Inspector general seeks changes to bypass mail system

REPORT: Proposals include having the state reimburse Postal Service.

Associated PressNovember 28, 2011 

JUNEAU -- The U.S. Postal Service watchdog is calling for changes to Alaska's bypass mail program, saying it has evolved past its original purpose and seems to help commercial interests more than rural residents.

The program has come under scrutiny, with the agency struggling financially and a U.S. House bill calling for Alaska to pay the estimated $70 million cost for bypass mail.

Alaska's congressional delegation has railed against the House bill, calling postal service a guaranteed right. A Congressional Research Service memo, requested by Sen. Lisa Murkowski, said the bill might be unconstitutional, "commandeering" Alaska to pass a law to pay for the service.

But the agency's inspector general, in a paper released Monday, said it is time for changes to the program.

"The Postal Service cannot afford to subsidize a service that has expanded beyond its original purpose and does not appear essential to the Postal Service's mission to bind the nation together through the provision of reliable, affordable, universal mail service," the paper states.

Bypass mail allows goods to be flown from Anchorage and Fairbanks to communities not on the road system. It was established in 1972 as a "mutually beneficial solution" between the agency and air carriers to remove bottlenecks at mail facilities and improve service, the inspector general's office said.

The Congressional Research analysis said the major players in the program are the Postal Service, the carriers and the U.S. Transportation secretary, who sets the rates based on costs incurred by the carriers. But the inspector general's office said the agency's main role is paying the bills and it has little control over any other aspect of the program.

The office proposes seven changes that it said could help the program meet its original goals in a "more cost effective and appropriate way." Those suggestions include having the state or federal government reimburse the Postal Service for program-related losses; allowing the Postal Service to negotiate rates directly with airlines, as it does elsewhere; and changing the law to strike restrictions on new carriers. It also suggests removing the Postal Service from the equation and ceding the program to the private sector.

"Without at least some of these changes or others, the Postal Service will continue to suffer significant losses on the Alaska Bypass program at a time when it can least afford it," the paper states.

Murkowski, in a September newspaper op-ed piece, said the program is an "efficient answer to Alaska's challenging mail routes," saving the Postal Service from having to pay for facilities, labor and equipment to sort and send packages. Sen. Mark Begich has said the program is critical in rural Alaska and helps communities get the same universal service other Americans receive.

The inspector general's paper states that residents "no longer appear to derive a proportional benefit" from what is essentially a freight service and are still stuck paying premiums for many goods, including groceries. Rural merchants reap benefits from having supplies delivered to their doors at a "very low price," but with little or no competition, they have little incentive to pass on savings to consumers, the paper states.

It says the program discourages the state from "providing appropriate infrastructure," saying the state is often slow to start highway expansion projects that could decrease fuel, freight and mail transport costs.

Murkowski, who was traveling Monday and had staff analyze the report, said she questioned whether the report was "worth the paper it was written on." Some suggestions don't make sense, she said, like charging priority mail rates instead of parcel post rates because the mail is sent by air. That ignores the fact that there are no roads to the serviced communities and everything must be sent by air, she said. Alaskans, though, need to be looking at ways to reduce the program's cost and she said that's happening.

Begich, who also was traveling in the state Monday, included a link on his Facebook page in which Alaskans could weigh in on the inspector general's report and what he called "some out-of-touch changes" proposed to the program.

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