necessarily expire.

That certainly ought to be long enough,

particularly now that the Rate Commission and its examiner

and staff have acquired some expertise about postal matters. I would also urge the Committee to recommend an

amendment to Sec. 3641 in order to make it clear that the

phasing requirement which I have discussed earlier is just as applicable to temporary rates as to new permanent rates. A company or a non-profit organization can be driven out of business just as surely by a precipitous increase in temporary rates as in permanent rates, particularly since we have already seen that so-called temporary rates may be in effect for as long as 13 months.

We are satisfied that the Act, properly interpreted, clearly makes phasing applicable to temporary rates. But with an ill-conceived, surprise Court of Appeals decision against us, we urge that Congress spell out in the amendment we propose what we are sure was the true intent.

The Governors Should Not be the "Supreme Court"

on Rate and

Classification Changes.

There is an aspect of Senate Bill 411 which we feel

is a cause for concern.

Section 8 of that bill would increase

the power of the Governors to modify a recommended decision

of the Rate Commission.

But how are the Governors to receive

input from anyone other than their own lawyers and rate tech

nicians as to whether or how a recommended decision should

be modified? As I mentioned above, as

a practical matter

the Governors only have 30 days to act after a recommended decision. They normally meet only once a month. They are busy men in private life and can hardly be expected to absorb 14,000-page hearing records. In the last rate case, the Governors refused to grant a hearing to mail users on objec

tions to the recommendation from the Rate Commission.

So despite months of expensive and time-consuming

hearings, the ultimate deciders on rates are people who never

had one minute of first-hand exposure to hearings.

Under these circumstances, is it conceivable that

the Governors will ever modify a Rate Commission recommendation except to agree with a request of the Postal Service? It's a one-way street.

We urge that the Committee reconsider the question

of whether the Governors should continue to have the role

of final arbiter and Supreme Court on rate and classification

matters. We think the decision of the Rate Commission

should be final. In the 1973 rate action one only need to read the decision by the Governors to see how they resisted and resented the authority of the Rate Commission. The Governors tried to rubber stamp everything the Postal Service lawyers had pushed for in the hearings. The Governors even went so far as to illegally modify the Rate Commission decision on phasing for third class. They made it applicable to Fiscal Year 1973 although the Rate Commission had only made a

recommendation applicable to Fiscal Year 1972.

Bulk Mail Facilities

There is one other subject I would like to touch

on in just a few sentences

the expensive new bulk mail

facilities the Post Office has announced.

There are refer

ences to bulk third class as one of the types of mail to be handled in these special buildings. The whole idea when bulk third class was started was to provide a fill-in type of nonpriority mail to make use of non-rush hour time in general post offices. That is where much of the cost saving on bulk third class comes from and is one of the reasons why bulk third class helps to hold down the need for higher

increases for first class. The Post Office has repeatedly

stated that "without third-class mail, first-class letters

We urge, therefore, careful investigation by this Committee of what moving third-class mail to these expensive new facilities is going to do to overall Post Office costs. We think it may drastically dilute an important cost-saving feature of present Postal Service practice.

Thank you for the opportunity to appear before the Committee today.

The CHAIRMAN. The next witness is Steve Kelly, and do you want to bring those who will be accompanying you up here with you, Steve? STATEMENT OF STEPHEN E. KELLY, PRESIDENT, MAGAZINE PUBLISHERS ASSOCIATION, ACCOMPANIED BY HARRY C. THOMPSON, CHAIRMAN OF THE BOARD; JOEL DAVIS, PRESIDENT AND PUBLISHER, DAVIS PUBLICATIONS, INC.; JOHN M. BURZIO, MPA WASHINGTON COUNSEL; RICHARD J. BARBER, PRESIDENT, RICHARD J. BARBER ASSOCIATES

Mr. KELLY. Mr. Chairman, members of the committee with me at the table, on my immediate left, is Harry C. Thompson, chairman of the board of MPA. To his left is Joel Davis, president and publisher of Davis Publications, Inc. To my right is John M. Burzio, MPA Washington counsel; and to his right, Richard J. Barber, president of Richard J. Barber Associates, Inc., from whom you will also hear, Mr. Chairman.

With your indulgence, as evidence of the great concern and interest on the part of MPA's membership, we have with us today a very distinguished group of people whose names I will read very quickly, Mr. Chairman.

Representing Time, Inc.: Bernard Skown, Deane Raley; representing Meredith: Wayne Miller, an MPA director, and James Narber; representing Lebhar-Friedman: Robert Birnbaum; representing Hearst John Roemish; representing New Republic: Robert Myers, publisher; representing the Washingtonian: Richard Contee, publisher; representing the New Yorker: David Michaels, publisher; representing Hadassah: Mrs. Walter Ezekiel; representing Our Sunday Visitor: John Fing, executive vice president; representing Conde Nast: Robert Laphem, executive vice president; representing Esquire: Jerry Jontroy, president; representing Newsweek: Gibson McCabe, president, and F. E. Davis, vice president; representing Progressive Farmer: Emory Cunningham, president; and representing Harper's: Russell Barnard, publisher; Ms. Dennie H. Carter, editor and publisher; representing Conso Publishing Co.: and Mr. James Snyder; representing Bill Communications.

Mr. Chairman, we are here today to urge you to amend the Postal Reorganization Act of 1970 to ease the impact on the magazine industry of imminent and immense postal rate increases. We speak on behalf of MPA's 134 members who publish 451 consumer magazines that account for two-thirds of total audited magazine circulation.

These are magazines which must stand on their own subscriptions and their own single copy sales and cannot be written off as a business

expense.

Mr. Chairman, to save time I would like to summarize my statement and request that the full statement, together with the Price Waterhouse compilations of MPA's financial survey, the statement of Joel Davis, the Richard J. Barber Associates' economic report, which has already been mentioned here today, and the summary of that report be included in the record.

Then with your permission Mr. Barber will give you a brief review of his projections of future Postal Service expenses and second-class