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--There are insufficient safeguards to protect the

Service from "fishing expeditions" by the Rate Commission.

--The recommendation for congressional approval of

adjustments to the Commission's budget would muddle rather than clarify the budget approval process.





Recommendation to the Congress
Postal Rate Commission comments
Postal Service comments

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Letter dated February 24, 1977, from the

Postmaster General, United States Postal




On January 15, 1975, Senator Joseph Montoya requested that we evaluate the performance of the Postal Rate Commission and study its cost, functions, and continuity of management.

The Postal Reorganization Act of 1970 (39 U.S.c. 101) created two independent executive branch establishments--the Postal Service and the Postal Rate Commission. The Service is directed by an ll-member Board of Governors composed of nine Governors appointed by the President and confirmed by the Senate, the Postmaster General appointed by the Governors, and the Deputy Postmaster General appointed by the Governors and the postmaster General.

The Commission consists of five Commissioners appointed by the President with the advice and consent of the Senate. Under the act, as amended, the Commission has jurisdiction over postal rates and fees, mail classification, nationwide changes in the nature of postal services, rate and service complaints, size and weight limitations for letter mail, and Postal Service determinations to close or consolidate any post office.


The act authorizes the Governors to establish reasonable and equitable classes of mail, and reasonable and eguitable rates of postage and fees for postal services. If the Service believes that changes in rates or fees are appropriate, it requests from the Commission a recommended decision on the proposed changes. The Commission makes a recommended decision after a hearing in which a formal evidentiary record--which is the sole basis for decision-is developed through the presentation and cross-examination of witnesses. The Commission's hearing procedures are expressly required by 39 U.S.C. S 3624 (a), which expressly makes applicable the on-the-record hearing procedures set forth in ss 556 and 557 of the Administrative Procedure Act (5 U.S.C. SS 556, 557). A similar procedure is followed for changes in mail classification.

Upon receiving a recommended decision from the Commission, the Governors may approve, allow under protest, or reject that decision. A rejected recommended decision is re-submitted to the Commission for reconsideration and a

subsequent recommended decision. When the Governors receive a second recommended decision they have the same options as they had for the initial decision but may also modify the decision by unanimous vote in specified situations.

The act provides for judicial review of the Governors' decision if appealed by a party to the proceeding before the Commission. The court's review of the decision is based on the hearing record before the Commission and the Governors. The Governors' decision may be affirmed or the entire matter returned to the Commission for further consideration, but it may not be modified by the courts.


The Commission and its staff are governed by strict rules prohibiting off-the-record ex parte communications (i.e., benefiting one party to thē proceeding made out of the presence of, and without notice to, the other parties) between the Commission and its staff, on the one hand, and interested persons outside the Commission, on the other, relating to any matter which is likely to be at issue in the proceeding before the Commission.

A related rule adopted by the Commission prohibits staff members who are participating in the trial of cases from advising the Commission as to its decision in that proceeding. To comply with these reguirements, the Commission has divided its staff into litigation and advisory teams. The litigation staff participates in the trial of cases and assists the Officer of the Commission--an official designated by the Commission, as required by the act, to represent the interests of the general public in formal hearings before the Commission.

As of October 27, 1976, the Commission had a staff of 73 employees consisting of 47 professional and 26 administrative positions. For a listing of Commission cases, see appendix II.


The Commission's first rate decision was issued on June 5, 1972. The Postal Service Governors approved the recommended decision on June 28, 1972, but expressed reservations about certain jurisdictional assertions by the Commission.

Several intervenors (persons claiming an interest in the proceedings and authorized by the Commission to participate) appealed the decision to the U.S. Court of Appeals

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