Amendments of 1976 established the Commission on Postal Service to study postal problems and recommend long-term solutions. As part of its task, the Commission on Postal Service is charged with evaluating the current ratemaking process and will necessarily examine the role of the Postal Rate Commission.

Our purpose in noting these differences is not to assess blame on either the Rate Commission or the Postal Service. Since the Postal Reorganization Act is not clear, the arguments advanced by both parties have merit and have support in the language of the act. Clarification of the act, therefore, should result in better cooperation between the Rate Commission and the Service.

RECOMMENDATION TO THE CONGRESS

If the Congress ultimately decides to leave the ratemaking process essentially as it is, its intent with respect to the role of the Postal Rate Commission should be clarified.

POSTAL RATE COMMISSION COMMENTS

The Commission disagrees with our recommendation. The Commission states in their reply that:

"These disagreements are normal in the development of
a new regulatory system, and it is equally normal for
them to be resolved not by continuous overhauling of
the governing statute but by litigation (which, by
its nature, is usually quite limited) in the courts."

The Commission further stated that:

"* * *as a practical matter--theoretical disagreements
between the Commission and the Postal Service over
the essential role of the Commission have not materi-
ally hindered postal regulation."

We do not dispute the statement that disagreements are not uncommon in a new regulatory system. However, unless and until the Rate Commission is given authority to initiate litigation, we doubt that these jurisdictional disputes will find their way to the courts for resolution. It is likely that only disputes having a substantial financial impact on a particular private party will reach the courts, quite apart from their importance to the ratemaking process, since the initiation of suits rests with the private sector. fact, that was the situation in the court case cited by the Commission in support of their position.

In

Furthermore, it is important to note that in the approximately 6-1/2 years since the Commission was established, the Commission and the Postal Service still disagree on the right of the Commission to review such fundamental issues as the Service's cost and revenue estimates in ratemaking proceedings. Although we recognize that it was proper Rate Commission advocacy to contend, in their reply, that the U.S. Court of Appeals for the District of Columbia, in a recent case, "seems largely to resolve previous disagreements over jurisdiction over cost and revenue estimates* * * caution that the issues were not briefed and argued in the case, and it is not clear that the language of the court resolved any of these disagreements.

With respect to the statement that "* * *theoretical disagreements* * * have not materially hindered postal regulation,' we note that responsible officials of the Commission specifically directed our attention to these matters and contended that the disputes resulted in delays in producing information and refusals to produce information.

we

For purposes of clarification, we did not intend to imply that the Rate Commission does or should function as an "inspector general" of the Postal Service or "roving Commission" to conduct general oversight of postal management performance outside the context of rate, classification, and service proceedings called for by the act, as the Rate Commission comments suggest. (See p. 37.)

POSTAL SERVICE COMMENTS

The Postmaster General stated that the Service has no objection to the Commission on Postal Service reviewing the jurisdictional issues, "but a number of events have occurred that lead us to think that a legislative remedy would be inappropriate and unnecessary.' The Postmaster General also stated:

"The proportion of the report devoted to so-called
jurisdictional disputes dramatically overstates their
practical importance to the ratemaking process,
particularly when it is suggested that these areas
of dispute have led to delays in Commission pro-
ceedings. There is not any evidence presented or
contained in the report to support such an
allegation."

Although the discussion of jurisdictional disputes is lengthy, we felt it was necessary to adequately present the views of both parties on each issue. We do not imply or

assert that jurisdictional disputes caused delays. The significance of this discussion is not delays resulting from the disputes, but rather the disagreement between the Service and the Commission over what the role of the Commission should be. Examples of instances of delays resulting from the disputes, however, are documented in the records of the Commission's proceedings.

The Postmaster General stated that most of the issues have been substantially resolved. The five issues we presented in this report are not all inclusive. And, although the Service and the Commission have reached a workable arrangement on most of the issues at the present time, the matter of jurisdiction has not been resolved. Consequently, the potential for disputes in the future over these and other areas of jurisdiction still exists. (See p. 48.)

The Postmaster General also stated that we should have directed our review to more fundamental questions of ratemaking. These questions go to the heart of ratemaking procedures, including the desirability of having one Federal agency whose sole purpose is to review the operation of another Federal agency and whether formal proceedings within the Postal Service itself would better serve the Commission's purposes.

At the request of Senator Montoya we restricted our review work to the Postal Rate Commission under the ratemaking procedures established by the Postal Reorganization Act. The questions raised by the Postmaster General have been discussed on a number of occasions in the Congress and are currently the subject of study by the Commission on Postal Service. We believe that the Commission on Postal Service is the appropriate forum to study these issues. (See p. 46.)

CHAPTER 3

NEED FOR AMENDMENTS TO THE

POSTAL REORGANIZATION ACT

The differing views of the Service and the Rate Commission have created other problems, some of which point up a need for other legislative changes that are desirable in the event of either a narrow or broad definition of the Commission's role.

These problems have to do with

--a periodic reporting system,

--subpoena power, and

--self-representation in court litigation.

PERIODIC REPORTING SYSTEM

There is a dispute between the Service and the Commission regarding the authority of the Commission to obtain relevant data from the Service. This problem relates directly to their differing views on the Commission's proper role.

The Service provides requested information that it considers necessary to fulfilling its definition of the Commission's functions. The Service has rejected, however, requests for information that it believes is not required to perform these functions. The Commission considers that it is legally entitled to obtain relevant information it needs itself or it requests on behalf of intervenors in performing its functions.

Postal ratemaking proceedings are relatively unique in that, although there are numerous parties and participants, the basic and essential data is in the control of only one party, the Postal Service. In each of the first three rate cases, there have been more than 50 intervenors aside from the Postal Service and the Officer of the Commission. Most of these had to obtain data from the Postal Service through interrogatories.

Almost 1,725 written interrogatories were filed by the participants in the second rate case, more than 1,013 of which were served on the Postal Service. By the conclusion

of the testimony, more than 66 interrogatories were unanswered and the Postal Service had not answered more than 46.

If basic ratemaking data was periodically submitted and made available for public inspection, separate and apart from any proceeding pending before the Commission, the necessity for large numbers of interrogatories during each proceeding might be considerably reduced. Since this basic information would be available to all the parties at the beginning of and even prior to, any particular proceeding, the parties could quickly evaluate the Service's application and prepare their own cases in a timely manner. Such periodic reporting requirements have been established by rule by most Federal regulatory agencies under specific authority to do so.

In its recommended decision in the first rate case, the Commission stated it would hold a rulemaking proceeding to determine what cost and revenue data should be obtained for use in future proceedings. A rulemaking proceeding was begun in the summer of 1972. Included in the proposed rules were a series of forms on which the Postal Service would be required to periodically report basic ratemaking data to the Commission.

The Postal Service contested the Commission's jurisdiction to impose periodic reporting requirements and contended that the decision to regulate the Service's reporting system was within the sole discretion of its management. Moreover, the Postal Service claimed that a great deal of the information the Commission required was not available and could be made available only at exorbitant expense.

The Commission relented and the proposed reporting forms were deleted from the proposed rules, including those for which the Postal Service conceded it had the information readily available. However, the rules that were implemented specified in more detail the information that must be filed in an application for rate adjustments and accordingly represented a significant step in acquiring needed information from the Postal Service. But the requirements were self-limiting in that the data need only be supplied "to the extent information is available or can be made available without undue burden."

A second rulemaking proceeding was concluded in October 1976, at which time the Commission prescribed the regular submission of some existing Postal Service data. The Postal Service agreed to supply the information, but does not recognize the Commission's authority to require such reporting.