    [Senate Hearing 114-605]
    [From the U.S. Government Publishing Office]

                                                            S. Hrg. 114-605

           NOMINATIONS OF HON. ROBERT G. TAUB AND HON. MARK D. ACTON

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

                                    HEARING

                                   before the

                                  COMMITTEE ON
                   HOMELAND SECURITY AND GOVERNMENTAL AFFAIRS
                              UNITED STATES SENATE

                        ONE HUNDRED FOURTEENTH CONGRESS

                                 SECOND SESSION

                                   __________

              NOMINATIONS OF ROBERT G. TAUB AND HON. MARK D. ACTON
               TO BE COMMISSIONERS, POSTAL REGULATORY COMMISSION

                                   __________

                               NOVEMBER 15, 2016

            Available via the World Wide Web: http://www.fdsys.gov/

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            Committee on Homeland Security and Governmental Affairs

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            COMMITTEE ON HOMELAND SECURITY AND GOVERNMENTAL AFFAIRS

                        RON JOHNSON, Wisconsin Chairman
    JOHN McCAIN, Arizona                 THOMAS R. CARPER, Delaware
    ROB PORTMAN, Ohio                    CLAIRE McCASKILL, Missouri
    RAND PAUL, Kentucky                  JON TESTER, Montana
    JAMES LANKFORD, Oklahoma             TAMMY BALDWIN, Wisconsin
    MICHAEL B. ENZI, Wyoming             HEIDI HEITKAMP, North Dakota
    KELLY AYOTTE, New Hampshire          CORY A. BOOKER, New Jersey
    JONI ERNST, Iowa                     GARY C. PETERS, Michigan
    BEN SASSE, Nebraska

                      Christopher R. Hixon, Staff Director
                    Gabrielle D'Adamo Singer, Chief Counsel
                Jennifer L. Scheaffer, Professional Staff Member
         John D. Cuaderes, Director, Subcommittee on Regulatory Affairs
                             and Federal Management
          Tara M. Schonoff, Professional Staff Member, Subcommittee on
                   Regulatory Affairs and Federal Management
                  Gabrielle A. Batkin, Minority Staff Director
               John P. Kilvington, Minority Deputy Staff Director
           John A. Kane, Minority Senior Governmental Affairs Advisor
         Felicia A. Hawkins, Minority U.S. Postal Service Office of the
                           Inspector General Detailee
          Viola B. Stoval, Minority U.S. Postal Service Office of the
                           Inspector General Detailee
                         Laura W. Kilbride, Chief Clerk

                                C O N T E N T S

                                     ------
    Opening statements:
                                                                       Page
        Senator Lankford.............................................     1
        Senator Carper...............................................     2
        Senator Heitkamp.............................................     9
        Senator Tester...............................................    11
        Senator Peters...............................................    14
    Prepared statement:
        Senator Lankford.............................................    23
        Senator Carper...............................................    24

                                   WITNESSES
                           Tuesday, November 15, 2016

    Hon. Robert G. Taub to be a Commissioner, Postal Regulatory
      Commission
        Testimony....................................................     4
        Prepared statement...........................................    28
        Biographical and financial information.......................    30
        Letter from the Office of Government Ethics..................    53
        Responses to pre-hearing questions...........................    56
    Hon. Mark D. Acton to be a Commissioner, Postal Regulatory
      Commission
        Testimony....................................................     5
        Prepared statement...........................................    75
        Biographical and financial information.......................    76
        Letter from the Office of Government Ethics..................    94
        Responses to pre-hearing questions...........................    96
    Prepared Statement of Senator Schumer............................    26
    Prepared Statement of Senator Gillibrand.........................    27

           NOMINATIONS OF HON. ROBERT G. TAUB AND HON. MARK D. ACTON

                           TUESDAY, NOVEMBER 15, 2016

                                         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. James
    Lankford, presiding.
        Present: Senators Lankford, Carper, Tester, Heitkamp, and
    Peters.

                 OPENING STATEMENT OF SENATOR LANKFORD

        Senator Lankford. Good afternoon, everyone. Let me call
    this hearing before the Senate Homeland Security and
    Governmental Affairs Committee to order today.
        We are considering today the nominations of Mr. Robert Taub
    and Mr. Mark Acton for Commissioners of the Postal Regulatory
    Commission (PRC). The Postal Regulatory Commission exercises
    statutory and comprehensive oversight of the U.S. Postal
    Service (USPS). Among its responsibilities are the mandates to
    prevent anticompetitive practices, to promote accountability
    and to adjudicate complaints, set postal rates, help oversee
    delivery service standards, and other things. It is a busy
    group. It is important that each Commissioner reflects the
    highest standard of public service.
        Robert Taub is a native of Gloversville, New York. He
    received a bachelor's degree and M.A. in political science from
    American University, where he graduated with honors. Mr. Taub
    has a distinguished career as a public servant, including work
    at the Government Accountability Office (GAO) , as chief of
    staff to former Representative John McHugh, and as an assistant
    to the Secretary of the Army. He is currently serving as the
    Acting Chairman of the Postal Regulatory Commission.
        Mark Acton is a native of Louisville, Kentucky. He earned
    his bachelor's degree from the University of Louisville and his
    MBA from the University of Maryland. I assume you are watching
    a little football lately as well.
        Mr. Acton. Indeed.
        Senator Lankford. Yes. Mr. Acton served at the Republican
    National Committee for more than two decades in a variety of
    positions, including as staff director for the counsel's office
    and government relations officer. Prior to his confirmation as
    Commissioner at the PRC, Mr. Acton was the Special Assistant to
    the Chairman.
        Committee staff had the opportunity to interview Mr. Taub
    and Mr. Acton regarding their work so far at the PRC. They have
    thoughtfully and competently answered each question to our
    satisfaction. Mr. Taub and Mr. Acton, to date, the Committee
    has found you to be qualified for the position you have been
    nominated, and I look forward to speaking with you more about
    this.
        When we go through this process and get a chance to open
    this up for questions and when you do your opening statements,
    I would hope both of you would introduce your family, and that
    will give a chance to tell a little bit about your story and
    what actually brought you here. You have both served very
    admirably already in these type of positions, and so this
    should be a very straightforward conversation about what we are
    doing in the days ahead to be able to help the Postal Service
    and the many great employees that serve there. So I look
    forward to this ongoing conversation.
        With that, I recognize Senator Carper for any opening
    statement you might make.

                  OPENING STATEMENT OF SENATOR CARPER

        Senator Carper. Thank you. Thank you, Mr. Chairman. Again,
    to our witnesses, to our guests, their families, and one and
    all, we are happy to be with all of you. Thank you for joining
    us today. And, Senator Heitkamp, thank you for letting me warm
    your seat for a little while this afternoon.
        I have statements of support for Chairman Taub from
    Senators Gillibrand and Schumer that I would like, Mr.
    Chairman, to ask unanimous consent be added to the record,
    please.\1\
    ---------------------------------------------------------------------------
        \1\ The prepared statements from Senator Schumer and Senator
    Gillibrand appear in the Appendix beginning on page 26.
    ---------------------------------------------------------------------------
        Senator Lankford. Without objection.
        Senator Carper. I just want to thank you, Mr. Chairman, for
    scheduling today's hearing to consider what I believe a very
    important nominations to fill two Commissioner vacancies for
    the Postal Regulatory Commission. Both Mr. Taub and Mr. Acton's
    terms expired on October 14, 2016, while we were away, and they
    are now one month into a one-year holdover term granted to them
    under the law, so they must leave the Commission next October
    unless they are reconfirmed. It is imperative, in my view, then
    that we take swift action on these nominees before the end of
    this year due to the pending critical work on rates before the
    Commission.
        I should also note that if we do not take action on these
    two nominations, the PRC will eventually be left with only two
    Commissioners, and that would be unacceptable and create even
    more uncertainty for the Postal Service and its customers. It
    is bad enough that we have a Board of Governors that has just
    one slot filled out of, gosh, roughly 10, and we do not want to
    repeat the same mistake here with respect to the Postal
    Regulatory Commission.
        But we are considering Mr. Taub's and Mr. Acton's
    nominations at what is a very challenging time for the Postal
    Service. It is not a time, though, that is devoid of promise or
    potential, although to achieve that promise, that potential, we
    need strong leadership at the PRC if the Postal Service is
    going to successfully confront the challenges such as poor
    service performance issues and the persistent decline in First-
    Class Mail volume.
        The future also offers the Postal Service a number of
    promising opportunities. Some of them we are familiar with,
    others not. But Congress and the PRC have important work to do
    to help the Postal Service take full commercial advantage of
    its unique delivery and logistics network. There is one entity
    in the country that goes to every mailbox in the country,
    residential, business, five or six times a week. Just one, and
    it is the U.S. Postal Service. And there is a huge burden in
    doing all that, but there is also great opportunity for that.
        The Postal Service operates at the center of a massive
    printing, delivery, and logistics industry that I am told adds
    up to about $1.4 trillion and employs nearly 8 million people.
    And even as First-Class Mail loses ground to other forms of
    communication, the future holds promise for the Postal Service
    in a number of other ways. Advertising mail is still a
    popular--and I am reminded every time I open up my mailbox at
    home in Delaware--still a popular and effective option for
    mailers. And e-commerce and package delivery are booming,
    making the Postal Service a vital partner for businesses large
    and small. Even the Postal Service's traditional competitors
    rely on it to carry items the last mile to rural communities
    around the country.
        Both Mr. Taub and Mr. Acton have been invaluable resources
    to the Congress as we work on postal reform legislation, and
    their confirmation will remove uncertainty about the future of
    regulatory action at the Postal Service. It will also allow
    Congress to continue its work on postal reform with a clear
    sense of who will be implementing the reform in the coming
    years.
        This is Chairman Taub's second nomination, I think, by
    President Obama, and he has served as the Acting Chairman of
    the PRC since December 2014. He was first nominated and
    confirmed in, I think, October 2011. Is that correct? And you
    have demonstrated, in my view, proven leadership skills to
    properly address issues and concerns facing the Postal Service
    and staying keenly aware of the delicate balance between
    congressional and postal industry needs.
        Mr. Acton has spent 14 years at the PRC. President Bush
    first nominated him as a Commissioner in 2005. He was confirmed
    by the Senate in 2006. His second nomination as a Commissioner
    was by President Obama, and he was confirmed a second time by
    the Senate in September 2011. As a Commissioner, Mr. Acton has
    shown a clear understanding of key postal issues, as well as a
    close familiarity with the concerns of Congress and postal
    stakeholders.
        As I stated at the beginning of my remarks, Mr. Chairman,
    the PRC has a tremendous amount of work ahead of them in the
    coming weeks and months, including a required 10-year review of
    the postal pricing system established in our 2006 postal reform
    law that Senator Collins and I co-authored. We need strong PRC
    Commissioners to properly address the issues I expect to be
    raised during the course of the review, which will determine
    the level of service the Postal Service will offer in the
    future, and the prices that will be charged for that service. I
    believe we need to ensure that there is a quorum of PRC
    Commissioners in place so that the rate review can happen and
    proceed uninterrupted over the course of the next year.
        I look forward to talking with Mr. Taub and Mr. Acton
    today--we have spoken any number of times before, but I want to
    talk today about what they think can be done to address some of
    the ongoing challenges facing the Postal Service and to hear
    about the skills, the knowledge, and the experience that they
    would bring to the PRC.
        Again, Mr. Chairman, thanks for letting me join you today,
    and to our witnesses for their willingness to serve, to your
    families for your willingness to share them, and at least one
    of your parents who is here to say thanks for raising this kid.
    He turned out well.
        Thank you.
        Senator Lankford. It is the custom of this Committee to
    swear in all witnesses before they appear, so if you would
    please stand, raise your right hand. Do you swear that the
    testimony that you are about to give before this Committee will
    be the truth, the whole truth, and nothing but the truth, so
    help you, God?
        Mr. Acton. I do.
        Mr. Taub. I do.
        Senator Lankford. You may be seated. Let the record reflect
    the witnesses answered in the affirmative.
        I would like to recognize both of you, and I would remind
    you again we would be honored to be able to have the
    introduction of your family as well whenever you give your
    opening statement.
        Mr. Taub, you are first in this.

     TESTIMONY OF THE HONORABLE ROBERT G. TAUB,\1\ NOMINEE TO BE A
               COMMISSIONER, POSTAL REGULATORY COMMISSION

        Mr. Taub. Thank you very much. Indeed, I will start out by
    introducing my family.
    ---------------------------------------------------------------------------
        \1\ The prepared statement of Mr. Taub appears in the Appendix on
    page 28.
    ---------------------------------------------------------------------------
        My dear wife, Cynthia Taub, is here. Our twin daughters are
    away at college and could not be here today to witness our
    Constitution in action today. And my dear father, Carlson Taub,
    and my sister, Beth Laddin, have both traveled a distance from
    upstate New York to attend as well. And so all have lent me
    love, encouragement, and a good dose of understanding over the
    years.
        I would also like to take an opportunity to acknowledge my
    colleague and fellow nominee today. Commissioner Acton is a
    dear friend and a good colleague on the Commission with me, and
    I wish him well as well. And as Senator Carper indicated, last,
    I would like to thank my home State Senators, Senators Schumer
    and Gillibrand, for their statements for the record.
        Mr. Chairman, Ranking Member, and Members of the Committee,
    I want to thank you for the opportunity to be here today and
    for your consideration of my qualifications to be a
    Commissioner of the Postal Regulatory Commission for another
    term.
        When the Senate confirmed me as a Commissioner 5 years ago,
    I was serving as a senior executive in the Department of the
    Army as the principal civilian advisor to Secretary John
    McHugh, helping him oversee a workforce of more than 1.2
    million people and manage an annual budget over $200 billion. I
    had arrived at the Army with Secretary McHugh, having served as
    his longtime chief of staff in the Congress as well as his
    leading staffer on postal issues within the House Oversight and
    Government Reform Committee. Like Secretary John McHugh, over
    the course of my 30 years in public service, I have worked in
    bipartisan fashion to develop solutions to many public policy
    issues, particularly the challenges confronting our Postal
    Service.
        The President designated me as head of the Commission
    nearly 2 years ago. During that time, the Commission has become
    even more efficient and effective in carrying out its mission
    as measured by budget savings and timeliness of the work. The
    Commission has achieved improvements in its employees'
    satisfaction and engagement, as evidenced by the Federal
    Employee Viewpoint Survey results. The Commission has become a
    more frequently sought resource for postal expertise,
    particularly to the Congress. If confirmed, I would welcome and
    hope to build upon these accomplishments to achieve further
    improvements in staff achievement, the timeliness and quality
    of work products, and the efficiency and effectiveness of
    agency operations.
        On December 20, the Commission will begin what may be its
    most important work in its 46-year history: a statutorily
    mandated ``10-year review'' of the Postal Service's price cap
    system, with unilateral authority to modify it or adopt an
    alternative system. Considering that the Postal Service's
    consecutive net losses since 2007 has increased its cumulative
    net deficit to more than $57 billion, the importance of this
    review cannot be overstated. The Postal Service's total
    liabilities exceed the total value of its assets by more than
    $53 billion. As I testified to the Committee in January, the
    Postal Service's balance sheet must be fixed. With the growing
    liability of retiree health benefits, the inability to borrow
    for needed capital investments, and the continued loss of high-
    margin First-Class Mail revenues, the important task of
    improving the financial condition of the Postal Service is
    daunting.
        I want to assure this Committee that I appear here before
    you today with few delusions as to the challenges that lie
    ahead. I believe I have a clear understanding of the serious
    and numerous challenges that face America's postal system.
        But the fact is, for all the challenges the Postal Service
    of the 21st Century faces, it still retains an integral role as
    a key cog in how American businesses conduct their affairs and
    how Americans all across this land communicate. The Postal
    Service is the one government agency that touches every
    American on a daily basis. It is an organization that literally
    serves 155 million American households and businesses on a
    typical day. It facilitates trillions of dollars in commerce.
    For 241 years, our Postal Service has provided a service that
    American people and American businesses alike have come and
    grown to expect. Universal service at a uniform price, no
    questions asked. Very few in this country go to his or her
    mailbox or his or her local post office wondering if the mail
    will be there. It is always there. It has always been there.
    But the true question, the question confronting our Nation, is:
    Will the mail always be there? The Postal Service is in a
    serious financial crisis that must be fixed.
        There are no easy answers, but answer we must. And I
    promise you, if confirmed, my first priority will be, along
    with this Committee, the entire Congress, the President, and my
    fellow Commissioners, to engage in a constant search for the
    discovery and implementation of solutions. I am truly honored
    to be considered. Thank you.
        Senator Lankford. Mr. Acton.

     TESTIMONY OF THE HONORABLE MARK D. ACTON,\1\ NOMINEE TO BE A
               COMMISSIONER, POSTAL REGULATORY COMMISSION

        Mr. Acton. Thank you, Mr. Chairman and Members of the
    Committee. I am honored to be with you today, and I thank you
    for holding this hearing to consider my nomination as a Postal
    Regulatory Commissioner.
    ---------------------------------------------------------------------------
        \1\ The prepared statement of Mr. Acton appears in the Appendix on
    page 75.
    ---------------------------------------------------------------------------
        I want to thank the President for the honor of nominating
    me for this appointment, and I am most grateful for the support
    of our Senate Majority Leader and my home State Senator, Mitch
    McConnell. My thanks to Committee staff for their expert
    guidance, and I also would like to acknowledge the support of
    my partner, family, and friends, some of whom are here today.
        I spent 4 years on staff at the Postal Rate Commission
    assisting the agency Chairman in administering PRC operations,
    and since then I have served as first a Postal Rate
    Commissioner and now as a Postal Regulatory Commissioner. I
    believe that my 14 years of postal policymaking experience
    affords me an informed perspective regarding the key postal
    issues that come before us today, as well as a great
    familiarity with the concerns of the postal community
    stakeholders at large. I am pleased to be considered for a
    continuing public policy role, and if confirmed, I pledge to
    work with this Committee to advance workable solutions that
    help to renew the vitality of a great American institution--the
    United States Postal Service.
        Mr. Chairman, I look forward to working with you and the
    other Members of this Committee, and I would be pleased to
    answer any questions.
        Senator Lankford. Thank you, Mr. Acton.
        I have three mandatory questions that we ask all of our
    nominees for all hearings, so let me ask these three, and then
    I am going to defer to the Ranking Member for his questions
    then. So these will all be ``yes'' or ``no'' questions, and I
    will ask both of you at the same time to be able to respond.
        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. Taub. No.
        Mr. Acton. No.
        Senator Lankford. OK. Thank you.
        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. Taub. No.
        Mr. Acton. No.
        Senator Lankford. OK. Thank you both.
        Do you agree without reservation to comply with any request
    or summons to appear and testify before any duly constituted
    committee of Congress if you are confirmed?
        Mr. Taub. Yes, I do.
        Mr. Acton. Yes.
        Senator Lankford. Thank you both. Senator Carper.
        Senator Carper. Thanks, Mr. Chairman.
        I would like to talk about customer service for starters.
    We have three offices in Delaware, a little State, three
    counties, an office in each county, and we have in each of
    those offices someone who is responsible for constituent
    services. And we have in my Wilmington office a woman named
    Heather Guerke, who has been with me since I was Governor, and
    she is great on constituent services. One of her areas of
    responsibility is Internal Revenue Service (IRS). She has her
    hands full there. Another is the Postal Service, which for many
    years, frankly, was not much trouble, not much concern.
        Boy, that has changed. We have gotten more complaints about
    quality of service, lack of quality of service from so many
    Delawareans, mostly residential but some businesses, over the
    last couple of years, much more than we have ever seen before.
        What is the responsibility, where is the intersection
    between the PRC and the Postal Service with respect to quality
    of service for the folks that we represent?
        Mr. Taub. Senator, the Postal Regulatory Commission has a
    very important responsibility of providing transparency and
    accountability of the Postal Service, not only with rates and
    products but service. In the 2006 law that was put together,
    when that law was passed, the only public data that was out
    there about service quality was what was on single-piece First-
    Class Mail.
        Today, as we speak, nearly 10 years later, we have full
    transparency of data on the service performance for all market-
    dominant classes of mail--First-Class, periodicals, Standard
    Mail--and we look at that annually and report on whether those
    service standards are met.
        The Postal Service has a major problem with service
    performance, and the Commission earlier this year in its most
    recent annual compliance determination, this was the first year
    we found that the Postal Service did not meet any of its
    targets for all of First-Class Mail. Standard Mail,
    periodicals, flats, and First-Class Mail flats are a perennial
    problem and had gotten worse.
        So we have directed the Postal Service to do a
    comprehensive analysis of what we identified as potential pinch
    points throughout the whole process and look at what are some
    of the solutions there. Again, we are the regulator, not the
    operator. Our responsibility is to provide some sunshine and
    spotlight that did not exist before and exists today. And the
    Postal Service did come back to us just a few months ago with
    that report. We have had some follow-up with them, and we are
    making some decisions among the Commission as to what the next
    steps will be.
        So the bottom line is the information from your case work
    operation is not an anomaly. Service performance is not where
    it should be for the U.S. Postal Service.
        Senator Carper. All right. Thank you.
        Maybe a question for Mr. Acton. In a conversation we had
    just this week, you talked a little bit about some of the
    different aspects of the postal reform legislation that we have
    worked on in this Committee and that is being worked on in the
    House of Representatives. And one of the challenges the Postal
    Service has, as almost every employer in the country that
    offers health care for their pensioners has, there is a
    liability associated with it. Most private sector companies
    frankly do not acknowledge that. I guess a lot of States do not
    acknowledge that liability for their pensioners either. The
    Postal Service has a lot of pensioners, and there is a
    liability, and it has to be acknowledged. The question is how
    to pay for that, over what period of time, and to what extent
    should it be addressed. There is a similarity in the House
    legislation and the Senate legislation on that point.
        One of the other areas where there is some similarity, but
    not total, is with respect to innovation and looking--I
    mentioned the challenge. We have a lot of challenges at the
    Postal Service. We also have opportunities. I like to say in
    adversity lies opportunity. That is actually Albert Einstein,
    not me.
        But with respect to innovation, in our Senate legislation
    we created a Chief Innovation Officer within the Postal
    Service, where we created sort of like a commission or a board
    of really smart people from the private sector who are very
    creative and thoughtful and can think of new ways for the
    Postal Service to generate income by providing services that
    are needed. And the question I would ask you, and I will start
    with Mr. Acton and then Mr. Taub: To what extent should we be
    thinking about, after having created a Chief Information
    Officer, creating a board or commission of people who advise
    the Postal Service, should we then tie the hands of the Postal
    Service and say, well, you cannot really be very innovative
    except maybe with respect to State and local governments? Any
    thoughts on that, please?
        Let me just say that some people want to see the Postal
    Service, like they have in other countries, to be a bank. OK? I
    am not interested in seeing the Postal Service be a bank. Some
    people are interested in seeing the Postal Service be an
    insurance company. I am not interested in seeing them be an
    insurance company. But I would like to not tie their hands in
    terms of being innovative and creative and using their brand
    and using what is unique about them, this legacy, 200-year-old
    delivery network that goes to every post office box in the
    country, five or six times a week. What do you think in terms
    of innovation and the flexibility of the Postal Service to use
    it to innovate?
        Mr. Acton. Thank you, Senator Carper. The Commission has
    been a ripe playing field for the Postal Service to come to
    with innovative thought. In instances where the Postal Service
    is proposing certain market tests for new revenue streams, the
    Commission in every instance has approved the market test. And,
    in fact, in our last report, which we call the ``701 report,''
    which is a mandate from Congress in the law for the Commission
    to come forth with some proposed changes in the legislation
    that might improve things, we talk in there about raising the
    thresholds of revenue involvement for market tests and
    extending the trial period.
        So I think that the Commission has demonstrated over a long
    period of time that we are very open to innovative thought. I
    do think, though, that if you are going to provide the Postal
    Service with that avenue to enhance the revenue situation, that
    you do have some regulatory involvement because it is important
    to remember, as I know you know, the Postal Service is a two-
    headed beast. It is operating in a market-dominant environment,
    and it is also competing in a competitive market environment.
        So when you talk about innovation, it is important that a
    regulator be involved--not an activist regulator, but a
    regulator who is there to ensure there is not an improper
    cross-subsidization between those two market arenas that
    compromises or distorts the competitive playing field.
        Senator Carper. All right. Thank you.
        Mr. Taub, I have just a few seconds. Anything you want to
    add or take away, please, quickly?
        Mr. Taub. I would concur with what Commissioner Acton said.
    Just a couple points I would amplify on.
        First of all, as you know, the 2006 law drew a very hard
    line as to the Postal Service is not allowed to get into non-
    postal products and services under current law. So the law
    would have to change if the aperture would grow.
        Knowing that, I do believe the Postmaster General and her
    team right now understand that their focus is innovating the
    core of the postal products. To the extent that aperture
    opened, I would just offer an observation. This has been a long
    concern of mine, which is trying to get to first principles.
    Why else do we have a government administration providing
    postal service? It is to provide universal service. But in the
    United States, we have never defined exactly what that means.
    And as we look to the Postal Service to get into other areas,
    it seems to me we need to have a conservation about what is it
    that we need and want this government administration to do to
    meet that universal service obligation (USO) and what is its
    cost. And then we could better sense what things could be added
    or subtracted from that equation.
        Senator Carper. All right. Good. Thank you so much. Thank
    you both.
        Senator Lankford. Senator Heitkamp.

                 OPENING STATEMENT OF SENATOR HEITKAMP

        Senator Heitkamp. Thank you, Mr. Chairman, and thank you,
    Senator Carper, for opening up exactly the topic of
    conversation that we are having consistently on this Committee,
    which really is kind of putting the cart before the horse. As
    you said, Chairman Taub, we do not talk about service; we just
    talk about how we are going to run the post office without
    defining what we expect that service to look like and what our
    expectations are.
        Spending the first couple years on this Committee with the
    previous Postmaster General, I was reminded of a statement that
    I give often, which is you cannot fix a problem you will not
    admit you have. We have a problem with service, and that
    problem is very acute in rural areas. With the closing of
    service centers, the narrowing of the focus, to suggest that we
    are getting the same level of postal service that we did 20
    years ago is incorrect. Our service is getting worse. When I
    sent out a ``Fix My Mail,'' opening up a portal on my Web page,
    600 North Dakotans responded. Now, you think about it, we are
    small State. You get 600 people to volunteer concerns, that
    tells us that we have a very real concern.
        Senator McCaskill and I recently asked for a GAO report
    taking a look at utilization and service in rural communities.
    In spite of broadband, there is this idea that broadband
    eliminates the necessity for attention to universal service. I
    will tell you, the GAO report argues the other way, that rural
    communities are even more dependent on the Postal Service than
    other parts of the country. And so we are going to be
    myopically focused in my office, and I think for a number of
    members here, on what is happening with universal service in
    rural communities.
        And so I think that the Commission plays a very important
    role in guaranteeing improvement in service and guaranteeing
    universal service. And so I just want a commitment from both of
    you that simply making the ends meet financially, balancing all
    of this, will not be the sole priority if as a result of that
    you do not have a post office that delivers any service. So I
    would like comments on that, but also a commitment that you are
    going to be focused on universal service and what that means,
    especially as it relates to rural communities.
        Mr. Taub. Senator, you have my personal commitment. I am
    heart attack serious about delivery performance for the Postal
    Service and seeing that improve. I was born and raised in
    northern New York State. I served for a decade as then-
    Congressman John McHugh's Chief of staff. His congressional
    district was over 14,000 square miles, one of the largest east
    of the Mississippi. Some of the communities may not have had
    much, but what they did have was a post office. So I personally
    well understand the importance in these rural areas.
        The Postal Service has to do better, and we are on top of
    that. Your legislation I think acknowledges that current law
    only goes so far with our tools in our toolkit, and the
    Commission would have some additional tools under what you have
    proposed to take that a bit further.
        But I fully agree, as I said, universal service is--why
    else do we have a government institution providing a service
    that is in a competitive marketplace every day, but to provide
    this type of level of service to all communities? The law
    already says there has to be effective service to areas of the
    country that may not otherwise be financially viable. And so
    the bottom line is I am with you 110 percent on that.
        Senator Heitkamp. Thank you, Chairman. Mr. Acton.
        Mr. Acton. Thank you, Senator. I just would like to, first
    of all, offer my assurances that I understand there is a
    problem. Do I understand all the particulars of why there is a
    problem? No. Do I think that the Postal Service is taking
    ownership of the fact that they have a problem? I do think that
    they are doing that. We have been meeting with them on a
    monthly basis in our consultations. They show us the trends
    about what they think went wrong operationally and otherwise
    back in the States. And they seem to be implementing some
    operational adjustments and working closer with the mailers in
    a fashion that is making some trend toward improvement. I hope
    that that trend continues. They have a long way to go,
    particularly in rural and remote portions of the Nation.
        There are four of us on the Commission. There is a guy from
    Kentucky. There is a fellow from upstate New York, which is
    largely rural. We have a fellow from rural Missouri. And we
    have someone from Hawaii, which is pretty remote in America. So
    remote and rural American concerns are always at the forefront
    of a lot of the postal policymaking that goes on at the
    Commission, and I think that you can examine our record and see
    that we often point to the disparate effect of certain
    operational changes that may result, particularly where the
    Postal Service is most important, which is in rural and remote
    America.
        Then the thing I would close with is your point about
    making finances better does not necessarily result in the sort
    of improvements we need, and I agree with that. But I also feel
    that there is a nexus between what is happening with the
    degradation of the Postal Service's performance particularly in
    rural and remote America and their fiscal status in terms of
    their health on the bottom line. And I think if you can get
    some meaningful, targeted reform through that offers them some
    improvements, that does not force the sort of cost efficiencies
    that they are driving that is compromising these performances,
    there could be some additional improvement.
        Senator Heitkamp. I think it is critical that we look for
    efficiencies, but I am always reminded of the story, if you are
    in retail business and you decide to cut your inventory and
    your cost of goods sold, you will not be in business very long.
        Mr. Acton. Yes, agreed.
        Senator Heitkamp. And that is my point. My point is if you
    cut service to the point where you are not delivering anything,
    that will just continue this spiral. And so you have to be
    ready to deliver the service that you are making a commitment
    to deliver. And if you cannot meet those, you are going to lose
    business, and it is going to be, I think, even more difficult
    for the Postal Service to catch up.
        So just know we are going to be myopically focused on this
    service issue. We think it is critical. And we need a partner
    on the Commission, partners on the Commission in doing that.
        Thank you, Mr. Chairman.
        Senator Lankford. Senator Tester.

                  OPENING STATEMENT OF SENATOR TESTER

        Senator Tester. Thank you, Mr. Chairman and Ranking Member,
    for having this hearing. Thank you both for your willingness to
    serve.
        I guess we will start out with one of the things you said,
    Mr. Taub, that the balance sheet needs to be fixed, and I could
    not agree more. Have you looked at any of the proposals that
    have been put forth over the last 6 years to see if you have a
    favorite?
        Mr. Taub. Senator, I do not have a favorite. What I have a
    favorite for is having something done to fix the balance sheet.
    I think all of them are moving in that same direction.
        Senator Tester. And I could not agree more with Mr. Acton
    when--I mean, I think finances do have an impact on everything
    we do. And so hopefully in this new Congress--I do not know
    that you are still going to be in this position, Senator
    Carper, but if you are, or whoever is Ranking Member of this
    Committee with the Chairman, make this a priority to get it
    done, because it is just really important, as Senator Heitkamp
    has pointed out, for rural America.
        Have you had the opportunity to go back and look at the
    Network Rationalization Plan--this is for either one of you--
    that was supposed to save a whole bunch of money, hundreds of
    millions of dollars, and it ended up costing millions of
    dollars, to determine what went wrong? Because, quite frankly,
    there were Members on this Committee that were arguing very
    vociferously not to close down all those processing centers. In
    Montana, I think we went from seven to three. You have trucks
    going over passes in wintertime. I mean, it was obvious what
    was going to happen, and what happened, happened. Your
    transportation costs went through the roof, and that is with
    $2.35 gas.
        So have you guys taken a look to see why it went south and
    we did not save the kind of money that was being predicted?
        Mr. Taub. Senator, we have not. We did under the law,
    because the separation of regulator and operator, when it came
    to the change itself, the Postal Service had to seek what was
    called an ``advisory opinion'' from us in 2012, and we outlined
    some very deep concerns to the Postal Service about how they
    are proceeding and some caution. But under the law, they can
    proceed forth once they had that advisory opinion, which they
    did.
        I do know their Office of Inspector General (OIG), which
    does have that focus on fraud, waste, and abuse, has done some
    studies to look at the network rationalization and has
    identified that the cost savings that they were expecting have
    not borne fruit to the level they thought.
        Senator Tester. So who puts forth the recommendations on
    how to fix it? I mean, one of the reasons it takes a week to
    mail a letter and get it across the State in Montana is we do
    not have those processing centers. I can give you plenty of
    examples where a letter that would go down a block or two would
    have to travel 300 miles or better. So who puts forth the
    proposals on how to fix it?
        Mr. Taub. The U.S. Postal Service does.
        Senator Tester. And you either bless it or you do not?
        Mr. Taub. They actually do not need our approval on that,
    but that is where Senator Heitkamp's legislation that you have
    been a cosponsor on would give us some tools to take that
    further under current----
        Senator Tester. OK. So let us talk about what your
    authority is. Is it strictly pricing?
        Mr. Taub. No. We do, as I was mentioning, oversee and
    report on service where, before the 2006 law, we were not
    providing that transparency.
        Senator Tester. OK.
        Mr. Taub. So we have been able to say----
        Senator Tester. But when it comes right down to it, if the
    Postal Service wants to do it, you cannot stop them.
        Mr. Taub. That is correct.
        Senator Tester. So what is your club?
        Mr. Taub. The club, when it comes to service, is our
    providing that report that did not exist in 2006, which is
    clear transparency on what is going on. So rather than, say,
    before 2006, where the Postal Service said, ``Yes, you may be
    hearing some problems from your constituents, but trust us, it
    is OK,'' we now have the data, fully transparent, reliable, and
    accurate, that shows performance is not being met. We have
    taken them to task on that. We have asked for reports on how to
    improve it. We are getting those reports. But in terms of our
    ability to, if you will, force those changes, that is not fully
    in our toolkit right now when it comes to the service. But
    compared to where we were before the 2006 law, there is more
    transparency.
        Senator Tester. So help me through this. I do not have my
    staffer whispering in my ear, so I will just ask you. If they
    want to close down a processing center, who makes that call?
        Mr. Taub. The Postal Service's Board of Governors.
        Senator Tester. The Board of Governors. And that is it,
    once they make it?
        Mr. Taub. Again, the theory in the 2006 law was maintaining
    this regulator versus operational separation. So there was a
    view that when it came to processing plants, that is an
    operational decision for the U.S. Postal Service and the
    Governors who exercise the powers of the Postal Service.
        Senator Tester. OK. So on your Commission, on the PRC, is
    there a view that the Postal Service has outlived--you did not
    say it in your opening statement, but is there a view by some
    members on the PRC that the Postal Service has outlived its
    usefulness?
        Mr. Taub. Senator, I can speak for myself on this, that no
    way in heck have they----
        Senator Tester. But how about the rest? And either one of
    you, just your sentiments. This is not about you guys. It is
    about the Board in general. I know there are only four and
    there needs to be five. But just tell me, is it--because I have
    gotten the sentiment by some in the Postal Service, I have
    gotten the sentiment by some in the Senate, by some on this
    Committee, that they would like to see it go away and let UPS
    and FedEx handle it.
        Mr. Acton. I would just say, Senator, that with the proper
    sort of targeted reform that this chamber and the House are
    considering, I think there is a bright future for the Postal
    Service.
        Senator Tester. I could not agree more.
        Mr. Acton. The aspects of the present situation that
    concern me most in terms of what you are talking about as an
    alternative go to these issues with respect to rural or remote
    America, because if you move, I think, to try to reduce the
    Postal Service's footprint in certain parts of America by, say,
    privatizing certain aspects of it, it is going to compromise
    the integrity and the livelihood of the entire infrastructure
    in a fashion that could have consequences which we do not
    anticipate well or plan for properly at this point.
        But, with just a few changes--for instance, this
    reamortization of the unfunded liabilities, that is the one
    position that the Commission has come forth in response to a
    congressional request to offer expert testimony that says that
    those changes should be made in a responsible fashion. The
    intent of covering those unfunded liabilities through the
    percentages that they initially enacted was a very responsible
    public policy approach, but it had some unintended consequences
    that basically have brought the Postal Service to the brink of
    bankruptcy.
        Senator Tester. Right.
        Mr. Acton. So the Commission is on the record with its
    viewpoint that some nature of reamortization needs to be done,
    and that alone could go miles toward establishing the Postal
    Service's fiscal health.
        Senator Tester. Make no mistake about it. As we point
    fingers at one another, Congress gets most of the fingers
    pointed at them, and rightfully so. We have not acted, and we
    should have acted many Congresses ago. And so thank you, folks,
    for your testimony and thanks for your willingness to serve.
        Thank you, Mr. Chairman.
        Senator Lankford. Thank you. Senator Peters.

                  OPENING STATEMENT OF SENATOR PETERS

        Senator Peters. Thank you, Mr. Chairman. And, again, I
    would reiterate what my colleagues have said. We appreciate
    your service and willingness to serve. This is a very difficult
    position that you will be conducting, but we stand behind you,
    and we have to figure out ways to make this work.
        My colleagues raised a number of issues that I had when I
    came here, so you have answered some of those. But I would pick
    up a little bit on what Senator Tester asked related to
    processing centers and take it down to local post offices. The
    State of Michigan, which I represent, has a very large rural
    population in addition to the urban areas, and folks have been
    concerned about individual post office closures and the
    negative result that that has brought about to their community.
    My understanding is that you are involved in oversight of the
    appeals process where communities can appeal. Could you tell me
    a little bit about that appeals process and how you see that
    functioning? And are there things that we need to be aware of
    to potentially improve the opportunity for folks to have a
    stronger impact in that appeals process?
        Mr. Taub. Senator, we have a process that dates from the
    1970s and the law in which any community or a patron of a post
    office, if it is being closed, can appeal to the Commission for
    a review as to whether the Postal Service followed the
    procedures that are outlined in statute. And if not, the
    Commission either can remand that decision back to the Postal
    Service for further action or affirm it.
        However, when it comes to processing facilities, as we were
    discussing with Senator Tester, those are not part of the
    process that the Commission is involved in and are wholly
    within the purview of the U.S. Postal Service itself. But I do
    believe the community aspect of citizen participation that
    allows people to come to the Commission is an important feature
    that should be maintained.
        I would note that the Commission updated and modernized its
    rules on post office closures in 2011 and 2012, and we recently
    held a proceeding looking at some precedent in this area. So we
    are trying to stay fresh and involved in that. But when it
    comes to the processing plants, that is just in the purview of
    the U.S. Postal Service itself.
        Senator Peters. Right, I realize that. But I am talking
    about individual post offices, which you have addressed, which
    have an impact on the community. At least some of the feedback
    that I have received from these local communities is that the
    decisionmakers look at the issue related to the health of the
    Postal Service as opposed to the impact on the local economy,
    and that the local economy should be factored in more in some
    of that appeals process. Is that accurate? Is that a concern or
    not? If you could comment on that, I would appreciate it.
        Mr. Acton. Thank you for the question, Senator. My personal
    view on the post office appeals process, as it is called, is
    that the name alone is a bit misleading. It implies that the
    Commission is empowered with the responsibility to decide
    whether or not the Postal Service has made the proper decision
    about closing or relocating a given post office, when indeed
    what it is is the Commission is tasked by law to review the
    administrative record that the Postal Service assembles in
    managing these decisions.
        So when the Postal Service comes to us in answer to an
    appeal for a given post office, they have to demonstrate to the
    Commission that they followed the proper rules and regulations
    that are outlined for building the record that is needed to
    make the decision that Postal Service management has made. And
    often those decisions are related to portions of the Postal
    Service network where it is not clear what the Commission's
    authority is. And in our recent 701 report, we put forth some
    recommendations, since you are contemplating postal reform,
    where you might want to improve that clarity about where the
    line is drawn between what the Postal Service does with respect
    to post office closings and suspensions and what the Commission
    is responsible to do. And I think that would be helpful moving
    forward.
        Senator Peters. And some clarification as to criteria
    beyond just following certain processes?
        Mr. Acton. People talk about applying criteria for the
    universal service obligation and for closing post offices, and
    I think that, broadly speaking, that is wise, and we have done
    that in the past in our Universal Service Obligation study
    where we talk about the various elements and aspects of the
    USO. But I also know now through my experience in having done
    dozens of these post office closing appeals and reviews that
    they are fact set specific; that what constitutes troublesome 5
    miles in Idaho can be much different than 5 miles in a more
    urban area.
        So lots of times, those considerations have to be taken up
    on an instance-by-instance basis, which is what the Commission
    does. I think if you start trying to apply general metrics
    about, do not close a post office within a certain radius of a
    number of miles, then you begin to generalize a process which
    in many instances is very specific to the community at hand.
        Senator Peters. All right. Very helpful. Thank you. I
    appreciate it.
        Senator Lankford. Thank you.
        Mr. Acton, let me continue to press on through just
    cooperation and some of the things that you are doing, and
    interaction. Tell me about just the relationship between PRC
    right now and the Office of Inspector General for USPS,
    distinctly different responsibilities but I would hope there is
    some coordination there as well in the oversight and
    transparency.
        Mr. Acton. We coordinate with them in the sense that we
    often have shared examinations of similar issues of concern.
    Sometimes Congress is interested in knowing the Postal
    Regulatory Commission's position with respect to a certain
    issue or concern, and sometimes they want it from the OIG, and
    sometimes they ask for it from both. So we do not interact with
    the OIG's office as regularly, as robustly as we do with the
    Postmaster General and her executive leadership team, whom we
    meet with monthly. But we are informed on what the OIG is up
    to, and the Acting Chairman and his staff are very active in
    keeping the Commission in close concert with all of the
    important postal players, including the Inspector General's
    office.
        Senator Lankford. OK. Your group, the PRC, has subpoena
    power to be able to get information from USPS if needed. Are
    there other tools that you need to be able to do your job?
        Mr. Acton. Well, I will tell you that it is my fervent
    belief that the Postal Service management is working hard to
    make things better, and they are stressed with the fiscal
    situation which pervades every aspect of their operation. So
    when the regulator talks about needing to develop these
    methodologies or pursue these systems or come up with this
    data, the thing that is always in the back of my mind, and I
    think the Commission's mind, when we pursue those sorts of
    avenues is that that costs money. And the Postal Service does
    not have a lot of money. In fact, as you know, they are
    billions in debt.
        So we do what we can to try to stress where we think pinch
    points may lie and where they may focus resources and introduce
    some metrics that will improve the situation in terms of how
    the community learns about these problems and what the Postal
    Service is doing to address them.
        But there are limited arrows in our quiver with respect to
    what we can do to drive that type of action, and subpoena power
    is certainly one of them. Another one is fining them for
    certain offenses, like not meeting service terms. But for me,
    if you fine the Postal Service for a given offense, that is the
    mailers' money, that is the ratepayers' money; and they will
    end up having to pay that bill, which for me does not seem
    equitable.
        Senator Lankford. All right. Mr. Taub, the recommendations
    came out today, the 701 recommendations and such. Any high
    points that you want to be able to walk us through on that?
        Mr. Taub. Probably high points 1, 2, 3, 4, 5 and on is
    fixing the financial balance sheet. That really is our
    overarching message to the Congress. We offer a variety of
    possible options on how to do that. The Postal Service and
    comments that are attached to the report go beyond and offer
    some additional ones. The bottom-line message is anything and
    all of the above that can be done in a fiscally responsible way
    can go a long way to giving the Postal Service that breathing
    room. Right now they have almost no working capital, very
    little liquidity. That is unsustainable for a $70 billion
    operation itself.
        Senator Lankford. Let us talk a little bit about
    international packages coming in and the two issues that come
    up over and over again, and that is, prohibited items coming
    into the United States through USPS or paying customs fees and
    being able to pick those up once they are coming in. What is
    the progress on those? And where do things stand right now?
    Just picking up customs fees and then picking up prohibited
    items.
        Mr. Taub. I would say, although the Commission has a very
    important role when it comes to international mail issues, it
    is over their rates and service offerings. We have to opine on
    any proposals to the Department of State before they conclude
    those treaties. Largely, this is within an area of the
    Department of Homeland Security (DHS) and Customs and Border
    Protection, but they are interrelated.
        Senator Lankford. Any interrelation is obviously the cost
    of how it is coming in and why, and what drives that cost and
    such to be able to pick that up internationally.
        Mr. Taub. That is right, and there is, unfortunately,
    distortions in the international system right now that create
    incentives for foreign posts and foreign mailers to use the
    postal systems, both for the lower cost that they are paying as
    well as avoiding the customs fees.
        The 2006 law had a directive that there should have been a
    strive for equalization of customs treatment, and that was on
    the Department of Homeland Security. Suffice it to say that has
    not been achieved, and I know there is some pending legislation
    both in the Senate and the House, and I think that would take
    it the full step to ameliorate the problem.
        Senator Lankford. Any comments on that?
        Mr. Acton. Thank you, Senator. I would mention, this rate
    review that we are talking about, this 10-year rate study,
    calls for the Commission to look at these nine featured
    elements of the law and decide whether or not they are being
    properly balanced under the present ratemaking system. One of
    those objectives includes security of the mail. So there is a
    hook to hang our hat on here going forward in terms of
    examining this if we think it is appropriate, and that may be
    part of what the Commission does.
        I would just follow up for a moment about Acting Chairman
    Taub's reference to some of the rate-setting activities with
    respect to global shipping. We do provide the Department of
    State with insights about whether or not their proposals that
    they are presenting at the Universal Postal Union (UPU) are in
    keeping with the criteria of American law. It is usually a sort
    of pro forma process. We do it on a 4-year basis. But the last
    examination was different in a lot of regards, and there are
    some fundamental problems with what is happening there in terms
    of how those rates are set and what it means for the American
    consumer.
        For me--and I said this in my remarks--the notion that an
    American consumer can go on Amazon today and have the same item
    delivered for less from Beijing, China, than you can from
    Dallas, Texas, to me strikes to the core of what is wrong with
    an international rate-setting body where, in an organization
    like ours that delivers 40 percent of the world's mail, gets
    only one vote. And so those outcomes are not equitable for the
    American consumer who is interested in getting fair shipping
    rates.
        Senator Lankford. Thank you.
        Senator Carper, any questions?
        Senator Carper. I have two quick ones, if I could, Mr.
    Chairman.
        I am going to direct this first question, if I could, to
    Chairman Taub and then ask Commissioner Acton to respond as
    well. In both of your written testimonies--earlier this year,
    one I think before this Committee in January, I believe it was
    January 21, and the other I think might have been before the
    House Oversight and Government Reform Committee on, I want to
    say, May 11. But you remain optimistic--and we have heard this
    here today--about the future of the Postal Service and stated,
    and I think this is a quote--``There is still strength in the
    system.'' Could you just expand a little bit on that thought,
    if you will, Mr. Chairman? And then I am going to ask
    Commissioner Acton to do so as well.
        Mr. Taub. Definitely, Senator. Thank you. Yes, I am very
    optimistic about the future of the United States Postal
    Service. Despite all the challenges that face us, it is still
    that key center of gravity (COG) of a delivery system in the
    United States that American businesses and households depend
    upon. As you indicated in your statement, by some estimates it
    is the center and a linchpin of a $1.4 trillion sector of our
    economy with 7.5 million jobs. So despite the problems the
    Postal Service faces, that is enormous strength that the
    Congress, the President, and all policymakers can build upon.
    So despite the loss of First-Class Mail and the reduced
    revenues there, I think the Postal Service is going through
    that process of, as some have called it, ``a new normal.'' But
    the idea that it is time to shut out the lights and we no
    longer need a postal administration--if it did not exist, we
    would have to think of it.
        Senator Carper. Thank you.
        Mr. Acton. I think you know, Senator, that public opinion
    polls consistently rate the United States Postal Service as the
    most trusted government agency in the land, and that does not
    happen by happenstance. It happens because, despite people's
    concerns about waiting time at the post office or what-not,
    they almost invariably have a great appreciation for this
    Federal Ambassador who visits their household, reaches out and
    touches their homes 6 days out of 7, and sometimes 7 out of 7.
        So I do not foresee the demise of the Postal Service by any
    means within the short term. I think that we have at hand a
    toolbox of reform that can make an important difference to put
    the Postal Service back in the black for years and years to
    come.
        Senator Carper. I like that, ``Back in the black.'' Maybe
    that could be our slogan here.
        A last question. I would direct this to you, Commissioner
    Acton, and, Chairman Taub, if you would like to take it on too,
    just briefly. Mr. Commissioner, what do you think might be the
    biggest challenge out of several challenges that plague the
    U.S. Postal Service in your eyes? And what is your role as a
    Commissioner in helping the Postal Service evolve in its third
    century and to remain relevant for years to come?
        Mr. Acton. We have been harping today on the problems with
    the Postal Service's business model, and I would say that that,
    of course, is the most challenging aspect of what the Postal
    Service is facing because it compromises every element of their
    operation, because once you start hemorrhaging losses at that
    scale, it pervades the entire enterprise.
        So I think the Commission's role here is still what the
    Commission's role was when it was created in the 1970s as the
    Postal Rate Commission. The Congress wanted out of postal rate
    setting. They wanted an expert body who could provide legal and
    technical assistance to give you the sort of information and
    insight that you are asking for here today so that you can make
    informed judgments which you have reserved for yourself, and
    rightly so, about what will best work to bring the Postal
    Service back to viability.
        So, for me, the Commission's real role here is to do what
    we are trying to do, which is focus the resources you afford us
    in a fashion that informs your view so that good decisions can
    be made.
        Senator Carper. Thank you. Mr. Chairman.
        Mr. Taub. Senator, I would echo Commissioner Acton's points
    on that. First and foremost, the financials need to be fixed.
    And, second, I am a big proponent of strategic planning, in the
    small percentage of time where you can be proactive as opposed
    to reactive. We just concluded just a few months ago a
    strategic planning process, issued a new strategic 5-year plan
    for the Commission where we identified our strengths, our
    challenges going forward, involved the whole agency from top to
    bottom. And first and foremost was a reaffirmation of our basic
    mission, which is twofold: transparency and accountability to
    the U.S. Postal Service, and ensuring a vital and efficient
    universal mail system for the United States. That is part and
    parcel of what we see our role in doing. Our challenge, quite
    frankly, is ensuring we have the staff and resources to do what
    needs to be done. We are a very small agency, a micro agency.
    We are about 75 folks. That includes the five Commissioners and
    their staff. We have our own Office of Inspector General, which
    is another three folks--once you peel back the administrative
    folks, it is really about 40 staff working really hard day in
    and day out ensuring that transparency and accountability. Our
    appropriation has been generally flat-lined, and to deal with
    that in previous years, the Postal Regulatory Commission was
    deferring hiring and deferring investments in information
    technology (IT) that are no longer sustainable. With the
    Congress' help, this past appropriations cycle we have been
    starting to turn the curve on that.
        But those are some of the internal challenges that we have,
    and certainly the external one for the Postal Service is the
    financials.
        Senator Carper. Good. Thanks. Just a concluding thought, if
    I could, Mr. Chairman.
        First of all, our thanks to both of you for your service to
    date and for your willingness to continue to serve. I think
    there is great opportunity that lies ahead, and I think you may
    in these positions, if you are reconfirmed, be in a position to
    help us seize the day, and that would be wonderful. I am
    encouraged that it can and will happen.
        I serve on another Committee called Environment and Public
    Works, and a couple of years ago, Mr. Chairman, maybe 6 years
    or so ago, George W. Bush was the President and he offered
    legislation called ``Clear Skies.'' It dealt with emissions of
    sulfur dioxide, nitrogen dioxide, mercury, and CO2 for the
    regulated community, utilities, and I offered legislation--we
    called it ``Really Clear Skies.'' And we brought in a bunch of
    utility Chief Executive Officers (CEOs) to come in and testify
    before us on--not to testify but actually meet with us in
    private on the President's proposal and our proposal,
    bipartisan proposal in the Senate. And I will never forget this
    one curmudgeonly old CEO from a utility, a southern utility.
    And he came in and he said to us about both the proposals, the
    President's proposal and our proposal, he said, ``Here is what
    you should do, Senator. Here is what you and your colleagues
    should do. Tell us what the rules are going to be. Give us some
    flexibility, give us a reasonable amount of time, and get out
    of the way.'' And what he was really saying is that they wanted
    some certainty and predictability, they wanted some
    flexibility, and a reasonable timeframe. And I think we have an
    obligation to those who are served by the Postal Service to
    better ensure they get the kind of service that they want and
    deserve and that we want them to have.
        But a good place to start, before we even pass our
    legislation--and I hope we will pass legislation. I hope we
    will actually continue the very hard work that is being done,
    Democrat and Republican, House and Senate, to narrow our
    differences and to try to do our job this year before we go
    home for the holidays. But a good place to start is with
    confirming these nominations. Excellent nominations. Both I
    think are Republican, if I am not mistaken. But we are lucky to
    have you in these jobs.
        The second would be we have--the President has nominated
    six people to serve as the Board of Governors. I just said to
    the Chairman that the one remaining non-postal person on the
    Board of Governors, they just had his retirement party
    yesterday, and so we are down to zero folks on the Board of
    Governors who are not part of the Postal Service. That is just
    not acceptable.
        And so we have excellent nominees to report out of
    Committee. We need to get that done. And I think there is a
    clear path to actually--not an easy path but a clear path to
    having bipartisan legislation to actually address a lot of the
    concerns that need to be done, the work for us to be enablers
    for the Postal Service, and for you to be able to do your work.
    And I am going to fight like hell to see that we realize that
    potential this year--this year, not some year down the road but
    this year--to get it done while we can, do our job.
        Thanks so much.
        Senator Lankford. Thank you, Senator Carper.
        Just one comment to my friend. As you were recalling it, 4,
    5, maybe 6 years ago when President Bush was President, I think
    it is more than six.
        Senator Carper. Probably. [Laughter.]
        It only seems like two or three.
        Senator Lankford. It always does. Time is flying when you
    are having fun with it.
        Gentlemen, you have served the men and women of the USPS,
    and we are very grateful for that. They are some very fine
    folks, including some of my own family members, that serve,
    that are out, as you all know well, in rain, snow, sunshine,
    whatever it may be. There are people that most of our neighbors
    will never, ever meet that are literally being served by folks
    every single day that work for the United States Postal
    Service. And so I want to say to you thank you for your service
    to them as they serve the entire Nation and as you all serve
    the Nation as well. This is a difficult, complicated task, and
    what we have asked you to do is difficult, because none of
    these decisions are easy. Twenty years ago, this was a simpler
    job. It is no longer simple, and this is a complicated process
    that we all have very hard decisions to make in the days ahead,
    and we appreciate your insight with that.
        Mr. Taub and Mr. Acton have filed responses and
    biographical and financial questionnaires, answered prehearing
    questions submitted by the Committee, and have had financial
    statements reviewed by the Office of Government Ethics. Without
    objection, this information will be made part of the hearing
    record\1\ with the exception of the financial data, which is on
    file and available for public inspection in the Committee
    offices.\2\
    ---------------------------------------------------------------------------
        \1\ The information of Mr. Taub appears in the Appendix on page 30.
        \2\ The information of Mr. Acton appears in the Appendix on page
    76.
    ---------------------------------------------------------------------------
        The hearing record will remain open until 12 p.m. tomorrow,
    November 16, 2016, for the submission of statements and
    questions for the record.
        To both of you, thank you, and to your families, thank you
    for your endurance through this long confirmation process, and
    we look forward to passing it on to the full body in the days
    ahead.
        With that, this hearing is adjourned.
        [Whereupon, at 3:34 p.m., the Committee was adjourned.]

                                A P P E N D I X

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