[Senate Report 108-318]
[From the U.S. Government Publishing Office]
Calendar No. 674
108th Congress
2d Session SENATE Report
108-318
_______________________________________________________________________
POSTAL ACCOUNTABILITY AND
ENHANCEMENT ACT
__________
R E P O R T
of the
COMMITTEE ON GOVERNMENTAL AFFAIRS
UNITED STATES SENATE
together with
ADDITIONAL VIEWS
TO ACCOMPANY
S. 2468
TO REFORM THE POSTAL LAWS OF THE UNITED STATES
August 25, 2004.--Ordered to be printed
Filed, under authority of the order of the Senate of July 22, 2004
COMMITTEE ON GOVERNMENTAL AFFAIRS
SUSAN M. COLLINS, Maine, Chairman
TED STEVENS, Alaska JOSEPH I. LIEBERMAN, Connecticut
GEORGE V. VOINOVICH, Ohio CARL LEVIN, Michigan
NORM COLEMAN, Minnesota DANIEL K. AKAKA, Hawaii
ARLEN SPECTER, Pennsylvania RICHARD J. DURBIN, Illinois
ROBERT F. BENNETT, Utah THOMAS R. CARPER, Delaware
PETER G. FITZGERALD, Illinois MARK DAYTON, Minnesota
JOHN E. SUNUNU, New Hampshire FRANK LAUTENBERG, New Jersey
RICHARD C. SHELBY, Alabama MARK PRYOR, Arkansas
Michael D. Bopp, Staff Director and Chief Counsel
Ann C. Fisher, Deputy Staff Director
Joyce A. Rechtschaffen, Minority Staff Director and Counsel
Susan E. Propper, Minority Counsel
John P. Kilvington, Legislative Assistant for Senator Carper
Amy B. Newhouse, Chief Clerk
CONTENTS
Page
I. Purpose and Summary..............................................1
II. Background.......................................................2
III. Legislative History.............................................39
IV. Section by Section Analysis.....................................41
V. Evaluation of Regulatory Impact.................................62
VI. Congressional Budget Office Cost Estimate.......................62
VII. Changes in Existing Law.........................................74
Calendar No. 674
108th Congress Report
2d Session SENATE 108-318
======================================================================
POSTAL ACCOUNTABILITY AND ENHANCEMENT ACT
_______
August 25, 2004.--Ordered to be printed
Filed, under authority of the order of the Senate of July 22, 2004
Ms. Collins, from the Committee on Governmental Affairs, submitted the
following
R E P O R T
[To accompany S. 2468]
The Committee on Governmental Affairs, to whom was referred
the bill (S. 2468) to reform the postal laws of the United
States, having considered the same reports favorably thereon
with amendments and recommends that the bill do pass.
I. Purpose and Summary
The purpose of S. 2468 is to reform the postal laws of the
United States. Among other things, S. 2468 preserves the basic
features of universal service-affordable rates, frequent
delivery, and convenient community access to retail postal
services. The bill also simplifies the pricing process for
Postal Service products and services and replaces the current
rate-setting process for market-dominant products with a rate-
cap based structure. It gives the Postal Service the authority
to set rates for competitive products, such as Express Mail and
Parcel Post, as long as these prices do not result in cross-
subsidy from the market-dominant products. S. 2468 grants the
new Postal Regulatory Commission the power to institute
emergency price increases due to ``unexpected and extraordinary
circumstances.'' It guarantees a higher degree of transparency
to ensure fair treatment of customers of the Postal Service's
and those companies competing with the Postal Service's
competitive products. It requires the Postal Service to report
to Congress with a strategy for how they intend to remove from
the network excess processing capacity and space. Finally, the
bill repeals a Civil Service Retirement System escrow fund
provision from Public Law 108-18 and transfers a military
pension obligation back to the U.S. Treasury, where it
originated.
II. Background and Need for Legislation
By most accounts, the 1970 Postal Reorganization Act
(Public Law 91-375), which created the modern Postal Service,
has been a success. Today, the Postal Service receives
virtually no taxpayer support and the service its approximately
710,000 career employees provide to every American, every day
is second to none. More than thirty years after its birth, the
Postal Service now delivers to 141 million addresses each day.
It is also the anchor of a $900 billion per year mailing
industry that, according to a study conducted by the Envelope
Manufacturers Association Foundation, employs roughly 11.1
million Americans nationwide in virtually every segment of the
economy.
Recent years, however, have been difficult ones for the
Postal Service. In late 2001, the Postal Service was projecting
its third consecutive year of deficits, having lost $199
million in fiscal year 2000 and $1.68 billion in fiscal year
2001. It was projecting losses of up to $4 billion in fiscal
year 2002. Mail volume was falling, revenues were below
projections and the Postal Service was estimating that it
needed to spend $4 billion on security enhancements in order to
prevent a repeat of the tragic anthrax attacks that took
several lives in the Fall of 2001. The Postal Service was also
perilously close to its $15 billion statutory debt ceiling.
Recent years have also been difficult for postal customers.
While rates have now temporarily stabilized, the combination of
an economic recession, terrorism and poor mail volume forced
the Postal Service to increase rates three times in less than
two years. These increases exceeded the rate of inflation. On
January 7, 2001, the price of postage increased by 4.7 percent
on average, increasing the price of a First Class stamp from 33
cents to 34 cents. On July 1, 2001, the price of a First Class
stamp did not go up again but prices for other postal products
increased by an additional 1.6 percent on average. On June 30,
2002, the price of postage increased by an additional 8.7
percent on average-raising the price of a First Class stamp
from 34 cents to 37 cents. When mail-dependant businesses
experience these kinds of price increases, they often begin
mailing less and jobs can be lost.
Things have turned around somewhat for the Postal Service
since the last rate increase. Postmaster General John Potter
has led a commendable effort to make the Postal Service more
operationally efficient. Billions of dollars in costs have been
taken out of the system, thousands of positions have been
eliminated through attrition and voluntary retirement and
successful automation programs have resulted in improved
service and productivity, along with reduced costs. More
dramatically, on November 1, 2002, the Postal Service learned
that an unfunded pension liability related to the cost of its
employees' participation in the Civil Service Retirement System
(CSRS) they once believed was as high as $32 billion was
actually $5 billion. A study conducted by the Office of
Personnel Management had found that, because pension
investments have been earning interest at a higher rate than
presumed in the statutory funding formula, the Postal Service
would over-fund its CSRS obligation by $78 billion if it
continued to make the same payments it had been making to that
point. Chairman Collins and Senator Carper introduced
legislation in early 2003, the Postal Civil Service Retirement
System Funding Reform Act (P.L. 108-18), which reduced the
amount the Postal Service must pay into the Civil Service
Retirement System each year by nearly $3 billion.
P.L. 108-18, however, did not provide a permanent solution
to the Postal Service's problems. The lower pension payment,
coupled with Postmaster General Potter's aggressive cost
cutting, averted the need for the Postal Service Board of
Governors to seek an increase to their statutory debt limit.
Aggressive cost cutting, however, cannot be sustained without
affecting universal service and so will not solve the Postal
Service's long-term challenges. According to the Postal
Service, the total volume of mail delivered by the Postal
Service has declined by more than 5 billion pieces since 2000.
Over the same period, the number of homes and businesses the
Postal Service delivers to increased by more than 5 million.
First Class mail, the largest contributor to the Postal
Service's bottom line, is leading the decline in volume. Some
of those disappearing First Class letters are being replaced by
advertising mail, which earns significantly less revenue for
the Postal Service.
In addition, the Postal Service has noted that only 22
percent of the Postal Service's current mail volume is
comprised of letters originating in households. A large
percentage of that 22 percent is being sent to businesses, non-
profit organizations and governments. Bill presentment and
payment, advertising mail and other commercial correspondence
account for 93 percent of total mail volume. It is highly
likely that, as Americans become more comfortable conducting
commercial transactions over the Internet, the Postal Service
will continue to see declines in First Class mail volume.
Approximately one in four Americans today pay at least some
of their bills online. Because processing an electronic payment
made over the Internet costs one-third less than processing a
check sent through the mail, businesses have an incentive to
encourage more Americans to carry out more transactions online.
In fact, many businesses no longer charge customers for the
convenience of innovations like electronic bill payment but are
instead offering incentives aimed at encouraging customers to
give up the mail and move to the Internet.
The electronic diversion of mail and its impact on the
Postal Service are among the reasons why the Postal Service has
been on the Government Accountability Office's (GAO) ``high-
risk'' list of troubled federal programs in need of reform
since 2001. Electronic diversion also comes at a time when, on
top of the costs related to serving a growing number of
delivery points, the Postal Service is facing more than $90
billion in unfunded liabilities and obligations. These include
$6.5 billion in debt to the U.S. Treasury, nearly $7 billion
for Workers' Compensation claims, $5 billion for CSRS
retirement costs, and as much as $45 billion to cover retiree
health care costs. The rate increases that will be needed to
finance these liabilities, maintain the Postal Service's
current infrastructure, pay for new letter carriers, and build
retail and processing facilities in growing parts of the
country will only further erode mail volume. GAO has warned
that the Postal Service could be on the verge of a ``death
spiral'' in which decreasing volume and increasing rates lead
to further decreases in volume.
To make matters worse, the rate and classification system
created in the 1970 Postal Reorganization Act often forces the
Postal Service to wait up to 18 months to change rates, giving
management little flexibility to adjust its revenues to
changing market conditions or to adapt to meet the unique and
changing needs of its customers. The 1970 Act also gives the
Postal Rate Commission limited oversight over the Postal
Service and creates a Postal Board of Governors comprised of
political appointees who sometimes do not have the management
experience necessary to run an organization the size of the
Postal Service.
There have been a number of efforts in recent years to make
some necessary reforms to the way the Postal Service does
business. This Committee, led by former Chairman Fred Thompson,
Ranking Member Lieberman and Senators Cochran and Akaka, former
Chairman and Ranking Member of the Subcommittee on
International Security, Proliferation, and Federal Services,
asked GAO in March 2001 for a study of the Postal Service's
precarious financial situation and its ability to continue to
fulfill its universal service obligation. This report
identified many of the Postal Service's serious long-term
problems. Senators Thompson, Lieberman, Cochran and Akaka then
sent a letter to the Postal Board of Governors then-Chairman
Robert Rider in June 2001 for a report from the Postal Service
on how it planned to reform itself to address the significant
challenges it faced. In April of 2002, Postmaster General
Potter delivered to Congress a comprehensive Transformation
Plan designed to ``ensure the continuation of affordable
universal service and to prepare the organization for the
challenges of change in a dynamic marketplace.'' Creation of
the Plan forced the Postal Service to determine what changes
could be made, within existing constraints, that would result
in improved operations, performance and finances.
While the Transformation Plan was widely acknowledged as a
good ``first step, `` it was also recognized that to truly
transform the Postal Service, legislative change would be
necessary. In an effort to take a fresh look at the issues, in
July of 2002, Chairman Collins introduced a bill to establish a
Presidential Postal Commission charged with examining the
problems the Postal Service faces, and developing specific
recommendations and legislative proposals that Congress and the
Postal Service could implement. Five months later, in December
of 2002, President Bush announced the creation of the
President's Commission on the United States Postal Service
(hereafter referred to as ``the President's Commission''), a
bipartisan commission charged with identifying the operational,
structural, and financial challenges facing the Postal Service.
The President charged this commission with examining all
significant aspects of the Postal Service with the goal of
recommending legislative and administrative reforms to ensure
its long-term viability.
The President's Commission conducted seven public hearings
across the country at which they heard from numerous witnesses.
On July 31, 2003, the Commission released its final report,
making 35 legislative and administrative recommendations for
the reform of the Postal Service. In issuing their report, they
sent a strong message to both Congress and the Postal Service:
. . . an incremental approach to Postal Service
reform will yield too little, too late given the
enterprise's bleak fiscal outlook, the depth of current
debt and unfunded obligations, the downward trend in
First Class mail volumes and the limited potential of
its legacy postal network that was built for a bygone
era.\1\
---------------------------------------------------------------------------
\1\ The President's Commission on the U.S. Postal Service,
Embracing the Future: Making the Tough Choices to Preserve Universal
Mail Service (July 31, 2003), Introduction, p. v.
Beginning in September of 2003, the Committee held a series
of seven hearings specifically to review the recommendations of
the President's Commission. The Committee heard from the
President's Commission's Co-Chair James Johnson, Postmaster
General Potter, Postal Service Board of Governors Chairman
David Fineman, GAO Comptroller General David Walker, Postal
Rate Commission Chairman George Omas, all four major postal
unions, postmaster and supervisor associations, mail-dependent
businesses, postal competitors, newspaper associations, and
experts on the issues of collective bargaining and postal
wages, among others. In addition, the Committee joined with the
House Government Reform and Oversight Committee to hold an
eighth hearing at which U.S. Department of Treasury Secretary
John Snow testified.
There appeared to be a broad, general, consensus in the
diverse stakeholder community on what elements of reform were
necessary, such as legislative changes to the rate-setting
process to allow for a more streamlined system. Postal
customers wanted this new rate-setting system to provide strong
incentives to hold down costs and to provide predictable rates.
Many witnesses also considered improved Postal Service
transparency and accountability to be essential aspects of
reform; along with pricing flexibility to enable the Postal
Service to better respond to its customers. The Committee was
also asked by countless stakeholders to reconsider two elements
of the Postal Civil Service Retirement System Funding Reform
Act of 2003. The Act changed the way the Postal Service funds
its Civil Service Retirement System (CSRS) obligation. The
Committee was specifically asked to repeal the escrow provision
of the CSRS Funding Reform Act and to transfer the military
pension obligation back to the U.S. Department of Treasury.
These were just a few of many legislative proposals for the
reform of the Postal Service that the Committee was asked to
consider.
These hearings culminated in Chairman Collins' and Senator
Carper's May 20, 2004 introduction of The Postal Accountability
and Enhancement Act of 2004, S. 2468.
THE POSTAL ACCOUNTABILITY AND ENHANCEMENT ACT OF 2004
Postal Service mission
Congress established the United States Postal Service ``to
bind the Nation together through the personal, educational,
literary, and business correspondence of the people.'' [39
U.S.C. 101(a)]. In this legislation, the Committee reaffirms
the core mission of the Postal Service and limits the Postal
Service to providing postal services which comprise the
physical delivery of letters, printed matter or packages
weighing up to seventy pounds and other ancillary services. By
focusing on the business of processing, transporting and
delivering physical mail pieces, the Postal Service will avoid
the distractions and the associated financial costs that have
arisen when the Postal Service has ventured away from its core
business. To further this focus on core mail products, the
Postal Service will not be permitted to offer nonpostal
products except in cooperation with other government agencies,
for example, sale of federal migratory bird hunting and
conservation stamps or acceptance of passport applications.
The definition of postal services and the associated
definitions of products and rates form a product framework
within which the Postal Service will operate and for which the
Postal Regulatory Commission will design a regulatory
structure. These definitions do not direct the Postal
Regulatory Commission or the Postal Service to adopt any
specific costing or rate design methodologies.
Regulatory structure
The Postal Service currently operates under a regulatory
structure created more than thirty years ago in the 1970 Postal
Reorganization Act, a bill enacted at a time when nobody
imagined that innovations like fax machines, cell phones and
the Internet would one day compete with hard copy mail. The
current structure offers the Postal Service little opportunity
to innovate or even to quickly change the prices it charges for
its products in response to changes in the market. It also
gives the Postal Service little incentive to cut costs, even
though the cost of a growing delivery network coupled with
falling mail volume and massive debt demands greater
efficiency. Meanwhile, the Postal Rate Commission is given
limited authority to exercise oversight over the Postal
Service. The President's Commission acknowledged these
concerns, stating in its report that the laws governing the way
the Postal Service operates need to be updated to meet the
challenges of the Internet age.\2\ The Postal Service
acknowledged this itself in the Transformation Plan:
---------------------------------------------------------------------------
\2\ Ibid., 8.
While the basic charter of the Postal Service has
remained static since its inception in 1970, the
mailing industry and private sector delivery companies
have evolved to meet the changing needs of the
marketplace. Indeed, innovation and competition were
not primary concerns of the 1970 Act. The Act was
designed to allow the Postal Service to do what it did
in 1970 in a more businesslike manner. By definition
and structure, a government entity has goals and
mandates that the private sector does not have, and
these inhibit the flexibility needed for direct
competition. In the far different and more competitive
environment of 2002, a revision of the Postal Service's
1970 charter is overdue.\3\
---------------------------------------------------------------------------
\3\ U.S. Postal Service, Transformation Plan, (April 2002), 3.
This legislation makes that long overdue revision by
establishing a regulatory structure that balances the Postal
Service's need for increased pricing and product flexibility
with the need for effective oversight and accountability. The
Committee has considered that the Postal Service faces little
or no competition in providing many products and, for some
products, has been granted a legal monopoly which prohibits
private sector firms from providing alternative services.
Therefore, the Postal Service's current products are divided
into two categories: market-dominant products for which there
is little or no competition and competitive products for which
private sector alternatives exist. The regulatory structure
grants the Postal Regulatory Commission enhanced review and
oversight responsibilities for market-dominant products while
streamlining the rate-making procedure for those products to
allow a more rapid Postal Service response to changes in market
conditions. In addition, the Postal Service's Board of
Governors is permitted to more directly manage and price the
Postal Service's competitive products; subject to minimal
Regulatory Commission oversight to ensure that the Postal
Service competes fairly with the private sector delivery
services.
Current Postal Service products classified in S. 2468 as
market-dominant include First Class Mail Letters, First Class
Mail Cards, Periodicals, Standard Mail, single-piece Parcel
Post, media mail, bound printed matter, library mail, special
services and single-piece international mail. Current Postal
Service products classified by this bill as competitive include
Priority Mail, expedited mail, bulk parcel post, bulk
international mail, and mailgrams.
The Committee considered classifying single-piece Parcel
Post as a competitive product. In many parts of the country
where a number of private sector delivery services compete with
the Postal Service in the package delivery market, classifying
single-piece Parcel Post in this way would not be likely to
have much of an impact on postal customers. However, the
Committee decided to make single-piece Parcel Post a market-
dominant product because of the negative impact we feared a
competitive classification would have on those postal customers
who live in parts of the country with fewer package delivery
options. The Postal Service has traditionally kept prices for
single-piece Parcel Post low to facilitate universal access to
affordable package delivery in all parts of the country. It
charges the same rate for single-piece Parcel Post in rural
communities as it does in urban or suburban communities with
more competitive package delivery markets. If single-piece
Parcel Post were made a competitive product subject to the
language in new section 3633 of title 39 of the U.S. Code
setting cost coverage requirements for all competitive
products, it is possible that the Postal Service would be
forced to increase the price it charges for the product. This
could make single-piece Parcel Post unaffordable for some
postal customers. That said, nothing in this bill prevents
single-piece Parcel Post from one day being moved from the
market-dominant to the competitive category under the new
section 3642 of title 39. If the Postal Regulatory Commission
considers making this change at any point in the future, the
Committee urges them to pay particular attention during their
deliberations to the impact their decision could have on the
affordability and availability of package delivery services in
those communities without a fully-developed competitive package
delivery market.
Regulation of market-dominant products
The Postal Service currently operates under a regulatory
structure that has changed little since it was established by
the Postal Reorganization Act in 1970 (Public Law 91-375).
However, the economy and the market place in which the Postal
Service operates have changed in ways that could not have been
foreseen more than thirty years ago. Today, electronic and
other alternatives to mail have the potential to significantly
reduce Postal Service mail volumes; volume reductions are
already being seen. These market pressures combined with a
continual growth of the Postal Service's network and the number
of postal delivery points threaten the ability of the Postal
Service to provide universal service. In addition, a rigid, and
overly litigious rate-setting process limits the Postal
Service's ability to adjust rates as needed and to adapt postal
prices and products to a changing marketplace. This bill
proposes needed reforms that will not only address these
critical needs but will also enhance oversight ensuring that
the Postal Service is accountable to the American people.
In designing the regulatory structure for market-dominant
products, the Committee carefully considered whether Congress
itself should legislatively establish the details of the
regulatory system. On balance, however, the Committee
determined that relying on the Postal Regulatory Commission's
expertise to develop the price cap will result in a more
flexible system that can be adapted to changing market
conditions. In implementing this authority, the Postal
Regulatory Commission should develop regulations that will give
the Postal Service the maximum pricing flexibility possible
consistent with the overarching financial and policy goals set
forth in this legislation. Replacing one inflexible system with
another will not address the needs of the postal community or
ensure long-term survival of the American public's postal
system.
For market-dominant products, the Postal Regulatory
Commission is directed to design, within 12 months, a modern
system for regulating rates and classes for market-dominant
products. This regulatory system shall be designed to meet nine
objectives. These objectives recognize the importance of the
postal rate-setting process to both the Postal Service and its
customers and the need to ensure that the Postal Service
remains a financially viable institution capable of providing
the mail services that the American public need. Specifically,
these objectives direct the Postal Regulatory Commission to
establish a more streamlined regulatory system which will
reduce the time and resources needed to litigate and establish
new postal rates while giving the Postal Service increased
pricing flexibility (Objectives 1 and 5). In addition, the new
regulatory system should address postal customers' concerns
that rate changes be both predictable and stable (Objective 2),
that the mail system be secure and terrorism be deterred
(Objective 4), and that an equitable distribution of the Postal
Service's institutional costs result (Objective 7). The long
term financial viability of the Postal Service is addressed by
requiring that the Postal Regulatory Commission maximize
incentives for the Postal Service to reduce costs and increase
efficiency (Objective 3) thus maintaining affordable and cost-
effective postal services. Lastly, the Postal Regulatory
Commission is directed to include a provision for the Postal
Service to earn adequate revenues, including the ability to
retain earnings, both to maintain the Postal Service's
financial stability and to meet established service standards
(Objective 6). It is the Committee's expectation that the new
rate and classification system will be fair and equitable for
mailers of all types of sizes.
The Committee believes that the provision for retained
earnings will address two concerns expressed during hearings
conducted prior to the introduction of this bill. First, the
ability to retain earnings will provide the Postal Service with
revenues necessary to fund network expansion and necessary
capital improvements. In the current environment the Postal
Service faces the need to expand its network as the number of
delivery points increases; however, if the concurrent downward
trend in mail volumes continues, it will become increasingly
difficult to fund this needed expansion. Retained earnings will
provide a resource that can be used by the Postal Service to
meet its universal service obligation. Secondly, the
Committee's determination that a rate cap mechanism is the
appropriate regulatory structure is based on a determination
that a rate cap can result in downward pressure on costs
through restrictions on price changes. If retained earnings are
not permitted, that is if revenues must equal costs, the
incentive to control costs and thus generate funds for long-
term capital investments, network growth or other needs will
not exist.
In designing the regulatory structure, the Postal
Regulatory Commission shall take into account twelve factors.
These factors encompass the current pricing and classification
criteria [39 U.S.C. 3622(b) and 3623(c)] used by the Postal
Rate Commission to evaluate the Postal Service's Governors'
rate and classification requests. The Committee believes that
these factors have served a useful role in evaluating rate and
classification changes under the current regulatory structure
and will provide similar policy guidance for the development of
the new regulatory system.
Accurate attribution of costs
The existing regulatory structure focuses considerable
attention on ascertaining what postal costs could reliably be
said to have been incurred to provide which specific postal
services. Current law requires that the rates for each class of
mail and type of service be set so as to recover the direct and
indirect costs that were caused by that class or type, in
addition to providing a reasonable contribution toward
institutional costs. Institutional costs are those 40 percent
of the Postal Service's costs, such as salaries for management
and other overhead costs, that the Postal Service says cannot
be attributed to any specific product. While considering this
legislation the Committee heard testimony suggesting that
currently accepted levels of cost attributions were both too
low and too high, and that specific rules for cost attribution
should be incorporated into law. The Committee has decided that
the technical decision of what cost analysis methodologies are
sufficiently reliable at any given time to form the basis for
attribution should be left to the Postal Regulatory Commission,
acting with benefit of counsel from all interested persons in
open public proceedings.
Identifying costs which can reliably be found to have been
caused by each specific subclass and service is essential to
maintaining economically efficient rates and avoiding
inequitable cross-subsidization, which occurs when rates from
one product are used to pay costs associated with another. Over
the history of the Postal Reorganization Act the ability to
accurately attribute costs has continually evolved, and the
Committee expects that with greater transparency about the
Postal Service's operations, this process will continue. The
current analysis has been guided by a Supreme Court decision,
National Assoc. of Greeting Card Publishers v. USPS, 462 U.S.
810, 829-34, (1982), that carefully analyzed how the term
attributable should be interpreted. This definition has been
further refined by U.S. Courts of Appeals and is well
understood in the industry. The NAGCP Court rejected a
contention that it was appropriate to make classes responsible
for the recovery of costs for which an extended inference of
causation was claimed. It emphasized the need for reliable
indicators of causality without specifying any specific method
for identifying causality. Governed by this ruling since 1982,
the Postal Rate Commission must have reasonable assurance that
any costs attributed to a class of mail are incurred as a
result of providing that class of mail. The Committee finds no
reason for changing this standard.
Establishment of a regulatory system for market-dominant products
In hearings, witnesses from the mailing industry cited the
need for predictable and stable rates. Predictability and
stability, the Committee learned, allows mailers to better plan
their mailing and could allow them to increase the amount of
business they do with the Postal Service. Of primary
importance, then, is the establishment of a regulatory system
that will provide for limits on the percentage changes in
Postal Service rates. This system--frequently referred to as a
rate or price cap--shall be designed to limit annual rate
changes based on the level of inflation. While the Committee
considered directing the use of a specific inflation measure as
the basis for the rate cap, concern existed that such a
determination would unreasonably restrict the flexibility of
the Postal Regulatory Commission to establish the best and most
effective rate cap mechanism. The Committee expects that the
Postal Regulatory Commission, in public proceedings and with
the input of all interested parties, will fully and carefully
evaluate the merits of a wide range of rate cap structures.
This consideration should include, but should not be limited
to, the relative merits of different inflation indices
including the Consumer Price Index, the Employment Cost Index,
and the Gross Domestic Product Price Index; the definition of
the product groupings to which the caps will be applied, and
the use of productivity factors or offsets. In addition, the
Postal Regulatory Commission should consider the experience
gained and lessons learned from the construction and
application of rate or price caps in other industries. Overall,
the Committee believes that the rate cap structure established
by the Postal Regulatory Commission should provide for the
maximum possible pricing flexibility while maintaining adequate
financial safeguards and incentives for cost control.
To provide for predictable rate changes which will allow
Postal Service customers to budget for postage expenditures,
the Postal Regulatory Commission shall establish a schedule
under which rates will change at regular intervals by
predictable amounts. While the establishment of a rate cap per
se will increase the predictability of postal rate changes by
imposing a known cap, the Postal Regulatory Commission must
consider whether additional requirements are necessary and
appropriate. The Committee believes that the characteristics
and relative sophistication of various customer groups may
suggest differing rate change schedules are appropriate for
specified product groupings. Similarly, market conditions and
the relative speed with which market conditions change may also
inform the Postal Regulatory Commission's decision in
establishing any rate change schedule. The Postal Regulatory
Commission may determine that more or less frequent rate
changes are appropriate for different product groupings.
However, establishment of schedules for rate changes should be
designed to provide a necessary and appropriate level of
predictability; it should not be designed to unreasonably
restrict the ability of the Postal Service to adjust prices
within the rate cap.
To provide for adequate review of any proposed changes in
market-dominant product price, a 45-day prior review period is
established. This period begins with the Postal Service's
public notice of a price adjustment affecting a market-dominant
product or products and will provide the Postal Regulatory
Commission an opportunity to review the adjustment. If the
Postal Regulatory Commission finds that the price adjustment is
not in compliance with the established statutory and regulatory
requirements, it must notify the Postal Service within the 45-
day notice period. In response to this notice, the Postal
Service shall describe the actions to be taken to ensure that
the rate change is in compliance with the statutory and
regulatory requirements. While the Postal Service is expected
to respond adequately to any Postal Regulatory Commission
determination of noncompliance prior to the scheduled rate
implementation, the burden is on the Postal Regulatory
Commission to provide adequate notice of noncompliance
permitting a Postal Service response prior to the expiration of
the 45-day period. If either intentionally or inadvertently,
the Postal Regulatory Commission does not notify the Postal
Service of any noncompliance, the Committee believes that there
would be no impediments to the Postal Service implementing the
rate adjustment as noticed at the end of the 45-day period. The
Committee clearly recognizes that the 45-day review period is
short and has determined that a short review period is
consistent with the goals of increasing Postal Service pricing
flexibility. To facilitate review of rate adjustments, the
Committee presumes that extremely clear and well-defined
standards will be established by regulation allowing the Postal
Service and the Postal Regulatory Commission to make a rapid
determination of whether a rate adjustment meets the applicable
criteria. The review period is not intended to be used to
evaluate the regulatory structure; if a full review of the
regulatory structure is deemed to be necessary, the Committee
expects that, during the period of any review of the regulatory
structure, the Postal Service will be permitted to adjust rates
under the regulatory requirements in effect as of the date of
public notice of the adjustment. Therefore, any changes in the
regulatory structure will be applicable only to rate
adjustments noticed by the Postal Service after the date the
new regulations are established.
The Committee believes that the rate cap system to be
established under this statute by the Postal Regulatory
Commission should give the Postal Service the flexibility to
respond to all circumstances it is likely to face in the normal
course of business. However, the terrorist attacks of September
11, 2001 and the subsequent use of the mail to transmit anthrax
highlight the need to address unexpected and extraordinary
circumstances and their effect on the Postal Service and its
financial requirements. Therefore, the Postal Regulatory
Commission shall establish procedures under which the Postal
Service can adjust rates on an expedited basis due to
unexpected and extraordinary circumstances. The Committee hopes
that these procedures will never be needed; however, it would
be unwise not to recognize the potential need for rapid changes
to the postal rate structure in the event of a national
emergency.
Workshare discounts
The Committee has heard testimony from many parties
describing the benefits of the Postal Service's worksharing
program. This program was developed by the Postal Service and
the Postal Rate Commission to enable customers to pay lower
rates when they perform mail preparation or transportation
activities such as presorting, prebarcoding, and certain other
mail handling activities that would otherwise be performed by
the Postal Service. This worksharing program has induced
mailers to invest in equipment and processes that facilitate
the Postal Service's automation program, has reduced mailing
costs, and has otherwise made mail a more economically
attractive medium.
The Committee agrees with the principle, supported by the
Postal Service, the Postal Rate Commission, and postal
employees, that workshare discounts should generally not exceed
the costs that the Postal Service avoids as a result of the
worksharing activity. When discounts are kept below the costs
saved by the Postal Service, mailers have a financial incentive
to do work more efficiently than the Postal Service can do it,
yielding savings to the participating mailers, to the Postal
Service, and to other postal customers whose rates are kept
down by the Postal Service's savings under the program.
However, there are four circumstances under which workshare
discounts in excess of avoided costs have historically been
allowed by the Postal Rate Commission and are warranted, and
the Committee has codified these exceptions in the legislation:
The first exception applies when a discount is
associated with a new or changed postal product and is needed,
for up to 4 years, to induce mailer behavior that furthers the
economically efficient operation of the Postal Service. Such a
discount can encourage mailers to invest in new technologies or
practices that will save the Postal Service money, and can then
provide the Postal Service an opportunity to achieve the
resulting efficiencies. For discounts already in effect on the
date of enactment, the 4-year period begins on that date.
The second exception provides that a workshare
discount may exceed costs avoided if a reduction in the
discount would--(i) lead to a loss in volume of the affected
category of mail and thereby reduce the aggregate contribution
to institutional costs, (ii) result in a further increase in
rates paid by mailers not able to take advantage of the
discount, or (iii) impede the efficient operation of the Postal
Service.
The third exception allows a workshare discount to
exceed costs avoided if that excess portion of the discount is
necessary to mitigate rate shock and will be phased out over
time. Discounts under this exception, like those under the
first exception, are time-limited.
The fourth exception applies to discounts that are
provided in connection with subclasses of mail consisting
exclusively of material having educational, cultural, or
scientific value. Discounts under this fourth exception, like
those under the second, are not time-limited.
To ensure that the economic rationale for workshare
discounts is transparent and clearly understood, the Postal
Service will be required to submit to the Postal Regulatory
Commission a report whenever it establishes or maintains a
workshare discount. This report must include an explanation of
the Postal Service's reasons for establishing or maintaining
the rate and must set forth the data, economic analyses, and
other information relied upon by the Postal Service to justify
the rate.
Service agreements for market-dominant products
In the hearings, the Committee heard from numerous
witnesses who argued that increased pricing and product
flexibility was necessary to provide the Postal Service with
the ability to respond quickly and effectively to customers'
needs. The current regulatory structure places roadblocks in
the way of responsive and cost-effective pricing initiatives.
For example, the Capital One service agreement required eight
months of litigation, hundreds of pages of testimony, hearings,
and extensive legal argument before being recommended by the
Postal Rate Commission. The Committee fully supports the Postal
Rate Commission's determination that service agreements
establishing customer-specific rates and classifications are
legal and permissible under current law. In addition, the
Committee believes that the regulatory structure established by
this legislation, absent the provisions of this section, would
permit customer-specific service agreements for both market-
dominant and competitive products. However, in evaluating the
concerns of postal stakeholders, the Committee has determined
that the limited experience to date with service agreements
suggests that prudent safeguards might reasonably be included
in this legislation. While future review may determine that the
requirements we have instituted are unnecessary, we believe
these requirements will provide useful legislative guidance in
evaluating future service agreements for market-dominant
products. Consistent with the Committee's determination that
increased pricing discretion should be granted to the
Governors, the requirements for service agreements for
competitive products decisions for competitive products do not
differ from those for any other competitive product rate change
as set out in section 3631.
Specifically, the Postal Service is authorized to negotiate
service agreements with individual customers or groups of
customers for market-dominant products. These agreements would
provide for the provision of postal services under terms,
conditions, or service standards that differ from those
generally available to other users of the mails. Service
agreements will, therefore, serve as a vehicle by which the
Postal Service and its customers can evaluate unique
opportunities to reduce costs, change product offerings to meet
specific customer needs or undertake other actions that will
provide a benefit to the participating customer. While many
view service agreements as a way for the participating customer
to reduce its costs (through lowered rates or acceptance of
reduced services), the Committee encourages the Postal Service
to investigate opportunities that may provide additional or
premium (possibly at a higher price) services that would not
otherwise be available to customers. We do not intend for
service agreements to be a limited substitute for more broadly
applicable classifications. The Postal Service should continue
to make every effort to provide products and services of value
available to as many customers as possible.
In fact, the conditions established in this legislation
will ensure that no one is made worse off as a result of a
customer-specific service agreement. Every service agreement
must provide sufficient total revenue to ensure that all Postal
Service costs attributable to the agreement are covered and
that the contribution to the Postal Service's institutional
costs from the mail covered by the agreement will not decline;
therefore, no other customer will bear an increased
institutional cost burden because the Postal Service has
entered into the service agreement. In addition, rates or fees
for other mailers cannot increase as a result of the agreement.
Lastly, the Postal Service will be required to enter into
agreements on the same (or substantially similar) conditions
with customers who are not party to the agreement; this will
result in the benefits from a service agreement being made
accessible to any customers who can meet the requirements of
the service agreement. Lastly, the Postal Regulatory Commission
may suspend, cancel or prevent an agreement if it does not meet
the requirements of this section, or following review under the
same procedures used for other rate and service complaints as
established in section 3662.
Administrative requirements are also established by this
legislation that will ensure that the terms and conditions of
any service agreements are publically known and to permit the
open evaluation of the agreements by both the Postal Regulatory
Commission and any customer who may want to determine whether
it could benefit under the terms of the agreement. The Postal
Service is required to publish the terms of a service agreement
in the Federal Register at least thirty days before the service
agreement is to take effect. This publication must describe the
postal services the agreement involves and the functions the
Postal Service and the customer respectively must perform, and
the rates and fees payable by the customer during the term of
the agreement. In addition, the notice must provide sufficient
information (based to the extent practicable on customer
specific data) to demonstrate the bases for the Postal
Service's view that the agreement meets the legislatively
established conditions for a permissible service agreement. As
a safeguard for regional or local businesses who may not
routinely review Federal Register notices, the Postal Service
shall publish this information in a manner that would provide
reasonable notice to persons within any geographic area if the
agreement pertains to that area specifically.
Pricing of competitive products
This bill establishes a flexible system of pricing the
Postal Service's competitive products which reduces regulatory
burdens and permits more customer- and market-responsive
pricing. It does this while establishing appropriate safeguards
to ensure that a level playing field is maintained and that the
Postal Service does not unfairly compete. The competitive
products are defined as priority mail, expedited mail, bulk
parcel post, bulk international mail and mailgrams. As
appropriate, the Postal Regulatory Commission may adjust the
list of competitive products in response to changes in market
conditions such as a significant increase in the number or type
of non-postal alternatives for a specific product. In the
market for each of these products, substantial private sector
competition exists giving customers alternatives to Postal
Service products. Unlike market-dominant products, where a lack
of competition leads the Committee to specify a rate cap
mechanism to ensure that costs and prices are controlled; for
the competitive products the Committee believes that the open
and fair competition with private sector firms will encourage
the cost-effective provision of Postal Service competitive
products.
The regulatory structure established by the Postal
Reorganization Act does not distinguish between market-dominant
and competitive products. See 39 U.S.C. 3622. Regardless of the
availability of competitive alternatives to postal products,
the same litigious and lengthy postal rate-making process is
applied to all products. Under this legislation, the
Presidentially-appointed Postal Service Governors are permitted
to establish rates and classes for competitive products as
needed under a streamlined review process.
To protect both customers and competitors of the Postal
Service, this legislation establishes a prior review process to
ensure that the Postal Service is not pricing competitive
products inappropriately and to ensure that the Postal
Regulatory Commission and all interested parties have the
opportunity to review the proposed competitive products prices
and to determine that the requirements of this act are met. The
public notice and concurrent Postal Regulatory Commission
review period for competitive product price change is limited
to thirty days. As compared to current statute, which allows
the Postal Rate Commission up to ten months to review all
Postal Service price requests, the limited thirty day review
period should substantively increase the ability of the Postal
Service to adjust its competitive pricing and products to react
to market changes and customer needs. If the Postal Regulatory
Commission finds that any proposed competitive product price
change does not meet the requirements of the regulatory
structure, it is required to notify the Governors of the
noncompliance and the Governors are required to respond to this
notice by describing the actions to be taken to comply.
The Postal Regulatory Commission is required, within 180
days of enactment, to promulgate regulations that prohibit the
cross-subsidization of competitive products by market-dominant
products, ensure that each competitive product covers its
attributable costs, and that all competitive products
collectively cover their share of the Postal Service's
institutional costs. These regulations are intended to ensure
that the Postal Service competes fairly in the provision of
competitive products. However, the Committee feels that the
regulation of competitive products should be constructed to
result in the minimum possible regulatory burden and to
facilitate a short and limited review of proposed competitive
product price changes. As a result, established regulations are
expected to be clear and easily interpreted to facilitate the
short prior review process established by this legislation. The
Governors, in turn, are expected to provide a clear and concise
explanation of how and why the proposed rate changes meet the
established requirements to facilitate Postal Regulatory
Commission review. The review process is intended to ensure
that the Governors' proposed competitive price adjustments meet
the established requirements, not to serve as an evaluation of
the merits of each proposed rate as compared to any other
alternative rates.
Experimental and new products
The Committee recognizes that, to remain financially viable
and to continue to meet the evolving needs of its customers,
the Postal Service must innovate and develop new products and
services. While this legislation limits the scope of the Postal
Service's product offerings to ``postal products,'' we do not
intend for this limitation to restrict the Postal Service's
ability to develop new postal products. In fact, developing an
organizational culture of innovation and market responsiveness,
can help the Postal Service to address its financial
difficulties by increasing the attractiveness of mail to both
new and existing customers. Therefore, this legislation sets
out procedures under which the Postal Service can offer
experimental and new postal products.
Under the provisions of the Postal Reorganization Act, the
Postal Service must request a recommended decision from the
Postal Rate Commission prior to offering any new product or
service. While the Postal Rate Commission has established rules
to expedite consideration of experimental and market test
classification requests, the Postal Service and other
stakeholders have often observed that the current regulatory
structure does not offer sufficient flexibility to innovate and
offer new products and services. To increase flexibility and to
facilitate a more entrepreneurial approach to product
development, the Committee believes that the Postal Service
should be granted additional flexibility permitting it to
market test experimental products without extensive prior
review by the Postal Regulatory Commission. Therefore, for
market tests of experimental products for which Postal Service
revenues are expected not to exceed $10 million annually, no
prior review will be required. In addition, these market tests
will be limited to 24 months in duration. However, if it is
necessary to determine the feasibility or desirability of the
product being tested, the Postal Regulatory Commission may,
upon receiving an application from the Postal Service, extend
the revenue limits to $50 million annually and the duration of
the market test for an additional 12 months. The Postal
Regulatory Commission shall approve any application to increase
the revenue limit or duration of the market test for an
experimental product if it determines that the product is
likely to benefit the public and meet an expected customer
demand, the product is likely to contribute to the financial
stability of the Postal Service and the product is not likely
to result in unfair or inappropriate competition. The ability
to modestly expand the market test revenue and duration limits
with Postal Regulatory Commission concurrence, will give the
Postal Service additional flexibility if it finds that a more
limited test will not provide sufficient information to
evaluate the market demand and the financial potential of a
product.
To ensure that proper safeguards exist at the outset of a
market test of an experimental product, the Postal Service will
be required to file with the Postal Regulatory Commission and
publish in the Federal Register a notice describing the test's
nature and scope and explaining why it believes the experiment
should be classified as a market test. Products eligible for
provision as a market test for an experimental product must be
sufficiently different from all products offered by the Postal
Service in the prior two years, thus protecting against the use
of the market test rules to adjust or change the rates charged
for existing products outside the rate-making processes
established in sections 3622 and 3623. However, this limitation
is not intended to foreclose the use of the market tests of
experimental products authority for enhancements to existing
products. The test used to determine whether the market test
provisions can be applied is a judgement that the proposed
product is, from the point of view of mail users, different
from those offered in the prior two years. These new products
could include ancillary services that were not previously
offered, product enhancements that provide services of value
that differ in some respect to currently offered products, re-
introductions of products that had been previously
discontinued, and adjustments to product offerings under the
experimental rules that change the nature or type of service
provided. The intent of the market test rules is not to
severely limit the type and scope of products that can be
offered under these provisions, it is rather to encourage the
Postal Service to expand the scope of its products to maintain
the attractiveness of the mails generally.
To protect both customers and competitors of the Postal
Service, the Postal Service should not be permitted to offer a
product under the market tests of experimental products
provisions if it would create an unfair or otherwise
inappropriate competitive advantage for either the Postal
Service or any mailer, especially small business concerns. In
addition, if a market test for an experimental competitive
product is undertaken, the protections offered for confidential
business information under the new Postal Regulatory Commission
subpoena powers will also apply. To ensure consistency and
preserve the distinctions made under the rate-making provisions
applicable to market-dominant and competitive products, costs
and revenues attributable to competitive experimental products
will be included in the determination of the Postal Service's
compliance with the provisions applicable to competitive
products generally. To prevent a potential anomaly that might
otherwise permit an enhancement to a competitive product to be
classified as a market-dominant product, any product developed
under the market test rules that only affects competitive
products or provides services ancillary to competitive products
will also be classified as a competitive product even if a
similar ancillary product is available for one or more market-
dominant products. Lastly, as a final safeguard, the Postal
Regulatory Commission may order the cancellation of a test or
take other appropriate action, if it determines that a market
test does not meet the requirements of the section. The
Committee established this provision as an ultimate safeguard
for customers and competitors of the Postal Service; however,
we do not intend this safeguard to result in a de facto prior
review of market tests of experimental products through the
establishment of rules that institute requirements for
provision of extensive information or data before the Postal
Service can begin a market test.
While the bill establishes procedures setting out a
simplified process allowing the Postal Service to conduct
market tests of experimental products, the Committee does not
intend to limit the Postal Service's product development
initiatives to small-scale product enhancements. Instead, we
strongly encourage the Postal Service to review its product
offerings on an ongoing basis to ensure that they continue to
meet the needs of the American people including customers of
all sizes. Because it is not unlikely that these reviews may
result in proposed product changes exceeding the scope of
changes permitted under the market test for experimental
products provisions, this legislation establishes a process
whereby the Postal Service can adjust its product lines and
respond to the market place while ensuring that the Postal
Regulatory Commission can provide appropriate regulatory
oversight.
As has been well demonstrated in public hearings both
before this Committee and before the President's Commission on
the United States Postal Service, the postal marketplace is
changing, perhaps more rapidly than at any time in our nation's
history. Therefore, while the Committee divided existing postal
products and services into the market-dominant and competitive
product groupings in this legislation, over time, we expect
that these product groupings will need review and revision as
circumstances change. Therefore, the Postal Regulatory
Commission is given the authority to change the lists of
market-dominant and competitive products by adding or removing
products from the lists or by transferring products between the
two lists. The Postal Service or users of the mails may request
changes in the product lists and the Postal Regulatory
Commission may also, upon its own initiative, change the
product lists. Under current law, the Postal Service has the
sole ability to request changes in the classification schedule,
and absent such a request, the Postal Rate Commission has
little ability to initiate classification changes even if the
change would be beneficial. However, we do not intend for these
provisions to result in Postal Regulatory Commission management
of the Postal Service's product offerings. The goal of
increased flexibility and increased responsiveness to
customers' needs requires that the Postal Service manage its
product offerings. But, in a changing environment, the Postal
Regulatory Commission must be able to make needed alterations
to the regulatory structure, including the classification of
products as market-dominant or competitive, to ensure that the
regulatory structure continues to meet the goals established by
Congress. Consequently, any changes to the product listings
should be well-reasoned and clearly justified based on changing
market conditions.
To guide Postal Regulatory Commission decisions on the
classification of products as either market-dominant or
competitive, ``market-dominant products'' have been defined as
including each product for which the Postal Service exercises
sufficient market power that it can effectively set prices
above costs, raise prices significantly, and decrease quality
or output without risk of losing substantial business to other
firms offering similar products. Because this legislation
establishes regulatory limits on, for example, price changes,
the evaluation of whether ``sufficient market power'' exists
must recognize the potential for price, quality, or output
changes and associated market effects in the absence of
established regulatory constraints. All products not defined as
market-dominant under these criteria shall be categorized as
competitive products. Generally, this definition adopts the
Federal Communications Commission definition of a dominant
carrier.
Furthermore, in recognition that some customers have no
non-Postal Service alternatives because of the Congressionally-
established restrictions on the carriage of letters outside the
mail, [18 U.S.C. 1696 subject to the same exception set forth
in the last sentence of section 409(e)(1)] this legislation
requires that any product subject to this monopoly remain
within the market-dominant category. In making any decision to
transfer products under this section, the Postal Regulatory
Commission should give due regard to the availability and
nature of services in the private sector engaged in the
delivery of the product, the views on the appropriateness of
the proposed action of those who use the product and the likely
effect on any small business concerns. This will allow for a
balanced evaluation of the merits of any proposed transfer of a
product between the market-dominant and competitive product
categories. Because changes in the market place may not equally
affect all of the subclasses or other subordinate units or a
class of mail or type of postal service, nothing in this title
shall be considered to prevent transfers under this section
from being made because they only affect some (but not all) of
the subclasses or other subordinate units of a class of mail or
type of mail service. To facilitate the effective operation of
the regulatory structure, the Postal Service cannot offer any
product involving the physical delivery of letters, printed
matter or packages unless it has been assigned to the market-
dominant or competitive category of mail.
Reporting requirements
In establishing the postal regulatory structure in the
bill, the Committee has attempted to balance the Postal
Service's need for additional flexibility with the public and
mailing community's need for increased financial transparency
and established safeguards to protect against unreasonable use
of the Postal Service's statutorily-granted monopoly. We are
also establishing reporting requirements for both the Postal
Regulatory Commission and the Postal Service to ensure that
Congress, the Postal Regulatory Commission and postal
stakeholders have sufficient information to determine the
ongoing effectiveness of the regulatory structure established
in this legislation as well as to provide for ongoing audits of
the Postal Service by the Commission. Specifically, the Postal
Regulatory Commission is required to report to Congress
annually on the operations of the Commission under the
provisions of this title including the extent to which
regulations are achieving the objectives of the rate-making
requirements of sections 3622 (market-dominant products) and
section 3623 (competitive products), and the service standard
provisions of section 3691.
To facilitate application of the rate-making requirements
of this title and to provide a basis for the evaluation of the
Postal Service's compliance with these requirements, the Postal
Service shall (within 90 days of the end of each year) submit a
report to the Postal Regulatory Commission that analyzes costs,
revenue, rates, and quality of service in sufficient detail to
demonstrate that all products complied with all applicable
requirements. In addition, for each market-dominant product
provided, this report shall include product information, and
measures of service for that product. This information will
allow the Postal Regulatory Commission and all interested
parties to evaluate the provision of market-dominant products.
To ensure that workshare discounts are appropriately
established, the report shall include data on a per-item basis
for each workshare discount including the costs-avoided, the
percent of the discount that the cost-avoided represents and
the contribution made to institutional costs. The Postal
Service may provide summary data by service agreement and
market test but must report the data that the Postal Regulatory
Commission requires. This report shall be audited by the
Inspector General. The results of the Inspector General's audit
will be submitted with the Postal Service's report.
The Postal Regulatory Commission shall prescribe by
regulation the content and form of the Postal Service's report.
In doing so the Postal Regulatory Commission must give due
consideration to the need to balance the requirements of full
and open access to postal information against the need to avoid
unnecessary or unwarranted administrative effort and expense on
the part of the Postal Service and the importance of protecting
the confidentiality of commercially sensitive information. The
reporting requirements are intended to provide an opportunity
for the Postal Regulatory Commission to review and evaluate the
compliance with the rate-making provisions of this title and to
evaluate the level of service provided to customers; they are
not intended to impose an excessive burden on the Postal
Service.
In establishing regulations implementing this section, the
Postal Regulatory Commission should carefully weigh the need
for and utility of any data it may request against the expected
benefit in increased transparency of postal operations and
finances. The reporting requirements are not intended to serve
as an unlimited opportunity to access any and all Postal
Service data including that which may be, at best,
tangentially-related to evaluating compliance with the rate and
service provisions of this title. However, in recognition that
circumstances and data needs may change over time, the Postal
Regulatory Commission may (on its own motion or upon request of
an interested party) initiate proceedings to improve the
quality, accuracy, or completeness of data provided it appears
that costs or revenue attribution data or service quality data
has become significantly inaccurate or can be significantly
improved or if revisions are necessitated by the public
interest. If the Postal Service determines that any information
provided in a nonpublic annex to a report under this section
contains information as described in 39 U.S.C. 410(c) or exempt
from disclosure under 5 U.S.C. 552(b) including commercially
sensitive information which under good business practice would
not be publically disclosed, the Postal Service shall notify
the Postal Regulatory Commission of its determinations and
describe the documents for which confidentiality is sought and
the reasons for this determination. Lastly, to ensure that the
Postal Regulatory Commission has access to up-to-date Postal
Service data to facilitate its statutory mission, the Postal
Service shall also provide copies of its most recent
comprehensive statement, strategic plan, performance plan and
program performance reports.
After receiving the required annual reports, the Postal
Regulatory Commission shall provide an opportunity for public
comment and shall determine within 90 days whether the rates
and fees in effect were not in compliance with the applicable
provisions of this chapter or whether any service standards
were not met. This compliance determination will serve as a
check on the Postal Service's rate-setting decisions and
provide a safeguard ensuring that the rate-making requirements
of this legislation have been met. However, this compliance
assessment is not intended to serve as an after-the-fact review
of the appropriateness of each individual rate in comparison
with any other possible alternative rates; the review is
intended to ensure that the rates for market-dominant products
meet the requirements of the established rate cap at the time
the rates were implemented and that the competitive products
meet the rate requirements established to ensure that
inappropriate cross-subsidy or competition does not occur. If
noncompliance is found, the Postal Regulatory Commission is
required to take appropriate remedial action by, for example,
ordering that a cross subsidy be ended or that a rate that has
exceeded the Commission-established price cap be lowered. To
avoid the potential for duplicative review of prior Postal
Service and Postal Regulatory Commission decisions, once the
Postal Regulatory Commission determines that the Postal Service
was in compliance with the applicable standard for any year,
this shall establish a rebuttable presumption of compliance by
the Postal Service for the purpose of any rate or service
complaint.
Rate and service complaints
Under current statute, rate and service complaints can be
filed; however, relatively little recourse is available if the
complaint is found to be justified. This legislation
strengthens the authority of the Postal Regulatory Commission
to act on a complaint and to require the Postal Service to take
action if the complaint is found to be justified. Any person
who believes that the Postal Service is not operating in
conformance with the statute may lodge a complaint with the
Postal Regulatory Commission which then is required (within 90
days) to either begin proceedings on the complaint or issue an
order dismissing the complaint. If the Postal Regulatory
Commission does not act on a complaint in a timely manner it
shall be treated as if it were dismissed. If, after open
proceedings the Postal Regulatory Commission finds that the
complaint is justified, this act gives the Commission broad
authority to correct violations by ordering the Postal Service
to take whatever steps the Commission considers appropriate. In
cases of deliberate noncompliance with the law, the Commission
is authorized to levy fines based on the seriousness of the
noncompliance. To ensure that customers using market-dominant
products are not unfairly penalized, fines resulting from
unlawful provision of competitive products must be paid using
revenues from the Postal Service's competitive products. All
fines will be paid into the U.S. Treasury's General Fund.
Appellate review and enforcement of orders
The Committee recognizes that persons, including the Postal
Service, may be adversely affected or aggrieved by decisions of
the Postal Regulatory Commission. If this occurs, within thirty
days after a Postal Regulatory Commission decision becomes
final, any person, including the Postal Service may petition
for judicial review of a Postal Regulatory Commission decision.
These petitions shall be filed in the United States Court of
Appeals for the District of Columbia. In addition, the district
courts shall have jurisdiction to enforce, and to enjoin and
restrain the Postal Service from violating any order issued by
the Postal Regulatory Commission.
Modern service standards
The bill also requires the Postal Regulatory Commission to
establish by regulation a set of modern service standards for
the Postal Service's market-dominant products. These
regulations, and the revised regulations the Regulatory
Commission would be authorized to issue from time to time,
would in effect serve as the Regulatory Commission's
interpretation of universal service as defined in sections
101(a), 101(b) and 403 of title 39 of the United States Code.
The Committee believes that sections 101(a), 101(b) and 403
of title 39 fully define the universal service obligation.
Section 101(a) states that the Postal Service shall ``bind the
Nation together through the mail'' and serve ``all patrons'' in
``all communities.'' Section 101(b) elaborates on these
requirements, stating that ``effective and regular postal
services'' shall be provided to ``rural areas, communities, and
small towns where post offices are not self-sustaining.''
Section 403 further elaborates on the requirements of Section
101(a), stating generally that the Postal Service ``shall serve
as nearly as practicable the entire population of the United
States'' and ``establish and maintain postal facilities of such
character and in such locations, that postal patrons throughout
the Nation will, consistent with reasonable economies of postal
operations, have ready access to essential postal services.''
Section 403 states further that the Postal Service shall not
``make any undue or unreasonable discrimination among users of
the mails, nor shall it grant any undue or unreasonable
preferences to any such user.
The Committee's main intent in giving the Regulatory
Commission the authority to interpret universal service through
regulation is to ensure that the service the Postal Service
provides its customers is consistent with the statutory
definition of universal service. The service standards
established by the Regulatory Commission, however, should be
reasonable. They should not force the Postal Service to charge
higher rates or make dramatic changes to its retail and mail
processing networks in order to meet them. In establishing and
revising such standards, the Regulatory Commission should take
into account the level of service the Postal Service provides
now and how successfully that service has met the needs of its
customers. The Regulatory Commission should also take into
account the fact that many Americans now use other forms of
communication, such as e-mail, electronic bill pay, and fax
machines, to conduct business and keep in touch with friends
and family. Over the years, the service standards established
by the Regulatory Commission should reflect the fact that more
and more Americans are likely to turn to these, and other,
electronic forms of communication. They should also reflect the
cost to the Postal Service of providing universal service as
the number of addresses they must serve grows at the same time
that mail volume is declining.
The other major goal in giving the Regulatory Commission
the authority to interpret universal service through regulation
is to preserve, and where possible enhance, the value of the
various market-dominant products offered by the Postal Service.
The Committee believes this is especially important at a time
when poor mail volume is having a major impact on postal
finances and there may be some temptation to erode service
quality in an effort to cut costs. On April 3, 2001 the Postal
Service's Board of Governors requested a study from postal
management of the cost savings associated with eliminating the
Saturday delivery of mail. While the Committee is strongly
supportive of any effort on the part of the Postal Service to
cut costs, we believe postal management should do all it
possibly can to find efficiencies before using cuts in service
to find savings. We were pleased, then, when the Board of
Governors announced in July 2001 that they would maintain six-
day delivery. Making the Regulatory Commission the body
responsible for determining the appropriate minimum delivery
speed and frequency for market-dominant products as mail volume
and the Postal Service's financial condition change will ensure
that postal customers receive an appropriate level of service
for the rates they pay. It also ensures that those parts of the
country with post offices and delivery routes that are not
profitable continue to receive a level of service consistent
with the definition of universal service contained in sections
101(a), 101(b) and 403 of title 39, even when mail volume and
revenues are poor.
The service standards established by the Regulatory
Commission should also serve as a benchmark for measuring the
Postal Service's performance. The Postal Service should strive
to exceed the standards set by the Regulatory Commission, but
the Regulatory Commission should regularly measure the Postal
Service's performance to ensure that these standards are met.
The Regulatory Commission is required to inform Congress in the
annual reports required of them under section 204 of the bill
whenever the Postal Service has failed to meet any existing
service standards. The Committee expects the Postal Service to
provide the Regulatory Commission with the data the Regulatory
Commission believes necessary to determine whether or not
service standards are being met. We also expect the Regulatory
Commission to make use of the new information gathering
authority made available to them in the bill to collect this
data should the Postal Service be unwilling to provide it.
There is some concern that the authority given the
Regulatory Commission to establish service standards would
allow that body to micromanage the Postal Service and involve
itself in product design. This is not the Committee's intent.
One of the overarching goals of S. 2468 is to give the Postal
Service the flexibility necessary to act more like a private
business. The bill, in section 203, gives the Postal Service
streamlined authority to introduce new and experimental
products. The Committee believes, then, that the Postal Service
should be free to innovate and to do what it needs to do to
make the products it offers valuable to its customers. We have
no intention through the service standards authority given the
Regulatory Commission to restrict the Postal Service's
commercial freedom, only to ensure that it lives up to its
universal service obligation and the obligation it has to its
captive customers to give them the service they pay for.
Processing facilities
The establishment by the Regulatory Commission of a set of
modern service standards for market-dominant products will give
the Postal Service a once-in-a-generation opportunity to
realign its operations, from its processing and retail
facilities to its delivery and transportation network, in a way
that allows it to most efficiently carry out its universal
service obligation. Section 302 of S. 2468 gives the Postal
Service six months from the establishment of the Regulatory
Commission's first set of service standards to put its
realignment plan in writing through a report to the Regulatory
Commission and Congress. The report will be a plan for how the
Postal Service intends to meet the service standards and will
include performance goals along with discussion of any changes
that need to be made to the way the Postal Service operates.
The Committee is particularly interested in learning
through this report some key information on any plans the
Postal Service has to change its network of processing and
retail facilities, a network that currently includes 446
processing facilities and more than 37,000 retail facilities.
In its report, the President's Commission on the United States
Postal Service found that the Postal Service's facilities
network, particularly its network of processing facilities, is
outdated and not closely related to its current mission. At one
point, the Commissioners argue that ``the legacy postal network
is not what would be built from scratch if the Postal Service
were created in the 21st Century.'' They go on to say:
``Without question, the Postal Service has far more facilities
than it needs and those facilities it does require are often
not used in the most efficient manner.'' \4\
---------------------------------------------------------------------------
\4\ Embracing the Future: Making the Tough Choices to Preserve
Universal Mail Service, 77.
---------------------------------------------------------------------------
In addition, the President's Commission found that
productivity often varies from facility to facility. They argue
that ``much of the Postal Service's legacy network could be
retired.'' Those that remain, they say, could be
``standardized, modernized and given a common footprint.'' \5\
While processing facilities should not be closed for the sake
of closing them, or simply as a way to cut costs, it will
certainly be possible for the Postal Service to close and
consolidate some facilities in the coming years without
jeopardizing its ability to meet the service standards that
will be established by the Regulatory Commission. In fact, as
both the number of addresses the Postal Service must serve and
the pace of electronic diversion of mail continues to grow, the
Committee believes it will no longer be possible for the Postal
Service to continue to operate inefficient or unnecessary
processing facilities.
---------------------------------------------------------------------------
\5\ Ibid., 12.
---------------------------------------------------------------------------
The Postal Service appears to recognize the need to
modernize its processing network. In the Transformation Plan it
submitted to Congress in April 2002, the Postal Service rightly
pointed out: ``The Postal Service's present financial position
coupled with rapid advances in supply chain management
technology make this the ideal time to initiate sweeping
logistics changes in transportation and distribution processes
throughout the organization.'' \6\ In order to seize this
opportunity, the Postal Service launched the Network
Integration and Alignment (NIA) initiative. According to the
Transformation Plan, the NIA would be an effort to create a
long-term blueprint for operations management at the Postal
Service. It was billed as an opportunity to look at future
service needs and logistics costs and build a new, more modern
processing network. By the Postal Service's own estimates, it
would affect $5 billion in transportation costs and $20 billion
in processing and distribution costs.\7\
---------------------------------------------------------------------------
\6\ Transformation Plan, 30.
\7\ Ibid., 31.
---------------------------------------------------------------------------
In its report, the President's Commission praised the
Postal Service for pursuing the NIA.\8\ The Transformation Plan
stated that the strategy to be used in the NIA would be
announced by the Fall of 2002 along with plans for plant
consolidations. Nearly two years later, however, no details on
the NIA have been forthcoming. The plan the Postal Service will
submit pursuant to section 302 will give Congress and the
public the information necessary to understand how the NIA, or
whatever other facilities realignment strategy the Postal
Service intends to use, will work. The Committee does not
believe it is necessary for the Postal Service to include in
this plan a list of facilities it intends to close. But the
report must include the information necessary to understand the
strategy the Postal Service will be using in its facilities
realignment, the methods that will be used to involve the
public and policy makers in the process, and the impact the
process will have on the Postal Service's workforce and on
other Postal Service initiatives, such as ongoing automation
efforts.
---------------------------------------------------------------------------
\8\ Embracing the Future: Making the Tough Choices to Preserve
Universal Mail Service, 75-76.
---------------------------------------------------------------------------
The Committee recognizes that closing or consolidating
processing facilities will be difficult for the Postal Service
to do. No community will want to lose the jobs associated with
a large processing facility. No Senator, Member of Congress or
local elected official will ever want to have a postal facility
in their state or district close on their watch. This is why we
believe it is vitally important that the Postal Service go
about its facilities realignment in the most transparent manner
possible. Transparency will not prevent communities and elected
officials from raising concerns about the Postal Service's
actions. It will, however, make it possible for those affected
by the Postal Service's actions to see the connection between
those actions and the need to preserve the vital services the
Postal Service provides.
Post Offices
S. 2468 maintains the current prohibition on closing post
offices solely because they operate at a deficit, ensuring that
rural and inner-city communities where post offices do not earn
a profit continue to have access to retail services. It also in
no way makes it any easier for the Postal Service to close a
post office for any reason. However, the report the Postal
Service will submit pursuant to section 302 should include a
detailed discussion of the Postal Service's plans to expand
access to alternate retail options, such as vending machines
and contract stations.
The President's Commission on the United States Postal
Service found that postal customers today can access the
products and services offered by the Postal Service at about
5,000 locations, such as grocery stores and banks, where they
conduct other necessary business each day. They can also buy
stamps, the Commission found, over the Internet, at 17,000
vending machines and from 20,000 private retailers. While the
vast majority of postal transactions still take place in post
offices, the Commission found that it is substantially cheaper
to conduct a postal transaction via alternate retail than at a
post office. According to the Commission's report, about eighty
percent of stamp sales still occur in the post office. However,
the eight percent of sales that occur through Automatic Teller
Machines (ATMs) or at grocery stores, drug stores and other
large retailers are nearly seven times cheaper to conduct.\9\
---------------------------------------------------------------------------
\9\ Ibid., 83.
---------------------------------------------------------------------------
The Committee is not suggesting that the Postal Service
close post offices and replace them with alternate retail. It
is not even clear it would be possible to close a post office
and fully replace the services it provides with a vending
machine or a window in a private retailer. It is even less
clear that postal customers would be pleased with such an
effort. Just as with inefficient processing facilities,
however, it will no longer be possible for the Postal Service
to continue to operate low-activity post offices as both the
number of addresses it must serve and the pace of electronic
diversion of mail continue to grow. As it found when it
examined the Postal Service's processing facilities, the
President's Commission found that ``many of the nation's post
offices are no longer necessary to the fulfillment of its
universal service obligation.'' The Committee, however,
believes that most of the nation's post offices are vital parts
of their communities and need to remain open for the Postal
Service to be able to fulfill its obligations under title 39,
and meet the service standards to be established by the
Regulatory Commission, to provide all parts of the country
reasonable access to essential postal services.
That said, the Committee believes it is vitally important
that the Postal Service begin expanding access to alternate
retail options. It is equally important, we believe, that the
Postal Service also begin to more aggressively market alternate
retail options so that more postal customers are aware that
they exist and grow more comfortable making use of them.
Because transactions conducted in alternate retail settings do
appear to be less expensive than transactions conducted in post
offices, it is possible that the Internet, vending machines,
contract stations and other innovations could be reasonable and
efficient replacements for post offices at a time in the future
when the demand for postal services is not as great as it is
today. It is also possible that alternate retail options could
serve as a substitute for a post office, but possibly only a
temporary one, in growing communities where it may be necessary
to construct additional post offices or expand existing ones at
some point. The Committee is certain, however, that the
aggressive expansion and marketing of alternate retail will
benefit all postal customers, regardless of how accessible
postal services are to them right now. The convenience and
often 24-hour-a-day, seven-day-a-week access some alternate
retail options offer will only make postal services more
valuable.
The Committee believes it is also important that the Postal
Service consult with stakeholders and its customers when
pursuing any initiatives that would change its retail network.
The Government Accountability Office (GAO) says in a recent
report that, despite surveys showing that the vast majority of
the Postal Service's customers are generally satisfied with the
services it provides, those same customers have expressed
concerns about such issues as long lines at post offices and
post office closings.\10\ Efforts have been made in the past,
through a 1976 amendment to the 1971 Postal Reorganization Act
and later a set of regulations issued by the Postal Service in
1998, to give customers and local officials more of a role in
shaping the Postal Service's retail network. The Postal Service
has also taken steps, described in the Transformation Plan, to
create new low-cost retail alternatives, to move stamp-only
transactions out of post offices and to close redundant or low-
activity post offices.\11\ Concerns remain, however, about the
details of these strategies. It is not clear, according to GAO,
if the Postal Service has consulted its customers in developing
its retail plans. It is also not clear, GAO points out, how the
Postal Service's stated goal of closing redundant or low-
activity post offices will work within the existing process for
closing post offices.\12\ Just as it must do when realigning
its processing network, the Postal Service must be as
transparent as possible when pursuing its retail strategy and
must give customers, local officials and other stakeholders the
information they need to fully understand how that strategy
will affect their communities.
---------------------------------------------------------------------------
\10\ Government Accountability Office, USPS Needs to Clearly
Communicate How Postal Services May Be Affected by Its Retail
Optimization Plan, GAO-04-803 (July 2004), 31-32.
\11\ Transformation Plan, 13-18.
\12\ GAO-04-803, 36.
---------------------------------------------------------------------------
Fair competition
S. 2468 contains a number of provisions the Committee
believes are necessary to ensure that the Postal Service
competes fairly with the private sector, particularly when
offering products and services classified as competitive. The
Postal Service, in our view, plays an important role in
offering competitive products, even though a number of private
sector businesses provide alternative services. We also
believe, however, that steps need to be taken to level the
playing field between the Postal Service and its competitors in
the competitive product market. This is especially important
now that this legislation gives the Postal Service significant
new commercial flexibilities, particularly in the area of
pricing. The language in Title IV ensures that the benefits the
Postal Service gets by virtue of its status as a government
entity do not give it an opportunity to abuse its new
commercial freedom.
As the President's Commission points out in its report, the
Postal Service's competitors are not able to borrow from the
U.S. Treasury. They do not benefit from a monopoly market that
provides a vast majority of their operating revenues. They are
not exempt from most taxes and laws imposed on private
businesses, as the Postal Service is, and they do not have the
rulemaking powers Congress has granted the Postal Service in
some areas.\13\ The Committee strongly believes that the Postal
Service should operate more like a private business but, when
competing head to head with a private business, we believe just
as strongly that the advantages the Postal Service has as a
government entity should be blunted.
---------------------------------------------------------------------------
\13\ Embracing the Future: Making the Touch Choices to Preserve
Universal Mail Service, 93.
---------------------------------------------------------------------------
This legislation provides a clear separation between
market-dominant and competitive products by creating a new
Postal Service Competitive Products Fund. The Postal Service
will deposit in this fund any revenue it earns from its
competitive products. The Postal Service will use that revenue
to pay all costs related to providing competitive products. Any
judgment against the Postal Service or the federal government
related to the Postal Service's competitive products will also
be paid out of the fund. The Postal Service will be free to
invest any surplus revenue deposited in the fund, subject to
regulations issued by the Department of the Treasury, and to
borrow money against any assets related to competitive
products. Receipts into and disbursements from the Postal
Service Competitive Products Fund will be treated the same way
as receipts and disbursements of the existing Postal Service
Fund pursuant to section 2009a of title 39. Like the Postal
Service Fund, then, the Postal Service Competitive Products
Fund will not be included in either the budget submitted by the
President or the congressional budget, will not be factored
into the calculation of the federal budget deficit and will be
exempt from any statutory budget limitation or deficit control
measures.
The legal advantages the Postal Service enjoys over its
private sector competitors are also erased in this legislation.
The Postal Service will be required to pay an annual ``assumed
Federal income tax'' on income earned by its competitive
products. The amount of the tax each year would equal the
income tax a corporation would pay if its only activities were
those activities conducted by the Postal Service that are
related to competitive products. The Postal Service will
compute its ``assumed Federal income tax'' itself and pay it by
January 15. Instead of paying the tax to the Treasury, the tax
will be deposited into the Postal Service Fund.
This legislation makes clear that the Postal Service is
barred from using its rulemaking authority to put itself at a
competitive advantage or put another party at a competitive
disadvantage. In addition it is put on the same legal ground as
its private sector competitors in seven key ways. First, all
Postal Service activities are subjected to those provisions in
federal laws prohibiting fraudulent business conduct. Second,
all Postal Service activities outside the postal monopoly are
subjected to federal antitrust laws and all prohibitions on
unfair competition. Third, the Postal Service Competitive
Products Fund is made a ``person'' for purposes of federal
bankruptcy laws. Fourth, the Postal Service is required to
consider local zoning, planning or land use regulations and
building codes when constructing new buildings. Fifth, U.S.
customs law and any other laws related to the import and export
of postal services are applied to the Postal Service's
international postal products classified as competitive in the
same manner that they apply to items shipped by the Postal
Service's private sector competitors. Sixth, the Postal
Service's sovereign immunity protection from suits in Federal
Court for violations of Federal law is eliminated. Seventh, and
finally, the Postal Service is required to represent itself in
most legal proceedings permitted under this legislation as well
as in cases involving administrative subpoenas issued by the
Postal Regulatory Commission and appeals of decisions by the
Commission or the Postal Service's Board of Governors.
The Committee recognizes that the Postal Service may enjoy
other advantages in the competitive product market that are not
addressed in this legislation. For this reason, we require in
section 703 that the Federal Trade Commission submit a report
to the President, Congress and the Postal Regulatory Commission
within one year of the enactment of this Act identifying any
federal and state laws that apply differently to the Postal
Service than they do to the Postal Service's private sector
competitors. If any discriminatory laws are identified, the
Trade Commission's report will include recommendations for
either ending the discrimination or accounting for them in some
way through the rates the Postal Service charges for its
competitive products. The Regulatory Commission will take the
Trade Commission's recommendations into account when revising
the regulations on rates for competitive products required
under section 3633 of title 39.
Improved accounting
To make the financial separation between the Postal
Service's market-dominant and competitive products even
clearer, S. 2468 also calls on the Secretary of the Treasury to
develop recommended accounting practices and principles for the
Postal Service. The Secretary will consult with the Postal
Service and an independent certified public accounting firm in
making these recommendations. The recommendations, which will
also include guidance on how the Postal Service should
determine its ``assumed Federal income tax'', which will be
submitted to the Postal Regulatory Commission within one year
of enactment. The Regulatory Commission will then establish a
set of rules on accounting and the calculation of the tax after
giving the Postal Service and other groups an opportunity to
comment.
The goal of this process is to prevent the subsidization of
competitive products by market-dominant products by better
identifying the costs incurred by the Postal Service in
providing competitive products. The President's Commission
points out that the Postal Service today is able to attribute
less than 60 percent of its costs among its various products.
This means that more than 40 percent of costs are labeled as
institutional.\14\ The Postal Service itself admits that a
disproportionate amount of these so-called institutional costs
are paid for with revenue generated by First-Class mail, which
is covered by the postal monopoly and, under this Act, will be
classified as market-dominant. According to the Transformation
Plan, First-Class mail comprises roughly half of the Postal
Service's mail volume but pays more than two-thirds of the
Postal Service's institutional costs.\15\ The Committee agrees
with the President's Commission when they say that this
situation should be improved.\16\ The Postal Service should be
able to attribute a greater percentage of its costs. If they do
this, it is likely that a greater share of costs can be
attributed to competitive products and, to the extent that they
can be, should be reflected in the rates charged for those
products.
---------------------------------------------------------------------------
\14\ Embracing the Future: Making the Tough Choices to Preserve
Universal Mail Service, 93.
\15\ Transformation Plan, 4.
\16\ Embracing the Future: Making the Tough Choices to Preserve
Universal Mail Service, 93.
---------------------------------------------------------------------------
The fact that the Committee believes the Postal Service can
improve on its 60 percent attribution rate does not mean we
believe the Postal Service should strive to attribute 100
percent of its costs, or any other arbitrary percentage. We
also do not believe that the Postal Service should be forced to
attribute such a large percentage of its costs to competitive
products that those products will no longer be affordable and
will no longer be made available to the customers who need
them, particularly those customers living in parts of the
country that are not well-served by the Postal Service's
private sector competitors. We do believe, however, that
Treasury, the Postal Service and the Postal Regulatory
Commission should partner with private sector accounting
experts and postal stakeholders in an open, transparent and
continuous process to improve cost accounting and cost
attribution at the Postal Service, especially as it applies to
competitive products.
International postal arrangements
This legislation also makes it clear that the Department of
State, not the Postal Service, is the federal agency that will
take the lead in formulating U.S. foreign policy related to
international postal services. The Secretary of State is given
the authority to lead U.S. delegations in intergovernmental
meetings devoted to postal matters and is barred from
concluding agreements that, with respect to any competitive
product, give preference to any entity, including the Postal
Service. In carrying out his responsibilities during
international postal negotiations, the Secretary is required to
maintain appropriate liaison with other federal agencies, with
the Postal Service, and with affected members of the public. He
or she is also required to establish an advisory committee
under the Federal Advisory Committee Act to help perform the
necessary coordination and liaison with entities in the public
and private sectors as U.S. foreign policy related to
international postal services is developed. Before concluding
an international agreement establishing a rate or
classification for a postal product subject to regulation by
the Postal Regulatory Commission, the Secretary will request
the Commission to submit views on whether the terms of the
agreement are consistent with the rate and classification
system they will establish.
This language does nothing to prevent the Postal Service
from entering into commercial or operational contracts related
to providing international postal services. Any such agreement
involving an agency of a foreign government, however, must be
solely contractual in nature and must apply only to the Postal
Service and those agencies party to the contract. No contracts
entered into by the Postal Service will be treated as binding
international law.
USPS Board of Governors
At present, the U.S. Postal Service Board of Governors is
comprised of nine Governors who serve with the PMG and Deputy
PMG on an 11 member Board of Governors. The Governors are
appointed by the President and confirmed by the Senate. They
serve staggered nine year terms, and by law, no more than five
members may belong to the same political party. The President's
Commission recommended that the Postal Service Board of
Governors be comprised of 12 individuals--eight independent
members, three Presidential appointees, and the Postmaster
General (who would be selected by the 11 other members). The
Commission felt strongly that an independent, depoliticized
Board is crucial to the future success of the Postal Service.
The President's Commission proposed that the President
appoint the first three members of the Board. Initially, these
three appointees would select the first eight independent Board
members whose selection would be dependent on the concurrence
of the Secretary of the Treasury. Thereafter, independent
members would be selected by the Board as a whole.
The Commission further recommended that all Board members
be selected based on business acumen and other experience
necessary to manage an enterprise of the Postal Service's size
and significance. They recommend three year terms for all
members with a mandatory minimum retirement age of seventy.
The Committee felt strongly that the Senate's role of
``advise and consent'' must be retained for all nominees to the
Board. The Committee also believed that a five year term seemed
more practical than a three year term, and would allow Board
members to be perceived as less partisan by serving across
Presidential terms of office. Finally, the Committee agreed
with the President's Commission that qualifications are
appropriate, therefore S. 2468 requires that future Board
members be chosen solely on the basis of their demonstrated
ability in managing organizations or corporations (in either
the public or private sector) of substantial size.
Private carriage of letters
This legislation reduces the Postal Service's monopoly over
the carriage of letters by permitting private carriage when the
amount paid for the private carriage is at least six times the
rate charged for the first-ounce of a single-piece First Class
Mail letter or when the letter weighs at least twelve-and-one-
half ounces. Under the existing statute, the scope of the
postal monopoly is defined by content and may not be readily
understood. By establishing a clear price- and weight-based
monopoly definition, both customers and competitors will be
able easily to determine when a mail piece is subject to
monopoly protections.
The Committee adopts the price-weight monopoly definition
based, in part, on the recommendation of the President's
Commission.\17\ While the Commission recommended a 12 ounce
weight limit, the Committee has adopted a twelve-and-one-half
ounce weight restriction that is closely correlated with the
monopoly definition (350 grams or 12.5 ounces) adopted by the
European Union in 1997. Linking the price limit to the first-
ounce, First Class Mail stamp rate permits automatic
adjustments of the price-based monopoly definition as stamp
prices change. In addition, as in the case of the weight limit,
the price limit is similar to that established by the European
Union in 1997 (five times the stamp rate); but less than the
current European Union threshold. While both the weight and
price limits are greater than the current limits established by
the European Union, the Committee believes that the higher
thresholds are appropriate, and provides significant additional
competition in the marketplace. Given the scope and size of the
postal marketplace as well as the number of American jobs that
depend, directly or indirectly, on the provision of postal
services, we are reluctant to move towards a narrower monopoly
definition (such as the current European Union definition)
without additional experience with a more flexible Postal
Service.
---------------------------------------------------------------------------
\17\ Ibid., 23.
---------------------------------------------------------------------------
In addition, the postal monopoly definition is revised to
explicitly incorporate those Postal Service regulations (in
effect as of July 1, 2001) which permit the private carriage of
letters by suspension of the postal monopoly. Doubt exists as
to the Postal Service's current legal authority to suspend the
Congressionally-granted postal monopoly; however, under its
interpretation of existing law, the Postal Service has
voluntarily suspended the private carriage of letters in a
number of instances (sections 310.1 and 320.2-320.8 of title 39
of the Code of Federal Regulations). The Committee believes
that defining the extent of the postal monopoly falls within
the purview of Congress, not the Postal Service, and in this
legislation strikes current 39 U.S.C. 601(b) (which has been
used by the Postal Service to justify unilateral suspensions of
restrictions on the private carriage of letters) and replaces
it with language codifying the current postal monopoly
suspensions thus permitting continued private sector provision
of services to these markets. To ensure the consistent and
objective application of the postal monopoly, the Postal
Regulatory Commission shall promulgate any necessary
regulations.
Rulemaking authority
By revision of 39 U.S.C. 401(2), the Postal Service is
granted authority to adopt, amend and repeal rules and
regulations that are necessary for the execution of its
functions under this title or assigned under any provisions of
law outside this title. However, these rules and regulations
must not be inconsistent with the provisions of this title.
This provision clarifies that the Postal Service's rulemaking
authority extend to rules and regulations ``necessary'' to
carry out its statutorily-defined functions not to rules and
regulations that the Postal Service, in its judgement, ``deems
necessary.''
Enhanced Regulatory Commission
Under current law, the Postal Rate Commission has very
narrow authority. They issue recommended decisions on mail
rates and classifications, and fees for postal services. Their
other job is to review changes in postal services that would
generally affect service on a nationwide basis and offer
advisory opinions. In their final report, the President's
Commission concluded that, ``The Postal Service's need for
oversight today is as broad as the Postal Rate Commission's
authority is narrow.'' On the basis of this assessment, the
President's Commission recommended that a Postal Regulatory
Board be vested with substantially expanded regulatory
authority. The Committee agreed.
S. 2468 requires the new Postal Regulatory Commission to
develop--with appropriate input from the postal community--a
new, highly streamlined, rate-setting process. This new process
should apply rigorous standards to rate-setting, but at the
same time, give postal officials the ability to manage and
lead. The process should also proactively encourage the Postal
Service to improve productivity and efficiency and not rely
solely on rate increases to secure its fiscal health. Although
S. 2468 specifies that market dominant products would be
subject to a rate cap, the actual design of the rate cap
mechanism, including choice of inflator, is left to the
Regulatory Commission. The Regulatory Commission would be
required to pre-approve any rate increases that exceed the rate
ceilings. The legislation also requires the Regulatory
Commission to engage in prior review periods for both market-
dominant and competitive products. In addition, the Regulatory
Commission will ensure that retained earnings are accumulated
at an appropriate level, and consistent with the public
interest.
S. 2468 places the Regulatory Commission in charge of
overseeing Postal Service cost distribution, ensuring that the
Service is appropriately allocating costs across its
competitive and non-competitive products and services. In
addition to verifying that cross-subsidies between products are
not occurring, such analysis is necessary for assessing the
fairness of the rates the Postal Service is currently charging,
or proposes to charge. The Regulatory Commission would also
exercise a new form of oversight regarding services the Postal
Service provides. It would monitor the types of products and
services offered by the Postal Service to ensure it does not
exceed its core mission.
S. 2468 grants to the Regulatory Commission the role of
ensuring the financial transparency of the Postal Service,
obtaining information from the Service--if need be--through the
use of subpoena power. The bill also requires strong
enforcement of financial transparency by the Regulatory
Commission, in part by requiring the Postal Service to report
periodically on allocation of costs among mail products and
services for auditing purposes.
The President's Commission recommended that the Regulatory
Commission be comprised of three members who are appointed by
the President and confirmed by the Senate. Members would be
selected solely on the basis of their demonstrated experience
and professional standing. At present, the Postal Rate
Commission is comprised of five presidentially-appointed
members who serve six year terms. Given the significantly
expanded authority S. 2468 grants to the Regulatory Commission,
the Committee felt it was appropriate to maintain the current
size of the Commission. The Committee, however, agreed with the
President's Commission that the Regulatory Commission would
benefit from strengthened qualification requirements. S. 2468
requires that all new Commissioners shall be chosen solely on
the basis of their technical qualifications, professional
standing, and demonstrated expertise in economics, accounting,
law, or public administration.
S. 2468 also changes the manner in which the Postal Rate
Commission's annual budget is approved. Under current law, the
Commission submits their budget request to the Board of
Governors. By unanimous agreement, the Board may adjust the
total amount of money requested in the budget. Funding for the
PRC's budget comes from the Postal Service Fund, established
under title 39 of the U.S. Code. S. 2468 directs the PRC to
instead submit their annual budget request to Congress, through
the appropriations process. Funding will continue to be paid
out of the Postal Service Fund. The budget, however, will no
longer be subject to disapproval by the Governors. This will
ensure the financial independence of the new Regulatory
Commission.
USPS retirement and health benefit funding and military pension
obligation
On April 23, 2003, President Bush signed into law the
Postal Civil Service Retirement System Funding Reform Act of
2003, P.L. 108-18. The Act was originally introduced by
Chairman Collins and Senator Carper. It changed the way the
Postal Service funds its Civil Service Retirement System (CSRS)
obligation. According to a 2003 GAO report, the Postal Service
had overfunded its pension obligation and, without this
legislation, was on course to overfund by approximately $73
billion. This overfunding was due to higher than assumed
historical interest earnings and lower than assumed outlays,
plus other factors.
The Act also transferred to the Postal Service from the
U.S. Treasury the responsibility for funding the costs of CSRS
benefits that current and former Postal Service employees have
earned through military service. Thus, the Act transferred $27
billion in cost from U.S. taxpayers to postal ratepayers. The
Committee had reservations about making the Postal Service the
only agency to bear these costs. The Administration, however,
felt differently. In a January 30, 2004 letter to Chairman
Collins, OPM Director Kay Coles James described the
Administration's reason for making the Postal Service
responsible for this military pension cost:
One of the primary goals for the reorganization of
the Post Office into the USPS was to ensure that all
the costs associated with the organization be paid
through stamp revenue and not through taxpayer dollars.
Therefore, all pension costs for employees that are
attributable to service after the reorganization should
be borne by the Postal Service.
The Act provided an opportunity for the Committee to
reconsider this transfer by requiring the Postal Service, the
Department of the U.S. Treasury and OPM to submit proposals
detailing whether and to what extent the Department of the
Treasury or the Postal Service should be responsible for the
funding of benefits attributable to the military service of
current and former employees of the Postal Service. In a
September 30, 2003 letter to Chairman Collins, Postmaster
General Potter recommended that the responsibility for these
costs should be returned to the U.S. Treasury, in part, because
the military service had no connection with Postal Service
functions or operations. The Postal Service also notes that the
funding of these costs has been the responsibility of the
Treasury since 1969 and Treasury has already paid the great
majority of this $27 billion in costs. Therefore, charging the
Postal Service for these past payments of the U.S. Treasury
would be a retroactive cost transfer to postal ratepayers.
The President's Commission reviewed the recommendations
made by the Postal Service, the U.S. Treasury Department and
OPM. While the Commission understood the stance taken by the
Administration, they did not agree with it. In their final
report, they concluded:
No other Federal agency is required to pay such costs
for its retirees under CSRS. In the Commission's view,
it is inappropriate to require the Postal Service, as a
self-financing entity that is charged with operating as
a business, to fund costs that would not be borne by a
private-sector corporation (costs associated with
benefits earned while the retiree was employed by
another employ). . . . It asks those who use the
nation's postal system to subsidize the U.S. military
every time they use the mail. . . . The Commission
supports returning responsibility for this portion of
retiree benefits to the Department of Treasury, where
it resided before the recent legislation, and where
this liability can be financed through funds generated
by taxpayers.\18\
---------------------------------------------------------------------------
\18\ Embracing the Future: Making the Tough Choices to Preserve
Universal Mail Service, 125, 126.
Having had the opportunity to reconsider the issue, the
Committee agreed with the President's Commission and included
language in S. 2468 to repeal this requirement, thereby
returning the military pension obligation to the U.S. Treasury.
It is important to point out that over ninety percent of the
financial obligation related to military retirees is the result
of military service performed before the creation of the Postal
Service in 1971. Besides being unrelated to postal operations,
the Committee does not believe the Postal Service should be
held responsible for paying a component of their employees'
military service that was performed before the Postal Service
was even created.
P.L. 108-18 placed additional requirements on the Postal
Service. Specifically, the Act identified as ``savings'' the
difference between the contributions the Postal Service would
have made to the CSRS Fund if the Act had not been enacted and
the contributions the Postal Service makes under the Act. In
2003 and 2004, the Act required USPS to use the ``savings'' to
reduce their outstanding debt to the U.S. Treasury. The
Committee made clear, through ``Sense of Congress'' language,
that the Postal Service should also use the ``savings'' to hold
postal rates unchanged until at least 2006; to pay some portion
of its postretirement health benefit obligation for current and
future employees; and that none of the ``savings'' should be
used to pay bonuses to Postal Service executives. It also
required the Postal Service to begin making payments into an
escrow account beginning in fiscal year 2006 in an amount equal
to the annual ``savings''. The amount of the payments into the
escrow account would have to be included in the Postal
Service's rate base. Under P.L. 108-18, the Postal Service
cannot use the funds in the escrow account unless Congress
eliminates the escrow requirement or specifies by law how the
escrow funds may be used. The legislation also required the
Postal Service to report to Congress by September 30, 2003, on
how it proposed to use those pension savings.
The Postal Service provided a report to Congress predicated
on the assumption that the Postal Service is relieved of
responsibility for military service costs. Specifically, the
Postal Service recommended making annual payments to cover one
of its major operating costs--postretirement health benefits--
for all employees and retirees, currently estimated at $47 to
$57 billion. Under this proposal, the Postal Service would be
the only federal agency to fully pay all pension and
postretirement health benefits for its employees and retirees.
S. 2468 sets up within the U.S. Treasury, a ``Postal Service
Retiree Health Benefits Fund''. This fund shall be administered
by OPM. Beginning in fiscal year 2006, the Postal Service will
be required to pre-fund its post-retirement health benefits
costs for all employees on a current basis and to fund one-
fortieth of the unfunded post-retirement health benefits
obligations each year through 2031 after which one-fifteenth
would be funded each year. Any remaining ``savings'' will be
used to pay down the outstanding debt to Treasury and for
operating expenses--thereby holding down rate increases as
well.
During the Committee's eight hearings on postal reform,
many disparate voices were heard from--the Postal Service
unions and associations; the CEOs of major companies;
representatives of the newspaper and direct marketing
associations--and the two things they all had in common were
the desire to see the escrow account requirement repealed and
the return of the military pension obligation to the Treasury
Department.
The amount due from postal ratepayers for the first annual
escrow payment in FY 2006 will be $3.2 billion. The cost to
fund the military pension obligations will cost postal
ratepayers, roughly, another $2 billion in FY 2006. Should the
military pension obligation remain with the Postal Service, and
the escrow fund fail to be released, according to the Postal
Service, mailers could potentially incur rate increases 5-6
percent higher in 2006 than they otherwise would be--at a time
when American businesses can ill afford it.
Based on its impact on postage rates and its effects on the
mailing industry, the general public and the economy as a
whole, the Committee chose to incorporate into S. 2468 the
repeal of the escrow requirement. Though S. 2468 does not
specify a percentage of the escrow account that must be used to
pay down obligations such as retiree health care benefits, with
approximately $90 billion in unfunded liabilities and
obligations, the Committee believes it is critical to the
Postal Service's future viability that it work aggressively to
pay down all outstanding liabilities and obligations.
Workers' compensation reforms
The Federal Employees' Compensation Act (FECA), enacted in
1916, is a comprehensive workers' compensation law designed to
provide medical and death benefits, income replacement, and
other services to employees with work-related injuries. FECA
does not place age or time limitations on an injured worker's
receipt of workers' compensation benefits. Employees who fully
or partially recover from their injuries are expected to return
to work.
The President's Commission found that under FECA, the
Postal Service has maintained a broad and effective workers'
compensation program and acknowledged recent efforts that have
lowered injury rates considerably. The Commission, however,
also concluded that the Service, given its unique status,
should be provided relief from FECA provisions that are
creating costly unintended consequences. The Commission
recommended making the Service's workers' compensation program
more comparable to State-run programs in order to control
costs, provide adequate benefits, and address the Service's
unfunded liability in this area. A similar stance was taken by
Postal Service Inspector General David Williams, who wrote in
his semi-annual report to Congress that, ``Given the Postal
Service's current $7.2 billion liability for workers'
compensation, there is an urgent need to reconsider the Postal
Service's obligations under FECA.'' \19\
---------------------------------------------------------------------------
\19\ Williams, David C., Inspector General, U.S. Postal Service,
Semiannual Report to Congress (April 1, 2004), 28.
---------------------------------------------------------------------------
The Postal Service is self-insured for workers'
compensation costs, and these costs have continued to escalate.
According to a March 2003 audit by the Postal Service Office of
Inspector General, 21 percent (2,819) of the approximately
13,400 postal employees on the periodic workers' compensation
roll were classified as totally disabled, and, as a result, not
expected to return to work. (Employees on the periodic roll
have injuries or disabilities that have lasted or are expected
to last for periods over one year.) Approximately 89 percent of
those 2,819 employees were age 55 or older as of September 30,
2003 and likely to be, for the most part, retirement-eligible.
The Postal Service's rolls include 81 cases that originated 40
to 50 years ago; 778 cases that originated 30 to 39 years ago;
and 1,189 cases that originated 20 to 29 years ago.\20\ The
IG's audit also noted that if an employee dies from a non-work
related injury while receiving Workers' Compensation benefits
and has not applied for disability with the Office of Personnel
Management, their survivors receive no benefits.\21\
---------------------------------------------------------------------------
\20\ U.S. Postal Service Office of Inspector General, Audit
Report--Comparison of Retirement Benefits to Workers' Compensation
Benefits for Employee on the Periodic Roll (Report No. HM-AR-04-001)
(December 12, 2003), 2.
\21\ Ibid., 8.
---------------------------------------------------------------------------
With no maximum dollar cap on FECA payments, employees
often opt not to retire, staying permanently on the more
generous workers' compensation rolls. All State plans, on the
other hand, apply either a cap or a maximum limitation, which
is usually defined in law as a percentage of the State average
weekly wage. In their report, the Commission provided an
example of the disparity in pay between those employees who
retire and those who choose to stay on the more lucrative
workers' compensation rolls:
Over a nine year period, a retirement eligible EAS-13
level postal employee with dependents could earn
$434,000 by not retiring and continuing to collect
workers' compensation (75% of pre-injury salary plus
COLAs, tax free). If that same employee were to retire,
their CSRS retirement net pay over that same period
would be $249,000 (56% of High 3, taxable)--a
difference of $185,000.\22\
---------------------------------------------------------------------------
\22\ Embracing the Future: Making the Tough Choices to Preserve
Universal Mail Service, 134.
S. 2468 converts workers' compensation benefits for total
or partial disability to a retirement annuity when the affected
employee reaches retirement age as defined by the Social
Security Act (SSA). The annuity would equal fifty percent of
the monthly pay of the employee. This change reflects the fact
that disabled postal employees would likely retire at some
point were they not on the rolls of the Office of Workers'
Compensation Programs. It will also help to ensure continued
benefits for survivors of workers' compensation recipients who
may die from a non-work related injury. Enactment of this
provision would change neither the time at which an employee
would become eligible for regular or disability retirements
benefits under the Civil Service Retirement System (CSRS) or
the Federal Employees Retirement System (FERS) nor the amount
of the benefit for which he or she would be eligible under CSRS
or FERS.
Unlike most State-run plans, FECA also imposes no waiting
period before benefits begin. Instead, FECA has a provision
that allows employees who sustain disabling job-related
traumatic injuries to receive continuation of their regular pay
for 45 calendar days after the injuries--a benefit unique to
the federal program--with a three-day waiting period at the end
of the continuation of pay (COP) period. A primary purpose of
the waiting period is to discourage the filing of frivolous
claims. According to Elliot Lewis, Assistant Inspector General
for Audit at the Department of Labor's Office of Inspector
General, placing the waiting period at the end of the COP
period does nothing to discourage frivolous claims.\23\ S.
2468, therefore, places the three-day waiting period at the
beginning of the COP period.
---------------------------------------------------------------------------
\23\ Lewis, Elliot P., Assistant Inspector General for Audit,
Office of Inspector General, U.S. Department of Labor, before the
Subcommittee on Workforce Protections, Committee on Education and the
Workforce, U.S. House of Representatives (May 13, 2004), 5.
---------------------------------------------------------------------------
In addition, S. 2468 allows the three days of annual leave,
sick leave, or leave-without-pay used by the injured employee
to be reimbursed, should the employee be out of work due to
injury for a period no less than 15 days (beginning on day one
of the injury). This ``qualifying period'' is standard practice
in State workers' compensation plans. The average qualifying
period for State plans is between 14 and 16 days.
Both the President's Commission and the Postal Service
recommended that any changes to FECA should be made on a
prospective basis. The Committee agreed. By lowering the
workers' compensation payments for retirement-eligible
employees (as defined by the SSA), the Congressional Budget
Office estimates the Postal Service will save $50 million over
the 2005-2014 period.
Report on universal service and the postal monopoly
The President's Commission believed that the Regulatory
Commission would be the appropriate body to regularly review,
and refine if necessary, the Postal Service's universal service
obligation. (The ``universal service obligation'' refers, in
general, to regular delivery at uniform rates across the
country.) With steadily declining volumes of First Class mail,
it is clear that the nation's correspondence needs are
changing. The President's Commission recommended, therefore,
that an independent entity--the Regulatory Commission--be
charged with, ``refining key aspects of universal service as
circumstances require/permit.'' \24\ Similarly, the President's
Commission recommended that the Regulatory Commission be
granted the authority to refine the scope of the mail monopoly
[generally believed to cover all First Class and Standard
(mostly advertising) Mail], noting that,
---------------------------------------------------------------------------
\24\ Embracing the Future: Making Tough Choices to Preserve
Universal Services, 63.
. . . the nation's postal monopoly law predates not
only the computer, e-mail and the fax machine, but also
the radio, the telephone and the electric light bulb. .
. . Several years into the nation's Information
Revolution, it is clear that these archaic laws should
be clarified and modernized.\25\
---------------------------------------------------------------------------
\25\ Ibid., 22.
From the perspective of the Committee, both the postal
monopoly and universal service are issues of broad public
policy--not regulatory issues. For that reason, the Committee
decided that the power to refine either the monopoly or the
universal service obligation should remain in the hands of
Congress. However, the Committee thought it would be helpful to
hear from the Regulatory Commission what potential changes to
either the monopoly or the universal service obligation they
believed made sense. Congress would then have the option to
enact any of the Regulatory Commission's recommendations with
which they agreed. Therefore, S. 2468 requires that the
Regulatory Commission, at least every three years, submit a
report to Congress detailing any recommended changes to
universal service and the postal monopoly they consider
appropriate, with estimated effects of the recommendations on
the service, financial condition, rates, and security of mail
provided by the Postal Service.
Bulk fuel program
The Committee notes that the U.S. Postal Service has
instituted a program to require vendors to purchase fuel from
designated sources. To insure that the program is generating
the maximum possible savings and is not burdening contractors
with unfair costs, the Committee expects the Postal Service to
periodically re-examine the Bulk Fuel program it has instituted
for Highway Contract Route (HCR) contracts under Section 5005
of title 39. The Committee suggests that the Postal Service
confer with the GAO when conducting these periodic reviews.
III. Legislative History
S. 2468 was introduced on May 20, 2004 by Chairman Collins
and Senator Carper. Senators Lieberman, Stevens, Akaka,
Voinovich, Durbin and Sununu were original cosponsors. S. 2468
was referred to the Committee on Governmental Affairs. On June
2, 2004, the Committee took up S. 2468.
A manager's amendment in the nature of a substitute,
offered by Chairman Collins, was adopted by voice vote. The
manager's amendment provided for the following: (1) established
an Officer of the Postal Regulatory Commission to represent the
general public in proceedings; (2) required reporting on postal
workplace safety and workplace-related injuries to ensure that
postal employees' health and personal safety are protected
while they serve the nation's postal customers; (3) provided
for employment of postal police officers in connection with the
protection of property owned or occupied by the Postal Service;
(4) expanded Postal Service transportation contracting
authority to permit the Postal Service to better manage costs;
(5) provided for payments for the first three days following an
injury for those employees who are on leave due to injury for a
minimum of 14 days; and (6) established as an objective of the
new ratemaking system, that interested parties be afforded a
reasonable opportunity to participate in the new process
designed by the Postal Regulatory Commission.
By a vote of 9-8, the Committee voted to pass a worksharing
amendment by Senator Lieberman. The Lieberman amendment limited
to four years workshare discounts that exceed costs avoided
when associated with a new postal service or with a change to
an existing postal service that is necessary to induce mailer
behavior that furthers the economically efficient operation of
the Postal Service. The amendment also struck language from S.
2468 that granted the Postal Regulatory Commission the
authority to approve discounts in excess of avoided costs for
situations outside of the following four exceptions: (1) any
discount associated with a new postal service or with a change
to an existing postal service that is necessary to induce
mailer behavior that furthers the economically efficient
operation of the Postal Service; (2) if a reduction in the
discount would (i) lead to a loss in volume of the affected
category of mail and reduce the aggregate contribution to
institutional costs, (ii) result in a further increase in rates
paid by mailers not able to take advantage of the discount, or
(iii) impede the efficient operation of the Postal Service; (3)
if the amount above the costs avoided (i) is necessary to
mitigate rate shock, and (ii) will be phased out over time; and
(4) if the discount is provided in connection with subclasses
of mail consisting exclusively of mail matter of educational,
cultural, or scientific value.
Yeas: Lieberman, Levin, Akaka, Durbin, Carper, Dayton,
Lautenberg, Pryor, Specter.
Nays: Collins, Stevens, Voinovich, Coleman, Bennett,
Fitzgerald, Sununu, Shelby.
The Committee adopted by voice vote an amendment offered by
Senator Durbin that calls for a study by GAO and submission of
a report, including recommendations for legislative action and
administrative action, to Congress, the Postal Service Board of
Governors, and the Postal Regulatory Commission. The report
will address the economic and environmental efficacy of
establishing rate incentives for mailers linked to the use of
recycled paper, what initiatives the Postal Service has
undertaken during the past five years to use recycled paper and
other products and to provide for recycling of undeliverable
and discarded mail, including revenue generated and savings
achieved as a result, and what additional opportunities may be
available for enhanced recycling of paper and other products
and the projected costs and revenues of such opportunities. The
report is due within one year of enactment of the Act.
Senators present were Collins, Voinovich, Coleman, Bennett,
Fitzgerald, Sununu, Lieberman, Levin, Akaka, Durbin, Carper,
Lautenberg and Pryor.
The Committee also adopted by voice vote an amendment
offered by Senator Sununu. The Sununu amendment requires the
Secretary of the U.S. Treasury, in consultation with the Postal
Service, a certified public accounting firm, and other
advisors, to develop recommendations regarding the accounting
practices and principles that should be followed by the Postal
Service when doing the following: (1) identifying and valuing
the assets and liabilities of the Postal Service associated
with providing, and the capital and operating costs incurred by
the Postal Service in providing competitive products; and (2)
preventing the cross-subsidization of competitive products by
market-dominant products. The Treasury Department would also
consult with the Postal Service on the rules that should be
followed in determining the Postal Service's assumed Federal
income tax on competitive products income. Treasury will submit
their final recommendations to the Postal Regulatory
Commission. After hearing from all interested parties, the
Regulatory Commission shall make a final decision as to which
rules the Postal Service will be required to incorporate into
their current accounting practices.
Senators present were Collins, Voinovich, Coleman, Bennett,
Fitzgerald, Sununu, Lieberman, Levin, Akaka, Durbin, Carper,
Lautenberg and Pryor.
The Committee then ordered the bill reported by voice vote,
with no members present dissenting. Senators present were
Collins, Voinovich, Coleman, Bennett, Fitzgerald, Sununu,
Lieberman, Levin, Akaka, Durbin, Carper and Lautenberg.
IV. Section by Section Analysis
TITLE I--DEFINITIONS; POSTAL SERVICES
Section 101--Definitions
Section 101 proposes, for the first time, a clear
definition of ``postal services.'' A ``postal service'' is
defined as ``the physical delivery of letters, printed matter,
or packages weighing up to 70 pounds, including physical
acceptance, collection, sorting, transportation, and other
services ancillary thereto.'' This definition clarifies the
jurisdiction of the Postal Rate Commission (renamed the
``Postal Regulatory Commission'') and the scope of commercial
activities that the Postal Service is authorized to pursue. In
addition, the term ``product'' is defined to mean ``any postal
service with a distinct cost or market characteristic'' which
thus encompasses all classes, subclasses, and rate categories
that comprise the mail classification system. Section 101
further defines ``market-dominant product'' to refer to ``a
product subject to subchapter I of chapter 36'' and
``competitive product'' to refer to ``a product subject to
subchapter II of chapter 36.''
Section 102--Postal Services
Section 102 limits the Postal Service to offering ``postal
services.'' If the Postal Service unlawfully offers a non-
postal service or product, the Postal Regulatory Commission may
order that the Postal Service cease providing the product under
the complaint procedures outlined in section 202 of the bill.
TITLE II--MODERN RATE REGULATION
In the new regulatory regime proposed in the bill, the
classes of mail and services are classified as either market-
dominant or competitive products. In general, Title II requires
the Postal Regulatory Commission to design, within 12 months, a
new rate cap system of rate regulation for market-dominant
products. With respect to competitive products, the Postal
Service is given pricing flexibility comparable to that
exercised by private competitors.
To prevent abuse, the new regulatory regime proposed in the
bill substantially enhances the authority of the Regulatory
Commission to define, audit, and remedy cross-subsidization of
competitive products from revenues earned from market-dominant
products.
Section 201--Provisions relating to market-dominant products
Section 201 of the bill establishes a new, modern system
for regulation of market-dominant products. In the current
title 39, chapter 36 deals with regulation of postal rates. The
bill re-designates subchapter I of chapter 36 (establishing the
Postal Regulatory Commission) as chapter 5 (see section 501,
below). Section 201 revises subchapter II, which currently sets
out the process of rate regulation, and re-designates it as
subchapter I. As amended, subchapter I relates only to the
regulation of market-dominant products. Section 201(a) adds
three new provisions to title 39, sections 3621, 3622 and 3623,
as follows.
Section 3621--Applicability; definitions
Section 3621 lists the postal products to be regulated as
market-dominant products immediately after enactment: First-
Class Mail Letters, First-Class Mail Cards, Periodicals,
Standard Mail, single-piece Parcel Post, media mail, bound
printed matter, library mail, special services and single-piece
international mail. After enactment, the Commission may revise
the list of market dominant products under new section 3642 set
out in section 203 of the bill.
Section 3622--Modern rate regulation
Subsection 3622(a) requires the Commission to design,
within 12 months of enactment, a modern system for regulating
postage rates and classes for market-dominant products.
Subsection 3622(b) provides that the objectives of the new
system shall be: (1) to reduce the administrative burden of the
ratemaking process; (2) to create predictability and stability
in rates; (3) to maximize incentives to reduce costs and
increase efficiency; (4) to enhance mail security and deter
terrorism by promoting secure, sender-identified mail; (5) to
allow the Postal Service pricing flexibility, including the
ability to use pricing to promote intelligent and encourage
increased mail volume during non-peak periods; (6) to assure
adequate revenues, including retained earnings, to maintain
financial stability and meet the service standards the
Regulatory Commission will establish under section 301 of the
bill; and (7) to allocate institutional costs equitably.
Subsection 3622(c) requires that the Commission consider
the rate and classification factors found in sections 3622 and
3623 of current law in addition to other factors when
developing the new system.
Subsection 3622(d) requires the Postal Regulatory
Commission to establish a rate cap system setting annual
limitations, based on measures of inflation as chosen by the
Commission, on percentage changes in rates. The rate-setting
system should establish a schedule whereby rates, when
necessary and appropriate, would increase at regular intervals
by predictable amounts. In addition, this subsection
establishes a 45-day Postal Regulatory Commission review and
approval process for rate changes for market-dominant products.
If the Postal Regulatory Commission notifies the Postal Service
of any noncompliance with the established rate cap mechanism,
the Postal Service shall respond to the notice and describe the
actions to be taken to comply with the rate cap mechanism.
Lastly, the Postal Regulatory Commission shall establish
procedures whereby rates may be adjusted on an expedited basis
due to unexpected or extraordinary circumstances such as the
September 11, 2001 terrorist attacks or the use of the mails to
transmit anthrax.
Subsection 3622(e) defines a ``workshare discount'' as a
rate discount provided to mailers for presorting, prebarcoding,
handling, or transportation of mail. These are activities that
would ordinarily be performed by the Postal Service. The Postal
Regulatory Commission is required to establish rules for
workshare discounts that ensure that these discounts do not
exceed the cost that the Postal Service avoids as a result of
the worksharing activities performed by the mailers, subject
only to four exceptions. Those exceptions authorize workshare
discounts that exceed the costs avoided--(1) when a discount is
associated with a new or changed postal product and is needed,
for up to 4 years, to induce mailer behavior that furthers the
economically efficient operation of the Postal Service; (2) if
a reduction in the discount would--(i) lead to a loss in volume
in the affected category of mail and thereby reduce the
aggregate contribution to institutional costs, (ii) result in a
further increase in rates paid by mailers not able to take
advantage of the discount, or (iii) impede the efficient
operation of the Postal Service; (3) if the discount is
necessary to mitigate rate shock and will be phased out over
time; or (4) if the discounts are provided in connection with
subclasses of mail consisting exclusively of material having
educational, cultural, or scientific value. Whenever the Postal
Service establishes or maintains a workshare discount, the
Postal Service shall, at the time it publishes the workshare
discount rate, submit a report to the Postal Regulatory
Commission explaining the reasons for establishing or
maintaining the rate and setting forth the data, economic
analyses and other information relied on by the Postal Service
to justify the rate.
Subsection 3622(f) provides that, until regulations under
this section take effect, the rate making and classification
provisions of current law shall remain in effect.
Section 3623--Service agreements for market-dominant products
Section 3623(a) authorizes the Postal Service to negotiate
service agreements with individual mailers or groups of mailers
of market-dominant products. Service agreements authorized
under this section could involve the contracting mailer
performing additional functions, such as the preparation,
processing, and transportation of the mail; the Postal Service
performing additional mail preparation, processing,
transportation, or other functions; or other terms and
conditions that meet the requirements of this section.
Subsection 3623(b) requires that the revenues generated
under any service agreement: (1) cover all costs attributable
to the postal services covered by the agreement and result in
no less contribution to the institutional costs of the Postal
Service; (2) not result in higher rates or fees for other
mailers; (3) pertain exclusively to market-dominant products;
and (4) not preclude or hinder any similarly-situated mailer
from entering into an agreement with the Postal Service.
Subsection 3623(c) limits the service agreements to no more
than three years in duration and makes any service agreement
subject to the cancellation authority of the Commission.
Subsection 3623(d) requires that the Postal Service notify
the Regulatory Commission at least 30 days prior to a service
agreement taking effect and publish the terms of the agreement
in the Federal Register. This notice shall include a
description of the agreement, the rates and fees payable by the
customer under the agreement, and sufficient information to
demonstrate the basis for the Postal Service's view that the
agreement meets the requirements of sections 3623(b). If the
agreement is less-than-national in scope, this information
shall also be published in a manner designed to afford
reasonable notice to persons within that geographic area.
Subsection 3623(e) requires the Postal Service to make any
service agreement available to similarly-situated mailers on
functionally-equivalent terms and conditions provided that any
distinctions based on mailer profiles would not render the
agreement uneconomic or impractical.
Subsection 3623(f) permits persons who believe that a
service agreement is not in compliance with the requirements of
this section to file a complaint with the Postal Regulatory
Commission under section 3662.
Subsection 3623(g) defines the Postal Regulatory
Commission's role with respect to service agreements. The
Postal Regulatory Commission may promulgate regulations
regarding service agreements. In addition, the Postal
Regulatory Commission may review any agreement under section
3623, and may suspend or cancel any service agreement that does
not meet the requirements of this section.
Subsection 3623(h) requires that the determination of
whether a service agreement meets the requirements of
subsection (b) be based, to the extent practicable, on the
actual contribution of the mail involved, not on the average
contribution of the mail classification most similar to the
services performed under the agreement. If mailer-specific data
is not available, the Postal Service shall provided the bases
for the determination that the revenue generated will meet the
requirements of subsection (b) and shall discuss the
suitability of the data used to make this determination in
accordance with regulations established by the Postal Rate
Commission.
Section 201(b) repeals Sec. Sec. 3624, 3625,and 3628 of
title 39 United States Code.
Section 201(c) redesignates Chapter 36 of title 39 United
States Code as by striking the heading for Subchapter II and
inserting ``Subchapter I--Provisions relating to market-
dominant products''
Section 202--Provisions relating to competitive products
Section 202 of the bill adds a new subchapter II to chapter
36 of title 39. Subchapter II establishes a flexible system for
regulation of competitive products. Section 202 adds three new
sections to title 39, as follows.
Section 3631--Applicability; definitions and updates
Section 3631 lists the postal products to be regulated as
competitive products immediately after enactment: Priority
Mail, Expedited Mail, bulk parcel post, bulk international
mail, and mailgrams. After enactment, the Regulatory Commission
may revise the list of competitive products under new section
3642 set out in section 203 of the bill.
Section 3632--Action of the Governors
Subsection 3632(a) provides that the Governors of the
Postal Service may establish rates and classes for all products
in the competitive category of mail.
Subsection 3632(b) requires the Governors to give notice in
the Federal Register of changes in competitive products rates
and classes no later than 30 days before implementation and to
provide an opportunity for review by the Postal Regulatory
Commission. Following this notice, the Postal Regulatory
Commission shall notify the Governors of any noncompliance with
requirements of section 3633 and the Governors shall respond to
the notice describing the actions to be taken to comply with
section 3633.
Subsection 3632(c) provides that, until regulations under
section 3633 take effect, the rate making and classification
provisions of current law shall remain in effect.
Section 3633--Provisions applicable to rates for competitive products
Section 3633 requires the Commission to promulgate
regulations within 180 days of enactment prohibiting
subsidization of competitive products by market-dominant
products; ensuring that each competitive product covers its
attributable costs; and ensuring that all competitive products
collectively cover their share of the institutional costs of
the Postal Service.
Section 203--Provisions relating to experimental and new products
Section 203 of the bill adds a new subchapter III to
chapter 36 of title 39. Subchapter III provides rules for
market tests of experimental products and for transferring
products between the market-dominant and competitive product
categories. The new subchapter III replaces, and thus repeals,
the current subchapter III dealing with temporary rates and
classes. Section 203 adds two new provisions to title 39 as
follows.
Section 3641--Market tests of experimental products
Section 3641 authorizes the Postal Service to conduct
limited market tests that are exempt from most specific pricing
requirements. Market tests under this section can last no
longer than two years and must earn less than $10 million
annually.
Subsection 3641(b) states that, a market test must involve
a product ``significantly different from all products offered
by the Postal Service within the 2-year period preceding the
start of the test'' and may not be conducted under this section
if it will ``create an unfair or otherwise inappropriate
competitive advantage for the Postal Service or any mailer,
particularly in regard to small business concerns.'' In
addition, the Postal Service must identify the product as
either market-dominant or competitive. Any product that solely
affects competitive products or only provides services
ancillary to competitive products shall be presumed to be
competitive even if a similar product exists within the market-
dominant category.
Subsection 3641(c) requires that the Postal Service notify
the Regulatory Commission at least 30 days prior to the start
of a test and publish the details of the test in the Federal
Register including the basis for the Postal Service's
determination that it meets the requirements of this section.
Paragraph 3641(c)(2) extends the right the Postal Service
currently has to protect certain commercially sensitive
information to any competitive product tested this section.
Subsection 3641(d) limits tests to two years in duration
but permits the Postal Service to seek a 12-month extension.
Subsection 3641(e) requires that the test result in additional
annual revenue of no more than $10 million. The Commission
shall raise the earnings limit to $50 million upon the Postal
Service's request and upon a determination that the product is
(1) likely to benefit the public and meet an expected demand;
(2) likely to contribute to the financial stability of the
Postal Service; and, (3) not likely to result in unfair or
inappropriate competition.
Subsection 3641(f) provides that the Postal Regulatory
Commission may order the cancellation of a test at any time if
it does not meet the requirements of this section. Subsection
3641(g) provides that the dollar amounts contained in this
section be adjusted for the changes in the Consumer Price
Index. Subsection 3641(h) defines a small business concern for
the purposes of this section. Subsection 3641(i) establishes
that market tests under this subchapter may be conducted in any
year beginning with the first year in which the Postal
Service's first report under section 3652(a) to the Postal
Regulatory Commission occurs.
Section 3642--New products and transfers of products between the
market-dominant and competitive categories of mail
Subsection 3642(a) authorizes the Regulatory Commission to
classify new products as either market-dominant or competitive
and to transfer existing products between the two categories
upon the request of the Postal Service, users of the mails or
upon its own initiative.
Subsection 3642(b) adopts criteria for the two categories
that reflect the Federal Communications Commission's (FCC)
approach to defining ``dominant'' carriers for the purpose of
regulation. Paragraph 3642(b)(1) provides that: ``The market-
dominant category of products shall consist of each product in
the sale of which the Postal Service exercises sufficient
market power that it can effectively set the price of such
product substantially above costs, raise prices significantly,
decrease quality, or decrease output without risk of losing
business to other firms offering similar products. The
competitive category of products shall embrace all postal
products not in the market-dominant category.'' Paragraph
3642(b)(2) states that the products covered by the postal
monopoly may not be transferred to the competitive category.
Paragraph 3642(b)(3) requires the Postal Regulatory Commission
to consider three other factors when deciding whether a product
should be classified as market-dominant or competitive: (1) the
availability of private sector alternatives to the product in
question; (2) the views of those who use the product; and (3)
the impact the decision will have on small businesses.
Subsection 3642(c) permits the transfer of some but not all
of the subclasses or ``subordinate units'' of a class of mail.
Subsection 3642(d) requires that any change in the lists of
products in the market-dominant and competitive categories
requested by the Postal Service be published in the Federal
Register and that the Postal Regulatory Commission, whenever it
changes the list of products in the market-dominant or
competitive category, publish new lists in the Federal
Register.
Subsection 3642(e) prohibits the Postal Service from
offering any product involving the physical delivery of
letters, printed matter, or packages until it is categorized as
either a market-dominant or a competitive product.
Section 204--Reporting requirements and related provisions
Section 204 of the bill adds a new subchapter IV to chapter
36 of title 39. In general, subchapter IV provides for annual
audits of Postal Service operations by the Commission to ensure
compliance with the ratemaking criteria of the act. Section 204
adds three new provisions to title 39 as follows.
Section 3651--Annual reports by the Commission
Section 3651 requires the Regulatory Commission to submit a
report to the President and Congress each year detailing its
activities and the extent to which regulations are achieving
the objectives set forth for the new rate and classification
system to be established under section 201 and the service
standards to be established under section 301. Section 3651
also requires that the Postal Service provide the Commission
any information that the Commission, in its judgment, believes
it needs to prepare its report.
Section 3652--Annual reports to the Commission
Subsection 3652(a) requires the Postal Service to submit
information to the Commission no later than three months after
the last day of each fiscal year demonstrating that the rates
in effect for all products during the year are in compliance
with the requirements of this title and that established
service standards are being met. The report will include
information on mail volume, service quality and customer
satisfaction and must be audited by the Inspector General.
Subsection 3652(b) requires annual reporting on the extent of
cost savings reflected in worksharing discounts. Subsection
3652(c) requires that the Postal Service provide in its annual
report such data as the Commission requires on service
agreements and market tests.
Subsection 3652(d) requires that the Commission have access
to all the working papers and supporting materials of the
Postal Service and the Inspector General in connection with the
required reports. Subsection 3652(e) requires that the
Commission, in developing regulations prescribing the content
and form of the required annual reports, consider the need to
provide the public with adequate information to justify the
lawfulness of rates charged, the need to avoid unnecessary or
unwarranted administrative effort or expense on the part of the
Postal Service, and the need to protect the confidentiality of
commercially sensitive information. As a result, the section
authorizes the Commission to specify what information will be
provided as either public reports or to accommodate the
confidentiality protections in subsection 3652 (f), which
allows the Postal Service to obtain confidential treatment for
commercially sensitive information that is protected from
disclosure under current law, in accordance with provisions
outlined in sections 502 and 504 of the bill. Subsection 3652
(d) also allows the Commission, on its own motion or at the
request of an interested party, to initiate a proceeding to
improve the quality, accuracy, or completeness of Postal
Service data.
Subsection 3652(g) requires the Postal Service to provide
the Commission, as part of the information to be examined in
the annual audit, specific reports that are submitted to
Congress, including the comprehensive statement required under
section 2401 and the performance plan and program reports
required under the Government Performance and Results Act. The
Postal Service is also required to provide reports detailing
the operations of the Competitive Products Fund created in
section 301 of the bill.
Section 3653--Annual determination of compliance
Section 3653 requires the Commission to provide an
opportunity for public comment after receiving annual reports
from the Postal Service. The Commission will then, within 90
days, make a written determination as to whether any rates or
fees were not in compliance with the law or whether any service
standards were not met. If noncompliance is found, the
Commission is required to take appropriate action under the
revised complaint procedure in new section 3662 laid out in
section 205 of the bill. A determination of compliance creates
a rebuttable presumption of compliance in any complaint
proceeding.
Section 205--Rate and service complaints
Section 402 of the bill revises the complaint and appellate
review provisions set out in subchapter V of chapter 36, title
39 as re-designated by the bill. In general, the bill
strengthens the authority of the Regulatory Commission to act
on a complaint in lieu of the current reliance on Rate
Commission review of postage rates prior to implementation.
Section 205 repeals current sections 3662 and 3663 and adds
three sections to title 39 as follows.
Section 3662--Rate and service complaints
Section 3662 provides the Regulatory Commission with
enhanced authority to respond to complaints of pricing,
service, or other actions by the Postal Service in violation of
law. As revised, this section requires the Commission to
investigate or dismiss complaints within 90 days. Subsection
3662(c) gives the Commission broad authority to correct
violations by ordering the Postal Service to take whatever
steps the Commission considers appropriate. For instance, the
Commission may order the Postal Service to adjust the rates of
competitive products to lawful levels if they are set below
attributable costs. The current Rate Commission has no such
authority under current law. In cases of deliberate
noncompliance with the law, the Commission is authorized to
levy fines based on the seriousness of the noncompliance. Fines
resulting from unlawful provision of competitive products must
be paid out of the Competitive Products Fund. All fines will be
paid into the U.S. Treasury.
Section 3663--Appellate review
Section 3663 provides for appeals of any order or decision
by the Commission to the United States Court of Appeals for the
District of Columbia Circuit in accordance with chapter 706 of
title 5 and chapter 158 and section 2112 of title 28.
Section 3664--Enforcement of orders
Section 3664 gives any United States District Court the
authority to enforce orders from the Commission.
Section 206--Clerical amendment
Section 206 of the bill revises the analysis of chapter 36,
title 39, in accordance with the changes made by the bill.
TITLE III--MODERN SERVICE STANDARDS
Title II of the bill requires the Postal Regulatory
Commission to design, within 12 months, a new system of rate
regulation for market-dominant products. Title III requires the
Commission to establish, within 12 months, a set of service
standards for market-dominant products. The Postal Service
currently sets its own service standards. Title III also
requires the Postal Service to submit a plan for how it will
meet the new standards established by the Commission. The
Postal Service's plan will include a list of facilities that
can be closed and consolidated without hindering their ability
to meet the new service standards. Title III maintains the
universal service requirements included in sections 101(a),
101(b) and 403 of title 39 and the post office closing
procedures in section 404(b) of title 39.
Section 301--Establishment of modern service standards
Section 301 creates a new section 3691 in title 39. Section
3691 requires the Regulatory Commission to design, within 12
months, a set of new service standards for market-dominant
products. The new standards shall be consistent with the
requirements in sections 101(a), 101(b), and 403 of title 39
requiring that the Postal Service ``bind the Nation together
through the mail'' and serve all parts of the country in a non-
discriminatory fashion. Subsection 3691(b) provides that the
objectives of the new system shall be: (1) to increase the
value of postal services to both senders and recipients; (2) to
provide a benchmark for Postal Service performance goals; and
(3) to guarantee Postal Service customers delivery speed and
frequency consistent with reasonable rates and best business
practices.
Subsection 3691(c) requires that, as they develop the new
service standards, the Commission take into consideration: (1)
actual level of service under any service standards previously
established by the Postal Service; (2) customer satisfaction
with Postal Service performance; (3) mail volume and revenues
projected in future years; (4) the projected growth in the
number of addresses the Postal Service will be required to
serve in future years; (5) the current and projected future
cost of serving Postal Service customers; (6) the effect of
changes in technology, demographics and population distribution
on the efficient and reliable operation of the postal delivery
system; and, (7) the policies of this title and such other
factors as the Commission determines appropriate.
Section 302--Postal Service plan
Section 302 requires the Postal Service to submit to
Congress, within 6 months of the establishment of the new
service standards for market-dominant products, a plan for
meeting the new standards. The Postal Service will develop the
plan in consultation with the Regulatory Commission. Subsection
302 (b) requires that the plan: (1) establish performance
goals; (2) describe any changes to the Postal Service's
processing, transportation, delivery and retail networks
necessary to allow the Postal Service to meet the new
performance goals; and (3) describe any changes to planning and
performance documents previously submitted to Congress to
reflect the new performance goals.
Subsection 302(c) requires that the Postal Service's plan
also include a description of its long-term vision for
rationalizing its infrastructure and workforce and its plan for
implementing that vision, including (1) a strategy for how it
intends to rationalize the postal facilities network and remove
excess processing capacity and space from the network, (2) an
update on how postal decisions related to mail changes,
security, automation initiatives, worksharing, information
technology systems and other areas will affect network
rationalization plans; (3) a discussion of what impact any
facility changes may have on the postal workforce and whether
the Postal Service has sufficient flexibility to make needed
workforce changes; and, (4) an identification of anticipated
costs, cost savings and other benefits associated with the
infrastructure rationalization alternatives discussed in the
plan.
Subsection 302(d) requires that the Postal Service include
plans to provide retail postal services by other means,
including vending machines, the Internet and retail facilities
in which overhead costs can be shared with private businesses
and other government agencies. Subsection 302(e) requires that
the Postal Service include plans to provide re-employment
assistance or early retirement benefits to employees displaced
as a result of automation or the closing and consolidation of
facilities.
Subsection 302(f) requires that the Postal Service's plan
be submitted to the Postal Service Inspector General for study
before it is submitted to Congress. The Inspector General will
then issue a report detailing the extent to which the plan is
consistent with the Postal Service's obligations under title 39
and the degree to which the plan allows them to meet the new
service standards.
TITLE IV--PROVISIONS RELATED TO FAIR COMPETITION
Section 401--Postal Service Competitive Products Fund
Section 401 adds a new section 2011 to title 39. Section
2011 establishes an off-budget fund within the Treasury for
revenues and expenditures associated with competitive products.
The ``Competitive Products Fund'' is in addition to the current
Postal Service Fund. The intent of this section is to level the
playing field for the Postal Service and its competitors in the
competitive product market by requiring the Postal Service to
keep separate financial accounts for market-dominant and
competitive products. Separation of accounts also protects
taxpayers and the interests of postal consumers in the market-
dominant category.
Section 2011--Provisions relating to competitive products
Section 2011 establishes the rules under which the Postal
Service will manage the Competitive Products Fund. The Postal
Service may invest money from the new fund in accordance with
rules that the Secretary of Treasury shall prescribe within 12
months after the date of enactment. The Postal Service may also
borrow against any assets related to its competitive products.
The Postal Service must regularly report to the Secretary of
the Treasury and the Postal Regulatory Commission on the
operation of the Fund. The Secretary of the Treasury in
consultation with the Postal Service, and independent,
certified public accounting firm and other appropriate advisors
shall, within 12 months of enactment, develop recommendations
regarding the accounting practices and principles to be used by
the Postal Service with the intent of preventing cross-subsidy
of market-dominant products by competitive products. In
addition, the Secretary of the Treasury shall develop
recommendations for the computation of the Postal Service's
assumed Federal income tax on competitive products income. The
Postal Regulatory Commission shall review these recommendations
and following consideration of recommendations of interested
parties, shall issue rules on the Postal Service's accounting
practices and principles and the method of computing the
assumed Federal income tax.
Section 402--Assumed Federal income tax on competitive products income
Section 402 adds a new section 3634 to title 39. Section
3634 requires the Postal Service to compute an assumed Federal
income tax on income from competitive products each year and to
transfer from the Competitive Products Fund to the Postal
Service Fund the amount of that assumed tax.
Section 403--Unfair competition prohibited
Section 403 adds a new section 404(a) to title 39. The new
section 404(a) prohibits the Postal Service from: (1)
establishing rules or regulations which preclude competition or
give the Postal Service an unfair competitive advantage; (2)
compelling disclosure, transfer, or licensing of intellectual
property; or (3) offering any product or service that makes use
of information obtained from a person that provides or seeks to
provide a product to the Postal Service unless the person has
consented to such use or the information can be obtained from
another source. The Regulatory Commission is required to
prescribe regulations to carry out the purposes of this
section, and the prohibitions will be enforced through the
Commission's strengthened complaint process and remedies, which
include ordering rescission of any regulation.
Section 404--Suits by and against the Postal Service
Section 404 amends section 409 of title 39 to make the
Postal Service subject to other laws regulating the conduct of
commercial activities. First, the amendment subjects all Postal
Service activities to federal laws prohibiting the conduct of
business in a fraudulent manner. Second, the amendment subjects
all Postal Service activities outside the postal monopoly to
federal antitrust laws and unfair competition prohibitions and
eliminates sovereign immunity protection from suits in Federal
Court for violations of Federal law. Third, the amendment makes
the Postal Service's Competitive Products Fund a ``person'' for
purposes of federal bankruptcy laws. Fourth, the amendment
requires the Postal Service to consider local zoning, planning,
environmental, or land use regulations and building codes when
constructing new buildings.
Section 409 as amended further requires the Postal Service
to represent itself in most legal proceedings permitted by the
amendment as well as in cases involving administrative
subpoenas issued by the Regulatory Commission and appeals of
decisions by the Commission or the Governors. The amendment
requires that judgments arising out of violations of law
involving competitive products be paid out of revenues earned
from competitive products.
Section 405--International postal arrangements
Section 405 amends section 407 of title 39, United States
Code. Paragraph 407(a) states that it is the policy of the
United States to promote and encourage communications between
peoples by efficient operation of international postal services
and other international delivery services for cultural, social,
and economic purposes; to promote and encourage unrestricted
and undistorted competition in the provision of international
postal services and other international delivery services
except where provision of those services by private companies
may be prohibited by U.S. law; to promote and encourage a clear
distinction between governmental and operational
responsibilities with respect to the provision of international
postal services; and to participate in multilateral and
bilateral agreements with other countries to accomplish the
objective.
Paragraph 407(b) provides that the Secretary of State shall
be responsible for the formulation, coordination, and oversight
of foreign policy related to international postal services.
However, the Secretary cannot conclude any postal treaty or
convention that would grant an undue or unreasonable preference
for the Postal Service with respect to any competitive product.
The Secretary of State shall coordinate with other agencies
having authority vested by law such as the Postal Regulatory
Commission, the Department of Commerce, the Department of
Transportation, and the Office of the United States Trade
Representative. In addition, the Secretary shall maintain
continuing liaison with other executive branch agencies
concerned with postal and delivery issues; the Committee on
Governmental Affairs of the Senate and the Committee on
Government Reform of the House of Representatives; and the
Postal Service and representatives of users and private
providers of international postal and delivery services.
Paragraph 407(c) requires that, before concluding any
treaty or convention that establishes a rate or classification
for a market-dominant product, the Secretary of State shall
request that the Postal Regulatory Commission submit its views
on whether such a rate is consistent with section 3622.
Paragraph 407(d) states that the Postal Service can enter
into commercial or operational contracts related to
international postal services as long as they are solely
contractual and do not purport to be binding under
international law. A copy of each contract shall be forwarded
to the Secretary of State and the Postal Regulatory Commission.
Paragraph 407(e) requires that the customs laws of the
United States be applied in the same manner to both shipments
of the Postal Service and private companies and that to the
extent practicable, the Secretary of State shall encourage
governments of other countries to make available a range of
nondiscriminatory customs procedures.
Subsection 405(b) permits the Postal Service to establish
postage rates for international mail until regulations under
section 3622 and 3633 are promulgated by the Postal Regulatory
Commission for market-dominant products and competitive
products respectively.
TITLE V--GENERAL PROVISIONS
Section 501--Qualification requirements for Governors
Section 501 amends section 202 of title 39. As revised,
section 202 provides that the nine members of the Board of
Governors shall represent the public interest generally. The
amendment also adds a requirement that the Governors shall be
selected by the President based solely on their demonstrated
ability in managing large organizations or corporations, in
either the public or the private sector. The amendment requires
the President to consult with the Speaker and minority leader
of the House and the majority and minority leaders of the
Senate in selecting individuals to nominate to the Board. The
term of office for Governor is five years instead of nine.
Those Governors serving under an appointment made prior to
enactment will not be affected, however, when that office
becomes vacant, the appointment of any person to fill that
office shall be made in accordance with this amendment. This
section also establishes transition rules for vacancies
occurring in terms of Governors incumbent as of the date of
enactment.
Section 502--Obligations
Section 502 amends section 2005 of title 39 to delete
specified limits on borrowing for capital improvements and for
operational expense by the Postal Service. The Postal Service
Fund's $2 billion annual cap on borrowing for capital
investments and $1 billion annual cap on borrowing for
operational expenses is modified to a $3 billion total annual
combined cap for both purposes.
Section 503--Private carriage of letters
Section 503 amends section 601 of title 39 to provide
limited additional statutory exemptions to the postal monopoly.
Subsection 503(b) provides that a letter may be carried outside
the mail under three new circumstances: (1) when the amount
paid to a private carrier is at least 6 times the rate then
currently charged for the first ounce of a single-piece first-
class letter; (2) when the letter weighs at least 12 and one-
half ounces; and (3) when private carriage is within the scope
of current Postal Service regulations that purport to suspend
the operation of current law. By setting the limit at 6 times
the first-class stamp price, the amended section 601 provides
that the price limit on the postal monopoly will rise as the
stamp price increases.
Section 601 as amended also codifies the exemptions to the
postal monopoly referenced in subsection 503(b)(3) that have
been administratively adopted by the Postal Service and widely
used by private carriers and the public even though they are
based on a questionable interpretation of current law. Entities
in both the government and the private sector have testified
that the Postal Service has misinterpreted the suspension power
found in section 601(b) of current law. Since 1974, the Postal
Service has, under color of section 601(b), issued regulations
that, in effect, suspend the postal monopoly. Subsection
601(b), however, is derived from section 7 of an 1864 postal
act. This provision was originally intended to authorize the
Postmaster General to suspend the exception to the postal
monopoly now found in section 601(a), which allows private
carriage of letters if postage is paid by applying and
canceling postage stamps. There is no evidence that Congress
intended to grant the Postal Service authority to suspend the
postal monopoly itself. The proposed amendment would repeal the
Postal Service's authority to suspend the postal monopoly
exception for stamped letters--an antiquated and never used
authority--and to codify the exemptions to the postal monopoly
that the Postal Service has adopted to date in apparent
misinterpretation of the suspension provision. The intent of
this provision to continue to allow private carriage under
those circumstances in which private carriage is purportedly
permitted by current Postal Service ``suspensions'' of the
monopoly but not to continue provisions in the Postal Service
regulations that purport to condition or limit use of such
``suspensions,'' e.g., a requirement that customers of private
carriers must permit otherwise unauthorized inspections by
postal inspectors.
The Regulatory Commission is authorized to adopt
regulations necessary to carry out the exceptions to the postal
monopoly set out in section 601 as amended. This amendment does
not take effect until the Postal Regulatory Commission
promulgates regulations for the competitive pricing system
under section 3633.
Section 504--Rulemaking authority
Section 504 amends section 401(2) of title 39 to clarify
the rulemaking function of the Postal Service. Amended section
401(2) authorizes the Postal Service ``to adopt, amend, and
repeal such rules and regulations, not inconsistent with this
title, as may be necessary in the execution of its functions
under this title and such other functions as may be assigned to
the Postal Service under any provisions of law outside of this
title.'' This amendment is intended to make clear that the
Postal Service is not empowered to adopt regulations
implementing other parts of the U.S. Code unless explicitly
authorized to do so by Congress. This amendment is modeled on
the Federal Communications Commission's rulemaking authority in
47 U.S.C. 154(i). The amendment recognizes that the rulemaking
authority of the Postal Service is affected by its obligations
under title 5 and certain other limited provisions of law
outside title 39.
Section 505--Noninterference with collective bargaining agreements
Section 505 revises the current procedures regarding
collective bargaining with unions representing postal
employees. It eliminates the fact-finding process in current
law and provides for the appointment of a mediator to try to
resolve collective bargaining disputes. Subsection 505(a)
amends section 1207 of title 39 to state that if there is a
collective bargaining agreement in effect, no party shall
terminate or modify such agreement unless they serve no less
than 90 days notice on the other party. The party serving such
notice shall notify the Federal Mediation and Conciliation
Service of the existence of a dispute within 45 days of such
notice. If no agreement is reached, the Director of the Federal
Mediation and Conciliation Service shall, within 10 days,
appoint a mediator. If no agreement is reached within 60 days
after the expiration or termination of the agreement or if the
parties decide upon arbitration but do not agree upon the
arbitration procedures, then a three member arbitration panel
shall be established with one member selected by the Postal
Service, one member selected by the bargaining representative
of the employees and the third jointly selected. Decisions of
the arbitration board shall be binding and final and the costs
shall be shared by both parties. In the case of a bargaining
unit whose recognized representative does not have an agreement
with the Postal Service, if the parties fail to reach agreement
within 90 days of the commencement of collective bargaining, a
mediator shall be appointed. If the parties fail to reach
agreement within 180 days of the commencement of collective
bargaining, and they have not agreed to another procedure for
binding resolution, an arbitration board shall be established
to provide conclusive and binding arbitration.
Subsection 505(b) states that except as provided in
subsection (a), nothing in this act shall restrict, expand or
otherwise affect any of the rights, privileges, or benefits of
either employees or of labor organizations representing
employees of the Postal Service.
Subsection 505(c) provides that nothing in the bill will
affect free mail as currently provided by law for: (1)
correspondence of members of the diplomatic corps and consuls
of the countries of the Postal Union of Americas and Spain; (2)
the blind and the disabled; and (3) mailing of balloting
materials under the Uniformed and Overseas Citizens Absentee
Voting Act.
TITLE VI--ENHANCED REGULATORY COMMISSION
Section 601--Reorganization and modification of certain provisions
relating to the Postal Regulatory Commission
Section 601 creates a new chapter 5 in title 39 to
establish the Postal Regulatory Commission, which will replace
the current Postal Rate Commission. It recognizes the
Regulatory Commission's enhanced responsibilities by
establishing it in provisions set out in a chapter located in
part I of title 39, dealing with general matters, rather than,
as in current law, provisions set out in a subchapter of
chapter 36, dealing with rate regulation. In addition, this
section establishes qualification requirements for Postal
Regulatory Commissioners. Lastly, it directs the Postal
Regulatory Commission to designate an officer of the Postal
Regulatory Commission in all public proceedings to represent
the interests of the general public.
Section 602--Authority of the Postal Regulatory Commission to issue
subpoenas
Section 602 amends section 504 of title 39, i.e., section
3604 of current law as re-designated by section 601 of the
bill. Section 504, as amended, provides that Commissioners, any
administrative law judge appointed by the Commission, and any
designated employee of the Commission may administer oaths,
examine witnesses, take depositions, and receive evidence. In
addition, the Chairman of the Commission, any Commissioner
designated by the Chairman, and any administrative law judge
appointed by the Commission may subpoena officers, employees,
contractors, and agents of the Postal Service to require
attendance, presentation of testimony, production of documents
or to order depositions and responses to written
interrogatories. Any subpoena requires the written concurrence
of a majority of Commissioners then holding office in advance
of its issuance. The Commission may seek an order enforcing the
subpoena in U.S. District Court in the event of a failure to
comply. Failure to obey the court's order is punishable as a
contempt of court.
The amendment also provides for the handling of proprietary
information requested from the Postal Service by the
Commission. Section 504, as amended, provides that, if the
Postal Service determines requested information is proprietary
and so notifies the Commission in writing, the Commission may
use the information only for the purpose for which it is
supplied and must restrict access to the information to
Commission officials. The amendment further provides for the
possibility of discovery of such information by private parties
in proceedings under sections 556 and 557 of title 5 and
requires the Commission to adopt rules to protect the
confidentiality of such information similar to the rules that
govern protective orders issued by the federal courts under the
Federal Rules of Civil Procedure.
Section 603--Appropriations for the Postal Regulatory Commission
Section 603 further amends section 504 of title 39 to
ensure the financial independence of the Postal Regulatory
Commission. Under the amendment, funding for the Commission
will be paid out of the Postal Service Fund, as under current
law, but the budget of the Commission will no longer be subject
to disapproval by the Governors.
Section 604--Redesignation of the Postal Regulatory Commission
Section 604 changes the name of the ``Postal Rate
Commission'' to the ``Postal Regulatory Commission'' in various
statutes.
Section 605--Financial transparency
Section 605 amends section 101 of title 39 by including a
requirement that the Postal Service shall be subject to ``a
high degree of transparency to ensure fair treatment of
customers of the Postal Service's market-dominant products and
companies competing with the Postal Service's competitive
products.''
TITLE VII--EVALUATIONS
Section 701--Assessments of ratemaking, classification and other
provisions
Section 701 requires the Regulatory Commission to report to
the President and the Congress at least every 3 years, in
conjunction with the Postal Service, on the operation of the
amendments made by this bill, with recommendations for any
legislative or other measures necessary to improve the
effectiveness or efficiency of the nation's postal laws.
Section 702--Report on universal postal service and the postal
monopoly.
Section 702(a) requires the Postal Regulatory Commission,
no later than 12 months after enactment, to submit a report to
the President and Congress on the universal postal service and
the postal monopoly including the monopoly on the delivery of
mail and access to mailboxes. The report shall include (1) a
comprehensive review of the history and development of
universal service and the postal monopoly; (2) the scope and
standards of universal service and the postal monopoly under
current law; (3) a description of any geographic areas or
communities that are not currently covered by universal service
or that are covered but that are receiving deficient services;
and (4) the scope and standards of universal service and the
postal monopoly likely to be required in the future to meet the
needs and expectations of the public. Section 702(b) requires
the Postal Regulatory Commission to include in the report any
recommended changes to universal service and the postal
monopoly as the Commission considers appropriate and an
estimate of the costs and likely benefits of the obligation to
provide universal service. The Regulatory Commission will
update the report in each report submitted to the President and
Congress pursuant to section 701.
Section 703--Study on equal application of laws to competitive
products.
Section 703 requires the Federal Trade Commission (FTC) to
prepare and submit to the President, Congress and the Postal
Regulatory Commission within one year after enactment a
comprehensive report identifying Federal and State laws that
apply differently to the Postal Service with respect to the
competitive category of mail and similar products provided by
private companies, including recommendations as it considers
appropriate to bring such legal discrimination to an end. In
preparing the report, the FTC shall consult with the Postal
Service, the Postal Regulatory Commission and other federal
agencies, mailers, private delivery companies and the general
public and append any comments to its report. The Postal
Regulatory Commission shall take the FTC's recommendations into
account in establishing regulations for competitive products
under section 3633 of title 39.
Section 704--Report on postal workplace safety and workplace-related
injuries
Subsection 704(a) directs the Inspector General of the
United States Postal Service, not later than six months after
enactment, to submit a report to Congress and the Postal
Service that details and assesses any progress the Postal
Service has made in improving workplace safety and reducing
workplace-related injuries nationwide and identifies
opportunities for improvement. This report shall: discuss any
injury reduction goals established by the Postal Service;
describe actions that the Postal Service has taken to improve
workplace safety and reduce injuries; identify areas where the
Postal Service has failed to meet its injury reduction goals;
explain the reasons why these goals were not met; and identify
opportunities for making further progress in meeting these
goals.
Subsection 704(b) requires the Postal Service, no later
than 6 months after receiving the report under Subsection
704(a), to submit a report to Congress detailing how it plans
to improve workplace safety and reduce workplace-related
injuries, including goals and metrics. The Postal Service's
report shall also include plans developed in conjunction with
the Inspector General and employee representatives, including
representatives of each postal labor union and management
association, for addressing the problem areas identified by the
Inspector General.
Section 705--Study on recycled paper
Subsection 705(a) directs the Government Accountability
Office (GAO), within 12 months of enactment, to submit to the
Congress, the Board of Governors of the Postal Service and the
Postal Regulatory Commission a report concerning the economic
and environmental efficacy of establishing rate incentives for
mailers linked to the use of recycled paper. The GAO report
shall also include a description of the Postal Service's
accomplishments in each of the preceding 5 years involving
recycling activities, including the amount of revenue generated
and savings achieved by the Postal Service as a result of its
use of recycled paper and other recycled products. Finally, the
GAO report shall discuss the Postal Service's efforts to
recycle undeliverable mail and other material and additional
opportunities that may be available for the Postal Service to
engage in recycling initiatives, including the projected costs
and revenues associated with undertaking such opportunities.
Subsection 705(b) specifies that the report under
Subsection 705(a) shall include recommendations for any
appropriate administrative or legislative actions.
TITLE VIII--POSTAL SERVICE RETIREMENT AND HEALTH BENEFITS FUNDING
Section 801--Short title
Section 801 provides that title VIII may be cited as the
``Postal Civil Service Retirement and Health Benefits Funding
Amendments of 2004''.
Section 802--Civil Service Retirement System
In general, section 802 provides for transfer of the costs
of providing military service credit under the Civil Service
Retirement System (CSRS) from the Postal Service to the U.S.
Treasury. It also modifies the existing provisions for funding
CSRS benefits for Postal employees. Paragraph (a)(1) eliminates
the current requirement that the Postal Service make a
contribution to the Retirement Fund based upon a percentage of
the salaries of Postal Service employees. Paragraph (a)(2)
amends the existing provisions of 5 U.S.C. Sec. 8348(h).
As amended, Sec. 8348(h)(1) defines ``Postal surplus or
supplemental liability'' as the estimated difference, as
determined by the Office of Personnel Management (OPM), between
the actuarial present value of future CSRS retirement benefits
attributable to civilian employment with the United States
Postal Service, and the sum of the actuarial present value of
future Postal Service CSRS deductions from the salaries of
current Postal employees plus the net portion of the Fund
balance attributable to Postal civilian employment (taking into
account contributions, payments and earnings); plus any other
appropriate amount, as determined by OPM in accordance with
generally accepted actuarial practices and principles.
As amended, Sec. 8348(h)(2)(A) provides that by June 30,
2006, OPM will determine the Postal surplus or supplemental
liability, as of September 30, 2005. Any surplus will be
transferred to the Postal Service Retiree Health Benefit Fund
established by the new 5 U.S.C. Sec. 8909a. If there is a
supplemental liability, OPM will establish an amortization
schedule providing for the liquidation of the liability by
September 30, 2043.
As amended, Sec. 8348(h)(2)(B) provides that OPM will each
year thereafter through FY 2038 recompute whether there is a
Postal surplus or supplemental liability. Any surplus will
remain in the Fund until transfers are authorized under
subparagraph (C). If there is a liability, OPM will establish a
new amortization schedule providing for the liquidation of the
liability by September 30, 2043, and superceding earlier
amortization schedules.
As amended, Sec. 8348(h)(2)(C) provides that if there is a
surplus at the end of FY's 2015, 2025, 2035, and 2039, it shall
be transferred to the Postal Service Retiree Health Benefits
Fund, terminating any prior amortization schedules.
As amended, Sec. 8348(h)(2)(D) and (E) provide that the
amortization schedules shall be set in accordance with
generally accepted actuarial practices and principles, with
interest computed at the rate used in the most recent valuation
of the CSRS, with Postal payments due not later than the date
scheduled by OPM.
As amended, Sec. 8348(h)(3) provides that in computing
payments under any other subsection of Sec. 8348 based upon
unfunded liability, OPM will compute those payments taking into
account payments under the amended Sec. 8348(h).
Section 802(b) provides that since the amounts paid in FY's
2003 through 2005 by the Postal Service for CSRS military
service costs will be recredited to the Postal Service towards
its civilian CSRS obligations, the Treasury shall make the
contributions for those years.
Section 803--Health insurance
Section 803(a)(1) also amends 5 U.S.C. Sec. 8906(g)(2)(A)
to provide that future payments for the employer share of
health benefits premiums for retired Postal employees shall be
made from the Postal Service Retiree Health Benefit Fund
established by the new 5 U.S.C. Sec. 8909a up to the amount in
the Fund, with any additional amount contributed by the Postal
Service.
Section 803(a)(1) also adds a new 5 U.S.C. Sec. 8909a
establishing a Postal Service Retiree Health Benefit Fund,
administered by OPM.
New Sec. 8909a(c) provides that the new Fund shall be
invested in the same manner as the Retirement Fund.
New Sec. 8909a(d)(1) provides that at the end of 2006 and
each year thereafter, OPM will compute the net present value of
the future payments required under section 8906(g)(2)(A) and
attributable to the service of Postal Service employees during
the most recently ended fiscal year.
New Sec. 8909a(d)(2)(A) provides that at the end of 2006
and each year thereafter, OPM will compute the net present
value of the unfunded liability for future payments required by
5 U.S.C. Sec. 8906(g)(2)(A), taking into account the Fund
balance and the amount computed under Sec. 8909a(d)(1) that
will be paid by the Postal Service.
New Sec. 8909a(d)(2)(B) provides that at the end of 2006
OPM will compute, and each year thereafter recompute, an
amortization schedule providing for the liquidation by January
31, 2046, or within 15 years, whichever is later, of the net
present value determined under subparagraph (A), including
interest at the rate used in that computation.
New Sec. 8909a(d)(3) provides that at the end of 2006 and
each year thereafter, the Postal service will pay into the
Postal Service Retiree Health Benefit Fund the amounts computed
under Sec. Sec. 8909a(d)(1) and (2)(B).
New Sec. 8909a(d)(4) provides that computations under
subsection (d) will be made consistent with the assumptions and
methodology used by OPM for financial reporting under the Chief
Financial Officers Act of 1990.
New Sec. 8909a(d)(4) provides that any necessary
regulations shall be promulgated by OPM after consultation with
the Postal Service.
Section 804--Repeal of disposition of savings provision
Section 804 repeals section 3 of the Postal Civil Service
Retirement System Funding Reform Act of 2003, Public Law 108-
18, which made provision for disposition of savings under the
provisions of that Act.
Section 805--Effective dates
Section 805(a) provides that title VIII generally takes
effect on October 1, 2005.
Section 805(b) provides that paragraph (1) of section
802(a), providing for the elimination of the Postal Service
contributions to the Retirement Fund based on a percentage of
employee salary, takes effect on the first day of the first pay
period beginning on or after October 1, 2005.
TITLE IX--COMPENSATION FOR WORK INJURIES
Section 901--Temporary disability; continuation of pay
Section 901 amends section 8117 of title 5 to put into
place a three-day waiting period before an employee of the
Postal Service injured on the first day of the first pay period
beginning on or after October 1, 2005 is eligible to receive 45
days of continuation of pay. The affected postal employee may
use annual leave, sick leave, or leave without pay during this
period. If the disability exceeds 14 days or is followed by
permanent disability, the employee may have any annual leave or
sick leave used reinstated or may receive pay for the time
spent on leave without pay.
Section 902--Disability retirement for postal employees
Section 902 amends sections 8105 and 8106 of title 5 by
converting compensation benefits for total or partial
disability to a retirement annuity when an affected postal
employee injured on the first day of the first pay period
beginning on or after October 1, 2005 reaches an appropriate
retirement age as defined by section 216(l) of the Social
Security Act. This change would reflect the fact that disabled
postal employees would likely retire at some point were they
not on the rolls of the Office of Workers' Compensation
Programs.
The compensation entitlement for partial disability is
converted to 50 percent of the difference between an employee's
monthly pay and his or her monthly wage earning capacity after
the beginning of partial disability when the injured employee
reaches his or her ``retirement age'' as defined in section 216
of the Social Security Act.
The compensation entitlement for total disability is
converted to 50 percent of the monthly pay of the employee when
the injured employee reaches his or her ``retirement age'' as
defined in section 216 of the Social Security Act.
Under current law, employees with dependents are eligible
for 75 percent of their pre-injury salary plus cost-of-living
adjustments (COLAs), tax-free. Employees with no dependents
receive 66\2/3\ percent of their pre-injury salary plus COLAs,
tax-free. There is no maximum dollar cap on workers'
compensation payments.
TITLE X--MISCELLANEOUS
Section 1001--Employment of Postal Police Officers
Section 1001 amends section 404 of title 39, United States
Code to permit the Postal Service to employ guards for
buildings owned and operated by the Postal Service or under the
charge and control of the Postal Service. The Postal Service
may give such guards with respect to this property the powers
of special policemen provided under section 1315 of title 40.
The Postmaster General or his or her designee may take any
action that the Secretary of Homeland Security may take under
section 1315 of title 40 with respect to that property.
Section 1002--Expanded contracting authority
Subsection 1002(a) amends 39 U.S.C 5402(d) to provide that
the Postal Service may contract with any air carrier for
transportation of mail in interstate air transportation,
including the rates therefor, through negotiations or
competitive bidding. The Postal Service may contract with any
air carrier or foreign air carrier for transportation of mail
in foreign air transportation, including the rates therefor,
through negotiations or competitive bidding except that (1) any
such contract may be awarded only to an air carrier holding a
certificate required by section 41101 of title 49 or an
exemption therefrom issued by the Secretary of Transportation,
or any such contract may be awarded only to a foreign air
carrier holding a permit required by section 41301 of title 49
or an exemption therefrom issued by the Secretary of
Transportation, or a combination of such air carriers and
foreign air carriers; (2) mail transported under any such
contract shall not be subject to any duty-to-carry requirement
imposed by any provision of subtitle VII of title 49 or any
certificate, permit, or corresponding authority issued by the
Secretary of Transportation; (3) every contract awarded to a
foreign air carrier shall be subject to the requirement that
air carriers shall be provided the same opportunity to carry
the mail of the country to and from which the mail is
transported and the flag country of the foreign air carrier;
(4) the Postmaster General shall consult with the Secretary of
Defense concerning actions that affect the carriage of military
mail in foreign air transportation.
Section 1002(b) amends section 41901(a) of title 49 to
permit the Postal Service to provide for the transportation of
mail by aircraft in air transportation and deletes restrictions
on the foreign air transportation of mail and prices for
foreign transportation of mail.
V. Evaluation of Regulatory Impact
Paragraph 11(b)(1) of rule XXVI of the Standing Rules of
the Senate requires that each report accompanying a bill
evaluate the regulatory impact that would be incurred in
carrying out the bill.
S. 2468 contains no intergovernmental or private-sector
mandates as defined in the Unfunded Mandates Reform Act and
would impose no costs on state, local, or tribal governments.
VI. Estimated Cost of Legislation
Section 11(a) of rule XXVI of the Standing Rules of the
Senate requires that each report accompanying a bill include an
estimate of the costs which would be incurred in carrying out
such bill. The following estimate was prepared by the
Congressional Budget Office:
S. 2468--Postal Accountability and Enhancement Act
Summary: S. 2468 would change the laws that govern the
operation of the United States Postal Service (USPS),
particularly those regarding the cost of pensions and health
care benefits of retired workers and the requirement to hold
certain funds in escrow. CBO estimates that enacting this
legislation would result in on-budget savings of $20.2 billion
and off-budget costs of $35.8 billion over the 2005-2014
period. (The net expenditures of the USPS are classified as
``off-budget.''). Thus, CBO estimates the net cost to the
unified budget would be $15.7 billion over the 2005-2014
period. Those costs would constitute direct spending. (The bill
would not affect revenues.) In addition, we estimate that
implementing S. 2468 would cost about $90 million (less than
$10 million a year) over the 2005-2014 period, assuming
appropriation of the necessary amounts.
Enacting S. 2468 would not affect how much the federal
government spends on pension or health care benefits for USPS
retirees. By increasing how much the Postal Service pays to
finance those benefits and by eliminating the current-law
escrow account requirements, however, the bill would increase
future budget deficits as measured by the unified federal
budget. Eliminating the escrow account requirement for the USPS
would allow that agency to increase spending for capital
improvements or other projects, pay down its outstanding debt,
postpone or diminish future rate increases, or some combination
of these options. Enacting the bill also would reduce direct
spending by making the costs of the Postal Rate Commission
subject to appropriation and by reducing payments made by the
Postal Service for workers' compensation.
S. 2468 contains no intergovernmental or private-sector
mandates as defined in the Unfunded Mandates Reform Act (UMRA)
and would impose no costs on state, local, or tribal
governments.
Major provisions of S. 2468 would:
Eliminat a requirement in Public Law 108-18 (P.L.
108-18), the Postal Civil Service Retirement Funding Reform Act
of 2003, that the Postal Service place savings from reduced
pension contributions in escrow.
Transfer from the Postal Service to the Department
of the Treasury responsibility for paying pension costs
associated with military service credits.
Replace direct payments the Postal Service is
making for retiree health care costs with payments designed to
prefund the health care costs of current employees when they
retire.
Revise the procedure for raising postal rates.
Strengthen the USPS Board of Governors and the
Postal Rate Commission, which would be redesignated the Postal
Regulatory Commission (PRC).
Make other changes designed to increase the Postal
Service's competitiveness with private industry.
Estimated cost to the Federal Government: The estimated
budgetary impact of S. 2468 is shown in Table 1. The costs of
this legislation fall within budget functions 370 (commerce and
housing credit), 550 (health), 900 (net interest), and 950
(undistributed offsetting receipts).
TABLE 1.--ESTIMATED BUDGETARY EFFECTS OF S. 2468
--------------------------------------------------------------------------------------------------------------------------------------------------------
By fiscal year, in billions of dollars--
-----------------------------------------------------------------------------------------
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
--------------------------------------------------------------------------------------------------------------------------------------------------------
CHANGES IN DIRECT SPENDING
On-Budget Effects:
Estimated Budget Authority................................ 0.0 2.4 -2.3 -2.4 -2.5 -2.7 -2.9 -3.1 -3.3 -3.5
Estimated Outlays......................................... 0.0 2.4 -2.3 -2.4 -2.5 -2.7 -2.9 -3.1 -3.3 -3.5
Off-Buget Effects:
Estimated Budget Authority................................ * 2.9 3.2 3.5 3.6 3.9 4.2 4.4 4.8 5.2
Estimated Outlays......................................... * 2.9 3.2 3.5 3.6 3.9 4.2 4.4 4.8 5.2
-----------------------------------------------------------------------------------------
Total Unified Budget Effect:
Estimated Budget Authority................................ * 5.4 0.9 1.1 1.1 1.2 1.4 1.4 1.6 1.7
Estimated Outlays......................................... * 5.4 0.9 1.1 1.1 1.2 1.4 1.4 1.6 1.7
--------------------------------------------------------------------------------------------------------------------------------------------------------
\1\ Implementing the bill also would affect discretionary spending, subject to the availability of appropriated funds. CBO estimates that those
discretionary costs would be less than $10 million a year.
Notes.--Components may not add to totals because of rounding.
* = savings of less than $50 million.
Basis of estimate: For this estimate, CBO assumes that S.
2468 will be enacted near the start of fiscal year 2005. CBO
estimates that enacting the bill would result in on-budget
savings of $20.2 billion and off-budget costs of $35.8 billion
over the 2005-2014 period, for a net cost to the unified budget
of $15.7 billion over the 10-year period. In addition, we
estimate that implementing S. 2468 would cost about $90 million
over the 2005-2014 period, assuming appropriation of the
necessary amounts, mostly to fund the PRC.
Background
The following paragraphs present background information
relating to the major provisions of S. 2468, mostly for postal
finances affected by the bill.
Budgetary Treatment of USPS. Although the Postal Service is
a federal agency, its financial operations are classified as
off-budget. Despite this treatment, federal budget documents
present the net income (gross income minus expenses) of the
agency in the unified budgetary totals for the federal
government. The Postal Service is required by law to set
postage rates to cover its full costs, although from year to
year its net income may be positive or negative. In fiscal year
2003, the Postal Service generated $69.5 billion in
collections, mostly from postage and user fees, and had $64.2
billion in expenses, for a net cash surplus of $5.3 billion in
that year.
USPS and Federal Retirement Plans. Postal Service employees
participate in the federal government's two main defined
benefit pension programs. Those workers initially hired prior
to 1984 are covered by the Civil Service Retirement System
(CSRS) while those initially hired after 1983, as well as
former CSRS workers who elected to change federal retirement
plans in 1987 or 1998, participate in the Federal Employees'
Retirement System (FERS). In 2003, about 30 percent of the USPS
workforce was covered by CSRS, and the rest were under FERS.
The Postal Service and its employees each make payroll
contributions toward the civilian retirement systm (CSRS and
FERS). Unlike other agencies, the agency contribution rate for
most CSRS employees is 17.4 percent of basic pay (most other
agencies contribute 7 percent), while the employee contribution
rate is 7 percent.\1\ For FERS employees, the agency
contribution rate for most employees is 10.7 percent, while the
employee rate is 0.8 percent, plus Social Security payroll
taxes on both employers and employees. Workers in CSRS receive
generally higher benefits than those in FERS, but unlike FERS,
those in CSRS do not participate in Social Security and do not
receive agency contributions toward the Thrift Savings Plan. In
addition to its payroll contributions, the Postal Service also
makes annual amortization payments toward an unfunded liability
within CSRS. In 2003, that payment was about $300 million.
---------------------------------------------------------------------------
\1\ P.L. 108-18 increased the contribution rate the Postal Service
pays for its CSRS employees from 7 percent to 17.4 percent. That
legislation also eliminated a series of amortization payments the
Postal Service was required to make for unfunded CSRS liabilities. For
more details, see CBO's cost estimates of the Postal Civil Service
Retirement System Funding Reform Act of 2003 (S. 380 and H.R. 735 from
the 108th Congress). These estimates are posted on www.cbo.gov.
---------------------------------------------------------------------------
USPS and Federal Health Benefits. The Postal Service also
pays a portion of health care premiums for currently retired
USPS employees who are eligible to participate in the Federal
Employees Health Benefits (FEHB) program. Currently, there are
over 400,000 Postal Service retirees who participate in the
FEHB program. On average, the Postal Service currently pays
about 45 percent of the health care premiums for its retirees.
Retirees pay about 30 percent of their FEHB premiums with
general revenues accounting for the remaining amount, roughly
25 percent. In 2003, the Postal Service paid $1.1 billion to
FEHB for premiums for current retirees.
USPS Escrow Fund. Starting in October 2006, the Postal
Service will be required under current law to begin holding
funds in an escrow account equal to the difference between what
the Postal Service currently pays toward CSRS and what it would
have paid for CSRS benefits prior to the enactment P.L. 108-18.
Under current law, CBO estimates the Postal Service will need
to hold in escrow nearly $3 billion in 2006 and $36 billion
over the 2006-2014 period. S. 2468 would eliminate the
requirement that USPS collect and hold these funds in escrow.
Effects on the Unified Budget
S. 2468 would not affect how much the federal government
spends on pension or health benefits for USPS retirees.
However, by increasing how much the Postal Service pays to
finance those benefits and by eliminating the current-law
escrow requirements, the bill would increase future budget
deficits as measured by the unified federal budget.
Off-budget payments made by the Postal Service for CSRS and
FEHB are transfers to on-budget federal accounts, and are
counted as offsetting receipts (a credit against direct
spending). Eliminating the USPS transfer to CSRS for military
service credits would reduce on-budget offsetting receipts by
$13.5 billion over the 2005-2014 period. Under the bill, that
reduction would be offset by a $33.6 billion net increase in
on-budget offsetting receipts paid by the Postal Service for
the new health benefits fund. Taken together, those provisions
would increase on-budget offsetting receipts by $20.2 billion
over the 2005-2014 period.
The collection of funds to be held in escrow by the Postal
Service is recorded as an off-budget offsetting receipt.
Eliminating the requirement to fund the escrow account would
allow the USPS to pay down debt, increase spending for capital
improvements or other projects, postpone or diminish future
rate increases, or some combination of these activities. CBO
estimates that this provision would increase net off-budget
spending by $36 billion over the 2006-2014 period. (Much of
that spending would be to fund the new health benefits payments
mentioned above as on-budget offsetting receipts.) Making the
costs of the PRC subject to appropriation would reduce direct
spending by the Postal Service by about $90 million over the
next 10 years. Furthermore, reducing USPS costs for workers'
compensation could reduce direct spending by an additional $50
million over the 2005-2014 period.
The combined effect of the $20.2 billion increase in on-
budget receipts, the $36 billion reduction in off-budget
offsetting receipts, and a $140 million reduction in USPS
direct spending would produce a $15.7 billion cost to the
unified budget deficit over the 2005-2014 period. Those effects
are presented in Table 2 and explained in more detail below.
TABLE 2.--ESTIMATED CHANGES IN DIRECT SPENDING FOR S. 2468
--------------------------------------------------------------------------------------------------------------------------------------------------------
By fiscal year, outlays in billions of dollars--
-----------------------------------------------------------------------------------------
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
--------------------------------------------------------------------------------------------------------------------------------------------------------
CHANGES IN DIRECT SPENDING
On-Budget Effects
Civil Service Retirement System............................... 0 2.0 1.9 1.8 1.7 1.5 1.4 1.2 1.1 0.9
Postal Service Retiree Health Benefits Fund net of retiree 0 0.4 -4.2 -4.2 -4.2 -4.2 -4.3 -4.3 -4.3 -4.4
premium payments to FEHB \1\.................................
-----------------------------------------------------------------------------------------
Total On-Budget Effects................................. 0 2.4 -2.3 -2.4 -2.5 -2.7 -2.9 -3.1 -3.3 -3.5
=========================================================================================
Off-Budget Effects
Eliminate Escrow Account...................................... 0 2.9 3.2 3.5 3.7 3.9 4.3 4.5 4.8 5.2
Funding for PRC Costs Subject to Appropriation and Workers' * * * * * * * * * *
Compensation Savings.........................................
-----------------------------------------------------------------------------------------
Total Off-Budget Effects................................ * 2.9 3.2 3.5 3.6 3.9 4.2 4.4 4.8 5.2
=========================================================================================
Total Unified Budget Effects............................ * 5.4 0.9 1.1 1.1 1.2 1.4 1.4 1.6 1.7
=========================================================================================
MEMORANDUM
Payments from the Postal Service received by PSRHBF........... 0 0 -5.9 -6.1 -6.4 -6.6 -6.8 -7.1 -7.4 -7.8
FEHB premiums paid from PSRHBF................................ 0 0.4 1.8 2.0 2.2 2.4 2.6 2.8 3.1 3.4
Net outlays of PSRHBF................................... 0 0.4 -4.2 -4.2 -4.2 -4.2 -4.3 -4.3 -4.3 -4.4
--------------------------------------------------------------------------------------------------------------------------------------------------------
\1\ Starting in July 2006, CBO assumes that payments of FEHB premiums for Postal Service retirees would be paid out of the Postal Service Retiree Health
Benefits Fund instead of being paid directly by the Postal Service as under current law. S. 2468 would require the first payment prefunding and
amortization amounts to be made by January 31, 2007. The bill would have no effect on spending by the FEHB program for health benefits for Postal
Service annuitants.
Notes.--FEHB = Federal Employees Health Benefits program; PSRHBF = Postal Service Retiree Health Benefits Fund; PRC = Postal Regulatory Commission; USPS
= United States Postal Service.
* = savings of less than $50 million.
Components may not add to totals because of rounding.
Amounts in the table represent net changes in offsetting receipts, which are recorded in the budget as changes in direct spending. A positive sign
indicates lower offsetting receipts, thus an increase in outlays; negative numbers represent increased offsetting receipts, or a reduction in net
outlays.
On-Budget Effects (Direct Spending)
CBO estimates the total on-budget effect of the pension and
health care provisions in S. 2468 would be a decrease in
offsetting receipts of $2.4 billion in 2006, an increase of
$4.8 billiion over the 2006-2009 period, and $20.2 billion over
the 2006-2014 period. That increase in on-budget collections
would come from increased transfers (off-budget outlays) coming
from the USPS. (The off-budget effects are discussed in the
following section.)
Civil Service Retirement Contributions. S. 2468 would
change the way the Postal Service finances retirement benefits
for current and retired employees. Starting in October 2005,
the bill would transfer financial responsibility for militlary
service credits earned by Postal Service employees and retirees
participating in CSRS from the Postal Service to the Department
of Treasury. Military service credits represent time served in
the U.S. military that is credited toward benefits under the
civilian retirement system. Most federal agencies are not
responsible for the cost to the pension system of the military
service credits incurred by their CSRS employees, but P.L. 108-
18 transferred responsibility for military service credits from
the Treasury tot he Postal Service beginning in June 2004.
The Office of Personnel Management (OPM) estimates that
transferring responsibility for military service credits from
the Postal Service back to the Treasury would cause the Postal
Service to have overfunded its obligation to CSRS by about
$19.4 billion through September 2005.\2\ Consequently, under S.
2468 the Postal Service would no longer be obligated to make
either agency contributions or any further annual amortization
payments for CSRS. (Employee contributions would continue at 7
percent of basic pay and retirement benefits under CSRS would
not change.)
---------------------------------------------------------------------------
\2\ This overfunding, which is calculated on a net-present-value
basis, represents an estimate of the total amount of money the Postal
Service will have contributed toward CSRS from 1971 through September
30, 2005, minus the agency's CSRS liabilities if USPS bears not
financial responsibility for the pension costs associated with military
service credits. The projected overfunding is due primarily to larger-
than-expected returns on assets held in the CSRDF.
---------------------------------------------------------------------------
Spending by the Postal Service--including amounts paid into
other federal accounts--is considered off-budget spending.
However, the Civil Service Retirement and Disability Fund
(CSRDF) is an on-budget account, so the amounts the CSRDF
collects from the Postal Service are on-budget offsetting
receipts. Reducing payments the Postal Service makes to the
CSRDF would result in a reduction in off-budget spending and a
reduction in on-budget offsetting receipts. CBO estimates
transferring responsibility for military service credits, and
the attendant reduction in CSRS contributions such a change
would bring, would reduce on-budget receipts by $2 billion in
2006 and $13.5 billion over the 2006-2014 period. Although the
Treasury Department would then be responsible for the costs
associated with those pension liabilities under the bill, the
Treasury payment and receipt by CSRDF are both on-budget
intragovernmental transactions. That is, the bill would replace
one intragovernmental transfer with another. Instead of a
transfer from the off-budget Postal Service to the on-budget
CSRDF, there would be a transfer from the Treasury to the
CSRDF.
Postal Service Retiree Health Benefits Fund. S. 2468 also
would change the way the Postal Service financeses its share of
the cost of providing health care to retirees. Instead of
directly paying a portion of the health premiums incurred by
current retirees each year, the USPS would begin paying for
estimated costs of retiree health care as such costs are
accrued by current workers. Starting in 2007, S. 2468 would
require the USPS to make payments equal to the annual increased
in retiree health care liabilities accrued by current
employees. These payments would be deposited into a new on-
budget account, the Postal Service Retiree Health Benefits Fund
(PSRHBF), which would earn interest at the same rate as the
CSRDF. The Postal Service's share of health care premiums for
current retirees would be paid out of the PSRHBF as soon as
adequeate funds are available in the account to do so.
Under S. 2468, any overfunding toward CSRS liabilities
(after financial responsibility for military service credits
reverts to the Treasury) would be transferred from the CSRDF to
the PSRHBF by June 30, 2006. Based on information provided by
OPM, CBO anticipates that the transfer to the new fund would
total $20.2 billion and would occur in June 2006. (This amount
reflects the $19.4 billion in estimated CSRS overfunding plus
interest that would accrue between the end of the valuation
period in September 2005 and when CBO assumes the asset
transfer would take place in June 2006.)
Under the bill, the Postal Service also would make annual
amortization payments toward the unfunded liabilites for health
care costs of both current and future retirees. The unfunded
liability would be the difference between the assets held in
the PSRHBF and the net present value of accrued liabilities
projected for retiree health care. The bill would direct OPM to
compute the required prefunding and amortization payments
consistent with assumptions and methodologies for financial
reporting used by OPM under current law. The bill specifies
that payment would be made by January 31st of each year,
starting in 2007, for the prior fiscal year. (CBO assumes those
payments would include interest accrued between the end of the
valuation period and the payment date each year.) Based on
information provided by OPM, CBO anticipates the net present
value of the unfunded liability for the health care costs of
retirees would amount to $43.2 billion at the end of 2006 and
would shrink to $39.9 billion by the end of 2014. CBO estimates
that payments by the Postal Service for prefunding health care
costs of retirees and amortization payments for the remaining
unfunded liability would be $5.9 billion in 2007, $18.4 biliion
over the 2007-2009 period, and $54.2 billion over the 2007-2014
period.
CBO epxects that the transfer of $20.2 billion from the
CSRDF to the PSRHBF resulting from the shift in responsibility
for military service credits would occur in June 2006.
Therefore, the Postal Service would cease making payments
under current law for its share of FEHB premiums for annuitants
beginning in July 2006; with those premium payments instead
being drawn from the PSRHBF. CBO estimates that change in the
funding mechanism for retiree health benefits would reduce off-
budget payments by the Postal Service for FEHB premiums by $0.4
billion in 2006 (which reflects premium payments, under current
law, for the last three months of 2006), $6.3 billion over the
2006-2009 period, and $20.5 billion over the 2006-2014 period.
On-budget payments for those amounts would then be transferred
from the PSRHBF to the FEHB and any payments that would be made
into the new PSRHBF would be considered on-budget offsetting
receipts. CBO estimates the increase in on-budget receipts as a
result of changes in how the Postal Service finances its health
care obligations would be $4.2 billion in 2007, $12.2 billion
over the 2007-2009 period, and $33.6 billion over the 2007-
20014 period.
Off-Budget Effects (Direct Spending)
CBO estimates that enacting S. 2468 would result in net
off-budget costs of $2.9 billion in fiscal year 2006, $13.2
billion over the 2005-2009 period, and $35.8 billion over the
2005-2004 period because it would eliminate the requirement to
fund the escrow account, allowing the Postal Service to
increase other spending, reduce postal rates, or some
combination of these actions. The bill also would make the
costs of the PRC subject to appropriation, thus reducing direct
spending by about $90 million over the next 10 years. In
addition, S. 2468 would reduce USPS payments for workers'
compensation, which would reduce direct spending by $50 million
over the next 10 years. The bill contains many other provisions
that could affect USPS cash flows in each year, but we estimate
they would not have a significant net effect on the USPS over
the long term.
Elimination of Escrow Fund. P.L. 108-18 permanently reduced
payments by the USPS to the CSRDF. As a result of that act,
USPS payments to the CSRDF declined by $2.5 billion to $5
billion annually, beginning in 2003. For fiscal years starting
in 2006, P.L. 108-18 requires that savings resulting from
reduced payments to the CSRDF be considered an operating
expense of the Postal Service and held in escrow, remaining
unavailable for obligation unless authorized by subsequent
legislation.
S. 2468 would amend P.L. 108-18 to eliminate the escrow
fund requirement. As a result of this provision, the Postal
Service could lower rates and thus reduce its revenues, or
maintain rates and increase spending, or some combination of
these actions. The net outlays of the Postal Service would
increase because collections would not be deposited in escrow.
CBO estimates that eliminating the escrow requirement would
increase net spending by about $2.9 billion in 2006, $13.3
billion over the 2006-2009 period, and $36 billion over the
2006-2014 period. Much of the spending would go toward making
new payments to the on-budget account for health care costs.
Make Cost of PRC Subject to Appropriation. Under current
law, the PRC is funded from the Postal Service Fund without
annual Congressional appropriation. This office spent about $8
million in 2003. S. 2468 would authorize the appropriation of
such sums as may be necessary from the Postal Service Fund for
the PRC. Thus, enacting this legislation would reduce direct
spending--and therefore, increase spending subject to
appropriation--by about $8 million annually beginning in fiscal
year 2005.
Workers' Compensation Costs. The bill would lower workers'
compensation payments made by the USPS by reducing an injured
postal worker's long-term disability payments when the
individual reaches retirement age as defined by the Social
Security Act. Based on information provided by the USPS, CBO
estimates that these savings would total roughly $50 million
over the 2005-2014 period. In addition, CBO estimates that
there would be a negligible net savings to the Department of
Labor's workers' compensation account, which is on-budget.
Changes to USPS Rate-Setting Procedures. Under the bill the
Postal Service would be directed to define the cost basis for
the different products and services it supplies. These products
and services would broadly be categorized as market-dominant
products and competitive products. Different rate-setting
procedures would apply to these different categories of
products and services.
Market-Dominant Products. Under S. 2468, market-dominant
products would include: first-class mail, special services,
periodicals, standard mail, media mail, library mail, bound
printed matter, single-piece parcel post, and single-piece
international mail.
S. 2468 would require the PRC to establish, within one year
of enactment, a new system for regulating postage rates for
market-dominant products. This new system would include annual
limitations on the percentage changes in rates based on
inflation-related indices, such as the Consumer Price Index,
the Employment Cost Index, or similar measures. Under the
legislation, however, these annual limits could be exceeded
under extraordinary circumstances.
Later this year we expect the Postal Service to begin
preparations for a rate case in 2006. Assuming the PRC would
need the full year that the bill would provide to establish the
new system for regulating rates for market dominant products,
we assume that the new rate setting system would not be
effective until after 2006.
Since 1970, increases in postage rates have largely tracked
the rate of inflation. Over the past 10 years, rates were
increased in 1995, 1999, 2001, and 2002 as a result of rate
cases. After 2006, we expect that the Postal Service would
increase rates for market-dominant mail services more
frequently than under current law, but by smaller increments
(as defined by the annual limitation). Over the long term, CBO
does not expect that enacting S. 2468 would significantly
change the revenues from market-dominant products that the
Postal Service would be expected to receive under current law.
Competitive Products. Under S. 2468, competitive products
would include the following: priority mail, express mail,
mailgrams, bulk international mail, and bulk parcel post.
Competitive products currently contribute less than 15 percent
of total postal revenues.
S. 2468 would direct the PRC to prohibit subsidizing
competitive products by market-dominant products, ensure that
each competitive product covers its attributable costs, and
ensure that all competitive products collectively cover their
share of the institutional costs of the Postal Service. After
these requirements have been implemented, the USPS could change
rates for competitive products as long as the cost coverage
requirements are met and the PRC has reviewed the proposed
changes. In addition, the Postal Service would have to provide
public notice and justification of changes in rates.
In addition, S. 2468 would require the Postal Service to
establish a new off-budget fund, the Competitive Products Fund,
solely for revenues and expenditures associated with
competitive products. We expect that it could be difficult to
differentiate postal expenses related only to competitive
products, as USPS uses the same employees and facilities to
handle both market dominant and competitive products.
CBO cannot predict the bill's effect on Postal Service
revenues from competitive products because the agency could set
and change prices with few restrictions, although we would
expect that yearly cash flows under the bill would differ from
those estimated under current law. CBO also cannot predict how
successfully the Postal Service might compete in the open
market. However, the highly competitive nature of the mailing
industry would tend to keep prices and revenues down, while the
labor-intensive cost structure of the USPS would maintain
upward pressure on expenses. Thus, over the long term under
this legislation, CBO expects the Postal Service to attempt to
recover its costs and break even as it did before the enactment
of P.L. 108-18.
Other Off-Budget Effects. S. 2468 would make many other
changes to the laws governing the Postal Service, the PRC, and
the delivery of mail and other postal products. Some of these
provisions, such as the expansion of USPS contracting authority
for the interstate air transportation of mail, would yield
savings. Other provisions, including the requirement for
numerous additional USPS reports, would increase costs. In
total, CBO does not expect the net effects of these provisions
to be significant.
Spending subject to appropriation
S. 2468 would authorize the appropriation of such sums as
may be necessary, out of the Postal Service Fund, for the PRC.
(Currently, the Postal Rate Commission is funded out of the
Postal Service Fund without Congressional action.) Beginning in
2005, this provision would entail about $8 million a year in
spending, subject to appropriation of the necessary amounts.
Enacting the bill would reduce direct spending by about the
same amount. Spending on this activity would likely still be
considered off-budget, since funds would come from the Postal
Service Fund.
In addition, S. 2468 would require OPM to make actuarial
computations related to the CSRS and PSRHBF trust funds and
would increase OPM's administrative workload to comply with the
requirements under the bill. CBO estimates that such activities
would cost less than $500,000 annually, assuming the
availability of appropriated funds.
Intergovernmental and private-sector impact: S. 2468
contains no intergovernmental or private-sector mandates as
defined in UMRA and would impose no costs on state, local, or
tribal governments.
Previous CBO estimate: On June 23, 2004, CBO transmitted a
revised cost estimate for H.R. 4341, the Postal Accountability
and Enhancement Act, as ordered reported by the House Committee
on Government Reform on May 12, 2004. CBO estimates that
enacting that legislation would result in on-budget savings of
$25.7 billion and off-budget costs of $34.5 billion over the
2005-2014 period, for a net cost to the unified budget of $8.7
billion over that period.
A key difference between S. 2468 and H.R. 4341 concerns how
the Postal Service would finance the health care costs of
retirees. Both of the bills would require payments to prefund
the costs associated with the annual retiree health liabilities
accrued by current employees although the proposed payment
schedules would differ. H.R. 4341 would require payments for
prefunding and interest to be made at the end of each fiscal
year, starting in fiscal year 2006. The first payment under S.
2468, however, would be made in fiscal year 2007, and annual
payments made in January of each year would reflect estimated
costs for the prior fiscal year.
Another important difference between these bills concerns
how they address the unfunded liabilities for the health care
costs of current and future retirees. H.R. 4341 would require
the Postal Service to pay annual interest costs on the unfunded
liability, while S. 2468 would require USPS to make
amortization payments toward that liability. Also, H.R. 4341
would require a minimum level of prefunding by the Postal
Service, net of premium disbursement from the PSRHBF. S. 2468
does not include a similar provision.
H.R. 4341 also would authorize the appropriation of such
sums as may be necessary for the USPS Office of Inspector
General. Thus, CBO estimated that implementing H.R. 4341 would
cost about $1.6 billion over the 2005-2014 period, assuming
appropriation of the necessary amounts, and an equivalent
amount of off-budget direct spending savings over that period.
In addition, H.R. 4341 did not reduce USPS costs for
workers' compensation, and the cost estimates reflect that
difference.
Estimate prepared by: Federal Costs: Mark Grabowicz for
USPS, Geoffrey Gerhardt for retirement costs, and Julia
Christensen for health care costs; Impact on State, Local, and
Tribal Governments: Sarah Puro; and Impact on the Private
Sector: Paige Piper/Bach.
Estimate approved by: Peter H. Fontaine, Deputy Assistant
Director for Budget Analysis.
ADDITIONAL VIEWS
In total, we are pleased with the outcome of the
legislation reported by the Committee. However, we are
concerned about the specific issue of negotiated service
agreements (NSA). This issue was raised during Committee
consideration of the bill and a number of Senators expressed
their concerns with the specific language addressing NSA's.
Similar concerns were raised during hearings on the
legislation. We are troubled by the inclusion of report
language that appears to endorse the NSA language that was
ultimately stricken from the bill. To that end, we do not
believe that the report accurately reflect the views expressed
during Committee consideration nor does it appropriately
reflect the legislative history.
We believe that the report should have pointed out that
while the existing regulatory system allows for negotiated
service agreements, if certain conditions are met, some mailers
in the committee's hearings expressed concerns that this type
of private sector pricing mechanism may not be appropriate for
a governmental organization such as the Postal Service. During
mark-up of the legislation, committee members expressed
reservations about the appropriateness of negotiated service
agreements, articulating concerns that service agreements for
individual mailers could result in discriminatory rates that
favor one mailer over other mailers, and thereby unfairly
distort the downstream markets in which those mailers compete.
This information, coupled with that which was included in
the underlying report more accurately reflect the views of the
Committee as a whole and more fairly represent the legislative
history of the issue. We appreciate the hard work of the
Chairman and Ranking Member of the Committee to complete this
important legislation and believe that the reforms included
herein are vital to the future of the United States Postal
Service.
Richard Shelby.
John E. Sununu.
George V. Voinovich.
VII. Changes in Existing Law
In compliance with paragraph 12 of the Standing Rules of
the Senate, changes in existing law made by S. 2468, as
reported, are shown as follows: existing law proposed to be
omitted is enclosed in black brackets, new matter is printed in
italic, existing law in which no change is proposed is shown in
roman:
TITLE 39, POSTAL SERVICE
PART I--GENERAL
CHAPTER 1.--POSTAL POLICY AND DEFINITIONS
Sec. 101. Postal policy
(a) The United States Postal Service shall be operated as a
basic and fundamental service provided to the people by the
Government of the United States, authorized by the
Constitution, created by Act of Congress, and supported by the
people. The Postal Service shall have as its basic function the
obligation to provide postal services to bind the Nation
together through the personal, educational, literary, and
business correspondence of the people. It shall provide prompt,
reliable, and efficient services to patrons in all areas and
shall render postal services to all communities. The costs of
establishing and maintaining the Postal Service shall not be
apportioned to impair the overall value of such service to the
people.
(b) The Postal Service shall provide a maximum degree of
effective and regular postal services to rural areas,
communities, and small towns where post offices are not self-
sustaining. No small post office shall be closed solely for
operating at a deficit, it being the specific intent of the
Congress that effective postal services be insured to residents
of both urban and rural communities.
(c) As an employer, the Postal Service shall achieve and
maintain compensation for its officers and employees comparable
to the rates and types of compensation paid in the private
sector of the economy of the United States. It shall place
particular emphasis upon opportunities for career advancements
of all officers and employees and the achievement of worthwhile
and satisfying careers in the service of the United States.
(d) As an independent establishment of the executive branch
of the Government of the United States, the Postal Service
shall be subject to a high degree of transparency to ensure
fair treatment of customers of the Postal Service's market-
dominant products and companies competing with the Postal
Service's competitive products.
[(d)] (e) Postal rates shall be established to apportion
the costs of all postal operations to all users of the mail on
a fair and equitable basis.
[(e)] (f) In determining all policies for postal services,
the Postal Service shall give the highest consideration to the
requirement for the most expeditious collection,
transportation, and delivery of important letter mail.
[(f)] (g) In selecting modes of transportation, the Postal
Service shall give highest consideration to the prompt and
economical delivery of all mail and shall make a fair and
equitable distribution of mail business to carriers providing
similar modes of transportation services to the Postal Service.
Modern methods of transporting mail by containerization and
programs designed to achieve overnight transportation to the
destination of important letter mail to all parts of the Nation
shall be a primary goal of postal operations.
[(g)] (h) In planning and building new postal facilities,
the Postal Service shall emphasize the need for facilities and
equipment designed to create desirable working conditions for
its officers and employees, a maximum degree of convenience for
efficient postal services, proper access to existing and future
air and surface transportation facilities, and control of costs
to the Postal Service.
Sec. 102. Definitions
As used in this title--
(1) ``Postal Service'' means the United States Postal
Service established by section 201 of this title;
(2) ``Board of Governors,'' and ``Board,'' unless the
context otherwise requires, mean the Board of Governors
established under section 202 of this title;
(3) ``Governors'' means the 9 members of the Board of
Governors appointed by the President, by and with the
advice and consent of the Senate, under section 202(a)
of this title; [and]
(4) ``Inspector General'' means the Inspector General
appointed under section 202(e) of this title[.];
(5) ``postal service'' refers to the physical
delivery of letters, printed matter, or packages
weighing up to 70 pounds, including physical
acceptance, collection, sorting, transporation, or
other services ancillary thereto;
(6) ``product'' means a postal service with a
distinct cost or market characteristic for which a rate
or rates are applied;
(7) ``rates'', as used with respect to products,
includes fees for postal services;
(8) ``market-dominant product'' or ``product in the
market-dominant category of mail'' means a product
subject to subchapter I of chapter 36; and
(9) ``competitive product'' or ``product in the
competitive category of mail'' means a product subject
to subchapter II of chapter 36; and
(10) ``year'', as used in chapter 36 (other than
subchapters I and VI thereof), means a fiscal year.
* * * * * * *
CHAPTER 2.--ORGANIZATION
Sec. 202. Board of Governors
[(a)] (a)(1) The exercise of the power of the Postal
Service shall be directed by a Board of Governors composed of
11 members appointed in accordance with this section. Nine of
the members, to be known as Governors, shall be appointed by
the President, by and with the advice and consent of the
Senate, not more than 5 of whom may be adherents of the same
political party. The Governors shall elect a Chairman from
among the members of the Board. [The Governors shall be chosen
to represent the public interest generally, and shall not be
representatives of specific interests using the Postal Service,
and may be removed only for cause.] The Governors shall
represent the public interest generally, and shall be chosen
solely on the basis of their demonstrated ability in managing
organizations or corporations (in either the public or private
sector) of substantial size. The Governors shall not be
representatives of specific interests using the Postal Service,
and may be removed only for cause. Each Governor shall receive
a salary of $30,000 a year plus $300 a day for not more than 42
days of meetings each year and shall be reimbursed for travel
and reasonable expenses incurred in attending meetings of the
Board. Nothing in the preceding sentence shall be construed to
limit the number of days of meetings each year to 42 days.
(2) In selecting the individuals described in paragraph (1)
for nomination for appointment to the position of Governor, the
President should consult with the Speaker of the House of
Representatives, the minority leader of the House of
Representatives, the majority leader of the Senate, and the
minority leader of the Senate.
(b)(1) The terms of the 9 Governors shall be [9 years] 5
years, except that the terms of the 9 Governors first taking
office shall expire as designated by the President at the time
of appointment, 1 at the end of 1 year, 1 at the end of 2
years, 1 at the end of 3 years, 1 at the end of 4 years, 1 at
the end of 5 years, 1 at the end of 6 years, 1 at the end of 7
years, 1 at the end of 8 years, and 1 at the end of 9 years,
following the appointment of the first of them. Any Governor
appointed to fill a vacancy before the expiration of the term
for which his predecessor was appointed shall serve for the
remainder of such term. A Governor may continue to serve after
the expiration of his term until his successor has qualified,
but not to exceed one year.
(2) No person may serve more than 3 terms as a Governor.
* * * * * * *
CHAPTER 4--GENERAL AUTHORITY
Sec. 401. General powers of the Postal Service
[The] Subject to the provisions of section 404a, the Postal
Service shall have the following general powers:
(1) to sue and be sued in its official name;
[(2) to adopt, amend, and repeal such rules and
regulations as it deems necessary to accomplish the
objectives of this title;]
(2) to adopt, amend, and repeal such rules and
regulations, not inconsistent with this title, as may
be necessary in the execution of its functions under
this title and such other functions as may be assigned
to the Postal Service under any provisions of law
outside of this title;
* * * * * * *
Sec. 404. Specific powers
(a) [Without] Subject to the provisions of section 404a,
but otherwise without limitation of the generality of its
powers, the Postal Service shall have the following specific
powers, among others:
(1) to provide for the collection, handling,
transportation, delivery, forwarding, returning, and
holding of mail, and for the disposition of
undeliverable mail;
(2) to prescribe, in accordance with this title, the
amount of postage and the manner in which it is to be
paid;
(3) to determine the need for post offices, postal
and training facilities and equipment, and to provide
such offices, facilities, and equipment as it
determines are needed;
(4) to provide and sell postage stamps and other
stamped paper, cards, and envelopes and to provide such
other evidences of payment of postage and fees as may
be necessary or desirable;
(5) to provide philatelic services;
[(6) to provide, establish, change, or abolish
special nonpostal or similar services;]
[(7)] (6) to investigate postal offenses and civil
matters relating to the Postal Service;
[(8)] (7) to offer and pay rewards for information
and services in connection with violations of the
postal laws, and, unless a different disposal is
expressly prescribed, to pay one-half of all penalties
and forfeitures imposed for violations of law affecting
the Postal Service, its revenues, or property, to the
person informing for the same, and to pay the other
one-half into the Postal Service Fund; and
[(9)] (8) to authorize the issuance of a substitute
check for a lost, stolen, or destroyed check of the
Postal Service.
* * * * * * *
(c) Except as provided in section 411, nothing in this
title shall be considered to permit or require that the Postal
Service provide any special nonpostal or similar services.
(d) The Postal Service may employ guards for all buildings
and areas owned or occupied by the Postal Service or under the
charge and control of the Postal Service, and may give such
guards, with respect to such property, any of the powers of
special policemen provided under section 1315 of title 40. The
Postmaster General, or the designee of the Postmaster General,
may take any action that the Secretary of Homeland Security may
take under section 1315 of title 40, with respect to that
property.
Sec. 404a. Specific limitations
(a) Except as specifically authorized by law, the Postal
Service may not--
(1) establish any rule or regulation (including any
standard) the effect of which is to preclude
competition or establish the terms of competition
unless the Postal Service demonstrates that the
regulation does not create an unfair competitive
advantage for itself or any entity funded (in whole or
in part) by the Postal Service;
(2) compel the disclosure, transfer, or licensing of
intellectual property to any third party (such as
patents, copyrights, trademarks, trade secrets, and
proprietary information); or
(3) obtain information from a person that provides
(or seeks to provide) any product, and then offer any
postal service that uses or is based in whole or in
part on such information, without the consent of the
person providing that information, unless substantially
the same information is obtained (or obtainable) from
an independent source or is otherwise obtained (or
obtainable).
(b) The Postal Regulatory Commission shall prescribe
regulations to carry out this section.
(c) Any party (including an officer of the Commission
representing the interests of the general public) who believes
that the Postal Service has violated this section may bring a
complaint in accordance with section 3662.
* * * * * * *
Sec. 407. International postal arrangements
[(a)(1) The Secretary of State shall have primary
responsibility for formulation, coordination and oversight of
policy with respect to United States participation in the
Universal Postal Union, including the Universal Postal
Convention and other Acts of the Universal Postal Union,
amendments thereto, and all postal treaties and conventions
concluded within the framework of the Convention and such Acts.
[(2) Subject to subsection (d), the Secretary may, with the
consent of the President, negotiate and conclude treaties,
conventions and amendments referred to in paragraph (1).
[(b)(1) Subject to subsections (a), (c), and (d), the
Postal Service may, with the consent of the President,
negotiate and conclude postal treaties and conventions.
[(2) The Postal Service may, with the consent of the
President, establish rates of postage or other charges on mail
matter conveyed between the United States and other countries.
[(3) The Postal Service shall transmit a copy of each
postal treaty or convention concluded with other governments
under the authority of this subsection to the Secretary of
State, who shall furnish a copy to the Public Printer for
publication.
[(c) The Postal Service shall not conclude any treaty or
convention under the authority of this section or any other
arrangement related to the delivery of international postal
services that is inconsistent with any policy developed
pursuant to subsection (a).
[(d) In carrying out their responsibilities under this
section, the Secretary and the Postal Service shall consult
with such federal agencies as the Secretary or the Postal
Service considers appropriate, private providers of
international postal services, users of international postal
services, the general public, and such other persons as the
Secretary or the Postal Service considers appropriate.]
(a) It is the policy of the United States--
(1) to promote and encourage communications between
peoples by efficient operation of international postal
services and other international delivery services for
cultural, social, and economic purposes;
(2) to promote and encourage unrestricted and
undistorted competition in the provision of
international postal services and other international
delivery services, except where provision of such
services by private companies may be prohibited by law
of the United States;
(3) to promote and encourage a clear distinction
between governmental and operational responsibilities
with respect to the provision of international postal
services; and
(4) to participate in multilateral and bilateral
agreements with other countries to accomplish these
objectives.
(b)(1) The Secretary of State shall be responsible for
formulation, coordination, and oversight of foreign policy
related to international postal services and shall have the
power to conclude postal treaties and conventions, except that
the Secretary may not conclude any postal treaty or convention
if such treaty or convention would, with respect to any
competitive product, grant an undue or unreasonable preference
to the Postal Service, a private provider of international
postal services, or any other person.
(2) In carrying out the responsibilities specified in
paragraph (1), the Secretary of State shall exercise primary
authority for the conduct of foreign policy with respect to
international postal services, including the determination of
United States positions and the conduct of United States
participation in negotiations with foreign governments and
international bodies. In exercising this authority, the
Secretary--
(A) shall coordinate with other agencies as
appropriate, and in particular, should consider the
authority vested by law or Executive order in the
Postal Regulatory Commission, the Department of
Commerce, the Department of Transportation, and the
Office of the United States Trade Representative in
this area;
(B) shall maintain continuing liaison with other
executive branch agencies concerned with postal and
delivery services;
(C) shall maintain continuing liaison with the
Committee on Governmental Affairs of the Senate and the
Committee on Government Reform of the House of
Representatives;
(D) shall maintain appropriate liaison with both
representatives of the Postal Service and
representatives of users and private providers of
international postal services and other international
delivery services to keep informed of their interests
and problems, and to provide such assistance as may be
needed to ensure that matters of concern are promptly
considered by the Department of State or (if
applicable, and to the extent practicable) other
executive branch agencies; and
(E) shall assist in arranging meetings of such public
sector advisory groups as may be established to advise
the Department of State and other executive branch
agencies in connection with international postal
services and international delivery services.
(3) The Secretary of State shall establish an advisory
committee (within the meaning of the Federal Advisory Committee
Act) to perform such functions as the Secretary considers
appropriate in connection with carrying out subparagraphs (A)
through (D) of paragraph (2).
(c) Before concluding any postal treaty or convention that
establishes a rate or classification for a product subject to
subchapter I of chapter 36, the Secretary of State shall
request the Postal Regulatory Commission to submit its views on
whether such rate or classification is consistent with the
standards and criteria established by the Commission under
section 3622.
(d) Nothing in this section shall be considered to prevent
the Postal Service from entering into such commercial or
operational contracts related to providing international postal
services as it deems appropriate, except that--
(1) any such contract made with an agency of a
foreign government (whether under authority of this
subsection or otherwise) shall be solely contractual in
nature and may not purport to be binding under
international law; and
(2) a copy of each such contract between the Postal
Service and an agency of a foreign government shall be
transmitted to the Secretary of State and the Postal
Regulatory Commission not later than the effective date
of such contract.
(e)(1) With respect to shipments of international mail that
are competitive products within the meaning of section 3631
that are exported or imported by the Postal Service, the
Customs Service and other appropriate Federal agencies shall
apply the customs laws of the United States and all other laws
relating to the importation or exportation of such shipments in
the same manner to both shipments by the Postal Service and
similar shipments by private companies.
(2) In exercising the authority under subsection (b) to
conclude new postal treaties and conventions related to
international postal services and to renegotiate such treaties
and conventions, the Secretary of State shall, to the maximum
extent practicable, take such measures as are within the
Secretary's control to encourage the governments of other
countries to make available to the Postal Service and private
companies a range of nondiscriminatory customs procedures that
will fully meet the needs of all types of American shippers.
The Secretary of State shall consult with the United States
Trade Representative and the Commissioner of Customs in
carrying out this paragraph.
(3) The provisions of this subsection shall take effect 6
months after the date of the enactment of this subsection or
such earlier date as the Customs Service may determine in
writing.
* * * * * * *
Sec. 409. Suits by and against the Postal Service
(a) [Except as provided in section 3628 of this title]
Except as otherwise provided in this title, the United States
district courts shall have original but not exclusive
jurisdiction over all actions brought by or against the Postal
Service. Any action brought in a State court to which the
Postal Service is a party may be removed to the appropriate
United States district court under the provisions of chapter 89
of title 28 [1. 28 USCS Sec. Sec. 1441 et seq.].
(b) Unless otherwise provided in this title, the provisions
of title 28 relating to service of process, venue, and
limitations of time for bringing action in suits in which the
United States, its officers, or employees are parties, and the
rules of procedure adopted under title 28 for suits in which
the United States, its officers, or employees are parties,
shall apply in like manner to suits in which the Postal
Service, its officers, or employees are parties.
(c) The provisions of chapter 171 [28 USCS Sec. Sec. 2671
et seq.] and all other provisions of title 28 relating to tort
claims shall apply to tort claims arising out of activities of
the Postal Service.
[(d) The Department of Justice shall furnish, under section
411 of this title, the Postal Service such legal representation
as it may require, but with the prior consent of the Attorney
General the Postal Service may employ attorneys by contract or
otherwise to conduct litigation brought by or against the
Postal Service or its officers or employees in matters
affecting the Postal Service.]
[(e) A judgment against the Government of the United States
arising out of activities of the Postal Service shall be paid
by the Postal Service out of any funds available to the Postal
Service.]
(d)(1) For purposes of the provisions of law cited in
paragraphs (2)(A) and (2)(B), respectively, the Postal
Service--
(A) shall be considered to be a ``person'', as used
in the provisions of law involved; and
(B) shall not be immune under any other doctrine of
sovereign immunity from suit in Federal court by any
person for any violation of any of those provisions of
law by any officer or employee of the Postal Service.
(2) This subsection applies with respect to--
(A) the Act of July 5, 1946 (commonly referred to as
the ``Trademark Act of 1946'' (15 U.S.C. 1051 and
following)); and
(B) the provisions of section 5 of the Federal Trade
Commission Act to the extent that such section 5
applies to unfair or deceptive acts or practices.
(e)(1) To the extent that the Postal Service, or other
Federal agency acting on behalf of or in concert with the
Postal Service, engages in conduct with respect to any product
which is not reserved to the United States under section 1696
of title 18, the Postal Service or other Federal agency (as the
case may be)--
(A) shall not be immune under any doctrine of
sovereign immunity from suit in Federal court by any
person for any violation of Federal law by such agency
or any officer or employee thereof; and
(B) shall be considered to be a person (as defined in
subsection (a) of the first section of the Clayton Act)
for purposes of--
(i) the antitrust laws (as defined in such
subsection); and
(ii) section 5 of the Federal Trade
Commission Act to the extent that such section
5 applies to unfair methods of competition.
For purposes of the preceding sentence, any private
carriage of mail allowable by virtue of section 601
shall not be considered a service reserved to the
United States under section 1696 of title 18.
(2) No damages, interest on damages, costs or attorney's
fees may be recovered, and no criminal liability may be
imposed, under the antitrust laws (as so defined) from any
officer or employee of the Postal Service, or other Federal
agency acting on behalf of or in concert with the Postal
Service, acting in an official capacity.
(3) This subsection shall not apply with respect to conduct
occurring before the date of the enactment of this subsection.
(f) To the extent that the Postal Service engages in
conduct with respect to the provision of competitive products,
it shall be considered a person for the purposes of the Federal
bankruptcy laws.
(g)(1) Each building constructed or altered by the Postal
Service shall be constructed or altered, to the maximum extent
feasible as determined by the Postal Service, in compliance
with 1 of the nationally recognized model building codes and
with other applicable nationally recognized codes.
(2) Each building constructed or altered by the postal
Service shall be constructed or altered only after
consideration of all requirements (other than procedural
requirements ) of zoning laws, land use laws, and applicable
environmental laws of a State or subdivision of a State which
would apply to the building if it were not a building
constructed or altered by an establishment of the Government of
the United States.
(3) For purposes of meeting the requirements of paragraphs
(1) and (2) with respect to a building, the Postal Service
shall--
(A) in preparing plans for the building, consult with
appropriate officials of the State or political
subdivision, or both, in which the building will be
located;
(B) upon request, submit such plans in a timely
manner to such officials for review by such officials
for a reasonable period of time not exceeding 30 days;
and
(C) permit inspection by such officials during
construction or alteration of the building, in
accordance with the customary schedule of inspections
for construction or alteration of buildings in the
locality, if such officials provide to the Postal
Service--
(i) a copy of such schedule before
construction of the building begins; and
(ii) reasonable notice of their intention to
conduct any inspection before conducting such
inspection.
Nothing in this subsection shall impose an obligation
on any State or political subdivision to take any
action under the preceding sentence, nor shall anything
in this subsection require the Postal Service or any of
its contractors to pay for any action taken by a State
or political subdivision to carry out this subsection
(including reviewing plans, carrying out on-site
inspections, issuing building permits, and making
recommendations).
(4) Appropriate officials of a State or a political
subdivision of a State may make recommendations to the Postal
Service concerning measures necessary to meet the requirements
of paragraphs (1) and (2). Such officials may also make
recommendations to the Postal Service concerning measures which
should be taken in the construction or alteration of the
building to take into account local conditions. The Postal
Service shall give due consideration to any such
recommendations.
(5) In addition to consulting with local and State
officials under paragraph (3), the Postal Service shall
establish procedures for soliciting, assessing, and
incorporating local community input on real property and land
use decisions.
(6) For purposes of this subsection, the term ``State''
includes the District of Columbia, the Commonwealth of Puerto
Rico, and a territory or possession of the United States.
(h)(1) Notwithstanding any other provision of law, legal
representation may not be furnished by the Department of
Justice to the Postal Service in any action, suit, or
proceeding arising, in whole or in part, under any of the
following:
(A) Subsection (d) or (e) of this section.
(B) Subsection (f) or (g) of section 504 (relating to
administrative subpoenas by the Postal Regulatory
Commission).
(C) Section 3663 (relating to appellate review). The
Postal Service may, by contract or otherwise, employ
attorneys to obtain any legal representation that it is
precluded from obtaining from the Department of Justice
under this paragraph.
(2) In any circumstance not covered by paragraph (1), the
Department of Justice shall, under section 411, furnish the
Postal Service such legal representation as it may require,
except that, with the prior consent of the Attorney General,
the Postal Service may, in any such circumstance, employ
attorneys by contract or otherwise to conduct litigation
brought by or against the Postal Service or its officers or
employees in matters affecting the Postal Service.
(3)(A) In any action, suit, or proceeding in a court of the
United States arising in whole or in part under any of the
provisions of law referred to in subparagraph (B) or (C) of
paragraph (1), and to which the Commission is not otherwise a
party, the Commission shall be permitted to appear as a party
on its own and as of right.
(B) The Department of Justice shall, under such terms and
conditions as the Commission and the Attorney General shall
consider appropriate, furnish the Commission such legal
representation as it may require in connection with any such
action, suit, or proceeding, except that, with the prior
consent of the Attorney General, the Commission may employ
attorneys by contract or otherwise for that purpose.
(i) A judgment against the Government of the United
States arising out of activities of the Postal Service
shall be paid by the Postal Service out of any funds
available to the Postal Service, subject to the
restriction specified in section 2011(g).
* * * * * * *
CHAPTER 5--POSTAL REGULATORY COMMISSION
Sec. 501. Establishment
The Postal Regulatory Commission is an independent
establishment of the executive branch of the Government of the
United States.
Sec. 502. Commissioners
(a) The Postal Regulatory Commission is composed of 5
Commissioners, appointed by the President, by and with the
advice and consent of the Senate. The Commissioners shall be
chosen solely on the basis of their technical qualifications,
professional standing, and demonstrated expertise in economics,
accounting, law, or public administration, and may be removed
by the President only for cause. Each individual appointed to
the Commission shall have the qualifications and expertise
necessary to carry out the enhanced responsibilities accorded
Commissioners under the Postal Accountability and Enhancement
Act. Not more than 3 of the Commissioners may be adherents of
the same political party.
(b) No Commissioners shall be financially interested in any
enterprise in the private sector of the economy engaged in the
delivery of mail matter.
(c) A Commissioner may continue to serve after the
expiration of his term until his successor has qualified,
except that a Commissioner may not so continue to serve for
more than 1 year after the date upon which his term otherwise
would expire under subsection (f).
(d) One of the Commissioners shall be designated as
Chairman by, and shall serve in the position of Chairman at the
pleasure of, the President.
(e) The Commissioners shall by majority vote designate a
Vice Chairman of the Commission. The Vice Chairman shall act as
Chairman of the Commission in the absence of the Chairman.
(f) The Commissioners shall serve for terms of 6 years.
Sec. 503. Rules; regulations; procedures
The Postal Regulatory Commission shall promulgate rules and
regulations and establish procedures, subject to chapters 5 and
7 of title 5 [5 USCS Sec. Sec. 501 et seq. and 701 et seq.],
and take any other action they deem necessary and proper to
carry out their functions and obligations to the Government of
the United States and the people as prescribed under this
chapter [9 USCS Sec. Sec. 3601 et seq.]. Such rules,
regulations, procedures, and actions shall not be subject to
any change or supervision by the Postal Service.
Sec. 504. Administration
(a) The Chairman of the Postal Regulatory Commission shall
be the principal executive officer of the Commission. The
Chairman shall exercise or direct the exercise of all the
executive and administrative functions of the Commission,
including functions of the Commission with respect to (1) the
appointment of personnel employed under the Commission, except
that the appointment of heads of major administrative units
under the Commission shall require the approval of a majority
of the members of the Commission, (2) the supervision of the
personnel employed under the Commission and the distribution of
business among them and among the Commissioners, and (3) the
use and expenditure of funds.
(b) In carrying out any of his functions under this
section, the Chairman shall be governed by the general policies
of the Commission.
(c) The Chairman may obtain such facilities and supplies as
may be necessary to permit the Commission to carry out its
functions. Any officer or employee appointed under this section
shall be paid at rates of compensation and shall be entitled to
programs offering employee benefits established under chapter
10 or chapter 12 of this title [39 USCS Sec. Sec. 1001 et seq.
or 1201 et seq.], as appropriate.
(d) There are authorized to be appropriated, out of the
Postal Service Fund, such sums as may be necessary for the
Postal Regulatory Commission. In requesting an appropriation
under this subsection for a fiscal year, the Commission shall
prepare and submit to Congress under section 2009 a budget of
the Commission's expenses, including expenses for facilities,
supplies, compensation, and employee benefits.
(e) The provisions of section 410 and chapter 10 of this
title [39 USCS Sec. Sec. 410 and 1001 et seq.] shall apply to
the Commission, as appropriate.
(f)(1) Any Commissioner of the Postal Regulatory
Commission, any administrative law judge appointed by the
Commission under section 3105 of title 5, and any employee of
the Commission designated by the Commission may administer
oaths, examine witnesses, take depositions, and receive
evidence.
(2) The Chairman of the Commission, any Commissioner
designated by the Chairman, and any administrative law judge
appointed by the Commission under section 3105 of title 5 may,
with respect to any proceeding conducted by the Commission
under this title or to obtain information to be used to prepare
a report under this title--
(A) issue subpoenas requiring the attendance and
presentation of testimony by, or the production of
documentary or other evidence in the possession of, any
covered person; and
(B) order the taking of depositions and responses to
written interrogatories by a covered person. The
written concurrence of a majority of the Commissioners
then holding office shall, with respect to each
subpoena under subparagraph (A), be required in advance
of its issuance.
(3) In the case of contumacy or failure to obey a subpoena
issued under this subsection, upon application by the
Commission, the district court of the United States for the
district in which the person to whom the subpoena is addressed
resides or is served may issue an order requiring such person
to appear at any designated place to testify or produce
documentary or other evidence. Any failure to obey the order of
the court may be punished by the court as a contempt thereof.
(4) For purposes of this subsection, the term ``covered
person'' means an officer, employee, agent, or contractor of
the Postal Service.
(g)(1) If the Postal Service determines that any document
or other matter it provides to the Postal Regulatory Commission
under a subpoena issued under subsection (f), or otherwise at
the request of the Commission in connection with any proceeding
or other purpose under this title, contains information which
is described in section 410(c) of this title, or exempt from
public disclosure under section 552(b) of title 5, the Postal
Service shall, at the time of providing such matter to the
Commission, notify the Commission, in writing, of its
determination (and the reasons therefor).
(2) Except as provided in paragraph (3), no officer or
employee of the Commission may, with respect to any information
as to which the Commission has been notified under paragraph
(1)--
(A) use such information for purposes other than the
purposes for which it is supplied; or
(B) permit anyone who is not an officer or employee
of the Commission to have access to any such
information.
(3)(A) Paragraph (2) shall not prohibit the Commission from
publicly disclosing relevant information in furtherance of its
duties under this title, provided that the Commission has
adopted regulations under section 553 of title 5, that
establish a procedure for according appropriate confidentiality
to information identified by the Postal Service under paragraph
(1). In determining the appropriate degree of confidentiality
to be accorded information identified by the Postal Service
under paragraph (1), the Commission shall balance the nature
and extent of the likely commercial injury to the Postal
Service against the public interest in maintaining the
financial transparency of a government establishment competing
in commercial markets.
(B) Paragraph (2) shall not prevent the Commission from
requiring production of information in the course of any
discovery procedure established in connection with a proceeding
under this title. The Commission shall, by regulations based on
rule 26(c) of the Federal Rules of Civil Procedure, establish
procedures for ensuring appropriate confidentiality for
information furnished to any party.
Sec. 505. Officer of the Postal Regulatory Commission representing the
general public
The Postal Regulatory Commission shall designate an officer
of the Postal Regulatory Commission in all public proceedings
who shall represent the interests of the general public.
* * * * * * *
CHAPTER 6--PRIVATE CARRIAGE OF LETTERS
Sec. 601. Letters carried out of the mail
(a) A letter may be carried out of the mails when--
(1) it is enclosed in an envelope;
(2) the amount of postage which would have been
charged on the letter if it had been sent by mail is
paid by stamps, or postage meter stamps, on the
envelope;
(3) the envelope is properly addressed;
(4) the envelope is so sealed that the letter cannot
be taken from it without defacing the envelope;
(5) any stamps on the envelope are canceled in ink by
the sender; and
(6) the date of the letter, of its transmission or
receipt by the carrier is endorsed on the envelope in
ink.
[(b) The Postal Service may suspend the operation of
any part of this section upon any mail route where the
public interest requires the suspension.]
(b) A letter may also be carried out of the mails when--
(1) the amount paid for the private carriage of the
letter is at least the amount equal to 6 times the rate
then currently charged for the 1st ounce of a single-
piece first class letter;
(2) the letter weighs at least 12\1/2\ ounces; or
(3) such carriage is within the scope of services
described by regulations of the United States Postal
Service (as in effect on July 1, 2001) that permit
private carriage by suspension of the operation of this
section (as then in effect).
(c) Any regulations necessary to carry out this section
shall be promulgated by the Postal Regulatory Commission.
* * * * * * *
PART II--PERSONNEL
CHAPTER 12--EMPLOYEE-MANAGEMENT AGREEMENTS
Sec. 1207. Labor disputes
(a) If there is a collective-bargaining agreement in
effect, no party to such agreement shall terminate or modify
such agreement unless the party desiring such termination or
modification serves written notice upon the other party to the
agreement of the proposed termination or modification not less
than 90 days prior to the expiration date thereof, or not less
than 90 days prior to the time it is proposed to make such
termination or modification. The party serving such notice
shall notify the Federal Mediation and Conciliation Service of
the existence of a dispute within 45 days of such notice, if no
agreement has been reached by that time.
(b) If the parties fail to reach agreement or to adopt a
procedure providing for a binding resolution of a dispute by
the expiration date of the agreement in effect, or the date of
the proposed termination or modification, the Director of the
Federal Mediation and Conciliation Service shall [direct the
establishment of a factfinding panel consisting of 3 persons.
For this purpose, he shall submit to the parties a list of not
less than 15 names, from which list each party, within 10 days,
shall select 1 person. The 2 so selected shall then choose from
the list a third person who shall serve as chairman of the
factfinding panel. If either of the parties fails to select a
person or if the 2 members are unable to agree on the third
person within 3 days, the selection shall be made by the
Director. The factfinding panel shall issue after due
investigation a report of its findings, with or without
recommendations, to the parties no later than 45 days from the
date the list of names is submitted.] within 10 days appoint a
mediator of nationwide reputation and professional stature, and
who is also a member of the National Academy of Arbitrators.
The parties shall cooperate with the mediator in an effort to
reach an agreement and shall meet and negotiate in good faith
at such times and places that the mediator, in consultation
with the parties, shall direct.
(c)(1) If no agreement is reached within [90] 60 days after
the expiration or termination of the agreement or the date on
which the agreement became subject to modification under
subsection (a) of this section, or if the parties decide upon
arbitration but do not agree upon the procedures therefor, an
arbitration board shall be established consisting of 3 members,
[not members of the factfinding panel,] 1 of whom shall be
selected by the Postal Service, 1 by the bargaining
representative of the employees, and the third by the 2 thus
selected. If either of the parties fails to select a member, or
if the members chosen by the parties fail to agree on the third
person within 5 days after their first meeting, the selection
shall be made from a list of names provided by the Director.
This list shall consist of not less then 9 names of arbitrators
of nationwide reputation and professional nature, who are also
members of the National Academy of Arbitrators, and whom the
Director has determined are available and willing to serve. [If
the parties do not agree on the framing of the issues to be
submitted, the factfinding panel shall frame the issues and
submit them to the arbitration board.]
(2) The arbitration board shall give the parties a full and
fair hearing, including an opportunity to present evidence in
support of their claims, and an opportunity to present their
case in person, by counsel or by other representative as they
may elect. Decisions of the arbitration board shall be
conclusive and binding upon the parties. The arbitration board
shall render its decision within 45 days after its appointment.
(3) Costs of the arbitration board and [factfinding panel]
mediation shall be shared equally by the Postal Service and the
bargaining representative.
(d) In the case of a bargaining unit whose recognized
collective-bargaining representative does not have an agreement
with the Postal Service, if the parties fail to reach agreement
within 90 days of the commencement of collective bargaining, a
[factfinding panel will be established] mediator shall be
appointed in accordance with the terms of subsection (b) of
this section, unless the parties have previously agreed to
another procedure for a binding resolution of their
differences. If the parties fail to reach agreement within 180
days of the commencement of collective bargaining, and if they
have not agreed to another procedure for binding resolution, an
arbitration board shall be established to provide conclusive
and binding arbitration in accordance with the terms of
subsection (c) of this section.
* * * * * * *
PART III--MODERNIZATION AND FISCAL ADMINISTRATION
CHAPTER 20--FINANCE
Sec. 2001. Definitions
As used in this chapter [39 USCS Sec. Sec. 2001 et seq.]--
(1) ``Fund'' means the Postal Service Fund
established by section 2003 of this chapter; [and]
(2) ``Competitive Products Fund'' means the Postal
Service Competitive Products Fund established by
section 2011; and
[(2)] (3) ``Obligations,'' when referring to debt
instruments issued by the Postal Service, means notes,
bonds, debentures, mortgages, and any other evidence of
indebtedness.
Sec. 2002. Capital of the Postal Service
(a) The initial capital of the Postal Service shall consist
of the equity, as reflected in the budget of the President, of
the Government of the United States in the former Post Office
Department. The value of assets and the amount of liabilities
transferred to the Postal Service upon the commencement of
operations of the Postal Service shall be determined by the
Postal Service subject to the approval of the Comptroller
General, in accordance with the following guidelines:
* * * * * * *
(b) The capital of the Postal Service at any time shall
consist of its assets, including the balance in the [Fund] Fund
and the balance in the Competitive Products Fund, less its
liabilities.
* * * * * * *
Sec. 2003. The Postal Service Fund
(a) There is established in the Treasury of the United
States a revolving fund to be called the Postal Service Fund
which shall be available to the Postal Service without fiscal-
year limitation to carry out the purposes, functions, and
powers authorized by this [title] title (other than any of the
purposes, functions, or powers for which the Competitive
Products Fund is available).
(b) [There] Except as otherwise provided in section 2011,
there shall be deposited in the Fund, subject to withdrawal by
check by the Postal Service--
(1) revenues from postal [and nonpostal] services
rendered by the Postal Service;
(2) amounts received from obligations issued by the
Postal Service;
(3) amounts appropriated for the use of the Postal
Service;
(4) interest which may be earned on investments of
the Fund;
(5) any other receipts of the Postal Service;
(6) the balance in the Post Office Department Fund
established under former section 2202 of title 39 as of
the commencement of operations of the Postal Service;
(7) amounts (including proceeds from the sale of
forfeited items) from any civil forfeiture conducted by
the Postal Service; and
(8) any transfers from the Secretary of the Treasury
from the Department of the Treasury Forfeiture Fund
which shall be available to the Postmaster General only
for Federal law enforcement related purposes.
* * * * * * *
(e)(1) [The Fund shall be available for the payment of all
expenses incurred by the Postal Service in carrying out its
functions as provided by law and, subject to the provisions of
section 3604 of this title, all of the expenses of the Postal
Rate Commission.] The Fund shall be available for the payment
of (A) all expenses incurred by the Postal Service in carrying
out its functions as provided by law, subject to the same
limitation as set forth in the parenthetical matter under
subsection (a); (B) all expenses of the Postal Regulatory
Commission, subject to the availability of amounts appropriated
under section 504(d); and (C) all expenses of the Office of the
Inspector General, subject to the availability of amounts
appropriated under section 8G(f) of the Inspector General Act
of 1978. The Postmaster General shall transfer from the Fund to
the Secretary of the Treasury for deposit in the Department of
the Treasury Forfeiture Fund amounts appropriate to reflect the
degree of participation of Department of the Treasury law
enforcement organizations (described in section 9703(p) of
title 31) in the law enforcement effort resulting in the
forfeiture pursuant to laws enforced or administered by the
Postal Service. Neither the Fund nor any of the funds credited
to it shall be subject to apportionment under the provisions of
subchapter II of chapter 15 of title 31 [31 USCS Sec. Sec. 1511
et seq.].
(2) Funds appropriated to the Postal Service under section
2401 of this title shall be apportioned as provided in this
paragraph. From the total amounts appropriated to the Postal
Service for any fiscal year under the authorizations contained
in section 2401 of this title, the Secretary of the Treasury
shall make available to the Postal Service 25 percent of such
amount at the beginning of each quarter of such fiscal year.
* * * * * * *
Sec. 2005. Obligations
(a)(1) The Postal Service is authorized to borrow money and
to issue and sell such obligations as it determines necessary
to carry out the purposes of this [title] title, other than any
of the purposes for which the corresponding authority is
available to the Postal Service under section 2011. The
aggregate amount of any such obligations outstanding at any one
time shall not exceed the maximum amount then allowable under
paragraph (2) of this subsection. [In any one fiscal year the
net increase in the amount of obligations outstanding issued
for the purpose of capital improvements shall not exceed
$2,000,000,000, and the net increase in the amount of
obligations outstanding issued for the purpose of defraying
operating expenses of the Postal Service shall not exceed
$1,000,000,000.]
(2) The maximum amount allowable under this paragraph is--
(A) $10,000,000,000 for fiscal year 1990;
(B) $12,500,000,000 for fiscal year 1991; and
(C) $15,000,000,000 for fiscal year 1992 and each
fiscal year thereafter.
[(b)](b)(1) The Postal Service may pledge the assets of the
Postal Service and pledge and use its revenues and receipts for
the payment of the principal of or interest on [such
obligations] obligations issued by the Postal Service under
this section, for the purchase or redemption thereof, and for
other purposes incidental thereto, including creation of
reserve, sinking, and other funds which may be similarly
pledged and used, to such extent and in such manner as it deems
necessary or desirable. The Postal Service is authorized to
enter into binding covenants with the holders of such
obligations, and with the trustee, if any, under any agreement
entered into in connection with the issuance thereof with
respect to the establishment of reserve, sinking, and other
funds, application and use of revenues and receipts of the
Postal Service, stipulations concerning the subsequent issuance
of obligations or the execution of leases or lease purchases
relating to properties of the Postal Service and such other
matters as the Postal Service deems necessary or desirable to
enhance the marketability of such obligations.
(2) Notwithstanding any other provision of this section--
(A) the authority to pledge assets of the Postal
Service under this subsection shall be available only
to the extent that such assets are not related to the
provision of competitive products (as determined under
section 2011(h) or, for purposes of any period before
accounting practices and principles under section
2011(h) have been established and applied, the best
information available from the Postal Service,
including the audited statements required by section
2008(e)); and
(B) any authority under this subsection relating to
the pledging or other use of revenues or receipts of
the Postal Service shall be available only to the
extent that they are not revenues or receipts of the
Competitive Products Fund.
* * * * * * *
Sec. 2006. Relationship between the Treasury and Postal Service
* * * * * * *
(b) Subject to the conditions of subsection (a) of this
section, the Postal Service may require the Secretary of the
Treasury to purchase obligations of the Postal Service in such
amounts as will not cause the holding by the Secretary of the
Treasury resulting from such required purchases to exceed
$2,000,000,000 at any one time. This subsection shall not be
construed as limiting the authority of the Secretary to
purchase obligations of the Postal Service in excess of such
amount. Nothing in this chapter shall be considered to permit
or require the Secretary of the Treasury to purchase any
obligations of the Postal Service other than those issued under
section 2005.
(c) Notwithstanding section 2005(d)(5) of this title,
obligations issued by the Postal Service under section 2005
shall be obligations of the Government of the United States,
and payment of principal and interest thereon shall be fully
guaranteed by the Government of the United States, such
guaranty being expressed on the face thereof, if and to the
extent that--
(1) the Postal Service requests the Secretary of the
Treasury to pledge the full faith and credit of the
Government of the United States for the payment of
principal and interest thereon; and
(2) the Secretary, in his discretion, determines that
it would be in the public interest to do so.
* * * * * * *
Sec. 2009. Annual budget
The Postal Service shall cause to be prepared annually a
budget program which shall be submitted to the Office of
Management and Budget, under such rules and regulations as the
President may establish as to the date of submission, the form
and content, the classifications of data, and the manner in
which such budget program shall be prepared and presented. The
budget program shall be a business-type budget, or plan of
operations, with due allowance given to the need for
flexibility, including provision for emergencies and
contingencies, in order that the Postal Service may properly
carry out its activities as authorized by law. The budget
program shall contain estimates of the financial condition and
operations of the Postal Service for the current and ensuing
fiscal years and the actual condition and results of operation
for the last completed fiscal year. Such budget program shall
include a statement of financial condition, a statement of
income and expense, an analysis of surplus or deficit, a
statement of sources and application of funds, and such other
supplementary statements and information as are necessary or
desirable to make known the financial condition and operations
of the Postal Service. Such statements shall include estimates
of operations by major types of activities, together with
estimates of administrative expenses and estimates of
borrowings. [The budget program shall also include separate
statements of the amounts which the Postal Service requests to
be appropriated under subsections (b) and (c) of section 2401
of this title.] The budget program shall also include separate
statements of the amounts which (1) the Postal Service requests
to be appropriated under subsections (b) and (c) of section
2401, (2) the Office of Inspector General of the United States
Postal Service requests to be appropriated, out of the Postal
Service Fund, under section 8G(f) of the Inspector General Act
of 1978, and (3) the Postal Regulatory Commission requests to
be appropriated, out of the Postal Service Fund, under section
504(d) of this title. The President shall include these
amounts, with his recommendations but without revision, in the
budget transmitted to Congress under section 1105 of title 31.
Sec. 2010. Restrictions on agreements
The Postal Service shall promote modern and efficient
operations and should refrain from expending any funds,
engaging in any practice, or entering into any agreement or
contract, other than an agreement or contract under chapter 12
of this title [39 USCS Sec. Sec. 1201 et seq.], which restricts
the use of new equipment or devices which may reduce the cost
or improve the quality of postal services, except where such
restriction is necessary to insure safe and healthful
employment conditions.
Sec. 2011. Provisions relating to competitive products
(a) There is established in the Treasury of the United
States a revolving fund, to be called the Postal Service
Competitive Products Fund, which shall be available to the
Postal Service without fiscal year limitation for the payment
of--
(1) costs attributable to the competitive products;
and
(2) all other costs incurred by the Postal Service,
to the extent allocable to competitive products.
For purposes of this subsection, the term ``costs
attributable'' has the meaning given such term by section 3631.
(b) There shall be deposited in the Competitive Products
Fund, subject to withdrawal by the Postal Service--
(1) revenues from competitive products;
(2) amounts received from obligations issued by the
Postal Service under subsection (e);
(3) interest and dividends earned on investments of
the Competitive Products Fund; and
(4) any other receipts of the Postal Service
(including from the sale of assets), to the extent
allocable to competitive products.
(c) If the Postal Service determines that the moneys of the
Competitive Products Fund are in excess of current needs, it
may invest such amounts as it considers appropriate in
accordance with regulations which the Secretary of the Treasury
shall prescribe within 12 months after the date of enactment of
the Postal Accountability and Enhancement Act.
(d) The Postal Service may, in its sole discretion, provide
that the moneys of the Competitive Products Fund be deposited
in a Federal Reserve bank or a depository for public funds.
(e)(1) Subject to the limitations specified in section
2005(a), the Postal Service is authorized to borrow money and
to issue and sell such obligations as it determines necessary
to provide for competitive products and deposit such amounts in
the Competitive Products Fund, except that the Postal Service
may pledge only assets related to the provision of competitive
products (as determined under subsection (h) or, for purposes
of any period before accounting practices and principles under
subsection (h) have been established and applied, the best
information available from the Postal Service, including the
audited statements required by section 2008(e)), and the
revenues and receipts from such products, for the payment of
the principal of or interest on such obligations, for the
purchase or redemption thereof, and for other purposes
incidental thereto, including creation of reserve, sinking, and
other funds which may be similarly pledged and used, to such
extent and in such manner as the Postal Service determines
necessary or desirable.
(2) The Postal Service may enter into binding covenants
with the holders of such obligations, and with the trustee, if
any, under any agreement entered into in connection with the
issuance thereof with respect to--
(A) the establishment of reserve, sinking, and other
funds;
(B) application and use of revenues and receipts of
the Competitive Products Fund;
(C) stipulations concerning the subsequent issuance
of obligations or the execution of leases or lease
purchases relating to properties of the Postal Service;
and
(D) such other matters as the Postal Service
considers necessary or desirable to enhance the
marketability of such obligations.
(3) Obligations issued by the Postal Service under this
subsection--
(A) may not be purchased by the Secretary of the
Treasury;
(B) shall not be exempt either as to principal or
interest from any taxation now or hereafter imposed by
any State or local taxing authority;
(C) shall not be obligations of, nor shall payment of
the principal thereof or interest thereon be guaranteed
by, the Government of the United States, and the
obligations shall so plainly state; and
(D) notwithstanding the provisions of the Federal
Financing Bank Act of 1973 or any other provision of
law (except as specifically provided by reference to
this subparagraph in a law enacted after this
subparagraph takes effect), shall not be eligible for
purchase by, commitment to purchase by, or sale or
issuance to, the Federal Financing Bank.
(4)(A) This paragraph applies wtih respect to the period
beginning on the date of the enactment of this paragraph and
ending at the close of the 5-year period which begins on the
date on which the Postal Service makes its submission under
subsection (h)(1).
(B) During the period described in subparagraph (A),
nothing in subparagraph (A) or (D) of paragraph (3) or the last
sentence of section 2006(b) shall, with respect to any
obligations sought to be issued by the Postal Service under
this subsection, be considered to affect such obligations'
eligibility for purchase by, commitment to purchase by, or sale
or issuance to, the Federal Financing Bank.
(C) The Federal Financing Bank may elect to purchase such
obligations under such terms, including rates of interest, as
the Bank and the Postal Service may agree, but at a rate of
yield no less than the prevailing yield on outstanding
marketable securities of comparable maturity issued by entities
with the same credit rating as the rating then most recently
obtained by the Postal Service under subparagraph (D), as
determined by the Bank.
(D) In order to be eligible to borrow under this paragraph,
the Postal Service shall first obtain a credit rating from a
nationally recognized credit rating organization. Such rating--
(i) shall be determined taking into account only
those assets and activities of the Postal Service which
are described in section 3634(a)(2) (relating to the
Postal Service's assumed taxable income from
competitive products); and
(ii) may, before final rules of the Postal Regulatory
Commission under subsection (h) are issued (or deemed
to have been issued), be based on the best information
available from the Postal Service, including the
audited statements required by section 2008(e).
(f) The receipts and disbursements of the Competitive
Products Fund shall be accorded the same budgetary treatment as
is accorded to receipts and disbursements of the Postal Service
fund under section 2009a.
(g) A judgment against the Postal Service or the Government
of the United States (or settlement of a claim) shall, to the
extent that it arises out of activities of the Postal Service
in the provision of competitive products, be paid out of the
Competitive Products Fund.
(h)(1) The Secretary of the Treasury, in consultation with
the Postal Service, an independent, certified public accounting
firm, and such other advisers as the Secretary considers
appropriate, shall develop recommendations regarding--
(A) the accounting practices and principles that
should be followed by the Postal Service with the
objectives of--
(i) identifying and valuing the assets and
liabilities of the Postal Service associated
with providing, and the capital and operating
costs incurred by the postal Service in
providing, competitive products; and
(ii) preventing the subsidization of such
products by market-dominant products; and
(B) the substantive and procedural rules that should
be followed in determining the Postal Service's assumed
Federal income tax on competitive products income for
any year (within the meaning of section 3634).
Such recommendations shall be submitted to the Postal
Regulatory Commission not earlier than 6 months, and not later
than 12 months, after the effective date of this section.
(2)(A) Upon receiving the recommendations of the Secretary
of the Treasury under paragraph (1), the Commission shall give
interested parties, including the Postal Service, users of the
mails, and an officer of the Commission who shall be required
to represent the interests of the general public, an
opportunity to present their views on those recommendations
through submission of written data, views, or arguments with or
without opportunity for oral presentation, or in such other
manner as the Commission considers appropriate.
(B) After due consideration of the views and other
information received under subparagraph (A), the Commission
shall by rule--
(i) provide for the establishment and application of
the accounting practices and principles which shall be
followed by the Postal Service;
(ii) provide for the establishment and application of
the substantive and procedural rules described in
paragraph (1)(B); and (iii) provide for thesubmission
by the Postal Service to the Postal Regulatory
Commission of annual and other periodic reports setting
forth such information as the Commission may require.
Final rules under this subparagraph shall be issued not later
than 12 months after the date on which the Secretary of the
Treasury makes his submission to the Commission under paragraph
(1) (or by such later date as agreed to by the Commission and
the Postal Service). The Commission is authorized to promulgate
regulations revising such rules.
(C) Reports described in subparagraph (B)(iii) shall be
submitted at such time, in such form, and shall include such
information, as the Commission by rule requires. The Commission
may, on its own motion or on requires of an interested party,
initiate proceedings (to be conducted in accordance with such
rules as the Commission shall prescribe) to improve the
quality, accuracy, or completeness of Postal Service data under
such subparagraph whenever it shall appear that--
(i) the quality of the information furnished in those
reports has become significantly inaccurate or can be
significantly improved; or
(ii) such revisions are, in the judgment of the
Commission, otherwise necessitated by the public
interest.
(D) A copy of each report described in subparagraph
(B)(iii) shall also be transmitted by the Postal Service to the
Secretary of the Treasury and the Inspector General of the
United States Postal Service.
(i) The Postal Service shall render an annual report
to the Secretary of the Treasury concerning the
operation of the Competitive Products Fund, in which it
shall address such matters as risk limitations, reserve
balances, allocation or distribution of moneys,
liquidity requirements, and measures to safeguard
against losses. A copy of its then most recent report
under this subsection shall be included with any other
submission that it is required to make to the Postal
Regulatory Commission under section 3652(g).
* * * * * * *
PART IV--MAIL MATTER
CHAPTER 36--POSTAL RATES, CLASSES, AND SERVICES [SUBCHAPTER I--POSTAL
RATE COMMISSION]
[Sec. 3601. Establishment
[(a) The Postal Rate Commission is an independent
establishment of the executive branch of the Government of the
United States. The Commission is composed of 5 Commissioners,
appointed by the President, by and with the advice and consent
of the Senate. The Commissioners shall be chosen on the basis
of their professional qualifications and may be removed by the
President only for cause. Not more than 3 of the Commissioners
may be adherents of the same political party.
[(b) A Commissioner may continue to serve after the
expiration of his term until his successor has qualified,
except that a Commissioner may not so continue to serve for
more than 1 year after the date upon which his term otherwise
would expire under section 3602 of this title.
[(c) One of the Commissioners shall be designated as
Chairman by, and shall serve in the position of Chairman at the
pleasure of, the President.
[(d) The Commissioners shall by majority vote designate a
Vice Chairman of the Commission. The Vice Chairman shall act as
Chairman of the Commission in the absence of the Chairman.]
[Sec. 3602. Terms of office
[The Commissioners of the Postal Rate Commission shall
serve for terms of 6 years except that--
[(1) the terms of the Commissioners first taking office
shall expire as designated by the President at the time of
appointment, 1 at the end of 2 years, 2 at the end of 4 years,
and 2 at the end of 6 years, following the appointment of the
first of them; and
[(2) any Commissioner appointed to fill a vacancy occurring
before the expiration of the term for which his predecessor was
appointed shall serve for the remainder of such term.
[Sec. 3603. Rules; regulations; procedures
[The Postal Rate Commission shall promulgate rules and
regulations and establish procedures, subject to chapters 5 and
7 of title 5 [5 USCS Sec. Sec. 501 et seq. and 701 et seq.],
and take any other action they deem necessary and proper to
carry out their functions and obligations to the Government of
the United States and the people as prescribed under this
chapter [9 USCS Sec. Sec. 3601 et seq.]. Such rules,
regulations, procedures, and actions shall not be subject to
any change or supervision by the Postal Service.]
[Sec. 3604. Administration
[(a) The Chairman of the Postal Rate Commission shall be
the principal executive officer of the Commission. The Chairman
shall exercise or direct the exercise of all the executive and
administrative functions of the Commission, including functions
of the Commission with respect to (1) the appointment of
personnel employed under the Commission, except that the
appointment of heads of major administrative units under the
Commission shall require the approval of a majority of the
members of the Commission, (2) the supervision of the personnel
employed under the Commission and the distribution of business
among them and among the Commissioners, and (3) the use and
expenditure of funds.
[(b) In carrying out any of his functions under this
section, the Chairman shall be governed by the general policies
of the Commission.
[(c) The Chairman may obtain such facilities and supplies
as may be necessary to permit the Commission to carry out its
functions. Any officer or employee appointed under this section
shall be paid at rates of compensation and shall be entitled to
programs offering employee benefits established under chapter
10 or chapter 12 of this title [39 USCS Sec. Sec. 1001 et seq.
or 1201 et seq.], as appropriate.
[(d) (1) The Commission shall periodically prepare and
submit to the Postal Service a budget of the Commission's
expenses, including, but not limited to, expenses for
facilities, supplies, compensation, and employee benefits. The
budget shall be considered approved--
[(A) as submitted if the Governors fail to act in
accordance with subparagraph (B) of this paragraph; or
[(B) as adjusted if the Governors holding office, by
unanimous written decision, adjust the total amount of
money requested in the budget. Subparagraph (B) shall
not be construed to authorize the Governors to adjust
any item included within the budget.
[(2) Expenses incurred under any budget approved under
paragraph (1) of this subsection shall be paid out of the
Postal Service fund established under section 2003 of this
title.
[(e) The provisions of section 410 and chapter 10 of this
title [39 USCS Sec. Sec. 410 and 1001 et seq.] shall apply to
the Commission, as appropriate.]
CHAPTER 36--POSTAL RATES, CLASSES, AND SERVICES
Subchapter II--Permanent Rates and Classes of Mail
[Sec. 3621. Authority to fix rates and classes
[Except as otherwise provided, the Governors are authorized
to establish reasonable and equitable classes of mail and
reasonable and equitable rates of postage and fees for postal
services in accordance with the provisions of this chapter [39
USCS Sec. Sec. 3601 et seq.]. Postal rates and fees shall be
reasonable and equitable and sufficient to enable the Postal
Service under honest, efficient, and economical management to
maintain and continue the development of postal services of the
kind and quality adapted to the needs of the United States.
Postal rates and fees shall provide sufficient revenues so that
the total estimated income and appropriations to the Postal
Service will equal as nearly as practicable total estimated
costs of the Postal Service. For purposes of this section,
``total estimated costs'' shall include (without limitation)
operating expenses, depreciation on capital facilities and
equipment, debt service (including interest, amortization of
debt discount and expense, and provision for sinking funds or
other retirements of obligations to the extent that such
provision exceeds applicable depreciation charges), and a
reasonable provision for contingencies.]
Sec. 3621. Applicability; definitions
(a) Applicability.--This subchapter shall apply with
respect to--
(1) first-class mail letters and sealed parcels;
(2) first-class mail cards;
(3) periodicals;
(4) standard mail;
(5) single-piece parcel post;
(6) media mail;
(7) bound printed matter;
(8) library mail;
(9) special services; and
(10) single-piece international mail, subject to any
changes the Postal Regulatory Commission may make under
section 3642.
(b) Rule of Construction.--Mail matter referred to in
subsection (a) shall, for purposes of this subchapter, be
considered to have the meaning given to such mail matter under
the mail classification schedule.
[Sec. 3622. Rates and fees
[(a) From time to time the Postal Service shall request the
Postal Rate Commission to submit a recommended decision on
changes in a rate or rates of postage or in a fee or fees for
postal services if the Postal Service determines that such
changes would be in public interest and in accordance with the
policies of this title. The Postal Service may submit such
suggestions for rate adjustments as it deems suitable.
[(b) Upon receiving a request, the Commission shall make a
recommended decision on the request for changes in rates or
fees in each class of mail or type of service in accordance
with the policies of this title and the following factors:
[(1) the establishment and maintenance of a fair and
equitable schedule;
[(2) the value of the mail service actually provided
each class or type of mail service to both the sender
and the recipient, including but not limited to the
collection, mode of transportation, and priority of
delivery;
[(3) the requirement that each class of mail or type
of mail service bear the direct and indirect postal
costs attributable to that class or type plus that
portion of all other costs of the Postal Service
reasonably assignable to such class or type;
[(4) the effect of rate increases upon the general
public, business mail users, and enterprises in the
private sector of the economy engaged in the delivery
of mail matter other than letters;
[(5) the available alternative means of sending and
receiving letters and other mail matter at reasonable
costs;
[(6) the degree of preparation of mail for delivery
into the postal system performed by the mailer and its
effect upon reducing costs to the Postal Service;
[(7) simplicity of structure for the entire schedule
and simple, identifiable relationships between the
rates or fees charged the various classes of mail for
postal services;
[(8) the educational, cultural, scientific, and
informational value to the recipient of mail matter;
and
[(9) such other factors as the Commission deems
appropriate.
[(c) Regular rates for each class or subclass of mail that
includes 1 or more special rate categories for mail under
former section 4358(d) or (e), 4452(b) or (c), or 4554(b) or
(c) of this title shall be established by applying the policies
of this title, including the factors of section 3622(b) of this
title, to the costs attributable to the regular rate mail in
each class or subclass combined with the mail in the
corresponding special rate categories authorized by former
section 4358(d) or (e), 4452(b) or (c), or 4554(b) or (c) of
this title.
[(d) Compliance with any provision of the Occupational
Safety and Health Act of 1970 (29 U.S.C. 651 et seq.) shall not
be considered by the Commission in determining whether to
increase rates and shall not otherwise affect the service of
the Postal Service.]
Sec. 3622. Modern rate regulation
(a) Authority Generally.--The Postal Regulatory Commission
shall, within 12 months after the date of the enactment of this
section, by regulation establish (and may from time to time
thereafter by regulation revise) a modern system for regulating
rates and classes for market-dominant products.
(b) Objectives.--Such system shall be designed to achieve
the following objectives:
(1) To reduce the administrative burden and increase
the transparency of the ratemaking process while
affording reasonable opportunities for interested
parties to participate in that process.
(2) To create predictability and stability in rates.
(3) To maximize incentives to reduce costs and
increase efficiency.
(4) To enhance mail security and deter terrorism by
promoting secure, sender-identified mail.
(5) To allow the Postal Service pricing flexibility,
including the ability to use pricing to promote
intelligent mail and encourage increased mail volume
during nonpeak periods.
(6) To assure adequate revenues, including retained
earnings, to maintain financial stability and meet the
service standards established under section 3691.
(7) To allocate the total institutional costs of the
Postal Service equitably between market-dominant and
competitive products.
(c) Factors.--In establishing or revising such system, the
Postal Regulatory Commission shall take into account--
(1) the establishment and maintenance of a fair and
equitable schedule for rates and classification system;
(2) the value of the mail service actually provided
each class or type of mail service to both the sender
and the recipient, including but not limited to the
collection, mode of transportation, and priority of
delivery;
(3) the requirement that each class of mail or type
of mail service bear the direct and indirect postal
costs attributable to each class or type of mail
service plus that portion of all other costs of the
Postal Service reasonably assignable to such class or
type;
(4) the effect of rate increases upon the general
public, business mail users, and enterprises in the
private sector of the economy engaged in the delivery
of mail matter other than letters;
(5) the available alternative means of sending and
receiving letters and other mail matter at reasonable
costs;
(6) the degree of preparation of mail for delivery
into the postal system performed by the mailer and its
effect upon reducing costs to the Postal Service;
(7) simplicity of structure for the entire schedule
and simple, identifiable relationships between the
rates or fees charged the various classes of mail for
postal services;
(8) the relative value to the people of the kinds of
mail matter entered into the postal system and the
desirability and justification for special
classifications and services of mail;
(9) the importance of providing classifications with
extremely high degrees of reliability and speed of
delivery and of providing those that do not require
high degrees of reliability and speed of delivery;
(10) the desirability of special classifications from
the point of view of both the user and of the Postal
Service;
(11) the educational, cultural, scientific, and
informational value to the recipient of mail matter;
and
(12) the policies of this title as well as such other
factors as the Commission deems appropriate.
(d) Requirements.--The system for regulating rates and
classes for market-dominant products shall--
(1) require the Postal Regulatory Commission to set
annual limitations on the percentage changes in rates
based on inflation using indices, such as the Consumer
Price Index, the Employment Cost Index, the Gross
Domestic Product Price Index, or any similar measure as
the Postal Regulatory Commission may prescribe;
(2) establish a schedule whereby rates, when
necessary and appropriate, would change at regular
intervals by predictable amounts;
(3) not later than 45 days before the implementation
of any adjustment in rates under this section--
(A) require the Postal Service to provide
public notice of the adjustment;
(B) provide an opportunity for review by the
Postal Regulatory Commission;
(C) provide for the Postal Regulatory
Commission to notify the Postal Service of any
noncompliance of the adjustment with the
limitation under paragraph (1); and
(D) require the Postal Service to respond to
the notice provided under subparagraph (C) and
describe the actions to be taken to comply with
the limitation under paragraph (1).
(4) notwithstanding any limitation set under
paragraphs (1) and (3), establish procedures whereby
rates may be adjusted on an expedited basis due to the
unexpected and extraordinary circumstances.
(e) Workshare Discounts.--
(1) Definition.--In this subsection, the term
``workshare discount'' refers to rate discounts
provided to mailers for the presorting, prebarcoding,
handling, or transportation of mail, as further defined
by the Postal Regulatory Commission under subsection
(a).
(2) Regulations.--As part of the regulations
established under subsection (a), the Postal Regulatory
Commission shall establish rules for workshare
discounts that ensure that such discounts do not exceed
the cost that the Postal Service avoids as a result of
workshare activity, unless--
(A) the discount is--
(i) associated with a new postal
service or with a change to an existing
postal service; and
(ii) necessary, over a period of time
not to exceed 4 years, to induce mailer
behavior that furthers the economically
efficient operation of the Postal
Service;
(B) a reduction in the discount would--
(i) lead to a loss of volume in the
affected category of mail and reduce
the aggregate contribution to
institutional costs of the Postal
Service from the mail matter subject to
the discount below what it otherwise
would have been if the discount had not
been reduced to costs avoided;
(ii) result in a further increase in
the rates paid by mailers not able to
take advantage of the discount; or
(iii) impede the efficient operation
of the Postal Service;
(C) the amount of the discount above costs
avoided--
(i) is necessary to mitigate rate
shock; and
(ii) will be phased out over time; or
(D) the workshare discount is provided in
connection with subclasses of mail consisting
exclusively of mail matter of educational,
cultural, or scientific value.
(3) Report.--Whenever the Postal Service establishes
or maintains a workshare discount, the Postal Service
shall, at the time it publishes the workshare discount
rate, submit to the Postal Regulatory Commission a
detailed report and explanation of the Postal Service's
reasons for establishing or maintaining the rate,
setting forth the data, economic analyses, and other
information relied on by the Postal Service to justify
the rate.
(f) Transition Rule.--Until regulations under this section
first take effect, rates and classes for market-dominant
products shall remain subject to modification in accordance
with the provisions of this chapter and section 407, as such
provisions were last in effect before the date of the enactment
of this section.
[Sec. 3623. Mail classification
[(a) Within 2 years after the effective date of this
subchapter [effective Jan. 20, 1971], the Postal Service shall
request the Postal Rate Commission to make a recommended
decision on establishing a mail classification schedule in
accordance with the provisions of this section.
[(b) Following the establishment of the mail classification
schedule requested under subsection (a) of this section, the
Postal Service may from time to time request that the
Commission submit, or the Commission may submit to the
Governors on its own initiative, a recommended decision on
changes in the mail classification schedule.
[(c) The Commission shall make a recommended decision on
establishing or changing the schedule in accordance with the
policies of this title and the following factors:
[(1) the establishment and maintenance of a fair and
equitable classification system for all mail;
[(2) the relative value to the people of the kinds of
mail matter entered into the postal system and the
desirability and justification for special
classifications and services of mail;
[(3) the importance of providing classifications with
extremely high degrees of reliability and speed of
delivery;
[(4) the importance of providing classifications
which do not require an extremely high degree of
reliability and speed of delivery;
[(5) the desirability of special classifications from
the point of view of both the user and of the Postal
Service; and
[(6) such other factors as the Commission may deem
appropriate.
[(d) The Postal Service shall maintain one or more classes
of mail for the transmission of letters sealed against
inspection. The rate for each such class shall be uniform
throughout the United States, its territories, and possessions.
One such class shall provide for the most expeditious handling
and transportation afforded mail matter by the Postal Service.
No letter of such a class of domestic origin shall be opened
except under authority of a search warrant authorized by law,
or by an officer or employee of the Postal Service for the sole
purpose of determining an address at which the letter can be
delivered, or pursuant to the authorization of the addressee.]
Sec. 3623. Service agreements for market-dominant products
(a) In General.--
(1) Authority.--The Postal Service may enter into
service agreements with a customer or group of
customers that provide for the provision of postal
services under terms, conditions, or service standards
that differ from those that would apply under the
otherwise applicable classification of market-dominant
mail.
(2) Agreements.--An agreement under this section may
involve--
(A) performance by the contracting mail user
of mail preparation, processing,
transportation, or other functions;
(B) performance by the Postal Service of
additional mail preparation, processing,
transportation, or other functions; or
(C) other terms and conditions that meet the
requirements of subsections (b) and (c).
(b) Requirements.--A service agreement under this section
may be entered into only if each of the following conditions is
met:
(1) The total revenue generated under the agreement--
(A) will cover all Postal Service costs
attributable to the postal services covered by
the agreement; and
(B) will result in no less contribution to
the institutional costs of the Postal Service
than would have been generated had the
agreement not been entered into.
(2) Rates or fees for other mailers will not increase
as a result of the agreement.
(3) The agreement pertains exclusively to products in
the market-dominant category of mail.
(4) The agreement will not preclude or materially
hinder similarly situated mail users from entering into
agreements with the Postal Service on the same, or
substantially the same terms or conditions, and the
Postal Service remains willing and able to enter into
such.
(c) Limitations.--A service agreement under this section
shall--
(1) be for a term not to exceed 3 years; and
(2) provide that such agreement shall be subject to
the cancellation authority of the Commission under
section 3662.
(d) Notice Requirements.--
(1) In general.--At least 30 days before a service
agreement under this section is to take effect, the
Postal Service shall file with the Postal Regulatory
Commission and publish in the Federal Register the
following information with respect to such agreement:
(A) A description of the postal services the
agreement involves.
(B) A description of the functions the
customer is to perform under the agreement.
(C) A description of the functions the Postal
Service is to perform under the agreement.
(D) The rates and fees payable by the
customer during the term of the agreement.
(E) With respect to each condition under
subsection (b), information sufficient to
demonstrate the bases for the view of the
Postal Service that such condition would be
met.
(2) Agreements less than national in scope.--In the
case of a service agreement under this section that is
less than national in scope, the information described
under paragraph (1) shall also be published by the
Postal Service in a manner designed to afford
reasonable notice to persons within any geographic area
to which such agreement (or any amendment to that
agreement) pertains.
(e) Equal Treatment Required.--If the Postal Service enters
into a service agreement with a mailer under this section, the
Postal Service shall make such agreement available to similarly
situated mailers on functionally equivalent terms and
conditions consistent with the regulatory system established
under section 3622 without unreasonable distinctions based on
mailer profiles, provided that such distinctions, if ignored,
would not render any subsequent agreement uneconomic or
impractical.
(f) Complaints.--Any person who believes that a service
agreement under this section is not in conformance with the
requirements of this section, or who is aggrieved by a decision
of the Postal Service not to enter into an agreement under this
section, may file a complaint with the Postal Regulatory
Commission in accordance with section 3662.
(g) Postal Regulatory Commission Role.--
(1) Regulations.--The Postal Regulatory Commission
may promulgate such regulations regarding service
agreements as the Commission determines necessary to
implement the requirements of this section.
(2) Review.--The Postal Regulatory Commission may
review any agreement or proposed agreement under this
section and may suspend, cancel, or prevent such
agreement if the Commission finds that the agreement
does not meet the requirements of this section.
(h) Interpretation.--The determination of whether the
revenue generated under the agreement meets the requirements of
subsection (b)(1)(B) shall be based, to the extent practicable,
on the actual contribution of the mail involved, not on the
average contribution made by the mail classification most
similar to the services performed under the agreement. If
mailer-specific data is not available, the bases for the
determination used shall be provided and shall include a
discussion of the suitability of the data used, in accordance
with regulations established by the Postal Regulatory
Commission.
[Sec. 3624. Recommended decisions of Commission
[(a) The Postal Rate Commission shall promptly consider a
request made under section 3622 or 3623 of this title, except
that the Commission shall not recommend a decision until the
opportunity for a hearing on the record under sections 556 and
557 of title 5 has been accorded to the Postal Service, users
of the mails, and an officer of the Commission who shall be
required to represent the interests of the general public.
[(b) In order to conduct its proceedings with utmost
expedition consistent with procedural fairness to the parties,
the Commission may (without limitation) adopt rules which
provide for--
[(1) the advance submission of written direct testimony;
[(2) the conduct of prehearing conferences to define
issues, and for other purposes to insure orderly and
expeditious proceedings;
[(3) discovery both from the Postal Service and the parties
to the proceedings;
[(4) limitation of testimony; and
[(5) the conduct of the entire proceedings off the record
with the consent of the parties.
[(c)(1) Except as provided by paragraph (2) of this
subsection, in any case in which the Postal Service makes a
request under section 3622 of this title for a recommended
decision by the Commission on changes in a rate or rates of
postage or in a fee or fees for postal services the Commission
shall transmit its recommended decision to the Governors under
subsection (d) of this section no later than 10 months after
receiving any such request from the Postal Service.
[(2) In any case in which the Commission determines that
the Postal Service has unreasonably delayed consideration of a
request made by the Postal Service under section 3622 by
failing to respond within a reasonable time to any lawful order
of the Commission, the Commission may extend the 10-month
period described in paragraph (1) of this subsection by one day
for each day of such delay.
[(d) The Commission shall transmit its recommended decision
in a rate, fee, or classification matter to the Governors. The
recommended decision shall include a statement specifically
responsive to the criteria established under section 3622 or
3623, as the case may be.]
[Sec. 3625. Action of the Governors
[(a) Upon receiving a recommended decision from the Postal
Rate Commission, the Governors may approve, allow under
protest, reject, or modify that decision in accordance with the
provisions of this section.
[(b) The Governors may approve the recommended decision and
order the decision placed in effect.
[(c) The Governors may, under protest, allow a recommended
decision of the Commission to take effect and (1) seek judicial
review thereof under section 3628 of this title, or (2) return
the recommended decision to the Commission for reconsideration
and a further recommended decision, which shall be acted upon
under this section and subject to review in accordance with
section 3628 of this title.
[(d) The Governors may reject the recommended decision of
the Commission and the Postal Service may resubmit its request
to the Commission for reconsideration. Upon resubmission, the
request shall be reconsidered, and a further recommended
decision of the Commission shall be acted upon under this
section and subject to review in accordance with section 3628
of this title. However, with the unanimous written concurrence
of all of the Governors then holding office, the Governors may
modify any such further recommended decision of the Commission
under this subsection if the Governors expressly find that (1)
such modification is in accord with the record and the policies
of this chapter [39 USCS Sec. Sec. 3601 et seq.], and (2) the
rates recommended by the Commission are not adequate to provide
sufficient total revenues so that total estimated income and
appropriations will equal as nearly as practicable estimated
total costs.
[(e) The decision of the Governors to approve, allow under
protest, reject, or modify a recommended decision of the
Commission shall be in writing and shall include an estimate of
anticipated revenue and a statement of explanation and
justification. The decision, the record of the Commission's
hearings, and the Commission's recommended decision shall be
made generally available at the time the decision is issued and
shall be printed and made available for sale by the Public
Printer within 10 days following the day the decision is
issued.
[(f) The Board shall determine the date on which the new
rates, fees, the mail classification schedule, and changes in
such schedule under this subchapter [39 USCS Sec. Sec. 3621 et
seq.] shall become effective.]
* * * * * * *
[Sec. 3628. Appellate review
[A decision of the Governors to approve, allow under
protest, or modify the recommended decision of the Postal Rate
Commission may be appealed to any court of appeals of the
United States, within 15 days after its publication by the
Public Printer, by an aggrieved party who appeared in the
proceedings under section 3624(a) of this title. The court
shall review the decision, in accordance with section 706 of
title 5, and chapter 158 [28 USCS Sec. Sec. 2341 et seq.] and
section 2112 of title 28, except as otherwise provided in this
section, on the basis of the record before the Commission and
the Governors. The court may affirm the decision or order that
the entire matter be returned for further consideration, but
the court may not modify the decision. The court may not
suspend the effectiveness of the changes, or otherwise prevent
them from taking effect until final disposition of the suit by
the court. No court shall have jurisdiction to review a
decision made by the Commission or Governors under this chapter
[39 USCS Sec. Sec. 3601 et seq.] except as provided in this
section.]
CHAPTER 36--POSTAL RATES, CLASSES, AND SERVICES
[Subchapter II--Permament Rates and Classes of Mail]
Subchapter I--Provisions Relating to Market-Dominant Products
Sec. 3629. Reduced rates for voter registration purposes [Caution: For
effective date of section, see Sec. 13 of Act May
20, 1993, P.L. 103-31, which appears as a note to
this section]
The Postal Service shall make available to a State or local
voting registration official the rate for any class of mail
that is available to a qualified nonprofit organization under
section 3626 for the purpose of making a mailing that the
official certifies is required or authorized by the National
Voter Registration Act of 1993.
Subchapter II--Provisions Relating to Competitive Products
Sec. 3631. Applicability; definitions and updates
(a) Applicability.--This subchapter shall apply with
respect to--
(1) priority mail;
(2) expedited mail;
(3) bulk parcel post;
(4) bulk international mail; and
(5) mailgrams; subject to subsection (d) and any
changes the Postal Regulatory Commission may make under
section 3642.
(b) Definition.--For purposes of this subchapter, the term
``costs attributable'', as used with respect to a product,
means the direct and indirect postal costs attributable to such
product.
(c) Rule of Construction.--Mail matter referred to in
subsection (a) shall, for purposes of this subchapter, be
considered to have the meaning given to such mail matter under
the mail classification schedule.
(d) Limitation.--Notwithstanding any other provision of
this section, nothing in this subchapter shall be considered to
apply with respect to any product then currently in the market-
dominant category of mail.
Sec. 3632. Action of the Governors
(a) Authority to Establish Rates and Classes.--The
Governors, with the written concurrence of a majority of all of
the Governors then holding office, shall establish rates and
classes for products in the competitive category of mail in
accordance with the requirements of this subchapter and
regulations promulgated under section 3633.
(b) Procedures.--
(1) In general.--Rates and classes shall be
established in writing, complete with a statement of
explanation and justification, and the date as of which
each such rate or class takes effect.
(2) Public notice; review; and compliance.--Not later
than 30 days before the date of implementation of any
adjustment in rates under this section--
(A) the Governors shall provide public notice
of the adjustment and an opportunity for review
by the Postal Regulatory Commission;
(B) the Postal Regulatory Commission shall
notify the Governors of any noncompliance of
the adjustment with section 3633; and
(C) the Governors shall respond to the notice
provided under subparagraph (B) and describe
the actions to be taken to comply with section
3633.
(c) Transition Rule.--Until regulations under section 3633
first take effect, rates and classes for competitive products
shall remain subject to modification in accordance with the
provisions of this chapter and section 407, as such provisions
were as last in effect before the date of the enactment of this
section.
Sec. 3633. Provisions applicable to rates for competitive products
The Postal Regulatory Commission shall, within 180 days
after the date of the enactment of this section, promulgate
(and may from time to time thereafter revise) regulations to--
(1) prohibit the subsidization of competitive
products by market-dominant products;
(2) ensure that each competitive product covers its
costs attributable; and
(3) ensure that all competitive products collectively
cover their share of institutional costs of the Postal
Service.
Sec. 3634. Assumed Federal income tax on competitive products income
(a) Definitions.--For purposes of this section--
(1) the term ``assumed Federal income tax on
competitive products income'' means the net income tax
that would be imposed by chapter 1 of the Internal
Revenue code of 1986 on the Postal Service's assumed
taxable income from competitive products for the year;
and
(2) the term ``assumed taxable income from
competitive products'', with respect to a year, refers
to the amount representing what would be the taxable
income of a corporation under the Internal Revenue Code
of 1986 for the year, if--
(A) the only activities of such corporation were the
activities of the Postal Service allocable under
section 2011(h) to competitive products; and
(B) the only assets held by such corporation were the
assets of the Postal Service allocable under section
2011(h) to such activities.
(b) Computation and Transfer Requirements.--The Postal
Service shall, for each year beginning with the year in which
occurs the deadline for the Postal Service's first report to
the Postal Regulatory Commission under section 3652(a)--
(1) compute its assumed Federal income tax on
competitive products income for such year; and
(2) transfer from the Competitive Products Fund to
the Postal Service Fund the amount of that assumed tax.
(c) Deadline for Transfers.--Any transfer required to be
made under this section for a year shall be due on or before
the January 15th next occurring after the close of such year.
CHAPTER 36--POSTAL RATES, CLASSES, AND SERVICES
[Subchapter III--Temporary Rates and Classes]
Subchapter III--Provisions Relating to Experimental and New Products
[Sec. 3641. Temporary changes in rates and classes
[(a) In any case in which the Postal Rate Commission fails
to transmit a recommended decision on a change in rates of
postage or in fees for postal services to the Governors in
accordance with section 3624(c) of this title, the Postal
Service may establish temporary changes in rates of postage and
in fees for postal services in accordance with the proposed
changes under consideration by the Commission. Such temporary
changes may take effect upon such date as the Postal Service
may determine, except that such temporary changes may take
effect only after 10 days' notice in the Federal Register.
[(b) Any temporary rate or fee established by the Postal
Service under subsection (a) of this section shall be in
accordance with the policies of this title and shall not exceed
such amount as may be necessary for sufficient revenues to
assure that the total estimated income, including
appropriations, of the Postal Service shall, to the extent
practicable, be equal to the total estimated costs of the
Postal Service.
[(c) Notwithstanding the provisions of subsection (b) of
this section, the Postal Service may not establish any
temporary rate for a class of mail or any temporary fee for a
postal service which is more than the permanent rate or fee
requested for such class or postal service by the Postal
Service under section 3622 of this title.
[(d) Any temporary change in rates of postage or in fees
for postal services made by the Postal Service under this
section shall remain in effect no longer than 150 days after
the date on which the Commission transmits its recommended
decision to the Governors under section 3624(d) of this title,
unless such temporary change is terminated by the Governors
before the expiration of such period.
[(e) If the Postal Rate Commission does not transmit to the
Governors within 90 days after the Postal Service has
submitted, or within 30 days after the Postal Service has
resubmitted, to the Commission a request for a recommended
decision on a change in the mail classification schedule (after
such schedule is established under section 3623 of this title),
the Postal Service, upon 10 days' notice in the Federal
Register, may place into effect temporary changes in the mail
classification schedule in accordance with proposed changes
under consideration by the Commission. Any temporary change
shall be effective for a period ending not later than 30 days
after the Commission has transmitted its recommended decision
to the Governors.
[(f) If, under section 3628 of this title, a court orders a
matter returned to the Commission for further consideration,
the Postal Service, with the consent of the Commission, may
place into effect temporary changes in rates of postage, and
fees for postal services, or in the mail classification
schedule.]
Sec. 3641. Market tests of experimental products
(a) Authority.--
(1) In general.--The Postal Service may conduct
market tests of experimental products in accordance
with this section.
(2) Provisions waived.--A product shall not, while it
is being tested under this section, be subject to the
requirements of sections 3622, 3633, or 3642, or
regulations promulgated under those sections.
(b) Conditions.--A product may not be tested under this
section unless it satisfies each of the following;
(1) Significantly different product.--The product is,
from the viewpoint of the mail users, significantly
different from all products offered by the Postal
Service within the 2 year period preceding the start of
the test.
(2) Market disruption.--The introduction or continued
offering of the product will not create an unfair or
otherwise inappropriate competitive advantage for the
Postal Service or any mailer, particularly in regard to
small business concerns (as defined under subsection
(h)).
(3) Correct categorization.--The Postal Service
identifies the product, for the purpose of a test under
this section, as either market-dominant or competitive,
consistent with the criteria under section 3642(b)(1).
Costs and revenue attributable to a product identified
as competitive shall be included in any determination
under section 3633(3) (relating to provisions
applicable to competitive products collectively). Any
test that solely affects products currently classified
as competitive, or which provides services ancillary to
only competitive products, shall be presumed to be in
the competitive product category without regard to
whether a similar ancillary product exists for market-
dominant products.
(c) Notice.--
(1) In general.--At least 30 days before initiating a
market test under this section, the Postal Service
shall file with the Postal Regulatory Commission and
publish in the Federal Register a notice--
(A) setting out the basis for the Postal
Service's determination that the market test is
covered by this section; and
(B) describing the nature and scope of the
market test.
(2) Safeguards.--For a competitive experimental
product, the provisions of section 504(g) shall be
available with respect to any information required to
be filed under paragraph (1) to the same extent and in
the same manner as in the case of any matter described
in section 504(g)(1). Nothing in paragraph (1) shall be
considered to permit or require the publication of any
information as to which confidential treatment is
accorded under the preceding sentence (subject to the
same exception as set forth in section 504(g)(3)).
(d) Duration.--
(1) In general.--A market test of a product under
this section may be conducted over a period of not to
exceed 24 months.
(2) Extension authority.--If necessary in order to
determine the feasibility or desirability of a product
being tested under this section, the Postal Regulatory
Commission may, upon written application of the Postal
Service (filed not later than 60 days before the date
as of which the testing of such product would otherwise
be scheduled to terminate under paragraph (1)), extend
the testing of such product for not to exceed an
additional 12 months.
(e) Dollar-Amount Limitation.--
(1) In general.--A product may only be tested under
this section if the total revenues that are
anticipated, or in fact received, by the Postal Service
from such product do not exceed $10,000,000 in any
year, subject to paragraph (2) and subsection (g).
(2) Exemption authority.--The Postal Regulatory
Commission may, upon written application of the Postal
Service, exempt the market test from the limit in
paragraph (1) if the total revenues that are
anticipated, or in fact received, by the Postal Service
from such product do not exceed $50,000,000 in any
year, subject to subsection (g). In reviewing an
application under this paragraph, the Postal Regulatory
Commission shall approve such application if it
determines that--
(A) the product is likely to benefit the
public and meet an expected demand;
(B) the product is likely to contribute to
the financial stability of the Postal Service;
and
(C) the product is not likely to result in
unfair or otherwise inappropriate competition.
(f) Cancellation.--If the Postal Regulatory Commission at
any time determines that a market test under this section fails
to meet 1 or more of the requirements of this section, it may
order the cancellation of the test involved or take such other
action as it considers appropriate. A determination under this
subsection shall be made in accordance with such procedures as
the Commission shall by regulation prescribe.
(g) Adjustment for Inflation.--For purposes of each year
following the year in which occurs the deadline for the Postal
Service's first report to the Postal Regulatory Commission
under section 3652(a), each dollar amount contained in this
section shall be adjusted by the change in the Consumer Price
Index for such year (as determined under regulations of the
Commission.)
(h) Definition of a Small Business Concern.--The criteria
used in defining small business concerns or otherwise
categorizing business concerns as small business concerns
shall, for purposes of this section, be established by the
Postal Regulatory Commission in conformance with the
requirements of section 3 of the Small Business Act.
(i) Effective Date.--Market tests under this subchapter may
be conducted in any year beginning with the first year in which
occurs the deadline for the Postal Service's first report to
the Postal Regulatory Commission under section 3652(a).
Sec. 3642. New products and transfers of products between the market-
dominant and competitive categories of mail
(a) In General.--Upon request of the Postal Service or
users of the mails, or upon its own initiative, the Postal
Regulatory Commission may change the list of market-dominant
products under section 3621 and the list of competitive
products under section 3631 by adding new products to the
lists, removing products from the lists, or transferring
products between the lists.
(b) Criteria.--All determinations by the Postal Regulatory
Commission under subsection (a) shall be made in accordance
with the following criteria:
(1) The market-dominant category of products shall
consist of each product in the sale of which the Postal
Service exercises sufficient market power that it can
effectively set the price of such product substantially
above costs, raise prices significantly, decrease
quality, or decrease output, without risk of losing
substantial business to other firms offering similar
products. The competitive category of products shall
consist of all other products.
(2) Exclusion of products covered by postal
monopoly.--A product covered by the postal monopoly
shall not be subject to transfer under this section
from the market-dominant category of mail. For purposes
of the preceding sentence, the term ``product covered
by the postal monopoly'' means any product the
conveyance or transmission of which is reserved to the
United States under section 1696 of title 18, subject
to the same exception as set forth in the last sentence
of section 409(e)(1).
(3) Additional considerations.--In making any
decision under this section, due regard shall be given
to--
(A) the availability and nature of
enterprises in the private sector engaged in
the delivery of the product involved;
(B) the views of those who use the product
involved on the appropriateness of the proposed
action; and
(C) the likely impact of the proposed action
on small business concerns (within the meaning
of section 3641(h)).
(c) Transfers of Subclasses and Other Subordinate Units
Allowable.-- Nothing in this title shall be considered to
prevent transfers under this section from being made by reason
of the fact that they would involve only some (but not all) of
the subclasses or other subordinate units of the class of mail
or type of postal service involved (without regard to
satisfaction of minimum quantity requirements standing alone.)
(d) Notification and Publication Requirements.--
(1) Notification requirement.--The Postal Service
shall, whenever it requests to add a product or
transfer a product to a different category, file with
the Postal Regulatory Commission and publish in the
Federal Register a notice setting out the basis for its
determination that the product satisfies the criteria
under subsection (b) and, in the case of a request to
add a product or transfer a product to the competitive
category of mail, that the product meets the
regulations promulgated by the Postal Regulatory
Commission under section 3633. The provisions of
section 504(g) shall be available with respect to any
information required to be filed.
(2) Publication requirement.--The Postal Regulatory
Commission shall, whenever it changes the list of
products in the market-dominant or competitive category
of mail, prescribe new lists of products. The revised
lists shall indicate how and when any previous lists
(including the lists under sections 3621 and 3631) are
superseded, and shall be published in the Federal
Register.
(e) Prohibition.--Except as provided in section 3641, no
product that involves the physical delivery of letters, printed
matter, or packages may be offered by the Postal Service unless
it has been assigned to the market-dominant or competitive
category of mail (as appropriate) either--
(1) under this subchapter; or
(2) by or under any other provision of law.
CHAPTER 36--POSTAL RATES, CLASSES, AND SERVICES
[Subchapter IV--Postal Services and Complaints]
Subchapter V--Postal Services, Complaints, and Judicial Review
CHAPTER 36--POSTAL RATES, CLASSES, AND SERVICES
[Subchapter V--General]
Subchapter VI--General
Subchapter IV--Reporting Requirements and Related Provisions
Sec. 3651. Annual reports by the Commission
(a) In General.--The Postal Regulatory Commission shall
submit an annual report to the President and the Congress
concerning the operations of the Commission under this title,
including the extent to which regulations are achieving the
objectives under sections 3622, 3633, and 3691.
(b) Information From Postal Service.--The Postal Service
shall provide the Postal Regulatory Commission with such
information as may, in the judgment of the Commission, be
necessary in order for the Commission to prepare its reports
under this section.
Sec. 3652. Annual reports to the Commission
(a) Costs, Revenues, Rates, and Service.--Except as
provided in subsection (c), the Postal Service shall, no later
than 90 days after the end of each year, prepare and submit to
the Postal Regulatory Commission a report (together with such
nonpublic annex to the report as the Commission may require
under subsection (e))--
(1) which shall analyze costs, revenues, rates, and
quality of service in sufficient detail to demonstrate
that all products during such year complied with all
applicable requirements of this title; and
(2) which shall, for each market-dominant product
provided in such year, provide--
(A) product information, including mail
volumes; and
(B) measures of the service afforded by the
Postal Service in connection with such product,
including--
(i) the level of service (described
in terms of speed of delivery and
reliability) provided; and
(ii) the degree of customer
satisfaction with the service provided.
Before submitting a report under this subsection (including any
annex to the report and the information required under
subsection (b)), the Postal Service shall have the information
contained in such report (and annex) audited by the Inspector
General. The results of any such audit shall be submitted along
with the report to which it pertains.
(b) Information Relating to Workshare Discounts.--The
Postal Service shall include, in each report under subsection
(a), the following information with respect to each market-
dominant product for which a workshare discount was in effect
during the period covered by such report:
(1) The per-item cost avoided by the Postal Service
by virtue of such discount.
(2) The percentage of such per-item cost avoided that
the per-item workshare discount represents.
(3) The per-item contribution made to institutional
costs.
(c) Service Agreements and Market Tests.--In carrying out
subsections (a) and (b) with respect to service agreements
(including service agreements entered into under section 3623)
and experimental products offered through market tests under
section 3641 in a year, the Postal Service--
(1) may report summary data on the costs, revenues,
and quality of service by service agreement and market
test; and
(2) shall report such data as the Postal Regulatory
Commission requires.
(d) Supporting Matter.--The Postal Regulatory Commission
shall have access, in accordance with such regulations as the
Commission shall prescribe, to the working papers and any other
supporting matter of the Postal Service and the Inspector
General in connection with any information submitted under this
section.
(e) Content and Form of Reports.--
(1) In general.--The Postal Regulatory Commission
shall, by regulation, prescribe the content and form of
the public reports (and any nonpublic annex and
supporting matter relating to the report) to be
provided by the Postal Service under this section. In
carrying out this subsection, the Commission shall give
due consideration to--
(A) providing the public with timely,
adequate information to assess the lawfulness
of rates charged;
(B) avoiding unnecessary or unwarranted
administrative effort and expense on the part
of the Postal Service; and
(C) protecting the confidentiality of
commercially sensitive information.
(2) Revised requirements.--The Commission may, on its
own motion or on request of an interested party,
initiate proceedings (to be conducted in accordance
with regulations that the Commission shall prescribe)
to improve the quality, accuracy, or completeness of
Postal Service data required by the Commission under
this subsection whenever it shall appear that--
(A) the attribution of costs or revenues to
products has become significantly inaccurate or
can be significantly improved;
(B) the quality of service data has become
significantly inaccurate or can be
significantly improved; or
(C) such revisions are, in the judgment of
the Commission, otherwise necessitated by the
public interest.
(f) Confidential Information.--
(1) In general.--If the Postal Service determines
that any document or portion of a document, or other
matter, which it provides to the Postal Regulatory
Commission in a nonpublic annex under this section or
under subsection (d) contains information which is
described in section 410(c) of this title, or exempt
from public disclosure under section 552(b) of title 5,
the Postal Service shall, at the time of providing such
matter to the Commission, notify the Commission of its
determination, in writing, and describe with
particularity the documents (or portions of documents)
or other matter for which confidentiality is sought and
the reasons therefor.
(2) Treatment.--Any information or other matter
described in paragraph (1) to which the Commission
gains access under this section shall be subject to
paragraphs (2) and (3) of section 504(g) in the same
way as if the Commission had received notification with
respect to such matter under section 504(g)(1).
(g) Other Reports.--The Postal Service shall submit to the
Postal Regulatory Commission, together with any other
submission that the Postal Service is required to make under
this section in a year, copies of its then most recent--
(1) comprehensive statement under section 2401(e);
(2) strategic plan under section 2802;
(3) performance plan under section 2803; and
(4) program performance reports under section 2804.
Sec. 3653. Annual determination of compliance
(a) Opportunity for Public Comment.--After receiving the
reports required under section 3652 for any year, the Postal
Regulatory Commission shall promptly provide an opportunity for
comment on such reports by users of the mails, affected
parties, and an officer of the Commission who shall be required
to represent the interests of the general public.
(b) Determination of Compliance or Noncompliance.--Not
later than 90 days after receiving the submissions required
under section 3652 with respect to a year, the Postal
Regulatory Commission shall make a written determination as
to--
(1) whether any rates or fees in effect during such
year (for products individually or collectively) were
not in compliance with applicable provisions of this
chapter (or regulations promulgated thereunder); or
(2) whether any service standards in effect during
such year were not met.
If, with respect to a year, no instance of noncompliance is
found under this subsection to have occurred in such year, the
written determination shall be to that effect.
(c) In Any Noncompliance is Found.--If, for a year, a
timely written determination of noncompliance is made under
subsection (b), the Postal Regulatory Commission shall take any
appropriate remedial action authorized by section 3662(c).
(d) Rebuttable Presumption.--A timely written determination
described in the last sentence of subsection (b) shall, for
purposes of any proceeding under section 3662, create a
rebuttable presumption of compliance by the Postal Service
(with regard to the matters described in paragraphs (1) through
(3) of subsection (b)) during the year to which such
determination relates.
* * * * * * *
[Sec. 3662. Rate and service complaints
[Interested parties who believe the Postal Service is
charging rates which do not conform to the policies set out in
this title or who believe that they are not receiving postal
service in accordance with the policies of this title may lodge
a complaint with the Postal Rate Commission in such form and in
such manner as it may prescribe. The Commission may in its
discretion hold hearings on such complaint. If the Commission,
in a matter covered by subchapter II of this chapter [39 USCS
Sec. Sec. 3621 et seq.], determines the complaint to be
justified, it shall, after proceedings in conformity with
section 3624 of this title, issue a recommended decision which
shall be acted upon in accordance with the provisions of
section 3625 of this title and subject to review in accordance
with the provisions of section 3628 of this title. If a matter
not covered by subchapter II of this chapter [39 USCS
Sec. Sec. 3621 et seq.] is involved, and the Commission after
hearing finds the complaint to be justified, it shall render a
public report thereon to the Postal Service which shall take
such action as it deems appropriate.]
Sec. 3662. Rate and service complaints
(a) In General.--Any person (including an officer of the
Postal Regulatory Commission representing the interests of the
general public) who believes the Postal Service is not
operating in conformance with the requirements of chapter 1, 4,
or 6, or this chapter (or regulations promulgated under any of
those chapters) may lodge a complaint with the Postal
Regulatory Commission in such form and manner as the Commission
may prescribe.
(b) Prompt Response Required.--
(1) In General.--The Postal Regulatory Commission
shall, within 90 days after receiving a complaint under
subsection (a), either--
(A) begin proceedings on such complaint; or
(B) issue an order dismissing the complaint
(together with a statement of the reasons
therefor).
(2) Treatment of complaints not timely acted on.--For
purposes of section 3663, any complaint under
subsection (a) on which the Commission fails to act in
the time and manner required by paragraph (1) shall be
treated in the same way as if it had been dismissed
under an order issued by the Commission on the last day
allowable for the issuance of such order under
paragraph (1).
(c) Action Required if Complaint Found To Be Justified.--If
the Postal Regulatory Commission finds the complaint to be
justified, it shall order that the Postal Service take such
action as the Commission considers appropriate in order to
achieve compliance with the applicable requirements and to
remedy the effects of any noncompliance including ordering
unlawful rates to be adjusted to lawful levels, ordering the
cancellation of market tests, ordering the Postal Service to
discontinue providing loss-making products, and requiring the
Postal Service to make up for revenue shortfalls in competitive
products.
(d) Authority To Order Fines in Cases of Deliberate
Noncompliance.--In addition, in cases of deliberate
noncompliance by the Postal Service with the requirements of
this title, the Postal Regulatory Commission may order, based
on the nature, circumstances, extent, and seriousness of the
noncompliance, a fine (in the amount specified by the
Commission in its order) for each incidence of noncompliance.
Fines resulting from the provision of competitive products
shall be paid out of the Competitive Products Fund established
in section 2011. All receipts from fines imposed under this
subsection shall be deposited in the general fund of the
Treasury of the United States.
[Sec. 3663. Annual report on international services
[(a) Not later than July 1 of each year, the Postal Rate
Commission shall transmit to each House of Congress a
comprehensive report of the costs, revenues, and volumes
accrued by the Postal Service in connection with mail matter
conveyed between the United States and other countries for the
previous fiscal year.
[(b) Not later than March 15 of each year, the Postal
Service shall provide to the Postal Rate Commission such data
as the Commission may require to prepare the report required
under subsection (a) of this section. Data shall be provided in
sufficient detail to enable the Commission to analyze the
costs, revenues, and volumes for each international mail
product or service, under the methods determined appropriate by
the Commission for the analysis of rates for domestic mail.]
Sec. 3663. Appellate review
A person, including the Postal Service, adversely affected
or aggrieved by a final order or decision of the Postal
Regulatory Commission may, within 30 days after such order or
decision becomes final, institute proceedings for review
thereof by filing a petition in the United States Court of
Appeals for the District of Columbia. The court shall review
the order or decision in accordance with section 706 of title
5, and chapter 158 and section 2112 of title 28, on the basis
of the record before the Commission.
Sec. 3664. Enforcement of orders
The several district courts have jurisdiction specifically
to enforce, and to enjoin and restrain the Postal Service from
violating, any order issued by the Postal Regulatory
Commission.
* * * * * * *
CHAPTER 36--POSTAL RATES, CLASSES, AND SERVICES
Subchapter VII--Modern Service Standards
Sec. 3691. Establishment of modern service standards
(a) Authority Generally.--The Postal Regulatory Commission
shall, within 12 months after the date of the enactment of this
section, by regulation establish (and may from time to time
thereafter by regulation revise) a set of service standards for
market-dominant products consistent with sections 101 (a) and
(b) and 403.
(b) Objectives.--Such standards shall be designed to
achieve the following objectives:
(1) To enhance and preserve the value of postal
services to both senders and recipients.
(2) To provide a system of objective external
performance measurements for each market-dominant
product as a basis for measurement of Postal Service
performance.
(3) To guarantee Postal Service customers delivery
reliability, speed and frequency consistent with
reasonable rates and best business practices.
(c) Factors.--In establishing or revising such standards,
the Postal Regulatory Commission shall take into account--
(1) the actual level of service that Postal Service
customers receive under any service guidelines
previously established by the Postal Service or service
standards established under this section;
(2) the degree of customer satisfaction with Postal
Service performance in the acceptance, processing and
delivery of mail;
(3) mail volume and revenues projected for future
years;
(4) the projected growth in the number of addresses
the Postal Service will be required to serve in future
years;
(5) the current and projected future cost of serving
Postal Service customers;
(6) the effect of changes in technology, demographics
and population distribution on the efficient and
reliable operation of the postal delivery system; and
(7) the policies of this title as well as such other
factors as the Commission determines appropriate.
* * * * * * *
PART V--TRANSPORTATION OF MAIL
CHAPTER 54--TRANSPORTATION OF MAIL BY AIR
Sec. 5402. Contracts for transportation of mail by air
* * * * * * *
[(d) If the Postal Service determines that service by
certificated air carriers or combination of air carriers
between any pair or pairs of points in foreign air
transportation is not adequate for its purposes, it may
contract for a period of not more than 4 years, without
advertising for bids, in such manner and under such terms and
conditions as it may deem appropriate, with any air taxi
operator or combination thereof for such air transportation
service. Contracts made under this subsection may be renewed at
the existing rate by mutual agreement between the holder and
the Postal Service. The Postal Service, with the consent of the
air taxi operator, may adjust the compensation under such
contracts for increased or decreased costs occasioned by
changed conditions occurring during the contract term. The
Postal Service shall cancel such a contract when the Secretary
of transportation authorizes an additional certificated carrier
or carriers to provide service between any pair or pairs of
points covered by the contract, and such carrier or carriers
inaugurate schedules adequate for its purposes.]
(d)(1) The Postal Service may contract with any air carrier
for the transportation of mail by aircraft in interstate air
transportation, including the rates therefor, either through
negotiations or competitive bidding.
(2) Notwithstanding subsections (a) through (c), the Postal
Service may contract with any air carrier or foreign air
carrier for the transportation of mail by aircraft in foreign
air transportation, including the rates therefor, either
through negotiations or competitive bidding, except that--
(A) any such contract may be awarded only to (i) an
air carrier holding a certificate required by section
41101 of title 49 or an exemption therefrom issued by
the Secretary of Transportation, (ii) a foreign air
carrier holding a permit required by section 41301 of
title 49 or an exemption therefrom issued by the
Secretary of Transportation, or (iii) a combination of
such air carriers or foreign air carriers (or both);
(B) mail transported under any such contract shall
not be subject to any duty-to-carry requirement imposed
by any provision of subtitle VII of title 49 or by any
certificate, permit, or corresponding exemption
authority issued by the Secretary of Transportation
under that subtitle;
(C) every contract that the Postal Service awards to
a foreign air carrier under this paragraph shall be
subject to the continuing requirement that air carriers
shall be afforded the same opportunity to carry the
mail of the country to and from which the mail is
transported and the flag country of the foreign air
carrier, if different, as the Postal Service has
afforded the foreign air carrier; and
(D) the Postmaster General shall consult with the
Secretary of Defense concerning actions that affect the
carriage of military mail transported in foreign air
transportation.
(3) Paragraph (2) shall not be interpreted as suspending or
otherwise diminishing the authority of the Secretary of
Transportation under section 41310 of title 49.
[(e)
[(1) The Postal Service may determine rates and
contract with any air carrier for the transportation of
mail by aircraft in interstate air transportation
either through negotiations or competitive bidding.
[(2)(A) In the exercise of its authority under
paragraph (1), the Postal Service may require any air
carrier to accept as mail shipments of day-old poultry,
honeybees, and such other live animals as postal
regulations allow to be transmitted as mail matter. The
authority of the Postal Service under this subparagraph
shall not apply in the case of any air carrier who
commonly and regularly refuses to accept any live
animals as cargo.
[(B) Notwithstanding any other provision of law, the
Postal Service is authorized to assess, as postage to
be paid by the mailers of any shipments covered by
subparagraph (A), a reasonable surcharge that the
Postal Service determines in its discretion to be
adequate to compensate air carriers for any necessary
additional expense incurred in handling such
shipments.]
(e) For purposes of this section, the terms ``air
carrier'', ``air transportation'', ``foreign air carrier'',
``foreign air transportation'', ``interstate air
transportation'', and ``mail'' shall have the meanings given
such terms in section 40102 of title 49.
* * * * * * *
TITLE 5--GOVERNMENT ORGANIZATION AND EMPLOYEES
PART I--THE AGENCIES GENERALLY
CHAPTER 1--ORGANIZATION
Sec. 104. Independent establishment
For the purpose of this title [5 USCS Sec. Sec. 101 et
seq.], ``independent establishment'' means--
(1) an establishment in the executive branch (other
than the United States Postal Service or the [Postal
Rate Commission] Postal Regulatory Commission) which is
not an Executive department, military department,
Government corporation, or part thereof, or part of an
independent establishment; and
(2) the General Accounting Office.
* * * * * * *
CHAPTER 3--POWERS
Sec. 306. Strategic plans
* * * * * * *
(f) For purposes of this section the term ``agency'' means
an Executive agency defined under section 105, but does not
include the Central Intelligence Agency, the General Accounting
Office, the Panama Canal Commission, the United States Postal
Service, and the [Postal Rate Commission.] Postal Regulatory
Commission.
* * * * * * *
PART III--EMPLOYEES
Subpart A--General Provisions
Chapter 21--DEFINITIONS
Sec. 2104. Officer
* * * * * * *
(b) Except as otherwise provided by law, an officer of the
United States Postal Service or of the [Postal Rate Commission]
Postal Regulatory Commission is deemed not an officer for
purposes of this title.
* * * * * * *
Subpart B--Employment and Retention
CHAPTER 33--EXAMINATION, SELECTION, AND PLACEMENT
Subchapter VI--Assignments to and from States
Sec. 3371. Definitions
For the purpose of this subchapter [5 USCS Sec. Sec. 3371
et seq.]--
* * * * * * *
(3) ``Federal agency'' means an Executive agency,
military department, a court of the United States, the
Administrative Office of the United States Courts, the
Library of Congress, the Botanic Garden, the Government
Printing Office, the Congressional Budget Office, the
United States Postal Service, the [Postal Rate
Commission] Postal Regulatory Commisson, the Office of
the Architect of the Capitol, the Office of Technology
Assessment, and such other similar agencies of the
legislative and judicial branches as determined
appropriate by the Office of Personnel Management; and
* * * * * * *
Subpart D--Pay and Allowances
CHAPTER 53--PAY RATES AND SYSTEMS
Subchapter II--Executive Schedule Pay Rates
Sec. 5314. Positions at level III
Level III of the Executive Schedule applies to the
following positions, for which the annual rate of basic pay
shall be the rate determined with respect to such level under
chapter 11 of title 2 [2 USCS Sec. Sec. 351 et seq.], as
adjusted by section 5318 of this title:
* * * * * * *
Chairman, [Postal Rate Commission] Postal Regulatory
Commission.
* * * * * * *
Sec. 5315. Positions at level IV
Level IV of the Executive Schedule applies to the following
positions, for which the annual rate of basic pay shall be the
rate determined with respect to such level under chapter 11 of
title 2 [1. 2 USCS Sec. Sec. 351 et seq.], as adjusted by
section 5318 of this title:
* * * * * * *
Members, [Postal Rate Commissions] Postal Regulatory
Commission (4).
* * * * * * *
CHAPTER 55--PAY ADMINISTRATION
Subchapter II--Withholding Pay
Sec. 5514. Installment deduction for indebtedness to the United States
* * * * * * *
(5) For purposes of this subsection--
(A) ``disposable pay'' means that part of pay
of any individual remaining after the deduction
from those earnings of any amounts required by
law to be withheld; and
(B) ``agency'' includes executive departments
and agencies, the United States Postal Service,
the [Postal Rate Commission] Postal Regulatory
Commission, the United States Senate, the
United States House of Representatives, and any
court, court administrative office, or
instrumentality in the judicial or legislative
branches of the Government, and government
corporations.
* * * * * * *
Subpart F--Labor-Management and Employee Relations
CHAPTER 73--SUITABILITY, SECURITY, AND CONDUCT
Subchapter IV--Foreign Gifts and Decorations
Sec. 7342. Receipt and disposition of foreign gifts and decorations
(a) For the purpose of this section--
(1) ``employee'' means--
(A) an employee as defined by section 2105 of
this title and an officer or employee of the
United States Postal Service or of the [Postal
Rate Commission] Postal Regulatory Commission;
* * * * * * *
CHAPTER 75--ADVERSE ACTIONS
Subchapter II--Removal, Suspension for More Than 14 Days, Reduction in
Grade or Pay, or Furlough for 30 Days or Less
Sec. 7511. Definitions; application
(a) For the purpose of this subchapter [5 USCS
Sec. Sec. 7511 et seq.]--
(1) ``employee'' means--
(A) an individual in the competitive
service--
(i) who is not serving a probationary
or trial period under an initial
appointment; or
(ii) who has completed 1 year of
current continuous service under other
than a temporary appointment limited to
1 year or less;
(B) a preference eligible in the excepted
service who has completed 1 year of current
continuous service in the same or similar
positions--
(i) in an Executive agency; or
(ii) in the United States Postal
Service or [Postal Rate Commission]
Postal Regulatory Commission; and
* * * * * * *
CHAPTER 81--COMPENSATION FOR WORK INJURIES
Subchapter I--Generally
Sec. 8105. Total disability
(a) If the disability is total, the United States shall pay
the employee during the disability monthly monetary
compensation equal to 66 \2/3\ percent of his monthly pay,
which is known as his basic compensation for total disability.
This section applies to a Postal Service employee, except as
provided under subsection (c).
(b) The loss of use of both hands, both arms, both feet, or
both legs, or the loss of sight of both eyes, is prima facie
permanent total disability.
(c)(1) In this subsection, the term ``retirement age'' has
the meaning given under section 216(l)(1) of the Social
Security Act (42 U.S.C. 416(l)(1)).
(2) Notwithstanding any other provision of law, for any
injury occurring on or after the date of enactment of the
Postal Accountability and Enhancement Act, and for any new
claim for a period of disability commencing on or after that
date, the compensation entitlement for total disability is
converted to 50 percent of the monthly pay of the employee on
the later of--
(A) the date on which the injured employee reaches
retirement age; or
* * * * * * *
(B) 1 year after the employee begins receiving
compensation.
* * * * * * *
Sec. 8106. Partial disability
(a) If the disability is partial, the United States shall
pay the employee during the disability monthly monetary
compensation equal to 66\2/3\ percent of the difference between
his monthly pay and his monthly wage-earning capacity after the
beginning of the partial disability, which is known as his
basic compensation for partial disability. This section applies
to a Postal Service employee, except as provided under
subsection (d).
(b) The Secretary of Labor may require a partially disabled
employee to report his earnings from employment or self-
employment, by affidavit or otherwise, in the manner and at the
times the Secretary specifies. The employee shall include in
the affidavit or report the value of housing, board, lodging,
and other advantages which are part of his earnings in
employment or self-employment and which can be estimated in
money. An employee who--
(1) fails to make an affidavit or report when
required; or
(2) knowingly omits or understates any part of of his
earnings;
forfeits his right to compensation with respect to any period
for which the affidavit or report was required. Compensation
forfeited under this subsection, if already paid, shall be
recovered by a deduction from the compensation payable to the
employee or otherwise recovered under section 8129 of this
title, unless recovery is waived under that section.
(c) A partially disabled employee who--
(1) refuses to seek suitable work; or
(2) refuses or neglects to work after suitable work
is offered to, procured by, or secured for him; is not
entitled to compensation.
(d)(1) In this subsection, the term ``retirement age'' has
the meaning given under section 216(l)(1) of the Social
Security Act (42 U.S.C. 416(l)(1)).
(2) Notwithstanding any other provision of law, for any
injury occurring on or after the date of enactment of this
subsection, and for any new claim for a period of disability
commencing on or after that date, the compensation entitlement
for partial disability is converted to 50 percent of the
difference between the monthly pay of an employee and the
monthly wage earning capacity of the employee after the
beginning of partial disability on the later of--
(A) the date on which the injured employee reaches
retirement age; or
(B) 1 year after the employee begins receiving
compensation.
* * * * * * *
Subpart G--Insurance and Annuities
CHAPTER 81--COMPENSATION FOR WORK INJURIES
Subchapter I--Generally
Sec. 8117. Time of accrual of right
[An employee] (a) An employee other than a Postal Service
employee is not entitled to compensation for the first 3 days
of temporary disability, except--
(1) when the disability exceeds 14 days;
(2) when the disability is followed by permanent
disability; or
(3) as provided by sections 8103 and 8104 of this
title.
(b) A Postal Service employee is not entitled to
compensation or continuation of pay for the first 3 days of
temporary disability, except as provided under paragraph (3) of
subsection (a). A Postal Service employee may use annual leave,
sick leave, or leave without pay during that 3-day period,
except that if the disability exceeds 14 days or is followed by
permanent disability, the employee may have their sick leave or
annual leave reinstated or receive pay for the time spent on
leave without pay under this section.
* * * * * * *
Sec. 8118. Continuation of pay; election to use annual or sick leave
(a) The United States shall authorize the continuation of
pay of an employee, as defined in section 8101(1) of this title
(other than those referred to in clause (B) or (E)), who has
filed a claim for a period of wage loss due to a traumatic
injury with his immediate superior on a form approved by the
Secretary of Labor within the time specified in section
8122(a)(2) of this title.
(b) Continuation of pay under this subchapter [1. 5 USCS
Sec. Sec. 8101 et seq.] shall be furnished--
[(1) without a break in time unless controverted
under regulations of the Secretary;]
(1) without a break in time, except as provided under
section 8117(b), unless controverted under regulations
of the Secretary.
2. (2) for a period not to exceed 45 days; and
(3) under accounting procedures and such other
regulations as the Secretary may require.
* * * * * * *
Subpart G--Insurance and Annuities
CHAPTER 83--RETIREMENT
Subchapter III--Civil Service Retirement
Sec. 8334. Deductions, contributions, and deposits
(a)(1)(A) The employing agency shall deduct and withhold
from the basic pay of an employee, Member, Congressional
employee, law enforcement officer, firefighter, bankruptcy
judge, judge of the United States Court of Appeals for the
Armed Forces, United States magistrate, Court of Federal Claims
judge, member of the Capitol Police, member of the Supreme
Court Police, or nuclear materials courier, as the case may be,
the percentage of basic pay applicable under subsection (c).
(B)(i) Except as provided in clause (ii), an equal amount
shall be contributed from the appropriation or fund used to pay
the employee or, in the case of an elected official, from an
appropriation or fund available for payment of other salaries
of the same office or establishment. When an employee in the
legislative branch is paid by the Chief Administrative Officer
of the House of Representatives, the Chief Administrative
Officer may pay from the applicable accounts of the House of
Representatives the contribution that otherwise would be
contributed from the appropriation or fund used to pay the
employee.
[(ii) In the case of an employee of the United States
Postal Service, the amount to be contributed under this
subparagraph shall (instead of the amount described in clause
(i)) be equal to the product derived by multiplying the
employee's basic pay by the percentage equal to--
(I) the normal-cost percentage for the applicable
employee category listed in subparagraph (A), minus
(II) the percentage deduction rate that applies with
respect to such employee under subparagraph (A).]
(ii) In the case of an employee of the United States Postal
Service, no amount shall be contributed under this
subparagraph.
* * * * * * *
Sec. 8348. Civil Service Retirement and Disability Fund
* * * * * * *
[(h)(1)(A) For purposes of this subsection, ``Postal
supplemental liability'' means the estimated excess, as
determined by the Office, of--
[(i) the actuarial present value of all future
benefits payable from the Fund under this subchapter [5
USCS Sec. Sec. 8331 et seq.] attributable to the
service of current or former employees of the United
States Postal Service, over
[(ii) the sum of--
[(I) the actuarial present value of
deductions to be withheld from the future basic
pay of employees of the United States Postal
Service currently subject to this subchapter [5
USCS Sec. Sec. 8331 et seq.] pursuant to
section 8334;
[(II) the actuarial present value of the
future contributions to be made pursuant to
section 8334 with respect to employees of the
United States Postal Service currently subject
to this subchapter [5 USCS Sec. Sec. 8331 et
seq.];
[(III) that portion of the Fund balance, as
of the date the Postal supplemental liability
is determined, attributable to payments to the
Fund by the United States Postal Service and
its employees, including earnings on those
payments; and
[(IV) any other appropriate amount, as
determined by the Office in accordance with
generally accepted actuarial practices and
principles.
[(B)(i) In computing the actuarial present value of future
benefits, the Office shall include the full value of benefits
attributable to military and volunteer service for United
States Postal Service employees first employed after June 30,
1971, and a prorated share of the value of benefits
attributable to military and volunteer service for United
States Postal Service employees first employed before July 1,
1971.
[(ii) Military service so included shall not be included in
the computation of any amount under subsection (g)(2).
[(2)(A) Not later than June 30, 2004, the Office shall
determine the Postal supplemental liability as of September 30,
2003. The Office shall establish an amortization schedule,
including a series of equal annual installments commencing
September 30, 2004, which provides for the liquidation of such
liability by September 30, 2043.
[(B) The Office shall redetermine the Postal supplemental
liability as of the close of the fiscal year, for each fiscal
year beginning after September 30, 2003, through the fiscal
year ending September 30, 2038, and shall establish a new
amortization schedule, including a series of equal annual
installments commencing on September 30 of the subsequent
fiscal year, which provides for the liquidation of such
liability by September 30, 2043.
[(C) The Office shall redetermine the Postal supplemental
liability as of the close of the fiscal year for each fiscal
year beginning after September 30, 2038, and shall establish a
new amortization schedule, including a series of equal annual
installments commencing on September 30 of the subsequent
fiscal year, which provides for the liquidation of such
liability over 5 years.
[(D) Amortization schedules established under this
paragraph shall be set in accordance with generally accepted
actuarial practices and principles, with interest computed at
the rate used in the most recent dynamic actuarial valuation of
the Civil Service Retirement System.
[(E) The United States Postal Service shall pay the amounts
so determined to the Office, with payments due not later than
the date scheduled by the Office.
[(F) An amortization schedule established under
subparagraph (B) or (C) shall supersede any amortization
schedule previously established under this paragraph.
[(3) Notwithstanding any other provision of law, in
computing the amount of any payment under any other subsection
of this section that is based upon the amount of the unfunded
liability, such payment shall be computed disregarding that
portion of the unfunded liability that the Office determines
will be liquidated by payments under this subsection.
[(4) Notwithstanding any other provision of this
subsection, any determination or redetermination made by the
Office under this subsection shall, upon request of the Postal
Service, be subject to reconsideration and review (including
adjustment by the Board of Actuaries of the Civil Service
Retirement System) to the same extent and in the same manner as
provided under section 8423(c).]
(h)(1) In this subsection, the term ``Postal surplus or
supplemental liability'' means the estimated difference, as
determined by the Office, between--
(A) the actuarial present value of all future
benefits payable from the Fund under this subchapter to
current or former employees of the United States Postal
Service and attributable to civilian employment with
the United States Postal Service; and
(B) the sum of--
(i) the actuarial present value of deductions
to be withheld from the future basic pay of
employees of the United States Postal Service
currently subject to this subchapter under
section 8334;
(ii) that portion of the Fund balance, as of
the date the Postal surplus or supplemental
liability is determined, attributable to
payments to the Fund by the United States
Postal Service and its employees, minus benefit
payments attributable to civilian employment
with the United States Postal Service, plus the
earnings on such amounts while in the Fund; and
(iii) any other appropriate amount, as
determined by the Office in accordance with
generally accepted actuarial practices and
principles.
(2)(A) Not later than June 30, 2006, the Office shall
determine the Postal surplus or supplemental liability, as of
September 30, 2005. If that result is a surplus, the amount of
the surplus shall be transferred to the Postal Service Retiree
Health Benefits Fund established under section 8909a. If the
result is a supplemental liability, the Office shall establish
an amortization schedule, including a series of annual
installments commencing September 30, 2006, which provides for
the liquidation of such liability by September 30, 2043.
(B) The Office shall redetermine the Postal surplus or
supplemental liability as of the close of the fiscal year, for
each fiscal year beginning after September 30, 2006, through
the fiscal year ending September 30, 2038. If the result is a
surplus, that amount shall remain in the Fund until
distribution is authorized under subparagraph (C), and any
prior amortization schedule for payments shall be terminated.
If the result is a supplemental liability, the Office shall
establish a new amortization schedule, including a series of
annual installments commencing on September 30 of the
subsequent fiscal year, which provides for the liquidation of
such liability by September 30, 2043.
(C) As of the close of the fiscal years ending September
30, 2015, 2025, 2035, and 2039, if the result is a surplus,
that amount shall be transferred to the Postal Service Retiree
Health Benefits Fund, and any prior amortization schedule for
payments shall be terminated.
(D) Amortization schedules established under this paragraph
shall be set in accordance with generally accepted actuarial
practices and principles, with interest computed at the rate
used in the most recent valuation of the Civil Service
Retirement System.
(E) The United States Postal Service shall pay the amounts
so determined to the Office, with payments due not later than
the date scheduled by the Office.
(3) Notwithstanding any other provision of law, in
computing the amount of any payment under any other subsection
of this section that is based upon the amount of the unfunded
liability, such payment shall be computed disregarding that
portion of the unfunded liability that the Office determines
will be liquidated by payments under this subsection.
* * * * * * *
Subpart G--Insurance and Annuities
CHAPTER 84--FEDERAL EMPLOYEES' RETIREMENT SYSTEM
Subchapter I--General Provisions
Sec. 8402. Federal Employees' Retirement System; exclusions
* * * * * * *
(c)(1) The Office may exclude from the operation of this
chapter [5 USCS Sec. Sec. 8401 et seq.] an employee or group of
employees in or under an Executive agency, the United States
Postal Service, or the [Postal Rate Commission] Postal
Regulatory Commission, whose employment is temporary or
intermittent, except an employee whose employment is part-time
career employment (as defined in section 3401(2)).
* * * * * * *
Subchapter II--Basic Annuity
* * * * * * *
Sec. 8423. Government contributions
* * * * * * *
(b)
(1) The Office shall compute--
(A) the amount of the supplemental liability
of the Fund with respect to individuals other
than those to whom subparagraph (B) relates,
and
(B) the amount of the supplemental liability
of the Fund with respect to current or former
employees of the United States Postal Service
(and the [Postal Rate Commission] Postal
Regulatory Commission) and their survivors;
* * * * * * *
Subpart G--Insurance and Annuities
Chapter 84--FEDERAL EMPLOYEES' RETIREMENT SYSTEM
Subchapter VII--Federal Retirement Thrift Investment Management System
Sec. 8474. Executive Director
* * * * * * *
(c) The Executive Director may--
(1) prescribe such regulations as may be necessary to
carry out the responsibilities of the Executive
Director under this section, other than regulations
relating to fiduciary responsibilities;
(2) appoint such personnel as may be necessary to
carry out the provisions of this subchapter and
subchapter III of this chapter [5 USCS Sec. Sec. 8471
et seq., 8431 et seq.];
(3) subject to approval by the Board, procure the
services of experts and consultants under section 3109
of this title;
(4) secure directly from an Executive agency, the
United States Postal Service, or the [Postal Rate
Commission] Postal Regulatory Commission any
information necessary to carry out the provisions of
this subchapter or subchapter III of this chapter [5
USCS Sec. Sec. 8471 et seq., 8431 et seq.] and policies
of the Board;
* * * * * * *
CHAPTER 89--HEALTH INSURANCE
Sec. 8906. Contribution
* * * * * * *
(g)
(1) Except as provided in paragraphs (2) and (3), the
Government contributions authorized by this section for
health benefits for an annuitant shall be paid from
annual appropriations which are authorized to be made
for that purpose and which may be made available until
expended.
(2)(A) The Government contributions authorized by
this section for health benefits for an individual who
first becomes an annuitant by reason of retirement from
employment with the United States Postal Service on or
after July 1, 1971, or for a survivor of such an
individual or of an individual who died on or after
July 1, 1971 while employed by the United States Postal
Service, [shall be paid by the United States Postal
Service.] shall be paid first from the Postal Service
Retiree Health Benefit Fund up to the amount contained
in the Fund, with any remaining amount paid by the
United States Postal Service.
(B) In determining any amount for which the Postal
Service is liable under this paragraph, the amount of
the liability shall be prorated to reflect only that
portion of total service which is attributable to
civilian service performed (by the former postal
employee or by the deceased individual referred to in
subparagraph (A), as the case may be) after June 30,
1971, as estimated by the Office of Personnel
Management.
(3) The Government contribution for persons enrolled
in a health benefits plan as part of the demonstration
project under section 1108 of title 10 shall be paid as
provided in subsection (i) of that section.
* * * * * * *
Sec. 8909. Employees Health Benefits Fund
(a) There is in the Treasury of the United States an
Employees Health Benefits Fund which is administered by the
Office of Personnel Management. The contributions of enrollees
and the Government described by section 8906 of this title
shall be paid into the Fund. The Fund is available--
(1) without fiscal year limitation for all payments
to approved health benefits plans; and(2) to pay
expenses for administering this chapter [5 USCS
Sec. Sec. 8901 et seq.] within the limitations that may
be specified annually by Congress.
* * * * * * *
(g) The fund described in subsection (a) is available to
pay costs that the Office incurs for activities associated with
implementation of the demonstration project under section 1108
of title 10.
Sec. 8909a. Postal Service Retiree Health Benefit Fund
(a) There is in the Treasury of the United States a Postal
Service Retiree Health Benefits Fund which is administered by
the Office of Personnel Management.
(b) The Fund is available without fiscal year limitation
for payments required under section 8906(g)(2)(A).
(c) The Secretary of the Treasury shall immediately invest,
in interest-bearing securities of the United States such
currently available portions of the Fund as are not immediately
required for payments from the Fund. Such investments shall be
made in the same manner as investments for the Civil Service
Retirement and Disability Fund under section 8348.
(d)(1) Not later than December 31, 2006, and by December 31
of each succeeding year, the Office shall compute the net
present value of the future payments required under section
8906(g)(2)(A) and attributable to the service of Postal Service
employees during the most recently ended fiscal year.
(2)(A) Not later than December 31, 2006, the Office shall
compute, and by December 31 of each succeeding year, the Office
shall recompute the difference between--
(i) the net present value of the excess of future
payments required under section 8906(g)(2)(A) for
current and future United States Postal Service
annuitants as of the end of the fiscal year ending on
September 30 of that year; and
(ii)(I) the value of the assets of the Postal Retiree
Health Benefits Fund as of the end of the fiscal year
ending on September 30 of that year; and
(II) the net present value computed under paragraph
(1).
(B) Not later than December 31, 2006, the Office shall
compute, and by December 31 of each succeeding year shall
recompute, an amortization schedule including a series of
annual installments which provide for the liquidation by
January 31, 2046, or within 15 years, whichever is later, of
the net present value determined under subparagraph (A),
including interest at the rate used in that computation.
(3) Not later than January 31, 2007, and by January 31 of
each succeeding year, the United States Postal Service shall
pay into such Fund--
(A) the net present value computed under paragraph
(1); and
(B) the annual installment computed under paragraph
(2)(B).
(4) Computations under this subsection shall be made
consistent with the assumptions and methodology used by the
Office for financial reporting under subchapter II of chapter
35 of title 31.
(5) After consultation with the United States Postal
Service, the Office shall promulgate any regulations the Office
determines necessary under this subsection.
* * * * * * *
TITLE 5--APPENDIX
ETHICS IN GOVERNMENT ACT OF 1978
TITLE I, FINANCIAL DISCLOSURE REQUIREMENTS OF FEDERAL PERSONNEL
Sec. 101. Persons required to file
* * * * * * *
(f) The officers and employees referred to in subsections
(a), (d), and (e) are--
* * * * * * *
(6) the Postmaster General, the Deputy Postmaster
General, each Governor of the Board of Governors of the
United States Postal Service and each officer or
employee of the United States Postal Service or [Postal
Rate Commission] Postal Regulatory Commission who
occupies a position for which the rate of basic pay is
equal to or greater than 120 percent of the minimum
rate of basic pay payable for GS-15 of the General
Schedule;
* * * * * * *
TITLE 29, LABOR
CHAPTER 16--VOCATIONAL REHABILITATION AND OTHER REHABILITATION SERVICES
RIGHTS AND ADVOCACY
Sec. 791. Employment of individuals with disabilities
* * * * * * *
(b) Federal agencies; affirmative action program plans.
Each department, agency, and instrumentality (including the
United States Postal Service and the [Postal Rate Commission]
Postal Regulatory Commission) in the executive branch and the
Smithsonian Institution shall, with one hundred and eighty days
after the date of enactment of this Act [enacted Sept. 26,
1973], submit to the Commission and to the Committee an
affirmative action program plan for the hiring, placement, and
advancement of individuals with disabilities in such
department, agency, instrumentality, or Institution. Such plan
shall include a description of the extent to which and methods
whereby the special needs of employees who are individuals with
disabilities are being met. Such plan shall be updated
annually, and shall be reviewed annually and approved by the
Commission, if the Commission determines, after consultation
with the Committee, that such plan provides sufficient
assurances, procedures and commitments to provide adequate
hiring, placement, and advancement opportunities for
individuals with disabilities.
* * * * * * *
TITLE 42, THE PUBLIC HEALTH AND WELFARE
CHAPTER 112--VICTIM COMPENSATION AND ASSISTANCE
Sec. 10601. Crime Victims Fund
(a) Establishment. There is created in the Treasury a
separate account to be known as the Crime Victims Fund
(hereinafter in this chapter referred to as the ``Fund'').
(b) Fines deposited in Fund; penalties; forfeited
appearance bonds. Except as limited by subsection (c), there
shall be deposited in the Fund--
(1) all fines that are collected from persons
convicted of offenses against the United States
except--
(A) fines available for use by the Secretary
of the Treasury pursuant to--
(i) section 11(d) of the Endangered
Species Act (16 U.S.C. 1540(d)); and
(ii) section 6(d) of the Lacey Act
Amendments of 1981 (16 U.S.C. 3375(d));
and
(B) fines to be paid into--
(i) the railroad unemployment
insurance account pursuant to the
Railroad Unemployment Insurance Act (45
U.S.C. 351 et seq.);
(ii) the Postal Service Fund pursuant
to sections 2601(a)(2) and 2003 of
title 39 of the United States Code and
for the purposes set forth in section
[404(a)(8)] 404(a)(7) of such title 39;
(iii) the navigable waters revolving
fund pursuant to section 311 of the
Federal Water Pollution Control Act (33
U.S.C. 1321) and
(iv) county public school funds
pursuant to section 3613 of title 18 of
the United States Code;
* * * * * * *
TITLE 44, PUBLIC PRINTING AND DOCUMENTS
CHAPTER 35--COORDINATION OF FEDERAL INFORMATION POLICY
Subchapter I--Federal Information Policy
Sec. 3502. Definitions
As used in this subchapter [44 USCS Sec. Sec. 3501 et
seq.]--
* * * * * * *
(5) the term ``independent regulatory agency'' means
the Board of Governors of the Federal Reserve System,
the Commodity Futures Trading Commission, the Consumer
Product Safety Commission, the Federal Communications
Commission, the Federal Deposit Insurance Corporation,
the Federal Energy Regulatory Commission, the Federal
Housing Finance Board, the Federal Maritime Commission,
the Federal Trade Commission, the Interstate Commerce
Commission, the Mine Enforcement Safety and Health
Review Commission, the National Labor Relations Board,
the Nuclear Regulatory Commission, the Occupational
Safety and Health Review Commission, the [Postal Rate
Commission] Postal Regulatory Commission, the
Securities and Exchange Commission, and any other
similar agency designated by statute as a Federal
independent regulatory agency or commission;
* * * * * * *
TITLE 49, TRANSPORTATION
Subtitle VII--Aviation Programs
PART A--AIR COMMERCE AND SAFETY
Subpart II--Economic Regulation
CHAPTER 411--AIR CARRIER CERTIFICATES
Sec. 41107. Transportation of mail
When the United States Postal Service finds that the needs
of the Postal Service require the transportation of mail by
aircraft [in foreign air transportation or] between places in
Alaska, in addition to the transportation of mail authorized
under certificates in effect, the Postal Service shall certify
that finding to the Secretary of Transportation with a
statement about the additional transportation and facilities
necessary to provide the additional transportation. A copy of
each certification and statement shall be posted for at least
20 days in the office of the Secretary. After notice and an
opportunity for a hearing, the Secretary shall issue a new
certificate under section 41102 of this title, or amend or
modify an existing certificate under section 41110(a)(2)(A) of
this title, to provide the additional transportation and
facilities if the Secretary finds the additional transportation
is required by the public convenience and necessity.
* * * * * * *
CHAPTER 419--TRANSPORTATION OF MAIL
Sec. 41901. General authority
[(a) Title 39.--The United States Postal Service may
provide for the transportation of mail by aircraft in
interstate air transportation under section 5402(e) and (f) of
title 39.]
(a) Title 39.--The United States Postal Service may provide
for the transportation of mail by aircraft in air
transportation under this chapter and under chapter 54 of title
39.
(b) Authority to prescribe prices. Except as provided in
section 5402 of title 39, on the initiative of the Secretary of
Transportation or on petition by the Postal Service or an air
carrier, the Secretary shall prescribe and publish--
(1) after notice and an opportunity for a hearing on
the record, reasonable prices to be paid by the Postal
Service for the transportation of mail by aircraft [in
foreign air transportation or] between places in
Alaska, the facilities used in and useful for the
transportation of mail, and the services related to the
transportation of mail for each carrier holding a
certificate that authorizes that transportation;
(2) the methods used, whether by aircraft-mile,
pound-mile, weight, space, or a combination of those or
other methods, to determine the prices for each air
carrier or class of air carriers; and
(3) the effective date of the prices.
* * * * * * *
Sec. 41902. Schedules for certain transportation of mail
(a) Requirement.--Except as provided in section 41906 of
this title and section 5402 of title 39, an air carrier may
transport mail by aircraft [in foreign air transportation or]
between places in Alaska only under a schedule designated or
required to be established under subsection (c) of this section
for the transportation of mail.
(b) Statements on Places and Schedules.--Every air carrier
shall file with the Secretary of Transportation and the United
States Postal Service a statement showing--
(1) the places between which the carrier is
authorized to provide foreign air transportation (other
than foreign air transportation of mail);
(2) the places between which the carrier is
authorized to transport mail in Alaska;
(3) every schedule of aircraft regularly operated by
the carrier between places described in clauses (1) and
(2) of this subsection and every change in each
schedule; and
(4) for each schedule, the places served by the
carrier and the time of arrival at, and departure from,
each place.
* * * * * * *
Sec. 41903. Duty to provide certain transportation of mail
(a) Air Carriers.--Subject to subsection (b) of this
section, an air carrier authorized by its certificate to
transport mail by aircraft [in foreign air transportation or]
between places in Alaska shall--
(1) provide facilities and services necessary and
adequate to provide that transportation; and
(2) transport mail between the places authorized in
the certificate for transportation of mail when
required, and under regulations prescribed, by the
United States Postal Service.
(b) Maximum Mail Load.--The Secretary of Transportation may
prescribe the maximum mail load for a schedule or for an
aircraft or type of aircraft for the transportation of mail by
aircraft [in foreign air transportation or] between places in
Alaska. If the Postal Service tenders to an air carrier mail
exceeding the maximum load for transportation by the carrier
under a schedule designated or required to be established for
the transportation of mail under section 41902(c) of this
title, the carrier, as nearly in accordance with the schedule
as the Secretary decides is possible, shall--
* * * * * * *
Sec. 41907. Prices for foreign transportation of mail
[(a) Limitations.]--When air transportation is provided
between the United States and a foreign country both by
aircraft owned or operated by an air carrier holding a
certificate under chapter 411 of this title [49 USCS
Sec. Sec. 41101 et seq.] and by aircraft owned or operated by a
foreign air carrier, the United States Postal Service may not
pay to or for the account of the foreign air carrier a price
for transporting mail by aircraft between the United States and
the foreign country that the Postal Service believes will
result (over a reasonable period determined by the Postal
Service considering exchange fluctuations and other factors) in
the foreign air carrier receiving a price for transporting the
mail that is higher than the price--
(1) the government of a foreign country or foreign
postal administration pays to air carriers for
transporting mail of the foreign country by aircraft
between the foreign country and the United States; or
(2) determined by the Postal Service to be comparable
to the price the government of a foreign country or
foreign postal administration pays to air carriers for
transporting mail of the foreign country by aircraft
between the foreign country and an intermediate country
on the route of the air carrier between the foreign
country and the United States.
[(b) Changes.--The Secretary of Transportation shall act
expeditiously on proposed changes in prices for transporting
mail by aircraft in foreign air transportation. When
prescribing those prices, the Secretary shall consider--
[(1) the prices paid for transportation of mail under
the Universal Postal Union Convention as ratified by
the United States Government;
[(2) the price-making elements used by the Universal
Postal Union in prescribing its airmail prices; and
[(3) the competitive disadvantage to United States
flag air carriers resulting from foreign air carriers
receiving Universal Postal Union prices for
transporting United States mail and national origin
mail of their own countries.]