    [House Hearing, 106 Congress]
    [From the U.S. Government Publishing Office]

         THE U.S. POSTAL SERVICE AND POSTAL INSPECTION SERVICE: MARKET
                  COMPETITION AND LAW ENFORCEMENT IN CONFLICT?

    =======================================================================

                                    HEARING

                                   before the

                       SUBCOMMITTEE ON THE POSTAL SERVICE

                                     of the

                                  COMMITTEE ON
                               GOVERNMENT REFORM

                            HOUSE OF REPRESENTATIVES

                           ONE HUNDRED SIXTH CONGRESS

                                 SECOND SESSION

                                   __________

                                 JULY 25, 2000

                                   __________

                               Serial No. 106-169

                                   __________

           Printed for the use of the Committee on Government Reform

      Available via the World Wide Web: http://www.gpo.gov/congress/house
                          http://www.house.gov/reform

                                     ______

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    _______________________________________________________________________
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                         COMMITTEE ON GOVERNMENT REFORM

                         DAN BURTON, Indiana, Chairman
    BENJAMIN A. GILMAN, New York         HENRY A. WAXMAN, California
    CONSTANCE A. MORELLA, Maryland       TOM LANTOS, California
    CHRISTOPHER SHAYS, Connecticut       ROBERT E. WISE, Jr., West Virginia
    ILEANA ROS-LEHTINEN, Florida         MAJOR R. OWENS, New York
    JOHN M. McHUGH, New York             EDOLPHUS TOWNS, New York
    STEPHEN HORN, California             PAUL E. KANJORSKI, Pennsylvania
    JOHN L. MICA, Florida                PATSY T. MINK, Hawaii
    THOMAS M. DAVIS, Virginia            CAROLYN B. MALONEY, New York
    DAVID M. McINTOSH, Indiana           ELEANOR HOLMES NORTON, Washington,
    MARK E. SOUDER, Indiana                  DC
    JOE SCARBOROUGH, Florida             CHAKA FATTAH, Pennsylvania
    STEVEN C. LaTOURETTE, Ohio           ELIJAH E. CUMMINGS, Maryland
    MARSHALL ``MARK'' SANFORD, South     DENNIS J. KUCINICH, Ohio
        Carolina                         ROD R. BLAGOJEVICH, Illinois
    BOB BARR, Georgia                    DANNY K. DAVIS, Illinois
    DAN MILLER, Florida                  JOHN F. TIERNEY, Massachusetts
    ASA HUTCHINSON, Arkansas             JIM TURNER, Texas
    LEE TERRY, Nebraska                  THOMAS H. ALLEN, Maine
    JUDY BIGGERT, Illinois               HAROLD E. FORD, Jr., Tennessee
    GREG WALDEN, Oregon                  JANICE D. SCHAKOWSKY, Illinois
    DOUG OSE, California                             ------
    PAUL RYAN, Wisconsin                 BERNARD SANDERS, Vermont
    HELEN CHENOWETH-HAGE, Idaho              (Independent)
    DAVID VITTER, Louisiana

                          Kevin Binger, Staff Director
                     Daniel R. Moll, Deputy Staff Director
               David A. Kass, Deputy Counsel and Parliamentarian
                            Robert A. Briggs, Clerk
                     Phil Schiliro, Minority Staff Director
                                     ------

                       Subcommittee on the Postal Service

                       JOHN M. McHUGH, New York, Chairman
    MARSHALL ``MARK'' SANFORD, South     CHAKA FATTAH, Pennsylvania
        Carolina                         MAJOR R. OWENS, New York
    BENJAMIN A. GILMAN, New York         DANNY K. DAVIS, Illinois
    STEVEN C. LaTOURETTE, Ohio
    DAN MILLER, Florida

                                   Ex Officio

    DAN BURTON, Indiana                  HENRY A. WAXMAN, California
                          Robert Taub, Staff Director
                   Jane Hatcherson, Professional Staff Member
                              Matthew Batt, Clerk
               Denise Wilson, Minority Professional Staff Member

                                C O N T E N T S

                                  ----------
                                                                       Page
    Hearing held on July 25, 2000....................................     1
    Statement of:
        Campbell, James I., Jr., attorney, Postal Policy Scholar.....    34
        Gallo, Richard J., national president of the Federal Law
          Enforcement Officers Association [FLEOA], accompanied by
          Gary L. Eager, FLEOA agency president, U.S. Postal
          Inspection Service.........................................    74
        Nolan, John, Deputy Postmaster General, accompanied by
          Kenneth C. Weaver, Chief Postal Inspector..................    28
    Letters, statements, et cetera, submitted for the record by:
        Campbell, James I., Jr., attorney, Postal Policy Scholar,
          prepared statement of......................................    37
        Eager, Gary L., FLEOA agency president, U.S. Postal
          Inspection Service, prepared statement of..................    76
        McHugh, Hon. John M., a Representative in Congress from the
          State of New York:
            Followup questions and responses.........................   102
            Letter dated December 3, 1999............................     4
        Nolan, John, Deputy Postmaster General, accompanied by
          Kenneth C. Weaver, Chief Postal Inspector, prepared
          statement of...............................................    30

         THE U.S. POSTAL SERVICE AND POSTAL INSPECTION SERVICE: MARKET
                  COMPETITION AND LAW ENFORCEMENT IN CONFLICT?

                                  ----------

                             TUESDAY, JULY 25, 2000

                      House of Representatives,
                    Subcommittee on the Postal Service,
                                Committee on Government Reform,
                                                        Washington, DC.
        The subcommittee met, pursuant to notice, at 1 p.m., in
    room 2247, Rayburn House Office Building, Hon. John M. McHugh
    (chairman of the subcommittee) presiding.
        Present: Representatives McHugh, LaTourette, and Fattah.
        Staff present: Tom Sharkey, Loren Sciurba, Jane Hatcherson,
    Heea Vazirani-Fales, Matthew Batt, clerk; Robert Taub, Dan
    Moll, deputy staff director, full committee; Earley Green,
    Denise Wilson, and Neil Snyder.
        Mr. McHugh. Good afternoon. The hearing will come to order.
        On behalf of all of us here on the subcommittee, I want to
    welcome you and thank you for being here as we continue our
    oversight agenda of the 106th Congress.
        In 1970, the Postal Reorganization Act redefined the Postal
    Service as an independent, self-sufficient establishment of the
    executive branch. Under this new regime, the Postal Service was
    to become more business-like in its structure and operations,
    although I happen to believe, as most of you are, I am sure,
    aware, that after 30 years the time has come for additional
    reforms of the 1970 act. I think, by most reasonable measures,
    it has been and remains a success.
        The Postal Service has improved its service and efficiency,
    it is no longer supported by the taxpayer, and it has
    diversified its operations; however, the Postal Service is not
    a private corporation. It is still very much a part of the
    Federal Government, and, as it continues its competitive
    mission, questions arise as to how much of its Federal power
    should be employed in market competition.
        Of all the trappings of government still held by the Postal
    Service, perhaps one of the most potent is its authority over
    the Postal Inspection Service. For over 200 years, postal
    inspectors have ensured the sanctity of the seal and have done
    so incredibly well by enforcing Federal statutes that protect
    the mail, Postal employees, customers, and assets.
        In this capacity, the Inspection Service plays a major role
    in a wide range of law enforcement activities. The Inspection
    Service does a fine job, but there is a potential for conflict
    of interest between Postal management's need to generate
    revenue and the Inspection Service's mission to enforce the
    law.
        I first raised these concerns to the Justice Department in
    1998 when it was proposed that the Attorney General delegate
    authority to the Postal Service to investigate violations of
    various wire and electronic communications laws. I questioned
    if perhaps this constituted an unfair competitive advantage in
    the area of electronic commerce.
        The Department's response of December 3, 1999, contains
    some interesting observations and raised even more questions.
    The letter states that, although the Department believes the
    Attorney General's delegation of the authority was appropriate,
    some basic questions about the relationship of the Inspection
    Service to the Postal Service remain.
        We have made the letter available today for inclusion in
    the hearing record, but I would like to quote just one section
    this afternoon, and I would ask unanimous consent to include
    the entire correspondence as part of the record, and without
    objection that will be done.
        Quoting now,

        Fundamental questions about the Federal identity of the
    position need to be addressed if there is to be any
    reconciliation of law and policy. The drafters of the Postal
    Reorganization Act of 1971 apparently did not contemplate the
    Postal Service's emergence as a profit-motivated business and
    did no provide safeguards against the possibility of conflicts
    between the Postal Service's goals in managing the Inspection
    Service and the law enforcement goals of the Federal
    Government.
        Current law also does not address problems of disparity in
    the Federal criminal justice system's handling of crimes
    against the Postal Service and crimes against its private
    sector competitors.

        Since the date of this letter, the Postal Service has
    stepped up its e-commerce initiatives and has touted the
    security of the Inspection Service as a feature that sets its
    products apart from those of its private competitors. It is no
    doubt true that the Inspection Service affords valuable
    protection for consumers, but this sort of marketing raises
    concerns among private competitors who do not enjoy the luxury
    of an in-house Federal law enforcement agency. We would never
    imagine giving Microsoft law enforcement authority over their
    e-commerce products, for example. Some also suggest we should
    question the wisdom of giving the Postal Service that same
    power.
        Control over the Inspection Service also raises questions
    about the continued effectiveness of law enforcement. The
    Inspection Service is directed by Postal management and reliant
    upon Postal revenue. Although the Postal Service is financially
    secure today, the Postmaster General has warned us in this
    subcommittee that lean times will soon arrive. If this comes to
    pass, the Postal Service may not be able to adequately fund the
    Inspection Service, and, even when funds are available, the
    very fact that the Postal Service has a financial interest in
    the priorities of the Inspection Service can raise the
    perception that such priorities are not driven solely by law
    enforcement concerns.
        The conflict of interest exists, and we must decide what,
    if anything, should be done about it. Some solutions have
    already been proposed. For instance, Congress could enact
    legislation transferring the Inspection Service to another
    executive agency with law enforcement responsibility. Others
    suggest that the Inspection Service jurisdiction shall either
    be greatly expanded to equally protect private postal delivery
    and express services or radically reduced to cover those laws
    directly related to the Postal monopoly.
        I want to emphasize that the purpose of today's hearing is
    not to take the Inspection Service away from the Postal
    Service, although that is an option that has been proposed. Our
    objective today is simply to explore in the light of day the
    relationship between the Postal Service's competitive agenda
    and the Inspection Service's law enforcement mission.
        It is my hope that this will be a first step in an open
    policy discussion on what I believe is a very serious issue,
    and I thank you all for being here today.
        With that, I would be happy to yield to the distinguished
    gentleman from the great State of Philadelphia--great State of
    Philadelphia? Well, may be--a place I am looking toward
    visiting in the next several days. The ranking member, Mr.
    Fattah.
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        Mr. Fattah. The location of our first Postmaster General
    and first Post Office as a country, Philadelphia.
        Let me welcome our panelists, and particularly I would like
    to welcome both the Deputy Postmaster General and Kenneth
    Weaver, who has recently been appointed as the chief postal
    inspector.
        This hearing is an important one. I think the subject
    matter, as outlined by the chairman, is one appropriately right
    for comment, and it is true that there are competitive features
    to the Postal Service of today.
        I would also say, however, there are many areas in which
    the Postal Service is not does have competition, and that it
    has as its responsibility to provide universal service and to
    over 40,000 post offices around the country. In those areas it
    is not a matter of a competition that drives the Postal Service
    but public service.
        I want to welcome you all here today. I look forward to
    your comments.
        Thank you.
        Mr. McHugh. I thank the gentleman, as always, for his
    participation and his support and leadership.
        We are also pleased to be joined today by the gentleman
    from the great State of Ohio, who has been one of the more
    active members of the subcommittee on these issues, and we are
    pleased that he is here and I would be happy to yield to Mr.
    LaTourette if he has any opening comments.
        Mr. LaTourette. I don't have any opening comments. I am
    looking forward to the hearing and I appreciate the opportunity
    to speak.
        Mr. McHugh. I thank the gentleman.
        Most of you are aware that the full committee procedure and
    rules requires all witnesses to be administered an oath, so if
    you gentlemen would be so kind as to stand and raise your right
    hands and answer after me.
        [Witnesses sworn.]
        Mr. McHugh. The record will show that all members at the
    front table, all five, answered the oath in the affirmative.
        With that, let me formally introduce and welcome our panel
    members today.
        We're honored and pleased to have Mr. John Nolan, who is
    Deputy Postmaster General, and who is accompanied by Mr.
    Kenneth Weaver, who is the chief postal inspector.
        Gentlemen, welcome. Thank you for being here.
        Next we have Mr. James Campbell, Jr., an attorney, a
    scholar, postal policy scholar particularly. If any of you
    doubt that, I suggest you may want to pick up his testimony and
    read it in its entirety, as I did, and I think you will agree
    that he is fully deserving of that title.
        We are also honored to be joined today by Mr. Richard
    Gallo, who is national president of FLEOA, the Federal Law
    Enforcement Officers Association, and he is accompanied by Mr.
    Gary Eager, FLEOA agency president, the U.S. Postal Inspection
    Service.
        Gentlemen, thank you. Mr. Eager, particularly, we
    appreciate all the effort and cooperation you have given to
    this subcommittee on a wide range of issues, and this one
    included.
        We are looking forward to all of your testimony.
        I have, as I mentioned, read the testimony. As you know, we
    do try to ask the witnesses, to the best of their ability, to
    summarize that for presentation here. Without objection, all of
    your testimony will be entered into the record in its entirety,
    and we look forward to your comments.
        With that, perhaps we should proceed as we introduced.
        Mr. Nolan, thank you, again, for being here.

    STATEMENT OF JOHN NOLAN, DEPUTY POSTMASTER GENERAL, ACCOMPANIED
              BY KENNETH C. WEAVER, CHIEF POSTAL INSPECTOR

        Mr. Nolan. Thank you, Mr. Chairman.
        The Postal Service and the mail system have been important
    to the growth and prosperity of this country. The growth and
    development of the Nation's mail system are inextricably
    interwoven with that of the Postal Inspection Service. As such,
    it is difficult to envision a Postal Service that does not
    include the fundamental Inspection Service function as it
    existed in one or more forms for most of our history.
        We find ourselves, to a certain extent, the victims of our
    own success in carrying out the legal mandate to maintain
    Inspection Service to ensure the sanctity of the mail and the
    security of our employees. We believe that success is, in
    sizable part, a direct result of the historic integration of
    Inspection Service operations into the fabric of the Postal
    Service.
        Trust in the USPS and the Inspection Service was not
    decreed as part of the law. It occurred over time, as the
    result of a lot of hard work. Inspectors live and breathe the
    mail. They understand the workings of the mail system and the
    interplay of its parts as no other security or law enforcement
    agency could, yet they maintain an independence of operation
    that is essential to carry out its mission.
        Now, some feel that the success that the American people
    and our employees benefit from causes the Postal Service to
    have an unfair advantage in the commercial marketplace. We
    believe the major benefit of the Inspection Service lies not in
    the marketplace but in its support of congressional oversight
    for the mail and universal service. From consumer child to
    child pornography to physical security of property, personnel,
    and the mail, the Inspection Service has been an effective
    agent for ensuring that the will of the Congress and the
    American people is reflected in the conduct of the Nation's
    mail service, and mailers pay all the cost to maintain this
    function.
        As communications in this country expand into a new medium
    called the Internet, the Postal Inspection Service is ensuring
    that the same protection of Postal property and operations and
    the same trust and the sanctity of information entrusted to the
    Postal Service is maintained. To do less would be a disservice
    to the people of this country, in our opinion.
        The issue of most importance is not competition, it's the
    privacy, security, and trust in the way Americans are able to
    communicate
    through their Postal system. The current structure and
    operation of the Postal Inspection Service helps make that
    requirement a reality.
        Mr. McHugh. Thank you very much. We appreciate that and
    appreciate your comments.
        [The prepared statement of Mr. Nolan follows:]
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        Mr. McHugh. Mr. Weaver, the agenda does not call for you to
    make a formal statement. I think you are aware of that. But we
    appreciate your being here and I'm sure there will be questions
    that we would want you to respond to. And even if we don't, you
    should.
        Mr. Weaver. Thank you.
        Mr. McHugh. OK. Great. We'll get back to you.
        I think it would be wisest to just proceed through all of
    the opening statements and then we can just open to general
    questions.
        With that, Jim Campbell would be next, sir.

     STATEMENT OF JAMES I. CAMPBELL, JR., ATTORNEY, POSTAL POLICY
                                SCHOLAR

        Mr. Campbell. Thank you, Mr. Chairman and members of the
    subcommittee. Thank you for your kind remarks, Mr. Chairman,
    probably uncalled for, but anybody who struggled through the
    footnotes is entitled to say his piece.
        As you know, I have been counsel to the private express
    companies for about 25 years, almost since they first started.
    In my statement I tried to give you a sense of how, from a
    private express standpoint, we have looked at the activities of
    the Inspection Service as they affect us.
        In my statement, I make a couple of introductory comments,
    which I'd like to emphasize.
        First, to the extent that there are any problems
    identified, I don't feel that the cause lies in the
    administration of the Inspection Service itself. In my personal
    experience, I've never had an instance in which I felt the
    inspectors were acting in an unreasonable or unfair or improper
    manner. I think that the cause lies more within the
    institutional framework in which they operate, as I've tried to
    make clear in my statement.
        Second, I am very well aware that enforcement of the
    monopoly is not the main task of the Inspection Service; that
    the Inspection Service has maintained the security of the mails
    for, as you said, 200 years; and that this is a public service
    that we have all benefited from. I wouldn't want my statement
    to suggest otherwise.
        What I've tried to do in our statement is to give you some
    of the details of the history of our relationship with the
    Inspection Service over the last 25 years, but also the benefit
    of the legal research that we've necessarily done to try to
    understand what's going on. That's why all the footnotes.
        As nearly as I can tell, the search and seizure power--and
    that's what we're talking about, use of Government power here
    against private competitors--that power was given to the Post
    Office Department in 1872, almost certainly without debate and
    without any clear intent.
        As nearly as I can tell, the administration of this power
    vis-a-vis private competitors was not a major issue, was not a
    controversial issue, all the way through the life of the Post
    Office Department, that is through 1970. There are very, very
    few cases, very little controversy that I've discovered.
        The real problem arises in the 1974 Postal monopoly
    regulations which were adopted by the Postal Service and which
    really were different in kind from anything the Post Office
    Department had done.
        Now, as I was writing this statement, I did not really
    intend to focus on these regulations, but the more I got into
    it and the more I thought about all this past history that I
    remember, the more I realized that really it was those
    regulations that put the Inspection Service in the business of
    harassing customers of private express companies, for two
    reasons.
        First, those regulations take such a complicated view of
    the monopoly that the regulations depend upon administrative
    enforcement for their effectiveness, and hence the Inspection
    Service has to enforce.
        Second, the regulations, by their nature, are very
    intimidating, very coercive. They basically tell mailers, ``You
    have to cooperate with the Inspection Service, regardless of
    what you think is reasonable, regardless of what you think the
    law is, or you may face some serious consequence,'' and so
    mailers have cooperated, much more, perhaps, than they wanted
    to.
        I certainly won't go through it, but if you look back at
    the history of what has gone on--and I could give you much more
    documentation if you wish--but if you look at the history of
    the last 25 years I think it is fair to say that the
    investigative powers of the Postal Service have been used in a
    manner which intrudes upon the mailers and the customers of
    private express companies to a greater degree than Congress
    envisioned or probably authorized.
        I think it is fair to say that effect of this has been to
    work against what, at least in retrospect, was sound public
    policy--a certain desirable level of competition.
        I think that there is, nonetheless, some merit in the
    position argued by the Postal Service that, after all, the
    Postal Service is only using the tools given them by Congress
    to do the job that Congress has mandated. They have protected
    revenue and universal service.
        I think that really what is implied by this history is a
    need for Congress to clarify some of the aspects of the
    institutional framework of the Postal Service, and I have four
    suggestions.
        One is that the monopoly is far too complicated today. It
    would be highly desirable to simplify the monopoly so it does
    not depend upon so much administrative enforcement. And this is
    not so difficult. Many other countries have done so. H.R. 22
    has a proposal along these lines that would pretty much do it.
        Second, I think that the enforcement of the monopoly ought
    not to be committed to somebody that has a commercial interest.
    This is just fundamental fairness. I think that enforcement of
    the monopoly could be committed to the Department of Justice. I
    know Treasury is another possibility. But somebody other than
    the Postal Service, itself.
        Now, this could be done either by taking this small
    function out of the Postal Service or by moving the Inspection
    Service. I have no particular opinion on that, but I think that
    the Postal Service ought not to be enforcing the monopoly.
        Third, I think that the administration of the monopoly--
    that is to say the rulemaking power--ought not to be handled by
    the Postal Service, either. I think that with a simplification
    of the monopoly you have much less need for rulemaking, for
    administration, but, nonetheless, the residual function ought
    to be handled by somebody impartial. The Rate Commission is the
    obvious candidate. Justice is another possibility. FTC is even
    a possibility. But somebody other than an interested commercial
    body.
        And then, last, you raised a point in your opening
    statement which is a problem that has emerged over the past
    couple of years. To some degree there seems to be a potential
    for the Postal Service they say, ``Our exclusive access to the
    Inspection Service, to the police power of the United States,
    gives us a commercial advantage. We have the only really secure
    e-mail because our e-mail is protected by the Inspection
    Service. We have the only really secure parcel service,'' or
    whatever it might be. That would seem to be, obviously,
    inappropriate. The enforcement authority of the United States
    should not be a commercial chip.
        Resolving that problem is not so easy. I have no simple
    answers to that. As you mentioned in your statement, you might
    commit the Inspection Service to the job of watching all
    letters and parcels and moving them to another agency. You
    might limit the authority of the Inspection Service to just
    deal with the noncompetitive aspects of the Postal Service's
    business. I think this is a matter that does deserve some
    attention. It is a matter that is of some concern to private
    express companies. But, as I said, I have no simple ready
    solution.
        Thank you, sir.
        Mr. McHugh. Thank you very much, Jim.
        [The prepared statement of Mr. Campbell follows:]
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        Mr. McHugh. We next have Mr. Richard Gallo, president of
    FLEOA.
        Mr. Gallo.

       STATEMENT OF RICHARD J. GALLO, NATIONAL PRESIDENT OF THE
         FEDERAL LAW ENFORCEMENT OFFICERS ASSOCIATION [FLEOA],
      ACCOMPANIED BY GARY L. EAGER, FLEOA AGENCY PRESIDENT, U.S.
                       POSTAL INSPECTION SERVICE

        Mr. Gallo. Gary Eager will be reading our statement.
        Mr. McHugh. OK, whose statement will be read by Mr. Eager.
        Mr. Eager.
        Mr. Eager. Thank you, Mr. Chairman and distinguished
    members of the subcommittee. We appreciate being invited here
    to discuss various aspects of the Postal Inspection Service and
    the direction that we feel it is taking, discussing the
    potential of moving the Inspection Service to another branch of
    the executive branch of Government.
        FLEOA believes any type of move to the executive branch of
    Government, we should factor in the direction the Service is
    taking today and the competitive aspect of complaints that are
    generated by other companies that were in an unfair advantage.
        We believe that right now, in terms of where we are headed,
    that the Inspection Service is having some difficulty in
    obtaining the resources, both fiscal and personnel resources,
    to accomplish our mission. And, of course, our membership is
    very sensitive to the--I would refer them to allegations of
    unfair competition, which FLEOA would see as crime prevention
    and just doing our job that has been vested with us.
        Since the Postal Reorganization Act, technology and
    competition has advanced such that the Postal Service is
    changing. They are in a quasi business environment, which is
    requiring them to deal with monetary issues, and, based on
    statements made recently by our Postmaster General, were having
    projections of reduced revenue, and, as such, the Postal
    Service is having to look at areas, like any business, to cut
    overhead.
        FLEOA feels that sometimes it appears that the Inspection
    Service is being seen as overhead. Examples of that would be
    our lab personnel. Our lab personnel have been trying to get
    pay comparability since, I believe, 1995, and it was recently
    denied by the Postal Service, and, as you can imagine, our
    crime labs are our very foundation for some of our
    investigative efforts.
        Prosecutors don't care about the internal politics within
    the Postal Service and the competition. They want lab results
    to proceed with prosecution.
        In addition to that, our allocation of resources has come
    into question in that we have not had a significant increase in
    resources since 1975. I believe we had 1,700 inspectors in
    1975, and today we have an authorized complement, I believe, of
    approximately 1,900. When you look at our complement and the
    way they are allocated, it creates some concern for FLEOA in
    that we don't know--I mean, there has not been a level of
    service study done since 1994. The only thing that we can say
    about our complement is it is merely a historical number, and
    that is a great concern.
        When the OIG was established, some of those resources were
    actually pushed over to the IG, but this was done, again,
    without a level of service review to see what was needed.
        I wrote the chairman of the Board of Governors a letter
    back in March 1999 expressing our concern that resources would
    be diverted to the IG at the detriment of our public service
    obligations, and I received a response back that this was not
    going to happen when, in fact, we believe it did happen.
        Those are concerns with regard to resources and the
    perception that we feel like sometimes we are being dealt with
    as overhead and it is at the detriment of the public.
        The Inspection Service exists--goes back to our very
    history, sanctity of the mail, and that is our primary task.
    When we question how resources are being allocated or do we
    have enough to do our jobs, it comes in--it becomes
    questionable when we haven't had a level of service review for
    that many years.
        An example of that would be our mail fraud program where we
    have had a reduction of approximately 25 percent commitment
    from 1992 to 1999. There are other agencies working mail fraud,
    and as well they should, but that doesn't diminish our
    responsibility to be aggressive in that area.
        Last, I'd like to say that, you know, in discussing moving
    us to the executive branch of Government, FLEOA believes that
    this issue obviously should be debated, but that privatization
    or moving us to the executive branch of Government with the
    Postal Service moving toward privatization--every time I read
    the paper, I read where they say we are having a reform or
    privatization, but there is no mention of the future of the
    Inspection Service, and I submit that the Inspection Service
    has a role, has always had a role, and will have a law
    enforcement role in the future.
        The sanctity of the mail and an individual's privacy should
    not be done away with because of privatization. We can maintain
    a mail stream and enforce the laws that we currently have. If
    anything, we should expand our jurisdiction to incorporate
    that, possibly with other carriers in the Postal system in the
    future. It is a concern.
        We don't have all the answers, but we see ourselves going
    down a road and our future looks, you know, questionable.
        I have no answers with regard to competitors or--we, as
    Postal inspectors, have no competitors. We are just simply cops
    trying to do our job and our public service role.
        Thank you.
        Mr. McHugh. Thank you, Mr. Eager.
        [The prepared statement of Mr. Eager follows:]
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        Mr. McHugh. Rather than start a line of questioning, as I
    predicted the votes have been called. We have one 15-minute and
    two 5-minute votes, so if you can bear with us, we will try to
    return as quickly as possible.
        We will stand in adjournment until return.
        [Recess.]
        Mr. McHugh. With the permission from the minority, we will
    begin to get into the question period. I appreciate all of your
    patience.
        When I first looked at this issue, I kind of felt like the
    Sunday night dinners where I'd look down on my plate and there
    would be a nice helping of mashed potatoes and next to it would
    be Harvard beets. Some of it seems very palatable and others of
    it less so. But I think we need to talk about the framework
    that exists today, and I would start with Mr. Eager.
        To what extent does the administrative side of the Postal
    Service work with you folks to define where you ought to be
    directing your objectives?
        You mentioned in your testimony a 25 percent cut since, I
    believe you said, 1992 on the allocations directed toward mail
    fraud. To some of us that seems like an ill-advised or perhaps
    inappropriate reallocation of resources. Do you get to discuss
    that with Mr. Nolan and others as to how you can best allocate
    what, in a Government setting, is always going to be limited
    resources, Mr. Eager?
        Mr. Eager. I would think that would be more appropriate for
    Chief Weaver to answer.
        Mr. McHugh. I'll get to him.
        Mr. Eager. We don't--as FLEOA, we don't discuss resources
    at all with management in terms of what is needed.
        Mr. McHugh. Well, if I may, I don't mean to interrupt you,
    but let's take away the resource question, the dollars. That's
    a budgetary activity and that's an administrative function. But
    do you talk about the categories of your oversight
    responsibilities? You know, ``We ought to be looking more over
    here rather than here,'' and that kind of thing.
        Mr. Eager. Well, it appears, like I said, that our history,
    instead of an allocation of resources--we had a level of
    service review in 1994 to look at the placement of Postal
    inspectors throughout the country and basically what they would
    work, but in essence this was merely a reallocation of
    resources. It was a very closed universe as to applying
    resources to where they should go.
        What we believe is sorely needed is a current level of
    service review to take in demographics, crime rates, volume of
    mail, number of employees, and examine that to determine a
    baseline for the number of people we need in certain cities.
        Mr. McHugh. Did you feel the 1994 review, forgetting the
    limited resources--I understand your point there--but, given
    the available resources, was it a fair review and an effective
    one?
        Mr. Eager. Yes. It was based on the tools they were given,
    because they knew--I believe, this is my opinion, that they
    went into it knowing it was merely a reallocation. It was
    just--and there had been a trend of a lot of the hours going
    toward revenue protection during that period of time under the
    previous administration.
        Mr. McHugh. OK.
        Mr. Weaver, at the suggestion of Mr. Eager, which I think
    was a sound one, to what extent are you provided the
    opportunity to work with Mr. Nolan or others to talk about that
    allocation of resources and where you are directing your
    attention?
        Mr. Weaver. I thank Mr. Eager for referring that, but we
    have ongoing discussions about where we are directing our
    resources, but, for the most part, once we have an established
    budget we determine where to prioritize our work and where to
    allocate those resources.
        It is true that between the years of 1992 and 1999 there
    was a reduction of hours devoted to our fraud work, but I think
    you need to take a look at more than just the raw numbers to
    determine what happened. It did not mean that we de-emphasized
    our fraud work, and it certainly didn't mean that we did not
    accomplish the work that we set out to do, because I think our
    results are pretty impressive in the fraud area. But what it
    did mean was that each year we have to prioritize our work and
    devote our resources where the action is, and that could change
    from year to year.
        During that span of time, as you are probably well aware,
    Mr. Chairman, we had some situations happen in the Postal
    Service where we had to divert resources, maybe from our fraud
    work, things like assaults and violence in the Postal Service,
    which was very important.
        So there are elements like that that come into play.
    There's also elements like working on inter-agency task forces,
    where we find it is more beneficial to work with other agencies
    than merely taking out on our own and working certain
    investigations, and that may result in a reduction of hours,
    too.
        The fact of the matter is that during this timeframe our
    work hours have increased over that time period from about 5
    million work hours to 5.2 million, so there has been a shift in
    hours from within our work.
        Mr. McHugh. Fair enough.
        The case has been made by those who feel very strongly that
    the Service is being inappropriately directed that, in fact,
    more and more of the Inspection Service work has been directed,
    and I suspect, if it's true, not by the Service, itself, but
    directed toward revenue assurance. In fact, I believe I just
    heard Mr. Eager say that one of the outcomes of the 1994 review
    was to emphasize that. There may be good reason for that.
        Do you agree with that assessment that that has happened
    factually, No. 1? And, No. 2, if it has, doesn't that call into
    question the utilization of the Service for a purpose that may
    not be a No. 1 priority in terms of preserving the seal, as we
    say?
        Mr. Weaver. As far as whether I agree that there was a
    shift, there was a re-distribution toward revenue protection,
    and to some degree that is valid, to where we look at the
    protection of the revenue and the assets of the organization. I
    think that is what we are entrusted to do, so to that extent
    there was.
        We also have to look at the time period that we're talking
    about. During that time period, the Inspection Service was also
    performing the role of the Inspector General and was performing
    audits and audit-related activities, so I think some of the
    work that was done in the revenue assurance area was a mere
    extension of that audit work that we performed.
        Since then, at least since I have taken over the
    organization, I am dedicated to refocusing our mission and
    refocusing our efforts to what our mission is, and that's
    protection of the employees and assets and ensuring that the
    American people have confidence in using the mail system.
        Mr. McHugh. And I appreciate that, and I want to underscore
    right here nothing in this hearing is in any way intended to
    call into question your abilities. In fact, I would note that
    in the full testimony of FLEOA they, I think very appropriately
    and right at the onset of their testimony, their full written
    testimony, attest to your professionalism and support, your
    approach, so I commend you for that.
        Mr. Nolan, obviously I'd like to have you respond to the
    conversation we just had, but if you look at the budget
    allocations for the Inspection Service since that review in
    1994 in its entirety, I think it is fair to say that the budget
    increases have been incremental, I suspect mostly a reflection
    of pay adjustments.
        You heard the comment from Mr. Eager that he has concerns
    that the administration views the Inspection Service--I believe
    the phrase he used was ``overhead.'' Would you care to respond
    to that and why, in an era when you definitely have the Postal
    Service into new endeavors like e-commerce, that I don't happen
    to personally believe is any way inappropriate, why we haven't
    seen a commensurate inspection of the Inspection Service, and,
    in fact, the current plan calls for diminution of another 125
    agents and such. What's the rationale behind all of that?
        Mr. Nolan. Well, there's a couple of things that come
    together here. No. 1, the 125 agents deal with audit work,
    which has now been transferred to the Inspector General's
    function, so that work that was done by the Inspection Service
    now will be done by the Inspector General, so there's a--that's
    really a separate issue.
        I think that, when it comes to resources in the Inspection
    Service, the Postal Service has had lean times before. When you
    are structured to break even, almost every year is a lean year,
    and we feel very strongly that the mission of the Postal
    Service and the need to maintain security is paramount.
        As Ken Weaver said, we don't control what the Inspection
    Service works on. They do what they feel they need to do to
    accomplish that mission.
        I think some of the numbers that were raised before are a
    little bit off. In the 1970's it was said there were 1,700
    Postal inspectors, now there's about 2,100 Postal inspectors,
    so that growth of 20 percent is certainly a reasonable growth,
    given the fact that the number of employees that we've got has
    certainly not grown that much during that period.
        I think that the--from the standpoint of management, the
    Inspection Service needs to be independent in the way it
    operates, meaning that it needs to make its decisions about
    where it needs to put its emphasis, and that shouldn't be done
    by management dictating and is not done that way.
        I think that the key thing, though, is that their
    involvement in every aspect of the Postal Service to know where
    to place their emphasis to be most successful is the key thing,
    and that's where the current structure, I think, serves us so
    well.
        Mr. McHugh. Thank you.
        Mr. McHugh. Jim Campbell, the point I was trying to explore
    here is that any time you've got an activity like the Postal
    Service it seems, if not just logical, absolutely essential
    that there be a level of coordination between the
    administrative function and what they perceive to be the
    shortcomings, the challenges, and the direction of, in this
    case, the Inspection Service.
        To what extent do you think that's important, No. 1, and,
    No. 2, when you have a proposal, as we do several, to move it
    to another agency, whether it be Treasury or whatever, Justice,
    is that not--that coordinated effort not lost? And is that a
    problem?
        Mr. Campbell. Well, from the standpoint of the private
    companies, we don't want to see, of course, the Inspection
    Service being used as a commercial tool--that is, as part of
    commercial policy; that we don't want to see coordination for
    commercial ends.
        As I say in the statement, we did notice--we didn't know
    why--but we did notice in 1992 or 1993, an increase in visits
    by Postal Inspectors the private express companies.
        Maybe this, in fact, was a result of the 1992 review. I
    don't know.
        Mr. McHugh. There was a 1994 review, though.
        Mr. Campbell. There was a review----
        Mr. McHugh. Maybe they were getting ready for it.
        Mr. Campbell. Well, I don't know. You're talking about
    larger issues that I certainly can't comment on----
        Mr. McHugh. Yes.
        Mr. Campbell [continuing]. In terms of commercial policy,
    certainly, we would not like to see such a coordination.
        Mr. McHugh. You say for commercial interest.
        Mr. Campbell. Yes.
        Mr. McHugh. When you say that to me, I'm thinking the ad
    that was used that, in fact, very directly touted the fact that
    the Postal Service's e-commerce initiative does have the
    Inspection Service guarantee, if you will, behind it. That's
    one thing. Are there other phases of that that concern you for
    commercial purposes?
        Mr. Campbell. You know, people forget what happened not too
    long ago, but in the mid-1970's--I remember it very well--the
    express companies were just struggling entities. They were just
    starting out. And there's no question that the Postal Service
    was afraid of the express companies and tried to stop them from
    developing, and the Inspection Service was very active, and it
    was presumably coordinated all the way up to Mr. Bolger, but I
    don't know the details of internal Postal management meetings.
    I just don't know, but that's a serious matter.
        Now, the express companies are today big and successful and
    it is not so much of a threat, but e-commerce is another new
    developing area. You surely would not want to see that sort of
    use of the police power to stop a new industry.
        Mr. McHugh. Yes.
        Mr. Nolan, do you want to respond to that?
        Mr. Nolan. I'd find it very hard for anyone to believe that
    the Postal Service was highly successful in killing the
    industry that we are supposed to have been attacking. United
    Parcel Service made $700 million last quarter. So if we set out
    to do it, we did a very poor job of it.
        I think the fact is that, in conjunction with audits in the
    past, there were identifications of areas where, whether it is
    in revenue protection or monopoly, that the Inspection Service
    emphasized. That is not part of their role at this point in
    time.
        It has been shifted. The audit function has been shifted to
    the IG. At its peak, we had two people in the country that were
    involved in monopoly related issues.
        The fact is that we did not have an appreciable impact on
    that industry. The fact is we are not trying to kill the
    Internet industry for the competition. This is not about
    competition. This is about effective law enforcement.
        When we--in our ads for e-commerce, what we are touting is
    the fact that the same trust and security that you have with
    the mail you would have with the Postal Service on the
    Internet. We're not touting Federal agency. We're not touting
    the Inspection Service. To the extent that people feel strongly
    that by doing business with us they are dealing with a secure
    agency, I think we ought to be congratulated for that. But we
    are not touting the fact that it is the Inspection Service.
        We feel there are a lot of technical issues involved in
    security. We also feel that there are laws and policies that we
    have that private companies don't have that are as important,
    in some respects, as the Inspection Service role in those
    areas.
        Frankly, we don't sell lists. We have been maintaining for
    this Nation names and addresses of people who move forever.
    People know they can trust us in that space.
        I think that the issue here really, though, is not--for us
    in the Inspection Service it is not competition, it is
    effective law enforcement.
        Mr. McHugh. Yes. Jim.
        Mr. Campbell. I just want to clarify one point. I certainly
    did not mean to imply that the Postal Service is doing to
    anybody what they were trying to do to us in the late 1970's. I
    have no reason to think so. It's simply a danger that you
    should learn from history. That's all.
        Mr. McHugh. I understand. Thank you.
        The gentleman from Ohio, Mr. LaTourette.
        Mr. LaTourette. Thank you, Mr. Chairman.
        Mr. Nolan, just to followup on your last answer, isn't it
    implicit, though, in that kind of advertisement that you're
    almost saying that your stuff is safe? I mean, that's what you
    want people to believe, that your stuff is safe. And you don't
    say necessarily that others aren't safe, but implicit in that
    statement is why is your stuff safe, and isn't it safe because
    of the ability of the Postal Service to rely on Federal law
    enforcement powers to ensure its safety, which you don't have
    to say ``Inspection Service,'' but isn't that implicit in that
    observation?
        Mr. Nolan. Well, I think--what I hope will be--what is
    implicit in that whole thing is a range of things. Part of it
    is that people know that we're not going to sell lists, unlike
    other companies that are doing this for profit, or when they go
    out of business the last thing they do is to sell the list to
    someone else. So I think we imply a lot of things by those ads,
    but basically what we are saying is, ``Whatever causes you, as
    an individual, to feel good about dealing with the Postal
    Service, you can continue to feel good about the Postal Service
    because we're there.''
        Mr. LaTourette. OK.
        Mr. Campbell, in his opening statement Chairman McHugh
    referenced a letter that was written by Deputy Attorney General
    Mr. Raben, who is well known to the full committee because of
    his work on other matters recently, but in the second page of
    that letter--I just want to read you an observation that he
    makes and invite your comment on it relative your written
    testimony that talks about maybe some of the competitive
    problems. The specific quote is, ``Current law also does not
    address problems of disparity in the Federal criminal justice
    system's handling of crimes against the Postal Service and
    crimes against its private sector competitors.''
        I think that's the one argument, I suppose, that he's
    making. Others make the argument that, well, if a crime is
    committed via a private parcel service, you have access to
    police officers, you have access to internal security measures,
    you have access to the courts.
        Is there any observation that you would like to make
    relative to Mr. Raben's comment?
        Mr. Campbell. I think that the Department of Justice has
    put their finger on the problem, but I don't know how bad the
    problem is. I do think it is true, if you read through title 18
    of the U.S. Code, you'll see that there are lots of laws that
    protect the Postal Service, the property of the Postal Service,
    the employees of the Postal Service, that don't apply to
    private companies.
        The position of the private companies certainly would be
    that, where the Postal Service competes with a private company,
    these laws should apply equally to everybody. It is just a
    simple matter of principle. It is not that the Postal Service
    should be less protected, but the safety of a FedEx or UPS
    driver is no less important than the safety of a Postal Service
    worker. That's simply their position.
        H.R. 22, as you know, provided for an overall review by--I
    think it wound up the FTC in the last version--of the laws to
    just identify these differences for Congress to make a judgment
    on. I think it is a good idea.
        Mr. LaTourette. Thank you.
        Mr. Nolan, I have a couple of questions that don't relate
    to the specific topic of this hearing, but they are of concern
    to some of the folks in Ohio relative to our State law relative
    to charitable mail versus the Postal Service's rules and
    regulations, and specifically Ohio is one of, I think, 12 or 13
    States that has a requirement that people involved in mail
    solicitations for charity--one, we require you have a
    professional fund raiser, and, two, there needs to be a
    contract in place between the charity that seeks to do it
    saying that they're going to get some money back. The fear is
    that these solicitations go out and none of the dough comes
    back to the charity, and so we have a particular problem with--
    everybody likes police work and police athletic leagues, for
    instance, but when you peel back the onion we find out none of
    the money goes to any kids or police agencies.
        Is that a problem that you are familiar with, the disparity
    between the Postal Service regulations in that regard and
    potential conflict with State laws?
        Mr. Nolan. I, personally, am not. I'm sorry.
        Mr. LaTourette. OK.
        Mr. Nolan. But we can certainly research that and get back
    to you on it.
        Mr. LaTourette. That's what I was going to ask you, to not
    hog up the purpose of this hearing. If I gave you a couple of
    questions in writing, could you get back to me on that?
        Mr. Nolan. Absolutely. Immediately.
        Mr. LaTourette. Thank you, Mr. Chairman.
        Mr. McHugh. I thank the gentleman.
        Inappropriate--the word is in the eye of the beholder,
    oftentimes, kind of like beauty, and we've heard that word
    quite often here today.
        Let me ask Jim Campbell, in your opinion, do you believe
    that the Postal Service has the legal authority to regulate in
    areas in which it also competes?
        Mr. Campbell. No.
        Mr. McHugh. You do not?
        Mr. Campbell. But they exercise that authority.
        Mr. McHugh. Pardon me?
        Mr. Campbell. But they exercise that authority,
    nonetheless.
        Mr. McHugh. Well, yes, obviously.
        Mr. Campbell. That is to say, the Postal Service monopoly
    regulations tell the private express companies, ``You have to
    charge at least so much.'' They have a certain set of rules
    about how you conduct the business. There are provisions about
    how you have to open your books to inspectors. There are
    provisions that provide that if you do not abide by the
    regulations they can, in essence, suspend your right to
    operate--that is, withdraw the administrative suspension with
    respect to a given private express company or a given customer.
    So, in essence, it is price and entry regulation.
        Do I think that Congress ever gave them that authority? No,
    I don't. The Postal Service bases their claim to that
    authority--the suspension power--on a 1864 law which is now 39
    U.S.C. 601b, I think that if you go back and look at the
    history of that law, it is perfectly clear that they do not
    have such authority.
        Now, this has never been tested in court, so it is a
    difference of opinion, but that's certainly my opinion.
        Mr. McHugh. Well, that's what we ask for.
        Let me ask you another opinion. Given what you just said,
    do you think there is any legal validation in their activities
    on e-commerce and on a competitive product as represented in
    the MOU that was executed between the Inspection Service, the
    FBI, and the Secret Service? Does that fill the gap, in your
    opinion, at least in that area?
        Mr. Campbell. Mr. Chairman, what I have to say about 601b
    and the suspension power is the result of a lot of time in the
    library, and some of it in the archives of the United States. I
    have not spent so much time on the e-commerce memo of the
    Attorney General. I know what you're talking about, but I just
    don't know enough about it to really make a comment.
        Mr. McHugh. Fair enough.
        Mr. Nolan, do you want to respond to your illegal behavior,
    alleged?
        Mr. Nolan. I think we are very legal. I, obviously, I think
    what Jim Campbell said is right, there is a difference of
    opinion there. I do think that we are focusing on an area where
    the Postal Service, as I said, spends typically less than one
    person a year working on. It is not a major activity that we
    undertake to monitoring the private express statutes. Private
    express statutes do not pertain to the Internet, so I don't
    think that's particularly relevant.
        I do think that what we're trying to do on the Internet is
    offer choice, offer--and in that choice, a lot of features. But
    we're not trying to set standards. We're not trying to preclude
    competition. We're trying to satisfy customers and maintain the
    viability so we can maintain our universal service.
        I think it is--some of the issues that related to the
    private express statutes and hard copy mail and the couriers we
    could probably debate forever, but I don't think it is relevant
    to the issue that we're facing with e-commerce and I don't
    think it is an issue that is an ongoing issue for the Postal
    Service and any industry right now because we're not actively
    enforcing it. We don't have problems in that area.
        Mr. Campbell. Mr. Chairman, excuse me, but I really have to
    comment on this at one point.
        So far as I can determine--and I certainly have not made a
    systematic study--it is true that the Postal Service has not
    been spending a lot of resources enforcing the Postal monopoly
    regulations since 1994, since the Postmaster General made that
    statement to the Senate committee. However, that is not what is
    going on in real life.
        What is going on in real life is that the postal monopoly
    regulations are Federal regulations that are embodied in the
    Code of Federal Regulations, and that has a real effect on
    people.
        If you go to a businessman and say, ``I have a very good
    service and I would like to offer you this delivery service,''
    and the business checks the Code of Federal Regulations and it
    says I can't do this service legally, and that chills the
    business significantly. Very large businesses are affected by
    that.
        The fact that the Postal Service does not make a lot of
    calls on customers doesn't change the fact that those
    regulations affect business. And if the regulations are not
    meant to be enforced, they should be withdrawn. If they are not
    legal, they should be withdrawn.
        Those regulations are a serious problem.
        Mr. Nolan. And I think that the chairman knows our
    feelings, as his, that the laws governing the Postal Service
    need to be changed. We need Postal reform.
        I don't think that anyone, in their wildest dreams, would
    say that the Postal Service is on the advantageous end of an
    unlevel playing field, given the restrictions that we have. I
    don't think anyone would trade places with us with the
    restrictions that we have.
        I think that, to maintain universal service at reasonable
    prices and recognizing what is going on in the industry and
    throughout the country and the world, change needs to occur.
        I think it is dangerous, though, to start picking out
    individual bits and pieces of that, and I think it makes more
    sense to do the kind of thing which you have undertaken, which
    is to look at the whole system to try and see what changes need
    to occur.
        So we're not protestors for no change. In fact, we want
    change. But in this particular issue I think picking out one
    individual piece of that is just not an acceptable way of
    approaching it.
        Mr. McHugh. Yes. And I fully understand that. If I thought
    we could win, we'd have a vote on the broader issue today, but
    I can still count.
        Mr. Nolan. You get the yellow jersey.
        Mr. McHugh. Yes. But, nevertheless, with full respect of
    what you say about picking, the purpose of the hearing is to do
    just that, and we're going to continue a little bit further, if
    we may.
        Jim Campbell made a series of suggestions, some of which
    have been supported in advance by others--for example,
    narrowing of the monopoly to serve as a way by which to take
    care of some of these competitive concerns.
        Mr. Eager, how would FLEOA respond to a suggestion, a
    proposal to narrow the monopoly and contain yourselves to that
    function?
        Mr. Eager. Well, Mr. Chairman, we sit back and we hear
    everyone talking about privatization in the future, and we are
    a law enforcement agency, and our memberships are Federal
    agents. The very root of what we do is arrest people and pursue
    prosecution of people that violate statutes from the Postal
    laws.
        When we hear talk of monopoly or this and that, what our
    concern really goes back to is the sanctity of the mail, the
    very root of the reason we exist.
        We are attached to a quasi-business/quasi-Government
    entity. The Inspection Service is Government, was meant to be
    Government, but yet when I hear the conversation from the
    business aspect of it, it has very little law enforcement
    meaning to me.
        Mr. McHugh. Yes.
        Mr. Eager. But I do know what the intent was when we were
    formed by our forefathers, and if they were here today they
    would tell all of us that anyone should be able to mail
    something and there should be an expectation of privacy, and if
    it is taken, someone should get them.
        Mr. McHugh. How would you react to the polar opposite of
    that proposal, and instead see your jurisdiction expanded to
    cover the private side of the equation, as well?
        Mr. Eager. I think time is going to take care of that. I
    think Congress, I think the way the Postal Service moves in the
    future, technology, competition, I think it is going to move us
    in that area. At some point there will probably have to be
    consideration to move us under the executive branch of
    Government, again taking the route back that people have an
    expectation of privacy in their mail.
        And I believe I said earlier, if it does move toward
    privatization or reform, that shouldn't negate our
    responsibility to the public to make sure that privatization
    doesn't interfere with their expectation of privacy.
        Mr. Gallo. And, Mr. Chairman, if I could just mention----
        Mr. McHugh. Mr. Gallo.
        Mr. Gallo. Thank you. The Deputy Postmaster General was
    mentioning how they have to break even at the end of the year.
    Federal law enforcement sometimes doesn't break even. We are
    not a profitmaking organization. If it takes several million
    dollars to track someone down, that's what it takes. That's
    what is done. These guys, these Postal inspectors, the Feds,
    they're cops, and sometimes law enforcement is not a
    profitmaking industry. It is not meant to be.
        Mr. McHugh. Yes.
        Mr. Eager. And, Mr. Chairman, we're concerned about the
    nuts and bolts of things, such as our lab. They are a very
    integral part of the Inspection Service, and the fact that we
    have been trying to achieve pay comparability for them since
    1995 and that was denied--I understand there was an IG report
    that came out. I haven't read the report, but I believe it
    recommended it and that it was denied without what I believe to
    be consideration of that report.
        What we're talking about here are forensic people that are
    instrumental in some of our investigations, and we are losing--
    we could potentially lose a lot of people from this, and they
    are hard to replace. That's a nuts and bolts law enforcement
    decision. It's not overhead. When we cut that, it hurts our
    agency, and FLEOA feels that way very strongly.
        Mr. McHugh. I believe you also make the claim that the pay
    disparity severely restricts your ability to both attract and
    retain those positions.
        Mr. Eager. Yes, sir.
        Mr. McHugh. Mr. Nolan, do you want to respond to that? If
    you choose not to----
        Mr. Nolan. No, that's fine. That's fine. Both the chief
    inspector and I agree that the inability to make a final
    decision on that has gone on too long. There has been no denial
    of--in a final form of that request for modification to the pay
    structure. There are still meetings taking place. The next
    meeting is scheduled for August 9th. It needs to be resolved.
    There are some knotty technical problems that we have been
    trying to work through. We need to do that. We need to work
    through them, and we're going to make sure that that happens,
    but there has been no final denial. The labs are a very
    important part of our operation, and sometimes people with best
    intentions get involved in little nitty-gritty details and fail
    to see the big picture. I think we need to get to that big
    picture and solve it.
        Mr. McHugh. OK. Let me return to my original question to
    Mr. Eager.
        How would you respond to an action that would either limit
    the Postal Inspection Service to investigations by narrowing
    the monopoly, or, second, to take the opposite track, and that
    is to expand their jurisdiction and to include the private
    sector companies.
        Mr. Nolan. Well, the Inspection Service needs to make sure
    that people follow the law. If the law changes, then the work
    that the Inspection Service would do would change. So, to the
    extent that there is a law on the books, we need to enforce the
    law.
        The fact is that attacking the monopoly issue has not been
    a major emphasis for the Inspection Service. How that monopoly
    law might change and, therefore, what the Inspection Service
    might do I can't say.
        When it comes to expanding the Inspection Service to cover
    private enterprises, my concern with that is one of scale and
    one of familiarity.
        Part of the reason why the Inspection Service is so
    successful is that they live and breathe this stuff every day.
    They are part of everything we do. They are in every meeting
    that we hold. They understand what is going on. We don't direct
    their activities, but knowing what is going on in our
    organization makes them a lot more effective.
        To now increase that span of control over areas where we
    are not as familiar I think does nothing to enhance our
    abilities to do our current job and could undermine that and
    may not make us the best people in the world to take on that
    new responsibility.
        Again, we fund our own security and Inspection Service
    activities. Those are not funded in the private sector. With
    increased law enforcement activities of some nature--and,
    again, I don't recommend it be ours--would there come some
    increased regulation of those private companies. Who can say?
    And I'm not sure that they would be particularly thrilled with
    that.
        So I think that the whole thing would need to be examined,
    but for us to expand our role I don't think would enhance our
    current success and our current mission, and I'm not sure that
    we would be the best people in that other space.
        Mr. McHugh. Mr. Weaver, do you agree with that?
        Mr. Weaver. Yes, Mr. Chairman, I do agree with it. And, as
    far as our role goes, you go back to the law and the fact that
    under title 39 we have been charged with a mission, and that
    mission has been unswerving. To expand our authority--again, I
    agree with the Deputy Postmaster General that we would lose
    focus, we would lose what was intended to--what our intended
    goal and mission was. And I just don't think it would be good
    for the Postal Service or it would be in the best interest of
    the American people to do that.
        Mr. McHugh. Mr. Nolan, I've got just one quick question. I
    am detecting a lack of enticement on your part that to move the
    Postal Inspection Service to the Treasury Department or Justice
    would produce almost half a billion dollars in budgetary
    savings. This is so important that that's not an issue?
        Mr. Nolan. Well, first of all, I think it is so important
    that it is absolutely a completely small issue for us, compared
    to the importance of maintaining the trust and carrying out the
    mission that we have, so I do think it is a very small issue.
        I also don't think it is a good idea to throw additional
    costs on the taxpayers because the Treasury obviously or the
    Federal Trade Commission or whoever is going to want money to
    support those activities of an Inspection Service, and I think
    the current model that says that you've got to pay what you
    get, pay for what you get, is not a bad one. But I do think for
    us it is a completely secondary issue, and second is way out of
    the ball park compared to the first one, and that's the
    sanctity of mail, the protection of our employees. It is not a
    budgetary issue to us.
        Mr. McHugh. What about containing the Inspection Service to
    pursuing questions that are related only to non-competitive
    products? I mean, after all the core of this discussion and
    those who seem to be concerned about it focuses on the issue of
    the Postal Service's ability to market the Inspection Service
    in the competitive area as a value-added kind of asset.
        Mr. Nolan. Again, I am being very careful to make sure that
    our organization does not market the Inspection Service as the
    reason why we have trust.
        Mr. McHugh. But, if I may, but you did make a suggestion in
    a public ad that that was there, and that--I mean, I'm not
    necessarily criticizing the attempt. I understand the role of
    advertising. But the suggestion was certainly there that that
    makes your product better than a private company.
        Mr. Nolan. Yes. No ad that we've put out has indicated that
    the Inspection Service is part of our security, and----
        Mr. McHugh. Well, back to Mr.--I don't mean to keep
    interrupting you, but back to Mr. LaTourette's point, you
    didn't use the words, but you made the suggestion. You don't
    agree?
        Mr. Nolan. I know what you're saying. To some people the
    fact that we have an Inspection Service is important. And would
    we do anything to tell them no, it's not important? The answer
    to that is no.
        Mr. McHugh. OK.
        Mr. Nolan. I think that, from a practical standpoint, if
    you say that all that we would work on is the noncompetitive
    things, the only thing that we have is noncompetitive, in a
    sense, is first-class mail. Advertising mail certainly has
    competition. Parcels have competition. When you are looking at
    investigating crime, crime doesn't know classes of mail, and we
    travel from one class of mail to another when we are
    investigating certain aspects of crime, whether it is
    pornography or child abuse, whether it is fraud. It travels
    across all classes of mail, and so I don't know how you do
    that. I really don't know how you do that.
        Mr. McHugh. How do you do that?
        Mr. Campbell. I think Mr. Nolan has a good point. I'm not
    suggesting that it is a very simple matter. A lot of H.R. 22
    deals with exactly these kinds of problems, because there is a
    certain unity of operation in the transport and collection and
    delivery of the mail, and some of it is competitive and some is
    not the provision in H.R. 22 about allocating overhead, the
    equal cost coverage provision, is an attempt to deal with that
    issue.
        With respect to the Inspection Service, I think that you
    have to think in similarly creative terms when you have joint
    operations. Obviously, if the Postal inspectors find a truck of
    stolen first-class mail, they are not going to give the mail to
    the Postal Service and give the parcels back to the thieves.
    All right. Nobody is advocating anything silly like that. But
    perhaps with accounting procedures you can take care of it.
        Certainly, as implied by your questions, you want to draw
    the line at misuse of the Inspection Service. You want to draw
    the line at activities that are not bound up with monopoly
    mail. When you get into e-commerce, that is probably
    operationally separate. The solution, in H.R. 22, was to create
    a separate corporation, which presumably would have taken care
    of the problem. But you want to first try to limit the
    Inspection Service to joint operations that you can't avoid
    protecting, as long as you are protecting first-class mail. In
    addition, you want to ensure the work of the Inspection Service
    is not expanded beyond those activities. You have to do it with
    some good will and some creativity. That's all.
        Mr. McHugh. Sounds like a damn good bill. I'll have to look
    at it. [Laughter.]
        Mr. Campbell. Go back and look at it again and see if you
    don't like it.
        Mr. McHugh. And I appreciate the accolades. The purpose of
    the hearing is really not on that focus, but it does provide
    one approach.
        Jim Campbell, you mentioned in your comments that there was
    the phrase used ``a coercive nature''----
        Mr. Campbell. Yes.
        Mr. McHugh [continuing]. With respect to the Postal
    Service, Inspection Service and its powers. Don't you find that
    in any law enforcement organization? I mean, doesn't the FBI
    have the coercive power of Federal law behind it? Does not the
    local police Doctor have the coercive power of the municipal
    code? I mean, isn't that kind of part and parcel with having a
    police agency overseeing anything?
        Mr. Campbell. Sure it is. Nobody objects--nobody can
    reasonably object to the fact that a law enforcement agency
    uses coercive powers. The problem in the past has been that the
    monopoly regulations create some of this coercion, apparently
    out of thin air, as predicates for using the suspension, taking
    advantage of suspension, and because the coercion is coming
    from a competitor in the field whose commercial incentive
    determines how the power of the Government is being used.
        Now, as I suggested in the testimony, you can certainly
    imagine, at least, redefining the monopoly in terms that are
    much more self-executing, so you don't need so much
    administration. You don't need so much coercion.
        But, furthermore, the coercion that is being used, the
    judgment that goes into enforcement, ``Shall we, push this guy
    or not?''--that judgment ought to be rendered by somebody who
    is impartial, not by somebody with a commercial interest.
        Mr. McHugh. Yes.
        Mr. Campbell. That's all I'm saying. I'm certainly not
    suggesting that in the end, whatever the monopoly is and
    whatever the laws are to enforce, it will not be coercive.
    Obviously they are going to be coercive.
        Mr. McHugh. So your concern is either, No. 1, your last
    point, that when you have a competitive interest it causes
    difficulties in terms of a truly unbiased enforcement of
    provisions.
        Mr. Campbell. Sure.
        Mr. McHugh. Or, No. 2, that, as a followup to your earlier
    comment, in your opinion you have a nexus here between the
    natural and probably unavoidable coercive power of any police
    agency and what you feel are, if not inappropriate, perhaps
    illegal or excessive assumption of power, police power, because
    I believe you said they didn't, in your opinion, have the
    authority under law to do some of the things you are doing.
    True?
        Mr. Campbell. Yes. I think that I do not want to be too
    accusatory here, but I do think that even veterans of the
    Postal Service, looking back over the last 25 years, would say
    that probably they've done a bit too much in pushing on the
    private express laws.
        I think that if we could all rewrite history, you could
    imagine a much more objective, fairer approach to defining and
    enforcing the monopoly. My suggestion is simply that if you
    look back at that 25 years, you can clarify the mission of
    everybody so that the next 25 years are better. That's all.
        Mr. McHugh. Mr. Nolan.
        Mr. Nolan. I thought I heard earlier that there wasn't any
    inference that the Postal Inspection Service had operated
    inappropriately, it was the way the law was written that was
    the real problem. Now apparently that's--I'm either hearing it
    differently, or maybe there is some other coercion taking
    place.
        My sense was that what Jim Campbell had a problem with was
    the way the law was written that made that monopoly statute
    something that people didn't even have to walk in the room and
    talk about, someone reading it would be uncomfortable.
        I think there is a big difference. When it comes to the
    Postal Service and how we reacted back in 1970 to competition
    that we never had before I think is an interesting discussion,
    but I don't think it is particularly relevant to where we are
    today.
        Mr. McHugh. I thought I heard Mr. Campbell respond to my
    question, did he believe that precisely--I didn't mention if
    section 1341 permits the Postal Service to regulate in the area
    in which it also competes, that in his opinion they did not.
        What did we hear?
        Mr. Campbell. I think that the heart of the Postal monopoly
    regulations of 1974, which are the current regulations, is the
    suspension power--the power that the Postal Service exercises,
    purportedly under 601b of Title 39. I think that the Postal
    Service has misinterpreted that provision. I'm not the only one
    who thinks so. I have good reason for thinking so. I think
    those regulations--the heart of those regulations represents a
    misinterpretation of the law.
        Now, that's not to say that there is no Postal monopoly.
    Obviously, there is a Postal monopoly.
        Mr. McHugh. Well, I was specifically talking about
    competitive products.
        Mr. Campbell. I'm sorry.
        Mr. McHugh. So am I.
        Mr. Campbell. I'm sorry. With the monopoly regulations what
    the Postal Service is doing is defining the line between
    competitive and noncompetitive.
        Mr. McHugh. OK.
        Mr. Campbell. It is not exactly that they are regulating
    competitive products, but they are defining that line in a
    rather creative manner, let's say.
        Mr. McHugh. Speaking of creativity, Mr. Nolan,
    hypothetically, if we were to move the Postal Inspection
    Service en masse, just pick it up as it exists today and imbued
    with all of the authority and all of the responsibilities it
    has and plop it into Treasury, for example, wouldn't your
    creativity still allow you to suggest that you, as the United
    States Postal Service, have a certain assurance of sanctity
    that others do not, because, indeed, a Postal Inspection
    Service located in Treasury or within the Postal Service would
    still have the responsibility of doing what it does today? Not
    that you would ever inappropriately advertise, but if you were
    just, you know, sitting around thinking about it.
        Mr. Nolan. I don't think it would be as effective. I think
    that we've got a focus with the Inspection Service right now
    that couldn't be guaranteed if the agency was picked up en
    masse and moved to another location.
        I think that the Nation benefits from the fact that we
    maintain that focus and cover all activities that we undertake.
        Mr. McHugh. Yes, sir. I understand that. And that really
    wasn't the point of my question. My question was more a truth
    in advertising question. I mean, in terms of--one of the major
    concerns that we've heard repeatedly is that the Postal Service
    right now is using the existence of the Postal Inspection
    Service as a reason why your e-commerce product is more secure
    than perhaps some other one.
        My question is, if you did that--and I understand you would
    say you have not, but if you were to do that today and tomorrow
    the Postal Inspection Service were part of Treasury, the same
    assurance is there. I understand your concern about diminution
    of effectiveness. I'm talking more about the advertising kind
    of perspective.
        Mr. Nolan. Again, I continue to believe that the reasons
    why people trust us are varied, and I think that the Inspection
    Service doing its job to some people indicates there should be
    trust, I think to some people the fact that we've handled
    addresses a certain way and can't sell things and have certain
    mandates that we have to live by and certain policies that we
    adhere to, and the way we've done business over the years
    indicates that we should be trusted.
        I think you are not going to see from us an emphasis on the
    Inspection Service as the reason why people should do business
    with us. If we had an Inspection Service that was constantly
    monitoring our products and services and reported to someone
    else, would we still have that same benefit if they were as
    effective? The answer is probably yes. We would still emphasize
    the fact that this is an organization that can be trusted,
    both, we think, from a technology standpoint and from a
    practice standpoint.
        The investigatory aspect of it is really just one leg of a
    stool and can't stand without the others.
        Mr. McHugh. Right, because your announcement--``yours''
    being USPS--announcement that Post-X would be the first
    commercial provider of electronic postmark speaks very
    specifically about affording the sender legal protections and
    remedies for illegal interception and tampering.
        If that were an Inspection Service--I assume that's who you
    meant, and if you didn't I think one can reasonably conclude
    that, but an Inspection Service in Treasury would still provide
    those legal protections and remedies for illegal interception.
        Mr. Nolan. We believe it is against the law to permit
    interception and modified seal, et cetera, communications,
    whether you're dealing with the Postal Service or anybody. The
    fact is we just happen to use the Inspection Service to do
    investigation. But I think that statement could be made by our
    competitors, too.
        Mr. McHugh. FedEx could tout the FBI, for example?
        Mr. Nolan. Sure.
        Mr. McHugh. Really?
        Mr. Nolan. That's correct.
        Mr. McHugh. Jim Campbell, is it not true that many of the
    concerns you voice are not, in and of themselves, remedied by
    just a transfer of location out of the Postal Service? I mean,
    I think you'd make the argument that--many have said that would
    do it. I don't see that that does. I don't see that without--if
    you're going to transfer, the same problematic circumstances
    exist across the wide range unless you also take the next step
    of doing some kind of jurisdictional amendment.
        Mr. Campbell. I think you're right. As I said in the
    beginning, I think the Inspection Service, by and large, in my
    experience, has been attempting to enforce the legal framework
    that they're given by others, by the Law Department or by
    Congress or whatever, and the fault lies not so much with the
    Inspection Service and how the law is administered but with the
    overall legal framework. I think you have to look at both.
        Mr. McHugh. Mr. Weaver, did you want to say something?
        Mr. Weaver. Yes. Thank you, Mr. Chairman. I think, once
    again, we've got a--and I agree with Mr. Campbell. I think we
    perform the role that we are given by law, and will continue to
    perform that. And I've always said that these hypothetical
    situations, although we need to consider them and we need to
    think about them, from our perspective it is very important for
    the organization to determine where they are going before you
    extract the Inspection Service from the organization.
        We have been charged with a mission of protecting the
    mails, protecting the employees of the Postal Service, and
    we're going to continue to do that and continue to enforce the
    laws, and that's our primary mission and I can't see it
    changing unless there is a major change in the organization,
    and then we have to look at it.
        Mr. McHugh. Mr. Eager or Mr. Gallo, if you've ever read a
    budget bill in Congress you know we spend a lot of time dealing
    in fantasy, so let's spend a little time here right now.
        If you had, if not unlimited, a significant opportunity for
    added resources and you--either or both of you together--could
    direct those resources, where would you put them right now?
    What would you like to see the Inspection Service doing beyond
    what they are budgetarily capable of doing today?
        Mr. Eager. It would be, again, based on a review of what is
    needed, but prohibitive mails, narcotics interdiction, we do a
    lot of good work in that area, but it is just, you know, I
    believe we could do more. I believe we could do more in the
    area of child pornography. But those are just guesses without
    an assessment by each division as to what the complaints are or
    what the needs are, discussions with the U.S. Attorney, and, of
    course, mail fraud, health care fraud.
        Again, it would be consultation with the U.S. Attorney's
    office in conjunction with their priorities as a law
    enforcement agency that we would consider.
        Mr. McHugh. Mr. Gallo, have you got any----
        Mr. Gallo. The devil is in the details. How much staffing?
    Funded by corporate taxes? User fees for this service?
        For the expansion of the Inspection Service's jurisdiction
    to ensure the sanctity of all communications, giving that to
    the professional men and women, these criminal investigators
    within the Inspection Service to expand their jurisdiction to
    these other areas of communication, they would handle the job
    and they'll handle it professionally, just as professionally as
    they are handling it now.
        But, as you said, with the budget bills, the devil would be
    in the details. How would they be funded? How much staffing?
        Mr. McHugh. Yes. Mr. Eager.
        Mr. Eager. Our concern, of course, is the future. I mean,
    every time we pick up, like I said before, the paper, we read
    of privatization, reform. I'll be retired, but I wonder about
    the sanctity of my mail when I'm 70 years old. If it is
    privatized, what happens. If it is reformed to the extent--
    where does privacy, where does the sanctity issue go?
        The Inspection Service has done it. I mean, for 200 years
    we've done this, and we should have a place in the future of
    doing this.
        Mr. McHugh. Yes.
        Mr. Eager. And that's why I think maybe it should be
    debated. I think the future will take care of itself, again,
    with technology. We may very well get to that point of needing
    to move under the executive branch of Government, depending on
    what happens to the Postal Service.
        Mr. McHugh. So you would share Mr. Weaver's opinion that,
    in terms of a logical sequence, you have to position the Postal
    Service in whatever way you're going to, and there's a variety
    of thoughts as to what should occur there before you can make a
    rational judgment on the Inspection Service?
        Mr. Eager. Absolutely. I mean, because if you just pick us
    up and put us under the executive branch of Government right
    now at this time with our current jurisdiction, you're still
    going to have the perception of unfair competition because
    we're enforcing the same statutes. The only way it could be
    conceivable is if it is expanded to other postal carriers in
    the postal system.
        Mr. McHugh. You mention your review in 1974 of the
    Inspection Service, the evaluation--or 1994, wasn't it, sorry,
    1994 as the last time that was conducted.
        Mr. Eager. Yes, sir.
        Mr. McHugh. I get the impression that you feel another one
    is due. Is that a correct impression?
        Mr. Eager. Yes, sir, I do.
        Mr. McHugh. Mr. Nolan or Mr Weaver, you want to----
        Mr. Weaver. Yes, Mr. Chairman. I am very familiar with the
    review that was conducted in 1994. It was a level of service
    review. What it attempts to do is evaluate the work flow and
    evaluate the resources to that work flow.
        I'm not saying it didn't need to be done, but it was not
    fully implemented probably the way it should have been. But I--
    it is a valid concern.
        Mr. McHugh. Mr. Eager.
        Mr. Eager. I've known Chief Weaver for over 20 years and
    he's a very capable, a man of integrity and a leader, and FLEOA
    is well pleased that he is our chief. We just hope he is
    afforded the tools to take our agency in the direction that we
    need to go.
        Mr. McHugh. Do you agree with that, Mr. Nolan?
        Mr. Nolan. Absolutely.
        Mr. McHugh. Well, I'm glad we settled that.
        The ranking member had other business and he has been
    tremendous, as all of you are aware, on all of this and
    continues to take an active interest in this particular
    hearing, but he has got to figure out how to be in two places
    at once, but he has submitted a number of questions for the
    record that he will submit to you gentlemen. We very much
    appreciate your responses at your earliest convenience.
        Mr. McHugh. As is the custom, we also ask for your
    indulgence in other followup questions from the committee, if
    you could provide those for the record.
        I'd like to ask Mr. LaTourette if he has any concluding or
    additional comments or questions.
        [The information referred to follows:]
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        Mr. LaTourette. I have one question.
        Mr. McHugh. Go ahead.
        Mr. LaTourette. Mr. Chairman, I will try to be expedient.
        I wrote down some comments as you all were answering the
    chairman's questions. It began with you, Mr. Gallo, when you
    were talking about the utility of law enforcement to do its job
    costs what it costs, and you can't look at a crime and say,
    ``We're going to spend $10,000 on this crime to follow the
    crime through to completion.''
        That, combined with--I believe Mr. Nolan made the
    observation that there had been a shift that was noticeable to
    revenue protection, and then Mr. Eager's observation that there
    was a 25 percent decrease in mail fraud activities within the
    department, and it comes from--and before I did this I was a
    county prosecutor, and we changed a lot of laws relative to
    drug enforcement. We had forfeiture laws. The deal was that if
    you went out and busted a guy that had a nice car, if you were
    the police agency you got to keep the car. Well, you didn't get
    to keep it, yourself; you got to take the assets and then file
    it into new stuff for the department or extra hires or things
    of that nature.
        There was some criticism that we--nobody was doing anything
    to be funny, but any time there was a chance to get more stuff
    or more officers that we would take our resources and funnel
    them into chasing these guys with the nice cars--[laughter]--
    and not necessarily the guy that broke into the house or the
    guy that stole the ice cream from the convenience store sort of
    got more priority.
        In this whole discussion that you were having with the
    chairman about moving these guys from the Postal Service over
    to Treasury Department--I understand completely that you'd have
    to change the statutes or you'd just be doing the same thing at
    a different place. But I wonder if the fact that, again, it
    takes as much as it takes, the direction was shifted in the
    direction to protect revenue, and the 25 percent reduction in
    mail fraud activities--is there a danger here that the Postal
    Inspection Service is compromised as a law enforcement agency
    because of its reliance on Postal Service revenues as opposed
    to the ability to take as much as it takes?
        Mr. Eager, have you thought that through? And then anybody
    who has a comment.
        Mr. Eager. I think, because of our structure, that we are a
    law enforcement agency that's really quasi-business and quasi-
    Government agency, that it gives that perception whether it is
    true or not. I mean, we can go out and conduct crime prevention
    and competitors to the Postal Service might say that we are
    taking an unfair advantage when we're marketing when, in fact,
    the field Postal inspector is simply trying to reduce theft,
    but the perception I guess is what we're dealing with in that
    area.
        I don't know of too many agencies, Federal law enforcement
    agencies, that are structured like we are. The more business-
    oriented the Postal Service gets, the more probably the level
    of accusations will, proportionately go up.
        Mr. LaTourette. But that's specifically in response to my
    query, that there may be the perception but there's no truth to
    it?
        Mr. Eager. Well, Mr. Campbell used the term of inspectors
    going out and coercing. I mean, inspectors don't have any
    monetary--we go to investigate what we're sent to investigate.
        I would think--I mean, if I was someone out there in the
    private sector and someone was coercing me, I'd take issue with
    it.
        Mr. LaTourette. I think it was more going back to the drug
    dealer situation. And I wasn't talking about agents running
    rogue and trying to bother people. What I was talking about is
    a decision somewhere within the Postal Service that we're going
    to focus on things that protect revenue of the Postal Service,
    and therefore, because we don't have enough guys and gals, or
    because of resources, or whatever, you're going to have a
    corresponding drop in other things such as going out and taking
    a look at mail pledges because there aren't enough hours in the
    day and enough people to do it.
        And my question is: is that just a potential perception, or
    is there some truth to that?
        Mr. Eager. That's FLEOA's perception in the past, as I
    stated earlier, that resources were diverted to revenue
    protection and they came from somewhere, and we assume they
    came from the mail fraud program, and we are dealing with a
    closed universe. We can quibble over number of how many
    inspectors in 1975 as opposed to the authorized complement, but
    we're not talking about thousands of people here. We're just
    talking about a couple of hundred here and there.
        We've always dealt within a closed universe of personnel,
    and our priorities do change, but reduction in mail fraud of 25
    percent over that period of time I think is significant.
        Mr. LaTourette. Chief Weaver or Mr. Nolan.
        Mr. Nolan. I would say one thing that we may not have made
    clear is that the revenue protection responsibilities have now
    been removed from the Inspection Service. It's in the revenue
    assurance or revenue protection unit within our administrative
    function area.
        In part, it was because it was a more productive way of
    dealing with our customers in solving problems, and in part
    because the Inspection Service now is focusing on criminal
    activities and on some of those audit-related things out of
    which grew the attempts to protect revenue from deficiencies.
        So I think what may have been a potential diversion at
    times has cleared up significantly because it doesn't exist any
    more as a possible area of emphasis to the Inspection Service.
        Mr. LaTourette. Mr. Weaver.
        Mr. Weaver. Yes, if I can just clarify a point here--and
    make no mistake about it, if there is a violation of the law
    involving our revenue systems or our revenue stream, we will
    conduct an investigation, and that is where there is criminal
    intent and intent to fraud. So what Mr. Nolan is talking about
    is the shift in moving out of the revenue assurance business to
    where we used to go out and identify revenue deficiencies and
    refer those to management. I know there is some question about
    whether we acted as a collection agency in that regard, and we
    did not. We would refer that to management for collection. We
    are out of that business altogether, now. We are strictly
    focused on upholding the laws that we are supposed to.
        As far as your other point, as far as being compromised and
    directing your resources to one area or another, that's a valid
    concern, and we watch that very closely and make sure that we
    are addressing problems that have a serious impact on the
    operations of the organization and where we see problems
    occurring.
        We utilize the forfeiture statute, and it is a valuable
    tool. And if we can hurt the bad guys, as you've seen many
    times, by taking their resources and their assets, we're going
    to do it. We put that money to good use as far as helping the
    organization move forward.
        Mr. LaTourette. I appreciate that. The point in my
    experience was--and I happen to be a fan of forfeitures because
    they brought in extra dollars that you wouldn't get through tax
    revenue and limited budget allocation.
        Sometimes if we were looking at two drug dealers and one
    guy had a Corvette and the other guy was driving a 1974 Old
    Cutlass, we would probably spend a little bit more time going
    for the Corvette. [Laughter.]
        But I thank you, Mr. Chairman and yield back.
        Mr. McHugh. I thank the gentleman.
        With that, I want to thank you all--Mr. Deputy Postmaster
    General, Chief Weaver, Mr. Campbell, Mr. Gallo, Mr. Eager,
    thank you for your presence here today and your patience.
        The hearing is adjourned.
        [Whereupon, at 3:20 p.m., the subcommittee was adjourned.]
        [Additional information submitted for the hearing record
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