US Postal Service changes post office closure rules

The US Postal Service has published new procedures for closing and consolidating post offices that it says will be more efficient and transparent, as it continues efforts to cut costs. Effective today with publication in the Federal Register, the new final rule means USPS headquarters will be able to identify facilities for possible closure, rather than just the managers of under-used facilities.

USPS said the new procedures would improve the public participation in its closure review process and would extend closure criteria currently in place for assessing independent post offices to also cover stations or branches.

The Postal Service said it would not change regulations that prevent a post office from being closed soley because it is operating at a deficit.

However, it said where retail traffic drops below minimal levels, it was likely that postal customers would be accessing postal services through alternative channels.

“The Postal Service accordingly maintains its focus upon providing all customers the access they require, whether it be via Post Offices or the available alternatives,” said USPS.

USPS has around 35,000 post offices across the United States, although precise numbers are disputed. Postmaster General Patrick Donahoe has said 2,000 are to be closed as part of current plans to reduce the network size.

The Postal Service is seeking to slim down its retail network as part of efforts to restore financial stability as it continues last ditch attempts to stave off insolvency this summer.

USPS said yesterday that by consolidating its operations, it would also be “adapting to meet the evolving needs of its customers”.

It said in a statement: “With an abundance of locations that offer postal products and services — including grocery stores, drug stores, office supply stores, and other retailers, both physical and online — customers have more than twice the number of outlets for postal products and services compared to brick-and-mortar Post Offices.”

The USPS rule change remains subject to legal action taken by the major postmaster associations.

A formal complaint by National Association of Postmasters of the United States (NAPUS) and the National League of Postmasters of the United States is currently before the Postal Regulatory Commission.

However, the final rule as published by USPS today did not include the main changes opposed in the postmasters’ complaint, such as the ability for post offices to be converted into stations or branches for an easier closure process, or for the definition of postmasters to be changed to allow non-postmasters to manage a post office.

Leveraging property

Meanwhile, the USPS Office of the Inspector General has suggested that under current laws, the struggling US Postal Service could hand over property assets to the federal government to help with its multi-billion dollar financial obligations.

In a report sent to top USPS executives this week, the OIG said the Postal Service currently owns around $27bn in property assets, based on original purchase prices, but that “fair market value” of its buildings and land if sold today would most likely be much higher.

The OIG suggested the assets could even cover the Postal Service’s remaining $55bn in liabilities for its retiree health benefits program, a program which has been partly blamed for the USPS financial woes in recent years.

“This would protect taxpayers, and a surplus of assets would likely be given to the Treasury if the Postal Service were suddenly shut down – a very unlikely event,” said the OIG report.

“Further, leveraging the substantial wealth the Postal Service holds in real property assets would assist it in meeting current operational needs without increasing debt.”

Any move to leverage property would need sign-off by the Treasury and Office of Personnel Management, however.

USPS and the US Treasury believe more analysis is needed on the idea, and that the best solution to the Postal Service’s current financial crisis is reform of pension and benefit payment programs.

However, with House Republicans standing firmly in the way of such reforms, the Postal Service has already started emergency moves to prop up liquidity in the face of its looming $15bn government borrowing limit. Last month it suspended employers’ contributions into its federal pension fund.

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