What’s to hide? The Postal Service turns over some closing lists

February 4, 2012

Getting closing lists out of the Postal Service is like, well, pulling teeth.  Over the past several months, hundreds of post offices have closed, gone into emergency suspension, or received a Final Determination notice indicating they’ll close in 60 days.  But try to find a list of all of these post offices on the USPS website.  One gets the impression that the Postal Service would prefer that the public not have access to this data. 

It’s not as if the information is really secret.  Every community that sees its post office close or that gets a Final Determination knows about it, and there’s usually at least one local news article when a post office closes.  But in a very real sense, most closures take place below radar, and it’s difficult to see what’s happening at a national level.  In the UK, where they’ve closed over 7,000 post offices, something similar has gone on.  They call it “the secret closure programme.”

To make things more transparent, Save the Post Office has been tracking the closings, but it’s been difficult.  The Postal Service turned down a request made under the Freedom of Information Act for materials about the closings.  (Actually, it didn’t turn down the request outright – it just said that the information would cost $650, plus photocopying.)  Compiling data from a variety of sources like news reports is time consuming and prone to error.  The USPS website itself has incorrect information, and important pages are not updated often enough.

Yesterday, we had some good news in the list department.  In response to a request from the Chairman of the Postal Regulatory Commission (PRC), the Postal Service submitted several lists containing information about post office closings and suspensions.  Chairman Ruth Goldway made the information request (see #28) a couple of weeks ago as part of the information gathering required for the PRC’s annual compliance report.

The lists can be accessed in an Excel document (with five sheets) on the PRC website here, and there’s a description of the lists he re.  The lists are readily available on the Save the Post Office website as well (links below).  (Note that the new lists have several errors and anomalies, some of which have already been identified by Going Postal.)

Goldway has requested seven lists.  Five were submitted yesterday, and two more are forthcoming.  Below are links to each list, along with a few comments (not provided by the Postal Service):

a. Post Offices Closed After 1/1/2011: This list contains 430 post offices that closed during 2011. 

That’s considerably more than the 280 USPS VP Dean Granholm indicated had closed as of October 13, and somewhat shy of the 500 that Postmaster General Donahoe said had closed as of mid-November.  It’s also many more than Save the Post Office was able to identify as of just a few weeks ago, when we published a list of 320

b. Post Offices Under Suspension as of 1/1/2012: This list contains 227 post offices — some suspended as recently as June 2011, and others as far back as 1986 — which were still suspended as of the first of the year.  

The list does not indicate the reason for the suspension, but it certainly illustrates how suspensions can go on forever, which amounts to a de facto discontinuance, without due process.  Most of these post offices were suspended during 2008 to 2010.  In March of 2011, the Postal Service gave the PRC a much longer list of about 330 post offices that remained under suspension.  Many of those have apparently re-opened or closed permanently after a formal discontinuance process.  Chairman Goldway mentioned at a meeting of the PRC in January that about 200 suspended offices had closed or were being studied for closure.

c. Post offices Suspended after 1/1/2011: This list contains 211 post offices that were suspended during 2011, as well as two that were suspended in early 2012. 

Like list (b), it does not indicate the reason for suspension, nor does it say what the current status of these post offices are.  A search of news articles about these suspensions suggests that many, if not most, were due to weather-related problems, like Hurricane Irene, the flooding in the Midwest, tornados, and so on, and most of them eventually re-opened.  In some cases, however, the Postal Service chose not to find a new location, and essentially used the natural catastrophe as an opportunity to suspend and subsequently close the post office.  The post office in Reading, Kansas, for example, was destroyed by a tornado in May, and three months later, the town learned the Postal Service was studying the post office for permanent closure.

Where's the emergency? Suspended post offices in 2011 & a list of leases ending soon

February 2, 2012

There’s a moratorium on closing post offices until May 15, but it doesn’t apply to “emergency suspensions,” as we learned at a meeting of the Postal Regulatory Commission earlier this week. That means any post office with a lease expiring soon is in danger, and there are 1,400 of them with leases that end during the moratorium.  A list is here.

An emergency suspension occurs when the Postal Service temporarily closes a post office — often with little or no notice to the community — for emergencies like the postmaster gets sick and there’s no replacement available, or the building is unsafe due to heavy snowfall or a tornado. 

But sometimes the emergency doesn’t seem like an “emergency” at all — it’s just a dispute over a lease renewal.  The Postal Service knows long in advance when a lease will expire, so there should be plenty of time to work out a new agreement or find a new location.  It’s rarely an emergency situation, but sometimes the Postal Service turns it into one.  And sometimes a “temporary” suspension can go on for years. 

The Postal Service often manufactures an emergency by making demands on the property owner that are just too hard to swallow — like insisting on a rent reduction or an early-out clause that gives the Postal Service the right to terminate the lease with 90-days’ notice, or like telling the owner to take over responsibility for maintenance work that the Postal Service had been doing.  When the owner and Postal Service can’t come to an agreement, the Postal Service declares an “emergency suspension” and the post office closes.

These days, with the Postal Service looking for any reason it can find to close facilities, a post office with a lease expiring is in imminent danger of an emergency suspension.  Some 4,500 post offices have leases that expire in 2012, and about 1,400 of them have leases that expire between January 1 and May 15, 2012, the day the moratorium ends. 

The issue of emergency suspensions came up this week at a meeting of the Postal Regulatory Commission, which has an open docket on an investigation into the practice of suspending post offices over lease issues.  That investigation began a couple of years ago, but it looks as if it stalled out because of the PRC’s other pressing business — Advisory Opinions, appeals cases, compliance reports, and all the rest.  Or perhaps because the Commissioners believe the abuses have ended.

At the meeting on Wednesday, PRC Chairman Ruth Goldway made the following comments during a discussion of the scope of the moratorium on closings: “Just for clarification, there have been a couple of small articles I’ve read recently on post office suspensions involving leases that were expired. . . .  If a post office is suspended,” she asked the PRC’s General Counsel, “do citizens have a right to appeal to us?” 

The PRC attorney said no, the statute applies only to closures, and he reminded the Chairman of “concern that suspensions were being maintained for an inordinately long period of time which amounted to a de facto closing, and we’ve had review work done in that area, but when a suspension occurs just because the lease expires, customers cannot appeal that action to us.” 

Goldway then commented, “So there are some post offices that are closing even within this moratorium, but to the best of my knowledge they are ones that involve issues where the Postal Service has been in negotiations and there are just disputes between the landlord and the Postal Service — legitimate disputes about lease terms — and as a result on occasion a post office does close.  But they are no longer using suspensions as a de facto cover for post office closings, as they admitted in some ways were the case because they admitted to us that there was a backlog of 400 or so suspended post offices that they were officially closing in their records that we haven’t received appeals on.  They’ve been at least more honest and straightforward and systematic about reporting their decisions on post office closings, so that’s useful. (Comments at about 32 minutes into the podcast).

The Chairman’s comments suggest that concern over the emergency suspensions has diminished because the Postal Service has become more “honest and straightforward.”  There’s reason to believe, however, that the Postal Service is continuing to manufacture emergencies and to close post offices without due process.  Several post offices closed in 2011 over dubious lease issues, and it looks like some will be suspended during the moratorium as well. 


Suspensions in 2011

About thirty post offices have been suspended since the beginning of 2011, and at least eleven of them were over lease problems. [CORRECTION; On Feb. 3, 2012, the Postal Service gave the PRC a list of post offices suspended since Jan. 1, 2011, and it contains 213 post offices.  Most of them involved floods and storms and were subsequently reopened.  Here’s the list of the suspended post offices,]

Here are a few details about some of those that were suspended because of lease issues:

The post office in Mineral Ridge, Ohio was suspended on March 25, 2011, over a lease dispute.  According to a local news report, the Postal Service says it tried to “reach out” to the owner in July 2009, but didn’t get a response until January 2010; the landlord rejected that offer, says the Postal Service, and didn’t make a counteroffer until October.   The owner says different.  He says, "We were never in negotiations.”  He sent the Postal Service a lease with a rent increase for the cost of things the postmaster wanted fixed, but he never heard back.  He emailed the Postal Service to complain: “You are publicly saying you’re trying to negotiate.”  He got an email back saying “they are not willing” to negotiate.

The post office in Johnsonburg, New Jersey, closed in March when the landlord terminated its lease.  No further details are available about why.  The post office has been in this location for a hundred years.

The post office in Arlington, Iowa, closed in April over a lease dispute — on five days’ notice.  According to an article in the Des Moines Register by Kyle Munson (who’s been following the closings in Iowa carefully), “The mayor and the lessor allege that the Postal Service manufactured the lease crisis to set up quicker closure of an office served by a full-fledged postmaster. The Postal Service denies this.”

The synergy of losses: How much will downsizing really save?

January 31, 2012

Imagine it’s Wednesday and you want to mail something, and you’re used to seeing that mail delivered the next day.  But things have changed.  You can’t get to the post office until Thursday because yours has closed and the nearest one is too far away to make the trip today.  The next-day mail now takes two days because 250 mail processing plants have closed, so your mail won’t be delivered until Saturday.  But now there’s no delivery on Saturday, so your mail won’t be delivered until Monday (if it’s a holiday, make that Tuesday).

Scenarios like that one will cost the Postal Service some serious money.  A lot of mail is time-sensitive — bill payments, periodicals, advertisements about sales — so longer delivery times can cause big problems and drive away business.  Individuals, organizations, and corporations will be more inclined to use the Internet, or advertise in other venues, or have a private company deliver their periodicals.  Customers will simply take their business elsewhere, and that means lost revenue for the Postal Service.

The Postal Service has presented three plans for downsizing to address falling mail volumes and declining revenues: eliminating Saturday delivery, closing post offices, and consolidating mail processing plants.  It has prepared detailed reports on each plan for the Postal Regulatory Commission (PRC) for Advisory Opinions, and the PRC has issued its own reports on the first two plans and it's working on the third right now.   There's plenty of material to look at if you're wondering whether or not these plans might succeed in balancing the books of the Postal Service.  (Of course, re-amortizing payments to pre-fund healthcare benefits for future retirees would solve the problem with much less pain, but that’s another story.)

Each plan looks as if it could save some money. The cost savings from cutting jobs and downsizing the infrastructure are greater than the revenue losses each plan might cause.  But that’s looking at the plans in isolation.  The problem is synergy.  What happens when all three plans are implemented?

Normally, synergy is seen as a positive phenomenon: it refers, for example, to when people work together and produce a result greater than the sum of their individual efforts.  But synergy can also be negative, like when several economic problems interact with each other and cause a recession.      

If all three plans the Postal Service is pushing were implemented, the danger is that this negative synergy would kick in, and the total revenue loss would be greater than the sum of the revenue losses incurred by the plans considered in isolation.  The synergy effect could be so great, in fact, that the cumulative revenue loss would exceed the cost savings.  Implemented together, the three plans could actually lose money and increase the postal deficit.  Then what?  More cuts, and more revenue declines?  The Postal Service could soon find itself in a downward spiral that’s impossible to stop. 

In the Advisory Opinion process for the Network Rationalization plan to consolidate 250 processing plants, the issue of cumulative effects has come up on several occasions.  The Postal Service asked a market research firm to do a study about customer’s attitudes toward the various plans, and the study revealed that customers were very concerned about the change in delivery standards coupled with eliminating Saturday delivery and closing post offices. 

Several witnesses in the case have also been asked about cumulative effects, and how revenue losses might be impacted if all three plans were implemented.  The Postal Service has apparently not sponsored any quantitative research on the synergistic effect of implementing all three plans, so it’s hard to say exactly what those revenue losses might add up to.  But we can look at the numbers for each plan and get an idea of what could happen.


Eliminating Saturday delivery

In its case for eliminating Saturday delivery, the Postal Service contracted the services of Opinion Research Corporation (ORC), one of the oldest and most respected marketing research firms in the United States.  (You may have seen the name lately, since ORC partners with CNN to do election polling.)  The goal was to develop estimates of how much revenue might be lost if there were no mail delivery on Saturday.

Rebecca Elmore-Yalch, Senior Vice President at ORC, testified before the PRC about her firm’s research.  In her testimony she explained that ORC did two “parallel phases of research” — one qualitative and one quantitative.  The qualitative research, conducted September 1 to 24, 2009, involved “drawing out participants’ attitudes, feelings, beliefs, experiences, and reactions” through focus groups and in-depth interviews with a variety of mailers, big and small.  The quantitative research, completed in October 2009, developed forecasts of how the proposed changes would impact the volume of various types of USPS products.  

Using ORC’s estimates of lost revenue, combined with its own estimates of cost-savings, the Postal Service estimated it would save $3.1 billion by eliminating Saturday delivery.  As explained in its Advisory Opinion, the PRC questioned the numbers, did its own calculations, and concluded the savings would be more like $1.7 billion. 

Part of the discrepancy had to do with interpreting ORC’s market research.  The Postal Service estimated that it might lose $0.2 billion net revenue, but the PRC, looking at the same research, gave the numbers a different interpretation and said net losses would be more like $0.6 billion.  In its response to the Advisory Opinion, the Postal Service stuck by its original estimates.  


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