Statements on Introduced Bills and Joint Resolutions - S. 2468 - Part 1
STATEMENTS ON INTRODUCED BILLS AND JOINT RESOLUTIONS
By Ms. COLLINS (for herself, Mr. Carper, Mr. Stevens, Mr. Voinovich, Mr. Sununu, Mr. Lieberman, Mr. Akaka, and Mr. Durbin):
S. 2468. A bill to reform the postal laws of the United States; to the Committee on Governmental Affairs.
Ms. COLLINS. Mr. President, I rise today with my friend and colleague, Senator Carper, to introduce the Postal Accountability and Enhancement Act of 2004, a bill designed to help the 225-year-old Postal Service meet the challenges of the 21st Century. This legislation represents the culmination of a process that began in the summer of 2002 when I introduced a bill to establish a Presidential 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.
It has long been acknowledged that the financial and operational problems confronting the Postal Service are serious. At present, the Postal Service has more than $90 billion in unfunded liabilities and obligations, which include $6.5 billion in debt to the U.S. Treasury, nearly $7 billion for Workers' Compensation claims, $5 billion for retirement costs, and as much as $45 billion to cover retiree health care costs. The General Accounting Office's Comptroller General, David Walker, has pointed to the urgent need for "fundamental reforms to minimize the risk of a significant taxpayer bailout or dramatic postal rate increases."
The Postal Service has been on GAO's "High-Risk" List since April of 2001. The Postal Service is at risk of a "death spiral" of decreasing volume and increasing rates that lead to further decreases in volume.
In December of 2003, President Bush announced the creation of a bipartisan commission charged with identifying the operational, structural, and financial challenges facing the U.S. 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.
As I read through the Commission's report, I was struck by what I considered the Commission's wake up call to Congress: its statement that "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." That is a very strong statement, and one that challenged both the Postal Service and Congress to embrace far-reaching reforms.
To the relief of many, including myself, the Commission did not recommend privatization of the Postal Service. Instead, the Commission sought to find a way for the Postal Service to do, as Co-Chair Jim Johnson described to me, "an overwhelmingly better job under the same general structure."
The Postal Service plays a vital role in our economy. The Service itself employs more than 750,000 career employees. Less well known is the fact that it is also the linchpin of a $900-billion mailing industry that employs 9 million Americans in fields as diverse as direct mailing, printing, catalog production, paper manufacturing, and financial services. The health of the Postal Service is essential to the vitality of thousands of companies and the millions that they employ.
One of the greatest challenges for the Postal Service is the decrease in mail volume as business communications, bills and payments move more and more to the Internet. The Postal Service has experienced declining volumes of First-Class mail for the past four years. This is highly significant, given that First-Class mail accounts for 48 percent of total mail volume, and the revenue it generates pays for more than two-thirds of the Postal Service's institutional costs.
The Postal Service also faces the difficult task of trying to cut costs from its nationwide infrastructure and transportation network. These costs are difficult to cut. Even though volumes may be decreasing, carriers must still deliver six days a week to more than 139 million addresses.
As Chairman of the Committee on Governmental Affairs, I held a series of eight hearings, including a joint hearing with the House, during which we reviewed the recommendations of the President's Commission. The bill Senator Carper and I introduce today is the culmination of everything the Committee learned from dozens of witnesses over the past eight months.
First and foremost, the Collins-Carper bill preserves the basic features of universal service-affordable rates, frequent delivery, and convenient community access to retail postal services. As a Senator representing a large, rural State, I want to ensure that my constituents living in the northern woods, or on the islands, or in our many rural small towns have the same access to postal services as the people of our cities. If the Postal Service were no longer to provide universal service and deliver mail to every customer, the affordable communication link upon which many Americans rely would be jeopardized. Most commercial enterprises would find it uneconomical, if not impossible, to deliver mail and packages to rural Americans at rates charged by the Postal Service.
The Collins-Carper bill allows the Postal Service to maintain its current mail monopoly, and retain its sole access to customer mailboxes. It grants the Postal Service Board of Governors the authority to set rates for competitive products like Express Mail and Parcel Post, as long as these prices do not result in cross subsidy from market-dominant products. As a safeguard, our bill establishes a 30 day prior review period during which the proposed rate changes shall be reviewed by the Postal Regulatory Commission.
It replaces the current lengthy and litigious rate-setting process with a rate cap-based structure for market-dominant products such as First-Class Mail, periodicals and library mail. This would allow the Postal Service to react more quickly to changes in the mailing industry. The rate caps would be linked to an inflation indicator selected by the Postal Regulatory Commission. The goal would be to make rate increases more predictable and less frequent and to provide incentives for the Postal Service to operate efficiently. Price changes for market-dominant products would be subject to a 45-day prior review period by the Postal Regulatory Commission.
Our bill would introduce new safeguards against unfair competition by the Postal Service in competitive markets. Subsidization of competitive products by market-dominant products would be expressly forbidden, and an equitable allocation of institutional costs to competitive products would be required.
The President's Commission recommended that the regulator be granted the authority to make changes to the Postal Service's universal service obligation and monopoly. The vast majority of the postal community, however, shared my belief that these are important policy determinations that should be retained by Congress. The Collins-Carper bill keeps those public policy decisions in congressional hands.
The existing Postal Rate Commission would be transformed into the Postal Regulatory Commission with greatly enhanced authority. Under current law, the Rate Commission has very narrow authority. We wanted to ensure that the Postal Service management has both greater latitude and stronger oversight. Among other things, the Postal Regulatory Commission will have the authority to regulate rates for non-competitive products and services; ensure financial transparency; establish limits on the accumulation of retained earnings by the Postal Service; obtain information from the Postal Service, if need be, through the use of new subpoena power; and review and act on complaints filed by those who believe the Postal Service has exceeded its authority. Members of the Postal Regulatory Board will be selected solely on the basis of their demonstrated experience and professional standing. Senate confirmation of all Board Members will be required.
The Governmental Affairs Committee dedicated two hearings to the examination of the Commission's workforce-related recommendations. The Postal Service is a highly labor intensive organization, using $3 out of every $4 to pay the wages and benefits of its employees. Their workforce is comprised of more than 700,000 dedicated letter carriers, clerks, mail handlers, postmasters, and others, who place great value on their right to collectively bargain. Our bill reaffirms that right. This bill only makes changes to the bargaining process that have been agreed to by both the Postal Service and the four major unions. We replace the rarely used fact-finding process with mediation, and shorten statutory deadlines for certain phases of the bargaining process.
Additionally, the Collins-Carper bill corrects what I believe to be an anomaly in the Federal workers' compensation law that results in high costs for the Postal Service. Under the Federal Employees Compensation Act (FECA), Federal employees with dependents are eligible for 75 percent of their take-home pay, tax free, plus cost of living allowances. In addition, there is no maximum dollar cap on FECA payments. As a result, employees often opt not to retire, staying on the more generous workers' compensation program permanently.
According to a March 2003 audit issued by the Postal Service's Office of Inspector General, the Postal Service's workers' compensation rolls include 81 cases that originated 40 to 50 years ago, with the oldest recipient being 102 years old. The IG's office found 778 cases that originated 30 to 40 years ago; and 1,189 cases that originated 20 to 29 years ago.
The Collins-Carper bill works to protect the financial resources of the Postal Service by converting workers' compensation benefits for total or partial disability to a retirement annuity when the affected employee reaches 65 years of age. This change would reflect the fact that disabled postal employees would likely retire at some point were they not receiving workers' compensation. I would like to note that the average postal employee retires far earlier than age 65, so this is still a generous program. It is important to point out that the Postal Service has reduced their workplace injury rate by twenty-eight percent over the past three years.
The Collins-Carper bill also puts into place a three-day waiting period before an employee is eligible to receive 45 days of continuation of pay. This is consistent with every state's workers' compensation program that requires a three- to seven-day waiting period before benefits are paid.
Our bill has reached an important compromise on the issue of workshare discounts. Some have raised concerns that the Postal Service has set rates so that mailers get a discount greater than the cost avoided by the Postal Service. While this may have occurred in a handful of instances, those mailers are still covering their attributable costs, as well as making a healthy contribution to overhead. The language in our bill sets a policy that the Postal Service shall not create new discounts greater than the cost avoided by the Postal Service. The only exception is in those cases where the Postal Regulatory Commission believes those rates are necessary.
The bill has also, for the first time, explicitly created the authority for the Postal Service to enter into negotiated service agreements with individual customers. This will allow the Postal Service to create agreements with customers to increase its revenue. I would point out that these agreements must cover all attributable costs, and will likely result in greater contribution to overhead. In addition, our bill requires that other similarly situated mailers will be able to enter into such agreements with the Postal Service.
Finally, our bill would repeal a provision of Public Law 108-18 which requires that money owed to the Postal Service due to an overpayment into the Civil Service Retirement System Fund be held in an escrow account. Repealing this provision would essentially "free up" $78 billion over a period of 60 years. These savings would be used to not only pay off debt to the U.S. Treasury and to fund health care liabilities, but to mitigate rate increases as well. In fact, failure to release these escrow funds would mean, for mailers, a double-digit rate increase in 2006-an expense most American businesses and many consumers are ill-equipped to afford.
The bill would also return to the Department of Treasury the responsibility for funding CSRS pension benefits relating to the military service of postal retirees. No other agency is required to make this payment. Ratepayers should not be held responsible for this $27 billion obligation.
The Postal Service has reached a critical juncture. If we are to save and strengthen this vital service upon which so many Americans rely for communication and their livelihoods, the time to act is now.
Our bill has the strong endorsements of the National Rural Letter Carriers Association, the National Association of Letter Carriers, the National Association of Postmasters of the United States, and the Coalition for a 21st Century Postal Service-which represents thousands of the major mailers, employee groups, small businesses, and other users of the mail. I am also very pleased to add Senators TED STEVENS, GEORGE VOINOVICH and JOHN SUNUNU as originated cosponsors of this bill.
I look forward to working with all of my colleagues in the Senate, and House Government Reform and Oversight Committee Chairman Tom Davis, who just last week passed a postal reform bill out of his committee by a vote of 40-0.
I ask unanimous consent that the text of the bill be printed in the RECORD, along with a letter sent to me from David Walker, Comptroller General of the General Accounting Office, addressing the need for comprehensive postal reform.
There being no objection, the material was ordered to be printed in the RECORD, as follows:
S. 2468
Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled,
SECTION 1. SHORT TITLE; TABLE OF CONTENTS.
(a) SHORT TITLE.-This Act may be cited as the "Postal Accountability and Enhancement Act".
(b) TABLE OF CONTENTS.-The table of contents for this Act is as follows:
Sec. 1. Short title; table of contents.
TITLE I-DEFINITIONS; POSTAL SERVICES
Sec. 101. Definitions.
Sec. 102. Postal services.
TITLE II-MODERN RATE REGULATION
Sec. 201. Provisions relating to market-dominant products.
Sec. 202. Provisions relating to competitive products.
Sec. 203. Provisions relating to experimental and new products.
Sec. 204. Reporting requirements and related provisions.
Sec. 205. Complaints; appellate review and enforcement.
Sec. 206. Clerical amendment.
TITLE III-MODERN SERVICE STANDARDS
Sec. 301. Establishment of modern service standards.
Sec. 302. Postal service plan.
TITLE IV-PROVISIONS RELATING TO FAIR COMPETITION
Sec. 401. Postal Service Competitive Products Fund.
Sec. 402. Assumed Federal income tax on competitive products income.
Sec. 403. Unfair competition prohibited.
Sec. 404. Suits by and against the Postal Service.
TITLE V-GENERAL PROVISIONS
Sec. 501. Qualification and term requirements for Governors.
Sec. 502. Obligations.
Sec. 503. Private carriage of letters.
Sec. 504. Rulemaking authority.
Sec. 505. Noninterference with collective bargaining agreements.
TITLE VI-ENHANCED REGULATORY COMMISSION
Sec. 601. Reorganization and modification of certain provisions relating to the Postal Regulatory Commission.
Sec. 602. Authority for Postal Regulatory Commission to issue subpoenas.
Sec. 603. Appropriations for the Postal Regulatory Commission.
Sec. 604. Redesignation of the Postal Rate Commission.
Sec. 605. Financial transparency.
TITLE VII-EVALUATIONS
Sec. 701. Assessments of ratemaking, classification, and other provisions.
Sec. 702. Report on universal postal service and the postal monopoly.
Sec. 703. Study on equal application of laws to competitive products.
TITLE VIII-POSTAL SERVICE RETIREMENT AND HEALTH BENEFITS FUNDING
Sec. 801. Short title.
Sec. 802. Civil Service Retirement System.
Sec. 803. Health insurance.
Sec. 804. Repeal of disposition of savings provision.
Sec. 805. Effective dates.
TITLE IX-COMPENSATION FOR WORK INJURIES
Sec. 901. Temporary disability; continuation of pay.
Sec. 902. Disability retirement for postal employees.
TITLE I-DEFINITIONS; POSTAL SERVICES
SEC. 101. DEFINITIONS.
Section 102 of title 39, United States Code, is amended by striking "and" at the end of paragraph (3), by striking the period at the end of paragraph (4) and inserting a semicolon, and by adding at the end the following:
"(5) 'postal service' refers to the physical delivery of letters, printed matter, or packages weighing up to 70
pounds, including physical acceptance, collection, sorting, transportation, or other services ancillary thereto;
"(6) 'product' means a postal service with a distinct cost or market characteristic for which a rate is 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.".
SEC. 102. POSTAL SERVICES.
(a) IN GENERAL.-Section 404 of title 39, United States Code, is amended-
(1) in subsection (a), by striking paragraph (6) and by redesignating paragraphs (7) through (9) as paragraphs (6) through (8), respectively; and
(2) by adding at the end the following:
"© Nothing in this title shall be considered to permit or require that the Postal Service provide any special nonpostal or similar
services.".
(b) CONFORMING AMENDMENTS.-(1) Section 1402(b)(1)(B)(ii) of the Victims of Crime Act of 1984 (98 Stat. 2170; 42 U.S.C. 10601(b)(1)(B)(ii)) is amended by striking "404(a)(8)" and inserting "404(a)(7)".
(2) Section 2003(b)(1) of title 39, United States Code, is amended by striking "and nonpostal".
TITLE II-MODERN RATE REGULATION
SEC. 201. PROVISIONS RELATING TO MARKET-DOMINANT PRODUCTS.
(a) IN GENERAL.-Chapter 36 of title 39, United States Code, is amended by striking sections 3621, 3622, and 3623 and inserting the following:
"§ 3621. Applicability; definitions
"(a) APPLICABILITY.-This subchapter shall apply with respect to-
"(1) first-class mail letters;
"(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.
"§ 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.
"(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.
"© 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 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 Rate 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 Rate Commission may prescribe;
"(2) establish a schedule whereby rates, when necessary and appropriate, would increase 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 Rate Commission;
"© provide for the Postal Rate 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 © 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 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 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;
"© the amount of the discount above costs avoided-
"(i) is necessary to mitigate rate shock; and
"(ii) will be phased out over time;
"(D) the workshare discount is provided in connection with subclasses of mail consisting exclusively of mail matter of educational, cultural, or scientific value; or
"(E) the Postal Regulatory Commission determines that such discounts are reasonable and equitable and consistent with the objectives and factors taken into account under subsections (b) and (c).
"(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.
"§ 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
"© 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.
"© 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.
"© 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.".
(b) REPEALED SECTIONS.-Sections 3624, 3625, and 3628 of title 39, United States Code, are repealed.
© REDESIGNATION.-Chapter 36 of title 39, United States Code (as in effect after the amendment made by section 601, but before the amendment made by section 202) is amended by striking the heading for subchapter II and inserting the following:
"SUBCHAPTER I-PROVISIONS RELATING TO MARKET-DOMINANT PRODUCTS".
SEC. 202. PROVISIONS RELATING TO COMPETITIVE PRODUCTS.
Chapter 36 of title 39, United States Code, is amended by inserting after section 3629 the following:
"SUBCHAPTER II-PROVISIONS RELATING TO COMPETITIVE PRODUCTS
"§ 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.
"© 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.
"§ 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 Rate Commission shall notify the Governors of any noncompliance of the adjustment with section 3633; and
"© the Governors shall respond to the notice provided under subparagraph (B) and describe the actions to be taken to comply with section 3633.
"© 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.
"§ 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 the institutional costs of the Postal Service.".
SEC. 203. PROVISIONS RELATING TO EXPERIMENTAL AND NEW PRODUCTS.
Subchapter III of chapter 36 of title 39, United States Code, is amended to read as follows:
"SUBCHAPTER III-PROVISIONS RELATING TO EXPERIMENTAL AND NEW PRODUCTS
"§ 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 revenues 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.
"© 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
"© 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).
"§ 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
"© the likely impact of the proposed action on small business concerns (within the meaning of section 3641(h)).
"© 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.".
SEC. 204. REPORTING REQUIREMENTS AND RELATED PROVISIONS.
(a) REDESIGNATION.-Chapter 36 of title 39, United States Code (as in effect before the amendment made by subsection (b)) is amended-
(1) by striking the heading for subchapter IV and inserting the following:
"SUBCHAPTER V-POSTAL SERVICES, COMPLAINTS, AND JUDICIAL REVIEW"; AND
(2) by striking the heading for subchapter V and inserting the following:
"SUBCHAPTER VI-GENERAL".
(b) REPORTS AND COMPLIANCE.-Chapter 36 of title 39, United States Code, is amended by inserting after subchapter III the following:
"SUBCHAPTER IV-REPORTING REQUIREMENTS AND RELATED PROVISIONS
"§ 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.
"§ 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.
"© 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
"© 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
"© 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© 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.
"§ 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.
"© IF 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. 205. COMPLAINTS; APPELLATE REVIEW AND ENFORCEMENT.
Chapter 36 of title 39, United States Code, is amended by striking sections 3662 and 3663 and inserting the following:
"§ 3662. Rate and service complaints
"(a) IN GENERAL.-Interested persons (including an officer of the Postal Regulatory Commission representing the interests of the general public) who believe 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).
"© 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.
"§ 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.
"§ 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.".