COMPTROLLER GENERAL'S REPORT TO GOVERNMENT COMMITTEE ON APPROPRIATIONS THE ROLE OF THE POSTAL DIGEST The overall structure of the postal ratemaking process COMMISSION JURISDICTION Because the Postal Service and the Postal Rate Commission --set certain postal rates, --pass on the validity of Service cost and revenue --investigate management efficiency and economy and The Postal Reorganization Act is not clear on these matters. Both parties find support in the act and its legislative history for their positions. The Commission argues that the functions given it under Unlike most regulatory agencies the Commission's decisions Tear Sheet. Upon removal, the report cover date should be noted hereon. i GGD-77-20 The first two rate cases took 17 and 23 months to complete. There is no appropriate standard against which the timeliness of these cases can be judged. Other regulatory agencies have often taken longer to resolve their cases. It is true, however, that the Service's finances were affected adversely by its inability to quickly adjust postal rates in response to swiftly rising costs. In GAO's view the cases required the time that they did The Commission completed the third case in only 9-1/2 months. This was a major accomplishment. The reduced time can be attributed to (1) its use of improved, streamlined procedures and (2) a costing approach which it laid down in the second rate case that the Service generally favored. It should be noted that the U.S. Court of Appeals recently rejected this costing approach. The Service, with the strong endorsement of the Commission, has taken steps to appeal the decision. Notwithstanding this improvement in rate case timeliness, the basic question of the proper role of the Commission persists. The fundamental assumptions underlying the Postal Reorganization Act and the wisdom of creating an independent, financially self-sufficient Postal Service are being reexamined by the Congress. The Postal Reorganization Act 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 examining the role of the Postal Rate Commission. RECOMMENDATION TO THE CONGRESS If the Congress 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. OTHER PROBLEMS REQUIRING CORRECTION The differing views of the Service and the Postal 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. Periodic Reporting There is a dispute between the Service and the Commission regarding the authority of the latter 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 fulfill its definition of the Commission's functions. The Service has rejected requests for information that it believes is not required to perform these functions, while the Commission considers that it is legally entitled to relevant information. There is some doubt whether the Commission has the legal authority to require the Postal Service to provide periodic reports on a regular basis, since the Postal Reorganization Act does not explicitly grant this power to the Commission. Nevertheless, regardless of how the Commission's role is defined, it should explicitly be granted this authority. Authority to subpoena The Commission and the Service disagree as to the present existence of subpoena authority by the Commission. In GAO's view, the Commission does not have explicit authority under the act to subpoena information required during a hearing. The Commission, like other regulatory agencies, should have such authority, regardless of whether its role is narrowly or broadly defined. Self-representation 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 these two official clients of the Attorney General advocate conflicting positions, as had happened recently. GAO concludes that the Commission should have the option of self-representation to assure that its views are adequately presented in court. The Commission and the Service concur. RECOMMENDATIONS TO THE CONGRESS Although the Commission and the Service have worked out mutually agreeable arrangements for providing certain data, to clarify the Commission's authority the Congress should amend the Postal Reorganization Act to provide the Commission with authority to The Commission's operations are financed by the Service. 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 an incident. In 1976 the Governors reduced the Commission's budget request by $1,371,000, of which $710,000 was to be spent developing a system of accounts. These funds were deleted because of the poor financial condition of the Service and because the Governors believed (1) the Commission lacked authority to impose a system of new accounts and (2) the Service should not be required to restructure its system of accounts to meet the desires of the Commission. (See p. 26.) Although GAO does not disagree with the Governors' decision in that case, it believes that the scope of the activities of the Commission should not be subject to the perceptions of the Governors or the state of the Service's financial condition. The Service has indicated that it was not opposed to the Commission being funded directly by the Congress RECOMMENDATION TO THE CONGRESS The Congress should amend the Postal Reorganization AGENCY COMMENTS AND UNRESOLVED ISSUES The Postal Rate Commission supports most of GAO's conclusions. The Commission does not believe that jurisdictional The Commission said that if the Governors' authority to disallow any funds is to be limited, a concurrence of the Director of the Office of Management and Budget is preferable to congressional approval. The Postal Service was provided with a draft of this " With the exception of the issue of self-representation, the Service disagrees with all of GAO's recommendations, stating that the proportion of the report devoted "*** to so-called jurisdictional disputes overstates their practical importance to the ratemaking process* * * The Service further stated that the jurisdictional issues * *have in the main been resolved through practical case experience. We do not believe that a need for remedial legislation exists." The Postal Service also believes that: --A periodic reporting system already has been established by the Rate Commission and so there is no need for any legislative action. --The need for subpoena power has not been demonstrated, implying that the Rate Commission would likely abuse the subpoena power. A |