[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
______
U.S. GOVERNMENT PRINTING OFFICE
67-997 DTP WASHINGTON : 2001
_______________________________________________________________________
For sale by the Superintendent of Documents, U.S. Government Printing
Office
Internet: bookstore.gpo.gov Phone: (202) 512-1800 Fax: (202) 512-2250
Mail: Stop SSOP, Washington, D.C. 20402-0001
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.
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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.
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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
follows:]
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