Douglas Carlson, who has been a frequent intervenor in Postal Rate/Regulatory Commission proceedings, has filed a complaint with the PRC alleging that the Postal Service has illegally made it difficult, if not impossible, for individual customers to mail packages at the bound printed matter rate, which is lower than the standard media mail rate. Carlson cites instances where he attempted to mail a dictionary, only to be told by window clerks that the rate was no longer available, that the book did not qualify for the rate, or, bizarrely, that it could only be accepted if it already had postage on it when he brought it to the window.

Carlson also notes that the USPS web site’s rate calculator no longer mentions the rate, and that it is not available from the Automated Postal Centers in post office lobbies.

Carlson’s complaint alleges that “When a customer presents items for mailing at a retail window and asks for the least-expensive shipping method and the window clerk knows or should know that the item would qualify for a Bound Printed Matter rate, Postal Service policy prohibits the window clerk from offering or suggesting Bound Printed Matter service to the customer, even if Bound Printed Matter service might or would fulfill the customer’s shipping needs at the lowest price of any service.”

He says this policy “unduly and unreasonably discriminates against individual and small business mailers, in a manner not specifically authorized by title 39. Compared to large mailers, individual and small-business mailers are less likely to know about services that window clerks do not offer, that Automated Postal Centers do not offer, and that the Postage Rate Calculator at www.usps.gov does not mention.”

Press release:

The Postal Regulatory Commission today issued its Opinion enabling the Governors of the U.S. Postal Service to provide a final review of the proposed Negotiated Service Agreement between the Postal Service and the Bank of America Corporation (Docket No. MC2007-1). “While the Commission found the agreement in compliance with the requirements of the Postal Accountability and Enhance Act (PAEA), we also found that the agreement could cost the Postal Service anywhere from $25 million to $45.8 million should the Governors move forward with the agreement,” said Commission Chairman Dan G. Blair.

“We hope the Governors will carefully review the findings in the Commission Opinion in making its final decision on whether to adopt the agreement,” said Blair. Under the proposed agreement, Bank of America would use improved address barcode technology in exchange for discounted postage rates. A principal feature of the proposal would be the commitment by Bank of America to use the Intelligent Mail Barcode (IMB) system, and other new systems, designed to facilitate mail acceptance and processing.

The Postal Service expects IMB to play a critical role in the measurement of the service standards it is developing in consultation with the Commission. Because the PAEA requires the Commission to report annually on how well the Postal Service is meeting its service standards goals, testing IMB and other advanced programs now will benefit all postal customers. Both these benefits and the potential financial losses from this proposed agreement will be weighed by the Governors.

The Commission found that claimed savings of $5.5 million produced by this agreement were based on 1999 read/accept rates. The Commission proceedings uncovered more recent read/accept rates from 2006 and 2007. When the more recent information is used, it shows that the Postal Service stands to lose $25 to $45.8 million should the agreement be implemented.

“Congress, through the PAEA, granted the Postal Service greater autonomy to set its own rates and enter into NSAs. The Act requires that such agreements either improve the net financial position of the Postal Service or enhance its operations. The Postal Governors will have to make the final decision of whether this agreement makes good business sense for the Postal Service,” concluded Blair.

The Commission noted in its Opinion “…that read/accept rates have improved to such an extent that Bank of America will not have to make any improvements in barcode readability to receive all available mail processing performance discounts.” The Commission also cautioned that because the Postal Service will require “…the use of IMB for all automation discount mail in the near future, incentives under this Agreement would be paid to Bank of America while other mailers may be being required to adopt the same mailing practices without similar incentives.”

The Commission’s Opinion was issued on a 4-1 vote, with Vice Chairman Dawn Tisdale dissenting. Attached is the summary of the Opinion, concurring opinion by Commissioner Ruth Goldway, and Vice Chairman Tisdale’s dissent. The Opinion is available on the Commission’s website at www.prc.gov.

Dawn A. Tisdale, vice chairman of the Postal Regulatory Commission (PRC), announced today that he will leave the Commission on November 22, 2007. He has advised President George W. Bush that he will not seek renomination.

“Three years ago, when I was sworn in as a Commissioner, I promised my family that I would return home to Texas when my term of office was over. I am following through on that commitment,” said Commissioner Tisdale. “Although every day is special with your children, my daughters are 14 and 16 years old. I want to share in the excitement of their passage into young adulthood.

“I am proud of my contributions to the Commission during what has been a very active period. Over the past three years, we have decided two rate cases, including the first fully litigated case since 2001, R2006-1. I have been involved with the reorganization of the PRC resulting from the enactment of the Postal Accountability and Enhancement Act, the PAEA, last December and the issuance of the proposed regulations for a new ratemaking process; participated in other rate and classification decisions; and presided over the Postal Service’s Evolutionary Network Development plans, N2006-1, which brought needed transparency to the Service’s network development plans.

“I wish my fellow Commissioners well as they continue the transformation of the Commission into the strengthened regulator envisioned by the PAEA. It has been my privilege to serve with Chairman Dan Blair, Commissioners Ruth Goldway, Tony Hammond, Mark Acton, and former Chairman George Omas,” said Commissioner Tisdale.

Commissioner Tisdale was nominated by President Bush on February 11, 2004, to complete a term expiring on November 22, 2006. He was confirmed by the United States Senate on November 21, 2004, and is currently in his holdover year. Mr. Tisdale previously served in various positions within the U.S. Postal Service from 1966-2000, and served in the U.S. Navy from 1962 to 1966. He is a native and longtime resident of Austin, Texas.

The PRC issued the following press release today:

WASHINGTON, DC, FEBRUARY 22, 2007: The Postal Regulatory Commission will announce its Recommended Decision to the Governors of the U.S. Postal Service at 11 AM, Monday, February 26, 2007 in its Hearing Room located at 901 New York Avenue, NW, 2nd Floor, West Tower, Washington DC.

The decision will include recommendations on postal rates and fees affecting all mail users. The decision will also address the request to establish a “Forever Stamp” that would allow consumers the opportunity to purchase a non-denominated, non-expiring stamp that would be valid regardless of future rate changes.

The Postal Rate Commission yesterday issued its “Opinion and Recommended Decision” in the Evolutionary Network Development (END) proceedings. The PRC found that the USPS had ”not provide assurance that the proposed realignment program, as currently envisaged, will meet its declared goals.  In particular, the record reflects flawed or absent information on certain crucial aspects of the Postal Service’s plan for network realignment.”

The PRC found that the plan’s flaws included:

• Questionable or Incomplete Cost and Service Estimates
• Inadequate Review of Local Impacts
• Insufficient Provisions for Public Participation

The commission analyzed the Area Mail Processing (AMP) process for evaluating individual plant consolidations, and found that:

• AMP Reviews Lack Consistency
• AMP Process Lacks Criteria for Approval
• The Post Implementation Review Process (PIR) is Flawed

The commission also criticized the USPS for failing to fully consider the service implications of plant realignments:

The Postal Service is a service organization, perhaps the largest such organization in the country.  It does not seem prudent, in the Commission’s view, for an organization of its size and economic importance to commit itself to a logistics network restructuring program of this magnitude, without first having a full grasp of its likely effect on the service that it provides its customers.  If the Postal Service’s representations in this docket are accurate, however, that is what the Postal Service is considering.  The Commission recommends that the Postal Service choose a “most likely” network realignment outcome for planning purposes, and estimate the full range of service impacts that would result from that outcome before it commits further resources to this program.

Commissioner Ruth Goldway wrote in a concurring opinion that the Commission’s opinion “fails to express sufficiently serious concern about the problems that have arisen in initial stages of the Postal Service’s consolidation efforts, in places such as Southern California, El Paso, Texas and Las Vegas, Nevada.”

I am concerned that unless the Postal Service management is truly attentive to improving the AMP change process, implementation of network realignment is likely to result in substantial, unexpected, and potentially expensive service disruptions throughout the nation.  A clear example is that the AMP change analysis performed prior to the recent consolidation of the Marina Del Rey facility into the existing Los Angeles facility totally failed to predict the myriad of service disruptions that occurred in the weeks and months after implementation.

…Before the Postal Service implements the dozens of consolidations required by network realignment, it should improve the AMP change process to insure that service disruptions are minimized.  The best way to improve that process is to fully review each consolidation that has already occurred. It should honestly face and thoroughly analyze mis-estimates and determine the lessons learned.  Going forward, the Postal Service should require forecasts of possible changes in service levels to the end users in planning every AMP change, require measurement of customer feedback in any post implementation review, and then accurately measure the net cost savings by including changes in post-implementation workforce, transportation or other adjustments.

ADVISORY OPINION CONCERNING A PROPOSED CHANGE IN THE NATURE OF POSTAL SERVICES

The White House yesterday confirmed that Dan Blair, deputy director of the Office of Personnel Management, and a former aide to Congressman John McHugh has been nominated to a seat on the Postal Rate Commission, “and upon confirmation designate Chairman”.

The nomination had been predicted last month by Linn’s columnist and veteran postal correspondent Bill McAllister, who wrote at the time that “Blair’s appointment to a five-year term is a highly significant move signaling that the administration wants a strong commission to oversee the Postal Service.”

The US Postal Service yesterday filed its reply brief in the END Plant Consolidation case being considered by the Postal Rate Commission. The agency repeated its contention that “The Commission is not tasked by § 3661 to second-guess the judgment of postal management in proposing the service changes in question. Nor is it the Commission’s task under § 3661 to determine whether some alternative objectives would be “better” for the Postal Service to pursue.”, and argued that any opinion the PRC renders will be “advisory only”.

Best line in the brief has to be the footnote on page 3. After pointing out the many layers of existing oversight the USPS operates under, the brief notes that ‘At page 74, the OCA [Office of the Consumer Advocate] refers to a need for “continued surveillance” of postal management.’ The footnote asks “Can postal rendition be far behind?”

USPS N2006-1 Reply Brief
USPS N2006-1 Initial Brief
Complete Listing of Briefs filed

Bill McAllister reports in Linn’s Stamp News that George Bush plans to nominate Dan Blair, deputy director of the Office of Personnel Management, to be chair of the Postal Rate Commission. Blair has frequently been the Administration’s spokesperson when it comes to defending the requirement that the Postal Service foot the bill for military pensions for its employees, a burden other agencies don’t have to bear.

McAllister’s article points out that “Blair’s appointment to a five-year term is a highly significant move signaling that the administration wants a strong commission to oversee the Postal Service.” The article points out that Blair is a former aide to Congressman John McHugh, and has worked on previous postal reform legislation, and cites sources as saying that ”he has stated that he would help Congress rewrite those laws before he takes his seat on the commission.”

It concludes: “Although the White House has not announced the Blair appointment, three postal industry officials told Linn’s the president had selected him for the job.”

In a letter to USPS Chief Operating Officer Pat Donohoe, BMG Columbia House VP Clifton B. Knight Jr. says that the proposed new Postal rates and regulations “will make it impossible for us to remain in the business of selling music and video products by mail”. Knight asserts that his company will face increases of “62% to 115%” in its product shipments. And if the company is “constrained to stop using the mail for product shipment”, it will “inevitably reduce, if not entirely eliminate” its “use of mail for marketing and promotional purposes”.

Knight says the problem isn’t just the rates- it’s the fact that the USPS is reclassifying his company’s product from flats to parcels, even though Knight claims BMG has gone to “considerable expense” to make sure that their CD and DVD shipments meet the requirements for automated flats.

Letter from Clifton B. Knight Jr to DPMG Pat Donohoe

The proceedings in the rate case are in the discovery phase at the moment. Part of the discovery process is the submission of interrogatories, or questions by participants. Most interrogatories, naturally, are submitted by intervenors to the Postal Service. But there are also quite a few questions being asked of other intervenors. Many of these are variations on “Where did you come up with those ridiculous numbers in the testimony you submitted?”

And sometimes interrogatories seem to serve no purpose but to make a point- here’s one, submitted to APWU witness Kathryn L. Kobe by the Major Mailers Association. Kobe had testified that “it seems highly unlikely that the mail that is converting to presort mail is equivalent to the average collection mail that is coming from individual households, nonprofit organizations, and small businesses”. The MMA posed the following questions:

Please assume that you are a dutiful niece who for years sent monthly letters to your Aunt Minnie. Assume further that all these letters exhibited the cost attributes similar to an “average” First-Class single piece letter. Now, in 2005 you and your Aunt Minnie discovered the Internet and you substituted your 12 monthly letters with 12 monthly emails. Please confirm that, as far as the Postal Service is concerned, those letters are lost to the system and First-Class Single Piece has lost 12 “average” Single Piece letters. If you cannot confirm, please explain.

Please assume that you also enjoy calling your Aunt Minnie as well, and in 2005 you decided to sign up for a cell phone. The cell phone company sent you 12 monthly bills in 2005, all of which qualified as Automation letters. Please confirm that, as far as the Postal Service is concerned, those letters are new to the system and First-Class Automation has gained 12 pieces that are similar to an “average” Automation letter. If you cannot confirm, please explain.

Please confirm that, as far as the Postal Service is concerned, the 12 “average” Single Piece letters lost and the 12 “average” Automation letters gained represent a “shift” of letters from First-Class Single Piece to Presorted. If you cannot confirm, please explain.