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, 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 be (1) tween 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. [The information referred to follows:] This responds to concerns you have regarding the competitive impact of the delegation of investigative jurisdiction to the Postmaster General pursuant to 18 U.S.C. Section 3061(b)(2). I agree with you that the delay which occurred in this matter is intolerable. There appears simply to be no excuse for it. I can assure you that it was never our intention to overlook or discount your competition policy concerns in previous correspondence. In providing a detailed discussion of the statutory criteria for a Section 3061 delegation, we meant to clarify the factors that the Attorney General must consider when evaluating a delegation of authority to the Postmaster General for law enforcement purposes. We continue to believe that the Attorney General's decision to delegate authority can only be evaluated in the context of the statutory criteria provided by Congress. The postal laws confer two significant criminal justice functions upon the Postal Service: control of a federal law enforcement agency and responsibility for the federal criminal laws designed to protect Postal Service assets. Before any permanent alteration is made to the scope of the Postal Inspection Service`s enforcement authority, those distinctions need to be evaluated and possibly redrawn. However, the consideration of these issues does not negate the Attorney General's responsibility to ensure that the Postal Inspection Service has the enforcement tools it needs to carry out its federal enforcement mandate. The Postal Inspection Service has a prominent role in high-profile, cooperative federal initiatives to deter the unlawful use of the mail or electronic equivalents of the mail in the commission of fraudulent crimes against consumers. Recent legislation broadening the Postal Inspection Service's enforcement authority to investigate and stop deceptive sweepstakes and skill contests is but one example of the confidence that Congress has placed in the Postal Inspection Service to appropriately carry out its law enforcement activities. -2 The Department of Justice understands the potential for abuse that exists as a result of the law enforcement powers and protections assigned to the Postal Service, and we concede that support for the enforcement activities of the Postal Inspection Service may be viewed as somewhat incongruous with this concern. However, the tension is not a result of internal policy inconsistencies at the Department of Justice but, instead, it is a reflection of fundamental and lasting changes in the relationship of the Postal Service to the federal government. Fundamental questions about the federal identity of the Postal Service 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 not provide safeguards against the possibility of conflicts between the Postal Service's goals in managing the Postal Inspection Service and the law enforcement goals of the Federal Government. Current law also does not address problems of disparity in federal criminal justice's system's handling of crimes against the Postal Service and crimes against its private sector competitors. We are very reluctant to address questions based on hypothetical laws, and therefore we are unable to address some of the specific questions associated with your competition concerns. To summarize, we do not believe that the Attorney General's delegation of authority to the Postmaster General impedes progress on postal reform or is inconsistent with current law. If there are inconsistencies to be found, it is because of the obsolescence of the postal laws and not because of divided loyalties or positions within the Department. We commend the subcommittee for leading the national debate on postal reform and reiterate our support for your work. Please let me know if you have any remaining questions or concerns that require our attention. Sincerely, Rolut Rak Robert Raben cc: The Honorable Chaka Fattah Ranking Minority Member |