U.S. GOVERNMENT PRINTING OFFICE

67–286 cc WASHINGTON : 2000

S. Hrg. 106–798

NOMINATION OF GEORGE A. OMAS

HEARING

BEFORE THE

COMMITTEE ON

GOVERNMENTAL AFFAIRS

UNITED STATES SENATE

ONE HUNDRED SIXTH CONGRESS

SECOND SESSION

ON THE

NOMINATION OF GEORGE A. OMAS, TO BE A COMMISSIONER OF THE

POSTAL RATE COMMISSION

SEPTEMBER 19, 2000

Printed for the use of the Committee on Governmental Affairs

(

For sale by the Superintendent of Documents, Congressional Sales Office

U.S. Government Printing Office, Washington, DC 20402

(II)

COMMITTEE ON GOVERNMENTAL AFFAIRS

FRED THOMPSON, Tennessee, Chairman

WILLIAM V. ROTH, Jr., Delaware

TED STEVENS, Alaska

SUSAN M. COLLINS, Maine

GEORGE V. VOINOVICH, Ohio

PETE V. DOMENICI, New Mexico

THAD COCHRAN, Mississippi

ARLEN SPECTER, Pennsylvania

JUDD GREGG, New Hampshire

JOSEPH I. LIEBERMAN, Connecticut

CARL LEVIN, Michigan

DANIEL K. AKAKA, Hawaii

RICHARD J. DURBIN, Illinois

ROBERT G. TORRICELLI, New Jersey

MAX CLELAND, Georgia

JOHN EDWARDS, North Carolina

HANNAH S. SISTARE, Staff Director and Counsel

DAN G. BLAIR, Senior Counsel

JUDITH WHITE, Detailee, International Security, Proliferation,

and Federal Services Subcommittee

JOYCE A. RECHTSCHAFFEN, Minority Staff Director and Counsel

PETER A. LUDGIN, Minority Professional Staff Member

NANCI E. LANGLEY, Minority Deputy Staff Director,

International Security, Proliferation, and Federal Services Subcommittee

DARLA D. CASSELL, Chief Clerk

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C O N T E N T S

Opening statements: Page

Senator Cochran ............................................................................................... 1

WITNESSES

TUESDAY, SEPTEMBER 19, 2000

Hon. Trent Lott, a U.S. Senator from the State of Mississippi ........................... 1

George A. Omas, nominated to be a Commissioner of the Postal Rate Commission ........................................................................................................................ 4

ALPHABETICAL LIST OF WITNESSES

Omas, George A.:

Testimony .......................................................................................................... 4

Biographical information ................................................................................. 12

Pre-hearing questions and answers ................................................................ 20

Lott, Hon. Trent:

Testimony .......................................................................................................... 1

Prepared statement .......................................................................................... 2

APPENDIX

Hon. Benjamin A. Gilman, a Representative from the State of New York,

prepared statement .............................................................................................. 9

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NOMINATION OF GEORGE A. OMAS

TUESDAY, SEPTEMBER 19, 2000

U.S. SENATE, COMMITTEE ON GOVERNMENTAL AFFAIRS, Washington, DC.

The Committee met, pursuant to notice, at 9:30 a.m., in room

SD–342, Dirksen Senate Office Building, Hon. Thad Cochran presiding.

Present: Senator Cochran.

OPENING STATEMENT OF SENATOR COCHRAN

Senator COCHRAN. The Committee will please come to order. This

morning our Committee is considering a hearing on the nomination

of George Omas, who was nominated to serve a 6-year term as

Commissioner of the Postal Rate Commission. We welcome all of

you here for this hearing this morning. We also especially welcome

the distinguished Majority Leader of the U.S. Senate, my colleague

and friend, Senator Trent Lott of Mississippi, who is here today to

introduce Mr. Omas.

Mr. Majority Leader, welcome. You are recognized for such time

as you may consume.

STATEMENT OF HON. TRENT LOTT, A U.S. SENATOR FROM THE

STATE OF MISSISSIPPI

Senator LOTT. Well, thank you very much, Mr. Chairman. Thank

you for having this hearing and moving forward on this nomination. There is nothing I could tell you publicly about this gentleman

that you do not already know. You know that we go back to about

1957, when we met on a bus in Biloxi, Mississippi, on the way to

Boys’ State, and I have never recovered from that experience.

But, George Omas is an outstanding nominee. He has a wonderful family in Biloxi, Mississippi. He has been outstanding in his involvement all his life, both in the private sector and in the public

sector. He certainly has the qualifications, the experience and the

educational background. He has, of course, a B.A. and an M.A. and

has done graduate work at Florida State University.

I first started working with him in the private sector when he

was the National Executive Vice President of the National Apartment Association. I was already a House member, and I remember

he brought representatives of that association to Washington and

we had a really good meeting. Then George served awhile on the

House Post Office and Civil Service Committee, where I had the

pleasure or the opportunity to serve for a brief period of time.

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George served as staff director of the subcommittee—interestingly—on Census, Statistics and Postal Personnel. He worked on

the committee that looked after or looked over the franking activities in the House of Representatives, the Franking Commission. He

served overall with the House committee and its different arms for

18 years. He worked for 3 years in the Doorkeeper’s Office in the

House of Representatives. He now has 3 years of experience on the

Postal Rate Commission, served as vice chairman for a year and,

of course, we are seeking his confirmation now for a full 6-year

term, which would expire October 14, 2006.

Well, that is the record academically and from his experience in

the area that he is dealing with every day. I also take note that

postal rates have stayed pretty steady under his leadership, and we

like that, but more than anything else about George Omas, from

my own standpoint, is he is a personal friend. I have always admired his commitment to duty, his hard work ethic and his ethical

standards.

We never would have to be concerned about George doing something that would be an embarrassment to his friends, his State, the

Postal Rate Commission or any work that he does. So, I am delighted, Mr. Chairman, to be here before you and to support this

confirmation, and I am hoping that we can get it through here

quickly and that George will be confirmed before the end of the session.

So, thank you for this opportunity. I might say, Mr. Chairman,

I would like to ask that my complete statement be made a part of

the record.

Senator COCHRAN. Without objection, it will be made a part of

the record.

[The prepared statement of Senator Lott follows:]

PREPARED STATEMENT OF SENATOR LOTT

Mr. Chairman, it is a pleasure to be here in the Governmental Affairs Committee

today to introduce to the Committee one of our fellow Mississippians, George Omas,

and to speak in favor of his nomination for this very important position.

Mr. Chairman, the Committee may recall that I introduced George at its hearing

on July 28, 1997, when he was first nominated to be a Commissioner on the Postal

Rate Commission. George was confirmed by the Senate for this position on July 31,

1997, and he has been serving with distinction on the Postal Rate Commission since

that time. On October 1, 1999, George began a term as Vice-Chairman of the Postal

Rate Commission. So, it is a delight to be here today to refresh the Committee Members’ memories about this distinguished Mississippian.

George and I first met back in the summer of 1957 when a delegation of boys on

the Mississippi Gulf Coast assembled to attend Boys’ State. George Omas—a real

character from Biloxi—was one of the first people I met when I got on the bus, and

we have been friends since that day.

George and I both went to college at the University of Mississippi, which the

Chairman knows we all fondly call ‘‘Ole Miss.’’ George earned a B.A. and an M.A.

degree at Ole Miss, and held a teaching fellow position while there. George also did

postgraduate work at Florida State University.

For a number of years after college George and I kept up with each other indirectly. When George became Executive Vice President of the National Apartment

Association, I was able to see George more often as he worked on Federal issues.

Later, he came to work for the Post Office and Civil Service Committee on which

I served in the House of Representatives. He served as staff director on the Subcommittee on Census, Statistics and Postal Personnel. Because he had done such

a good job, he was asked by the distinguished Chairman, Ed Derwinski, to stay on

after I had left. He worked for the House Committee on Post Office and Civil Service for nearly 18 years in all.

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1The prepared statement of Mr. Gilman appears in the Appendix on page 9.

More recently, before his appointment to the Postal Rate Commission, he served

for approximately 3 years in the Doorkeeper’s Office of the House of Representatives.

Mr. Chairman, George has gained invaluable experience over the past 3 years on

the Postal Rate Commission, particularly since he has been serving as its vice chairman for almost a year. This experience is in addition to the knowledge he gained

while serving as a staff member for the House of Representatives’ Committee on

Post Office and Civil Service. I believe that America would be well-served by taking

advantage of this experience. In addition to this excellent record of experience, I

want to personally attest to George’s skills and abilities which I have had the

chance to observe throughout the course of our friendship. I urge this Committee

to act favorably on his nomination, and I look forward to the full Senate confirming

him for this 6-year term which expires October 14, 2006.

Thank you, Mr. Chairman, for allowing me to testify on behalf of George Omas.

Senator COCHRAN. We appreciate very much your being here and

introducing Mr. Omas to us. As a matter of fact, you may remember my first encounter with George Omas was in the capacity of

his dormitory manager. When I went back to law school after serving in the Navy, I found that I needed a little extra money to pay

the room rent and a dorm manager’s job might be available, and

it just happened to be down the hall from where George Omas was

staying in Guest Hall at the University of Mississippi.

Senator LOTT. Well, he was from Biloxi. He didn’t cause any kind

of commotion; did he?

Senator COCHRAN. Very rarely. He was a very positive influence

in all respects. That is my memory, anyway.

Senator LOTT. Great.

Senator COCHRAN. Well, thank you very much for being here. We

know you are busy and you can go do whatever else you need to

do at this time.

Senator LOTT. Thank you very much.

Senator COCHRAN. In keeping with the rules of the Committee,

I need to say that we have done the required examination into the

experience, qualifications, suitability and integrity with questions

to the nominee about his financial situation. All of the materials

that have been requested by the Committee to be submitted by Mr.

Omas have been submitted. These items are on file.

The financial statements are available in the Committee office

for review by anyone who wants to see them. A copy of Mr. Omas’

biographical information and responses to the inquiries of the Committee that had previously been submitted are available upon request. They are all a part of the record of this hearing.

I have also received a statement of support for this nomination

from Congressman Benjamin Gilman.1 His remarks will be printed

in the record, as well.

The Committee staff have reviewed all of the information that

the nominee has submitted in response to our inquiries, including

the financial disclosure report submitted by the Office of Government Ethics. I have personally reviewed the FBI background investigation reports and we are now ready to proceed to the formal

questioning of the witness. Our rules require that all nominees be

under oath while testifying on matters relating to their suitability

for office, including the policies and programs which the nominee

will pursue, if confirmed.

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1The biographical information and pre-hearing questions and answers from Mr. Omas appear

in the Appendix on pages 12 and 20 respectively.

So, Mr. Omas, if you will please stand. Do you solemnly swear

to tell the truth, the whole truth, and nothing but the truth, so

help you, God?

Mr. OMAS. I do.

Senator COCHRAN. Thank you. At this time, we will be glad to

receive any opening statement or comments that you would like to

make, Mr. Omas.

TESTIMONY OF GEORGE A. OMAS,1 NOMINATED TO BE A

COMMISSIONER OF THE POSTAL RATE COMMISSION

Mr. OMAS. Thank you, Mr. Chairman. I do have a brief statement. Mr. Chairman and Members of the Subcommittee, it is a

privilege for me to once again appear before you today as you consider my nomination to the Postal Rate Commission. Before I make

some very brief remarks, I would like to take this opportunity to

thank the President of the United States, the Majority Leader,

Trent Lott, and you, Mr. Chairman, and this Subcommittee for giving me this opportunity.

While it has been just slightly over 3 years since I was last here,

it has been an exciting and intense time in the postal community.

I arrived at the PRC in August 1997 after a rate case had been requested by the Postal Service that July. That case, R97–1, was not

only massive, but I was told it was one of the most complicated in

recent history. Today, we are in the process of considering R2000–

1, and while I cannot talk about the specifics of the case, I can say

that it is just as intricate and complicated as its predecessors.

Today, with 2 months left to go in the case, there have been 69

witnesses from the Postal Service, 107 witnesses representing

other parties, with a transcript of over 20,000 pages. Due to the

timing of my first appointment, and the fact that generally new

commissioners have much to learn, I had to, as they would say, hit

the ground running in R97–1. Having gone through that process,

I am now much more conversant—or so I would like to think—with

the complicated economic theories and the legal arguments than

when I last sat in this chair.

During the past 3 years, we have considered a number of smaller

cases. In addition to R97–1 and R2000–1, the rate proceedings,

these cases have been much narrower in focus and are targeted to

meet the needs of particular types of mailers. Through the streamlined administrative process established by the Postal Rate Commission to handle such cases, we are able to process them much

faster than the 10 months allowed by law.

Mr. Chairman, I have also had the opportunity to preside over

several cases and I take pride in the fact that we were able to

reach settlement agreements that allowed the Postal Service and

the mailers to immediately benefit from the proposals. I look forward to working with the Postal Service and the mailing community to make the rate-setting process as expeditious as possible.

Also, Mr. Chairman, as you know from your recent hearing on

e-commerce issues, these are interesting times for the Postal Service. The postal landscape is changing and it is not clear what the

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impact of technology on the Postal Service will be over the next

decade. I can assure you, however, and the Subcommittee that universal service, rates that cover cost and a willingness to work with

the postal community will be the hallmark of my tenure at the

Postal Rate Commission, should I be reconfirmed.

I would be remiss, Mr. Chairman, if I did not comment on the

fine staff of the full Committee and the Subcommittee. Awaiting

word on your nomination, as you know, can be a little anxious, and

the staff was excellent in keeping me informed on matters related

to my renomination, and I want to thank them personally.

Thank you, Mr. Chairman.

Senator COCHRAN. Thank you, Mr. Omas. I think we should

point out you are now serving as Vice Chair of the Postal Rate

Commission. Is that correct?

Mr. OMAS. Yes, sir.

Senator COCHRAN. I think it is clear from the comments made by

Senator Lott and others whom I have encountered that you have

served with honor and have been a very positive influence in the

decision-making process of the Postal Rate Commission. Let me ask

you a few standard questions that the Committee staff have put in

my folder.

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. OMAS. No, sir.

Senator COCHRAN. Do you know of any reason, 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. OMAS. No, sir.

Senator COCHRAN. 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. OMAS. Yes.

Senator COCHRAN. Those are the required questions. I thought

up a couple on my own which would probably make you nervous,

but they do not have anything to do with our recollections of student days on the campus of the University of Mississippi, I assure

you. But what I am curious about is what your reaction is to legislation that Congress enacts relating to the rate-making process.

You mentioned in your statement that R2000–1 is pending before

the Postal Rate Commission, and I guess this is the big rate case.

This is the request for increased rates submitted by the U.S. Postal

Service.

Mr. OMAS. That is correct.

Senator COCHRAN. And, under the law, that has been referred to

the Postal Rate Commission for its consideration, approval, or disapproval. You can modify it. You can amend it—isn’t that correct—

and approve, in effect, rate changes?

Mr. OMAS. Well, the Postal Rate Commission conducts public

hearings and, as I have said, we have had like 69 witnesses from

the Postal Service who defend the rates that they are requesting.

Then we give the opportunity to intervenors, which we have had

in this case 107, who come in to tell us whether they support or

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whether they oppose what the Postal Service is requesting, and we

at the Postal Rate Commission must go by what is on the record

and we cannot—we can alter, but we must have specific economic

backup and statistics to back up whatever decisions we make.

Senator COCHRAN. When the Postal Reorganization Act was

passed by Congress, signed, and became law, taking away from

Congress the supervision and control over the Postal Service and

making it an independent agency, in effect it created the Postal

Rate Commission, the Board of Governors, and the arrangement

we have now. At that time the Act was advertised as an opportunity to get Congress out of the business of interfering or managing, appointing postmasters, appointing rural mail carriers, basically running it as a cottage industry in the Congress, and leaving

it up to the independent bodies that were created to run it.

But now what I have noticed is, as Chairman of the Subcommittee that has jurisdiction over these issues and the laws, we

are being called upon to legislate still on issues that some might

think are under the strict purview and responsibility of the Postal

Rate Commission, such as a recent bill that we have approved here

in our Subcommittee. We have reported it out for consideration by

the full Committee, dealing with these very rates that you are now

considering in the Postal Rate Commission.

My question is what effect does that have on the process? What

effect does that have on the decisions that will be made by the

Postal Rate Commission in R2000–1?

Mr. OMAS. Well, I think, Mr. Chairman, what you are referring

to is the legislation for non-profit mailers. And we, or the Postal

Rate Commission, must follow the rules and regulations set forth

in Title 39, and those regulations stipulate that we must accept the

case that is presented to the Postal Rate Commission and then, according to the record that is developed during the course of the

hearings, make our decisions accordingly.

Legislation is sometimes—in this particular instance with nonprofit mailers, is that, for some reason unbeknownst to the Postal

Service and to the Postal Rate Commission, non-profit mail costs

have just gone out of sight. Without legislation, we would have to

impose the rates that the statistics and—that have been given to

us. Those are the rates we would have to impose on the nonprofit

community unless the legislation is passed by Congress.

Senator COCHRAN. So, you are telling me that this legislation is

welcomed by the Postal Rate Commission and facilitates your decision?

Mr. OMAS. Well, it would facilitate the interest of that community, if that is what Congress so desires. Congress has always tried

to be of assistance to the non-profit community, and if they want

to continue that, this legislation would be required.

Senator COCHRAN. Are there any other classes of mail where the

rates are influenced by legislative action, other than the so-called

non-profits, to your knowledge?

Mr. OMAS. No, sir.

Senator COCHRAN. Did this start some time ago or did we just

dream this up this year?

Mr. OMAS. Well, I think it is the first time that non-profit costs

have just—they are astronomical, and they had a great increase in

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the R97 case, which I cannot remember the exact percentage. But

in this one, the rate increase for non-profits could go anywhere

from 18 to 40 percent in some instances.

Senator COCHRAN. These are increases, 18 to 40 percent increases, over current rates that are being paid for such mail?

Mr. OMAS. Correct.

Senator COCHRAN. Well, what would happen if we did not pass

the legislation, as a practical matter?

Mr. OMAS. Well, that is very interesting. That was asked to me

by staff and we also asked that question of the Postal Service when

the case was filed. In fact, it is the first time that the Postal Service, since the Postal Reorganization Act, has submitted an omnibus

rate case, that the rates of a specific group of rates or a subclass

was dependent on legislation being passed. So, we, the Chairman,

the Committee, with the consent of the other commissioners, wrote

a letter to the Postal Service. When we did write a letter, it was

in the term of a POIR, a Presiding Officer’s Information Request.

The Postal Service said the rates would stand as proposed in

R2000–1 should the legislation not pass and, as I told you earlier,

we can only go by what is supplied to the Postal Rate Commission

and what other facts are given to us in public hearings.

Senator COCHRAN. Do you see any need for reform of the law as

it exists to restore the power to the Postal Rate Commission to

make these decisions? I mean, if we carried out the legislative history of the Postal Reorganization Act, it would seem to me that we

would leave to the Postal Rate Commission the full power and authority to set rates. Isn’t that why the Postal Rate Commission was

created?

Mr. OMAS. Yes, sir.

Senator COCHRAN. Why then would we permit a situation to continue where your hands are tied and you really cannot set rates except within very strict limitations which don’t permit you to respond to needs or justifiable changes that you think are necessary,

given the current state of the economics of mailing or whatever the

facts are? Should you be given more power, rather than less? It

sounds like you are getting less power than you had when you were

first created.

Mr. OMAS. Well, Mr. Chairman, I don’t know if we are getting

less power. This is, as I said earlier, non-profits are sort of a special group that have always been treated in a different manner.

RFRA, which was a law that amended the Postal Reorganization

Act in, I think, 1994, said that the non-profit rates would be half

of the markup. That worked for awhile, but for some unexplainable

reason, non-profit costs have just gone out of sight. And, as I said,

we are only able——

Senator COCHRAN. Well, has the Postal Rate Commission approved this?

Mr. OMAS. No, sir.

Senator COCHRAN. When you say the rates have gone out of

sight, the cost of mailing——

Mr. OMAS. I am sorry. The cost——

Senator COCHRAN. But not the rates.

Mr. OMAS. But not the rates. I am sorry. The cost of processing

this subclass of mail has gone up, and we have asked the Postal

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Service, we have asked intervenors, no one can tell you why this

particular——

Senator COCHRAN. Because of the requirement that each class of

mail has to stand on its own, you cannot cross-subsidize, you are

saying. Therefore, the rates have to go up unless you are going to

incur big deficits in the operation and require subsidies from Congress, from the taxpayers, etc.

Mr. OMAS. That is right. And that is why our hands are tied, because with the facts presented to us and the figures that have been

given to us by the Postal Service, their rates would have to go up

anywhere from 18 to 40 percent, depending on the subclass, just

for it to cover its costs and stand alone.

Senator COCHRAN. Well, I am sorry to spring all of these questions on you here without any warning, but it occurs to me that

this is a matter of some urgency for us to decide, because there is

pending now in the full Committee, maybe for action this week,

this legislation that has been generated out of this process. And I

was curious to know why we are doing it.

Mr. OMAS. Yes, sir.

Senator COCHRAN. I understand why we are doing it now.

Mr. OMAS. I think the non-profit community feels that it is very

necessary.

Senator COCHRAN. Well, you have been very helpful to me personally, as you have always been when I have had questions about

the Postal Service. With your experience on the House Committee

and now as Postal Rate Commissioner, you are the best thing we

have as an expert from our State on this subject. We appreciate

your serving with such distinction on the Postal Rate Commission.

I know of no other questions to submit to you. We appreciate your

attendance and cooperation with our Committee. Good luck. I hope

we can get you confirmed quickly. We need your service to continue

on the Postal Rate Commission.

Mr. OMAS. Thank you, Mr. Chairman.

Senator COCHRAN. The hearing is adjourned.

[Whereupon, at 10 a.m., the Committee was adjourned.]

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