[House Hearing, 106 Congress]
[From the U.S. Government Publishing Office]
UNITED STATES POSTAL SERVICE'S REGULATIONS REGARDING COMMERCIAL MAIL
RECEIVING AGENCIES (CMRAs)
=======================================================================
HEARING
before the
SUBCOMMITTEE ON REGULATORY REFORM
AND PAPERWORK REDUCTION
of the
COMMITTEE ON SMALL BUSINESS
HOUSE OF REPRESENTATIVES
ONE HUNDRED SIXTH CONGRESS
FIRST SESSION
__________
WASHINGTON, DC, OCTOBER 19, 1999
__________
Serial No. 106-36
__________
Printed for the use of the Committee on Small Business
U.S. GOVERNMENT PRINTING OFFICE
61-646 WASHINGTON : 2000
COMMITTEE ON SMALL BUSINESS
JAMES M. TALENT, Missouri, Chairman
LARRY COMBEST, Texas NYDIA M. VELAZQUEZ, New York
JOEL HEFLEY, Colorado JUANITA MILLENDER-McDONALD,
DONALD A. MANZULLO, Illinois California
ROSCOE G. BARTLETT, Maryland DANNY K. DAVIS, Illinois
FRANK A. LoBIONDO, New Jersey CAROLYN McCARTHY, New York
SUE W. KELLY, New York BILL PASCRELL, New Jersey
STEVEN J. CHABOT, Ohio RUBEN HINOJOSA, Texas
PHIL ENGLISH, Pennsylvania DONNA M. CHRISTIAN-CHRISTENSEN,
DAVID M. McINTOSH, Indiana Virgin Islands
RICK HILL, Montana ROBERT A. BRADY, Pennsylvania
JOSEPH R. PITTS, Pennsylvania TOM UDALL, New Mexico
JOHN E. SWEENEY, New York DENNIS MOORE, Kansas
PATRICK J. TOOMEY, Pennsylvania STEPHANIE TUBBS JONES, Ohio
JIM DeMINT, South Carolina CHARLES A. GONZALEZ, Texas
EDWARD PEASE, Indiana DAVID D. PHELPS, Illinois
JOHN THUNE, South Dakota GRACE F. NAPOLITANO, California
MARY BONO, California BRIAN BAIRD, Washington
MARK UDALL, Colorado
SHELLEY BERKLEY, Nevada
Harry Katrichis, Chief Counsel
Michael Day, Minority Staff Director
------
Subcommittee on Regulatory Reform and Paperwork Reduction
SUE W. KELLY, New York, Chairwoman
LARRY COMBEST, Texas BILL PASCRELL, New Jersey
DAVID M. McINTOSH, Indiana ROBERT A. BRADY, Pennsylvania
JOHN E. SWEENEY, New York DENNIS MOORE, Kansas
JOHN THUNE, South Dakota
Meredith Matty, Professional Staff Member
C O N T E N T S
----------
Page
Hearing held on October 19, 1999................................. 1
Witnesses
Crawford, Anthony J., Inspector, Mid-Atlantic Division, United
States Postal Service.......................................... 4
Heskin, Rachel, Communications Director, Mail Boxes Etc.......... 6
Taylor, Sandi, President, Strategic Technologies................. 8
Fulcher, Juley, Public Policy Director, National Coalition
Against Domestic Violence...................................... 10
Morrison, James, Senior Policy Advisor, National Association for
the Self Employed.............................................. 32
Mansfield, Michael J., Assistant District Attorney, Chief of
Economic Crimes Bureau......................................... 35
Merritt, Rick, Executive Director, PostalWatch Incorporated...... 37
Hudgins, Edward L., Director of Regulatory Studies, CATO
Institute...................................................... 39
Appendix
Opening statements:
Kelly, Hon. Sue.............................................. 51
Sweeney, Hon. John........................................... 53
Pascrell, Hon. Bill.......................................... 54
Prepared statements:
Crawford, Anthony J.......................................... 56
Heskin, Rachel............................................... 70
Taylor, Sandi................................................ 78
Fulcher, Juley............................................... 88
Morrison, James.............................................. 93
Mansfield, Michael J......................................... 112
Merritt, Rick................................................ 124
Hudgins, Edward L............................................ 152
Additional material:
Statement of Ron Paul, a U.S. Representative of the 14th
District of Texas.......................................... 165
Letter from Sheila T. Meyers, Government Relations of the
United States Postal Service, to Chairman James Talent..... 167
Application for Delivery of Mail Through Agent, submitted by
Mr. Spates................................................. 169
Mailbox Service Agreement, submitted by Ms. Taylor........... 173
Letter submitted by Mr. Hudgins from Gerea Hayman, Postmaster 177
Post-Hearing questions submitted to Mr. Crawford by
Chairwoman Sue Kelly....................................... 178
Response to Post-Hearing questions submitted to Mr. Crawford
by Chairwoman Sue Kelly with accompanying documents for the
record..................................................... 181
Prepared statement of George Russell, President/CEO, Five
Winds Corp................................................. 288
Letter from James M. Goldberg, Goldberg & Associates, PLLC,
to Chairwoman Kelly........................................ 292
U.S. POSTAL SERVICE'S REGULATIONS REGARDING COMMERCIAL MAIL RECEIVING
AGENCIES (CMRAs)
----------
TUESDAY, OCTOBER 19, 1999
House of Representatives,
Subcommittee on Regulatory Reform
and Paperwork Reduction,
Committee on Small Business,
Washington, DC.
The subcommittee met, pursuant to call, at 10 a.m., in room
2360 Rayburn House Office Building, Hon. Sue W. Kelly
[Chairwoman of the Subcommittee] presiding.
Chairwoman Kelly. Good morning.
Today the Subcommittee on Regulatory Reform and Paperwork
Reduction is meeting to discuss United States Postal Service
(USPS) regulations regarding Commercial Mail Receiving Agencies
(CMRAs) and their clients, Private Mail Box subscribers. USPS
officially issued its initial final rule on March 25, 1999.
However, it is my understanding that over the past seven
months, USPS either modified, repealed, delayed or clarified
most of the initial requirements contained in the final rule.
As I am sure most of my colleagues in Congress would agree,
our offices received an influx of constituent opposition to the
regulations after USPS enacted the final rule. Personally, I
did not realize the severity of the problem until Mr. George
Russell, an owner of a HQ Global Workplaces franchise,
testified at our subcommittee's field hearing on September 1,
1999, in White Plains, New York, regarding the impact of
Federal regulations on small businesses in the Hudson Valley.
Mr. Russell provided insight on how the regulations will
affect his fellow CMRAs, as well as the businesses that
subscribe to his services.
After hearing Mr. Russell's testimony, upon my return to
Washington, I immediately signed on as a cosponsor to
Representative Ron Paul's legislation, H.J. Res. 55, that would
use the Congressional Review Act to disapprove this rule. In
early September, I also discovered that Chairman Talent of the
full Committee had an outstanding document request on this
issue. It was the second document request sent to USPS by the
Committee.
On May 19, 1999, Chairman Talent's first letter to
Postmaster General William J. Henderson requested the Postal
Service's economic analysis on the impact of the final rule on
small business. Almost 2 months later, on July 13, 1999, USPS
Government Relations wrote Mr. Talent a two-page response. The
response did not even mention the words ``economic,''
``analysis,'' ``small'' nor ``business.'' Chairman Talent sent
a second and more detailed document request on August 16, 1999.
Due to the urgency of the regulations, he requested the
response by August 31, 1999.
On August 31, 1999, USPS Government Relations called
Committee staff to ask for an extension. It is my understanding
that USPS and the Committee staff agreed on September 9, 1999.
However, even after USPS started to enforce the regulations,
even after we invited Mr. Henderson to appear before the
Committee today, USPS did not deliver its full response until 5
days ago. Once again, the USPS did not address all of Mr.
Talent's document and information requests.
I am not sure why Mr. Henderson could not make it here, but
I hope the Postal Service officials he sent to replace him will
be more forthcoming in responding to Congressional concerns
today.
I am looking forward to hearing testimony presented by both
panels today. Our first panel will weigh the interests of the
stakeholders--the small businesses and domestic violence
victims that subscribe to private mail boxes, the small
entrepreneurs that run commercial mail receiving agencies, and
the coalition consisting of CMRA franchises and franchisees--
with the interests that inspired the Postal Service to issue
these regulations.
Our second panel will look at the broader issues involved.
The balanced panel will debate the public's necessity for the
regulations versus the possible costs to the citizens affected.
The panel will also address the postal system's role as a
``quasi-governmental'' agency. We will discuss how USPS
operates within its regulatory capacity in some instances and
its commercial capacity in others.
I will now yield to my good friend from New Jersey, the
ranking member, Mr. Pascrell, for any comments that he may wish
to make. However, I do hope that Mr. Pascrell will join me in
asking why we have not received information from the USPS in a
timely manner.
Mr. Pascrell.
Mr. Pascrell. Thank you very much.
I would like to begin by thanking Madam Chairwoman Kelly
for bringing this important issue to the attention of the
Committee, and I would like to thank the distinguished
panelists for their participation today. Small businesses are
the engines of growth for our Nation's economy. They are indeed
the backbone of the economic system.
In examining how regulations affect small business
communities, we are then better able to make adjustments to
alleviate any undue hardships. That is precisely why we are
here today. The Postal Service has issued a final rule
regarding Commercial Mail Receiving Agencies and their clients.
Under this new rule, customers would be required to write the
``Private Mail Box'' or the ``Pound Sign'' followed by the box
number on the second line of the mailing address. Those are the
mechanics. We are not here about the mechanics today.
The small business community and others have raised concern
about the net effect of this rule. Let me say, by definition,
small businesses are disproportionately affected by regulations
because of their very size. At the same time, the Postal
Service has stated unequivocally the point of the new policy is
to combat mail fraud. That certainly is a worthy objective.
They maintain that too often criminals rent mailboxes to
use as a front for illegal activities that include credit card
fraud, identity theft and schemes to swindle the elderly. A
cost-benefit analysis is in order even though the Postal
Service does not fall under the Federal law mandating this, and
I agree wholeheartedly with the Chairwoman of this Committee
that there is absolutely no exception to why even independent
agencies cannot provide such information without having to be
asked for that information.
I believe that today's hearing represents a prime
opportunity to hear from both sides of the issue and hopefully
come to some conclusions about what can be done. Small business
was not included in the preliminary study until this issue came
under congressional scrutiny, and that is my main concern; I
will be very frank with you. So when I am looking at the Postal
Service authorities, I am looking at every independent agency
in the Federal Government that thinks that they can do whatever
they wish. I don't accept that.
I can only speak for myself. But until we understand that
those independent agencies have some qualifiers and some
conditions, even for their very existence--I will repeat, even
for their very existence--we are going to continue to have the
promulgation of regulations without the input of whatever folks
happen to be impacted, be it small business or otherwise in
this case.
I am concerned about several aspects of these regulations
and how we got here. I think the Postal Service needs to
reexamine their rulemaking process. Other independent agencies
are doing it. The Post Office should be doing it. The Post
Office should include those folks that are going to be
immediately impacted early on in the process, not later on when
there is some dust arising from the ground.
They need to take into consideration the concerns of all
these affected, including small businesses. Regulations should
be formulated with full participation from those who will be
potentially impacted. All parties should be at the table from
the very beginning, and that is how you avoid hearings like
this. There is no other shortcut.
Thank you, Madam Chairlady, for bringing us together, and I
am anxious to listen.
Chairwoman Kelly. Thank you very much, Mr. Pascrell.
Are there any other opening statements this morning? If
not, then we will move on.
Our first panel consists of Mr. Tony Crawford, the
Inspector, Mid-Atlantic Division, accompanied by Mr. Mike
Spates, Manager of Delivery for the United States Postal
Service. We have Rachel Heskin, Communications Director for
Mail Boxes Etc.; Ms. Sandi Taylor, Owner/Manager of Strategic
Technologies; and we also have with us Juley Fulcher, Public
Policy Director, National Coalition Against Domestic Violence.
We welcome all of you here today and we look forward to
your testimony.
Let's begin with you, Mr. Crawford.
STATEMENT OF ANTHONY J. CRAWFORD, INSPECTOR IN CHARGE, MID-
ATLANTIC DIVISION, ACCOMPANIED BY MIKE SPATES, MANAGER,
DELIVERY, U.S. POSTAL SERVICE
Mr. Crawford. Good morning, Chairwoman Kelly and members of
the Subcommittee. With your permission, I would like to
summarize the lengthy statement I submitted for the record.
Like the Subcommittee, the Postal Service appreciates the
role that small businesses play in the success of our Nation.
We consider ourselves an important partner of small businesses.
We provide low-cost universal postal services and many high-
quality programs that help small businesses grow and prosper.
Some observers have tried to portray our revised rules
governing commercial mail receiving agencies, or CMRAs, as an
effort by the Postal Service to hurt small businesses or even
retaliate against the CMRA industry. These charges are
unfounded. We have strengthened the CMRA rules for one reason
and one reason alone, to help prevent and deter fraud.
CMRAs provide important mailing services to our Nation. All
too often, however, CMRAs are unwitting victims of criminals
who use their services to defraud and deceive the American
people and their organizations. In recent years, a growing
number of criminals have made private mailboxes one of the most
dangerous weapons in their arsenal of trickery and deceit.
Ithas been all too easy for con artists to hide their true location and
identities behind the cloak of anonymity afforded by private mailboxes.
The rules have not even required a person to submit a photo ID, making
it easy to falsify an identity.
Private mail box customers have also been allowed to use
``suite'' or ``apartment'' in their addresses, creating the
illusion of a physical presence in a prestigious location.
The Postal Service does not have exact statistics on the
number of fraud cases involving CMRA services. Historically, we
have tracked investigations by the type of illegal activity
such as child pornography or identity theft, not by the tools
used to carry out that activity. Still, the Postal Service is
convinced, based on our own experiences and those reported to
us by the law enforcement community, consumer groups, financial
and direct marketing companies and even the CMRA industry
itself, that the amount of illegal activities conducted through
private mailboxes is significant and warrants closing the
regulatory loopholes.
The Inspection Service, for its own part, has seen many
serious and diverse crimes taking place through private
mailboxes. More than any other illegal activity, we have found
unscrupulous individuals using CMRA boxes to misrepresent who
they are and take over someone else's identity and accounts.
We have investigated drug pushers who sell illegal
narcotics and pedophiles who secretly trade child pornography
through CMRA addresses. In fact, the most prolific distributor
of child pornography through the mail that we have ever
identified used CMRAs.
We have witnessed a number of criminals operating
lotteries, sweepstakes and fake billing scams from the safety
of a suite that leads nowhere. For 4 years during the 1990s,
for example, two foreign nationals used more than 120 CMRA
addresses in the United States as fronts for fake Yellow Page
listings. They mailed more than a million fraudulent invoices
that could have potentially cheated small businesses, churches
and nonprofit organizations out of $160 million.
In another case, a Canadian con artist used private
mailboxes to dupe elderly Americans out of more than $100
million. A survey of 880 known victims revealed an average age
of 74. Losses for 192 of these individuals ranged from $10,000
to $329,000 each.
The Postal Service's investigations into illegal activities
conducted through CMRAs, however, represent just the tip of the
iceberg. The Federal Bureau of Investigation, the Federal Trade
Commission, various State attorneys general and local district
attorneys also investigate and prosecute these crimes. Later
today, Mike Mansfield, Assistant District Attorney in Queens,
New York, will talk in detail about the illegal practices he
has seen involving services offered by CMRAs.
Many State attorneys general have had similar experiences.
Elliot Burg, Assistant Attorney General in the State of
Vermont, wrote to the Chief Postal Inspector last week on
behalf of 22 State attorneys general. He outlined the types of
fraud they have seen involving private mailboxes and
specifically urged the Postal Service not to implement its
recent proposal to allow the use of the pound sign in CMRA
addresses. With your permission, I would like to add Mr. Burg's
letter to the hearing record. [See p. 244.]
Chairwoman Kelly. So moved.
Mr. Crawford. Still, some voices in the debate say that the
CMRA rules should not be implemented because of the burdens
they place on small businesses. We understand those concerns,
and that is why we have gone to great lengths to be responsive
to the issues raised by those impacted by the regulations.
Since April, we have held regular meetings with numerous
representatives of the small business community, the CMRA
industry, and others, and have struck a series of compromises
to address issues they have raised.
Given the wide range of views, we may never be able to
reach a unanimous agreement. Still we believe that we have
struck a fair balance between privacy, business, and consumer
needs, without weakening the integrity of the regulations. Over
the long term, we believe the revised rules will pay off for
the CMRA industry and the Nation as a whole. When crime takes
place through a CMRA mail box, it doesn't just hurt the
individuals who have been defrauded. It is a black eye for the
CMRA owner and the entire industry.
Earlier this year, the Senate unanimously passed a bill to
curb deceptive and fraudulent mailings involving sweepstakes
and games of chance. The House is sponsoring similar
legislation, and both the chairwoman and the ranking minority
member of this subcommittee are cosponsors. Clearly just as our
Nation deserves to be protected from deceptive sweepstakes
mailings, it deserves to be protected from the unscrupulous use
of private mailboxes. We have been urged by many different
groups to take action and that is what we have done. In the
end, we hope that everyone will come to an understanding that
the sacrifices we are making are for a greater collective good
that transcends our individual interests.
Together, working with small businesses, the CMRA industry,
and others, the Postal Service has fashioned a set of rules
that will help create a safer and stronger America by reducing
fraud and other serious crimes. That is something we all agree
is a worthy cause.
This concludes my statement. We would be happy to answer
any questions you might have.
[Mr. Crawford's statement may be found in the appendix]
Chairwoman Kelly. Next, we move to Mr. Spates.
Mr. Spates. I am here to answer any questions that you
have. My statement is included with Mr. Crawford's.
Chairwoman Kelly. Thank you.
Ms. Heskin.
STATEMENT OF RACHEL HESKIN, SENIOR COMMUNICATIONS MANAGER, MAIL
BOXES ETC.
Ms. Heskin. Madam Chair, members of the Subcommittee, thank
you for the opportunity to testify today before your
Subcommittee. I will summarize my written testimony and ask
that my written testimony be included in the hearing record.
I am here today representing a group of CMRA owners,
including national franchisers, franchisees, and independent
store owners. My group includes my company, Mail Boxes Etc.,
PAK MAIL, Post Net, Postal Annex, and the Associated Mail and
Parcel Centers. Together, we represent the vast majority of the
over 10,000 Commercial Mail Receiving Agencies in the country.
Our group has been active on these regulations since they were
originally proposed.
Our initial position was to oppose these regulations.
During the initial publication and subsequent comment period in
July and November 1997, we actively generated many of the over
8,000 comments opposing these regulations. Nevertheless, the
Postal Service put these regulations into effect. Since their
publication, we have been working with the Postal Service and
Members of Congress to determine if these regulations can be
implemented in a manner which is workable for our industry.
I am pleased to tell you that our efforts with the Postal
Service seem to be working toward success, and we may soon be
in a position to accept the regulations in a modified form. Our
group has found the senior management of the Postal Service,
particularly retiring Chief Postal Inspector Ken Hunter, his
successor, current Chief Postal Inspector Ken Weaver, and
Manager of Delivery Michael Spates, willing to work with us to
solve most of the problems created by the current regulations.
We intend to continue this effort with the Postal Service until
all outstanding issues have been solved.
In our working group, convened and chaired first by Ken
Hunter and now by Ken Weaver of the Postal Inspection Service,
we have tackled all of the tough issues. Attached to my
testimony is a description of various solutions which we have
discussed. At this point, I would like to highlight some of the
more important issues.
As members of the Committee know, the PMB designation is
one of the most emotional issues for our customers and has
resulted in a great deal of communications to Congress by our
owners and customers. At our last meeting, the Postal Service
agreed to a solution to this issue which we believe is highly
workable: An address designator must be provided on line 2 or 3
of the mail for a CMRA customer. The approved designator may be
PMB or simply the pound sign. All other designators would be
prohibited, including suite and apartment. There would be no
grandfathering of the use of suite for any box holder and the
mail to the CMRA owner would remain unaffected by the
regulations.
Most of our stores already urge their box holders not to
use any designator other than the pound sign. This will not
disrupt the mail or create a stigma for our box holders and is
acceptable to our group.
In addition, the USPS and CMRA industry will establish a
joint task force to develop a joint protocol by which CMRA
owners can better identify potential fraud and notify the
Postal Inspection Service, to develop a training regime to be
incorporated in training of CMRA owners and staff as part of
establishing new CMRAs and for retraining, and to develop a
list of CMRA addresses which will be posted and available
through the USPS Web site and their toll-free telephone number.
This would permit any customer to check an address to determine
if it is a CMRA.
We firmly believe that the best way to attack this issue is
with a joint effort combining the skills of the Inspection
Service with our everyday knowledge of the CMRA industry.
Termination of service to CMRAs remains the area in which work
must be done. The current CMRA regulations contain a provision
by which a postal manager can order termination of mail service
to a CMRA for all customers if the CMRA owner is not in
compliance with the regulations. The Postal Service has assured
us this will not be misused by overzealous local postmasters,
and the regulations do include a requirement that any
termination order be approved by a higher Postal Service
official.
Unfortunately, some overzealous postal officials have
already sent out some termination notices, even though we were
assured no such notices would be sent while we continue to work
on these issues. Postal Service management has rescinded these
notices, but that showed us a firm policy on termination needs
to be established on a uniform basis throughout the country.
We have proposed the following to the Postal Service:
The Domestic Mail Manual would contain instructions
regarding termination of mail service to ACMRA as follows:
One, mail delivery to a CMRA would not be terminated
because a box holder or box holders have refused to fill out a
form 1583. Mail delivery would be terminated only for those box
holders.
Two, the USPS would provide specific notice to a CMRA if it
feels that it is not in compliance with the regulations. The
notice would provide specific direction as to how to cure the
deficiency.
Three, no notice of potential termination would be sent
unless previously reviewed by the authorized superior of the
postal manager. The notice of termination shall list the party
who reviewed the notice.
This remains a work in progress, but we are hopeful that we
can resolve this issue soon with the Postal Service. We have
proposed that these changes in regulations be included in the
Domestic Mail Manual. This is the bible for postal employees
and users. It states firmly what postal policy is on these
matters. So many changes are being made to the regulations and
their implementation that it is important that they be included
in the DMM.
Congress deserves a lot of credit for moving these changes
along. Many Members of Congress have contacted the Postal
Service and urged that these regulations be fixed.
Most notably, we would like to thank Congressman Todd
Tiahrt, who sponsored a critical amendment in the House
appropriations process, and Congressman Ron Paul, sponsor of
H.J. Res. 55, who first brought this matter to the attention of
Congress. The fact is that Congress rallied to this issue early
and often, which has been tremendously helpful.
This has been a painful process for our owners and their
customers, but we think that we have established a solid
working relationship with the Postal Service on this issue and
we are dedicated to making the revised regulations work and to
developing a successful joint task force on fraud.
Thank you for the opportunity to testify, and I would be
happy to answer any questions that you have on my testimony.
[Ms. Heskin's statement may be found in the appendix.]
Chairwoman Kelly. Thank you very much. We have been called
to the floor for a vote. Because of my interest in having
continuity, we will break here and go to the floor and vote;
and we will come back and as soon as possible resume the
hearing, because I would like to have as much of this--I would
like to give Ms. Taylor and Ms. Fulcher as much time as they
need to testify as well. So we will be right back.
[Recess.]
Chairwoman Kelly. We will resume the hearing and thank you
for waiting. Let's start with you, Ms. Taylor.
STATEMENT OF SANDI TAYLOR, OWNER, STRATEGIC TECHNOLOGIES
Ms. Taylor. Madam Chairwoman and fellow House subcommittee
members'. Thank you for giving me the opportunity to speak to
you today, so that I can address the real-world commercial
impossibility, huge financial burden, and irreparable damage to
my business that the U.S. Postal Service's rule on customers of
CMRAs (Commercial Mail Receiving Agencies) imposes upon my
business.
While I support the USPS and law enforcement agencies in
their efforts to protect the public from mail fraud and other
illegal activities, they must not be allowed to have carte
blanche to impose rules and regulations that destroy the
livelihoods and the rights of thousands of law-abiding citizens
like myself in the process. In their sincere efforts to protect
the public, the USPS has failed thus far to factor into their
equation how these draconian measures affect thousands of
legitimate small business owners.
I am a self-employed executive search consultant who has
earned my living in this profession since 1978. I have been a
single parent of three children, with my office in my home, for
most of the past 20 years. Since 1988, I have used the same
Mail Boxes, Etc. address of Strategic Technologies, 2183
Buckingham Road, Suite 232, Richardson, Texas 75081, as my
business address, for very sound business reasons:
One, as a single female, I do not desire to publicize my
home address across the country, much less around the world. My
clientele, both clients and candidates, is 99 percent male. A
large part of the service my clients require of me is to screen
out candidates who do not meet their requirements, for any
number of reasons. Historically, some of these passed over
individuals have become disgruntled, and it could be very
dangerous for them to know where I reside.
Two, if the USPS is allowed to refuse to deliver my
business mail, returning it to the sender based solely on the
wording ``Suite 232,'' it will result in a substantial loss of
my income, cause an onerous expense to me, drastically impact
my business for years to come, and inflict an unwarranted
stigma upon my professionalism. The business address I use,
``Suite 232,'' presents a professional, image which is very
important to small business owners like myself--and causes
absolutely no harm to anyone.
I am in a very competitive industry, and I have worked very
hard over the years to earn, build and maintain an impeccable
reputation. I cannot afford to allow anything to result in even
the slightest lessening of my professionalism--which is exactly
what the enforcement of this rule will do.
On Thursday, October 7, 1999, I spoke with Richard
Hallabrin, Executive Director of Public Relations at Mail Boxes
Etc.'s corporate office, at which time he told me that the
incoming postal inspector and the CMRAs had ``accepted a
compromise with the USPS'' that they considered to be the best
alternative--to give customers the option to use PMB or the
pound sign in their mailing address, but than they absolutely
could not use ``suite''.
I explained to him that this compromise did not solve my
problem, as I had used ``Suite 232'' as my business address for
almost 12 years. Further, Mr. Hallabrin told me that MBE's
policy has always been that customers should not use the latter
wording in their business address, and if I were to check my
contract, I would see that I had been in the wrong all these
years.
I obtained a copy of my original contract, dated May 9,
1988, attached to my written testimony as addendum A, wherein
it gives the following instructions:
``Important: In establishing your mailing address, your
mail box number is designated as a suite number.'' And it is in
there, I might add, in three different places.
I have been informed by MBE franchise owners that several
years ago, MBE corporate instructed its franchisees to tell new
customers to use the pound sign, but that they should not say
anything to existing customers like myself, because those
customers already had established business addresses.
I have paid many thousands of dollars over the years to
have this address printed on business cards, stationery and
brochures. I have also paid many tens of thousands of dollars
for advertising in industry trade publications. I have
distributed countless thousands of business cards at an average
of half a dozen trade shows per year. I am known within my
industry specialization throughout the U.S., Europe, the
Pacific Rim and South America.
In addition to my using this address in advertising in
professional industry trade publications, this same address has
been published in many plastics and composites industry, as
well as nonindustry specific publications, including
directories, databases, mailing lists, e-mail lists,
outplacement and resume services, et cetera.
``Addendum B'' in your copy of my written testimony is a 3
page representative list of those professional publications
that I advertise in, subscribe to, or have given my consent to
be listed in, as well as those in which my business is listed
based upon the publisher's assumed consent.
I receive 200 to 300 unsolicited resumes in the mail each
week, not including candidates I have recruited, telephone
calls, referrals, new client contacts, and unsolicited
candidates' resumes received via fax and e-mail. My database
contains more than 55,000 names, with several thousand more yet
to be entered, and the list grows daily. It is not physically,
technically nor financially possible for me to identify and
notify everyone necessary as to an address change.
The USPS rule would cost me tens of thousands of dollars in
additional advertising costs, not to mention many more tens of
thousands in lost income. I offer as an example my experience
of two years ago when the Dallas telephone area code was split.
I have paid a monthly fee for the past four years so that my
old phone number will roll over to my present phone number.
I discovered, months after the area code change, that the
Public Utility Commission took my old phone number away from
the phone company; as a result, individuals trying to contact
me at my old phone number reach a recording that says ``This is
no longer a working number.'' I have since learned that I have
lost many thousands of dollars in income as a result of the
area code change. I estimate that the area code change cost me
approximately $15,000 for printing and mailing of new
stationery and business cards, an additional $20,000 for
increased advertising in industry trade journals to publicize
the area code change, and at least $100,000 in lost income. I
do not want, and I cannot afford a repeat of this situation.
In closing, it is my contention that the USPS does not have
any justifiable reason to deny the delivery of my business mail
addressed to Suite 232. If the mailed item has the proper
postage, then their job is to deliver it to its destination--my
business address.
I hope that you now have a better understanding of how
devastating this rule is for small business owners like myself,
and how the USPS's proposed extension for its enforcement of
the rule to April 26, 2000, does not solve our problem. I and
thousands of other legitimate small business owners are asking
for your help to keep the USPS from destroying our livelihoods.
Again, thank you for your time, and I will be happy to
answer any questions you may have.
Chairwoman Kelly. Thank you, Ms. Taylor.
[Ms. Taylor's statement may be found in the appendix.]
STATEMENT OF JULEY FULCHER, PUBLIC POLICY DIRECTOR, NATIONAL
COALITION AGAINST DOMESTIC VIOLENCE
Ms. Fulcher. Thank you Chairwoman Kelly and members of the
Subcommittee. On behalf of the National Coalition Against
Domestic Violence, I thank you for the opportunity to address
the safety concerns of battered women in relation to the new
postal regulations.
The National Coalition Against Domestic Violence is a
nationwide network of approximately 2,000 domestic violence
shelters, programs and individual members working on behalf of
battered women and their children. I am here today because we
are disturbed by the circumstances under which personal
information can be released under the new regulations of the
United States Postal Service.
Each year, 1.4 million Americans are stalked. One in every
12 women will be stalked at somepoint in their lives and 59
percent of these women will be stalked by their current or former
intimate partners. Stalkers can be very persistent, especially domestic
violence stalkers. A domestic violence or stalking victim must be
allowed to take steps to protect herself where we cannot protect her.
When Jane left her batterer, he became her stalker. She
moved and obtained a post office box in order to keep her new
address secret, but he found her and was waiting for her at her
post office box. She moved to another State and got a new post
office box, but again her batterer was waiting for her when she
went to pick up her mail. Jane moved from State to State only
to be found again and again. In desperation, Jane went to
domestic violence advocates in her newest hometown, as well as
to various law enforcement officials to get advice on how not
to be found this time. She learned that many other women had
suffered the same problem, and she was advised to obtain a
private mail box, or PMB. Jane did so and still continues to
live peacefully in that same town. Unfortunately, since August
26, 1999, she has been unable to receive her mail because all
delivery to her PMB was stopped when she refused to provide her
home address on the Form 1583 now required of PMB users.
Under the final rule issued on March 25, the Form 1583 must
be completed and placed on file with the Postal Service in
order to receive mail. The form requires a home address and
telephone number and traceable information from two forms of
identification. It even requires the names and ages of any
children that may receive mail through the PMB. Under the
August 26 proposed rule, that information may be provided to
any government agency requesters. This policy puts the lives of
many women and children at risk.
The Los Angeles Stalking Victims' Handbook advises victims
to use a Private Mail Box service to receive all personal mail.
They also recommend that victims use suite numbers rather than
box numbers because it does not alert the stalker that it is a
PMB. These recommendations come from experienced workers in the
field who understand the persistence of batterers and other
stalkers and who have seen the ways that these criminals locate
their victims.
Now advocates and law enforcement officials are left
without any assurance that victim information will be
adequately safeguarded, and none of us can blame Jane and other
women like her for refusing to provide their home addresses on
the Form 1583. We understand that the purpose of the new
regulations is to prevent criminals from using PMBs to commit
fraud. We respect the need to address this problem. However,
personal information about mail box holders should not be
released without a warrant.
We are very concerned about the dissemination of addresses
even to law enforcement personnel without the proper checks and
balances required by judicial involvement. If the information
is needed as part of an official investigation, a warrant
should not be difficult to obtain and would provide an
important added protection for battered women. Anything less
increases the possibility that the lives of battered women and
their children will be endangered by unwitting release of
information by law enforcement officers to a batterer.
Moreover, the August 26th proposed rule allows that information
can be given to all local, state and federal agencies creating
broad categories of individuals who are granted access to this
information without any restrictions on the reasons for which
that information can be obtained.
A similar concern exists for battered women's shelters.
Shelters house many victims of domestic violence at one time;
putting one woman in danger puts all shelter residents in
danger, including their children. Disclosure of the shelter
location can be especially critical to these families' lives.
The threat is so great that many shelters do no publish their
addresses, withholding addresses even from other domestic
violence service providers. For this reason, shelters will
commonly use a post office box or a PMB for receipt of mail.
Again, the new rule allows for disclosures broadly to
federal, state and local agencies. Once this information has
been turned over to these agencies, there is nothing to prevent
that information from being further disclosed to others or
included in documents that are available to the public.
The regulation unacceptably places shelter residents and
workers at risk without any clear connection to a legitimate
law enforcement purpose. The safety needs of the women and
children seeking refuge in a shelter obligate us to hold
shelter locations confidential. It is imperative that no one
obtain a shelter address without a warrant. And I will just add
that there is an article in the Washington Post today about how
the Supreme Court has just held that police cannot search a
murder scene without a warrant, but apparently we can turn over
the individual's home address without a warrant.
Finally, if PMB holders are going to be required to submit
the completed 1583 forms, it is critical that the Postal
Service develop a protocol to help ensure adequate security for
the information, such as a secure filing system with restricted
access and a formal system of recording releases of
information. A protocol such as this one could mean the
difference between life and death for a battered woman.
Keeping the personal information of Private Mail Box owners
confidential is essential in protecting lives. The National
Coalition Against Domestic Violence understands the need to
develop regulations that address the legitimate mail fraud
concerns of the United States Postal Service, but we must not
do so at the expense of battered women, their children,
shelters, and stalking victims who utilize commercial and post
office mail boxes.
We call upon the United States Postal Service and Members
of Congress to address this issue without compromising the
safety of women and children who are struggling to survive.
Thank you.
Chairwoman Kelly. Thank you very much, Ms. Fulcher.
[Ms. Fulcher's statement may be found in the appendix.]
Chairwoman Kelly. As we have heard this morning, this is a
very difficult issue. But I would like to begin with some
questions. I have some questions here that I would like to ask
you, Mr. Crawford.
In the supplementary information that USPS issued
accompanying the March 25, 1999 proposed rule, the Postal
Service said, ``the sole purpose for the rule is to increase
the safety and security of the mail. The rule is designed to
benefit both businesses and consumers by reducing the
opportunities to use the mail for fraudulent purposes.''
Do you think that statement accurately reflects the general
intent for the final rule?
Mr. Crawford. I think it does, but I would like to add to
it that the main focus that we had for this rule is the
protection of the American public, businesses and to keep fraud
out of the mail stream.
Chairwoman Kelly. Mr. Crawford, perhaps you would like to
address how protection of the American public is entrained in
the rule to Ms. Fulcher and explain to her how people she is
representing here on the panel today are protected by your
rule?
Mr. Crawford. I can fully understand and sympathize with
her and any battered person. We have tried to work with
organizations to try to determine the best way to approach the
problem.
In terms of release of the information, we went back to the
Postal Service; we were trying to bring everything in line. In
Postal Service regulations for a post office box, there was a
stipulation that information could be released to the public on
a box holder if that box holder was doing business with the
public. That was basically something that was put in place
because of pressure put on the Postal Service in response to
businesses, and consumer groups, and people doing business with
organizations, or small businesses and large who were operating
out of post office boxes.
We went back and revisited that and said that we would not
release the information to individuals even if they were doing
business out of those boxes, whether it is with the CMRA or
with a P.O. Box.
I think that this would all apply to battered persons who
are operating businesses out of their home. That was the
initial concern that we had.
Chairwoman Kelly. We are not talking about battered women
or men operating businesses here. We are talking about battered
women who are trying to escape their stalkers and batterers.
Ms. Fulcher, feel free to jump in here. I think it is important
to have a dialogue between you two on this point.
Mr. Crawford, when did you start working with the battered
women's shelters and with the National Coalition Against
Domestic Violence and some of these other groups?
Mr. Crawford. I don't have the exact time on that.
Chairwoman Kelly. Mr. Spates?
Mr. Spates. I can't give you the exact date, but when we
were first contacted, we met with representatives--Ms. Fulcher
and representatives from the inspection service and they
described the situation. Two things occurred, one regarding the
temporary shelters that battered spouses go off to. In our
discussions with them, since those were temporary shelters,
they are treated as hotels, et cetera, and would not be
subjected to the CMRA regulations. The privacy issues were a
main concern, and that was one of the reasons that we met with
the other groups, and that is why we put out the proposed
regulation, to make the change in the privacy statement on the
back to delete it.
We have preliminary responses back, showing that out of 287
responses on removing the privacy statement, 232 of them
reflect what Ms. Fulcher said: We need tighter restrictions on
when that information can be released. Considering that, there
was overwhelming support for what she just said in releasing
the information. I am sure that would all be taken into
consideration.
Chairwoman Kelly. But you have gone ahead and issued a
rule.
Mr. Spates. That rule was issued before. In fact, the rule
was originally published in the Federal Register in August
1997. We got comments back at the last minute from CMRAs,
primarily; and then there was pressure from the CMRA industry
to publish the rule again to give more adequate time for people
to comment. So the rule was republished. We still received no
comments from the interested groups until we finally put the
rule out in March. Then they all came.
Chairwoman Kelly. Were you waiting for everybody to read
the Federal Register, or did you do any outreach to try to meet
with these groups? What about Ms. Taylor's group and how are
people that are effected supposed to know except to read the
Federal Register? What kind of outreach did you do prior to the
promulgating of the rule?
Mr. Spates. The outreach was primarily through the CMRAs.
Some of these interest groupswe were not aware of.
Chairwoman Kelly. I am sitting here with Postal Bulletin
21982 as of 10-8-98. I have the Privacy Act statement.
According to reading this, even I can get the information
from somebody who has a postal box, a P.O. Box. You are saying
that anyone who is going to go to a CMRA is going to sign an
agreement that a PMB will be subject to the same Privacy Act
statement that I am looking at here which means that you are
not offering any further protections to these people who are
trying to restart their lives and escape stalkers and
batterers?
Are you going to try to address this now or where are we
with this?
Mr. Spates. As a result of the feedback, we published in
the Federal Register to eliminate that statement and
information would not be provided except under certain
restrictions. In the interim, while that proposal was issued, a
letter went out from our chief operating officer and a follow-
up letter went out just as a reminder back in July: Do not
release any information on anybody renting a post office box or
private mailbox until we reach resolution on this privacy
statement. That is the proposal that I was just referring to.
We have the comments back from the people who saw the Federal
Register notice, and it has a lot of publicity on this one
because of all of the activity around the privacy issue.
Chairwoman Kelly. There are a number of more questions
that I want to ask about this specific area. I would like to be
able to--and I am going to hold the hearing open for 14 days
for people to submit questions for answering because I myself
will have some more.
In the interest of time, I want to move on because I still
have some other questions.
I want to specifically hone in on a couple of things. You
are currently regulating the CMRA industry. You are trying to
improve the ``safety and security of the mail,'' and I think
that is a valid goal. You are trying ``to bring provisions in
line with those governing,''--and I am taking these as quotes
from you--``with those governing post office boxes.''
I have to assume that the P.O. Box industry currently has
more effective regulations to help deter and expose the types
of fraud that the regulations address. Is that correct?
Mr. Spates. Referring to fraud and post office boxes?
Chairwoman Kelly. Yes.
Mr. Spates. I have to yield to Mr. Crawford.
Mr. Crawford. I would say yes. What we have seen during the
1970s and 1980s, the choice for most of the scam artists was
P.O. Boxes. But with the proliferation of CMRAs, they have
started to migrate from P.O. Boxes to CMRAs merely because of
the fact--and this is based on comments that we have gotten
from inspectors in the field who have interviewed people that
they have brought in relative to these cases, and they have
just asked them the simple question why did you use a CMRA? The
response was because there was no identification required, and
it is easier to secure a CMRA box than to get a P.O. Box. With
the P.O. Boxes our employees were required to get specific
identification from an individual, and it was maintained there
at the Postal Service.
Chairwoman Kelly. Do you have any statistics to show what
you are talking about, Mr. Crawford?
Mr. Crawford. No, I don't.
Chairwoman Kelly. The Postal Service has done no studies?
They have no quantifiable analysis, no statistics at all to
support the promulgation of the rule. Is that what I hear you
saying?
Mr. Crawford. To my knowledge, there was nothing done
relative to that.
When we got involved in the CMRA issue, it was based on
merely--the information that we were getting from the credit
card industry, as well as from other law enforcement agencies,
is that they had seen a proliferation in the use of CMRA
addresses for crimes.
Chairwoman Kelly. In your statement to us, you say and I
quote, ``The amount of illegal activities conducted through
private mailboxes is significant.'' If you haven't done any
studies and you don't have any quantifiable numbers, how do you
know the accuracy of your statement?
Mr. Crawford. I would say that the accuracy of that
statement is based on those cases that I gave you.
We went through our database in the Inspection Service, our
information database, and pulled up all of the cases that were
related to crimes being perpetrated, whether it was fraud,
credit card scams, any types of crimes, and we used that
information. We didn't do a complete analysis of the
information, but we saw that we did have a problem; and like
these cases that I have shown you where we have people who are
operating out of Canada and other locations, who will have
hundreds of CMRA boxes in the United States, these individuals
never set foot on United States soil and they are ripping off
the American public. The money is going out to these
individuals.
And to quantify it, if I came in and told you, just like
here, I have two cases that I related to you and someone would
say we are only talking about two cases out of thousands of
cases that the Inspection Service investigates. Then we have to
go into the number of people who are being victimized by these
scams.
Chairwoman Kelly. But you don't have any idea how many
there are?
You have not done any studies?
Mr. Crawford. We never maintained the information in a form
where we could go in and just pull up cases based on CMRAs. You
know, we have realized the error of that. We have gone back and
our IT people are in the process now of giving us fields where
we can capture that information.
Chairwoman Kelly. It is a tough problem, Mr. Crawford. You
are trying to protect the American public and yet protect the
public's privacy.
I want to ask you a question about whether or not the
Postal Service has any records about the amount of fraud or
criminal activity emanating from addresses with people using
post office boxes? Do you have that kind of information?
Mr. Crawford. No, we don't.
Chairwoman Kelly. You don't have any information about that
either?
Mr. Crawford. No, we don't.
Chairwoman Kelly. You will regulate the CMRA industry,
assuming fraud, but you will not assume fraud from our own post
office boxes? I find that difficult because--maybe it is
because I don't think that the government should be interfering
with people's privacy to such an extent. Whether I have a post
office box from you people, or I get one from the CMRA, I am
concerned about people being able to lead private lives. And
most people don't rent these boxes to commit fraud; most people
are pretty honest, and they have good, strong reasons why they
have done what they have done.
You are telling me that you have done no studies for either
your own post office boxes or for CMRA?
Mr. Crawford. Chairwoman Kelly, I agree with you 100
percent.
Chairwoman Kelly. Is that what you said?
Mr. Crawford. Yes, that is exactly what I said. But can I
continue?
Chairwoman Kelly. Please.
Mr. Crawford. What I was saying to you was that the
information that we gathered was based on cases that we had
coming from all of our divisions.
Believe me, if we had seen a proliferation of crime
activity in P.O. Boxes, that is where we would have directed
our attention. What we saw was the CMRAs. We just didn't jump
out of the box and start to ask for changes.
Several of our divisions of the Inspection Service
conducted audits of CMRAs and postal facilities to determine
what is causing this, what is causing the criminals to go to
these facilities. The audit was expanded, but we didn't take
that information and roll it up and come up with any statistics
on it that we were going to use on a national basis. But we did
see from those audits that there were certain things that the
CMRA industry and the Postal Service were not doing, and it was
incumbent upon us to try to correct those breakdowns.
Chairwoman Kelly. I have one problem with what the USPS has
provided to Chairman Talent. When he asked for specific
information from the USPS, they sent five pages of anecdotal
evidence of criminal investigations within the CMRA industry.
But you have not produced any kind of an analysis to estimate
the amount of the fraud that is representative over the course
of any time period, let alone 6 months, a year. We don't know
what time period these anecdotes are coming from.
I think it is incumbent upon you to come back to this
committee with some information based on time and something
besides anecdotal evidence. I think it is important that you
come to the Committee. If all you have got is anecdotal
evidence, similar to the kind of thing that you have done, I
don't see how you can argue that fraud doesn't exist in your
own Post Offices. So I would like to see you come back to us
with some information for not only me, but I am sure Chairman
Talent would be interested in that also.
Mr. Crawford. I didn't say that fraud didn't exist in our
P.O. Boxes.
Chairwoman Kelly. Okay.
Mr. Crawford. At least I hope I didn't say that.
Chairwoman Kelly. I don't understand how you can write each
individual regulation in the way that you have. You had to make
some kind of a determination on how each regulation was going
to deter fraud. I have a list of the regulations that you have
promulgated in your rule. If I quote that supplementary
information, ``the rule clarifies and updates the requirements
to be consistent with other current postal rules, policies and
requirements.''
Isn't that really sort of the basis of how you drafted the
regulations?
Mr. Crawford. The Inspection Service has to maintain the
sanctity of the seal. When people put mail into the mail
stream, they are expecting it to go from point A to point B
without being victimized, whether it is stolen or someone is
ripping them off with a crime. That is what we were looking at
when we were trying to bring the CMRA forms in line with the
forms that were being used by the Postal Service, which
required some form of identification. It was the whole issue of
an individual being able to go into one entity and be able to
secure a box and maintain total anonymity.
When we would have folks from the public contacting us to
say that they had been ripped off or victimized by some scheme,
and it is being operated out of a suite at--you know, Suite
300, Pennsylvania Avenue, and we go to those locations, based
on the information that is available and we see that it is a
CMRA address, and there are no leads to take us to who the
perpetratorswere.
Mr. Spates. May I add something?
Chairwoman Kelly. By all means.
Mr. Spates. The 22 attorneys general, which now I believe
is up to 28, the primary thing is when you use a post office
box, it says post office box on the address. When you use a
CMRA, you can use number, suite, what have you. These 20-plus
State attorneys general are looking at State legislation to
prohibit the use of suite, et cetera. So the post office has a
better chance of eliminating fraud because the person who is
responding to that address knows that physical address is a
box. With a CMRA they don't know whether it is a box or a
suite. A little over a year ago NBC News in ``Fleecing of
America'' did a major case on Medicaid fraud involving CMRAs
because they thought that they were sending checks to medical
suites when it turns out to be a box about this big. That is
the difference between a post office box and a CMRA. You know
that you are mailing to a post office box. You don't know that
you are mailing to a Private Mail Box.
Chairwoman Kelly. Thank you.
I am still struggling with this a little bit. Mr. Crawford,
it seems that you are arguing both ways. If you don't know what
the problem is, how can you fix it? You don't have anything out
there, you have to know what is broken before you can fix it,
it seems to me. If I took my car to an automobile mechanic and
I said, as I usually do, ``the engine is going clunk, clunk,
clunk when I try to start it,'' he will pop up the hood and
say, ``try to start it.'' He will analyze the problem. Then he
and I will agree what needs to be done and a price.
That is kind of standard operating for most businesses
and--what I don't understand here is how you can fix the car
without popping up the hood and analyzing what is going on
underneath.
On page 8 of your written testimony, you claim that after
two comment periods the USPS studied and considered the
comments--those comments for well over a year before issuing
the March regulations. Now, is that correct?
Mr. Crawford. I would like to refer that to Mike Spates.
Chairwoman Kelly. It is on page 8.
Mr. Spates. That is true. When we got the comments back,
8,000 of them, primarily from CMRA owners and box holders, we
went through those comments. We strategized within our own
organization what is the best approach to take. We had not
heard from these other interest groups at that time. We decided
to go forward based on the comments that we had with the March
25 issuance, and that brought all of the attention to this
issue.
As we said in this opening statement, we have met with
these interested groups ever since that time. They are sort of
like the mechanics that you use in your analogy. We knew that
there was a problem. We brought all of these people together
and--how can we work out a compromise and come to a joint
resolution? The witness from the CMRA industry said they are
interested in preventing or reducing fraud themselves.
What came out of all of this is the industry working
together and at the same time trying to satisfy the particular
needs of groups like the National Coalition Against Domestic
Violence.
Chairwoman Kelly. Mr. Spates, I am glad you brought up the
8,000 organizations that responded to you.
According to your supplementary information preceding the
statutory language, you state that ``nearly 8,100 organizations
and citizens oppose the 1997 proposed rule compared to 10 that
generally supported it.'' Yet in the July 13th letter that you
sent to Congressman Talent, you state ``during the notice and
comment period the Postal Service received 8,107 letters. They
included expressions of support from organizations representing
thousands of leading businesses, key law enforcement agencies,
and millions of American consumers including''--and you list a
group of people. ``Most of the letters opposing the changes
were form letters,'' and that is the final sentence in that
paragraph.
I can't figure out why you state here that there were
nearly 8,000 people--in this supplementary information you
State nearly 8,000 organizations and citizens opposed your 1997
proposed rule, and in your letter on July 13 you imply that
those 8,000 people were supportive of what you were trying to
do. Can you tell me how those two figures--I am confused. Can
you unconfuse me?
Mr. Spates. I am not familiar with the letter that you are
referring to.
Chairwoman Kelly. The letter is signed by Sheila T. Meyers,
and it came from Government Relations of the United States
Postal Service.
[The information may be found in the appendix.]
Mr. Spates. I am not aware of the letter, but the first
statement was accurate.
Chairwoman Kelly. This came to Chairman Talent in a letter
July 13, 1999. And perhaps you would like to go back and in our
further dialogue, you would like to bring both of these
statements into some kind of compliance with each other.
Mr. Spates. The first statement was accurate. There are
8,107 letters opposed, and that was made up of CMRA owners,
which is a little less than 10 percent. The rest were made up
of CMRA box holders. There were 10 letters of support, but they
were from associations such as the International Association of
Financial Crimes Investigation, Secret Service, Visa, Wells
Fargo, American Bankers Association, Discover, American
Financial Services Association. They were groups. Those 10 were
from groups representing major parts of industry.
Your first numbers that you had were correct. The ones in
the letter, I am not familiar with the letter--it is turned
around, the way that I understand it.
Chairwoman Kelly. I hope that in your further dialogue with
this Committee you will be familiar with the letter and let us
know what happened with those numbers. My final question here,
when the USPS stated in the final rule that, ``compliance would
put the CMRAs out of business''--and I am quoting--``the
rulemaking appears to discriminate against them because of
their choice of an address,'' ``these requirements are
burdensome and unnecessary and the current annual submission is
sufficient,'' ``the PMB designation is unnecessary and a stigma
that unfairly portrays the customer CMRA as unsavory,'' ``CMRA
customers will incur costs to print new stationery and to
notify all current correspondents of the address change,''
``there is no requirement or opportunity to allow the CMRA to
come into compliance,'' and when ``CMRAs expressed concerns for
their customers' privacy,'' this was not noted.
What did the Postal Service do to take all of these
statements and interests into account before you promulgated
your final rule?
Mr. Spates. Those statements and issues never surfaced
until after the final rule. The two----
Chairwoman Kelly. They are stated in the final rule, Mr.
Spates. They are stated in the final rule.
Mr. Spates. But I am talking about the details worked out
with the other interest group. Those came from the CMRA
industry itself.
Maybe I misunderstood your question.
Chairwoman Kelly. When you stated in your final rule the
things that I enumerated, you did not state what USPS had done
to try to take the interests of the CMRAs into account. You
simply stated these things and let them stand for themselves
and went ahead and promulgated the final rule, and these were
stated in your final rule.
Mr. Spates. I am sorry, I misunderstood your question. I
thought you were talking about the interested groups that we
were working with after. That was my mistake.
Chairwoman Kelly. No, these were people during the comment
period who commented, apparently to no avail and of no interest
to the USPS here because they were stated, which is a very
worthy thing; but on the other hand, I don't see what the
Postal Service did to take these interests into account.
Mr. Spates. First of all, we were trying to mirror the
regulations as they apply to post office boxes. The post office
box has a particular addressing requirement, and it also has a
privacy statement on the back of it. We wanted to apply that to
the group. We felt taking away not requiring PMB or some
designation to let you know it is a Private Mail Box would
deter what we are trying to do from the fraud standpoint, and
this was brought up strongly by the States' attorneys general
because they said if we don't do it, they are going to do
something locally, and then you are going to have a different
mixture. That is why PMB stayed in there.
The privacy statement was put in there because it was on
the post office boxes, and then that came out. As a result of
the final rule, people were opposed to it.
All we are trying to do is match it up, the requirement
where we had a year, changed it from a year to a quarterly
update provided by the CMRAs, because of the turnover rate they
have--in private mailboxes in cases of fraud, they are not
there very long. We wanted an updated list. It does not create
any more paperwork. They still have the 1583 on file; they just
have to tell us where there is a change.
Chairwoman Kelly. Mr. Spates, that sounded terrific, but
quite frankly, I don't think that it answered my question.
We will want a further answer to my question.
At this point, I thank you, Mr. Pascrell, for indulging me
in a longer questioning period and I am going to turn this over
to you.
Mr. Pascrell. First of all, I want to thank Mr. Crawford
for your candor because I can only conclude from that candor
that on the process side of this I think there is much that is
desired here. You leave much to be desired--not you personally,
I think the process itself. It is a bit convoluted, and when we
go back to the March 25th date, because I don't want to spend
too much time on process, I am a results kind of person, but
these regulations were promulgated on March 25th. You didn't
start--the post office didn't start meeting with small
businesses until after the promulgation. It would seem to me
that the small businesses, those affected, those organizations
affected, should have been with you at the table before the
promulgation of any rules and regulations.
This leaves a lot of question here. It also leaves a lot of
question, the fact that you don't have much live data to begin
with. So I believe that the process is flawed, and I believe
you need to do something about it rather than just catch up.
I want to deal now with substance, if I may.
There are two issues here: the issue of cost and the issue
of privacy as I see it. On the issue of cost, well, you moved
the deadline to April of 2000 from October of 1999 as I
understand thetestimony. So, therefore, it leaves me with the
conclusion that you could just as well stretch it to the year April
2001. And therefore when people are providing stationery and things
like that, there is a changeover anyway, and I think the cost could be
worked out.
How do you determine the dissemination of these addresses?
How do you decide--who decides on whether information about
these addresses and post office boxes is disseminated? Who
makes that decision?
Is there any public dissemination, Mr. Spates?
Mr. Spates. Public dissemination, as far as letting them
know what happened?
Mr. Pascrell. No, as to actual numbers that you are now
requesting, who can go into a post office, who can go into one
of these private association--the carriers, the--and ask for
information about these post office boxes? Who is allowed to do
that? Anybody can go in, right?
Mr. Spates. If John Q. Public walked into the post office
and his business is being conducted with a company using a post
office box, they can get information regarding where they are
doing business, if they are doing it from their home. Up until
July 1, yes, anybody can go in there.
Mr. Pascrell. Anybody. So there is no real need to know.
The information is just requested; the information is
presented. Does that make sense to you? Aren't there problems
there?
Mr. Spates. That is our policy. When we applied it on the
CMRA side and went back in history and tried to find out what
triggered that, to put it on the P.O. Box, they couldn't track
how long that was put on post office boxes for information
purposes. Now with a lot of small home offices, they decided we
should pull it from post office boxes and from CMRAs and not
provide that information other than as we mentioned before.
Mr. Pascrell. Do you keep a record as to who asks for this
information?
Mr. Spates. I would have to go back and check.
Mr. Crawford. Not to my knowledge. That is for people who
are doing--like Mike Spates said, individuals doing business
with the public out of that box. The stipulation or the rule
had always been that for business purposes if an individual
contacted the Postal Service to find out who this individual
was, the information was released to them.
Mr. Pascrell. So you want to address the problem of fraud.
You want to--although we do not know statistically, or
anecdotally we have stories, but we don't have numbers as to
how severe the problem is. We know that the problem does exist,
and I think we would be a fool to think that it doesn't.
So I think--it is very easy for me to conclude that what is
on paper for us to react to is almost like a knee jerk reaction
to try to address the problem of fraud without getting an
understanding of what the privacy issue means.
I think if you would go back to the embryonic stages of
this thing, if we would have sat down--if we sit down with the
organizations that I mentioned before, I think a lot of this
could be avoided.
Mr. Crawford. I agree with you 100 percent.
Mr. Pascrell. Now we have a lot of things to make up. And
you understand the questions that are being asked today; they
are very pointed and direct. And they are very real, and I
think they are fair questions. Don't you think so?
Mr. Crawford. I most certainly do.
Mr. Pascrell. How do we preserve privacy and at the same
time have access on the need to know from government agencies
that are dealing in search of crimes? How do we do that? Do you
think that you've resolved that question? Do you think that
you've answered that question up until now, or do you think
that you have a long way to go?
Mr. Crawford. It hasn't been answered, but I don't think
that we have a long way to go to get to a conclusion on that.
What we are doing right now--like Mike Spates has said, ideally
we should have met with all of these groups, but we didn't know
who all of the various groups were.
You know, the process, we thought it was to put the
information into the Federal Register. As Chairwoman Kelly
said, then we are relying on everyone to read the Federal
Register. We were relying on those different organizations that
represent the various groups to read the Federal Register and
pass that information on.
Again, in an ideal situation, we would have known every one
of the facets that we should have checked into. We didn't. That
is why we have gone back. We have met with the different
organizations, and in the process of doing that beginning in
April, former Chief Postal Inspector Ken Hunter--he met
regularly with the various groups and invited--I mean, the
meetings just started to grow and grow because other
organizations were being made aware of this and they were
coming into the meetings.
Mr. Pascrell. Mr. Crawford, tell me where my logic is
faulty here. It would seem to me, before you begin to enforce a
regulation, before you enforce the regulation, that you be more
substantive as to what you are doing. It would seem to me--and
correct me if I'm wrong, I will stand corrected--that we are
putting the proverbial cart before the horse here, and I think
that has caused a lot of problems, and I think you need to
address this.
I think these are very serious problems. In fact, you may
be contributing more in the process that you have highlighted
today--without resolving the privacy issue, you may be doing
more to enhance those who want to break down the privacy in the
United States than you would like to. You may be the greatest
contributor to the dissemination of information that is
nobody's business in your attempt to fight fraud because of how
you have gone through procedurally to get to this conclusion.
I mean, if--you should not start enforcing a regulation
unless you are on sound ground. And your testimony today--and I
think it is candid and I respect your candor--is such that you
either should--and I can't tell you what to do. You either
should remove the implementation of the regulation this
afternoon, or you need to provide to us the data upon which
that enforcement, that implementation exists. Otherwise I
believe that the post office itself, that the department itself
is promulgating rules and regulations that should not be in
existence. I have no other conclusion.
I want to ask you another question.
If a number sign on a box would allow consumers to know the
exact type of establishment to where they are mailing
something, would that--is that part of what we are talking
about here? Is that part of the regulation, as I understand it?
Mr. Spates. We originally had PMB and working with all of
these interested groups, it was going to be PMB--the
recommendation came Private Mail Box or pound sign, one or the
other. You cannot use ``suite.'' You cannot use anything else
that may indicate that it is anything other than a mail box.
When you see a number sign, you may think that is an apartment.
We have what we call 1-800 call centers and the software is
going to be modified because John Q. Public doesn't necessarily
know how to use a computer or have access, can dial up and give
the address if they want to verify if that is a CMRA, and they
will tell you.
That is not going to do you any good unless you do an
education program to let them know what PMB and number sign
mean. The industry and Inspection Service and the Postal
Service operations are going to participate in jointly
educating people, what PMB means and what the number sign could
mean and how you can access information to find out.
Mr. Pascrell. I think what you have heard from us on this
side of the table is that we admire your attempt, Mr. Crawford,
to address the issue of fraud and crime. I think that is
important. There is a lot that goes on in the postal
department, and you want to try to get a handle. But this--like
profiling; you stop cars on a highway because the people
driving the cars look like something. You are punishing
everybody in order to prevent and protect.
I think sometimes you need to do that, but I think you
ought to be a little more careful and your words are clearer
than my words that you haven't been, and I say to you if you
have enforced this regulation with many of these open-ended
questions still in mind, I think you ought to rethink where you
are at this time. You may come back to the same point, but I
think you will have more to stand on and you will have more
supportive evidence, and I really question the direction that
you are going in on this matter.
So I applaud your candor. I applaud--I don't applaud your
conclusion, and I think you ought to take a look at that very
carefully, and then you will have all of us on the same side of
the fence.
We all want to do the same thing, but I don't want you to
punish people simply because they are using the mail or simply
because they are using--the two young ladies that spoke today,
their issues are real and need to be addressed and you've
admitted that they were not addressed before the rules were
promulgated.
Mr. Crawford. Congressman Pascrell, there was no intent to
punish anyone----
Mr. Pascrell. I didn't think there was.
Mr. Crawford [continuing]. In the whole process.
Mr. Pascrell. The intentions may be one thing, but the
results may be another.
Mr. Spates. Hindsight is 20/20. If we knew about these
associations beforehand, we would have sent the Federal
Register notice directly to them. But that does not mean that
we cannot correct past errors in coming up with a compromise.
Mr. Pascrell. You are enforcing the regulations.
Mr. Spates. You have to have the form completed to act as
an agent to deliver. What is not being promulgated right now is
the release of information. That was stopped July 1. The
Private Mail Box designation and the number sign still don't go
into effect until April of 2000.
One thing that has been stopped right now is the release of
any information on privacy awaiting the results--and we haven't
gone through the detailed comments that came up through the
original proposal on privacy.
Mr. Pascrell. You are going to tell us about that? When are
you going to do that?
Mr. Spates. Right now, all I know is the profile of
support, and the major thrust is, as was brought up by the
Coalition Against Domestic Violence, tougher restrictions on
who can get access to the information.
Mr. Pascrell. If you were a governmental agency per se, you
would have to come before the Congress of the United States
before you regulate and before you promulgate the regulations
and enforce them, would you not?
Mr. Spates. I would have to plead--I don't know the laws.
Mr. Pascrell. You are not covered by the law as such, but
the fact is that we are trying tocatch the tail here. We are
trying to hold onto something to try to fix what we think needs to be
fixed. You are trying to deal with crime. We are trying to deal with
crime and yet protect people's privacy and not sweep with a wide broom
and include everybody.
Ninety-nine percent of the folks who have these CMRAs are
honest people. Thank you.
Mr. Spates. I agree with you totally.
Chairwoman Kelly. Thank you, Mr. Pascrell.
Ms. Taylor. May I make a comment?
Chairwoman Kelly. By all means.
Ms. Taylor. As a small business owner who has had the same
address for these past 12 years, the Federal Register is not in
my daily reading. I do good to read the Wall Street Journal and
the Dallas Morning News on a regular basis. But the lack of
dissemination of information by the U.S. Postal Service,
corporate, the agency, to the local postmasters is also quite a
problem.
A lot of people have refused to sign this new 1583 form,
and I was one of them, because by doing so, you are agreeing to
some egregious infringement on how you are going to conduct
your business and privacy. There has been zero communication
from the USPS to the local postmasters and the Postal Service
to the CMRAs about a lot of these changes in that regard. Mail
Boxes Etc. sent out a memo telling about the option, but people
are not understanding.
The Richardson postmaster, where I reside, has tried to
enforce this law refusing to deliver mail in August, and again
as of Friday last week. The U.S. Postmaster needs to
communicate better to the local postmasters to avoid these
types of problems.
Thank you.
Chairwoman Kelly. Thank you very much, Ms. Taylor. I
appreciate your additional comments here.
Actually, I was going to intercede at this point to ask a
question which is exactly what you raised. So I am delighted
that you did it because it is better coming from you. You've
seen the regulations and the information that came from Mail
Boxes Etc., and I think it is important that we hear from you.
That is the purpose of this hearing.
I would now like to go to my colleague from Kansas, Mr.
Moore.
Mr. Moore. Thank you, Madam Chair.
Mr. Crawford, you have identified as one of the primary
reasons for these new regulations to prevent fraud; is that
correct?
Mr. Crawford. Yes.
Mr. Moore. Ms. Fulcher, you are here because you have grave
concerns about privacy for the people who come to the shelters
that your organization is concerned about; isn't that correct?
Ms. Fulcher. Shelters and, in addition, the women who are
not in shelters, but are in hiding.
Mr. Moore. So basically you are concerned about the safety
of women who have been subjected to battering in the past?
Ms. Fulcher. Yes.
Mr. Moore. And you recognize that fraud is a legitimate
concern that Mr. Crawford has, correct?
Ms. Fulcher. Correct.
Mr. Moore. Mr. Crawford, you understand that Ms. Fulcher
represents some grave concerns about the safety of women who
have been battered in the past?
Mr. Crawford. Without a doubt.
Mr. Moore. And you are both willing to accommodate the
concerns about privacy and safety considerations, correct?
Mr. Crawford. Definitely.
Mr. Moore. Ms. Fulcher, you are willing to acknowledge that
fraud is a legitimate concern of the United States Postal
Service, and you want to work reasonably with them on behalf of
your organization to accommodate those concerns and at the same
time protect your constituency, correct?
Ms. Fulcher. Correct.
Mr. Moore. Ms. Taylor, you are concerned about costs as one
of the CMRA box holders, correct?
Ms. Taylor. That is part of it.
Mr. Moore. And privacy?
Ms. Taylor. And also--my main issue is that I have had this
address for 12 years, and they are now saying that they are not
going to deliver my mail, and the cost that would result in,
yes.
Mr. Moore. Right now, Mr. Crawford, I accept your statement
and Mr. Spates' statement that you followed what you believed
to be the rules as far as putting this information in the
Federal Register and inviting comment on these proposed
regulation changes, okay. That is what you did, correct?
Mr. Crawford. Yes.
Mr. Moore. You didn't know about some of the interest
groups that have now come forward at the time your agency
originally did that, correct?
Mr. Crawford. That is correct.
Mr. Moore. Now you are aware that there are many other
groups in the country, or at least some groups, that have some
concerns about these proposed regulations, and you have
indicated that--that was a yes?
Mr. Crawford. Yes.
Mr. Moore. And you have indicated a willingness to try to
accommodate those concerns or at least listen to those
concerns?
Mr. Crawford. Yes.
Mr. Moore. And take those concerns into consideration in
promulgating new regulations, correct?
Mr. Crawford. Correct.
Mr. Moore. I want to get your response for the record.
Mr. Spates. Yes.
Mr. Moore. And right now, just so I understand, the
enforcement of at least a portion of this regulation has been
extended until April of 2000, correct?
Mr. Crawford. Yes.
Mr. Spates. Yes.
Mr. Moore. I am a little unclear about that. Can you
explain to me what portion has been extended to 2000, the
enforcement--or has been suspended, what portion of the
regulation is currently being enforced, if you will, either you
or Mr. Spates?
Mr. Spates. The completion of the form, first of all, to
act as an agent and also to rent a box through that agent, the
deadline has already passed. What was extended to April 26,
2000, was the fact that originally you had to use PMB by that
time.
If I can alleviate some of your concerns about mail being
returned, the original rule had a statement that mail without
PBM will be returned. That has been rescinded. If you are
making a reasonable effort--and we have to depend on our
working relationship with the CMRA--no mail will be returned
that doesn't have PMB, and if it still has ``suite'' because
some of your correspondents are responding to advertising
literature which has been out there for some time, has a long
shelf life, we are not going to return that.
The CMRA industry has agreed when they are sorting the mail
to their customers. If they see a customer that does not have a
PMB on any of their mail, they will put a notice reminding them
of their obligation. It is going to take time to get 100
percent. You know when you get Christmas or holiday cards, some
people still have old addresses, so we are giving it plenty of
time. We are not looking for excuses to return mail.
Ms. Taylor. The intent is one thing, and the reality is
another. I have had problems with the Richardson postmaster.
Intent at the corporate level may be one thing, and in the
field, implementation is totally different.
The interpretation by the people in the field is that--and
by a lot of the Mail Boxes Etc. and CMRA owners is, if your
mail is not changed to the pound sign or PMB, then your mail
will, in fact, be returned.
When you have had an address out there--to be honest, I can
never have all of my mail addressed to #232. It isn't going to
happen. I am too widely known throughout the world. So for them
to even have that stipulation in there is ridiculous. Some
person down here is going to implement it rather stringently.
Mr. Moore. Mr. Spates, do you understand the concern that
Ms. Taylor has?
Mr. Spates. That stipulation has been removed, but you have
30,000 postmasters, and some will go off on their own. The
industry has worked with us and brought to our attention the
cases where they have been ordered to shut down or what have
you. I wrote down Richardson, Texas, and we will follow up.
Mr. Moore. So you can give Ms. Taylor your assurances that
your agency will do its best to try to accommodate her concern
there.
Mr. Spates. We will make sure that accommodation is being
exercised in Richardson, Texas.
Mr. Moore. Ms. Fulcher, would it satisfy some of your
concerns for the privacy and safety of the individuals that
your group represents if a warrant were required, issued by a
judge, before information could be released based upon probable
cause?
Ms. Fulcher. Yes, absolutely. The requirement of a warrant
would solve a lot of the safety concerns that we have.
Mr. Moore. At least an impartial judge would pass on the
information before that information was released?
Ms. Fulcher. Correct. I will point out, as was already
stated, the Form 1583 requirements have gone into effect. At
this point, battered women who are not sure what is going to
happen to their address (and based on the Privacy Act statement
that is on Form 1583, it can be handed out to just about
anybody) are in a situation where they are not receiving mail
because they can't fill out that form not knowing what is going
to be done with the information.
Mr. Moore. I thought Mr. Spates indicated that portion of
the regulation has been suspended as far as nondelivery of
mail.
Mr. Spates. Exactly.
Ms. Fulcher. As I understand it, Form 1583 is required of
the individuals. They had tohave completed that at this point.
Mr. Moore. Is that correct?
Mr. Spates. You had to complete the form. They had the
privacy statement on the back, but the chief operating officer
issued a letter plus a follow-up letter reminding, you will not
release any information to anyone until the proposed Federal
Register statement on privacy is resolved, so they should not
be releasing anything.
Ms. Fulcher. That is a very difficult thing for a battered
woman who is facing a life-and-death situation to trust that
the system will figure out, in the end, a good way to insure
that her information is kept private.
Mr. Moore. You understand that, Mr. Spates?
Mr. Spates. We do.
Mr. Moore. Ms. Fulcher has indicated that a requirement for
a warrant before release of information would go a long way
towards satisfying her concerns. What is your position on that
proposition?
Mr. Spates. I would yield to Mr. Crawford.
Mr. Moore. Mr. Crawford.
Mr. Crawford. That is something that we will take under
advisement. I am willing to discuss any of these issues, and we
will see if that can be done, but that is something that I
would have to discuss with our counsel.
Mr. Moore. I understand that. But there are only three
members here this morning and one is gone now, but Ms.--the
Chairwoman and Mr. Pascrell both have indicated, and I will
tell you that I feel the same way, privacy of American citizens
is a grave concern in these regulations that have been
implemented.
As a former district attorney and law enforcement officer
for 12 years, I place a lot more trust, frankly, in an
impartial judge issuing a warrant and who is there, concerned
for what purpose, what legitimate purpose this information may
be requested, than just some individual at a post office, for
example, or in an agency making a decision about release of
information.
Can you appreciate that?
Mr. Crawford. I do.
Mr. Moore. I guess the question is, in view of the fact
that right now a portion of the enforcement of this regulation
has been suspended until April of 2000, is there any good
reason right now that the remainder of the regulation
enforcement cannot be suspended until some point in the future
until some of these concerns are addressed and resolved?
Mr. Crawford. I would say that based on our experience, we
are pretty much for getting the rules out there. The longer it
is postponed, we will still have people who are being
victimized by the crimes that we have out there.
Mr. Moore. I understand that, and I think even Ms. Fulcher
indicates that she understands that. But there are victims on
the other side as well who might be victimized by the
regulation in effect at the present time. That may include Ms.
Taylor or people represented by Ms. Fulcher. And so my question
is----
Mr. Crawford. From the Inspection Service standpoint, we
are willing to work on anything to try to get this as perfect
as possible.
Mr. Moore. But my question really is, a part of this
regulation has been suspended, implementation has been
suspended. A part of it is already being enforced. So to
resolve the concerns that have been raised here today, my
question to you is, would there be consideration on your
agency's part to suspending the balance of the enforcement
portion of the regulation now in effect until--say for another
3 to 5 months until some of these issues can be addressed and
resolved? That is my question.
Mr. Spates. Enforcement of PMBs is not until April. The
form that you are signing--because the privacy issue is up in
the air, you don't sign the form. I guess I have to check from
the legal standpoint, if you don't sign the form, we cannot
deliver the mail to that address. I would have to check with
the law department on that.
Mr. Moore. I would ask if you would check and let us know
the answer.
[The information may be found in the appendix.]
Ms. Taylor. May I offer an option on that?
Mr. Moore. Certainly.
Ms. Taylor. On my contract on the new 1583 form, I went
through it just like any other legal contract, and crossed out
those parts that I don't agree with, and put my initials on
them.
Mr. Moore. Have you made that a part of the record?
Ms. Taylor. No, but I would be glad to do so.
Mr. Moore. I would like to see what portions of that form
you find objectionable, and I think other members of this
committee would like to see that as well.
Ms. Taylor. I would be glad to do that.
[The information may be found in the appendix.]
Mr. Moore. Any other recommendations, Ms. Fulcher?
Ms. Fulcher. I mentioned in my oral testimony, in addition
to a warrant requirement, we would like to see some very strict
protocol put into place to make sure that those forms, when
they are on file, are kept under adequate security and have
someone in charge to make sure that the decisions to release
that information are correct decisions. And we have even
indicated, as well, that for purposes of battered women and
victims of stalking, it would be good if they could actually
contact someone in the post office to find out if their
information has been released to anyone at some point. If that
is something that they are keeping on file, that should not be
a difficult question to answer.
But our understanding is that these forms will be kept on
file at the individual post offices throughout the country,
which makes security of the information very difficult if there
isn't a very strict protocol in place. You have thousands of
people across the country making decisions about whether to
release that information and what is a valid request, what is a
valid warrant to get that information.
Mr. Moore. If there is a strict protocol in place which
requires issuance of a warrant before release of that
information and some sort of penalties for wrongful release, I
would hope that would satisfy your concerns.
Ms. Fulcher. Yes, it will.
Mr. Moore. Mr. Crawford and Mr. Spates, I don't fault you
or your organization. It sounds like you followed the
procedures in place for trying to publish the notices this
proposed regulation, and sometimes the people don't sit around
and read the Federal Register and I think maybe it is a fault
on our part, meaning Congress's part, for making that procedure
if that is the procedure promulgated by Congress.
But now there have been some valid and legitimate concerns
raised, and I hope that your organization would take the view
that it is appropriate to try to satisfy some of these valid,
legitimate concerns even though they may not have been raised
timely. Can I get your agreement with that?
Mr. Crawford. I agree with you.
Mr. Spates. I agree, and there is a meeting scheduled with
representatives of this group for next week.
Mr. Moore. I thank all of the witnesses.
Thank you, Madam Chair.
Chairwoman Kelly. I just have a couple more questions that
this line of questioning has brought out.
Mr. Crawford, does the Postal Service compete with the CMRA
industry?
Mr. Crawford. No, not to my knowledge. CMRAs actually are
quite a benefit to us because CMRAs have boxes where we don't
have boxes. We deliver the mail to the CMRA, and to my
knowledge, there is no competition.
Chairwoman Kelly. It is interesting that you make that
statement. I am quoting from the Postal Service's 1997
Strategic Plan as mandated by the Government Performance and
Results Act. ``Substantial competition from private mail and
parcel franchise has emerged in recent years. Starting with a
few hundred stores in 1980, this industry has grown to include
7,800 Commercial Mail Receiving Agencies, such as Mail Boxes
Etc., FedEx, United Parcel Service, and other package delivery
services have another 5,300 outlets that are focused primarily
on business shippers. UPS also has contract arrangements with
another 28,000 agents. Together, these companies generate over
$5 billion in revenues.''.
Just a side note, the Postal Service published this
statement the same month it extended the initial comment period
in 1997.
I am very interested that you said that there is no
competition. I wonder how you say that has changed--has the
system changed somehow since 1997?
Mr. Crawford. The Postal Service is working with MBE. They
pilot programs with MBE, and they are working in partnership.
Chairwoman Kelly. Mr. Crawford, you included FedEx, United
Parcel Service and other groups that are in the private mail
business in this statement; they were included. Now you are
telling me that you are only working with MBE.
Mr. Crawford. That is not my statement. That is the
Strategic Plan for the Postal Service. You didn't say that was
my statement, did you?
Chairwoman Kelly. No. I said I was quoting from the Postal
Service's Strategic Plan, but you do work for the Postal
Service?
Mr. Crawford. Yes, ma'am.
Chairwoman Kelly. I assume in your capacity here before the
Committee today, you probably have read this and understand it.
I asked you a question and you gave me an answer that I
don't think is in compliance with what is indicated here in
1997.
Mr. Crawford. Chairwoman Kelly, you asked me if I saw
competition between the Postal Service and the CMRA industry,
and I answered it as best I could. I do not see where we are in
competition with the industry. Postage----
Chairwoman Kelly. I am glad to hear that. There was a
brochure, if I went into a post office--I saw this in my post
office. It said, ``Apply for Post Office Box Service, the Safe
and Convenient Way to Get Your Mail.'' ``This was in an October
8, 1998 Postal Bulletin. Can you define ``safe''? Safer than
what?
Mr. Spates. I am not familiar with the brochure, but there
have been cases with curb line mailboxes where there has been
theft from the mailbox that ``safe'' was aimed at that, people
getting access to the box.
We use the same type of promotion where you see cluster
boxes, 15 or 16 boxes that lock. This is a way of having your
mail delivered to you behind a lock as opposed to your standard
curbside mailbox. That is safe.
Chairwoman Kelly. So you are saying that people who have
rural route boxes and people who have cluster boxes and boxes
in apartments and so on, they are in an unsafe alternative to
the Post Office box?
Mr. Spates. No, I am not saying that at all. We have had
cases that received publicity, such as in Seattle where a group
was breaking into the box and stealing mail before the customer
got home to pick it up. That is what they are aimed at. They
say it is a safe way; especially if you travel and are away
from home for 2 or 3 days at a time and you don't have them put
it on hold, a post office box is an option.
Chairwoman Kelly. The implication--it sounds to me like you
may not feel the delivery that you are giving us is necessarily
safe, if I just distill it down to a very simplified version of
what you have said.
You don't feel that this comment is in any way headed
toward the CMRA industry?
Mr. Spates. No, ma'am, I don't. I will verify with the
author of that letter. From a delivery standpoint, the CMRA
industry does the post office a lot of good.
As Mr. Crawford mentioned, we deliver the mail in bulk and
they sort it, and if they have 250 customers, they are sorting
it to the customers. If we are in competition, I have never
seen any--outward competition with CMRAs as far as the
mailboxes themselves, because we didn't have enough to go
around; and in the locations we are, they are not.
Chairwoman Kelly. Mr. Spates, we have obviously got a vote,
and we are going to have to go vote. But I want to ask one
quick question, and I want a fast answer on this.
Last Monday this committee gave you the letter that I
believe came from the postmaster that Ms. Taylor was referring
to, and we gave that letter to you. What have you done since
last Monday to help Ms. Taylor?
Mr. Spates. I had a member of my staff contact the
postmaster in Richardson to take care of that situation. We had
two letters handed to us. One was Richardson, Texas; and I
can't remember the other one.
Chairwoman Kelly. You are now--as Mr. Moore pointed out--
you are now thinking about what you are going to do in terms of
specific penalties regarding postmasters who do not observe
what the letter of what your rule will be?
Mr. Spates. I don't think that we need to look at
penalties. I think they need to make sure that they are
informed how the regulations should be applied.
Chairwoman Kelly. What will you do if they don't comply?
Mr. Spates. We go to their vice president and make sure
that they comply. The industry has provided us with letters
similar to the one that she received in Richardson, but it has
been less than a dozen. There was an education program that
went on. We will make sure that people are properly educated.
Chairwoman Kelly. At this point, I will stop this panel.
However, I am holding the hearing open for further questions on
this issue. You will be receiving some questions from them, and
I want you to be prepared to please give us the answers.
Thank you all very much for appearing here today. This
panel will end, and when we return from the vote, we will begin
the second panel. Thank you.
[Recess.]
Chairwoman Kelly. I am going to get started here. There are
other people who are moving around, who are asking how this
hearing is going. It is going, and so we are going to continue
on right now with you, Mr. Morrison. We have our second panel.
I thank all of you for being with us here today.
We have in our second panel, Mr. James Morrison, Senior
Policy Adviser of the National Association for the Self-
Employed; Mr. Michael Mansfield, Assistant District Attorney
for Queens, New York, Chief of the Economic Crimes Bureau; Mr.
Rick Merritt, the Executive Director of Postal Watch
Incorporated; and Mr. Ed Hudgins, Director of Regulatory
Studies of the CATO Institute.
I thank you all for being here today and let's go to you,
Mr. Morrison.
STATEMENT OF JAMES MORRISON, SENIOR POLICY ADVISOR, NATIONAL
ASSOCIATION FOR THE SELF-EMPLOYED
Mr. Morrison. Good morning, Chairwoman Kelly and members of
the subcommittee. I am James Morrison, the Senior Policy
Advisor to the National Association for the Self-Employed. On
behalf of the Nation's more than 16 million self-employed
individuals, we want to thank you for reviewing this important
issue.
Never, since I began working with the NASE in 1991, have I
personally seen an issue that stirred more extensive and
spontaneous member concern. We have attached to the written
testimony a typical member letter from Judith and Thomas Coates
in Washington State. They have published a dozen books and
circulated more than 20,000 brochures, including reply
envelopes with the designation ``suite'' in their return
address, as they were told they could. Now they and others like
them stand to lose a substantial portion of their business.
Reply mail bearing the ``suite'' designation will be returned
to its senders as undeliverable.
Why? Why would the Postal Service adopt rules that would
devastate thousands of law-abiding small businesses. The Postal
Service believes its actions are needed to prevent postal
crime.
No one disagrees with the goal of fighting crime. All of us
respect the work that the postal inspectors do. Like all law
enforcement officials, they are courageous public servants who
deserve our support and thanks. The postal crime that they are
trying to root out is certainly a major problem. But how best
to combat that crime?
Ms. Kelly, no one objects to allowing law enforcement
officers on additional duty learning the identity of PMB
renters, monitoring unusual or suspicious activity at a PMB or
fostering a closer working relationship between the CMRAs and
the postal inspectors. But in our written testimony we
suggested some types of postal crime, including telemarketing
and Internet fraud, identity theft and credit card fraud, that
might be more easily prevented in ways that the PMB rules
especially do not address, such as giving credit card companies
access to Postal Service databases on CMRA locations, taking a
closer look at post office change-of-address forms, providing
better training to CMRA operators, and improving the
cooperation between CMRA operators and the postal inspectors.
The PMB rules should avoid imposing costs on legitimate
businesses unless those costs represent the best way to fight
crime, because we need to deter crime in ways that are targeted
and effective to avoid wasting law enforcement resources. In
ways that will build public support for law enforcement, not
erode it. And in ways that would burden would-be criminals
without unnecessarily burdening the law-abiding. In ways that
can be shown to work. That is the nub of the problem with these
rules.
The NASE believes that the PMB rules are flawed not because
there is no crime problem, but because the process that
generated these rules is so flawed that no one can have any
confidence in them.
We can all agree, I think, that the rules impose a burden.
What we cannot know, because the rules do not provide the
information necessary, is whether that burden is appropriate or
necessary. We don't know in large part because USPS has been
given so many exemptions from the rulemaking laws that apply to
the rest of the Federal Government. From the Administrative
Procedure Act, the core Federal statute governing rulemaking.
From the Paperwork Reduction Act. From the Regulatory
Flexibility Act and from the Small Business Regulatory
Enforcement Fairness Act, Congress's bill of rights for small
business.
All of these exemptions mean that USPS is not even required
to empirically justify its regulations, let alone to seek and
weigh public comment. With the PMB rules, USPS did solicit
public comment, but then they basically ignored what they
didn't want to hear.
Over 8,000 people objected to the first set of rules. And
what did USPS do? They spent entire pages of the Federal
Register dwelling on the 10, yes, 10 comments that they
received favoring the proposal. There are also major
disconnects between the problems as originally stated and the
solutions proposed.
Our written testimony goes into that in more detail. But
suffice it to note that the initial proposed rule did not
mention the following terms: mail fraud, identity theft, or
even crime. So now we are facing Postal Service rules imposed
on perhaps 2 million renters of private mailboxes, many of them
small businesses, but we lack a few things. We lack any
regulatory flexibility analysis of the rules. We lack any
definition of small business, any analysis of small business
impact, and we never had any outreach to PMB renters who are
small businesses. Nor did we have any frank acknowledgment that
the USPS does in fact directly compete with CMRAs. Above all,
there was no honest effort to surface less burdensome
alternatives for small businesses.
USPS says that CMRA fraud has grown. Perhaps so. But CMRAs
themselves have grown exponentially. Is fraud as a percent of
the CMRAs growing or declining? We are also missing a few other
data elements such as any hard data on mail fraud, identity
theft or other postal-related crimes; any empirical breakdown
of how, where and by whom such crimes are committed; any
statistics on postal crimes committed through CMRAs compared to
those committed through private households, USPS post office
boxes, apartments, executive suites, or other addresses.
In sum, USPS has no baseline from which to measure the
success or failure of any CMRA rule it implements. So when the
Postal Service says these rules will stop postal crime the
obvious response is, ``how do you know?'' And even if the rules
do help prevent crime how can anyone know whether a better
approach to stopping crime has been overlooked?
USPS evidently intends to reopen part of this rule.
According to a press release last week, USPS now proposes to
give PMB renters two options--use the PMB designation in the
return address or the number sign. But people and Mr. and Mrs.
Coates who have used suite in their catalogues and reply
envelopes will still be out of luck. And why? Well, lately USPS
has talked less about crime and more about suite designations
as being, quote, unquote, ``misleading.''
If the powers of the Federal Government now will be brought
to bear on misleading addresses, especially in light of Mr.
Spates' statement a moment ago that anyone will be able to dial
an 800 number and find out whether an address is in fact a
CMRA, well, we can think of a few other misleading addresses
besides those used by entrepreneurs that should also get
scrutiny, and some of those are in our testimony.
We look forward to seeing USPS's empirical justification
for the rule, but chances are there won't be one. Most likely
we will hear again about USPS' many exceptions from the laws
that apply to the rest of the Federal Government. And there is
no assurance that USPS will not engage in similar activity
again in the future. Far from it. Given the Postal Service's
first class mail monopoly and life or death grip on businesses
that depend on the mail for their cash flow, given its power to
regulate many of its own competitors such as the commercial
mail receiving agencies, given its exemptions from every
regulatory law that counts in this country and given its for-
profit status, given all this, there will someday be a
disastrous misuse of this regulatory power--if not on this
issue this time, then on another issue another time.
The whole PMB fiasco shows that Congress should revisit the
legal framework under which the Postal Service regulates the
public. This Committee which shares legislative jurisdiction
over the Regulatory Flexibility Act with the Judiciary
Committee ought to lead the way.
Chairwoman Kelly. Thank you very much, Mr. Morrison.
[Mr. Morrison's statement may be found in the appendix.]
Chairwoman Kelly. I have been informed of a change in the
floor plan for the things that are going to go on the floor of
the House today, and I am going to have to ask you all to limit
your statements to 5 minutes or less in order to be able to try
to fit the rest of this hearing into the floor schedule today.
Mr. Mansfield.
STATEMENT OF MICHAEL MANSFIELD, ASSISTANT DISTRICT ATTORNEY,
QUEENS, NEW YORK, CHIEF OF ECONOMIC CRIMES BUREAU
Mr. Mansfield. Thank you, Madam Chairperson.
Actually, my comments take somewhat longer than that, so I
will try to skip through them and be as brief as possible.
As an Assistant District Attorney of Queens County I am in
charge of the Economic Crimes Bureau for Richard Brown, the
District Attorney of Queens County. District Attorney Brown
represents a constituency of almost 2 million people. Our
office prosecutes approximately 60,000 cases a year, running
the gamut from homicides, rapes, to quality-of-life crimes such
as prostitution and the like.
In addition, we play a significant investigative role in
such areas of criminal conduct as narcotics trafficking,
organized crime, labor racketeering and economic crime.
I very much appreciate the opportunity to speak here today
in support of the Postal Service's regulatory changes
concerning CMRAs, and I want to take this opportunity to thank
the Postal Inspection Service on behalf of the prosecutorial
law enforcement community for its aggressive investigative
efforts in the fight against white collar financial crimes.
However, Madam Chairperson, we in the City of New York are
fighting an uphill battle against these criminals based on the
current regulations concerning CMRAs.
To paraphrase that famous bank robber from the 50s, Willie
Sutton, whose response to the question why he robs banks was
because that is where the money is, similarly financial crime
thieves use CMRAs because that is where the money goes. And go
it does. The losses attributable to identity theft and other
forms of account takeover number in the billions of dollars a
year, not to mention the financial havoc that is visited upon
the consumers who are the victims of these crimes. I know from
my 16 years of being an economic crime prosecutor that it
sometimes takes years for these victims to undo the damage done
to their credit status.
What I wanted to speak about today is, over the past 4
years my office, in conjunction with the Postal Inspection
Service, Federal and State law enforcement agencies, has
dismantled four multi-million dollar financial fraud
enterprises who owed their very existence and survival to the
many CMRAs which operate in the New York metropolitan area.
The problem with criminal use of CMRAs has become so
widespread that the prosecutions that we have conducted in
Queens County have drawn the attention of national media,
including numerous newspaper and magazine articles as well as
being featured on 60 Minutes and other news magazine shows.
Our four investigations, dubbed Operation Silver Parrot,
Operation Mail Stop, Operation Black Leather and Operation
Nigerian Express, involved highly structured ethnic organized
crime groups that used New York City as their base of
operations, but their criminal activity extended throughout the
United States. Indeed, they had the opportunity to operate
wherever a CMRA existed.
Briefly, Operation Silver Parrot was an 8-month
investigation that resulted in a 200 count indictment under our
State's equivalent of the Federal Rico Statute, charging eight
Nigerian nationals with operating a multi-million dollar fraud
ring that specialized in the theft of credit identities of
thousands of people throughout the United States.
The individual who was responsible for that ring, Olishina
Adecombie, received a 10-year prison sentence for his role in
that enterprise; and that was based on his cooperation with our
office.
Basically, the tactic used by this ring was to obtain
personal information about a potential victim from a number of
sources. It is commonly known as identity theft. And they would
then divert that individual's mail to a CMRA. The ring
systematically drained the victim of all available cash and
credit from their accounts--from home improvement accounts to
pension lines--even to the point of using one victim's frequent
flier miles that he had accumulated.
Since that time, some of the loopholes that permitted that
and those crimes to occur have been plugged by the Postal
Service. And the leader of that group, when we interviewed him,
indicated that he made $8 million during the course of our
investigation and the time prior to it in the area of identity
theft and his use of CMRAs.
As a result of that prosecution, we in the law enforcement
community learned a lot about identity theft rings and their
use of CMRAs. And under the adage ``if you can't beat 'em, join
'em,'' we decided to commence a sting operation where we set up
our own CMRA which was manned by undercover postal inspectors,
Federal agents and detectives from my office. I am happy to say
that early this year we convicted the last of the 13 defendants
in Operation Mail Stop who comprised a ring of West African
nationals who were again prosecuted under our State Rico
statute.
As its name suggests, Operation Mail Stop was a major
financial fraud ring whose success was only possible because of
the extensive and pervasive use of CMRAs by the criminal
element.
And reminiscent of Kevin Costner's movie Field of Dreams,
``if you build it they will come'' our experience was not only
that they came to our CMRA but they came in such overwhelming
numbers that we were forced to concentrate our efforts on only
one of many rings there were operating out of our CMRA. In this
case, stores and other financial institutions were contacted
directly by the criminals and diverted the mail directly from
the individual financial institutions directly to the CMRAs.
We obtained court-ordered wiretaps. We were able to track
this ring. They were calling up credit bureau reporting
agencies, having copies of people's credit reports sent to the
CMRA and then would systematically drain that individual's
entire financial profile.
If I could go on to our third example which was operation
Black Leather. This again was a multi-million dollar fraud ring
operating in New York, New Jersey----
Chairwoman Kelly. Excuse me, Mr. Mansfield. That amber
light means you have about 1 more minute left.
Mr. Mansfield. I will be quicker then, Madam Chairperson.
My time is already up.
But briefly in that investigation that was a merchant bust-
out scheme where all the members of the ring set up phony
storefronts using CMRAs as their base of operations. Our entire
investigation brought us back to CMRAs. It took us
approximately 8 months to complete that investigation.
Again, in that case we had one Westchester resident, a
Sister Margaret Mary, a Dominican nun who noticed on her credit
card bill that she was charged for the purchase of a leather
coat from Queens, New York. She ended up being a very credible
witness for us because she never even tried one on, much less
purchased one.
I won't go into the last one because I see my time is up,
Madam Chairperson. But from the perspective of law enforcement,
particularly in the city of New York, if we don't have the
ability to track people who are renting boxes at CMRAs and
engaging in criminal conduct, as well as being able to identify
boxes that are actually at homes as opposed to CMRAs, our job
in fighting financial crime will be that much more difficult.
I thank you for your time.
Chairwoman Kelly. Thank you very much, Mr. Mansfield.
[Mr. Mansfield's statement may be found in the appendix.]
Chairwoman Kelly. Mr. Merritt.
STATEMENT OF RICK MERRITT, EXECUTIVE DIRECTOR, POSTALWATCH
INCORPORATED
Mr. Merritt. Chairwoman Kelly and distinguished members of
the subcommittee, thank you very much for this opportunity to
appear here before you today.
My name is Rick Merritt. I am the executive director of
PostalWatch Incorporated, a small business owner and a long-
time private mailbox customer. PostalWatch is a grass roots
organization founded in order to provide to the small business
community a voice in postal-related issues such as this.
Speaking on behalf of our membership and all of the small
businesses that utilize private mailboxes, we commend the
Subcommittee's tenacious pursuit of regulatory equitability on
this issue.
For the record, PostalWatch strongly opposed the U.S.
Postal Service regulations published in the Federal Register on
March 25th, 1999, governing Commercial Mail Receiving Agencies. We are
of the opinion that the Postal Service enacted these regulations
without any documented justification and that the procedural processes
surrounding their enactment continues to be so egregiously flawed that
these regulations should be rescinded in their entirety immediately.
At this time I would like to provide special thanks to
Congressman Ron Paul and Congressman Todd Tiahrt for their
efforts on behalf of overturning these regulations as well.
Attached to my written testimony is a CATO Institute
briefing paper which contains a table entitled ``Cost of New
Postal Regulations.'' This table is an estimated ``Range of
Direct Costs'' to small business during the first year of these
regulations. Since its publication, the Postal Service has
repeatedly attempted to discredit this estimate by charging
that the assumptions used in the estimate were unsupported and
inflated. I would argue that the direct cost estimates are, in
fact, conservative. I would further argue that the direct cost
represents but a fraction of the total economic impact these
regulations will impose on small business. The future value of
``Lost Opportunities'' and ``Future Revenues'' could easily add
an additional $1 billion if not $2 billion to the total cost
imposed by these regulations.
The real cost of these regulations, however, is not
measured in dollars but in human suffering. Please make no
mistake. The Postal Service is actually putting people out of
business with these regulations.
The Postal Service is quick to point out and leverage the
truly sad human suffering and economic devastation caused by
the crimes of mail fraud and identity theft. They fail,
however, to acknowledge the truly devastating effect that these
regulations will impose on potentially millions of Americans
and their families. A small business is, for the most part, a
family institution that represents the hopes, dreams and, many
times, the life savings of several family members. Starting and
operating a small business is an emotional experience that
requires long hours, unrelenting dedication and personal
sacrifice.
The following are excerpts from a few of the hundreds of
individual stories we have received from our members on how
these regulations are impacting their lives and livelihoods.
A small business owner in San Antonio, Texas, wrote, ``the
new regulations were the last straw. Our private mailbox outfit
went out of business. They made arrangements to transfer their
mailbox holders to another firm right down the street. However,
the Postal Service has been holding our mail for a week now and
will not release it to anyone. Do you have any suggestions as
to how we might get our mail, checks and orders? The Postal
Service just says, `We have not decided what we are going to do
with the mail yet.' They do imply, however, that if we get a
P.O. box from them the mail would instantly appear in the
box.''
Another boxholder wrote, ``it is beyond my ability to know
how to make these ridiculous changes. I am a divorced mother of
three children trying to make a business to support my family,
and the government will put me out of business. Please explain
that one to me.''
A CMRA in Fresno, California, wrote, ``I am a CMRA who is
about to go out of business due to the cancellation by my
mailbox holders who are furious about this insane regulation
and the invasion of their privacy.''
A CMRA in Baltimore wrote, ``with boxholders dropping like
flies, closing boxes because they are fed up with the rules,
funds are dwindling, just what the Postal Service wants: Put
the competition out of business.''
A boxholder in Arizona wrote, ``I am married to a diabetic.
He has had eight operations since October. He is now on
dialysis four times a day. Besides taking care of him every
chance I get, I work most days from 6 a.m. to 10 p.m. Now the
Post Office comes along and says, fill out this form. They want
to know everything about you except the color of your kitchen
sink, and they want you to change your address and advertising.
I have been in business 17 years and have acquired
approximately 300,000 clients, businesses and vendors. What on
earth is going on here? This regulation must be stopped
immediately.''
In conclusion, I would like to say that millions of small
businesses are being forced to absorb a huge economic burden to
solve a perceived problem the Postal Service has not even
bothered to define. Without collecting the criminality
statistics about CMRAs prior to enacting these regulations
there will be absolutely no way to ever determine if these
regulations were effective at anything other than terrorizing
millions of small business people.
This regulatory action on the part of the Postal Service by
decree cripples thousands of its private sector competitors,
imposes a huge unfunded mandate on small business and tramples
the privacy rights of 2 million law-abiding American citizens,
without as much as a token attempt at justification, cost-
benefit analysis or demonstrating the existence of any
compelling public interest.
The fact that these onerous regulations found their way so
easily into law makes a compelling case for Congress to repeal
U.S. Code Title 39, section 410, which grants the Postal
Service an exemption from the Administrative Procedures Act and
thus all other statutes that protect the American people from
runaway regulatory agencies.
This concludes my testimony. Thank you for this opportunity
to appear here today. I would welcome any questions.
Chairwoman Kelly. Thank you very much, Mr. Merritt.
[Mr. Merritt's statement may be found in the appendix.]
Chairwoman Kelly. Mr. Hudgins.
STATEMENT OF DR. EDWARD L. HUDGINS, DIRECTOR OF REGULATORY
STUDIES, CATO INSTITUTE
Mr. Hudgins. Thank you for the opportunity to testify today
on the problems of the new CMRA regulations. I will summarize
my testimony which will echo some of my colleagues.
The sloppy, capricious and arbitrary manner in which the
Postal Service has made and implemented these regulations have
harmed small businesses. The new regulations illustrate why the
Postal Service, a government monopoly with regulatory powers
that it can use against its competitors, at minimum should be
made fully subject to the Paperwork Reduction Act, Regulatory
Flexibility Act, and other government statutes that are meant
to protect citizens from abuses by government. If it had been
so subject we probably wouldn't be having this hearing today
because many of these issues would have been vetted earlier. I
also think that the new CMRA regulations should be repealed.
Take a look at the process by which the new regulations
have been made. I will just highlight some of the problems.
First, the Postal Service has ignored the will of the
people--8,100 comments against, 10 in favor. It went with the
10.
Second, the Postal Service failed to demonstrate the
magnitude of the problems.
We found an Inspector General report that indicated that in
a 1-year period there are 9,642 convictions for mail-related
crimes, of which 1,533 involved mail fraud or about 16 percent
of the total. But there was no breakdown about how many of
those cases involved CMRAs versus home addresses versus post
office boxes.
Third, the Postal Service has failed to show exactly how
the new regulations will deal with the mail fraud problem.
Fourth, the Postal Service has failed to determine whether
the costs of its regulations in fact outweigh the benefits. If
in fact the costs are a billion dollars and there, let's say,
are about 1,000 cases involving CMRAs, that is about $1 million
per case. Is that too much? Too little? We don't know.
Fifth, the Postal Service has failed to seek the
regulations that had the least costly impact on small business
as it would be if it were under the Paperwork Reduction Act.
Sixth, the Postal Service has shown a reckless disregard
for the privacy of the citizens. Its March 25th posting
indicated that in fact it would be releasing confidential
information to the public, but this seemed to fly in the face
of its own Title 39 regulation in the Code of Federal
Regulations.
Seventh, the Postal Service seems to be making up the
regulations on the fly, as it goes along. Interestingly enough,
it seemed to realize that it was violating its own privacy
rules because on June 9th it had another posting in the Federal
Register basically saying that it now would release the
information to anyone who walked in and asked for it. And then
on August 26th it rescinded that proposal and changed it again.
Eighth, the Postal Service has denied to many enterprises
the opportunity to comment on the regulations to which they are
subject. It was only on April 29th in a memo from Patricia
Gilbert of the U.S. Postal Service that it declared that
executive office suites and other mail forwarding enterprises
would be subject to these regulations. Those enterprises never
had a chance 2 years ago to comment on them. And, of course,
the Postal Service has made no attempt whatsoever to show that
any cases of mail fraud have originated from executive office
suites.
Ninth, the Postal Service has been erratic and inconsistent
in its enforcement.
And I will call your attention to the case of Ms. Sabiha
Zubair, who operates a CMRA franchise in northern Virginia. She
has gone from having 221 boxholders to 159 boxholders because
of the harassment by the local Postmaster. She has lost 30
percent of her business because of these regulations.
I want to put into the record the letter from the local
Postmaster to this woman that almost shut down her business.
Tenth, I do believe the Postal Service uses its regulatory
authority against its competitors.
Eleventh, this latest incident gives small businesses and
large a preview of what can be expected in the future. The U.S.
Postal Service has been losing a lot of profitable first-class
mail to faxes, e-mails and private carriers. Its own numbers
indicate that when electronic billing is fully implemented in 5
to 10 years it could lose $15 billion in revenue off of a base
of $65 billion.
In recent years, the Postal Service has begun to offer many
services that are not part of its mail monopoly--for example,
check-clearing operations, e-commerce operations, et cetera.
And, of course, the Postal Service is competing head to head
with private businesses, yet it is not subject to taxes and not
subject to most government regulations. It can borrow from the
U.S. Treasury, and it has regulatory authority against its
competitors.
In the future, I think you are going to see a lot more of
these kinds of regulatory problems.
The examination that is going on right now should have
occurred 2 years ago. If the PostalService had been subject to
other government regulations, it would have.
Ultimately, the only answer to these problems is going to
be privatization. New Zealand and Sweden have both privatized
their Postal Services. The largest postal carrier in Europe,
the Germany's Deutsch Post, is going to be making an initial
stock offering next year of its shares, and it is going to be
removing its monopoly on January 1, 2003. Also, in Germany,
there is an independent regulator to regulate not only Deutsch
Post but its competitors. But until we privatize the Postal
Service in this country I think the minimum action should be to
make the Postal Service subject to all of the other safeguards
that other government agencies are subjected to and, that the
CMRA regulations be rescinded immediately.
Thank you for your attention.
Chairwoman Kelly. Thank you very much, Mr. Hudgins.
[Mr. Hudgins' statement may be found in the appendix.]
Chairwoman Kelly. Mr. Hudgins, you have a letter that you
would like to insert in the record. We are delighted to accept
that with unanimous consent.
[The information may be found in the appendix.]
Chairwoman Kelly. At this point, we have been joined by my
colleague from New York, Mr. Sweeney. Do you have a statement
you would like to make?
Mr. Sweeney. Yes, I would.
First, let me congratulate and thank the panelists for
being here.
Madam Chairwoman, everyone wants to reduce fraud.
Unfortunately, as I believe the testimony--what we have seen
today, what I have read of it, this rule opens the door for
identity theft and invasion of privacy and threats of violence.
In my district alone just yesterday I found out a
constituent of mine, Mr. Greg Tucci, who is an owner of a
company in Granville, New York, a commercial mail receiving
agency, was effectively shut down and put out of business by
the postal authority. And I am outraged by that. The Postal
Service not only stopped his delivery service, but they are
also holding his mail. And effectively--and they have done that
because all of his customers have essentially refused to fill
out the revised PS form 1583.
So, with that in mind, I would like to submit my formal
statement, and I do have some questions.
Chairwoman Kelly. Your statement is accepted.
[Mr. Sweeney's statement may be found in the appendix.]
Chairwoman Kelly. Mr. Sweeney, if you don't mind allowing
me the prerogative here of the chair, I would like to ask one
question of Mr. Mansfield.
Mr. Mansfield, you testified continually referring to
identity theft as going through financial institutions. The
financial institutions as I understand it can and do purchase a
delivery sequence file, and the file shows a financial
institution whether or not an address is a CMRA. So why aren't
the banks and the credit card companies using this?
Mr. Mansfield. Madam Chairperson, I think you would have to
address the financial institutions in that regard.
But I do know from speaking with them, what they have said
to me when I have said many of the same things to them, they
have said, well, we have a number of legitimate cardholders
that use CMRAs. When I give examples of all the fraudulent
users of CMRAs--obviously, I am a prosecutor; that is a lot of
all I see. But there are, as you know, a vast majority of
individuals who are legitimate users of CMRAs.
They said, we have people who, for the reasons set forth
like this morning with the woman discussing domestic violence
and the like, who have legitimate reasons for using CMRAs. So
financial institutions will not block deliveries to CMRAs
though even small businesses are affected by fraud occurring in
CMRAs.
In one of the investigations that I didn't get an
opportunity to speak of, but it is in my testimony, orders were
being placed with many small businesses that operated on the
Internet and had mail order catalogue businesses and that
merchandise was being sent to the CMRAs by the criminal
element. And then, either the checks they sent or the cards
they were using were bad--the small businesses ended up
suffering the losses. And these losses have to do with the
regulations concerning credit cards when there is actually not
a signature on file that the Internet company or the mail order
company uses the credit cards at their peril.
Chairwoman Kelly. I am just interested in your perspective
on what responsibility you feel that the banking institutions
and department stores and people who issue credit cards have to
investigate where they send their mail?
Mr. Mansfield. Well, they clearly have to be more vigilant.
After the last investigation that we had completed, my boss,
District Attorney Brown, testified before another Senate
Committee concerning regulations that the Postal Service has
since put in effect to stop our first crime wave, if you will,
from occurring, and those regulations were put into effect.
With respect to the financial institutions, they clearly
have to be more vigilant when they are given a change of
address form to divert someone's mail. But I think imposing on
the financial institutions the responsibility that they should
stop sending mail to the CMRAs would have an effect on those
that are legitimately using the CMRAs also.
Chairwoman Kelly. Don't you think it would be an effective
solution to have the financial institutions verify an address
change? You know, why don't they just call a person and find
out, ``Did you change your address?'' Or you know, it seems to
me that I get calls all the time because of the erratic use of
my own personal credit cards. I only have two, and I use them
erratically, and, inevitably I get a telephone call from the
credit card company saying, is this really you? Did you really
use this? If the credit card company can do that, it seems to
me that other credit-issuing organizations ought to be able to
pick up the phone and just check, the same way that my credit
card people do. Do you have any explanation for that?
Mr. Mansfield. Let me give you an example of one way that
that will not work. On one of the rings that we prosecuted the
way they started getting the person's credit information was
they first went to the credit reporting agencies, Equifax, TRW,
Transunion, and they said that my husband lost or was denied
employment or my husband was denied credit and we would like a
copy of our credit bureau. Under the Fair Credit Act, they are
required to send that out. They said, by the way, I have moved;
and they gave the address of a CMRA to the credit bureau.
Now, that is through the credit reporting agency. So now
the credit reporting agency thinks they are updating their
file, oh, we will update our files now. We are putting this
other address down. Then when the credit bureau was sent to the
CMRA, the criminals would then go to the individual department
stores or the individual financial institutions and say--I want
a new credit card sent to me. I have a new address. If that
credit institution were to verify the change of address, one of
the things they would do is pull the TRW or pull the credit
bureau and, lo and behold, that credit bureau have the same
change of address.
In other cases, they were even changing the victim's
telephone numbers to numbers that were controlled by some of
these criminal organizations.
So the short answer to the question is, yes, there is a lot
financial institutions can do, but I think there is a lot that
we, as government officials, are able to do also to prevent
this kind of thing from occurring. The individuals are not
suffering, by and large, financial losses, but just dealing
with some of these people, what has happened to their credit
ratings, it takes them years to get it back.
Chairwoman Kelly. And that still doesn't answer the
question of why the credit bureaus don't pick up the phone--
they are carrying a great deal of information about all of us
in computers in the sky somewhere, and it seems to me that we
ought to have some kind of information check. If somebody is
changing their address, their telephone number, then
legitimately if you pick up the phone and call and say, is this
you, did you change your telephone number, did you change your
address, I think that there is certainly some obligation they
must carry.
I have lived in the same house for almost 39 years now. I
have actually had four addresses. I don't change my address.
The post office changes my address.
That brings me to a question I wanted to ask about this
regulation. Do you think that by tightening its controls in the
way that the post office did that you think it is a way for
them to deter fraud? Why are they aimed only at the small
businesses using the CMRAs? I think that you ought to be able
to include other regulations that don't destroy legitimate
small businesses.
Mr. Mansfield. Are you asking me that question, Madam
Chairperson?
Chairwoman Kelly. Yes.
Mr. Mansfield. Which specific regulation are you referring
to? Are you referring to the fact that identification should be
used to open it, the fact that they should have a PMB
designation? Because I think the answers to each regulation are
somewhat different.
Chairwoman Kelly. Well the USPS has changed their own rule,
so they have a move verification letter that is sent back to
you if you have a change of address form. Wouldn't that suffice
for what we are talking about here?
Let's let anybody else on the panel jump in on this one. Go
ahead, Mr. Mansfield.
Mr. Mansfield. I'm sorry, in terms----
Chairwoman Kelly. If they had a verification letter or a
verification telephone call, wouldn't that suffice to stamp out
fraud?
Mr. Mansfield. In terms of the financial institutions doing
it? Well, the Postal Service----
Chairwoman Kelly. The Postal Service just changed their
regulation to include this.
Mr. Mansfield. That was the result of testimony by District
Attorney Brown before another Committee where that was the very
problem that caused the first ring that we prosecuted to exist,
that they were wholesale changing addresses with the Postal
Service. I imagine what you are asking me is could we have a
move verification letter with the financial institutions.
Chairwoman Kelly. And with any other----with the, as you
say, the credit companies, anyone who has credit information,
any department store that issues credit cards, all of those
people could send verification letters or make verification
telephone calls, could they not?
Mr. Mansfield. They probably could. I don't know what that
would do to the cost of our credit cards. But that also doesn't
address the issue of when criminals open up PMBs, operate them
as suites and then apply for credit cards and conduct fraud
right out of that location when they are not actually changing
someone's address--you know, just bilking the consumers also.
Chairwoman Kelly. You mean originals.
Mr. Mansfield. I have only addressed the identity theft
issues. We have--as an economiccrime prosecutor, I have a host
of consumer-fraud-related problems that occur also. They are not as
large as the issues involving identity theft, but they also exist at
CMRAs. And those don't involve changing somebody's address.
Chairwoman Kelly. I see both Mr. Merritt and Mr. Hudgins
would like to jump in here. Feel free.
Mr. Merritt. Madam Chairman, I would ask Mr. Mansfield, has
he ever encountered an identity theft problem where a CMRA was
not used, but an apartment complex or a small office was used?
Mr. Mansfield. Sure, we have.
Mr. Merritt. So this is not exclusively a CMRA problem but
there seems to be some feeling although no statistics that show
it, that it is more prevalent at CMRAs than any other
particular type of address.
Mr. Mansfield. It is overwhelmingly at CMRAs.
Mr. Merritt. But no statistical data to support that.
Mr. Mansfield. I can give you statistical data from my
office from the number of cases we prosecute. For the past 4
years that I have been in charge of the Economics Crime Bureau,
without being back there and doing research, I have probably
had a handful of cases involving apartment buildings and the
rest actually involve CMRAs.
Mr. Merritt. If in fact the CMRAs were completely shut
down, if the Postal Service made it illegal to be a CMRA, are
you actually of the belief that there would be any
significantly less identity theft perpetrated or would the
perpetrators be ingenious enough to find an alternative which
is not regulated like an apartment or small office where
identification is not required at all?
Mr. Mansfield. As a lawyer, it is difficult to answer
speculative questions such as that. But all the cases we worked
on--the criminal element is very intelligent. We are always,
unfortunately, one step behind them. I am sure it would take a
large chunk out of the identity theft issue. We are not asking
CMRAs be shut down. They serve legitimate purposes.
One of the other hats I happen to wear at the District
Attorney's Office, I am in charge of our witness protection
program; and I relocate witnesses throughout the United States.
And one of the things that I do when I have my detectives
relocate witnesses, we set them up at a CMRA in order for them
to get their mail. So the conversations that were being had
with the women from the domestic violence group impact our way
of relocating witnesses who have death threats against them
also.
Chairwoman Kelly. Right. Mr. Mansfield, I am glad you
offered that. I think this is a really difficult problem that
we must work through with a lot of information. You don't know
of anyone who happens to have any statistical basis for this
particular rule that the USPS promulgated, do you?
Mr. Mansfield. Madam Chairperson, I am not here on behalf
of the Postal Inspection Service. I am here on behalf of the
law enforcement community in New York. But I can tell you that
one of the reasons that we opted to open a CMRA for our sting
operation was the statistical data that we were getting from
the financial institutions about losses that were occurring at
specific addresses and at specific with zip codes. Then we were
able to reduce it to specific addresses. So I think perhaps the
financial community would be in a position to give you some of
that statistical data that you seek.
Chairwoman Kelly. Thank you very much.
Mr. Hudgins.
Mr. Hudgins. If I could just add, I think your point is
well taken when you say perhaps some sort of a confirming phone
call would be useful. I suggest in my written testimony that
one of the problems of not having a process by which the Postal
Service must vet these issues before the fact is that it might
overlook what I would call a more minimalist solution that
would deal with, say, 90 percent of the problem. It might
involve, for example, phone calls; it might involve, for
example, the fact that credit companies have access to a data
base where they can learn whether an address in fact is a CMRA.
Perhaps companies could organize their own internal
workings differently so that if an individual has a CMRA
address and is moving, well, the company would check that one
particular individual carefully. And perhaps a combination of
those kinds of safeguards would head off 90 percent of the
problem. That is why I think if the Postal Service were subject
to the Paperwork Reduction Act and lots of other acts, that we
would have vetted these issues 2 years ago and we wouldn't be
having this conversation now.
Chairwoman Kelly. Mr. Merritt.
Mr. Merritt. Madam Chairperson, one thing I would like to
clarify, there seems to be some misconception that
identification was not required in order to rent a CMRA box
prior to these regulations, which is not the case.
Identification was required before this, and one of the most
onerous things that the existing small business community finds
about these regulations is the fact that they are retroactively
forcing people like Sandi Taylor, who has been in the same CMRA
location for many years, to now fork over significant
identification, again.
I would argue that if fraud of any type is perpetrated at
CMRAs it is probably perpetrated by the people who come in,
open a box for a short period of time and then leave. So
consequences of these regulations are forcing existing
boxholders to go and reaffirm their identities and provide
significant personal information--I might add that information
that people are fighting to keep private--is the same
information that has found its way so prevalently out into
cyberspace that now facilitates the identity theft that they
are trying to curb with these regulations. So protecting your
personal information prevents identity theft, identity theft is
the result of unprotected private information.
I would ask if you would not agree with that, Mr.
Mansfield.
Mr. Mansfield. I think I agree with that, yes.
Mr. Hudgins. If I could add to what Rick has just said, we
find that, in fact, many of the CMRAs are not allowing new
customers to have ``suites'' or ``apartment'' addresses, that
they are doing that voluntarily. So it seems that most of the
suite and the apartment addresses in the future are going to be
the older ones, and those are not the quick-hit artists who are
pulling the scam. So it seems like, in a sense, the market is
starting to take care of the situation all right.
Mr. Merritt. I might, if I could, add that the people that
have rented a box the longest are the ones who are going to
endure the most cost because they would have had the most
clients that have the old address. So the people least likely
to perpetrate crimes are the ones that suffer the most from
these regulations. Thank you.
Chairwoman Kelly. I thank you.
Now I am going to turn to my colleague from New York, Mr.
Sweeney.
Mr. Sweeney. Thank you, Madam Chairwoman. I came late, and
you have been here a long time. I will try to be brief.
Mr. Mansfield, I, too, am a very strong supporter of the
law enforcement community in New York. I am sponsor of six
asset forfeiture bills in the House and regularly take on both
the right and the left on those issues. So this reminds me--
these regulations remind me of some of the same arguments used
in those instances, and the question is, where is the line
drawn and where it is most effective?
So while you are not representing the post office here you
are someone who can find--someone who can find those lines of
delineation where we protect folks. There are five broad
requirements in the new rule, and I think one of the keys to
this hearing and our process here in the Committee is going to
be try to find a way to narrow that process down and achieve
the goals.
You said that the reason financial institutions change
addresses to CMRA boxes is because legitimate people use them,
and I think Mr. Merritt has touched on this a little bit as
well. Why would a PMB designation do anything then if that is
the case?
Mr. Mansfield. Because if someone is calling up and saying,
I have moved; this is my new address, that is not where they
have moved to. If it is a PMB or a post office box, you know
mail is changed a lot, and it is changed to post office boxes
or something that it is clearly identifiable as to where it is
going. When you say you have moved, this is where I now live,
you are not living in that 6-inch box. You are getting your
mail there. That is a legitimate thing to get your mail
somewhere, but then it requires a follow-up question, where are
you moving to?
All the PMB designation is doing is it is indicating what
the reality is, that this is a place that an individual is
receiving mail and should be accepted as such. You shouldn't be
able to have the facade that you have moved to a location when
in point of fact you haven't moved there.
Mr. Sweeney. All right. But I think--well, okay. Let me go
down because I know you want to finish it.
Mr. Merritt, who is your biggest competitor?
Mr. Merritt. My biggest competitor? PostalWatch? As far as
I know, we don't have a competitor.
Mr. Sweeney. Would the postal authority be your biggest
competitor?
Mr. Merritt. We represent the individual boxholders as a
grass-roots organization, Congressman Sweeney, so we don't
really have a competitor I don't think. We are a dot-org. We
are just trying to protect the boxholders from these
regulations.
Mr. Sweeney. Let me ask you, Mr. Hudgins and Mr. Morrison,
if we were to extend the Regulatory Flexibility Act to include
the post office in this process, would that be an appropriate
first step?
Mr. Hudgins. I think it absolutely would be an appropriate
first step.
Mr. Morrison. I would strongly agree with that. In fact, I
actually mentioned that in the testimony.
Mr. Sweeney. Okay. Thank you.
Chairwoman Kelly. Thank you.
Mr. Morrison, I want to say that I found your testimony
extremely enlightening, and I appreciate the fact that you were
willing to be as absolutely direct as you were. I agree with
some of the questions that you raised, and I hope that we are
going to get answers.
Mr. Mansfield, one more question. I am sorry we all seem to
be alighting on your doorstep here, but since you actually have
a problem from both aspects of this issue, have you thought
through what you think might be a good idea for--if we are
going to have to have a regulation of some sort, what kinds of
regulations or what kind of regulation would be something that
couldprotect our privacy as individuals yet still give you, as
a law enforcement officer, the arm that you need?
Mr. Mansfield. Madam Chairperson, I assume you are speaking
in terms of getting the identification of the person who is
renting a PMB when someone goes in to get that information. You
know, I know there was talk earlier this morning about the
requirement of a search warrant. Without having addressed it to
other members of the law enforcement community, I could tell
you that we would be strongly opposed to the requirement of a
search warrant for that information. That requires us to have a
representation of probable cause to a magistrate before they
are able to issue it, and it requires us sitting down and
filing a document with the court.
In similar situations, for instance when we want to get
subscriber information from the telephone company for--what we
call a nonpublic number, a number that is not published, it
requires us to issue a subpoena to the telephone company, and
they will give it. As a prosecutor, I am able to sign a grand
jury subpoena and get this information. If a defense attorney
wants it or private litigation, it requires a judge to sign it.
Similarly, under the Fair Credit Reporting Act there are
requirements for judicial subpoenas in order to get somebody's
credit bureau from a credit institution. Those are all
requirements that are less than a search warrant but somewhat
more than just walking in off the street and saying, give me
that information.
So during the course of an investigation many times you
don't have probable cause to get a search warrant, but you
certainly need information that is going to lead you to
probable cause for search warrants for other locations.
Just this week we happen to be working on an investigation
involving diverted merchandise, and we had to go to a self-
storage location because we needed information. We knew that
the person we were looking for stored their stolen material on
the third level of the storage place. So we had to send our
detectives in to get information about everybody that was
renting boxes on the third floor, and then we were able to find
the individual we were looking for, and that required us to
give a subpoena to the owner of the self-storage place. There
is no legal requirement for that. He could have just said, I am
not giving you the information. So we are--I was required to
draft a grand jury subpoena and then he gave the detectives
that information.
So I think that, if we were to mirror what was being done
in other areas, particularly with the telephone company, I
think that would certainly assure the privacy rights of
individuals. And as someone who relocates witnesses that have
death threats against them all over the United States, I
certainly wouldn't want the people who have been in harm's way
and I am trying to take them out of harm's way to be in a
situation where somebody could walk in a door and just ask for
that information and get it without any legitimate reason for
having it.
Chairwoman Kelly. And I am sure that the domestic violence
people would agree with you on that.
As you probably heard if you were here earlier today, I am
holding this hearing open for an additional 14 days. There will
be questions from other people who have not been able to be
here. And I am going to ask Mr. Sweeney if he has any further
questions before we close the hearing.
Mr. Sweeney. Just one. Maybe Mr. Merritt could help me. I
mentioned it at the opening of my statement.
I have a constituent who has had his mail--delivery of mail
has stopped. And just does this individual have or any of those
who face this situation, do they have any recourse at this
time? And his customers--how will his customers be able to
receive their mail? One of his customers yesterday--this is how
we heard about this--went to the post office, and they refused
to give her her mail. She is a self-employed individual and
what she was essentially picking up were checks.
Mr. Merritt. I got the impression earlier this morning that
Mr. Spates welcomes anyone having a problem to contact him
directly to resolve it on an individual basis.
The problem was touched on earlier this morning, that is
that the enforcement of these regulations is not being
uniformly administered. They are not supposed to be withholding
anybody's mail, Congressman Sweeney, but that dictum hasn't
been able to find its way out on a universal basis in the field
of the Postal Service administration.
I can empathize with the size of the organization with
almost a million employees how difficult it might be to get
information disseminated to everybody so that the correct
things get done. I guess that makes it more important that they
do regulations correctly in the first place.
We maintain a web site at PostalWatch.org and you can have
any of the people contact us and we will try to contact the
Postal Service as well or their CMRA can also contact them. Mr.
Spates seemed to indicate he was willing to help anybody that
was individually offended on a personal basis.
Mr. Sweeney. As you can imagine, they are going to be
getting a phone call from me probably in about half an hour.
Mr. Hudgins. I will just add that, in my testimony I
brought up one case of a woman in northern Virginia who
received her ``we are going to cut off your mail'' letter. She
has actually lost a third of her business. I have the copies of
the letter here to submit for the record.
Mr. Sweeney. I have a similar letter.
Mr. Hudgins. And that argues that the Postal Service
representatives this evening should go back, issue a memo to
all Postmasters saying, ``you will not send out any of these
letters, you will not enforce these regulations until we can
decide exactly what it is that these regulations mean.'' It
seems that that is a minimum that they could do.
By the way, I also point out in my written testimony that
the Postal Service is not subject to Title 5, chapter 7, of the
U.S. Code that grants citizens an appeals process against
actions that are ``arbitrary and capricious.'' That would
suggest that, again, the Postal Service should be subject to a
lot of the same regulations that other government regulatory
agencies are subject to.
Mr. Merritt. If I could further answer or put some light on
your constituent's problem, when a person is denied mail from a
P.O. box, there is a specific administrative procedure which
the Postal Service must go through. It seems they have crafted
these regulations in such a way as to deny people, individuals
of that process because they are expecting the CMRA to, if you
will, do their dirty work for them.
So what they are basically saying is, if the CMRA doesn't
have compliance--in other words, if the people who rent the
mailboxes from the CMRA don't do what they are supposed to do,
then the Postal Service will shut down the CMRA. And somewhere
in there they seem to have the idea that they don't need to go
through their individual administrative procedures for actually
withholding someone's mail in that process. That I think will,
if it actually happens, will remain to be something decided in
the courts at some future date.
Chairwoman Kelly. Thank you very much. I want to thank this
panel very much for appearing here today and for being very
direct in your testimony. I have a feeling that we may be
talking with each other for some time to come until we get this
issue resolved. But thank you so much. Thank all of you for
being here today.
At this point, the hearing is adjourned.
[Whereupon, at 1:35 p.m., the Subcommittee was adjourned.]
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