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[House Hearing, 106 Congress]
[From the U.S. Government Publishing Office]

 
     THE U.S. POSTAL SERVICE AND POSTAL INSPECTION SERVICE: MARKET 
              COMPETITION AND LAW ENFORCEMENT IN CONFLICT?

=======================================================================

                                HEARING

                               before the

                   SUBCOMMITTEE ON THE POSTAL SERVICE

                                 of the

                              COMMITTEE ON
                           GOVERNMENT REFORM

                        HOUSE OF REPRESENTATIVES

                       ONE HUNDRED SIXTH CONGRESS

                             SECOND SESSION

                               __________

                             JULY 25, 2000

                               __________

                           Serial No. 106-169

                               __________

       Printed for the use of the Committee on Government Reform

  Available via the World Wide Web: http://www.gpo.gov/congress/house
                      http://www.house.gov/reform

                                 ______

                    U.S. GOVERNMENT PRINTING OFFICE
67-997 DTP                  WASHINGTON : 2001
_______________________________________________________________________
 For sale by the Superintendent of Documents, U.S. Government Printing 
                                 Office
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                     COMMITTEE ON GOVERNMENT REFORM

                     DAN BURTON, Indiana, Chairman
BENJAMIN A. GILMAN, New York         HENRY A. WAXMAN, California
CONSTANCE A. MORELLA, Maryland       TOM LANTOS, California
CHRISTOPHER SHAYS, Connecticut       ROBERT E. WISE, Jr., West Virginia
ILEANA ROS-LEHTINEN, Florida         MAJOR R. OWENS, New York
JOHN M. McHUGH, New York             EDOLPHUS TOWNS, New York
STEPHEN HORN, California             PAUL E. KANJORSKI, Pennsylvania
JOHN L. MICA, Florida                PATSY T. MINK, Hawaii
THOMAS M. DAVIS, Virginia            CAROLYN B. MALONEY, New York
DAVID M. McINTOSH, Indiana           ELEANOR HOLMES NORTON, Washington, 
MARK E. SOUDER, Indiana                  DC
JOE SCARBOROUGH, Florida             CHAKA FATTAH, Pennsylvania
STEVEN C. LaTOURETTE, Ohio           ELIJAH E. CUMMINGS, Maryland
MARSHALL ``MARK'' SANFORD, South     DENNIS J. KUCINICH, Ohio
    Carolina                         ROD R. BLAGOJEVICH, Illinois
BOB BARR, Georgia                    DANNY K. DAVIS, Illinois
DAN MILLER, Florida                  JOHN F. TIERNEY, Massachusetts
ASA HUTCHINSON, Arkansas             JIM TURNER, Texas
LEE TERRY, Nebraska                  THOMAS H. ALLEN, Maine
JUDY BIGGERT, Illinois               HAROLD E. FORD, Jr., Tennessee
GREG WALDEN, Oregon                  JANICE D. SCHAKOWSKY, Illinois
DOUG OSE, California                             ------
PAUL RYAN, Wisconsin                 BERNARD SANDERS, Vermont 
HELEN CHENOWETH-HAGE, Idaho              (Independent)
DAVID VITTER, Louisiana

                      Kevin Binger, Staff Director
                 Daniel R. Moll, Deputy Staff Director
           David A. Kass, Deputy Counsel and Parliamentarian
                        Robert A. Briggs, Clerk
                 Phil Schiliro, Minority Staff Director
                                 ------                                

                   Subcommittee on the Postal Service

                   JOHN M. McHUGH, New York, Chairman
MARSHALL ``MARK'' SANFORD, South     CHAKA FATTAH, Pennsylvania
    Carolina                         MAJOR R. OWENS, New York
BENJAMIN A. GILMAN, New York         DANNY K. DAVIS, Illinois
STEVEN C. LaTOURETTE, Ohio
DAN MILLER, Florida

                               Ex Officio

DAN BURTON, Indiana                  HENRY A. WAXMAN, California
                      Robert Taub, Staff Director
               Jane Hatcherson, Professional Staff Member
                          Matthew Batt, Clerk
           Denise Wilson, Minority Professional Staff Member

                            C O N T E N T S

                              ----------                              
                                                                   Page
Hearing held on July 25, 2000....................................     1
Statement of:
    Campbell, James I., Jr., attorney, Postal Policy Scholar.....    34
    Gallo, Richard J., national president of the Federal Law 
      Enforcement Officers Association [FLEOA], accompanied by 
      Gary L. Eager, FLEOA agency president, U.S. Postal 
      Inspection Service.........................................    74
    Nolan, John, Deputy Postmaster General, accompanied by 
      Kenneth C. Weaver, Chief Postal Inspector..................    28
Letters, statements, et cetera, submitted for the record by:
    Campbell, James I., Jr., attorney, Postal Policy Scholar, 
      prepared statement of......................................    37
    Eager, Gary L., FLEOA agency president, U.S. Postal 
      Inspection Service, prepared statement of..................    76
    McHugh, Hon. John M., a Representative in Congress from the 
      State of New York:
        Followup questions and responses.........................   102
        Letter dated December 3, 1999............................     4
    Nolan, John, Deputy Postmaster General, accompanied by 
      Kenneth C. Weaver, Chief Postal Inspector, prepared 
      statement of...............................................    30

     THE U.S. POSTAL SERVICE AND POSTAL INSPECTION SERVICE: MARKET 
              COMPETITION AND LAW ENFORCEMENT IN CONFLICT?

                              ----------                              

                         TUESDAY, JULY 25, 2000

                  House of Representatives,
                Subcommittee on the Postal Service,
                            Committee on Government Reform,
                                                    Washington, DC.
    The subcommittee met, pursuant to notice, at 1 p.m., in 
room 2247, Rayburn House Office Building, Hon. John M. McHugh 
(chairman of the subcommittee) presiding.
    Present: Representatives McHugh, LaTourette, and Fattah.
    Staff present: Tom Sharkey, Loren Sciurba, Jane Hatcherson, 
Heea Vazirani-Fales, Matthew Batt, clerk; Robert Taub, Dan 
Moll, deputy staff director, full committee; Earley Green, 
Denise Wilson, and Neil Snyder.
    Mr. McHugh. Good afternoon. The hearing will come to order.
    On behalf of all of us here on the subcommittee, I want to 
welcome you and thank you for being here as we continue our 
oversight agenda of the 106th Congress.
    In 1970, the Postal Reorganization Act redefined the Postal 
Service as an independent, self-sufficient establishment of the 
executive branch. Under this new regime, the Postal Service was 
to become more business-like in its structure and operations, 
although I happen to believe, as most of you are, I am sure, 
aware, that after 30 years the time has come for additional 
reforms of the 1970 act. I think, by most reasonable measures, 
it has been and remains a success.
    The Postal Service has improved its service and efficiency, 
it is no longer supported by the taxpayer, and it has 
diversified its operations; however, the Postal Service is not 
a private corporation. It is still very much a part of the 
Federal Government, and, as it continues its competitive 
mission, questions arise as to how much of its Federal power 
should be employed in market competition.
    Of all the trappings of government still held by the Postal 
Service, perhaps one of the most potent is its authority over 
the Postal Inspection Service. For over 200 years, postal 
inspectors have ensured the sanctity of the seal and have done 
so incredibly well by enforcing Federal statutes that protect 
the mail, Postal employees, customers, and assets.
    In this capacity, the Inspection Service plays a major role 
in a wide range of law enforcement activities. The Inspection 
Service does a fine job, but there is a potential for conflict 
of interest between Postal management's need to generate 
revenue and the Inspection Service's mission to enforce the 
law.
    I first raised these concerns to the Justice Department in 
1998 when it was proposed that the Attorney General delegate 
authority to the Postal Service to investigate violations of 
various wire and electronic communications laws. I questioned 
if perhaps this constituted an unfair competitive advantage in 
the area of electronic commerce.
    The Department's response of December 3, 1999, contains 
some interesting observations and raised even more questions. 
The letter states that, although the Department believes the 
Attorney General's delegation of the authority was appropriate, 
some basic questions about the relationship of the Inspection 
Service to the Postal Service remain.
    We have made the letter available today for inclusion in 
the hearing record, but I would like to quote just one section 
this afternoon, and I would ask unanimous consent to include 
the entire correspondence as part of the record, and without 
objection that will be done.
    Quoting now,

    Fundamental questions about the Federal identity of the 
position need to be addressed if there is to be any 
reconciliation of law and policy. The drafters of the Postal 
Reorganization Act of 1971 apparently did not contemplate the 
Postal Service's emergence as a profit-motivated business and 
did no provide safeguards against the possibility of conflicts 
between the Postal Service's goals in managing the Inspection 
Service and the law enforcement goals of the Federal 
Government.
    Current law also does not address problems of disparity in 
the Federal criminal justice system's handling of crimes 
against the Postal Service and crimes against its private 
sector competitors.

    Since the date of this letter, the Postal Service has 
stepped up its e-commerce initiatives and has touted the 
security of the Inspection Service as a feature that sets its 
products apart from those of its private competitors. It is no 
doubt true that the Inspection Service affords valuable 
protection for consumers, but this sort of marketing raises 
concerns among private competitors who do not enjoy the luxury 
of an in-house Federal law enforcement agency. We would never 
imagine giving Microsoft law enforcement authority over their 
e-commerce products, for example. Some also suggest we should 
question the wisdom of giving the Postal Service that same 
power.
    Control over the Inspection Service also raises questions 
about the continued effectiveness of law enforcement. The 
Inspection Service is directed by Postal management and reliant 
upon Postal revenue. Although the Postal Service is financially 
secure today, the Postmaster General has warned us in this 
subcommittee that lean times will soon arrive. If this comes to 
pass, the Postal Service may not be able to adequately fund the 
Inspection Service, and, even when funds are available, the 
very fact that the Postal Service has a financial interest in 
the priorities of the Inspection Service can raise the 
perception that such priorities are not driven solely by law 
enforcement concerns.
    The conflict of interest exists, and we must decide what, 
if anything, should be done about it. Some solutions have 
already been proposed. For instance, Congress could enact 
legislation transferring the Inspection Service to another 
executive agency with law enforcement responsibility. Others 
suggest that the Inspection Service jurisdiction shall either 
be greatly expanded to equally protect private postal delivery 
and express services or radically reduced to cover those laws 
directly related to the Postal monopoly.
    I want to emphasize that the purpose of today's hearing is 
not to take the Inspection Service away from the Postal 
Service, although that is an option that has been proposed. Our 
objective today is simply to explore in the light of day the 
relationship between the Postal Service's competitive agenda 
and the Inspection Service's law enforcement mission.
    It is my hope that this will be a first step in an open 
policy discussion on what I believe is a very serious issue, 
and I thank you all for being here today.
    With that, I would be happy to yield to the distinguished 
gentleman from the great State of Philadelphia--great State of 
Philadelphia? Well, may be--a place I am looking toward 
visiting in the next several days. The ranking member, Mr. 
Fattah.
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    Mr. Fattah. The location of our first Postmaster General 
and first Post Office as a country, Philadelphia.
    Let me welcome our panelists, and particularly I would like 
to welcome both the Deputy Postmaster General and Kenneth 
Weaver, who has recently been appointed as the chief postal 
inspector.
    This hearing is an important one. I think the subject 
matter, as outlined by the chairman, is one appropriately right 
for comment, and it is true that there are competitive features 
to the Postal Service of today.
    I would also say, however, there are many areas in which 
the Postal Service is not does have competition, and that it 
has as its responsibility to provide universal service and to 
over 40,000 post offices around the country. In those areas it 
is not a matter of a competition that drives the Postal Service 
but public service.
    I want to welcome you all here today. I look forward to 
your comments.
    Thank you.
    Mr. McHugh. I thank the gentleman, as always, for his 
participation and his support and leadership.
    We are also pleased to be joined today by the gentleman 
from the great State of Ohio, who has been one of the more 
active members of the subcommittee on these issues, and we are 
pleased that he is here and I would be happy to yield to Mr. 
LaTourette if he has any opening comments.
    Mr. LaTourette. I don't have any opening comments. I am 
looking forward to the hearing and I appreciate the opportunity 
to speak.
    Mr. McHugh. I thank the gentleman.
    Most of you are aware that the full committee procedure and 
rules requires all witnesses to be administered an oath, so if 
you gentlemen would be so kind as to stand and raise your right 
hands and answer after me.
    [Witnesses sworn.]
    Mr. McHugh. The record will show that all members at the 
front table, all five, answered the oath in the affirmative.
    With that, let me formally introduce and welcome our panel 
members today.
    We're honored and pleased to have Mr. John Nolan, who is 
Deputy Postmaster General, and who is accompanied by Mr. 
Kenneth Weaver, who is the chief postal inspector.
    Gentlemen, welcome. Thank you for being here.
    Next we have Mr. James Campbell, Jr., an attorney, a 
scholar, postal policy scholar particularly. If any of you 
doubt that, I suggest you may want to pick up his testimony and 
read it in its entirety, as I did, and I think you will agree 
that he is fully deserving of that title.
    We are also honored to be joined today by Mr. Richard 
Gallo, who is national president of FLEOA, the Federal Law 
Enforcement Officers Association, and he is accompanied by Mr. 
Gary Eager, FLEOA agency president, the U.S. Postal Inspection 
Service.
    Gentlemen, thank you. Mr. Eager, particularly, we 
appreciate all the effort and cooperation you have given to 
this subcommittee on a wide range of issues, and this one 
included.
    We are looking forward to all of your testimony.
    I have, as I mentioned, read the testimony. As you know, we 
do try to ask the witnesses, to the best of their ability, to 
summarize that for presentation here. Without objection, all of 
your testimony will be entered into the record in its entirety, 
and we look forward to your comments.
    With that, perhaps we should proceed as we introduced.
    Mr. Nolan, thank you, again, for being here.

STATEMENT OF JOHN NOLAN, DEPUTY POSTMASTER GENERAL, ACCOMPANIED 
          BY KENNETH C. WEAVER, CHIEF POSTAL INSPECTOR

    Mr. Nolan. Thank you, Mr. Chairman.
    The Postal Service and the mail system have been important 
to the growth and prosperity of this country. The growth and 
development of the Nation's mail system are inextricably 
interwoven with that of the Postal Inspection Service. As such, 
it is difficult to envision a Postal Service that does not 
include the fundamental Inspection Service function as it 
existed in one or more forms for most of our history.
    We find ourselves, to a certain extent, the victims of our 
own success in carrying out the legal mandate to maintain 
Inspection Service to ensure the sanctity of the mail and the 
security of our employees. We believe that success is, in 
sizable part, a direct result of the historic integration of 
Inspection Service operations into the fabric of the Postal 
Service.
    Trust in the USPS and the Inspection Service was not 
decreed as part of the law. It occurred over time, as the 
result of a lot of hard work. Inspectors live and breathe the 
mail. They understand the workings of the mail system and the 
interplay of its parts as no other security or law enforcement 
agency could, yet they maintain an independence of operation 
that is essential to carry out its mission.
    Now, some feel that the success that the American people 
and our employees benefit from causes the Postal Service to 
have an unfair advantage in the commercial marketplace. We 
believe the major benefit of the Inspection Service lies not in 
the marketplace but in its support of congressional oversight 
for the mail and universal service. From consumer child to 
child pornography to physical security of property, personnel, 
and the mail, the Inspection Service has been an effective 
agent for ensuring that the will of the Congress and the 
American people is reflected in the conduct of the Nation's 
mail service, and mailers pay all the cost to maintain this 
function.
    As communications in this country expand into a new medium 
called the Internet, the Postal Inspection Service is ensuring 
that the same protection of Postal property and operations and 
the same trust and the sanctity of information entrusted to the 
Postal Service is maintained. To do less would be a disservice 
to the people of this country, in our opinion.
    The issue of most importance is not competition, it's the 
privacy, security, and trust in the way Americans are able to 
communicate
through their Postal system. The current structure and 
operation of the Postal Inspection Service helps make that 
requirement a reality.
    Mr. McHugh. Thank you very much. We appreciate that and 
appreciate your comments.
    [The prepared statement of Mr. Nolan follows:]
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    Mr. McHugh. Mr. Weaver, the agenda does not call for you to 
make a formal statement. I think you are aware of that. But we 
appreciate your being here and I'm sure there will be questions 
that we would want you to respond to. And even if we don't, you 
should.
    Mr. Weaver. Thank you.
    Mr. McHugh. OK. Great. We'll get back to you.
    I think it would be wisest to just proceed through all of 
the opening statements and then we can just open to general 
questions.
    With that, Jim Campbell would be next, sir.

 STATEMENT OF JAMES I. CAMPBELL, JR., ATTORNEY, POSTAL POLICY 
                            SCHOLAR

    Mr. Campbell. Thank you, Mr. Chairman and members of the 
subcommittee. Thank you for your kind remarks, Mr. Chairman, 
probably uncalled for, but anybody who struggled through the 
footnotes is entitled to say his piece.
    As you know, I have been counsel to the private express 
companies for about 25 years, almost since they first started. 
In my statement I tried to give you a sense of how, from a 
private express standpoint, we have looked at the activities of 
the Inspection Service as they affect us.
    In my statement, I make a couple of introductory comments, 
which I'd like to emphasize.
    First, to the extent that there are any problems 
identified, I don't feel that the cause lies in the 
administration of the Inspection Service itself. In my personal 
experience, I've never had an instance in which I felt the 
inspectors were acting in an unreasonable or unfair or improper 
manner. I think that the cause lies more within the 
institutional framework in which they operate, as I've tried to 
make clear in my statement.
    Second, I am very well aware that enforcement of the 
monopoly is not the main task of the Inspection Service; that 
the Inspection Service has maintained the security of the mails 
for, as you said, 200 years; and that this is a public service 
that we have all benefited from. I wouldn't want my statement 
to suggest otherwise.
    What I've tried to do in our statement is to give you some 
of the details of the history of our relationship with the 
Inspection Service over the last 25 years, but also the benefit 
of the legal research that we've necessarily done to try to 
understand what's going on. That's why all the footnotes.
    As nearly as I can tell, the search and seizure power--and 
that's what we're talking about, use of Government power here 
against private competitors--that power was given to the Post 
Office Department in 1872, almost certainly without debate and 
without any clear intent.
    As nearly as I can tell, the administration of this power 
vis-a-vis private competitors was not a major issue, was not a 
controversial issue, all the way through the life of the Post 
Office Department, that is through 1970. There are very, very 
few cases, very little controversy that I've discovered.
    The real problem arises in the 1974 Postal monopoly 
regulations which were adopted by the Postal Service and which 
really were different in kind from anything the Post Office 
Department had done.
    Now, as I was writing this statement, I did not really 
intend to focus on these regulations, but the more I got into 
it and the more I thought about all this past history that I 
remember, the more I realized that really it was those 
regulations that put the Inspection Service in the business of 
harassing customers of private express companies, for two 
reasons.
    First, those regulations take such a complicated view of 
the monopoly that the regulations depend upon administrative 
enforcement for their effectiveness, and hence the Inspection 
Service has to enforce.
    Second, the regulations, by their nature, are very 
intimidating, very coercive. They basically tell mailers, ``You 
have to cooperate with the Inspection Service, regardless of 
what you think is reasonable, regardless of what you think the 
law is, or you may face some serious consequence,'' and so 
mailers have cooperated, much more, perhaps, than they wanted 
to.
    I certainly won't go through it, but if you look back at 
the history of what has gone on--and I could give you much more 
documentation if you wish--but if you look at the history of 
the last 25 years I think it is fair to say that the 
investigative powers of the Postal Service have been used in a 
manner which intrudes upon the mailers and the customers of 
private express companies to a greater degree than Congress 
envisioned or probably authorized.
    I think it is fair to say that effect of this has been to 
work against what, at least in retrospect, was sound public 
policy--a certain desirable level of competition.
    I think that there is, nonetheless, some merit in the 
position argued by the Postal Service that, after all, the 
Postal Service is only using the tools given them by Congress 
to do the job that Congress has mandated. They have protected 
revenue and universal service.
    I think that really what is implied by this history is a 
need for Congress to clarify some of the aspects of the 
institutional framework of the Postal Service, and I have four 
suggestions.
    One is that the monopoly is far too complicated today. It 
would be highly desirable to simplify the monopoly so it does 
not depend upon so much administrative enforcement. And this is 
not so difficult. Many other countries have done so. H.R. 22 
has a proposal along these lines that would pretty much do it.
    Second, I think that the enforcement of the monopoly ought 
not to be committed to somebody that has a commercial interest. 
This is just fundamental fairness. I think that enforcement of 
the monopoly could be committed to the Department of Justice. I 
know Treasury is another possibility. But somebody other than 
the Postal Service, itself.
    Now, this could be done either by taking this small 
function out of the Postal Service or by moving the Inspection 
Service. I have no particular opinion on that, but I think that 
the Postal Service ought not to be enforcing the monopoly.
    Third, I think that the administration of the monopoly--
that is to say the rulemaking power--ought not to be handled by 
the Postal Service, either. I think that with a simplification 
of the monopoly you have much less need for rulemaking, for 
administration, but, nonetheless, the residual function ought 
to be handled by somebody impartial. The Rate Commission is the 
obvious candidate. Justice is another possibility. FTC is even 
a possibility. But somebody other than an interested commercial 
body.
    And then, last, you raised a point in your opening 
statement which is a problem that has emerged over the past 
couple of years. To some degree there seems to be a potential 
for the Postal Service they say, ``Our exclusive access to the 
Inspection Service, to the police power of the United States, 
gives us a commercial advantage. We have the only really secure 
e-mail because our e-mail is protected by the Inspection 
Service. We have the only really secure parcel service,'' or 
whatever it might be. That would seem to be, obviously, 
inappropriate. The enforcement authority of the United States 
should not be a commercial chip.
    Resolving that problem is not so easy. I have no simple 
answers to that. As you mentioned in your statement, you might 
commit the Inspection Service to the job of watching all 
letters and parcels and moving them to another agency. You 
might limit the authority of the Inspection Service to just 
deal with the noncompetitive aspects of the Postal Service's 
business. I think this is a matter that does deserve some 
attention. It is a matter that is of some concern to private 
express companies. But, as I said, I have no simple ready 
solution.
    Thank you, sir.
    Mr. McHugh. Thank you very much, Jim.
    [The prepared statement of Mr. Campbell follows:]
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    Mr. McHugh. We next have Mr. Richard Gallo, president of 
FLEOA.
    Mr. Gallo.

   STATEMENT OF RICHARD J. GALLO, NATIONAL PRESIDENT OF THE 
     FEDERAL LAW ENFORCEMENT OFFICERS ASSOCIATION [FLEOA], 
  ACCOMPANIED BY GARY L. EAGER, FLEOA AGENCY PRESIDENT, U.S. 
                   POSTAL INSPECTION SERVICE

    Mr. Gallo. Gary Eager will be reading our statement.
    Mr. McHugh. OK, whose statement will be read by Mr. Eager.
    Mr. Eager.
    Mr. Eager. Thank you, Mr. Chairman and distinguished 
members of the subcommittee. We appreciate being invited here 
to discuss various aspects of the Postal Inspection Service and 
the direction that we feel it is taking, discussing the 
potential of moving the Inspection Service to another branch of 
the executive branch of Government.
    FLEOA believes any type of move to the executive branch of 
Government, we should factor in the direction the Service is 
taking today and the competitive aspect of complaints that are 
generated by other companies that were in an unfair advantage.
    We believe that right now, in terms of where we are headed, 
that the Inspection Service is having some difficulty in 
obtaining the resources, both fiscal and personnel resources, 
to accomplish our mission. And, of course, our membership is 
very sensitive to the--I would refer them to allegations of 
unfair competition, which FLEOA would see as crime prevention 
and just doing our job that has been vested with us.
    Since the Postal Reorganization Act, technology and 
competition has advanced such that the Postal Service is 
changing. They are in a quasi business environment, which is 
requiring them to deal with monetary issues, and, based on 
statements made recently by our Postmaster General, were having 
projections of reduced revenue, and, as such, the Postal 
Service is having to look at areas, like any business, to cut 
overhead.
    FLEOA feels that sometimes it appears that the Inspection 
Service is being seen as overhead. Examples of that would be 
our lab personnel. Our lab personnel have been trying to get 
pay comparability since, I believe, 1995, and it was recently 
denied by the Postal Service, and, as you can imagine, our 
crime labs are our very foundation for some of our 
investigative efforts.
    Prosecutors don't care about the internal politics within 
the Postal Service and the competition. They want lab results 
to proceed with prosecution.
    In addition to that, our allocation of resources has come 
into question in that we have not had a significant increase in 
resources since 1975. I believe we had 1,700 inspectors in 
1975, and today we have an authorized complement, I believe, of 
approximately 1,900. When you look at our complement and the 
way they are allocated, it creates some concern for FLEOA in 
that we don't know--I mean, there has not been a level of 
service study done since 1994. The only thing that we can say 
about our complement is it is merely a historical number, and 
that is a great concern.
    When the OIG was established, some of those resources were 
actually pushed over to the IG, but this was done, again, 
without a level of service review to see what was needed.
    I wrote the chairman of the Board of Governors a letter 
back in March 1999 expressing our concern that resources would 
be diverted to the IG at the detriment of our public service 
obligations, and I received a response back that this was not 
going to happen when, in fact, we believe it did happen.
    Those are concerns with regard to resources and the 
perception that we feel like sometimes we are being dealt with 
as overhead and it is at the detriment of the public.
    The Inspection Service exists--goes back to our very 
history, sanctity of the mail, and that is our primary task. 
When we question how resources are being allocated or do we 
have enough to do our jobs, it comes in--it becomes 
questionable when we haven't had a level of service review for 
that many years.
    An example of that would be our mail fraud program where we 
have had a reduction of approximately 25 percent commitment 
from 1992 to 1999. There are other agencies working mail fraud, 
and as well they should, but that doesn't diminish our 
responsibility to be aggressive in that area.
    Last, I'd like to say that, you know, in discussing moving 
us to the executive branch of Government, FLEOA believes that 
this issue obviously should be debated, but that privatization 
or moving us to the executive branch of Government with the 
Postal Service moving toward privatization--every time I read 
the paper, I read where they say we are having a reform or 
privatization, but there is no mention of the future of the 
Inspection Service, and I submit that the Inspection Service 
has a role, has always had a role, and will have a law 
enforcement role in the future.
    The sanctity of the mail and an individual's privacy should 
not be done away with because of privatization. We can maintain 
a mail stream and enforce the laws that we currently have. If 
anything, we should expand our jurisdiction to incorporate 
that, possibly with other carriers in the Postal system in the 
future. It is a concern.
    We don't have all the answers, but we see ourselves going 
down a road and our future looks, you know, questionable.
    I have no answers with regard to competitors or--we, as 
Postal inspectors, have no competitors. We are just simply cops 
trying to do our job and our public service role.
    Thank you.
    Mr. McHugh. Thank you, Mr. Eager.
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    Mr. McHugh. Rather than start a line of questioning, as I 
predicted the votes have been called. We have one 15-minute and 
two 5-minute votes, so if you can bear with us, we will try to 
return as quickly as possible.
    We will stand in adjournment until return.
    [Recess.]
    Mr. McHugh. With the permission from the minority, we will 
begin to get into the question period. I appreciate all of your 
patience.
    When I first looked at this issue, I kind of felt like the 
Sunday night dinners where I'd look down on my plate and there 
would be a nice helping of mashed potatoes and next to it would 
be Harvard beets. Some of it seems very palatable and others of 
it less so. But I think we need to talk about the framework 
that exists today, and I would start with Mr. Eager.
    To what extent does the administrative side of the Postal 
Service work with you folks to define where you ought to be 
directing your objectives?
    You mentioned in your testimony a 25 percent cut since, I 
believe you said, 1992 on the allocations directed toward mail 
fraud. To some of us that seems like an ill-advised or perhaps 
inappropriate reallocation of resources. Do you get to discuss 
that with Mr. Nolan and others as to how you can best allocate 
what, in a Government setting, is always going to be limited 
resources, Mr. Eager?
    Mr. Eager. I would think that would be more appropriate for 
Chief Weaver to answer.
    Mr. McHugh. I'll get to him.
    Mr. Eager. We don't--as FLEOA, we don't discuss resources 
at all with management in terms of what is needed.
    Mr. McHugh. Well, if I may, I don't mean to interrupt you, 
but let's take away the resource question, the dollars. That's 
a budgetary activity and that's an administrative function. But 
do you talk about the categories of your oversight 
responsibilities? You know, ``We ought to be looking more over 
here rather than here,'' and that kind of thing.
    Mr. Eager. Well, it appears, like I said, that our history, 
instead of an allocation of resources--we had a level of 
service review in 1994 to look at the placement of Postal 
inspectors throughout the country and basically what they would 
work, but in essence this was merely a reallocation of 
resources. It was a very closed universe as to applying 
resources to where they should go.
    What we believe is sorely needed is a current level of 
service review to take in demographics, crime rates, volume of 
mail, number of employees, and examine that to determine a 
baseline for the number of people we need in certain cities.
    Mr. McHugh. Did you feel the 1994 review, forgetting the 
limited resources--I understand your point there--but, given 
the available resources, was it a fair review and an effective 
one?
    Mr. Eager. Yes. It was based on the tools they were given, 
because they knew--I believe, this is my opinion, that they 
went into it knowing it was merely a reallocation. It was 
just--and there had been a trend of a lot of the hours going 
toward revenue protection during that period of time under the 
previous administration.
    Mr. McHugh. OK.
    Mr. Weaver, at the suggestion of Mr. Eager, which I think 
was a sound one, to what extent are you provided the 
opportunity to work with Mr. Nolan or others to talk about that 
allocation of resources and where you are directing your 
attention?
    Mr. Weaver. I thank Mr. Eager for referring that, but we 
have ongoing discussions about where we are directing our 
resources, but, for the most part, once we have an established 
budget we determine where to prioritize our work and where to 
allocate those resources.
    It is true that between the years of 1992 and 1999 there 
was a reduction of hours devoted to our fraud work, but I think 
you need to take a look at more than just the raw numbers to 
determine what happened. It did not mean that we de-emphasized 
our fraud work, and it certainly didn't mean that we did not 
accomplish the work that we set out to do, because I think our 
results are pretty impressive in the fraud area. But what it 
did mean was that each year we have to prioritize our work and 
devote our resources where the action is, and that could change 
from year to year.
    During that span of time, as you are probably well aware, 
Mr. Chairman, we had some situations happen in the Postal 
Service where we had to divert resources, maybe from our fraud 
work, things like assaults and violence in the Postal Service, 
which was very important.
    So there are elements like that that come into play. 
There's also elements like working on inter-agency task forces, 
where we find it is more beneficial to work with other agencies 
than merely taking out on our own and working certain 
investigations, and that may result in a reduction of hours, 
too.
    The fact of the matter is that during this timeframe our 
work hours have increased over that time period from about 5 
million work hours to 5.2 million, so there has been a shift in 
hours from within our work.
    Mr. McHugh. Fair enough.
    The case has been made by those who feel very strongly that 
the Service is being inappropriately directed that, in fact, 
more and more of the Inspection Service work has been directed, 
and I suspect, if it's true, not by the Service, itself, but 
directed toward revenue assurance. In fact, I believe I just 
heard Mr. Eager say that one of the outcomes of the 1994 review 
was to emphasize that. There may be good reason for that.
    Do you agree with that assessment that that has happened 
factually, No. 1? And, No. 2, if it has, doesn't that call into 
question the utilization of the Service for a purpose that may 
not be a No. 1 priority in terms of preserving the seal, as we 
say?
    Mr. Weaver. As far as whether I agree that there was a 
shift, there was a re-distribution toward revenue protection, 
and to some degree that is valid, to where we look at the 
protection of the revenue and the assets of the organization. I 
think that is what we are entrusted to do, so to that extent 
there was.
    We also have to look at the time period that we're talking 
about. During that time period, the Inspection Service was also 
performing the role of the Inspector General and was performing 
audits and audit-related activities, so I think some of the 
work that was done in the revenue assurance area was a mere 
extension of that audit work that we performed.
    Since then, at least since I have taken over the 
organization, I am dedicated to refocusing our mission and 
refocusing our efforts to what our mission is, and that's 
protection of the employees and assets and ensuring that the 
American people have confidence in using the mail system.
    Mr. McHugh. And I appreciate that, and I want to underscore 
right here nothing in this hearing is in any way intended to 
call into question your abilities. In fact, I would note that 
in the full testimony of FLEOA they, I think very appropriately 
and right at the onset of their testimony, their full written 
testimony, attest to your professionalism and support, your 
approach, so I commend you for that.
    Mr. Nolan, obviously I'd like to have you respond to the 
conversation we just had, but if you look at the budget 
allocations for the Inspection Service since that review in 
1994 in its entirety, I think it is fair to say that the budget 
increases have been incremental, I suspect mostly a reflection 
of pay adjustments.
    You heard the comment from Mr. Eager that he has concerns 
that the administration views the Inspection Service--I believe 
the phrase he used was ``overhead.'' Would you care to respond 
to that and why, in an era when you definitely have the Postal 
Service into new endeavors like e-commerce, that I don't happen 
to personally believe is any way inappropriate, why we haven't 
seen a commensurate inspection of the Inspection Service, and, 
in fact, the current plan calls for diminution of another 125 
agents and such. What's the rationale behind all of that?
    Mr. Nolan. Well, there's a couple of things that come 
together here. No. 1, the 125 agents deal with audit work, 
which has now been transferred to the Inspector General's 
function, so that work that was done by the Inspection Service 
now will be done by the Inspector General, so there's a--that's 
really a separate issue.
    I think that, when it comes to resources in the Inspection 
Service, the Postal Service has had lean times before. When you 
are structured to break even, almost every year is a lean year, 
and we feel very strongly that the mission of the Postal 
Service and the need to maintain security is paramount.
    As Ken Weaver said, we don't control what the Inspection 
Service works on. They do what they feel they need to do to 
accomplish that mission.
    I think some of the numbers that were raised before are a 
little bit off. In the 1970's it was said there were 1,700 
Postal inspectors, now there's about 2,100 Postal inspectors, 
so that growth of 20 percent is certainly a reasonable growth, 
given the fact that the number of employees that we've got has 
certainly not grown that much during that period.
    I think that the--from the standpoint of management, the 
Inspection Service needs to be independent in the way it 
operates, meaning that it needs to make its decisions about 
where it needs to put its emphasis, and that shouldn't be done 
by management dictating and is not done that way.
    I think that the key thing, though, is that their 
involvement in every aspect of the Postal Service to know where 
to place their emphasis to be most successful is the key thing, 
and that's where the current structure, I think, serves us so 
well.
    Mr. McHugh. Thank you.
    Mr. McHugh. Jim Campbell, the point I was trying to explore 
here is that any time you've got an activity like the Postal 
Service it seems, if not just logical, absolutely essential 
that there be a level of coordination between the 
administrative function and what they perceive to be the 
shortcomings, the challenges, and the direction of, in this 
case, the Inspection Service.
    To what extent do you think that's important, No. 1, and, 
No. 2, when you have a proposal, as we do several, to move it 
to another agency, whether it be Treasury or whatever, Justice, 
is that not--that coordinated effort not lost? And is that a 
problem?
    Mr. Campbell. Well, from the standpoint of the private 
companies, we don't want to see, of course, the Inspection 
Service being used as a commercial tool--that is, as part of 
commercial policy; that we don't want to see coordination for 
commercial ends.
    As I say in the statement, we did notice--we didn't know 
why--but we did notice in 1992 or 1993, an increase in visits 
by Postal Inspectors the private express companies.
    Maybe this, in fact, was a result of the 1992 review. I 
don't know.
    Mr. McHugh. There was a 1994 review, though.
    Mr. Campbell. There was a review----
    Mr. McHugh. Maybe they were getting ready for it.
    Mr. Campbell. Well, I don't know. You're talking about 
larger issues that I certainly can't comment on----
    Mr. McHugh. Yes.
    Mr. Campbell [continuing]. In terms of commercial policy, 
certainly, we would not like to see such a coordination.
    Mr. McHugh. You say for commercial interest.
    Mr. Campbell. Yes.
    Mr. McHugh. When you say that to me, I'm thinking the ad 
that was used that, in fact, very directly touted the fact that 
the Postal Service's e-commerce initiative does have the 
Inspection Service guarantee, if you will, behind it. That's 
one thing. Are there other phases of that that concern you for 
commercial purposes?
    Mr. Campbell. You know, people forget what happened not too 
long ago, but in the mid-1970's--I remember it very well--the 
express companies were just struggling entities. They were just 
starting out. And there's no question that the Postal Service 
was afraid of the express companies and tried to stop them from 
developing, and the Inspection Service was very active, and it 
was presumably coordinated all the way up to Mr. Bolger, but I 
don't know the details of internal Postal management meetings. 
I just don't know, but that's a serious matter.
    Now, the express companies are today big and successful and 
it is not so much of a threat, but e-commerce is another new 
developing area. You surely would not want to see that sort of 
use of the police power to stop a new industry.
    Mr. McHugh. Yes.
    Mr. Nolan, do you want to respond to that?
    Mr. Nolan. I'd find it very hard for anyone to believe that 
the Postal Service was highly successful in killing the 
industry that we are supposed to have been attacking. United 
Parcel Service made $700 million last quarter. So if we set out 
to do it, we did a very poor job of it.
    I think the fact is that, in conjunction with audits in the 
past, there were identifications of areas where, whether it is 
in revenue protection or monopoly, that the Inspection Service 
emphasized. That is not part of their role at this point in 
time.
    It has been shifted. The audit function has been shifted to 
the IG. At its peak, we had two people in the country that were 
involved in monopoly related issues.
    The fact is that we did not have an appreciable impact on 
that industry. The fact is we are not trying to kill the 
Internet industry for the competition. This is not about 
competition. This is about effective law enforcement.
    When we--in our ads for e-commerce, what we are touting is 
the fact that the same trust and security that you have with 
the mail you would have with the Postal Service on the 
Internet. We're not touting Federal agency. We're not touting 
the Inspection Service. To the extent that people feel strongly 
that by doing business with us they are dealing with a secure 
agency, I think we ought to be congratulated for that. But we 
are not touting the fact that it is the Inspection Service.
    We feel there are a lot of technical issues involved in 
security. We also feel that there are laws and policies that we 
have that private companies don't have that are as important, 
in some respects, as the Inspection Service role in those 
areas.
    Frankly, we don't sell lists. We have been maintaining for 
this Nation names and addresses of people who move forever. 
People know they can trust us in that space.
    I think that the issue here really, though, is not--for us 
in the Inspection Service it is not competition, it is 
effective law enforcement.
    Mr. McHugh. Yes. Jim.
    Mr. Campbell. I just want to clarify one point. I certainly 
did not mean to imply that the Postal Service is doing to 
anybody what they were trying to do to us in the late 1970's. I 
have no reason to think so. It's simply a danger that you 
should learn from history. That's all.
    Mr. McHugh. I understand. Thank you.
    The gentleman from Ohio, Mr. LaTourette.
    Mr. LaTourette. Thank you, Mr. Chairman.
    Mr. Nolan, just to followup on your last answer, isn't it 
implicit, though, in that kind of advertisement that you're 
almost saying that your stuff is safe? I mean, that's what you 
want people to believe, that your stuff is safe. And you don't 
say necessarily that others aren't safe, but implicit in that 
statement is why is your stuff safe, and isn't it safe because 
of the ability of the Postal Service to rely on Federal law 
enforcement powers to ensure its safety, which you don't have 
to say ``Inspection Service,'' but isn't that implicit in that 
observation?
    Mr. Nolan. Well, I think--what I hope will be--what is 
implicit in that whole thing is a range of things. Part of it 
is that people know that we're not going to sell lists, unlike 
other companies that are doing this for profit, or when they go 
out of business the last thing they do is to sell the list to 
someone else. So I think we imply a lot of things by those ads, 
but basically what we are saying is, ``Whatever causes you, as 
an individual, to feel good about dealing with the Postal 
Service, you can continue to feel good about the Postal Service 
because we're there.''
    Mr. LaTourette. OK.
    Mr. Campbell, in his opening statement Chairman McHugh 
referenced a letter that was written by Deputy Attorney General 
Mr. Raben, who is well known to the full committee because of 
his work on other matters recently, but in the second page of 
that letter--I just want to read you an observation that he 
makes and invite your comment on it relative your written 
testimony that talks about maybe some of the competitive 
problems. The specific quote is, ``Current law also does not 
address problems of disparity in the Federal criminal justice 
system's handling of crimes against the Postal Service and 
crimes against its private sector competitors.''
    I think that's the one argument, I suppose, that he's 
making. Others make the argument that, well, if a crime is 
committed via a private parcel service, you have access to 
police officers, you have access to internal security measures, 
you have access to the courts.
    Is there any observation that you would like to make 
relative to Mr. Raben's comment?
    Mr. Campbell. I think that the Department of Justice has 
put their finger on the problem, but I don't know how bad the 
problem is. I do think it is true, if you read through title 18 
of the U.S. Code, you'll see that there are lots of laws that 
protect the Postal Service, the property of the Postal Service, 
the employees of the Postal Service, that don't apply to 
private companies.
    The position of the private companies certainly would be 
that, where the Postal Service competes with a private company, 
these laws should apply equally to everybody. It is just a 
simple matter of principle. It is not that the Postal Service 
should be less protected, but the safety of a FedEx or UPS 
driver is no less important than the safety of a Postal Service 
worker. That's simply their position.
    H.R. 22, as you know, provided for an overall review by--I 
think it wound up the FTC in the last version--of the laws to 
just identify these differences for Congress to make a judgment 
on. I think it is a good idea.
    Mr. LaTourette. Thank you.
    Mr. Nolan, I have a couple of questions that don't relate 
to the specific topic of this hearing, but they are of concern 
to some of the folks in Ohio relative to our State law relative 
to charitable mail versus the Postal Service's rules and 
regulations, and specifically Ohio is one of, I think, 12 or 13 
States that has a requirement that people involved in mail 
solicitations for charity--one, we require you have a 
professional fund raiser, and, two, there needs to be a 
contract in place between the charity that seeks to do it 
saying that they're going to get some money back. The fear is 
that these solicitations go out and none of the dough comes 
back to the charity, and so we have a particular problem with--
everybody likes police work and police athletic leagues, for 
instance, but when you peel back the onion we find out none of 
the money goes to any kids or police agencies.
    Is that a problem that you are familiar with, the disparity 
between the Postal Service regulations in that regard and 
potential conflict with State laws?
    Mr. Nolan. I, personally, am not. I'm sorry.
    Mr. LaTourette. OK.
    Mr. Nolan. But we can certainly research that and get back 
to you on it.
    Mr. LaTourette. That's what I was going to ask you, to not 
hog up the purpose of this hearing. If I gave you a couple of 
questions in writing, could you get back to me on that?
    Mr. Nolan. Absolutely. Immediately.
    Mr. LaTourette. Thank you, Mr. Chairman.
    Mr. McHugh. I thank the gentleman.
    Inappropriate--the word is in the eye of the beholder, 
oftentimes, kind of like beauty, and we've heard that word 
quite often here today.
    Let me ask Jim Campbell, in your opinion, do you believe 
that the Postal Service has the legal authority to regulate in 
areas in which it also competes?
    Mr. Campbell. No.
    Mr. McHugh. You do not?
    Mr. Campbell. But they exercise that authority.
    Mr. McHugh. Pardon me?
    Mr. Campbell. But they exercise that authority, 
nonetheless.
    Mr. McHugh. Well, yes, obviously.
    Mr. Campbell. That is to say, the Postal Service monopoly 
regulations tell the private express companies, ``You have to 
charge at least so much.'' They have a certain set of rules 
about how you conduct the business. There are provisions about 
how you have to open your books to inspectors. There are 
provisions that provide that if you do not abide by the 
regulations they can, in essence, suspend your right to 
operate--that is, withdraw the administrative suspension with 
respect to a given private express company or a given customer. 
So, in essence, it is price and entry regulation.
    Do I think that Congress ever gave them that authority? No, 
I don't. The Postal Service bases their claim to that 
authority--the suspension power--on a 1864 law which is now 39 
U.S.C. 601b, I think that if you go back and look at the 
history of that law, it is perfectly clear that they do not 
have such authority.
    Now, this has never been tested in court, so it is a 
difference of opinion, but that's certainly my opinion.
    Mr. McHugh. Well, that's what we ask for.
    Let me ask you another opinion. Given what you just said, 
do you think there is any legal validation in their activities 
on e-commerce and on a competitive product as represented in 
the MOU that was executed between the Inspection Service, the 
FBI, and the Secret Service? Does that fill the gap, in your 
opinion, at least in that area?
    Mr. Campbell. Mr. Chairman, what I have to say about 601b 
and the suspension power is the result of a lot of time in the 
library, and some of it in the archives of the United States. I 
have not spent so much time on the e-commerce memo of the 
Attorney General. I know what you're talking about, but I just 
don't know enough about it to really make a comment.
    Mr. McHugh. Fair enough.
    Mr. Nolan, do you want to respond to your illegal behavior, 
alleged?
    Mr. Nolan. I think we are very legal. I, obviously, I think 
what Jim Campbell said is right, there is a difference of 
opinion there. I do think that we are focusing on an area where 
the Postal Service, as I said, spends typically less than one 
person a year working on. It is not a major activity that we 
undertake to monitoring the private express statutes. Private 
express statutes do not pertain to the Internet, so I don't 
think that's particularly relevant.
    I do think that what we're trying to do on the Internet is 
offer choice, offer--and in that choice, a lot of features. But 
we're not trying to set standards. We're not trying to preclude 
competition. We're trying to satisfy customers and maintain the 
viability so we can maintain our universal service.
    I think it is--some of the issues that related to the 
private express statutes and hard copy mail and the couriers we 
could probably debate forever, but I don't think it is relevant 
to the issue that we're facing with e-commerce and I don't 
think it is an issue that is an ongoing issue for the Postal 
Service and any industry right now because we're not actively 
enforcing it. We don't have problems in that area.
    Mr. Campbell. Mr. Chairman, excuse me, but I really have to 
comment on this at one point.
    So far as I can determine--and I certainly have not made a 
systematic study--it is true that the Postal Service has not 
been spending a lot of resources enforcing the Postal monopoly 
regulations since 1994, since the Postmaster General made that 
statement to the Senate committee. However, that is not what is 
going on in real life.
    What is going on in real life is that the postal monopoly 
regulations are Federal regulations that are embodied in the 
Code of Federal Regulations, and that has a real effect on 
people.
    If you go to a businessman and say, ``I have a very good 
service and I would like to offer you this delivery service,'' 
and the business checks the Code of Federal Regulations and it 
says I can't do this service legally, and that chills the 
business significantly. Very large businesses are affected by 
that.
    The fact that the Postal Service does not make a lot of 
calls on customers doesn't change the fact that those 
regulations affect business. And if the regulations are not 
meant to be enforced, they should be withdrawn. If they are not 
legal, they should be withdrawn.
    Those regulations are a serious problem.
    Mr. Nolan. And I think that the chairman knows our 
feelings, as his, that the laws governing the Postal Service 
need to be changed. We need Postal reform.
    I don't think that anyone, in their wildest dreams, would 
say that the Postal Service is on the advantageous end of an 
unlevel playing field, given the restrictions that we have. I 
don't think anyone would trade places with us with the 
restrictions that we have.
    I think that, to maintain universal service at reasonable 
prices and recognizing what is going on in the industry and 
throughout the country and the world, change needs to occur.
    I think it is dangerous, though, to start picking out 
individual bits and pieces of that, and I think it makes more 
sense to do the kind of thing which you have undertaken, which 
is to look at the whole system to try and see what changes need 
to occur.
    So we're not protestors for no change. In fact, we want 
change. But in this particular issue I think picking out one 
individual piece of that is just not an acceptable way of 
approaching it.
    Mr. McHugh. Yes. And I fully understand that. If I thought 
we could win, we'd have a vote on the broader issue today, but 
I can still count.
    Mr. Nolan. You get the yellow jersey.
    Mr. McHugh. Yes. But, nevertheless, with full respect of 
what you say about picking, the purpose of the hearing is to do 
just that, and we're going to continue a little bit further, if 
we may.
    Jim Campbell made a series of suggestions, some of which 
have been supported in advance by others--for example, 
narrowing of the monopoly to serve as a way by which to take 
care of some of these competitive concerns.
    Mr. Eager, how would FLEOA respond to a suggestion, a 
proposal to narrow the monopoly and contain yourselves to that 
function?
    Mr. Eager. Well, Mr. Chairman, we sit back and we hear 
everyone talking about privatization in the future, and we are 
a law enforcement agency, and our memberships are Federal 
agents. The very root of what we do is arrest people and pursue 
prosecution of people that violate statutes from the Postal 
laws.
    When we hear talk of monopoly or this and that, what our 
concern really goes back to is the sanctity of the mail, the 
very root of the reason we exist.
    We are attached to a quasi-business/quasi-Government 
entity. The Inspection Service is Government, was meant to be 
Government, but yet when I hear the conversation from the 
business aspect of it, it has very little law enforcement 
meaning to me.
    Mr. McHugh. Yes.
    Mr. Eager. But I do know what the intent was when we were 
formed by our forefathers, and if they were here today they 
would tell all of us that anyone should be able to mail 
something and there should be an expectation of privacy, and if 
it is taken, someone should get them.
    Mr. McHugh. How would you react to the polar opposite of 
that proposal, and instead see your jurisdiction expanded to 
cover the private side of the equation, as well?
    Mr. Eager. I think time is going to take care of that. I 
think Congress, I think the way the Postal Service moves in the 
future, technology, competition, I think it is going to move us 
in that area. At some point there will probably have to be 
consideration to move us under the executive branch of 
Government, again taking the route back that people have an 
expectation of privacy in their mail.
    And I believe I said earlier, if it does move toward 
privatization or reform, that shouldn't negate our 
responsibility to the public to make sure that privatization 
doesn't interfere with their expectation of privacy.
    Mr. Gallo. And, Mr. Chairman, if I could just mention----
    Mr. McHugh. Mr. Gallo.
    Mr. Gallo. Thank you. The Deputy Postmaster General was 
mentioning how they have to break even at the end of the year. 
Federal law enforcement sometimes doesn't break even. We are 
not a profitmaking organization. If it takes several million 
dollars to track someone down, that's what it takes. That's 
what is done. These guys, these Postal inspectors, the Feds, 
they're cops, and sometimes law enforcement is not a 
profitmaking industry. It is not meant to be.
    Mr. McHugh. Yes.
    Mr. Eager. And, Mr. Chairman, we're concerned about the 
nuts and bolts of things, such as our lab. They are a very 
integral part of the Inspection Service, and the fact that we 
have been trying to achieve pay comparability for them since 
1995 and that was denied--I understand there was an IG report 
that came out. I haven't read the report, but I believe it 
recommended it and that it was denied without what I believe to 
be consideration of that report.
    What we're talking about here are forensic people that are 
instrumental in some of our investigations, and we are losing--
we could potentially lose a lot of people from this, and they 
are hard to replace. That's a nuts and bolts law enforcement 
decision. It's not overhead. When we cut that, it hurts our 
agency, and FLEOA feels that way very strongly.
    Mr. McHugh. I believe you also make the claim that the pay 
disparity severely restricts your ability to both attract and 
retain those positions.
    Mr. Eager. Yes, sir.
    Mr. McHugh. Mr. Nolan, do you want to respond to that? If 
you choose not to----
    Mr. Nolan. No, that's fine. That's fine. Both the chief 
inspector and I agree that the inability to make a final 
decision on that has gone on too long. There has been no denial 
of--in a final form of that request for modification to the pay 
structure. There are still meetings taking place. The next 
meeting is scheduled for August 9th. It needs to be resolved. 
There are some knotty technical problems that we have been 
trying to work through. We need to do that. We need to work 
through them, and we're going to make sure that that happens, 
but there has been no final denial. The labs are a very 
important part of our operation, and sometimes people with best 
intentions get involved in little nitty-gritty details and fail 
to see the big picture. I think we need to get to that big 
picture and solve it.
    Mr. McHugh. OK. Let me return to my original question to 
Mr. Eager.
    How would you respond to an action that would either limit 
the Postal Inspection Service to investigations by narrowing 
the monopoly, or, second, to take the opposite track, and that 
is to expand their jurisdiction and to include the private 
sector companies.
    Mr. Nolan. Well, the Inspection Service needs to make sure 
that people follow the law. If the law changes, then the work 
that the Inspection Service would do would change. So, to the 
extent that there is a law on the books, we need to enforce the 
law.
    The fact is that attacking the monopoly issue has not been 
a major emphasis for the Inspection Service. How that monopoly 
law might change and, therefore, what the Inspection Service 
might do I can't say.
    When it comes to expanding the Inspection Service to cover 
private enterprises, my concern with that is one of scale and 
one of familiarity.
    Part of the reason why the Inspection Service is so 
successful is that they live and breathe this stuff every day. 
They are part of everything we do. They are in every meeting 
that we hold. They understand what is going on. We don't direct 
their activities, but knowing what is going on in our 
organization makes them a lot more effective.
    To now increase that span of control over areas where we 
are not as familiar I think does nothing to enhance our 
abilities to do our current job and could undermine that and 
may not make us the best people in the world to take on that 
new responsibility.
    Again, we fund our own security and Inspection Service 
activities. Those are not funded in the private sector. With 
increased law enforcement activities of some nature--and, 
again, I don't recommend it be ours--would there come some 
increased regulation of those private companies. Who can say? 
And I'm not sure that they would be particularly thrilled with 
that.
    So I think that the whole thing would need to be examined, 
but for us to expand our role I don't think would enhance our 
current success and our current mission, and I'm not sure that 
we would be the best people in that other space.
    Mr. McHugh. Mr. Weaver, do you agree with that?
    Mr. Weaver. Yes, Mr. Chairman, I do agree with it. And, as 
far as our role goes, you go back to the law and the fact that 
under title 39 we have been charged with a mission, and that 
mission has been unswerving. To expand our authority--again, I 
agree with the Deputy Postmaster General that we would lose 
focus, we would lose what was intended to--what our intended 
goal and mission was. And I just don't think it would be good 
for the Postal Service or it would be in the best interest of 
the American people to do that.
    Mr. McHugh. Mr. Nolan, I've got just one quick question. I 
am detecting a lack of enticement on your part that to move the 
Postal Inspection Service to the Treasury Department or Justice 
would produce almost half a billion dollars in budgetary 
savings. This is so important that that's not an issue?
    Mr. Nolan. Well, first of all, I think it is so important 
that it is absolutely a completely small issue for us, compared 
to the importance of maintaining the trust and carrying out the 
mission that we have, so I do think it is a very small issue.
    I also don't think it is a good idea to throw additional 
costs on the taxpayers because the Treasury obviously or the 
Federal Trade Commission or whoever is going to want money to 
support those activities of an Inspection Service, and I think 
the current model that says that you've got to pay what you 
get, pay for what you get, is not a bad one. But I do think for 
us it is a completely secondary issue, and second is way out of 
the ball park compared to the first one, and that's the 
sanctity of mail, the protection of our employees. It is not a 
budgetary issue to us.
    Mr. McHugh. What about containing the Inspection Service to 
pursuing questions that are related only to non-competitive 
products? I mean, after all the core of this discussion and 
those who seem to be concerned about it focuses on the issue of 
the Postal Service's ability to market the Inspection Service 
in the competitive area as a value-added kind of asset.
    Mr. Nolan. Again, I am being very careful to make sure that 
our organization does not market the Inspection Service as the 
reason why we have trust.
    Mr. McHugh. But, if I may, but you did make a suggestion in 
a public ad that that was there, and that--I mean, I'm not 
necessarily criticizing the attempt. I understand the role of 
advertising. But the suggestion was certainly there that that 
makes your product better than a private company.
    Mr. Nolan. Yes. No ad that we've put out has indicated that 
the Inspection Service is part of our security, and----
    Mr. McHugh. Well, back to Mr.--I don't mean to keep 
interrupting you, but back to Mr. LaTourette's point, you 
didn't use the words, but you made the suggestion. You don't 
agree?
    Mr. Nolan. I know what you're saying. To some people the 
fact that we have an Inspection Service is important. And would 
we do anything to tell them no, it's not important? The answer 
to that is no.
    Mr. McHugh. OK.
    Mr. Nolan. I think that, from a practical standpoint, if 
you say that all that we would work on is the noncompetitive 
things, the only thing that we have is noncompetitive, in a 
sense, is first-class mail. Advertising mail certainly has 
competition. Parcels have competition. When you are looking at 
investigating crime, crime doesn't know classes of mail, and we 
travel from one class of mail to another when we are 
investigating certain aspects of crime, whether it is 
pornography or child abuse, whether it is fraud. It travels 
across all classes of mail, and so I don't know how you do 
that. I really don't know how you do that.
    Mr. McHugh. How do you do that?
    Mr. Campbell. I think Mr. Nolan has a good point. I'm not 
suggesting that it is a very simple matter. A lot of H.R. 22 
deals with exactly these kinds of problems, because there is a 
certain unity of operation in the transport and collection and 
delivery of the mail, and some of it is competitive and some is 
not the provision in H.R. 22 about allocating overhead, the 
equal cost coverage provision, is an attempt to deal with that 
issue.
    With respect to the Inspection Service, I think that you 
have to think in similarly creative terms when you have joint 
operations. Obviously, if the Postal inspectors find a truck of 
stolen first-class mail, they are not going to give the mail to 
the Postal Service and give the parcels back to the thieves. 
All right. Nobody is advocating anything silly like that. But 
perhaps with accounting procedures you can take care of it.
    Certainly, as implied by your questions, you want to draw 
the line at misuse of the Inspection Service. You want to draw 
the line at activities that are not bound up with monopoly 
mail. When you get into e-commerce, that is probably 
operationally separate. The solution, in H.R. 22, was to create 
a separate corporation, which presumably would have taken care 
of the problem. But you want to first try to limit the 
Inspection Service to joint operations that you can't avoid 
protecting, as long as you are protecting first-class mail. In 
addition, you want to ensure the work of the Inspection Service 
is not expanded beyond those activities. You have to do it with 
some good will and some creativity. That's all.
    Mr. McHugh. Sounds like a damn good bill. I'll have to look 
at it. [Laughter.]
    Mr. Campbell. Go back and look at it again and see if you 
don't like it.
    Mr. McHugh. And I appreciate the accolades. The purpose of 
the hearing is really not on that focus, but it does provide 
one approach.
    Jim Campbell, you mentioned in your comments that there was 
the phrase used ``a coercive nature''----
    Mr. Campbell. Yes.
    Mr. McHugh [continuing]. With respect to the Postal 
Service, Inspection Service and its powers. Don't you find that 
in any law enforcement organization? I mean, doesn't the FBI 
have the coercive power of Federal law behind it? Does not the 
local police Doctor have the coercive power of the municipal 
code? I mean, isn't that kind of part and parcel with having a 
police agency overseeing anything?
    Mr. Campbell. Sure it is. Nobody objects--nobody can 
reasonably object to the fact that a law enforcement agency 
uses coercive powers. The problem in the past has been that the 
monopoly regulations create some of this coercion, apparently 
out of thin air, as predicates for using the suspension, taking 
advantage of suspension, and because the coercion is coming 
from a competitor in the field whose commercial incentive 
determines how the power of the Government is being used.
    Now, as I suggested in the testimony, you can certainly 
imagine, at least, redefining the monopoly in terms that are 
much more self-executing, so you don't need so much 
administration. You don't need so much coercion.
    But, furthermore, the coercion that is being used, the 
judgment that goes into enforcement, ``Shall we, push this guy 
or not?''--that judgment ought to be rendered by somebody who 
is impartial, not by somebody with a commercial interest.
    Mr. McHugh. Yes.
    Mr. Campbell. That's all I'm saying. I'm certainly not 
suggesting that in the end, whatever the monopoly is and 
whatever the laws are to enforce, it will not be coercive. 
Obviously they are going to be coercive.
    Mr. McHugh. So your concern is either, No. 1, your last 
point, that when you have a competitive interest it causes 
difficulties in terms of a truly unbiased enforcement of 
provisions.
    Mr. Campbell. Sure.
    Mr. McHugh. Or, No. 2, that, as a followup to your earlier 
comment, in your opinion you have a nexus here between the 
natural and probably unavoidable coercive power of any police 
agency and what you feel are, if not inappropriate, perhaps 
illegal or excessive assumption of power, police power, because 
I believe you said they didn't, in your opinion, have the 
authority under law to do some of the things you are doing. 
True?
    Mr. Campbell. Yes. I think that I do not want to be too 
accusatory here, but I do think that even veterans of the 
Postal Service, looking back over the last 25 years, would say 
that probably they've done a bit too much in pushing on the 
private express laws.
    I think that if we could all rewrite history, you could 
imagine a much more objective, fairer approach to defining and 
enforcing the monopoly. My suggestion is simply that if you 
look back at that 25 years, you can clarify the mission of 
everybody so that the next 25 years are better. That's all.
    Mr. McHugh. Mr. Nolan.
    Mr. Nolan. I thought I heard earlier that there wasn't any 
inference that the Postal Inspection Service had operated 
inappropriately, it was the way the law was written that was 
the real problem. Now apparently that's--I'm either hearing it 
differently, or maybe there is some other coercion taking 
place.
    My sense was that what Jim Campbell had a problem with was 
the way the law was written that made that monopoly statute 
something that people didn't even have to walk in the room and 
talk about, someone reading it would be uncomfortable.
    I think there is a big difference. When it comes to the 
Postal Service and how we reacted back in 1970 to competition 
that we never had before I think is an interesting discussion, 
but I don't think it is particularly relevant to where we are 
today.
    Mr. McHugh. I thought I heard Mr. Campbell respond to my 
question, did he believe that precisely--I didn't mention if 
section 1341 permits the Postal Service to regulate in the area 
in which it also competes, that in his opinion they did not.
    What did we hear?
    Mr. Campbell. I think that the heart of the Postal monopoly 
regulations of 1974, which are the current regulations, is the 
suspension power--the power that the Postal Service exercises, 
purportedly under 601b of Title 39. I think that the Postal 
Service has misinterpreted that provision. I'm not the only one 
who thinks so. I have good reason for thinking so. I think 
those regulations--the heart of those regulations represents a 
misinterpretation of the law.
    Now, that's not to say that there is no Postal monopoly. 
Obviously, there is a Postal monopoly.
    Mr. McHugh. Well, I was specifically talking about 
competitive products.
    Mr. Campbell. I'm sorry.
    Mr. McHugh. So am I.
    Mr. Campbell. I'm sorry. With the monopoly regulations what 
the Postal Service is doing is defining the line between 
competitive and noncompetitive.
    Mr. McHugh. OK.
    Mr. Campbell. It is not exactly that they are regulating 
competitive products, but they are defining that line in a 
rather creative manner, let's say.
    Mr. McHugh. Speaking of creativity, Mr. Nolan, 
hypothetically, if we were to move the Postal Inspection 
Service en masse, just pick it up as it exists today and imbued 
with all of the authority and all of the responsibilities it 
has and plop it into Treasury, for example, wouldn't your 
creativity still allow you to suggest that you, as the United 
States Postal Service, have a certain assurance of sanctity 
that others do not, because, indeed, a Postal Inspection 
Service located in Treasury or within the Postal Service would 
still have the responsibility of doing what it does today? Not 
that you would ever inappropriately advertise, but if you were 
just, you know, sitting around thinking about it.
    Mr. Nolan. I don't think it would be as effective. I think 
that we've got a focus with the Inspection Service right now 
that couldn't be guaranteed if the agency was picked up en 
masse and moved to another location.
    I think that the Nation benefits from the fact that we 
maintain that focus and cover all activities that we undertake.
    Mr. McHugh. Yes, sir. I understand that. And that really 
wasn't the point of my question. My question was more a truth 
in advertising question. I mean, in terms of--one of the major 
concerns that we've heard repeatedly is that the Postal Service 
right now is using the existence of the Postal Inspection 
Service as a reason why your e-commerce product is more secure 
than perhaps some other one.
    My question is, if you did that--and I understand you would 
say you have not, but if you were to do that today and tomorrow 
the Postal Inspection Service were part of Treasury, the same 
assurance is there. I understand your concern about diminution 
of effectiveness. I'm talking more about the advertising kind 
of perspective.
    Mr. Nolan. Again, I continue to believe that the reasons 
why people trust us are varied, and I think that the Inspection 
Service doing its job to some people indicates there should be 
trust, I think to some people the fact that we've handled 
addresses a certain way and can't sell things and have certain 
mandates that we have to live by and certain policies that we 
adhere to, and the way we've done business over the years 
indicates that we should be trusted.
    I think you are not going to see from us an emphasis on the 
Inspection Service as the reason why people should do business 
with us. If we had an Inspection Service that was constantly 
monitoring our products and services and reported to someone 
else, would we still have that same benefit if they were as 
effective? The answer is probably yes. We would still emphasize 
the fact that this is an organization that can be trusted, 
both, we think, from a technology standpoint and from a 
practice standpoint.
    The investigatory aspect of it is really just one leg of a 
stool and can't stand without the others.
    Mr. McHugh. Right, because your announcement--``yours'' 
being USPS--announcement that Post-X would be the first 
commercial provider of electronic postmark speaks very 
specifically about affording the sender legal protections and 
remedies for illegal interception and tampering.
    If that were an Inspection Service--I assume that's who you 
meant, and if you didn't I think one can reasonably conclude 
that, but an Inspection Service in Treasury would still provide 
those legal protections and remedies for illegal interception.
    Mr. Nolan. We believe it is against the law to permit 
interception and modified seal, et cetera, communications, 
whether you're dealing with the Postal Service or anybody. The 
fact is we just happen to use the Inspection Service to do 
investigation. But I think that statement could be made by our 
competitors, too.
    Mr. McHugh. FedEx could tout the FBI, for example?
    Mr. Nolan. Sure.
    Mr. McHugh. Really?
    Mr. Nolan. That's correct.
    Mr. McHugh. Jim Campbell, is it not true that many of the 
concerns you voice are not, in and of themselves, remedied by 
just a transfer of location out of the Postal Service? I mean, 
I think you'd make the argument that--many have said that would 
do it. I don't see that that does. I don't see that without--if 
you're going to transfer, the same problematic circumstances 
exist across the wide range unless you also take the next step 
of doing some kind of jurisdictional amendment.
    Mr. Campbell. I think you're right. As I said in the 
beginning, I think the Inspection Service, by and large, in my 
experience, has been attempting to enforce the legal framework 
that they're given by others, by the Law Department or by 
Congress or whatever, and the fault lies not so much with the 
Inspection Service and how the law is administered but with the 
overall legal framework. I think you have to look at both.
    Mr. McHugh. Mr. Weaver, did you want to say something?
    Mr. Weaver. Yes. Thank you, Mr. Chairman. I think, once 
again, we've got a--and I agree with Mr. Campbell. I think we 
perform the role that we are given by law, and will continue to 
perform that. And I've always said that these hypothetical 
situations, although we need to consider them and we need to 
think about them, from our perspective it is very important for 
the organization to determine where they are going before you 
extract the Inspection Service from the organization.
    We have been charged with a mission of protecting the 
mails, protecting the employees of the Postal Service, and 
we're going to continue to do that and continue to enforce the 
laws, and that's our primary mission and I can't see it 
changing unless there is a major change in the organization, 
and then we have to look at it.
    Mr. McHugh. Mr. Eager or Mr. Gallo, if you've ever read a 
budget bill in Congress you know we spend a lot of time dealing 
in fantasy, so let's spend a little time here right now.
    If you had, if not unlimited, a significant opportunity for 
added resources and you--either or both of you together--could 
direct those resources, where would you put them right now? 
What would you like to see the Inspection Service doing beyond 
what they are budgetarily capable of doing today?
    Mr. Eager. It would be, again, based on a review of what is 
needed, but prohibitive mails, narcotics interdiction, we do a 
lot of good work in that area, but it is just, you know, I 
believe we could do more. I believe we could do more in the 
area of child pornography. But those are just guesses without 
an assessment by each division as to what the complaints are or 
what the needs are, discussions with the U.S. Attorney, and, of 
course, mail fraud, health care fraud.
    Again, it would be consultation with the U.S. Attorney's 
office in conjunction with their priorities as a law 
enforcement agency that we would consider.
    Mr. McHugh. Mr. Gallo, have you got any----
    Mr. Gallo. The devil is in the details. How much staffing? 
Funded by corporate taxes? User fees for this service?
    For the expansion of the Inspection Service's jurisdiction 
to ensure the sanctity of all communications, giving that to 
the professional men and women, these criminal investigators 
within the Inspection Service to expand their jurisdiction to 
these other areas of communication, they would handle the job 
and they'll handle it professionally, just as professionally as 
they are handling it now.
    But, as you said, with the budget bills, the devil would be 
in the details. How would they be funded? How much staffing?
    Mr. McHugh. Yes. Mr. Eager.
    Mr. Eager. Our concern, of course, is the future. I mean, 
every time we pick up, like I said before, the paper, we read 
of privatization, reform. I'll be retired, but I wonder about 
the sanctity of my mail when I'm 70 years old. If it is 
privatized, what happens. If it is reformed to the extent--
where does privacy, where does the sanctity issue go?
    The Inspection Service has done it. I mean, for 200 years 
we've done this, and we should have a place in the future of 
doing this.
    Mr. McHugh. Yes.
    Mr. Eager. And that's why I think maybe it should be 
debated. I think the future will take care of itself, again, 
with technology. We may very well get to that point of needing 
to move under the executive branch of Government, depending on 
what happens to the Postal Service.
    Mr. McHugh. So you would share Mr. Weaver's opinion that, 
in terms of a logical sequence, you have to position the Postal 
Service in whatever way you're going to, and there's a variety 
of thoughts as to what should occur there before you can make a 
rational judgment on the Inspection Service?
    Mr. Eager. Absolutely. I mean, because if you just pick us 
up and put us under the executive branch of Government right 
now at this time with our current jurisdiction, you're still 
going to have the perception of unfair competition because 
we're enforcing the same statutes. The only way it could be 
conceivable is if it is expanded to other postal carriers in 
the postal system.
    Mr. McHugh. You mention your review in 1974 of the 
Inspection Service, the evaluation--or 1994, wasn't it, sorry, 
1994 as the last time that was conducted.
    Mr. Eager. Yes, sir.
    Mr. McHugh. I get the impression that you feel another one 
is due. Is that a correct impression?
    Mr. Eager. Yes, sir, I do.
    Mr. McHugh. Mr. Nolan or Mr Weaver, you want to----
    Mr. Weaver. Yes, Mr. Chairman. I am very familiar with the 
review that was conducted in 1994. It was a level of service 
review. What it attempts to do is evaluate the work flow and 
evaluate the resources to that work flow.
    I'm not saying it didn't need to be done, but it was not 
fully implemented probably the way it should have been. But I--
it is a valid concern.
    Mr. McHugh. Mr. Eager.
    Mr. Eager. I've known Chief Weaver for over 20 years and 
he's a very capable, a man of integrity and a leader, and FLEOA 
is well pleased that he is our chief. We just hope he is 
afforded the tools to take our agency in the direction that we 
need to go.
    Mr. McHugh. Do you agree with that, Mr. Nolan?
    Mr. Nolan. Absolutely.
    Mr. McHugh. Well, I'm glad we settled that.
    The ranking member had other business and he has been 
tremendous, as all of you are aware, on all of this and 
continues to take an active interest in this particular 
hearing, but he has got to figure out how to be in two places 
at once, but he has submitted a number of questions for the 
record that he will submit to you gentlemen. We very much 
appreciate your responses at your earliest convenience.
    Mr. McHugh. As is the custom, we also ask for your 
indulgence in other followup questions from the committee, if 
you could provide those for the record.
    I'd like to ask Mr. LaTourette if he has any concluding or 
additional comments or questions.
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    Mr. LaTourette. I have one question.
    Mr. McHugh. Go ahead.
    Mr. LaTourette. Mr. Chairman, I will try to be expedient.
    I wrote down some comments as you all were answering the 
chairman's questions. It began with you, Mr. Gallo, when you 
were talking about the utility of law enforcement to do its job 
costs what it costs, and you can't look at a crime and say, 
``We're going to spend $10,000 on this crime to follow the 
crime through to completion.''
    That, combined with--I believe Mr. Nolan made the 
observation that there had been a shift that was noticeable to 
revenue protection, and then Mr. Eager's observation that there 
was a 25 percent decrease in mail fraud activities within the 
department, and it comes from--and before I did this I was a 
county prosecutor, and we changed a lot of laws relative to 
drug enforcement. We had forfeiture laws. The deal was that if 
you went out and busted a guy that had a nice car, if you were 
the police agency you got to keep the car. Well, you didn't get 
to keep it, yourself; you got to take the assets and then file 
it into new stuff for the department or extra hires or things 
of that nature.
    There was some criticism that we--nobody was doing anything 
to be funny, but any time there was a chance to get more stuff 
or more officers that we would take our resources and funnel 
them into chasing these guys with the nice cars--[laughter]--
and not necessarily the guy that broke into the house or the 
guy that stole the ice cream from the convenience store sort of 
got more priority.
    In this whole discussion that you were having with the 
chairman about moving these guys from the Postal Service over 
to Treasury Department--I understand completely that you'd have 
to change the statutes or you'd just be doing the same thing at 
a different place. But I wonder if the fact that, again, it 
takes as much as it takes, the direction was shifted in the 
direction to protect revenue, and the 25 percent reduction in 
mail fraud activities--is there a danger here that the Postal 
Inspection Service is compromised as a law enforcement agency 
because of its reliance on Postal Service revenues as opposed 
to the ability to take as much as it takes?
    Mr. Eager, have you thought that through? And then anybody 
who has a comment.
    Mr. Eager. I think, because of our structure, that we are a 
law enforcement agency that's really quasi-business and quasi-
Government agency, that it gives that perception whether it is 
true or not. I mean, we can go out and conduct crime prevention 
and competitors to the Postal Service might say that we are 
taking an unfair advantage when we're marketing when, in fact, 
the field Postal inspector is simply trying to reduce theft, 
but the perception I guess is what we're dealing with in that 
area.
    I don't know of too many agencies, Federal law enforcement 
agencies, that are structured like we are. The more business-
oriented the Postal Service gets, the more probably the level 
of accusations will, proportionately go up.
    Mr. LaTourette. But that's specifically in response to my 
query, that there may be the perception but there's no truth to 
it?
    Mr. Eager. Well, Mr. Campbell used the term of inspectors 
going out and coercing. I mean, inspectors don't have any 
monetary--we go to investigate what we're sent to investigate.
    I would think--I mean, if I was someone out there in the 
private sector and someone was coercing me, I'd take issue with 
it.
    Mr. LaTourette. I think it was more going back to the drug 
dealer situation. And I wasn't talking about agents running 
rogue and trying to bother people. What I was talking about is 
a decision somewhere within the Postal Service that we're going 
to focus on things that protect revenue of the Postal Service, 
and therefore, because we don't have enough guys and gals, or 
because of resources, or whatever, you're going to have a 
corresponding drop in other things such as going out and taking 
a look at mail pledges because there aren't enough hours in the 
day and enough people to do it.
    And my question is: is that just a potential perception, or 
is there some truth to that?
    Mr. Eager. That's FLEOA's perception in the past, as I 
stated earlier, that resources were diverted to revenue 
protection and they came from somewhere, and we assume they 
came from the mail fraud program, and we are dealing with a 
closed universe. We can quibble over number of how many 
inspectors in 1975 as opposed to the authorized complement, but 
we're not talking about thousands of people here. We're just 
talking about a couple of hundred here and there.
    We've always dealt within a closed universe of personnel, 
and our priorities do change, but reduction in mail fraud of 25 
percent over that period of time I think is significant.
    Mr. LaTourette. Chief Weaver or Mr. Nolan.
    Mr. Nolan. I would say one thing that we may not have made 
clear is that the revenue protection responsibilities have now 
been removed from the Inspection Service. It's in the revenue 
assurance or revenue protection unit within our administrative 
function area.
    In part, it was because it was a more productive way of 
dealing with our customers in solving problems, and in part 
because the Inspection Service now is focusing on criminal 
activities and on some of those audit-related things out of 
which grew the attempts to protect revenue from deficiencies.
    So I think what may have been a potential diversion at 
times has cleared up significantly because it doesn't exist any 
more as a possible area of emphasis to the Inspection Service.
    Mr. LaTourette. Mr. Weaver.
    Mr. Weaver. Yes, if I can just clarify a point here--and 
make no mistake about it, if there is a violation of the law 
involving our revenue systems or our revenue stream, we will 
conduct an investigation, and that is where there is criminal 
intent and intent to fraud. So what Mr. Nolan is talking about 
is the shift in moving out of the revenue assurance business to 
where we used to go out and identify revenue deficiencies and 
refer those to management. I know there is some question about 
whether we acted as a collection agency in that regard, and we 
did not. We would refer that to management for collection. We 
are out of that business altogether, now. We are strictly 
focused on upholding the laws that we are supposed to.
    As far as your other point, as far as being compromised and 
directing your resources to one area or another, that's a valid 
concern, and we watch that very closely and make sure that we 
are addressing problems that have a serious impact on the 
operations of the organization and where we see problems 
occurring.
    We utilize the forfeiture statute, and it is a valuable 
tool. And if we can hurt the bad guys, as you've seen many 
times, by taking their resources and their assets, we're going 
to do it. We put that money to good use as far as helping the 
organization move forward.
    Mr. LaTourette. I appreciate that. The point in my 
experience was--and I happen to be a fan of forfeitures because 
they brought in extra dollars that you wouldn't get through tax 
revenue and limited budget allocation.
    Sometimes if we were looking at two drug dealers and one 
guy had a Corvette and the other guy was driving a 1974 Old 
Cutlass, we would probably spend a little bit more time going 
for the Corvette. [Laughter.]
    But I thank you, Mr. Chairman and yield back.
    Mr. McHugh. I thank the gentleman.
    With that, I want to thank you all--Mr. Deputy Postmaster 
General, Chief Weaver, Mr. Campbell, Mr. Gallo, Mr. Eager, 
thank you for your presence here today and your patience.
    The hearing is adjourned.
    [Whereupon, at 3:20 p.m., the subcommittee was adjourned.]
    [Additional information submitted for the hearing record 
follows:]
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