[Federal Register Volume 76, Number 207 (Wednesday, October 26, 2011)]
[Rules and Regulations]
[Pages 66184-66187]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2011-27641]


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POSTAL SERVICE

39 CFR Part 241


Post Office Organization and Administration: Establishment, 
Classification, and Discontinuance

AGENCY: Postal Service.

ACTION: Final rule.

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SUMMARY: The Postal Service is amending its regulations to improve the 
administration of the Post Office closing and consolidation process. 
This final rule adopts changes to Postal Service regulations pertaining 
to the definition of ``consolidation'' and the staffing of Post 
Offices.

DATES: Effective Date: December 1, 2011.

FOR FURTHER INFORMATION CONTACT: Jim Boldt, (202) 268-6799.

SUPPLEMENTARY INFORMATION: On March 31, 2011, the Postal Service 
published a proposed rule in the Federal Register (76 FR 17794) to 
improve the process for discontinuing Post Offices and other Postal 
Service-operated retail facilities. The proposed rule also included 
various proposals to apply certain discontinuance procedures to all 
retail facilities operated by Postal Service employees. The Postal 
Service requested comments on the proposed rule.
    On July 13, 2011, the Postal Service published an initial final 
rule (76 FR 41413), with minor corrections published on July 21, 2011 
(76 FR 43898). That final rule responded to comments and made numerous 
changes from the proposed rule, resulting in revised regulations that 
took effect on July 14, 2011. In the final rule, the Postal Service 
noted that certain aspects of the proposed rule were subject to then-
ongoing consultations under 39 U.S.C. 1004(b)-(d). As a result, the 
first final rule implemented only changes to 39 CFR part 241 that were 
not subject to ongoing consultations. 76 FR 41413. The Postal Service 
advised that changes subject to consultation--namely, those concerning 
the definition of ``consolidation'' and the staffing of Post Offices--
were being deferred and could be addressed in a subsequent final rule. 
Id. at 41414-15.
    At this time, the consultations referenced in the first final rule 
have run their course, and the Postal Service is prepared to issue the 
remaining proposed changes, with minor modifications as explained in 
section III below. Analysis of the pertinent comments received appears 
below. With the changes described herein, the final rule will take 
effect upon the publication of corresponding changes in

[[Page 66185]]

the Postal Bulletin, scheduled for December 1, 2011.

I. Response to Comments Received

    As recounted in the first final rule (76 FR 41413), the Postal 
Service received approximately 257 comments in response to the proposed 
rule. Commenters included 34 Members of Congress, the Postal Regulatory 
Commission (``Commission'' or ``PRC''), five state legislators, three 
postmasters' and postal supervisors' organizations, one postal lessors' 
organization and various of its members, one mailing industry 
stakeholder, and numerous other postal customers. Although some 
comments were favorable about certain aspects of the proposed rule, 
almost all of the comments expressed concerns about various aspects of 
the proposed rule. Below we discuss the comments pertinent to this 
final rule and our response to each.

A. Definition of ``Consolidation''

    Several commenters expressed concern about the proposed rule's 
interpretation of ``consolidation,'' such that the term would no longer 
apply to the conversion of a Post Office into a Postal Service-operated 
station or branch. In particular, these commenters claim that this 
approach, combined with the fact that 39 U.S.C. 404(d)(5) does not 
confer appeal rights for closings or consolidations of stations and 
branches, could result in an effective denial of appeal rights if the 
Postal Service were to convert a Post Office into a station or branch 
and then proceed to close or consolidate the facility. Comments about 
appeal rights were discussed in the first final rule (76 FR 41414-15).
    Overall, this rulemaking expands the circumstances in which full-
blown discontinuance studies are used; hence, it increases the overall 
transparency of discontinuance decisions affecting Postal Service-
operated retail facilities. Previously, stations and branches studied 
for discontinuance were studied in a faster, less intensive process. 
See PRC, Advisory Opinion Concerning the Process for Evaluating Closing 
Stations and Branches (``SBOC Opinion''), Docket No. N2009-1, March 10, 
2010, at 48-57, 61-65 (exploring differences between the discontinuance 
processes for Post Offices and for stations and branches).
    Contrary to longstanding arguments by the Postal Service resting on 
much of the legislative history and case law on which some of the 
comments rely, the Commission, labor organizations, and others have 
asserted that customers perceive no functional difference between a 
Post Office and a classified station or classified branch. See, e.g., 
SBOC Opinion at 52, 64; Comments of American Postal Workers Union, AFL-
CIO, Eugene Area Local No. 679, PRC Docket No. A2011-4, January 21, 
2011, at 1-3. While the Postal Service continues to disagree with the 
proponents of this view as to whether that lack of perceived difference 
has legal relevance, the Postal Service acknowledges the practical 
vitality of the observation. As a result, it is difficult to understand 
what concrete purpose would be furthered by continuing to apply 
discontinuance procedures to the conversion of one Postal Service-
operated retail facility type to another, when customers will not see 
any significant difference in service. In contrast, customers are more 
likely to experience or perceive an impact from the replacement of a 
Postal Service-operated retail facility with a contractor-operated 
retail facility.
    ``Consolidation,'' in its former sense of changing a Post Office 
into a station or branch of another Post Office, has rarely been 
applied over the last 20 years. From the perspective of postal 
customers, a conversion between Postal Service-operated retail facility 
types has only minimal impact, as few customers are aware of the 
distinction between different types of retail units.
    Unlike classified stations and branches, contractor-operated retail 
facilities can be closed without being subject to the discontinuance 
process. Relationships established through a contract have alternative 
mechanisms for termination or other changes. The continuation of 
contractor-operated facilities is much more dependent on the 
contractor's willingness to furnish services under contract for a 
reasonable fee. Contractor-operated units may accordingly experience 
less predictability in their continuation. Hence, it is more important 
that customers and other stakeholders have an opportunity to provide 
input when a Postal Service-operated retail facility is converted into 
a contractor-operated retail facility than when a conversion results in 
Postal Service-operated classified station or branch. The latter are 
not subject to the greater unpredictability of a contractor-operator, 
and so customers are unlikely to perceive a significant difference in 
service when a Post Office is converted into a Postal Service-operated 
classified station or branch.
    Two postmaster organizations submitted a legal opinion to the 
effect that the proposed approach to ``consolidation'' runs counter to 
a consistent definition provided by legislative history, courts, and 
the Postal Service itself. This legal analysis appears to overlook the 
fact that most of the authorities on which it relies, some of which 
date back to the 1970s, were premised on Postal Service regulations in 
effect at the time and did not speak to whether the Postal Service was 
somehow precluded from changing those regulations. That the Postal 
Service's previous interpretation of ``consolidation'' was found to be 
reasonable does not mean that that interpretation is the only 
reasonable and valid one. See Citizens for the Hopkins Post Office v. 
United States Postal Serv., 830 F. Supp. 296, 299 (D.S.C. 1993) (``This 
court finds the definition of `consolidation' advanced by the Postal 
Service [in its then-current regulations] to be one which is 
reasonable[.]'' (emphasis added)).\1\
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    \1\ The author of the legal opinion appears to have misquoted 
this sentence of the Citizens for the Hopkins Post Office opinion as 
referring to ``the [sic] one which is reasonable.'' This error may 
help to explain why the author reads the opinion as supporting the 
author's conclusion that the Postal Service's historical 
interpretation of ``consolidation'' is the only permissible one, 
rather than one of multiple interpretive possibilities. The actual 
quotation supports the latter view.
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    The United States Supreme Court has long held that an ``initial 
agency interpretation [of a statute] is not instantly carved in stone'' 
and that any agency ``must consider varying interpretations and the 
wisdom of its policy on a continuing basis.'' Chevron, U.S.A., Inc. v. 
Natural Resources Defense Council, Inc., 467 U.S. 837, 863-64 (1984). 
This is the case even where a revised interpretation ``represents a 
sharp break with prior interpretations.'' Id. at 862. Because the plain 
language of the statute is silent and ambiguous as to the intended 
definition of ``consolidation,'' and because the Postal Service is 
charged with implementing 39 U.S.C. 404(d), the Postal Service is free 
to revise its interpretation of the statute so long as its 
interpretation is reasonable. See id. at 842-43; Rust v. Sullivan, 500 
U.S. 173, 186-87 (1991); see also Citizens for the Hopkins Post Office, 
830 F. Supp. at 298-99 (``The term `consolidation' as used in Sec.  
404(b) [now 404(d)] is not defined in the statute. Consequently, this 
court will begin with the principle that the construction placed on a 
statute by the agency charged with administering it is entitled to 
considerable deference and should be upheld if reasonable.''). In the 
proposed rule and elsewhere in this final rule, the Postal Service has 
explained why it is reasonable to revise its interpretation of 
``consolidation'' in order to give sensible and feasible effect to 
larger regulatory

[[Page 66186]]

changes that will increase transparency and public participation.
    The same legal opinion cited a pleading filed by the Postal Service 
in an ongoing federal action to support its view that the instant 
rulemaking somehow undoes an indelible aspect of postal law. The legal 
opinion fails to note that the subject matter of the litigation and the 
quoted pleading itself concern Postal Service regulations in effect at 
the time. They do not prejudice the Postal Service's authority or 
discretion to revise those regulations at a later time. An agency is 
entitled to defend its actions based on its legal interpretation and 
regulations in effect at the applicable time, rather than on prior or 
subsequent policies and regulations. As the Postal Service noted in its 
proposed rule and first final rule, and reiterates here, this 
rulemaking is not retroactive and does not affect any actions taken by 
the Postal Service under previous regulations. See generally, Bowen v. 
Georgetown Univ. Hosp., 488 U.S. 204, 208 (1988) (holding that agency 
regulations are not retroactive except as specifically authorized by 
Congress).
    In sum, the proposed reinterpretation of ``consolidation'' is 
within the Postal Service's authority to administer the statutory 
scheme. The Postal Service is adopting a new interpretation of the 
existing statutory term, while continuing to apply the discontinuance 
procedures established by Congress to consolidations as distinct from 
closings. The proposed interpretation is reasonable in its own right 
and goes a long way toward closing the gap between respective Postal 
Service and Commission positions. It also fits into the larger 
framework of changes to orient discontinuance processes more 
appropriately around customer expectations--as the Commission and 
others have recommended for years--and to increase public transparency 
and participation.

B. Staffing of Post Offices

    Many commenters expressed the view that the Postmaster Equity Act, 
Public Law 108-86 (2003), precludes the proposed change to 39 CFR 241.1 
such that a Post Office may be staffed by non-postmaster personnel. As 
codified in 39 U.S.C. 1004(i)(3), the Postmaster Equity Act defines a 
``postmaster'' as ``an individual who is the manager in charge of the 
operations of a post office, with or without the assistance of 
subordinate managers or supervisors.''
    The Postmaster Equity Act serves the purpose of requiring 
consultation by the Postal Service with groups representing middle 
management tiers regarding, among other things, pay policies and 
schedules. It was not intended to--and unambiguously did not--modify 
the Postal Service's authority to determine the staffing and scope of 
its retail facility network. See 39 U.S.C. 403(b)(1), 403(b)(3), 
404(a)(3), 1001(e)(4)-(5). Congress was explicit in framing Section 
1004(i)'s definitions as applicable only ``for purposes of this 
section.'' 39 U.S.C. 1004(i). Cf. United States v. Cons. Life Ins. Co., 
430 U.S. 725, 769 (1977) (White, J., dissenting) (finding a definition 
under section 801(c)(2) and (3) of the Internal Revenue Code of 1954 to 
be inapplicable to rules for taxing the income of life insurance 
companies from modified coinsured contracts under section 820 of the 
Internal Revenue Code of 1954, because the definition was applicable 
only ``for purposes of * * * subsection 801(a)''); Thomas v. U.S. Bank 
Nat'l Ass'n, 575 F.3d 794, 798 (8th Cir. 2009) (construing preemption 
language ``for purposes of this section'' in 12 U.S.C. 1831d(a) as 
meaning that ``conflicting state constitutions or statutes are not 
preempted for every and all purposes, but only for purposes of `this 
section'''). Congress could have applied Section 1004(i)'s definitions 
to title 39 more broadly or even to section 404(d) in particular, but 
it did not do so. Therefore, the limited context of the Postmaster 
Equity Act is inapposite to this rulemaking.
    Even if the Postmaster Equity Act had some import in this context, 
the proposed rule would not be inconsistent with the definition of a 
``postmaster'' therein. The Postmaster Equity Act does not require that 
each postmaster manage only one Post Office or that every Post Office 
be individually staffed by a postmaster. Indeed, in many cities, 
postmasters are responsible for a main Post Office and several 
classified stations and branches, which the Commission has repeatedly 
described as having no functional difference from customers' 
perspectives from Post Offices. The Postal Service is confident that 
rural postmasters would be similarly capable of overseeing operations 
at more than one retail facility.
    Decisions about the staffing of Post Offices are within the Postal 
Service's general authority to manage Post Offices and staff 
appointments under the Postal Reorganization Act provisions cited 
above. The proposed rule is consistent with the definition of a 
postmaster under the Postmaster Equity Act, exercises appropriate and 
reasonable rule-making authority under the Postal Reorganization Act, 
and streamlines postal operations in order to reduce costs and enhance 
value. Therefore, it is a reasonable exercise of the Postal Service's 
authority to administer its statutory objectives, and it is not 
inconsistent with title 39 of the U.S. Code.
    One commenter was concerned that, as a result of the same change, 
the presence of Post Offices staffed by non-postmaster personnel would 
make it easier for the Postal Service to close those facilities. It is 
unclear how such an effect would flow from mere staffing arrangements, 
however. The same requirements, criteria, and procedures apply to all 
Post Offices, regardless of how they are staffed. As explained in the 
proposed rule, those same requirements, criteria, and procedures are 
now applied, as a matter of policy, to Postal Service-operated stations 
and branches, which are not staffed by postmasters today. If anything, 
this change could lead to the continued operation of Post Offices that 
otherwise would be discontinued, due to the Postal Service's ability to 
staff them in a more flexible and economical fashion.
    Another commenter viewed the proposed change to 39 CFR 241.1 as 
inconsistent with Employee and Labor Relations Manual (ELM) 113.3, 
which the commenter believed to correspond to 39 U.S.C. 1004(i)(3). ELM 
113.3(k) reflects the Postal Service's previous practice of requiring a 
postmaster at all Post Offices. As explained above, 39 U.S.C. 
1004(i)(3) defines a ``postmaster'' in association with a Post Office, 
but does not require that a Post Office be associated with a postmaster 
staffing each Post Office in all cases. Hence, the Postal Service is 
not precluded by statute from taking a different approach. The Postal 
Service plans to update ELM 113.3(k) to reflect the change to 39 CFR 
241.1.
    A postal supervisors' organization raised concerns that the 
replacement of Executive and Administrative Schedule (EAS) employees 
with bargaining-unit employees, and/or postmasters with clerks-in-
charge, would increase workload, deprive communities of access to 
knowledgeable management personnel, and not offer significant cost 
savings in light of current pay ceilings. The Postal Service has not 
yet determined to take any such specific action in furtherance of these 
changes to the overarching regulations. Any particular staffing 
decision would presumably take account of workload, community needs, 
and cost savings. In this rulemaking, the Postal Service only removes, 
as a general matter, a self-imposed restriction on its discretion to 
make such decisions in instances where

[[Page 66187]]

more flexible staffing may be the most rational option.

II. Explanation of Changes From Proposed Rule

    The final rule includes the following additional changes to the 
proposed rule.
    Paragraph 241.1(a) has been revised to clarify that the operation 
or staffing of a Post Office by non-postmaster personnel must be at the 
direction of the postmaster, and that it may include times when the 
postmaster is not physically present. While the proposed rule referred 
to whether a Post Office was ``operated or managed'' by non-postmaster 
personnel, the phrase ``operated or staffed'' better reflects the 
intended meaning that a postmaster would continue to manage operations 
at the Post Office, albeit possibly without personally operating or 
staffing it on a continuous basis.
    A sentence is added to paragraph 241.3(a)(1)(ii) (redesignated as 
241.3(a)(1)(iii)) to clarify that these regulations will no longer 
apply to discontinuance actions pending as of December 1, 2011, that 
pertain to the conversion of a Post Office to another type of USPS-
operated facility.
    The definition of ``consolidation'' in paragraph 241.3(a)(2)(iv) is 
revised to restrict the term's definition to instances where a Postal 
Service-operated retail facility is replaced with a contractor-operated 
retail facility that reports to a Postal Service-operated retail 
facility. Consistent with the proposed rule, the term no longer 
encompasses situations where a Post Office is replaced with a 
Classified Station or Classified Branch.
    Paragraph 241.3(b)(4) is revised to indicate the possibility that a 
consolidated facility's name, or a similar name, can be used by the 
succeeding facility, rather than suggesting an expectation that the 
former name will be maintained, thereby allowing for the range of 
contract- and service-specific circumstances that can affect such a 
determination.
    The Postal Service hereby adopts the following changes to 39 CFR 
part 241.

List of Subjects in 39 CFR Part 241

    Organization and functions (government agencies), Postal Service.

    Accordingly, 39 CFR part 241 is amended as follows:

PART 241--RETAIL ORGANIZATION AND ADMINISTRATION: ESTABLISHMENT, 
CLASSIFICATION, AND DISCONTINUANCE

0
1. The authority citation for 39 CFR part 241 continues to read as 
follows:

    Authority: 39 U.S.C. 101, 401, 403, 404, 410, 1001.


0
2. In Sec.  241.1, paragraph (a) is revised to read as follows:


Sec.  241.1  Post offices.

    (a) Establishment. Post Offices are established and maintained at 
locations deemed necessary to ensure that regular and effective postal 
services are available to all customers within specified geographic 
boundaries. A Post Office may be operated or staffed by a postmaster or 
by another type of postal employee at the direction of the postmaster, 
including when the postmaster is not physically present.
* * * * *

0
3. In Sec.  241.3:
0
a. Paragraph (a)(1)(i)(B) is revised;
0
b. Paragraph (a)(1)(ii) is redesignated as paragraph (a)(1)(iii), and 
new paragraph (a)(1)(ii) is added;
0
c. Newly redesignated paragraph (a)(1)(iii) is revised;
0
d. Paragraph (a)(2)(iv) is revised;
0
e. Paragraph (b)(2)(i) is revised;
0
f. Paragraph (b)(4) is revised; and
0
g. Paragraph (c)(2) is revised.
    The revisions and additions read as follows:


Sec.  241.3  Discontinuance of USPS-operated retail facilities.

    (a) * * *
    (1) * * *
    (i) * * *
    (B) Combine a USPS-operated Post Office, station, or branch with 
another USPS-operated retail facility, or
    (ii) The conversion of a Post Office into, or the replacement of a 
Post Office with, another type of USPS-operated retail facility is not 
a discontinuance action subject to this section. A change in the 
staffing of a Post Office such that it is staffed only part-time by a 
postmaster, or not staffed at all by a postmaster, but rather by 
another type of USPS employee, is not a discontinuance action subject 
to this section.
    (iii) The regulations in this section are mandatory only with 
respect to discontinuance actions for which initial feasibility studies 
have been initiated on or after July 14, 2011. Unless otherwise 
provided by responsible personnel, the rules under Sec.  241.3 as in 
effect prior to July 14, 2011 shall apply to discontinuance actions for 
which initial feasibility studies have been initiated prior to July 14, 
2011. Discontinuance actions pending as of December 1, 2011, that 
pertain to the conversion of a Post Office to another type of USPS-
operated facility are no longer subject to these regulations.
    (2) * * *
    (iv) ``Consolidation'' means an action that converts a Postal 
Service-operated retail facility into a contractor-operated retail 
facility. The resulting contractor-operated retail facility reports to 
a Postal Service-operated retail facility.
* * * * *
    (b) * * *
    (2) * * *
    (i) In a consolidation, the ZIP Code for the replacement 
contractor-operated retail facility is the ZIP Code originally assigned 
to the discontinued facility.
* * * * *
    (4) Name of facility established by consolidation. If a USPS-
operated retail facility is consolidated by establishing in its place a 
contractor-operated facility, the replacement unit can be given the 
same name of the facility that is replaced, if appropriate in light of 
the nature of the contract and level of service provided.
    (c) * * *
    (2) Consolidation. The proposed action may include a consolidation 
of USPS-operated retail facilities. A consolidation arises when a USPS-
operated retail facility is replaced with a contractor-operated retail 
facility.
* * * * *

Stanley F. Mires,
Attorney, Legal Policy and Legislative Advice.
[FR Doc. 2011-27641 Filed 10-25-11; 8:45 am]
BILLING CODE 7710-12-P