**Before The**

**POSTAL RATE COMMISSION**

**Washington, D.C. 20268-0001**

**\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_**

**Evolutionary Network Development Docket No. N2006-1**

**Service Changes, 2006**

**\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_**

**OPPOSITION OF AMERICAN POSTAL WORKERS UNION, AFL-CIO, TO**

**UNITED STATES POSTAL SERVICE MOTION TO ADOPT**

**PROCEDURAL SCHEDULE AND SPECIAL RULES OF PRACTICE**

**AND APWU REQUEST FOR ALTERNATIVE SCHEDULE INCLUDING HEARING**

**(MARCH 17, 2006)**

In accordance with the Commission's February 24, 2006, Order, the
American Postal Workers Union, AFL-CIO (APWU), hereby respectfully
objects to the Motion of the United States Postal Service seeking
adoption of a proposed procedural schedule and special rules of
practice.

The APWU hereby also requests that the Commission schedule a hearing on
this matter.

As explained below, the Postal Service's requested timetable is
inconsistent with past practice of the Commission and unrealistic in
terms of the complexities of the issues. The pending discovery disputes
between the Postal Service and interveners focus primarily on the
failure of the Postal Service to acknowledge and account for the fact
that implementation of END will result in a diminution of service to
some segments of the mailing community. Those discovery disputes are
reasonably complex. Once they are resolved, the Commission will have to
begin to consider the implications of the service standard changes that
will thus be revealed. It seems likely that additional rounds of
discovery will be necessary at that point.

In addition, further examination of the materials the Postal Service has
already submitted indicates that the Postal Service is overstating the
savings that may potentially be obtained through its END/AMP process. As
we explain further below, in some instances, the losing facilities may
be more productive and more efficient than the gaining facilities. The
Postal Service projections of "savings" from the expensive moves
contemplated by their AMPs depend on as-yet unrealized improvements in
productivity that (a) may never be realized, and (b) might be realized
regardless of the AMP-driven changes. Given that the initial Postal
Service submission in this case was based on considerations of cost
savings, to the virtual exclusion of consideration of service
decrements, the possible inaccuracy of the estimated cost savings is an
issue of undeniable importance to the work of the Commission. The Postal
Service's submission ignores the policies expressed in Sections 101 and
403 of the Postal Reorganization Act of 1970, 39 U.S.C. §§ 101, 403,
including the requirements that

> ... The Postal Service shall have as its basic function the obligation
> to provide postal services to bind the Nation together through the
> personal, educational, literary, and business correspondence of the
> people. It shall provide prompt, reliable, and efficient services to
> all communities. ...

39 U.S.C. § 101(a); and

> The Postal Service shall provide a maximum degree of effective and
> regular services to rural areas, communities, and small towns where
> postal offices are not self-sustaining. ...

39 U.S.C. § 101(b). Therefore, while consideration of cost savings is
important and necessary, it is not the only factor that the Commission
must evaluate in determining whether the END process conforms to the
Postal Reorganization Act.

[Comparison to Earlier Cases]{.underline}

The schedule the Postal Service has proposed in this case would be a
dramatic departure from schedules kept by the Commission in earlier
cases filed under Section 3661 of the Act. Yet the Postal Service has
done nothing to explain why this case should be given abbreviated
treatment in comparison to the usual practice, other than to say that
the Postal Service intends to implement its END plan no later than May
15, 2006. The merit of using the Postal Service's preferred
implementation timetable as a basis for setting the Commission's
schedule for this proceeding should be evaluated in light of the fact
that the Postal Service has been developing its END strategy since 2001.

The timetable for submission of the END plan to the Commission, and a
sufficient period for its consideration by the Commission, should have
been a factor in the Postal Service's planning of END. Even a cursory
examination of the timetables followed in earlier similar cases reveals
that the Postal Service's suggested timetable is not reasonable. For
example:

1\. **[Docket N75-1 RE: RAP]{.underline} (ONE YEAR)**

[General Timeline]{.underline}:

-   The USPS filed its Request for an Advisory Opinion on **April 11,
    1975**

-   Notice of Request filed by the PRC on **April 16, 1975**

-   Petitions to Intervene were due on **April 30, 1975**

-   PRC Advisory Opinion issued on **April 22, 1976**

> [Parties]{.underline}: 4
>
> [Discovery]{.underline}: (The precise time allowed for discovery is
> unknown)

-   First Interrogatory Request was filed **May 15, 1975**

    -   OCA to USPS regarding USPS's direct case

-   Last Interrogatory Request was filed **September 23, 1975**

    -   USPS to OCA regarding USPS's cross examination

    ```{=html}
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    -   USPS's last answer to interrogatories and request for documents
        was filed on **August 22, 1975**

    -   OCA's last answer to USPS's interrogatories was filed on
        **October 6, 1975**

> [Briefs:]{.underline}

-   Original Post Hearing Briefs were due on **November 14, 1975**

-   Reply brief were due on **December 4, 1975**

2\. **[Docket N86-1 and MC86-3, COD Service]{.underline} (ONE YEAR)**

[General Timeline]{.underline}:

-   The USPS filed its Request for an Advisory Opinion on **February 12,
    1986**

-   Notice of Request was filed by the PRC on **February 20, 1986**

-   Petitions to Intervene were due on **March 6, 1986**

-   PRC Advisory Opinion issued on **February 6, 1987**

> [Parties]{.underline}: 7
>
> [Discovery]{.underline}:

-   Deadline for discovery on USPS's direct case extended to **July 25,
    1986** (originally July 11, 1986)

-   Hearing on USPS's direct case was held on **August 5, 1986**

-   **September 17, 1986 -** Close of first round of discovery

-   **October 3, 1986** -- Close of second round of discovery

-   Common record was closed on **October 31, 1986**

> [Briefs]{.underline}:

-   Initial briefs were due by **November 24, 1986**

-   Reply briefs were due by **December 16, 1986**

4\. **[Docket N89-1 RE: First Class Delivery Standards]{.underline} (10
MONTHS)**

[General Timeline]{.underline}:

-   The USPS filed its Request for an Advisory Opinion on **September
    29, 1989**

-   Notice of Request was filed by the PRC on **October 3, 1989**

-   Petitions to Intervene were due on **October 23, 1989**

-   PRC Advisory Opinion issued on **July 25, 1990**

> [Parties]{.underline}: 28
>
> [Discovery]{.underline}:

-   **November 17, 1989 -**Deadline for filing discovery on the USPS's
    Direct Case

-   Answers to Interrogatories due **December 1, 1989**

-   **February 9, 1990** -- Deadline for filing discovery on
    Interventors' Direct Cases

-   Answers to Interrogatories due **February 28, 1990**

> [Briefs]{.underline}:

-   Initial briefs were due by **April 24, 1990**

-   Reply briefs were due by **May 8, 1990**

Based on this past experience, the presumptive timetable for this
proceeding should

span approximately one year.

We respectfully suggest that the Commission need not feel compelled to
base its timetable in this case on the Postal Service's preferred
timetable for implementation of END. The Commission may wish to observe
that the Postal Service first promised to disclose its Network
Integration and Alignment (NIA) strategy no later than December
2002.[^1] That strategy was delayed and slowed down because the Postal
Service decided to use a more "evolutionary " approach to network
realignment; thus, NIA was re-named END. Yet, the Postal Service now
wants the Commission to use an expedited procedure to perform its
statutory duty to review the END program before it is implemented.

We think it is telling that the Postal Service has failed to conform to
its own proposed special procedural timeline. The Postal Service has
exceeded its proposed deadline in responding to the interrogatories
propounded by the APWU, David Popkin and the OCA; the only parties to
file interrogatories to date. Specifically, the Postal Service has not
responded to any of the OCA's requested interrogatories, the first of
which were filed 14 days ago on Friday, March 3, 2006. The Postal
Service has also failed to meet its proposed deadline for filing replies
to motions. In fact, on March 16, 2006, the Postal Service filed a
Motion for Late Acceptance of Reply in Opposition to David Popkin Motion
to Compel a Response to Interrogatory DBP/USPS-30. The Postal Service's
reply exceeded even the standard 7 day deadline by two days. This
performance by the Postal Service indicates that the other parties,[^2]
and the Commission, will need the usual amount of time in this case.

Furthermore, the Postal Service has made no argument that an early
decision in this matter is urgent. The Postal Service has acknowledged
that END implementation will span a long period of time. The initial 10
projects the Postal Service would like to implement in the near future
would save the Postal Service \$12.7 million per year, [in the
aggregate]{.underline}. It is not evident from the current record that
it is critical that these projects be implemented on May 15, 2006. More
important is that the Commission fulfills its statutory obligation to
provide a hearing on this matter and establish a record that will permit
the individual Commissioners to provide certifications that the END
program conforms to the policies of the Postal Reorganization Act. 39
U.S.C. § 3661(c).

**[Pending Discovery Disputes]{.underline}**

Two APWU Motions to Compel Responses to Interrogatories dated February
28, 2006, are pending before the Commission. The Postal Service filed
its oppositions to those motions on March 7, 2006. The exchanges between
the APWU and the Postal Service on these interrogatories show that the
parties, and the Commission, will need a substantial amount of time to
resolve the issues in this case.

A central point made by the APWU Motions to Compel interrogatory answers
in this case is that the Postal Service submissions to date have served
to obscure rather than illuminate the service changes that must be
weighed against the alleged financial benefits of END. By its Reply to
the APWU Motion to Compel in APWU/USPS-T2-1, the Postal Service has
managed to transport the obscure into the metaphysical. The Postal
Service argues (Reply to APWU/USPS-T2-1, at 2):

> With the END model developed, the Postal Service decided in 2005 to
> test it\[s\] ability to manage a centralized and accelerated AMP
> review process, by directing that 10 of these 24 local AMP proposals
> be placed back on the front burner, reviewed and, if approved,
> implemented. \[Citation omitted.\] [During 2005, the Postal Service
> initiated development of its plan for a national roll-out of a
> centrally directed and accelerated application of the AMP review
> process to its entire network. That plan is the subject of this
> proceeding.]{.underline} \[Emphasis added here.\]

Thus, we are now advised that the matter before the Commission is not
review of END itself, but review of the plan to roll out END on a
nationwide basis.

This muddle would be amusing if were not so serious. As we have argued
in our motions to compel, the Postal Service is trying to skirt or
ignore the fact that END is nothing more than a slower version of NIA
that was promised for delivery in December 2002. This denial of the
continuity of the two programs is a primary basis of the Postal
Service's resistance to permitting the Commission to consider events
that preceded the "roll-out" in 2005.

Thus, the Postal Service resists providing a list of AMP studies begun
since the end of 2001 in part as follows:

> By definition, such a list would exclude [any post-2001/non-N2006-1
> AMP]{.underline} [decisions not part of the current centrally directed
> and accelerated program]{.underline} for operational review that has
> the potential to produce service changes **on a cumulative basis**
> sufficient to trigger the request in this proceeding. Accordingly,
> such studies are -- by definition -- irrelevant to this docket and
> would pertain to isolated, localized network changes and any service
> changes that may have resulted. \[USPS Reply, supra, at 5; emphases
> added here.\]

Again, this response obscures rather than illuminates the matters in
dispute. The "definition" relied on is nowhere stated; we do not know
what this means. We have inferred that "definition" refers to the Postal
Service phrase "any decisions that were not made as a part of "the
current centrally directed and accelerated program." If that is what is
meant, the assertion is arguable but irrelevant.[^3] END began in 2001
as NIA and is ongoing. Every AMP since 2001 has been affected by the
NIA/END process \-- unless, of course, the Postal Service really means
it when it states that the Commission is not being asked to evaluate END
but only the "plan for a national rollout" of END.[^4] Even limiting the
Commission's advice to "a plan for national roll out," an historical
examination especially of recent AMPs should aid the Commission in its
evaluation.

This matter would be complex enough without obfuscation. Given that the
Postal Service is going to have to be compelled by the Commission to be
forthcoming with facts it is presently seeking to deny or obscure, the
Commission may wish to build more than the ordinary amount of time into
the schedule in this matter.

**Substantial Additional Discovery Is Necessary**

In addition to the objections the Postal Service has expressed in its
objections to APWU interrogatories and in its Opposition to our Motions
to Compel, the Postal Service has provided only grudging and partial
answers to most of our other interrogatories. As a result, the APWU will
be required to, and soon will, file follow-up and clarifying
interrogatories on questions that the Postal Service has acknowledged,
by answering, that it has a duty to answer.

These pending discovery disputes hinge in large part on the Postal
Service's reluctance to reveal the fact that END will have negative
service impacts. But it is now becoming clear, after further study of
the materials thus far submitted by the Postal Service, that substantial
discovery will be necessary on the issue of cost savings.

The Postal Service (a) uses hypothetical productivity rather than actual
productivity data to determine whether an AMP change will result in cost
savings; (b) uses average weekly volumes rather actual daily volumes to
determine whether the AMP transfer will be efficient; and (c) fails to
reveal to the Commission and the other parties whether actual
productivity is better or worse at the gaining facility than at the
losing facility. All these matters, and no doubt others, will require
discovery and consideration by the Commission.

We observe that the Postal Service has, in several of the AMP studies
submitted to the Commission, used something it calls "Breakthrough
Productivity Initiative" to measure the results of its AMP. An example
is provided by the Olympia/Tacoma AMP. See USPS LR 1/5, page 000040. As
note 2 of the AMP report reveals, the "Western Area" changed the
productivity assumption from the actual productivity of 199 to the BPI
of 456. [Id]{.underline}. Use of the BPI, a hypothetical productivity,
in this manner is totally incorrect. Not only does it use a productivity
goal that may never be reached in place of reality, this use of BPI
could result in a completely false positive outcome on the AMP study.
The Olympia positive outcome on the Olympia/Tacoma pairing is thus
apparently based not solely on the positive change that may be caused by
the transfer of work, it is based on the productivity increase due to
BPI -- an outcome that would be expected without the transfer of work.
The same problem is revealed in the paperwork on the
Marysville/Sacramento pairing. USPS LR 1/5, page 000168. We do not know,
because the footnotes have not been provided for all the studies,
whether all the studies are thus afflicted; but we will proffer
interrogatories on this subject.

The limited footnotes available to us also reveal that the Postal
Service is using average weekly volumes in its AMP studies. The use of
average volumes masks a very substantial problem of under-capacity.
Daily volumes vary substantially (how much will be the subject of
further discovery). The use of average weekly volumes may mask the fact
that, on peak days, the gaining facilities may not be able to handle the
volumes without using overtime or manual processing to meet service
standards; or service standards may not be met on heavy volume days.

An example of this problem is provided by the Olympia/Tacoma pairing.
Thus, note 2 to the AMP report states, in part (at 000040):

> ...the THP of 599,352 did not reflect the actual volume that would be
> processed in 060. It was written up in the notes, but was not
> reflected on sheet 4a. The TPH volume for 060 should have been
> 2,928,963 pieces. Tacoma does not have the available runtime on the
> AFSM 100 to process all of the Olympia 331 volume. The Olympia 331 TPH
> volume of 5,862,254 pieces. The distribution will be as follows:

Op 331- 1,940,750 pieces op 441 -- 1,588,004 pieces op 060 2,333,500

If you check the previous sheets, you will see that all the 331 volume
was not accounted for. Operation 060 is the manual distribution of flat
mail. Thus, the AMP report for the Olympia/Tacoma pairing apparently
overlooks the fact, except in footnote 2, that one effect of this
transfer of mail will be to cause a very substantial increase in the
manual processing of flat mail in Tacoma. This raises serious questions
of staffing levels, cost and service standards.

We suppose that the Postal Service will reply to this point that the
fact that the AMP for Olympia/Tacoma makes this mistake is not of
systemic significance and is thus beyond the scope of this proceeding.
But from the data that is available, it seems that this problem is
endemic. We can see that average piece handlings rather than actual
daily piece handlings have been used to evaluate AMPs also in Santa
Clara/Industry (page 000020); and the Bakersfield/Mojave pairing (page
000184). Thus, substantial discovery will be necessary on this point.

**[CONCLUSION]{.underline}**

For the above-stated reasons, the Commission should reject the proposed
schedule submitted by the Postal Service and should provide the parties
sufficient time for discovery. The APWU also requests that a hearing be
scheduled in this matter. The APWU requests that the schedule provide
for three rounds of discovery (approximately 90 days) and requests that
the schedule thereafter follow the Commission's usual practices in
setting hearings and briefing deadlines.

Respectfully submitted,

\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

Darryl J. Anderson

Counsel for American Postal Workers Union, AFL-CIO

O'Donnell, Schwartz & Anderson, P.C.

1300 L Street, N.W., Suite 1200

Washington, D.C. 20005-4126

Voice: (202) 898-1707

Fax: (202) 682-9276

Danderson@odsalaw.com

[^1]: Source -- Library Reference N2006-1/7 pg. 36

[^2]: As of March 17, 2006, 21 intervening parties have yet to file
    interrogatories.

[^3]: Even if there are such AMPs, the Commission is entitled to examine
    their results by way of comparison to END results. This would be a
    good way to determine what END has changed.

[^4]: Furthermore, this Postal Service response may signal a Postal
    Service intention to raise a major legal issue related to the scope
    of its duty to submit this matter to the Commission. The phrase "on
    a cumulative basis sufficient to trigger the request in this
    proceeding" does not appear in Section 3661 of the Act. The
    statutory standard is whether the change will "generally affect
    service on a nationwide or substantially nationwide basis." 39
    U.S.C. § 3661(b). There is no question from what we have already
    seen that END will generally affect service on a nationwide or
    substantially nationwide basis. Perhaps the reference to "cumulative
    basis" means that the Commission will be asked to subtract benefits
    to large mailers due to END from the adverse impacts on individuals
    and small mailers to determine whether the impact is cumulatively
    significant.