Postmaster General Pat Donahoe was sworn in on January 14 as the 73rd Postmaster General of the United States. In keeping with his reputation as a hard charging executive that gets things done, Mr. Donahoe is already rolling out sweeping plans to trim costs through facility and personnel reductions across the nation. We wish him well and hope he is successful in this important downsizing initiative.

The Postal Service's downsizing plan includes the closing and consolidation of postal facilities; reduction in force (RIF) initiatives; and early retirement offerings. Facility actions will target Associate Post Offices, Stations, Branches, Processing and Distribution Centers, District and Area Offices----pretty much every everything but Postal Service Headquarters in Washington. And although Headquarters will remain at 475 L'Enfant Plaza, it will undergo a twenty percent reduction of the workforce.

Mr. Donahoe's aggressive plans will no doubt encounter considerable resistance despite the obvious need to right size the organization. Rather than simply complaining that politicians won't let the Postal Service do what needs to be done, however, the new Postmaster General is taking the bull by the horns. Good for Pat Donahoe.
Key Senator Encourages Tough Decisions by USPS
Senator Tom Carper (D-DE), chairman of the Postal Service oversight subcommittee, issued the following statement regarding Postmaster General Donahoe's plan to eliminate 7,500 administrative, supervisory and postmaster positions.
"Postmaster General Donahoe has a daunting task before him - he must find significant, effective means to streamline the Postal Service and he needs to do it quickly. Current projections show that the Postal Service may be left without the resources necessary to operate by the next holiday season. Major changes must be made so that taxpayers aren't left to bailout this struggling, but salvageable, institution. I have said it before and I'll say it again, we need to think outside the box when it comes to identifying solutions to prevent the Postal Service from going broke and every option needs to be on the table. This plan to make the Postal Service more efficient by reducing unnecessary positions certainly fits that criteria and is something that I think we should take a serious look at. This announcement also shows that all stakeholders - including top managers - will need to feel the impact of the tough decisions that will need to be made in the coming months. I look forward to working with Postmaster General Donahoe on this and other proposals to reform the U.S. Postal Service and put it on more solid financial footing."
Mailer Brief Filed In Exigent Increase Rejection Appeal
The Affordable Mail Alliance, Alliance of Nonprofit Mailers, and other mailer groups filed a legal brief on January 14 in support of the Postal Regulatory Commission's decision to reject the Postal Service proposed 5.6% exigent rate increase. The brief was filed with the United States Court of Appeals for the District of Columbia Circuit.
David Levy of Venable LLP was the lead attorney in drafting the brief. Among the arguments in the filing were these: "The USPS position essentially recasts section 3622(d)(1)(E) as an all-purpose make-whole provision that would allow the USPS to use above-CPI rate increases to cover revenue shortfalls regardless of their cause. This would defeat the entire purpose of index or incentive regulation, and resurrect cost-of-service regulation, the very methodology that Congress sought in PAEA to retire."
"The PRC rejected the proposed increase not because the showing of causation offered by the USPS was too imprecise or uncertain, but because the USPS made no showing of causation at all. The mailers established---and the USPS essentially conceded---that (1) its most serious problems are long term and structural, not extraordinary or exceptional; (2) solving those problems would be necessary and sufficient to restore the USPS to financial solvency; (3) the problems have been created and maintained by legislation; and (4) the above-CPI rate increase sought by the USPS, without resolution of its structural and long-term problems, would not resolve the insolvency problem."
Oral arguments before the Court are scheduled for March 15. A decision is expected in the spring.
Key Senator Files Brief in Exigent Rejection Appeal
Senator Susan Collins (R-ME), ranking member of the Postal Service oversight committee, filed an amicus brief on January 14 supporting the Postal Regulatory Commission's decision to reject the Postal Service's proposed exigent rate increase. The brief was filed with the U.S. Court of Appeals for the District of Columbia.
Senator Collins' brief argued that the PRC's decision is consistent with the text, legislative history, purpose, and intent of the Postal Accountability and Enhancement Act of 2006. In a press release, Ms. Collins said the "economy and technology are affecting the Postal Service and, indeed, all businesses. But in writing postal reform legislation in 2006, my intention was not to permit rate increases above the inflation-based cap as relief from chronic, ordinary, or unexceptional circumstances and general Postal Service red ink. I hope the Court of Appeals will uphold the September 2010 PRC decision which found that the Postal Service failed to prove that its request met the standard of the law."
"Allowing the Postal Service's exigent rate increase would undermine the stability and predictability in rates that the PAEA sought to establish. Moreover, such an interpretation of law would produce absurd results---allowing the Postal Service to raise rates to cover revenue shortfalls from any cause, so long as it could identify an extraordinary or exceptional circumstance' affecting any portion of postal operations. The resulting loophole in the hard, inflation-based cap would lead to disastrous consequences for the Postal Service as the resulting rates would further erode volume as postal customers seek alternatives to mailing."
PRC To Review Proposed USPS Rate Increases
The Postal Regulatory Commission has established a docket to receive comments on the Postal Service's proposed rate increases for market dominant products that were filed January 13. The proposed increases, averaging 1.7% by class, are scheduled to take effect on April 17, 2011.
The Commission has 45 days to review the proposed rates increases, including a 20-day period for public comment. Comments from interested parties are due by February 2, 2011.
PRC Chairman Ruth Goldway said the "Commission will carefully review the Postal Service's pricing proposals to ensure that the increases comply with the price cap and are consistent with statutory pricing policies. We encourage the public to participate in the process by sharing with the Commission their views on the requested postage increases."
Inspector General David Williams Reappointed
The Postal Service Governors have reappointed Inspector General David Williams to a second 7-year term effective January 4, 2011. This is great news for the postal community!
Mr. Williams is responsible for a staff of more than 1,100 employees nationwide that conducts independent audits and investigations for the Postal Service. Prior to his initial appointment and August 20, 2003 as Inspector General of the Postal Service, Mr. Williams served as the IG for five federal agencies.
Before his first appointment as the IG for the U.S. Nuclear Regulatory Commission in 1989, Mr. Williams served as Director of Operations in the Office of Labor Racketeering at the Department of Labor; the President's Commission on Organized Crime; and as Director of the Office of Special Investigations at the General Accounting Office.
David Williams took the job as Postal Service Inspector General in 2003 following considerable press coverage of questionable activities at the agency. He has since transformed the Postal Service Office of Inspector General into a model IG office. Among the Inspector General's finest achievements was the release of a report showing that the Postal Service has overpaid its Civil Service Retirement Fund by some $75 billion. That finding is now driving legislative efforts to apply the overpayment to the Postal Service's retiree health benefit liability account.
Postal Employee Groups Urge President To Action
The presidents of four postal unions and two postal management organizations wrote to President Obama on January 12, urging him to take action to correct the Postal Service retirement fund overpayment and retiree health benefit liability obligation. The employee group heads pointed out that were it not for the required annual retiree health benefit liability payments, the "Postal Service would have been profitable over the past four years by $611 million."
The solution proposed to the President is that he direct the Office of Personnel Management "to immediately recalculate the postal pension balances in the Civil Service Retirement and Disability Fund using the methods endorsed by the USPS Office of Inspector General and the Postal Regulatory Commission studies and that you include provisions in your 2012 budget that would: (2) move up the date of the pension surplus transfer from 2015 to 2011; (b) repeal the pre-funding payment schedule included in the PAEA; and (c) maintain the well-established policies on six-day delivery and small post offices in the annual financial services appropriation."
Postal Service Continues Environmental Leadership
The Postal Service continued its impressive green efforts in 2010 producing savings and revenue of $27 million for the year. With the help of USPS Lean Green Teams across the country, the Postal Service saved $5 million in energy, water and solid waste reduction; recycled 220,000 tons of material that generated $13 million in revenue; and saved $9 million in landfill fees.
The Postal Service plans to continue its socially responsible leadership by meeting the following reduction goals by 2015:
Facility energy use 30 percent
Water use 10 percent
Petroleum fuel use 20 percent
Landfill waste 50 percent.
The Postal Service has won more than 75 environmental awards and is light years ahead of other federal agencies and many businesses in its green efforts.