WASHINGTON – A dispute between greeting card giant Hallmark Cards Inc. and outdoor retailer L.L. Bean is holding up sweeping legislation that would make the U.S. Postal Service more competitive in the age of e-mail.

The bill to overhaul the Postal Service already has passed the House, and a version has been overwhelmingly approved by a Senate committee. But Sen. Kit Bond, R-Mo., has placed a hold on the bill, saying he wants to insert language that would allow mailers to challenge prices for first-class mail if they feel the rates are not “fair and equitable.”

Bond says his provision – backed by Kansas City, Mo.-based Hallmark and other companies that rely on first-class mail – would protect consumers from being hit with higher postage rates to subsidize discounts for large bulk mailers.

“The Postal Service could jack up the rates of the smaller guys and leave the larger guys at the lower rates,” Bond said.

The language is already in the House version of the bill, but Republican Sen. Susan Collins of Maine has pushed to get it stripped from the Senate version. Collins says Bond’s language would reduce the flexibility of the Postal Service to set its own rates.

“The compromise proposed by Senator Bond would have almost certainly assured the continuation of a rate-setting system that is costly, cumbersome and unsuitable to the threats and challenges the Postal Service and its stakeholders now face,” Collins said in a written statement. “It would have eliminated or significantly reduced any benefit of the new system for a large proportion of mailers.”

Large catalog mailers such as Freeport, Maine-based L.L. Bean want the Postal Service to be able to set rates in a way that recognizes market dynamics.

“The ‘fair and equitable’ language is an effort to graft language from an outdated 30-year-old statute designed in a different world, when the Postal Service was a true monopoly and the post office didn’t face electronic competition,” said John Oliver, a spokesman for L.L. Bean.

Bond said eliminating the “fair and equitable” standard would allow large bulk mailers to wield enormous clout with the Postal Service.

“The reason we can give them a monopoly is so they can handle first-class mail,” Bond said of the Postal Service.

That is the main argument made by Hallmark and others concerned about rising rates on greeting cards and other individual pieces of mail.

“If the American public wants to end up with only the mass mailers’ products in their mailbox and no Christmas cards from Aunt Minnie, eliminating fair and equitable standards from postal standards is a good way to end up there,” said Robert Walker, chairman of Postal Reform in the Public Interest, which supports the “fair and equitable” language.