Commission struggles to define 'postal service'

Editor's Note: This story was updated at 4:17 p.m. Jan. 23, 2006, to clarify that the Postal Rate Commission is a rate-setting, not regulatory body.

Members of the Postal Rate Commission said they hoped that their new ruling on the definition of the term "postal service" would make it easier for the commission to settle complaints that the U.S. Postal Service competes unfairly when offering new services. But the commission's final rule might not be the last word.

USPS officials argued during the rule-making process that the rate commission was overstepping its authority by issuing such a rule. In the rule's broad definition of postal service, which includes electronic services, the commission claims authority to approve or disallow such services and to regulate what USPS charges for them.

The commission is a congressionally mandated rate-setting agency whose members are appointed by the president.

USPS may appeal the commission's final rule to the federal district court to protest the commission's authority. However, postal officials would not comment. "Since this issue is being reviewed by our legal department, we won't be able to discuss it," said Patricia Licata, a USPS spokeswoman.

Defining postal services and setting charges for new postal services are significant for USPS because it must find new revenue sources. USPS faces declining income from first-class mail and competition from commercial package mailers. Meanwhile, its obligations to provide universal delivery keep expanding each year. In 2005 USPS added 2 million addresses to its delivery routes.

The 1970 statute under which USPS operates does not explicitly define postal service, so the commission conducted a formal rulemaking process to define it, said Stephen Sharfman, general counsel for the rate commission. "We're trying to clarify the rules to make sure that it is understood at least how we view the statute," he said.

A similar definition appears in postal reform legislation approved by the House and Senate committees that oversee USPS.

Under the direction of Postmaster General John Potter, USPS has focused on electronic services that enhance the value of traditional mail and package delivery. But in its final rule, the commission defined postal service broadly enough to encompass any number of electronic services that USPS might offer in the future. "It might be that the Postal Service has no current plans to take advantage of the maximum breadth of its authority under the current statute, and that would be fine," Sharfman said.

Business mailers, which have long opposed USPS' forays into electronic services, are generally satisfied that the ruling appears to give the commission authority over decisions that USPS has been making without seeking the commission's approval. "The Postal Rate Commission, from our point of view, decided to craft for themselves the broadest possible jurisdiction," said Gene Del Polito, president of the Association for Postal Commerce, an industry group interested in postal policies.

Commercial mailers aren't worried that the commission will interpret the new rule in ways that ignore their interests, Del Polito added. "To the extent that the commission historically has been very skeptical of the Postal Service's ventures into these areas, then I guess we could say we're satisfied."

The commission will next decide whether electronic services that USPS now offers fit the new definition. The commission set a Feb. 17 deadline for USPS to update the commission on the status of 14 service offerings that were the subject of a Consumer Action group complaint that led to the recent rule.

For all other services that fit the new definition of postal service, USPS must request the commission's approval no later than June 1, according to the final rule issued Jan. 4. The new rule is effective 30 days after its publication in the Federal Register.

The commission said it will soon decide whether to hear two pending complaints against USPS. One of the complainants is from DigiStamp, which alleges that USPS is using its Electronic Postmark service to compete illegally and unfairly against small businesses that offer a similar Internet service for verifying the authenticity of digital documents.

DigiStamp claims that USPS violated its charter by not seeking approval from the commission before offering the postmark service.