League of Postmasters reaction to Senate passage of S.1789

Today, the United States Senate passed S. 1789, the 21st Century Postal Act of 2012, in a bi-partisan fashion 62 to 37. The bill gives rural post offices more support and adds on a number of restrictions to the Postal Service’s ability to close them. Clearly, the Senate was not at all pleased with the behavior of the Postal Service in attempting to close thousands of small post offices over the last year or two. The bill contained a moratorium on closing small post offices in rural areas for one year, as well a moratorium of going to five-day delivery for two years.

From a broader perspective, the bill returns some $11 billion of overpaid FERS money back to the Postal Service, allowing some to be used for buyouts, and the remainder to be used to pay down its debt and to cover other employee benefits, such as workers’ compensation, pensions and health care. Further, the bill also begins a 40-year amortized payment schedule for the Postal Service to fund the rest of its retirees’ health benefits and would calculate those payments using the same discount rate that is used for the major federal government retirement funds.

The bill would also begin paying current postal retirees’ health care premiums out of the funds accumulated from earlier payment, thus reducing the size of USPS current payments for the prefunding. Together, these measures would save the Postal Service billions of dollars annually while still ensuring adequate funds for future postal retirees’ health benefits.

Although, as noted below, the Postal Service received substantial financial relief, it generally was not a good day for the Postal Service, and a significant vote of “no confidence” in the way it has been handling matters such as small post offices, small business issues, and overall service reductions. The bill restricts, to some degree, the Postal Service’s attempts to cut delivery standards, go immediately to five-day delivery, and close mail facilities. The bill allows the Postal Service to offer new products and new services, subject to PRC approval, so long as it follows all federal laws and regulations required to be followed by private sector companies.

Specifically, in terms of small post offices. the Postal Service must establish national retail service standards that take into account such factors as the proximity of retail postal services to customers, the age and disability status of individuals in the area, and the transportation challenges in the areas served.

Moreover, in order to counter the Postal Service’s willingness to sacrifice the needs of rural communities in favor of its own needs, the bill forbids the Postal Service to close any post office if, after it would be closed, there would be no other post office within ten miles from the post office to be closed (as measured on roads with year-round access). Further, no post office could be closed if the area served by the post office does not have adequate access to wired broadband Internet, as identified by the NTIA. See for example www.broadbandmap.gov/speed .

Additionally, the Postal Service could not close a post office if the “economic loss to the community served by the post office as a result of the closing ”exceeded “ the cost to the Postal Service of not closing the post office.” Further, the Postal Service could not close a post office without determining that businesses located in the community served by the post office would not suffer substantial financial loss as a result of the closing. Finally, postal customers would have to continue to receive substantially similar access to essential items such as prescription medications and time-sensitive communication sent through the mail or the Postal Service could not close the Postal Service.

The bill also allows the filing of a complaint concerning a closing or consolidation, and the immediate suspension of the closing, if the person filing the complaint does so on the basis that it is not in conformance with service standards issued under section 3691, including the service standards required to be maintained under law; or unsupported by evidence on the record that substantial economic savings are likely to be achieved as a result of the closing or consolidation. It does allow the Postal Service to reduce hours. The Commission, in considering closing where there is broadband, would have to take into consideration how good and how widespread it is.

Finally, the Commission shall make a determination based upon such review no later than 120 days after receiving any appeal under this paragraph. The Commission shall set aside any determination, findings, and conclusions found to be either arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with the law; without observance of procedure required by law; inconsistent with the delivery service standards required to be maintained under section 201 the law, not in conformance with the retail service standards established under the law, or unsupported by substantial evidence on the record, including that substantial economic savings are likely to be achieved as a result of the closing or consolidation.

A more comprehensive analysis will be available in several days. The Postal Service is the cornerstone of a $1 trillion mailing industry that accounts for more than 8 million jobs in manufacturing, publishing, advertising, and other sectors.