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Issue Date: March 2009 e-news, Posted On: 3/3/2009


The USPS: A Government Agency or a Private Corporation?
By Joy Leong
First, thank you all for the many responses to my column in the February Mailing Systems Technology e-newsletter on the Postal Service business model. The thoughtful emails I received confirmed my belief that there is a wealth of experience outside of Washington that policymakers need to listen to. So here goes another question:

One undercurrent that I detected in your responses was confusion about whether the Postal Service is a government agency or an independent entity akin to a private corporation. The legal answer – that it is “an independent establishment of the executive branch of the Government of the United States” – begs the question.

As a government agency, the Postal Service would normally receive government funding to fulfill functions that are deemed socially desirable, such as providing universal service or subsidizing materials for the blind.

On the other hand, as a private corporation, the Postal Service would recover its costs from revenue received from customers (mailers). Those costs would include reasonable prefunding of its deferred liabilities such as pensions and retirement health care. If a private corporation could not raise its prices high enough to cover costs (because demand would drop as customers go elsewhere or stop buying), then losses would have a negative impact on the corporation’s shareholders.

But who are the shareholders of the Postal Service?

Mailers are customers of the Postal Service, not shareholders. Printers, mail fulfillment services and other vendors are contractors of the Postal Service, not shareholders. Postal Service executives and workers are employees, not shareholders. Shareholders of private corporations elect a board of directors, but the Postal Service Board of Governors is appointed by the President with the advice and consent of the Senate. So does that make the government the shareholder? That brings us full circle. No wonder we are all confused!

The practical implications of this confusion are everywhere. Should the Postal Service be allowed to “rationalize” its network and close post offices without restrictions? Should the Postal Service’s finances be “transparent” for review by regulators – and competitors? Should the Postal Service receive government funds for the electrification of its delivery fleet or for energy-saving improvements to its buildings? Should the Postal Service be exempt from antitrust laws that apply to private corporations? (The Supreme Court said yes; Congress said no.) Should the Postal Service be considered a federal agency to qualify for a “bail out” if that becomes necessary? 
 
What do you think?

Ms. Leong has both depth and breadth in the postal industry, having represented individual mailers in the financial services and catalog industries, trade associations, vendors, suppliers, and posts (including the USPS). Ms. Leong specializes in negotiating contracts with the Postal Service and obtaining regulatory approvals for these agreements and in representing mailers in rate cases. She has participated in the entire range of regulatory proceedings at the Postal Regulatory Commission, including rulemaking, ratemaking, regulatory approval, and complaint proceedings. She was involved in the passage and implementation of the Postal Accountability and Enhancement Act of 2006. She helped start the American Catalog Mailers Association, negotiated the first competitive contract under the PAEA, and filed the first major complaint case under the PAEA on behalf of her clients. Together with PRC Commissioner Ruth Goldway, Ms. Leong founded Women in Logistics and Delivery Services (WILDS), which has grown into a national network of over 100 professional women in the postal and delivery industry.

After serving as a partner at Morrison & Foerster and Sidley Austin (two of the top ten law firms in the world), Ms. Leong founded her own law firm, The Leong Law Firm PLLC, and consulting company, Joy Leong Consulting, LLC. She is a graduate of Harvard College and Yale Law School.
Comments:
Monday, May 16, 2011 10:53:13 AM by James
I worked for 12 years for the P.O. and guit in 1974. Why did those 12 yrs. not count on my Social Security amount of money I am receiving now. Also my 2 yrs. active duty in the army in 1956-58 and 2 yrs. active reserve and 2 yrs. inactive reserve. If they are not a gov. agency then I would think I should be able to have at least some of that time to count as points on my S.S. Please let me hear from you. Thanks
Friday, July 15, 2011 4:14:45 PM by Anonymous
It's sad but the USPS is just another government agency that has the ability to raise it's "taxes" [stamps] at will to cover it's costs without any competition or control. Congress says it's a government agency and the supreme court says it isn't. That has left it in uncontrolled limbo ever since it was established. What a shame!!!!!

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