Commentary

Regulating Private Mail Boxes

By Edward L. Hudgins
October 22, 1999
Thank you for the opportunity to testify today on the problems of the U.S. Postal Service’s new regulations on commercial mail-receiving agencies (CMRAs) that offer private mail boxes for rent.

The sloppy, capricious and arbitrary manner in which the Postal Service has made and implemented those regulations has harmed small businesses and customers of those businesses alike. But the Postal Service not only is exempt from all taxes and most regulations to which its private competitors are subject, it is exempt from most federal regulations to which other federal agencies are subject. For example, it is not subject to Title 5, Chapter 7 of the U.S. Code which grants citizens an appeals process for actions that are “arbitrary and capricious.” The new regulations on CMRAs illustrate why the Postal Service, a government monopoly with regulatory powers that it can use against its competitors, at minimum, should be made subject to the Paperwork Reduction Act, Regulatory Flexibility Act, the Results Act, and other federal statutes meant to protect citizens against abuses by government agencies, and why the new regulations on private mail boxes should be repealed immediately.

When the government uses its power to restrict the freedom of citizens or to impose upon them financial burdens, it must make the case why this is absolutely necessary for the protection of the lives, liberties and property of the citizens. The burden of proof is on the peoples’ servant, the government. The Postal Service has failed in its responsibility to make the case for the new regulations on private mail boxes…

The bottom line is this. The U.S Postal Service should be brought under all of the rules and regulations to which other government agencies are subject, including the Administrative Procedures Act, the Paperwork Reduction Act, Regulatory Flexibility Act, and the Results Act. Under these regulations the Postal Service would be required to state exactly what goals it seeks to accomplish through its regulations, where it gets the authority to seek such goals, how its policies are meant to obtain such goals, and what evidence it has that those goals are achieved through those regulations.

When it makes new regulations it should be required to show exactly what the expected benefits will be, what the expected costs will be, and how those benefits outweigh the costs. It should be required to show that the regulations it chooses are the least costly compared to other alternatives and are the least burdensome for small businesses.

Postal officials might argue that such a regulatory regime will harm its efficiency. But the Postal Service has used its regulatory powers to harms private competitors large and small, as well as consumers. Other countries have discovered a means to deal with this dilemma. They are privatizing their postal services. New Zealand and Sweden already have done so. The largest mail carrier in Europe, Deutsche Post in Germany, is now under private management. It pays taxes on its competitive services and is subject to the same regulations that are imposed on other businesses. Next year it makes an initial public offering of its stock, and on January 1, 2003 its monopoly on mail delivery will be abolished.

In conclusion, the Postal Service’s new regulations on CMRAs have been enacted and enforced in a sloppy, capricious and arbitrary manner. The Postal Service should be subject to the same checks on its power to which other government agencies are subject. And until it can make its case in accordance with those safeguards, the new regulations on private mail boxes should be rescinded.

Edward L. Hudgins is the director of regulatory studies at Cato Institute. The following is excerpted from his testimony October 19, 1999, before the House Small Business Subcommittee.