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obligations under the Postal Reorganization Act. We established an eightmember task force to discuss these problems thoroughly, and to provide us with some ideas for new procedures which could alleviate some of the structural rigidities that have grown up over the twenty-one years since Congress assigned us the task of setting postal rates.

The Commission and the Governors each appointed four experienced, respected postal experts to the Task Force. During the time that the Task Force was meeting and preparing its suggestions, both the Commission and the Governors scrupulously avoided discussions with Task Force members which might have tended to influence its findings, or limit the scope of its ideas.

The Task Force appeared before this Committee last month to provide an overview of the types of recommendations they were considering. Three days ago, on Monday, June 1, 1992, the Task Force delivered its written report to the Commission and the Governors.

As I went through this report for the first time, I found a number of ideas which are both innovative and thought-provoking. It is obvious that a great deal of thought went into its preparation, and it is also clear that the report reflects a sophisticated knowledge of how the separate obligations of the Commission and the Governors mesh. For that reason, I think this report is far more useful than any of the other commentaries on postal ratemaking which have been produced recently.

The Commission and the Governors wanted to have the benefit of a fresh look at postal ratemaking problems, but more than that, we wanted to have the benefit of a fresh look taken by people who had been intimately involved in making postal policy and postal rates, people who would understand the particular problems and nuances of our public-service-oriented, quasi-business-enterprise Postal Service. It appears we got precisely what we wanted — not in the sense that the Task Force satisfied some hidden agenda of what the Commission and the Governors wanted, but because the Task

Force has provided a body of ideas and suggestions which were developed with full knowledge of the legal and practical constraints which apply to postal ratemaking. I do not know which of the many ideas it proffered will be implemented, as proposed or as modified; but I do have confidence that they were offered on the basis of knowledge and careful thought.

These proposals will surely spark a broad public dialogue focused on specific problems identified by the Task Force, and on proposed solutions. Those solutions were developed with full awareness of the legal and practical constraints which apply, and the public dialogue I mentioned will reflect them also. I have no doubt that this process will be extremely enlightening for all of us concerned with making the Postal Service and the Postal Rate Commission more responsive to our many obligations. As a result, I consider the Joint Task Force a success. I would like to take this opportunity to thank publicly the members of the Task Force for their efforts on behalf of the postal community

There is another aspect of this effort that should be recognized. The Task Force Report is the result of a joint effort supported by both the Postal Rate Commission and the Governors of the Postal Service. I believe that some of our current problems might have been avoided if there had been more of this type of cooperation in the past, and I hope that we will make greater efforts to improve the lines of communication between our two agencies in the future.

The Commission and the Governors have separate functions, and ex parte rules exist to preserve the appropriate separation. But the Commission and the Governors also have overlapping obligations, in particular to assure that the process for public ratemaking, consistent with the overall policies established by Congress, works well. Joint projects to identify problems, and to offer ideas for public comment which might form the basis for potential solutions, are a good way to avoid becoming mired in opposing positions which reflect structural, rather than policy, differences. I fully expect to work

with both Chairman Pace and Postmaster General Runyon to find other ways in which we can cooperate both to improve our understanding of, and to find solutions for, the problems affecting postal ratemaking.

As for this Task Force Report all I can say now is that it will take us some time to absorb the broad range of proposals it presents. Similarly, I expect the Governors will make their own independent evaluation. Certainly we will not make any changes without hearing from the Postal Service and those interested members of the public who regularly appear in our proceedings.

Now that we have the Task Force Report, the obvious question is what happens next. Of course it will not be possible to act on each of these suggestions simultaneously. The Report, however, identifies several items as candidates for immediate action, and the Commission will look at these first.

We have all heard that the Postal Service is not happy about its recent operating results: costs are disappointingly high and volumes are disappointingly low. If these trends do not turn around quickly, we can expect an omnibus rate request sometime early next year. The possibility of an imminent rate filing suggests that the Commission should turn first to evaluating the Task Force proposals concerning rate cases.

The Task Force has suggested that the Commission consider projections of Postal Service financial and operating results over a four-year cycle, and that most rates change perhaps yearly, or perhaps twice during the four years

once at the beginning of the cycle and then again after two years. While similar suggestions have been made before, we have not yet had an opportunity to consider how the specific proposal offered by the Task Force might be implemented, and whether it would be likely to achieve the benefits expected of it.

Also, and this is of primary importance, the Commission has not had an opportunity to hear from the Postal Service, from mailers, or from other interested members of the general public on how they view the Task Force

recommendations. The Commission made it quite plain when it appointed participants to the Task Force that it would not prejudge any proposals, or commit to implementing any recommendations, until after everyone had been given an opportunity to review the Task Force findings, and to present comments and suggestions.

Thus one of our major responsibilities at this time is to offer a full and fair opportunity for interested members of the public to participate meaningfully in the Commission's evaluation of the Task Force recommendations. This obligation is particularly sensitive with regard to the Task Force recommendations concerning the handling of omnibus rate cases.

The Task Force has suggested that the Commission might publish draft implementing regulations by the end of this month in the hopes that final rules might be adopted by mid-August. Apparently, the Task Force believed that the Postal Service would need to know by mid-August whether the fouryear rate cycle would be in place in order to effectively incorporate that concept into the preparation of its next rate request. Under the best of circumstances, that would be an extraordinarily stringent timetable. Interested members of the public must be consulted immediately so that we can use their experience and perspectives to help us reach conclusions on whether the fouryear cycle is a good idea in theory, and if it is, on how such a system might be successfully used in setting postal rates.

The Task Force has also suggested changes in how rates are set for mail which directly competes with products offered by private enterprises. These proposals may be controversial. Again, it is important that we have access to the views of a broad spectrum of the general public before we reach conclusions.

The Commission has thought about how best to develop a full public record on these topics while moving with sufficient expedition so that there is a reasonable likelihood that our decision on whether to accept some of these

proposals is reached soon enough so that they can be used in the next rate case. We have determined to obtain public comment in two stages.

First, we will ask for written and/or oral comments on the theoretical and policy precepts which seem to underlie the Task Force proposals. Thus in the first stage we will seek comments on whether an extended four-year rate cycle, with interim increases, is a reasonable improvement in the current system. The first stage will also provide an opportunity for the public to comment on economic or legal concerns raised by the suggested system for setting rates for competitive mail services. The Commission has issued a notice requesting written opinions and scheduling an on-the-record conference on these topics for Friday, June 12.

While we expect to receive a significant number of written and oral submissions addressing the theoretical and policy ratemaking issues raised by the Task Force recommendations, the Commission recognizes that in many areas a full evaluation of the recommendations may require consideration of implementation details.

To put it bluntly, it often is easier to recommend that a process be made more simple and expeditious, than to develop a detailed set of concrete provisions which preserve the fairness and usefulness of the process while making it more simple and expeditious.

This brings me to the second step the Commission will take to obtain input from the general public on the Task Force recommendations. The Commission intends to take the Task Force recommendations concerning rate cases, and the oral and written comments we receive concerning those recommendations, and attempt to develop draft rules which would implement them. In light of the Task Force suggestion that we prepare proposed rules in a month, this effort may result in the publication of proposed rules that are somewhat less than polished. We understand and regret that possibility, yet we are determined to move forward with our evaluation of these proposals because we are sensitive to the hope that any improvements in ratemaking

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