "underwater" postal products, on top of annual CPI increases, until the product covers at least 90% of its attributable costs. Given the current data on periodical cost coverage and the anticipated CPI increases, this provision would likely result in a more than 20% increase in postal rates over the next three years for ABM members. This provision is simply untenable, and ABM has already begun to mobilize its resources and align with allies to fight it.

As you may know, over the last two years, ABM has advocated for postal reform measures in Washington both as an association and as an Executive Committee member of the Coalition for a 21st Century Postal Service. In these efforts, ABM has sought a legislative solution that would address structural issues at USPS, fix the overpayment of its pension system, and put the Postal Service on a stable path for long-term viability. As the financial situation at USPS has worsened, these efforts have grown more critical.

As we continue to leverage ABM's coalitions and contacts to address this issue on your behalf, stay tuned for updates.

 

 

Supreme Court Hands Victory to Data Industry, Overturns State Law That Restricted Data Use

The United States Supreme Court last Thursday gave the data industry a big win, by holding in Sorrell v. IMS Health that data collection and use implicates First Amendment protection, and by striking down, as an unconstitutional free speech restraint, a state law that had restricted certain sales and uses of data in order to silence a particular message. 
 
HOW COULD IT AFFECT ABM MEMBERS? 
Many ABM members collect, use and transfer valuable data collections. Prior to last Thursday's ruling, some courts had approved intrusive state regulation of such activities. One federal appeals court had even suggested that data could be as easily regulated as "beef jerky." The Supreme Court, however, overruled those decisions, and noted the importance of data to the communicative process protected by the First Amendment, thereby considerably strengthening the data industry and protecting it from similar restrictions. 

WHAT IS ABM DOING ABOUT THIS?
Through its amicus brief and other activities, ABM actively supported data-collection rights in this case. ABM will continue to monitor and fight attempts to prevent or inhibit customary business collection, use and transfer of data. For more information, contact ABM's information policy counsel, Mark Sableman of Thompson Coburn LLP, at msableman@thompsoncoburn.com or (314) 552-6103.

Click here for a detailed memo from Sableman.

 

  

Data Security in the Legislative Spotlight

Earlier this month, Congresswoman Mary Bono-Mack (R-CA), who was recently appointed chairwoman of the Subcommittee on Commerce, Manufacturing and Trade, released draft data security legislation focused on a single federal standard for data breach protocol to replace the patchwork of state laws on the topic. Under the bill, companies that are breached by hackers who steal consumer information would have to notify customers within 48 hours of assessing and identifying the intrusion.

While the bill is not intended as an omnibus consumer privacy law – ABM still expects Chairwoman Bono-Mack to offer legislation similar to the other privacy bills we have been following – it is clear that recent, high-profile breaches have brought this issue to the top of the current priority list.

The draft does not seem to contain anything of particular or unique importance to the b-to-b industry; however, it does define "personally-identifiable information," which may be something to look at for future precedent. A single data breach standard is generally a good thing, given how difficult and costly it is for a company to comply with the myriad state laws in the case of a breach.

  

 

Second Circuit Rejects ‘Hot News’ Claim

An influential federal appeals court has taken a very narrow view of the ability of news organizations to bring claims for misappropriation of “hot news.” 

HOW COULD IT AFFECT ABM MEMBERS?
Many news aggregation websites summarize and link to various news articles on other websites.  Some news organizations have advocated fighting such aggregation sites through legal tools including the “hot news misappropriation” doctrine, while other news organizations have desired to themselves provide news aggregation services. This decision, Barclays Capital v. Theflyonthewall.com, narrowly construing the “hot news” doctrine, tends to support the ability to provide news aggregation services.

WHAT IS ABM DOING ABOUT THIS?
ABM has long been involved in Congress and the courts with efforts to protect the rights of news organizations in areas such as copyright, database protection and hot news. Among other things, ABM has been working with its Digital Media Council and other committees to determine ABM members’ concerns and positions with respect to news aggregation activities. For more information, contact ABM information policy counsel, Mark Sableman of Thompson Coburn LLP, at msableman@thompsoncoburn.com or (314) 552-6103.

Click here for a detailed memo from Sableman.

 

FCC: Net Neutrality Rules About to be Official
Will likely take effect in October at earliest

The Federal Communications Commission (FCC) is expected this week to submit its network neutrality rules to the Office of Management and Budget (OMB) for review, according to Broadcasting & Cable. The submission will restart a delayed process to make the rules official.

As ABM reported, the rules adopted in December prohibit content discrimination by Internet pipeline providers, but are limited in some important ways and their viability is unclear.

Because the rules cause new reporting requirements, those were put out separately for comment by the FCC, which has been vetting those comments since April. The rules cannot be challenged in court until they are published in the Federal Register, which can't come until OMB has put them out for comment for 30 days and decided they do not create undue paperwork burdens.
 
The rules do not go into effect until 60 days after that publication, however, so it will likely be October at the earliest before they would take effect.

Click here to read more from Broadcasting & Cable.

  

  

Franken Introduces First Location Privacy Bill in Senate

Senator Al Franken (D-MN) and Sen. Richard Blumenthal (D-CT) have introduced the first locational privacy bill, reported paidContent.org, which would require smartphone companies like Apple and Google to tell consumers more about the kinds of information sharing they do.

The proposal, a summary of which is available on Franken’s website, would require companies to notify consumers when they collect location information and when they share it with third parties, like advertising networks. In addition, the bill would impose data security requirements for companies that have location information for more than 5,000 devices.

Click here to read more from paidContent.org.

 

 

POSTAL UPDATES

USPS Institutes Cash Conservation Plan
Payment to FERS suspended

On June 22, the U.S. Postal Service announced it would suspend its employer contributions to the Federal Employees Retirement System (FERS) to conserve cash and preserve liquidity. The Postal Service has a FERS account surplus valued at $6.9 billion. Suspension of payments, which became effective June 24, will free about $800 million in the current fiscal year.

The Postal Service continues to cut costs significantly with initiatives to reduce the size of its labor force, the number of mail processing facilities and administrative overhead. Over the last four fiscal years, the Postal Service has reduced its size by 110,000 career positions and saved $12 billion in costs.

According to the Coalition for a 21st Century Postal Service, of which ABM is an Executive Committee member, the Postal Service could run out of cash as soon as October, which would result in a national shutdown of the mail.

As a result of this announcement, we anticipate more financial information will be shared by the USPS shortly, so stay tuned.

 

 

ABM Meets with Deputy Postmaster General

Late last month, ABM's lobbyist, Tom Carpenter, and postal consultant, Jack Widener, met with newly-appointed Deputy Postmaster General Ron Stroman, whose leads all USPS outreach and communication with congressional and mailing industry leaders. ABM's goals for the meeting were to develop another postal executive contact for defending and promoting the b-to-b industry's needs and share ABM issue positions in terms of postal legislation and operations.

Carpenter and Widener discussed the fact that margins are tight for ABM member publications, and that consistent and timely delivery are critical to their continued success. They also stressed that ABM is committed to working with the Postal Service, whether through helping to implement new programs or resolve current issues.

Stroman raised the elimination of Saturday delivery, to which Carpenter and Widener restated ABM’s position, that ending Saturday delivery should only be a consideration after all other cost-reduction opportunities have been exhausted. They argued that reducing labor cost is critical to the USPS’ financial stability, especially considering the continued loss of revenue; Stroman believes that labor can only be cut so far before the quality of USPS service declines.

If Congress fails to act, Stroman mentioned that USPS officials were beginning to examine options that “would not be pleasant,” including defaulting on the retiree health prefunding payment, not paying workman’s compensation, cutting employee benefits and other drastic measures.

(Update: One of those unpleasant options has already occurred with the USPS suspending its employer contributions to the FERS to conserve cash and preserve liquidity, which is described above.)

 

 

Canada Post Lockout Over

Earlier this month, Canada Post Corp. suspended all operations across Canada and blamed rotating strikes by the Canadian Union of Postal Workers. The lockout resulted in no mail being accepted, processed or delivered, including periodicals, across Canada.

Then on June 26, the Canadian Parliament passed legislation to end the lockout and instructed employees to return to work on June 27. The back-to-work legislation imposes a four-year contract with wage increases that, according to the union, are less than those being offered by the post office during negotiations. Prime Minister Stephen Harper said that the increases were in line with those given to other federal government employees. 

 

 

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