[Senate Hearing 113-429]
[From the U.S. Government Publishing Office]


                                                        S. Hrg. 113-429

 
       NOMINATIONS OF HON. TONY HAMMOND AND HON. NANCI E. LANGLEY

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


                                HEARING

                               before the

                              COMMITTEE ON

               HOMELAND SECURITY AND GOVERNMENTAL AFFAIRS

                          UNITED STATES SENATE

                    ONE HUNDRED THIRTEENTH CONGRESS


                             FIRST SESSION

                               __________

   NOMINATIONS OF HON. TONY HAMMOND AND HON. NANCI E. LANGLEY TO BE 
              COMMISSIONERS, POSTAL REGULATORY COMMISSION

                               __________

                            OCTOBER 2, 2013

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        COMMITTEE ON HOMELAND SECURITY AND GOVERNMENTAL AFFAIRS

                  THOMAS R. CARPER, Delaware Chairman
CARL LEVIN, Michigan                 TOM COBURN, Oklahoma
MARK L. PRYOR, Arkansas              JOHN McCAIN, Arizona
MARY L. LANDRIEU, Louisiana          RON JOHNSON, Wisconsin
CLAIRE McCASKILL, Missouri           ROB PORTMAN, Ohio
JON TESTER, Montana                  RAND PAUL, Kentucky
MARK BEGICH, Alaska                  MICHAEL B. ENZI, Wyoming
TAMMY BALDWIN, Wisconsin             KELLY AYOTTE, New Hampshire
HEIDI HEITKAMP, North Dakota         JEFF CHIESA, New Jersey

                   Richard J. Kessler, Staff Director
               John P. Kilvington, Deputy Staff Director
                  Katherine C. Sybenga, Senior Counsel
            Deirdre G. Armstrong, Professional Staff Member
               Keith B. Ashdown, Minority Staff Director
         Christopher J. Barkley, Minority Deputy Staff Director
               Andrew C. Dockham, Minority Chief Counsel
     Catharine A. Bailey, Minority Director of Governmental Affairs
    Joseph D. Moeller, Minority U.S. Postal Service, Office of the 
                       Inspector General Detailee
                     Laura W. Kilbride, Chief Clerk
                   Lauren M. Corcoran, Hearing Clerk



                            C O N T E N T S

                                 ------                                
Opening statements:
                                                                   Page
    Senator Carper...............................................     1
    Senator Coburn...............................................     2
    Senator Ayotte...............................................     5
Prepared statements:
    Senator Carper...............................................    15

                               WITNESSES
                       Wednesday, October 2, 2013

Hon. Nanci E. Langley, to be Commissioner, Postal Regulatory 
  Commission
    Testimony....................................................     3
    Prepared statement...........................................    62
    Biographical and financial information.......................    64
    Letter from the Office of Government Ethics..................    84
    Responses to pre-hearing questions...........................    87
    Responses to post-hearing questions..........................   109
Hon. Roy Blunt, a United States Senator from the State of 
  Missouri.......................................................     7
Hon. Tony Hammond, to be Commissioner, Postal Regulatory 
  Commission
    Testimony....................................................     7
    Prepared statement...........................................    17
    Biographical and financial information.......................    19
    Letter from the Office of Government Ethics..................    37
    Responses to pre-hearing questions...........................    39
    Responses to post-hearing questions..........................    59
Statement for the record from Senator Schatz.....................   112


       NOMINATIONS OF HON. TONY HAMMOND AND HON. NANCI E. LANGLEY

                              ----------                              


                       WEDNESDAY, OCTOBER 2, 2013

                                     U.S. Senate,  
                           Committee on Homeland Security  
                                  and Governmental Affairs,
                                                    Washington, DC.
    The Committee met, pursuant to notice, at 11:18 a.m., in 
room SD-342, Dirksen Senate Office Building, Hon. Thomas 
Carper, Chairman of the Committee, presiding.
    Present: Senators Carper, Coburn, and Ayotte.

              OPENING STATEMENT OF CHAIRMAN CARPER

    Chairman Carper. This is like the second half of the day-
night doubleheader in baseball and I am glad that you all stuck 
around for the second game. We welcome our nominees here this 
morning.
    The Committee will come to order to consider the 
nominations of Tony Hammond and Nanci Langley to continue to be 
members of the Postal Regulatory Commission (PRC).
    As my colleagues and those following this hearing certainly 
know, these are very challenging times for the U.S. Postal 
Service (USPS). While so many other vital Federal services are 
shut down, the mail continues to be delivered. Absent the 
legislative action, however, the post office may face a similar 
fate unless Congress can get its act together, and frankly, I 
would just say, if the Administration gets involved. We need 
the Administration to be a participant in this in a significant 
way as well.
    The Postal Service has maxed out, as we know, its line of 
credit with Treasury and is rapidly running out of cash. 
Despite an improving economy and some positive signs from parts 
of its business, its immediate future is unfortunately still 
not bright.
    Absent legislative intervention, the Postal Service will 
likely limp along for a few more months, unable to invest for 
the future, with its employees and customers uncertain of what 
that future holds, and that is not good.
    It is up to those of us on this Committee and the rest of 
our colleagues in the Senate and the House and the 
Administration to do what we need to do to avoid a postal 
shutdown, a shutdown that would threaten the jobs of some 8 
million people across the country whose jobs depend on the kind 
of private-public sector relationship that they enjoy with the 
Postal Service.
    Over the past 2 weeks, this Committee has debated some of 
the tough decisions that will need to be made in the coming 
months and years regarding the level of service the Postal 
Service should offer the American people and the type of 
workforce we must develop to provide that service. We also 
discuss how it should price and market its product and how much 
it should pay to fund its employees health and pension 
obligations.
    Most importantly, we have heard about some innovative ways 
the Postal Service can make itself relevant to new generations 
of customers by taking creative advantage of its one-of-a-kind 
retail processing and delivery network.
    In the very near future, we will take what we learned from 
our hearings and go to work on crafting and refining a 
legislative response to the very real crisis we face on this 
issue; and in fact, we have already spent a fair amount of time 
crafting that legislative response; and while I think it is not 
a final product, I think it is a good effort. We will look 
forward to making it better.
    But today we gather to consider two very qualified nominees 
that the President has put forward to continue their service on 
the Postal Regulatory Commission. That commission has played a 
key role in recent years in partnering with the Postal Service 
to develop a rate system that has, since it was implemented, 
followed the postal reform legislation signed into law in 2006.
    That law gives the Postal Service significant new 
commercial flexibilities that have helped it to whether both 
the major recession and significant growth in electronic 
communication.
    It has also served as a venue where postal employees and 
customers can have their voices heard about the painful but 
often very necessary changes that postal management has been 
forced to consider.
    In the coming months and years, the work of the Postal 
Regulatory Commission will be no less important.
    So, I am pleased that Mr. Hammond and Ms. Langley are 
willing to continue their service. While I have not always 
agreed with every decision by the Commission, I am sure you 
have not always agreed with everything that we have done 
either. But the Congress, the Postal Service, and the public in 
general rely on it to efficiently and effectively perform its 
responsibilities and to be a source of key knowledge and 
expertise during both good times and bad.
    Dr. Coburn, you are recognized.

              OPENING STATEMENT OF SENATOR COBURN

    Senator Coburn. I have no opening statement, and I 
apologize for having to leave in about 5 minutes; I will submit 
my questions for the record.
    Chairman Carper. OK. Would you want to ask any questions 
before you go?
    Senator Coburn. No.
    Chairman Carper. With that, then what we are going to do is 
I am going to ask you to do something you have done before and 
that is to rise and to raise your right hand and we will 
administer the oath before you testify.
    Do you swear 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. Hammond. I do.
    Ms. Langley. I do.
    Chairman Carper. Please be seated. [Pause.]
    I think that Senator Blunt is going to try to get here to 
introduce you, Mr. Hammond; and when he arrives, we will 
recognize him. And maybe even if it interrupts the flow a 
little bit, we will interrupt and we will do that and ask him 
to make some comments about you.
    I am going to withhold my comments, my introductory 
comments, in anticipation of his arrival. If he is unable to 
come, I will revisit them.
    Nanci Langley was sworn in as a Commissioner in June 2008. 
During her tenure she has been elected to two separate terms as 
vice chair of the Commission.
    I note that the Chairman of the Commission is here. We 
welcome her.
    Commissioner Langley has over 30 years of public service 
experience, including 24 years as a senior adviser to two U.S. 
Senators from her home State of Hawaii, most recently Danny 
Akaka, be loved by all of his colleagues and now retired in 
Hawaii.
    Please give him our aloha.
    She has also served as Deputy Staff Director of the Senate 
Committee on Homeland Security Subcommittee on Government 
Management and Federal Workforce.
    Mr. Hammond, why do you not go ahead and proceed with your 
statement, well, I will tell you what. Just hold on to your 
statement. We will let Nanci go first and then maybe if Senator 
Blunt will join us we will roll right into you. OK.
    Ms. Langley, as you know, your whole statement will be made 
part of the record. Feel free to summarize and we will then 
turn to your colleague there and ask him to proceed.
    Thank you. Please proceed.
    Ms. Langley. Thank you very much.
    Chairman Carper. Welcome.

    TESTIMONY OF THE HONORABLE NANCI E. LANGLEY\1\ TO BE A 
           COMMISSIONER, POSTAL REGULATORY COMMISSION

    Ms. Langley. Mr. Chairman and Senator Ayotte, distinguished 
Members of this Committee, and I know that Senator Coburn has 
departed but my appreciation to him as well.
---------------------------------------------------------------------------
    \1\ The prepared statement of Ms. Langley appears in the Appendix 
on page 62.
---------------------------------------------------------------------------
    I appreciate having the opportunity to appear before you 
today and I thank you for considering my nomination to a second 
term on the Postal Regulatory Commission. I am very honored to 
be nominated by President Obama to a second term and I thank 
him for the trust that he has placed in me.
    I also appreciate the recounting of my career here at the 
Senate as well as the Commission. I never set out to spend 30 
years as a Federal employee and it still surprises me every day 
that I continue to enjoy what I am doing but I do and I 
appreciate the comments.
    And, I was honored and privileged to advise Senator Akaka 
on issues that came before this Committee for a little over 15 
years, nine of which as his Deputy Staff Director. He was one 
of the guiding forces on the development and enactment of the 
Postal Accountability and Enhancement Act (PAEA).
    He was particularly interested in financial transparency 
and championed the idea of having the Postal Service adhere to 
some aspects of the Sarbanes-Oxley Act, and I am very pleased 
to see that has actually turned out to be a very good thing for 
the Postal Service.
    So, I do appreciate his support for my initial nomination 
as well as my renomination. I am absolutely grateful for the 
unwavering support he has provided me through much of my career 
and that of my husband, William Selander, of 33 years. He is 
unable to be here today but I know he is thinking about me 
right now and cheering me on.
    Having grown up in Hawaii, I understand the unique 
challenges faced by individuals who reside in rural, remote, or 
noncontiguous areas of the United States. Their dependence on 
the U.S. Mail is different and many times greater than for 
those who reside in urban or suburban areas.
    But just as I appreciate the challenges they face, I also 
understand the challenges that the Postal Service is requiring 
to make right now because of the volumes declining, the 
diversion of mail because of new technologies that were really 
unheard of or unthought of by our Founding Fathers when they 
called for the development of the U.S. Postal Service.
    So, I am pleased that this Committee and Congress is 
tackling these issues; and as Chairman Carper said, these are 
really tough decisions that need to be made for the Postal 
Service to ensure its sustainability.
    The Postal Service is vital to the Nation. It spurs 
economic growth yet fosters the entrepreneurial spirit that is 
so much a part of the country, and it really does bind family 
and friends across thousands of miles.
    So, even though we are communicating in ways that were 
unimagined, the importance of the mail continues. It is a 
relevant part of our society and it is important that it 
provides universal and affordable service.
    So, after working on the PAEA and now implementing the 
provisions, I have a deeper appreciation of the importance of 
an independent regulator. The need for clear, well reasoned, 
and unbiased reviews of Postal Service initiatives and its 
financial condition are especially important to ensure a 
balance between the flexibilities given to the Postal Service 
by the PAEA with the accountability and transparency provided 
by the Commission.
    As a Commissioner, I strive to provide fair, reasoned, and 
expeditious review on all matters that come before me; and I 
will continue to work toward streamlining our review processes 
while ensuring due process, if I am confirmed for a second 
term.
    Thank you, Chairman Carper and Members of the Committee. I 
also wish to thank your staff who have helped me through this 
process, especially John, Katie, Kata, Joe, and Deirdre.
    And I want to thank the dedicated Commission staff for 
their professionalism and expert advice as well as the support 
of Chairman Ruth Goldway, Vice Chairman Robert Taub, 
Commissioner Mark Acton, I am especially pleased to appear 
before you today with my good friend and colleague, 
Commissioner Tony Hammond.
    Mr. Chairman, this concludes my statement and at the 
appropriate time I am happy to answer any questions that you 
may have of me.
    Thank you.
    Chairman Carper. Thank you very much. I think what I am 
going to do is ask you the three questions, standard questions 
we ask all of our witnesses at this and then I am going to 
yield to Senator Ayotte for some questions she may have.
    I understand Senator Blunt is 5 or 10 minutes out so that 
should work out pretty well. Here we go. Three standard 
questions. I have already had a chance to practice this once 
today so hopefully it will go well.
    Is there anything you are aware of it in your backgrounds 
that may present a conflict of interest with the duties of the 
office to which you have been nominated?
    Ms. Langley. No.
    Chairman Carper. I would ask the same question of you, Mr. 
Hammond.
    Mr. Hammond. No.
    Chairman Carper. All right. Do you know of anything, 
personal or otherwise, that would in any way prevent you from, 
either of you, from fully and honorably discharging the 
responsibility of the office to which you have been nominated?
    Ms. Langley. No.
    Mr. Hammond. No.
    Chairman Carper. And No. 3. 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?
    Ms. Langley. Yes.
    Mr. Hammond. Yes.
    Chairman Carper. Senator Ayotte please. Thanks for sticking 
with us.

              OPENING STATEMENT OF SENATOR AYOTTE

    Senator Ayotte. Thank you, Chairman. You are very kind to 
let me ask first and I thank both of you for being here. I 
appreciate it.
    I just wanted to get a sense of--a lot has changed. I know 
that, Mr. Hammond, you have been appointed to the then Postal 
Rate Commission since 2002.
    Mr. Hammond. Yes.
    Senator Ayotte. We have seen a 25 percent drop in volume. 
And so, is the PRC structured to properly respond to the 
changes?
    I mean, what we are doing here is we are hearing, the 
Committee is trying to work on a bipartisan basis to allow the 
Postal Service to appropriately restructure in a way that 
allows them to continue to serve the public that I think all of 
us are committed to but in light of the changing market 
conditions.
    So, I guess I wanted to ask the two of you, in light of the 
changes we are having to make in the Postal Service, is that 
PRC structure where it should be and it just wanted to get your 
thoughts on that.
    And then related to that, since I know--I do not want to 
take up too much time--I know that the Chairman will explore in 
much more detail which I am sure he will ask about is the 
Consumer Price Index (CPI) rate cap and the proposed 
legislation that is pending before this Committee, what are 
your views on that.
    But most of all I wanted to ask first about the structure 
as we look to make changes here based on your experience.
    Mr. Hammond. Well, I think if you do make changes in the 
law, I think the Postal Regulatory Commission can adapt to any 
new structure. I was a member of the old Postal Rate Commission 
before the PAEA was passed; and once the PAEA was passed, we 
had to setup an entirely new rate-making system. We had a whole 
lot of obligations to go along with that.
    We changed in the agency. I think we did a good job at that 
time. It took a tremendous amount of work cooperation from the 
chairman and the staff that we had at the time but we worked 
our way through that without a big difficulty. And, I think if 
new legislation is passed, I think our structure can adapt so 
that we will be responsive.
    Senator Ayotte. And, do both of you have a view on the 
legislation that is pending that we are examining and having 
important hearings on right now that would give the Board of 
Governors greater authority to set rates? And so, I wanted to 
get your thoughts on that.
    Ms. Langley. I have read the legislation and I am aware of 
the change that the legislation right now is seeking. Knowing 
that nearly 80 percent of postal revenues are from the market 
dominant products and that the Postal Service has a market 
dominant position for these products as well as a captive 
audience that uses the products, I do believe that where there 
are customers who do not have other alternatives, individuals 
and businesses that could be harmed without adequate protection 
and oversight, that the idea of the price cap as it was written 
was prudent public policy.
    But I am also aware that the objectives of maximizing 
incentives by reducing costs and increasing efficiencies as 
well as providing predictable and stable rates has worked.
    One of the objectives which is to assure adequate revenues, 
including retaining revenues, has not been met. So, I do 
believe that there are appropriate discussions going on; but as 
Commissioner Hammond said, the Commission has performed 
remarkably well in transitioning from one form of body to 
another; and now that we are a full-time regulator, we have 
been able to adjust quickly and we have an extremely flexible 
staff who are dedicated to doing the work that Congress intends 
us to do.
    Senator Ayotte. Well, I see my colleague Senator Blunt 
here. I am so glad to see you, Senator Blunt. So, I know that 
the Chairman will want to take back over and allow Senator 
Blunt to speak.
    I appreciate your answer. I know that there will be further 
followup. I am going to submit some additional questions for 
the record; but as I am hearing you both, what I heard you say 
is that you will work with whatever changes we make with regard 
to this legislation to make sure that the PRC functions 
properly and assist in the goals that we all share to have a 
viable Post Office.
    Ms. Langley. That is correct.
    Senator Ayotte. Thank you.
    Chairman Carper. Senator, thank you so much for joining us 
today.
    Senator Blunt, nice to see you. How have you been, pal?
    Senator Blunt. I am good, Senator Carper. Thanks for 
letting me come in.
    Chairman Carper. Welcome. I understand you have a couple of 
stories you want to tell us about Tony Hammond.

 TESTIMONY OF THE HONORABLE ROY BLUNT, A UNITED STATES SENATOR 
                   FROM THE STATE OF MISSOURI

    Senator Blunt. Well, I could tell you a lot of stories, and 
thanks to Senator Ayotte for going ahead and allowing me to say 
some things about Tony Hammond.
    I have known him a long time. That may not necessarily be 
good for him but it has always been good for me. When he 
started his career, our Congressman Gene Taylor was the ranking 
member on the Post Office Committee and Tony staffed that 
Committee.
    This is the fourth time he has been before this Committee 
to serve on the Commission. So if you approve him and if the 
Senate approves him, we have done it three other times, and I 
think Tony has done a good job.
    Only one of those was a full term and then he served two 
partial terms. So, he knows what he is doing here. He has done 
a great job. We are lucky he is willing to continue to do it 
and I am pleased to see him nominated. I hope that he is easily 
confirmed and know that he will continue to do the good work he 
has been doing on this Commission for some time now.
    Chairman Carper. Well, you are good for coming. I know you 
have a lot on your plate today. Thank you so much for coming 
by. I know it means a lot to him as well.
    Senator Blunt. Thank you. Good luck.
    Mr. Hammond. Thank you.
    Senator Blunt. See you all.
    Chairman Carper. Thank you, Roy.
    Mr. Hammond, that is a tough act to follow but we are going 
to give you some time to do that. You are recognized for your 
statement. Please proceed.

      TESTIMONY OF THE HONORABLE TONY HAMMOND\1\ TO BE A 
           COMMISSIONER, POSTAL REGULATORY COMMISSION

    Mr. Hammond. Thank you, Chairman Carper, and I would like 
to express my appreciation to you and Dr. Coburn for scheduling 
this hearing to consider our nominations to continue as members 
of the Postal Regulatory Commission, and I appreciate Senator 
Ayotte for being here also.
---------------------------------------------------------------------------
    \1\ The prepared statement of Mr. Hammond appears in the Appendix 
on page 17.
---------------------------------------------------------------------------
    I do appreciate the confidence that President Obama placed 
in me with this nomination as well as the support I received 
from Senate Minority Leader Mitch McConnell during this 
process, and I especially do want to thank Senator Blunt for 
his willingness to be here today to introduce me to this 
Committee. I am grateful for his comments and especially for 
his friendship and the support that he has given me in my 
renomination.
    I also appreciate our Chairman Ruth Goldway being in 
attendance here today, and I especially feel fortunate that I 
have been able to go through this nomination process with my 
colleague and friend Nanci Langley.
    Although we are of different political parties, she shows 
every day on the Commission how we can work together in a 
bipartisan and cooperative manner, and that is very important 
for the work that we do.
    The one other person that I would like to recognize, if I 
could, is fortunately my nephew Tracy Hammond is once again to 
represent the family. It is easier for him since he and his 
wife live here in Washington but I appreciate him making time 
to be here.
    Chairman Carper. I will ask Tracy to raise his hand please. 
Welcome Tracy. Thank you.
    Mr. Hammond. Much has changed since my original appointment 
to the old Postal Rate Commission in 2002. As we were 
discussing, the PRC gained enhanced responsibilities with the 
passage of the PAEA in 2006.
    It required a major revamping of our agency's functions, 
and it was because of the hard work and cooperation among the 
commissioners and staff that the transformation we made to a 
new agency, I believe, was achieved in a responsible and 
effective manner and in keeping with the mandates of the PAEA.
    And, I was pleased to be actively involved in all the 
transition activities of the Commission. The first among them, 
of course, was the requirement that the Commission implement an 
entirely new rate making system which we actually completed 
several months ahead of schedule during that process.
    We also provided the report on the universal Postal Service 
and the postal monopoly to the Congress on time as mandated by 
the PAEA. Each year the PRC is also responsible for our annual 
report to the President and the Congress which, of course, 
among other things, contains the current estimated value of the 
monopolies and the estimated cost of the universal service 
obligation (USO).
    We also continue to produce the comprehensive annual 
compliance determination (ACD), which is the ongoing mechanism 
for providing accountability, transparency, and oversight of 
the Postal Service.
    Recently, I have advocated the reform of our regulations to 
better assure that our advisory opinions are both timely and 
relevant, and I especially appreciate, Mr. Chairman, the 
interest that you have shown in this matter and the suggestions 
that you provided to our Commission for improvement of the 
process, and I hope we are able to finalize the proposed new 
regulations governing the issuance of advisory opinions in the 
very near future.
    As the Members of this Committee know, the Postal Service 
is dealing with multiple challenges; and because of that, the 
Postal Regulatory Commission has an extraordinary 
responsibility to adjudicate fairly in a professional and 
timely manner all the decisions on every case that comes before 
us.
    For approximately 10 years now, I have enjoyed the 
challenging work at the Commission and I hope that this 
Committee will look favorably on my experience in considering 
my nomination for an additional term to the PRC.
    Mr. Chairman, I want to thank you once again and the staff 
of this Committee for this opportunity, and I will be happy to 
respond to any questions that you or your colleagues would 
have.
    Chairman Carper. Good. Thank you, Mr. Hammond.
    I have a question for both of you if I could. Were both of 
you present when we held the earlier hearing for Beth Cobert to 
be the Deputy at the Office of Management and Budget (OMB) for 
Management? Were you here?
    Mr. Hammond. We were able to watch part of it.
    Ms. Langley. We watched part of it.
    Chairman Carper. OK. When I asked her, one of the questions 
I asked was to talk about what she learned from her mom and dad 
that might be applicable and helpful in this new role and what 
she learned in her role as a spouse, as a mom, as well; and she 
said that among the things she learned being a spouse and a mom 
is she learned the value of patience.
    When we were closing out her hearing, I said I believe that 
patience is a virtue but in the Federal Government we need to 
convey a sense of urgency.
    And, there is so much that we need to be doing, and we only 
have so much time, and it is especially frustrating this week 
as you might imagine for people particularly like Dr. Coburn 
and I and the others who have been here today.
    Let me just say in terms of conveying a sense of urgency, 
one of the things that we sought to do before is to convey a 
sense of urgency to the PRC to go through the regulatory 
process.
    I think, Mr. Hammond, you used the word timely when you 
were talking about adjudication. Just talk to us about trying 
to find the right balance between being timely and being, by 
the same token, appropriately thoughtful.
    Ms. Langley. I appreciate that; and as Commissioner Hammond 
said, your letter of last year I thought was very thoughtful 
and appropriate in its comments.
    I always look at doing things as expeditiously as possible 
but also keeping in mind that we do act in a quasi-judicial 
fashion; and as such, we need to give appropriate consideration 
to the issue of due process.
    And, one of the, I think, guiding principles for an 
independent regulator is to make sure that they are, indeed, 
independent and give an unbiased review. We do have procedures 
in place that allow interested parties to make comment but we 
are working right now on streamlining the advisory opinion 
process. We are in the process of reviewing the comments that 
we have received; and they have been very active and thoughtful 
but also very pointed in some instances.
    We are looking to try to see if we can achieve a 90-day 
turnaround while still preserving due process. So, I am happy 
to discuss more of that or let Commissioner Hammond also talk.
    Mr. Hammond. Well, I would just reiterate what Commissioner 
Langley said. One of the things that we have an obligation to 
do is to provide due process to parties that are interested in 
all the activities that come before the Commission.
    In our system, the Postal Service and interveners alike 
come before us; and when the Postal Service comes before us and 
provides the evidence, the interveners want to know more about 
that evidence, want to be able to question the Postal Service, 
et cetera.
    And so, part of the time and especially in the advisory 
opinion process because people are allowed that opportunity, 
that can slow things down. I admit it.
    And, possibly at times we have been too accommodating to 
both sides as they tried to explore everything involved there. 
But I think that, as Commissioner Langley said, we are in the 
process right now of going through the final review of comments 
that have been submitted; and I think that we are going to be 
able to come to agreements on new regulations that will be 
acceptable to both sides, maybe not entirely but I think that 
we will be able to do that.
    Chairman Carper. All right. Thank you.
    I think, Ms. Langley, you indicated you had a chance to 
review the legislation that Dr. Coburn and I have introduced. 
Is that correct?
    Ms. Langley. I had gone through it once, yes.
    Chairman Carper. OK. Mr. Hammond, have you had a similar 
opportunity?
    Mr. Hammond. I have looked at it somewhat too, not an 
expert on it.
    Chairman Carper. Both of you have thought a lot about these 
issues before and at least one of you has played a role where 
you helped counsel and advise people, as it were Dr. Coburn and 
my colleagues said, what do you find especially encouraging 
about the legislation? What are some areas that you think it 
could be improved?
    I would like to say everything we do, we know we can do 
better; and when we introduced the legislation, we described it 
as a work in progress. We think it is a pretty good work but we 
know it can be improved.
    So, just give us some of your thoughts. Where do you think 
it has, we found the right spot, the sweet spot and what were a 
couple of areas where maybe we could do better please?
    Ms. Langley. Well, I hesitate to give my personal views 
because we are in the process of responding to a question by 
Senator McCain that asks us to go through the legislation and 
provide our views.
    And as the Commission did with the testimony presented by 
Chairman Goldway a couple of weeks ago, that was something that 
the Commission and the Commissioners reviewed.
    But I can say personally that I am very pleased to see 
certain aspects, particularly the reamortization of the Retiree 
Health Benefit Fund (RHBF). I think that is a very good and 
appropriate and necessary undertaking, using Postal Service 
specific demographics is quite important.
    The PRC did a report on what we consider pension surplus, 
both on the Civil Service Retirement System (CSRS) and the 
Federal Employees Retirement System (FERS). Those are good. 
Changing or ensuring that the definition of Post Office covers 
all postal retail facilities, postal-run retail facilities, is 
an important change that I see as being responsive to some of 
the concerns that people out in the communities have, and 
ensuring that there is no distinction among stations, branches, 
and post offices.
    Chairman Carper. Thank you. Mr. Hammond.
    Mr. Hammond. Well, there is no doubt the legislative 
changes are needed to place the Postal Service on a more sound 
financial footing. I agree with all of those provisions which 
Commissioner Langley brought up, especially, of course, one of 
the major ones is the adjustment of the pre-funding of the 
retiree health benefits schedule. That helps address the 
liquidity challenge and is very important.
    Some of the other provisions that I have looked at, and I 
know we discussed this last time I was before you last year 
with your previous bill, in having a provision that allows 
opportunities for non-postal products offerings. I think that 
is good as long as they do not create unfair competition with 
the private sector, and you seem to have taken care of making 
sure that is what occurs.
    Chairman Carper. We have sought to do that.
    Mr. Hammond. Yes.
    Chairman Carper. I hope we were effective.
    Mr. Hammond. And also as Nanci mentioned, clarifying which 
retail facilities are subject to review, I am glad to see that 
in there. If you include the provision that would increase the 
amount of dollars involved in experimental products that the 
Postal Service can provide, I think that is possibly something 
that should be done also.
    So, those are some of the provisions which seemed to be 
very positive.
    Chairman Carper. What are--just give some broad guidance 
and counsel if you would--some areas that we need to keep in 
mind as we legislate, particularly in areas where we think we 
can do better.
    We are meeting with people of this week, probably everyday 
this week, next week as well; meeting with our colleagues to 
get their input, their staffs, and the key stakeholders. But my 
guess is that the two of you have forgotten more than most 
people have learned about these issues.
    I just welcome some general thoughts you have where we 
might be able to do a better job.
    Ms. Langley. I think it is always difficult to find, as you 
said, the sweet spot, the balance. But I think looking at the 
rate cap is certainly an appropriate action since the Postal 
Service has not been able to retain revenue.
    But as I mentioned to Senator Ayotte, I do believe that it 
is good public policy to ensure that there is appropriate 
oversight and independent oversight. So, I would just urge that 
it is appropriate public policy that drives any changes that 
might be considered.
    Chairman Carper. All right. Mr. Hammond.
    Mr. Hammond. Well, in broad overview, just like 
Commissioner Langley says, if you are going to make the changes 
and increase flexibility to the Postal Service once again, you 
do need an independent oversight of that if it is going to be 
effective.
    People sometimes get tired of hearing me say it but I 
continually remind them that the U.S. Postal Service is the 
world's biggest government monopoly; and so since they are the 
world's biggest government monopoly, you have to have oversight 
of them.
    You have to have some controls on them. You have to force 
efficiencies upon them. Otherwise, I do not know what 
government monopoly would become more efficient if they are not 
required to, for instance.
    So, things like that I think that you do need to keep in 
mind as you look at the legislative proposals.
    Ms. Langley. And, I just want to add to that. The rate cap 
as it exists now has been effective. It has not been as 
effective as it could be and that is because of many external 
issues.
    But when you take the Postal Service's total revenue for 
fiscal year 2012 and back out the Retiree Health Benefit Fund 
as well as workers' compensation adjustment, there is a 
remaining $2.4 billion that is under the control of the Postal 
Service.
    So, the amount of money that needs to be bridged under the 
current rate cap system is not quite as great. But the rate 
making system has worked before the Commission. We do have a 
statutory review of 45 days for market dominant products, and 
the Commission itself has instituted a 34-day review of that 
general rate case.
    So, we are providing a very quick turnaround, looking at 
whether or not the law has been met and whether or not any 
workshare costs are over the 100 percent attributable cost.
    So, the rate making system for market dominant is a very 
quick turnaround, and a more in-depth review comes during our 
annual compliance determination review. And, the same as with 
competitive products, where there is a 30-day review.
    I think the Commission, while ensuring public participation 
and a comment period, is turning around rate cases in a very 
expeditious time line.
    Chairman Carper. OK. I do not know if it was in your 
statement, Ms. Langley, or in response to a question raised by 
Senator Ayotte, but I think you mentioned that 80 percent of 
the Postal Service's revenues come from market dominant 
products.
    Just tell us what those include please.
    Ms. Langley. Periodicals, First-Class Mail, Standard Mail, 
Special Services, and some international mail.
    Chairman Carper. And the other 20 percent would include 
what?
    Ms. Langley. That is the competitive Priority Mail and some 
of their market tests which are competitive, Express Mail.
    Chairman Carper. We have had any number of hearings. Even 
last month we had two hearings on the legislation that Dr. 
Coburn and I introduced, and one of the points I have made as 
important as it is to find efficiencies within the Postal 
Service, it is not enough to just cut, cut, cut but they have 
to be encouraged and incentivized to find ways, and we cannot 
be an impediment, as they look for ways to use this unique 
distribution system.
    It goes to every mailbox in the country at least 5 or 6 
days a week, find ways to use that, and their brand, to 
generate additional revenues.
    When you think of some opportunities that are out there 
that you heard about, you know of, that you maybe even 
suggested to the Postal Service to consider, what are some of 
the more promising places for them to turn to generate 
additional revenues?
    Mr. Hammond, Ms. Langley, either of you can respond.
    Mr. Hammond. Well, she is much more articulate. I like for 
her to talk more than me but, well, like I mentioned before, 
one of the provisions that you have that would allow the Postal 
Service an increase in experimental products.
    I cannot tell you what experimental product they need to 
propose to us next. It does work the other way where we are the 
ones who are responsible for, once they come up with a new 
product, for instance, for us to review it rather than for us 
to recommend to them.
    So, I do not want to be nonresponsive but I also do not 
want to make a whole bunch of recommendations for the Postal 
Service to send us when we are the ones that are going to have 
to review them. That is one of the areas of where they have 
flexibility and you are going to provide possibly increased 
flexibility.
    Chairman Carper. Ms. Langley.
    Ms. Langley. I think the concept of an innovation chief is 
a good idea. There could be great benefit to having someone at 
or a division within the Postal Service where individuals can 
go with their ideas.
    I think there are a great many ideas out there. But 
sometimes when you reach into the Postal Service, just because 
of its size and the number of different departments and 
different individuals, it is not always easy to find where you 
should go, where somebody should go to bring a good idea.
    But the Postal Service has been working on utilizing 
emerging technologies to bring forward to us incentives and 
experimental products. One of their most successful ones has 
been the Every Door Direct which allows--and it is really 
geared to small and medium-sized businesses--but cutting 
through some of the barriers that these much smaller mailers 
might see. And, that has been a successful initiative that the 
Postal Service has undertaken.
    But they are trying to work with product samples, for 
example; and I remember we used to get products in the mail, 
small sizes of detergent or face cream, something.
    That was always exciting, and I think the Postal Service is 
trying to go back to some of the concepts that used to work to 
see if there is a way of bringing it back into the fold but 
also utilizing technology.
    So, if you can have a quick response (QR) code that you can 
read on an envelope and it drives a customer to look at a 
catalog or to use the QR code that then takes you to that page 
on a Web site, I think there is great innovation out there and 
great opportunities to continue to grow volume.
    Chairman Carper. We had a hearing here early this year--in 
fact, the first hearing we did with Dr. Coburn and I as the 
leaders of this Committee, was on postal reform. And, we had a 
fellow from one of the States. I do not know if it was 
Wisconsin; but his company a legacy company in the paper 
industry, and the name of the company was Quad/Graphics.
    And I have always been intrigued by his testimony because 
what he basically said they have really what we are is a legacy 
industry, and they figured out how to be relevant, not just 
relevant but very profitable in the digital age.
    I am convinced that there are opportunities like this. You 
just mentioned one of them with respect to the Postal Service 
where they can find ways to generate revenues and be relevant 
in the digital age.
    And, what we want to do is make sure that we incentivize 
them, do not impede their ability to do that, at the same time 
trying to be respectful of the fact that it is not appropriate 
for them to be competing head to head with the private sector 
on things the private sector is perfectly capable of doing.
    Well, my colleagues and I will probably have some questions 
for the record. Before I talk about the deadline for submission 
of those, let me just say that we appreciate your giving us 
responses to the questions that we have asked with respect to 
your biographical and financial questionnaires, answering 
prehearing questions that have been submitted by the Committee, 
and you have had your financial statements reviewed by the 
Office of Government Ethics.
    Without objection, this information will be made a part of 
the hearing record with the exception of the financial data 
which are on file and are available for public inspection in 
our Committee's offices.
    And, the hearing record will remain open until noon, 
October 3, for the submission of statements and questions for 
the record.
    Again, we thank you both for your service. We thank you for 
your presence here today and for your willingness to continue 
to serve.
    With that, this hearing is adjourned. Thank you so much.
    Mr. Hammond. Thank you.
    Ms. Langley. Thank you.

    [Whereupon, at 12:02 p.m., the Committee was adjourned.]

                            A P P E N D I X

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