The Postal Service wants to slow down the mail, Congress says not so fast

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By Steve Hutkins

The House Committee on Oversight and Reform has just posted a discussion draft of postal reform legislation in advance of Wednesday’s hearing with Postmaster General DeJoy and the Chairman of the Board of Governors, Ron Bloom. The draft has three main sections — one about creating a Postal Service health benefits program that includes Medicare, one on reforming the Retiree Health Benefit Fund obligation, and a third on service standards for on-time delivery.

The section on service standards comes first, and it is obviously a response to all the problems with poor service over the past seven months. It includes more stringent service performance reporting than currently shared with the Postal Regulatory Commission and the public, a tougher line on what happens when the Postal Service fails to meet the standards, and changes to the PRC’s advisory opinion process for reviewing a change in standards (including a report to Congress). The draft legislation concludes this section as follows:

“The United States Postal Service may not revise the service standards for market-dominant products in effect on the day before the date of enactment of this Act in a manner that lengthens delivery times before the date on which the report required by subsection (c) is submitted to Congress.”

The Committee’s meeting on Wednesday is clearly going to address the past problems with service performance and what to do about them moving forward. (There’s more about the delays here.) It’s also clear that the Committee is aware of the Postmaster General’s plans to change service standards, as was reported recently in a great scoop by the Washington Post, and the Committee wants to head the PMG off at the pass.

Aside from the few clues in the Post’s article, we haven’t heard anything about what these changes in service standards might be. Perhaps the Postmaster General will reveal more in Wednesday’s hearing. While we wait, let’s speculate.  Read More

Back to the Future: The USPS, PRC and Mailers revisit the meaning of PAEA

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By Steve Hutkins

Earlier this week a group of mailers’ associations continued their effort to convince the DC Circuit Court to stop the Postal Service from increasing rates under the new authority it was recently granted by the Postal Regulatory Commission.

The Postmaster General has told the mailers that another rate increase, based on the new authority, is “imminent.” The exact size of the increase has not yet been revealed, but the Postal Service’s calculations indicate it could be as large as 5.56 percent. Market Dominant revenues in 2020 were about $42 billion, so a full increase could mean $2.3 billion in additional costs for mailers.

In December, the Mailers filed appeals on the PRC’s order approving the new system in the DC Circuit. On January 27, 2021, they proceeded to file a request for a stay seeking to prevent the order from being implemented while the court heard the appeal. On February 8, the Commission filed its brief opposing the request for a stay, and the Postal Service filed its own opposition as well. On Tuesday of this week (February 16), the Mailers filed their reply. (For more background about the case, see this previous post and this one too.)

The issues in the case are numerous and complex, but the crux of the matter appears to be something like this:

The current rate system was established in 2006 under the Postal Accountability and Enhancement Act. The key passage (39 U.S.C. §3622) says, “The Postal Regulatory Commission shall, within 18 months after the date of enactment of this section, by regulation establish (and may from time to time thereafter by regulation revise) a modern system for regulating rates and classes for market-dominant products.”

Section 3622(d)(1) goes on to say, “The system for regulating rates and classes for market-dominant products shall — (A) include an annual limitation on the percentage changes in rates to be set by the Postal Regulatory Commission that will be equal to the change in the Consumer Price Index.”

Section (d)(3) then says that ten years after the enactment of PAEA, the Commission will review the system and determine if it’s fulfilling the objective enumerated in the statute. If it’s not, the Commission shall “make such modification or adopt such alternative system for regulating rates and classes for market-dominant products as necessary to achieve the objectives.”

In other words, PAEA directed the Commission to create a modern rate system and said that the system needed to include the CPI rate cap. PAEA also said the Commission should review the system after ten years and possibly change it or adopt a new one.

The Mailers argue that section (d)(1) means that any new system developed by the Commission must continue to include the price cap. The Commission and the Postal Service argue that section (d)(1) means that the price cap had to be a component of the initial rate system in 2007, but it did not need to be a part of the alternative system developed ten years later.

The statute is arguably ambiguous on this issue, and the opposing briefs develop various reasons why one interpretation is better than the other.

In most cases of major legislation like PAEA, there’s a report by the Congressional committee responsible for crafting the legislation, and one could turn to it for help in determining legislative intent. During an earlier version of PAEA, back in 2004, there was such a Senate Committee Report, but no report about the final version has been published. The Senate staff probably wrote such a report, but for some reason it has never been released. If it were available now, it might address what Congress intended. And if if were formally approved by the Senate Committee on Governmental Affairs, the report could also become significant in the mailers’ appeal.

As it is, a lot of weight falls on remarks made to the Senate by Susan Collins, one of the architects of PAEA, on December 8, 2006, the day before PAEA would be passed by the Senate.  Read More

The 2020 Mail Delays: Stats & Charts

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By Steve Hutkins

The Postal Regulatory Commission’s annual compliance review ordinarily focuses on postal rates, but this year, due to widespread reports of mail delays over the past several months, the Commission has been scrutinizing on-time service performance. Over the past few weeks, the Commission and its newly appointed Chairman have filed a number of information requests seeking data from the Postal Service about the scope and causes of these delays.

According to the service performance data provided by the Postal Service, the delays began at a modest level in March 2020 when the pandemic started, deepened noticeably in July when the Postal Service implemented cost-cutting operational changes, improved modestly in the fall, and then got much worse in December with the holiday mail crush.

As for the causes of the delays, the Postal Service has blamed COVID — the surge in packages, employee availability problems, more dependence on surface transportation because of a lack of available space on aircraft, and so on. It has also cited bad weather, the need to prioritize election mail and other factors. The Postmaster General has acknowledged that operational changes made in July caused delays, but the Postal Service says the system adjusted to these changes in a matter of weeks and they were not a factor in the delays that followed.

The various causes are difficult to isolate and quantify, particularly because they interact and compound each other. So the reports submitted to the Commission do not provide a simple explanation of what’s behind the poor service, but they can shed some light on the question and perhaps suggest paths toward a solution.

Service performance

In response to Chairman’s Information Request No. 6, the Postal Service provided two data sets on service performance. The first spreadsheet shows service performance for First-Class Mail, Marketing Mail, and Periodicals on a weekly basis for the period FY 2019, FY 2020, and the first quarter of FY 2021 (Oct. 2018 – Dec. 2020), disaggregated for each USPS geographic Area and the nation.

Normally the Postal Service provides quarterly and annual service performance reports for the fiscal year covered by the compliance review. In this case, however, the Commission has sought weekly performance scores, and the requests go beyond the fiscal year (Oct. 2019 – Sept. 2020) to encompass the first quarter of FY 2021 (Oct.-Dec., 2020).

Here’s a chart based on that data, showing the national scores for First Class Mail from February through December 2020 compared with the same months in 2019. Most of the following charts, by the way, are interactive and you can scroll over them for more stats. (If you’re having trouble loading the charts, you can see another version of the post here.)

As the chart shows, performance declined noticeably in July and August when the Postal Service implemented operational changes concerning transportation and overtime as part of its Workhour Reduction Plan to cut 64 million hours. Performance scores improved in September, then started going down again in November, precipitously so in December.

Here’s a chart showing the service performance of three main types of Market Dominant mail.

The ups and downs seen throughout the year are roughly the same for each type of mail, with First Class and Marketing Mail performing at similar levels and Periodicals performing at much lower levels.

A second spreadsheet, responding to ChIR No. 6, Question No. 20, shows weekly service performance for First-Class Mail disaggregated into presort and single piece, letters/cards and flats, and mail with an overnight (ON) 1-day service standard, a 2-day standard and a 3-5 day standard.

This 3-5-day mail, it should be noted, consists almost entirely of mail sent and delivered within the continental U.S., which has a 3-day standard. The fourth and fifth day are for mail to and from Alaska, Hawaii, Puerto Rico, and the Virgin Islands.

Here’s a chart, based on that second spreadsheet, showing the national scores for the main types of First Class Mail.

Each type of First Class went through the same ups and downs, with single-piece mail suffering more delays than presort and with 3-5 day single piece doing the worst, declining to 38 percent on time in December.  Read More

How the pandemic could lead to a big USPS price hike

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On November 30, 2020, the Postal Regulatory Commission issued a 484-page order revising the rate system for Market Dominant products. Under the new system, the Postal Service will be able to raise rates beyond the Consumer Price Index, which it was prevented from doing (aside from the provision for an exigent increase) by the Postal Accountability and Enhancement Act of 2006. (See this previous post for more about the order.)

Last week, the Postal Service gave the PRC its calculations for the two new authorities crafted by the Commission. The Notice of Calculations of Future Rate Authorities indicates that the density-based rate authority will be 4.5 percent, and the retirement-based rate authority will be 1.06 percent, for a total of 5.56 percent.

Those potential increases are on top of the approximately 1.8 percent increase for First-Class Mail and 1.5 percent increase for other categories the Postal Service has already proposed for 2021. If the Postal Service were to exercise its full rate authority, the total increase would thus be over 7 percent. The new system also gives the Postal Service authority for an additional 2 percent increase for products that don’t cover their attributable costs.

The new rate authorities will take some time to go into effect in a price hike, almost certainly not before summer 2021. And it’s very possible that the Postal Service will not take full advantage of its new authority and instead bank some portion for future use.

The rate authority numbers presented last week are considerably greater than what the Commission had envisioned over the past couple of years as it was developing the formulas for future above-CPI increases. This table from the order shows what the density-based increases would have been in previous years based on the new formula. The average authority for this period would have been about 1.23 percent annually; the highest was the 2013 number, 2.69 percent.  Read More

City of Spanish Fort, AL, appeals closure of its post office

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By Steve Hutkins

Fairhope Courier, November 15, 1961: “Pulitzer Prize Winning Author Visits Spanish Fort Post Office: Harper Lee, author of the Pulitzer Prize winning novel, To Kill A Mocking Bird, chats with Har­mon Hanson (photo above) while admiring his newly opened post office at Span­ish Fort. Miss Lee is a frequent visitor to this area and was de­lighted with the addition of this facility. Residents too, are singing the praises of this office — Christmas mails will be handled with greater speed. Many have rented post office boxes, finding it is con­venient to receive mails from early morning until night.”

A few weeks ago — nearly sixty years after Harper Lee’s visit — the Postal Service announced it was closing the post office in Spanish Fort, Alabama, effective January 15, 2021. Today the City of Spanish Fort filed an appeal with the Postal Regulatory Commission to stop the closure. The appeal, along with extensive documentation about the case, including bid solicitations and emails, can be found here.

The gist of the appeal is that the Postal Service has not gone through the normal discontinuance procedure required by 39 C.F.R. 241.3, which includes a feasibility study, questionnaires to postal customers, a public meeting, an opportunity to submit comments, access to the administrative record, and the right to appeal to the PRC.

As it has in the past with similar appeals, the Postal Service will soon file a motion to dismiss the appeal, arguing that that the Spanish Fort post office is a contractor-operated unit, not a USPS-operated facility, so the post office is not actually a “Post Office” and the closing is not covered by the regulations that govern discontinuances.

The Commission has dismissed several similar appeals on contract offices over the past decade, and most likely it will follow its own precedents and do so again. The Commission’s position is a slight variation of the Postal Service’s rationale. The Commission says that the discontinuance rules may apply to a contract unit but only if it is the “sole source” of postal services in the community.

That’s clearly the case in Spanish Fort. It’s a city of over 9,000 people, it was incorporated in 1993, it has its own government — and it has only the one post office.

The Commission will probably find a way to dismiss the appeal anyway, perhaps by expanding the geographic range of “community” to include nearby communities that do have post offices, as well as noting that one can always do postal business online.  Read More

PRC busts the price cap, lawsuits sure to follow

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By Steve Hutkins

The Postal Regulatory Commission has spent the past four years working on a revision of the rate system for Market Dominant products. Yesterday the Commission issued its final rule on the changes. The order is here. The PRC’s press release is here. The media kit contains a useful FAQ.

The review of the rate system involved the Commission, the Postal Service, and an extensive list of stakeholders and commenters.  And even though this contentious process has been going on since December 2016, it’s not over yet, not by a long shot. Given that many of the mailers have fought the changes that were finally approved, it’s widely expected that some stakeholders will appeal the PRC’s order to the D.C. Circuit.

The Alliance of Nonprofit Mailers has already promised as much. In an article on its website back in February 2020, the ANM wrote that the proposed changes would not achieve the objectives stated in the 2006 Postal Accountability and Enhancement Act and would thus “violate the law.” If the regulator were to approve these proposals in a final rule, wrote the ANM, “many expect multiple stakeholders to appeal it at the U.S. Court of Appeals.  The court could take some time to reach a decision, meaning that mailers could face a year or two of surcharges in 2021 and 2022, before the appeals are resolved.”

We will probably soon hear similar comments from other mailers and industry insiders. Just yesterday, minutes after the order was posted on the PRC website, DeadTreeEdition, a highly respected blog that covers the print business and postal issues, posted a tweet about the new order saying, “If you’re involved in mailing or #printmedia, stay tuned. Big developments are afoot in #USPS pricing. See you in court.”

The new rate system gives the Postal Service significant above-inflation pricing authority over Market Dominant products. Or, as the mailers put it, the new system “busts the price cap.”

At one stage of the proceedings, the Commission considered a simple CPI-plus formula that would have allowed the Postal Service to increase prices by 2 percent on top of the regular CPI increase. In the end, the Commission adopted a different approach. Under the new system, rate increases will be tied to two factors.

The first factor ties the above-CPI authority to changes in mail density, i.e., the number of pieces per delivery point. This aspect of the rate system would address increases in the cost-per-mailpiece that are driven by measured declines in year-over-year density. The second factor ties the above-CPI authority to Congressionally-required amortization payments for retirement health benefit and pension costs. This second factor could become irrelevant if Congress were to pass legislation that modified how the Postal Service deals with these costs.  Read More

Updates on the USPS Service Performance Reports

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We’re tracking all the reports the Postal Service has been submitting on service performance, the processing of ballots, and other data being shared in the various lawsuits. The Postal Service’s weekly on-time service performance reports submitted in Jones v USPS can be found here. The daily reports being submitted in Richardson, Vote Forward, and NAACP are here. There have also been reports made public by requests via FOIA and the PRC. All the performance reports are here.

November 7, 2020

The Postal Service has submitted its weekly service performance reports in Jones. You can find them here.

The First Class score for the nation as a whole was 81.57 percent, up slightly from the week before, when it was 80.85 percent. Since the week of July 11, when scores dropped due to operational changes, First Class has averaged 84.77 percent. That’s compared to the 92 percent for First Class in FY 2019 and FY 2020 before operational changes went into effect. Here’s a chart showing First Class service performance since the first of the year.

The scores on Election Mail have been significantly better. It will be a couple of weeks before we see the report for the week of the election itself, but here’s a table with the scores through the week of Oct. 24. Note that these are processing scores, not on-time delivery scores, and the numbers only includes scores for mailpieces that have been properly identified by the mailer as election mail, outbound ballots, or inbound ballots and if it adhered to Service Performance Measurement business rules.

  Read More

Lawsuits against DeJoy, USPS & Trump over mail delays and election mail

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Twelve lawsuits have been filed against Postmaster General DeJoy, the U.S. Postal Service, and President Trump over issues connected to mail delays and threats to voting by mail in the November election. We’re “live blogging” the latest developments on a daily basis. You can find a list of all the cases at the end of this post here, with links to the original complaints and the case numbers on PACER.

We’re reporting on the service performance reports being submitted in several of the cases on a separate updates page, here.  (The Postal Service’s weekly on-time service performance reports submitted in Jones v USPS can be found here. The daily reports being submitted in Richardson, Vote Forward, and NAACP are here. There have also been reports made public by requests via FOIA and the PRC. All the performance reports are here.)

November 6, 2020

As ordered by Judge Sullivan yesterday, the Postal Service has filed two reports early this morning. The first is a summary of information learned from plant managers for the following USPS districts: Greensboro, MidCarolinas, Central Pennsylvania, Western Pennsylvania, and Philadelphia Metropolitan.

The second is a report showing the total number of ballots identified through daily sweeps of processing facilities in states with extended ballot receipt deadlines.

The Postal Service has filed another of its reports explaining districts with low inbound or outbound processing scores. Specifically, “for each USPS District whose Election Mail processing scores for Inbound Ballots were below 90 percent on each of the previous two days or below 80 percent on the previous day, Defendants’ understanding, based on all reasonably available information, of potential explanations for the current level of service and any corrective measures that are now being implemented, as previously required under the Court’s October 30 Order.”

The plaintiffs in Richardson, Vote Forward, and NAACP have filed a notice and proposed order. The proposed order says, “Beginning November 7, 2020, Defendants shall no longer be required to produce daily data on the percentage of on-time deliveries at the Nation, Area, and District level for first class mail and marketing mail, as previously required under the Court’s October 27 Order. Instead, Defendants shall produce this data on a weekly basis.”

The proposed order also modifies other reports the Postal Service had been required to produce. It will no longer be required to produce data on outbound ballots (those sent to voters), and it won’t be required to produce those explanations for processing scores for Inbound Ballots below 90 percent on each of the previous two days.

The order would also ask for “information sufficient to show the absolute number Inbound Ballots covered by the processing score for a given District that had an origination scan in the District, a destination scan in the District, or both. Defendants shall include this data retroactive to November 4.”

The order also states, “Plant managers and district managers jointly overseeing USPS processing facilities that serve Alaska, Illinois, Iowa, Maryland, Mississippi, North Dakota, Ohio, and West Virginia shall coordinate with all local Boards of Elections (the “Local Boards”) in those states to deliver all ballots to the Local Boards before the relevant extended state ballot receipt deadline.”

The notice provides the rationale for the specific requests for information described in the proposed order.

November 5, 2020

Afternoon update: Judge Sullivan presided over another hearing today. One of the questions on the table was how many ballots may have been delivered late or are still in the system and not delivered yet. The Postal Service shared some specific numbers, as reported in a great “live” twitter thread on the hearing by @USPostOffice911.

Looking a ballots without a destination scan, the Postal Service says that in the Central PA district, there are 1524 total, and of these USPS has confidence that 979 were expedited, while 545 require further investigation.  In Greensboro, 3087 total, 1752 expedited, 1335 to investigate. In the Carolina district, 2404 total without destination scans, 1204 confidence they were expedited, 1200 to investigate. In Philadelphia, 2496 total, 1682 expedited, 814 to investigate. The Postal Service said that there is no evidence yet that the ballots in the “investigated” category were not delivered.

In a separate filing, the Postal Service provided a list of the number of ballots that were delivered Express in each district over the three days Nov. 1- Nov. 3. The total appears to be about 10,655.

The plaintiffs have presented two proposed orders, which Judge Sullivans appears to have ordered.

The first states: All USPS processing facilities that serve a state with an extended ballot receipt deadline shall, until that deadline passes, perform a morning ballot sweep (no later than 10 a.m., local time) and a mid-to-late afternoon ballot sweep that is timed to ensure that any identified local ballots can be delivered that day. Upon completing a sweep, each facility shall report to USPS Headquarters the total number of ballots identified and confirm that those ballots have been expedited for delivery to meet applicable extended state deadlines. Beginning on November 5, 2020, and until further order of the Court, Defendants shall promptly submit to Plaintiffs a single report with the total number of ballots identified through daily sweeps, with one exception: for facilities that are located in states whose ballot receipt deadline is that day, Defendants shall submit the results of those sweeps to Plaintiffs immediately following its receipt of the results of the second sweep at these facilities.

The second proposed order states:

1. On November 5, 2020 and November 6, 2020, Defendants shall file before the Court the equivalent information presented in “Defendants’ Summary of Information Learned from Plant Managers” (ECF No. 78) for the following United States Postal Service (USPS) districts: Greensboro, Mid-Carolinas, Central Pennsylvania, Western Pennsylvania, and Philadelphia Metropolitan.

2. Plant managers and district managers jointly overseeing USPS facilities in Greensboro, Mid-Carolinas, Central Pennsylvania, Western Pennsylvania, and Philadelphia Metropolitan shall coordinate with all local county Boards of Elections in North Carolina or Pennsylvania (the “Local Board”) to deliver all ballots to the Local Board before 5:00 PM local time in North Carolina or Pennsylvania on November 6, 2020. Such arrangements shall include, at a minimum, the following:

a. USPS employees of each facility shall be directed to undertake a sweep of the facility on the morning and again on the afternoon of November 6 to identify any inbound ballots postmarked on or before November 3.

b. The afternoon sweep should be conducted at a time sufficient for the ballots to be delivered to the Local Board for receipt by 5:00 PM local time on November 6, 2020.

c. Plant managers and district managers may implement a hub-and-spoke plan for each county, to the extent that such plan would assist timely delivery of the ballots to the Local Board.

3. No later than 5:00 PM EST today, Defendants shall file before the Court details of the arrangements adopted pursuant to Paragraph 2 of this Order by each USPS district and, to the extent facilities within each USPS district adopt different plans, by each USPS facility.

Morning update: The big news to come out of yesterday’s hearing in NAACP-Richardson-Vote-Forward was, of course, Judge Sullivan’s expression of displeasure with the Postal Service’s failure to follow his order of Nov. 3. It immediately made headlines like these:

Most of yesterday’s hearing was considerably less dramatic than the headlines suggest. A lot of it was an in-the-weeds discussion about how the processing plants were handling ballots, conducting sweeps, etc. The hearing focused largely on the testimony of Kevin Bray, the USPS executive lead for mail processing in the 2020 elections. He also submitted a written declaration. Daniel Brubaker, a member of the Postal Service Inspection Service, submitted a declaration as well.

The Postal Service also filed a response to the court’s Nov. 3 order, which provides a narrative of the actions of the Postal Inspection Service on election day, the sweeps of processing plants that took place, and an explanation of why the Postal Service was not able to comply entirely with the court’s order. In addition, the Postal Service filed a summary of information learned from plant managers as required by the court’s order on Nov. 3.

For more about the hearing and where things stand, check out these articles:

Read More

Stop girdling the Post Office

SteveBlog, Slideshow

By Mark Jamison

In forestry the practice of tree girdling is well known. Although there are some circumstances where this can be a useful practice, in most cases the technique is used for nefarious ends. Girdling involves removing the bark and layers below the bark, usually around the trunk of the tree. The cut, when it includes the entire circumference of the tree, makes it impossible for the tree to heal itself and everything above the cut will eventually die. In forests where logging is limited to dying or diseased trees, loggers will girdle healthy trees to kill them and make them available for harvest.

For at least the last fifty years, the right wing has been girdling the post office and the postal network in the hope of undermining its health and thereby reaping a financial harvest. The very people who have been charged with caring for and sustaining the Postal Service have instead repeatedly cut services, saddled the institution with requirements that undermine its ability to function, and denigrated the value of the network.

Louis DeJoy and Robert Duncan are the latest in the long line of postal girdlers. But they have taken their game to a higher level and for what are clearly political reasons. Both are products of the president that appointed them and both evidence their benefactor’s outright mendacity. They have made it clear that regardless of the law, public necessity, or public opinion, their goal is to cut postal operations. The recent OIG report reviewed here at STPO  demonstrates that clearly.

DeJoy and Duncan are political men doing political deeds. Both have engaged in major fundraising for the Republican Party and both have been active and vocal in partisan politics. That their deeds in their current positions as Postmaster General and chairman of the postal Board of Governors are political should be obvious to anyone with even a scintilla of common sense.

But to borrow from Shakespeare, I come not to criticize DeJoy and Duncan but to bury them. Having chosen to serve political goals rather than the American public during a national crisis, they have proven themselves unfit. They lack the competence and foresight required to administer an essential national infrastructure. They have to go.  Read More