USPS reverses policy, will publish all post office discontinuances in Postal Bulletin

Steve HutkinsBlog, Featured

Back in September, the Postal Service introduced a new policy that put a limit on the number of discontinuances it would publish in any given issue of Postal Bulletin. In the issues of September 8 and September 22, the Bulletin explained that “due to the extensive number of offices on the Discontinuance List,” the discontinuances would be announced on the Postal Pro, a website used primarily by business mailers.

As a result of the new policy, 85 post office discontinuances were not published in the Postal Bulletin (all of them for post offices suspended many years ago), even though the Bulletin has been the official record of discontinuances for over 140 years — and despite that fact that publication of discontinuances in the Bulletin is required by federal regulations.

In response to an inquiry from Linn’s Stamp News, the Postal Service explained that that “increasing printing costs” led the Postal Service to devise an “alternative format” when the list of post office changes gets too large to print — when it exceeds 3 pages or 27 items.

On January 18th, I raised the issue with the Postal Regulatory Commission in a motion for an information request that included much of the material in my article arguing that it was a mistake not to include all discontinuances in the Bulletin.

The motion requested that the Commission ask the Postal Service how the new policy conformed with federal regulations, why it wasn’t being applied consistently to other long lists in the Bulletin, how much it cost to print the Bulletin’s pages, and why the Postal Service hadn’t simply spread the announcements over several issues so that no single issue had too long of a list.

The next day, the Postal Service issued an opposition to my motion, which, among other things, suggested that my information request about the Postal Bulletin “more closely resembles a thinly disguised rhetorical ploy than a good-faith request for information.”

That same day, the Commission issued an information request in which it asked the Postal Service whether it “has considered publishing the list of discontinued post offices and their office closing dates as an Appendix to the Postal Bulletin instead of as a link to separate website.” The question included a reference to 39 C.F.R. § 241.3(g)(2), which states “If no appeal is filed, the official closing date of the office must be published in the Postal Bulletin….”

This past Friday, the Postal Service provided a one-sentence response: “The Postal Service currently plans to publish the list referenced in this information request in a future edition of the Postal Bulletin.”

Rather than bothering with an appendix, then, the Postal Service will apparently simply include the 85 discontinuances in a future issue of the Bulletin, even though it will exceed the 27-item limit. It looks like the policy to limit the number of discontinuances in any issue of the Bulletin has been discontinued.

All’s well that ends well.

— Steve Hutkins

The S&DC rollout rolls on: Implementation & Impacts of Delivery Network Transformation

Steve HutkinsBlog, S&DC

By Steve Hutkins

The Postal Service is in the process of implementing a large-scale initiative to transform its delivery network by relocating letter carriers from post offices to Sorting & Delivery Centers.

The first S&DC went into operation in Athens, Georgia, in mid-November. Its first phase included the post office in Watkinsville, GA, and several others not yet identified. There may have been a second phase in January that encompassed the rest of the 13 “spoke” offices originally listed by the USPS in a letter to the National Association of Postal Supervisors (and to the APWU) on August 12, 2022.

The next round of “conversions” is set for February, followed by more in June.  According to a December 2nd letter to NAPS, the February conversions include 17 post offices giving up their carriers to five S&DCs: Utica, NY (phase 1); Gainesville, FL; Woburn, MA; Panama City, FL; and Bryan, TX. (New carrier sorting cases were delivered to the new S&DC in Bryan a few weeks ago, and the same is probably true for these other facilities.)

The December 2nd list also shows the plans for June 2023; they include Utica (phase 2) and nine other S&DCs, with 37 impacted post offices, not all of which have been previously announced.

The three rounds of conversions from November, February and June encompass 15 S&DCs and about 65 post offices and 600 routes. This stage of the rollout has been scaled down considerably from what had been previously announced in August, when a list showed 21 S&DCs and over 200 spoke post offices being converted by the end of February.

The offices on the current list are, on average, about 13 miles and an 18-minute drive from their S&DCs (and that’s based on the optimistic estimates provided by the Postal Service — actual drive times can be several minutes more). The longer drive from S&DCs to routes will mean fewer delivery points per route and necessitate about 5 to 10 percent more routes, with increased costs for labor, fuel and vehicle maintenance.

Some of the offices losing carriers are very small, with just one or two routes. A few are very large, with over 60 routes. The current list averages about 10 routes per post office, somewhat below what the average will be after the full implementation of the initiative, when more of the large urban and suburban offices are included.

The Postal Service owns about 20 of the properties and leases the others. Several of the owned properties are historic buildings from the New Deal. When the carriers go, there will be a lot of excess space in the post office, which will eventually lead to selling buildings, not renewing leases, relocating to smaller spaces, and closing post offices.

Our enhanced list of 55 of the impacted post offices, with more information about each of them, is here. (For the Athens S&DC, only Watkinsville is included; others will be added when they’re identified.)

Here’s a map of the 15 S&DCs and 55 of their spoke offices. If you zoom in, you’ll see the S&DC in red and the spoke offices in blue (February) and purple (June).  The map is on Google Maps here.

The S&DC initiative is not something that may or may not happen, sometime in the distant future. It’s happening now, and all indications are that wherever the changes take place, they will be permanent. Carriers won’t be going back to their post offices. About the only thing that may stop the plan is a major pushback from local communities, elected officials, and perhaps the postal unions and management associations.

Some details about the plan have been revealed over the past several months, but the Postal Service has, for the most part, been reluctant to share much with stakeholders and the public. It seems to be taking the position that because the plan is in flux, it’s premature to reveal important information about the initiative’s full scope and potential impacts.

The Postal Service has also not requested an advisory opinion from the Postal Regulatory Commission, which would subject the plan to thorough public scrutiny. Such a request is supposed to be made prior to implementing any initiative that constitutes a “change in the nature of postal services on a nationwide or substantially nationwide basis.”

Given that the Postal Service is proceeding with the February and June conversions without having requested an opinion, it appears that postal officials may believe that an advisory opinion is not required because the S&DC plan involves operational realignments that will not change “postal services.” Post offices will remain where they are and continue to serve the public just as they did before losing their carriers. An advisory opinion, officials may be thinking, would only become necessary if and when the Postal Service decides to begin closing post offices and reducing retail hours — steps that will be facilitated by the S&DC plan, but that could be seen as separate measures, at least in the view of postal officials. Or perhaps the Postal Service will request the opinion later this summer, after it adjusts the plan in response to what it learns from the early conversions.

Rear lot, post office in Woodstock, GA, to be converted to the S&DC in Canton, GA (Atlanta metro)

While the introduction of S&DCs may still be in its early stages, the Postal Service has been implementing the plan since the spring of 2022, when leases were signed for large facilities in Charlotte and Atlanta that will serve as S&DCs. And while the Postmaster General has repeatedly said that the plan will make operations more efficient, cut costs, and improve service, he has provided no data showing how this will happen, and he has yet to address the negative impacts the initiative is likely to cause.

The following timeline shows how the S&DC initiative has been implemented, step by step, since it was first mentioned in the Delivering for America plan in early 2021. The timeline also includes the various iterations of the program to buy electric vehicles — which the Postal Service has tied to the S&DC plan — as well as some of the responses of stakeholders. After the timeline is a list summarizing some of the potential impacts of the initiative.

Implementation Timeline

March 23, 2021: The Postal Service releases its Delivering for America plan. It refers, in general terms, to aligning the “delivery unit footprint” to growing package volumes, “optimizing delivery units,” and “streamlining carrier functions” — which suggests that the Postal Service was already envisioning some version of the S&DC plan when it crafted the DFA plan.

March 24, 2022: The Postal Service announces that it will increase its purchase of electric delivery vehicles, from 10 percent of the procurement to 20 percent, “as our financial condition improves and as we refine our network and vehicle operating strategy.”

May 18, 2022: At the Postal Forum the Postmaster General discusses his “initiative to reinvent our delivery network and improve our route structure.” “This is a massive effort,” he says, “that will touch almost 500 network mail processing locations, 10,000 delivery units, 1,000 transfer hubs, and almost 100,000 carrier routes.”

May, 2022: An article in the Charlotte Business Journal (July 25, 2022) reports that the Postal Service has signed a lease on a building of over 620,000 square feet at Gateway85 in Charlotte, North Carolina. The article says the news of the lease was first revealed at a Gaston Business Association event in May, but the USPS was not named as the tenant at that time.

Site of the future South Metro S&DC, Atlanta, GA.Source

Spring, 2022: According to a real estate market report, the Postal Service has signed the lease on a one-million-square-foot facility in the Palmetto Logistics Park, in Atlanta, Georgia, sometime during April-June 2022.

June 1, 2022:  The Postal Service announces that it will increase its order of electric delivery vehicles to about 40 percent, thanks to “delivery network and related route refinements” associated with the S&DC plan.

July 12, 2022: USPS officials meet with APWU representatives to discuss what the union thinks will be a meeting about the new “mega-plants,” like those in Charlotte and Atlanta. Instead, the union is “ambushed with the SDC concept.” APWU officials voice various concerns, especially on the timeline and how they were not given an opportunity for input: “We have not been given the number of employees impacted, where excessing may occur, nor when any excessing may happen.”

July 18, 2022: A preview of an article in the July 2022 issue of Eagle Magazine, shared on liteblue.com, describes a “massive redesign of the postal processing, transportation, and delivery infrastructure,” including a “systematic replacement of many existing facilities.”  According to the Eagle, “Detailed plans are already underway with major initiatives initially targeted in the Atlanta, Indianapolis and Charlotte areas.”

July 20, 2022: USPS announces it anticipates increasing the number of delivery EVs to at least 50% of the procurement, reflecting “refinements to the Postal Service’s overall network modernization, route optimizations, improved facility electric infrastructure, and availability of vehicles and technology.”

July 27, 2022: In comments at a forum sponsored by AEI, the Postmaster General explains that the Postal Service “will be aggregating much of our carrier base into larger properly equipped and strategically located sort and delivery centers.” He states that 19,000 carrier units would be reduced to 12,000 or 13,000 by consolidating them into bigger facilities.

July 29, 2022: A USPS presentation shared with UPMA describes the S&DC plan in some detail. It shows ten S&DCs (currently P&DCs) that would absorb 1,460 routes from 153 “spoke” post offices and modeling for two Metro area conversions: Indianapolis, where two S&DCs would absorb 1,058 routes from 35 post offices, and Atlanta, where 2,327 routes at 73 post offices would be consolidated to seven or eight S&DCs, including the South Metro P&DC (the facility in the Palmetto Logistics Park). It also describes conversions from seven stations to the Alabama Avenue carrier annex in Brooklyn, which has been leased for peak season operations. A letter dated July 29, 2022, from USPS Director of Labor Relations Policies and Programs to the president of UPMA, identifies the post offices set for initial conversion to S&DCs (the same ten listed in the presentation).

THE ATLANTA “TEMPLATE” of the S&DC plan. SOURCE:SOURCE: USPS PRESENTATION (JULY 29, 2022)

August 4, 2022: In an article in Government Executive, the president of UPMA says he was caught off guard by the July 29th notice from the Postal Service; his questions have gone largely unanswered; his members have expressed outrage over the plan (because post offices that have only retail offerings typically do not have a postmaster on site); and he may need to work with the Postal Service to offer early retirement or to find new landing spots for impacted personnel. The director of APWU’s clerk division has told members that “USPS has not been forthcoming with much information as they don’t know what this all entails. We have asked questions and they have not been able to provide answers or provide any supporting documentation.”

August 9, 2022: In his keynote address at the annual NALC convention, President Rolando says the potential impact of the S&DC plan on letter carriers is “only now coming into view,” and the union is “reserving judgment until we know more.”  He emphasizes that NALC must “be given a seat at the table” and not just “consulted after key decisions have been made,” and the plan will not succeed unless the Postal Service solves its chronic staffing problems first.

August 12, 2022: The Postal Service sends a letter to NAPS and the APWU about the S&DC plan, with a list showing 21 S&DCs and over 200 post offices where carrier conversions will take place. (We’ve created a more detailed version of the list, here.) The letter states that implementation will begin with the Athens, GA, consolidations by September 24; the Brooklyn, NY, conversions in November, and the remainder by February 2023.

August 16, 2022: NAPS sends a letter to its board members saying the intended implementation of this project, which had been set for August 27, 2022, will be held off until after peak season, with the exception of Athens P&DC, which is still scheduled for September. The letter adds that the S&DC plan “will allow Postmasters the ability to reconnect with the community they serve, therefore re-establishing the prestige of the position” — apparently a reference to the fact that postmasters will have more time to spend with customers since they won’t have to spend time supervising carriers.

DeJoy is shown around by a superintendent at a new Postal Service facility near Atlanta. (Dustin Chambers for The Washington Post)

Late September 2022: The Postmaster General takes the Washington Post on a tour of postal facilities in the Atlanta area to show off the “template” of the new S&DC plan, which “can be replicated in 59 other metro areas across the country.” The tour includes a stop at the new facility in the Palmetto Logistics Park, where the Postmaster General is photographed being shown around by a superintendent.

November 19, 2023: After being postponed several times, the first S&DC in the country goes into operation, in Athens, Georgia. The first phase consolidates about 50 routes from several of the 13 post offices on the August 12 list.

November 25, 2022: In the article about the September tour of Atlanta facilities, the Washington Post reports that the Postmaster General plans to use some of the $3 billion Congress appropriated for electrifying the delivery fleet to install charging stations at S&DCs. “I can’t put [electric] vehicles everywhere,” explains DeJoy, and he cannot “fathom” putting them at small post offices, which he claims lack the power to support EVs.

November 30, 2022: In a letter to NAPS, the Postal Service says that the transition to S&DCs scheduled for February will not result in the reduction of supervisor positions — supervisors will relocate to the S&DCs along with the carriers — and postmasters will remain in their post offices at the same grade.

December 2, 2022: The Postal Service notifies NAPS of the updated schedule of implementation for S&DC sites. The list shows five S&DCs that will go into operation in February — Utica, NY; Gainesville, FL; Woburn, MA; Panama City, FL; and Bryan, TX — and 9 more S&DCs that will start up in June.

December 20, 2022: The Postal Service announces that it will expand its order of delivery EVs even more, again thanks to the delivery network improvement plan. The press release claims that buying more EVs will not be possible unless the S&DC plan is implemented.

December 29, 2022: According to an article in Government Executive, “The first of hundreds of sorting and delivery centers just opened in Athens, Ga., with more slated for February.” The article quotes the president of UPMA saying 2023 is “the year of implementation” for the S&DC initiative. The Postmaster General says his biggest concern is not moving fast enough. “That’s why I’m here seven days a week, 15 hours a day,” says DeJoy, “because we are in a race against time.”

USPS postcard sent to employees (Jan. 2023)

January 12, 2023: USPS Link reports that the Postal Service is sending a postcard to employees that “touts USPS efforts to transform its delivery network” by combining carrier operations into new, larger sorting and delivery centers. The postcard ends with the curious claim that “S&DCs will allow us to serve close to 100 percent of the American public within two days.” What does that even mean?

January 13, 2023: The Postal Service and National Association of Letter Carriers sign two Memorandums of Understanding (M-01990 and M-01991) regarding the transfer of city letter carriers to an S&DC. The MOUs ensure that carriers will retain their craft seniority and bid assignments, but the MOUs don’t appear to apply to carriers at post offices that are discontinued or to those who are transferred to an S&DC from stations and branches (urban post offices subordinate to a city’s main office).

Potential Impacts

The following list identifies some of the potential impacts of the S&DC plan. (For more details, see this previous post and this one.)

Additional route estimates. Source: USPS presentation, July 29, 2022

More routes: The July 29, 2022, presentation indicates that the longer distances between S&DCs and routes will mean fewer delivery points per route, thus requiring the Postal Service to add five to ten percent more routes for the areas encompassed by the plan. If the plan includes 100,000 routes — about 43 percent of the routes in the country — that’s 5,000 to 10,000 more routes and an even larger increase in the number of letter carriers.

More delivery vehicles: More routes will require more delivery vehicles and, for electric vehicles, more charging stations, which will add to the costs of the next-generation fleet.

More transportation costs: Data provided in the July 29, 2022, presentation indicate that the average route will increase by about 12 miles, each way. According to a recent OIG report on electrifying the delivery fleet, the average carrier route is about 24 miles. The S&DC plan will thus double the miles traveled in the average route encompassed by the plan. For traditional vehicles, this will increase fuel and maintenance costs, and for the new electric vehicles, it will mean more frequent recharging and shorter battery life.

Crash in Englewood, OH. Source: WDTN PHOTO/ALEX KORECKY

Increased risk of accidents: The additional driving between S&DCs and routes — much of it during rush hour and often on busy highways — will increase the risk of vehicle accidents. This will add to costs for vehicle repair, workers compensation, and lost time associated with employee injuries. City carriers already have the highest injury rates of all USPS employees. There will also be additional costs for tort claims for property damage and injury to non-USPS personnel.

Longer commutes: The July 29, 2022, presentation indicates that many postal employees will see their commute to the S&DC increase by several miles and minutes, which will add to their personal transportation costs and cause many unpaid hours for commuting time. A chart in the presentation shows that the median commute to the new Athens S&DC will increase by about 11 minutes each way, from 16 to 27 minutes. Some employees are seeing their 30-minute commute turn into an hour. The Postmaster General has himself acknowledged the longer commutes, telling employees in a video message in July 2022, “For some of you, this might mean you have to travel a little further to get to work.”

Crash in Englewood, OH. Source: <a href="https://www.wdtn.com/news/local-news/mail-truck-involved-in-englewood-crash-street-closed/">WDTN PHOTO</a>/ALEX KORECKY

Non-Career Turnover Rates, GAO report

Morale and employee retention problems: Working conditions at the S&DCs and the additional costs of longer commutes in unpaid hours, fuel and maintenance may exacerbate employee retention problems. City carrier assistant positions have the highest turnover of all non-career employees, with rural carriers coming in second. Unavailability of carriers is also one of the main causes of undelivered or partially delivered routes and delayed mail. In an interview for KBTX about the future Bryan S&DC, retired carrier Jamie Partridge of Community and Postal Workers United (CPWU) noted that “letter carriers are already working into the night and dark, retiring early, hiring on and then quitting,” and the S&DC plan will “just accelerate that process.” According to an article in the Oconee Enterprise about the startup of the Athens S&DC right at peak season, “One carrier noted that she was not able to start her 77-mile route until 11:10 a.m., leaving only five hours of daylight to deliver to 386 mailboxes during the busiest time of year.”

Watkinsville, GA Post Office, part of Athens S&DC

Displacing and eliminating clerk positions: The clerks in post offices not only provide services at the window but also support carrier operations. When carriers are relocated to S&DCs, there’s less work for clerks at the post office. Initially, some clerks may be relocated to the S&DC or to another post office.  A recent piece about the Watkinsville post office, part of the Athens S&DC, bemoans how “some beloved front-desk employees have been transferred out of the county,” leaving the post office understaffed and customers complaining about late and missing mail and long lines at the window. Eventually, many clerk positions will be eliminated. At the AEI forum, the Postmaster General said, “Right now, to get to break even, I think we may need to get 50,000 people out of the organization.” With the number of letter carriers actually increasing, the job cuts will have to come elsewhere, and clerks will be the hardest hit.

Displacing postmasters, managers and supervisors: When carriers are relocated from post offices, those in managerial positions will have fewer employees to supervise. At the Watkinsville post office, for example, there were about 40 employees — 31 carriers and 9 doing customer service — and there are probably just a half dozen remaining. The Postal Service has told NAPS that “there will be no reduction in the number of supervisor positions in the sites scheduled for implementation in February.” Some supervisors will relocate to the S&DC and oversee carriers from there. The letter to NAPS also indicates that postmasters at the spoke offices on the February list will remain at the same grade, but if the office becomes vacant, the level of the office may change. While the Postal Service is trying to mitigate impacts at the outset, eventually many postmaster and supervisor positions will be downgraded or eliminated. Several thousand employees could be impacted.

Downgrading post offices: When a multi-functional independent post office becomes simply a retail outlet, it’s possible that it will be downgraded to a facility subordinate to the S&DC, similar to the way stations and branches are subordinate to the city’s main post office and the way POStPlan removed postmasters at thousands of small independent post offices, which were then put under the supervision of the postmaster at a another post office. According to the NAPS website, the Athens S&DC installation is staffed by a postmaster who oversees all operations of the S&DC; it’s possible that this postmaster could eventually oversee all the “spoke” post offices of the S&DC as well.

Relocating post offices: When delivery operations are removed from thousands of post offices, the excess space is likely to be cited as a reason to relocate some offices to a smaller space, most typically in a shopping center.

Historic Frankfurt, NY post office (1941), losing its carriers in Feb. 2023

Selling USPS buildings: If the Postal Service owns the building, the excess space will be cited as a reason to sell the property. The December 29 article in Government Executive reports that one of the cost savings from the S&DC initiative will be “real estate,” and postal officials plan to “get rid of buildings.” Among the post offices set to lose their carriers in February and June are several historic New Deal buildings: Frankfort, NY (1941); Wakefield, MA (1934); Ilion, NY (1936); Tipton, IN (1936); Muncy, PA (1937) and Panama City (Downtown Station), FL, as well as the post office in Lock Haven, PA, completed in 1921.

Cutting hours at post offices: Removing carriers will facilitate the Postal Service’s initiative to “align hours of operation to customer demands at low traffic Post Offices,” one of the cost-saving measure identified in the Delivering for America plan.

Closing stations and branches: Removing carriers will help the Postal Service to “consolidate low-traffic stations and branches,” another cost-saving measure identified in the Delivering for America plan. There are currently about 2,700 stations and branches with delivery units, as well as 1,700 finance units without carrier operations. Some unspecified number of these facilities will be closed.

Getting undelivered mail: Getting mail and packages that couldn’t be delivered (signature required, too big for the mailbox, etc.) will become more complicated and take longer due to the new logistics: Can customers pick up the item at the local post office or do they have to go to the S&DC? Where is the item? If the customer chooses redelivery, how long before it goes out again for another attempt?

Delivering to post office boxes: Under the current system, a contract truck takes the carrier mail and PO box mail from the processing center to the post office each morning. Under the S&DC system, the carriers will deliver the PO box mail to the post office (as well as picking up the sent mail at the end of the day). The extra stops will make it more difficult to do the regular route in the designated time. And if there’s not enough space on the truck for both the route mail and the PO Box mail, an extra trip will be necessary, and the PO Box mail will arrive later at the post office.

Changes in delivery unit mailings: Big customers — like Amazon, FedEx and UPS — that use the Postal Service for last-mile delivery will appreciate being able to drop their packages at an S&DC rather than trucking them to individual delivery units at post offices — probably one of the main reasons for introducing the S&DC system in the first place. (Apparently last-mile delivery will soon mean last-twenty.) But it will be a different story for small businesses. In order to use the new USPS Connect, they’ll have do their mailings at the S&DC instead of their local post office, which cancels out one of the main selling points of USPS Connect, namely that small businesses could drop shipments at their local post office for delivery to addresses in the ZIP area served by their post office.

Charging stations at S&DCs, not post offices: The Postal Service has not committed to locating charging stations at post offices, and it appears uninterested in making them available to the public when they’re not being used for postal vehicles. The Postmaster General says he can’t fathom putting them at small rural post offices because they lack the juice. So the charging stations will be installed at S&DCs — and paid for by taxpayers with the funds appropriated by Congress in the Inflation Reduction Act. Plus, says the Postal Service, it won’t be possible to electrify the delivery fleet unless it can go forward with the S&DC plan. Yet according to a March 2022 OIG report on EVs at post offices, “Some facilities may already be capable of supporting an electric fleet with minimal improvements because they have the necessary electrical equipment installed to power level 2 chargers,” while other facilities may simply require some retrofitting.

Still no external review

Despite the potential impacts on employees and customers, the vast scale of the plan, and the fact that implementation has already begun, the S&DC initiative has not yet been subject to any kind of external review.

The House Oversight Committee would be a likely venue for such a review, but now that Republicans control the House, that’s not happening. The Senate could hold a hearing or commission an analysis, but that’s probably not going to happen either.

The Office of Inspector General announced in November that it was beginning an audit to “evaluate Postal Service’s data models used to determine sites for conversion into S&DCs, cost and savings impacts associated with the conversions, as well as how those plans were communicated to external stakeholders and internally.” But the results will not be published until June 2023, by which time 15 S&DCs will already be in operation, impacting more than 60 post offices.

The employee unions and associations could press the Postal Service to make more information public, but they don’t seem interested in making a row. NALC may be anticipating thousands of new members, while the APWU, NAPS, and UPMA may be waiting to see how the plan plays out for their members.

The best option for a full public review of the plan would be an advisory opinion by the Postal Regulatory Commission, but under 39 U.S.C. 3661, the Postal Service itself must initiate the process by requesting an opinion.

Back in 2021, the attorneys general of 21 states filed a complaint with the PRC arguing that the Postal Service should have requested an advisory opinion on the Delivering for America plan “as a whole,” rather than in a piecemeal way that considers only some of its components (like the changes in service standards) and only in isolation from the others. The complaint argued that waiting until implementation of the 10-year plan is imminent means that “the Commission will have to wait a decade” to issue an advisory opinion, at which point “it will be too late” for public participation. In December 2021, the Commission dismissed the complaint, explaining that the advisory opinion statute doesn’t apply to “broad strategic plans.”

In December 2022, the Commission finally asked the Postal Service a few questions about the S&DC plan, but they were restricted to how the changes might affect the new USPS Connect product. The Postal Service didn’t want to say much, telling the Commission, “The introduction of Sort and Delivery Centers (S&DCs) is in early stages, and the Postal Service intends to study and learn more from experience in order to determine the best practices to be employed in future roll outs.”

Last week, as part of the PRC’s Annual Compliance Review, I submitted a motion that included earlier versions of the S&DC implementation timeline and impact list from above, along with a request that the Commission ask the Postal Service if and when it planned to submit a request for an advisory opinion. The Postal Service objected to the question, saying it “has no foundation in or bearing on the substance of the ACR” and “concerns prospective actions, not matters within the past fiscal year.”

At this point, it’s not even certain that the Postal Service will even request an advisory opinion on the S&DC plan. It would be quite amazing if the PRC never weighed in one of the most massive transformations of the postal system in recent decades.

In the meantime, the implementation of the S&DC initiative continues apace. The rollout rolls on.

Related Posts

Is Biden still considering appointing two new postal governors?

Steve HutkinsBlog, Featured

A few weeks ago, it appeared (as noted in this previous post) that President Biden had passed up the opportunity to appoint two new members of the Board of Governors, and with it, the chance to maybe appoint Governors who might want to replace the Postmaster General. Now it seems that the appointment of two new Governors is still a real possibility.

On December 16, 2022, the bio pages on the USPS website for Governors Zollars and Moak both indicated that their terms had ended on December 8, 2022, and that they were serving in holdover years until December 8, 2023. That seemed to indicate Biden had decided not to replace them with new appointments.

Here’s Governor Zollars’ bio as it appeared on December 7 (now available on the Wayback Machine):

Zollars served the remainder of a seven-year term that expired on December 8,  2022, and he is currently in his holdover year. He currently chairs the Board’s Operations Committee.

Now here’s Governor Zollars’ bio as it appears on the USPS website today:

Zollars served the remainder of a seven-year term that expired on December 8, 2022, and he is currently in his holdover year. He will continue to serve under his current appointment until December 8, 2023, unless he or a successor is nominated, confirmed and appointed prior to that date. He currently chairs the Board’s Operations Committee.

At some point between December 16 and today, then, the Postal Service added the sentence about Zollars serving until December 8, 2023, unless a successor is confirmed before then. The same is true for Governor Moak’s bio.

It’s not clear when and why these changes were made in the Governors’ bios, but it clearly indicates that the Postal Service was getting ahead of itself when it said simply that the Governors were serving a holdover year, and it now wants to clarify that their positions are, in effect, still open.

It is not uncommon for Governors to leave their positions before their terms end. In fact, seven of the nine current Governors joined the Board by replacing individuals who left before their term expired. What seems unusual about the situation with Governors Zollars and Moak is that their holdover year has begun with the possibility that they won’t serve it out if a replacement is confirmed.

In any case, at this point there are four Governors who identify as Democrat (Vice Chairman Anton G. HajjarRon Stroman, Daniel Tangherlini, and Donald L. Moak), four who identify as Republican (Chairman Roman Martinez IV, Robert M. Duncan, Derek Kan, and William D. Zollars), and one independent (Amber F. McReynolds).

No more than five Governors can belong to the same political party. If President Biden were to replace Moak (D) and Zollars (R) with two Democrats, the Board would thus have five Democrats, which would be within the rules.

The appointments would still need to win Senate confirmation, which could be problematic with two Democratic nominees, but it would be possible. And if the Biden administration has any inclination to replace the Postmaster General, that would be a necessary first step.

(For more about the two BOG openings, see this article by David Dayen in the American Prospect, Nov. 29, 2022. Note that Congresswoman Brenda Lawrence is described as having been the chair of the House Oversight’s Subcommittee on Government Operations. She was a member of the subcommittee, but the chair was Gerry Connolly. There’s more in this article by Eric Katz on Government Executive, Oct. 27, 2022.)

— Steve Hutkins

What’s fair is fair: The PRC issues a final order on the “appropriate share” issue

Steve HutkinsBlog, Featured

After six years of debate and deliberation, hundreds of pages of stakeholder comments, several previous PRC orders evaluating these comments, an appeal by UPS to federal court, and God knows how many hours of attorney fees (some paid by corporations like UPS and Amazon, some by taxpayers), the Postal Regulatory Commission has issued what it surely hopes will be its final order relating to the institutional cost contribution requirement for Competitive products.

Order No. 6399, issued on Monday of this week, runs to over 280 pages. The main question it addresses is what is the “appropriate share” that Competitive products should contribute to the Postal Service’s institutional costs. The order reviews the entire history of the “appropriate share” issue, going back to the legislative background of the 2006 Postal Accountability and Enhancement Act. It then responds in detail to an order from the D.C. Circuit Court remanding an earlier PRC order, and it concludes by “finalizing” the rule on the appropriate share it had previously approved.

On one side of the debate is the United Parcel Service, which has been trying for many years to get the PRC to change how it allocates costs so that the Postal Service would need to raise rates on the products with which UPS competes. Supporting UPS in this effort are two conservative, free-market think tanks, the Lexington Institute and the American Consumer Institute. On other side of the debate are the Postal Service, Amazon, Pitney Bowes, and a group of mailers associations, including the Parcel Shippers Association, all of which, for one reason or another, benefit by maintaining lower shipping rates.

The issues in the case go back to 2006, when PAEA divided postal products into Market Dominant (letters, flats and periodicals) and Competitive (priority and most parcels). In order to prevent the Postal Service from using revenues from Market Dominant products to defray costs from Competitive products, which would be unfair to competitors like UPS and FedEx, PAEA required each product to cover its attributable costs (those that are caused by or otherwise associated with a particular product) and also to contribute an “appropriate share” to institutional costs (the fixed costs that can’t be associated with a particular product).

In 2007, based on Competitive products’ historical contribution to institutional costs during the previous two years, the Commission set the minimum contribution at 5.5 percent. PAEA also directed the PRC to revisit the appropriate share regulation at least every 5 years to determine if the minimum contribution requirement should be “retained in its current form, modified, or eliminated.”  The first review maintained the 5.5 percent floor, but the second review, initiated in 2016, led to a significant change.

The formula-based approach

In 2018 the Commission proposed a new formula-based approach to determining the minimum contribution. Based on this formula, the minimum contribution was increased to 8.8 percent in FY 2020 and 9.1 percent in FY 2021. Based on the recently submitted Annual Compliance Review, it will increase to 10 percent for FY 2022.

Those numbers, it should be emphasized, represent just the floor. In actuality, Competitive products have been contributing much more than the minimum: 30.8 percent of total institutional costs in FY 2020, 39.2 percent in FY 2021, and 38.1 percent in FY 2022.

Because Competitive products have been contributing an amount several times greater than the floor set by the new formula, several commenters, including Amazon and the Parcel Shippers Association, have argued that the minimum contribution is no longer necessary and should simply be eliminated.

UPS, however, has not been satisfied with even these relatively large contribution numbers, and it has persisted in trying to get the PRC to require the Postal Service to allocate more costs to competitive products. UPS challenged the PRC’s 2018 order approving the formula-based approach in the D. C. Circuit Court and won a decision remanding the order back to the PRC for further consideration and clarification. At issue was the technical language used in the statute describing the standard for which costs should be viewed as attributable and which should be viewed as institutional. In this week’s order, the Commission responds to the issues identified by the court but stands by the formula-based approach it had developed previously.

A “fully distributed” costing methodology

Some of the UPS proposals would essentially eliminate institutional costs altogether and produce a “fully distributed” costing system, i.e., all costs would be attributed to one product or another and there would be no fixed, institutional costs.

Moving toward a “fully distributed” cost methodology was one of the recommendations of the report by President Trump’s Task Force on the Postal Service. (One can safely assume that this recommendation was the result of lobbying by UPS.) According to the Task Force, “the USPS’s current cost allocation methodology is outdated, leading to distortions in investment and product pricing decisions.” In order to reduce this “distortion,” the Task Force recommended that “the USPS and the PRC develop a new cost allocation model with fully distributed costs to all products, services, and activities.”

The recently passed Postal Reform Act (Section 203) also calls for a PRC review of the costing methodology “to determine whether revisions are appropriate to ensure that all direct and indirect costs attributable to competitive and market-dominant products are properly attributed to those products.” (Again, the provision was probably the result of lobbying by UPS.)

One of the more straight-forward proposals offered by UPS would attribute the institutional costs to various products based on their percentage of attributable costs. Here’s how that could affect postal rates. (The following analysis is not part of the Commission’s order.)

According to the USPS Annual Compliance Report released a couple of week ago, in FY 2022, Competitive products contributed $12.46 billion to total institutional costs of $32.71 billion — a contribution of 38.1 percent of the total. Attributable costs for competitive products were $20.7 billion out of a total of $47 billion — 44 percent of the total attributable costs.

If institutional costs were distributed based on the attributable cost percentages, competitive products would need to contribute 44 percent rather than 38 percent of institutional costs. In order to maintain the current profit margin on competitive products, the Postal Service would need to increase revenues by about $2 billion a year and raise rates by 6 percent. That, presumably, would be on top of the regular annual increases necessary to keep up with rising expenses and inflation.

With billions of dollars at stake, then, it’s easy to see why UPS has been working so hard for costing methodologies that will drive up USPS rates. Spending millions on legal fees, lobbying, and campaign contributions is well worth the cost if it means winning a larger market share and increasing profits. That’s why UPS may once again challenge the Commission’s “final” order on the appropriate share issue. It may not be the final word at all.

Constraining prices

The aim of UPS and its free-market allies is to increase the costs — and consequently the rates — for Competitive products. Higher cost allocations would not in themselves require the Postal Service to raise prices — it could just accept a lower profit margin — but price increases would be the most likely outcome.

Higher rates could make some USPS products simply unsustainable. At the least, they would drive away business to the Postal Service’s competitors and lead to higher prices for consumers. That’s the concern expressed by the Commission in this week’s order:

Most significantly of all, the arbitrary allocation of institutional costs to Competitive products could undermine the Postal Service’s ability to effectively compete in the market for competitive postal services because it could force the Postal Service to either stop offering products that were actually helping to cover institutional costs, or to raise product prices to unsustainable levels relative to other competitors in the market. Either outcome would lead to less rigorous competition in the market. Customers would have fewer options and there would be fewer constraints on the prices charged by competitors. (Page 109)

Constraining the prices charged by competitors has always been one of the main reasons the Postal Service delivers packages. The Post Office only got into the parcel post business in the early 1900s because the private express delivery companies were working together to keep prices high. Competition from the public Post Office was thus a way to keep the private companies in check. And that’s as true now as it was a hundred years ago.

—Steve Hutkins

USPS submits calculations for density and retirement rate authorities to raise prices

Steve HutkinsBlog, Featured

Today the Postal Service submitted its calculations to the Postal Regulatory Commission for its density rate authority and retirement rate authority to increase rates in the coming year.

These are the amounts that the Postal Service is permitted to raise rates on Market Dominant products beyond the Consumer Price Index (which, until November 2020, had put a cap on increases).

As the Postal Service explains in the notice accompanying the calculations, this is an unusual year because the Postal Service Reform Act eliminated all past due retiree health benefit payments, which amount to a $57 billion “negative expense.”

The Postal Service has proposed to the PRC that this one-time adjustment be excluded from institutional costs — one of the factors used to determine the density rate authority. If the PRC approves the proposal, it would change the calculations significantly. (The proposal, it may be noted, has been opposed by the Mailers associations, while the PRC’s Public Representative has recommended approving it.)

The Postal Service has therefore provided two sets of calculations. If the proposal is not approved, there would be no density rate authority available; if the proposal is approved, the rate authority would be 0.936 percent. That’s compared to 4.5 percent for FY 2020 and 0.583 percent for FY 2021. (The spreadsheet with the calculations is available on the PRC site here.)

The calculation of the retirement rate authority is not affected by the Reform Act. It comes out to be 1.036 percent.

According to the Notice, “The Postal Service intends to use these additional rate authorities, although precise decisions about how, and in what amounts, will be made by the Governors after the Commission formally determines how much of each rate authority is available.”

Lease dispute over an Alexandria, VA post office goes to court

Steve HutkinsBlog, Featured

The Community Branch post office in the Mount Vernon Plaza shopping center in Alexandria, VA (22306), is set to close at the end of February. The owner of the property has filed a lawsuit against the Postal Service, and both sides are telling the media that they can’t talk about the case due to the pending legal action. A local news report on Fox5 and court filings, however, provide some background on what’s happened.

The Postal Service has been leasing space for the post office at the Plaza at 7676 Richmond Highway since 1983. It’s a large and very busy shopping center, and the post office is described as a “popular” spot. It’s just 15 miles from USPS headquarters in L’Enfant Plaza, so it’s probably known to some of the people who work at HQ. (As Bill McAllister of Linn’s Stamp News let me know, the post office is actually in Fairfax County and not within the city limits of Alexandria, but the Postal Service classifies it as a “branch” of the main post office in Alexandria.)

The current lease with Federal Realty Partners started in 2007, and it’s due to end on February 28, 2023. In 2014, the landlord filed a complaint alleging that the Postal Service had not paid real estate taxes of $29.549 and common area maintenance (CAM) charges of $2,116, from 2008 to 2012. That dispute was settled, and the lease was amended in 2015 to include the additional payments.

For some reason not made clear in the court filings, the Postal Service apparently stopped making the payments in 2020. In early August 2022, Federal Realty wrote the Postal Service to say that it did not intend to offer the USPS the opportunity to renew the lease or do a holdover period, apparently because the Postal Service was not paying the additional amounts agreed upon in the amended lease.

On September 1, 2022, Federal Realty again wrote the Postal Service to remind the agency that it was in default of the payments: “If you fail to forward the full amount due through August 2022 within the time period provided in the Lease, we are permitted under the Lease to take legal action against you in order to collect the outstanding amounts due and/or to recover possession of the premises. Your immediate response is required to avoid legal action.”

A couple of weeks later, on September 13, 2022, the Postal Service put out a news release in which it proposed relocating the Community Branch post office to a yet-to-be-determined location and invited customer feedback.

This notice is a required step in the post office relocation process. As noted in the news release, the Postal Service is required to follow the regulations in 39 CFR § 241.4. This news release should be provided to the news media serving the community, shared with local officials, posted in the lobby of the post office, and sent to the lessor. There’s also supposed to be a public meeting at some point.

A news item in On the Move, dated Sept. 5, 2022, discusses the proposed relocation and says that “a USPS notice posted to Nextdoor on Aug. 26 by a branch customer indicated that the Postal Service was proposing moving.” The customer may have seen a notice in the Community Branch lobby or received a copy in their mail, but the Fox5 report this week made it seem as if some customers were first finding out about the pending closure in December, when some employees started sharing the fact that they wouldn’t be around in the coming year.

The Federal Realty makes no reference to such an announcement in its court filings, so it’s not clear if the Postal Service ever informed the lessor of the relocation plan. The notice also does not mention anything about a public meeting, which the Postal Service may plan to skip due to the pandemic.

In any case, Federal Realty again wrote the Postal Service on October 12, 2022: “Landlord has attempted, through numerous formal and informal communications over the last year, to resolve with Tenant issues concerning the Lease’s termination and turnover, as well as the open CAM charges and operating expenses. Despite Landlord’s communications, there has been no response or resolution.”

Then on December 22, 2022, Federal Realty filed its lawsuit. In its filing, Federal Realty claims that there are “current arrears” of $71,015 — the equivalent of about two and half months’ rent — in taxes and operating expenses and other costs, plus interest, damages, additional rent and attorneys’ fees and costs.

Based on the documents in the filing, it appears that the Postal Service has not been responding to the letters Federal Realty has been sending, and perhaps some phone calls as well. The filing contains no exhibits of USPS responses, and the only public statement from the USPS (which is not included in the filing) is the Sept. 13 news release saying that it was initiating the process for relocating the post office.

The Postal Service probably has a lot more say about the dispute, but it declined to comment to Fox5 due to the pending litigation. The lawsuit may go on for a while, so one possible outcome at this point is that the Postal Service will declare an emergency suspension and close the office sometime before Feb. 28, 2023, when the lease ends and the owner reclaims the property.

Or perhaps the parties will come to an agreement as they did back in 2014, and the post office will remain open. The amount in dispute shouldn’t be enough to close a popular post office that probably generates plenty of revenue.

— Steve Hutkins

Lawsuits respond to USPS announcement it will buy more EVs

Steve HutkinsBlog, Featured

On Dec. 20, 2022, the Postal Service issued a press release announcing it would buy more electric vehicles than it had committed to just a few months ago.

On that same day, the Postal Service submitted the press release to two district courts that are hearing challenges to the USPS environmental impact statements that were done in connection with purchasing the next-gen fleet.

The press release was accompanied by a brief letter noting that the percentage of EVs in the planned procurement is even greater than contemplated in the notice of a supplemental environmental review published in July 2022. The Postal Service says that it is currently conducting this supplemental review and anticipates completing it by August 2023.

The letter does not say anything about how the Dec. 20th announcement should or could impact the lawsuits, but the plaintiffs were quick to respond that it should have no bearing on the case.

The state AGs and three environmental groups — Cleanairnow, Center for Biological Diversity, and Sierra Club — who are challenging the Postal Service’s environmental review submitted a response observing that “The Notice attaches a press release which is not a final agency action and therefore should not affect the Court’s consideration of this case.” (These two cases have been consolidated.)

The plaintiffs ask the court to require the USPS to file regular status reports detailing “the Postal Service’s activities in the supplemental NEPA process, any further changes to its preferred vehicle powertrain mix, and any other significant developments impacting its intended procurement strategy. The Notice and press release reinforce the need for these status reports by announcing yet another change to the Postal Service’s intended mix of electric versus gas-powered vehicles, at least the third such change in less than a year.”

In the NRDC v DeJoy case, the court has directed the parties to submit a joint letter on the implications of the USPS announcement by December 30. The parties have asked for a one-week extension.

Winter 2023 CPWU Newsletter

Steve HutkinsBlog, Featured

The Winter 2023 newsletter from Communities and Postal Workers United (CPWU) has articles about letter carriers in Maine rallying to protest overwork, understaffing, robberies, delay of mail, and prioritizing Amazon parcels; the increasing number of letter carriers are being robbed on their mail routes; the victory on electric vehicles weakened by exclusion of union workers and public charging stations; and protests against the Sort & Delivery Center plan. Read the newsletter here.

OIG provides a Primer on Postal Reform

Steve HutkinsBlog, Featured

The USPS OIG has just released a report entitled Primer on Postal Reform. The report reviews the key provisions of the Postal Service Reform Act of 2022 (PSRA), signed into law on April 6, 2022, and “identifies potential opportunities and challenges they present for the Postal Service.”

As described by the IG, the financial provisions of the PSRA “will eliminate large unpaid obligations and reduce the size of the Postal Service’s annual budget deficit. At the same time, operational provisions will increase transparency and improve the quality of service provided to customers.”

The IG may be overly optimistic about how much the reform legislation will do to improve transparency and service. For example, the legislation requires the Postal Service to provide more information about on-time service performance by creating a publicly available dashboard. That may help make performance more available to the general public, but the big mailers already have several tools for tracking the mail and they don’t seem to have had much impact on performance.

The IG also notes that the legislation requires the Postal Regulatory Commission to conduct a review of the causes and effects of “possible inefficiencies” in the processing of flats mail. That’s been on the radar of the PRC for years, and there doesn’t seem to have been a lot of progress in that department.

Similarly, the PSRA directs the PRC to do a review that might lead to revised methods for attributing costs to postal products. That element of the legislation was primarily a concession to lobbying done by UPS and others who have for years been complaining about the cost attribution methodology. The Commission has reviewed the issues and complaints over and over again — and ended up in court with UPS several times — and it’s not likely that another review will lead to significant changes.

One provision of the PSRA that could prove interesting is its authorization of the Postal Service to enter into agreements with state/local/tribal governments to offer nonpostal services to the public on their behalf. The could include enabling customers to obtain hunting or fishing licenses from their local post office rather than requiring a visit to another government office. Granted, this is not a significant departure from current policies, which allow the Postal Service to provide nonpostal services to federal agencies, such as passport services, displaying posters and educational information about National Crime Victim’s Rights Week, and providing selective service registration at post offices. Still, expanding such government services would be a great way to enhance the role of local post offices.

Overall, the report is probably the best available overview of the PSRA. You can view it here.

You’ve got no mail: The OIG reports on the problem of undelivered routes

Steve HutkinsBlog, Featured

The #USPS OIG has just released an audit report on Delivery Operations – Undelivered and Partially Delivered Routes. This refers to instances where carriers were unable to deliver all the mail along their assigned route on the scheduled delivery day. The causes include unavailability of carriers, severe weather, traffic, accidents, blocked receptacles that prevent the carrier from servicing the route, and so on.

The Postal Service has various technical tools that identify mail that was delayed because of these problems. But the tools do not identify the number of undelivered and partially delivered routes nationally due to technology constraints and reliance on the manual recording of delayed mail by delivery unit management, which is often underreported. As a result, the actual number of undelivered and partially delivered routes is unknown.

The OIG recommended that the Postal Service “leverage existing tools and technologies to identify the actual number of undelivered and partially delivered routes.” The OIG also recommended that the Postal Service “enhance processes and tools to notify customers of delayed mail and undelivered and partially delivered routes.”

In response to a draft of the report, USPS management disagreed with this second recommendation: “To notify customers of delayed mail, or undelivered/partially delivered routes, requires the development of a technological infrastructure far beyond existing Postal Service operational scope and purpose…. With the large volume of mail moving through their network each day, it is not feasible to trace a single piece of letter-sized mail.”

The OIG said that managements comments were “non-responsive” to the recommendation, and it “will pursue through the resolution process….  Recommendations should not be closed in the Postal Service’s follow-up tracking system until the OIG provides written confirmation that the recommendations can be closed.”

Canada’s postal workers want to put public charging stations at post offices: Why can’t it happen here?

Steve HutkinsBlog, Featured

The Canadian Union of Postal Workers has put forward a plan — Delivering Community Power — to transform the postal system in ways that will “fight climate change and deliver vital new services to every corner of the country.” Under the plan, post offices would offer new services, like high-speed internet; provide low-fee financial services; and expand their role as community hubs. The plan also calls for putting public charging stations at every Canada Post office, where they can be used not only for the next generation of electric postal vehicles but also by the public.

The CUPW plan is in direct contrast to what Postmaster General DeJoy is going to do with the billions of dollars the Postal Service will be getting to electrify its fleet. His plans call for relocating letter carriers from post offices to large Sorting & Delivery Centers, and that’s where the charging stations will go, not at your local post office. The chargers will thus be well out of reach of postal customers.

Here’s what the Delivering Community Power plan has to say about putting charging stations at post offices:

There is no doubt that electric vehicles (EVs) are the way of the future. EVs reduce local pollution and significantly contribute to climate change mitigation efforts. But while electric vehicle prices have fallen dramatically over the past few years, one important barrier to widespread adoption of EVs is lack of consumer confidence in the availability of public charging stations.

With more post offices than there are Tim Horton’s in the country, we can help pave the way for more electrification by installing public charging stations at every Canada Post office.

Post offices are already centrally located, accessible and highly visible. By extending the nationwide EV charging network to every corner of the country, our post offices will become hubs of the new green economy.

Canada lags behind other countries in electric vehicle (EV) adoption, accounting for only 3% of new car sales. Norway leads with 74%, followed by Iceland at 45% and Sweden at 32% EV market share in new car sales. A green transition requires large-scale public investment in renewables. Why not put our largest public infrastructure at the centre of that transformation?

The same question should be asked about our postal infrastructure. In fact, just two days ago, the APWU came out in favor of public charging stations. In its statement applauding the White House announcement of new plans for a massive transition to electrification of the next generation USPS delivery fleet, the union says this: “The APWU and our community allies will continue advocating for charging stations at post offices which will be available for public use. There is no better network suited to be the foundation of a nationwide system/grid of EV charging stations than the public Postal Service anchored in every town and community.”

Several members of Congress have also been advocating for public-facing charging stations at US post offices. Rep. Brenda Lawrence (D-Mich.), who served as a postal worker for thirty years, has been promoting the idea, as reported in a 2021 Bloomberg article, “Post Offices Floated as Public Electric Vehicle Charging Sites.” Marcy Kaptur (D-Ohio), co-chair of the House Auto Caucus, said she too supports the idea: “We already own the property, the postal service has these vehicles and we could make them available to the public as well.”

In May 2022, the House Oversight Committee held a hearing entitled “It’s Electric: Developing The Postal Service Fleet Of The Future.” Rep. Lawrence questioned Victoria K. Stephen, USPS Executive Director, Next Generation Delivery Vehicle, about the idea of public-facing charging stations. Stephen was not very positive and pointed to some of the obstacles, including legal constraints on what services the Postal Service is allowed to provide beyond strictly “postal” services, as well as the need to maintain a secure fence line to enclose vehicles. Lawrence nonetheless made it clear that in her view funding to the Postal Service for electrifying the fleet should include public-facing chargers.

In October 2022, Rep. Carolyn B. Maloney, Chairwoman of the Committee on Oversight and Reform, sent a letter to the Postmaster General requesting information on his plans to use funding made available by the Inflation Reduction Act and the Bipartisan Infrastructure Law to help create a nationwide public EV charging network. Maloney asked the PMG to reply by October 25. His reply, if he wrote one, has not been made public.

If the Postal Service really wanted to install public-facing chargers, the obstacles could be overcome. Many (probably most) post offices don’t locate postal vehicles behind a fence, and those that do could put the chargers near the fence line so that they could service postal vehicles on one side and the public on the other. As for the prohibition against providing non-postal services, the Postal Service could ask Congress to make an exception for charging stations.

An OIG report from earlier this year, Electric Delivery Vehicles and the Post Office, discusses how other potential problems, like inadequate electrical power and limited space, as well as local zoning and land use codes, can also be managed. If there’s a will, there’s a way.

The Postal Service has given no indication that it’s the least bit interested in making its charging infrastructure available to the public. If the chargers are installed only at Sorting & Delivery Centers, it will be a missed opportunity.

While everyone is celebrating this week’s announcement that the Postal Service’s will buy more electric vehicles, we shouldn’t lose sight of how taxpayer funds are used to build the USPS EV infrastructure. If Canada’s postal workers see the value of putting public-facing chargers at post offices, why can’t it happen here?

— Steve Hutkins

(Updated 12/27/22 to include the APWU statement.)

Clearing up a few misconceptions about S&DCs and EVs

Steve HutkinsBlog, Featured

The Washington Post is reporting that the Postal Service plans to spend almost $10 billion for 66,000 electric vehicles and related infrastructure, a big win for the Biden administration and environmentalists.

This is, of course, very good news, and one hesitates to throw cold water on the announcement. But unfortunately, in reporting on its scoop, the Post — as it did in a related article back in November — seems to go along with the Postmaster General’s highly problematic linkage of buying more EVs to his plan to relocate letter carriers from post offices to large Sorting & Delivery Centers.

In today’s article there’s one paragraph in particular that could use some clarification:

“The Postal Service is restructuring its vast mail processing and delivery network to minimize unnecessary transportation and fit facilities specifically for EVs. It will concentrate letter carriers at centralized locations rather than using small-town post offices to take advantage of existing infrastructure and cost savings associated with electric vehicles.”

There are several problems here:

First, the plan to restructure the delivery network actually adds hundreds of millions of miles to carrier routes. DeJoy has repeatedly said his plan will simplify the network and reduce transportation costs, but he’s provided no evidence for this, and there’s plenty of data showing the opposite.

An internal USPS presentation from July 29, 2022, shows that the plan adds about 12 or 13 miles to each route, one-way, which, for the 100,000 routes that will be relocated from post offices, adds up to something like 700 million more miles annually. The Postal Service has yet to explain how the plan will “minimize unnecessary transportation” or how, even with all these additional miles, it will reduce costs overall.

Second, most of the routes that will be centralized will come from midsize to large post offices in metro areas, not small towns. Nearly all the S&DCs will be located in metro areas, and the plan puts a limit of 30 minutes for travel time between S&DC and the route — guaranteeing that the vast majority of the routes will be relocated from metro-area post offices, not small towns, most of which will be beyond the 30-minute reach.

According to the 7/29 presentation, in the Atlanta metro area, seven or eight S&DCs — three in existing facilities, four or five in new ones — will absorb over 2,300 routes from about 80 post offices. Very few of these offices are in what could be called small towns. They’re nearly all urban and suburban.  Overall, only a small percentage of the 100,000 routes encompassed by the plan will come from small-town post offices, which typically house five to ten carriers, while the larger offices house 20 to 50. In any case, once the carriers are gone, a post office, big or small, becomes much more vulnerable to having its retail hours cut, getting relocated to a smaller space, or being closed completely.

Third, while hundreds of existing postal facilities will be modified to become S&DCs, the centerpieces of DeJoy’s future network will be the 60 or 70 new multi-functional mega-plants he plans to create. The Postal Service has already leased massive logistics warehouses in Charlotte and Atlanta, and a third, in Indianapolis, is included in the 7/29 presentation.

In September, the PMG took the Post on a tour of several facilities in Atlanta to illustrate his “template” for the future delivery network. Among them was the million-square-foot facility in the Palmetto Logistics Park, southwest of the city, that the Postal Service began leasing early this year. These are the kinds of facilities where DeJoy plans to install charging stations for his fleet of EVs. Why put them at post offices when the trucks will be spending the night at the S&DCs?

And fourth, DeJoy is not restructuring the delivery network in order to fit facilities for EVs. Any post office can be fitted for EVs. You don’t need to centralize the network in order to make that happen.

The plan to consolidate routes was developed long before any thought was given to buying tens of thousands of electric vehicles. The Delivering for America plan released in March 2021 was already talking about “improving our delivery unit footprint,” “optimizing delivery units,” and “streamlining carrier functions.” At that point, the Postal Service was committed to electrifying only 10 percent of the new fleet.

It wasn’t until June 2022 that the Postal Service began saying it could buy more EVs thanks to “delivery network and related route refinements,” even though by then it had been developing the S&DC plan for over a year. A July 2022 article in the USPS Eagle Magazine rolling out the new delivery network doesn’t even mention electric vehicles.

The commitment to buy more EVs wasn’t made possible by the S&DC plan. It was a response to lawsuits, the EPA’s criticism of the Postal Service’s environmental impact study on the next-gen fleet, and pressure — and the promise of funding — from Congress and the Biden administration.

In today’s press release about the big EV buy, the Postal Service goes a step further. It’s not simply that the network reconfiguration makes it possible to buy more EVs. Now we’re told that purchasing more EVs will only be possible if the delivery network is modernized: “What is less widely understood is that our network modernization initiative is necessary to enable this vehicle electrification and will also provide meaningful cost and carbon reductions in other ways.” In other words, DeJoy can’t buy all these EVs unless he can go forward with his S&DC plan.

DeJoy is thus using the very popular plan to buy electric vehicles to justify his very unpopular delivery centralization plan.  As an Earthjustice attorney told the Washington Post, it’s “a shrewd approach.”  But it’s based on the false premise that EVs need S&DCs. Rather than promoting this claim, the media should be examining it more critically.

— Steve Hutkins

More about the plan here:

Postal Confidential: USPS hides more information about its leased facilities

Steve HutkinsBlog, Featured

For many years now, the Postal Service has published state-by-state lists of its owned and leased facilities under the Freedom of Information Act. The practice represents the kind of transparency one expects from a government agency.

For some reason, the Postal Service recently decided that the reports on its 23,000 leased properties were providing too much transparency. A few days ago, it quietly stopped sharing some of the information it had been providing previously. Now the reports include only the bare minimum — the post office’s address and the square footage of the interior and site — and everything else is considered too confidential to be made public.

This is the second time the Postal Service has reduced the scope of the reports.

These reports go back at least to 2009, as indicated by this reference in a filing with the Postal Regulatory Commission by the late postal watchdog David Popkin, who wanted the Postal Service to provide the finance numbers for its facilities.

In the early years, the leased reports were comprehensive.  They provided the name of the postal facility, its address, the dates when the current lease went into effect and when it would be renewed, any purchase options, allocation of responsibility for maintenance and taxes, the name and address of the lessor, the square footage of the interior and site, and the current annual rent and the next annual rent.

Such information was often used by journalists doing research on the Postal Service, as in this interesting analysis of the relationship between lease costs and lessor location. I frequently used the reports for articles on Save the Post Office, such as this overview of post office closings and suspensions.

Since the facilities reports provided lease costs for comparable properties, they were also used by lessors and real estate brokers when negotiating leases. It was for that very reason that in 2017 the Postal Service stopped sharing the data on lease costs.

This decision was made sometime after the Postal Service switched real estate providers, from CBRE to JLL, in the spring of 2017, so it’s possible that the new broker had something to do with the change in policy.

In any case, soon after the changes were made, postal enthusiast Steve Bahnsen filed a FOIA request to get the full reports. His request was denied, he appealed, and the appeal was also denied. (There’s more about the story in this piece by Bill McAllister on Linn’s Stamp News.)

In its letter explaining the decision to reject the FOIA request, the Postal Service said that providing the lease cost data was “inconsistent with good business practice because it places us at a disadvantage in our leasing activities, to our potential financial detriment.”

The Postal Service explained that “some lessors were using the information in the Report to demand above market leases when our existing leases expired… In certain markets, the Postal Service competes with other businesses for the same available space, and alerting these competitors to our lease terms provides them with an advantage that can result in our inability to lease needed space.”

The letter went on to point out that Congress has given the Postal Service a “special” exemption under the Freedom of Information Act to protect “information of a commercial nature, including trade secrets, whether or not obtained from a person outside the Postal Service, which, under good business practice would not be publicly disclosed.”

If you prefer to see the Postal Service as a business rather than a government service, all this may seem reasonable enough. But now the Postal Service has apparently decided that even the curtailed reports it’s been providing since 2017 are giving out too much information.

In late November, the leased facilities reports went offline for several days, and when they returned on December 7, the updated versions omitted all the information about the lessor — name and address — and the lease dates as well. The new leased facilities reports now contain only the name and address of the post office, along with the interior and site square footage.

It’s not clear why the Postal Service would make this change. How would sharing such basic information put the Postal Service at a commercial disadvantage? And why did the Postal Service decide in 2017 that it was fine to continue providing this information and then reverse course and determine that even this information is too much? What’s changed since 2017?

With each passing year, the Postal Service has become increasingly secretive about its operations and finances. To cite just a few examples:

More and more products have been transferred from Market Dominant — the monopoly products for which the Postal Service is obligated to provide a lot of financial data — to the Competitive list, for which the Postal Service is required to share much less information since it could benefit competitors.

The practice of making confidential Negotiated Service Agreements continues to expand. In FY 2008, there were 17 domestic NSAs on Competitive products. In FY 2021, there were 137 of these NSAs, covering 800 products. On many days, it seems as if the only work the Commission does is review and approve NSAs, and it is done almost entirely in secret.

When a group of unions asked to see the NSA for the Amazon contract to look for evidence that the Postal Service is prioritizing Amazon parcels, the USPS opposed their motion and the PRC denied the request. (Back in 2014, the Commission denied a similar request by postal commentator Mark Jamison, who discussed it here.)

Elected officials are repeatedly denied access to USPS processing plants, as if they were top secret military facilities. In response, the House Committee on Oversight and Reform recently passed a bill called “Ensuring Oversight Access at the Postal Service Act,” which bars the Postal Service from inhibiting a member of Congress from accessing a postal facility for official purposes. Perhaps it will eventually become law.

It’s not as if the facilities are all that secret. In September, the Postmaster General was happy to take the Washington Post on a tour of several facilities in Atlanta to show off one of his new Sorting & Delivery Centers.

Not that the Postal Service is very interested in sharing real information about the S&DC plan. It remains shrouded in secrecy, so one can only speculate about its potential scope and impacts.

The Postal Service has even changed how it reports on the post offices that have been discontinued. Instead of announcing them in Postal Bulletin, as it’s done since 1880, the Postal Service will use Postal Bulletin only if there aren’t too many discontinuances.

Now the Postal Service is hiding the names and addresses of the lessors who provide space for the country’s post offices. It’s just part of the pattern.

By the way, you can find a version of the leased facilities reports, as of March 2021, on the Internet Archive here. It has all the lease and lessor information that will no longer be shared with the public.

— Steve Hutkins

Has Biden taken a pass on his opportunity to replace the PMG?

Steve HutkinsBlog, Featured

President Biden has apparently passed up the opportunity to replace two members of the USPS Board of Governors whose term expired on Dec. 8. The USPS website now shows these Governors as serving a holdover year until Dec. 2023:

  • William Zollars “served the remainder of a seven-year term that expired on December 8, 2022, and he is currently in his holdover year.”
  • Donald L. Moak “served the remainder of a seven-year term that expired on December 8, 2022, and he is currently in his holdover year.”

Perhaps the USPS website has gotten ahead of things and there’s still a chance for new Governors, or perhaps the holdover appointments went unnoticed by the media.

For more about what the two new appointments might have meant, see this excellent article by David Dayan.

USPS OIG launches audit of plan to centralize carrier operations

Steve HutkinsBlog, Featured

The USPS Office of Inspector General is doing an audit of the Postal Service’s plan to relocate letter carriers from post offices to centralized Sort & Delivery Centers. Here’s the OIG’s announcement:

Postal Service’s Development and Communication of Sorting and Delivery Centers

Recently, the Postal Service announced their intention to consolidate delivery operations at more than 200 post offices and other facilities into larger, regional hubs known as Sorting and Delivery Centers (S&DC). The purpose of S&DCs is to reduce transportation and mail handling costs, as well as provide customers with additional services. Our objective is to evaluate Postal Service’s data models used to determine sites for conversion into S&DCs, cost and savings impacts associated with the conversions, as well as how those plans were communicated to external stakeholders and internally.

If you have any information or input that might be beneficial to the auditors on this topic, click here.

For more about the plan…

The PRC finally starts asking the USPS about the S&DC plan

Steve HutkinsBlog, Featured

The Postal Regulatory Commission is currently reviewing the Postal Service’s request to make its pilot USPS Connect Local Mail (CLM) a permanent product. CLM offers same or next-day delivery for documents sent at a post office with a delivery unit (carrier operation) to the addresses served by that DU.

Today the PRC asked how the CLM product would be impacted by the Sort & Delivery Center plan, which will be implemented in 2023.

The S&DC plan will relocate delivery unit operations to large, centralized facilities that are in many cases 10 or 15 miles from the post office, making it more difficult for some mailers to use CLM. CLM also allows mailers to hand off mail directly to the carrier, which could be complicated by the S&DC plan.

The PRC has thus asked the USPS to “describe in detail how implementing this [S&DC] plan would affect the existing entry of USPS Connect Local Mail.”

Responses to the questions are due by Dec. 23.

The PRC’s questions appear to be the first time the Commission has asked the Postal Service about the S&DC plan. The OIG is also asking for input into the plan for an audit it’s conducting. Expect a lot more of this in 2023.