Again, while we respect the advocacy position of the Commission, we have reservations whether it would prevail in a court case. Consequently, we believe, and the Commission agrees, that future proceedings could involve procedural subpoena questions and prior congressional enactments of our recommendations would aid the Commission in resolving such questions. (See p. 41.)

POSTAL SERVICE COMMENTS

The Postal Service states that a review of the legislative history of the Postal Reorganization Act indicates the Congress did not want a bureaucratic struggle between the Commission and the Service, and the proposed extension of subpoena power would lead to relationships which the Congress did not envision or want. The Service also implies that the Rate Commission would likely abuse the subpoena power, and contends that there are insufficient safeguards to protect the Service from "fishing expeditions" by the Rate Commission. In addition, the Service states that it has supplied voluminous data in all proceedings when the data was available and the expense reasonable in obtaining it.

Although the Congress did not want a bureaucratic struggle between the Rate Commission and the Service, we do not believe that providing the Rate Commission with the explicit power of subpoena need result in such a struggle. In fact, the Rate Commission believes it already has the power of subpoena under the present statute, although it is not specific. We do not believe that it is appropriate for the Service to be determining what data is reasonable for it to supply to the Rate Commission in a rate case, nor do we believe that the Rate Commission would undertake fishing expeditions with the subpoena power. (See p. 52.)

THE COMMISSION NEEDS THE
OPTION OF SELF-REPRESENTATION
IN COURT LITIGATION

The Justice Department is charged with representing both the Postal Service and the Commission in court litigation. Existing law makes no provision for situations where the Attorney General's two official clients advocate conflicting positions.

An example is the recent case of Associated ThirdClass Mail Users v. United States Postal Service where an issue was whether the Commission had jurisdiction over changes in special service fees. The Associated Third-Class

Mail Users, in accord with the views of the Commission, argued that the Commission had jurisdiction while the Postal Service denied any such jurisdiction. Therefore, the two Federal agencies were on opposite sides of the litigation.

The matter was resolved by the expedient of having the Justice Department advocate the Postal Service's position but simultaneously attaching to its brief an "informational" memorandum of law prepared by the Commission staff setting forth the Commission's views. The U.S. District Court found in favor of the Associated ThirdClass Mail Users and thus upheld the Commission's position.

When the case was appealed to the U.S. Court of Appeals for the District of Columbia by the Postal Service, the same difficult situation existed. The Justice Department again supported the views of the Postal Service and presented only the position of the Postal Service in oral argument with the result that the views of the Commission may have been inadeguately presented. Nevertheless, when the Court rendered its decision, the Commission's position was affirmed.

In this case, the views of the Commission were at least made known by the Department of Justice. However, it might in its discretion have refused to do so. The possibility exists, therefore, that in some future case the views of the Commission may not be presented at all. RECOMMENDATION TO THE CONGRESS

To avoid a situation where the views of the Commission may not be presented adeguately or at all, the Congress should amend the Postal Reorganization Act by adding the following section to Title 39, U.S. Code:

"1 S 3606. Legal services for Postal Rate Commission.
"The Postal Rate Commission shall have the right to be
a party to litigation involving proceedings under this
chapter. The Commission may employ, by contract or
otherwise, such attorneys as it finds necessary for
proper legal aid and service of the Commission or
its members in the conduct of their work, or for proper
representation of the public interest in investigations
made by it, or cases or proceedings pending before

it, or
to appear for or represent the Commission
in any case in court."

POSTAL RATE COMMISSION COMMENTS

The Commission agrees with the recommendation.

(See p. 42.)

POSTAL SERVICE COMMENTS

The Postal Service agrees with our recommendation and further stated that "from our point of view, it would be appropriate if both the Service and the Commission are able to represent themselves in court." (See p. 52.)

CHAPTER 4

GOVERNORS' ADJUSTMENTS OF

COMMISSION BUDGET REQUESTS SHOULD

BE CONGRESSIONALLY APPROVED

The Commission's operations are financed by the Postal Service, and the Governors have approval authority over the amount the Commission can spend. There is no reason to believe that the Governors would abuse this power. On the other hand, the potential in this regard is illustrated by a past incident.

The Commission has submitted five budgets for fiscal years 1972 through 1976. proved as submitted. The the following schedule.

Fiscal

Four of these budgets were ap-
budgeted amounts are shown in

For fiscal year 1976 the Commission requested $4,150,000. The Board of Governors, however, adjusted the total amount of money requested to $2,779,000 which represented the total expenditures for fiscal year 1975 plus 10 percent. In adjusting the budget, the Governors, by letter dated June 3, 1975, stated:

"*** the Governors wish to avoid any action in regard
to the Commission's budget which would impair the
ability of the Commission to perform its duties in
a timely and efficient manner. Nevertheless, the
Commission's proposal for a FY 1976 budget in the
amount of $4,150,000 represents an increase of more
than 65 percent over the Commission's estimated expen-
ditures for FY 1975. Given the current condition of
the national economy, the very large deficits generally
faced by the Federal Government, and the present
financial condition of the Postal Service itself, we
believe it would be irresponsible for us to approve
an increase of such magnitude at this time * * *"

The Governors took particular exception to the request for an increase of $710,000 to beg in developing a system of accounts for the Postal Service. The Governors recognized that the

"* * * Commission is seeking a system which would
enable the Postal Service to periodically report
cost and revenue data to the Commission to provide
on-going support for more expeditious consideration
of rate and classification proceedings."

However, the Governors believed (1) the Commission lacked authority to impose a system of new accounts and (2) since the Commission is regulating a unique entity and not an industry where uniform reporting might be desirable, the Service should not be required to restructure its system of accounts to meet the desires of the Commission. In addition, the Governors stated that the Postal Service was well advanced in the process of revising its chart of accounts and a new system will be largely in place during fiscal year 1976.

In conclusion, the Governors stated:

"*** we have no intention of reducing the Commission's
budget so as to impair its ability to perform its
statutory functions. In the past, we have followed a
practice of restraint so as to avoid any risk of such
impairment; we intend to follow the same practice in
the future. Thus, if the Commission finds that its
ability to operate effectively is threatened by our
adjustment of its budget, we would expect to have the
opportunity to consider further adjustment.

"

The Commission, in replying to the Governors, stated that the adjustment to the budget "seriously threatens the Commission's ability to carry out its statutory responsibilities" and, as a minimum, an additional $825,000 over the estimated fiscal year 1975 expenditure level was needed to meet its obligations under the Postal Reorganization Act. In justifying the appeal, the Commission stated that its request for $3,440,000 represented the minimal staff and housekeeping resources needed to carry a "vastly-increased workload." In addition to the major postal rate and mail classification cases, the Commission's workload included two advisory opinion cases filed by the Postal Service, a complaint filed by a private party concerning the Postal Service's interpretation of the Private Express Statutes, and an issue raised in the mail classification case concerning the Commission's jurisdiction over Private Express