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551across the country, we have learned a great deal about2how the mailing public would be affected by such a3change from six to five, and how the u.s. Postal4Service can continue to be just that, a service when5faced with billions of dollars of yearly budget6deficits.7mind on this issue, have made no decisions on the8plan, and I look forward to hearing more as we9continue our consideration, so thank you.CHAIRMAN GOLDWAY:1011So like most, I continue to keep an openThank you.CommissionerActon.COMMISSIONER ACTON:12Thank you, Madam13Chairman.I have nothing to add except to ask the14witnesses to please speak loudly and clearly for the15benefit of our listeners.Thank you.16CHAIRMAN GOLDWAY:17COMMISSIONER BLAIR:And Commissioner Blair.Good morning, everyone.18I appreciate you being here this morning.I see all19the usual suspects in the audience today.I have a20lengthier statement I would just like to put in the21record but I know that we are pressed for time, and so22I would just say I'm looking forward to hearing and23flushing out the issues that we have had before us.24We have had seven good field hearing and I look25forward to the D.C. hearings as well.Thank you.Heritage Reporting Corporation(202) 628-4888

561CHAIRMAN GOLDWAY:And Commissioner Langley.2COMMISSIONER LANGLEY:Thank you, Madam3Chairman, I, too, have a statement that I would like4to submit for the record, but I do want to thank5everyone for being here, and for continuing your6interest in what we are doing in this context.7you.89CHAIRMAN GOLDWAY:ThankI would simply like toreiterate that all of us in our experience of going10across the country and meeting with people who are11interested in the proposal of the Postal Service felt12honored to be part of a system that is so valuable to13the American society, and everyone who participated in14those hearings demonstrated a respect for and an15appreciation of the Postal Service and its role in16America, and in particular the representatives who17spoke who actually worked for the Postal Service18either a managers or as employee in labor ranks of one19sort or another.20to feel that we were part of that organizational21effort, and we took the comments that were made by all22of these people very seriously to heart, and we will23try our best to balance all the points of views that24have been brought forward to us.25I think it was inspirational for usSo with that I want to remind everyone thatHeritage Reporting Corporation(202) 628-4888

571this hearing is being web broadcast, and to reduce2potential confusion, I would ask the counsel to wait3to be recognized before speaking and to please4identify yourself when making comments.5There are three witnesses scheduled to6appear today:7Kearney, and I have one brief procedural issue to go8over.9Sam Pulcrano, Dean Granholm and StephenIf parties wish to designate any Postal10Service institutional responses to written discovery,11they can do so up until July 19, 2010, three days12before the final day of hearings, consistent with13Commission Rules and Practice.14On the final day of hearings, July 22, 2010,15all of the designated institutional responses'16designations shall be offered for receipt into17evidence.18answers to assure that they continue to be accurate.1920Postal Service counsel will review thoseDoes any participant have a proceduralmatter to discuss before we begin?21MR. TIDWELL:22Tidwell for the Postal Service.23Madam Chairman, MichaelThe Postal Service wants to apologize for24any confusion relating to the filing of Witness25Pulcrano's response to the USPS-T-1-9, which I thinkHeritage Reporting Corporation(202) 628-4888

581we resolved finally last night and early this morning,2and we think we have resolved an issue regarding3Witness Pulcrano's responses to PR-USPS-T3-4154responses which were designated by APWU, and we have5no objection to APWU's designations.CHAIRMAN GOLDWAY:6Thank you.I think that7is satisfactory and I am glad those matters are8resolved.I should remind the reporter, the court910reporter here, to transcribe Commissioner Blair's and11Langley's statement at this point in the record before12we actually begin, we will put them in now.13(The documents referred to14were marked for15identification and were16received in tage Reporting Corporation(202) 628-4888

59Statement of the Honorable Dan G. BlairCommissionerPostal Regulatory CommissionJuly 14, 2010Good morning. I appreciate the chance to hear from our witnesses today.After seven field hearings, the Commission has developed a thoughtful recordwhereby we compiled views from the public, Postal Service field representatives,and affected mailers and stakeholders. I expect the formal proceedings over thenext few weeks will further flesh out further issues associated with stoppingSaturday delivery.We have a number of issues to resolve as we deliberate this case. I want tolearn more about the potential costs savings and how they are quantified. I amconcerned about potential "warehousing" of mail on weekends and holidays and howthe Service will address these concerns. Mailers also raised concerns thatcessation of a day of delivery is in effect a rate increase and that it couldpierce the inflation-based price cap for rate increases.During the field hearings, we heard from impacted mailers, particularly communitynewspapers, about how devastating to their business .operations a cessation ofSaturday delivery might be. The Service needs to address why they settled onceasing delivery on Saturday, as opposed to other days of the week, and whether.We heard from area vice presidents and local postal officials that they were notinvolved with the development of the proposal. I want to hear from the PostalService witnesses how they have addressed operational concerns that are likely toarise given the national scope of such an endeavor as reducing days of delivery.The Service's proposal has proven complex and contentious. The question remainswhether this is indeed the right time to cut delivery, or will it further thedownward spiral in demand for postal services.I look forward to this round of hearings to shed light on the Service's proposaland help inform the commission as we deliberate this proposal.

60Statement of Commissioner Nanci E. LangleyJuly 14, 2010Thank you, Chairman Goldway.As has been stated, the Postal Service is obligated to seek an opinionfrom the Commission before moving forward on a nationwide change inservice. We are limited to the evidence presented in this open docket, andtoday opens another essential chapter in this process. Our opinion will serveto inform members of Congress, who ultimately will decide if the U.S. PostalService can reduce a day of delivery.Like all users of themail,Iam mindful of the Postal Service's direfinancial condition - which it cites as its reason for seeking this change. Ialso understand that the Service has certain statutory financial obligationsthat are unaffordable and put it at risk of running out of money.But I am equally mindful that the changes and ramifications of itsproposal to eliminate Saturday delivery and processing could also put thePostal Service in jeopardy of losing a key competitive advantage - offeringservice six days a week. Based on the Commission's hearings - manyanticipated and unintended consequences of such a move have been raised.There are those who question whether cutting essentially 17 percent ofdelivery service for a 5 percent savings in the Postal Service's budget is agood trade off.

61The history of the United States and its Postal Service is intertwined.The first Article of the US Constitution (I, Section 8, Clause 7) empowersCongress "To establish Post Offices and post Roads".The US postal systemis a cornerstone of the nation's economy, which has long depended on avibrant postal service that fosters America's entrepreneurial spirit whilelinking family and friends across thousands of miles.And even though we communicate in ways unthought-of by ourFounding Fathers, hard copy mail continues to bind the nation by providinguniversal and affordable service.The US Postal Service is especially important in broadeningaccessibility to the nation's senior citizens, individuals with limited mobility,residents of geographically remote areas, and the 93 million of Americanswithout broadband access.Just as the senior citizen or homebound individual relies on the timelydelivery of a prescription medicine - product - or a card from a friend there are untold number of businesses that rely on six-day a week delivery.Thank you Madame Chairman.

62CHAIRMAN GOLDWAY:1Okay, with that, Mr.2Tidwell, will you identify the first witness so I can3swear them in.MR. TIDWELL:4Madam Chairman, our first5witness is Samuel Pulcrano.6CHAIRMAN GOLDWAY:7please stand.8Whereupon,9SAMUEL PULCRANO1011having been duly sworn, was called as awitness and was examined and testified as follows:12CHAIRMAN GOLDWAY:Thank you.DIRECT EXAMINATION131415Mr. Pulcrano, would youBY MR. TIDWELL:QMr. Pulcrano, on the table before you are16two copies of a document that is entitled The Direct17Testimony of Samuel Pulcrano on Behalf of the United18States Postal Service designated for purpose of this19proceeding USPS-T-1.20you or under your supervision?Was that document prepared by21AYes, it was.22QIf you would provide the content of that23document as your oral testimony today, would it be the24same as reflected in that document?25AYes, it would.Heritage Reporting Corporation(202) 628-4888

6312345QAre there any errata you would like to bringto the attention of the parties?AYes, there are three typo corrections thatwe would like toQOn the testimony, just one.If you turn to6page 4, line 15, in the first words of the sentence7there "describe" should be deleted.8QAnd is that the only change?9AI this document, yes.10MR. TIDWELL:Madam Chairman, with that11change the Postal Service would move into evidence the12direct testimony of Witness Pulcrano.13CHAIRMAN GOLDWAY:14(No response.)15CHAIRMAN GOLDWAY:Is there any objection?Hearing none I will16direct counsel to provide the reporter with two copies17of the corrected testimony of Samuel Pulcrano.18testimony is received into evidence.1920ThatHowever, as is our practice, it will not betranscribed.21(The document referred to was22marked for identification as23Exhibit No. USPS-T-l, and was24received in evidence.)25CHAIRMAN GOLDWAY:Mr. Pulcrano, have youHeritage Reporting Corporation(202) 628-4888

641had the opportunity to examine the packet of2designated written cross-examination and responses to3the Chairman's information requests that were made4available to you in the hearing room?5THE WITNESS:Yes, I have.6CHAIRMAN GOLDWAY:If the questions7contained in that packet were posed to you orally8today would your answers be the same as those you9previously provided in writing?10THE WITNESS:Yes, they would.11CHAIRMAN GOLDWAY:Are there any corrections12or additions that you would like to make to those13answers?14THE WITNESS:Yes, there are.There are two15corrections.If you will go to DFC -- this in the16interrogatory of Mr. Douglas Carlson, DFC-USPS-Tl-l,17page 1, line 5, and the first two words in that18sentence, it currently says "less inefficient", we19want to change that to "less efficient".20CHAIRMAN GOLDWAY:21THE WITNESS:Okay.And then on page 2 of that22same document, line 1, in the middle of the sentence23we want to delete the first "not", N-O-T.2425And then if I may direct your attention toPublic Representative document, PR-USPS-T3-4.Heritage Reporting Corporation(202) 628-4888Give

651you a moment to get to that, and it's in the next to2the last line, and between the words "expect savings3to approach," between "to approach" we would like to4insert the words "begin to".5"approach" delete "or achieves".6CHAIRMAN GOLDWAY:7THE WITNESS:8Are those --Those are the end of thecorrections that I have.CHAIRMAN GOLDWAY:910And then afterIs there any additionalwritten cross-examination for witness Pulcrano?11Counsel, would you please provide two copies12of the corrected designated written cross-examination13and responses to the Chairman's information request14for witness Pulcrano to the reporter.15is received into evidence and it is to be transcribed16into the record.That material17(The document referred to was18marked for identification as19Exhibit No. USPS-T-l, and was20received in evidence.)21II22II23II24II25IIHeritage Reporting Corporation(202) 628-4888

66BEFORE THEPOSTAL REGULATORY COMMISSIONWASHINGTON, DC 20268-0001Six-Day to Five-Day Street Delivery andRelated Service Changes, 2010Docket No. N2010-1DESIGNATION OF WRITIEN CROSS-EXAMINATIONOF UNITED STATES POSTAL SERVICEWITNESS SAMUEL PULCRANO(USPS-T-1)InterrogatoriesAmerican Postal Workers Union, AFLCIOAPWU/USPS-T1-1-3,5-9DFC/USPS-T1-1, 3, 6,9, 11NALC/USPS-T1-1PRiUSPS-T1-4-5, 8, 14, 16, 18, 20, 22-24PRC/USPS-T1-CHIR No.2 - Q2, CHIR NO.5 - Q3National Newspaper AssociationAPWU/USPS-T1-6NNAIUSPS-T1-1-7, 8b, 8c, 8d, 9-11Postal Regulatory CommissionAPWU/USPS-T1-1-2DFC/USPS-T1-1-3, 6, 8NNAIUSPS-T1-1-7, 8b, 8c, 8d, 9-11PRiUSPS-T1-8, 14,22,24PRC/USPS-T1-CHIR No.2 - Q2, CHIR NO.5 - Q3Public LC/USPS-T1-1NNAIUSPS-T1-8b, 8c, 8d, 10PRiUSPS-T1-7, 9, 11, 15-18,23Respectfully submitted,Shoshana M. GroveSecretaryI

67INTERROGATORY RESPONSES OFUNITED STATES POSTAL SERVICEWITNESS SAMUEL PULCRANO (T-1)DESIGNATED AS WRITTEN CROSS-EXAMINATIONInterrogatoryDesignating PartiesAPWU/USPS-T1-1APWU, PRCAPWU/USPS-T1-2APWU, PR, PRCAPWU/USPS-T1-3APWU, PRAPWU/USPS-T1-5APWU, PRAPWUlUSPS-T1-6APWU, NNA, PRAPWU/USPS-T1-7APWU, PRAPWU/USPS-T1-8APWU, PRAPWU/USPS-T1-9APWU, PRDFC/USPS-T1-1APWU, PRCDFC/USPS-T1-2PRCDFC/USPS-T1-3APWU, PRCDFC/USPS-T1-6APWU, APWU, PRNALC/USPS-T1-1APWU, PRNNAIUSPS-T1-1NNA,PRCNNAIUSPS-T1-2NNA, PRCNNAIUSPS-T1-3NNA, PRCNNAIUSPS-T1-4NNA, PRCNNAIUSPS-T1-5NNA, PRCNNAIUSPS-T1-6NNA,PRCNNAIUSPS-T1-7NNA, PRCNNAIUSPS-T1-8bNNA,PR,PRCNNAIUSPS-T1-8cNNA, PR, PRCNNAIUSPS-T1-8dNNA, PR, PRCNNAIUSPS-T1-9NNA, PRCNNAIUSPS-T1-10NNA,PR,PRCNNAIUSPS-T1-11NNA, PRCPRIUSPS-T1-4APWUPRIUSPS-T1-5APWU

68InterrogatorvDesignating PartiesPRiUSPS-T1-7PRPRiUSPS-T1-8APWU, PRCPRiUSPS-T1-9PRPRiUSPS-T1-11PRPRiUSPS-T1-14APWU, PRCPRiUSPS-T1-15PRPRiUSPS-T1-16APWU, PRPRiUSPS-T1-17PRPRiUSPS-T1-18APWU, PRPRiUSPS-T1-20APWUPRiUSPS-T1-22APWU, PRCPRiUSPS-T1-23APWU, PRPRiUSPS-T1-24APWU, PRCPRC/USPS-T1-CHIR No.2 - Q2APWU, PRCPRC/USPS-T1-CHIR No.5 - Q3APWU, PRC

69N2010-1United States Postal ServiceSamuel Pulcrano(USPS-T-1)

70RESPONSE OF UNITED STATES POSTAL SERVICE WITNESS PULCRANOTO AMERICAN POSTAL WORKERS UNION INTERROGATORYAPWu/USPS-T1-1 On page 5 of your testimony, lines 2-5, you state:In March of 2009, senior postal management asked me to organize a crossfunctional team (hereinafter, the "Five-Day Team") to more closely examine thefeasibility of changing the delivery model from six-day to five-day, with a focus onSaturday as the delivery day that might be eliminated.a.) How was it determined that the "Five-Day Team" focus on the eliminationof Saturday at the outset?b.) Were any other days examined for possible elimination other thanSaturday?RESPONSE(a-b) When they gave me my charter, postal managers senior to me wereaware of relevant fundamental considerations that would favor Saturdayas the second non-delivery day. Those considerations were affirmed bythe work of the Five-Day Team. See USPS-T-1 at pages 9-10. Anydetermination to focus on Saturday as the second non-delivery day wouldbe made with full awareness that there are five alternative candidates(Monday through Friday) for the second non-delivery day. Considerationof alternatives was not foreclosed. However, the work of the Five-DayTeam did not identify a compelling basis for seriously analyzing analternative to Saturday or for recommending to senior management thatthe focus shift to such an alternative.

7lRESPONSE OF UNITED STATES POSTAL SERVICE WITNESS PULCRANOTO INTERROGATORIES OF AMERICAN POSTAL WORKERS UNIONAPWUlUSPS-T1-2 USPS Library Reference N2010-1/1 states at the end of itsExecutive Summary "the Postal Service expects a smooth transition. It isdeveloping detailed plans for every area of postal operations."a). Are you in charge of developing these detailed plans?b). If not, who will be in charge of those activities?c). Are those plans already being drawn up? If so, when do you expectthem to be completed?RESPONSEa)Yes. I am responsible for coordinating the development of detailedimplementation plans. I will be receiving input from the respectivefunctional Vice Presidents who have responsibility for various aspects ofimplementation.b)N/Ac)All plans are contingent upon developments, the timing of which I amunable to predict. Completion of all plans would be expected at least 30days before the 2011 implementation date.

72RESPONSE OF UNITED STATES POSTAL SERVICE WITNESS PULCRANOTO INTERROGATORIES OF AMERICAN POSTAL WORKERS UNIONAPWu/USPS-T1-3 USPS Library Reference N2010-1/1 states on page 3 "Noone anticipates renewed demand for hard-copy correspondence andremittances-particularly First-Class Mail-in the future."a).Does this mean that the Postal Service has no expectation of mail volumerecovering at all from the FY2009 levels?If so, has the Postal Service made any operational plans for an increase inb).mail volume from FY2009 levels?Has there ever been an instance in the history of the Postal Service whenc).mail volume growth has not improved immediately following a recession?RESPONSEa)See the USPS response to NALC/USPS-T1-3. I am informed bywitnesses Whiteman and Corbett that while overall mail volume mail isexpected to recover from FY 2009 levels, it is not expected to recover toanywhere near FY 2007 levels.b)I am informed by witness Neri that the Postal Service will have sufficientoperating capacity to handle increases in volume that could reasonably beexpected to occur.c)See the response to subpart (a) above. All of the annual reports of theUnited States Postal Service published since postal reorganization arepublicly available in the USPS Headquarters Library and contain annualmail volumes. One could compare those data to periods of time oneassociated with economic recessions in the past four d

Englewood, New Jersey 07631-0528 (201) 569-2212 On Behalf of National Postal Policy Council. Inc. (NPpcl: WILLIAM B. BAKER Wiley, Rein LLP 1776 K Street, N.W. Washington, D.C. 20006-2304 (202) 719-7255 On Behalf of Association for Postal Commerce (PostComl: GENE DEL POLITO President Association for Postal Commerce