[Federal Register Volume 62, Number 84 (Thursday, May 1, 1997)]
[Notices]
[Pages 23813-23817]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-11379]


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POSTAL SERVICE


Decision of the Governors of the United States Postal Service on 
the Recommended Decision of the Postal Rate Commission on the Complaint 
of the Coalition Against Unfair USPS Competition, Docket No. C96-1

AGENCY: Postal Service.

ACTION: Notice of decision.

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SUMMARY: Notice is hereby given of the Decision of the Governors in the 
complaint brought to the Postal Rate Commission concerning the 
packaging service known as Pack & Send. By direction of the Governors, 
their Decision is published in the Federal Register following this 
notice.

FOR FURTHER INFORMATION CONTACT: Scott L. Reiter, (202) 268-2999.
Stanley F. Mires,
Chief Counsel, Legislative.
April 8, 1997.

    With this decision, the Governors exercise their authority to act 
in rate complaints brought to the Postal Rate Commission under the 
Postal Reorganization Act (``the Act''). 39 U.S.C. Secs. 3625, 3662. 
The circumstances in this case are unprecedented and unusual. The 
complainant challenged rates charged by the Postal Service for a 
packaging service known as Pack & Send. The complaint's principal 
allegation was that Pack & Send is a postal service for which a 
classification and fees must be recommended by the Commission. After 
hearings, the Commission determined that the complaint was justified, 
but declined to issue a Recommended Decision to us regarding the status 
of Pack & Send. Instead, the Commission elected to characterize its 
conclusion as a ``declaratory order.''
    We believe that the Commission's obligation under the Act and its 
own rules was to issue a Recommended Decision. Taken at face value, the 
Commission's action would effectively deprive us of our role in the 
statutory scheme. We have thus construed the Commission's order to be a 
Recommended Decision. For the reasons expressed below, we hereby reject 
it. By separate action the Postal Service has decided to discontinue 
the Pack & Send service.

Statement of Explanation and Justification

Background

    This docket was initiated as the result of a complaint filed under 
39 U.S.C. section 3662 by the Coalition Against Unfair USPS Competition 
(``Coalition'' or ``CAUUC''). The Coalition is a trade association 
representing operators of commercial mail receiving agencies 
(``CMRAs''), who, among other things, offer mail boxes, shipping 
services, packaging materials and packaging services in competition 
with the Postal Service. For the past two years, the Postal Service has 
offered Pack & Send as a pilot test, extending it over that time to 
approximately 260 selected postal facilities in a few geographic areas. 
The Coalition claimed that this service was unlawful, because the 
Postal Service had not first sought a recommended decision from the 
Commission to establish it and to set appropriate fees. Conversely, the 
Postal Service contended that packaging service is not required by the 
Act to be recommended by the Commission. All parties and the Commission 
agreed that the only issue that needed to be resolved to determine 
whether the complaint was justified was whether Pack & Send was a 
``postal service.'' According to the Commission, if it made this 
finding, then the complaint was necessarily justified, because the 
service had not been established through proceedings before the 
Commission.
    Testimony was filed on behalf of the Coalition and the Postal 
Service. The Postal Service provided the testimony of its Vice 
President for Retail, explaining the nature and operation of Pack & 
Send, and the reasons why it did not have to be recommended by the 
Commission. The Commission held hearings on the testimony under its 
rules governing complaints filed under 39 U.S.C. section 3662. The 
Commission ultimately found that the service was a postal service, and 
concluded that the complaint was justified. It made this determination 
in the form of a ``Declaratory Order,'' PRC Order No. 1145, issued on 
December 16, 1996. The Postal Service moved for reconsideration of the 
Order. In Order No. 1156, issued on February 3, 1997, the Commission 
affirmed both its substantive view regarding the status of Pack & Send, 
and its procedural view that it need not issue a recommended decision.
    As had been suggested by the Commission's Office of the Consumer 
Advocate (OCA), the Coalition threatened to initiate federal court 
litigation seeking to enjoin the Postal Service from continuing to 
provide the service in the face of the Commission's findings. (Letter 
of January 29, 1997, from Chair of the Coalition to Chairman of the 
Board of Governors.) In part because such litigation would have made 
resolution of this matter more complicated than it needed to be, the 
Postal Service, with our concurrence, discontinued offering Pack & Send 
service as of February 14, 1997.

Statutory Scheme

    The Commission's handling of this matter, both substantively and 
procedurally, raises several serious concerns. Initially, we believe 
that the form of the Commission's action is fundamentally inconsistent 
with the statutory scheme governing the Postal Service, and the 
respective roles of the Commission and the Governors under the Postal 
Reorganization Act.
    The Act gives the Postal Service both general and specific powers, 
including the specific authority to provide and establish nonpostal 
services. 39 U.S.C. Secs. 401, 404(a)(6). Nowhere in the statute is 
there any reference to Commission action in connection with nonpostal 
services. For postal services, the Governors are given the final 
authority to establish rates, fees, and mail classifications in 
accordance with applicable provisions in chapter 36, which generally 
provide for Commission proceedings leading to a recommended decision on 
these matters for postal services. 39 U.S.C. Secs. 3621'3625. The 
Postal Service alone may initiate proceedings to establish or change 
postal rates or fees. 39 U.S.C. Sec. 3622. Under section 3662, 
interested parties may challenge postal rates or services alleged not 
to be in accordance with the policies of the statute, but there is no 
explicit reference in that provision to any activity that is not a 
domestic postal service. The Act, in fact, does not create an explicit 
mechanism for challenging the legal status of services as postal or 
nonpostal.
    In our opinion, the suitability of section 3662 to challenge the 
legal status of Postal Service activities only

[[Page 23814]]

makes sense if it is done in a way that respects the roles of the 
Postal Service and the Governors in the statutory scheme.1 
Section 3662 states that in the case of a rate complaint filed with the 
Commission, if the Commission ``determines the complaint to be 
justified, it shall, after proceedings in conformity with section 3624 
of this title, issue a recommended decision which shall be acted upon 
[by the Governors] in accordance with the provisions of section 3625 of 
this title, and subject to review in accordance with the provisions of 
section 3628 * * *.'' 39 U.S.C. Sec. 3662 (emphasis added). The 
Commission's own procedural rules state that ``[i]f the Commission 
determines, after the completion of proceedings which provide an 
opportunity for hearing, that a complaint is justified in whole or in 
part, the Commission shall issue a recommended decision to the Postal 
Service, if the complaint involves a matter of rates and fees or mail 
classification * * *.'' 39 CFR Sec. 3001.87 (emphasis added).
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    \1\ The Postal Service did not challenge the Commission's 
jurisdiction under 39 U.S.C. Sec. 3662 to resolve the question of 
whether a service is postal or nonpostal within the meaning of the 
Act. Since the statute contemplates that the Commission's resolution 
of the proceeding would be in the form of a recommended decision, 
rather than a unilateral ``declaratory order,'' it expected that the 
Governors would have an opportunity to act in accordance with 
sections 3662 and 3625. We do not concede that section 3662 gives 
the Commission jurisdiction to review new products and services to 
establish their status as postal or nonpostal service.
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    In this proceeding, the Commission has held hearings in conformity 
with its rules implementing section 3624. It has made a determination 
concerning the only question that was before it, and has determined the 
complaint to be justified. No further issues remain to be determined to 
reach a final conclusion on the merits of the complaint. The Commission 
should therefore have issued its finding in the form of a recommended 
decision to us, as required by the plain language of the statute and 
its own rules. The action it took does not allow for the exercise of 
our statutory authority in this complaint case.
    The Commission's conclusions regarding the status of Pack & Send 
raise issues that we would have addressed had the Commission properly 
issued a recommended decision. Accordingly, we are treating the 
Commission's Orders as a recommended decision. In this regard, section 
3625 gives us a number of options. For the reasons set forth in this 
Decision, we are exercising our option to reject.

Principles at Issue

    The first principle at issue is that we and the Commission are 
intended to be partners in the ratemaking process. With regard to this 
relationship, courts have concluded that ``one partner does not 
regulate another,'' and that ``Congress did not intend that the Postal 
Rate Commission regulate the Postal Service.'' Governors of United 
States Postal Service v. Postal Rate Commission, 654 F.2d 108, 114-15 
(D.C. Cir. 1981); Mail Order Association of America v. United States 
Postal Service, 986 F.2d 509, 524 (D.C. Cir. 1993). The statute 
establishes the Commission as the body with primary expertise in 
classification and ratemaking, but, even on such matters, gives the 
Governors the authority to make a final decision. There is, however, no 
basis in the statute or in judicial precedent to support the 
proposition that the Commission has primary expertise in determining 
the nature of the services offered by the Postal Service. Indeed, the 
absence of any provision for it in the statute suggests that the 
Commission was not intended to play a role in the creation and 
operation of nonpostal services. It does not have unilateral authority 
in the area of its primary expertise, but rather shares that authority 
in a partnership with us. The Postal Service has the primary expertise 
and authority in determining the nature of the services it offers.
    The second principle is one which derives from general notions of 
public policy: that an administrative agency should attempt to resolve 
issues before it in a way that avoids needless federal court 
litigation, or, at the very least, is not designed explicitly for the 
purpose of fostering such litigation. In this case, the course that the 
Commission has taken by choosing not to issue a recommended decision 
appears to respond to the OCA's argument that the Commission should not 
issue a recommended decision, because of the possibility that the 
Governors would exercise their lawful statutory option to reject it. 
According to the OCA, this would leave the complainant with no way to 
appeal our decision, since a rejection decision is not appealable under 
section 3628.2 Instead, the OCA urged the Commission to 
issue a ``declaratory jurisdictional order'' that could be the basis 
for the Coalition to ask a federal district court to enjoin the Postal 
Service from continuing to offer packaging service.3 That is 
precisely what the Commission did, and what the Coalition has 
threatened.
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    \2\ The OCA characterized this sequence of events as a ``pit'' 
that the Postal Service was luring the Commission to ``fall 
in[to].'' See OCA Response in Support of Complainant's Motion for 
Summary Judgment at 5-6 (September 27, 1996); OCA Brief at 15-16 
(November 22, 1996). The Commission, furthermore, in Order No. 1156, 
noted that parties aggrieved by the interlocutory Order might avail 
themselves of the federal district courts. Order No. 1156, at 16 & 
n. 6.
    The OCA's concern was apparently that the Governors would take 
action under 39 U.S.C. Sec. 3625 that would not be reviewable under 
Sec. 3628, and that Pack & Send would thereby be immune from 
judicial review. OCA Motion at 6 & n.2; OCA Brief at 16 n.8. In this 
regard, we note that courts have been known to assume jurisdiction 
to review agency action where the claim is made that an agency's 
conduct exceeds its statutory authority, even where review would 
otherwise be precluded by statute.
    \3\  Id.
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    The third principle is that the statutory scheme embodies the 
Governors' and postal management's responsibilities for managing the 
Postal Service. If sound policy leads to a determination that section 
3662, as a practical matter, should be adapted to enable interested 
persons to challenge the nonpostal status of Postal Service activities, 
it must accommodate the authority for making management decisions that 
the Act entrusts to the Governors and postal management. In this 
instance, the Commission justified its decision not to issue a 
recommended decision on its belief that ``there is no substantive 
recommendation for the Commission to make'' to the Governors. The 
Commission stated that ``a recommended decision simply declaring that 
Pack & Send is a postal service, and thus subject to the Commission's 
jurisdiction, would be a hollow vessel lacking any recommendation of 
substance upon which the Governors could act under Sec. 3625.'' Order 
No. 1145, at 24.
    It is not clear precisely what is meant by this. If the Commission 
is suggesting that a recommendation can only pertain to changes in 
rates or in the Domestic Mail Classification Schedule (DMCS), we do not 
agree, at least in the context of this complaint.4 Here, the 
only issue

[[Page 23815]]

was the legal status of a particular activity, i.e., whether it was 
postal in nature. The Commission's recommendation and opinion, although 
embodied in the form of a ``declaratory order,'' created constraints 
and options for management decisionmaking. In our opinion, this is a 
situation for which Governors' action responding to the Commission's 
determination is both logical and mandated under sections 3662 and 
3625.
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    \4\ It is not the case that a meaningful or appropriate 
recommendation could only be to change rates or classifications. The 
Commission has often recommended maintaining the status quo, 
sometimes based on a legal conclusion that a proposal would violate 
the policies of the Act, or that existing classifications were not 
unlawful. The Governors, furthermore, have in the past approved such 
recommendations. E.g., Docket No. MC76-1-4 (The Commission 
recommended that Mailgram service not be included in the Domestic 
Mail Classification Schedule; the Governors approved that 
recommendation.); Docket No. R77-1 (Based in part on a legal 
conclusion, the Commission recommended to the Governors that the 
Postal Service's proposed citizens' rate mail not be adopted; the 
Governors approved). In complaint cases as well, the Commission has 
based a recommendation on its legal conclusion that a challenged 
classification did not violate law. Docket Nos. C85-2 and C86-1 (The 
Commission recommended no change based on its legal conclusion that 
the DMCS did not violate the Constitution.)
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    Had the Commission issued a recommended decision, it would have 
given us a number of options.5 One that we might have chosen 
would have been to accept the Commission's recommendation. This would 
have given the Board the further options of instructing postal 
management either to discontinue the service or to prepare to file a 
case seeking the Commission's recommendation of a classification and 
fees for the service. To assume that we would under no circumstances 
agree with the Commission that substantial evidence supported its 
substantive finding, or that we would not seek to exercise a role in 
the permanent establishment of this service, essentially 
mischaracterizes the Governors' role with respect to both the 
Commission and postal management.
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    \5\ In this case, a possible recommendation could have been that 
the Board should initiate a proceeding under Chapter 36, based on 
the Commission's legal conclusion that Pack & Send is a postal 
service.
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    A recommended decision affords us other options which the 
Commission sought to foreclose. We would have had the opportunity to 
accept the recommendation under protest and return it to the Commission 
with our request for reconsideration, or clarification, perhaps on 
bases different from those already expressed by the Postal Service. 
Alternatively, we could have sought judicial review under section 
3625(c). We may or may not have chosen to exercise these options; but 
we believe we have the statutory right to make that decision.
    Finally, we could have rejected the recommendation. Indeed, we have 
now chosen to do so. In this instance, however, our rejection occurs 
under circumstances in which the Board and postal management decided to 
discontinue the challenged service. This action, which effectively 
afforded the complainant the relief it sought, does not reflect on the 
merits of their challenge,6 but is based on a recognition 
that the short-term and long-term costs of further controversy in this 
matter may be too high.
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    \6\ The Postal Service action was not intended to waive its 
opposition to the Commission's legal conclusion, or to agree with 
the Commission's Orders.
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Other Considerations

    Another serious concern is that the outcome in this case may signal 
a bias against Postal Service activities that might be considered to be 
in competition with private sector entities.7 The general 
question embodied in the debate over the scope of Postal Service 
activities involves a complex inquiry into important policy issues. For 
example, we understand that CAUUC, the complainant in this case, is 
currently advocating legislation that would curtail the Postal Service 
from offering services that compete with private businesses. This, in 
fact, was also a theme running throughout the proceedings before the 
Commission. In this regard, we acknowledge that those and other issues 
are matters about which individual Governors might hold differing 
views. Nevertheless, as officials who are mandated by statute to 
represent the public interest generally, and not particular interests, 
we are acutely aware of our duty to ensure that the Postal Service 
lives up to the obligations and responsibilities conferred upon it by 
the Postal Reorganization Act. In other words, whether the Postal 
Service competes with private entities in any given instance is a 
question of fundamental policy that lies ultimately with Congress. How 
that policy is manifested in Postal Service activities has been 
entrusted by the Act to postal management and the Governors.
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    \7\ We understand that in the course of this litigation the OCA, 
the only other party to play a significant role in the litigation, 
sided with the Coalition.
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Scope of Review

    Because Pack & Send has been discontinued, we need not engage in a 
comprehensive analysis and discussion of the record. However, important 
policy considerations arising in the Pack & Send matter are likely to 
come up again in the future as new services are developed. As 
Governors, we have a responsibility to consider and direct the broad 
objectives of postal operations and policy. As a threshold matter, we 
reiterate that we do not concede that jurisdiction lies at the Postal 
Rate Commission by complaint under 39 U.S.C. section 3662 to challenge 
new products, services, or activities that the Postal Service has 
determined to be nonpostal. The principal inquiry presented by such a 
complaint concerns the nature and status of the Postal Service's 
product offerings, matters that lie outside the Commission's 
acknowledged primary expertise in allocating costs and recommending 
rates, fees, and classifications. Even assuming there is jurisdiction, 
if section 3662 is employed, we believe that the statute requires a 
joint determination between the two agencies acting as partners, as 
discussed earlier.
    The Governors would prefer to find in the Pack & Send Orders 
guidance for the formulation and conduct of policy in differentiating 
postal and nonpostal services for the future. But the Orders seem to us 
to extend the standard for evaluating whether an activity is a postal 
service farther than is supported by current caselaw. So too, there are 
now questions regarding the application of the Commission's prior 
precedents and opinions. For these reasons, rather than from our 
independent assessment of the Commission's findings, we must reject the 
conclusions in these two Orders.8
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    \8\ The posture of the case requires that we treat the 
Commission's action here as a recommended decision for our 
consideration under 39 U.S.C. Sec. 3625, although not so denominated 
in the Orders themselves. For the reasons expressed below, we have 
concluded that the option available to the Governors which best 
allows us to register our concerns is the statutory option to 
reject. We also find that the Commission's interpretation of its 
obligations to issue a recommended decision under 39 U.S.C. 
Sec. 3662 serves as an independent basis for rejection.
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Applicable Standards

    The introduction of new services, involving innovative features 
juxtaposed with existing activities, tests the Governors' ability both 
to find consistency with what has gone before and to identify firm 
ground for the future. In our capacity as Governors, we have developed 
an increasing appreciation for both the challenge of drawing the 
appropriate lines around some of the forward-looking services which 
management is developing to serve our customers, and the inescapable 
need to make these decisions in the interest of a modern, vibrant 
postal system moving into the twenty-first century, and within the 
statutory framework currently afforded. We sense that the 
Commissioners, in their effort to provide verbal yardsticks for 
measuring the postal or nonpostal character of Pack & Send, have 
recognized some of the same needs and wrestled with much the same 
inherent ambiguities.
    For judicial assistance, the Commission and the Governors must rely 
primarily on one case which attempted a definition of postal versus

[[Page 23816]]

nonpostal as applied to specific services then offered. In Associated 
Third Class Mail Users v. United States Postal Service, 405 F. Supp. 
1109 (D.D.C. 1975), (``ATCMU''), the district court reviewed the Postal 
Service's assertion that fees for a group of special services, such as 
mailing list corrections, registry, and insurance, could be changed 
without a Commission recommendation. The court concluded that all of 
the services under consideration were ``postal services,'' because 
``nearly all of these other services are very closely related to the 
delivery of the mail.'' Id. at 1115. The court found that money orders 
were a ``possible exception * * * since they can be used equally as 
well without being delivered by mail.'' Id. Nevertheless, the court 
concluded that money orders would also be treated as postal, since the 
majority of Postal Service money orders were ``* * * actually'' sent by 
mail. The court also found that whether the fees set for these services 
had a ``substantial public effect'' was relevant to whether Congress 
intended them to be recommended by the Commission. On appeal, the Court 
of Appeals affirmed the district court's holding, without adopting all 
of its reasoning. National Association of Greeting Card Publishers v. 
United States Postal Service, 569 F.2d 570, 596-96 (D.C. Cir. 1976) 
(``NAGCP''). The court found that the services in question were postal 
because ``each clearly involves an aspect in the posting, handling and 
delivery of mail matter.'' 9 As for the money order 
exception, the court agreed with the district court that, since the 
majority were mailed, they could be viewed as ``intimately a part of 
postal services.'' Id. The court did not comment on the district 
court's ``public effect'' criterion.
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    \9\ Id. at 596. The Court of Appeals stated: ``Since the Act 
provides no specific definition of `postal services,' * * * we must 
construe its meaning within the purposes of the Act, looking to 
legislative history where the words themselves, read plainly, are 
inadequate.'' Id.
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    Subsequent to the district court decision, but before the NAGCP 
Court of Appeals affirmance, the Commission in Docket No. R76-1 
reviewed the jurisdictional status of a broad range of postal 
activities and services, referring to the test formulated by the 
district court. PRC Op. R76-1, Vol. 2, App. F. The Commission concluded 
that many of these satisfied the general tests outlined by the district 
court. However, the Commission then questioned the applicability of 
those tests to several other activities. In particular, the Commission 
questioned the ``jurisdictionality'' of money orders, ``because of 
their lack of intrinsic connection with the carriage of mail.'' Id. at 
12. Furthermore, in its Opinion in Docket No. R76-1, the Commission 
elaborated on the standard articulated by the court, in connection with 
special postal services. The Commission characterized these as:

services other than actual carriage of mail but supportive or 
auxiliary thereto. They enhance the value of service rendered under 
one of the substantive mail classes by providing such features as 
added security, added convenience or speed, indemnity against loss, 
correct information as to the current address of a recipient, etc. 
We believe that this standard is consistent with the decision in 
Associated Third Class Mail Users, supra, that special postal fees 
are within the jurisdiction of the Commission.

PRC Op. R76-1, Vol. 1, at 266-67.
    We have concluded that the Commission's decision in this proceeding 
expands this earlier standard. The order identified Pack & Send as 
``[i]ntrinsically'' a ``value-added'' service that was ``supportive or 
auxiliary'' to the carriage of mail. Order No. 1145, at 19.
    The order also found the public effect standard applicable to Pack 
& Send's ``impact on competing stores in the private sector that offer 
packaging service and access to alternative means of shipping 
parcels.'' Id.

Policy Concerns

    The Commission's action raises questions about a broader standard 
for postal services than the courts have defined. In this regard, 
several general policy implications emerge.
    First, we have concerns about the validity and implications of the 
``value added'' standard suggested in the order. The district court in 
ATCMU defined a postal service as ``closely related to the delivery of 
mail.'' 405 F. Supp. at 1115 (emphasis added). The Court of Appeals 
referred to services ``involv[ing] an aspect in the posting, handling 
and delivery of mail matter.'' 596 F.2d at 596 (emphasis added). The 
value added concept differs from these more conventional tests. For our 
own analysis, we have found it a vaguer standard providing little 
guidance. Nor does the value added concept necessarily flow logically 
from either of the courts' definitions.
    The Commission's assessment of Pack & Send under this standard was 
based on its conclusion that ``the locus of the added value is the 
alternative form of acceptance it provides.'' Order No. 1145, at 19; 
see id. at 15. While we do not address that finding, we note that the 
observation that packaging amounts to ``mail preparation for a fee'' 
may imply an overbroad and unworkable formula. The Commission and the 
Governors had earlier found that the sale of packaging materials did 
not constitute a postal service. PRC Op. R76-1, Vol. 2, App. F, at 20-
21. In this regard, the fact that packaging materials are inventoried, 
stocked, and sold by postal employees did not change the inherent 
nature of their sale as a nonpostal service. Furthermore, as a general 
matter, the performance of a service by a postal employee does not 
change the essential nature of that service and cannot, merely by 
virtue of the employee's involvement, make that service a postal 
service.
    Based on the description in Docket No. R76-1, quoted above, the 
Commission presumably intended the ``value-added'' criterion to be the 
same as the courts' standards. The concepts of ``value'' and 
``enhancement,'' however, may be impractically broad and imprecise 
considering the variety of support services that are increasingly 
offered and required as conditions for mailing in an automated 
operational environment. We are concerned, furthermore, that such a 
standard could be taken so broadly as to include a range of activities 
that might be considered ``valuable'' in connection with particular 
uses of mail, but that do not bear any substantive relationship to mail 
in an operational sense.10
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    \10\ The Postal Service may find it advantageous in the future 
to offer services that enhance the value of mail content after it 
ceases to be mail, or perhaps before mail is produced. In this 
regard, we are concerned that a ``value-added'' test could extend to 
Postal Service activities that bear little relation to the actual 
provision of conventional, core mail services.
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    Second, we are concerned with the ramifications of the Commission's 
use of the money order, or ``frequency of mailing'' rationale that was 
enunciated early on by the courts, but that has not been consistently 
applied since that time. The Commission considered in Docket No. R76-1 
that photocopying machines in postal lobbies would not be a postal 
service, even if every copy made were required to be mailed. PRC Op. 
R76-1, Vol. 2, App. F, at 20. In that case, where the service did not 
involve a clearly postal-related activity, a complete correlation 
between the service and mailing could not support a finding that the 
service is postal. With regard to Pack & Send, the Commission's order 
concluded that the likelihood of mailing established only ``a 
dispositive tendency toward a finding'' that packaging service was 
postal in nature. What emerges from this history is an unreliable 
guideline. While it may be easy to assume that use of a

[[Page 23817]]

service could result in mailing, it is difficult to see how a standard 
based on frequency of this occurrence can determine Commission 
jurisdiction.11
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    \11\ We must defer to the courts' formulation of the frequency 
of mailing standard. Nevertheless, we note that in the cases the 
test was established as an exception for an entrenched existing 
service, sale of money orders, which did not share the 
characteristics that the courts concluded established a status as a 
postal service. Consistent with the Commission's reservations, it is 
possible that the application of that standard is limited to the 
unique circumstances in ATCMU, in which the court was asked to 
consider jurisdiction over existing special services as a group.
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    Finally, the application of the public effect standard in Pack & 
Send appears to differ from the ATCMU court's original formulation. As 
described by the district court, the public effect test pertained to 
the financial consequences of a particular service, as reflected in 
postal revenues, and the effect on consumers' expenses for the service. 
405 F. Supp. at 1115. The court implied that, beyond the simple 
magnitude of customer expenses, the impact on mailers who had no other 
alternatives (in the case of money orders) had a bearing on this 
consideration. The court indicated that the test was related broadly to 
the policies in the Act favoring the availability of hearings and the 
opportunity to scrutinize and challenge proposed changes in fees. 
Again, however, the court indicated that the magnitude as well as the 
scope of the financial impact ``on sizeable and diverse groups in 
society'' was a controlling consideration. Id. at 1116. In the Pack & 
Send complaint proceeding, the Commission focused on the potential 
financial impact on competitors, rather than on the public or customers 
of the service. Indeed, the Commission properly acknowledged that the 
impact of Pack & Send in its current form was relatively minor.
    It is unclear how a public effect consideration, which includes 
postal competitors and omits postal customers, is consistent with the 
standard outlined by the district court. We do not endorse it as a 
guide to future policy, or as a test of the Postal Service's or the 
Commission's jurisdiction.

Need for Change

    The uncertainties that have complicated the Pack & Send situation 
amplify the inadequacies of existing administrative mechanisms to 
accommodate the needs of a modern Postal Service. A modest proposal, 
such as offering packaging services, should not have to be unduly 
inhibited or interrupted by potentially lengthy administrative or court 
proceedings. The Postal Service should be able, quickly and 
efficiently, to test the viability and design of service offerings that 
provide service of value to the general public, and that have already 
been established in the marketplace. In the long run, if the Postal 
Service is to provide affordable universal service, at uniform rates, 
it must be able to take advantage of opportunities for new revenues. 
Furthermore, to keep in step with the continually evolving economic 
environment, it must be able to provide innovative services quickly. 
This will require real flexibility to design and test products and to 
set rates, in accordance with fair, uncomplicated opportunities for 
review that are appropriate for the circumstances.
    We have come to our resolution of this matter with regret. It would 
be far better if the legal standards were clear, well settled, and 
universally understood, so that full attention could be given to 
meeting the real needs of the public.
    For the ordinary citizen, the current accumulation of past choices 
about what has or has not been put in the rate and mail classification 
schedules, what does or does not have the participation of the 
Commission, is difficult to comprehend. When a customer makes a 
photocopy in the lobby to put in his envelope, he uses a service not 
classified in the schedules. When he buys a money order for the same 
purpose, the schedules define that service for him. When he purchases 
philatelic services, the fees are outside the rate schedules, because 
the Postal Service has separate authority for them under 39 U.S.C. 
section 404(a)(5). When he buys stamped envelopes, the fees are in the 
rate schedules, although the Postal Service has separate authority for 
the service under 39 U.S.C. section 404(a)(4). Mailgrams, delivered in 
the mailstream, are not classified as mail services. Mailing list 
services, which correct the customer's address file and do not directly 
involve the mailstream at all, are classified as mail services.
    Perhaps it is too much to expect at this point that the Commission 
and the Governors should have achieved full congruence and consistency 
between what is in and what is outside the accumulation of services 
reflected in the schedules recommended by the Commission and approved 
by the Governors. Virtually the only judicial assistance for the task 
has come from one case, litigated more than 23 years ago, early in the 
history of the reorganized Postal Service. With the benefit of 
additional years of experience, perhaps it is now time to revisit the 
drawing of the relevant lines.

Conclusion

    In summary, there are important policy considerations raised in the 
Pack & Send analysis of the postal versus nonpostal nature of a 
service. The Postal Service has nonetheless discontinued the operation 
of Pack & Send and is not reversing that action by this Decision. 
Postal management will, however, continue to study its options 
regarding packaging service in general or a variant of Pack & Send as a 
postal service, and, if appropriate, make recommendations to the Board 
of Governors.

Estimate of Anticipated Revenue

    The Postal Reorganization Act requires that our Decision include an 
estimate of anticipated revenues. 39 U.S.C. Sec. 3625(e). Because the 
Postal Service has already discontinued Pack & Send service, our 
Decision will have no effect on anticipated postal revenues.

Order

    In accordance with the foregoing Decision of the Governors, the 
Commission's Orders No. 1145 and 1156, construed as a recommended 
decision under 39 U.S.C. section 3662, are rejected. This Decision 
shall be published in the Federal Register.

    By the Governors:
Tirso Del Junco,
Chairman.
[FR Doc. 97-11379 Filed 4-30-97; 8:45 am]
BILLING CODE 7710-12-P