Appeals in vain: The long odds on success at the PRC

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Over the past fifteen months, more than two hundred communities have tried to save their post office from being closed by appealing to the Postal Regulatory Commission (PRC).  For nearly all of them, the effort was in vain.  

Between January 1, 2011, and April 6, 2012, the PRC issued orders on 180 appeals.  Only thirteen of them were successful, meaning the PRC remanded the Final Determination to close the post office back to the Postal Service for further consideration.  In the other 167 cases, the PRC affirmed the Postal Service's decision to close the post office.  Those aren’t very good odds for people trying to save their post office.

 

Ties favor the Postal Service

The PRC is supposed to have five commissioners, but the Commission is awaiting the Senate confirmation of Tony Hammond, and for the past several months, there have been only four commissioners.  Since December, when the moratorium on post office closings went into effect, every PRC order affirming a Final Determination to close a post office has ended in a split decision, two votes to two.  

Commissioners Mark Acton and Robert Taub have consistently voted to affirm the decision to close the post office, and Chairman Ruth Goldway and Vice-Chairman Nanci Langley  have consistently voted to remand the closing decision back to the Postal Service.   (For what it’s worth, Acton and Taub are Republicans; Goldway and Langley, Democrats.)

There's nothing in the PRC's written rules about how to handle tie votes, but the Commission has determined that in the absence of a majority, the Final Determination stands.  All of the tie votes have thus led to the Commission issuing an "Order Affirming Determination," that is, a ruling affirming the Postal Service's Final Determination to close the post office.  Whether or not the Commission has the authority to issue such orders may eventually be challenged in court.

In the meantime, with their votes, Commissioners Acton and Taub have sealed the fates of about 127 post offices — all those for which appeals were decided during the moratorium.  Unless Congress intervenes or the Postal Service changes its mind, these post offices will close in late May or early June, soon after the moratorium ends on May 15.

The cartoon at the right comes from 1986.  That was a period when a lot of post offices were closed — 111 in 1985, and 150 in 1986.  Appeals at the PRC (then the Postal Rate Commission) weren't usually successful either.  In 1985, twenty-four orders affirmed the closing, and there were only three remands.  Even those bad odds, however, were better than what we've been seeing lately.

In 2011, the Postal Service closed 430 post offices, and another 240 were issued Final Determinations — most of them will close when the moratorium ends.   Those kind of numbers are totally unprecedented.  With several thousand more closings on the horizon, what's that cartoon going to look like?

 

How the appeals have fared

Since the Postal Service was created in 1971, it has closed an average of a hundred post offices a year;  fewer than nine closings were appealed to the PRC each year.  In 2011, the Postal Service issued 671 Final Determinations.  A third of them were appealed.  

It's taken a while, but the PRC has rendered decisions on nearly all of the 225 cases that have been appealed.  There are thirteen cases still pending, and work on these appeals should be completed by May 3.  Here’s a summary of how the appeals have fared since January 1, 2011, along with some data on appeals going back to 1976, just to provide an historical perspective.  (The data for the past fifteen months comes from the PRC website; an unofficial list of the 2011-2012 appeals is here; information about the historic data is here.)

Period
1976 – 2010
Jan. 1, 2011 – April 6, 2012
Disposition
Number
% affirm vs. remand
Number
% affirm vs. remand
Affirmed
190
75%
167
93%
Remanded
62
25%
13
7%
Dismissed
39
 
8
 
Withdrawn
 
 
24
 
Pending
 
 
13
 
Total
291
 
225
 

As the table shows, for the thirty-five years before 2011, one out of every four appeals ended with an order remanding the closing decision back to the Postal Service.  Over the past fifteen months, the chances of winning a remand have been about one in 14. 

Communities actually had a better chance with the Postal Service, which decided to withdraw the Final Determination in twenty-four cases — almost twice as often as the PRC issued a remand.  (Why the Postal Service changed its mind in these cases remains unknown.)  A few cases were also dismissed, usually because the PRC decided the issue was out of its jurisdiction, as was the case with Venice, California, where a beautiful New Deal post office is being closed and sold, but that's considered a "relocation," not a "closing."

In early 2011, before the number of appeals began to increase significantly due to the step-up in post office closings, the decisions to affirm a closing decision were almost always unanimous.  Then last summer, Chairman Goldway issued dissents on the Freehold, New Jersey, and Fort Smith, Arkansas cases; she followed with several more dissents during the fall.   In November, Langley also began to issue dissenting opinions. 

By December, when the moratorium went into effect, Goldway and Langley were consistently voting to remand the Final Determinations back to the Postal Service.  Since November, they have dissented on 127 decisions. 

It’s not clear why Commissioners Acton and Taub have made it so difficult to win a remand.  Perhaps they believe the Postal Service should have the authority to close post offices as it sees fit, without too much interference from the PRC, which has very limited power over appeals anyway.

Perhaps they think the Postal Service has been doing a satisfactory job with the closing process so that there are rarely grounds sufficient for a remand.  Maybe they feel that unless the Postal Service has blatantly failed to follow the law or obviously demonstrated bad faith, the decision to close a post office should not be remanded on procedural grounds.

The hundreds of thousands of people who filled out questionnaires and attended four thousand town meetings last year probably have a different view of how well the process was conducted.  There have been countless complaints about the Postal Service getting its facts wrong, giving out misinformation, failing to follow its own guidelines, abandoning its obligation to provide a maximum degree of service to rural areas, demonstrating a lack of responsiveness to customer concerns, and giving people the impression that the decision to close the post office was a done deal long before the process was completed.  

Another possibility is that Commissioners Acton and Taub are concerned, like everyone else, about the financial situation of the Postal Service.  Perhaps they believe that if the Postal Service thinks closing post offices is a good way to save some money, it's not up to the Commission to second-guess the decision.   

Whatever their motives, Commissioners Acton and Taub apparently don't believe it is the role of the Commission to help communities trying to save their post offices.  Instead, the Commissioners have taken a very narrow view of what the law requires of the Postal Service when deciding to close a post office. 

 

No moratorium on appeals

When the Postal Service declared a moratorium on closing post offices from December 12, 2011, to May 15, 2012, it limited the moratorium to actual closings.  Everything else — like moving forward on the plan to consolidate mail processing plants, temporarily closing post offices by emergency suspension, studying post offices for closure, and going through the appeals process — was excluded.  

The PRC was not in a legal position to declare a moratorium of its own, and the Postal Service formally asked the Commission to continue its responsibility to review appeals during the moratorium — and there have been plenty of them.  The Postal Service put off making decisions on the 3,652 post offices in the Retail Access Optimization Initiative (RAOI), but 671 post offices outside of the RAOI were issued Final Determination notices during 2011.  Some 225 of them appealed the decision to the PRC, most of them just before the moratorium went into effect.

Chairman Goldway came up with an interesting approach to the question of how to handle appeals during the moratorium.  She has voted to remand every closing decision, and in each dissenting opinion, she has identified the flaws in the Postal Service's case and the reasons for remanding, as well as calling attention to how “confusing and perhaps unfair” it is to require some people to pursue an appeal while others benefit from the moratorium.

If a majority of the Commissioners had followed Goldway’s lead on the moratorium issue, the PRC could have fulfilled its statutory obligations to review the appeals, all of the closing decisions would have been remanded back to the Postal Service, and the Postal Service could have returned the cases to the PRC when the moratorium ended. 

Unfortunately, that didn’t happen, and now about 130 post offices whose appeal failed will close as soon as the moratorium ends, along with some unknown number that didn’t file an appeal.  The PRC asked the Postal Service back in February for a list of all the post offices that had received Final Determinations and that would have closed were it not for the moratorium, but the Postal Service refused to provide such a list, saying "the information described is not within the scope of the information or determinations required pursuant" to Title 39.

If the Postal Service proceeds this summer with its plan to close about 3,000 post offices under the RAOI, and if it then goes on to shutter 12,000 more (as the Postmaster General plans), closing two or three hundred post offices in May won’t mean much.  They will just be a brief chapter in the story of how the Postal Service dismantled the country’s vast network of post offices.  But if Congress does put a stop to the closings, those post offices will turn out to have been unfortunate casualties in a game being played by lawmakers, the leaders of the Postal Service, and the stakeholders in postal world.

 

The Postal Service has an answer for everything

When closing a post office, the Postal Service is required by law to consider the following:

  • The effect of closing on the community;
  • The effect of closing on employees;
  • The economic savings to the Postal Service and;
  • Whether closing is consistent with postal policy 
to provide a “maximum degree of effective and regular postal services to rural areas, communities and small towns where post offices are not self-sustaining.”

When the PRC considers an appeal, it reviews the Administrative Record upon which the Postal Service based its decision, and it goes over these factors one by one.  The only factual evidence that it can consider is what's in the record.  

If the Commission finds that the Postal Service’s decision was “arbitrary, capricious or otherwise not in accordance with the law or unsupported by substantial evidence in the record,” it remands the decision back to the Postal Service for further consideration.  That's the most the Commission can do — it cannot overrule the Postal Service's decision to close the post office.

There’s inevitably some ambiguity in what’s “arbitrary” and “capricious” or “unsupported by evidence,” so it’s not surprising that the commissioners would disagree on individual cases.  But when two commissioners rule 93% of the time in favor of the Postal Service, one has to wonder, what’s going on?

 

1. Effects on community

The law says that the Postal Service must “consider” the “effect of closing on the community.”  Any reasonable interpretation of “consider” in this context would suggest that the Postal Service should make a serious effort to hear from the community about what those effects might be, to address the concerns in a meaningful way, to do what it can to mitigate the negative impacts, and to entertain the possibility of not closing the post office because of the seriousness of the concerns.

When it issues a Final Determination, however, what the Postal Service does is simply list the concerns expressed in the questionnaires, paired with its boilerplate responses.  If someone expresses concern, for example, that the community will lose its identity if the post office is closed, the Postal Service explains that “a community’s identity derives from the interest and vitality of its residents,” and it promises to allow residents to continue using their town’s name in addresses.  If someone says they’re concerned about losing the post office because it’s a center of community, the Postal Service says “residents may continue to meet informally, socialize, and share information at other places,” like businesses and churches.

Such responses to customer concerns have given many people the distinct impression that the Postal Service doesn’t care one bit about the “effect on community.”  Commissioners Taub and Acton, however, seem to think that the Postal Service has met its statutory obligation if it simply lists some of the concerns and matches each one with a ready-made response.   

That’s enough evidence for the commissioners to conclude this section of the “Commission Analysis” with the statement, “The Postal Service has adequately considered the effect of the post office closing on the community as required by 39 U.S.C. § 404(d)(2)(A)(i).”

 

2. “Effective and regular postal services”

The Postal Service is required to consider whether or not a post office closing is consistent with its obligation to provide a “maximum degree of effective and regular postal services to rural areas, communities and small towns where post offices are not self-sustaining.” 

The Postal Service always uses the same explanation to address this requirement:  Customers can obtain postal services at a new administrative post office.  

If customers complain that they would be better served by a different administrative post office — one that’s closer, for instance — the Postal Service says it reserves the right to decide which post office it wants to declare as the administrative office for a community. 

If people object that it’s a long drive to the new administrative office — ten or fifteen miles, in many cases — the Postal Service says that they don’t have to go to a post office at all — “retail services will be available from the carrier.” 

If people complain that they can’t stay home all day waiting for the carrier, the Postal Service says, “It is not necessary to meet the carrier for service since most transactions do not require meeting the carrier at the mailbox.” 

If people say they may need to do a transaction that requires meeting the carrier or going to a post office, the Postal Service says many services are available online. 

The appeal documents are filled with these kinds of responses from the Postal Service.  When the folks in Halsey, Nebraska, for example, expressed concern that the nearest post offices were 13 and 17 miles away, which would be a particular hardship on seniors, the Postal Service responded that closing the post office would be “beneficial” for seniors because carrier service “alleviates the need to travel to the post office for delivery and retail services.”

Such responses to the concerns of citizens that they are being deprived of their right to a “maximum degree of effective and regular service” apparently satisfy Commissioners Acton and Taub.  Their rulings consistently conclude this section of the Commission Analysis by stating, “The Postal Service has considered the issues raised by customers concerning effective and regular service as required by 39 U.S.C. § 404(d)(2)(A)(iii).”  (The phrase "a maximum degree" does not appear in the rulings.)

 

 3. Effects on employees

The Postal Service always says that it has “considered” the effect of the closing on employees, and in every case, it says that there won’t be any adverse effects.  That's because the employees at the post office being closed will simply be “reassigned” to another post office. 

There’s no discussion about how a postmaster or officer-in-charge might feel about being uprooted from the workplace and community where they may have worked for years, and there’s no reference to the fact that any employee not covered by a contract ensuring job security is likely to be out of work. 

The PRC’s rulings always repeat the Postal Service’s claim that there will be no adverse effects on employees, and they invariably conclude this section of the Commission Analysis with, “The Postal Service has satisfied its obligation to consider the effect of the closing on employees at the [X] post office as required by 39 U.S.C.
§ 404(d)(2)(A)(ii).”

 

4. Economic savings

Although the Postal Service is not permitted to close a post office only because it’s running at a deficit, the issue of economic savings is obviously the primary reason for closing post offices.  The Postal Service cites others — the absence of a postmaster, the proximity of another post office, declining revenues — but these hardly constitute a reason to close a post office.  It’s all about saving money.

The economic analysis should thus be an important part of the Postal Service’s case, but that doesn’t mean the Postal Service worries much about the details.  It takes a simple approach.  It adds up the salaries of the employees and the rent, and then subtracts whatever “replacement costs” there might be — usually additional salary for a rural carrier, who will need to add some stops to the route. 

As simple as it is, this economic analysis is often quite flawed. 

a. Employee salaries: There are two main problems in the way employee salaries are calculated.  First, the Postal Service says that there will be no adverse effect on employees because no one is losing their job, but then it calculates their salaries as a cost savings.  That’s patently contradictory, of course, but the PRC has been unable to stop the Postal Service from using salaries as a savings.

The second problem is that over the past several years, the Postal Service has been replacing postmasters who leave their positions with an officer-in-charge (OIC), who typically earns much less than a postmaster (especially if the OIC is a non-career employee), or a postmaster relief (PMR), who earns even less.  There are currently over 4,000 postmaster positions filled by OICs and PMRs, and the Postal Service says a postmaster vacancy is one of the reasons for closing the post office.   But when it does its economic analysis, the Postal Service always uses the full salary of postmaster, even though the post office may not have been staffed by a postmaster for years.

In the Final Determination to close the post office in Freeport, Kansas, for example, the Postal Service used a postmaster’s salary for the cost-saving analysis, but the office has been run by an OIC since 1992.  In St. Anthony, Iowa, the post office has been staffed by an OIC since 1995, yet the Postal Service still used a postmaster’s salary to calculate cost savings.

Commissioners Goldway and Langley have consistently pointed to this problem in the Postal Service's economic analysis, but the contradiction has not stopped Commissioners Acton and Taub from affirming Final Determinations.

This mode of calculation obviously exaggerates the economic savings, but it’s problematic for another reason.  The Postal Service has saved a lot of money by not replacing postmasters.  In its annual financial statements, that cost savings is reflected in lower operating costs.  By claiming a postmaster salary as a cost saving when it makes a Final Determination to close a post office, the Postal Service is in effect taking double credit for the same cost savings.  Chairman Goldway has noted this problem consistently in her dissenting opinions, but her fellow commissioners don't mention it in their Commission Analysis.

b. Lease issues:  Most post offices use leased space, and when it calculates cost savings, the Postal Service says it will save the rent money.  But in many cases, there are several years left on the lease, and no early-termination clause, so the cost savings on the rent won’t be realized for many years to come. 

Just last week, for example, the PRC affirmed the final determination to close the post office in Daisy, Georgia.  The Postal Service said it would save $37,373 a year — a typical savings for a small rural post office.  It derived this figure by adding up the postmaster’s salary and benefits ($44,279) and annual lease costs ($3,100), minus the cost of replacement service ($9,986).  But not only has the post office been staffed by an OIC since July 2009, the lease runs until April 2016. 

When the Postal Service did the figuring on the post office in Sherwood, Michigan, it was the same story.  They added up the salary and benefits of a postmaster ($47,499) and the annual lease costs ($16,356), and subtracted replacement costs for the rural carrier ($14,100).  This produced an annual savings of $49,755.  But since March 2010 the Sherwood post office has been staffed by an OIC, and the lease runs until 2017.  So for the next few years, the estimated savings are illusory — more like $10,000 a year rather than $50,000. 

Vice-Chairman Langley frequently points out this problem in her dissenting opinions, and Chairman Goldway has mentioned it many times as well.  The orders to affirm sometimes note the lease issue, but apparently it does not rise to the level of seriousness that would merit a remand decision.

c. Revenues: To help make its case, the Postal Service usually cites declining revenues at a post office over the past three years.  But revenues during 2008, 2009, and 2010 were obviously impacted by the recession, and they don’t reflect the long-term trends at a particular post office.

Another problem with the revenue calculations is that the Postal Service doesn’t include lost revenue in its economic savings analysis.  It simply assumes all the revenue at the closing post office will find its way back to the Postal Service in other ways.  Sometimes petitioners note the obvious: that may not always happen.  For example, there’s an appeal before the Commission right now, still pending, from Randolph, Iowa, and the Mayor has written a very detailed letter explaining all the flaws in the postal Service’s case.  He points out that closing the post office will push a local bank, which does $30,000 worth of business with the Postal Service every year, to encourage its customers to use electronic alternatives.  That potential revenue loss is not included in the economic analysis.

Another issue that has come up in revenue calculations occurred in the case of Odin, Minnesota.  The Postal Service had always included commercial (metered) revenue in calculating total revenue, and for FY 2010, Odin brought in $30,070, including over $10,000 in commercial revenue.  But the Final Determination reflected only retail window transactions, and therefore grossly underestimated total revenues.  When the Mayor and City Council asked the Postal Service for the financial records for the Odin post office, the Postal Service chose to interpret the inquiry as a Freedom of Information Act request and withheld access to the information.  As Goldway commented in her dissenting opinion, “The Postal Service’s response does not provide assurances that it is acting in a transparent manner.”

These problems in the economic analysis don’t seem to trouble commissioners Acton and Taub.  Their rulings review the numbers and facts provided by the Postal Service, acknowledge the objections raised by the petitioner and Public Representative, and then proceed to observe that the Postal Service has fulfilled its statutory obligation.  They invariably conclude this section of the Commission Analysis by simply stating, “The Postal Service has satisfied the requirement that it consider economic savings as required by 39 U.S.C. § 404(d)(2)(A)(iv).” 

In other words, it doesn’t matter that the calculation of economic savings is wrong on its face — it’s enough that the Postal Service has “considered” economic savings. 

 

Winning a remand, against all odds

Another aspect of the PRC rulings that’s troubling is that the eleven remand decisions don’t stand out as particularly unique.  Many cases were remanded for reasons that could have just as equally applied to cases that resulted in affirm decisions.  Consistency doesn't seem to be an issue.

The decision to close the post office in Evansdale, Iowa, for example, was remanded because of the way the Postal Service calculated economic savings.  The Postal Service said it would save the cost of employee salaries, yet it also said that the employees were simply being transferred to another facility.  The Postal Service said it would save the rent costs, but the lease runs until January 31, 2016.  Those same two problems occurred in the Final Determinations to close the post offices in Sherwood, Michigan, and Daisy, Georgia, but those two decisions were affirmed.

The decision to close the post office in Saratoga, Arkansas, was also remanded at least partly because of the same lease issue.  The lease runs until December 31, 2015, at an annual cost of $6,650, but the Postal Service calculated the savings for rent, effective immediately.  Another issue in the Saratoga case was that the Postal Service told customers they could transfer their post office boxes to the post office in Columbus, but when a customer expressed concern there weren’t enough boxes in Columbus, the Postal Service did not consider the concern, and the cost of moving boxes was not included in the economic analysis. 

Some of the other remand orders were made for reasons unique to particular cases, and it's hard to know what to make of them.  Still, they’re worth noting, just to get a better sense of what will persuade a majority of the commissioners to vote for a remand.

The Watson, Alabama decision was remanded because the Postal Service went into contract to set up a CPO in a neighboring town before the public had had an opportunity to express its views about the closing of the Watson post office.  In other words, the Postal Service had already decided to close the office before the community input was assessed.

The Final Determination for Innis, Louisiana, was remanded for a variety of reasons:  The Postal Service erroneously estimated the future growth of Innis; the economic analysis did not acknowledge the negative effects on revenues caused by a postal employee’s “subpar performance," and it didn't provide an accurate estimate for the additional costs of rural delivery; the Postal Service failed to explain how it planned to deal with the fact that there weren't enough available post office boxes at the new administrative office to handle all the boxes at the Innis post office; and the new office was located "in the middle of nowhere, while the Innis office was located in a "bona fide community."

The Monroe, Arkansas, decision was also remanded because the Postal Service provided inaccurate numbers for the cost of a rural carrier, and because of an error in the Administrative Record — the Postal Service had initially neglected to note that the post office had closed under an emergency suspension when the officer-in-charge left the position.

The decision to close the post office in Etna, New York, was remanded because of numerous errors in the Administrative Record.  For example, the Postal Service said there were no churches in Etna, but the post office shares a parking lot with one.  The Postal Service had also promised to provide rural delivery, but there are many streets in Etna where the Postal Service won’t deliver, so the Postal Service could not ensure “effective and regular postal services to all members of the Etna community.”

The decision to close the post office in Deering, Missouri, was remanded primarily because of “an unusual factual circumstance” — namely, the Postal Service changed its mind in the middle of the discontinuance process about what the new administrative post office would be, which denied customers the opportunity to express their concerns.

The decision to close the post office in Gepp, Arkansas, was remanded because of numerous discrepancies in the Administrative Record.  For example, Gepp was closed by emergency suspension, supposedly because the OIC resigned, but when the reason was challenged, the Postal Service “offered inconsistent explanations for why the Gepp post office was closed by emergency suspension.”  There was also a problem with the questionnaire — 98 were received, but the Postal Service identified only five concerns.

The number of remand orders is so small, it's hard to generalize about why the problems in these cases seemed more egregious to the Commissioners than the issues raised with the 167 other Final Determinations that were affirmed.  Most of those cases also involved factual errors in the Administrative Record, "inconsistent explanations," inaccurate economic analyses, and so on. 

 

Up next: Congress considers postal reform

This week Congress returns from its recess, and among the first things it will take up is postal reform.  Some of the bills might actually change the way post offices closings are handled.  The Senate bill, S.1789, for example, has a passage about “service standards” that would require the Postal Service to consider geographic and demographic factors before closing a post office.

Some of the proposed legislation also involves appeals.  Senator Carl Levin, for example, has introduced an amendment to prevent a post office or processing facility from being closed while it’s being appealed.  Under current rules, a community can file a request to keep the office open while under appeal, but Levin’s bill would make that automatic, and it would extend the right of appeal to processing plants.

Congressman Nick Rahall of West Virginia has introduced legislation that would make more significant changes in the appeals process.  Under current law, when issuing a decision on an appeal, the PRC can only remand the final determination back to the Postal Service for further consideration.  (In actual practice, it’s rare for the Postal Service to return to the PRC after a decision has been remanded, but that could change if there were a lot of remand decisions.)

Rahall’s bill would strengthen the power of the PRC by giving it a binding authority to block a post office closing.  Like Levin’s bill, it would also give communities the right to appeal a decision to close or consolidate a processing facility. 

Rahall’s bill would also address the issue of two-to-two ties in appeals decision.  As noted above, under current PRC rules, a tie means the Final Determination is affirmed.  Rahall’s bill would require a majority of the commissioners (at least 3) to affirm a decision.  Tie votes would thus result in a remand.

It's probably a long shot that these proposals will make it into the bill ultimately signed by President Obama, and even longer odds that the bill will save post offices already slated for closure.  But the proposals by Levin and Rahall would represent improvements in the appeals process. 

The PRC has also implemented new rules to improve the appeals process by making it more “user-friendly.”  The new procedures make it easier for people to file an appeal without going online; they give petitioners extra time to reply to Postal Service motions and briefs; and they make it easier for interested parties to file comments.  

But changes in the appeals process won’t change the way commissioners think.  If, despite all evidence to the contrary, they continue to think that the Postal Service is fulfilling its statutory obligations, the prospects for winning an appeal are not going to improve. 

The commissioners have a right to call things the way they see them, but by consistently ruling to affirm post office closings, they are legitimizing the Postal Service's ill-conceived plans to dismantle the country's rich legacy of brick-and-mortar post offices.  

(Photo credits: Graveyard cartoon; post offices in Freehold, NJ; Halsey, NE (google streetview); Daisy, GAOdin, MNEvansdale, IAEtna, NY)

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