With No Remaining Governors, the U.S. Postal Service Delivers Itself Into Uncharted Waters

Author: Jon Hill, TheStreet.com

A governance crisis has put a big question mark on the future of the United States Postal Service (USPS) just in time for the holiday mail season, which is expected to peak Monday as Americans scramble to send off millions of greeting cards, letters, and packages ahead of holiday shipping deadlines later this week. The holds may reflect objections from APWU members and postal advocates that the pending governor nominees won't represent the best interests of the USPS' half-­million employees. But if the goal is to save the USPS from further downsizing or forestall efforts to privatize the post office, this strategy may backfire.

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Responsibility for overseeing the postal service is the job of the nine presidential appointees to the USPS Board of Governors. Together, they function like a corporate board of directors­­ governors guide long-term strategy, control expenditures, set postal policies, and select both the Postmaster General and her deputy.

But the USPS no longer has any governors. Their numbers have dwindled over the past six years until the last one, James Bilbray, left on Dec. 8. Like the governors who left before him, his term was up.

Bilbray and his former colleagues are victims of a years­long process of attrition. Postal governors serve staggered seven-­year terms, so their ranks must regularly be replenished; however, President Barack Obama's attempts to fill the vacancies hit a brick wall in the Senate. Thanks to the secret hold­­—a legislative maneuver that allows individual senators to anonymously block an up­-or-­down vote on a nominee—­­the President's most recent batch of governor nominations has sat on ice in the Senate for almost two years and will likely expire. That means filling the empty Board seats will soon be President­elect Donald Trump's problem.

But this is not a simple case of partisan gridlock. Although Senate Republicans have stymied the President's attempts to fill a variety of federal offices in recent years, it is something of an open secret that the senators blocking the postal governor nominees are actually not Republicans. Perhaps the most prominent of these is Vermont Sen. Bernie Sanders, whose support for the postal service earned him the endorsement of the American Postal Workers Union (APWU) during his presidential campaign. Sen. Sanders has not spoken publicly on the vacancies, though, and his office has not yet returned TheStreet's request for comment.

The holds may reflect objections from APWU members and postal advocates that the pending governor nominees won't represent the best interests of the USPS' half­-million employees. But if the goal is to save the USPS from further downsizing or forestall efforts to privatize the post office, this strategy may backfire.

That is because the lack of governors could ultimately precipitate the kind of emergency that would necessitate Congressional intervention. Without governors, for example, it is unclear whether the USPS could legally raise postage prices, alter services, approve big contracts, or even hire a new Postmaster General. For an organization that generates nearly $70 billion in annual revenue and has more employees than McDonald's, that operational limbo presents huge risks.

"Any time there's any sort of uncertainty about the authority to approve massive contracts, you're basically inviting lawsuits," said Kevin Kosar, a senior fellow at the free­-market think tank R Street. "The stakes are so high, why not sue if you don't get your way?"

And as James O'Rourke, a professor of management at Notre Dame, points out, a major lawsuit or acute funding shortfall could give cover for the USPS' Congressional detractors to pursue privatization.

"That may well provoke a crisis of the sort they're looking for," O'Rourke said.

The USPS maintains that, for the time being, its ability to deliver the mail will not be affected by the governors' absence. In place of the Board, a "Temporary Emergency Committee" (TEC) consisting of the Postmaster General and her deputy will ostensibly allow the postal service to take steps necessary to keep operations running until replacement governors arrive. "We will have the authority to exercise the powers of the Board," said USPS media relations manager David Partenheimer in an emailed statement.

But it is an open question whether the TEC can, in fact, legally continue to wield even a limited set of Board powers without any governors present. "If the USPS continues to take that view, then the powers of the Board of Governors will be wielded by the two people whom the board was to oversee," said Kevin Kosar. "Craziness!"