WMT Walmart Inc

By Heidi Vogt 

This article is being republished as part of our daily reproduction of WSJ.com articles that also appeared in the U.S. print edition of The Wall Street Journal (April 11, 2018).

WASHINGTON -- At a time when many government agencies are relying on acting directors or making do with unfilled positions, the U.S. Postal Service may have it the worst. Its governing board has been empty since December 2016.

That means no one fills nine seats on a body akin to a corporate board of directors for an agency that is the largest civilian employer in the country after Walmart Inc.

At a February board meeting, only two people -- Postmaster General Megan Brennan and her deputy -- sat at the long table in the Ben Franklin conference room on the top floor of the Postal Service headquarters. They were flanked by empty chairs. The board is operating without governors for the first time since it was created in 1970.

The Postal Service is in the spotlight after President Donald Trump tweeted accusations that Amazon Inc. -- a key postal system customer -- exploits the service for its own gains, accusations that immediately met with controversy. A bigger issue, according to the Postal Service, is unfunded liabilities for employee benefits, which requires congressional legislation to fix. Bills addressing these issues have been introduced in the House and Senate.

These issues highlight the leadership shortage, since it usually falls to the board members to advise on everything from crisis management to congressional engagement. The board is also responsible for many other tasks, from rate increases to the hiring or firing of the postmaster general, and it sets policies that directly affect operations at big customers, such as mail-order catalog businesses.

"It's a huge problem," said Hamilton Davison, the head of the American Catalog Mailers Association, an industry group. He said many catalog mailers are dealing with the expiration of discounts that need the postal governors' approval to renew.

"For the larger mailers, this represents millions of dollars," Mr. Davison said.

The shortage of Postal Service leadership could well be as consequential as the vacancies at other agencies, including the State Department, the Environmental Protection Agency, the Energy Department and others. After the president nominates someone for the Postal Board, the nominee must go through a Senate hearing and then be confirmed by a Senate vote.

It became clear the board would be at least temporarily without governors when President Barack Obama's nominees didn't make it through Congress before the end of his term. More than a year has passed since then. And with so many other appointments in limbo and Congress tussling over items like budget and immigration, the Postal Service board doesn't appear to be at the top of anyone's agenda.

"The president, I'm sure it's not his top priority, but it doesn't seem to be Congress's top priority either," said Jim Bilbray, who was the sole remaining governor until his term expired in 2016.

Mr. Trump's tweets have been more focused on Amazon contracts, which are negotiated with the agency's sales, finance and legal departments then submitted for regulatory approval. The board of governors isn't directly involved in negotiating these contracts, but it is involved in setting long-term strategy and consulting with members of Congress on legislation that might improve its cost structure.

Meanwhile, businesses that rely on the service are growing nervous, particularly as volume discounts and other arrangements have expired.

Retailer Hammacher Schlemmer & Co., a seller of gifts, gadgets and housewares that has mailed catalogs since 1881, used such discounts to send out additional catalogs -- a move the Postal Service has said boosts future revenue.

The lack of new promotions is going to cost the company hundreds of thousands of dollars, said Steve Gustafson, marketing manager at the retailer.

"It's a de facto price increase," Mr. Gustafson said.

The Postal Service has suffered from leadership shortages since well before the Trump administration. Mr. Obama nominated five people to the board, but they didn't get through the approval process. Sen. Bernie Sanders (I., Vt.) blocked three of them -- a move that, in practice, kept all of them from being approved. He was concerned two of them wanted to gut the Postal Service, and that another -- a former payday lending lobbyist -- would block an effort to bring in additional revenue by offering basic banking services.

Mr. Trump nominated three people in October, but the approval process is in the early stages. In a rare situation these days, the slate of nominees has bipartisan support. Most expect them to be approved if they ever make it to a committee hearing, but no such hearings have been scheduled.

Some people familiar with the confirmation process have said a backlog in more high-profile positions at other agencies is likely making it more difficult to get to lower-level appointments, while others argue it is because of a general slowdown in activity at the Homeland Security and Governmental Affairs Committee.

Jack Potter, who was postmaster general from 2001 to 2010, said the status quo can't last much longer.

"It's very problematic at a period of time when the Postal Service is seeking to right-size its finances, and pricing and products are two of the key tools to do that," Mr. Potter said. "There is this shroud of doubt over how to make that happen without a board."

He said the board was a key sounding board when he was postmaster general and essential to dealing with crises, such as the 2001 anthrax attacks, when letters laced with anthrax spores arrived at media and government offices. Five people died.

"They were invaluable to me at that time," Mr. Potter said, explaining he held regular teleconferences with the board as the attacks unfolded. They "were able to help connect me with different groups in the government and advise who I should be working with."

In February, Ms. Brennan said she was "optimistic" that Mr. Trump's nominees will be confirmed in time for a board meeting scheduled for April. That meeting is now tentatively scheduled for early May.

Write to Heidi Vogt at heidi.vogt@wsj.com

Corrections & Amplifications Hamilton Davison is the head of the American Catalog Mailers Association. An earlier version of this article incorrectly called the industry group Catalog Mailers Association.

(END) Dow Jones Newswires

April 11, 2018 02:47 ET (06:47 GMT)

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