Tuesday, February 9, 2010

Rethinking The Value of Postal Regulatory Policy

I have never been much of a fan of old regulatory process of setting postal prices.   The contradictions among the competing objectives of pricing policy in the law created a zero sum game that resulted in mailers and the Postal Service spending millions to litigate prices that could be set in a much less constrained litigious environment. 

Currently, the Postal Regulatory Commission is in the middle of a proceeding to see whether what the Postal Service presented in its Annual Compliance Report puts it out of compliance with requirements in postal law in regards to financial stability and requirements in regards to pricing workshare discounts.

As stated in previous posts, I agree that postal stakeholders, and in particular Congress, the Office of Management and Budget, and the U.S. Treasury acting as shareholder and creditor, need to know whether the Postal Service has a business plan, working under existing law, that will ensure financial stability.  If such a plan does not exist, then those parties representing the shareholder and creditor interests in the Postal Service need to see a set of alternative plans with hard numbers that would produce financial stability under alternatives that require changes in existing law.

While the PRC, with its knowledge of postal data and operations can provide assistance in this effort, its forte is not evaluating business plans.  Its strength is examining in a legalistic manner whether a particular plan follows regulatory precedent in meeting the objectives of postal law.

The problem with the PRC's attempt to evaluate the Postal Service's business plans is seen in the language that the parties use to discuss the issues that the PRC's review of the Annual Compliance Review generates.    The first paragraph of the summary of the Comments of Time Warner on Issues raised in Commission Information Request No. 1 illustrates this point.

In these comments, we explain why Time Warner believes that § 3622(b)(5) does not, and cannot, raise  an issue of "compliance" within the meaning of § 3653(b).We review Time Warner's previous comments on the scope of § 3653(b) and the Commission's discussion of those comments, and we conclude that the Commission has as yet made no statement responsive to the two major points of our analysis: (1) that it is impossible to make a determination of Postal Service noncompliance with the "objectives" and "factors" of § 3622(b) and (c) because those factors and objectives are not addressed to the Postal Service but to the Commission, relating to the Commission's design of a new ratemaking system; and (2) that it is impossible to make a determination of Postal Service noncompliance with the "objectives" and "factors" of § 3622(b) and (c) because a set of nine mutually competing "objectives," "each of which [is required] to be applied in conjunction with the others" (§ 3622(b)) and fourteen mutually competing "factors," which are required only to be "take[n] into account" in designing the new system (§ 3622(c)) are not conceptually susceptible to a "determination of noncompliance" (unless all that is meant by "noncompliance" is that they are disregarded completely).

Remember, this language is the first paragraph of the summary of document presented in a proceeding designed to look at what is necessary to make the Postal Service a financially stable business. I cannot imagine anything being further from the language of business than what Time Warner's lawyers wrote in that paragraph and leads me to two questions. 
  • How did we get here?
  • How and when do we stop spending our time and resources in activities that do not ensure that mailers continue to use the Postal Service to advance economic activity?

No comments: