March 29, 2015
In December 2011, the Postal Service declared a five-month moratorium on post office closings, and by the time it was over, the plans to close thousands of post offices had been abandoned. The Postal Regulatory Commission had already dealt with over 200 appeals during the previous two years, and it was expecting an avalanche. Instead, there was just a handful of new appeals over the coming months, and the Commission resumed its work on the usual matters, like rates and classifications.
As this point it’s been seventeen months since anyone appealed a post office closure to the PRC. But two appeals were filed recently, and they are both interesting and important cases.
Earlier this month, the mayor of Norwich, Connecticut, filed an appeal concerning the Yantic post office, which was suspended suddenly in February 2012 for safety and security issues associated with the condition of the building. There’s more about this appeal here.
On the other side of the country, the Postal Service is planning to close a community post office in Careywood, Idaho, a small town northeast of Spokane, near the Coeur D'Alene National Forest. The closing date is March 31. On Friday, March 27, the Postal Service began preparing by packing up equipment in the post office and moving out the p.o. boxes.
On March 19, Marrion Banks and a couple of other people in Careywood filed an appeal with the PRC. The petitioners argue that the Postal Service did not go through the discontinuance procedure required by law. There were no surveys to elicit comments from customers, no public meeting, no 60-day comment period, and so on.
Banks also filed an “application for suspension” asking the Commission to order the Postal Service to keep the post office open while the appeal is heard. On Friday, the day the Postal Service was packing up, she filed an Emergency Request for Injunctive Relief in which she provides further arguments for why the post office should be kept open during the appeals process.
The letters from the folks in Careywood explain that the post office is its hub and center, “the heart of the community." They point to how much it will cost in time and money for everyone to drive further to another post office, how highway traffic will increase, how people depend on the security of their post office boxes for receiving medications, how much local businesses spend on postage, and so on.
The community has also done a petition drive and gathered almost 500 signatures. The petition has been submitted to the PRC by U.S. Senator Mike Crapo, along with his letter urging the PRC to fully consider the appeal.
That may not happen. On Friday, March 27, the Postal Service filed a Motion to Dismiss in which it argues that the Careywood post office is a contract postal unit, so it has no obligation to do a discontinuance procedure and the Commission has no authority to hear the appeal. The Postal Service is also fighting the effort to keep the post office open so that it can proceed with the closing on March 31.
There’s good reason to be concerned that the Commission will indeed dismiss the Careywood appeal. In order to do so, however, it would need to repudiate its own precedents, which date back to 1983 and which were affirmed numerous times during the 1980s and 1990s.
There are currently about 3,100 contract post offices. (A list is here.) According to the Postal Service, any of these facilities can be closed without following the laws governing post office closings and with no opportunity for appeal.
Careywood is a small place in Idaho, but the Commission’s decision on the Careywood appeal could have huge implications.
March 27, 2015
The Postal Service has replaced the Voice of the Employee (VOE) survey with a new one called Postal Pulse. The survey is being administered by Gallup from March 16 to April 3.
The Postal Service hasn’t said much publicly about why it decided to discontinue the VOE and develop the Pulse. A press release simply says the Postal Service “aims to improve postal workplaces by better engaging employees and leveraging their ideas and feedback.”
The VOE survey did the same thing, so that’s not saying much. The press release also quotes Chief Human Resources Officer Jeff Williamson saying this:
“As Postmaster General Brennan says, our employees are the bedrock of our success, and their ideas and insights are crucial to our future. Through the Postal Pulse program, we’ll work together to strengthen our workplaces and continue moving our organization forward.”
That’s a worthy sentiment, but again, it doesn’t really explain what was wrong with the VOE and how the Pulse will do a better job getting feedback from employees.
An internal USPS announcement says that VOE has been "retired" and "the new process will help collect employee views about the work place and be used as a tool to help improve the work environment over time." But this too does not explain why the Pulse will achieve these goals better than the VOE.
One interesting change is that the VOE initially surveyed only career employees, while Postal Pulse, says the announcement, "will survey everyone, career and noncareer."
That probably a good thing, considering that the USPS workforce, as noted in the February 2015 financial report, now consists of 490,291 career employees and 131,078 non-career. Why leave out over 21 percent of the workforce, especially when many of them are CCAs working on Sunday for Amazon and delivering Amazon Fresh in the early morning hours (as seen in this video). Management surely wants to hear what they have to say.
Postmaster General Megan Brennan also discussed Postal Pulse in her latest “Business Focus” video, released yesterday. “I urge you to take the survey so we can better help you do the best job possible,” said the PMG. Individual responses aren’t shared with managers or supervisors, she added. “They’re confidential. You have my commitment on that point.”
The APWU objects
The APWU, which didn’t like the VOE, has criticized the Pulse and encouraged its members not to complete the survey. The union believes that these surveys can be used against workers during contract negotiations.
As an APWU article about the Pulse notes, management first cited employee survey data during bargaining in the 1990s, and the APWU National Executive Board adopted a resolution opposing such surveys.
APWU Vice President Debby Szeredy tells members, “Remember, management cannot force you to complete the survey. It’s addressed to you. I suggest you throw it away and/or notify your steward.”
AWPU President Mark Dimondstein was disturbed about the fact that management told employees about the new survey on February 19, the opening day of contract talks. He called the timing “insidious.”
The APWU has filed an Unfair Labor Practice charge with the National Labor Relations Board protesting management’s claim in this USPS announcement that the APWU, along with other unions and management associations, supports the goals of the program.
Despite all the controversy, the questions in the Postal Pulse seem fairly innocuous. They’re mostly about how employees feel about whether their contributions are valued by others and whether they’re getting the kind of support they need. It’s not obvious how the answers to such questions might be used against unions in contract negotiations. But the APWU probably believes that there's no reason to provide management with anything it could use as leverage.
As one compares the VOE survey with Postal Pulse, it's not hard to see why the APWU would be suspicious. The changes in the survey don't reflect very well on management's intentions.
March 26, 2015
The Postal Service has made a final determination to close the post office in Yantic, Connecticut, a village in Norwich. Deberey Hinchey, the mayor of Norwich, and Kevin Ryan, a state representative, have filed an appeal on the closing to the Postal Regulatory Commission.
It’s the first appeal filed on a post office closing since July 2013. (Another appeal has recently been filed for a contract post office in Careywood, Idaho.) It will be interesting to see how the PRC, under the new leadership of Acting Chairman Robert Taub, handles the appeal.
Appeals on post office closings are rarely successful. Between April 2012 and November 2013, the PRC ruled on over 200 appeals. Only 17 of them resulted in an order remanding the closing decision back to the Postal Service for further consideration. (The PRC can only remand; it cannot completely overturn a decision to close.)
During that period, most of the PRC orders affirming the Postal Service's decision were decided by a tie vote. Commissioner Tony Hammond was waiting for Senate confirmation, so there were only four commissioners. Mark Acton and Robert Taub consistently voted to affirm the decision to close, and then-Chairman Ruth Goldway and then-Vice-Chairman Nanci Langley consistently voted to remand. (Goldway and Langley, by the way, are Democrats; the other three commissioners are Republicans.)
As we observed in a post in April 2012 reviewing these appeals, it's always long odds getting a remand out of the PRC — like about one out of twelve. The Yantic case has even less chance of success. The post office has already been closed for over three years.
Suspended for undisclosed reasons
A post office was established in Yantic in 1852. The Post Office Department started leasing a building for the post office on Yantic Road in 1955, just after it was built, and the Postal Service took it over in 1970. It's been there since then.
On Monday, Feb. 6, 2012, the Postal Service suddenly suspended the Yantic post office, with no notice to customers, after postal officials noted “deficiencies in safety and security.” A news report on the suspension says, "The Yantic post office will be closed indefinitely for security and safety reasons based on an undisclosed issue that arose last week."
The post office was open on Monday, with no signs of a problem, and then it was closed on Tuesday. The "undisclosed issue" that led to the suspension was never revealed. Customers, including 223 box holders, were directed to the post office in Bozrah, a couple of miles away, and the Yantic postmaster was transferred to Bozrah to help with the extra business.
On Feb. 16, 2012, a postal inspector filed a report about the security review he had conduced at the post office on Feb. 13, a week after the post office had been suspended.
The report notes several issues: (1) a wood door on the side of the building going into the workroom should be replaced with a solid wood or hollow metal door, with a deadbolt lock; (2) a security light in the rear of the building did not seem to be working; and (3) the floor under the safe was buckling.
The report notes that a number of other safety issues should also be addressed, but it does not identify them. The inspector’s report concludes with, “All issues can be remedied at a minimal cost.”
Included in the Administrative Record filed by the Postal Service with the PRC are several photographs of the building that illustrate some of the problems. They show lead paint on a window sash, exposed wiring, duct tape covering a sharp edge on a doorjamb, an open ash door on the chimney, and so on. They have the look of crime scene photos. All that's missing is the chalk mark outlining where the body was.
Months after the post office was suspended, the community still didn’t understand why it had closed or when it would reopen. Looking back, the problems don’t seem all that bad, at least not for a building that was almost 60 years old.
So why did the post office close? What was the "undisclosed issue" that prompted the suspension and inspector's review? Were the problems really so dangerous? Was the cost of repairs so expensive? Was there an issue getting the owner of the building to do something about the problems? Did the Postal Service look for another location where it might move the post office? Or was the Postal Service simply looking to close another post office to save some money, a fairly common thing at the time?
March 25, 2015
For the first time since they were created in 2002, a Negotiated Service Agreement (NSA) has been rejected by the Postal Regulatory Commission. Yesterday the PRC turned down the Postal Service’s request to add a NSA with Discover Financial Services to its market-dominant list.
This is quite an unusual event. Since the 2006 Postal Accountability and Enhancement Act, the PRC has reviewed about 500 NSA requests. (According to this PRC presentation about NSAs, as of May 2014, that number included 446 competitive and 24 market-dominant NSAs.)
Every one of the requests was approved, including previous NSAs with Discover. In yesterday's order on the Discover NSA, the Commission pointed out that this was the first NSA it had been unable to approve, “and it is not a decision the Commission takes lightly.”
As the order notes, while PAEA granted new flexibility to the Postal Service in setting postal prices, “it also made clear that only NSAs that improve the net financial position of the Postal Service or enhance the performance of certain postal operations may be approved.”
According to the Commission’s analysis, the Discover NSA “would not improve the net finances of the Postal Service.” In other words, it would lose money.
The Postal Service disagreed. It said that the problem was not that the deal would lose money but that Commission was using the wrong methodology to analyze the finances. Using an appropriate alternate methodology, argued the Postal Service, the deal would in fact yield a significant profit.
Under the “accepted methodology” previously used by the Commission, the Postal Service calculated that the net benefit from the Discover NSA would be a negative $6,180,863 in the first year of the Agreement. Over its three-year term, the deal would cost the Postal Service $18 million.
The only scenario within the proposal that provided a positive impact on net contribution was if Discover missed the NSA’s volume threshold and paid a penalty. The Commission concluded that this was unlikely.
The Postal Service, along with Discover, criticized the accepted methodology for analyzing the finances and argued that an alternative approach was in order. The criticisms are too complicated to explain here, but they involve issues of price elasticities and the potential impact of the incentives offered by the discount on how much mail Discover sent.
The Postal Service’s alternative approach to analyzing the deal came up with completely different results. Rather than losing money, the NSA would have a net positive value of over $25 million in the first year and over $91 million over three years.
The Commission was not persuaded. It could not accept the Postal Service’s alternative approach as a viable methodology, and it stuck by the accepted methodology.
According to the Commission’s analysis, “the Postal Service’s calculation of the net benefit of the Agreement was based on a number that neither the Postal Service can justify nor the Commission can verify.”
“Without acceptable objective data,” the order proceeds to state, “the Commission must conclude that the Postal Service’s analysis relies on subjective intuition.”
The Commission’s concerns about this proposed NSA with Discover were exacerbated by its analysis of a previous Discover NSA approved in 2011, which resulted in a net loss of $25 million to the Postal Service over the three years of the contract.
This prior NSA was similar to the proposed NSA in that in both deals Discover received rebates for all volume mailed, provided that a revenue threshold was reached. (There's an analysis of the prior NSA with Discover in the PRC's 2013 Annual Compliance Report.)
As yesterday’s ruling noted, the Commission had approved the prior NSA partly on “the premise that the Postal Service would use the experience as an opportunity to observe and attempt to measure the specific factors affecting Discover’s mailing behavior.” In the Commission’s estimation, however, the Postal Service “does not appear to have availed itself of this opportunity.”
At some point during the proceedings, when it was becoming clear that the NSA was in trouble, the Commission says it “proactively solicited potential additional rationales under which the Discover NSA could be approved under existing statutory and regulatory requirements.”
Nineteen information requests were issued by the Commission and its Chairman, asking the Postal Service to offer different rationales for the benefits of the Discover NSA. No fewer than seven such rationales were proposed by the Commission. “Each was rejected by the Postal Service,” observes the order.
Overall, it seems that the Commission was rather frustrated with the Postal Service. The PRC filed numerous information requests trying seeking clarification of various elements of the deal, and it even looked for ways to help the Postal Service find a rationale upon which the deal could be approved. Apparently the Postal Service wanted the NSA approved on its own terms.
It’s not clear what will happen next, but given how unusual it is for the PRC to reject a NSA request, and given the nature of the Postal Service’s arguments, the case may well end up in court.
(Photo credit: Discover sign)