Comments on USPS July 11, 2001 CMRA Proposal
In its July 11, 2001 CMRA proposal to delineate which Business Center clients would be included in its CMRA regulations and which not, the USPS attempts to do with detailed product specifications what it proposed to do with a price fixing arrangement in February, 2000. That is, it attempts to rig markets outside mail delivery – and more precisely to use a mail descriptor to equate with mail receipt services a much broader range of services offered by Business Centers and used by their clients.
In economic terms, Postal Management proposes to use legislatively unauthorized administrative fiat to bias competition in a market broader than mail receipt exceeding $100 millions annually, to the disadvantage of tens of thousands of users Business Center Services and derivatively the thousands of Business Centers which serve them.
In determined pursuit of its objective, Postal Management staff casually flouts fundamental requirements for any legitimate and sustainable regulatory action.
Postal Management attempts actions ultra vires. All of what Postal Manaagement attempts to do with its address designations is beyond its authority.
The USPS has no authority to specify address forms for purposes other than mailability. More particularly, USPS has no authority to require of persons using an address to specify address forms so as to advise the mailer of the nature of the business conducted at the address.
USPS’s delegated authority to participate in curbing particular, legislatively defined fraudulent and deceptive practices provides no basis for control of identities and terms of competition in lines of commerce affected by mail delivery in a speculative attempt to diminish the possible incidence of mail fraud.
USPS has no authority to impose general, widespread withholdings of mail delivery to categories of mail recipients in its own discretion. Congress has demonstrated an intent to specify particularly the circumstances in which mail transmission and delivery can be denied. If the USPS wishes to extend its authority to withhold mail, it must go to Congress, and make a case for new legislative authority.
Aside from the lack of authority to act as proposed, Postal Management proposes to act without any factual foundation to show a need for regulatory action as to Business Centers, or to guide such action.
The USPS has demonstrated no problem at Business Center operations arguably to be acted upon, in its July 11 discussion or any previous discussion. The USPS cites no evidence to show that there is any, let alone any disproportionate, incidence or severity of mail fraud perpetrated by the businesses which would fall within the scope of the CMRA regulations at Business Centers. Postal Management cannot regulate based upon a presumption of illegitimacy in a large sector of American business.
Further, the criteria which would be used to determine the requirement of the CMRA mail address form bear no explicit or defensible relationship to any demonstrated type or incidence of fraudulent or deceptive activity, or an attempt to prevent or minimize such activity (assuming the USPS had such authority).
Rather, the criteria are patently designed to try to equate a larger category of business support services than mail receipt with mail receipt services, to protect the competitive interests of mail receiving stores, including the operations of the USPS and those of the package and mail stores subject to the USPS CMRA proposal.
Postal Management flouts the advice of the USPS Office of Inspector General. The USPS has not deigned to make any inquiry into the administrative and business-prejudicing costs which its proposed regulations would impose on the users of Business Centers, and the Centers themselves. Nor has it considered less burdensome alternative means of addressing any claimed fraud prevention or minimization goals.
Postal Management proposes to flout the pro-competitive policy of the Nation. Both in evolving and publishing its proposals, the USPS staff has shown no awareness that it is obliged to avoid prejudicing competitive offers in open, flexible efficient markets which would be affected by its proposed actions. The manner in which the USPS has arrived at these proposals is inherently likely to prejudice competition.
The USPS obviously can be held accountable on such fundamental issues as its basic authority to use governmental authority to promulgate regulations, and fundamental due process of law requirements for the attempted exercise of such authority. Further, the inhibitions of 39 U.S.C. on APA review should not be applicable to regulations which relate not to the efficient delivery of mail, but to the organization of markets beyond mail delivery itself.
In such a judicial review, flimsy, arbitrary and self serving arguments will not hold up. The proposals are subject to judicial review, and will not be able to withstand it.
CMRA PROPOSAL DOCUMENT
In the other portions of the CMRA proceeding, Postal Management has claimed two principal justifications for its CMRA regulations.
First, Postal Management asserted in its March 25, 1999 publication that its intent was “…reducing the opportunities to use the mails for fraudulent purpose….” Presumably this assertion was intended to apply to both the mailee registration and the address requirements.
Secondly, in a website explanation of its regulations – particularly the address specification portion, Postal Management argued “We believe the sender has a primary right to know the true identity of the location where his or her mail is delivered.” In connection with this, Postal Management argued that “The current use of APT, STE and other address designations by CMRA customers is misleading… (and) the misleading use of a mailing address …may cause harm to the sender.”
In the July 11 Business Center proposal, Postal Management takes the CMRA regulations and the justifications for them as a given, and here discusses the rationale for including Business Center clients within their scope.
After observing that “CECs” or Business Centers, ‘primarily’ provide offices and business support services for clients, the text continues
CECs also may have customers that do not occupy a private office and use the CEC address primarily to receive mail and other business support services. These CEC customers receive services similar to those a CMRA provides its customers. For this reasons, a number of parties have asserted that these customers and the CECs serving them should follow the same procedures as CMRAs and their customers. The Postal Service agrees with them.
Then follows a discussion of the aborted $125 per month criterion for subjecting ‘CEC’ customers to the CMRA regulations, and further discussions with the service providers. Postal Management then states:
After reviewing the points raised by the parties, the proposed guidelines in this NPRM are based on 16 hours of private office occupancy per month. That is, if the agreement between the CEC and its customer provides the right to at least 16 hours per month of private office occupancy, (in addition to certain support services and other requirements), then that customer will not be considered a CMRA customer for postal purposes. We understand that the fees charged by CMRAS for services that include at least 16 hours per month of private offices occupancy will generally significantly exceed the fees charged by CMRAs and will ensure a meaningful distinction between CMRA and CEC customers.
The other services are:
live telephone answering,
full time reception services,
a listing on the office directory if available, and
other offices services on demand.
Participants in the discussions with the USPS have indicated, and the USPS staff has not denied, that USPS initiated the extension of the CMRA regulations to OBC operations at the behest of the mail and package stores within the scope of its initial CMRA proposal. The affected mail and package store representatives protested that if OBC operations were not covered the CMRA stores would lose clients to OBC operations.
The July 11 document is thus given to distinguishing what services are to be equated with mail and package stores and what not.
Postal Management obviously is faced with a continuum of office related services. The approach it takes is to insert a discriminator based on a determination of what set of services are ‘primarily’ mail related and what services are ‘primarily’ office related.
However, the set of services which Postal Management deems ‘primarily’ mail related are obviously much broader than mail services. No reason is given for equating this much broader service aggregate with mail service other than to clear a large area in which the OBC operators’ offering of a suite address would not be price competitive with the services of mail and package stores.
Further, Postal Management adduces no facts to which to tether its determination of what is ‘primarily’ mail service and what not. And the “primary” purpose mode of discrimination ignores the market facts known to Business Center operators – that the availability of a range of services flexibly available is itself the chief discriminator between mail and package stores and Business Centers. The Postal Management determination is, therefore, unfounded and arbitrary.
The July 11 statement abandons all reference to any fraud prevention or deception prevention purpose.
Postal Management’s July 11 discussion does not offer any reasoning or authority for the proposition that the Post Office’s legislative authority to participate in the investigation and prosecution of particular mail frauds can legitimately be extended to authorize it to control address forms so as, hypothetically or hopefully, to diminish the possibility of mail frauds.
Nor does the July 11 discussion cite any authority for the proposition that the USPS is authorized to prevent arguably deceptive use of address forms, as distinguished from the question of a specific fraudulent activity.
The issue of USPS authority to control address forms in this fashion is left as it has been at all points to date – that is, an unexplained, undocumented assertion.
The discussion at no point refers to the issue of whether there is or might be any incidence of fraud by clients at Business Center locations disproportionate to the incidence at other locations, or on some other grounds sufficient to warrant exercise of regulatory authority.
The USPS might conceivably have argued that if there is enough fraud to warrant regulatory action among mail and package store users, there must be an equivalent amount of fraud among users of OBC operations. However, this would have been unsupported inference.
Postal Management did not discuss how applying the CMRA rules to clients at OBC locations might or might not diminish the possibilities of fraudulent activity at such locations. This so, the discussion does not deal with questions as to how the particular criteria for inclusion and exclusion from the scope of the CMRA regulations bear any relationship to any claimed fraud fighting purpose.
In its July 11 proposal, Postal Management gives no consideration to the USPS Office of Inspector General criticisms of Postal Managements’s approach to the package and mail store element of the CMRA proceeding. Thus, it takes no account of how those criticisms might relate to Postal Management’s attempt to extend the CMRA regulations to the OBC population, though the OIG comments obviously suggest a far different approach to the OBC portion of the proceeding than Postal Management has adopted.
Thus, the discussion does not treat with elementary issues which should be dealt with in any rule making, such as those noted above -- the question whether the Postal Service should undertake to determine whether there is any problem in the OBC population requiring action, and whether the regs would do anything useful as to that portion of the OBC using population which is targeted. Other elementary issues not addressed are the costs of compliance with the regulations, and how those costs would compare with any claimed benefits to the public from the regulation.
Given the lack of any attempt at justification on any fraud or deception prevention ground, and the lack of any evidence or cognizable logic to use in attempting any such justification, the USPS proposal can be taken for what is suggested clearly by the content of its terms and the rationale which Postal Management does offer.
On the most favorable interpretation, the July 11 2001 proposal might be argued to be an attempt to identify the ‘true’ nature of the business operation at the designated address. However, evident in the proposal is a substantial bias highly favorable to the mail and package type of store, by requiring that a much larger and more expensive set of services be offered than those offered by the postal service, and by its private sector analogues, to avoid use of an address form equating the service to that of the USPS and the private sector mail and package stores.
WHICH POSTAL MANAGEMENT
SEEKS TO REGULATE
In our earlier filing with the USPS on its February, 2000 proposal, and in a document which PostalWatch was good enough to publish, __________ , we have attempted to explain that both the full time and ‘part time’ components of Business Center clienteles are demonstrating a form of ‘alternative officing’ arrangements, which have become much more widespread in recent decades.
‘Alternative officing’ arrangements include ‘hot desk’ facilities at major corporation office complexes, telecommuting, home based businesses (often using ancillary officing services), ‘mobile officing’ (a term often used by the telecommunications and computer trades to suggest how their devices and services can facilitate use of a variety of physical facilities, or even none except those devices and services, to maintain communications with clients, staff and suppliers) – and Business Centers.
Indeed, Business Centers have been created to embody this ‘alternative officing’ concept and facilitate its development.
The alternative officing phenomenon is well recognized commercially and in academia (some universities, such as Cornell, have organized centers to explore and demonstrate the concepts).
A common denominator of such arrangements is more efficient use of capital and labor than traditional officing arrangements. This is derived from greater particularity and greater flexibility in defining, mixing and matching needs and resources.
For example, at Business Centers, ‘full time’ clients share common facilities -- phone systems, other office equipment, staff, conference rooms, etc. This materially reduces the cost of officing for start-up businesses, and for branch arrangements for larger businesses.
The ‘part time’, or ‘on demand’ segment of the Business Center clientele can be seen as an extension of this type of arrangement. These clients similarly share the offices and conference rooms, the phone system, the other office equipment (copiers, computers, fax machines, etc.) and the administrative staff. They extend the sharing concept by each client not taking up a designated space exclusively, but rather by sharing office spaces. The raison d etre, the zeitgeist, the central utility of this development is flexibility in dynamically mixing and matching needs and resources, to achieve greater efficiency and economy.
In its CMRA proposal, Postal Management proposes to rigidify and categorize these arrangements by equating them with or distinguishing them from its own very limited service concept, and that of a similar and competing service – mail receiving.
Postal Management seeks the equivalent of trying to characterize a corporate ‘hot desk’ system as a mailroom or not a mailroom, depending on how desk space and phone use are allocated in advance – when the entire concept is not to have either a mailroom or a traditional office but rather to have a mixed use, as needed, dynamically configured facility.
If one were doing an op-ed piece, once could evidence amusement at the persistent, myopic parochialism of federal bureaucrats who seek to make a fleet and dynamic world fit into their own antique little cubbyholes.
But if one is offering or using these officing arrangements, one cannot limit one’s reaction to amusement. The practical reality one must face in one’s own world is that Postal Management is attempting to raise the costs, curtail the flexibility, and/or minimize the commercial presence of the citizens of the United States who have created and use these alternative officing systems, and who do not want them falsely equated with an ossified Post Office or the much more limited mail and package stores.
The Postal Service does not have any explicit authority, or any authority which is subject to reasonable construction, to permit it to condition or to define address forms for purposes other than mailability.
The Postal Service has no explicit authority to create ‘primary (or secondary or tertiary) rights in mailers to knowledge of what lies at the receiving end of a mail piece, and no authority which can by reasonable extension be extended to this generalized goal.
The Postal Service’s authority to assist in the investigation of and prosecution of specific mail frauds cannot be extended to warrant control of address forms in order to “reduce the possibility of use of the mails for fraudulent purposes”.
Nor can those specific mail fraud related authorities be extended to prevent the possibility that a ‘misleading’ use of a mailing address ‘may cause harm to the (mail) sender”. Such a consumer protection issue, if there is one, is generally delegated to the Federal Trade Commission.
The USPS has no authority to deal with questions of unfair competition, such as that of the Federal Trade Commission.
The USPS lacks authority to use the instrument it wishes to use as the enforcement tool for this regulation -- the withholding of mail delivery. The USPS has authority to withhold mail delivery only upon specific grounds detailed by Congress, not present in this situation.
And the USPS cannot create the missing statutory authority for any of these purposes or actions by publishing a regulation which assumes or asserts the absent authority.
Let us briefly review the key statutory authorities relevant to this situation.
According to Section 101 of Title 39, United States Code,
The Postal Service shall have as its basic function the obligation to provide postal services
Section 403 specifies that
The Postal Service shall receive, transmit, and deliver throughout the United States, its territories and possessions, and … throughout the world, written and printed matter, parcels, and like materials….
And to this end the USPS is
… to maintain an efficient system of collection, sorting, and delivery of the mail nationwide…
Section 404 specifies that the USPS has the particular authority
1) to provide for the collection, handling, transportation,
delivery, forwarding, returning, and holding of mail, and for the disposition of undeliverable mail;
All these authorities relate directly to a mandate to deliver mail. The Postal Service has appropriately construed this mandate to require it to deliver mail to addresses, without generally determining the identity of the addressee.
Congress has spelled out with specificity the permissible grounds for not transmitting mail tendered to the USPS. In Sections 3001-3010 of Title 39.
Some of this Chapter relates to items the Postal Service is not to accept, such as motor vehicle master keys (Section 3002), locksmithing devices (3003), and plants and plant pests (3014,15).
In this Chapter Congress provides specifically for a limited class of mail withholding on the grounds of actual or potential deception or fraud, on the part of the mailer or recipient.
Subsection 3001(d) prohibits mailing of solicitations disguised as bills, Subsection (h) and (i) prohibit mailers masquerading as government agencies or pretending to have government endorsement when they do not, Subsction (j) requires notice that services substitutable for free government services state the government service availability, and (k) deals in detail with sweepstakes mailings.
Section 3003 authorizes the detention of mail with respect to receivers found on satisfactory evidence to be engaged in certain specified violations of laws set out in Title 18 -- in substance, mail fraud.
Section 3003 provides in most relevant part
Upon evidence satisfactory to the Postal Service that any person is using a fictitious, false, or assumed name, title, or address in conducting, promoting, or carrying on or assisting therein, by means of the postal services of the United States, an activity in violation of sections 1302, 1341, and 1342 of title 18,
it may -
(1) withhold mail so addressed from delivery; and
(2) require the party claiming the mail to furnish proof to it of the claimant's identity and right to receive the mail.
Section 1302 of Title 18 relates to certain proscribed aspects of gambling and lotteries.
Section 1341 of Title 18 is the basic, and carefully worded, section defining and prohibiting specific acts of mail fraud, by specific persons, acting as mailers.
Section 1342 of Title 18 deals with mail fraud by mail receivers. It reads as follows
Whoever, for the purpose of conducting, promoting, or carrying on by means of the Postal Service, any scheme or device mentioned in section 1341 of this title or any other unlawful business, uses or assumes, or requests to be addressed by, any fictitious, false, or assumed title, name, or address or name other than his own proper name, or takes or receives from any post office or authorized depository of mail matter, any letter, postal card, package, or other mail matter addressed to any such fictitious, false, or assumed title, name, or address, or name other than his own proper name, shall be fined under this title or imprisoned not more than five years
To recapitulate, Section 3003 authorizes the USPS to withhold mail and require proof of the right to receive mail as to specific mail receivers whom it deems, on satisfactory evidence, to be “using a fictitious, false, or assumed name, title, or address” to facilitate fraudulent activity prohibited by 18 USC 1341 and 1342.
Section 3004 of Title 39 provides as follows
Whenever the Postal Service determines that letters or parcels sent in the mail are addressed to places not the residence or regular business address of the person for whom they are intended, to enable the person to escape identification, the Postal Service may deliver the mail only upon identification of the person so addressed.
Section 3005 is a long and convoluted section dealing with lotteries and similar promotions, closely conditioning the terms on which advertisements can be made by mail, and Section 3007 spells out specifically the remedial steps the Postal Service is authorized to take when it has evidence to indicate that activities are undertaken in violation of the guidelines of Section 3005.
Sections 3008 in effect gives addressees rights to prevent mailers sending them mail which they find objectionable, on the grounds of sexually provocative content, and Section 3009 gives addressees certain rights as to unordered merchandise which they receive.
This review of the Postal Service’s authorities reveals the following
1. The basic mandate of the Postal Service is to deliver mails.
2. There is no specific mandate for the Postal Service to condition address forms on any basis other than efficiency and accuracy in mail delivery, and no basis for implying any such authority is apparent.
3. Congress has carefully circumscribed the authorities of the Postal Service to withhold delivery of mails, spelling out with great specificity the particular circumstances in which it may do so.
4. As to fraud and deception questions, the Postal Service has been authorized to detain or refuse to deliver mail only as to specific instances of the use of false names or addressed to facilitate fraudulent activity, and as to minutely defined violations of guidelines applicable to mass promotions involving elements of lotteries and games of chance.
The Postal Service has been granted no authority to use its physical ability to withhold the delivery of mail to force mail recipients and those who serve them to use an address designator of the Postal Service’s choice, having nothing to do with mail delivery efficiency, or to enforce its notions of competitive equity in alternative officing markets, or to reduce or minimize the mere possibility of mail fraud, or for any other purpose which Postal Management has cited in this proceeding.
The preceding paragraph is the bottom line, insofar as the CMRA proposals of the USPS are concerned. This conclusion applies to the patrons of “Commercial Mail Receiving Agencies” and to the operators of those entities across the board.
Thus, the enforcement device which Postal Management apparently has believed to be available to it for the enforcement of the CMRA regulations is not available to it. Any attempt to use mail withholding to enforce the CMRA regulations is ultra vires -- outside the authority given the Postal Service. And it is elementary that the Postal Service cannot create a statutory authority which it does not have simply by publishing a regulation which assumes, asserts or claims it.
As a protestant in the USPS attempt to apply the CMRA rules to Business Centers, we are not at this time in a position to attempt to protect the interests of the mail and package store operators, and their clients, who may have acquiesced in these regulations. However, if the USPS attempts to extend its unauthorized scheme to Business Centers, we must point out that it cannot lawfully do so, either as to the clients of Business Centers, or to the operators of Business Centers, or to the clients and operators of package and mail stores.
Though Postal Management has thus far not acknowledged it, apparent in its address specification proposals is a desire to prevent what might be called unfair competition on the part of mail and package stores. That is, as a competitive vendor of mailbox services, Postal Management can argue that it is put at a competitive disadvantage vis-à-vis private sector mail and package stores when such stores permit their clients to represent to the general public that they have at the private store something they do not have and the USPS does not offer – office facilities.
If Postal Management acts in accordance with one of the primary purposes of the Postal Reorganization Act of 1970 – to act as a business enterprise – then it can and should take this sort of issue to the federal forum established to deal with questions of unfair competition and related consumer protections issues – the Federal Trade Commission. Postal Management should not attempt to use federal regulatory authority intended to be used for mail delivery purposes to address competitive issues in markets other than mail delivery, as it does here. This constitutes an attempted abuse of regulatory authorities. We expand on the remnedy available to USPS is in Appendix ______
As to authority issues, if the Postal Service wishes to engage in control of address descriptions for purposes other than mailability, so as to attempt to characterize the sort of business activities undertaken at the addresses, and if the Postal Service wants to obtain broad authority to deny mail delivery to persons and businesses which do not wish to accept the characterizations of their businesses which the Postal Service designates, the Postal Service needs to go to Congress to justify such an extraordinary and intrusive expansion of its authorities and its operations.
OTHER FATAL DEFICIENCIES OF
THE CMRA PROCEEDING,
AS APPLIED TO BUSINESS CENTERS
First, there is absent any showing of public need to regulate the forms of addresses used at Business Centers, which number in the thousands, and serve hundreds of thousands of businesses. In the United States, people are generally presumed innocent, and honorable, and not having need of federal stricture, until there is a convincing showing to the contrary.
The Postal Service has yet to produce or to cite any record evidence that there is any incidence of fraudulent activity at Business Centers which would justify Postal Service action, had it authority to take general measures to reduce fraudulent practices as distinguished from particular instances of mail fraud or other particular practices described in 39 U.S. Code.
Some State Attorneys General have expressed concern about the possibility that some issuers of ‘commercial and charitable solicitations’ would use Business Center addresses to create an impression of localization and local business size to consumer disadvantage. But no data are given on the prevalence of such activities, the number of persons mislead to disadvantage, what the disadvantage amounts to, and so forth. One does not legislate, or regulate, so as to affect the economic lives of tens of thousands of businesses on the basis of apprehensions and generalized concerns.
This is not to say that there are no users of Business Centers which engage in deceptive or otherwise unlawful practices. Some incidence of unlawful activity can be found in any line of commerce, and in virtually any type of location in the United States (or abroad for that matter).
But the costs and burdens of regulatory constraint cannot be imposed without facts as to what problem is to be addressed, facts to guide the form of regulation which is proposed, and facts to determine whether the costs and burdens of regulation outweigh the putative benefits.
The Office of Inspector General’s criticism of the Postal Management’s CMRA proceeding across all affected by its proposals – that Postal Management has not compiled a statistically valid and meaningful set of data sufficient to warrant regulatory action – applies with conclusive force to the Business Center component of firms which Postal Management seeks to control. None of the data which Postal Management cited to attempt to refute the OIG criticism drew upon Business Center operations.
The Postal Service might assume that whatever incidence of fraudulent activity which it believes to occur at mail and package stores may or must occur at Business Centers. But the Postal Service has produced no systematic or substantial data to support such an inference. The USPS cannot rationally or discriminately regulate on such an inference. Postal Management cannot impute problems to a sizable segment of honest business people – both at the Centers and in their user populations – without firm factual foundation.
Secondly, it is readily apparent that users of Business Centers have available to them office ‘suite’ facilities, and there is no obvious or clear reason to suppose that they should not use a ‘suite’ address.
We have pointed out that the the USPS has no authority to prevent deception in address form on any general, across the board basis, as distinguished from its specified authority to deal with specific instances of the sort cited in the previous section.
But let us put that point in suspension for the moment. The Postal Service has compiled no information to support any judgment on the question as to whether the public is mislead in any meaningful way, so as to result in any identifiable harm, as to the use of a ‘suite’ address form by any definable subset of the users Business Center users.
Postal Management’s attempt to use the concept of ‘primary’ purpose in office system use is an attempt to use a logical category without factual foundation sufficient to permit logical application. And for reasons we will set out later, this logical category is not apt for the Business Center situation.
Thirdly, as noted in prior discussion, the Postal Service can make no rational, verifiable argument to demonstrate that use of criteria which the Postal Service proposes to differentiate inclusion or exclusion in its regulations would diminish, in any reliable way, the incidence of fraud or deception in the affected population.
Taken individually, criteria such as the use of live phone answers, or contracting for sixteen rather than any other posited number of hours, or use of a directory listing, have no verifiable or supportable relationship to the degree of honesty or responsibility, or fraud or irresponsibility, among the people using Business Center arrangements.
Indeed, it is insulting and perjorative to suppose that an attorney, or therapist, or consultant, or business of any kind, which uses offices for 4 or 10 or 15 hours a month is less honest than one using the facilities for 16 or 17, 20 or 160 hours per month. And the same can be said for the question of how the phone is answered, or what sort of voice mail system is or is not used. Postal Management has no basis for regulating on a presumption of illegitimacy in this business population.
Postal Management might try to make the argument that though no one criterion it proposes differentiates more or less risky populations (as if it were properly in the business of doing so), the over all assemblage of criteria defines a population likely to use suite addresses irresponsibly. But where are the data to support such a conjecture? Without such data, where is there any rational basis for proposing this set of criteria?
Fourthly, Postal Management has made no effort to quantify the costs of compliance with these proposals which would be levied upon clients of Business Centers, and the Business Centers themselves.
Fifthly, but as significantly as other observations, the proposal fails any test related to recognizing and implementing the general pro-competitive policy of the nation as a whole.
We pointed out in our previous filing on the price criterion, proposed in February of 2000, that agreement among vendors of a product or service or set of products or services having competitive interplay, on the prices to be associated with such products or services is a per se violation of the antitrust laws. This is so because such collective attempts are overwhelmingly likely to dampen competitive rivalry among the participants, to burden consumers of the products or services, and to bias consumer choices from those which would obtain in a more competitive market.
The same considerations apply to collective attempts to control the characteristics of products or services. See Areeda, Einer Elhauge, & Hovenkamp, Antitrust Law, Sections 1500-1511. Here, Postal Management makes a transparent attempt to achieve the same results as a price fix by using product descriptions, and even gives the game away in its own discussion of its objectives, by referring to its desire to achieve a price level for the use of a suite address form well above that usually charged for their services by mail and package stores.
As to the agreement among competitors element of a trade restraint, Postal Management in effect argues that in its closed door interaction with market participants it is not participating in an agreement among competing vendors, but rather unilaterally specifying rules.
However, in its discussion and in its proposed action, Postal Management allies itself with the contentions and expressed interests of package and mail stores, whose operations are much like its own, to require the use of an address designator in such a way as to equate with its own and its mailbox competitors a much broader set of services.
Though the mail and package store representatives would probably like Postal Management to attempt to make a broader scope of services appear to be equivalent to mailbox services, there is no reasonable doubt that they agree with the scope being at least as broad as is now proposed.
And, of course, however we treat the agreement question, the intent and effect of Postal Management’s ukase is the same as that to be created by explicit agreement as between it and its mail and package store competitors.
This July 11 2001 proposal, just as the February 2000 proposal, amounts to market rigging, in concert with competitive interests, by use of coercive effect of the monopoly power of the postal service over mail delivery.
In prior Postal Service proceedings, the Department of Justice has pointed out that the Postal Service is obliged to recognize the pro-competitive policy of the United States as a whole, and to accommodate that policy in any regulatory proceedings it may undertake which have significant competitive implications. A copy of one such comment is appended.
The current proposal of Postal Management would not accommodate, but rather would contravene, the nation’s procompetitive policies.
We submit that all of the above deficiencies amount to action so arbitrary and capricious as to constitute a violation of the due process of laws requirement of the fifth amendment to the constitution of the United States.
Postal Management proposes not to be bound by the confines of its own statutory authority, to take no account of the need for evidence to justify action which would adversely affect the lives and properties of tens of thousands of Americans, and to provide no significant or substantive rationale which would defensibly relate its action even to those authorities which it claims but does not have. This course of action does not meet ‘due process’ requirements.
The ‘due process of law’ requirement is a living entity in the law. It is so formulated to have reference to the standards of the day, and the specific circumstances of the case. Postal Management’s actions are so bizarrely aberrant from standards of conduct required of other government agencies in the coercive use of government authority to affect lives and properties in the society, and in its economic operation, as to meet no reasonable standard of ‘due process’. 
ADVERSE ECONOMIC EFFECTS
OF THE JULY 11 PROPOSAL
Postal Management has made no effort to learn how many businesses would be affected by its proposal, or what the effects on them will be.
No close estimate of the cost impact is feasible absent an organized effort to generate a statistically valid approximation method. However, some preliminary observations are possible.
The Office Business Center Association estimates the total revenues of Business Centers in the United States at about $3 billions. The proportion of that revenue stream allocable to clients other than full time clients is generally taken to be between five and ten percent. Let us take the lower number for present purposes. Five percent of $3 billions is about $150 millions annually.
At this time, there has been no industry survey which would give a good approximation, based on a valid sampling, of the proportion of the businesses generating this $150 or so millions which fall within the product definition set out in the July 11 proposal. However, in the O.S.I. clientele, we can say that most of the non-full time clients do not explicitly contract for more than 16 hours of office use in advance, each month. Rather, what they generally contract for is the ability to use hours as needed, either with or without other Center services. Actual usage varies widely as between clients, and can vary substantially, over time, as to an individual client.
Let us suppose that 80% or more of the current OBC clients do not now contract to be assured 16 or more hours of office use in advance, either with or without the other services which the USPS proposes to specify.
If this is so, and this operator believes it is so, recognizing that no one has a usable industry wide survey in hand, the Postal Management proposes to drive up the costs of Business Center usage, utilizing an ordinary Suite address form, on over $100 millions in revenues annually.
That Postal Management’s intent is to assure a target level of costs will be levied to permit usage of an ordinary suite address is evident in the language of the proposal –
“We understand that the fees charged by CECs for services that include the right to at least 16 hours per month of private office occupancy will generally significantly exceed the fees charged by CMRAs…. “
We do not know just how the Business Centers would react to the plan, in structuring and pricing their offerings. Nor do we know just how the clients of the Business Centers would react to the regulations, in terms of paying more or accepting an address equating their service to that of a mail and package store. What we do know is that, as to about $100 millions in commerce, the USPS seeks to drive costs up, or alternatively to gain a competitive advantage by inducing Business Center clients to use an address form equating their broader services with mailbox services like those of the USPS and the package and mail stores.
Now let us take this $100 millions order of magnitude number as to commerce affected, and try to compare it with such amount of commerce as may be involved in (a) mail frauds conducted by OBC clients, and (b) such amount of commerce as may be affected to citizen disadvantage by reason of the OBC clients using a suite address rather than a mailbox-like address.
The problem with attempting to make this comparison is that no one has any data whatsoever on the amount of commerce involved in either of these two categories of supposed public harms.
In sum, we have the Postal Service trying to drive up costs to small business people (in the main) on about $100 millions of commerce, for no gain in consumer protection which can be rationally offset against the harm to OBC users and their clients in the general public.
There is of course no defensible logic to this position.
What does emerge starkly from this analysis is the competitive motivations of the Postal Service, and the mail and package stores with which it acts in effective concert in this portion of the CMRA proceeding.
Postal Management apparently seeks to obfuscate this situation with the proposition that OBC users which satisfy its criteria use OBCs ‘primarily’ for office services, and those which do not meet those criteria are primarily interested in CMRA type services.
There are no data, and there is no clear logic, to support this proposition. And it misconceives the market which it addresses.
Business Center operators know that their clients – both exclusive use clients and others -- seek out Business Centers in order to access in one location a range of business support services much exceeding mailbox and packing services. Objective verification of this is afforded by the fact that OBC operators put in place and financially support this much broader range of services, for both exclusive use and other clients.
A major component of what the OBCs offer and their clients buy is the ability to mix and match a range of office support services as needed, from time to time, on a flexible basis. Some clients will enter the system on a very limited basis, and expand their uses over time. Some will enter the system in a traditional full time, exclusive use officing pattern, and curtail their office use, from little to much, as business needs change. Some will have periods of relatively intense office use, interspersed with periods of little use. Some will mix telephone call relays, cell phone use, voice mails, and live answers in ingenious and flexible ways, responsive to their particular business needs.
It is true that at any given time some portion of the OBC clients – not all of them -- may focus primarily on one or another of this mix of services. It is also true that a client with a particular focus at a particular time may change focuses -- modify and permute their service plan -- and they use the OBC system because it enables them to do so. If all they wanted were mailbox service, they have cheaper alternatives. If all they wanted were phone answering, they have in some cases cheaper and in some cases more expansive phone answering alternatives. What attracts clients to the business center is the combination of services available.
Absent any showing of a substantial incidence of clear harm to the public from the use of a suite address by firms having this form of office support system, there can be no sound reason for the USPS, or any other government body, seeking to compartmentalize and rigidify this system. Any attempt to increase costs and rigidify the system will tend to harm a sizable group of entrepreneurs who use Business Centers as business incubators.
THE AVAILABILITY OF JUDICIAL CORRECTION
The preceding sections of this paper have pointed out that the CMRA proposals are in excess of the statutory authority given the USPS, that they lack foundation in facts showing any public harm to be avoided, that there is no rational connection between the criteria for imposing the regulations and the avoidance of any public harm, that they would raise costs and/or reduce flexibility in commerce approximating $100 millions annually, that there is no cognizable cost benefit analysis supporting them, that they are designed to serve an anticompetitive purpose in contravention of the national policy in favor of open competitive markets not biased by private and public restraints, that they were arrived at by a process inherently likely to produce restraints upon competition – closed door discussions among competitors -- and that they would burden tens of thousands of entrepreneurs at the early stage of business development.
In short, the grounds for judicial review are abundant. The deficiencies of statutory authority are apparent. The ‘due process’ failures are egregious and pervasive. Upon review, the need for judicial correction is likely to be apparent to a reviewing court.
It is the well settled law in the D.C. circuit that private parties have a non-statutory right of judicial review when the issues relate to the statutory authority of the federal agency, or constitutional questions. Chamber of Commerce v Reich, 74 F 3rd 1322 (D.C. Cir 1996)
The Court in Reich cited language cited from the root case for the nonstatutory judicial review, American School of Magnetic Healing v. McAnnulty, 187 U.S. 94 (1902), involving Postmaster General McAnnulty. The logic of the Supreme Court is as applicable in 2001 as in 1902, and as applicable to the current USPS as it was to Postmaster Mcannulty
…acts of all (a government department’s) officers must be justified by some law, and in case an official violates the law to the injury of an individual the courts generally have jurisdiction to grant relief…..Otherwise the individual is left to the absolutely uncontrolled and arbitrary action of a public and administrative officer, whose action is unauthorized by any law, and is in violation of the rights of the individual.
We are confident that this logic will continue to prevail. It rests, fundamentally, on the separation of powers built in to the Constitution of the United States, and on that Constitution’s guarantee of citizen protection and fundamental fairness embodied in the fifth amendment’s assurance of due process of law.
The Postal Service is familiar with judicial review for ultra vires actions. See Combined Communications v USPS, 891 F.2d 1221 (6th Cir. 1989) and Association of American Publishers v. USPS, 485 f. 2d 768 D.C. Cir, 1972).
For elaboration of the standards the courts could utilize in such a review, one can look at Tovar v USPS, 3 F3rd 1271 (9th cir, 1993). The first questions presented in this CMRA proceeding relate to a complete lack of statutory authority for the actions proposed here. However, Tovar points out that even where there may be a claim of statutory authority for a regulatory action, the court can review whether the agency’s construction of its statute is arbitrary and capricious, and, beyond that, whether the construction meets ‘reasonableness’ standards.
As to the reasonableness standard, the Court noted that where the regulation was on its face discriminatory as to the person affected, an employee, “…the government is obligated, at a minimum, to offer concrete, evidentiary facts to explain why the regulation is nevertheless reasonable”. (at 1278).
Here, for reasons we have pointed out, Postal Management would be unable to offer facts to show a rational connection to its authorities, a rational connection to its claimed permissible objectives, or a rational connection to the realities of the markets which it attempts to address.
The availability of a non-statutory right of review makes unnecessary any appeal to Administrative Procedure Act standing. However, for reasons set out in the footnote, APA standing should also be available, in this particular case, involving an attempt to extend regulatory reach beyond the delivery of mail and necessary administrative arrangements for doing so. 
Before departing the question of judicial review, we will also point out that if, as we believe is clear, Postal Management is seeking to act ultra vires, and to impose anticompetitive restraints which violate the standards of the antitrust laws, both the USPS and its individual managers individually can be held monetarily accountable for such antitrust law violations and the harms attendant to them. Ultra Vires acts can and should have unwelcome consequences.
Postal Management may have entered into this CMRA proceeding with mixed motives, though it has thus far not been willing to admit having done so.
We understand that Postal Inspectors are distressed by, and wish to correct, fraudulent activity facilitated by the use of the mails, whether at their own Post Box facilities, at CMRAs or at any commercial location.
But a commercial interest is also apparent – the competition with mail and package stores who have offered a more attractive form of address – the suite designator.
This commercial interest has led Postal Management far afield from its legislative authorities to deliver the mail, its experience and its competence.
First Postal Management tried to control the addresses of its direct competitors, the mail and package stores. The competing mail and package stores then complained about competitive disability relative to Business Centers. Postal Management’s attempt to respond to that complaint led it into an attempt to govern competitive relationships, by means of address form, in a portion of the ‘alternative officing’ field extending far beyond its apparent knowledge or competence.
Postal Management’s attempts to control competitive relationships have been disingenuous, crude, and clumsy. It attempted to act as a cartel administrator in setting up a price fixing arrangement. Finding that embarrassing, it has now attempted to achieve the same ends by using product specifications with intended cost and price consequences -- and in its ineptness even states its intent to do so. Postal Management now transparently seeks to equate with limited mail and package services a grouping of services far wider.
The July 11 proposal is embarrassingly deficient. It is obviously unconnected with the statutory authorities of the Postal Service. It lacks any defensible, rational connection with the initial claimed objectives of the CMRA proposals, even though those themselves were in substantial measure specious. It violates due process requirements left, right and center. Whether by intent, inattention, or irresponsible indifference, it would burden tens of thousands of entrepreneurs who use Business Center facilities to do honest business flexibly and economically.
Upon judicial challenge, this proposal should collapse like a house of cards. It won’t fly.
THE AVAILABILITY OF
REMEDY FOR A CLAIM OF
If the USPS, as an operating entity, acting as a business pursuant to its statutory directions to do so, feels that it has a claim against a group of mail and package store owners for unfair competition, involving an element of deception, its proper remedy is to present its complaint to the Federal Trade Commission, and/or to equivalent bodies at the State level.
This may make the USPS feel less than God-like, reduced in this respect to the status of a mere private company in petitioning a government agency for redress for a business problem encountered in its business operations. But that appears to be implicit in the directions the Congress gave it to start acting like a private company.
The rationale for the CMRA rules made in the USPS web announcement seems close to asserting such a claim. That is, Postal Management seems to be claiming that it is deceptive to claim to have a suite when one has a mailbox, and implicitly it is unfair competition for a private vendor to facilitate such claims by offering Suite addresses.
However, such a claim does not on its face apply to users of Business Centers, since such persons do have available to them physical suites, where they use a variety of office support services, and the operators of such Business Centers do provide them such suites.
If the Postal Service believes a subset of such persons use a business suite address in a deceptive fashion, and Business Center operators facilitate such actions, then its remedy is to try to define that subset, and present its contentions to the Trade Commission.
We would note, in anticipation of any such action, that the Postal Service must be prepared to demonstrate to the Trade Commission much more than it has spelled out in its justifications for its proposed application of the CMRA regulations to Business Centers and their clients.
At the Trade Commission, the USPS would be required to demonstrate that the use of suite address forms by some specifically defined subset of Business Center users has a “direct, substantial, and reasonably foreseeable effect” on commerce, and that it causes “substantial injury to consumers which is not reasonably avoidable by consumers themselves and not outweighed by countervailing benefits to consumers and competition.” 15 U.S.C. 45(a)
Having made no factual inquiry into the nature of the population of businesses using Business Centers, or the effects of their use of Center suite addresses, the Postal Service cannot at this time make any such showing, either in this proceeding or in a Trade Commission proceeding. We do not think the Postal Service would be able to make such a showing as to any significant class of users of Business Centers. But it is welcome to try, in a proper proceeding, before an unbiased adjudicator.
THE ISSUE OF REASONABLENESS
OF THE CLIENT REGISTRATION REQUIREMENTS
AS TO BUSINESS CENTER CLIENTS
The Postal Service does have authority to withhold mail in specific cases where it appears that a person is the Postal Service by using a ‘fictitious, false or assumed name or name other than his own proper name” as a part of a fraudulent scheme prohibited in 18 USC 1341. The Postal Service now has procedures for dealing with such individual circumstances.
The Postal Service would be closer to reasonable interpretations of its authorities in attempting some form of registration review procedure, than in its address form proposals.
As one Business Center operator, we would be much less troubled by a registration review process than the address form proposals.
However, we note that internet emessaging rapidly gains in utility and volume without any such federal requirement as to internet service providers (the commercial emessage CMRAs) and their subscribers, and such a federal requirement for uniform registration procedures as to snail mail appears to be unnecessary as well.
All this is aside from cooperation with Postal Inspectors as to any specific use of the mail service provided at the Business Center to perpetrate fraudulent schemes. We believe the typical Business Center operator wants to steer clear of such use of its facilities, for a number of reasons, and will usually be eager to cooperate with law enforcers of whatever legitimate description, to identify business scams.
In our opinion, Business Center operators would react favorably to any lawful form of interaction with Postal Inspectors designed specifically to facilitate identifying and bringing to justice particular persons engaged in the use of mail – and our facilities – for fraudulent schemes.
But that is not what the CMRA proceeding is about, and certainly not that portion of it having to do with addressing requirements.
 We think the ‘security of the mails’ justification is frivolous, or if not that antique in concept. As to the relationship between registration of mail recipients and fraud prevention, we can see some rational connection. We will discuss this more in the appendices.
 The text asserts that the proposal seeks to “ensure a meaningful distinction between CMRA and CEC customers” by having fees charged by OBC operators for the combined services “generally significantly exceed the fees charged by CMRAs”.
 The USPS has established a category of mail as to which the sender desires confirmation of delivery, but even as to this category proof of identity of the receiver is not required.
 We note also that if there is a problem of the sort the Attorneys General relate, then this can be documented and a remedy specific to the problem crafted, as was done with lottery solicitations, cited later in this paper.
 What sort of data would be required? In a Trade Commission proceeding, the USPS would be required to demonstrate that the use of suite address forms by some specifically defined subset of Business Center users has a “direct, substantial, and reasonably foreseeable effect” on commerce, and that it causes “substantial injury to consumers which is not reasonably avoidable by consumers themselves and not outweighed by countervailing benefits to consumers and competition.” 15 U.S.C. 45(a) No less standard should be used here. It is obvious that this standard has not been met in this proceeding.
 We understand that some mailbox store interests may try to make the ingenious argument that they are competitively disadvantaged because an office support capability consisting of a combination of office use (16 hours or some other similar quantity of hours), phone service, and a number of other office capabilities amounts to little or nothing more than mail and package service, and for that reason does not warrant the use of a ‘suite’ address designator by the clients of Business Centers. Taken on its face, and assuming for the moment a role for the Postal Service in making this sort of judgment, this assertion does not pass the giggle test. One need only visit virtually any Business Center and virtually any mail and package store to see that Business Center clients – part time or full time – have available officing functionalities far in excess of those of the typical mail and package store, and can represent that they do have officing support.
We would agree with any given mail and package store which on its own created office support capabilities that it and the clients using those officing arrangements should not be characterized as a conventional mail and package store.
But this area and type of argumentation merely illustrate that the Postal Service has no proper role in deciding such issues, and they are better determined, if at all, in a forum such as the Federal Trade Commission which has the statutory authority, the statutory guidelines, and the experience needed to assess unfair competition and consumer protection issues. In such a forum, with any kind of organized factual inquiry, we do not think contentions of equivalence between Business Center and mail and package store officing supports would go far or last long.
 We must observe, in this section on procedural and substantive deficiencies of this proceeding to date, that Postal Management’s failure, or perhaps refusal, even to recognize and discuss the advice of the Postal Service’s office of Inspector General, as that advice would apply to the specific business sector involved in this segment of the CMRA proceeding, evidences an insular and irresponsible mindset which is part and parcel of Postal Management’s unauthorized, arbitrary and capricious, anticompetitive, and even unconstitutional conduct.
 The legal offices of USPS will presumably be aware that the Postal Service attempted to get the Supreme Court to rule that there could be no judicial review of its regulations in Air Courier Conference of America v. American Postal Workers Union of the AFL-CIO 498 U.S. 517 (1991), and the Supreme Court declined to adopt this position, finding other grounds for decision in that case. A review of the briefing of this earlier case reveals two interesting points.
First, the pleadings reveal that the appellate issue presented is more properly, we suggest, whether the Administrative Procedure Act provides a basis for appeal, than whether Section 410 of 39 U.S. Code prevents judicial review. That becomes important quickly, as we shall shortly demonstrate.
Secondly, in the Courier Conference case the Postal Union made an interesting, and in our opinion valid, suggestion that the language of Section 410 should be construed to invalidate applicability of the APA to postal service ratemaking only as to the operational aspects of delivering mail, and the administrative apparatus supporting that function, as distinguished from rule makings which are directed to commercial markets outside the scope of the USPS’s proprietary, or ministerial, function – such as, in this case, the markets for mail receiving operations and other markets which appear to be in some sense adjacent to the mail receiving markets.
Were there a contest over the nature of the applicability of the Administrative Procedure Act, and the meaning of 39 U.S.C. 410 language, we expect that we would make the same contention as did the union in the Courier Conference case. We believe that were the issue pressed to the final judicial arbiter, where the adverse effects of the construction the USPS has sought would be clearly evident, as in this proceeding, this more reasonable construction would be upheld.
 No one in the market is buying the suggestion which M. Spates made to the House Small Business Committee recently to the effect that USPS does not compete with mail and package store operations. In the colloquial – Please! One is led to advise Postal Management to credit people with a modicum of common sense, and the ability to look at what goes on at post offices and at mail and package stores.