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With stamp prices set to rise, legal challenges filed

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The price of a first-class stamp rises from 46 to 49 cents tomorrow and the cost of a host of other mail products and services will also increase following regulators’ decision last month to grant the U.S. Postal Service a temporary emergency rate increase.

As FedLine noted a couple of days ago, both the U.S. Postal Service and a mailing industry coalition planned to contest (albeit for different reasons) the Postal Regulatory Commission’s ruling. In appeals Thursday with the U.S. Court of Appeals for the District of Columbia Circuit, both camps followed through. You can read the USPS filing here and the industry’s here, but neither spells out the grounds for their respective appeals. They will have to do so by Feb. 24, under a schedule released Friday by the court clerk’s office.

In a news release, industry leaders called the PRC’s ruling mistaken and warned that it could boomerang on the Postal Service. “The evidence used to secure this increase, more than three times the rate of inflation, is fundamentally flawed, and thus inherently inaccurate,” said Mary Berner, president and CEO of MPA–The Association of Magazine Media. “Increased rates will only result in more lost volume for the Postal Service. . . . This counterproductive decision should be returned to sender.”

 

 

 

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Postal Service documents cast more light on rationale for Saturday delivery cut

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In announcing plans to end Saturday mail delivery, Postmaster General Pat Donahoe himself posed the key question yesterday: “Is this legal?”

Donahoe’s answer, naturally, was yes, hinging on a rather complicated analysis of the impact of congressional spending legislation (more about that in a moment).

Official U.S. Postal Service talking points obtained by Federal Times offer a more straightforward explanation: USPS leaders are under orders from the agency’s board to accelerate cost-cutting measures; they believe they have the authority to go to five-day mail delivery on their own; and they are hoping that Congress won’t take any action to stop them.

“The biggest driver of this change is our obligation, consistent with the requirements of Title 39 of the United States Code, to take the responsible steps necessary to ensure our financial stability so that we can provide efficient, reliable and affordable mail delivery service to the American people,” according to the talking points, marked “For Internal Use Only.”

“Given our worsening financial situation, the strong public support for this change, and the plan to maintain six-day package delivery, it is anticipated that most members of Congress understand the urgent need to implement this change.”

At the moment, that hope appears to be debatable.

Reaction to yesterday’s announcement has broken mostly along party lines, with Republican lawmakers supportive and Democrats opposed.

In a news release today, Senate Majority Leader Harry Reid, D-Nev., accused Donahoe of using “flawed legal guidance” to circumvent Congress’s authority and warned that the postmaster general has damaged his reputation with congressional leaders and complicated prospects for comprehensive postal legislation. More encouraging, from the Postal Service’s perspective, was the reaction from House Minority Whip Steny Hoyer, D-Md., who called on Congress to “get serious about comprehensive reform” to put the mail carrier on a long-term path to financial stability. (House Speaker John Boehner, R-Ohio, and Senate Minority Leader Mitch McConnell, R-Ky., have thus far not weighed in.)

For Capitol Hill critics, the flash point is their belief that the Postal Service is doing an end run around a long-standing legislative ban on reducing six-day mail delivery.

For almost 30 years, that prohibition has been folded into annual appropriations bills. But yesterday, Donahoe suggested that the continuing resolution now in effect offers an opening. Although the Postal Service gets no taxpayer dollars for operating expenses, it does receive a relatively small amount of money for providing free mail to the blind and for overseas voting purposes. Because that money is reimbursement for services already provided—not to fund operations going forward–the prohibition against mail delivery is non-binding, Donahoe indicated.

Left unanswered is why—if this interpretation holds good for any appropriations bill—the Postal Service hadn’t already moved to end Saturday delivery rather than waiting for Congress to drop the prohibition. The unstated answer, perhaps, is that the Postal Service has now been waiting for years, and lawmakers still haven’t acted. In addition, there’s an argument that by continuing to drop off packages on Saturday, the Postal Service really isn’t defying Congress, but simply changing the classes of mail that are delivered.

USPS officials have declined to release the legal analysis that undergirds Donahoe’s position. In a  In an email, USPS spokesman Dave Partenheimer also would not comment on the talking points, which he called “documents meant for internal audiences.”

“To be clear, we believe we have authority under current law to make this change,” Partenheimer added. “Also, if there is any question, the continuing resolution expires March 27.  We will urge Congress not to take any action to prevent this delivery schedule change.”

But in a letter,  Reps. Gerald Connolly, D-Va., and Sam Graves, R-Mo., have asked Donahoe to “immediately” supply the legal justification for the Saturday cutback, as well as all documents related to the decision.

And although USPS executives don’t think they’re under any legal obligation to do so, they’re going to ask the Postal Regulatory Commission to update its 2011 advisory opinion on an earlier, more expansive plan to eliminate virtually all Saturday delivery.

In that opinion, the commission found that the Postal Service had significantly overstated the projected $3.1 billion annual savings from that proposal.  Because the Postal Service has only provided a “broad outline” of its newly revamped schedule change, a commission spokeswoman said in a news release this week, the five-member oversight panel “is currently unable to evaluate how the new plan differs from the previous proposal.”

 [This post has been expanded and updated.]

 

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Number of empty chairs on Postal Service board increasing

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As the U.S. Postal Service’s problems grow, its governing board is shrinking.

The board, which is supposed to have 11 members, currently has eight and will lose another next week when Chairman Thurgood Marshall Jr. steps down, leaving it with just one more body than the six needed for a quorum to conduct business.

As of today, however, the Senate Homeland Security and Governmental Affairs Committee hasn’t scheduled  confirmation votes on three board nominations that have been awaiting action since summer. In an email, committee spokeswoman Leslie Phillips said she did not know the reason for the delay.

Although there have no recent meetings where the lack of a quorum has been an issue, “we look forward to having all the board vacancies filled and hope that happens as soon as possible,” USPS spokesman Dave Partenheimer said, also by email.

The increasing number of empty seats on what is officially known as the Board of Governors comes as the Postal Service is grappling with record financial losses and questions about its long-term direction as the Internet continues to drain away business. Besides nine presidentially appointed part-time members, the board includes Postmaster General Pat Donahoe and Deputy Postmaster General Ron Stroman. Among other jobs, the board sets postal policy, directs agency spending and decides top officers’ salaries.

“Certainly the Postal Service could benefit from the advice and wisdom of more members who bring a wide range of expertise,” Postal Regulatory Commission Chairman Ruth Goldway said in an interview. The mail carrier also needs “people of status” to take its concerns to Congress, she added.

The commission, which oversees the Postal Service, is facing its own personnel issues. The terms of two of its five members recently expired; while they can serve another year, the Obama administration has yet to either renominate them or name replacements, Goldway said. The White House did not respond to a request for comment.

Neither Marshall, a Washington lawyer, nor the incoming board chairman, Mickey Barnett, a former state legislator and lawyer from New Mexico, could be reached for comment. Because the panel usually meets in private, its influence is hard to assess.

But George Gould, a consultant and former lobbyist for the National Association of Letter Carriers, called the board’s makeup “a serious concern.” The Postal Service’s challenges are so great that the board “has become more directly involved in policy than it has in the past,” Gould said. “I think you need people who really understand the Postal Service, understand government, understand the employees.”

Under the law, board members are supposed to be chosen for their experience in public service, law, accounting or demonstrated management ability. They collect a base annual salary of $30,000, along with as much as $12,600 depending on the number of meetings each year. Their seven-year terms can be extended for another year in the absence of a replacement.

Of the three nominees whose appointments are awaiting Senate action, two are no strangers to the Postal Service. James Miller, who headed the Office of Management and Budget during part of the Reagan administration, was on the board from 2003 until last year; Katherine Tobin, a senior Education Department official earlier in the Obama administration, served from 2006 to 2009.

The new member, if confirmed, would be Stephen Crawford, a public policy professor at George Washington University who has written on postal issues. In an interview, Crawford attributed the nomination holdup to the press of other business and the fact that Congress has mostly been out of session since the Senate committee held a hearing on his nomination in July.

But with lawmakers now consumed with tax and spending conundrums, Crawford wasn’t counting on a final confirmation vote before the 112th Congress effectively goes out of business next month.

“There may just be too many other things competing with the limited time left.”

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Carper urges curbs on Postal Regulatory Commission travel

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Some seven months after inquiring about overseas travel by Postal Regulatory Commission Chairman Ruth Goldway, Sen. Tom Carper is pressing some recommended changes for the commission as a whole. So far, it’s not clear whether the five-member oversight panel will go along.

In a Sept. 6 letter to Goldway, Carper questioned “the amount of time and resources devoted to international travel in recent years, particularly as the commission has struggled at times to fulfill its higher-priority statutory responsibilities in a timely manner.” He urged the PRC to limit such trips to what is “truly necessary” to fulfill its legal role in setting international postal policy. He also pressed the PRC to do more to document that it has explored other options—such as phone, fax and email—to conduct business before putting someone on a plane. Carper, D-Del., chairs the Senate subcommittee that oversees the commission and the U.S. Postal Service.

In a Sept. 11 reply, Goldway said she appreciated the “thoughtful review” and accompanying recommendations, but committed only to giving “serious consideration to those recommendations, which are in the spirit of improvements we have already made to our policies.” She added that the commission has come in “more than 30 percent” under its 2012 travel budget.

A PRC spokeswoman confirmed Friday that Goldway and two commission staff members are attending the Universal Postal Union’s quadrennial congress, which got under way Monday in Doha, Qatar, according to an official web site. Goldway is serving as deputy head of the U.S. delegation, the spokeswoman, Gail Adams, said.

Goldway, however, will be leaving for the event Oct. 3 and returning to Washington on Oct. 12, Adams added in an email. One staffer is already in Doha, while the other leaves today.

As Federal Times reported in February, Goldway at that point had taken 34 trips –11 of them overseas–costing almost $71,000 since becoming PRC chair in August 2009. Her predecessor, Dan Blair, had taken 25 trips worth some $59,000 during a slightly longer tenure. Since then, Goldway has attended a UPU meeting in Switzerland, as well as a weeklong “Postal Regulatory Dialogue” in Rio de Janeiro, where she was a speaker, according to commission records obtained by Federal Times. As of late last month, Goldway was the only commissioner to go abroad this calendar year, although some PRC staff have also attended overseas events.

Goldway has staunchly defended travel as relevant to her work and the commission’s role in helping to set international postal policy. “I know that travel raises questions,” she said in an interview earlier this year, “but I really feel that I’m doing an honest job and the right thing for the Postal Regulatory Commission and the country.”

 

 

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Union loses bid to block mail processing plant consolidations

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In case anyone missed it, (this particular FedLine correspondent was away when the decision came down), the Postal Regulatory Commission last week officially dismissed a union complaint seeking to block the U.S. Postal Service’s downsizing of its mail processing plant network.

The complaint, filed in June by the American Postal Workers Union, argued in part  that the Postal Service had first to receive an advisory opinion from the PRC on the proposed changes to first-class mail delivery standards that are accompanying the downsizing. But while that approach is “preferred,” it’s not mandatory, the five-member commission ruled in its 16-page order.

The decision is no surprise, given that the commission had earlier declined to issue an emergency  injunction to stop the first round of 46 plant consolidations from going forward. The Postal Service wrapped up that round last month and–as previously announced-is taking a breather for the rest of the year “to allow employees to fully focus on the processing and delivery of election mail and the volumes of mail expected during the busy fall and holiday mailing seasons,” a spokeswoman said in an email.

In all, the Postal Service plans to close or consolidate roughly half of its plants during the next two years. The agency currently has 433 processing facilities.

 

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Report: Post office closing appeals skyrocket

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Here’s at least one area where the U.S. Postal Service is showing some serious growth: The number of appeals of post office closings.

From 2007 to 2009, there were exactly two such appeals. As of mid-May, the year-to-date total for fiscal 2012 was 126, or well above the 103 appeals filed in all of 2011, according to a new joint report from the inspectors general for the Postal Service and Postal Regulatory Commission.

The increases shouldn’t come as a surprise, given that the Postal Service has ramped up its efforts to get rid of under-performing P.O.’s. The tally for closures this year (also as of mid-May) stood at 537, almost four times the number in 2010.

Anyone served by a post office targeted for demise can appeal to the PRC within 30 days of a final USPS decision. The commission can then uphold the closing, send the case back to the Postal Service for reconsideration, or dismiss the appeal on the grounds that it was filed late or for some other technical reason.

Perhaps to the relief of PRC staff, the Postal Service in May backed off a plan that could have resulted in more than 3,000 additional post office shutdowns. Instead, after getting an earful from members of Congress, USPS officials are opting to cut customer service “window” hours at many post offices.

The paperwork in closing appeals can be voluminous.  Given the cost of legal services (even those provided by in-house attorneys), the expense of processing individual cases appears surprisingly low. Between the Postal Service and PRC, the average cost ranges from about $3,171 to $3,861, the report found. But the Postal Service, recognizing that it lacks the manpower to handle the estimated workload, has issued a statement of work for a one-year litigation support contract.  Exactly how much it plans to pay, though, is unclear. The contract’s “not-to-exceed” value was blacked out of the publicly released version of the report.

 

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Story of one mail processing plant consolidation reveals possible pitfalls

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The U.S. Postal Service plans to close or consolidate about half of its 461 mail processing facilities during the next two years or so. Judging from a newly released after-action review of one recent downsizing, a bumpy road lies ahead both for postal employees and customers.

The review, released today by the Postal Service’s inspector general, examines the consolidation of the Frederick, Md. Processing and Distribution Facility with the Baltimore Processing and Distribution Center between last October and January. Long story short: Service suffered and costs were higher than expected.

One big mistake was scheduling the move during the Christmas mailing season (what were USPS execs thinking?) and it didn’t help that a couple of key management positions went vacant around the same time, according to the report. Although service rebounded fairly quickly, one hopes the Postal Service picked up a few pointers on what not to do.

While we’re on the topic, incidentally, the first phase of the new consolidation push was supposed to get under way this week after the American Postal Workers Union failed to win an injunction from the Postal Regulatory Commission. The Postal Service plans to consolidate 48 plants by the end of next month. Everything then goes on hold through the end of the year, both to avoid disruption to mail balloting for the November election and–yes–this year’s holiday season.

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Postal Service processing plant closures in jeopardy

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Don’t look now, but a key piece of the U.S. Postal Service’s downsizing drive this year is at risk of getting smoked before it even gets started.

It’s the piece that involves closing or consolidating 48 mail processing plants in July and August. As part of that effort, the Postal Service is seeking a legally required advisory opinion from the Postal Regulatory Commission on a related proposal to revamp first-class mail delivery standards. The problem is that the commission doesn’t plan to issue that non-binding opinion until early September—after the downsizing is supposed to have been completed.

That doesn’t sit well with the American Postal Workers Union, which represents some processing plant employees. In a 29-page complaint filed last week, the union called on the PRC to bar the Postal Service from proceeding until the opinion comes out. The commission plans to rule on the APWU complaint by July 1, a spokeswoman said today, and its decision in that case will be binding.

Not surprisingly, Postal Service lawyers argue in a rebuttal today that the union doesn’t have a legal leg to stand on. But they acknowledge that even a short-term delay to the plant closings “will have real consequences.” That’s because the  Postal Service has already agreed to suspend any further closings from September through December to avoid disruption to mail balloting in this November’s elections or shipments during the lucrative holiday shopping season.

So, if the five-member commission effectively opts to bar any closings this summer, it will likely be game over for this year. While the Postal Service intends to resume the plant closings early next year,  a new implementation date would require “a significant overhaul to . . .  current operations plans, leading to even more expense to the Postal Service in terms of costs and resources,” the agency said in today’s filing.

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Federal prosecutors decline to take Postal Regulatory Commission case

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It looks like the end of the road for a long-lived inquiry into possible misappropriation of funds by a (now former) Postal Regulatory Commission employee.

In a new activity report covering the six-month period from October through March, the PRC’s inspector general said he referred the case to the U.S. Attorney for the District of Columbia, who declined to prosecute. The matter dates back to a 2008 IG audit related to bookkeeping practices at the commission, a five-member panel that oversees the U.S. Postal Service.

Among other no-nos, auditors flagged a non-interest-bearing checking account containing almost $192,000. That came as a surprise to commission managers, who thought the account had been closed a year earlier. While no money had been withdrawn, “the funds were at increasing risk of misuse and were not available for other PRC purposes,” the inspector general said in the audit. Following the finding, the commission shut down the account and sent the money to the Postal Service Fund, where it was supposed to have gone all along.

The employee, who was not named in the report, retired in 2009, PRC spokeswoman Ann Fisher said today. She declined further comment.

 

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U.S. Postal Service cutback numbers: Handle with care

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When it comes to predicting the impact of its proposed mail processing plant cuts, the U.S. Postal Service has been throwing out some pretty big numbers that don’t always seem to jibe.

Back in February, for example, a USPS spokesman said the downsizing would eliminate 35,000 jobs; under a revised plan unveiled this month, that figure dropped to 28,000. And while USPS officials have pegged the projected savings at about $2.1 billion, they’ve also used the figure, $4.1 billion.

What gives?

Well, it’s complicated and some of the figures are in flux, the Postal Service acknowledges.

The estimated job effect, for example, is “constantly evolving as we continue to develop this plan,” spokesman Mark Saunders said in an email. To take just one factor that’s changed since the Postal Service first advanced the plant downsizing strategy last summer, the USPS career workforce (which would bear the brunt of the job cuts) has continued to shrink, while the mail carrier’s reliance on lower-cost temps has increased.

The plan “will continue to evolve as we implement this in phases, finalize the details and get a better understanding of how many employees will choose to voluntarily retire this year,” Saunders said. The $2.1 billion savings estimate comes from a filing last month with the Postal Regulatory Commission, the oversight body that’s reviewing a proposed change in first-class mail delivery standards tied to the plant cuts.

More than half of that dollar amount would come from reduced labor costs and productivity gains. But with fewer plants, the Postal Service would also need less maintenance, fewer contractors, etc., bringing the total expected savings up to $2.1 billion in comparison with fiscal 2010 levels.

On top of that, the agency then calculated the “per piece” costs associated with the new reduced network and applied that number to estimated mail volume in 2016 when all the changes are supposed to be fully in place, according to another spokesperson, Sue Brennan.  By the Postal Service’s reckoning, that would lead to another $2 billion in cost reductions for a total projected annual savings of $4.1 billion, she said.

When dealing with proposed reductions of this scope, uncertainty is probably inevitable. The bottom line: take these numbers with a grain of salt–and don’t be surprised if they continue to change.

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