Released: November 19, 2004

Postal Rate Comm fails to ensure public that monopoly postage revenues won’t bankroll bad business

PRC condemns the Postal Services's 'nonpostal' activities and tries to clarify what Congress meant by 'postal services'

Contact: Ken McEldowney, Consumer Action, (415) 777-9648; Linda Sherry, Consumer Action, (202) 544-3088

More than two years after Consumer Action and the Office of the Consumer Advocate asked the U.S. Postal Rate Commission (PRC) to regulate the Postal Service’s unauthorized commercial ventures, the Commission on Nov. 12 issued an emphatic condemnation of the Service’s provision of “nonpostal” commercial products and services, but declined to subject nonpostal activities to PRC rate and classification authority.

The Commission instead proposed a definition of “postal services”* that it hopes will clarify activities in which the Postal Service may legitimately funnel revenues for research and development of new product lines. (The proposed definition, which appears at the end of this release, is open for comment until Dec. 15, 2004.)

Consumer Action is disappointed that the Commission stopped short of ensuring that mail customers don’t pay for the Postal Service’s failed, largely loss-producing services through higher postal rates.

Ken McEldowney, executive director of Consumer Action, said, “The PRC’s ruling is a mixed bag for consumers. On one hand, the Commission agreed with our argument that Congress never delegated authority to the Postal Service to develop new products that don’t fit the definition of mail, but on the other hand it did not support our view that any retail activity, whether a traditional postal activity or not, was subject to the Commission’s rate review and authority.”

Shelley Dreifuss, director, Office of the Consumer Advocate, Postal Rate Commission, said, “We are pleased that the Commission concluded that the Postal Service is acting outside of any grant of power given to it by the Postal Reorganization Act and flatly rejected every statutory interpretation offered by the Postal Service to justify its activities.”

In 1970, Congress created the Postal Service out of the Post Office Department and continued its monopoly on non-urgent letter delivery. The Office of the Consumer Advocate is the federal office charged with assuring that postal rate increases are fair for consumers and is part of the Postal Rate Commission. When the Postal Service wants to change postal rates, it must file a request with the PRC.

Consumer Action, founded in 1971, is a national non-profit education and advocacy organization based in San Francisco, CA.

* The Commission proposes to amend its Rules of Practice and Procedure by adding a new definition in the Code of Federal Regulations [Title 39-Postal Service, Chapter III-Postal Rate Commission, Part 3001-Rules of Practice and Procedure, Subpart A-Rules of General Applicability, Sec. 3001.5 Definitions]: "Postal service means the receipt, transmission, or delivery by the Postal Service of correspondence, including, but not limited to, letters, printed matter, and like materials; mailable packages; or other services supportive or ancillary thereto."