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73–674 PDF 2012

S. Hrg. 112–525 

NOMINATION OF HON. TONY HAMMOND 

HEARING 

BEFORE THE

COMMITTEE ON 

HOMELAND SECURITY AND 

GOVERNMENTAL AFFAIRS 

UNITED STATES SENATE 

ONE HUNDRED TWELFTH CONGRESS 

SECOND SESSION 

NOMINATION OF HON. TONY HAMMOND TO BE A COMMISSIONER, 

POSTAL REGULATORY COMMISSION 

MARCH 6, 2012 

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

Printed for the use of the 

Committee on Homeland Security and Governmental Affairs 

( 

(II) 

COMMITTEE ON HOMELAND SECURITY AND GOVERNMENTAL AFFAIRS 

JOSEPH I. LIEBERMAN, Connecticut, Chairman 

CARL LEVIN, Michigan 

DANIEL K. AKAKA, Hawaii 

THOMAS R. CARPER, Delaware 

MARK L. PRYOR, Arkansas 

MARY L. LANDRIEU, Louisiana 

CLAIRE MCCASKILL, Missouri 

JON TESTER, Montana 

MARK BEGICH, Alaska 

SUSAN M. COLLINS, Maine 

TOM COBURN, Oklahoma 

SCOTT P. BROWN, Massachusetts 

JOHN MCCAIN, Arizona 

RON JOHNSON, Wisconsin 

ROB PORTMAN, Ohio 

RAND PAUL, Kentucky 

JERRY MORAN, Kansas 

MICHAEL L. ALEXANDER, Staff Director 

KRISTINE V. LAM, Professional Staff Member 

JOHN P. KILVINGTON, Staff Director, Subcommittee on Federal Financial 

Management, Government Information, Federal Services, and International Security 

NICHOLAS A. ROSSI, Minority Staff Director 

JENNIFER L. TARR, Minority Counsel 

WILLIAM H. WRIGHT, Minority Staff Director, Subcommittee on Federal Financial 

Management, 

Government Information, Federal Services, and International Security 

TRINA DRIESSNACK TYRER, Chief Clerk 

PATRICIA R. HOGAN, Publications Clerk 

LAURA W. KILBRIDE, Hearing Clerk 

(III) 

C O N T E N T S 

Opening statements: Page 

Senator Carper ................................................................................................. 1 

Senator Brown .................................................................................................. 3 

Prepared statements: 

Senator Carper ................................................................................................. 15 

Senator Brown .................................................................................................. 17 

WITNESSES 

TUESDAY, MARCH 6, 2012 

Hon. Roy Blunt, a U.S. Senator from the State of Missouri: 

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

Hon. Tony Hammond to be a Commissioner, Postal Regulatory Commission: 

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

Prepared statement .......................................................................................... 19 

Biographical and financial information .......................................................... 21 

Letter from the Office of Government Ethics ................................................. 29 

Responses to pre-hearing questions ................................................................ 30 

(1) 

NOMINATION OF HON. TONY HAMMOND 

TUESDAY, MARCH 6, 2012 

U.S. SENATE, COMMITTEE ON HOMELAND SECURITY

AND GOVERNMENTAL AFFAIRS, Washington, DC. 

The Committee met, pursuant to notice, at 10:34 a.m., in room 

SD–342, Dirksen Senate Office Building, Hon. Thomas R. Carper 

presiding. 

Present: Senators Carper and Brown. 

OPENING STATEMENT OF SENATOR CARPER 

Senator CARPER. The hearing will come to order. Before I offer 

an opening statement and begin the hearing to consider the nomination of Tony Hammond to be, once again, a Member of the Postal 

Regulatory Commission (PRC), I would like to yield to Senator 

Blunt for any comments that he would like to offer at this time. 

TESTIMONY OF HON. ROY BLUNT, A U.S. SENATOR FROM THE 

STATE OF MISSOURI 

Senator BLUNT. Well, Senator Carper, thank you. 

Senator CARPER. Welcome. We are glad you are here. 

Senator BLUNT. Thank you for yielding to me and letting me 

have the opportunity to introduce my good friend, Tony Hammond. 

I have known Mr. Hammond for at least 30 years. He is a native 

of Hickory County, Missouri, one of the three counties in Missouri 

that is named after Andrew Jackson. We actually ran out of ways 

to honor Andrew Jackson, so we just named one of the counties 

Hickory County in his honor, and that is the one where Tony grew 

up. 

He is a graduate of Missouri State University in Springfield. He 

previously began service on this same Commission in August 2002, 

following an appointment by President Bush, and was reappointed 

in January 2005. The Senate, at that point, confirmed Commissioner Hammond to a term that expired in October 2011. He served 

2 years as Vice Chairman of the Commission and has represented 

the Commission on the U.S. State Department delegation to the 

Universal Postal Union. 

Before being named to the Postal Rate Commission, Commissioner Hammond owned and managed a consulting firm. From 

1989 to 1994, he was Executive Director of the Missouri Republican 

Party. And before that, he served on Capitol Hill for 10 years on 

the official staff of Southwest Missouri Congressman Gene Taylor. 

During Congressman Taylor’s tenure as ranking member of the 

2 

Post Office and Civil Service Committee, Mr. Hammond dealt with 

the diverse issues that relate to postal rates and postal operations. 

I think he served well on the Commission. I am pleased that the 

President has nominated him, but he has nominated him for a 

term that ends in November of this year. And so, I look forward 

to Commissioner Hammond, based on the recommendation, I hope, 

of this Committee, to be able to serve some additional time on this 

Commission that he has already served on so well. 

Senator CARPER. Well, hopefully, he will have, if confirmed, a lot 

to do this year and some more to do after November. But we will 

cross that bridge when we come to it. 

I want to thank you very much for coming. 

Senator BLUNT. Well, thank you for coming, and I am going to 

excuse myself. But I appreciate your having this hearing, and I 

look forward to whatever we can do, working together, to get this 

nomination confirmed by our colleagues in the Senate. Thank you. 

Senator CARPER. Thanks for your testimony and for your endorsement. 

Mr. Hammond is not a stranger, as you know, to the Commission. He knows, just as everyone watching this hearing likely 

knows, that these are challenging times for the Postal Service. As 

we sit here today, the future of the Postal Service and the massive 

private sector mailing industry it supports is uncertain. Absent 

congressional action this year, that future will be dire. 

Last year, the Postal Service suffered an operating loss of more 

than $5 billion. It will see a similar loss this year even if it finds 

some way to avoid making the retiree health pre-funding payments 

due in the coming months. These losses will accelerate starting in 

fiscal year 2013—$6.5 billion that year, just under $10 billion in 

fiscal year 2014, more than $12 billion in fiscal year 2015, and I 

am told more than $15 billion in fiscal year 2016. 

Coincidentally, under current law, the cap on the line of credit 

that the Treasury may extend to the Postal Service, as you may recall, is $15 billion. 

Postmaster General Patrick Donahoe has said repeatedly that he 

and his team will do everything they can to keep the mail moving, 

even as the Postal Service’s finances deteriorate. I believe him, and 

I think he has done a remarkable job so far, along with his team. 

But make no mistake; if the Postal Service is not permitted in 

the very near future to begin adjusting its network to reflect the 

changing demand for its products and services and to respond to 

the likely permanent declines in mail volume we have seen in recent years, it will drown in red ink, and millions of jobs, maybe as 

many as 7 million jobs, will be at risk as a result. 

We need to work quickly to prevent this economic catastrophe. 

Everyone—postal management, postal employees, Members of Congress, and the Postal Regulatory Commission—need to act with a 

sense of urgency in the coming weeks and months. We need to do 

our jobs. We need to show leadership, and we need to redouble our 

efforts to put the right policies in place to change the Postal Service’s business model and help it right-size its operations and seek 

new revenues. 

In the past, I have made no secret of my concerns about the 

Commission’s ability to fulfill its statutory role in addressing the 

3 

Postal Service’s financial challenges. We spoke about that when 

you met with me in my office. 

I have called on the Commission to speed up and improve the 

quality of its work on Advisory Opinions. The Commission’s opinion 

on the advisability of the Postal Service’s proposal to eliminate Saturday delivery did not appear for about a year and, in a lot of 

ways, created more questions than it answered. 

We are, unfortunately, now facing problems with another Advisory Opinion, this one involving proposed changes to the overnight 

delivery standard and mail processing facility closures. The Commission has indicated that it will not issue an Advisory Opinion on 

the Postal Service’s proposals until this summer. The Postal Service, meanwhile, has a right to act sooner and plans to do so in May. 

I recognize that there are a number of procedural hurdles the 

Commission must get past before issuing an Advisory Opinion. It 

is unclear to me, however, why commissioners are unable to release 

even some preliminary findings before May. I do not want the Commission to put out bad work or just rubberstamp the Postal Service’s plans. I just want them to be heard and for the Postal Service 

and Congress to have the benefit of their analysis and opinions before a major change in service is implemented. 

The Postal Service says it is acting on its plans in May because 

it urgently needs to begin making adjustments to its networks before the fall when mail volumes will ramp up due to the holiday 

season and the upcoming elections. I want to see the same sense 

of urgency from the Commission as it goes about its business in the 

coming weeks and months. Otherwise, I fear that the legitimacy 

and the role of the Commission in these matters could be threatened. 

I look forward to our discussion today with Mr. Hammond about 

his views on a number of postal issues and also on the urgency that 

he feels to find a way to help the Postal Service get back on its feet 

while at the same time practicing what I call the Golden Rule, 

treating all the key stakeholders in this—postal customers, postal 

employees, and taxpayers—the way we would want to be treated. 

With that, let me turn to Senator Brown for any comments that 

he would like to make at this time. Welcome. 

OPENING STATEMENT OF SENATOR BROWN 

Senator BROWN. Mr. Chairman, thank you very much for holding 

this hearing. 

As you know, this nomination is being considered at a time 

when, as you referenced, the Postal Service is at a crossroads. The 

evolution of electronic communications and the lingering effects of 

an economic recession have caused mail volumes to drop at unprecedented rates, and this decline, which is not expected to rebound, 

has combined with enormous labor costs and statutory mandates 

that have left the Postal Service financially crippled. And there is 

little disagreement that the current business model is not sustainable. 

Through our efforts—I think my office spent about 500 hours on 

this, between staff and me, trying to come up with a proposal. 

I think the 21st Century Post Service Act, S. 1789, with Senators 

Lieberman, Collins, Carper, and me, was a good start and a good 

4 

1The prepared statement of Mr. Hammond appears in the Appendix on page 19. 

framework based on information we had by sitting down with the 

Postmaster General and determining what his needs were. And 

then, somehow along the way, it got sidetracked by other concerned 

Members putting out information, rightly or wrongly, based on fact 

or not. That is when I made a recommendation, as you know, for 

us all to get in a room—Democrats and Republicans—to solve this 

very real problem because if we get delayed much more, we are not 

going to have another opportunity to address it in an open, honest, 

and fair way. 

We are here to consider, obviously, your nomination, and I am 

looking forward to your testimony. However, I am bouncing back 

and forth between the Armed Services Committee and here. 

But as you know, the PRC’s role is critical to everything we are 

going to be doing. It is critical not only in addressing the closures 

that are being recommended, but also in dealing with the analysis 

as to how the Postal Service should continue and grow, or not. 

I know you have, obviously, a very long and storied history, a 

tremendous amount of experience and knowledge of how politics 

comes into play, and I think that is going to be very important for 

you to continue to work through. 

So I have not yet had a chance to sit down with you, but as I 

said, I am sure I will in the near future. And I look forward to 

starting the conversation today. So, thank you. 

Senator CARPER. Thanks very much, Senator. 

Mr. Hammond 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 a part of the hearing record, with the exception of the financial data, which are on file and available for public inspection 

in the Committee offices. 

Our Committee rules require that all witnesses at nomination 

hearings give their testimony under oath. 

Mr. Hammond, I am going to ask, if you will, to stand and raise 

your right hand. You have done this before, so this will be like 

what they say about riding a bicycle. 

Do you swear that the testimony you will give before this Committee will be the truth, the whole truth, and nothing but the 

truth, so help you, God? 

Mr. HAMMOND. I do. 

Senator CARPER. All right, please feel free to proceed with your 

statement. 

Again, welcome. Thank you, and thank you for your willingness 

to assume this responsibility once again. 

TESTIMONY OF HON. TONY HAMMOND 1 TO BE A 

COMMISSIONER, POSTAL REGULATORY COMMISSION 

Mr. HAMMOND. Well, thank you, Senator Carper and Senator 

Brown, for being here. 

First of all, I want to express my appreciation to you and all the 

Members of the Committee for scheduling this hearing to consider 

my nomination to return to the Postal Regulatory Commission. 

5 

I appreciate the confidence that President Obama has placed in 

me with his nomination as well as the support I received from Senate Minority Leader Mitch McConnell during this process, too. 

And I want to especially thank Senator Blunt, who my family 

and I have been privileged to call a friend for many years, for being 

here. I am grateful for his willingness to introduce me to this Committee. 

I would also like to acknowledge my recent colleagues, Vice 

Chairman Nanci Langley and Commissioner Mark Acton, for the 

support they have given me in attending today. Their friendship in 

our working together has been invaluable over the years. 

And finally, if I could, while the rest of my family is back in Missouri, my nephew, Tracy Hammond, does live here in Washington, 

DC, and he moved his schedule around today in order to sit 

through this. So I greatly appreciate it. 

Senator CARPER. I am going to ask, Mr. Hammond, would you 

raise your hand, please? All right, welcome. 

Mr. HAMMOND. When I first became a Commissioner in 2002, the 

PRC was an entirely different agency. As you know, the old Postal 

Rate Commission was mainly responsible for considering changes 

in postal rates and classifications. 

But with the passage of the Postal Accountability and Enhancement Act (PAEA) in 2006, the PRC acquired enhanced responsibilities, which required a major revamping of the agency functions. 

With the leadership of our then-Chairman Dan Blair and the genuine cooperation among all the commissioners and especially with 

a dedicated PRC staff, we were able to achieve the transformation 

in a responsible manner, I believe, in keeping with the mandates 

of the PAEA. 

I was actively involved in all the transition activities. Among 

them, of course, we were required to implement an entirely new 

rate-making system, which we were actually able to complete several months in advance of the deadline. The Commission was also 

timely in providing the mandated Report to the Congress on the 

Postal Service’s Universal Service Obligation. In addition, each 

year, of course, we are responsible for producing the comprehensive 

Annual Compliance Determination (ACD), which is the important 

look-back regulatory model of the PAEA. 

And so, along with the annual rate change cases and the other 

requested decisions, I have also worked with the other members of 

the Commission in the formal Advisory Opinion requests received 

from the Postal Service and, of course, the Commission’s unanimous ruling on the Postal Service’s Exigent Rate Request. 

With the Postal Service dealing with such severe financial difficulties, I know that the Postal Regulatory Commission has an 

extra responsibility to adjudicate fairly, in a professional and timely manner, all the decisions on every case that comes before us. I 

also know that we must be mindful that all our activities are carried out in a responsible and transparent manner that makes wise 

use of the ratepayer dollars that provide the PRC’s annual budget. 

For over 9 years, I enjoyed the challenging work at the Commission, and I hope this Committee will look favorably on my experience and my enthusiasm in considering my return to the PRC. 

6 

Mr. Chairman, thank you again for this opportunity. I will be 

happy to respond to any questions that you or your colleagues 

might have. 

Senator CARPER. Fair enough. 

I want to welcome Commissioner Langley and Commissioner 

Acton as well. Thank you for joining us. 

Sometimes I watch the body language of our guests to see how 

they react, especially your fellow colleagues, past and future. And 

let the record show that their eyes were rolling for most of the time 

that you were speaking, but we are going to set that aside, and I 

will just keep my eyes on you and listen to what you have to say. 

No, I think they seemed to be smiling and their body language 

was quite the opposite of that. 

As you know, there are three questions that our Committee rules 

require us to ask, and those questions are as follows: 

Is there anything you are aware of in your background that presents a conflict of interest with the duties of the office to which you 

have been nominated. 

Mr. HAMMOND. No. 

Senator CARPER. 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. HAMMOND. No. 

Senator CARPER. And 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. HAMMOND. Yes. 

Senator CARPER. Good. When you and I met, we talked about my 

sense of urgency, and I want to ask a couple of questions that relate to that. 

As you are aware and as I mentioned again in my opening statement, it was frustrating to me that it took the Commission so long 

to issue an Advisory Opinion on an issue as important as the Postal Service’s proposal to eliminate Saturday delivery, and I have a 

couple questions about this issue. In fact, I have three questions. 

I am going to ask all three, and then I will come back and we will 

do them one at a time. 

The first question is: Would you agree that it was unacceptable 

for the Commission to keep everyone waiting so long for its 

thoughts on the Saturday delivery issue? 

The second question is: What went wrong in your view and what 

can you commit to do, if reconfirmed, to address whatever management problems contributed to the delay? 

And the third question is: If you are confirmed and return to the 

Commission, at some point in the coming weeks, can you commit 

to doing what you can to make sure that the Advisory Opinion the 

commissioners are currently working on, involving overnight delivery and mail processing facility closures, is completed as expeditiously as possible? 

So those are the three questions. 

I am going to reread the first one and ask you to respond, and 

we will do them one at a time. First, would you agree that it was 

7 

unacceptable for the Commission to keep everyone waiting for so 

long for its thoughts on the Saturday delivery issue? 

Mr. HAMMOND. Well, my short answer is yes, I think that we did 

take too long. And when that issue first came before us, I expressed my opinion as to what I thought the timetable should be. 

My view did not predominate at that time. 

So yes, it was unacceptable. 

Senator CARPER. What do you think went wrong, as in my second 

question? What do you think went wrong in your view and what 

can you commit to do, if you are reconfirmed, to address whatever 

management problems may have contributed to this delay? 

Mr. HAMMOND. Well, I believe whenever possible we should take 

action as quickly as possible. As far as the specifics, I must say I 

do respect the prerogative of the chair and the responsibilities that 

she has ultimately for setting the schedule in consultation with 

others. So I respect that view. 

Things that we could have done differently—I have supported 

hearing as much opinion as possible on major decisions in the past, 

but we did take a long time in the hearing process. We held several 

hearings all across the country. Possibly, we could have tightened 

that schedule. That could have made a difference. 

We were very lenient in allowing people to request additional 

time than probably we should have allowed for gathering of information. 

So those are a couple of the problems that we faced. But no, I 

did think that we should have done it quicker. 

And, yes, I do commit in the future, when and if I am back at 

the Commission, to see that we make timely decisions. 

Senator CARPER. Is that also with respect to the issues the Commission is working on, involving overnight delivery and mail processing facilities? 

Mr. HAMMOND. With the current Advisory Opinion, yes. 

I left 5 months ago from my current term. And I had already left 

the Commission when the Advisory Opinion came before the Commission. So I have not been involved in any of the discussion or decisionmaking on what the timetable would be. 

But I certainly would commit, and I guess I should say that I 

hope to be confirmed by the Senate and I hope to be confirmed in 

time to return to the Commission to actually participate in part of 

that decision. So I do not want to say anything that would jeopardize—— 

Senator CARPER. Fair enough. 

Mr. HAMMOND [continuing] My ability to actually participate, 

where anyone would seek my recusal. 

But that being said, there are certain things I hope are under 

way right now, especially after hearing from so many Members of 

Congress and Committee staff and people in the mailing community about the timetable that it is currently under. Even small 

things could possibly be of benefit. 

I mean, I hope that, for instance, right now, the staff is working 

on expediting analysis. I know that is difficult to define at times, 

but I hope that is occurring. 

I think that the Commission, on many occasions, has possibly 

been too accommodating to both the U.S. Postal Service attorneys 

8 

and their requests and to interveners and their requests on timetables, and possibly, we need to consider tightening that up. 

If we need to have a complete review of our operational procedures, we should all get together and discuss that to see what we 

could do in order to assure that all of our decisions are timely because, I mean, I am totally aware that if the Postal Service asks 

for a major Advisory Opinion from us and it is not timely, we have 

not really accomplished anything. It does not make any difference 

how reliable it is when the product gets out if no one is looking at 

it. We have wasted our time and everyone’s time. 

Senator CARPER. Fair enough. All right. I have a couple more 

questions I want to ask, but I am going to yield to Senator Brown 

so that he might return to his other hearing. 

Senator BROWN. Well, thank you, Mr. Chairman, for letting me 

go out of order. 

Yes, we need to get those reports quickly. We are in an emergency with the Postal Service. It is going to be out of business pretty soon. Grandparents are not going to be able to give and get 

cards from the grandkids. We have an industry and an economy 

that is relying on the delivery of products, mail, and bills. So yes, 

we need to get this squared away. 

So one of the biggest problems that I am always wrestling with 

is we make a request, we need some information, and it comes 10 

years down the road. 

I am looking forward to confirming you. I am going to support 

you. I look forward to it. 

Mr. Chairman, I would ask that you speak to the Majority Leader and have him get this done so we can have his expertise on the 

Commission and the ability for him to push things forward because 

I think it is vitally necessary for what we are trying to do—the 

band of four trying to save the Postal Service. 

And as you know, the Postal Service has made tentative plans 

to consolidate and close around half of its processing facilities, four 

of which are in my home State of Massachusetts. What role has, 

or should, the PRC play in ensuring that this process has been, and 

will be, fair and the community input has been, and will be, appropriately considered? 

Mr. HAMMOND. Well, I know we face difficulties here because we 

have talked about the amount of time to work on this Advisory 

Opinion, but there certainly is a process set up on purpose for the 

PRC to give an adequate amount of time for community input, as 

well as everyone else. As you know, of course, anyone can come before the Commission as an intervener. Anyone can seek that sort 

of information in that manner. But community input is important 

also, and so sometimes we do have to take into account that part 

of the timeliness is involved with how much people want to be involved in what we are doing. 

Senator BROWN. And do you think is it appropriate for the PRC 

to have greater oversight responsibility in the process, yes or no, 

or why or why not? 

Mr. HAMMOND. Well, I think that we have a proper role. You 

know, when the PAEA was passed, we got enhanced responsibilities, and maybe at the time we did not anticipate that the Advisory Opinion process would be so predominant as it has been. 

9 

So we have to take those responsibilities seriously, but we do so, 

and that is what we do. We are there for that, and that is part of 

our responsibility for accountability and transparency in everything 

that we do also. 

Senator BROWN. Right. And it is funny; that is a significant criticism from people in Massachusetts regarding the Postal Service’s 

ability to provide sufficient data and justification to back up its decision to consolidate and close operations in my State. I recently 

met with the Postmaster General to specifically ask for additional 

information on how he came to the decision on which facilities to 

close. 

What were the PRC’s most significant concerns with the retail 

closing plan, if you know? 

Mr. HAMMOND. Yes, I was still on the Commission when we 

originally received that Advisory Opinion request and was active in 

the hearings and the testimony received and all. 

I had left the Commission by the time the decision was issued, 

but I agree with what the other Commissioners all unanimously 

signed off on, and that was that the Postal Service had not done 

an adequate job of getting together the necessary information, just 

like you talk about the necessary data, that is necessary to make 

some of those decisions. 

I think that was a major recommendation of the Commission, 

and I think that was a proper one; that, as well as the other things 

which came up, such as had they thought out adequately alternative access and things like that. I agree with the decision that 

the Commission ultimately made. 

Senator BROWN. So in terms of the rollout of the plan and communicating how service standards would affect the communities 

that would be impacted, do you think they could have done it a little better? 

Mr. HAMMOND. Yes. 

Senator BROWN. And what is the tradeoff between the need to 

lower operating costs and the impact that service changes and rate 

increases have on future revenues? For example, I know from my 

last conversation that there was a potential to go up to 50 cents 

per parcel now for first-class mail. 

What are the most important factors in preventing a death spiral 

to the point where people will just say, I am at that point where 

I would rather get online and do it; I would rather do it differently, 

find other ways to deliver mail? What do you think the trigger 

points are? 

Mr. HAMMOND. Well, since you mention the possibility particularly of an increase in essentially the price of stamps outside the 

PAEA’s restrictions, if the Congress chooses to do that without the 

input of the Postal Regulatory Commission, we would, of course, 

have nothing to say about it. But when we had that issue before 

us earlier, with the Postal Service’s Exigent Rate Request, we 

unanimously rejected that, and I think we made the right decision. 

So as far as that goes, that is what I think about that. 

We have an obligation, and obviously, as you pointed out, the 

Postal Service is in severe financial difficulty. So of course, everything they are doing is trying to become more efficient in cutting 

costs, etc., in what they have to do. 

10 

But our first obligation, which has been given to us, and what 

I always looked at when I was a member of the Commission in everything that came before us—in an Advisory Opinion request, a 

complaint case, no matter what it was—is to make sure that the 

Postal Service is continuing their Universal Service Obligation. So 

if they do not meet the criteria of keeping the Universal Service 

Obligation, we cannot consider it any further in my opinion. 

So they have to do that. That is the absolute No. 1 thing. 

Senator BROWN. Yes. Well, it is interesting. I have had many 

people who have come to me and said: Listen, when first-class 

stamps reach 50 cents and over, that is it. I am done. 

But they said: Why not lower the price to 30 or 35 cents? Then 

I would actually take all my stuff offline, and I would actually do 

it the old-fashioned way, not only to support the institution, but 

people actually like getting that old-fashioned mail, so to speak. 

Is there ever any conversation about actually lowering prices? I 

will just give you an example. I know the Philadelphia 76ers lowered their costs. They revamped the way they do business. They 

have re-energized that franchise, and they have more people coming because it is more affordable. 

Is there ever any discussion about lowering the costs and actually making it more affordable for people to participate again in the 

Postal Service? 

Mr. HAMMOND. Yes, well, certainly, another goal of the PAEA 

was to give the Postal Service the flexibility to experiment in 

things like that. And you know, 2 to 3 years ago now—I cannot remember exactly when they started it—the Postal Service experimented with the so-called seasonal sales. 

The summer sale is what they originally started with, and that 

was actually providing a preferred rate for people who were going 

to be in the mail system. And that was successful. Without any 

delay, we approved that. 

And they subsequently came back to us with several other seasonal sales. Yes, that is an example of the flexibility that they have 

to experiment with things like that. 

They have come to the Commission with other experiments like 

that, and the Commission has approved every single one of them. 

So we have encouraged that innovation. We are not the ones who 

are responsible for telling them what new product they ought to 

offer, but we have not been a hindrance in approval. 

Senator BROWN. Well, good luck, sir. Thank you. 

Mr. HAMMOND. Thank you. 

Senator CARPER. Thanks, Senator Brown. Thanks very much for 

being here and being a part of this hearing. 

A couple more questions, if I could. Recently, the Commission 

has been spending a significant amount of time hearing appeals of 

post office closings, as you know. It is my understanding that the 

authority the Commission has to prevent closings is somewhat limited. Closings can only be halted if the Postal Service has been arbitrary or has not followed the process laid out in the law. At the 

end of the day, the Postal Service will likely have its way if it really wants to close a post office under current law and rules. 

Now I think the Postal Service should have the right to close 

post offices or consolidate them and probably needs to close or conVerDate Nov 24 2008 11:58 Sep 18, 2012 Jkt 073674 PO 00000 Frm 00014 Fmt 6633 Sfmt 6633 P:\DOCS\73674.TXT SAFFAIRS PsN: PAT
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solidate some, but I want to make sure that communities, particularly rural communities, that rely more on their post offices than 

others have reasonable access to some sort of postal retail service. 

What role should the Commission have in this area and how 

would you approach post office appeals should you return to the 

Commission? 

Mr. HAMMOND. Well, I somewhat understand that because I am 

originally from a rural area, as you know. And yes, you are absolutely right about how they rely on their U.S. Postal Service and 

their postal facilities. 

Currently—and we have been responsible in setting up an appeals process—anyone can appeal who feels that he has been impacted by that potential closure. And the thing, of course, as you 

mentioned, that we have to look at in appeals is if the U.S. Postal 

Service is being arbitrary and capricious. So that is roughly no farther than anyone has to go to make that allegation for an appeal 

to be filed and considered. 

That requires a full administrative record from the Postal Service and requires review by the Commission on what the actions 

were that the Postal Service took. And for the ultimate decision, we 

have to look at each and every post office appeal individually, and 

that is a great protection for people. 

It is time-consuming, and I anticipate if the Postal Service goes 

back to a big amount of closings possibly, that we will have a tremendous amount of appeals before us. And that will be time-consuming, but that is the process that was set up to provide people 

their rights, and we have to continue to consider individually all 

the appeals that would come before the Commission. 

Senator CARPER. All right. All of the changes that are being contemplated by the Postal Service with regard to its facilities, with 

regard to its delivery speed, with regard to Saturday delivery and 

other issues are coming as a result, as we know, of serious financial issues. In weighing the advisability of some of what the Postal 

Service wants to do in these areas, I think we need to keep in mind 

that the demand for what the Postal Service offers has changed. 

For example, in my office I get, every other week, a mail report 

from my staff. I started asking for it in 2001 so we know what people are writing, faxing, calling, and emailing us about and how 

promptly we are responding to them. 

I get this biweekly mail report, so I asked my staff to go back 

and look at 2001 and tell me how many letters we received for 

every email. The ratio was something like 15 letters for every 

email. 

And I asked them to look at 2011 to see what, in our office, the 

ratio was between letters and emails, and the numbers had just 

flipped. Roughly, for every letter we receive today, we receive 15 

emails. So I think that pretty much speaks for itself and has done 

a lot to help change the financial picture at the Postal Service. 

There is likely some percentage of the mail volume we have lost 

in recent years that will just never come back. I do not expect us 

to start getting 10 letters for every 10 emails anytime soon. I think 

both the public and the Commission need to recognize that, and so 

do my colleagues. 

12 

How do you think the Commission should account for things like 

the Postal Service’s financial problems or electronic diversion of the 

mail when considering a proposed service change or post office closing? 

Mr. HAMMOND. Well, you are absolutely correct about the electronic diversion being a major cause. If you look at particularly bill 

payment, the diversion on bill payment came about a lot quicker 

and a lot more massively than anyone anticipated. So I mean, that 

is another example. 

And sure, we have to look at all the financial issues of the Postal 

Service. There is no doubt that, as you hear constantly, they are 

almost out of money. 

We have to continue. The PRC is responsible for approving or reviewing every innovative proposal that the Postal Service brings to 

us, whether it is, like I mentioned, the seasonal sales, the flat rate 

box, the second ounce free, or this new every door direct—I cannot 

remember the acronym for it. But you know the PRC approved that 

as an experimental product just recently, and I did read that the 

first quarter results showed that the Postal Service looked at 57 

million pieces of mail being mailed because of that, which was a 

tremendous opportunity. 

We need to encourage the flexibility to look at innovative things 

like that, which will make a difference to their bottom line. The 

goal is to bring them more financial resources. And an innovation 

like that is what we have a responsibility to look at and approve 

expeditiously, without delay, if it has possibilities. 

I mean, we have to make sure that everyone has their opportunity to review, but we have to get that done within the time 

frames allowed. And we have done that in every instance when I 

was at the PRC. 

Senator CARPER. I hope it is not too late when this happens. I 

do not think it will be. 

Someday, somebody is going to look at the business model and 

the network of the Postal Service, their presence in every community in America, the fact that 5 or 6 days a week a letter carrier 

goes to everybody’s door, everybody’s business in America, or at 

least to their post office box if they choose to have a post office box 

in a rural community. But somebody is going to say, why did we 

not think of a particular idea that would have better utilized that 

network, that delivery system? 

And you have mentioned a couple of ideas that are good ones. 

There are others. 

One of the things I have said repeatedly—I say it again here 

today—it is not enough for the Postal Service or for the Congress 

just to say cut, cut, cut. We have to find ways to grow some revenues, think outside the box. There are a number of us in the Senate, and I am sure in the House, who are interested in encouraging 

and facilitating the Postal Service in their efforts to be more entrepreneurial, to be more innovative, and to consider good ideas. 

I think the legislation, the Managers’ amendment, that is going 

to come to the Senate before long, I hope, will strengthen the likelihood that when some folks come up with great ideas to increase 

revenues at the Postal Service, the Postal Service will have a 

chance to do those. 

13 

Language in legislation this Committee has reported out would 

allow the Postal Service to take advantage of its resources and its 

delivery networks to experiment on a limited basis with non-postal 

products, and let me just ask what your thoughts are on the proposal. How would you approach non-postal proposals if they were 

to come across your desk as a Commissioner? 

Mr. HAMMOND. Well, I know when I first had the written questions from the Committee that asked about Postal Service competition with the private sector, I indicated that I did not see any reason for the Postal Service to compete where the private sector is 

already providing the service. 

But after I had discussions with some of the other Senators as 

well as you about what was contained in that specific proposal— 

I believe there is a four-prong test that the PRC would be responsible to review for anything that the Postal Service was to begin 

to offer under that—I think that would provide adequate safeguards. 

And of course, I recall one of those tests was if the private sector 

was currently providing the service, and if you have that as a safeguard, I do not see a problem. Your specific proposal takes into consideration the potential problem and has adequately dealt with it 

as far as I could see. 

And we would do a very expeditious job if we had that responsibility, I know, in reviewing and approving. 

Senator CARPER. Thank you. I want to thank Senator Brown for 

joining us today. 

I want to thank our staff for working with you to prepare you 

and us for this hearing as well. 

Thank you for your willingness to return and to resume your 

service to the Postal Regulatory Commission. 

As you know, we have to allow a certain amount of time for 

Members who may not have been here to submit questions to you, 

and we are going to let them have until noon tomorrow for the submission of additional comments and questions. I do not know that 

I will have any of my own, or if Senator Brown will, but we might. 

And if you get those, I would just ask that you respond to them 

promptly. 

Mr. HAMMOND. I certainly will. 

Senator CARPER. Any closing word that you might like to offer? 

Mr. HAMMOND. No. Again, I appreciate what you are doing, and 

I wish you success. 

Senator CARPER. Thank you. Thanks so much. 

And to the Commissioners who are here, we welcome you. We 

thank you for your service. You have some excellent staff on the 

Commission, and we are grateful for their service as well. 

With that having been said, I am going to rush off to my Finance 

Committee hearing and try to get there before they finish that up 

as well. Thanks so much. 

The hearing is adjourned. 

[Whereupon, at 11:16 a.m., the Committee was adjourned.] 

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