[Congressional Record Volume 142, Number 95 (Tuesday, June 25, 1996)]
[Extensions of Remarks]
[Pages E1159-E1160]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




             INTRODUCTION OF THE POSTAL REFORM ACT OF 1996

                                 ______


                          HON. JOHN M. McHUGH

                              of new york

                    in the house of representatives

                         Tuesday, June 25, 1996

  Mr. McHUGH. Mr. Speaker, Monday, July 1, 1996, will mark the 
beginning of the 26th year of operations for the U.S. Postal Service 
under the Postal Reorganization Act of 1970. That act has worked well 
for the past 25 years. However, changing market conditions and advances 
in communications technology necessitate that Congress revisit the 
legislative infrastructure of the Postal Service to ensure its 
continued viability and financial well-being into the next century.
  Today I am introducing the Postal Reform Act of 1996. This measure 
represents the first comprehensive reform effort involving the U.S. 
Postal Service since 1970. For the past year and a half the 
Subcommittee on the Postal Service, which I chair, has conducted in-
depth and lengthy hearings on the U.S. Postal Service. During these 
hearings we heard from more than 60 witnesses representing all facets 
of the postal community. In addition, I have had the opportunity to 
meet with a variety of individual postal customers, postal employees, 
and business leaders from some of our Nation's major corporations 
regarding postal affairs. I have listened and attempted to absorb the 
varying comments and interests put forth on and off the record. 
Ideally, this legislation addresses many of those issues.
  Before outlining the details of the bill, let me say that the one 
central point of consensus in all my discussions has been the 
continuing need to maintain universal postal service to all of our 
citizens at a uniform, affordable rate. Coming as I do from a 
predominantly rural area, I believe that maintenance of a universal 
postal system is the cornerstone of any reform measure. I strongly 
believe universal service at reasonable rates remains the primary 
mission of the U.S. Postal Service. However, shifting mail volumes and 
stagnant postal revenue growth require Congress to reexamine the 
statutory structure under which our current postal system now operates 
if we are to maintain this important public service mission.
  During the conducting of our oversight hearings, the subcommittee 
heard a number of witnesses describe methods of communications that 
were not imaginable in 1970. At that time, who could have foreseen the 
explosion of personal computers, the Internet, and facsimile machines 
as methods of communication? There has been a steady erosion of what 
used to be standard correspondence moving through the U.S. Mail that 
now moves electronically or via carriage by a number of private urgent 
mail carriers.
  According to reports of the General Accounting Office, the U.S. 
Postal Service controlled virtually all of the express mail market in 
the early 1970's; by 1995 its share had

[[Page E1160]]

dropped to approximately 13 percent. Similarly, the Postal Service is 
moving considerably fewer parcels today than 25 years ago. In 1971 the 
Postal Service handled 536 million parcel pieces and enjoyed a 65 
percent share of the ground surface delivery market. Compare this to 
1990 when the Postal Service parcel volume had dropped to 122 million 
pieces with a resulting market share of about 6 percent.

  Even the Postal Service's ``bread and butter,'' first-class financial 
transactions and personal correspondence mail, are beginning to show 
the effect of electronic alternatives. Financial institutions are 
promoting computer software to consumers as a method of conducting 
their billpaying and general banking, while Internet service providers 
and online subscription services are offering consumers the ability to 
send electronic messages to anyone in the world or around the corner. 
Similarly, many of us have become accustomed to the immediacy of the 
facsimile machine. These new communication technologies all carry 
correspondence that formerly flowed through the Postal Service. These 
former sources of revenues supported a postal infrastructure dedicated 
to the mission of universal service.
  This shift in postal revenues will have a negative long-term effect 
on the financial well being of the Postal Service. Should the service 
continue to labor under the parameters established by the 1970 act, its 
inability to compete, develop new products and respond to changing 
market conditions jeopardizes its ability to continue to provide 
universal service to the diverse geographic areas of our Nation. We 
must make adjustments to the Postal Reorganization Act of 1970 which 
will allow the Postal Service more flexibility in those areas in which 
it faces competition while assuring all postal customers of a continued 
universal mail service with the protection of reasonable rates that can 
be easily calculated and predicted. My legislation meets this goal by 
replacing the zero-sum game that has driven postal ratemaking for the 
last 25 years with a system that reflects today's changing 
communication markets.
  Mr. Speaker, I propose to allow the U.S. Postal Service the 
opportunity to make a profit and remove the break-even financial 
mandate of existing law that promotes the wide, yearly, swings of 
postal profit and deficit and weeks of negotiations on arcane economic 
assumptions for ratemaking purposes.
  I propose to divide the product offerings of the Postal Service into 
two primary categories. The first, the ``non-competitive mail'' 
category, represents all single piece letters, cards and parcels as 
well as those classes of users without significant alternatives. The 
class will utilize a postage rate cap process by which the associated 
customers can easily determine postal rates. The second category will 
be the competitive mail category and will include those mail classes, 
products and services the Postal Service provides through the 
competitive marketplace. Within this category the Postal Service may 
set its rates according to market forces subject to an annual audit 
provided to the Postal Rate Commission to assure that rates are 
reflective of costs while providing a contribution to the overhead of 
the U.S. Postal Service. In addition, it would allow the Postal Service 
freedom to experiment with new offerings for a period of 3 years before 
requiring the Postal Rate Commission to permanently place it in either 
the competitive or non-competitive mail categories.
  This legislation grants significant freedoms and flexibility to the 
Postal Service. Consequently, other changes are needed to reflect this 
status. I propose to remove the safety net of the U.S. Treasury and the 
Federal Financing Bank from postal operations and repeal the remaining 
authorizations for taxpayer appropriations to the Postal Service. 
Similarly, I propose to apply the anti-trust laws of our Nation to the 
Postal Service products offered in either the competitive mail or the 
experimental market test categories. I am also proposing that the 
Postal Service conduct a demonstration project that will provide us 
with the data needed to determine the continued necessity of providing 
the Postal Service with sole access to individual private mailboxes. 
This bill, Mr. Speaker, will also settle once and for all the nagging 
problem of an agency's chief law enforcement officer and member of 
postal management serving as its Inspector General by establishing an 
independent, Presidentially-appointed, Inspector General for the Postal 
Service.

  The bill enacts stringent reporting requirements to the Congress and 
to the U.S. Postal Rate Commission by providing the Commission with the 
ability to issue subpoenas, manage proprietary documentation and 
procure necessary information. This legislation places significant 
responsibilities on the Commission and, reflective of that, directs 
that the Commission will have for the first time its own Inspector 
General.
  My proposal, Mr. Speaker, also increases the penalties for repeated 
mailings of unsolicited sexually oriented advertising as well as the 
mailing of hazardous materials and controlled substances. It protects 
workers on the job by making it a felony to stalk, assault or rob a 
postal employee. Just this past month we saw a letter carrier killed 
while on duty in our Nation's capital and we cannot allow those that 
would harm or rob postal carriers to go without significant punishment. 
My proposal addresses this serious situation by increasing the 
penalties for such acts of violence.
  I stress that significant areas of current law remain intact. This 
legislation does not affect the existing collective-bargaining process. 
However, the subcommittee recognizes that serious problems exist 
between postal management and labor. To address this serious situation, 
I propose to form a Presidentially appointed commission made up of non-
postal union and corporate representatives as well as those well known 
in the field of labor-management relations. The commission would be 
charged with addressing these issues in detail and provide guidance to 
the Congress and the Postal Service on any needed changes.

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