Senate adds post office standards to USPS rescue package

The US Senate has added a measure to its USPS rescue package that would prevent closure of US post offices until a retail service standard has been drawn up. The move came today as the 21st Century Postal Service Act was marked up by the Senate’s Homeland Security and Government Affairs Committee ready for heading by the full Senate.

The Act proposes to provide a $6.9bn rebate to the struggling USPS to help it cut its work force by 100,000, restructure its multi-billion dollar healthcare prefunding obligations and allow sale of additional non-postal products.

Today saw the Senate committee rejecting proposals to immediately allow a move to five-day-a-week delivery, leaving in place the proposal for a two-year ban on eliminating Saturday deliveries.

But, the Senate did add a measure that would require a set of criteria to be used by USPS and the Postal Regulatory Commission when determining possible post office closures.

Making $10bn in annual losses at the moment, USPS is in the process of reviewing around 3,700 post offices for possible closure, in a move it believes would save $200m a year in operating costs, about 1% of the annual budget cut it needs to make in order to remain sustainable in the long term.

Retail standards

Senator Jerry Moran’s amendment adopted today would set a criteria for the basic postal services USPS must provide rural communities, which would have to be met when looking to close post offices.

National retail standards under the Moran amendment would take into account proximity of customers to postal retail outlets, alternative services available in an area, but also the unique characteristics of rural areas like Alaska and Hawaii.

Moran said he accepted that some post offices in the US had “outlived their viability”, but claimed the Postal Service was merely “going through the motions” when holding meetings with local communities while reviewing their post offices for possible closure.

“I’ve yet to see the criteria by which the USPS decides which ones remain viable and which ones do not,” he said.

“This sets a criteria for which we have some level of ability to determine why us and not somebody else. But more importantly, it creates the opportunity for the community to appeal that decision based on the criteria, to the Postal Regulatory Commission.”

The standards, which would apply to post offices already under review, would also require USPS to look at alternatives to closing post offices, such as shortening working hours at a local post office, having a postmaster there for fewer hours, and the co-locating of post offices with local grocery stores.

Joe Lieberman, the chairman of the Senate committee, said USPS has more retail outlets than Starbucks, Walmart and McDonalds combined, “so we’ve got to close some post offices”.

Lieberman, who supported the amendment, said: “It doesn’t stop the Postmaster General from doing what he thinks is necessary to keep the Postal Service going, but it creates some reasonable due process before post offices are closed.”

Among other amendments adopted today were measures requiring Postal Service to provide a full explanation whenever it decided not to adhere to a non-binding Postal Regulatory Commission, and a measure requiring more Congressional access to details within USPS contracts with partners like UPS and FedEx.

Delivery frequency

While the Oversight Committee in the House of Representatives has marked up a bill including provisions to take control of USPS to force cutbacks, and also eliminate Saturday delivery from day one, the Senate Committee rejected such approaches.

Senator John McCain’s amendments to bring the House proposals into the Senate bill were left by the committee, which preferred giving the USPS two years to get its house in order before any move to five-day-a-week delivery would be allowed.

Commenting on the House Republicans’ proposals, Senator Tom Carper said like the auto industry, the Postal Service needed to right-size its network, but that he did not believe a new authority needed to be set up to force closure of post offices.

“We need to come up with savings roughly $20bn a year for the Postal Service. Under our legislation, it says if you haven’t figured out how to do this in two years, you can go from six to five days,” he explained.

“I think that’s a pretty smart approach, it gives labour and management the opportunity to do what they did in the auto industry and that’s negotiate a different wage benefit structure.”

Lieberman said: “The way I read the provision of the bill is, we’re going to five-day delivery after two years. Unless the Postal Service can reach the level of savings without it, that’s the goal. I’m personally doubtful they can (achieve the required savings) without moving to five-day. So to me this is easing into something we’re going to have to do anyway.”