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FBI inquiry of USPS chief DeJoy threatens bipartisan overhaul bill

Experts say the campaign fundraising investigation could fray a fragile bipartisan and cross-industry coalition key to financial relief legislation for the Postal Service

Louis DeJoy, the postmaster general, at a House Oversight and Reform Committee hearing in August. (Tom Williams/CQ Roll Call/Bloomberg News)

The FBI investigation into Postmaster General Louis DeJoy threatens to fray a fragile bipartisan and cross-industry coalition that supports financial relief legislation for the U.S. Postal Service, opening a new vein of turmoil for the embattled agency.

A DeJoy spokesman confirmed to The Washington Post on Thursday that the postal chief is cooperating with the inquiry tied to political fundraising at his now-defunct North Carolina business. Agents have interviewed current and former employees of DeJoy and New Breed Logistics in connection with allegations that employees donated to Republican candidates and were later reimbursed with workplace bonuses.

FBI investigating Postmaster General Louis DeJoy in connection with past political fundraising

The Post first reported the allegations in September, and agents have conducted the interviews in the past two weeks, according to two people familiar with the investigation, who spoke on the condition of anonymity to describe an ongoing investigation. Another said DeJoy was issued a subpoena in connection with the inquiry. DeJoy’s spokesman said the postmaster general never “knowingly” violated campaign finance law.

Though DeJoy has not been charged with any crimes, the inquiry presents a new political hazard as he presses forward with one of the biggest overhauls in the agency’s history, one contingent on winning legislative support to restructure its finances. Congressional and industry officials say his legal position could imperil bills advancing in the House and Senate that would relieve the Postal Service of $44 billion in debt, as well as its annual $5 billion retiree health-care payments.

His standing before the agency’s board of governors, to which he reports, appears stable, according to experts who closely monitor the group’s work. The panel has resisted previous calls to dismiss DeJoy, who has been called before Congress four times to answer for directives — a crackdown on overtime, limits on mail trips and the removal of hundreds of mail sorters, among them — widely blamed for mail backlogs nationwide and a pronounced slowdown in delivery.

The USPS is facing financial, service and public relations crises, but the president's new appointees could have an impact beyond restoring timely service. (Video: Joshua Carroll, Brian Monroe/The Washington Post)

None of the six sitting board members — Republicans Robert M. Duncan, John Barger, Roman Martinez IV and William Zollars and Democrats Ron Bloom, the board’s chair, and Lee Moak — responded to requests for comment.

Louis DeJoy’s rise as GOP fundraiser was powered by contributions from company workers who were later reimbursed, former employees say

Postal legislation has failed on lesser controversies, congressional officials noted. Some House Democrats late last week privately considered dropping their support for the measure in light of the DeJoy investigation, said four people with knowledge of the talks, reasoning that the chamber could advance more aggressive legislation on a party-line vote.

They pushed Rep. Carolyn B. Maloney (D-N.Y.), chair of the powerful Oversight and Reform Committee, to include provisions on voting access and postal banking and funding for electric mail vehicles. To court Republican votes, Maloney spun some of those components off into a separate bill that the Senate has not considered.

“Aside from the [postmaster general] being under investigation, nobody ultimately wants to do anything [on the bill] because everyone’s selfish and unreasonable,” said one Senate aide, who, like others in this report, spoke on the condition of anonymity to discuss negotiations.

“It would depend upon how committed you are to the bill. It would depend upon how fickle you are,” said Leo Raymond, managing director at Mailers Hub, an organization that provides market information and support for commercial mailers. “If you’re just going along to get along, if you’re not ardent, this could make you say, ‘Well, I’m not working with this guy.’”

In the breach stands Maloney, who in recent days has sought to maintain the fractious alliance. She spent months drafting a bill that was more narrowly tailored than some Democrats preferred, but also had significant bipartisan support. An identical bill has 11 GOP co-sponsors in the Senate, enough with Democratic support to block a potential filibuster.

“The latest news about Postmaster General DeJoy does not change our strategy on the vitally important Postal Service Reform Act,” Maloney said in a statement. “I will continue working with my colleagues, stakeholders, and the unions so we can move this bill to the House floor as soon as possible.

“Many of us have priorities that we would love to see included in the Postal Service reform bill. However, we all understand that our top priority is to keep the Postal Service solvent so it can continue to provide critical services for all Americans. To do that, the Postal Service Reform Act has to have broad support from all stakeholders.”

Industry groups, too, have weighed how to engage with lawmakers over Maloney’s bill and with the Postal Regulatory Commission over DeJoy’s controversial 10-year “Delivering for America” plan, the people said. That effort, announced in March, calls for longer delivery windows, higher prices, fewer employees and regional consolidation to shed $160 billon in projected losses over the next decade. Last week, the agency said postage rates would climb as much as 6.9 percent in August, sending the cost of a first-class stamp to 58 cents.

The groups see DeJoy’s legal issues as an opening to beat back his proposals to raise postage prices and slow delivery times. But they’re also fearful that if support crumbles around the bill, new policies could disproportionately affect certain industry stakeholders, including unions and commercial mailers.

What’s in Louis DeJoy’s 10-year plan for the USPS

The people say the groups are looking to Maloney to solidify the agreements surrounding the legislation and navigate it through the uncertainty caused by the investigation.

“It’s a delicate balance for Maloney,” said one Democratic House aide. “On our side of the aisle … there are a lot of people who won’t do anything to give DeJoy a win or extend viability to the postmaster general.”

DeJoy was met with suspicion nearly the moment the governing board announced his hiring in May 2020 because of his deep ties to President Donald Trump and history of political fundraising. Rep. Gerald E. Connolly (D-Va.) labeled DeJoy a “crony” and has called his restructuring efforts a “Trojan horse.”

Democrats in the House and Senate have called for the governors to remove DeJoy from his post over the agency’s troublesome delivery performance, and some have pushed President Biden to fire the governors if they won’t do so themselves.

The postal chief, for his part, has made clear that he expects his tenure to be long-term. When Rep. Jim Cooper (D-Tenn.) asked how long he planned to remain at the Postal Service during a House hearing in February, DeJoy said, “Get used to me.”

He has continued to move forward on his agenda. Last month, DeJoy struck a deal with House leaders on one of his most pressing priorities: replacing the aging mail truck fleet with electric vehicles at a cost of $8 billion. But the investigation threatens to derail the momentum between the two sides.

“For nearly a year, I have been clear that Postmaster General DeJoy would not be in his job if he worked for any other company,” Maloney said. “If these allegations are true and Postmaster General DeJoy violated campaign finance laws, he must resign immediately or the Board of Governors must remove him.”

Rep. Bill Pascrell Jr. (D-N.J.), who has urged Biden to dismiss the six sitting board members, called for the president’s three recently confirmed nominees to move to fire DeJoy immediately after being sworn in.

DeJoy spokesman Monty Hagler said in September, after The Post published its initial report on his fundraising activities, that the postal leader “believes that he has always followed campaign fundraising laws and regulations.” DeJoy had previously sought and received legal advice from a former general counsel for the Federal Election Commission, Hagler said, to ensure he and his company “fully complied with any and all laws.”

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Meanwhile, some of DeJoy’s harshest critics have urged colleagues to remain focused on the Postal Service Reform Act while the FBI investigation continues. Cooper, who asked DeJoy in an August hearing whether he had repaid executives for making donations to the Trump campaign, cautioned his colleagues in a Friday interview: “Don’t let the best be the enemy of the good.”

“Talk to me when we don’t have a 50-50 Senate and a three-vote margin in the House,” Cooper said. “We have to be able to show the American people we can govern, and we have to show that we can keep the post office functioning.”

USPS raises stamp price to 58 cents as part of DeJoy’s 10-year plan

“I think the DeJoy scandal has reminded every congressperson how beloved the post office is and how dependent we are on an efficient post office,” he said. “The structural reforms that Maloney is recommending are long overdue. And now that we have the attention of the members, it’s time to pass this postal reform bill.”

Other congressional officials have advised that even if the Postal Service’s governing board were to remove DeJoy, the agency and his would-be successor would still face long-term financial barriers. But DeJoy’s job appears safe because the board lacks the votes to remove him even after Biden’s three appointees take office later this month. Bloom, the board’s chair, has publicly backed the postmaster general and his 10-year plan. Moak has remained mum on the topic.

The Postal Service has $188.4 billion in liabilities, nearly three-quarters of which is made up of retiree health-care and pension costs. Officials project the agency will lose another $160 billion over the next decade as mail volume declines, though revenue for 2021 has so far greatly exceeded expectations.

Experts expect Biden’s recently confirmed board appointees to press DeJoy on his past political fundraising and his 10-year plan at the group’s first in-person meeting later this month.

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