US Postal Service will keep open rural routes

Bending to strong public opposition, the nearly bankrupt U.S. Postal Service on Wednesday backed off a plan to close thousands of rural post offices after May 15 and proposed keeping them open, but with shorter operating hours.

The move to halt the shuttering of 3,700 low-revenue post offices followed months of dissent from rural states and their lawmakers, who said the cost-cutting would hurt their communities the most. In recent weeks, rising opposition had led Postmaster General Patrick Donahoe to visit some rural areas in a bid to ease fears about cuts that could slow delivery of prescription drugs, newspapers and other services.

In an election year, the angst over postal closings also extended to nearly half the senators, who in letters last week urged Donahoe to postpone closing any mail facility until Congress approves final postal overhaul legislation. The Senate last month passed a bill that would halt many of the closings; the House remains stalled over a separate bill allowing for aggressive cuts.

"I could live with this plan, and I think the majority of people could," said June Nygren, who runs the Jersey Lilly Saloon & Eatery in the tiny Montana town of Ingomar. Donahoe visited the rural town of about 80 people last month, which welcomed him with a spread of home-made baked goods and a packed school gymnasium as people pleaded for their post office to stay open.

"I felt he really paid attention, and apparently he did," Nygren said.

At a news briefing, Donahoe said he hoped the latest plan will help allay much of rural America's concern about postal cutbacks. He prodded Congress to act quickly on legislation that will allow the agency to move ahead with its broader multi-billion dollar cost-cutting effort and return to profitability by 2015.

"We've listened to our customers in rural America, and we've heard them loud and clear — they want to keep their post office open," he said. "We believe today's announcement will serve our customers' needs and allow us to achieve real savings to help the Postal Service return to long-term financial stability."

While no post office would be closed, more than 13,000 rural mail facilities could see reduced operations of between two hours and six hours a day, but only after a review process that is expected to take several months. An additional 4,000 rural post offices would keep their full-time hours.

The agency also will announce new changes next week involving its proposal to close up to 252 mail processing centers.

After the Postal Service gets regulatory approval and hears public input sometime this fall, the new strategy would go into place over two years and be completed in September 2014, saving $500 million a year by reducing full-time staff.

Under the plan, communities would get the option of keeping their area post offices open, but with reduced hours. Another option would be to close a post office in one area while keeping a nearby one open full time. Communities could opt to create a Village Post Office, one set up in a library, government office or store such as Walmart, Walgreens or Office Depot.

"At the end of the day, we will not close rural post offices until we receive community input," said Megan Brennan, the Postal Service's chief operating officer.

The latest move comes as the Postal Service is pushing Congress to pass cost-saving postal legislation that includes an end to Saturday mail delivery.

The Senate-passed bill would give the Postal Service an $11 billion cash infusion but also impose a one-year freeze on shuttering rural post offices. It would reduce by half the planned closings of mail processing centers, give affected communities new avenues to appeal closing decisions and bar cuts to Saturday delivery for at least two years.

At the time it was passed, the Postal Service denounced the Senate bill as "totally inappropriate" because it would keep unneeded facilities open.

In the House, hesitancy among rural lawmakers is helping to stall a separate bill that would allow for far more aggressive cuts, including a more immediate end to Saturday delivery.

Rep. Darrell Issa, R-Calif., a co-sponsor of the House bill, said the plan announced Wednesday doesn't cut costs enough. He noted, for instance, that additional cuts can be made in more densely populated urban communities, which should also be prodded to consider Village Post Offices or other alternatives that save money.

"The smallest 10,000 post offices collectively cost USPS less than $600 million to operate each year," he said. "To achieve real savings creating long-term solvency, the Postal Service needs to focus on consolidation in more-populated areas where the greatest opportunities for cost reduction exist."

Most of the 3,700 post offices that had been under review for possible closing had been in rural areas with low volumes of business, with most having only two hours of business a day even though they are open longer. Currently the post office operates more than 31,000 retail outlets.

The agency said its new plan will save more, mostly by weeding out full-time postmasters who don't have labor contract protections and replacing them with part-time workers. It plans to discuss possible buyouts with 13,000 postmasters who are now eligible for retirement. More than 80 percent of postal costs in rural areas are labor-related.

The Postal Service has been grappling with losses as first-class mail volume declines and more people switch to the Internet to communicate and pay bills. The agency has forecast a record $14.1 billion loss by the end of this year; without changes, it said, annual losses will exceed $21 billion by 2016.

If the House fails to act soon, postal officials say, they will face a cash crunch in August and September, when the agency must pay more than $11 billion to the Treasury for future retiree health benefits. Already $13 billion in debt, the health payment obligation will force the agency to run up against its $15 billion debt ceiling, causing it to default on the payments.

The agency plans to release its latest quarterly financial results on Thursday.