Last week the Postal Regulatory Commission dismissed the appeal on the closure of the Sherwood Carrier Annex Post Office in Topeka, Kansas. The case provides a revealing window into how the Postal Service is conducting its transformation of the processing and delivery network.

As discussed in this previous post, in early June the Postal Service relocated 31 routes and more than 40 letter carriers from the Sherwood Annex, along with carriers from four other post offices, to the new S&DC at the Topeka P&DC. In mid-July, the Postal Service announced that on August 26 the Sherwood Annex would be closed.

On August 18, the President of the APWU Local 270 filed an appeal on the closing with the Postal Regulatory Commission on behalf of the Sherwood post office community, along with a “Save the Post Office” petition with 195 signatures from customers. The appeal argued that the Postal Service did not follow the proper procedures for discontinuing a post office, which include providing an opportunity for the community to comment in writing and at a public meeting.

The Postal Service replied with a motion arguing that the appeal should be dismissed because (1) the petitioner did not have standing since she wasn’t a customer of the post office, and (2) the Annex isn’t a “post office” so there’s no right of appeal to begin with.

To address the problem of standing, a customer of the post office subsequently filed an amended appeal. The PRC’s Public Representative submitted comments arguing that the appeal should be put on hold while the Commission gathered more facts about the services provided by the Annex.

In dismissing the appeal last week, the Commission’s order said the lateness wasn’t the issue, but the status of the post office and the services it provided were. The case boiled down to the definition of a “post office” under the discontinuance statute —39 U.S. Code § 404 — and the regulations that promulgate the statute — 39 CFR § 241.3.

Before getting into the weeds on all this, a simple observation: The Postal Service did not want to hear from the community and customers about the closure of the Sherwood Annex Post Office, even though it served over 20,000 addresses. A comment period and public meeting may not have been required, but the Postal Service could have held them anyway.

Shutting out of the public like this is part of a pattern with today’s Postal Service.

In June, the Postal Service revised the federal regulations on relocating retail services to eliminate the requirement for a public meeting and, in some cases, public notification itself.

The Postal Service has also, without explanation, banned virtual and remote public comments at the meetings of the Board of Governors. Starting next year, the Board will only hear public comments once per year in November, and not at its meetings in February, May, and August 2024.

Plus, the Postal Service is participating in the PRC’s Public Inquiry into the Delivering for America plan only with great reluctance. At the BOG meeting last week, the Postmaster General again complained that “our regulator has a demonstrated tendency to resist change or to move only incrementally as it concerns our efforts to acquire new business and save this institution.”

When a post office is not a post office

In its Motion to Dismiss, the Postal Service explains that it “has consistently maintained that relocation of the Annex operations is outside the scope of 39 U.S.C. § 404(d) because that section only applies to Postal Service determinations to discontinue a Post Office and the Annex was neither a Post Office nor was it discontinued…. The Annex provided no retail services but was merely a mail sorting and delivery facility.’

But in many other contexts, the Annex clearly was a post office. For example:

On the Find USPS Locations website, the Sherwood Annex is identified as a Post Office^™, complete with the USPS trademark.

The closure notice posted at the facility on July 17 refers to the Annex as a “Post Office.”

On the notification letter the Postal Service sent to stakeholders in August 2022 about the next post offices to give their carriers to S&DCs, the Sherwood office is identified as “Top-Sherwood Sta,” i.e., a post office station in Topeka, just as the nearby Gage Center post office is identified as “Top-Gage Center Sta.”

On more than one USPS facility list, the Sherwood Annex, like all carrier annexes, is classified as a subtype of post office.

The PRC’s Annual Compliance Determination Report states, “Postal Service-operated retail facilities consist of post offices, classified stations and branches, and carrier annexes.” Carrier annexes are listed in Table V-11 of the ACDR, showing the Number of Retail Facilities, and they’re included in Table V-12, which shows the number of suspended post offices. Seven annexes were suspended in FY 2022, and these are individually listed in a library reference.

All of these examples make it clear that the Sherwood Carrier Annex was a post office. The Postal Service could have focused its argument on the narrower question of whether or not it was a “retail facility” under section 241.3. But the Postal Service made the broader argument that it wasn’t a post office at all.

This may be because the postal Service has been saying for over a year now that no post office would close as a result of having its carriers relocated to an S&DC. For example, in a recent filing for the PRC’s Public Inquiry on Delivering for America, the Postal Service told the Commission that the transformation of the network would only impact delivery operations, not post office services.

In an interview or the latest issue of Eagle Magazine, the Postmaster General reiterated the claim: “Customers will see no changes to their local Post Office retail operations; no Post Offices will be closed and PO Box service will not be changed with the opening of the S&DCs.”

If the Postal Service had acknowledged to the Commission that the Sherwood Carrier Annex was a post office, it would have contradicted these assurances that no post office would close if it lost its carriers to an S&DC.

The statute and the regulation

The issue in the appeal came down to the definitions of “post office” and “retail facility” under the statute and regulations.

Section 404(d) sets forth the basic requirements for a discontinuance of post offices, including the right to appeal to the PRC. It says that in making a determination whether or not to close or consolidate a post office, the Postal Service shall consider  the effect on the community served and postal employees as well as the economic savings.

The statute says nothing about the definition of “post office,” and it doesn’t use the term “retail services” at all. When the federal regulation that promulgated this statute was first created, it too did not use the term “retail.”

The phrases “retail facility’ and “retail services” were introduced to the regulations in 2011, when the Postal Service issued a revision of section 241.3 that extended the discontinuance procedures to stations and branches. Up until then, the Postal Service had taken the position that section 404(d) applied only to the main post office of a city or town and not to stations and branches, i.e., the offices subordinate to the main office in a city.

In revising the regulations, the Postal Service used the term “USPS-operated retail facility” as a catch-all for post offices, stations, and branches. The revision wasn’t intended to distinguish between post offices that offer retail services and those that don’t, and the revision makes no mention of annexes. But the revision set the stage for the argument that annexes which don’t offer retail services aren’t covered by the discontinuance statute.

A door is not a window

The determination that the Annex was not a retail post office hinged on several factors, including the issue of whether a Dutch door qualified as a window.

The Annex offered several services to the public, and it had more than one customer service employees, but it had no Post Office boxes and did not sell postage. There was no retail counter or traditional service window in the Annex. Instead, customers needing to retrieve packages, drop off postage-paid items, and do other business would ring a bell and conduct the transaction through the window in a Dutch door.

The Postal Service submitted testimony about operations at the Annex by the Manager of Post Office Operations in the district covering Topeka. (One might ask why the MPOO would provide testimony in a case that does not involve a post office.) During a period of 19 business days in August 2023 (just about the last 19 days the Annex was in operation), 192 mailpieces were picked up by customers and 768 pieces were dropped off and accepted with prepaid postage.

The Annex kept a stock of stamps so carriers could sell stamps on their routes, but it did not sell stamps directly to customers. There was even a sign on the door saying, “No Postage Sold Here,” although it’s not clear when the sign went up. The customer service employees operated a cash drawer, but it was for the stamps sold by carriers and for collecting postage due.

Customers could also telephone the Annex to request delivery of Hold Mail or redelivery of Accountable Mail.

All of these customer service activities are classified as Function 4. These activities include work hours devoted to managing Post Office boxes, retail windows, vending equipment; and miscellaneous administrative and mail forwarding operations, as well as scanning incoming mail and distributing it to carriers.

The Postal Service’s Retail Operations Handbook, PO-209 identifies many services that are classified as Function 4 that don’t involve purchasing postage. For example, Labor Distribution Code 45: Window Services includes caller mail pickup at window, maintaining stamp stock, and non-revenue transactions at the window. The Labor Distribution Codes include “Dutch door operation” in facilities both with and without retail operations.

Employees of the Sherwood Annex performed several Function 4 retail operations, but since the Annex did not sell postage directly to customers, the Commission agreed with the Postal Service that it was not a post office under section 404(d). Hence the appeal was dismissed “with prejudice” — meaning that it cannot be contested with a subsequent appeal.

A new precedent

Unfortunately, the merits of the Postal Service’s arguments in the case went unchallenged.

For some reason, the APWU did not have its lawyers submit anything on behalf of the appeal. Considering that an APWU Local President initiated the appeal, one might have expected more from the union. Perhaps it looked like the appeal couldn’t be won, which, in any case, would not have forced the Postal Service to reopen the Annex. The Commission can’t overturn a decision to close a post office; it can only remand the decision back to the Postal Service for further consideration.

The PRC has a Public Representative assigned to each appeal, and early on the PR submitted comments arguing the motion to dismiss should be held in abeyance until more facts could be gathered about the issue of standing and the operations of the Annex. But then, for some reason, in the middle of the case, the PR was replaced by a new PR, who did not submit any additional comments on the case.

The Commission’s ruling will now serve as a precedent, and no appeals will ever be heard over the closure of carrier annexes unless they sell postage.

There are over 500 annexes in the country, and it’s likely that many of them will close after giving up their carriers to an S&DC. The Postal Service will not hold a public meeting about any of these closures, and the Commission will not hear any appeals on them.

This is not the first time the Commission has voluntarily narrowed the scope of its jurisdiction over post office appeals. A few years ago, the PRC determined that hearing appeals over the closure of contract postal units was outside its jurisdiction, even when the contract unit is a Community Post Office that was once a USPS-operated post office. Just a couple of months ago, the PRC dismissed the appeal on the closing of the CPO in Westbrookville, NY, because it was a contract office and outside the Commission’s jurisdiction.

In 2012 the PRC revised its own regulations on appeals to state that relocations of postal services from one building to another are not subject to appeals, even when the building being closed is a historic landmark in the community.

Normally it’s the courts that tell an agency when it has exceeded its authority. But by restricting the scope of its jurisdiction over appeals in these ways, the Commission is voluntarily narrowing its authority.

What about a MPFR process?

Throughout the case, the Postal Service argued that the annex was essentially a sorting and processing facility rather than a retail facility. It cited a 1978 case, Knapp v. USPS, in which the court determined that 404(d) applies only to consolidating post offices, not the transfer of bulk mail sorting operations from one facility to another.

In its order dismissing the appeal, the Commission agreed that its jurisdiction under 404(d) is limited to retail facilities and does not extend to determinations to close or consolidate activities related to processing and distribution (Order at 12 and again at 13).

This distinction raises an interesting question. If the annex is a sorting, processing, and distribution facility, why isn’t the consolidation of its operations to the S&DC subject to the MPFR process?

As the PO-408 on handbook on MPFR explains, “The purpose of this policy is to outline the legal, statutory, contractual, and regulatory requirements of the Mail Processing Facility Review (MPFR). MPFR is the consolidation of all originating and/or destinating distribution operations from one or more Post Offices/facilities into other automated processing facilities for the purpose of improving operational efficiency and/or service.”

Closing the Sherwood Annex and consolidating all of its operations to the S&DC is really no different from what happens when a P&DC has its originating operations moved to a Regional Processing & Distribution Center, which has been happening all over the country.

For most of these consolidations, the Postal Service is holding a comment period and a public meeting, as required by the PO-408. As part of the process, the Postal Service also shares the business case, with projected cost savings, number of positions to be eliminated, etc.

The Postal Service shared none of this information for the closing of the Sherwood Carrier Annex. In fact, it has not shared any financial information about the relocation of carriers from post offices to S&DCs for any of the facilities where this has taken place.

— Steve Hutkins

For more about S&DCs and the Delivering for America plan, check out our dashboard.

For more about carrier annexes, check out this excellent post by Evan Kalish on Postlandia.

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