October 24, 2024
Issue 24/10
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Representative Jake LaTurner (R-KS) recently introduced a bill that attempts to right the U.S. Postal Service ship. It has many good ideas in it, but unfortunately, it is another “reform” bill that does not do enough to ensure a reasonable chance for a financially sustainable USPS. It reminds us of the Postal Service Reform Act of 2022 that led many in Congress to declare great success, only to witness a loss of $6.5 billion in FY2023 and north of $8 billion in FY2024.
It was introduced by soon-to-be former Kansas Congressman Jake LaTurner (R-KS), who is not running for reelection. LaTurner represents the second congressional district, which covers most of the eastern part of the state of Kansas, except for the core of the Kansas City Metropolitan Area.
The “Keep Us Posted ” lobby group that helped with the bill is run by former Kansas Congressman Kevin Yoder (R-KS), who represented the third congressional district in eastern Kansas that includes some of Kansas City. The main impetus and funding source for Keep Us Posted is Hallmark Cards, Inc., a privately-held company since 1910 based in Kansas City.
The bill tries to force some of the things we are urging the PRC to do in the current rate review. Key provisions of the USPS SERVES US Act according to the Congressman’s staff include:
The final bullet point refers to the current underinvestment in non-marketable Treasury securities of three funds for USPS retirees, two pensions and one healthcare. As we have reported before, the USPS Office of Inspector General calculated that if the three funds had been invested as normal pension funds since their inceptions, they would total over $1.1 trillion instead of the current value of about $300 billion.
Unfortunately, this bill calls for reformed investment of only 25% of the health benefits fund, or $7 billion. Whereas full investment of all three funds would make a big difference in USPS finances, the proposed tiny amount does not.
At least five to seven of the bullet points are within the current power of the PRC to implement during its current rule-making on rate regulation: 1 through 5 plus 8 and 9. This is why the Alliance is putting so much weight and effort into the regulatory rate review.
Rep. LaTurner’s bill is a good start at a discussion document for future postal reform efforts. It has no chance of near-term passage, however, and does not provide the additional revenue and cost reduction needed to close the growing multi-billion losses.
Most importantly, the bill provides excellent suggestions for the PRC to consider as it deliberates on a proposed rule for USPS rate regulation.
USPS plans to stop evening pickup of outbound mail from 74% of its post offices to save about $3.6-$3.7 billion a year. The slowdown applies to every post office that is 50 miles or more from one of the approximately 60 regional processing centers that USPS is implementing. Most people would consider most of the affected post offices to be rural, but USPS has gone to great pains to emphasize that technically some are urban.
Semantics aside, this is one of the best examples of the tension between operating like a business and providing a universal public service. In this case, business beats service. The previous several Postmasters General knew the funding model for a public USPS was no longer working, but they held its service mission to be unalterable.
The impact will be mostly felt by people and small businesses that send mostly single-piece First Class Mail from their homes, places of business, local collection boxes, and local post offices. That mail, simply put, will sit overnight in the local post office to eliminate the evening truck trips to pick up mail that our postal service has employed for decades. They will get the outbound mail the following morning when they bring the mail to be delivered that day.
The current USPS management team and Governors have indicated time and again that they will move forward no matter what the PRC advises. Customers are left to consider how much effort and expense to dedicate to the complicated regulatory process when the outcome is inevitable.
Key dates related to the PRC Advisory Opinion:
August 22, 2024 – USPS filed first notice and intent to conduct a pre-filing conference.
August 26, 2024 – PRC issued Order No.7414 which established Docket No. N2024-1.
September 5, 2024 – USPS held its pre-filing conference selling its ideas and hearing questions by the public, but not answering many.
October 4, 2024 – USPS filed a request for an advisory opinion by the PRC.
October 9, 2024 – PRC issued Order N. 7695 laying out the process and requirements for an advisory opinion. It extended the timeframe from 90 days to 120 days from the USPS filing.
October 16, 2024 – PRC held a technical conference with USPS as “…an informal, off-the-record opportunity to clarify technical issues as well as to identify and request information relevant to evaluating the Postal Service’s proposed changes.”
October 21, 2024 – Filing of Notioce of Intervention.
November 5, 2024 – Last Filing of Discovery Requests.
November 12, 2024 — Filing of USPS Answers to Discovery.
Deadlines in Preparation for Hearing (assuming no rebuttal case):
November 25, 2024 — Filing of Notice Confirming Intent to Oral Conduct Cross-
Examination
November 25, 2024 — Filing of Request to Present Oral Argument
November 26, 2024 — Filing of Notice of Designations (Parties)
December 2, 2024 — Filing of Notices of Designated Materials (Postal Service)
Rebuttal Case Deadlines (if applicable):
November 27, 2024 — Filing of Notice Confirming Intent to File a Rebuttal Case
December 4, 2024 — Filing of Rebuttal Case
Surrebuttal Case Deadlines (if applicable):
December 6, 2024 — Filing of Motion for Leave to File Surrebuttal Case
December 10, 2024 — Filing of Response to Motion for Leave to File Surrebuttal
December 13, 2024 — Filing of Surrebuttal Case (if authorized)
Hearing Dates:
December 4 to 6, 2024 — Hearings (with no Rebuttal Case)
December 11 to 13, 2024 — Hearings (with Rebuttal Case, but no authorized Surrebuttal Case)
December 18 to 20, 2024 — Hearings (with Rebuttal Case and authorized Surrebuttal Case)
Briefing Deadlines:
December 12, 2024 — Filing of Initial Briefs (with no Rebuttal Case)
December 19, 2024 — Filing of Reply Briefs (with no Rebuttal Case)
Statement of Position Deadline:
December 12, 2024 — Filing of Statement of Position (with no Rebuttal Case)
Advisory Opinion Deadline:
January 31, 2025 — Filing of Advisory Opinion
Customers and other interested people have two ways to participate. The more involved way was to file to be an Intervenor by October 21. Parties that files to be Intervenors are:
The second way to participate is to file a Statement of Position by December 12, 2024. The PRC offers specifics on such a statement:
Any interested person, including anyone that has not filed a notice of intervention
and become a party to this proceeding, may file a statement of position. See 39 CFR
3020.123(g); see also 39 CFR 3010.142(a). A statement of position is limited to the
existing record and may not include any new evidentiary material. See 39 CFR
3020.123(g). Filings styled as a brief or comments, conforming with the content and
timing requirements, shall be deemed statements of positions. Any statement of
position is due December 12, 2024.
In any case, it is a near certainty that no matter what the regulator says on January 31, the USPS will go ahead with full scale implementation of its proposal. It will take quite a while to implement and USPS has cautioned that the annual promised savings of $3.6 to $3.7 billion will take some time to be realized. Also, we should bear in mind that the Postal Service has so far failed to achieve the financial results that it promised in the Delivering for America plan over three years ago.
At its open Board of Governors meeting on November 14, 2024, the Postal Service will announce its loss for the fiscal year ended September 30. The loss through August had grown to $8.3 billion. (Removing the workers’ compensation non-cash expense of $1.8 billion the loss would be $6.5 billion.)
We expect a large loss on the order of $9 billion or more.
There is a lot of news coverage of election mail these days. Much of it expresses concern by election officials about whether the Postal Service will deliver ballots on time to be counted. Such concern is warranted given the poor delivery performance, especially for First-Class Mail.
Nevertheless, even though election ballots are mailed as First-Class Mail, they are given special, expedited handling. This has been true for many years since long before the pandemic increased voting by mail. Also, election mail on average travels shorter distances than all FCM.
The Postal Service has promised to propose a new product category for election mail on 2025, to reflect its special handling.