[Senate Hearing 106-798]
[From the U.S. Government Publishing Office]




                                                        S. Hrg. 106-798

                      NOMINATION OF GEORGE A. OMAS

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



                                HEARING

                               BEFORE THE

                              COMMITTEE ON
                          GOVERNMENTAL AFFAIRS
                          UNITED STATES SENATE

                       ONE HUNDRED SIXTH CONGRESS

                             SECOND SESSION

                                 ON THE

 NOMINATION OF GEORGE A. OMAS, TO BE A COMMISSIONER OF THE POSTAL RATE 
                               COMMISSION

                               __________

                           SEPTEMBER 19, 2000

                               __________

      Printed for the use of the Committee on Governmental Affairs



                               __________

                    U.S. GOVERNMENT PRINTING OFFICE
67-286                     WASHINGTON : 2000


_______________________________________________________________________
For sale by the Superintendent of Documents, Congressional Sales Office
         U.S. Government Printing Office, Washington, DC 20402


                   COMMITTEE ON GOVERNMENTAL AFFAIRS

                   FRED THOMPSON, Tennessee, Chairman
WILLIAM V. ROTH, Jr., Delaware       JOSEPH I. LIEBERMAN, Connecticut
TED STEVENS, Alaska                  CARL LEVIN, Michigan
SUSAN M. COLLINS, Maine              DANIEL K. AKAKA, Hawaii
GEORGE V. VOINOVICH, Ohio            RICHARD J. DURBIN, Illinois
PETE V. DOMENICI, New Mexico         ROBERT G. TORRICELLI, New Jersey
THAD COCHRAN, Mississippi            MAX CLELAND, Georgia
ARLEN SPECTER, Pennsylvania          JOHN EDWARDS, North Carolina
JUDD GREGG, New Hampshire
             Hannah S. Sistare, Staff Director and Counsel
                      Dan G. Blair, Senior Counsel
     Judith White, Detailee, International Security, Proliferation,
                   and Federal Services Subcommittee
      Joyce A. Rechtschaffen, Minority Staff Director and Counsel
          Peter A. Ludgin, Minority Professional Staff Member
           Nanci E. Langley, Minority Deputy Staff Director,
      International Security, Proliferation, and Federal Services 
                              Subcommittee
                     Darla D. Cassell, Chief Clerk


                            C O N T E N T S

                                 ------                                
Opening statements:
                                                                   Page
    Senator Cochran..............................................     1

                               WITNESSES
                      Tuesday, September 19, 2000

Hon. Trent Lott, a U.S. Senator from the State of Mississippi....     1
George A. Omas, nominated to be a Commissioner of the Postal Rate 
  Commission.....................................................     4

                     Alphabetical List of Witnesses

Omas, George A.:
    Testimony....................................................     4
    Biographical information.....................................    12
    Pre-hearing questions and answers............................    20
Lott, Hon. Trent:
    Testimony....................................................     1
    Prepared statement...........................................     2

                                Appendix

Hon. Benjamin A. Gilman, a Representative from the State of New 
  York, prepared statement.......................................     9

 
                      NOMINATION OF GEORGE A. OMAS

                              ----------                              


                      TUESDAY, SEPTEMBER 19, 2000

                                       U.S. Senate,
                         Committee on Governmental Affairs,
                                                    Washington, DC.
    The Committee met, pursuant to notice, at 9:30 a.m., in 
room SD-342, Dirksen Senate Office Building, Hon. Thad Cochran 
presiding.
    Present: Senator Cochran.

              OPENING STATEMENT OF SENATOR COCHRAN

    Senator Cochran. The Committee will please come to order. 
This morning our Committee is considering a hearing on the 
nomination of George Omas, who was nominated to serve a 6-year 
term as Commissioner of the Postal Rate Commission. We welcome 
all of you here for this hearing this morning. We also 
especially welcome the distinguished Majority Leader of the 
U.S. Senate, my colleague and friend, Senator Trent Lott of 
Mississippi, who is here today to introduce Mr. Omas.
    Mr. Majority Leader, welcome. You are recognized for such 
time as you may consume.

STATEMENT OF HON. TRENT LOTT, A U.S. SENATOR FROM THE STATE OF 
                          MISSISSIPPI

    Senator Lott. Well, thank you very much, Mr. Chairman. 
Thank you for having this hearing and moving forward on this 
nomination. There is nothing I could tell you publicly about 
this gentleman that you do not already know. You know that we 
go back to about 1957, when we met on a bus in Biloxi, 
Mississippi, on the way to Boys' State, and I have never 
recovered from that experience.
    But, George Omas is an outstanding nominee. He has a 
wonderful family in Biloxi, Mississippi. He has been 
outstanding in his involvement all his life, both in the 
private sector and in the public sector. He certainly has the 
qualifications, the experience and the educational background. 
He has, of course, a B.A. and an M.A. and has done graduate 
work at Florida State University.
    I first started working with him in the private sector when 
he was the National Executive Vice President of the National 
Apartment Association. I was already a House member, and I 
remember he brought representatives of that association to 
Washington and we had a really good meeting. Then George served 
awhile on the House Post Office and Civil Service Committee, 
where I had the pleasure or the opportunity to serve for a 
brief period of time.
    George served as staff director of the subcommittee--
interestingly--on Census, Statistics and Postal Personnel. He 
worked on the committee that looked after or looked over the 
franking activities in the House of Representatives, the 
Franking Commission. He served overall with the House committee 
and its different arms for 18 years. He worked for 3 years in 
the Doorkeeper's Office in the House of Representatives. He now 
has 3 years of experience on the Postal Rate Commission, served 
as vice chairman for a year and, of course, we are seeking his 
confirmation now for a full 6-year term, which would expire 
October 14, 2006.
    Well, that is the record academically and from his 
experience in the area that he is dealing with every day. I 
also take note that postal rates have stayed pretty steady 
under his leadership, and we like that, but more than anything 
else about George Omas, from my own standpoint, is he is a 
personal friend. I have always admired his commitment to duty, 
his hard work ethic and his ethical standards.
    We never would have to be concerned about George doing 
something that would be an embarrassment to his friends, his 
State, the Postal Rate Commission or any work that he does. So, 
I am delighted, Mr. Chairman, to be here before you and to 
support this confirmation, and I am hoping that we can get it 
through here quickly and that George will be confirmed before 
the end of the session.
    So, thank you for this opportunity. I might say, Mr. 
Chairman, I would like to ask that my complete statement be 
made a part of the record.
    Senator Cochran. Without objection, it will be made a part 
of the record.
    [The prepared statement of Senator Lott follows:]

                   PREPARED STATEMENT OF SENATOR LOTT

    Mr. Chairman, it is a pleasure to be here in the Governmental 
Affairs Committee today to introduce to the Committee one of our fellow 
Mississippians, George Omas, and to speak in favor of his nomination 
for this very important position.
    Mr. Chairman, the Committee may recall that I introduced George at 
its hearing on July 28, 1997, when he was first nominated to be a 
Commissioner on the Postal Rate Commission. George was confirmed by the 
Senate for this position on July 31, 1997, and he has been serving with 
distinction on the Postal Rate Commission since that time. On October 
1, 1999, George began a term as Vice-Chairman of the Postal Rate 
Commission. So, it is a delight to be here today to refresh the 
Committee Members' memories about this distinguished Mississippian.
    George and I first met back in the summer of 1957 when a delegation 
of boys on the Mississippi Gulf Coast assembled to attend Boys' State. 
George Omas--a real character from Biloxi--was one of the first people 
I met when I got on the bus, and we have been friends since that day.
    George and I both went to college at the University of Mississippi, 
which the Chairman knows we all fondly call ``Ole Miss.'' George earned 
a B.A. and an M.A. degree at Ole Miss, and held a teaching fellow 
position while there. George also did postgraduate work at Florida 
State University.
    For a number of years after college George and I kept up with each 
other indirectly. When George became Executive Vice President of the 
National Apartment Association, I was able to see George more often as 
he worked on Federal issues. Later, he came to work for the Post Office 
and Civil Service Committee on which I served in the House of 
Representatives. He served as staff director on the Subcommittee on 
Census, Statistics and Postal Personnel. Because he had done such a 
good job, he was asked by the distinguished Chairman, Ed Derwinski, to 
stay on after I had left. He worked for the House Committee on Post 
Office and Civil Service for nearly 18 years in all.
    More recently, before his appointment to the Postal Rate 
Commission, he served for approximately 3 years in the Doorkeeper's 
Office of the House of Representatives.
    Mr. Chairman, George has gained invaluable experience over the past 
3 years on the Postal Rate Commission, particularly since he has been 
serving as its vice chairman for almost a year. This experience is in 
addition to the knowledge he gained while serving as a staff member for 
the House of Representatives' Committee on Post Office and Civil 
Service. I believe that America would be well-served by taking 
advantage of this experience. In addition to this excellent record of 
experience, I want to personally attest to George's skills and 
abilities which I have had the chance to observe throughout the course 
of our friendship. I urge this Committee to act favorably on his 
nomination, and I look forward to the full Senate confirming him for 
this 6-year term which expires October 14, 2006.
    Thank you, Mr. Chairman, for allowing me to testify on behalf of 
George Omas.

    Senator Cochran. We appreciate very much your being here 
and introducing Mr. Omas to us. As a matter of fact, you may 
remember my first encounter with George Omas was in the 
capacity of his dormitory manager. When I went back to law 
school after serving in the Navy, I found that I needed a 
little extra money to pay the room rent and a dorm manager's 
job might be available, and it just happened to be down the 
hall from where George Omas was staying in Guest Hall at the 
University of Mississippi.
    Senator Lott. Well, he was from Biloxi. He didn't cause any 
kind of commotion; did he?
    Senator Cochran. Very rarely. He was a very positive 
influence in all respects. That is my memory, anyway.
    Senator Lott. Great.
    Senator Cochran. Well, thank you very much for being here. 
We know you are busy and you can go do whatever else you need 
to do at this time.
    Senator Lott. Thank you very much.
    Senator Cochran. In keeping with the rules of the 
Committee, I need to say that we have done the required 
examination into the experience, qualifications, suitability 
and integrity with questions to the nominee about his financial 
situation. All of the materials that have been requested by the 
Committee to be submitted by Mr. Omas have been submitted. 
These items are on file.
    The financial statements are available in the Committee 
office for review by anyone who wants to see them. A copy of 
Mr. Omas' biographical information and responses to the 
inquiries of the Committee that had previously been submitted 
are available upon request. They are all a part of the record 
of this hearing.
    I have also received a statement of support for this 
nomination from Congressman Benjamin Gilman.\1\ His remarks 
will be printed in the record, as well.
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    \1\ The prepared statement of Mr. Gilman appears in the Appendix on 
page 9.
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    The Committee staff have reviewed all of the information 
that the nominee has submitted in response to our inquiries, 
including the financial disclosure report submitted by the 
Office of Government Ethics. I have personally reviewed the FBI 
background investigation reports and we are now ready to 
proceed to the formal questioning of the witness. Our rules 
require that all nominees be under oath while testifying on 
matters relating to their suitability for office, including the 
policies and programs which the nominee will pursue, if 
confirmed.
    So, Mr. Omas, if you will please stand. Do you solemnly 
swear to tell the truth, the whole truth, and nothing but the 
truth, so help you, God?
    Mr. Omas. I do.
    Senator Cochran. Thank you. At this time, we will be glad 
to receive any opening statement or comments that you would 
like to make, Mr. Omas.

TESTIMONY OF GEORGE A. OMAS,\1\ NOMINATED TO BE A COMMISSIONER 
                 OF THE POSTAL RATE COMMISSION

    Mr. Omas. Thank you, Mr. Chairman. I do have a brief 
statement. Mr. Chairman and Members of the Subcommittee, it is 
a privilege for me to once again appear before you today as you 
consider my nomination to the Postal Rate Commission. Before I 
make some very brief remarks, I would like to take this 
opportunity to thank the President of the United States, the 
Majority Leader, Trent Lott, and you, Mr. Chairman, and this 
Subcommittee for giving me this opportunity.
---------------------------------------------------------------------------
    \1\ The biographical information and pre-hearing questions and 
answers from Mr. Omas appear in the Appendix on pages 12 and 20 
respectively.
---------------------------------------------------------------------------
    While it has been just slightly over 3 years since I was 
last here, it has been an exciting and intense time in the 
postal community. I arrived at the PRC in August 1997 after a 
rate case had been requested by the Postal Service that July. 
That case, R97-1, was not only massive, but I was told it was 
one of the most complicated in recent history. Today, we are in 
the process of considering R2000-1, and while I cannot talk 
about the specifics of the case, I can say that it is just as 
intricate and complicated as its predecessors.
    Today, with 2 months left to go in the case, there have 
been 69 witnesses from the Postal Service, 107 witnesses 
representing other parties, with a transcript of over 20,000 
pages. Due to the timing of my first appointment, and the fact 
that generally new commissioners have much to learn, I had to, 
as they would say, hit the ground running in R97-1. Having gone 
through that process, I am now much more conversant--or so I 
would like to think--with the complicated economic theories and 
the legal arguments than when I last sat in this chair.
    During the past 3 years, we have considered a number of 
smaller cases. In addition to R97-1 and R2000-1, the rate 
proceedings, these cases have been much narrower in focus and 
are targeted to meet the needs of particular types of mailers. 
Through the streamlined administrative process established by 
the Postal Rate Commission to handle such cases, we are able to 
process them much faster than the 10 months allowed by law.
    Mr. Chairman, I have also had the opportunity to preside 
over several cases and I take pride in the fact that we were 
able to reach settlement agreements that allowed the Postal 
Service and the mailers to immediately benefit from the 
proposals. I look forward to working with the Postal Service 
and the mailing community to make the rate-setting process as 
expeditious as possible.
    Also, Mr. Chairman, as you know from your recent hearing on 
e-commerce issues, these are interesting times for the Postal 
Service. The postal landscape is changing and it is not clear 
what the impact of technology on the Postal Service will be 
over the next decade. I can assure you, however, and the 
Subcommittee that universal service, rates that cover cost and 
a willingness to work with the postal community will be the 
hallmark of my tenure at the Postal Rate Commission, should I 
be reconfirmed.
    I would be remiss, Mr. Chairman, if I did not comment on 
the fine staff of the full Committee and the Subcommittee. 
Awaiting word on your nomination, as you know, can be a little 
anxious, and the staff was excellent in keeping me informed on 
matters related to my renomination, and I want to thank them 
personally.
    Thank you, Mr. Chairman.
    Senator Cochran. Thank you, Mr. Omas. I think we should 
point out you are now serving as Vice Chair of the Postal Rate 
Commission. Is that correct?
    Mr. Omas. Yes, sir.
    Senator Cochran. I think it is clear from the comments made 
by Senator Lott and others whom I have encountered that you 
have served with honor and have been a very positive influence 
in the decision-making process of the Postal Rate Commission. 
Let me ask you a few standard questions that the Committee 
staff have put in my folder.
    Is there anything you are aware of in your background which 
might present a conflict of interest with the duties of the 
office to which you have been nominated?
    Mr. Omas. No, sir.
    Senator Cochran. Do you know of any reason, personal or 
otherwise, that would in any way prevent you from fully and 
honorably discharging the responsibilities of the office to 
which you have been nominated?
    Mr. Omas. No, sir.
    Senator Cochran. Do you agree without reservation to 
respond to any reasonable summons to appear and testify before 
any duly constituted Committee of Congress if you are 
confirmed?
    Mr. Omas. Yes.
    Senator Cochran. Those are the required questions. I 
thought up a couple on my own which would probably make you 
nervous, but they do not have anything to do with our 
recollections of student days on the campus of the University 
of Mississippi, I assure you. But what I am curious about is 
what your reaction is to legislation that Congress enacts 
relating to the rate-making process. You mentioned in your 
statement that R2000-1 is pending before the Postal Rate 
Commission, and I guess this is the big rate case. This is the 
request for increased rates submitted by the U.S. Postal 
Service.
    Mr. Omas. That is correct.
    Senator Cochran. And, under the law, that has been referred 
to the Postal Rate Commission for its consideration, approval, 
or disapproval. You can modify it. You can amend it--isn't that 
correct--and approve, in effect, rate changes?
    Mr. Omas. Well, the Postal Rate Commission conducts public 
hearings and, as I have said, we have had like 69 witnesses 
from the Postal Service who defend the rates that they are 
requesting. Then we give the opportunity to intervenors, which 
we have had in this case 107, who come in to tell us whether 
they support or whether they oppose what the Postal Service is 
requesting, and we at the Postal Rate Commission must go by 
what is on the record and we cannot--we can alter, but we must 
have specific economic backup and statistics to back up 
whatever decisions we make.
    Senator Cochran. When the Postal Reorganization Act was 
passed by Congress, signed, and became law, taking away from 
Congress the supervision and control over the Postal Service 
and making it an independent agency, in effect it created the 
Postal Rate Commission, the Board of Governors, and the 
arrangement we have now. At that time the Act was advertised as 
an opportunity to get Congress out of the business of 
interfering or managing, appointing postmasters, appointing 
rural mail carriers, basically running it as a cottage industry 
in the Congress, and leaving it up to the independent bodies 
that were created to run it.
    But now what I have noticed is, as Chairman of the 
Subcommittee that has jurisdiction over these issues and the 
laws, we are being called upon to legislate still on issues 
that some might think are under the strict purview and 
responsibility of the Postal Rate Commission, such as a recent 
bill that we have approved here in our Subcommittee. We have 
reported it out for consideration by the full Committee, 
dealing with these very rates that you are now considering in 
the Postal Rate Commission.
    My question is what effect does that have on the process? 
What effect does that have on the decisions that will be made 
by the Postal Rate Commission in R2000-1?
    Mr. Omas. Well, I think, Mr. Chairman, what you are 
referring to is the legislation for non-profit mailers. And we, 
or the Postal Rate Commission, must follow the rules and 
regulations set forth in Title 39, and those regulations 
stipulate that we must accept the case that is presented to the 
Postal Rate Commission and then, according to the record that 
is developed during the course of the hearings, make our 
decisions accordingly.
    Legislation is sometimes--in this particular instance with 
non-profit mailers, is that, for some reason unbeknownst to the 
Postal Service and to the Postal Rate Commission, non-profit 
mail costs have just gone out of sight. Without legislation, we 
would have to impose the rates that the statistics and--that 
have been given to us. Those are the rates we would have to 
impose on the nonprofit community unless the legislation is 
passed by Congress.
    Senator Cochran. So, you are telling me that this 
legislation is welcomed by the Postal Rate Commission and 
facilitates your decision?
    Mr. Omas. Well, it would facilitate the interest of that 
community, if that is what Congress so desires. Congress has 
always tried to be of assistance to the non-profit community, 
and if they want to continue that, this legislation would be 
required.
    Senator Cochran. Are there any other classes of mail where 
the rates are influenced by legislative action, other than the 
so-called non-profits, to your knowledge?
    Mr. Omas. No, sir.
    Senator Cochran. Did this start some time ago or did we 
just dream this up this year?
    Mr. Omas. Well, I think it is the first time that non-
profit costs have just--they are astronomical, and they had a 
great increase in the R97 case, which I cannot remember the 
exact percentage. But in this one, the rate increase for non-
profits could go anywhere from 18 to 40 percent in some 
instances.
    Senator Cochran. These are increases, 18 to 40 percent 
increases, over current rates that are being paid for such 
mail?
    Mr. Omas. Correct.
    Senator Cochran. Well, what would happen if we did not pass 
the legislation, as a practical matter?
    Mr. Omas. Well, that is very interesting. That was asked to 
me by staff and we also asked that question of the Postal 
Service when the case was filed. In fact, it is the first time 
that the Postal Service, since the Postal Reorganization Act, 
has submitted an omnibus rate case, that the rates of a 
specific group of rates or a subclass was dependent on 
legislation being passed. So, we, the Chairman, the Committee, 
with the consent of the other commissioners, wrote a letter to 
the Postal Service. When we did write a letter, it was in the 
term of a POIR, a Presiding Officer's Information Request.
    The Postal Service said the rates would stand as proposed 
in R2000-1 should the legislation not pass and, as I told you 
earlier, we can only go by what is supplied to the Postal Rate 
Commission and what other facts are given to us in public 
hearings.
    Senator Cochran. Do you see any need for reform of the law 
as it exists to restore the power to the Postal Rate Commission 
to make these decisions? I mean, if we carried out the 
legislative history of the Postal Reorganization Act, it would 
seem to me that we would leave to the Postal Rate Commission 
the full power and authority to set rates. Isn't that why the 
Postal Rate Commission was created?
    Mr. Omas. Yes, sir.
    Senator Cochran. Why then would we permit a situation to 
continue where your hands are tied and you really cannot set 
rates except within very strict limitations which don't permit 
you to respond to needs or justifiable changes that you think 
are necessary, given the current state of the economics of 
mailing or whatever the facts are? Should you be given more 
power, rather than less? It sounds like you are getting less 
power than you had when you were first created.
    Mr. Omas. Well, Mr. Chairman, I don't know if we are 
getting less power. This is, as I said earlier, non-profits are 
sort of a special group that have always been treated in a 
different manner. RFRA, which was a law that amended the Postal 
Reorganization Act in, I think, 1994, said that the non-profit 
rates would be half of the markup. That worked for awhile, but 
for some unexplainable reason, non-profit costs have just gone 
out of sight. And, as I said, we are only able----
    Senator Cochran. Well, has the Postal Rate Commission 
approved this?
    Mr. Omas. No, sir.
    Senator Cochran. When you say the rates have gone out of 
sight, the cost of mailing----
    Mr. Omas. I am sorry. The cost----
    Senator Cochran. But not the rates.
    Mr. Omas. But not the rates. I am sorry. The cost of 
processing this subclass of mail has gone up, and we have asked 
the Postal Service, we have asked intervenors, no one can tell 
you why this particular----
    Senator Cochran. Because of the requirement that each class 
of mail has to stand on its own, you cannot cross-subsidize, 
you are saying. Therefore, the rates have to go up unless you 
are going to incur big deficits in the operation and require 
subsidies from Congress, from the taxpayers, etc.
    Mr. Omas. That is right. And that is why our hands are 
tied, because with the facts presented to us and the figures 
that have been given to us by the Postal Service, their rates 
would have to go up anywhere from 18 to 40 percent, depending 
on the subclass, just for it to cover its costs and stand 
alone.
    Senator Cochran. Well, I am sorry to spring all of these 
questions on you here without any warning, but it occurs to me 
that this is a matter of some urgency for us to decide, because 
there is pending now in the full Committee, maybe for action 
this week, this legislation that has been generated out of this 
process. And I was curious to know why we are doing it.
    Mr. Omas. Yes, sir.
    Senator Cochran. I understand why we are doing it now.
    Mr. Omas. I think the non-profit community feels that it is 
very necessary.
    Senator Cochran. Well, you have been very helpful to me 
personally, as you have always been when I have had questions 
about the Postal Service. With your experience on the House 
Committee and now as Postal Rate Commissioner, you are the best 
thing we have as an expert from our State on this subject. We 
appreciate your serving with such distinction on the Postal 
Rate Commission. I know of no other questions to submit to you. 
We appreciate your attendance and cooperation with our 
Committee. Good luck. I hope we can get you confirmed quickly. 
We need your service to continue on the Postal Rate Commission.
    Mr. Omas. Thank you, Mr. Chairman.
    Senator Cochran. The hearing is adjourned.
    [Whereupon, at 10 a.m., the Committee was adjourned.]


                            A P P E N D I X

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