Reuters: Regulatory News: UPDATE 1-U.S. drops plan to close rural post offices

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UPDATE 1-U.S. drops plan to close rural post offices May 9th 2012, 19:02 Wed May 9, 2012 3:02pm EDT * Postal Service considered closing 3,600 post offices * USPS says will keep locations open with shorter hours * Donahoe says listened to customers in rural America * USPS is losing billions of dollars per year By Lily Kuo WASHINGTON, May 9 (Reuters) - The U.S. Postal Service said it is abandoning for now its plan to close thousands of post offices in rural locations and instead will shorten their hours of operation. The cash-strapped agency faced significant backlash from Congress and communities last summer when it began considering more than 3,600 post offices for closure this year. Now the plan is to cut the opening hours of 13,000 post offices with little traffic to between two and six hours a day. "We've listened to our customers in rural America and we've heard them loud and clear - they want to keep their post offices open," said Postmaster General Patrick Donahoe. "There's no plan for closings at this point." Although the new plan would save more money - roughly $500 million annually compared to $200 million - the shift highlights how difficult it will be to overhaul the virtually bankrupt U.S. agency as lawmakers and communities resist changes in postal services. The Postal Service, which relies on sales of stamps and other products rather than taxpayer dollars, has been losing billions of dollars each year as Americans increasingly communicate online. Barring drastic changes, many of which require congressional action, officials have said the mail agency could face annual losses of $18 billion by 2015. The Senate passed legislation last month that would boost protections for rural post offices, allows USPS to end Saturday mail delivery after two years, and let it use a surplus of about $11 billion in a retirement account to offer retirement incentives to older workers. House of Representatives leaders have not scheduled a vote on postal legislation, and a bill from Republican Darrell Issa that passed his Oversight Committee more than six months ago is significantly different from the Senate version. The Postal Service is using its limited authority to make its own cost cuts in the meantime. The agency is now seeking regulatory approval for the new rural post office strategy, which would not be completely implemented until September 2014. LEGISLATIVE HOPE The Postal Service's decision on Wednesday may lessen a sense of urgency among lawmakers to pass a postal overhaul. Previously the USPS had put a moratorium on the closing of post offices and processing facilities to give Congress more time to pass legislation. That moratorium was due to lift on May 15, and a bipartisan group of lawmakers was hoping to drum up support in the House by targeting representatives who stood to lose postal facilities and jobs in their districts. The Postal Service will make an announcement next week about its earlier plan to close more than 200 mail processing centers. Representative Peter Welch, who is pushing for quick legislation, said the Postal Service's plan to suspend closings gives Congress breathing room but it also removes a deadline to act. "It does seem the brinkmanship style here in Congress often requires a drop-dead deadline," Welch said. Lawmakers had criticized the agency for focusing on small, money-losing post offices without considering factors such as community impact or Internet access. A Reuters investigation determined that about one-third of the post offices facing closure were located in areas with limited or no wired broadband. The Postal Service has announced plans to contract with local general stores to offer some postal services and to use more rural letter carriers, who serve as a post office on wheels, in areas where post offices close. Communities can choose to use these "village post offices" in conjunction with fewer hours at their post offices. The Postal Service also said it was offering more than 21,000 postmasters a buy-out to retire from the service by the end of July. Link this Share this Digg this Email Reprints

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