a/Numbering: R-Rate case; MC-Mail classification case;
N=Nature of postal services case (39 U.S.c.
3661(b)); C=Complaint case; RM-Rule-making
proceeding.

First 2 digits represent the fiscal year in which the case began and the hyphenated digit represents the sequential case in the same fiscal year.

b/Phase I only. Phases II and III were re-docketed as MC 76-1, -2, -3, -4, and -5.

c/In Dockets MC 76-1, -2, -3, and -4, the Commission

has received several settlement proposals covering limited issues. Some of these, after analysis of the record, have been approved by the Commission and embodied in recommended decisions sent to the Governors.

This is in response to your request for comments on your draft report entitled "The Role of the Postal Rate Commission Should Be Clarified." We appreciate the opportunity to offer our views.

[See GAO note below.]

Summary of GAO Recommentations.

We understand GAO to advocate, first, some "clarification" of the role of the Commission (a question which GAO recognizes is under study by the Commission on Postal Service), and, second, several amendments to the statute which should be enacted regardless of whether "a narrow or broad definition of the Commission's role" (Digest, p. v) is adopted. We agree with the second of these propositions, 1/ and to the extent we

1/ The recommendations for periodic reporting authority, Subpoena power, and authority to appear in court by Commission counsel have all been made by the Commission itself in legislative statements. See, e.g., 94th Cong., 1st Sess., House Committee on Post Office and Civil Service, Hearings on H.R. 2445 (March 11, 1975); 94th Cong., 2nd Sess., Senate Committee on Post Office and Civil Service, Hearings on S. 2844 (January 28, 1976) (statements of Chairman DuPont); 93rd Cong., 2nd Sess., House Committee on Post Office and Civil Service, Hearings on H.R. 15511 (July 10, 1974), p. 112.

GAO note:

Material no longer related to this report
has been deleted.

Victor L. Lowe, Director
Page Two

disagree with the first it is because--as a practical matter --theoretical disagreements between the Commission and the Postal Service over the essential role of the Commission have not materially hindered postal regulation.

COMMISSION COMMENTS CONCERNING JURISDICTIONAL DISAGREEMENTS ·

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 disputes, in other words, are sometimes expressed as disagreements over fundamental roles, but it is almost always possible to resolve them simply as questions of statutory interpretation--which is the province of the courts. Thus, for example, one of the most serious disagreements--whether the Commission has authority to regulate fees for special services 1/--has now been resolved by the United States Court of Appeals for the District of Columbia Circuit. National Association of Greeting Card Publishers v. United States Postal Service, F.2d (D.C. Cir. No. 75-1856, et al., December 28, 1976, affirming Associated Third Class Mail Users v. United States Postal Service, 405 F. Supp. 1109 (D.D.C., 1975).

It should be noted that where questions of Postal Rate Commission jurisdiction have arisen in court litigation, the courts have generally upheld the existence of such jurisdiction. 2/ The court in the Greeting Card Publishers case also indicated (slip op., 56) that the Commission's "authority. . . reasonably extends to all aspects of such [rate] decisions, including review of budget estimates, allocation of postal costs, establishment of rates for postage (Emphasis added.) This seems largely to resolve previous disagreements

1/ In spite of the fact that this disagreement arose squarely In the third rate case, its existence did not prevent the Commission from completing the case in the 9-1/2-month schedule it had established at the outset. This clearly shows that even conceptually significant jurisdictional disagreements have not materially delayed the Commission's execution of its regulatory functions.

2/

See, e.g., Buchanan v. United States Postal Service, 508 F.2d 259 (5th Cir., 1975) ($ 3661); Associated Third Class Mail Users v. United States Postal Service, 405 F. Supp. 1109 (D.D.C., 1975), affirmed sub nom. National Association of Greeting Card Publishers v. United States Postal Service, F.2d (D.C. Cir., 1976).

APPENDIX III

Victor L. Lowe, Director
Page Three

APPENDIX III

over jurisdiction over cost and revenue estimates presented by the Service in rate cases filed with the Commission. Conversely, the Commission has taken care not to assume jurisdiction where objective legal analysis does not support its existence. See Statement of General Policy, Order No. 133, Docket No. RM76-4 (August 6, 1976) (Jurisdiction over administration of Private Express Statutes); Order No. 148, Docket Nos. MC76-1 et al. (January 12, 1977) (Jurisdiction to add to list of mail items eligible for phasing).

Similarly, the Commission has disclaimed any intent to function as an "inspector general" of the Postal Service (see PRC Opinion, Docket No. R71-1, pp. 255-260). What the Commission has asserted is "that the Commission, in rendering rate recommendations, must advise the Governors whether the cost estimates on which the rates are based reflect the $ 3621 criteria." (Id., p. 258.) The particular question to which the quoted statement was addressed had to do with Commission inquiries into quality of service and efficiency of postal management, and the Commission was attempting to make it clear that while it does not review postal management performance under a "roving commission" to conduct general oversight (that being the function of, among others, GAO itself) it must, by statute, assure that the cost estimates advanced as a basis for rate proposals are justified in terms of the statutory criteria. Thus the Commission is required to undertake certain inquiries in the specific context of its cases which it does not undertake outside that context. It may well be that failure to distinguish between such an investigation performed as an integral part of a rate proceeding and a similar investigation performed for the sole purpose of evaluating the performance of postal management has given rise to some of the perceptions of jurisdictional conflict between the Service and the Commission. GAO's reference (Digest, p. i) to "investigating the efficiency and economy of management and the quality of mail service," if meant to imply that the Commission undertakes such investigations outside the context of rate, classification and service proceedings called for by the Act, is therefore not correct.

COMMISSION COMMENTS CONCERNING

GAO'S SPECIFIC LEGISLATIVE RECOMMENDATIONS

When we turn from jurisdictional matters to the specific measures which GAO advocates, we agree with the conclusions expressed at pp. iv - vi, under the heading "OTHER PROBLEMS REQUIRING CORRECTION." We are pleased, as well, to see that an impartial observer such as GAO has independently come to the same conclusions as the Commission on the need for these additional regulatory tools. See p. 1, fn. 1, supra.