[Federal Register Volume 80, Number 241 (Wednesday, December 16, 2015)]
[Pages 78260-78262]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2015-31572]

[[Page 78260]]



[Docket Nos. PI2016-2; Order No. 2862]

Public Inquiry on Commission Jurisdiction Over Postal Service 
Determinations To Close or Consolidate Post Offices

AGENCY: Postal Regulatory Commission.

ACTION: Notice.


SUMMARY: The Commission is establishing a public inquiry to receive 
comments regarding the Commission's jurisdiction over Postal Service 
determinations to close or consolidate post offices. This notice 
informs the public of this proceeding, invites public comment, and 
takes other administrative steps.

DATES: Comments are due: January 29, 2016. Reply Comments are due: 
February 23, 2016.

ADDRESSES: Submit comments electronically via the Commission's Filing 
Online system at http://www.prc.gov. Those who cannot submit comments 
electronically should contact the person identified in the FOR FURTHER 
INFORMATION CONTACT section by telephone for advice on filing 

FOR FURTHER INFORMATION CONTACT: David A. Trissell, General Counsel, at 

I. Introduction
II. Public Inquiry
III. Conclusion
IV. Public Representative
V. Ordering Paragraphs

I. Introduction

    The Postal Regulatory Commission (Commission) seeks comments on the 
interpretation of terms related to 39 U.S.C. 404(d), which governs the 
jurisdiction of the Commission over Postal Service determinations to 
close or consolidate post offices. This statute sets forth requirements 
for the Postal Service to follow when it closes or consolidates a post 
office, and authorizes the Commission to review these closures and 
consolidations. Petitions filed before the Commission regarding the 
closing of various Postal Service retail facilities often indicate a 
misunderstanding among the general public of the scope of Commission 
authority to review Postal Service decisions regarding the operation of 
its retail facilities.
    The Commission seeks input as to what, in commenters' views, 
constitutes a relocation or rearrangement of postal services and is 
thus exempt from Commission review pursuant to section 404(d); and when 
or if the Commission should have jurisdiction to review the closing or 
consolidation of a contract postal unit (CPU). The remainder of this 
Notice provides background information on the Commission precedent 
related to its jurisdiction to aid commenters.
    In Order Nos. 1866 \1\ and 2505 \2\ the Commission signaled its 
intent to initiate this type of separate proceeding in which it could 
consider the scope of its appellate authority with regard to 
relocations and rearrangements of postal retail facilities, as well as 
the closure of CPUs. Specifically, in Glenoaks, the Commission 
expressed a preference to initiate a proceeding in which it would 
clarify and distinguish Postal Service characterizations of relocations 
and rearrangements from closures and consolidations. Order No. 1866 at 
12. In Careywood, the Commission acknowledged the need to review the 
sole source standard that it has applied to CPUs. Order No. 2505 at 14. 
The Commission initiates this public inquiry to discuss the 
aforementioned matters and provide stakeholders and other interested 
persons an opportunity to provide written comments.

    \1\ Docket No. A2013-5, Glenoaks Station Post Office, Burbank, 
California, Order Affirming Determination, October 31, 2013 (Order 
No. 1866).
    \2\ Docket No. A2015-2, Careywood Post Office, Careywood, Idaho, 
Order Dismissing Appeal, May 27, 2015 (Order No. 2505).

II. Public Inquiry

    The Commission establishes Docket No. PI2016-2 to solicit comments 
regarding its interpretation of terms and concepts related to section 
404(d) including the distinctions between closures or consolidations 
and relocations or rearrangements of postal retail facilities, and the 
interpretation and application of the sole source standard which 
provides for Commission jurisdiction over certain CPUs. Title 39 U.S.C. 
404(d) sets forth the procedures the Postal Service shall follow when 
closing or consolidating a post office and delineates the Commission's 
prescribed authority to review these closures and consolidations. 
``Closing'' refers to the elimination of a post office in a 
community,\3\ while ``consolidation'' has not been defined by the 
Commission since the Postal Service updated its regulations in 2011 and 
changed its definition of ``consolidation.'' \4\

    \3\ See, e.g., Docket No. A86-13, In the Matter of Wellfleet, 
Massachusetts 02667, Order Dismissing Docket No. A86-13, June 10, 
1986 (Order No. 696).
    \4\ In the 2011 update, the Postal Service defined 
``consolidation'' as a conversion from a Postal Service-operated 
retail facility to a contractor-operated retail facility that 
reports to a Postal Service-operated retail facility. See 39 CFR 
241.3(a)(2)(iv). Previously, the Postal Service had defined 
``consolidation'' as the act of subordinating day-to-day overall 
management of one office with a postmaster to the administrative 
personnel of another office. See Knapp v. U.S. Postal Service, 449 
F.Supp. 158 (E.D. Mich. 1978) (Knapp).

    The Commission's limited authority to review post office closings 
and consolidations is provided by 39 U.S.C. 404(d)(5).\5\ That section 
requires that the Commission review the Postal Service's determination 
on the basis of the record that is before the Postal Service. The 
Commission is empowered by section 404(d)(5) to set aside any 
determination or findings and conclusions that the Commission finds to 
be: (A) Arbitrary, capricious, an abuse of discretion, or otherwise not 
in accordance with the law; (B) without observance of procedure 
required by law; or (C) unsupported by substantial evidence in the 
record. Should the Commission set aside any such determination or 
findings and conclusions, it may remand the entire matter to the Postal 
Service for further consideration. Section 404(d)(5) does not, however, 
authorize the Commission to reject or modify the Postal Service's 
determination by substituting its judgment for that of the Postal 

    \5\ The word ``appeal'' in the statute is somewhat imprecise, as 
the Commission does not have the authority to reverse or undo the 
Postal Service's action. If the Commission remands the Postal 
Service's determination, the Postal Service's regulations require 
that any deficiencies identified by the Commission be corrected 
before closing the facility. See 39 CFR 241.3(g)(4(ii).
    \6\ However, section 404(d)(5) does authorize the Commission to 
suspend the effectiveness of a Postal Service determination pending 
disposition of the appeal.

    The Commission requests comments on whether its regulations in 39 
CFR part 3025 and their application by the Commission in prior orders 
interpreting the statute and regulations are sufficiently clear.

A. Relocations and Rearrangements

    The Commission has determined that when the Postal Service 
redeploys retail facilities within a community, such a change 
constitutes a relocation or rearrangement of postal retail services 
within a community, as opposed to a closing or a consolidation. A 
relocation or rearrangement is not subject to section 404(d) and 
therefore not within the Commission's jurisdiction. This interpretation 
of the definition of closing affords the Postal Service, as the 
operator and provider of service, the flexibility to organize and place 
its retail service outlets in the ways it sees best. Although the 
relocation of postal retail services is not defined by statute, the 
Postal Service defines and distinguishes

[[Page 78261]]

it from facility discontinuances and consolidations. See 39 CFR 241.4.
    Generally speaking, relocation involves the moving of retail 
services from one station or branch to another postal facility within 
the same community. Id. The Commission has concluded that a Postal 
Service action affecting a postal retail facility constitutes a 
relocation and falls outside the scope of 39 U.S.C. 404(d) if both the 
existing site and the proposed site of the retail facility are located 
in the same community.\7\ This view is consistent with the Commission's 
predecessor, the Postal Rate Commission's ruling in Oceana, where it 
held that when enacting section 404(b),\8\ Congress did not intend for 
the procedures and appeal right to apply to the specific building 
housing the post office, but rather Congress was concerned with the 
provision of a facility within the community. Order No. 436 at 1. The 
Commission has determined that Postal Service decisions to relocate 
retail facilities within the same community are not closings or 
consolidations and, therefore, fall outside the scope of the 
Commission's jurisdiction under 39 U.S.C. 404(d). See Order No. 436.

    \7\ See Docket No. A82-10, Oceana Station, Virginia Beach, 
Virginia, Order Dismissing Docket No. A82-10, June 25, 1982, at 7 
(Order No. 436).
    \8\ Section 404(b) of title 39 was renumbered to section 404(d) 
with the enactment of the Postal Accountability and Enhancement Act, 
Public Law 109-435, December 20, 2006.

    The Commission has applied this rationale in several post office 
closing appeals and found that transfers of retail operations 
constituted relocations over which it lacked section 404(d) 
jurisdiction to review. For example, in Venice, the Commission 
dismissed an appeal of a Postal Service decision to transfer retail 
operations to a carrier annex approximately 400 feet away as a 
relocation falling outside the scope of 39 U.S.C. 404(d).\9\ In Santa 
Monica and Ukiah, the Commission determined that the transfer of retail 
operations to a carrier annex approximately 1 mile away from the main 
post office constituted a relocation of retail services falling outside 
the scope of 39 U.S.C. 404(d).\10\ Similarly, in Wellfleet, the Postal 
Rate Commission determined that moving retail operations to a new 
location 1.2 miles away was a relocation and 39 U.S.C. 404(d) did not 
apply. See Order No. 696.

    \9\ Docket No. A2012-17, Venice Post Office, Venice, California, 
Order Dismissing Appeal, January 24, 2012 (Order No. 1166).
    \10\ Docket A2013-1, Santa Monica Post Office, Santa Monica, 
California, Order Granting Motion to Dismiss, December 19, 2012 
(Order No. 1588); Docket No. A2011-21, Ukiah Main Post Office, 
Ukiah, California, Order Granting Motion to Dismiss, August 15, 2011 
(Order No. 804).

    The Commission also has determined that section 404(d) does not 
apply to Postal Service actions that rearrange retail services within a 
community. In Oceana, the Postal Rate Commission determined that the 
Postal Service decision to close the Oceana Station was part of an 
overall plan to rearrange postal retail and delivery operations within 
the Virginia Beach community and section 404(d) did not apply. The plan 
included building a new post office within Virginia Beach approximately 
4 miles away from the site of Oceana Station, reorganizing carrier 
operations, improving retail services, and opening a CPU. Order No. 436 
at 4-5.
    The Commission has consistently applied its rationale used in 
Oceana and dismissed several post office closing appeals on the grounds 
that the Postal Service action constituted a rearrangement of retail 
facilities within a community. In Sundance, the Commission held the 
transfer of postal retail operations to a postal facility within the 
same community was a rearrangement of retail facilities and not subject 
to 39 U.S.C. 404(d).\11\

    \11\ Docket No. A2010-2, Sundance Post Office, Steamboat 
Springs, Colorado, Order Dismissing Appeal, April 27, 2010 (Order 
No. 448).

    Currently, the Postal Service's regulations regarding the 
relocation of postal facilities within a community can be found in 39 
CFR part 241--Establishment, Classification, and Discontinuance; 
expansion, relocation, and construction of post offices, and was most 
recently revised February 20, 2015, and became effective March 23, 
2015.\12\ However, Commission regulations do not specifically address 
relocations or rearrangements and, in light of previous Commission 
orders, it is interested in receiving comments regarding this 

    \12\ 80 FR 9190 (Feb. 20, 2015).
    \13\ Previously the Commission deferred consideration of a 
definition of the term ``relocation.'' See Order No. 1171, Docket 
No. RM2011-13, Order Adopting Final Rules Regarding Appeals of 
Postal Service Determinations to Close or Consolidate Post Offices, 
January 25, 2012, at 8.

B. Sole Source

    CPUs and Community Post Offices (CPOs) are types of contractor-
operated (as opposed to Postal Service-operated) facilities. See 39 CFR 
241.3(a)(2)(ii). A CPU is a contract station, contract branch, or CPO 
operated under contract by persons who are not postal employees in a 
space provided by the contractor.\14\ Village Post Offices (VPOs), 
although operated under a contract, are not classified by the Postal 
Service as a CPU.\15\ While CPUs generally do not fall within the scope 
of 39 U.S.C. 404(d), in select circumstances when the Commission 
determines that a CPU is the sole source of postal retail services to a 
community, it has found that section 404(d) (both the statutory intent 
and language) justifies the Commission exercise of review authority 
over sole source CPU closures and consolidations.\16\

    \14\ Postal Operations Manual section 123.126, Issue 9, July 
2002, Updated With Postal Bulletin Revisions Through October 31, 
2013 (POM); see also, Publication 32--Glossary of Postal Terms, July 
2013, https://about.usps.com/publications/pub32/ (Glossary of Postal 
Terms), defining a CPU as a ``postal unit that is a subordinate unit 
within the service area of a main Post Office. It is usually located 
in a store or place of business and is operated by a contractor who 
accepts mail from the public, sells postage and supplies, and 
provides selected Special Services (e.g., Postal Money Order or 
Registered Mail). Also called contract branch, contract station, and 
community Post Office unit.''
    \15\ See Village Post Offices Fact Sheet, July 2011, https://about.usps.com/news/electronic-press-kits/expandedaccess/assets/pdf/vpo-fact-sheet-110726.pdf. VPOs, like CPUs and CPOs, are part of the 
Postal Service's ``Approved Postal Provider'' network and are retail 
outlets for postal products and services operated by a third party.
    \16\ See Docket No. A83-30, In the Matter of Knob Fork, West 
Virginia 26579, Commission Opinion Remanding Determination for 
Further Consideration 39 U.S.C. 404(b)(5), January 18, 1984, at 7 
(Knob Fork).

    A CPO is a contractor-operated facility that provides services in 
small communities where an independent post office has been 
discontinued; a CPO bears its community's name and ZIP Code as part of 
a recognized mailing address. POM section 123.126, see also Glossary of 
Postal Terms.
    In Knob Fork, the Commission first established the sole source 
exception, applying 39 U.S.C. 404(b) to a CPU \17\ closure when that 
facility was the sole source of retail postal services to a community. 
Knob Fork at 10. In Knob Fork, the Postal Service emphasized that the 
main difference between a CPO and an independent post office was the 
employment status of the facility operator. Id. at 6. The Commission 
noted that if it accepts the Postal Service's statement that a CPO 
serves the public in the same way as a post office, it is reasonable to 
apply the section 404(b) procedures whenever the Postal Service 
proposes to close or consolidate a community's retail postal facility. 
Id. at 7. The Commission found that applying the section 404(b) closing 
procedures, given the Postal Service's definition of a CPO as the sole 
postal retail source serving a community, is consistent with Congress's 
intent that section 404(b) apply to the closing of the

[[Page 78262]]

sole postal retail facility serving a community. Id. at 8.

    \17\ The specific type of CPU at issue in Knob Fork was a CPO.

    In Green Mountain, the Commission reiterated that section 404(b) 
applies to sole source CPOs:
    It is the view of the Commission that Congress expected the section 
404(b) procedures to apply not only to independent post offices, as 
defined by the Postal Service, but also Community Post Offices when 
they are the sole source of postal services to a community. The Postal 
Service's consistent position is that the service of a Community Post 
Office is equivalent to that of an independent post office it seeks to 
consolidate. Therefore, the most reasonable reading of section 404(b) 
and Congressional intent is that 404(b) must apply whenever there is a 
proposed closure or consolidation of a community's sole retail postal 
facility, including a Community Post Office.\18\

    \18\ Docket No. A94-9, In the Matter of Green Mountain, Iowa 
50637, Commission Opinion Affirming Decision Under 39 U.S.C. 404(b), 
August 16, 1994, at 5 (Green Mountain).

    Over the last 30 years, when determining whether a CPU is the sole 
source of postal retail services in a community, the Commission has 
considered other sources of retail postal services to the community at 
issue. For example, in Alplaus, since there was a post office located 
approximately 1 mile from the Alplaus CPO and there were over 20 
alternate access locations within a 5-mile radius, the Commission 
concluded that the Alplaus CPO was not the ``sole source'' of postal 
services for the community.\19\ Accordingly, the Commission determined 
that since the Alplaus CPO was not the sole source of postal services 
for the community, section 404(d) did not apply.

    \19\ Docket No. A2012-88, Alplaus Post Office, Alplaus, New 
York, Order Dismissing Appeal, March 21, 2012, at 6 (Order No. 

    Similarly, in the past 3 decades since the sole source standard was 
set forth in Knob Fork, there have been advancements in technology, 
creation and expansion of commercial business centers, evolution of the 
postal retail network, and different modes of transportation. The 
Commission has continued to apply the sole source framework using a 
reasonable standard based on the statute and legislative intent. The 
sole source standard is not based simply on whether a facility is the 
only postal retail service facility located in a community. The 
standard is whether that retail facility is the sole provider of 
services to a community. This standard allows the Commission to 
recognize ongoing developments in travel, communication, and other 
services that may impact a community in how it receives its postal 
    In Careywood, the most recent Commission decision to apply the sole 
source standard, the Commission recognized that approved shippers, 
contract units such as VPOs, and automated postal centers may not be 
currently available. However, it acknowledged that other categories of 
postal services, such as another postal retail facility approximately a 
7-minute drive away, rural carriers, https://www.usps.com, and the 
Internet are available. Order No. 2505 at 12. The Commission noted that 
a facility that decades previously may have been considered the sole 
source may no longer be the sole source in part due to improved road 
safety, provisions of services by alternate means, and migration of 
business services to different areas. Id. The Commission also 
referenced Congress's requirement in section 302 of the Postal 
Accountability and Enhancement Act of 2006, that the Postal Service 
develop a plan for the expansion of access to alternate retail services 
including the Internet and non-post office access channels. Id. The 
Commission also held that while the Careywood CPU was the only physical 
postal retail provider in the community, it was not the community's 
only source for postal retail services, therefore section 404(d) did 
not apply. Id. at 13. The Commission explained that the closure of the 
Careywood CPU did not eliminate the Careywood community's access to 
postal retail services. Id.
    The Commission requests comments on the issue of the sole source 
standard used to determine whether section 404(d) applies to the 
closure or consolidation of a CPU.

III. Conclusion

    The Commission invites public comment on the Commission's 
interpretation of the language and intent of 39 U.S.C 404(d) with 
regards to the relocation and rearrangement of postal retail 
facilities, and the criteria and application of a sole source standard 
to CPU closures and consolidations. Additional information may be 
accessed via the Commission's Web site at http://www.prc.gov. 
Interested persons may submit comments no later than January 29, 2016. 
Reply comments may be filed no later than February 23, 2016.

IV. Public Representative

    Pursuant to 39 U.S.C. 505, Lauren A. D'Agostino is designated as an 
officer of the Commission (Public Representative) to represent the 
interests of the general public in this proceeding.

V. Ordering Paragraphs

    It is ordered:
    1. The Commission hereby establishes Docket No. PI2016-2 to review 
issues related to the scope of its appellate authority over relocations 
and rearrangements of postal retail facilities and the closure or 
consolidation of CPUs.
    2. Interested persons may submit comments no later than January 29, 
    3. Reply comments may be filed no later than February 23, 2016.
    4. Pursuant to 39 U.S.C. 505, the Commission appoints Lauren A. 
D'Agostino to serve as an officer of the Commission (Public 
Representative) to represent the interests of the general public in 
this docket.
    5. The Secretary shall arrange for publication of this notice in 
the Federal Register.

    By the Commission.
Stacy L. Ruble,
[FR Doc. 2015-31572 Filed 12-15-15; 8:45 am]