Try, try again: Postal Service and mailers to appeal PRC ruling on exigent rate increase

January 23, 2014

According to a short article in yesterday's Federal Times, the Postal Service will file an appeal in the U.S. Court of Appeals today challenging the decision of the Postal Regulatory Commission regarding the exigent rate increase.  The article also says that "the mailers alliance" will be appealing the PRC's ruling as well.  There's no association with that name, so presumably that's a general reference to the group of mailers and mailers associations that will be joining in the suit.  

The Postal Service's appeal comes as no surprise, and it was predicted here the day the PRC issued its ruling.  That the mailers would appeal as well was harder to predict, since it seemed that they had come out on the better end of the decision.  But immediately after the Commission granted the increase, the mailers started complaining and talking about a lawsuit, so it won't be surprising if the Federal Times is right and the mailers file an appeal today too. [Update: The mailers did appeal.  Here's a press release; a list of all those who joined in the suit can be seen on the petition they filed with the court.]

Today is the day, though.  The parties have 30 days in which to appeal a PRC decision in the courts, and today is the 30th day since the Commission issued its ruling back on Christmas Eve.  In a two-to-one decision (with Commissioner Taub dissenting), the Commission determined that the Postal Service could raise rates by the 4.3 percent it had requested — but only for about 18 months, not permanently.  That fell considerably short of what the Postal Service was seeking, but it was still more than the mailers wanted to pay.  

The Court of Appeals will probably take several months to make a decision.  In the meantime, the rate increase will go into effect on January 26.  Overall, rates will go up about 6 percent — 1.7 percent for the "normal" increase under the price cap, plus 4.3 percent for the exigent increase.

The document filed today with the D.C. Court of Appeals will be brief and simply indicate that the Postal Service is appealing.  The arguments, testimony, and rebuttals will come later.  In the meantime, here’s a little background and a review of what the PRC had to say in its December 24th ruling on the exigent case (which you can find here).

How slowing down Standard Mail paves the way for ending Saturday delivery

January 19, 2014

The Postal Regulatory Commission is currently reviewing a request from the Postal Service to change delivery service standards for a large portion of Standard mail.  The plan is to “load level” the heavy volume of mail that is normally delivered on Monday by delivering some of it on Tuesday.  The plan has been presented as a way to "ease the burden" on processing and delivery operations, but documents released this week to the PRC indicate that the plan may have another purpose — preparing the way for ending Saturday delivery.

In the Request, the Postal Service explains the rationale for the plan this way: “By changing the service standard for DSCF Standard Mail, the Postal Service can adjust operations in a manner that will level the load of the DSCF Standard Mail that it delivers throughout the week, thereby removing the disproportionate burden associated with Monday Standard Mail delivery that is currently placed on the Postal Service network.”

The Postal Service says load leveling will have several benefits.  First of all, it will “ease the burden currently placed on the network by the convergence of current mail entry patterns and applicable service standards.”  More specifically, it will reduce mail processing work hours, cut down on carrier overtime hours, allow for earlier completion of carrier routes, and result in earlier return of mail collected on carrier routes.  It will also mean “earlier delivery for customers” (earlier in the day, that is, albeit a day later in some cases) as well as earlier cancelation and processing of collection mail picked up by carriers along their routes.

One of the biggest benefits of the plan isn’t mentioned in the Request for an advisory opinion, and it hasn’t come up in any interrogatories yet either.  But it could be the main reason why the Postal Service wants to make this change in service standards: It will make it easier to end Saturday delivery.

That idea actually came up during the PRC’s advisory opinion on five-day delivery in 2010-2011.  One of the Commission's main concerns about ending Saturday delivery was that it would create a “peak load problem” — not delivering mail on Saturday would cause a pile up on Monday.  This graphic from the advisory opinion shows just what that might look like in terms of Monday mail volumes.

Thinking inside the PO Box

January 17, 2014


On January 26, postage rates are going up — about 6 percent across the board, which means a First Class stamp will go from 46 to 49 cents.  But there's another rate increase going into effect on that day, and it hasn't gotten much attention.  

Three weeks ago, deep in the back of the December 26 issue of Postal Bulletin (on page 69), the Postal Service announced that it was raising the fees on post office boxes at some of its post offices.  Depending on the size of the box and the fee group, the new rental prices for a six-month period will range from $16 to $625. 

The new fees are within a range previously approved by the Postal Regulatory Commission back in December 2011, so they do not need any additional approval, and the Postal Service simply informed the PRC of the new fees in a letter on December 27.

Raising rates on boxes at just some post offices is actually a relatively recent event.  Historically, box rates were considered market-dominant products and subject to rate caps. That changed a couple of years ago, though, when some 6,800 postal facilities were classified as “Competitive Post Offices.”  At these offices, the Postal Service could charge higher fees than at its “regular” post offices. The Postal Service also added some service enhancements for these competitive boxes.

The issues surrounding fees for PO boxes are rather arcane, and the story of how the PO boxes at some offices came to be categorized as competitive is not likely to make headlines.  But PO boxes are an important part of the postal infrastructure, and what happens to them is inextricably tied to what’s happening to the rest of the Postal Service infrastructure of post offices, processing plants, historic buildings, vehicles, and workforce.  To understand the significance of what's going on with PO boxes, it helps to start with a little history.


From Kappel to PAEA

In June of 1968, the President’s Commission on Postal Organization — the Kappel Commission — issued its report, “Towards Postal Excellence.”  Its primary conclusion was that the executive departments of the federal government were “inappropriate” for the Post Office, and it recommended instead that Congress charter Government-owned Corporation to operate the postal service.

The Postal Reorganization Act of 1970 implemented the Kappel Commission’s recommendation. It changed the Post Office Department into the Postal Service while moving it from its status as a cabinet agency to a semi-corporate entity owned by the government.

For the next three decades, mail volumes grew — from 50 billion pieces of First Class mail in 1970 to over 103 billion by 2000 — and so did the workforce —  from  550,000 career employees in 1970 to nearly 800,000 in 2000.

Even as the Postal Service was growing, the leadership of the Postal Service, as well many in Congress, were envisioning a downsized Postal Service with a significantly smaller footprint.  That was precisely the point of then PMG Jack Potter’s 2002 Transformation Plan

Potter argued that the appropriate response to encroaching technologies was to treat postal infrastructure as unnecessary and overbuilt industrial capacity.  Rather than adapt, modernize, and find alternate uses for valuable postal infrastructure, the Transformation Plan envisioned a future environment that would jettison much of the retail network and shrink the mail processing network by using workshare discounts to transfer much of the work to the private sector.

Alternatives to the Post Office: Expanded Access in FY 2013

January 16, 2014

The APWU is currently sending delegations to Staples stores in their communities to meet with store managers to protest the postal counters that have been installed at 82 stores, with plans for more.  After the visits, the APWU plans to organize a day of action at Staples stores around the country, followed by sustained actions at a number of stores where postal retail units have opened.

Putting these contract postal units — or “mini post offices,” as they’re being called — in Staples is a threat not just to union jobs but to brick-and-mortar post offices in general.  It represents the latest initiative by the Postal Service to get rid of post offices — something it's been wanting to do for a long time, with encouragement from a variety of sources.

Some big mailers — like Valpak, for example — view post offices as a financial burden on the Postal Service, and they would prefer alternatives that are less costly to operate, like CPUs, to help keep their rates down.  Advocates of privatization, like the National Academy of Public Administration, recommend privatizing the retail network by replacing post offices with postal counters in retail stores, gas stations, schools, coffee shops, movie theaters.

The GAO regularly issues reports about how much money could be saved by closing thousands of post offices.  The GAO has been doing this for decades.  In 1975, for example, it issued a report recommending that Congress change the laws on closing post offices so that the Postal Service could close 12,000 post offices and save $200 million.  A 2011 report recommended much the same, and pointed to all the cheaper alternatives, like kiosks, CPUs, and stamp retailers.

President Bush’s 2003 Commission on the Postal Service recommended expanding alternative access as a way to pave the way for post office closures, and the 2006 Postal Accountability and Enhancement Act (sec. 302) made that recommendation part of the law by directing the Postal Service to expand “alternative retail options” like vending machines, kiosks, the Internet, and “retail facilities in which overhead costs are shared with private businesses."  The Postal Service doesn't really hide what it's all about.  In 2011, it called the plan to close 3,700 post offices "Expanded Access."

In accordance with PAEA, every year the Postal Service summarizes the progress it has made in expanding retail access as part of its Annual Compliance Report (ACR).  The Postal Regulatory Commission then reviews the numbers as part of its Annual Compliance Determination Review (ACDR).  As a result of the compliance review, a lot of the data about post office closures, contract units, and so on becomes part of the public record.

Both the ACR and the ACDR, it should be noted, basically take it as a positive thing that access to postal services is being enhanced in many ways.  They don’t explore the fact that "expanded access" is largely about closing post office.  In any case, here’s a look at what this year’s ACDR has revealed so far with respect to alternative retail access.

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Also: Sarah Ryan's "Understanding Postal Privatization: Corporations, Unions, and the "Public Interest"


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