USPS tells regulator, “mind your own regulations”

Steve HutkinsBlog, Featured

The Postal Service has started off the New Year by refusing to answer important questions about its 10-year plan, Delivering for America. Earlier this week, the Postal Service told the Postal Regulatory Commission that its latest information request was outside the statutory authority of the Commission. The Postal Service has basically told the PRC to mind its own business.

As part of its Public Inquiry into DFA, the Commission had asked for data about routes and costs for transportation between postal facilities, as well as more information about what happens to the post offices that see their letter carriers consolidated to a Sorting & Delivery Center. The Postal Service refused to provide the data and instead argued that the information request should be withdrawn.

This lack of transparency is becoming a central feature of DeJoy’s tenure as Postmaster General. The Postal Service apparently prefers to tell the story of its massive network transformation through clever television spots, like this year’s holiday commercial showing miniature postal vehicles going from processing facilities to post offices to homes, all made out of postal packaging materials. It’s like a model train set of postal world.

In the real world, it’s a different story. Commercial mailers, postal lessors, truck contractors, and other stakeholders are left in the dark about what changes are coming next. At public meetings about plant consolidations, the USPS representatives are refusing to answer questions from employees and the public. Members of Congress are demanding more transparency on the potential impacts of DFA on postal employees, customers, and service performance (as in this letter to DeJoy from Senator Gary Peters, Chairman of the Homeland Security and Governmental Affairs Committee).

Instead of sharing more information, the Postmaster General continues to attack the PRC itself. In his cover letter to the Section 207 Report to Congress filed a few weeks ago, the Postmaster General reiterated his complaint 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.”

Information request No. 7

The Commission’s information request — it’s No. 7 in the DFA Public Inquiry docket — asked for details about transportation routes between processing facilities, including miles, costs, and truck space utilization, and whether the trip was a Highway Contract Route (HCR) trip or a Postal Vehicle Services (PVS) trip. The request asked for similar data on transportation between processing facilities and post offices. Another set of questions asked for more details, including the estimated cost savings, about the plan to insource transportation by converting some HCR routes to PVS routes (as discussed in this post).

The Commission also asked the Postal Service to explain the criteria used to determined which “underutilized and eroding existing facilities” (the Postal Service’s description) would be repurposed as Sorting & Delivery Centers. The Commission requested more specific details about what’s happening at post offices that have lost their carriers, including how the extra space is being used, the number of clerks and carriers who have been relocated or terminated, and what type of work is being done by the staff remaining at the post office.

The Commission also asked for more information about the transfer hubs that will serve those post offices that aren’t consolidated with a S&DC — which includes about 25,000 of the nation’s 31,000 post offices.

And lastly, the Commission asked how the Postal Service was dealing with the truck driver employment shortage described in two recent OIG reports.

The Postal Service’s Response

In response to the information request, the Postal Service declined to provide any of the data and instead filed a motion for reconsideration arguing that the request should be withdrawn because it is not “within the Commission’s authority and the legitimate scope of this docket” and “is based on a material error of law.”

Similar sorts of information have been provided in the past as part of the Commission’s Advisory Opinions on consolidating processing facilities, closing post offices, and changing service standards. But the Postal Service says the current Public Inquiry docket is not the same as these prior N-cases (the docket prefix for Advisory Opinions), so requests for analogous information are inappropriate.

“In harkening back to prior N-cases, (which again, this is not), and in issuing information requests that seek this sort of information, the Commission is treating this docket as if an advisory opinion had been requested regarding the Plan’s network efforts.”

The Postal Service says it has not requested an Advisory Opinion because the network changes now underway do not constitute “nationwide changes in the nature of postal services” (the phrase used in the advisory opinion statute).

The Commission has plenty of reasons to be concerned that the network transformation will indeed change the nature of postal services. For example, the Postal Service is currently implementing an initiative called Optimized Collections, which eliminates the evening pickup of mail at small, rural post offices. Mail sent from these offices will need to wait until the next morning for pickup, when the mail from processing centers is dropped off.

When asked why such an initiative did not require an advisory opinion, the Postal Service claimed (in response to Information Request No. 6) that even if the mail sits overnight at the post office, there would not be any “material impacts to First-Class Mail service performance.” (Tell that to customers when they learn that the mail sent today won’t leave the post office until the next day.)

In the past, when the Postal Service made significant changes in the processing and delivery network that also impacted postal services on a nationwide basis, it submitted to the requirement of the advisory opinion process and shared all sorts of data, rarely balking at a Commission information request.

The recent advisory opinions done for aspects of the DFA plan focused on changes in service standards and encompassed only one aspect of the network changes — shifting First Class mail from air to ground transportation. As part of these advisory opinions, the Postal Service did not share anything about the massive network changes it was planning.  Instead, the Postal Service cleverly detached the changes in the network from the changes in service standards, thus evading the kinds of questions the Commission is now asking.

As for the specific details sought by the information request, the Postal Service’s motion for reconsideration takes the requests one by one and shows why each of them is not being fulfilled. According to the Postal Service, the “time and effort required to gather (and to assess) such voluminous data are inversely proportional to any function they might serve in the pursuit of legitimate regulatory objectives.” Furthermore, in some cases, the data concern labor matters outside of the Commission’s jurisdiction. Overall, says the Postal Service, it is unclear “how such information is relevant to the Commission’s stated objectives in the instant docket.”

What comes next?

In some respects, the situation is back to where things stood in June, when the Postal Service opposed the creation of the Public Inquiry in the first place.

At that time, the Postal Service argued that the Commission, rather than acting outside of its authority by establishing a public inquiry docket, “should use established mechanisms to ensure adequate oversight, consistent with its past decisions and its statutory authority… An open-ended PI docket that encompasses review of all possible initiatives under the Plan is wholly unnecessary, unwarranted, and contrary to the Commission’s statutory authority.”

The Commission rejected that argument, and the public inquiry proceeded. The Postal Service responded to the first six information requests by providing almost nothing in the way of actual data about facilities, impacts, and costs. In Information Request No. 7, the Commission finally got around to asking for the hard data, and that was too much for the Postal Service.

The Commission is now faced with a decision. It can decide that the Postal Service is correct in its interpretation of the law and remove the information request. Or it can deny the motion for reconsideration and direct the Postal Service to provide the data. The latter seems more likely, since the Commission probably anticipated the Postal Service’s argument and determined that the request was indeed within its legal authority.

If the Commission denies the motion, the Postal Service would have to choose between providing the information in some form or another or refusing to comply with the Commission’s request.

If the Postal Service were to refuse to comply, the Commission has the power to subpoena the information. That would probably lead to a protracted legal case before the DC Circuit.

That possibility was actually raised at the outset of the Public Inquiry. In its first motion arguing that the Commission was exceeding its authority when it established the docket, the Postal Service issued this warning: “An attempt to use the Commission’s subpoena power as a legal basis to initiate Docket No. PI2023-4 would be mistaken.”

There’s no timeframe for the Commission to rule on the motion for reconsideration, so it may be a while before we see what comes next. In fact, another possibility is that the Commission will not even respond to the motion, thereby avoiding a legal confrontation with the Postal Service that could end the inquiry itself.

The Commission’s ruling and the Postal Service’s response could be extremely consequential. If the case goes to the DC Circuit, it will involve basic issues of administrative authority – just the kind of issues the Supreme Court is confronting in several current cases.

If the Postal Service refuses to provide the information, it may not only lead to a protracted legal dispute. It will also add to the growing controversy over the lack of transparency as the Postal Service moves forward with Delivering for America.

— Steve Hutkins