Breaking News: The Closure List Is Out

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Here’s the list.

The Postal Service has released the list of over 3,600 post offices that will be studied for closure over the coming months.  It’s organized state by state, and the USPS website provides only the office name, city, and ZIP code.   There’s no information about whether the location is an independent post office, station or branch; whether or not there’s a postmaster running the post office; whether the space is owned or leased.  Hopefully more details like that will be forthcoming.

More to come. . . .

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The PMG’s “New Concept” Unveiled: Not so new, but what a concept

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The major media outlets are finally reporting, as we’ve known for several days now, that over 3,600 post offices are being targeted for closure in the Postal Service's new plan, but here’s the real news.  The Postal Service is also unveiling its “replacement strategy” for communities that lose their post office, and it turns out to be a “plan to have third-party retailers provide services in places that lose a post office.”

Postal Service spokeswoman Sue Brennan explains: “If you're a community and there is a local convenience store, for example, we might be reaching out to these organizations to see if they would be interested in providing limited postal service for the community that might be affected."

Such arrangements will likely be put in place place in "communities that have existing businesses, mom and pop shops — some type of local business that could also provide postal services," Brennan told CNNMoney.

Postmaster General Donahoe referred to the strategy as a new "village post office concept." "We're finding a lot of interest with small businesses who say, 'I'll gladly sell stamps and provide package services,' " he said. Of the 3,653 post offices on the list being released Tuesday, 2,500 potentially qualify for the "village" concept, he estimated. In other cases, the agency could move postal services to a neighboring town.

So this is the “new concept” that the PMG referred to last week?  A $70-billion-a-year operation, and this all they’ve come up with?  A few days ago I joked that the “new concept” was going to be contracting out postal services to Starbucks.  That was supposed to be funny.  The only thing I got wrong, it seems, was the name of the business.  It’s not Starbucks, it’s your local 7-11 and Charlies' gift shop.

While the Postal Service may want to make this idea sound homey with its talk about "mom-and-pop stores" and the "village post office," there’s nothing new about contracting out postal services.  It’s called a “contract postal unit” or CPU, and as of 2010, there were some 2,931 CPUs in the country, as well as 763 “community post offices" or CPOs.

According to the 2009 Postal Employees Guide to Contract Postal Units, a CPU is “a supplier-owned or supplier-leased site operated by the supplier under contract to the Postal Service to provide postal services to the public at postal prices.”  A CPO is closely related—that's a contract postal unit in which a small rural community, rather than a local business, assumes the responsibilities of providing postal services.

The USPS publication “Foundation for the Future” (2010-2011) states further that “most CPUs offer the same basic services available at Post Offices.  CPUs are staffed by the host retailer, typically in supermarkets, card and gift shops, colleges, and similar locations.”

The Postal Service has also made arrangements with private retailers, typically a packaging service, to sell stamps and some postal services.  These retailers charge customers a service fee in addition to the postage and shipping costs.  These are not CPUs because they receive no fee from the Postal Service.  

From what Ms. Brennan is quoted as saying, the "replacement strategy" sounds more like a CPU than this other sort of arrangement.  In any case, the PMG may come up with a new type of CPU, but for now there are two:

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Optimizing Bethesda: Another New Deal post office, sold and soon to close

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Head west out of USPS headquarters in L’Enfant Plaza and take Wisconsin Avenue north, and in less than 30 minutes, if the traffic isn’t too bad, you’ll find yourself in one of the richest and most highly educated communities in the country, Bethesda, Maryland. 

In the middle of town at 7400 Wisconsin Avenue you’ll discover one of the more beautiful of the country’s post offices.  You can’t miss it because it’s right next to a large Madonna of the Trail statue, erected by the National Old Trails Association and the Daughters of the American Revolution to honor pioneer women.  Future president Harry S. Truman, then president of the Trails Association, presided over the dedication of the monument on April 19, 1929. 

The Wisconsin Avenue post office was built by the New Deal in 1938.  It is included in the Montgomery County Master Plan for Historic Preservation, and it contains a mural by Robert Gates, who would later become the head of the Art Department at American University.  The mural shows farm women feeding their animals on one side, selling produce at the market on the other, which may be an allusion to the Farm Women’s Cooperative Market that began across the street in 1932.

Eleanor Roosevelt took a special interest in this post office, and on Dec. 12, 1938, in the middle of a day packed with personal engagements and public appearances, she visited the Procurement Division of the Treasury Department to look at the mural sketches Gates was working on.  The sketch was “charming,” wrote Eleanor in her diary, and then she added, “I think these post offices are making the country more and more conscious of decorative, artistic values.” 

The Postal Service sold the Wisconsin Avenue post office in March for about $4 million, and the new owner has been renting space back to the Postal Service, so the post office is still open.  But now the Postal Service is planning to consolidate the Wisconsin Ave post office and the Arlington Road post office, and to re-locate both to a central office.

Dennis Perry is a real estate specialist who works in the USPS eastern facilities service office in Greensboro, North Carolina.  Asked why the Postal service was considering closing the Wisconsin Avenue post office, Perry replied, “To drive the highest and best use, to optimize our operations.”

I guess you’d have to ask the folks over in L’Enfant Plaza how it came to pass that the post office is not being used to its full capacity.  They probably moved most of the postal workers to other locations some time ago, leaving only a small retail operation, just as they’ve done at downtown post offices across the country. 

There’s a meeting to discuss the consolidation plan on July 27.  If you can’t be there but would like to let Mr. Perry know what you think about “optimizing” this historic post office, you can give him a call at 336-665-2863 or drop him an email at dperry2@usps.gov.   I’m sure he’d be happy to explain why history doesn’t mean squat to the Postal Service.

(Photo credits: Wisconsin Ave. post officepost office and Madonna of the Trailmural)

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It’s the end of the post office, and the national media didn’t get the press release

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More than 150 post offices close in a matter of months, over a thousand post offices are under study for closure, the Postal Service announces that it is going to consider 3,600 post offices for discontinuance over the next year, and the Postal Regulatory Commission is about to begin a review of the USPS plan for an Advisory Opinion—an Opinion that may determine the fate of the brick-and-mortar post office as a national institution—and all this barely makes it into the national news.  Didn't our major news outlets get the press release?

 

Not fit to print?

What’s up with the New York Times?  It has barely touched the story of how post offices are closing all across the country.  Every day for the past several months there have been a half dozen stories in local newspapers and online sources about a closing announcement, a public hearing with USPS representatives, or a post office’s last day.  There are hundreds and hundreds of post offices being closed, and nothing about it in the nation’s paper of record?

This week the Times took a pass on the major closing events of the past few days.  It did publish a very good article (which I recommend) by Sean Collins Walsh (July 21, 2011) about the various bills in Congress that would address the USPS fiscal problems, but the article says nothing about the PRC Advisory Opinion or next week's closing list, and it says almost nothing about post office closings at all except for a passing comment.  It mentions that one of the bills in Congress would “grant the Postal Service much of what it wants, including the ability to tap into surpluses in its retiree benefits funds, which would maintain solvency in the short term. It could also allow the Postal Service to ship wine and beer, close more unprofitable post offices and eliminate Saturday deliveries.” 

That makes it sound as if the issue of shipping wine and beer were on a par with closing thousands of post offices.  And why identify these post offices with the phase “the more unprofitable.”  Thanks to the way the Postal Service keeps its books, something like 80% or 90% of post offices are “unprofitable,” and sometimes the “more unprofitable” ones are those most crucial to the life of a community—like small rural post offices.  The Times makes it sound as if the Postal Service just wants to do a little pruning of its worse money-losers.  But 3,600 post offices is hardly a trim, especially if it's your post office.  As a man named Sonny Pate, who lives in the small town of Irwinville, Georgia, told his local news reporter a couple of weeks ago, "If you take the post office from Irwinville, it's kind of like taking a limb from the body.”  Well, at least Sonny may be able to get his beer delivered by the Postal Service.

 

The incredible shrinking closure list

The Washington Post has an article by Lisa Rein and Joe Davidson (July 21, 2011) makes some important points about what’s been going on the past week, but it doesn't convey the gravity of the situation.  It notes that that the Postal Service has produced a new version of its closing regulations (the earlier version came out in March) that will make it “easier to shutter post offices,” and it notes that this version  preserved a key but controversial element "allowing the Postal Service to target facilities that suffer from ‘insufficient customer demand’ or where customers have other options for buying stamps and postal services.” 

Those two details are crucial, and they will make all the difference when it comes to the PRC Advisory Opinion.  The Postal Service’s main defense against the accusation that closing thousands of post offices violates its universal service obligation under Title 39 is likely to be that there are “other options” out there, like kiosks, stamps by mail, and contracted outlets in supermarkets.  And the whole point of the universal service obligation is to protect post offices where there aren’t a lot of customers.

The problem with the Post article is the way it minimizes the significance of what’s going on.  It says, “Since March, [Postmaster General Patrick] Donahoe has floated a couple of numbers on how many facilities he wants to close within the next year. The initial figure was around 2,000, but it then fell to 1,000.”  That makes it sound as if the PMG were just "floating" numbers with no real plan, and it sounds like the threat is diminishing rather than increasing.  Why not mention the fact that Donahoe said in June that he thinks they’ll be closing 16,000 post offices over the next six years? 

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The Post Office Gets Its Day in Court

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The post office as a national institution will soon have its day in court, and the verdict could be a matter of life or death. 

Yesterday, the Postal Service announced that it will request an Advisory Opinion from the Postal Regulatory Commission about its plan to study 3,600 post offices for closure.  On July 26, the Postal Service will release the list of postal facilities under consideration for discontinuance—about 2,800 post offices and 800 stations.  The day after, the Postal Service will present its plan to the PRC, which will embark on a review period that will last several months. 

The PRC process is similar in many ways to a courtroom proceeding, and there will be lawyers, arguments, counter-arguments, expert testimony, cross examinations, rebuttal testimony, witnesses, and, if necessary, subpoenas.  Maybe there will be some courtroom drama as well.

At the end of the process, the PRC will issue its Advisory Opinion.  That Opinion could determine the future of the brick-and-mortar post office.

 

What a difference a week makes

The Postal Service is required by law to seek such a PRC Advisory Opinion before it embarks on a program that could have a significant impact on its service to the nation.  Although it has been clear for some time that it had begun a program to close thousands of post offices, the Postal Service has been claiming for months that it had no such plan. 

It was just last Thursday (July 14) that the Postal Service released its revision of the Rule describing changes to the closure process (published in the Federal Register on Friday).  The Rule, like the earlier version released in March, states explicitly that the Postal Service had not developed “a program to study the discontinuance of large numbers of retail facilities that [has] the potential to effect a nationwide or substantially nationwide change in service.”  In fact, the Postal Service wrote that “unless and until such a program is developed and presented to the [Postal Regulatory] Commission,” concerns about its impacts “are speculative and premature.” (Rule here; see section N)  

Now we know that these concerns were not so “speculative and premature” after all.

Earlier that same day, at an open session of the PRC, Chairman Ruth Goldway indicated that she had received what she hoped was a “comprehensive list” of post offices being studied for closure, and she said the PRC would make the list available “so that the public will better understand what the Postal Service is now engaged in in terms of post office closings and then very shortly what their future concepts are for adjusting the retail network.”  That made it seem like something had to happen soon.  And it did.

On Tuesday came word from Goldway that “Postal Service has indicated that it intends soon to file a request for an Advisory Opinion on a nationwide plan to review post office facilities for closure.” 

On Wednesday, the Postal Service confirmed that it would be releasing a list of post offices to be studied for closing and that it would be initiating the process for an Advisory Opinion.  At the same time that it releases the list and its closure plan, the Postal Service will be unveiling “a new concept” for replacing post offices.  

While all that was going, the PRC also decided on two appeals, and in both cases, Chairman Goldway dissented from the majority’s rulings on behalf of the Postal Service.  On Tuesday the PRC denied a request to suspend the closing of the Lafayette Postal Facility in Freehold, New Jersey, while an appeal was being considered, but Goldway said the post office should stay open while the appeal went forward.  The next day, the majority upheld the Postal Service’s decision to close a postal station in Fort Smith, Arkansas.  Again, the chairman dissented, this time because of “material flaws” in the Postal Service’s case.

Yesterday, Thursday, the national media joined the conversation with articles in the Washington Post and New York Times about legislation making its way (or not) through Congress and about the closure plan to be announced by the Postal Service. 

It’s been quite a week.  And did I mention, it's hot out there.

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Week in Review

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There's a lot of postal news out there right now, and it's going to get even crazier next week when the Postal Service releases a list of some 3,500 post offices that will be (or are being) studied for closure.  Expect thousands of articles, in every local newspaper and online news source that covers a town with a post office on the list, as well as many articles in the national news—finally.  Here are a few articles from the last couple of days that are worth a look to get a sense of where things stand:

"Postal Service to consider closing thousands of new post offices," by Lisa Rein and Joe Davidson. Washington Post. July 21, 2011

"Many Seek to Revamp Post Office," by Sean Collins Walsh. New York Times, July 21, 2011

"USPS to mount nationwide review of post office network." (Based on an interview with the PRC's Ruth Goldway) Post & Parcel, July 20, 2011.

"Review Of Fort Smith Postal Closing Rejected," By Rusty Garrett. Times Record, July 21, 2011 (for another version of the PRC decision, see my blog post)

And just another note: In a blog post last week on "Leveraging the Post Office"—about a proposal to use post offices as collateral for a loan to the Postal Service—I mentioned that the Postal Service had hired a real estate company to help "downsize" its real estate portfolio.  Postal News Blog has more, here

(Image source: Postal Service: Give Up, a new album by Ben Gibbard and Jimmy Tamborello )

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NY Times July 21, 2011

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Many Seek to Revamp Post Office

WASHINGTON — Until the deficit negotiations took center stage this summer, several members of Congress had another issue they wanted to focus on: an overhaul of the Postal Service, which is on the brink of insolvency.

“If it wasn’t for the federal debt ceiling and the budget issues, this would be a major, major issue,” said Representative Stephen F. Lynch, a Massachusetts Democrat who has proposed a bill that would overhaul the Postal Service’s pension obligations.

The Postal Service has been imploring Congress to act for years. If the status quo continues, Postmaster General Patrick R. Donahoe said Wednesday, mail delivery could be cut back to three days a week within 20 years.

Lawmakers on both sides of the aisle agree that the Postal Service needs revamping. Five overhaul bills have been introduced — two by Republicans and three by Democrats — with proposals addressing issues like  the actuarial assumptions for employees’ retirement benefits and the viability of Saturday deliveries.

“The situation at the Postal Service is dire,” said Senator Thomas R. Carper, a Delaware Democrat who has introduced one of the bills. “The option of doing nothing is not an option.”

The most likely path to passing major legislation appears to be through the Senate, where Mr. Carper, who is chairman of the committee responsible for the Post Office, and Senator Susan Collins, a Maine Republican who has introduced a different bill, are working together to draft a compromise that could pass with bipartisan support.

The Senate bill would probably grant the Postal Service much of what it wants, including the ability to tap into surpluses in its retiree benefits funds, which would maintain solvency in the short term. It could also allow the Postal Service to ship wine and beer, close more unprofitable post offices and eliminate Saturday deliveries.

“Those of us in the postal community believe that if Senator Carper’s bill can pass the Senate with some bipartisan support, there may be a chance that some legislation can be considered and voted upon in the House,” said Ruth Y. Goldway, chairwoman of the Postal Regulatory Commission, an oversight body established by Congress.

The wild card is a plan put forth by Representative Darrell Issa, chairman of the House oversight committee. He proposes letting the Postal Service default on its obligations and then establishing a regulatory body with a broad mandate to restructure the organization. The bill would also allow the elimination of Saturday deliveries, the use of postal vehicles and properties for commercial advertisements and the establishment of a commission that would operate much like the military base-closing panel in recommending closures of unprofitable post offices.

Mr. Issa, Republican of California, adamantly opposes letting the Postal Service touch the retirement fund surpluses. All of the other bills involve such a step, which Mr. Issa has described as a “multibillion-dollar bailout funded by the taxpayers.”

Representative Gerald E. Connolly, a Virginia Democrat who has proposed an overhaul bill, contested Mr. Issa’s characterization, calling the use of the word “bailout” politically charged and “disingenuous.”

“This is their money,” he said of the Postal Service.

The regulatory commission and the Office of Personnel Management, which manages the retirement funds, agree with the Postal Service’s position that it has been overpaying. Estimates of the surpluses range from $50 billion to more than $80 billion.

The popularity of Mr. Issa’s bill among House Republicans, many of whom campaigned against policies labeled as bailouts, may be the deciding factor in whether a major overhaul is approved this year. Representative Dennis Ross, the Florida Republican who heads the House oversight subcommittee that works on postal issues, is so far the only co-sponsor on Mr. Issa’s bill. He said he did not support withdrawals from the retirement funds but stopped short of calling the other proposals bailouts.

So far, 14 House Republicans and 161 Democrats are listed as co-sponsors of Mr. Lynch’s bill.

Despite cutting $12 billion in costs over the last four years and eliminating more than 200,000 career positions in the last decade, the Postal Service is expected to lose $8 billion for the second consecutive year as mail volume has dropped by about 20 percent from 2006 to 2010.

“There’s no disagreement with anyone that we will continue to reduce head count,” Mr. Donahoe, the postmaster general, said. “We will continue to do network consolidations and route consolidations.”

Last month, to keep the organization afloat, Mr. Donahoe stopped making required payments of $115 million every other week to one retirement fund. Without legislation, the Postal Service will again run out of money in the fall, and Mr. Donahoe said he would have to take more drastic steps.

For 179 years, mail delivery was managed by the Post Office Department; it was financed by tax revenue, and its leader held a cabinet-level position. In 1970, Congress reinvented the department as the United States Postal Service, an independent entity with federal oversight and an official monopoly.

The Postal Service now relies on its own revenue, although it has taken out about $12 billion in loans from the Treasury and its obligations to its employees are guaranteed by the government.

Current payment levels for the retirement funds were established by a 2006 law just before mail volume started plummeting and the work force began shrinking. Consequently, postal officials said, they face formidable burdens, such as an annual $5.5 billion check that prepays 100 percent of retiree health care liability — a prepayment required of no other federal entity.

“It’s just tied their finances in knots and made it impossible for them to respond to any new programs in the changing dynamics of the new market,” Ms. Goldway said.

Mr. Carper and Ms. Collins, who helped write the 2006 law, are meeting regularly to find a compromise. Their main dispute appears to be the issue of ending Saturday deliveries, which the Postal Service and regulatory commission say could save $1.7 billion to $3 billion a year.

Mr. Carper favors eliminating Saturday mail, while Ms. Collins said such a step could deter mailing-dependent industries from using the Postal Service, and would hurt rural Americans who have limited access to the Internet. Ms. Collins said she might support such a provision if the Postal Service could present plans to address these impacts.

Such willingness to compromise is in short supply in the House, where some representatives are now drawing a line down the center aisle over an issue once considered nonpartisan.

Mr. Lynch offered a theory as to how the line was drawn.

Because the retirement fund surpluses are now in the hands of the federal government, returning the money to the Postal Service would be listed as new government spending. And that would upset the budget-focused House majority.

“They don’t want it to show on the books,” Mr. Lynch said. “That’s where the resistance comes.”

 

 

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PRC Chairman Goldway dissents two times in two days

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In what may be an indication of growing concern over closing post offices, the Chairman of the Postal Regulatory Commission, Ruth Goldway, issued two dissenting opinions in as many days this week.  The first expressed her reluctance to allow a post office in New Jersey to be closed while the decision to close was under appeal, and the second focused on “material flaws” in the Postal Service’s decision-making process in closing a post office in Arkansas. 

With the PRC about to begin a review of the Postal Service's plan to close thousands of post offices, these two cases may provide some insight into how the Postal Service will defend its plan and what the PRC's Advisory Opinion may say.  

One issue in these rulings involves a long-standing debate over the status of "stations" when it comes to Title 39 section 404(d), which describes the process for closing a post office.  It's a lengthy process—about nine months—and it permits an appeal to the PRC.  The Postal Service maintains that this section of the law does not apply to stations and branches, while the PRC says it does.  That issue may soon become moot because the Postal Service has apparently agreed to use uniform procedures for stations, branches, and post offices in the new procedures published last week in the Federal Register.  In any case, the issue did come up in both of these decisions, even though it does not appear to have been at stake in the rulings.

 

The Lafayette post office in Freehold, New Jersey

On Tuesday (July 19), the PRC denied a request on behalf of the Lafayette Postal Facility in Freehold, New Jersey, to “suspend” (i.e., postpone) closing the post office while the closure decision is under appeal.   This post office is located in downtown Freehold Borough in a trailer in a parking lot a few blocks from the old post office, abandoned by the USPS years ago.  (The PRC decision is here, and you can read my “boss” blog post about the Freehold post office from a few weeks ago, here.)

The Postal Service argued that it had gone through a more thorough review process than it needed to for a station, and it stated that there are alternative access to retail postal services for affected customers—postponing the closure may even disrupt those alternatives.  The PRC concurred and rejected the request to keep the post office open while the appeal was being considered.

Goldway’s dissent stated that while on prior occasions, she had “reluctantly” concurred in denying applications for suspensions, in this case she was taking a different view.  She pointed to the Postal Service’s recently adopted new rules, which employ uniform procedures for closing stations, branches, and main post offices.  “The public and the Postal Service will be better served if affected offices are not closed until completion of the ongoing review process,” wrote Goldway.  “Particularly in light of the new rules, the Commission will accelerate its efforts to review post office appeals expeditiously. Given the procedural requirements of section 404(d), maintaining operations at a retail facility pending disposition of an appeal will not materially increase Postal Service costs and, in the long run, will avoid unnecessary expenses and public confusion about the process.”

Now that the petition to suspend closure has been denied, the Freehold post office will close on Friday next week (July 29). 

 

Rogers Avenue Station, Fort Smith, Arkansas

On Wednesday (July 20), the PRC turned down an appeal that might have saved the Rogers Avenue Station in Fort Smith.  The PRC's ruling denied a request to return the case to the Postal Service for further evaluation, thus sealing the fate of the post office.  Rogers Avenue Station is one of several post offices in Fort Smith, Arkansas.  It’s located in Park Plaza strip mall, facing Creekmore Park.  The Postal Service has been renting the space since 1998, for an annual rent of $53,401, and there are two more years left on the lease.  The post office was closed on March 26, 2011.  (The PRC decision is here.)

In closing the Rogers Avenue post office, the Postal Service argued that “even if the requirements of section 404(d) were applied in the context of the discontinuance of the Rogers Avenue Station, it had satisfied the salient statutory provisions.”  It had considered all the relevant criteria, including the effect on postal services, the community, and employees, and the economic savings gained from closing the post office for the Postal Service.

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PMG finds plan to close thousands of post offices in bottom of desk drawer

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Postmaster General Patrick Donahoe made a startling discovery over the weekend—a USPS plan to close 16,000 post offices over the next few years.  Just last Friday, in the Rule announcing changes to its procedures for closing post offices (published in the Federal Register), the Postal Service had indicated it had no plan in place to close a significant number of post offices nationwide and concerns about the impacts of such a plan, if it existed, were "speculative and premature.”

The statement provoked mocking derision ("The plan is we have no plan") on the part of the national media (i.e., this blog), so the PMG called an emergency meeting of his senior staff late Friday afternoon.  “They weren’t happy about that,” the PMG told Save the Post Office in an exclusive interview earlier today.  “They were all headed out to their beach houses for the weekend and in no mood for another meeting.”

The PMG berated his staff for not having a plan in place if they were going to be closing all these post offices.  “It just didn’t look good,” said the PMG.  “It made it seem like we didn’t know what we were doing.  But then someone at the meeting pointed out that we did in fact have such a plan, and that I had been given a copy months ago.  I just didn’t remember.”

The PMG spent the weekend looking all over his office and home for the plan, and eventually found it on the bottom of a desk drawer, under a pile of unopened mail. 

“I was shocked by what I read,” said the PGM.  “It turns out the USPS has a plan to close 16,000 post offices over the next six years.  I thought I was kidding when I said that at a meeting of the American Catalog Mailers a few weeks ago.  It’s no joke.”

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Breaking News: USPS will file for Advisory Opinion on nationwide post office closures

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On the Postal Regulatory Commission website:

Chairman’s Message:

Dear Postal Consumers:

The Postal Service has indicated that it intends soon to file a request for an Advisory Opinion on a nationwide plan to review post office facilities for closure.

The Commission will welcome comments from the public and will take prompt action on the request for an Advisory Opinion.  Once we receive the Postal Service’s formal request for our Opinion, we will post instructions in this column on how to submit comments  either formally for the record or informally for our public comment file.

Ruth Y. Goldway
Chairman

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