Annual Compliance Reviews (ACRs) begin in late December and result in Annual Compliance Determinations (ACDs) in 90 days. They are “assessments of [the previous year’s] … rates and service mandated by” the law and Postal Regulatory Commission rules. Later, the Commission issues a Financial Analysis and a report on the USPS’s Performance Report and Plan. The first of these two look like a Wall-Street ratio analysis, and are of little value, though they are a good resource. The ACD is the big one, 251 pages this year, accompanied by 61 public files (mostly Excel).

For FY ‘23, Appendix A is a 20-page compendium of 62 bullets (with 42 sub-bullets) of “Key Commission Findings and Directives.” Two pages are on worksharing and underwater matters, 5.6 are on competitive products, and 12.2 are on service (including things like customer satisfaction). During the review, the PRC Chairman issued 18 information requests, most with a number of questions, and most questions with sub-parts. Service received most of the attention by far in the findings and the questions.

ACMA filed comments in the ACR (along with six other parties, the Public Representative, and a letter from the Taxpayers Protection Alliance; unusually, the National Association of Presort Mailers did not file). Only the Postal Service and Amazon filed reply comments.

The underwater problem was elevated in the 2010 ACR, with the Commission relying on section 101(d) of the postal law. The Postal Service appealed the reach to 101(d), a broad introductory section. The Commission argued that the reach was appropriate for “extreme” cases of underwater. The court agreed on the reach but remanded on a question of whether the treatment of Standard Mail Flats (since rebranded Marketing Mail Flats) was consistent with the treatment of similarly-situated products and on whether Flats might “cease to be an extreme case at some slightly-less-than” 100% cost coverage. The Commission then explained the first question and answered the second question as “yes,” depending on USPS’s recent steps and explanation.

In ACR 2018, the Commission “recommended” an extra 2 percentage points for any product with a cost coverage below 100%, and in ACR 2019 (March 25, 2020) it became “mandatory.” The 10-year review (Docket No. RM2017-3) put this requirement into the Code of Federal Regulations (on December 30, 2020).

ACMA’s comments covered a range of territory, with the main focus on a proposal to waive the extra 2 percentage points for Carrier Route, particularly since the CR coverage was only slightly below 100%. ACMA presented an extensive empirical analysis to support a position that the cause of the below-100% is that nonprofit volume grew significantly while the commercial volume declined significantly. The Commission neglected this analysis.

ACMA also argued that there are fairness issues (e.g., why should High Density also have to pay an extra 2 percentage points or more, as it has a workshare relation to CR?, and why should nonprofit have to pay more when its growth caused the problem?) and that significant questions exist about the level of the costs (e.g., see the separate note on rural carrier costs). The Postal Service supported our request, adding that an ongoing costing case well might lower CR costs.

As for the fairness issues, the Commission said, essentially, that’s the way the cookie crumbles, and that if CR got a lower increase, someone else would get a higher increase, and that this would be unfair to these others.

As for the costs, it said the costs are the costs, and any changes in them need to be made in a separate case. It said ACMA could file such a case, although it knows that doing so would be complex and very expensive, and highly unlikely to succeed (such cases are almost impossible for a group outside the Postal Service). Further, it said that any motion for a waiver would have to be presented as a motion in a separate case. In other words, the die is cast, it is rigid, and you can’t change it.

All this does not mean the Commission is uninterested in costs. A number of questions were asked about costs. It is just that the answers were along the lines of, “well, this happened, that happened, and this was this big.”

The extreme attention to matters of service is obviously important, although many argue that the Postal Service’s self interest in service is all the push it needs. Most of the PRC-push is to get more detailed data on more aspects for smaller and smaller geographic areas for shorter periods of time for narrower components of volume. The image that comes to mind is of a patient with so many electrodes attached that s/he can’t walk. One hopes that all this information is useful to someone and that it leads somewhere.

Beyond more data, there are specific recommendations. The first two in Appendix A are:

  1. The Commission recommends that the Postal Service analyze trends in employee availability and focus its efforts to reduce seasonal variation in employee availability to improve service performance, and
  2. The Commission recommends that the Postal Service analyze the diverse impacts of employee turnover across functional areas to focus retention efforts where they are likely to yield the most benefit for service performance.

Again, one hopes that these recommendations are helpful.

 

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