[Senate Hearing 111-1045]
[From the U.S. Government Publishing Office]


                                                       S. Hrg. 111-1045
 
                     NOMINATION OF DENNIS J. TONER 

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

                                HEARING

                               before the

                              COMMITTEE ON
                         HOMELAND SECURITY AND
                          GOVERNMENTAL AFFAIRS
                          UNITED STATES SENATE


                     ONE HUNDRED ELEVENTH CONGRESS

                             SECOND SESSION

                               __________

                             JUNE 10, 2010

                               __________

  NOMINATION OF DENNIS J. TONER TO BE A GOVERNOR, U.S. POSTAL SERVICE

                               __________

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        COMMITTEE ON HOMELAND SECURITY AND GOVERNMENTAL AFFAIRS

               JOSEPH I. LIEBERMAN, Connecticut, Chairman
CARL LEVIN, Michigan                 SUSAN M. COLLINS, Maine
DANIEL K. AKAKA, Hawaii              TOM COBURN, Oklahoma
THOMAS R. CARPER, Delaware           SCOTT P. BROWN, Massachusetts
MARK L. PRYOR, Arkansas              JOHN McCAIN, Arizona
MARY L. LANDRIEU, Louisiana          GEORGE V. VOINOVICH, Ohio
CLAIRE McCASKILL, Missouri           JOHN ENSIGN, Nevada
JON TESTER, Montana                  LINDSEY GRAHAM, South Carolina
ROLAND W. BURRIS, Illinois
EDWARD E. KAUFMAN, Delaware

                  Michael L. Alexander, Staff Director
               Kristine V. Lam, Professional Staff Member
                        Kenya N. Wiley, Counsel
 John P. Kilvington, Staff Director, Subcommittee on Federal Financial 
Management, Government Information, Federal Services, and International 
                                Security
     Brandon L. Milhorn, Minority Staff Director and Chief Counsel
                   Jennifer L. Tarr, Minority Counsel
                  Trina Driessnack Tyrer, Chief Clerk
         Patricia R. Hogan, Publications Clerk and GPO Detailee
                    Laura W. Kilbride, Hearing Clerk





















                            C O N T E N T S

                                 ------                                
Opening statements:
                                                                   Page
    Senator Carper...............................................     1
    Senator Kaufman..............................................     1
Prepared statements:
    Senator Carper...............................................    13
    Senator Kaufman..............................................    15

                                WITNESS
                        Thursday, June 10, 2010

Dennis J. Toner to be a Governor, U.S. Postal Service:
    Testimony....................................................     5
    Prepared statement...........................................    16
    Biographical and financial information.......................    17
    Responses to pre-hearing questions...........................    25
    Letter from the Office of Government Ethics..................    38


                     NOMINATION OF DENNIS J. TONER

                              ----------                              


                        THURSDAY, JUNE 10, 2010

                                     U.S. Senate,  
                           Committee on Homeland Security  
                                  and Governmental Affairs,
                                                    Washington, DC.
    The Committee met, pursuant to notice, at 2:33 p.m., in 
room SD-342, Dirksen Senate Office Building, Hon. Thomas R. 
Carper, presiding.
    Present: Senators Carper and Kaufman.

              OPENING STATEMENT OF SENATOR CARPER

    Senator Carper. The Committee will come to order. It is not 
exactly standing room only, but that does not mean this is not 
an important hearing.
    Senator Kaufman. Quality over quantity. [Laughter.]
    Senator Carper. We are delighted to be here, Senator 
Kaufman, myself, and Dennis Toner. I do not know what the odds 
would be that three guys from Delaware would be sitting here in 
these three rows for today's hearing, but however long those 
odds might be, we are here, and it is a good thing, I would 
like to say, for Delaware and for our country, I hope.
    Today, we are going to be considering the nomination of 
Dennis Toner to be a member of the U.S. Postal Service's Board 
of Governors. Senator Kaufman has in his past, not too recent 
past, been a governor. I have been a governor. And if things go 
well with your nomination and the confirmation process, the 
three of us may share the common bond of being governors, 
recovering governors in the case of Senator Kaufman and myself, 
and you, a real governor as a member of the Board of Governors. 
We will see how this process moves forward after today.
    Before I give my opening statement, I want to give my 
friend, our colleague from Delaware, Senator Kaufman, the 
opportunity to introduce this nominee, whom I think he knows 
pretty well. Sometimes, we have the opportunity to introduce 
people that we really do not know that well, but in this case, 
you know him well, so we are anxious to hear what you have to 
say about him. Senator Kaufman.

              OPENING STATEMENT OF SENATOR KAUFMAN

    Senator Kaufman. Thank you, Mr. Chairman. It is a great 
honor to be here with you chairing the Committee, and----
    Senator Carper. Well, we were just talking earlier. We 
reversed roles about a month or so ago, when you chaired the 
Judiciary Committee for the hearing for Leonard Stark when he 
was nominated to be a Federal District Court Judge.
    Senator Kaufman. Yes, small world.
    Senator Carper. It is interesting how we do this. 
Obviously, Delaware has taken over here.
    Senator Kaufman. Exactly. [Laughter.]
    You said it. It is a great day for Delaware, and it is a 
great day for the country.
    Senator Carper. Could I ask you a question before you go 
any further?
    Senator Kaufman. Yes.
    Senator Carper. How long have you been married?
    Senator Kaufman. Fifty years.
    Senator Carper. When is your anniversary?
    Senator Kaufman. Today.
    Senator Carper. Congratulations.
    Senator Kaufman. Thank you.
    Senator Carper. Is that not great?
    [Applause.]
    Let the record show polite, scattered applause. [Laughter.]
    No, it was robust. It was vigorous.
    Senator Kaufman. And it is a special day, too----
    Senator Carper. Congratulations.
    Senator Kaufman. I just want to thank you for the 
opportunity to introduce Dennis Toner to be the President's 
nominee for the Board of Governors for the U.S. Postal Service. 
As you say, I have known Mr. Toner for over 30 years, and he is 
truly a man of singular intelligence, character, integrity, and 
conviction.
    He had a career spanning more than three decades of service 
in the Federal Government as an invaluable, important, 
essential member of then-Senator Joe Biden's staff. As someone 
who had the true privilege of working closely with him for much 
of this time, I can attest to his loyalty and his strong 
leadership. As long as I have known him, I have always been 
able to rely upon his wise judgment and sound advice.
    More importantly, he brings a business acumen to the Board 
of Governors that will help the Postal Service successfully 
navigate the major financial and operational challenges that it 
currently faces. He served as Finance Director for Biden for 
President and Citizens for Biden, and as a business consultant 
over the last 2 years, he provided comprehensive business 
solutions to a broad range of private and public entities.
    I am truly confident that he can draw upon his wealth of 
business knowledge and experience to identify the critical 
issues affecting the Postal Service and implement the vital 
reforms that it needs to continue serving its essential role to 
our country.
    He will be an excellent leader and member of the Postal 
Service Board of Governors if the Senate chooses to confirm 
him, and I certainly hope they will. Mr. Toner is truly one of 
the most qualified people that I have ever worked with.
    Thank you, Mr. Chairman.
    Senator Carper. Thank you, Senator. Thank you very much. I 
know it means a lot to him that you are sitting here with him, 
and it means a lot to me, as well. Thank you.
    I have a statement I am going to go on with. Senator 
Kaufman, I know you are on about four or five committees, and 
if you have to leave, we understand, but you are great to be 
here.
    Dennis Toner is, of course, no stranger to me. For many 
years, he and I have been runners in Delaware. He has run in 
more Caesar Rodney Half-Marathons than I have and certainly a 
lot more marathons. I have never run in one, but he has run in 
a bunch of those. I have never finished ahead of him, and I 
have always looked forward to the opportunity to get even with 
him---- [Laughter.]
    And then today comes along. I only recognize him in a race 
from behind, way behind. So he is no stranger to me, certainly 
no stranger to Senator Kaufman and to those who worked with him 
during all those years that he worked for Senator Joe Biden.
    I am delighted that he is willing to now put in the time 
and the effort that is needed to help steer the Postal Service 
out of the difficulties that it finds itself in. As anyone 
watching this hearing certainly knows, this is a challenging 
time for the Postal Service. It is a challenging time for our 
country.
    Mr. Toner. Yes.
    Senator Carper. I think the country is up to that 
challenge, and I believe the Postal Service is, too. We need 
good people in leadership positions, and we have the 
opportunity to find out that we have a pretty good one right 
here, I think.
    Mr. Toner. Thank you.
    Senator Carper. The Postal Service ended fiscal year 2009 
with a 13 percent decline in mail volume compared to fiscal 
year 2008. This resulted in a year-end loss of some $3.8 
billion, up from $2.8 billion a year before, and a couple of 
years ago, this outfit was making that much money, and here we 
are dropping like a rock.
    This loss comes despite heroic efforts on not just the part 
of the Postmaster General and his team, but a lot of folks who 
work in the Postal Service across the country in towns large 
and small as they have sought to achieve more than $6 billion 
in cost savings over a very short period of time. And the loss 
would have been significantly higher, I think a total of about 
$7.8 billion, to be exact, if Congress and the President had 
not acted at the last minute to reduce the size of the Postal 
Service's overly large retiree health prefunding payment.
    Unfortunately, the projections for the current fiscal year 
look no better than the results for fiscal year 2009. And 
despite an expected recovery in at least some areas of the 
economy, the Postal Service is anticipating a further decline 
in mail volume. This, coupled with the fact that savings will 
likely be harder to come by, not easier, this year, will result 
in the kind of massive $7 or $8 billion loss that we were 
expecting right up until the end of fiscal year 2009.
    On top of all this news, the Postal Service recently hired 
a group of three outside consultants to look at its business 
model and to look ahead. Those three outfits came back with 
findings showing that the Postal Service will continue to lose 
mail volume, even when the economy recovers. They even pointed 
out that the Postal Service can be expected to lose more than 
$230 billion over the next decade if major changes are not 
made.
    Congress must address this situation, first by finishing 
the work we began last September and permanently restructuring 
the Postal Service's retiree health obligation in a way that 
makes sense. Payments that the Postal Service is required to 
make under current law are unaffordable, especially during such 
a difficult economic time when the Postal Service is already 
losing customers to electronic forms of communication. I will 
also note that these payments are not related at all to what 
the Postal Service owes to its future retirees.
    I have introduced with some of my colleagues legislation to 
address this problem. It has been reported out of this 
Committee. My hope is it can be considered by the full Senate 
in the near future.
    We also need to look at the Postal Service's pension 
obligations. According to an analysis conducted not many months 
ago by the Postal Service's Office of Inspector General, the 
formula that is used to determine how much the Postal Service 
must pay into the old Civil Service Retirement System may have 
actually resulted in an overpayment by the Postal Service into 
that system of as much as $75 billion. The Postal Regulatory 
Commission is currently examining these findings and should be 
finished with that work sometime this summer. It is my hope 
that any overpayment that did occur can be used to provide the 
Postal Service with immediate relief and to prevent or delay 
potentially damaging service or other cuts that might be on the 
table during this difficult time.
    Another thing that Congress can do to help in this 
environment is to leave the day-to-day management of the Postal 
Service to the Postal Service. Too often, those of us here in 
the Senate and the House stand in the way of the Postal 
Service's efforts to streamline operations and to remove excess 
capacity, especially when it comes to closing or consolidating 
retail and processing facilities. We also, unfortunately, are 
preventing the Postal Service from changing delivery frequency 
to adjust to the changing mailing economy. Studies have shown 
that the elimination of Saturday delivery alone could save the 
Postal Service upwards of $3 billion per year. In addition, 
about 75 percent of the public would support such a move, 
according to a number of polls. I might say, that 70 or 75 
percent number came as a surprise to me and, I know, to a 
number of my colleagues.
    In many ways, then, we need to let the Postal Service 
management do what it needs to do to manage its way through the 
crisis it currently faces, and that is not to say we do not 
have some obligations here, as well, and we need to meet those 
obligations. But I think a good deal of it lies on the 
management and their ability to work with the rank and file and 
the union leadership, as well, to manage through this crisis.
    Mr. Toner, you have decades of experience in public policy, 
in management, and perhaps most importantly, in listening to a 
variety of views and finding consensus--not just finding 
consensus, but building consensus--and those are skills that 
will be much needed in the days ahead on the Board of Governors 
in the Postal Service. I look forward to learning more today 
about how you would apply that experience and those skills to 
the crisis currently facing the Postal Service.
    At this time, I would usually turn to my colleagues on the 
dais for any statements that they might like to add. The fact 
that there is no one here sitting with me at this moment is 
actually a good sign because if they were sitting here, they 
probably would not be here to throw bouquets in your direction. 
[Laughter.]
    It might be to throw some tough questions your way and to 
raise questions about your worthiness as a nominee.
    Mr. Toner, I would note for the record, has filed responses 
to a biographical and financial questionnaire. He has also 
answered pre-hearing questions that were submitted by Committee 
Members and Committee staff. In addition, his financial 
statements have been reviewed by the Office of Government 
Ethics.
    Without objection, this information will be made part of 
the hearing record. Financial data, however, will remain on 
file and available for public inspection in the Committee 
offices.
    Committee rules require that all witnesses at nomination 
hearings give their testimony, as you may know, under oath.
    Mr. Toner. I understand.
    Senator Carper. I am going to ask you, if you would, to 
please stand and raise your right hand, and I will administer 
this oath.
    Do you swear that the testimony you will give before this 
Committee will be the truth, the whole truth, and nothing but 
the truth, so help you, God?
    Mr. Toner. I do.
    Senator Carper. Please be seated. So far, so good. And with 
that, you are recognized to offer your statement. I would ask 
that you keep your statement within 30 minutes. [Laughter.]
    Mr. Toner. Very good. Thank you.
    Senator Carper. If you go much beyond that, I will have to 
leave. [Laughter.]

TESTIMONY OF DENNIS J. TONER \1\ TO BE A GOVERNOR, U.S. POSTAL 
                            SERVICE

    Mr. Toner. Thank you, Mr. Chairman, both for your kind 
remarks and, as well, for holding this hearing this afternoon. 
I am very grateful to President Obama for nominating me to 
serve as a Governor in the U.S. Postal Service. I would like to 
thank you, Senator Carper, for your abiding interest in the 
Postal Service and the role the Postal Service plays in 
American life. If confirmed, I hope to be able to work with you 
to address the many challenges confronting the Postal Service.
---------------------------------------------------------------------------
    \1\ The prepared statement of Mr. Toner appears in the Appendix on 
page 16.
---------------------------------------------------------------------------
    I would also like to take a minute to thank my personal 
friend, Senator Kaufman, for taking time out of his schedule to 
introduce me today. I had the pleasure and honor of working 
closely with Senator Kaufman for more years than we need to 
count when we both worked for then-Senator Joe Biden. I would 
just like to simply say thanks to Senator Kaufman for the 
support and friendship he has provided me throughout this 
process.
    I have been asked by many why I would want to serve on the 
Postal Board of Governors given the extreme financial 
difficulty it faces today. My answer is this: The Postal 
Service is woven into the fabric of every American community. 
It is a way of life. However, it is clear that changes are 
needed on a number of fronts to allow the Postal Service to 
regain its financial footing.
    In my more than 30 years working for the U.S. Senate, I 
developed an ongoing interest in the challenges that arise from 
organizations such as the Postal Service and Amtrak--Federal 
organizations that Congress wants to act like a business but 
provide public service in all of its many combinations. Should 
I be confirmed, I believe that I can bring that experience to 
bear working with the Governors, Postal Service management, and 
the many different Postal Service stakeholders to address the 
mutual interest facing the Postal Service.
    I thank you for holding this hearing, and I will be happy 
to answer any questions. Thank you.
    Senator Carper. You are quite welcome. Thank you for that 
statement.
    Under the Committee rules, there are a couple of standard 
questions that I need to ask you and ask that you would then 
respond to those, and then I will ask you a number of questions 
that are policy-related.
    Mr. Toner. Thank you.
    Senator Carper. First, is there anything that you are aware 
of in your background that might present a conflict of interest 
with the duties of the office to which you have been nominated?
    Mr. Toner. No.
    Senator Carper. Second, do you know of anything, 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. Toner. No.
    Senator Carper. Third, 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. Toner. Yes.
    Senator Carper. Thank you. Now, a couple of policy 
questions, if I could. As you and I discussed recently, we made 
changes to the law in 2006, I believe, so that members of the 
Board of Governors had the experience necessary to play a role 
in managing what is really one of the largest organizations in 
the world. What do you think that you would bring to the Board, 
particularly at such a challenging time for the Postal Service? 
There are times in our lives to be modest, and there are times 
to be immodest. This is the latter.
    Mr. Toner. Thank you, Mr. Chairman. I believe my experience 
or what I bring to the Board rests heavily on my 30-plus-year 
Senate career. It has given me an opportunity to provide 
insight in this constant match that we come across between 
government and business models, that is, the idea to balance 
service and costs. I believe my Senate career has dealt with 
this throughout its entire time, and I consider that a real 
asset, hopefully, if I should be confirmed or added to the 
Board.
    In addition to that, I just believe the institutional 
knowledge that I have gained on postal legislative issues that 
continue to be shaped by continuing technology will be an 
asset. When I first came to the Senate in the very early 1970s, 
when there were discussions regarding electronic mail, the 
ideas were just foreign to any of us.
    Senator Carper. Did they still have quill pens then? 
[Laughter.]
    Mr. Toner. No, we did not, but we did have the old 
facsimile machines. We did have those.
    In addition to that, I believe that my career has provided 
the process in which it has become clear that we need to 
involve all stakeholders in possible solutions. But at the same 
time, we need to strive to find solutions that are both 
realistic and achievable. I think what I bring is a 
conservative outlook in terms of what is possible as we deal 
with the legislative process as it relates to any government 
agency, but particularly the Postal Service.
    Senator Carper. All right. Thank you.
    As I noted in my opening statement, the Postal Service 
suffered a significant loss in fiscal year 2009, coming on the 
heels of an early loss in 2008. The Postal Service is projected 
to lose a significant amount this year, as well. If confirmed, 
how would you work with your new colleagues on the Board of 
Governors and with senior Postal Service management to attempt 
to minimize the financial impact of the loss in revenue that 
the Postal Service is currently experiencing?
    Mr. Toner. Mr. Chairman, I agree with your statement that 
the Postal Service is experiencing financial losses of 
historical proportions. I believe every facet, every piece 
needs to be on the table in terms of negotiation. I have had 
the opportunity to review the business model presented by the 
Postal Service. I am encouraged by the new initiatives that 
have been offered. But at the same time, I think we need to do 
more in terms of reviewing the cost control measures in 
particular. These are hard choices as relates to excess 
capacity and how we best address declining volume.
    My position, as a candidate for the Postal Board of 
Governors, is that it is imperative that the Governors continue 
or increase their outreach to all stakeholders to help best 
determine how we go forward in terms of addressing the 
financial situation in which we find ourselves.
    Senator Carper. Thank you.
    As you know, the Postal Service is required to make a 
payment at the end of each fiscal year to pre-fund its future 
health obligations for its pensioners. These payments are 
large, ranging anywhere from about $5.4 billion to $5.8 
billion. They are not closely related to what the Postal 
Service owes its future retirees. They are also something that 
the Postal Service simply cannot afford at a time like this 
when the economy is still recovering and the competition from 
electronic forms of communication is growing.
    How important is it, in your view, for Congress to find 
some way to permanently restructure the Postal Service's 
retiree health obligation--not to walk away from that 
obligation, but to restructure it in a way that is more 
realistic and sensible?
    Mr. Toner. Thank you for the question. Mr. Chairman, I 
fully support the need for Congress to restructure these 
obligations. I believe the retiree health benefits represents 
the most threatening issue the Postal Service needs to address. 
These current obligations have produced far-ranging 
consequences on other operations, as well. Absent a solution 
provided by Congress as relates to retiree health benefits, we 
will not be able to address other issues that need to be 
considered.
    Senator Carper. In my old job as State Treasurer, the State 
Treasurer's responsibilities included administering fringe 
benefit programs for State employees, including all the folks 
in our school system. At the time, in 1976, 1977, we had no 
pension fund. We had not created a pension fund. We paid 
pension payments every month to State retirees on a cash basis. 
When the State of Delaware's credit rating was lowered to the 
lowest in the Nation, the rating agencies pointed to the fact 
that we had no amortization schedule. It was one of the 
problems with our finances. We had given no thought to meeting 
the health care obligations of future pensioners. We did not 
even have a pension fund for the pension obligation.
    Mr. Toner. I did not know that.
    Senator Carper. And you know what? We were not by 
ourselves. There were a lot of other States and local 
governments in the same situation.
    Fast forward about 20 years, and the State of Delaware, 
which used to have the worst credit rating in the country, 
ended up with the best credit rating, AAA credit ratings across 
the board. We had literally about 10 years to create a pension 
fund that fully amortized our pension obligations, but we got 
the AAA credit ratings. The folks from the rating agency said, 
you still have not done much at all with respect to your future 
health obligations that you owe to those people. You are going 
to be making pension payments, too. So we began making a 
downpayment on that obligation, but a very modest downpayment. 
And over the last 8 years, with the governor who succeeded me, 
the State attempted to make some progress in meeting that 
health care obligation to those potential future pensioners, 
but not much progress was made.
    And as it turns out, relatively few State and local 
governments have done much to meet the similar obligation to 
their future pensioners. If you actually look at corporations, 
the private sector, and what they have done in terms of setting 
aside money to meet their health care obligations for their 
future pensioners, their story is not a great deal better than 
the State and local governments.
    The legislation that was signed by President Bush in 2006 
said, we are going to require the Postal Service to commit to a 
prepayment schedule that is unlike any that we would ever 
require with a State or local government or a private 
corporation. And while we think it is important to meet that 
obligation within a reasonable schedule, to have it front-end 
loaded and as conservative as it is, in my view, just makes 
little sense. And as it turns out, I think that is a view that 
is shared by my colleagues.
    Mr. Toner. Good.
    Senator Carper. In my view, it is important for the Postal 
Service to combine any efforts to cut costs and streamline 
operations during this financial crisis with an aggressive 
effort to attract new business and retain as much as possible 
of what is left after the downturn. What is your assessment of 
the steps that the Postal Service management has done so far on 
the revenue side in recent months and years? What further steps 
might you suggest be taken, if confirmed, to further bolster 
future revenues?
    Mr. Toner. Mr. Chairman, I have had an opportunity to 
review the business plan. I have also considered the Government 
Accountability Office study and other reactions to the plan 
offered by the Postal Service in this process. But in terms of 
the Postal Service business plan itself, I believe that the 
steps represented so far are just that, first steps. I believe 
that the revenue initiatives that have been attempted--flat-
rate boxes, for instance, summer sales, pursuing partnerships--
these are awfully strong productive measures that the Postal 
Service has put forward, and hopefully it is measures such as 
these that will best allow the Postal Service to regain a firm 
financial footing.
    I believe going forward that the Board of Governors, in 
particular, needs to do even more in terms of outreach with all 
of its stakeholders to find common grounds so that we can all 
work together to bring the financial footing the Postal Service 
needs back to a reasonable course.
    Senator Carper. A colleague of ours from Oregon, Ron Wyden, 
and I and others have introduced legislation modeled after what 
they do in Oregon when it comes to voting. They end up being 
able to realize a far greater turnout of voters conducting 
elections every couple of years in a way that not only draws a 
greater turnout, but I think actually costs less money. They 
have been able to, they think, in a satisfactory way, address 
the potential for fraud among folks trying to vote, and they do 
it by relying on the mail.
    In my old role as Governor, I used to say that every 
problem, every challenge we face in Delaware, some other State 
has not only faced that challenge, but solved it, figured out 
how to do it, and sometimes I think of the States as 
laboratories of democracy. In this case, I think Oregon could 
be a State for us to model as a Nation.
    There are some benefits that flow to the Postal Service, 
obviously, in terms of additional revenues and business, but 
there is also on the civic side the potential for 10, 20, 30 
percent greater turnout and the ability to hold elections not 
only with more people voting, but also in a way that does not 
cost more money and might actually cost less. So that is the 
kind of thing we are looking at.
    There is a fellow that a lot of us from Delaware know. He 
is a professor at the University of Delaware College of Earth, 
Ocean, and Environment. His name is Willett Kempton, and he 
works on technology called Vehicle to Grid. And as you know, 
Mr. Toner, the State of Delaware is looking forward to, about 2 
years from now, being able to deploy a windmill farm----
    Mr. Toner. Yes.
    Senator Carper [continuing]. Twelve miles off the cost of 
Rehoboth. Down in Dover, I think this week, they are beginning 
the work on a 60- or 80-acre solar energy farm just outside of 
the city to provide the city and the city's residents with much 
of their electricity needs.
    We also know that the wind does not always blow and the sun 
does not always shine----
    Mr. Toner. Yes.
    Senator Carper [continuing]. And however wonderful these 
renewable energies might be, and they are, we need the ability 
to be able to store electricity when the wind is blowing and 
the sun is shining. Willett Kempton has been working on a 
technology to do that, to store the energy through something 
called Vehicle to Grid, where the electricity generated is 
actually stored by batteries of fleets of vehicles, and then as 
the energy is needed to go back onto the grid to meet our 
needs, the electricity is drawn down from the fleet of 
vehicles.
    There are not many companies in this country that have more 
vehicles in their fleet than the Postal Service, and there are 
not many companies in this country that have an older fleet 
than the Postal Service. And there might be some opportunities 
here for the Postal Service to help in a day that we are trying 
to do more with non-fossil fuel generation of electricity, and 
at the same time do some good things for our environment, 
strike a blow for technology and innovation, and make some 
money at it at the same time. Those are a couple of ideas.
    Mr. Toner. Good.
    Senator Carper. You probably are aware that the Postal 
Service receives criticism whenever it attempts to close or 
consolidate facilities. Let me just ask, what do you think the 
Postal Service needs to do to address this criticism and, where 
necessary, to eliminate excess retail and processing capacity?
    Mr. Toner. Mr. Chairman, I believe that excess retail and 
processing capacity clearly has become a drain on the resources 
and has contributed, in part, to the current state that the 
Postal Service finds itself. At the same time, I believe the 
Postal Service has been very diligent in terms of maintaining 
its service standards that it has always kept in place.
    As relates to processing facilities, again, I do believe 
that we all must recognize excess capacity, but I do think it 
is important that we do as good a job or even a better job in 
communications with all of the stakeholders as we attempt to 
redefine or streamline this excess retail capacity so that 
people can plan accordingly and private citizens can be assured 
that we will continue to maintain the same standard of service. 
And I think if we can just do a better job of communicating our 
attempts to deal with excess processing capacity, we can help 
alleviate the fears that people have with it.
    Senator Carper. All right. Thanks very much.
    In the past, I have spoken about the need for the Postal 
Service to focus not just on closing facilities, but also 
expanding access to the services that it offers. This does not 
necessarily mean building new post offices. It could, where 
appropriate, mean expanding access to alternate retail, such as 
Automated Postal Centers located in places where people go 
every day, like our grocery stores or our pharmacies.
    It used to be that if I wanted to go to the bank, I would 
go to the bank. Today, I can go to the bank at my grocery 
store. It used to be I would go to the pharmacy, or today I can 
go to the pharmacy in my grocery store. Times have changed, as 
you know. But what do you think the Postal Service might be 
able to do in this area?
    Mr. Toner. Thank you, Mr. Chairman. I believe that 
obviously, the Postal Service needs to discover new revenue 
initiatives if it is going to survive. To the extent that I 
have had a chance to review it, I believe the Postal Service 
has done a commendable job during the past 6 years in terms of 
dealing with cost controls and so forth. However, these 
measures are not sufficient to deal with the financial 
realities that the Postal Service faces. Thus, the new revenue 
initiatives need to be put into place.
    And I believe that the customers are comfortable, provided 
alternative access is available, that is, as you point out, Mr. 
Chairman, as it relates to doing so-called multi-tasking, be it 
grocery shopping and pharmacies and so forth, such actions are 
likely essential to future growth, and the Postal Service needs 
to do as other outfits have been able to do, and that is, 
follow your market, so to speak. These new revenue initiatives, 
I think, can only enhance the financial stability that we need 
to get to.
    Senator Carper. Thank you. One of the biggest issues that 
the Congress and the Postal Service will face in the coming 
months is the question of whether delivery frequency should be 
changed, perhaps by eliminating Saturday delivery. How 
important do you think it is that the Congress allow the Postal 
Service to make the business decision to eliminate a day of 
delivery if doing so is deemed necessary?
    Mr. Toner. Thank you, Mr. Chairman. In my view, I believe 
the Postal Service has done a commendable job in involving all 
so-called stakeholders regarding the possible change in 
frequency, be it 6 days to 5 days or 6 days to whatever. I 
believe the Postal Service has done its homework in terms of 
conducting studies, holding interviews, completing its various 
opinion polls, and seeking outside guidance in terms of 
developing the business plan that could perhaps address moving 
delivery from 6 days down to 5 days.
    All of that being said, I believe the Postal Service is 
well positioned to make the decision itself, and I believe the 
decision should be made by the Postal Service rather than the 
Congress.
    Senator Carper. Thanks. Do you think there might be some 
way to retain 6-day-a-week delivery and to take a page out of 
what they have done over in the U.S. domestic auto industry, 
where new folks who are being hired to build cars, trucks, and 
vans in America actually come in at a somewhat different wage-
benefit structure than the folks who have been there for an 
extended period of time? Maybe the folks who deliver the mail 
on Saturdays could come out of a somewhat different 
compensation structure.
    Mr. Toner. Interesting thought. Obviously, when I was 
completing a round of interviews during the past few days with 
a few of your colleagues, such a proposal was put forward. I 
believe it is worth further study. I would like to have the 
opportunity to speak with various stakeholders about the 
prospects, but again, I think the Postal Service needs to 
become just more responsive to this should the decision be made 
to maintain 6-day service as opposed to the cost savings that 
could be represented by a reduction to 5-day service.
    Senator Carper. I may have some extra questions for the 
record, and my colleagues may have some questions for the 
record. This is the last one I will ask you today. The Postal 
Service receives a lot of praise. When you ask people in this 
country, when they consider different, if you will, government 
services that are available to them, where do they have the 
most confidence or where they give the highest ratings, I think 
the Postal Service usually ranks right up around the top. That 
should be noted and commended.
    But the Postal Service receives a fair amount of criticism 
due to the fact that labor costs are such a large percentage of 
their total costs. As I recall, it is maybe as much as 80 
percent. All four Postal Service unions will be entering 
contract negotiations with the Postal Service in the coming 
year or so, and if confirmed, how would you recommend that 
Postal Service management approach these negotiations?
    Mr. Toner. Thank you, Mr. Chairman. It is a very difficult, 
involved question, obviously, when you are dealing with labor 
costs that have become such a high percentage for not only the 
Postal Service, but any such institution, be it public or 
private business.
    I believe that all parties are now aware of the historic 
financial times the Postal Service finds itself and that 
sacrifice is needed by all the stakeholders. I think the Postal 
Service will need to do more to address this idea of an 80 
percent figure as relates to labor costs. As I understand it, I 
believe the Postal Service has made some gains in lowering this 
percentage cost and hopefully will continue to work to that 
end. I think, in addition to that, the role of the Governors 
needs to be to further encourage these discussions and continue 
these communications as we approach all of the assets as it 
relates to the upcoming negotiations.
    Senator Carper. Thank you. Again, my thanks to you for 
responding to our questions.
    Mr. Toner. Thank you, Mr. Chairman.
    Senator Carper. I thank you for appearing before us today 
and for your testimony. I also want to thank you for your 
service for more than three decades and for making our former 
junior and then senior Senator, Joe Biden, look good enough to 
actually become----
    Mr. Toner. Easy task. Thank you.
    Senator Carper [continuing]. Vice President of this 
country, no small undertaking. But we thank you for your 
willingness to maybe continue that service to our country in a 
different way through serving on the Board of Governors, should 
my colleagues see fit to confirm your nomination, and if they 
do, I certainly look forward to working with you. I know I 
speak for our staff and for my colleagues.
    The hearing record will be open until noon tomorrow for the 
submission of additional questions. That is a pretty short 
period of time. I think we might be having a Committee markup 
the following week. And there is a chance that if there is no 
objection raised by our colleagues, your nomination could 
literally be on the agenda for that business meeting the week 
after next, but we will see.
    Mr. Toner. I would welcome that. Thank you.
    Senator Carper. Again, thanks to our staff for helping to 
arrange for this hearing and to you for your preparation and 
your responses. I wish you well and look forward to seeing you 
again soon. Thanks so much.
    Mr. Toner. Thank you.
    Senator Carper. And with that, this hearing is adjourned.
    [Whereupon, at 3:12 p.m., the Committee was adjourned.]























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