<DOC>
[109 Senate Hearings]
[From the U.S. Government Printing Office via GPO Access]
[DOCID: f:27758.wais]
S. Hrg. 109-549
NOMINATION OF MARK D. ACTON
=======================================================================
HEARING
before the
COMMITTEE ON
HOMELAND SECURITY AND GOVERNMENTAL AFFAIRS
UNITED STATES SENATE
ONE HUNDRED NINTH CONGRESS
SECOND SESSION
ON THE
NOMINATION OF MARK D. ACTON, TO BE COMMISSIONER, POSTAL RATE COMMISSION
__________
MARCH 31, 2006
__________
Printed for the use of the
Committee on Homeland Security and Governmental Affairs
_____
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COMMITTEE ON HOMELAND SECURITY AND GOVERNMENTAL AFFAIRS
SUSAN M. COLLINS, Maine, Chairman
TED STEVENS, Alaska JOSEPH I. LIEBERMAN, Connecticut
GEORGE V. VOINOVICH, Ohio CARL LEVIN, Michigan
NORM COLEMAN, Minnesota DANIEL K. AKAKA, Hawaii
TOM COBURN, Oklahoma THOMAS R. CARPER, Delaware
LINCOLN D. CHAFEE, Rhode Island MARK DAYTON, Minnesota
ROBERT F. BENNETT, Utah FRANK LAUTENBERG, New Jersey
PETE V. DOMENICI, New Mexico MARK PRYOR, Arkansas
JOHN W. WARNER, Virginia
Michael D. Bopp, Staff Director and Chief Counsel
Jennifer A. Hemingway, Professional Staff Member
Joyce A. Rechtschaffen, Minority Staff Director and Counsel
Adam R. Sedgewick, Minority Professional Staff Member
Trina Driessnack Tyrer, Chief Clerk
C O N T E N T S
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Opening statements:
Page
Senator Collins.............................................. 1
Senator Akaka................................................ 2
Senator Coburn............................................... 3
WITNESS
Friday, March 31, 2006
Mark D. Action, to be Commissioner, Postal Rate Commission
Testimony.................................................... 3
Prepared statement........................................... 13
Biographical and professional information.................... 14
Responses to pre-hearing questions........................... 19
Letter from U.S. Office of Government Ethics................. 32
NOMINATION OF MARK D. ACTON
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FRIDAY, MARCH 31, 2006
U.S. Senate,
Committee on Homeland Security and
Governmental Affairs,
Washington, DC.
The Committee met, pursuant to notice, at 11:01 a.m., in
room SD-342, Dirksen Senate Office Building, Hon. Susan M.
Collins, Chairman of the Committee, presiding.
Present: Senators Collins, Coburn and Akaka.
OPENING STATEMENT OF CHAIRMAN COLLINS
Chairman Collins. The Committee will be in order.
The Committee will now consider the nomination of Mark
Acton to be a Commissioner of the Postal Rate Commission.
This Committee is very familiar with the many serious
issues facing the U.S. Postal Service and has spent a great
deal of time crafting postal reform legislation. Our
legislation has been passed by the Senate, and it is my hope
that the conference with the House will begin shortly.
The Postal Rate Commission will play an important role in
ensuring the success of postal reform.
As an independent regulatory agency, the Commission reviews
Postal Service requests for new domestic mail rates, fees, and
classifications, and for major changes in service.
The five commissioners review these requests in public
proceedings and then make recommendations to the Governors of
the Postal Service. They provide a forum for postal customers
to be heard, and their proceedings provide the transparency and
accountability that are necessary to justify changes in rates
or service.
In addition, the Commission also investigates complaints
from postal customers concerning rates, fees, classifications,
and service changes.
Mark Acton, our nominee, has been a Special Assistant to
the Chairman of the Postal Rate Commission since March 2002. As
such, he has been involved in managing the operations of the
Commission and participates in its briefings and deliberations.
He also serves as the Commission's liaison to the White House,
Congress, the Postal Service, and other government and private
sector entities, and he represents the Commission at the Postal
Service Board of Governors meetings.
If confirmed, he would fill the remainder of a term that
expires in the year 2010.
From his work as an Assistant to the Commission Chairman, I
am sure that Mr. Acton is very aware of the challenges facing
the Postal Service and of the challenges facing the Commission
as a partner in reform. Under the legislation that I authored
with our colleague, Senator Carper, the Postal Rate Commission
will be renamed the Postal Regulatory Commission. As that
change suggests, the powers and responsibilities of the
Commission will be expanded considerably.
Under the current law, the Rate Commission has very narrow
authority. Among other changes, our postal reform bill would
grant the Postal Regulatory Commission the authority to
regulate rates for noncompetitive products and services, ensure
financial transparency, establish limits on the accumulation of
retained earnings by the Postal Service, obtain information
from the Postal Service if need be through the use of a new
subpoena power, and review and act on complaints filed by those
who believe that the Postal Service has exceeded its authority.
As the members of this Committee know, the U.S. Postal
Service is a vital part of our society and our economy. We know
that the fiscal challenges facing the Postal Service threaten
the future of affordable universal service unless reform
legislation is enacted and implemented.
I look forward to discussing these challenges with Mr.
Acton today. I am very pleased that the President has appointed
an individual with a great deal of experience on these very
issues, and I welcome him to the Committee. Senator Akaka.
OPENING STATEMENT OF SENATOR AKAKA
Senator Akaka. Thank you very much, Madam Chairman.
I want to add my welcome to you to the Committee, Mr.
Acton. And I want to commend you for accepting the nomination
to serve as a Commissioner on the U.S. Postal Rate Commission.
Mr. Acton, I know it is so easy to say to a nominee that
his tenure comes at the pivotal time for the agency to which he
has been nominated. However, today I can say to you that your
nomination comes at a significantly critical time.
As you know, the Postal Rate Commission will be
strengthened under the two postal reform bills that are now
awaiting conference action.
Having served as a Chairman and Ranking Member of the
Committee's former Postal Subcommittee, and as a Member of the
upcoming conference on postal reform, I believe that the
flexibilities granted to the U.S. Postal Service demand strong
accountability. Both postal reform bills would significantly
strengthen the Postal Rate Commission.
That is an important step to me because I believe the
continued stability and viability of the U.S. Postal Service
will depend on a strong Postal Rate Commission. Reaching that
goal will require the dedication of individuals such as you,
Mr. Acton, who, if confirmed, will be called on to make some
really tough decisions.
Madam Chairman, I also wish to note the critical vacancies
that exist on the U.S. Postal Board of Governors, and I call on
the President to select nominees as soon as possible.
There are nine members of the Board, of which no more than
five may be affiliated with the same political party.
Currently, there are only five sitting board members, four of
whom are from the President's party. A Republican nominee and a
Democratic nominee have been referred to this Committee.
However, given the critical role that the Postal Service plays
in the Nation's economy, it is imperative that the U.S. Postal
Service Board of Governors, which directs and controls
expenditures and controls postal policy, have nine members.
Thank you very much, Madam Chairman, and I look forward to
our discussion with Mr. Acton.
Chairman Collins. Thank you. Senator Coburn.
OPENING STATEMENT OF SENATOR COBURN
Senator Coburn. Madam Chairman, just a short opening
statement.
First of all, I want to welcome Mr. Acton and congratulate
him on his nomination. I am going to have several questions
that came up in the staff briefing with my staff, and I will
hold those.
It is an important thing, and I will say again, we do need
postal reform and the Chairman's bill. Other than one little
small part of it that I had a problem with, it is a great step
forward. But we are not going to be there to bail you out, I
can just tell you that, if you look at the long-range financial
projections for the Congress in terms of appropriating money.
So I am very interested in how aggressive we can become in
making the changes that make it viable, efficient, and
effective in surviving.
Chairman Collins. Thank you.
Mr. Acton has filed responses to a biographical and
financial questionnaire, answered pre-hearing questions
submitted by the Committee, and had his financial statements
reviewed by the Office of Government Ethics.
Without objection, this information will be made part of
the hearing record, with the exception of the financial data
that are on file and available for public inspection in the
Committee's offices.
Our Committee's rules require that all witnesses at
nomination hearings give their testimony under oath, so Mr.
Acton I would ask that you stand and raise your right hand.
Do you swear that the testimony you are about to give to
the Committee will be the truth, the whole truth, and nothing
but the truth, so help you, God?
Mr. Acton. I do.
Chairman Collins. You may proceed with your statement.
TESTIMONY OF MARK D. ACTON,\1\ TO BE COMMISSIONER, POSTAL RATE
COMMISSION
Mr. Acton. Thank you, Madam Chairman, and Members of the
Committee.
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\1\ The prepared statement of Mr. Acton appears in the Appendix on
page 13.
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I am honored to be here with you today to thank you for
holding this hearing to consider my nomination as Postal Rate
Commissioner. I want to thank President Bush for his confidence
in me and for the honor of nominating me for this appointment.
I am grateful, too, for the support of my home State
senators, Mitch McConnell and Jim Bunning, as well as the
Senate Majority Leader, Bill Frist.
My thanks to the Committee staff for their expert guidance.
And I also would like to acknowledge the loving support of my
family and my friends.
As many of you know, I spent most of the past 4 years on
staff at the Postal Rate Commission, assisting the Agency
Chairman in administering Postal Rate Commission operations. I
believe that this experience has afforded me a clear
appreciation of the key postal rate issues, as well as a close
familiarity with the concerns of the postal community
stakeholders.
If confirmed, I pledge to work with this Committee in
advancing the vital element of fair and impartial due process
for all that Congress has tasked the Postal Rate Commission to
ensure.
Madam Chairman, I look forward to working with you and
other Members of the Committee, and I would be pleased to
answer any questions you may have.
Chairman Collins. Thank you very much.
The Collins-Carper bill establishes the Consumer Price
Index (CPI) as the rate cap on each class of mail, as you are
well aware. And it only allows for exigency rate changes in
``unexpected and extraordinary circumstances.''
The Postal Service Board of Governors has expressed support
for the CPI-based rate cap but wants a far lower standard
which, in my opinion, would render the rate cap meaningless.
They are advocating language more similar to the House version
of the Postal Reform bill and that there be a standard of
reasonable and necessary.
My concern is that a reasonable and necessary standard is
so easy to meet and so ill-defined that the CPI cap on rates
would be easily breached and it would essentially be
meaningless. Obviously, reasonable and necessary is very
different from the language in our bill, which is unexpected
and extraordinary.
What is your opinion of the circumstances under which an
exception should be allowed under a CPI-based rate cap?
Mr. Acton. I think that the term exigent holds meaning and
that there are at least three competing assessments of what
that meaning is. There is the Senate version, the House
version, and the Postal Service version, as well.
It seems to me that a key element in this legislation is an
exchange of greater pricing freedoms for the Postal Service
and, in return, adherence to a strict exigency standard. And I
abide by the Senate language in this regard.
I think that, in terms of examples of types of exceptions
that may qualify, you can look to the last two rate cases.
Certainly the September 11 circumstance, I think, would be an
exceptional case. And perhaps even the compelling argument that
the Postmaster General made on behalf of the escrow obligations
could also be considered.
So in light of this history and in keeping with the spirit,
I think, of the Senate language, I would agree that going
forward we would want to work to ensure that the Senate
language is used in the final form of the legislation.
Chairman Collins. Thank you.
In your answer to written questions, you expressed the
importance of the Postal Service providing high-quality, timely
data to the Postal Rate Commission. The Senate-passed postal
bill increases the Postal Service's obligation to provide
additional data, including requiring annual cost, revenue,
rates, and service reports, requiring SEC-type reporting, and
granting the Postal Rate Commission subpoena power that could
be used to get other information if necessary.
Do you support those changes?
Mr. Acton. I do support it. I think that the accountability
provisions in the new legislation are particularly important.
Transparency and sharing information is key to a successful
rate-making process.
History has shown us at the Postal Rate Commission that
when the Postal Service develops new data and shares it in a
timely way with the Postal Rate Commission then the postal rate
setting process is enhanced.
I also believe that subpoena power is a useful tool for any
regulatory authority, but one that should be used prudently and
only in an instance of last resort.
Chairman Collins. I actually think that just having the
authority to subpoena information often makes its use
unnecessary.
Mr. Acton. I think there is considerable truth in that
view.
Chairman Collins. In a recent Postal Service filing at the
Postal Rate Commission, the Postal Service included as part of
its testimony information on its service standards. As I
understand it, with the exception of first-class mail, the
Postal Service has not updated those standards since the 1970s.
In addition, the Postal Service does not appear to track or
measure its performance against those standards. It is fine to
establish service standards, but if you are not measuring your
performance against them, they really do not have much meaning.
The need for standards and new measurement systems is an
issue that is of great importance to the mailing community. I
was giving a speech in Maine last week, and a local newspaper
publisher came up to me, and he said, ``It is not really the
rates. It is the service. It is ensuring on-time delivery of
our products that matters even more to us.''
This is an issue of great importance to all of us who have
been working on the postal bill, and we have included language
in our bill to improve the process by which service standards
are set. We have also asked for GAO to take a look at this
issue.
My question for you, Mr. Acton, is what do you believe is
the appropriate role for the Postal Rate Commission in defining
requirements for performance standards for postal products and
services and for monitoring compliance with those standards?
How well is the Postal Service doing in meeting those
standards?
Mr. Acton. Performance standards are a key concern. My
experience is similar to yours in the sense that when I visit
the various postal forums and functions, one clear message that
comes through on regular occasion is the need for better
performance measures. And not just for first-class mail but
also for business-class mail. It is an important piece of
information for a business mailer to know when a given piece of
mail in the mailstream arrives at its destination. There is
real value in that information.
And I think the Postal Service needs to contemplate that
going forward, given the fact that standard mail is such a
growing portion of total revenue.
As far as how the Postal Rate Commission may participate,
or the Postal Regulatory Commission, in facilitating that
process, performance standards are met or established in answer
to demand. And I think that the Postal Regulatory Commission is
well-positioned to solicit what the consumer needs are, to work
with the Postal Service in establishing suitable standards, and
then making sure that those standards are met.
Chairman Collins. Thank you. Senator Akaka.
Senator Akaka. Thank you, Madam Chairman.
Mr. Acton, the ability of the Postal Service to carry out
its universal service's obligation is critically important to
my State of Hawaii, which has over 628,000 delivery points
throughout the State.
My question to you is, in serving as a Commissioner of the
Postal Rate Commission, how will you address the preservation
of this important function of the Postal Service?
Mr. Acton. The universal service obligation is a key
concern regardless of whether we reform or not. It is an
important dynamic that acts to tie the Nation together by
making affordable Postal Service available in even the most
remote regions of the country.
I think a good start in terms of how we might advance its
preservation would be offering a real definition of exactly
what constitutes the obligation. I am not sure that an official
definition of the universal service obligation exists.
And I believe that the Postal Regulatory Commission holds
the expertise to offer some guidance and advice and a
leadership role in terms of developing a definition that would
help preserve the obligation in the long term.
Senator Akaka. Thank you, Mr. Acton. The Senate's postal
reform bill, which as you know passed unanimously on February
9, balances rate flexibility for the Postal Service while
ensuring financial accountability and transparency of
operations. Concerns have been expressed about this bill in its
current form, that it would allow the new Postal Regulatory
Commission to become too involved in the day-to-day operations
of the Postal Service.
My question to you is do you agree with that assumption?
Mr. Acton. Senator, I am familiar with those concerns. I
would respectfully disagree. I think that the legislation, as
it is drafted, provides the Postal Service management,
including the Postmaster General and the top executives, with
both the responsibility and the authority to manage the daily
operations of the Postal Service.
I think the concerns that you describe stem from worries
about the complaint process. People are concerned that under
the new program, individuals who are interested in what is
happening can bring complaints before the Postal Regulatory
Commission and then the Agency would go about intervening in
the daily minutiae of the operations of the Postal Service.
I think history proves that concern unwarranted from the
standpoint that there is already a complaints process in place.
The Postal Rate Commission has properly imposed certain rules
that limit our intervention to those instances of complaints
brought on issues of national scope only. I see no indication
that going forward our approach in that regard would be any
different than it is now.
Senator Akaka. Under the Senate bill, the Postal Rate
Commission will be required to develop rules for carrying out
its new responsibilities in a number of areas. For example, our
bill provides the Commission with 12 months to develop a system
for adjusting rates while the House version allows 24 months.
Has the Commission begun thinking about what resources,
including personnel, will be needed to carry out the new
responsibilities? In particular, how much time will be
necessary to develop the rules for charging rates?
Mr. Acton. As you would imagine, there has been
considerable discussion and thought and energy applied at the
Postal Rate Commission about how to manage the transition to
the Postal Regulatory Commission. The Chairman has appointed an
internal working group of individuals, including our General
Counsel, Steve Sharfman, as well as our Human Resource
Director, our Chief Administrative Officer, and a number of
other key personnel to advise the Commission on how best to go
about managing this transition.
We have been searching for a qualified organizational
management consultant with expertise in Federal reform. We have
been engaged in informal discussions with other agencies that
have undergone similar type legislative reform to get an
indication on what the important pitfalls are and what worked
best and what did not.
In terms of the time frames, it is so much a matter of
timing. And the two key elements are when will the rate case be
filed? And when will the legislation be enacted? If the rate
case is filed early and nearly completed by the time that the
bill is made law, then there is really not much of a
competition in resources. But if they coincide, then we are
going to have a real challenge on our hands.
I know that Congress has spelled out two specific time
frames, 12 and 24 months. We will pursue the goal at hand in
the time frame that Congress deems best. Twelve months is a
very ambitious schedule. Twenty-four would allow for a more
thoughtful review.
In preliminary discussions with the Chairman and with our
General Counsel, the general thought is that we could
accomplish and manage the transition well in approximately 18
months if allowed.
Senator Akaka. Mr. Acton, strengthening financial
transparency and accountability at the Postal Service is a
longtime goal of mine. The Rate Commission and the public
benefit from timely and accurate data. If confirmed, how will
you address the related objectives of Postal Service
accountability and transparency as outlined in the postal
reform legislation?
Mr. Acton. The accountability provisions are key to the
success of the new ratemaking process. Of course, the Postal
Rate Commission has a wealth of experience in accepting data
from the Postal Service. Sometimes not as much as we would
like.
But in terms of what is called for under the new
obligations, it is SEC-type reporting and auditing of certain
expertise that we do not presently have a lot of experience in.
In order for us to deal effectively with the new obligations,
we likely would have to hire a small staff of individuals with
professional experience in SEC-type auditing and reporting.
Senator Akaka. Thank you very much, Madam Chairman.
Chairman Collins. Thank you. Senator Coburn.
Senator Coburn. Thank you. You are obviously well qualified
for this position, so there are no doubts about that.
Your bachelor's degree is in what field?
Mr. Acton. Chemistry.
Senator Coburn. And you are working on a MBA, I understand.
Mr. Acton. That is right, University of Maryland.
Senator Coburn. My only concern I have is when you have a
monopolistic process--and I am not talking about parcels, I am
talking about first-class mail and on down--you have two events
of control. One is cost control and the other is price
increase.
We have a commission established, and we will have the
Regulatory Commission. We have that. But when you are in that
type of environment, the easiest thing to do is to raise
prices. And so I really want to hear your philosophy about
innovation and competition and streamlining and budgeting and
how does the Postal Service establish the cost reductions and
the efficiencies that are going to be necessary?
When I look at what I think is going to happen with mail,
there is going to be a whole lot less of it, other than
advertisement, newspapers, and that type of thing, and a
markedly increased number of parcels. How do we handle that?
And how do you stimulate the type of competition within the
Postal Service?
And I know you do not manage it, you just regulate it. But
how do you set the expectation from your position that you are
going to hold, so that that is integrated within the Postal
Service?
Mr. Acton. It is a sensitive question, of course, Senator,
for a lot of individuals, particularly the Postal Service and
the interested stakeholders. I think that a lot of these issues
were explored in the greater context of the work that Congress
has done here in crafting the legislation that is currently
pending. I know that the President's Commission was involved in
a thorough assessment of all the different options.
But I do think that the price cap scheme that you are
contemplating in this present legislation is going to go a long
way toward forcing new efficiencies in the Postal Service. I
think that sort of default response that you described on how
to deal with rising costs is raising the rates is going to have
to be thrown by the wayside when you introduce a situation
where you have a mechanism in place such as the price cap,
which forces the development of new efficiencies to meet cost
rather than raising the price of the product.
Senator Coburn. What happens when, if we have the new
postal reform bill, and you do not have--there is no exigent
circumstances for a rate increase and yet you do not have the
cost controls? What happens?
Mr. Acton. Well, it is a worst-case scenario, of course. I
think the Postal Service is recognizing the new challenge. I
think that they understand the inevitability of the passage of
this legislation, as much as anyone else. I think part of their
efforts to reoptimize their networks, the realignments and
changes in the way that they are dealing with post offices and
postal facility arrangements is an indication that they are
looking to increase efficiencies that meet the sort of
requirements that are pending.
Senator Coburn. Do you think there is ways to have postal
reform in a way that costs are borne by those utilizing the
service instead of the taxpayers?
Mr. Acton. Do I think that there is a way that can be done?
Senator Coburn. Yes.
Mr. Acton. I would have to give that some thought, Senator.
A successful approach does not come immediately to mind. I know
that there have been a number of theories in this regard,
certain new approaches in terms of how they go about doing
pricing and particularly rate review, in general. But I do not
know offhand what specific approach we would want to engage in.
Senator Coburn. One final question, one of the things that
I would worry about as a Commissioner would be would we price
ourselves out of business based on technology? That would be
one of the things that I would think everybody working in the
Postal Service would be concerned with, that as technology
advances further and further that, in fact, even under the
reform bills many of the people who have well served the Postal
Service for years and are new into the Postal Service may, in
fact, find that there is not a market there any more because
technology has superseded them. Any comments on that?
Mr. Acton. Yes. What you are describing is the postal death
spiral phenomena, and it is attributed, in large part, to what
is called electronic diversion, which is people using e-mail
rather than postal services.
But it has been my impression and I think there have been
some interesting studies done on this by Pitney Bowes and
others that show that the expectation on how technology is
going to impact the postal mail stream is not necessarily
predictable.
It seems to be as you describe, but on the other hand more
people using the Internet, for instance, means more packages to
be delivered, which means more product and service deliveries
for the Postal Service. Now it is not an even exchange in terms
of first-class versus parcel delivery, but I think there are
some uncertain dynamics at work that are difficult to
anticipate.
Senator Coburn. Just one little comment before my time runs
out. I can envision somebody innovating, say come to us. We
will, in fact, print all of your catalogs and all of the junk
mail I get every day. And we will package them in a box. And we
will use somebody outside the postal--we will use another
competitive market, or the parcel service of the post office,
rather than that class of mail today.
And in fact, we do not have mail as we know it today. What
we have is packages.
And so in that area you are competing effectively. And the
question I would have is as a revenue stream, are you
profitable in that? And is that subsidizing the other? Or is
one subsidizing that? Because if that kind of thing happens,
will you be in the position where you are competitive enough in
the parcel business to compete if that were to happen?
Mr. Acton. I think it is important to point out that the
Postal Service has been very active in terms of dealing with
what is happening with new technology. In fact, the situation
you describe is comparable to their online mailing service,
which has been a big success for them. And I think that they
are realizing that they are going to have to do more of that
sort of innovative thought across the board, not just in terms
of how they approach their service obligations but also in
terms of the rate-making process.
So I am hopeful that the Postal Service, particularly under
the leadership of someone like General Potter, is going to see
what the vision of the future is and come to terms with it in a
positive, productive, profitable way.
Senator Coburn. Thank you very much.
Mr. Acton. Thank you, Senator.
Chairman Collins. Mr. Acton, I just want to clarify an
exchange that you just had with Senator Coburn because I think
it is based on an outdated perception.
It is my understanding that the Postal Service has not
received a taxpayer subsidy for a number of years, except for
services provided to the blind and for overseas mailing. Is
that correct?
Mr. Acton. I would have to research that to know the answer
in a definitive way, Senator, but I do believe I have heard
that.
Chairman Collins. That is correct.
Senator Coburn. Can I raise a question? Not all of the
costs of the Postal Service are borne by the Postal Service,
especially when it comes to health care, retirement, benefits,
and everything else. So my question just relates--not implying
that there was but under the reform that preceded this one that
is coming when it was reorganized, not all of it is a cost
center within it.
So when decisions are made within it, it does not truly
reflect necessarily all of the costs associated with the U.S.
Postal Service.
Chairman Collins. There are issues on allocating costs to
various users and classes of mail, and how much should be
allocated. But it has been a number of years since the Postal
Service has received an appropriation.
Senator Coburn. I understand that.
Chairman Collins. One of the problems that our bill, which
Senator Akaka is a cosponsor of, is intended to help with are
those unfunded liabilities for workers compensation claims and
for retiree health insurance, which amount to billions of
dollars.
The legislation that we have advanced makes a big dent in
those unfunded liabilities by requiring three-quarters of the
funds from the escrow account to be used to prefund the health
insurance obligations that are due to future retirees.
Moreover, the debt that the Postal Service did owe to the
U.S. Treasury has largely been eliminated in the past few years
by being paid down. I just wanted to clarify the record on that
point.
Mr. Acton, in my haste to discuss policy issues with you, I
skipped over the standard questions that we ask of every
nominee. So let me do that now.
First, is there anything you are aware of in your
background which might present a conflict of interest with the
duties of the office to which you have been nominated?
Mr. Acton. No.
Chairman Collins. Second, do you know of anything personal
or otherwise that would in any way prevent you from fully and
honorably discharging the responsibilities of the office?
Mr. Acton. No.
Chairman Collins. And finally, do you agree without
reservation to respond to any reasonable summons to appear and
testify before any duly constituted committee of Congress, if
you are confirmed?
Mr. Acton. Yes.
Chairman Collins. Thank you. Senator Akaka.
Senator Akaka. Thank you, Madam Chairman.
Mr. Acton, given the new responsibilities we discussed in
the previous question, I am curious what additional funds will
be needed by the Postal Rate Commission? Has this aspect been
examined by the Commission?
Mr. Acton. This aspect of the transformation has not been
thoroughly defined, Senator. Presently our budget is near $10
million. I think we are going to need more than that perhaps to
accomplish the goals in the new legislation.
But I would hesitate to offer you a guess without more
information. But this is one of the questions that the working
group is planning on advising the Chairman of the Agency soon
in very close term, hopefully prior to the filing of the next
rate case.
Senator Akaka. Mr. Acton, it is expected that the Postal
Service will file a new rate case sometime this spring or
summer. If the Postal Rate Commission is considering a rate
increase under existing law when the legislation is enacted,
how will this impact the Commission's ability to meet all of
its additional responsibilities as proposed in the current
legislation?
Mr. Acton. It will be a great challenge. I think I
mentioned earlier a lot of it is dependent upon timing, the two
factors being when the bill is enacted and when the rate case
is filed. If we are able to complete most of the work that is
required in terms of fully litigating the case prior to the
enactment of the bill, then the conflict of resources will not
exist as predominantly as they would if the circumstances were
different.
It is really an instance by instance sort of assessment. We
will have to deal with it as it comes, but certainly there will
be a stretch of resources if we are asked to not only complete
the existing final cost-based omnibus rate case but also
implement the new obligations of the new legislation.
I just want to add that the key consideration here,
Senator, is understanding, as I know you do, that the final
omnibus rate case set under the old scheme will act as the
baseline going forward under the new price cap regimen. It is
important that we have a fully litigated case so we can resolve
any inequities and go forth with a fully balanced and equitable
rate plan so that the implementation of the new legislation can
be met with great success.
Senator Akaka. I thank you so much for your responses.
Thank you, Madam Chairman.
Chairman Collins. Thank you. Senator Coburn.
Senator Coburn. No questions.
I would note, however, my question regarding taxpayer
liability was really about the future, not really about the
past. That is our worry and that is the Postal Service's worry.
They have to become totally self-sufficient and independent
given the fiscal situation. So mine is really about the future,
not the past.
Chairman Collins. That is a helpful clarification. One of
the motivations for the postal reform legislation is to prevent
the need for a taxpayer bailout.
Senator Coburn. I will get there, Madam Chairman, I
promise.
Chairman Collins. Eventually I am going to get a yes vote
from you on something.
Senator Coburn. You are.
Chairman Collins. I want to thank our witness for appearing
before the Committee today.
Senator Akaka, I should ask if you have any further
questions?
Senator Akaka. I am fine. Thank you.
Chairman Collins. Without objection, the record will be
kept open until 12 noon on Monday, April 3, for the submission
of written questions or statements for the record.
And again, Mr. Acton, I would encourage you to turn around
those questions as rapidly as possible because it will help us
move your nomination along.
I thank you very much for your willingness to serve. This
hearing is now adjourned.
[Whereupon, at 11:39 a.m., the Committee was adjourned.]
A P P E N D I X
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