Testimony of Chairman Ruth Y. Goldway

Postal Regulatory Commission

before the

U.S. Senate Appropriations Subcommittee on

Financial Services and General Government

March 18, 2010

Chairman Durbin, Ranking Member Collins and members of 

the Subcommittee, thank you for the opportunity to testify. I am 

pleased to represent the Commission today, and to explain its

role in the process of reviewing the coming Postal Service

proposal for a reduction in the mandated mail delivery frequency. 

This proposal impacts virtually every citizen in the Nation, and this 

Subcommittee is wise to turn its attention so quickly to this issue. 

Today, I hope to provide you with a clear understanding of the 

Postal Regulatory Commission’s statutory obligation and how we 

intend to fulfill it.
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When the Postal Service determines that there should be a 

change in the nature of postal services which will generally affect 

service on a nationwide, or substantially nationwide basis, it must 

submit a proposal to the Commission requesting an advisory 

opinion on the change. This requirement was established by the 

Postal Reorganization Act of 1970, and was retained by the 

Postal Accountability and Enhancement Act of 2006. Our rules 

provide that such a request must be filed with the Commission no 

less than 90 days in advance of the date on which the Postal 

Service proposes to make the change effective.

The Commission is responsible for providing a public, onthe-record, hearing process so that mail users and other

interested members of the public can test the Postal Service’s 

proposal and offer supporting or opposing views. The 

Commission will then provide an opinion that takes into account 

all applicable public policies, such as the need to maintain 

adequate and effective universal service, and the need to provide 

services in an economic and efficient manner.
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While we have not yet received a formal proposal from the 

Postal Service to eliminate Saturday delivery, we have been told 

to expect one this month. In this specific instance, the Postal 

Service must also seek approval from Congress, since for over 25

years, 1983 delivery levels have been specified as a minimum in 

annual appropriations legislation, thereby requiring maintenance 

of 6-days-a-week city and rural delivery.

Last week, on March 10, the Commission submitted an 

advisory opinion on another service change proposal. The Postal 

Service requested a review of its process for closing the more 

than 4,000 retail facilities it denominates as classified stations and 

branches. The Commission found that significant improvements 

should be made to this process. These improvements would 

result in more accurate, comprehensive, and balanced financial 

projections as a basis for Postal Service decisions, and would 

ensure the rights of affected customers who should have a 
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meaningful opportunity to provide input before a decision to cut 

service is made. Copies of that opinion have been provided to 

members of this Committee. I believe this case is representative

of the thorough review and constructive advice the Commission 

provides in response to Postal Service requests.

When the Postal Service submits the request for an advisory 

opinion on elimination of Saturday delivery, it will provide 

evidence explaining why it believes this change is justified. The 

Commission will follow established procedures and create a 

schedule to analyze that evidence. The schedule will include an 

opportunity to question the Postal Service, and an opportunity for 

the public to provide its views, both informally and as part of more 

formal, technical presentations. The Postal Service and 

interested members of the public will have the opportunity to brief 

issues and submit reply briefs.
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Based on recent experience, I expect the Commission will 

receive detailed and thoughtful comments from a wide variety of 

businesses and associations that are dependent upon, or make 

significant use of, the Postal Service. To the extent necessary, 

the Commission will issue information requests so that a 

comprehensive record exists to support conclusions on potential 

cost savings, volume declines, and impacts on the maintenance 

of timely and reliable service.

Additionally, the Commission will expand its outreach efforts 

to encourage participation by both individuals and groups 

representing businesses and average citizens affected by the 

proposal. In recent cases, the Commission has found that going 

outside of Washington, DC, and holding field hearings in such 

places as The Bronx, New York, Independence, Ohio, St. Paul, 

Minnesota and Flagstaff, Arizona has proven extremely helpful. 

During these hearings, we learn about specific experiences that 
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give meaning to the broad national trend data we generally rely 

on.

As we have not yet seen the actual Postal Service proposal, 

it is difficult to estimate precisely the amount of time that will be 

necessary to develop a thorough advisory opinion. Depending on 

the complexity of the issues raised both by the Postal Service and 

by individual and business participants, a rough estimate would 

be six to nine months.

The invitation to testify today also sought witness comments 

on the current financial situation facing the Postal Service. 

Suffice it to say that we are all well aware of the seriousness of 

the Postal Service’s current situation, and hopeful that Congress 

may see fit to address the retiree health care benefit issue 

promptly. The Commission will issue its Annual Compliance 

Determination later this month that will provide a full analysis of 

the Postal Service finances in the context of its rate and service 
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performance in Fiscal Year 2009. I will make certain that each 

member of this Committee is immediately provided with a copy of 

the Annual Compliance Determination.

As a point of reference, the Commission recently had 

occasion to approximate the cost savings associated with 5-daysa-week mail delivery. In December 2008, the Commission 

submitted a report to Congress entitled “Universal Postal Service 

and the Postal Monopoly”, as required by the Postal

Accountability and Enhancement Act of 2006. Specifically, the 

Act required the Commission to estimate the costs of the 

Universal Service Obligation and the value of the existing 

monopoly.

The Commission accepted as reasonable an estimate 

developed by a team of outside consultants that reducing the 

frequency of delivery from 6 to 5 days would have increased the 

Postal Service’s Fiscal Year 2007 profits by $1.9 billion. This was 
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about $1.6 billion less than a Postal Service calculation at that 

time. About one-third of the difference was due to the fact that 

the Postal Service assumed no mail volume would be lost as a 

result of the reduction in service. The consultants’ estimates 

reflected a 2 percent reduction in volume due to the reduction in 

service. The other major difference related to the costs of 

delivering pieces that otherwise would be delivered on Saturday.

However, neither the Postal Service nor the Commission 

were quantifying a fully developed change proposal of the type 

the Postal Service has said it will be providing later this month. I 

look forward to carefully analyzing a Postal Service proposal that 

includes a sophisticated presentation of potential cost and 

revenue changes to support its estimates of the impact of 

elimination of Saturday delivery both on the Postal Service and on 

the economic and social interests of its customers.
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Thank you again for providing me the opportunity to testify 

today. I would be pleased to respond to any questions 

Subcommittee members may have.