[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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