The Year In Congress p. 26

By: Debra Gersh Hernandez

Comprehensive telecommunications legislation failed again to
become law in 1994, but observers believe 1995 may be the year sp.

THERE WILL BE a profusion of new members in the 104th Congress, but many of the issues of concern to the newspaper industry will be similar to those raised in 1994.
"It was a pretty good Congress," commented John Sturm, senior vice president/public policy and general counsel of the Newspaper Association of America (NAA).
Comprehensive telecommunications legislation failed again to become law in 1994, although observers believe 1995 may be the magic year.
Last year's legislation made its way out of two House committees and was passed on the floor. The Senate version, however, made it out of committee but did not get to a vote on the floor.
"That's the one issue that seems fairly well poised for next year," noted Sturm, adding, "we're very hopeful" that it will be passed.
Sturm said Republican committee chairmen in both the House and Senate have indicated "they want to move a bill fairly quickly.
"I think the Senate will be the more interesting place," he added. "There will be an effort made to do this on a bipartisan basis in the Senate ? at least initially ? and see if there are any significant points of departure between the new majority and the new minority.
"The key thing," Sturm continued, "is getting this bill moving quickly. My view is that there is about a 10- or 11-month window for this bill. All those months are in calendar year 1995. After that, it could get up in presidential [campaign] political gridlock in 1996."
In addition, he said, "The new Congress is going to want to show the American public some results. What's better than a result that doesn't cost them any money, doesn't cost them any rights . . . . It lays out the ground rules for services that could be beneficial to the American public. It's a good deal."
Telco also is a nonpartisan issue that is not part of the Republicans' contract with America, is one in which a lot of deals were struck between the affected industries, and was ready to go at the end of the last Congress.
"Those types of bills are in the best position to move," Sturm noted.
National Newspaper Association (NNA) president and CEO Tonda Rush agreed that work on the telco issue will not have to begin from scratch.
The NNA was able to get included in both the last House and Senate bills its ARC (Access, Rates, and Fair Competition) provisions, and Rush believes that should happen again with the new legislation.
"If there's a bill, I think we have a good chance of getting our piece of it attached," Rush said.
In addition, with NNA vice chairman R. Jack Fishman ? president of Lakeway Publishers Inc., Morristown, Tenn. ? on the vice president's advisory council on the National Information Infrastructure, Rush pointed out that issues such as freedom of information and access for community newspapers are included in the mix.
"The pieces are in place," she said. "Whether or not there will be legislation that passes is another question."
New postal rates were approved in 1994 with relatively little trouble ? second-class, in-county had a bit of a scare at first ? but 1995 could become more tumultuous as the Postal Service looks at reclassification and possibly another rate case.
"In many ways, that's the numero uno issue," Sturm said, adding, "postal reclassification may be the biggest thing we face . . . and we're treating it as that."
Both Sturm and Rush pointed out that it was difficult to discuss the issue, since the Postal Service had not filed its case when they spoke to E&P.
"We have to see what they propose," Sturm said. "The good news is that the Postal Rate Commission seems to have already displayed a willingness to take a hard look at what the Postal Service proposes," he said, referring to the recent rate case.
"I cannot overvalue the importance of that issue overall in this coming year," Sturm continued. "If the [newspaper] industry got a fair shake [on reclassification] a year from now, I would consider it a successful year ? no matter what happens on the Hill."
Rush noted, "Postal is always big. It looks like it will be again."
Although it ended as a 1.8% increase, last year's originally proposed 34% increase for second-class, in-county mail was the "shock of our lives," Rush said, adding, however, that there was a "silver lining."
"It exposed the flaws in the data service collection," she said.
Fixing the data collection method is "complicated and protracted," but "worth doing," Rush added.
Estimating "handling costs has been fairly well corrected," she said. "The hardest part is counting the mail volume," since many NNA members use post offices that are not computerized.
"We're trying to rejigger the formula they use to sample," she explained. "It'll probably take another 18 months before we have data we have any degree of confidence."
With another rate case looming before then, Rush said the NNA will be watching closely.
The Newspaper Alliance for Fair Postal Rates, recently established by NNA to raise the money needed for its postal battles, is "doing very well," Rush said, noting that about $40,000 had been raised.
"Reclassification will probably be our biggest litigation challenge next year," she said. "We'll be up to our armpits in it by March, and then right after that's finished, there will probably be another rate case."
Another perennial issue, recycling ? specifically, mandated content ? reared its head in an amendment introduced by the head of the House Energy and Commerce Committee, Rep. John Dingell (D-Mich.), but was later withdrawn by the chairman after staunch opposition from the newspaper industry.
"Obviously, it's different now," Sturm said of the post-election change in chairmanships to Republican control. "But it does not mean the issue is off the table. It will depend on [other] issues before the committee."
Sturm guessed that "federal mandates on recycling would appear to be something that a Republican-controlled Congress would not be interested in ? especially since 26 or 27 states already have voluntary agreements."
It is at the state level, however, that Sturm believes there may be legislation involving mandated content.
"With an increasingly tight supply of fiber, the problem is whether there will be enough paper with enough recycled content to meet the requirements" in the states, he said. "Folks are going to start having to pay some attention to that."
Since state mandated regulations were enacted, "the market has changed dramatically," he continued. "Then, you couldn't give it away. Now, it is a hot commodity."
Rush commented that "we were very lucky that federal amendment did not pass."
She agreed that this Congress is less likely to be interested in the issue of mandated content, and said she believes "people who have convinced themselves the mandate is a good idea will go to the state legislatures.
"Also, a lot of states with statutory mandates and agreements are headed toward recycled content requirements that can't be met," Rush said, explaining that "collection and production is not up to that level."
Community newspapers, which make up the bulk of NNA membership, will be hurt first, she pointed out ? especially as the cost of newsprint goes up, and its availability goes down.
Health care reform was supposed to be a real barnburner in 1994, but the year ended without so much as a spark.
Included in the reform package was a proposal regarding independent contractors. The end result would have been a rewriting of the Internal Revenue Service code regarding such workers, which includes newspaper delivery people.
As occurred with the health care issue, the IRS rules for independent contractors went nowhere, but Sturm said he thinks the IRS would still like to negotiate a different set of tests for the newspaper industry.
"I don't think health care is going to be a problem for us," Sturm said. "Whatever they do will be largely insurance-based reforms, not anything approaching what we saw last time."
Independent contractors, however, are a separate issue.
"The IRS clearly would like to sit down and negotiate a different set of tests for independent contractors in the newspaper industry. They've told us that. It remains to be seen whether [the industry is] receptive," Sturm said, explaining that the IRS cannot rewrite the regulations, but it can negotiate a settlement.
"From a legislative standpoint, it's hard to say what's going to happen in the tax area overall," he added, referring to independent contractors, advertising deductibility, and other issues.
"I'm not sure what the agenda will be, other than popular proposals . . . but one thing is for sure: They will be looking for money," Sturm said. But he added, that it "seems unlikely the majority is going to get into the area of business deductions. But I don't know."
Of particular concern to the NNA is the last Congress' repeal of regulations requiring federal banks to publish quarterly notices of their financial situation.
Repealed at the end of the last session, without any hearing, the notice statute led NNA to go back and look at what purposes the notices served and what value they had for the community.
"We have come back with what I think is going to be a better end result," Rush said.
Regarding the measure calling for federal banks to report what they have done for local development, NNA is "seeing whether we can redesign content to be more relevant to the community and more responsive to the legislation," she said.
Another immediate concern is the Housing and Urban Development (HUD) Fair Housing Act, which penalizes newspapers that carry discriminatory housing ads.
"One problem is, as an industry, we always take issue when the advertising medium is forced to carry the responsibility for the content of the message," Rush said. "It should be the responsibility of the content" creator.
"The second thing is the way it works," she said. "When a complaint is filed, settlements tend to happen at the conciliation table before anyone has determined that the newspaper is in the wrong."
For smaller papers, there is no choice between settling early or paying legal fees for protracted hearings that could end up penalizing the paper, anyway.
A third problem, Rush explained, is that there are no tangible guidelines for what newspapers are not allowed to do, such as running apartment ads that say "no kids."
After holding discussions with officials, Rush said she expects "to see HUD make some affirmative responses within its own bureaucracy. It's not going to solve the problem, but it may clear up some of the gray areas."
Rush noted that she does not believe there is "anything wrong with the housing policy . . . . Newspapers ought not to be the 'word police.' If they [advertisers] intend to violate the housing law, they ought to be accountable, not the newspaper."
Sturm called administration of the Fair Housing Act "ripe for some serious oversight and rethinking.
"The smaller newspapers have been getting huge fines for noncompliance that are wholly out of relationship," he said, noting a paper might be fined "a thousand dollars for a five-dollar ad they knew nothing about. The smaller market papers do not have the resources to police all these things."
In the larger markets, Sturm explained, one or two errors ? "and they do slip through from time to time" ? can cause "all kinds of problems for the allegedly offending newspaper."
This is "creating a cottage industry in litigation. That's not what the act was designed to do," Sturm said, adding, "at some point, this area deserves some attention."
Some form of rule making awaited for next year should come from the Federal Reserve, which is expected to hear arguments from all sides about whether TV and print ads must include all the fine print about auto leasing offers. Radio was excluded last year.
"The first thing we have to do is get them to open up the proceeding," Sturm said. "We'll file our views ? we and the members will make our views known ? that what's good for the goose ought to be good for the gander.
"We have a good public policy argument," he added, noting that "the indication is that will open it up. That's a good sign."
When it comes to opening things up, Sen. Patrick Leahy (D- Vt.) has been pushing an electronic Freedom of Information Act for years, and last Congress it got as far as passing a floor vote. A companion bill in the House went nowhere.
"It's pretty noncontroversial," Sturm noted. "I think the prospect is for getting it through sometime. We have to see who has authority over it in the House and push for it."
Other issues of openness, such as releasing the aggregate budget for the CIA, "are not at the top of its list," Sturm said of the Congress. "Those kinds of issues, if they're going to be considered at all, will be way off in the distance."
One loss in the 103rd Congress was an amendment to the Crime Bill that closed off access to driver information from the state motor vehicle agencies.
"That was no one's happiest moment," Sturm said. "So often in this game you have to play with the cards you were dealt. That was a joker that came out of the deck."
States now have a three-year window in which to adopt an opt-out policy that keeps the information open unless people choose to have themselves excluded.
The Society of Professional Journalists and others are spearheading attempts at the state level to protect access to this information.
"There is talk about reopening the Crime Bill, but I'm not sure there will be any opportunity to change that," Sturm said. "We have to do the best we can."
Also at the state level, NNA's Rush said she expects to see the Uniform Correction or Clarification of Defamation Act introduced in four or five state legislatures.
The main concern, she said, is how the measure will look when the legislators get through with it.
"If it starts to go through in two or three states uniformly, we'll be less worried, but I don't know how it's going to look at the end," Rush said.