29–006 

108TH CONGRESS REPT. 108–672 " ! HOUSE OF REPRESENTATIVES 2d Session Part 1 

POSTAL ACCOUNTABILITY AND ENHANCEMENT ACT 

SEPTEMBER 8, 2004.—Ordered to be printed 

Mr. TOM DAVIS of Virginia, from the Committee on Government 

Reform, submitted the following 

R E P O R T 

[To accompany H.R. 4341] 

[Including cost estimate of the Congressional Budget Office] 

The Committee on Government Reform, to whom was referred 

the bill (H.R. 4341) to reform the postal laws of the United States, 

having considered the same, report favorably thereon without 

amendment and recommend that the bill do pass. 

CONTENTS 

Page 

Committee Statement And Views .......................................................................... 1 

Section-By-Section ................................................................................................... 4 

Explanation Of Amendments .................................................................................. 30 

Committee Consideration ........................................................................................ 30 

Committee Consideration Prior to the 108th Congress ........................................ 31 

Roll Call Votes ......................................................................................................... 33 

Application Of Law To The Legislative Branch .................................................... 34 

Statement Of Oversight Findings And Recommendations Of The Committee .. 34 

Statement Of General Performance Goals And Objectives .................................. 34 

Constitutional Authority Statement ...................................................................... 34 

Federal Advisory Committee Act ............................................................................ 34 

Unfunded Mandate Statement ............................................................................... 34 

Committee Estimate ................................................................................................ 34 

Budget Authority And Congressional Budget Office Cost Estimate ................... 35 

Changes In Existing Law Made By The Bill As Reported ................................... 45 

COMMITTEE STATEMENT AND VIEWS

BACKGROUND AND NEED FOR LEGISLATION

The United States Postal Service (USPS) processes and delivers 

208 billion pieces of mail to more than 130 million households and 

businesses in the United States each year. The agency’s mission, 

outlined in the Postal Reorganization Act of 1970, is to provide 

postal services that bind the Nation together through the corVerDate Aug 04 2004 05:40 Sep 11, 2004 Jkt 029006 PO 00000 Frm 00001 Fmt 6659 Sfmt 6602 E:\HR\OC\HR672P1.XXX HR672P1
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1 39 U.S.C. 101 et seq. 

respondence of the people, to provide access in all communities, 

and to offer prompt, reliable postal services at uniform prices.1 The 

law was designed to transform the Postal Service from a bureaucracy subsidized by tax revenue to a self-supporting, businesslike 

entity supported by the fees 

The mission of the USPS is being challenged by a variety of factors including decreasing volume, insufficient revenue, mounting 

debts, and electronic communications alternatives such as Internet 

advertising, electronic bill payments, emails and faxes. In addition: • The Postal Service is the center of a $900 billion industry employing 9 million workers nationwide. • Mail volume has declined during each of Fiscal Years 2001, 

2002 and 2003. • USPS has lost $2.3 billion in the last three years. • USPS will be required to file a rate case late in 2004, which 

would raise rates an additional 5.4 percent. 

PRESIDENT’S COMMISSION

On July 31, 2003, the President’s Commission on the Postal 

Service released its recommendations for maintaining the viability 

of the Postal Service. Roughly half of the recommendations require 

legislative change. Most of these concerns have been addressed in 

earlier postal reform proposals, although some specific recommendations differ. New issues raised by the Commission include 

reform of the collective bargaining process and legislative changes 

making it easier to close post offices and processing centers. In addition, the Commission recommended that the Postal Service not 

be responsible for funding the portion of Civil Service Retirement 

System (CSRS) employees’ pensions that are attributable to their 

prior military service, for which no other agency is responsible 

under CSRS. 

ADMINISTRATION’S PRINCIPLES FOR POSTAL REFORM

On December 8, 2003, the Department of the Treasury released 

a set of 5 principles, based on the recommendations of the President’s Commission, that should guide Congress’s effort to reform 

the Postal Service. The principles are: • Implement Best Practices. Ensure that the Postal Service’s 

governing body is equipped to meet the responsibilities and objectives of an enterprise of its size and scope. • Transparency. Ensure that important factual information on 

the Postal Service’s product costs and performance is accurately 

measured and made available to the public in a timely manner. • Flexibility. Ensure that the Postal Service’s governing body 

and management have the authority to reduce costs, set rates, and 

adjust key aspects of its business in order to meet its obligations 

to customers in a dynamic marketplace. • Accountability. Ensure that a Postal Service operating with 

greater flexibility has appropriate independent oversight to protect 

consumer welfare and universal mail service. 

• Self-Financing. Ensure that a Postal Service operating with 

greater flexibility is financially self-sufficient, covering all of its obligations. 

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POSTAL ACCOUNTABILITY AND ENHANCEMENT ACT

The ‘‘Postal Accountability and Enhancement Act’’ affirmatively 

responds to all five of the Administration’s principles for postal reform, and incorporates nearly all of the seventeen legislative recommendations made by the President’s Commission on the U.S. 

Postal Service. This bill mandates transparency in the Service’s finances, costs, and operations. The legislation creates a modern system of rate regulation, establishes fair competition rules and a 

powerful new regulator, addresses the Postal Service’s universal 

service obligation and the scope of the mail monopoly, and improves the collective bargaining process. However, unlike the unlimited and unfettered pricing flexibility recommended for the Postal Service by the President’s Commission for competitive product 

offerings, the bill imposes important controls to protect the public 

interest from unfair competition. 

The objective of the bill is to position the Postal Service to operate in a more business-like manner. In order to achieve this goal 

the system must be responsive to market considerations and must 

provide clear incentives for postal management and the Postal 

Service as an institution. The Postal Service would no longer operate under a break-even mandate. By maximizing gains and minimizing costs, the Postal Service could generate earnings that would 

be retained, and which could be distributed as incentives to management as well as employees through collective bargaining. Similarly, losses could not be recovered by increasing rates beyond specific parameters without regulatory approval. 

SUMMARY HIGHLIGHTS OF THE POSTAL ACCOUNTABILITY AND

ENHANCEMENT ACT

Preserve Universal Service. Maintenance of a universal postal 

system must be the cornerstone of any postal reform measure. The 

bill preserves this mandate by giving the Postal Service the ability 

to remain viable and effective. The statutory mission of the Postal 

Service is focused strictly on postal services. A study will be required to recommend concrete standards for universal service. In 

addition, the Postal Regulatory Commission will develop an annual 

estimate of the costs of universal service so that Congress can better understand how to provide the necessary protections in the future. 

Promote Efficiency and Flexibility. The bill gives postal management and employees the tools to adapt and survive in the face of 

enormous challenges caused by changing technology and a dynamic 

communications marketplace. The bill encourages innovation and 

efficiency by permitting the Postal Service to distribute earnings as 

bonuses to all employees. In the same way, losses could not be recovered by increasing rates beyond specified parameters without 

regulatory approval. The bill also enables the Postal Service to better react to market conditions by streamlining the rate setting 

process, and permitting rates that are better tailored to consumers’ 

needs. 

Ensure Fair Competition and Accountability. Under the legislation, the Postal Service will compete on a level playing field, under 

many of the same terms and conditions as faced by its private sector competitors, albeit with stronger controls, oversight, and limitaVerDate Aug 04 2004 04:03 Sep 11, 2004 Jkt 029006 PO 00000 Frm 00003 Fmt 6659 Sfmt 6602 E:\HR\OC\HR672P1.XXX HR672P1
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tions in recognition of its governmental status. The Postal Service 

will be given flexibility to price competitive products, but competitive products and services would have to pay their own costs without subsidy from First-Class mail revenues. A ‘‘Postal Regulatory 

Commission’’ is created to oversee and regulate the Postal Service. 

The bill clarifies the distinction between competitive and marketdominant products and imposes prohibitions on the Postal Service’s 

ability to regulate areas in which it competes. The bill additionally, 

for the first time, subjects the Postal Service’s competitive products 

to many of the same laws as private companies, including: • Antitrust laws; • Fair-trade laws; • Equal customs procedures; and • An assumed federal income tax payment. 

Establish a Basis for Future Reforms. The legislation mandates 

several studies, including a comprehensive assessment of the scope 

and standards for universal service. Other evaluations address: • Equal application of laws; • Plans for assisting displaced workers; • Quality of ratemaking data for Periodicals’ costs; and • An assessment of the revenue deficiency process. 

SECTION-BY-SECTION

TITLE I—DEFINITIONS; POSTAL SERVICES

Sec. 101 Definitions 

Section 101 of the bill proposes, for the first time, a clear definition of ‘‘postal services’’ as the carriage of letters, printed matter, 

or mailable packages, including acceptance, collection, processing, 

delivery, or other services supportive or ancillary thereto. The definition is modeled after language proposed by the Postal Rate Commission earlier this year. (See Proposed Rulemaking Concerning 

Amendment to the Rules of Practice and Procedure, Order No. 

1389, Docket No. RM 2004–1 (Jan. 16, 2004).) The definition of 

‘‘postal service’’ is used to clarify the jurisdiction of the Postal Rate 

Commission (renamed in the bill the ‘‘Postal Regulatory Commission’’) and the scope of commercial activities that the Postal Service 

is authorized to pursue. 

Section 101 also defines the term ‘‘product’’ to mean ‘‘any postal 

service with a distinct cost or market characteristic for which a 

rate or rates are, or may reasonably be applied.’’ 

Section 101 further clarifies that ‘‘rates,’’ as used with respect to 

products, ‘‘includes fees for postal services.’’ It defines ‘‘marketdominant product’’ to as ‘‘a product subject to subchapter I of chapter 36’’ and ‘‘competitive product’’ as ‘‘a product subject to subchapter II of chapter 36.’’ Section 101 defines ‘‘Consumer Price 

Index’’ to mean the Consumer Price Index for All Urban Consumers published monthly by the Bureau of Labor Statistics of the 

Department of Labor. Finally, section 101 defines ‘‘year’’ to refer to 

a fiscal year for most purposes of rate regulation. 

Sec. 102 Postal services 

Section 102 declares that the Postal Service’s authority to offer 

products and services is limited to postal services. Current law is 

unclear in this respect. The section strikes a provision that gave 

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the Postal Service the specific power ‘‘to provide, establish, change, 

or abolish special nonpostal or similar services.’’ If the Service unlawfully offers a nonpostal 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. An exception is made for ‘‘special nonpostal or 

similar services’’ provided as of May 12, 2004. 

The changes made by this section should not be interpreted to 

impact the Postal Service’s ability to furnish government services 

to the public, such as acceptance of passport applications and sale 

of duck stamps, in accordance with section 411 of title 39. 

Sec. 103 Transparency 

Recognizing the recommendations of the President’s Commission 

on the U.S. Postal Service as well as the Administration’s key principles for reform, including the need for a more open and accountable executive branch, the nation’s postal laws will now include a 

clear mandate that the Postal Service must be subject to a high degree of transparency, including in its finances and operations. This 

is a key foundation for ensuring fair treatment of both customers 

and competitors. 

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, the bill requires the Postal Regulatory Commission to design, within 24 months, a new system of 

rate regulation for Market Dominant products. The new system 

will, for the most part, continue the ratemaking factors found in 

current law while providing increased flexibility, predictability, incentives for efficiency, and long term financial stability. The Commission is required to ensure that price increases of subclasses in 

the Market Dominant category do not exceed the rise in the Consumer Price Index (CPI) unless such an increase is reasonable and 

equitable and necessary for the Postal Service, under best practices 

of 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. 

With respect to Competitive products, the Postal Regulatory 

Commission must issue regulations within 18 months to guard 

against subsidization by market-dominant products and ensure 

competitive products cover their attributable costs and, as a group, 

make a reasonable contribution to institutional costs. Once the 

Commission has issued its regulations, the Postal Service is given, 

pricing flexibility somewhat comparable to that exercised by private competitors. The changes regarding competitive products will 

be complemented by title III, which provides for a level playing 

field for such products in several important respects. 

Sec. 201 Provisions relating to market-dominant products 

Section 201 of the bill establishes a new, modern system for regulation of Market Dominant products, which account for almost 90 

percent of current Postal Service revenues. In current title 39, 

chapter 36 deals with regulation of postal rates. The bill redesignates subchapter I of chapter 36 (establishing the Postal Rate ComVerDate Aug 04 2004 04:03 Sep 11, 2004 Jkt 029006 PO 00000 Frm 00005 Fmt 6659 Sfmt 6602 E:\HR\OC\HR672P1.XXX HR672P1
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mission) as chapter 5 (see section 501, below). Section 201 revises 

subchapter II, which currently sets out the process of rate regulation, and redesignates it as subchapter I. As amended, subchapter 

I relates only to regulation of Market Dominant products. Section 

201 adds two new provisions to title 39, sections 3621 and 3622, 

as follows. 

Section 3621 lists certain postal products to be regulated as Market Dominant products immediately after enactment: First-Class 

mail (but not priority and express mail, which are deemed competitive products), Periodical mail, Standard mail, media mail, library 

mail, and bound printed matter. This list specifically includes 

‘‘Aunt Minnie’’ or ‘‘individual consumer’’ mail, that is, domestic and 

international single piece First-Class letters and cards. Special 

services (e.g., post office boxes in rural areas, certificates of mailing 

and delivery, etc.) are also regarded as Market Dominant products. 

The products listed have the same meaning given them in the Mail 

Classification Schedule (39 C.F.R. pt. 3001, Subpt. C, App. A) as 

of the date of enactment. After enactment, the Commission may revise the list of Market Dominant products. See new section 3642 

set out in section 203 of the bill. 

Subsection 3622(a) requires the Postal Regulatory Commission to 

establish within 24 months a new system for regulating postage 

rates and classes for Market Dominant products. The Commission 

may subsequently revise the system. 

Subsection 3622(b) provides that the objectives of the new system 

shall be: 

1. Maximize incentives to reduce costs and increase efficiency; 

2. Create predictability and stability in rates; 

3. Maintain high quality service standards; 

4. Allow the Postal Service pricing flexibility; 

5. Assure adequate revenues, including retained earnings, to 

maintain financial stability; and 

6. Reduce the administrative burden of the ratemaking process. 

Subsection 3622(c) requires that, in establishing or revising the 

new system, the Commission shall take into account certain factors, which are modeled after the rate and classification factors 

found in sections 3622 and 3623 of current law. These factors include the establishment and maintenance of a fair and equitable 

schedule for rates and classification system; the value of the mail 

service actually provided for each class or type of mail to both the 

sender and recipient; the direct and indirect postal costs attributable to each class or type of mail service and that portion of all 

other Postal Service costs reasonably assignable to the class or 

type; the effect of rate increases on certain groups; available alternative means to sending and receiving letters or other mail matter 

at reasonable costs; the degree of preparation of mail for delivery 

into the system performed by the mailer and its effect upon reducing Postal Service costs; simplicity of structure for the entire schedule, along with simple, identifiable relationships between rates or 

fees charged the various classes of mail for postal services; the relative value to the people of the kinds of mail matter entered in the 

postal system and the desirability and justification for special classifications and services; the importance of providing classifications 

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with extremely high degrees of reliability and speed of delivery, 

and of providing classifications without such requirements; the desirability of special classifications; and the educational, cultural, 

scientific, and informational value to the recipient. 

Subsection 3622(d) declares that the new system may include 

price caps, revenue targets, cost-of-service regulation, or such other 

forms of regulation as the Commission considers appropriate. This 

subsection lists potential approaches and is not intended to limit 

the options of the Commission to a particular result. 

Subsection 3622(e) requires that the system established by the 

Postal Regulatory Commission must ensure that the average rate 

for any subclass does not increase by more than the annual increase in the Consumer Price Index unless the Commission has determined, after notice and opportunity for a public hearing and 

comment, that such an increase is ‘‘reasonable and equitable and 

necessary to enable the Postal Service, under best practices of 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.’’ 

The new system will ensure fairness because the Postal Service 

will not be able to derive from any one subclass a percentage increase in revenue greater than CPI and will at the same time be 

encouraged to improve efficiency and control costs. In contrast, the 

current rate-setting process provides little or no incentive for the 

Postal Service to control its costs because all costs are ultimately 

passed through to the consumer regardless of how efficiently or inefficiently the Postal Service operates. 

Sec. 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, which currently account for about 10 

percent of current Postal Service revenues. Section 202 adds three 

new sections to title 39, as follows. 

Section 3631 lists the present mail classes and products to be included within the Competitive category immediately after enactment. This list includes Priority mail, Express mail, mailgrams, 

international mail not included in the market-dominant category, 

and parcel post. After enactment, the Commission may revise the 

list of Competitive products. See new section 3642 set out in section 203 of the bill. Further the section defines ‘‘costs attributable’’, 

as the direct and indirect costs attributable to a postal product. Although single piece parcels are assigned to the competitive category, the Committee expects the Postal Regulatory Commission to 

monitor package delivery services of the Postal Service. If there is 

not effective competition in rural areas or elsewhere, the Postal 

Regulatory Commission should consider appropriate changes, including transfers to the market dominant category. 

Section 3632 provides that the Governors of the Postal Service 

may establish rates and classes for all products in the Competitive 

category of mail after giving notice in the Federal Register at least 

30 days in advance, for rates or classes of general applicability in 

the Nation as a whole or in any substantial region. For rates and 

classes not in that category, the Governors must file their decision 

at least 15 days in advance with the Postal Regulatory CommisVerDate Aug 04 2004 04:03 Sep 11, 2004 Jkt 029006 PO 00000 Frm 00007 Fmt 6659 Sfmt 6602 E:\HR\OC\HR672P1.XXX HR672P1
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sion, which shall establish the criteria for determining when rate 

or class falls within this 15 day category. The Governors’ new pricing authority for competitive products does not take effect until the 

Postal Regulatory Commission promulgates regulations under section 3633. 

Section 3633 requires the Postal Regulatory Commission to promulgate regulations within 18 months of enactment prohibiting 

subsidization of competitive products by market dominant products. The Commission shall ensure that each competitive product 

covers its attributable costs, and in addition ensure that competitive products collectively make a ‘‘reasonable contribution’’ to the 

institutional costs of the Postal Service. 

In addressing the attributable costs, the Commission should continue to focus on the need to have reliable indicators of cost causality. This committee heard testimony from differing viewpoints, 

with some urging a higher attribution of costs. The goal of the 

Commission should be a technically correct result, placing accuracy 

above achieving a particular outcome of higher or lower attribution. 

With respect to the requirement that competitive products collectively make a reasonable contribution to overhead, it should be 

noted that the broad standard contains inherent flexibility. It is not 

intended to dictate a particular approach that the Postal Regulatory Commission should follow. 

Sec. 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 shifting products between the Market 

Dominant and Competitive 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 authorizes the Postal Service to conduct limited 

market tests, which are exempt from the statutory criteria for market-dominant and competitive products. Market tests under this 

section are restricted to periods that last no more than two years 

(which may be increased to three years by the Commission) and to 

products that earn less than $10 million annually nationwide 

(which may be raised to $50 million by the Commission). Regardless of duration or size, a market test 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.’’ Under this section, the 

Commission retains substantial oversight authority over market 

tests. Under section 3652, the Postal Service is obliged to provide 

summary information in annual reports to the Postal Regulatory 

Commission about market tests. 

Section 3642 authorizes the Postal Regulatory Commission to 

classify new products as falling in either the Market Dominant category or Competitive category, to transfer existing products between the two categories, and to remove a product from a list for 

a category. Subsection (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 (b)(1) provides that: ‘‘The market-dominant category of prodVerDate Aug 04 2004 04:03 Sep 11, 2004 Jkt 029006 PO 00000 Frm 00008 Fmt 6659 Sfmt 6602 E:\HR\OC\HR672P1.XXX HR672P1
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ucts 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 consist of all other products.’’ Products covered by the postal monopoly may not be transferred to the 

Competitive category. Paragraph (b)(3) requires the Postal Regulatory Commission to consider in addition (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 action; and (c) the likely impact of the proposed action on small business concerns. The Commission is also allowed to transfer a subclass or other subordinate 

unit of a class of mail or type of postal service. 

Subsection 3642(d) provides that the Postal Regulatory Commission must ensure that any change in the lists of products in the 

Market Dominant and Competitive categories is published in the 

Federal Register. Subsection (e) requires that Congress be notified 

when the Commission has concluded a product should be transferred and that such transfer may not take effect for one year. Subsection (f) provides that the Postal Service may not offer any product involving the carriage of letters, printed matter, or packages 

until it is categorized as falling in either the Market Dominant or 

Competitive Category (except for an experimental product). 

Sec. 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 Postal Regulatory Commission to 

ensure compliance with the ratemaking criteria of the act. 

Section 3651 requires that the Postal Regulatory Commission 

provide an annual report to the President and the Congress concerning its operations, including an assessment of whether its regulations for Market Dominant and Competitive products are meeting 

legislative policy. As part of this report, the Commission is directed 

to prepare an estimate of public service costs borne by the Postal 

Service including universal service costs, revenue-forgone costs, 

and other costs (e.g., law enforcement activities). The Postal Service must give the Commission such information as the Commission 

deems necessary to prepare the reports. 

Subsection 3652(a) requires that the Postal Service submit information to the Postal Regulatory Commission, no later than three 

months after the last day of each fiscal year, which demonstrates 

that the rates in effect for all Market Dominant and Competitive 

products during the year are in compliance with the requirements 

of this title. In addition, information must be provided on each 

product in the Market Dominant category including volume and 

market information, along with measures of quality of service, including service standards, the level of service (in terms of speed 

and reliability), and customer satisfaction. In this manner, the bill 

mandates that the Postal Service must develop measures for and 

report on, among other things, the speed and reliability of postal 

services in all classes of mail in the Market Dominant category. 

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The Postal Service Inspector General is required to audit the report 

prepared for Postal Regulatory Commission review. 

Subsection 3652(b) requires annual reporting on work-sharing 

discounts, including the per-item cost avoided by the Postal Service 

by virtue of such discount; the percentage of such per-item cost 

avoided that the per-item discount represents; and the per-item 

contribution made to institutional costs. 

Subsection 3652(c) provides that the Service must provide such 

data as the Commission requires for market tests but may provide 

summary data on the required costs, revenues, and quality of service for market tests for which the Commission has not required 

specific information. 

Subsection 3652(d) states that the Commission will 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) provides that the Commission must develop 

regulations prescribing the content and form of the required annual 

reports. In doing so, the Commission shall give due consideration 

to providing the public with adequate information to assess the 

lawfulness of rates charged, avoiding unnecessary or unwarranted 

administrative effort or expense on the part of the Postal Service, 

and protecting the confidentiality of commercially sensitive information. The Commission may specify what information will be provided as either (1) public reports or (2) non-public annexes and supporting matter. The subsection also contains a provision for the 

Commission, on its own motion or on request from an interested 

party, to initiate a proceeding to improve the quality, accuracy, or 

completeness of Postal Service data required by the Commission. 

Subsection 3652(f) provides that the Postal Service may obtain 

confidential treatment for information that is protected from disclosure under current law, in accordance with provisions outlined in 

new section 504. See section 502 of the bill. 

Subsection 3652(g) requires the Postal Service to provide the 

Commission, as part of 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. 

Section 3653 provides that, after receiving annual reports from 

the Postal Service in accordance with section 3652, the Postal Regulatory Commission shall provide an opportunity for public comment. The Commission will then, within 90 days, make a written 

determination whether any rates and fees were not in compliance 

with the law or whether performance goals or any service standards were not met. If any noncompliance is found, the Commission 

is required to take appropriate action under the revised complaint 

procedure, section 3662 (section 205 of the bill, below). On the 

other hand, a determination of compliance creates a rebuttable presumption of compliance in any complaint proceeding on the specific 

matters reviewed in the annual audit. 

Sec. 205 Complaints; appellate review and enforcement 

Section 205 of the bill revises the complaint and appellate review 

provisions set out in subchapter V of chapter 36, title 39 (as redesVerDate Aug 04 2004 04:03 Sep 11, 2004 Jkt 029006 PO 00000 Frm 00010 Fmt 6659 Sfmt 6602 E:\HR\OC\HR672P1.XXX HR672P1
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ignated by the bill). In general, the bill strengthens the authority 

of the Postal Regulatory Commission to act on complaints. Section 

205 repeals current sections 3662 (rate and service complaints) and 

3663 (annual report on international services) and adds three sections in title 39 as follows. 

Section 3662 provides the Postal 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 would require the Commission to begin proceedings on 

or dismiss complaints within 90 days and if not acted on, the complaint shall be treated in the same way as if it had been dismissed 

pursuant to an order issued by the Commission on the last day allowable for the issuance of such order under paragraph (1). In subsection 3662(c), the amendment 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 Commission has no such authority under 

current law). The Commission is authorized to suspend rates or 

classifications that are not of general applicability in the Nation as 

a whole or in any substantial region of the Nation. The suspension 

is permitted for only a limited period of time pending expedited 

proceedings under 3662, and four key factors are outlined in subsection (d) that the Commission must consider in evaluating 

whether this authority may be exercised. In cases of deliberate 

noncompliance with law, the Commission is authorized to levy fines 

based on the seriousness, nature, circumstances, and extent of the 

noncompliance. Fines resulting from provision of Competitive products must be paid out of the Competitive Products Fund, and all 

fines are paid into the general Treasury fund. 

Section 3663 provides for appeals of any order or decision of the 

Postal Regulatory 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 of title 28. 

Section 3664 gives any United States District Court jurisdiction 

to enforce orders of the Postal Regulatory Commission and issue injunctions or restraining orders. 

Sec. 206 Workshare discounts 

Section 206 amends Title 39 by adding section 3687, requiring 

the Postal Regulatory Commission to establish rules for workshare 

discounts that ensure that workshare discounts do not exceed the 

cost that the Postal Service avoids as the result of private sector 

workshare activity, except (1) where the discount is associated with 

a new product or service or with a change to an existing product 

or service and is necessary to induce certain mailer behavior, although such discount cannot be provided for longer than four years; 

(2) to the extent that a reduction in the discount would lead to a 

loss of volume in the affected category 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; 

would result in a further increase in the rates paid by mailers not 

able to take advantage of the discount; or would impede the effiVerDate Aug 04 2004 04:03 Sep 11, 2004 Jkt 029006 PO 00000 Frm 00011 Fmt 6659 Sfmt 6602 E:\HR\OC\HR672P1.XXX HR672P1
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cient operation of the Postal Service; (3) where the amount of the 

discount above costs avoided is necessary to mitigate rate shock 

and will be phased out over time; or (4) where the workshare discount is provided in connection with subclasses of mail consisting 

exclusively of mail matter of educational, cultural, or scientific 

value. 

Sec. 207 Clerical amendment 

Section 207 of the bill revises the analysis of chapter 36, title 39, 

in accordance with the changes made by the bill. 

TITLE III—PROVISIONS RELATING TO FAIR COMPETITION

Sec. 301 Postal Service Competitive Products Fund 

Section 301 of the bill 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 the interests of postal consumers in the Market Dominant category and taxpayers. 

Subsection 2011 essentially permits the Postal Service to manage 

the Competitive Products Fund in its discretion but prohibits the 

Postal Service from borrowing funds from Treasury or borrowing 

from private capital markets by pledging the full faith and credit 

of the United States. The new fund can borrow money to support 

competitive products by pledging the assets of the fund and its revenues and receipts. The Postal Service may invest money from the 

new fund in accordance with rules which the Secretary of Treasury 

shall prescribe (by not later than 18 months after the date of enactment)—in such other obligations or securities as the Postal Service 

deems appropriate. 

Subsection 2011(h) requires that the Secretary of the Treasury, 

in consultation with the Postal Service, an independent accountant, 

and other appropriate advisors, develop recommendations for rules 

such as accounting practices and principles that will identify and 

value the assets, liabilities, capital, and operating costs, associated 

with Competitive products. Treasury’s recommendations must be 

submitted to the Postal Regulatory Commission, which must then 

provide an opportunity for all other interested parties to present 

their views. The Postal Service, among others, will therefore be 

able to present its own recommendations and counterarguments. 

While Treasury will have the first opportunity to make recommendations, the Committee expects the Commission to give consideration to all input from interested parties, without a presumption that the Treasury recommendations are correct. After taking 

into account all views and information presented, the Commission 

must issue rules providing for the establishment and application of 

accounting practices and principles, certain substantive and procedural rules, and submission by the Postal Service of annual and 

periodic reports. The Commission is authorized to update the rules 

as necessary. 

13 

The Postal Service must report to the Postal Regulatory Commission on the Competitive Products Fund periodically, as may be required by the Commission. In addition, the Postal Service must 

prepare an annual report for the Secretary of the Treasury concerning the operation of this Fund. This report 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 the report must also be provided to the 

Commission as part of the required annual reports. 

Sec. 302 Assumed Federal income tax on competitive products income 

Section 302 of the bill adds a new section 3634 to title 39. Section 3634 requires the Postal Service each year to compute an assumed Federal income tax on income from Competitive products 

and to transfer from the Competitive Products Fund to the Postal 

Service Fund the amount of that assumed tax. 

Sec. 303 Unfair competition prohibited 

Section 303 of the bill adds a new section 404a to title 39. Section 404a 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 to any third party; 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 substantially the same information is otherwise obtainable). The 

Postal Regulatory Commission is required to prescribe regulations 

to carry out the purposes of this section, and the prohibitions are 

enforced through the Commission’s strengthened complaint process 

and remedies, which include ordering rescission of any regulation. 

Sec. 304 Suits by and against the Postal Service 

Section 304 of the bill amends section 409 of title 39 to make the 

Postal Service more amenable 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 (the Lanham Act and certain parts of the Federal Trade Commission Act). 

Second, the amendment subjects Postal Service conduct with respect to competitive products to federal antitrust laws and unfair 

competition prohibitions and eliminates sovereign immunity protection from suits in Federal court for violations of Federal law. The 

amended section 409 allows injunctive relief against officers and 

employees of the Postal Service in case of violation of the antitrust 

laws, while the Postal Service itself would be subject to all available remedies. 

Third, the amendment would make the Postal Service, to the extent it engages in conduct with respect to the provision of competitive products, a ‘‘person’’ for purposes of the Federal bankruptcy 

laws. 

14 

Fourth, the amendment would require the Postal Service to consider local zoning, planning, or land use regulations and building 

codes when constructing or altering buildings. 

As amended, section 409 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 Postal Regulatory Commission and appeals of decisions by 

the Commission or the Governors. The amendment requires that 

judgments arising out of activities of the Postal Service must be 

paid by the Postal Service, and judgments arising out of violations 

of law involving competitive products must be paid from revenues 

from competitive products. 

Sec. 305 International postal arrangements 

Section 305 of the bill replaces section 407 of title 39. Section 407 

deals with international postal arrangements. 

New subsection 407(a) establishes a policy framework for future 

international postal agreements that stresses separation of regulatory and operational functions. 

Subsection 407(b) vests the Secretary of State with authority to 

lead U.S. delegations in intergovernmental meetings devoted to 

postal matters. The Secretary is barred from concluding agreements with respect to any competitive product that give preference 

to any entity, either public or private, including the Postal Service. 

The subsection provides the Secretary in carrying out his responsibilities under this section shall maintain continuing liaison with 

other federal agencies and the Congress, and appropriate liaison 

with the Postal Service and affected members of the public. The 

subsection further declares that the Secretary of State shall establish an advisory committee, under the Federal Advisory Committee 

Act, to help perform such functions as the Secretary considers appropriate in connection with the necessary coordination and liaison 

with entities in the public and private sectors as the Secretary develops U.S. foreign policy related to international postal services 

and other international delivery services. 

Subsection 407(c) provides that, before concluding an international agreement that establishes a rate or classification for a 

market-dominant product, the Secretary shall request a decision 

from the Postal Regulatory Commission to determine whether the 

proposed rate or classification is consistent with the Commission 

standards and criteria for market dominant products. The Secretary must ensure that international agreements are consistent 

with the Commission’s decision except to the extent that modification may be required by considerations of foreign policy or national 

security. 

Subsection 407(d) authorizes the Postal Service to enter into 

agreements or contracts as it deems appropriate for international 

postal services or other international delivery services without the 

consent of the Secretary as long as any agreements with agencies 

or subsidiaries of foreign governments are contractual in nature 

and do not purport to be international law. The Postal Service 

must notify the Secretary and the Commission of agreements with 

agencies of foreign governments. 

In light of studies conducted by the General Accounting Office 

and the former U.S. Customs Service, subsection 407(e) requires 

15 

the Bureau of Customs and Border Protection of the Department 

of Homeland Security to afford non-discriminatory access to U.S. 

customs procedures for both the Postal Service’s Competitive products and similar products of U.S.-owned private carriers. Since 

some foreign governments currently limit access to simplified customs procedures to government post offices—thus discriminating 

between the Postal Service and U.S. private carriers—the subsection requires the Secretary of State ‘‘to the maximum extent 

practicable’’ to negotiate with other countries to make available 

customs procedures that do not discriminate between the Postal 

Service and U.S. private carriers while fully meeting the needs of 

all types of American shippers. 

Sec. 306 Redesignation 

Section 306 redesignates a subchapter heading in chapter 36 of 

title 39 to reflect various amendments in the bill. 

Sec. 307 Clarification 

Section 306 of the bill amends section 403(c), title 39, to clarify 

that the subsection shall not be construed to prevent the establishment of rates that vary with volume if such rates will be made 

available to similarly situated persons and will increase the aggregate contribution to the institutional costs of the Postal Service. 

This provision is not intended to require the Postal Regulatory 

Commission to allow establishment of such volume-variable rates, 

but simply to clarify that the first sentence of section 403(c) does 

not prohibit such rates. The Commission must still determine 

whether establishment of such rates would satisfy other applicable 

criteria and policies. In determining what constitutes unjust or unreasonable discrimination, the committee expects that the Commission, like the courts, will take into account the inherent differences 

between market dominant and competitive markets. The committee 

does not intend this provision to restrain the ability of the Postal 

Service to compete fully and fairly against private sector competitors in competitive markets. 

TITLE IV—GENERAL PROVISIONS

Sec. 401 Qualification requirements for Governors 

Section 401 of the bill amends section 202 of title 39. Section 202 

establishes the Board of Governors and provides that the nine Governors shall represent the public interest generally. The amendment adds a requirement that the President shall select at least 

four Governors based solely on their demonstrated ability in managing organizations or corporations, in either the public or the private sector, of substantial size (employing at least 50,000 employees). 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 amendment also has a provision that one of the nine Governors must be chosen from among persons unanimously nominated by all labor unions recognized by law as collective-bargaining 

representatives for employees of the Postal Service in one or more 

16 

bargaining units. The term of office for this Governor is three years 

(instead of nine). 

Section 401 recognizes the bill vests enhanced powers and responsibilities in the Governors. A majority of current and former 

Board members have indicated support for well-defined qualification requirements for Board appointments. The qualification provisions in the bill are modeled on the appointment criteria for the 

Amtrak Board of Directors. Those Governors currently serving or 

nominated before enactment are not affected by this change. 

Sec. 402 Obligations 

Current law imposes a $2 billion annual cap on borrowing for capital investments and a $1 billion annual cap on borrowing for 

operating expenses. As recommended by the President’s Commission on the U.S. Postal Service, section 402 of the bill amends section 2005 of title 39 to eliminate these annual sub-limits, but still 

maintains the overall annual borrowing cap of $3 billion. Current 

law also remains unchanged regarding the aggregate $15 billion 

limit of obligations outstanding at any one time, and this cap would 

apply in the aggregate to the Postal Service Fund and the Competitive Products Fund. 

Sec. 403 Private carriage of letters 

Section 405 of the bill amends section 601 of title 39 to provide 

limited additional statutory exemptions to the postal monopoly. In 

summary, this section 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 a 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. 

The proposed price and weight limits for the postal monopoly, 6 

times the first-class stamp price and 12 and a half ounces, remain 

significantly more protective of the Postal Service than postal monopoly limits enacted in other industrialized nations that have concluded smaller monopolies will promote greater efficiency without 

jeopardizing universal service. For example, in 1997, the European 

Union limited European postal monopolies to 5 times the stamp 

price or 12 and a half ounces. In 2002, the European Union adopted a second postal directive that reduced last year the limits on 

postal monopoly laws to 3 times the stamp price or 3 and a half 

ounces. Canada’s postal monopoly has been limited to 3 times the 

stamp price since 1981; Australia’s monopoly is limited to 4 times 

the stamp price or 8 ounces. Indeed, several countries have abolished their postal monopolies or are in the process of doing so, including Germany, Sweden, New Zealand, and the United Kingdom. 

In comments submitted to the Committee in August 1998, the Department of Justice stated its support for limiting the scope of the 

statutory monopoly with a bright-line test for identifying products 

falling within it. In that August 1998 correspondence, the Department also noted that the Postal Service’s entry into competitive 

markets suggested that economic theory did not justify the postal 

monopoly as it existed under current law. In April 1997, the General Accounting Office testified that the ‘‘impact of reducing the 

17 

scope of the letter mail monopoly to $2 would not significantly affect the Postal Service’s ability to provide affordable universal service because little of the first-class mail volumes that are currently 

protected by the postal monopoly would become subject to competition. * * * Available data indicate that less than 3 percent of the 

first-class mail revenues are currently derived from first-class mail 

that falls outside the proposed reduced limit of $2.’’ 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 that the stamp price increases. 

As predicted by the Postal Rate Commission Chairman’s testimony in 1996, the Postal Service subsequently testified that year 

that it would interpret current Section 601(b) of Title 39 to allow 

it to repeal the changes proposed by the bill. Subsection (b) is derived from section 7 of an 1864 postal act, and the revision repeals 

it as obsolete—this suspension power has never been used as provided; in fact, no occasion is known of the Post Office or the Postal 

Service suspending the exception for postage paid mail. Current 

subsection (b) of 601 simply authorizes the Postal Service to suspend the exception of paragraph (a) and thereby forbid the private 

carriage of letters even if postage is paid. The Postal Service’s authority to reapply the postal monopoly to stamped letters is unnecessary and antiquated; it is repealed by the bill. Some entities in 

both the government and the private sector have testified that 

since 1974, the Postal Service has often misused the suspension 

power of 601(b). Since 1974, the Postal Service has, under color of 

subsection (b), issued regulations that rather than suspend the exception to the monopoly for stamped letters set out in subsection 

(a), instead suspend the postal monopoly itself (i.e., the criminal 

prohibitions set out in chapter 83 of title 18, U.S. Code). Indeed, 

when the Postal Service first proposed these regulations in 1973 

that purported to derive a suspension power for the private express 

statutes contained in Title 18 of the U.S. Code, the Postal Rate 

Commission’s General Counsel concluded that use of the suspension authority in this way violated the legislative language and intent. The ‘‘grandfather clause’’ provided in the bill will authorize 

the continuation of private activities that the Postal Service has 

permitted under color of this section. In this way, the bill protects 

mailers and private carriers who have relied upon regulations that 

the Postal Service has adopted to date in apparent misinterpretation of the current subsection (b). 

By establishing boundaries for the postal monopoly while providing the Postal Service more commercial freedom, the bill clarifies the scope of the statutory monopoly that historically has been 

defined solely by the Service. 

The suspension for outgoing international mail would be continued, to the extent that it involves the uninterrupted carriage of letters from a point within the United States to a foreign country for 

delivery to an ultimate destination outside the United States. However, the requirement that a shipper or carrier submit to an inspection or audit or face a presumption of violation would not be continued. At the time this regulation (section 320.8 of title 39 of the 

Code of Federal Regulations) was promulgated, the carriage and 

delivery of mail was generally the preserve of government-owned or 

sponsored postal administrations in foreign countries. The ComVerDate Aug 04 2004 04:03 Sep 11, 2004 Jkt 029006 PO 00000 Frm 00017 Fmt 6659 Sfmt 6602 E:\HR\OC\HR672P1.XXX HR672P1
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mittee intends the suspension to incorporate more recent changes 

in the laws of destinating countries, so that it would not prohibit 

delivery outside a foreign government-owned or sponsored post if 

such delivery is permitted by the laws of the foreign country. 

The Postal 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. 

Sec. 404 Rulemaking authority 

Section 404 of the bill amends section 401(2) of title 39 to clarify 

the rulemaking function of the Postal Service. As 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, unless explicitly authorized by Congress, empowered to adopt regulations 

implementing other parts of the U.S. code, e.g., the criminal laws. 

This amendment is fully consistent with the legislative history of 

this provision (which originated in the 1960 codification) and is 

modeled on the Federal Communications Commission’s rulemaking 

authority, 47 USC 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. 

Sec. 405 Noninterference with collective bargaining agreements, etc. 

Section 405 of the bill addresses two specific issues. First, subsection (a) mandates that, except for section 407, nothing in the 

bill, or amendments made by the bill to current law, can affect any 

of the rights, privileges, or benefits of postal employees or the labor 

organizations representing them. Second, subsection (b) clarifies 

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) people who are blind and other people with a physical 

impairment preventing them from using or reading conventionally 

printed material; and (3) mailing of balloting materials under the 

Uniformed and Overseas Citizens Absentee Voting Act. 

Sec. 406 Bonus authority 

Section 406 of the bill adds a new section 3686 to title 39. Section 3686 authorizes the Postal Service to establish one or more 

bonus or reward programs in furtherance of the objectives of chapter 36. The Postal Regulatory Commission must review any such 

program prior to implementation and approve any program that it 

finds ‘‘likely to achieve the objectives of this chapter.’’ The section 

states that bonus payments may exceed the salary cap for postal 

employees established in section 1003(a) of title 39 if the relevant 

program has been approved by the Commission. For each employee 

whose compensation exceeds the salary cap by virtue of a bonus 

awarded under this section, the Postal Service is required to list in 

19 

its annual comprehensive statement the name of the employee, the 

amount of the bonus, the limitation of the salary cap, and amount 

by which the cap was exceeded. Nothing in this new section is intended to modify existing statutory authority for employment in 

the Postal Service under chapter 10 of title 39, particularly in regard to section 1001(c) (i.e., authority for the Postal Service to hire 

individuals as executives under employment contracts). 

Sec. 407 Mediation in collective bargaining disputes 

Section 407 is intended to expedite the resolution of collective 

bargaining disputes. It would replace the fact-finding panel that 

currently conducts the first step in the dispute resolution process 

with a mediator appointed by the Director of the Federal Mediation 

and Conciliation Service. If the parties are unable to agree and determine to submit the dispute to arbitration, the existing process 

of an arbitration board remains in place. This new step in the current bargaining process reflects a joint suggestion by the Postal 

Service and its four postal unions, and is based upon a recommendation by the President’s Commission on the U.S. Postal 

Service. It should assist disagreeing parties in forging a final 

agreement, or limiting the issues that must be addressed if interest 

arbitration becomes necessary. 

TITLE V—ENHANCED REGULATORY COMMISSION

Sec. 501 Reorganization and modification of certain provisions relating to the Postal Regulatory Commission 

Section 501 of the bill creates a new chapter 5 in title 39 to establish the Postal Regulatory Commission. Chapter 5 consists of 

four sections as follows. 

Section 501 of title 39 establishes the Postal Regulatory Commission. Section 3601 of current law, establishing the Postal Rate 

Commission, is repealed. 

Section 502 of title 39 sets out the qualifications and terms of office for the five Commissioners. This section provides that ‘‘Commissioners shall be chosen solely on the basis of their technical 

qualifications, professional standing, and demonstrated expertise in 

economics, accounting, law, or public administration.’’ Section 3602, 

establishing terms of office for Commissioners of the Postal Rate 

Commission, is repealed. Commissioners currently serving or nominated before enactment are not affected by this change. 

Section 503 of title 39 authorizes and directs the Commission to 

issue rules and regulations. Section 503 is a redesignation of current section 3603. 

Section 504 of title 39 sets out rules governing the administration of the Commission. Section 504 is a redesignation of current 

section 3604. 

In sum, section 501 of the bill recognizes the Commission’s enhanced responsibilities by establishing the Commission 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, and dealing with rate regulation. 

20 

Sec. 502 Authority for Postal Regulatory Commission to issue subpoenas 

Section 502 of the bill amends section 504 of title 39 (i.e., section 

3604 of current law as redesignated by section 501 of the bill). As 

amended, section 504 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 issue subpoenas requiring the attendance and 

presentation of testimony by, or production of documentary or other 

evidence in the possession of, officers, employees, agents, or contractors of the Postal Service and to order the taking of depositions 

of and responses to written interrogatories by such persons. Such 

subpoena or order is allowed with respect to any proceeding conducted by the Commission under this title. Any subpoena requires 

the written concurrence of a majority of Commissioners then holding office in advance of its issuance. Failure to obey a subpoena 

may be referred to the appropriate United States district court and 

failure to obey a court order is punishable as a contempt of court. 

The amendment also provides for the handling of information the 

Postal Service views as proprietary that is requested from the Postal Service by the Commission. As amended, section 504 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 supplied and must 

restrict access to the information to Commission officers and employees. The amendment further provides for the possibility of discovery of such information by interested parties 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. 

The Committee recognizes that, in the past, specifically identified 

commercially sensitive information has been made available to parties—including the Postal Service’s competitors—during litigation 

by using protective conditions. Such conditions would protect the 

sensitive commercial nature of the information while allowing the 

competitors’ agents full access to the information to make their 

case. The new subsection 504(g) of title 39 will allow the Postal 

Service to protect information recognized in past proceedings as 

sensitive. At the same time, it is the Committee’s expectation that 

this subsection will not be used to withhold information currently 

available to the public. 

Sec. 503 Appropriations for the Postal Regulatory Commission 

Section 503 of the bill 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. 

21 

Sec. 504 Redesignation of the Postal Rate Commission 

Section 504 of the bill changes ‘‘Postal Rate Commission’’ to the 

‘‘Postal Regulatory Commission’’ in various statutes. 

Sec. 505 Officer of the Postal Regulatory Commission representing 

the general public 

Section 505 ensures that the existing role of a Consumer Advocate is maintained in all proceedings of the new Postal Regulatory 

Commission, to ensure that the interests of the general public are 

represented. 

TITLE VI—INSPECTORS GENERAL

Sec. 601 Inspector General of the Postal Regulatory Commission 

Section 601 of the bill amends the Inspector General Act of 1978 

to provide for an Inspector General for the Postal Regulatory Commission. 

Sec. 602 Inspector General of the United States Postal Service to be 

appointed by the President 

Section 602 of the bill amends the Inspector General Act of 1978 

to require appointment of the Postal Service’s Inspector General by 

the President with Senate confirmation, in the same manner as the 

other presidentially appointed Inspectors General at major federal 

departments and agencies. 

The bill also subjects the Postal Service, for the first time, to provisions of the Anti-Kickback Act, gives Postal Service contractor 

employees whistleblower protection, and requires the Postal Service to develop and issue purchasing regulations prohibiting the reimbursement of certain contractor costs. 

Under the Anti-Kickback Act, major postal contractors would 

have to maintain compliance systems that would detect and prevent kickbacks. In addition, whistleblower protection would apply 

to postal contractors’ employees. Finally, the Postal Service would 

be required to develop and issue purchasing regulations that prohibit the reimbursement of contract costs not allowable under the 

Postal Service Procurement Manual. 

In addition, this amendment authorizes the Inspector General of 

the Postal Service to audit or oversee the audit of the Postal Service’s financial statements in order to bring the Postal Service in 

line with the Inspector General Act and meet accountability standards required of other federal agencies, as well as to implement the 

annual audit reports required under chapter 36 as amended. The 

independence and objectivity of the Inspector General will reinforce 

the independence of the Postal Service’s outside accountants. 

TITLE VII—NATIONAL COMMISSION; EVALUATIONS

Sec. 701 Universal Postal Service Study 

Recognizing that the concept of universal postal service has 

never been defined in the United States, and yet is a critical component of assessing the future role of a national post office, section 

701 directs the Postal Service to submit a report on universal postal service in the United States to the President, Congress, and the 

Postal Regulatory Commission. The report must include a review 

22 

of the history and development of universal service, an explanation 

of the current scope and standards of universal service and what 

will likely be required in the future, a description of groups not 

currently covered by universal service or receiving deficient service 

or quality, and such recommendations as the Postal Service deems 

appropriate. The Postal Regulatory Commission must then evaluate the Postal Service’s study and issue its own report to the President and the Congress. That report must include, according to 

paragraph (b): (1) comments and observations on the matters 

raised in the Postal Service’s report as the Commission considers 

appropriate; (2) an estimate of the cost attributable to the obligation to provide universal service under prior and current law; (3) 

an estimate of the likely cost of fulfilling the obligation to provide 

universal service; and (4) additional topics and recommendations as 

the Commission considers appropriate. According to paragraph (c), 

in preparing the reports required by section 701 the Postal Service 

and the Postal Regulatory Commission (1) shall consult with each 

other, other Federal agencies, users of the mails, enterprises in the 

private sector engaged in the delivery of mail, and the general public; and (2) shall address in their respective reports any written 

comments received under this section. 

Sec. 702 Assessments of ratemaking, classification and other provisions 

Section 702 of the bill requires the Postal Regulatory Commission to report, in conjunction with the views of the Postal Service, 

to the President and the Congress, at least every 5 years, 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. Specifically, 

at least the first report must include, under paragraph (c), information on (1) the operation of the Commission regulations applicable 

to rates for competitive products and relevant recommendations; (2) 

the competitive products fund; and (3) the assumed federal income 

tax on the competitive products fund. 

Sec. 703 Study on equal application of laws to competitive products 

Section 703 of the bill requires the Federal Trade Commission to 

prepare a report detailing how federal and state laws apply differently to the Postal Service with respect to competitive products 

and private companies providing similar products. The Commission 

is directed to report within one year after enactment and to include 

recommendations for resolving any identified disparities in legal 

treatment. The Federal Trade Commission is to consult in preparing its report with the Postal Service, the Postal Regulatory 

Commission, other Federal agencies, mailers, private companies 

that provide delivery services, and the general public, and shall append to such report any written comments received. 

Sec. 704 Greater diversity in Postal Service executive and administrative schedule management positions 

Section 704 of the bill directs the Board of Governors to study 

and report to the President and Congress on the extent of representation by women and minorities in supervisory and management 

positions within the Postal Service. In addition, the Postal Service 

23 

is required, as part of its performance evaluations of supervisory 

and management employees, to give appropriate consideration to 

meeting affirmative action goals, achieving equal employment opportunity requirements, and implementation of plans to achieve 

greater workforce diversity. 

Sec. 705 Plan for assisting displaced workers 

Section 705 of the bill requires the Postal Service to develop and 

be prepared to implement a plan for affording reemployment assistance to employees displaced by automation or privatization. The 

plan is to be provided to the Board of Governors and Congress 

within one year of enactment. 

Sec. 706 Contracts with women, minorities and small businesses 

Section 706 of the bill requires the Board of Governors, within 

one year, to study and report to the President and Congress on the 

number and value of contracts and subcontracts entered into with 

women, minorities, and small businesses. 

Sec. 707 Rates for periodicals 

Section 707 of the bill requires the Postal Service, acting jointly 

with the Postal Regulatory Commission and the General Accounting Office, to study and submit to the President and Congress a report concerning (1) the quality, accuracy, and completeness of the 

information used by the Postal Service in determining the direct 

and indirect postal costs attributable to periodicals; and (2) any opportunities that might exist for improving efficiencies in the collection, handling, transportation, or delivery of periodicals by the 

Postal Service, including any pricing incentives for mailers that 

might be appropriate. The report shall include recommendations 

for any administrative action or legislation that might be appropriate. 

Sec. 708 Assessment of certain rate deficiencies 

Section 708 of the bill requires the Office of Inspector General of 

the Postal Service to study and submit to the President, the Congress, and the Postal Service a report concerning the Postal Service’s administration of the reduced rate provisions of section 

3626(k) of title 39. The study must specifically address the adequacy and fairness of the process by which assessments are determined and appealable, including whether the Postal Regulatory 

Commission or any other body outside the Postal Service should be 

assigned a role, and whether a statute of limitations should be established for the commencement of proceedings by the Postal Service. 

Sec. 709 Postal processing and distribution network study 

Section 709 requires the Postal Service to provide a report to the 

President, the Congress, and the Board of Governors on the processing and distribution network of the Service, with an eye toward 

recommendations on improving the system’s efficiency and effectiveness. 

24 

Sec. 710 Definition 

Section 710 of the bill declares that the term ‘‘Board of Governors’’ as used in this title shall have the same meaning as given 

in section 102 of title 39. 

TITLE VIII—MISCELLANEOUS; TECHNICAL AND CONFORMING

AMENDMENTS

Sec. 801 Employment of Postal Police Officers 

Section 801 of the bill further amends section 404 and makes 

permanent the authority for the Postal Service to employ postal police officers to protect property owned or occupied by the Postal 

Service or under the charge and control of the Postal Service and 

to protect persons on the property. The Postal Service currently 

employs more than one thousand uniformed Postal Police Officers 

who are assigned to critical postal facilities throughout the country. 

The officers provide perimeter security, escort high-value mail shipments, and perform other essential protective functions. To date, 

Congress has provided temporary authority for such officers each 

year in appropriations bills. The bill language is modeled after the 

appropriations bills, with updates to terminology and statutory references. 

One aspect of the appropriations language that has been updated 

is the cross-reference to the Act of June 1, 1949, as amended (62 

Stat. 281, 40 U.S.C. 318–318d). That Act was replaced by 40 U.S.C. 

1315. As a result of differences between 40 U.S.C. 1315 and the 

older statutory provision, a manager’s amendment is anticipated to 

clarify the powers available to the officers. The anticipated amendment would replace the last sentence of the new section 404(f) created by section 801 of the bill with the following: ‘‘With respect to 

such property, such officers shall have the powers available under 

section 1315(b)(2)(A)–(C) of title 40 and may have, to such extent 

as the Postal Service may by regulation prescribe, the powers 

available under section 1315(b)(2)(D)–(F) of such title. As to such 

property, the Postal Service may take any action that the Secretary 

of Homeland Security may take under section 1315 of title 40, attaching thereto penalties under the authority and within the limits 

provided in subsection (c)(2) of such section.’’ 

Sec. 802 Date of postmark to be treated as date of appeal in connection with the closing or consolidation of post offices 

Section 802 of the bill further amends section 404 of title 39 to 

provide that the appeal to the Postal Regulatory Commission of a 

post office closing by any person shall be considered timely if it is 

postmarked within 30 days of notification of the closure to the appellant. The Commission testified that current law, which requires 

the appeal to be received by the Commission within 30 days, precludes adequate consideration of certain post office closings. 

Sec. 803 Provisions relating to benefits under chapter 81 of title 5, 

United States Code, for officers and employees of the former 

Post Office Department 

Section 803 of the bill amends section 8 of the Postal Reorganization Act of 1970 (39 U.S.C. 1001 note) and addresses the administrative status of employees affected by change made by Public Law 

25 

105–33 (repealing the authority for transitional appropriations) by 

clarifying their status as officers and employees of the U.S. Postal 

Service with respect to compensation for work injuries. 

Sec. 804 Obsolete provisions 

Subsection 804(a) of the bill repeals chapter 52 of title 39, relating to contracts for the surface transportation of mail. Such contracts are now let under section 5005 of title 39. 

Subsection 804(b) authorizes the Postal Service to lengthen the 

statutory four-year limitation on postal transportation contracts as 

it deems appropriate or advisable. The four-year limitations in current postal law date from President Grant’s Administration and reflect the spoils system of that era by allowing a new President to 

assume control of the Post Office Department and its accompanying patronage. 

The Committee has spent the last 10 years examining all aspects 

of the Postal Service with the thought of giving it the flexibility 

and the authority it needs to survive as a viable public institution 

well into the future. During our extensive review we have discovered some sound policies and programs of the Postal Service that 

have been quite successful and the Committee recommends the 

Postal Service continue that which works for it. One such sound 

policy is the Postal Service relationship with its Highway Contractors (Star Routes). For the last 56 years, the Postal Service has 

contracted with Highway Contractors for periods up to four years. 

Such contracts may be renewed for successive contract terms and 

may be adjusted, with the consent of the Contractor, for increased 

or decreased costs resulting from changed conditions occurring during the contract term. The Postal Service has also provided indemnity payments for contracts canceled for reasons other than default. 

This program has returned corresponding benefits to both the Postal Service and its Highway Contractors. The Postal Service has had 

the benefit of continuity of service from a dedicated group of highway transportation suppliers, and the contractors have been able 

to amortize their costs over a longer period of time thus keeping 

their rates economic and efficient. These Highway Contractors have 

also provided efficient and reliable service in times of unanticipated 

increases in Postal mail volume. As a result of this program’s highly successful history, the Committee recommends that the Postal 

Service maintain its 56 year old policy of renewing and adjusting 

Highway Contractors with indemnity provisions or liquidated damages. As noted, the Committee has included in this bill a provision 

that permits the Postal Service to contract for longer terms than 

4 years. 

The Postal Service is in the midst of a major transformation to 

improve and modernize its operations. The Postal Service has identified the procurement area, particularly improvements in its supply chain management, as an area in need of change and improvement. 

The Committee requested that the Government Accountability 

Office (GAO) determine the Postal Service’s progress in implementing supply chain management initiatives and whether these 

initiatives have had an effect on small businesses. Supply chain 

management is a process that has helped successful private-sector 

26 

companies leverage their buying power and identify more efficient 

ways to procure goods and services. 

In its report entitled ‘‘Progress in Implementing Supply Chain 

Management Initiatives,’’ GAO–04–540, the GAO recommended 

that the Postal Service improve implementation of its bulk fuel program, consider adjustments to reverse auction procedures, and 

focus more attention on small, minority-owned, and woman-owned 

businesses in carrying out supply chain management initiatives. 

GAO also believes that the Postal Service should have a mechanism in place to ensure accountability and transparency in its 

small business contracting. 

The Committee will continue its oversight of these programs and 

urges the Postal Service to move quickly to address issues identified by GAO in its report. 

Sec. 805 Expanded contracting authority 

Section 805 of the bill amends section 5402 of title 39 and corresponding provisions in title 49, relating to air transportation. In 

substance, section 805 permits the Postal Service to contract for 

international air transportation of mail at competitive market 

rates. Under current law the Postal Service may contract freely for 

interstate air transportation of mail (outside of Alaska), but international air transportation of mail is regulated by the Department 

of Transportation, and U.S. carriers are generally entitled to preference in the carriage of U.S. mail. The Postal Service’s inability 

to contract freely with U.S. and foreign air carriers for international transportation of mail diminishes its competitiveness in 

international markets and costs the Postal Service an estimated 

$40 million to $50 million annually. The amendment further provides for (1) repeal of duty-to-carry requirements imposed on U.S. 

air carriers (as inconsistent with Postal Service authority to negotiate); (2) exclusion of foreign carriers whose governments bar U.S. 

carriers from carrying their international mail; and (3) consultation 

between the Postmaster General and the Secretary of Defense in 

respect to the carriage of international military mail. This has been 

a long standing provision in postal reform bills dating back to the 

104th Congress. In 1999, the Department of Transportation testified in support of this approach. 

Sec. 806 Investments 

Section 806 of the bill amends section 2003 of title 39 to prohibit 

the Postal Service from using funds from the Postal Service Fund 

to invest in ‘‘obligations or securities of a commercial entity.’’ 

Under the bill, such investments are permitted using funds from 

the Competitive Products Fund. 

Sec. 807 Repeal of section 5403 

Section 807 of the bill repeals section 5403 of title 39. Section 

5403 authorizes the Postal Service unilaterally to impose fines on 

carriers of international mail for delay of the mail or ‘‘other delinquencies.’’ Since the bill authorizes the Postal Service to contract 

for international mail transportation, the authority to levy such 

fines is no longer appropriate. 

27 

Sec. 808 Reduced rates 

Section 808 makes changes related to the rates provided for 

‘‘within county publications’’—publications within the county in 

which they are published. These types of publications are predominantly small-circulation, local newspapers—family-owned or small 

group weeklies targeted toward the news and advertising needs of 

small communities or counties. Before the Postal Reorganization 

Act, within county publications, along with other classes of mail 

and types of mailers such as nonprofit periodicals and library matter, were allowed to mail at reduced rates of postage. In 1970, the 

Postal Reorganization Act required that the products cover their attributable costs, but their institutional costs were paid for by annual appropriation. In 1993, Congress phased in rate increases so 

that after five years the reduced rate mailers would eventually pay 

half the institutional costs that comparable commercial mailers 

paid. Following the realization of some practical difficulties related 

to this ‘‘fifty percent markup rule,’’ the law was changed in 2000 

with respect to certain publications. Within county publications, 

however, remained subject to the fifty percent markup rule. 

This bill correctly discontinues the fifty percent markup rule for 

within county publications. Continuing such a rule could unduly 

limit the flexibility available to the Postal Regulatory Commission 

in creating a new rate-setting approach. In the course of deleting 

the fifty percent markup rule, however, this bill inadvertently deleted the primary statutory authority for preferred treatment of 

within county publications in terms of rates. 

Therefore, a manager’s amendment is anticipated that will preserve the preferred status of within county publication rates. The 

language in the amendment would replace paragraph (a)(3) of section 3626 to read: ‘‘Rates of postage for a class of mail or kind of 

mailer under former section 4358 (a)–(c) shall be established so 

that postage on each mailing of such mail reflects its preferred status as compared to the postage for the most closely corresponding 

regular-rate category mailing.’’ This language tracks the phrasing 

in the current statute. The intent of the change is to maintain the 

special status of within county publications while replacing the 

fifty percent markup rule with a more general statement that within county rates should reflect the mail’s ‘‘preferred status.’’ 

Because of the local nature of within county publications, they 

have low costs compared to many national publications. As a result, the current approach toward within county publications is for 

them to have their own subclass status, which keeps them from 

having their costs averaged together with more costly national 

mail. The manager’s amendment is not intended to require the 

Commission or Postal Service to delete the within county subclass. 

Sec. 809 Hazardous matter 

Section 809 provides for penalties regarding illegal use of the 

mails to transport hazardous matter. It adds a new section 3018 

to title 39 that prohibits the mailing of hazardous material, the 

causing of hazardous material to be mailed, and the manufacture, 

distribution, or sale of containers, packaging kits or other devices 

(for use in mailing hazardous materials) that fail to conform with 

relevant standards. Subsection (c) states that persons violating 

hazardous material mailing provisions shall be liable for civil penVerDate Aug 04 2004 04:03 Sep 11, 2004 Jkt 029006 PO 00000 Frm 00027 Fmt 6659 Sfmt 6602 E:\HR\OC\HR672P1.XXX HR672P1
28 

alties, clean up charges, and damages. Subsection (d) states that 

there must be notice and an opportunity for hearing before the 

Postal Service can determine a violation to the hazardous material 

provisions has occurred. Subsection (e) states what matters the 

Postal Service shall consider before determining the amount of civil 

penalties to violators of the hazardous material provisions. 

Sec. 810 Provisions relating to cooperative mailings 

Section 810 directs the Postal Regulatory Commission to study 

the Postal Service’s Cooperative Mail Rule to determine whether it 

contains adequate safeguards to protect against abuses of rates for 

nonprofit mail and deception of consumers. The Cooperative Mail 

Rule is a long-standing postal regulation designed to prevent the 

commercial exploitation of the nonprofit rate by prohibiting forprofit mail matter such as advertisements for products and services 

from being sent at the nonprofit rate. It has also been applied to 

prevent abusive relationships between commercial fundraisers and 

nonprofits, and to otherwise regulate those relationships. If the 

Postal Regulatory Commission determines that the Cooperative 

Mail Rule does not adequately safeguard against abuse of the nonprofit rate, section 810 authorizes the Commission to promulgate 

such regulations as it deems necessary. 

Sec. 811 Technical and conforming amendments 

Miscellaneous technical and conforming amendments required by 

the bill’s changes to Title 39. 

TITLE IX—POSTAL PENSION FUNDING REFORM AMENDMENTS

In 2003, the Postal Civil Service Retirement System Funding Reform Act of 2003 (P.L. 108–18 or the Act) was enacted to change 

the calculation of Postal Service contributions to the Civil Service 

Retirement System (CSRS). The Act credited the Postal Service for 

the real value of contributions it had made in the past and changed 

how contributions would be computed in the future. The Act provided immediate financial relief to the Postal Service, allowing the 

Postal Service to use the savings resulting from the change in FY 

2003–2005 to reduce its debt and hold postage rates steady. After 

FY 2005, the Act required that the savings go into an escrow account, absent any additional congressional action. 

P.L. 108–18 was enacted quickly to avert a financial crisis at the 

Postal Service, which had indicated that, absent a change, a rate 

increase would have been necessary within a year. However, the 

Act left two issues unresolved. First, the Act did not address 

whether the escrow account would be used to pay down debt, 

prefund retiree health benefits, or for some other purpose. Second, 

there was disagreement about what entity should be responsible 

for paying the costs of retirement benefits related to military service. Under previous law, the Treasury Department had paid those 

benefits for CSRS retirees. P.L. 108–18 shifted the responsibility 

for military costs to the Postal Service, both prospectively and retrospectively. 

This bill addresses both of these issues. The bill removes the requirement in P.L. 108–18 that funds be collected and placed in an 

escrow account, and requires the Treasury Department to pay the 

costs of retirement benefits related to military service. Returning 

29 

the responsibility for military costs to Treasury will result in an 

immediate overfunding of the CSRS fund. The bill directs the Postal Service to use that overfunding and other savings to address 

both its short- and long-term financial needs and ensures that the 

Postal Service reduces its growing unfunded liability for retiree 

health benefits. In its 2003 annual report, the Postal Service estimated that liability as being between $47 and $57 billion. 

Sec. 901 Civil Service Retirement System 

Section 901 restores the responsibility to the Treasury Department for paying retirement costs related to military service. Because such a change will result in an immediate overfunding of the 

Postal Service’s portion of the CSRS Fund, the section terminates 

the Postal Service’s obligation to make CSRS contributions. The Office of Personnel Management is required to determine whether 

there is a postal surplus or a supplemental liability by June 15, 

2006. If there is a surplus, as anticipated, the Office must transfer 

that amount to the Postal Service Retiree Health Benefits Fund. If 

there is a supplemental liability, the Office must establish an amortization schedule to liquidate the liability by the end of FY 2043. 

All determinations and redeterminations made by the Office are 

subject to review by the Postal Regulatory Commission at the Postal Service’s request. The Commission must submit the results of its 

review to the Office, the Postal Service, and Congress. The Office 

must reconsider its decision in light of the Commission’s review 

and make appropriate adjustments. 

Subsection (c) ensures that the monetary impact of restoring to 

Treasury the responsibility for military costs is retroactive, as if 

the relevant provision of P.L. 108–18 had not been enacted. It directs the Office to transfer to the CSRS Fund amounts that it 

would otherwise have paid for FY 2003–2005 and earnings on those 

amounts. 

Sec. 902 Health insurance 

Section 902 would change the way the Postal Service finances its 

share of the cost of providing health care to retirees. The Postal 

Service must pay a portion of health care premiums for currently 

retired employees eligible to participate in the Federal Employees 

Health Benefits (FEHB) program. Currently, the Postal Service 

pays only its portion of the health premiums incurred by current 

retirees each year. Under section 902, the Postal Service would 

begin paying for estimated costs of retiree health care as such costs 

are accrued by current workers. 

The bill creates a new on-budget account, the Postal Service Retiree Health Benefits Fund (PSRHBF), which would earn interest 

at the same rate as the CSRS Fund. The bill also requires calculation of the unfunded liability for health care costs of current and 

future retirees, which would be the difference between the assets 

held in the PSRHBF and the net present value of accrued liabilities 

projected for retiree health care. 

Starting in 2006, the bill requires the Postal Service to make 

payments equal to the annual increase in the unfunded liability attributable to current employees. The Postal Service also would pay 

annual interest costs on the unfunded liability (attributable to current and future retirees). These payments, made at the end of each 

30 

fiscal year, would be deposited into the PSRHBF. The Postal Service’s share of health care premiums for current retirees would be 

paid out of the PSRHBF as soon as adequate funds are available 

in the account to do so. 

The bill directs the Office of Personnel Management to compute 

the required prefunding and interest payments after consultation 

with the Postal Service. All computations or other determinations 

made by the Office, along with any relevant regulations established 

by the office, are subject to review by the Postal Regulatory Commission at the Postal Service’s request. The Commission must submit the results of its review to the Office, the Postal Service, and 

Congress. The Office must reconsider its decision in light of the 

Commission’s review and make appropriate adjustments. 

Sec. 903 Repealer 

Section 903 repeals section 3 of the Postal Civil Service Retirement System Funding Reform Act, related to the disposition of savings accruing to the Postal Service. This change removes the requirement that savings be placed in an escrow account. 

Sec. 904 Ensuring appropriate use of escrow and military savings 

Section 904 requires that for the ten years beginning in FY 2006, 

two-thirds of the ‘‘total savings’’—the amount of money the Postal 

Service would have had to pay to the CSRS Fund if P.L. 108–18 

and this bill had not been enacted, less any amortization payments 

required to the CSRS Fund for any supplemental liability as described above—be used to address the Postal Service’s long-term 

needs of prefunding retiree health benefits and paying down its 

debt. Amounts used to reduce the postal debt may not exceed a 

total of $3 billion for fiscal years 2006–2015. A safety valve is also 

put in place to allow the Postal Service to appeal to the Postal Regulatory Commission for relief from the requirement that two-thirds 

of the savings be allocated for such purposes. 

After FY 2015, there is not a specific statutory requirement related to the total savings. Instead, the Committee expects that the 

Postal Service will use its best judgment in promoting its the longterm viability (by further reducing the unfunded liability for retiree 

health benefits, debt repayment, and other measures) while moderating postage rate increases. The absence of a specific requirement 

after FY 2015 should not be interpreted by the Postal Service as 

a sign that it no longer needs to be concerned with the outstanding 

unfunded liability for retiree health benefits. 

Sec. 905 Effective dates 

Title IX will take effect on October 1, 2005. 

EXPLANATION OF AMENDMENTS

The bill was not amended. 

COMMITTEE CONSIDERATION

In response to the President’s call for reform in December, the 

Government Reform Committee’s Special Panel on Postal Reform 

and Oversight held three hearings in a two week period to examine 

the need to modernize our nation’s postal laws. On January 28 the 

31 

Panel heard from the Treasury Department, the Postal Service, the 

Postal Rate Commission, and the General Accounting Office. On 

February 5, the Panel traveled to Chicago, Illinois for a hearing in 

which the Presidents of all postal unions and employee groups testified. The Panel held a final hearing on February 11 in which nine 

CEOs of competitors, commercial and nonprofit mailers, and postal 

reliant businesses testified. On March 23, 2004, the Committee 

held a joint hearing with the Senate Governmental Affairs Committee, in which it heard testimony from the Secretary of the 

Treasury and the Postal Service. 

All witnesses stated support for the Administration’s broad principles on postal reform, and the hearings underscored that universal postal service is at risk and reform is urgently needed to 

minimize the danger of significant taxpayer bailout or dramatic 

postal rate increases. As the General Accounting Office emphasized, the Postal Service’s current business model, formulated as it 

was in 1970, is no longer sustainable in the 21st century. 

On May 12, 2004, the Committee met in open session and ordered reported favorably the bill, H.R. 4341 by roll call vote, a 

quorum being present. 

COMMITTEE CONSIDERATION PRIOR TO THE 108TH CONGRESS

H.R. 4341 is derived from H.R. 3717, introduced in the 104th 

Congress, and H.R. 22, introduced in the 105th and 106th Congresses, and H.R. 4970 introduced in the 107th Congress. The 

hearings leading directly to H.R. 4341 were as follows. 

In the 104th Congress, the former Postal Service Subcommittee, 

chaired by Mr. McHugh, held oversight hearings on the Postal 

Service and, in particular, its calls for greater commercial flexibility, on February 23, March 2 and 8, May 23, June 7, 14, and 28, 

and November 15, 1995, and January 25 (with the Senate Committee on Governmental Affairs) and March 13 and 19, 1996. In 

addition, on November 15, 1995, the Subcommittee held a legislative hearing on H.R. 210, a bill to provide for privatization of the 

Postal Service. 

On June 25, 1996, Subcommittee Chairman McHugh introduced 

H.R. 3717, the Postal Reform Act of 1996. The Subcommittee held 

legislative hearings on H.R. 3717 on July 10 and 18 and September 

17 and 26, 1996. 

In the 105th Congress, on January 7, 1997, Subcommittee Chairman McHugh reintroduced former H.R. 3717 as H.R. 22, the Postal 

Reform Act of 1997. The Subcommittee held a legislative hearing 

on H.R. 22 on April 16, 1997. The Subcommittee also held a general oversight hearing on April 24, 1997. On December 12, 1997, 

Mr. McHugh issued a comprehensive, section-by-section plan for revision of H.R. 22. In late February 1998, Mr. McHugh announced 

that the Subcommittee was actively soliciting written comments 

through early April on proposed revisions to H.R. 22. The Subcommittee received 47 written submissions. The 47 comments subsequently received were shared with all Subcommittee Members for 

review, and they were posted on the Subcommittee’s web page for 

public examination. In addition, the Subcommittee received extensive additional comments more informally from representatives of 

interested parties. Through this process, the Subcommittee attempted to ensure that the public and all postal stakeholders had 

32 

repeated opportunities to provide input on the revisions as proposed December 1997. 

After carefully evaluating all of the comments received, Postal 

Service Subcommittee Chairman McHugh released the text of a 

comprehensive amendment to H.R. 22 on September 2, 1998, which 

was also posted on the Subcommittee’s web page. On September 

24, 1998, the Subcommittee on the Postal Service voted to approve 

H.R. 22, renamed the Postal Modernization Act of 1998, as amended by the comprehensive amendment announced by Subcommittee 

Chairman McHugh on September 2, 1998, and to send it to the 

Committee on Government Reform and Oversight for further consideration, which did not occur before the 105th Congress adjourned. 

With the beginning of the 106th Congress, the Postal Service 

Subcommittee convened a final round of hearings on a revised 

version of H.R. 22 on February 11 and March 4, 1999. After incorporating further modifications from these hearings on April 29, 

1999, Postal Service Subcommittee approved H.R. 22 again and reported it to the Committee on Government Reform. However, the 

Committee did not consider the bill before the 106th Congress expired. The Subcommittee did convene additional hearings throughout 1999 and 2000 that continued to explore and underscore the 

need for reform. 

In the 107th Congress, the Postal Service Subcommittee was 

abolished and postal issues became the focus of the full Government Reform Committee. After several full Committee hearings on 

the Postal Service’s worsening financial situation—the General Accounting Office added the Service to its watch-list of ‘‘high risk’’ 

agencies—the Committee marked-up a revised postal reform bill, 

H.R. 4970. H.R. 4970, the Postal Accountability and Enhancement 

Act, was the product of a nearly year long bipartisan effort of the 

Committee staff to address remaining concerns and objections that 

certain stakeholders expressed with previous versions of the postal 

reform legislation. Despite support for the legislation, there was 

disagreement among some Committee members over the timing of 

moving the bill forward. As a result, in a mark-up on June 20, 

2002, H.R. 4970 failed on a vote of 6 ayes, 20 no, and 9 voting 

‘‘present.’’ Nine Members did not vote. 

33 


Insert offset folio 35 here HR672.001
34 

APPLICATION OF LAW TO THE LEGISLATIVE BRANCH

Section 102(b)(3) of Public Law 104–1 requires a description of 

the application of this bill to the legislative branch where the bill 

relates to the terms and conditions of employment or access to public services and accommodations. This bill creates a modern system 

of rate regulation, establishes fair competition rules and a powerful 

new regulator, addresses the Postal Service’s universal service obligation and the scope of the mail monopoly, and institutes improvements to the collective bargaining process. 

Legislative branch employees and their families, to the extent 

that they are otherwise eligible for the benefits provided by this 

legislation, have equal access to its benefits. 

STATEMENT OF OVERSIGHT FINDINGS AND RECOMMENDATIONS OF

THE COMMITTEE

In compliance with clause 3(c)(1) of Rule XIII and clause (2)(b)(1) 

of Rule X of the Rules of the House of Representatives, the Committee’s oversight findings and recommendations are reflected in 

the descriptive portions of this report. 

STATEMENT OF GENERAL PERFORMANCE GOALS AND OBJECTIVES

In accordance with clause 3(c)(4) of Rule XIII of the Rules of the 

House of Representatives, the Committee’s performance goals and 

objectives are reflected in the descriptive portions of this report. 

CONSTITUTIONAL AUTHORITY STATEMENT

Under clause 3(d)(1) of Rule XIII of the Rules of the House of 

Representatives, the Committee must include a statement citing 

the specific powers granted to Congress to enact the law proposed 

by H.R. 4341. Article I, Section 8, Clause 7 of the Constitution of 

the United States grants the Congress the power to establish post 

offices. 

FEDERAL ADVISORY COMMITTEE ACT

The Committee finds that the legislation does not establish or 

authorize the establishment of an advisory committee within the 

definition of 5 U.S.C. App., Section 5(b). 

UNFUNDED MANDATE STATEMENT

Section 423 of the Congressional Budget and Impoundment Control Act (as amended by Section 101(a)(2) of the Unfunded Mandate 

Reform Act, P.L. 104–4) requires a statement whether the provisions of the reported include unfunded mandates. In compliance 

with this requirement the Committee has received a letter from the 

Congressional Budget Office included herein. 

COMMITTEE ESTIMATE

Clause 3(d)(2) of rule XIII of the Rules of the House of Representatives requires an estimate and a comparison by the Committee of the costs that would be incurred in carrying out H.R. 

4341. However, clause 3(d)(3)(B) of that rule provides that this requirement does not apply when the Committee has included in its 

35 

report a timely submitted cost estimate of the bill prepared by the 

Director of the Congressional Budget Office under section 402 of 

the Congressional Budget Act. 

BUDGET AUTHORITY AND CONGRESSIONAL BUDGET OFFICE COST

ESTIMATE

With respect to the requirements of clause 3(c)(2) of rule XIII of 

the Rules of the House of Representatives and section 308(a) of the 

Congressional Budget Act of 1974 and with respect to requirements 

of clause (3)(c)(3) of rule XIII of the Rules of the House of Representatives and section 402 of the Congressional Budget Act of 

1974, the Committee has received the following cost estimate for 

H.R. 4341 from the Director of Congressional Budget Office: 

H.R. 4341—Postal Accountability and Enhancement Act 

Summary: H.R. 4341 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 onbudget savings of $24.1 billion and off-budget costs of $34.5 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 $10.4 billion over the 2005–2014 period. 

In addition, we estimate that implementing H.R. 4341 would cost 

about $1.5 billion over the 2005–2014 period, assuming appropriation of the necessary amounts. 

Enacting H.R. 4341 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 requirements 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 and the USPS Office of the Inspector General 

subject to appropriation. 

H.R. 4341 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 H.R. 4341 would: 

• Eliminate 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 some of 

the health care costs of current employees when they retire. 

• Revise the procedure for raising postal rates. 

36 

• Stregthen 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 H.R. 4341 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 H.R. 4341 

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 ¥3.1 ¥2.0 ¥2.2 ¥2.3 ¥2.5 ¥2.7 ¥2.9 ¥3.1 ¥3.3 

Estimated Outlays .............. 0.0 ¥3.1 ¥2.0 ¥2.2 ¥2.3 ¥2.5 ¥2.7 ¥2.9 ¥3.1 ¥3.3 

Off-Budget Effects: 

Estimated 

Budget Authority ........... ¥0.1 2.8 3.1 3.4 3.5 3.8 4.1 4.3 4.6 5.0 

Estimated Outlays .............. ¥0.1 2.8 3.1 3.4 3.5 3.8 4.1 4.3 4.6 5.0 

Total Unified Budget 

Effect: 

Estimated 

Budget Authority ........... ¥0.1 ¥0.3 1.1 1.2 1.2 1.3 1.4 1.4 1.5 1.7 

Estimated Outlays .............. ¥0.1 ¥0.3 1.1 1.2 1.2 1.3 1.4 1.4 1.5 1.7 

CHANGES IN SPENDING SUBJECT TO APPROPRIATION 

Estimated Authorization 

Level ............. 0.1 0.1 0.1 0.1 0.2 0.2 0.2 0.2 0.2 0.2 

Estimated Outlays .............. 0.1 0.1 0.1 0.1 0.2 0.2 0.2 0.2 0.2 0.2 

Note.—Components may not add to totals because of rounding. 

Basis of estimate: For this estimate, CBO assumes that H.R. 

4341 will be enacted near the start of fiscal year 2005. CBO estimates that enacting the bill would result in on-budget savings of 

$24.1 billion and off-budget costs of $34.5 billion over the 2005– 

2014 period, for a net cost to the unified budget of $10.4 billion 

over the 10-year period. In addition, we estimate that implementing H.R. 4341 would cost about $1.5 billion over the 2005– 

2014 period, assuming appropriation of the necessary amounts, 

mostly to fund the USPS Office of the Inspector General. 

Background 

The following paragraphs present background information relating to the major provisions of H.R. 4341, 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 

37 

1P.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. 

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 system (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 with CSRS. In 2003, that payment as about 

$300 million. 

USPS and Federal Health Benefits. The Postal Service also pay 

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. 

38 

H.R. 4341 would eliminate the requirement that USPS collect and 

hold these funds in escrow. 

Effects on the unified budget 

H.R. 4341 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 would reduce on-budget offsetting receipts by $13.5 billion over the 2006–2014 period. Under the bill, 

that reduction would be offset by a $37.6 billion net increase in onbudget offsetting receipts paid by the Postal Service for the new 

health benefits fund. Thus, the bill would increase on-budget offsetting receipts by $24.1 billion over the 2006–2014 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 and the USPS Office 

of the Inspector General subject to appropriation would reduce direct spending by the Postal Service by $1.5 billion over the next 10 

years. The combined effect of the $24.1 billion increase in on-budget re- ceipts, the $36 billion reduction in off-budget offsetting receipts, 

and a $1.5 billion reduction in USPS direct spending would produce 

a $10.4 billion cost to the unified budget deficit over the 2006–2014 

period. Those effects are presented in Table 2 and explained in 

more detail below. 

TABLE 2.—ESTIMATED CHANGES IN DIRECT SPENDING FOR H.R. 4341 

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 

premium payments 

to FEHB 1 ............... 0 ¥5.1 ¥3.9 ¥4.0 ¥4.0 ¥4.0 ¥4.1 ¥4.1 ¥4.2 ¥4.2 

Total OnBudget Effects ........ 0 ¥3.1 ¥2.0 ¥2.2 ¥2.3 ¥2.5 ¥2.7 ¥2.9 ¥3.1 ¥3.3 

39 

TABLE 2.—ESTIMATED CHANGES IN DIRECT SPENDING FOR H.R. 4341—Continued 

By fiscal year, outlays in billions of dollars— 

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 

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 and 

USPS Inspector 

General Office 

Costs Subject to 

Appropriation ........ ¥0.1 ¥0.1 ¥0.1 ¥0.1 ¥0.2 ¥0.2 ¥0.2 ¥0.2 ¥0.2 ¥0.2 

Total OffBudget Effects ........ ¥0.1 2.8 3.1 3.4 3.5 3.8 4.1 4.3 4.6 5.0 

Total Unified 

Budget Effects ........ ¥0.1 ¥0.3 1.1 1.2 1.2 1.3 1.4 1.4 1.5 1.7 

MEMORANDUM 

Payments from the 

Postal Service received by PSRHBF 0 ¥5.5 ¥5.7 ¥5.9 ¥6.1 ¥6.4 ¥6.6 ¥6.9 ¥7.2 ¥7.6 

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 ¥5.1 ¥3.9 ¥4.0 ¥4.0 ¥4.0 ¥4.1 ¥4.1 ¥4.2 ¥4.2 

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. 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. 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 H.R. 4341 would be an increase in offsetting receipts of $3.1 billion in 2006, $9.7 billion over the 2006–2009 

period, and $24.1 billion over the 2006–2014 period. That increase 

in on-budget collections would come from increased transfers (offbudget outlays) coming from the USPS. (The off-budget effects are 

discussed in the following section.) 

Civil Service Retirement Contributions. H.R. 4341 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 military service credits earned 

by Postal Service employees and retirees participating in CSRS 

from the Postal Service to the Department of the 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 to the 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 

40 

2This 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 no 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. 

to have overfunded its obligation to CSRS by about $19.4 billion 

through September 2005.2 Consequently, under H.R. 4341 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.) 

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. H.R. 4341 also 

would change the way the Postal Service finances 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 2006, H.R. 4341 would require the USPS to make payments 

equal to the annual increase 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 adequate funds are available in the account to do so. 

Under H.R. 4341, 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 pay annual interest 

costs on the unfunded liabilities for health care costs of both curVerDate Aug 04 2004 04:03 Sep 11, 2004 Jkt 029006 PO 00000 Frm 00040 Fmt 6659 Sfmt 6602 E:\HR\OC\HR672P1.XXX HR672P1
41 

rent 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 

interest payments after consultation with the Postal Service, subject to review by the PRC. The bill specifies that payments would 

be made at the end of each fiscal 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 $37.7 billion at the end of 2006 and would shrink to $35.8 billion 

by the end of 2014. CBO estimates that payments by the Postal 

Service for prefunding health care costs of retirees and interest on 

the remaining unfunded liability would be $5.5 billion in 2006, 

$23.3 billion over the 2006–2009 period, and $58.1 billion over the 

2006–2014 period. CBO expects 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 

program to pay the Postal Service’s share of health care costs for 

retirees. 

The bill would require a minimum level of prefunding by the 

Postal Service through 2015, after accounting for disbursements for 

health premiums from the PSRHBF. To achieve the annual or cumulative prefunding target, payments from the Postal Service to 

the PSRHBF—net of premiums paid by the PSRHBF—must total 

at least two-thirds of the amount the Postal Service would have 

paid toward CSRS prior to the enactment of P.L. 108–18. If the 

threshold is not met, additional prefunding payments would be required to make up the shortfall. Those payments also could be used 

to reduce postal debt (up to $3 billion) in lieu of contributions to 

the fund. The requirement could be waived completely by the PRC 

under certain conditions. CBO anticipates that the threshold established under the bill would be met and no additional payments 

would be required through 2014. 

Health premiums paid by the Postal Service for 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 $5.1 billion in 

2006, $17.0 billion over the 2006–2009 period, and $37.6 billion 

over the 2006–2014 period. 

Off-budget effects (direct spending) 

CBO estimates that enacting H.R. 4341 would result in net offbudget costs of $2.8 billion in fiscal year 2006, $12.7 billion over 

42 

the 2005–2009 period, and $34.5 billion over the 2005–2014 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 and the USPS Office of the 

Inspector General subject to appropriation, thus reducing direct 

spending by $1.6 billion 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. 

H.R. 4341 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 and USPS IG Subject to Appropriation. Under 

current law, the PRC and the Inspector General of the Postal Service are funded from the Postal Service Fund without annual Congressional appropriation. In total, these offices spent about $140 

million in 2003. H.R. 4341 would authorize the appropriation of 

such sums as may be necessary from the Postal Service Fund for 

these offices. Thus, enacting this legislation would reduce direct 

spending—and therefore, increase spending subject to appropriation—by about $140 million annually beginning in fiscal year 2005. 

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 H.R. 4341, market-dominant 

products would include: first-class mail, special services, periodicals, standard mail, media mail, library mail, and bound printed 

matter. 

H.R. 4341 would require the PRC to establish, within two years 

of enactment, a new system for regulating postage rates for market-dominant products. The bill would permit the new system to involve price caps, revenue targets, or other forms of incentive or 

cost-of-service regulation. However, the legislation would mandate 

that the average rate for any market-dominant product could not 

rise more than the annual increase in the Consumer Price Index 

43 

(CPI), unless a larger increase would be necessary to ensure the viability of the Postal Service. 

Later this year we expect the Postal Service to begin preparations for a rate case in 2006. Assuming the PRC would need the 

two years 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 marketdominant mail servies more frequently than under current law, but 

by smaller increments (as limited by the CPI). Over the long term, 

CBO does not expect that enacting H.R. 4341 would significantly 

change the revenues from market-dominant products that the Postal Service would be expected to receive under current law. 

Competitive Products. Under H.R. 4341, competitive products 

would include the following: priority mail, express mail, mailgrams, 

international mail, and parcel post. Currently, the competitive 

products contribute less than 15 percent of total postal revenues. 

H.R. 4341 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 make a reasonable contribution to 

the institutional costs of the Postal Service. After these requirements have been implemented, the USPS could change rates for 

competitive products without consulting the PRC, as long as the 

cost coverage requirements are met. The Postal Service, however, 

would have to provide public notice and justification of changes in 

rates. 

In addition, H.R. 4341 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. H.R. 4341 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 additional USPS reports 

44 

and the establishment of an inspector general for the PRC, would 

increase costs. In total, CBO does not expect the net effects of these 

provisions to be significant. 

Spending subject to appropriation 

H.R. 4341 would authorize the appropriation of such sums as 

may be necessary, out of the Postal Service Fund, for the PRC and 

the Inspector General of the Postal Service. (Currently, these offices are funded out of the Postal Service Fund without Congressional action.) Beginning in 2005, this provision would entail about 

$140 million a year in spending, subject to appropriation of the 

necessary amounts. Enacting the bill would reduce direct spending 

by the same amount. Spending on these activities would likely still 

be considered off-budget, since funds would come from the Postal 

Service Fund. 

In addition, H.R. 4341 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: H.R. 4341 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: This estimate supersedes previous cost 

estimates for H.R. 4341, which CBO transmitted on June 10 and 

June 23, 2004. Our June 23 estimate indicated that the bill would 

have a net cost to the unified budget of $8.7 billion over the 2005– 

2014 period. CBO now estimates the bill would have a net cost of 

$10.4 billion over the next 10 years. 

In its previous estimates for H.R. 4341, CBO incorrectly calculated the interest payments that the Postal Service would be required to make on the unfunded liability of health costs for its retirees. This estimate corrects that error. Estimated interest payments on the unfunded liability—which would be recorded as receipts to an on-budget fund—would be about $1.7 billion less over 

the 2006–2014 period than what CBO included in the June 23 estimate, adding that amount to CBO’s estimate of the bill’s effect on 

the unified budget. 

On June 24, 2004, CBO transmitted a cost estimate for S. 2468, 

the Postal Accountability and Enhancement Act, as ordered reported by the Senate Committee on Governmental Affairs on June 

2, 2004. S. 2468 also would make changes to the operation of the 

Postal Service. However, the bills present different approaches to 

some of the changes—especially with regard to financing the cost 

of health care benefits of USPS retirees. Our estimates reflect 

those differences. CBO estimates that enacting S. 2468 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 that period. 

Estimate prepared by: Federal Costs: Mark Grabowicz for USPS 

costs (226–2860), Geoffrey Gerhardt for retirement costs (226– 

2820), and Julia Christensen for health care costs. Impact on State, 

45 

Local, and Tribal Governments: Sarah Puro. Impact on the Private 

Sector: Paige Piper/Bach. 

Estimate approved by: Peter H. Fontaine, Deputy Assistant Director for Budget Analysis. 

CHANGES IN EXISTING LAW MADE BY THE BILL, AS REPORTED

In compliance with clause 3(e) of rule XIII of the Rules of the 

House of Representatives, changes in existing law made by the bill, 

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, UNITED STATES CODE 

* * * * * * * 

PART I—GENERAL 

Chap. Sec. 

1. Postal Policy and Definitions ..................................................................... 101 

* * * * * * * 

5. Postal Regulatory Commission ................................................................... 501 

CHAPTER 1—POSTAL POLICY AND DEFINITIONS 

* * * * * * * 

§ 101. Postal policy 

(a) * * * 

* * * * * * * 

(d) As an establishment that provides both market-dominant and 

competitive products, the Postal Service shall be subject to a high 

degree of transparency, including in its finances and operations, to 

ensure fair treatment of customers of the Postal Service’s marketdominant products and companies competing with the Postal Service’s competitive products. 

ø(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. 

ø(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. 

ø(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. 

ø(g)¿ (h) In planning and building new postal facilities, the Postal Service shall emphasize the need for facilities and equipment deVerDate Aug 04 2004 04:03 Sep 11, 2004 Jkt 029006 PO 00000 Frm 00045 Fmt 6659 Sfmt 6602 E:\HR\OC\HR672P1.XXX HR672P1
46 

signed 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. 

§ 102. Definitions 

As used in this title— 

(1) * * * 

* * * * * * * 

(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; øand¿ 

ø(4) ‘‘Inspector General’’ means the Inspector General appointed under section 202(e) of this title;¿ 

(4) ‘‘Inspector General’’ means the Inspector General of the 

United States Postal Service, appointed under section 3(a) of 

the Inspector General Act of 1978; 

(5) ‘‘postal service’’ means the carriage of letters, printed matter, or mailable packages, including acceptance, collection, processing, delivery, or other services supportive or ancillary thereto; 

(6) ‘‘product’’ means a postal service with a distinct cost or 

market characteristic for which a rate or rates are, or may reasonably be, applied; 

(7) ‘‘rates’’, as used with respect to products, includes fees for 

postal services; 

(8) ‘‘market-dominant product’’ or ‘‘product in the marketdominant category of mail’’ means a product subject to subchapter I of chapter 36; 

(9) ‘‘competitive product’’ or ‘‘product in the competitive category of mail’’ means a product subject to subchapter II of chapter 36; 

(10) ‘‘Consumer Price Index’’ means the Consumer Price Index 

for All Urban Consumers published monthly by the Bureau of 

Labor Statistics of the Department of Labor; and 

(11) ‘‘year’’, as used in chapter 36 (other than subchapters I 

and VI thereof), means a fiscal year. 

CHAPTER 2—ORGANIZATION 

* * * * * * * 

§ 202. Board of Governors 

(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. øThe 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 at least 4 of the 

Governors shall be chosen solely on the basis of their demonstrated 

ability in managing organizations or corporations (in either the 

47 

public or private sector) of substantial size; for purposes of this sentence, an organization or corporation shall be considered to be of 

substantial size if it employs at least 50,000 employees. 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, 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)(A) Notwithstanding any other provision of this section, in the 

case of the office of the Governor the term of which is the first one 

scheduled to expire at least 4 months after the date of the enactment 

of this paragraph— 

(i) such office may not, in the case of any person commencing 

service after that expiration date, be filled by any person other 

than an individual chosen from among persons nominated for 

such office with the unanimous concurrence of all labor organizations described in section 206(a)(1); and 

(ii) instead of the term that would otherwise apply under the 

first sentence of paragraph (1), the term of any person so appointed to such office shall be 3 years. 

(B) Except as provided in subparagraph (A), an appointment 

under this paragraph shall be made in conformance with all provisions of this section that would otherwise apply. 

* * * * * * * 

ø(e)(1) The Governors shall appoint and shall have the power to 

remove the Inspector General. 

ø(2) The Inspector General shall be appointed— 

ø(A) for a term of 7 years; 

ø(B) without regard to political affiliation; and 

ø(C) solely on the basis of integrity and demonstrated ability 

in accounting, auditing, financial analysis, law, management 

analysis, public administration, or investigations. 

ø(3) The Inspector General may at any time be removed upon the 

written concurrence of at least 7 Governors, but only for cause. 

Nothing in this subsection shall be considered to exempt the GovVerDate Aug 04 2004 04:03 Sep 11, 2004 Jkt 029006 PO 00000 Frm 00047 Fmt 6659 Sfmt 6602 E:\HR\OC\HR672P1.XXX HR672P1
48 

ernors from the requirements of section 8G(e) of the Inspector General Act of 1978.¿ 

* * * * * * * 

CHAPTER 4—GENERAL AUTHORITY 

Sec. 

401. General powers of the Postal Service. 

* * * * * * * 

404a. Specific limitations. 

* * * * * * * 

§ 401. General powers of the Postal Service 

øThe¿ Subject to the provisions of section 404a, the Postal Service 

shall have the following general powers: 

(1) * * * 

ø(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; 

* * * * * * * 

§ 403. General duties 

(a) * * * 

* * * * * * * 

(c) In providing services and in establishing classifications, rates, 

and fees under this title, the Postal Service shall not, except as 

specifically authorized in this title, 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 prohibition in this subsection shall not be construed to prevent the establishment of rates that vary with volume if such rates will be made 

available to similarly situated persons and will increase the aggregate contribution to the institutional costs of the Postal Service. 

§ 404. Specific powers 

(a) øWithout¿ 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 eviVerDate Aug 04 2004 04:03 Sep 11, 2004 Jkt 029006 PO 00000 Frm 00048 Fmt 6659 Sfmt 6602 E:\HR\OC\HR672P1.XXX HR672P1
49 

dences of payment of postage and fees as may be necessary or 

desirable; 

(5) to provide philatelic services; 

ø(6) to provide, establish, change, or abolish special nonpostal or similar services;¿ 

ø(7)¿ (6) to investigate postal offenses and civil matters relating to the Postal Service; 

ø(8)¿ (7) to offer and pay rewards for information and services in connection with violation 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 

ø(9)¿ (8) to authorize the issuance of a substitute check for 

a lost, stolen, or destroyed check of the Postal Service. 

(b) 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 chapter 36. Postal rates and fees shall 

be reasonable and equitable and sufficient to enable the Postal Service, under best practices of 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. 

(c) 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. 

ø(b)¿ (d)(1) * * * 

* * * * * * * 

(5) A determination of the Postal Service to close or consolidate 

any post office may be appealed by any person served by such office 

to the øPostal Rate¿ Postal Regulatory Commission within 30 days 

after such determination is made available to such person under 

paragraph (3). The Commission shall review such determination on 

the basis of the record before the Postal Service in the making of 

such determination. The Commission shall make a determination 

based upon such review no later than 120 days after receiving any 

appeal under this paragraph. The Commission shall set aside any 

determination, findings, and conclusions found to be— 

(A) * * * 

* * * * * * * 

(6) For purposes of paragraph (5), any appeal received by the 

Commission shall— 

(A) if sent to the Commission through the mails, be considered to have been received on the date of the Postal Service postVerDate Aug 04 2004 04:03 Sep 11, 2004 Jkt 029006 PO 00000 Frm 00049 Fmt 6659 Sfmt 6603 E:\HR\OC\HR672P1.XXX HR672P1
50 

mark on the envelope or other cover in which such appeal is 

mailed; or 

(B) if otherwise lawfully delivered to the Commission, be considered to have been received on the date determined based on 

any appropriate documentation or other indicia (as determined 

under regulations of the Commission). 

(e) Nothing in this title shall be considered to permit or require 

that the Postal Service provide any special nonpostal or similar 

services, except that nothing in this subsection shall prevent the 

Postal Service from providing any special nonpostal or similar services provided by the Postal Service as of May 12, 2004. 

(f) The Postal Service may employ police officers for duty in connection with the protection of property owned or occupied by the 

Postal Service or under the charge and control of the Postal Service, 

and persons on the property, including duty in areas outside the 

property to the extent necessary to protect the property and persons 

on the property. Such officers shall have, with respect to such property, the powers available under section 1315 of title 40, and, as to 

such property, the Postal Service may take any action that the Secretary of Homeland Security may take under such section, attaching 

thereto penalties under the authority and within the limits provided 

in subsection (c)(2) of such section. 

§ 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 product or 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. 

* * * * * * * 

ø§ 407. International Postal Arrangements. 

ø(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, includVerDate Aug 04 2004 04:03 Sep 11, 2004 Jkt 029006 PO 00000 Frm 00050 Fmt 6659 Sfmt 6602 E:\HR\OC\HR672P1.XXX HR672P1
51 

ing 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. 

ø(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). 

ø(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. 

ø(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. 

ø(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. 

ø(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). 

ø(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.¿ 

§ 407. International postal arrangements 

(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 other international delivery services by the Government of the United 

States and by intergovernmental organizations of which the 

United States is a member; 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 other international delivery services, and shall 

have the power to conclude treaties, conventions and amendments 

related to international postal services and other international delivery services, except that the Secretary may not conclude any treaty, convention, or other international agreement (including those 

52 

regulating international postal services) if such treaty, convention, 

or agreement would, with respect to any competitive product, grant 

an undue or unreasonable preference to the Postal Service, a private 

provider of international postal or delivery 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 

and international delivery 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, shall give full consideration to 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 

Government Reform of the House of Representatives and the 

Committee on Governmental Affairs of the Senate; 

(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)(1) Before concluding any treaty, convention, or amendment 

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 a decision on whether such 

rate or classification is consistent with the standards and criteria 

established by the Commission under section 3622. 

(2) The Secretary shall ensure that each treaty, convention, or 

amendment concluded under subsection (b) is consistent with a decision of the Commission adopted under paragraph (1), except if, or 

to the extent, the Secretary determines, by written order, that considerations of foreign policy or national security require modification of the Commission’s decision. 

(d) Nothing in this section shall be considered to prevent the Postal Service from entering into such commercial or operational conVerDate Aug 04 2004 04:03 Sep 11, 2004 Jkt 029006 PO 00000 Frm 00052 Fmt 6659 Sfmt 6603 E:\HR\OC\HR672P1.XXX HR672P1
53 

tracts related to providing international postal services and other 

international delivery 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 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 Bureau of Customs 

and Border Protection of the Department of Homeland Security 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) For purposes of this subsection, the term ‘‘private company’’ 

means a private company substantially owned or controlled by persons who are citizens of the United States. 

(3) In exercising the authority pursuant to subsection (b) to conclude new treaties, conventions and amendments related to international postal services and to renegotiate such treaties, conventions 

and amendments, 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, Department of Homeland Security in carrying 

out this paragraph. 

(4) 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 Bureau of Customs and Border Protection of the Department of Homeland Security may determine in writing. 

* * * * * * * 

§ 409. Suits by and against the Postal Service 

(a) øExcept 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. 

* * * * * * * 

ø(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 

54 

conduct litigation brought by or against the Postal Service or its officers or employees in matters affecting the Postal Service. 

ø(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 competitive product, 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. 

(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 one 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 

55 

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 is begun; 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 

56 

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 motion 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). 

* * * * * * * 

§ 410. Application of other laws 

(a) * * * 

(b) The following provisions shall apply to the Postal Service: 

(1) * * * 

* * * * * * * 

(5) the following provisions of title 41: 

(A) sections 35–45 (known as the Walsh-Healey Act, relating to wages and hours); øand¿ 

(B) chapter 6 (the Service Contract Act of 1965); 

(C) the Anti-Kickback Act of 1986 (41 U.S.C. 51 and following), other than subsections (a) and (b) of 7 and section 

8 of that Act; and 

(D) section 315 of the Federal Property and Administrative Services Act of 1949 (41 U.S.C. 265) (relating to protecting contractor employees from reprisal for disclosure of 

certain information); 

* * * * * * * 

(e) The Postal Service shall develop and issue purchasing regulations that prohibit contract costs not allowable under section 5.2.5 

of the United States Postal Service Procurement Manual (Publication 41), as in effect on July 12, 1995. 

* * * * * * * 

CHAPTER 5—POSTAL REGULATORY COMMISSION 

Sec. 

501. Establishment. 

502. Commissioners. 

503. Rules; regulations; procedures. 

57 

504. Administration. 

505. Officer of the Postal Regulatory Commission representing the general public. 

§ 501. Establishment 

The Postal Regulatory Commission is an independent establishment of the executive branch of the Government of the United 

States. 

§ 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 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) 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 

(e). 

(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. 

(e) The Commissioners shall serve for terms of 6 years. 

ø§ 3603.¿ § 503. Rules; regulations; procedures 

The øPostal Rate¿ Postal Regulatory Commission shall promulgate rules and regulations and establish procedures, subject to 

chapters 5 and 7 of title 5, 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 øchapter¿ title. Such rules, regulations, procedures, and actions shall not be subject to any change or supervision 

by the Postal Service. Such rules shall include procedures which 

balance, inter alia, the need for protecting due process rights and 

ensuring expeditious decision-making. 

ø§ 3604.¿ § 504. Administration 

(a) The Chairman of the øPostal Rate¿ 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 

58 

under the Commission and the distribution of business among 

them and among the Commissioners, and (3) the use and expenditure of funds. 

* * * * * * * 

ø(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— 

ø(A) as submitted if the Governors fail to act in accordance 

with subparagraph (B) of this paragraph; or 

ø(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. 

ø(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.¿ 

(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 the Congress under section 2009 a budget of the Commission’s expenses, including expenses for facilities, supplies, compensation, and 

employee benefits. 

* * * * * * * 

(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— 

(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. 

59 

(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 pursuant to 

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) 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) Paragraph (2) shall not prevent information from being furnished under any process of discovery established under this title 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 any information furnished under the preceding sentence. 

(h)(1) Notwithstanding any other provision of this title or of the 

Inspector General Act of 1978, the authority to select, appoint, and 

employ officers and employees of the Office of Inspector General of 

the Postal Regulatory Commission, and to obtain any temporary or 

intermittent services of experts or consultants (or an organization of 

experts or consultants) for such Office, shall reside with the Inspector General of the Postal Regulatory Commission. 

(2) Except as provided in paragraph (1), any exercise of authority 

under this subsection shall, to the extent practicable, be in conformance with the applicable laws and regulations that govern selections, appointments and employment, and the obtaining of any such 

temporary or intermittent services, within the Postal Regulatory 

Commission. 

§ 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 (such 

as developing rules, regulations, and procedures) who shall represent the interests of the general public. 

CHAPTER 6—PRIVATE CARRIAGE OF LETTERS 

* * * * * * * 

§ 601. Letters carried out of the mail 

(a) * * * 

ø(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.¿ 

60 

(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 121⁄2 ounces; or 

(3) such carriage is within the scope of services described by 

regulations of the Postal Service (including, in particular, sections 310.1 and 320.2–320.8 of title 39 of the Code of Federal 

Regulations, as in effect on July 1, 2003) that purport to 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 10—EMPLOYMENT WITHIN THE POSTAL 

SERVICE 

* * * * * * * 

§ 1001. Appointment and status 

(a) * * * 

* * * * * * * 

(d) Notwithstanding section 5533, 5535, or 5536 of title 5, or any 

other provision of law, any officer or employee of the Government 

of the United States is eligible to serve and receive pay concurrently as an officer or employee of the Postal Service (other than 

as a member of the Board or of the øPostal Rate¿ Postal Regulatory 

Commission) and as an officer or employee of any other department, agency, or establishment of the Government of the United 

States. 

* * * * * * * 

§ 1002. Political recommendations 

(a) Except as provided in subsection (e) of this section, each appointment, promotion, assignment, transfer, or designation, interim 

or otherwise, of an officer or employee in the Postal Service (except 

a Governor or member of the øPostal Rate¿ Postal Regulatory Commission) shall be made without regard to any recommendation or 

statement, oral or written, with respect to any person who requests 

or is under consideration for such appointment, promotion, assignment, transfer, or designation, made by— 

(1) * * * 

* * * * * * * 

§ 1003. Employment policy 

(a) Except as provided under øchapters 2 and 12 of this title, section 8G of the Inspector General Act of 1978, or other provision of 

law,¿ chapter 2 or 12 of this title, subsection (b) or (c) of this secVerDate Aug 04 2004 04:03 Sep 11, 2004 Jkt 029006 PO 00000 Frm 00060 Fmt 6659 Sfmt 6602 E:\HR\OC\HR672P1.XXX HR672P1
61 

tion, or any other provision of law, the Postal Service shall classify 

and fix the compensation and benefits of all officers and employees 

in the Postal Service. It shall be the policy of the Postal Service to 

maintain compensation and benefits for all officers and employees 

on a standard of comparability to the compensation and benefits 

paid for comparable levels of work in the private sector of the economy. No officer or employee shall be paid compensation at a rate 

in excess of the rate for level I of the Executive Schedule under section 5312 of title 5. 

(b) Compensation and benefits for all officers and employees 

serving in or under the Office of Inspector General of the United 

States Postal Service shall be maintained on a standard of comparability to the compensation and benefits paid for comparable 

levels of work in the ørespective¿ other Offices of Inspector General 

of the various establishments named in section 11(2) of the Inspector General Act of 1978. 

(c) Compensation and benefits for all Postal Inspectors shall be 

maintained on a standard of comparability to the compensation 

and benefits paid for comparable levels of work in the executive 

branch of the Government outside of the Postal Service. As used 

in this subsection, the term ‘‘Postal Inspector’’ øincluded¿ includes 

any agent to whom any investigative powers are granted under section 3061 of title 18. 

* * * * * * * 

§ 1005. Applicability of laws relating to Federal employees 

(a) * * * 

* * * * * * * 

(d)(1) * * * 

(2) The provisions of øsubsection (g) of section 5532,¿ subsections 

(i) and (l)(2) of section 8344ø,¿ and subsections (f) and (i)(2) of section 8468 of title 5 shall apply with respect to the Postal Service. 

For purposes of so applying such provisions— 

(A) * * * 

* * * * * * * 

CHAPTER 12—EMPLOYEE-MANAGEMENT AGREEMENTS 

* * * * * * * 

§ 1207. Labor disputes 

(a) * * * 

(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 ødirect 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 

62 

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 ø90¿ 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, ønot 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 øby the Director. 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.¿ from 

a list of names provided by the Director. This list shall consist of 

not less than 9 names of arbitrators of nationwide reputation and 

professional stature, who are also members of the National Academy of Arbitrators, and whom the Director has determined are 

available and willing to serve. 

* * * * * * * 

(3) Costs of the arbitration board and øfactfinding panel¿ mediation shall be shared equally by the Postal Service and the bargaining representative. 

(d) In the case of a bargaining unit whose recognized collectivebargaining 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 øfactfinding 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 

Chap. Sec. 

20. Finance .......................................................................................................... 2001 

* * * * * * * 

63 

ø28. Strategic planning and performance management .......................... 2801¿ 

28. Strategic Planning and Performance Management ...................................... 2801 

* * * * * * * 

CHAPTER 20—FINANCE 

Sec. 

2001. Definitions. 

* * * * * * * 

2011. Provisions relating to competitive products. 

§ 2001. Definitions 

As used in this chapter— 

(1) ‘‘Fund’’ means the Postal Service Fund established by section 2003 of this chapter; øand¿ 

(2) ‘‘Competitive Products Fund’’ means the Postal Service 

Competitive Products Fund established by section 2011; and 

ø(2)¿ (3) ‘‘obligations’’, when referring to debt instruments 

issued by the Postal Service, means notes, bonds, debentures, 

mortgages, and any other evidence of indebtedness. 

§ 2002. Capital of the Postal Service 

(a) * * * 

(b) The capital of the Postal Service at any time shall consist of 

its assets, including the balance in the øFund,¿ Fund and the balance in the Competitive Products Fund, less its liabilities. 

* * * * * * * 

§ 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 

øtitle.¿ title (other than any of the purposes, functions, or powers for 

which the Competitive Products Fund is available). 

(b) øThere¿ Except as otherwise provided in section 2011, there 

shall be deposited in the Fund, subject to withdrawal by check by 

the Postal Service— 

(1) * * * 

* * * * * * * 

(7) amounts (including proceeds from the sale of forfeited 

items) from any civil forfeiture conducted by the Postal Service; 

øand¿ 

(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 purposesø.¿; and 

(9) any amounts collected under section 3018. 

ø(c) If¿ (c)(1) Except as provided in paragraph (2), if the Postal 

Service determines that the moneys of the Fund are in excess of 

current needs, it may request the investment of such amounts as 

it deems advisable by the Secretary of the Treasury in obligations 

of, or obligations guaranteed by, the Government of the United 

States, and, with the approval of the Secretary, in such other obligations or securities as it deems appropriate. 

64 

(2)(A) Nothing in this section shall be considered to authorize any 

investment in any obligations or securities of a commercial entity. 

(B) For purposes of this paragraph, the term ‘‘commercial entity’’ 

means any corporation, company, association, partnership, joint 

stock company, firm, society, or other similar entity, as further defined under regulations prescribed by the Postal Regulatory Commission. 

* * * * * * * 

(e)(1) øThe 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 pursuant to section 504(d); and (C) all expenses of the 

Office of Inspector General, subject to the availability of amounts 

appropriated pursuant to section 8J(e) 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. 

* * * * * * * 

§ 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 øtitle.¿ 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 øany such obligations¿ obligations issued by the Postal Service which may be 

outstanding at any one time shall not exceed the maximum amount 

then allowable under paragraph (2) of this subsection. øIn 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.¿ In 

any one fiscal year, the net increase in the amount of obligations 

outstanding issued for the purpose of capital improvements 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 a combined total of $3,000,000,000. 

* * * * * * * 

(3) For purposes of applying the respective limitations under this 

subsection, the aggregate amount of obligations issued by the Postal 

65 

Service which are outstanding as of any one time, and the net increase in the amount of obligations outstanding issued by the Postal 

Service for the purpose of capital improvements or for the purpose 

of defraying operating expenses of the Postal Service in any fiscal 

year, shall be determined by aggregating the relevant obligations 

issued by the Postal Service under this section with the relevant obligations issued by the Postal Service under section 2011. 

(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 øsuch 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. 

* * * * * * * 

§ 2006. Relationship between the Treasury and the Postal 

Service 

(a) * * * 

(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. 

66 

(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) * * * 

* * * * * * * 

§ 2008. Audit and expenditures 

(a) * * * 

* * * * * * * 

ø(d) Nothing¿ (d)(1) Except as provided in paragraph (2), nothing 

in this section shall be construed as denying to the Postal Service 

the power to obtain audits of the accounts of the Postal Service and 

reports concerning its financial condition and operations by certified public accounting firms. Such audits and reports shall be in 

addition to those required by this section. 

(2) An audit or report under paragraph (1) may not be obtained 

without the prior written approval of the Inspector General. 

ø(e) At least once each year beginning with the fiscal year commencing after June 30, 1971, the Postal Service shall obtain a certification from an independent, certified public accounting firm of 

the accuracy of any financial statements of the Postal Service used 

in determining and establishing postal rates.¿ 

(e)(1) At least once each year beginning with the fiscal year commencing after the date of the enactment of the Postal Accountability 

and Enhancement Act, the financial statements of the Postal Service 

(including those used in determining and establishing postal rates) 

shall be audited by the Inspector General or by an independent external auditor selected by the Inspector General. 

(2) Audits under this section shall be conducted in accordance 

with applicable generally accepted government auditing standards. 

(3) Upon completion of the audit required by this subsection, the 

person who audits the statement shall submit a report on the audit 

to the Postmaster General. 

§ 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, 

67 

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. 

øThe 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 8J(e) 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. 

* * * * * * * 

§ 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 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— 

(1) obligations of, or obligations guaranteed by, the Government of the United States; and 

(2) in accordance with regulations which the Secretary of the 

Treasury shall prescribe (by not later than 18 months after the 

date of the enactment of the Postal Accountability and Enhancement Act), such other obligations or securities as it deems 

appropriate. 

(d) The Postal Service may, in its sole discretion, provide that 

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 competiVerDate Aug 04 2004 04:03 Sep 11, 2004 Jkt 029006 PO 00000 Frm 00067 Fmt 6659 Sfmt 6603 E:\HR\OC\HR672P1.XXX HR672P1
68 

tive 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 it deems 

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 with 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 

69 

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 and an independent, certified public accounting firm 

and such other advisors 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 no earlier than 6 months, and no 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; 

70 

(ii) provide for the establishment and application of the substantive and procedural rules described in paragraph (1)(B); 

and 

(iii) provide for the submission 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 the Commission and the Postal Service may 

agree to). The Commission is authorized to promulgate regulations 

revising such rules. 

(C) Reports described in subparagraph (B)(iii) shall be submitted 

at such time and in such form, and shall include such information, 

as the Commission by rule requires. The Commission may, on its 

own motion or on request 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). 

* * * * * * * 

CHAPTER 24—APPROPRIATIONS AND ANNUAL REPORT 

* * * * * * * 

§ 2401. Appropriations 

(a) * * * 

* * * * * * * 

(d) As reimbursement to the Postal Service for losses which it incurred as a result of insufficient amounts appropriated under section 2401(c) for fiscal years 1991 through 1993, and to compensate 

for the additional revenues it is estimated the Postal Service would 

have received under the provisions of section 3626(a) (as last in effect before enactment of the Postal Accountability and Enhancement 

Act), for the period beginning on October 1, 1993, and ending on 

September 30, 1998, if the fraction specified in subclause (VI) of 

71 

section 3626(a)(3)(B)(ii) (as last in effect before enactment of the 

Postal Accountability and Enhancement Act) were applied with respect to such period (instead of the respective fractions specified in 

subclauses (I) through (V) thereof), there are authorized to be appropriated to the Postal Service $29,000,000 for each of fiscal years 

1994 through 2035. 

(e) The Postal Service shall present to the Committee on Governmental Affairs of the Senate and the øCommittee on Post Office 

and Civil Service¿ Committee on Government Reform of the House 

of Representatives and the Committees on Appropriations of the 

Senate and the House of Representatives, at the same time it submits its annual budget under section 2009 of this title, sufficient 

copies of the budget of the Postal Service for the fiscal year for 

which funds are requested to be appropriated, and a comprehensive 

statement relating to the following matters: 

(1) * * * 

* * * * * * * 

øNot later than March 15 of each year,¿ Each year, the Postal 

Service shall appear before the Committee on Governmental Affairs of the Senate and the øCommittee on Post Office and Civil 

Service¿ Committee on Government Reform of the House of Representatives to submit information which any such committee considers necessary to determine the amount of funds to be appropriated for the operation of the Postal Service, and to present testimony and respond to questions with respect to such budget and 

statement. Each such committee shall take such action as it considers appropriate and shall advise the Postal Service of such action. 

* * * * * * * 

§ 2402. Annual report 

The Postmaster General shall render an annual report to the 

Board concerning the operations of the Postal Service under this 

title. Each report under this section shall include a copy of the report most recently received by the Postmaster General under section 

2008(e)(3). Upon approval thereof, or after making such changes as 

it considers appropriate, the Board shall transmit such reports to 

the President and the Congress. 

* * * * * * * 

CHAPTER 28—STRATEGIC PLANNING AND 

PERFORMANCE MANAGEMENT 

* * * * * * * 

§ 2803. Performance plans 

(a) The Postal Service shall prepare an annual performance plan 

covering each program activity set forth in the Postal Service budget, which shall be included in the comprehensive statement presented under section ø2401(g)¿ 2401(e) of this title. Such plan 

shall— 

(1) * * * 

* * * * * * * 

72 

§ 2804. Program performance reports 

(a) The Postal Service shall prepare a report on program performance for each fiscal year, which shall be included in the annual 

comprehensive statement presented under section ø2401(g)¿ 

2401(e) of this title. 

* * * * * * * 

PART IV—MAIL MATTER 

* * * * * * * 

CHAPTER 30—NONMAILABLE MATTER 

Sec. 

3001. Nonmailable matter. 

* * * * * * * 

3018. Hazardous material. 

§ 3001. Nonmailable matter 

(a) * * * 

* * * * * * * 

(o)(1) Except as otherwise authorized by law or regulations of the 

Postal Service, hazardous material is nonmailable. 

(2) In this subsection, the term ‘‘hazardous material’’ means a 

substance or material designated by the Secretary of Transportation 

under section 5103(a) of title 49. 

ø(n)¿ (o) The district courts, together with the District Court of 

the Virgin Islands and the District Court of Guam, shall have jurisdiction, upon cause shown, to enjoin violations of section 1716 of 

title 18. 

* * * * * * * 

§ 3005. False representations; lotteries 

(a) Upon evidence satisfactory to the Postal Service that any person is engaged in conducting a scheme or device for obtaining 

money or property through the mail by means of false representations, including the mailing of matter which is nonmailable øunder 

3001(d),¿ under section 3001(d), (h), (i), (j), or (k) of this title, or 

is engaged in conducting a lottery, gift enterprise, or scheme for 

the distribution of money or of real or personal property, by lottery, 

chance, or drawing of any kind, the Postal Service may issue an 

order which— 

(1) * * * 

* * * * * * * 

(3) requires the person or his representative to cease and desist from engaging in any such scheme, device, lottery, or gift 

enterprise. 

For purposes of the preceding sentence, the mailing of matter 

which is nonmailable øunder such 3001(d),¿ under such section 

3001(d), (h), (i), (j), or (k) by any person shall constitute prima facie 

evidence that such person is engaged in conducting a scheme or deVerDate Aug 04 2004 04:03 Sep 11, 2004 Jkt 029006 PO 00000 Frm 00072 Fmt 6659 Sfmt 6602 E:\HR\OC\HR672P1.XXX HR672P1
73 

vice for obtaining money or property through the mail by false representations. 

* * * * * * * 

§ 3013. Semiannual reports on investigative activities of the 

Postal Service 

The øPostmaster General¿ Chief Postal Inspector shall submit 

semiannual reports to the Inspector General summarizing the investigative activities of the Postal Service. One semiannual report 

shall be submitted for the reporting period beginning on October 1 

and ending on March 31, and the other semiannual report shall be 

submitted for the reporting period beginning on April 1 and ending 

on September 30. Each such report shall be submitted within 1 

month (or such shorter length of time as the Inspector General 

may specify) after the close of the reporting period involved and 

shall include with respect to such reporting period— 

(1) * * * 

* * * * * * * 

The information in a report submitted under this section to the Inspector General with respect to a reporting period shall be included 

as part of the semiannual report prepared by the Inspector General 

under section 5 of the Inspector General Act of 1978 for the same 

reporting period. Nothing in this section shall be considered to permit or require that any report by the øPostmaster General¿ Chief 

Postal Inspector under this section include any information relating 

to activities of the Inspector General. 

* * * * * * * 

§ 3018. Hazardous material 

(a) IN GENERAL.—The Postal Service shall prescribe regulations 

for the safe transportation of hazardous material in the mail. 

(b) PROHIBITIONS.—No person may— 

(1) mail or cause to be mailed hazardous material that has 

been declared by statute or Postal Service regulation to be nonmailable; 

(2) mail or cause to be mailed hazardous material in violation of any statute or Postal Service regulation restricting the 

time, place, or manner in which hazardous material may be 

mailed; or 

(3) manufacture, distribute, or sell any container, packaging 

kit, or similar device that— 

(A) is represented, marked, certified, or sold by such person for use in the mailing of hazardous material; and 

(B) fails to conform with any statute or Postal Service 

regulation setting forth standards for a container, packaging kit, or similar device used for the mailing of hazardous material. 

(c) CIVIL PENALTY; CLEAN-UP COSTS AND DAMAGES.— (1) IN GENERAL.—A person who knowingly violates this section or a regulation prescribed under this section shall be liable 

for— (A) a civil penalty of at least $250, but not more than $100,000, for each violation; 

74 

(B) the costs of any clean-up associated with each violation; and 

(C) damages. 

(2) KNOWING ACTION.—A person acts knowingly for purposes 

of paragraph (1) when— 

(A) the person has actual knowledge of the facts giving 

rise to the violation; or 

(B) a reasonable person acting in the circumstances and 

exercising reasonable care would have had that knowledge. 

(3) SEPARATE VIOLATIONS.— 

(A) VIOLATIONS OVER TIME.—A separate violation under 

this subsection occurs for each day hazardous material, 

mailed or caused to be mailed in noncompliance with this 

section, is in the mail. 

(B) SEPARATE ITEMS.—A separate violation under this 

subsection occurs for each item containing hazardous material that is mailed or caused to be mailed in noncompliance 

with this section. 

(d) HEARINGS.—The Postal Service may determine that a person 

has violated this section or a regulation prescribed under this section only after notice and an opportunity for a hearing. Proceedings 

under this section shall be conducted in accordance with section 

3001(m). 

(e) PENALTY CONSIDERATIONS.—In determining the amount of a 

civil penalty for a violation of this section, the Postal Service shall 

consider— 

(1) the nature, circumstances, extent, and gravity of the violation; 

(2) with respect to the person who committed the violation, 

the degree of culpability, any history of prior violations, the 

ability to pay, and any effect on the ability to continue in business; 

(3) the impact on Postal Service operations; and 

(4) any other matters that justice requires. 

(f) CIVIL ACTIONS TO COLLECT.— 

(1) IN GENERAL.—In accordance with section 409(d), a civil 

action may be commenced in an appropriate district court of the 

United States to collect a civil penalty, clean-up costs, and damages assessed under subsection (c). 

(2) COMPROMISE.—The Postal Service may compromise the 

amount of a civil penalty, clean-up costs, and damages assessed 

under subsection (c) before commencing a civil action with respect to such civil penalty, clean-up costs, and damages under 

paragraph (1). 

(g) CIVIL JUDICIAL PENALTIES.— 

(1) IN GENERAL.—At the request of the Postal Service, the Attorney General may bring a civil action in an appropriate district court of the United States to enforce this section or a regulation prescribed under this section. 

(2) RELIEF.—The court in a civil action under paragraph (1) 

may award appropriate relief, including a temporary or permanent injunction, civil penalties as determined in accordance 

with this section, or punitive damages. 

75 

(3) CONSTRUCTION.—A civil action under this subsection 

shall be in lieu of civil penalties for the same violation under 

subsection (c)(1)(A). 

(h) DEPOSIT OF AMOUNTS COLLECTED.— (1) POSTAL SERVICE FUND.—Except as provided under paragraph (2), amounts collected under subsection (c)(1)(B) and (C) 

shall be deposited into the Postal Service Fund under section 

2003. 

(2) TREASURY.—Amounts collected under subsection (c)(1)(A) 

and any punitive damages collected under subsection (c)(1)(C) 

shall be deposited into the Treasury of the United States. 

CHAPTER 32—PENALTY AND FRANKED MAIL 

* * * * * * * 

§ 3210. Franked mail transmitted by the Vice President, 

Members of Congress, and congressional officials 

(a)(1) * * * 

* * * * * * * 

(6)(A) * * * 

* * * * * * * 

(C) No Member of the Senate may mail any mass mailing as 

franked mail if such mass mailing øis mailed fewer¿ is postmarked 

fewer than 60 days immediately before the date of any primary 

election or general election (whether regular, special, or runoff) for 

any national, State or local office in which such Member is a candidate for election. 

* * * * * * * 

øCHAPTER 36—POSTAL RATES, CLASSES, AND SERVICES 

øSUBCHAPTER I—POSTAL RATE COMMISSION 

øSec. 

ø3601. Establishment. 

ø3602. Terms of office. 

ø3603. Rules; regulations; procedures. 

ø3604. Administration. 

øSUBCHAPTER II—PERMANENT RATES AND CLASSES OF MAIL 

ø3621. Authority to fix rates and classes. 

ø3622. Rates and fees. 

ø3623. Mail classification. 

ø3624. Recommended decisions of Commission. 

ø3625. Action of the Governors. 

ø3626. Reduced rates. 

ø3627. Adjusting free rates. 

ø3628. Appellate review. 

ø3629. Reduced rates for voter registration purposes. 

øSUBCHAPTER III—TEMPORARY RATES AND CLASSES 

ø3641. Temporary changes in rates and classes. 

ø3642. Special authority relating to reduced-rate categories of mail. 

øSUBCHAPTER IV—POSTAL SERVICES AND COMPLAINTS 

ø3661. Postal services. 

ø3662. Rate and service complaints. 

ø3663. Annual report on international services. 

76 

øSUBCHAPTER V—GENERAL 

ø3681. Reimbursement. 

ø3682. Size and weight limits. 

ø3683. Uniform rates for books; films; other materials. 

ø3684. Limitations. 

ø3685. Filing of information relating to periodical publications. 

øSUBCHAPTER I—POSTAL RATE COMMISSION 

ø§ 3601. Establishment 

ø(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. 

ø(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. 

ø(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. 

ø(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. 

ø§ 3602. Terms of office 

øThe Commissioners of the Postal Rate Commission shall serve 

for terms of 6 years except that— 

ø(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 

ø(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. 

øSUBCHAPTER II—PERMANENT RATES AND CLASSES OF 

MAIL 

ø§ 3621. Authority to fix rates and classes 

øExcept 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. 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 

77 

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. 

ø§ 3622. Rates and fees 

ø(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 the 

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. 

ø(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: 

ø(1) the establishment and maintenance of a fair and equitable schedule; 

ø(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; 

ø(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; 

ø(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; 

ø(5) the available alternative means of sending and receiving 

letters and other mail matter at reasonable costs; 

ø(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; 

ø(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; 

ø(8) the educational, cultural, scientific, and informational 

value to the recipient of mail matter; and 

ø(9) such other factors as the Commission deems appropriate. 

ø(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 

78 

former section 4358 (d) or (e), 4452 (b) or (c), or 4554 (b) or (c) of 

this title. 

ø(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. 

ø§ 3623. Mail classification 

ø(a) Within 2 years after the effective date of this subchapter, 

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. 

ø(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. 

ø(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: 

ø(1) the establishment and maintenance of a fair and equitable classification system for all mail; 

ø(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; 

ø(3) the importance of providing classifications with extremely high degrees of reliability and speed of delivery; 

ø(4) the importance of providing classifications which do not 

require an extremely high degree of reliability and speed of delivery; 

ø(5) the desirability of special classifications from the point 

of view of both the user and of the Postal Service; and 

ø(6) such other factors as the Commission may deem appropriate. 

ø(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. 

ø§ 3624. Recommended decisions of Commission 

ø(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. 

79 

ø(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— 

ø(1) the advance submission of written direct testimony; 

ø(2) the conduct of prehearing conferences to define issues, 

and for other purposes to insure orderly and expeditious proceedings; 

ø(3) discovery both from the Postal Service and the parties 

to the proceedings; 

ø(4) limitation of testimony; and 

ø(5) the conduct of the entire proceedings off the record with 

the consent of the parties. 

ø(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. 

ø(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. 

ø(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. 

ø§ 3625. Action of the Governors 

ø(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. 

ø(b) The Governors may approve the recommended decision and 

order the decision placed in effect. 

ø(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. 

ø(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 

80 

Governors expressly find that (1) such modification is in accord 

with the record and the policies of this chapter, 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. 

ø(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. 

ø(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 shall become effective.¿ 

CHAPTER 36—POSTAL RATES, CLASSES AND SERVICES

SUBCHAPTER I—PROVISIONS RELATING TO MARKET-DOMINANT PRODUCTS

Sec. 

3621. Applicability; definitions. 

3622. Modern rate regulation. 

[3623. Repealed]. 

[3624. Repealed]. 

[3625. Repealed]. 

3626. Reduced Rates. 

3627. Adjusting free rates. 

[3628. Repealed]. 

3629. Reduced rates for voter registration purposes. 

SUBCHAPTER II—PROVISIONS RELATING TO COMPETITIVE PRODUCTS

3631. Applicability; definitions and updates. 

3632. Action of the Governors. 

3633. Provisions applicable to rates for competitive products. 

3634. Assumed Federal income tax on competitive products. 

SUBCHAPTER III—PROVISIONS RELATING TO EXPERIMENTAL AND NEW PRODUCTS

3641. Market tests of experimental products. 

3642. New products and transfers of products between the market-dominant and 

competitive categories of mail. 

SUBCHAPTER IV—REPORTING REQUIREMENTS AND RELATED PROVISIONS

3651. Annual reports by the Commission. 

3652. Annual reports to the Commission. 

3653. Annual determination of compliance. 

SUBCHAPTER V—POSTAL SERVICES, COMPLAINTS, AND JUDICIAL REVIEW

3661. Postal services. 

3662. Rate and service complaints. 

3663. Appellate review. 

3664. Enforcement of orders. 

SUBCHAPTER VI—GENERAL

3681. Reimbursement. 

3682. Size and weight limits. 

3683. Uniform rates for books; films, other materials. 

3684. Limitations. 

3685. Filing of information relating to periodical publications. 

3686. Bonus authority. 

3687. Workshare discounts. 

81 

SUBCHAPTER I—PROVISIONS RELATING TO MARKETDOMINANT PRODUCTS 

§ 3621. Applicability; definitions 

(a) APPLICABILITY.—This subchapter shall apply with respect to— 

(1)(A) single piece first-class letters (both domestic and international); 

(B) single piece first-class cards (both domestic and international); and 

(C) special services; 

(2) all first-class mail not included under paragraph (1); 

(3) periodicals; 

(4) standard mail; 

(5) media mail; 

(6) library mail; and 

(7) bound printed matter, 

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 24 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 maximize incentives to reduce costs and increase efficiency. 

(2) To create predictability and stability in rates. 

(3) To maintain high quality service standards. 

(4) To allow the Postal Service pricing flexibility. 

(5) To assure adequate revenues, including retained earnings, 

to maintain financial stability. 

(6) To reduce the administrative burden of the ratemaking 

process. 

(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 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 

82 

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) ALLOWABLE PROVISIONS.—The system for regulating rates and 

classes for market-dominant products may include one or more of 

the following: 

(1) Price caps, revenue targets, or other form of incentive regulation. 

(2) Cost-of-service regulation. 

(3) Such other form of regulation as the Commission considers appropriate to achieve, consistent with subsection (c), the 

objectives of subsection (b). 

(e) LIMITATION.—In the administration of this section, the Commission shall not permit the average rate in any subclass of mail 

to increase at an annual rate greater than the comparable increase 

in the Consumer Price Index, unless it has, after notice and opportunity for a public hearing and comment, determined that such increase is reasonable and equitable and necessary to enable the Postal Service, under best practices of 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. 

(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. 

§ 3626. Reduced rates 

ø(a)(1) Except as otherwise provided in this section, rates of postage for a class of mail or kind of mailer under former section 4358, 

4452(b), 4452(c), 4554(b), or 4554(c) of this title shall be established 

in accordance with the applicable provisions of this chapter. 

ø(2) For the purpose of this subsection— 

83 

ø(A) the term ‘‘costs attributable’’, as used with respect to a 

class of mail or kind of mailer, means the direct and indirect 

postal costs attributable to such class of mail or kind of mailer 

(excluding any other costs of the Postal Service); 

ø(B) the term ‘‘regular-rate category’’ means any class of 

mail or kind of mailer, other than a class or kind referred to 

in paragraph (3)(A) or section 2401(c); and 

ø(C) the term ‘‘institutional-costs contribution’’, as used with 

respect to a class of mail or kind of mailer, means that portion 

of the estimated revenues to the Postal Service from such class 

of mail or kind of mailer which remains after subtracting an 

amount equal to the estimated costs attributable to such class 

of mail or kind of mailer. 

ø(3)(A) Except as provided in paragraph (4) or (5), rates of 

postage for a class of mail or kind of mailer under former section 4358 of this title shall be established in a manner such 

that the estimated revenues to be received by the Postal Service from such class of mail or kind of mailer shall be equal to 

the sum of— 

ø(i) the estimated costs attributable to such class of mail 

or kind of mailer; and 

ø(ii) the product derived by multiplying the estimated 

costs referred to in clause (i) by the applicable percentage 

under subparagraph (B). 

ø(B) The applicable percentage for any class of mail or kind of 

mailer referred to in subparagraph (A) shall be the product derived 

by multiplying— 

ø(i) the percentage which, for the most closely corresponding 

regular-rate category, the institutional-costs contribution for 

such category represents relative to the estimated costs attributable to such category of mail, times 

ø(ii)(I) one-twelfth, for fiscal year 1994; 

ø(II) one-sixth, for fiscal year 1995; 

ø(III) one-fourth, for fiscal year 1996; 

ø(IV) one-third, for fiscal year 1997; 

ø(V) five-twelfths, for fiscal year 1998; and 

ø(VI) one-half, for any fiscal year after fiscal year 1998. 

ø(C) Temporary special authority to permit the timely implementation of the preceding provisions of this paragraph is provided 

under section 3642. 

ø(D) For purposes of establishing rates of postage under this subchapter for any of the classes of mail or kinds of mailers referred 

to in subparagraph (A), subclauses (I) through (V) of subparagraph 

(B)(ii) shall be deemed amended by striking the fraction specified 

in each such subclause and inserting ‘‘one-half’’.¿ 

(a)(1) Except as otherwise provided in this section, rates of postage for a class of mail or kind of mailer under former section 4358, 

4452(b), 4452(c), 4554(b), or 4554(c) of this title shall be established 

in accordance with section 3622. 

(2) For the purpose of this subsection, the term ‘‘regular-rate category’’ means any class of mail or kind of mailer, other than a class 

or kind referred to in section 2401(c). 

ø(4)(A)¿ (3)(A) Except as specified in subparagraph (B), rates 

of postage for a class of mail or kind of mailer under former 

section 4358 (d) or (e) of this title shall be established so that 

84 

postage on each mailing of such mail shall be as nearly as 

practicable 5 percent lower than the postage for a corresponding regular-rate category mailing. 

* * * * * * * 

ø(5)¿ (4) The rates for any advertising under former section 

4358(f) of this title shall be equal to 75 percent of the rates for advertising contained in the most closely corresponding regular-rate 

category of mail. 

ø(6)¿ (5) The rates for mail matter under former sections 

4452 (b) and (c) of this title shall be established as follows: 

(A) * * * 

* * * * * * * 

ø(7)¿ (6) The rates for mail matter under former sections 

4554 (b) and (c) of this title shall be established so that postage 

on each mailing of such mail shall be as nearly as practicable 

5 percent lower than the postage for a corresponding regularrate mailing. 

* * * * * * * 

(g)(1) * * * 

* * * * * * * 

(3) For purposes of this section and former section 4358(a) 

through (c) of this title, those copies of an issue of a publication entered within the county in which it is published, but distributed outside such county on postal carrier routes originating in the county 

of publication, shall be treated as if they were distributed within the 

county of publication. 

(4)(A) In the case of an issue of a publication, any number of copies of which are mailed at the rates of postage for a class of mail 

or kind of mailer under former section 4358(a) through (c) of this 

title, any copies of such issue which are distributed outside the 

county of publication (excluding any copies subject to paragraph (3)) 

shall be subject to rates of postage provided for under this paragraph. 

(B) The rates of postage applicable to mail under this paragraph 

shall be established in accordance with section 3622. 

(C) This paragraph shall not apply with respect to an issue of a 

publication unless the total paid circulation of such issue outside 

the county of publication (not counting recipients of copies subject 

to paragraph (3)) is less than 5,000. 

* * * * * * * 

(n) In the administration of this section, matter that satisfies the 

circulation standards for requester publications shall not be excluded from being mailed at the rates for mail under former section 

4358 solely because such matter is designed primarily for free circulation or for circulation at nominal rates, or fails to meet the requirements of former section 4354(a)(5). 

ø§ 3627. Adjusting free and reduced rates¿ 

§ 3627. Adjusting free rates 

If Congress fails to appropriate an amount authorized under section 2401(c) of this title for any class of mail sent free of postage 

under section 3217 or 3403–3406 the rate for that class may be adVerDate Aug 04 2004 04:03 Sep 11, 2004 Jkt 029006 PO 00000 Frm 00084 Fmt 6659 Sfmt 6602 E:\HR\OC\HR672P1.XXX HR672P1
85 

justed in accordance with the provisions of this subchapter so that 

the increased revenues received from the users of such class will 

equal the amount for that class that the Congress was to appropriate. 

ø§ 3628. Appellate review 

øA 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 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 except as provided in this section.¿ 

* * * * * * * 

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) mailgrams; 

(4) international mail; and 

(5) parcel post, 

subject to 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. 

§ 3632. Action of the Governors 

(a) AUTHORITY TO ESTABLISH RATES AND CLASSES.—The Governors 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. 

86 

(2) RATES OR CLASSES OF GENERAL APPLICABILITY.—In the 

case of rates or classes of general applicability in the Nation as 

a whole or in any substantial region of the Nation, the Governors shall cause each rate and class decision under this section and the record of the Governors’ proceedings in connection 

with such decision to be published in the Federal Register at 

least 30 days before the effective date of any new rates or classes. 

(3) RATES OR CLASSES NOT OF GENERAL APPLICABILITY.—In 

the case of rates or classes not of general applicability in the 

Nation as a whole or in any substantial region of the Nation, 

the Governors shall cause each rate and class decision under 

this section and the record of the proceedings in connection with 

such decision to be filed with the Postal Regulatory Commission 

by such date before the effective date of any new rates or classes 

as the Governors consider appropriate, but in no case less than 

15 days. 

(4) CRITERIA.—As part of the regulations required under section 3633, the Postal Regulatory Commission shall establish 

criteria for determining when a rate or class established under 

this subchapter is or is not of general applicability in the Nation as a whole or in any substantial region of the Nation. 

(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. 

§ 3633. Provisions applicable to rates for competitive products 

The Postal Regulatory Commission shall, within 18 months after 

the date of the enactment of this section, promulgate (and may from 

time to time thereafter revise) regulations— 

(1) to prohibit the subsidization of competitive products by 

market-dominant products; 

(2) to ensure that each competitive product covers its costs attributable; and 

(3) to ensure that all competitive products collectively make a 

reasonable contribution to the institutional costs of the Postal 

Service. 

§ 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— 

87 

(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. 

øSUBCHAPTER III—TEMPORARY RATES AND CLASSES 

ø§ 3641. Temporary changes in rates and classes 

ø(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. 

ø(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. 

ø(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. 

ø(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. 

ø(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 

88 

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. 

ø(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. 

ø§ 3642. Special authority relating to reduced-rate categories 

of mail 

ø(a) In order to permit the timely implementation of section 

3626(a)(3), the Postal Service may establish temporary rates of 

postage for any class of mail or kind of mailer referred to in section 

3626(a)(3)(A). 

ø(b) Any exercise of authority under this section shall be in conformance with the requirements of section 3626(a), subject to the 

following: 

ø(1) All attributable costs and institutional-costs contributions assumed shall be the same as those which were assumed 

for purposes of the then most recent proceedings under subchapter II pursuant to which rates of postage for the class of 

mail or kind of mailer involved were last adjusted. 

ø(2) Any temporary rate established under this section shall 

take effect upon such date as the Postal Service may determine, except that— 

ø(A) such a rate may take effect only after 10 days’ notice in the Federal Register; and 

ø(B) no such rate may take effect after September 30, 

1998. 

ø(3) A temporary rate under this section may remain in effect no longer than the last day of the fiscal year in which it 

first takes effect. 

ø(4) Authority under this section may not be exercised in a 

manner that would result in more than 1 change taking effect 

under this section, during the same fiscal year, in the rates of 

postage for a particular class of mail or kind of mailer, except 

as provided in paragraph (5). 

ø(5) Nothing in paragraph (4) shall prevent an adjustment 

under this section in rates for a class of mail or kind of mailer 

with respect to which any rates took effect under this section 

earlier in the same fiscal year if— 

ø(A) the rates established for such class of mail or kind 

of mailer by the earlier adjustment are superseded by new 

rates established under subchapter II; and 

ø(B) authority under this paragraph has not previously 

been exercised with respect to such class of mail or kind 

of mailer based on the new rates referred to in subparagraph (A). 

ø(c) The Postal Service may prescribe any regulations which may 

be necessary to carry out this section, including provisions govVerDate Aug 04 2004 04:03 Sep 11, 2004 Jkt 029006 PO 00000 Frm 00088 Fmt 6659 Sfmt 6602 E:\HR\OC\HR672P1.XXX HR672P1
89 

erning the coordination of adjustments under this section with any 

other adjustments under this title. 

ø(d) Notwithstanding any provision of section 3626(a)(3)(B) or 

subsection (a) of this section, any temporary rates established 

under this section for non-letter-shaped mail under former section 

4452(b) or 4452(c) of this title shall not be lower than the rates in 

effect for such mail on September 30, 1993.¿ 

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). 

(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)). 

90 

(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 be tested under this section 

only if the total revenues that are anticipated, or in fact received, by the Postal Service from such product do not exceed 

$10,000,000 nationwide in any year, subject to paragraph (2) 

and subsection (g). In carrying out the preceding sentence, the 

Postal Regulatory Commission may limit the amount of revenues the Postal Service may obtain from any particular geographic market as necessary to prevent market disruption (as 

defined in subsection (b)(2)). 

(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, with respect to any particular product, to meet one 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. 

91 

(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 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 MONOP- OLY.—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, 

92 

that the product meets the regulations promulgated by the Postal Regulatory Commission pursuant to 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) NOTIFICATION REQUIREMENT.—The Postal Regulatory Commission shall, whenever it reaches a conclusion that a product or 

products should be transferred between the list of market-dominant 

products under section 3621 and the list of competitive products 

under section 3631, immediately notify the appropriate committees 

of the Congress. No such transfer may take effect less than 12 

months after such conclusion. 

(f) PROHIBITION.—Except as provided in section 3641, no product 

that involves the carriage of letters, printed matter, or mailable 

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. 

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 and 3633, respectively. 

(b) ADDITIONAL INFORMATION.—In addition to the information required under subsection (a), each report under this section shall 

also include, with respect to the period covered by such report, an 

estimate of the costs incurred by the Postal Service in providing— 

(1) postal services to areas of the Nation where, in the judgment of the Postal Regulatory Commission, the Postal Service 

either would not provide services at all or would not provide 

such services in accordance with the requirements of this title 

if the Postal Service were not required to provide prompt, reliable, and efficient services to patrons in all areas and all communities, including as required under the first sentence of section 101(b); 

(2) free or reduced rates for postal services as required by this 

title; and 

(3) other public services or activities which, in the judgment 

of the Postal Regulatory Commission, would not otherwise have 

been provided by the Postal Service but for the requirements of 

law. 

93 

The Commission shall detail the bases for its estimates and the statutory requirements giving rise to the costs identified in each report 

under this section. 

(c) 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, AND RATES.—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 thereto as the 

Commission may require under subsection (e))— 

(1) which shall analyze costs, revenues, and rates, using such 

methodologies as the Commission shall by regulation prescribe, 

and in sufficient detail to demonstrate that the rates in effect 

for 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) market information, including mail volumes; and 

(B) measures of the quality of service afforded by the 

Postal Service in connection with such product, including— 

(i) the service standard applicable to such product; 

(ii) the level of service (described in terms of speed of 

delivery and reliability) provided; and 

(iii) the degree of customer satisfaction with the service provided. 

Before submitting a report under this subsection (including any 

annex thereto 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.— 

(1) IN GENERAL.—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: 

(A) The per-item cost avoided by the Postal Service by 

virtue of such discount. 

(B) The percentage of such per-item cost avoided that the 

per-item workshare discount represents. 

(C) The per-item contribution made to institutional costs. 

(2) WORKSHARE DISCOUNT DEFINED.—For purposes of this 

subsection, the term ‘‘workshare discount’’ refers to presorting, 

barcoding, dropshipping, and other similar discounts, as further defined under regulations which the Postal Regulatory 

Commission shall prescribe. 

(c) MARKET TESTS.—In carrying out subsections (a) and (b) with 

respect to 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 market test; and 

94 

(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 

thereto) 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 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 pursuant to 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 

it is required to make under this section in a year, copies of its then 

most recent— 

95 

(1) comprehensive statement under section 2401(e); 

(2) performance plan under section 2803; and 

(3) 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); 

(2) whether any performance goals established under section 

2803 or 2804 for such year were not met; and 

(3) whether any market-dominant product failed to meet any 

service standard during such year. 

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) 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 appropriate action 

in accordance with subsections (c)–(e) of section 3662 (as if a complaint averring such noncompliance had been duly filed and found 

under such section to be justified). 

(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. 

øSUBCHAPTER IV—POSTAL SERVICES AND COMPLAINTS¿ 

SUBCHAPTER V—POSTAL SERVICES, COMPLAINTS, AND 

JUDICIAL REVIEW 

* * * * * * * 

ø§ 3662. Rate and service complaints 

øInterested 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, determines the complaint to be justified, it shall, 

after proceedings in conformity with section 3624 of this title, issue 

96 

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 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. 

ø§ 3663. Annual report on international services 

ø(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. 

ø(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.¿ 

§ 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 pursuant to 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 (such as 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, or requiring the Postal Service to make up for revenue shortfalls in competitive products). 

97 

(d) SUSPENSION AUTHORITY.—The Postal Regulatory Commission 

may suspend implementation of rates or classifications under section 3632(b)(3) for a limited period of time pending expedited proceedings under this section. In evaluating whether circumstances 

warrant suspension, the Commission shall consider factors such as 

(1) whether there is a substantial likelihood that such rate or classification will violate the requirements of chapter 1, 4, or 6, or this 

chapter (or regulations promulgated under any of those chapters), 

(2) whether any persons would suffer substantial injury, loss, or 

damage absent a suspension, (3) whether the Postal Service or any 

other persons would suffer substantial injury, loss, or damage under 

a suspension, and (4) the public interest. 

(e) 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 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. For purposes of this section, the term ‘‘person’’ includes the Postal Service. 

§ 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. 

øSUBCHAPTER V—GENERAL¿ 

SUBCHAPTER VI—GENERAL 

§ 3681. Reimbursement 

No mailer may be reimbursed for any amount paid under any 

rate or fee which, after such payment, is determined to have been 

unlawful after proceedings in accordance with the provisions of 

øsection 3628¿ sections 3662 through 3664 of this title, or is superseded by a lower rate or fee established under subchapter II of this 

chapter. 

98 

ø§ 3682. Size and weight limits 

øThe Postal Service may establish size and weight limitations for 

mail matter in the same manner as prescribed for changes in mail 

classification under subchapter II of this chapter.¿ 

§ 3682. Size and weight limits 

The Postal Service may establish size and weight limitations for 

mail matter in the market-dominant category of mail consistent 

with regulations the Postal Regulatory Commission may prescribe 

under section 3622. The Postal Service may establish size and 

weight limitations for mail matter in the competitive category of 

mail consistent with its authority under section 3632. 

* * * * * * * 

§ 3684. Limitations 

Except as provided in section 3627 of this title, no provision of 

this chapter shall be construed to give authority to the Governors 

to make any change in any provision øof section 3682 or 3683 or 

chapter 30, 32, or 34 of this title.¿ of this title. 

* * * * * * * 

§ 3686. Bonus authority 

(a) IN GENERAL.—The Postal Service may establish one or more 

programs to provide bonuses or other rewards to officers and employees of the Postal Service to achieve the objectives of this chapter. 

(b) WAIVER OF LIMITATION ON COMPENSATION.— (1) IN GENERAL.—Under any such program, the Postal Service may award a bonus or other reward in excess of the limitation set forth in the last sentence of section 1003(a), if such program has been approved under paragraph (2). 

(2) APPROVAL PROCESS.—If the Postal Service wishes to have 

the authority, under any program described in subsection (a), 

to award bonuses or other rewards in excess of the limitation 

referred to in paragraph (1)— 

(A) the Postal Service shall make an appropriate request 

to the Postal Regulatory Commission, in such form and 

manner as the Commission requires; and 

(B) the Postal Regulatory Commission shall approve any 

such request if it finds that the program is likely to achieve 

the objectives of this chapter. 

(3) REVOCATION AUTHORITY.—If the Postal Regulatory Commission finds that a program previously approved under paragraph (2) is not achieving the objectives of this chapter, the 

Commission may revoke or suspend the authority of the Postal 

Service to continue such program until such time as appropriate corrective measures have, in the judgment of the Commission, been taken. 

(c) REPORTING REQUIREMENT RELATING TO BONUSES OR OTHER

REWARDS.—Included in its comprehensive statement under section 

2401(e) for any period shall be— 

(1) the name of each person receiving a bonus or other reward 

during such period which would not have been allowable but 

for the provisions of subsection (b); 

(2) the amount of the bonus or other reward; and 

99 

(3) the amount by which the limitation referred to in subsection (b)(1) was exceeded as a result of such bonus or other 

reward. 

§ 3687. Workshare discounts 

(a) IN GENERAL.—As part of the regulations established under 

section 3622(a), the Postal Regulatory Commission shall establish 

rules for workshare discounts that ensure that workshare discounts 

do not exceed the cost that the Postal Service avoids as the result 

of private sector workshare activity, except— 

(1) where the discount is associated with a new product or 

service or with a change to an existing product or service and 

is necessary, over a period of time not to exceed 4 years, to induce mailer behavior that will enable the new or changed product or service in furtherance of the overall economically efficient 

operation of the Postal Service; 

(2) to the extent that a reduction in the discount would lead 

to a loss of volume in the affected category 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; would result in a further increase in the rates 

paid by mailers not able to take advantage of the discount; or 

would impede the efficient operation of the Postal Service; 

(3) where the amount of the discount above costs avoided is 

necessary to mitigate rate shock and will be phased out over 

time; or 

(4) where the workshare discount is provided in connection 

with subclasses of mail consisting exclusively of mail matter of 

educational, cultural, or scientific value. 

(b) REPORTING REQUIREMENT.—Whenever the Postal Service establishes or maintains a workshare discount, the Postal Service 

shall, at the time it publishes the workshare discount rate, file with 

the Postal Regulatory Commission a detailed report and explanation of its 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. 

(c) DEFINITION.—For purposes of this section, the term ‘‘workshare 

discount’’ refers to rate discounts provided to mailers for presorting, 

prebarcoding, handling, or transportation, as further defined by the 

Postal Regulatory Commission as part of regulations established 

under section 3622(a). 

PART V—TRANSPORTATION OF MAIL 

Chap. Sec. 

50. General ........................................................................................................... 5001 

ø52. Transportation of Mail by Surface Carrier ........................................ 5201¿ 

* * * * * * * 

CHAPTER 50—GENERAL 

* * * * * * * 

100 

§ 5001. Provisions for carrying mail 

The Postal Service shall provide for the transportation of mail in 

accordance with the policies established under section ø101(e) and 

(f)¿ 101(f) and (g) of this title and the provisions of this chapter. 

Notwithstanding any other provision of this title, the Postal Service 

may make arrangements on a temporary basis for the transportation of mail when, as determined by the Postal Service, an emergency arises. Such arrangements shall terminate when the emergency ceases and the Postal Service is promptly able to secure 

transportation services under other provisions of this title. 

* * * * * * * 

§ 5005. Mail transportation 

(a) The Postal Service may obtain mail transportation service— 

ø(1) from common carriers by rail and motor vehicle or persons as provided in chapter 52 of this title;¿ 

ø(2)¿ (1) from air carriers as provided in chapter 54 of this 

title; 

ø(3)¿ (2) from water carriers as provided in chapter 56 of 

this title; and 

ø(4)¿ (3) by contract from any person ø(as defined in section 

5201(6) of this title)¿ or carrier for surface and water transportation under such terms and conditions as it deems appropriate, subject to the provisions of this section. 

(b)(1) Contracts for the transportation of mail procured under 

subsection ø(a)(4)¿ (a)(3) of this section shall be for periods not in 

excess of 4 years ø(or where the Postal Service determines that 

special conditions or the use of special equipment warrants, not in 

excess of 6 years)¿ (or such longer period of time as may be determined by the Postal Service to be advisable or appropriate) and 

shall be entered into only after advertising a sufficient time previously for proposals. The Postal Service, with the consent of the 

holder of any such contract, may adjust the compensation allowed 

under that contract for increased or decreased costs resulting from 

changed conditions occurring during the term of the contract. 

(2) A contract under subsection ø(a)(4)¿ (a)(3) of this section may 

be renewed at the existing rate by mutual agreement between the 

contractor or subcontractor and the Postal Service. 

* * * * * * * 

(c) The Postal Service, in determining whether to obtain transportation of mail øby carrier or person under subsection (a)(1) of 

this section, by contract under subsection (a)(4) of this section, or¿ 

by contract under subsection (a)(3) of this section or by Government 

motor vehicle, shall use the mode of transportation which best 

serves the public interest, due consideration being given to the cost 

of the transportation service under each mode. 

* * * * * * * 

øCHAPTER 52—TRANSPORTATION OF MAIL BY SURFACE 

CARRIER 

øSec. 

ø5201. Definitions. 

ø5202. Applicability. 

101 

ø5203. Authorization of service by carrier. 

ø5204. Changes in service; placement of equipment. 

ø5205. Evidence of service. 

ø5206. Fines and deductions. 

ø5207. Surface Transportation Board to fix rates. 

ø5208. Procedures. 

ø5209. Special rates. 

ø5210. Intermodal transportation. 

ø5211. Statistical studies. 

ø5212. Special contracts. 

ø5213. Carrier operations; receipts; expenditures. 

ø5214. Agreements with passenger common carriers by motor vehicle. 

ø5215. Star route certification. 

ø§ 5201. Definitions 

øFor purposes of this chapter— 

ø(1) ‘‘Board’’ means the Surface Transportation Board; 

ø(2) ‘‘carrier’’ and ‘‘regulated surface carrier’’ mean a railroad, a freight forwarder, or a motor carrier; 

ø(3) ‘‘railroad’’ means a railway common carrier, including an 

electric urban and interurban railway common carrier; 

ø(4) ‘‘freight forwarder’’ means any regulated freight forwarder which holds itself out to the general public as a carrier 

to transport or provide transportation of property as authorized by a registration issued by the Board; 

ø(5) ‘‘motor carrier’’ means a motor carrier, except a passenger-carrying motor vehicle of such a carrier, within the 

meaning of section 13102(12) of title 49, that holds a registration issued by the Board; 

ø(6) ‘‘person’’ includes any person other than a carrier holding a certificate or registration issued by the Board; and 

ø(7) ‘‘mail’’ includes equipment and supplies of the Postal 

Service. 

ø§ 5202. Applicability 

øThis chapter applies to mail transportation performed by any 

person or carrier or carrier combination regardless of the mode of 

transportation actually used to provide the service. 

ø§ 5203. Authorization of service by carrier 

ø(a) The Postal Service may establish mail routes and authorize 

mail transportation service thereon. 

ø(b) A carrier shall transport mail offered for transportation by 

the Postal Service in the manner, under the conditions, and with 

the service prescribed by the Postal Service. A carrier is entitled 

to receive fair and reasonable compensation for the transportation 

and service connected therewith. 

ø(c) The Postal Service shall determine the trains or motor vehicles upon which mail shall be transported, except that no carrier 

shall be compelled to transport mail on any train or vehicle which 

is operated exclusively for the transportation of passengers and 

their baggage. 

ø(d) A carrier shall transport with due speed such mail as the 

Postal Service directs under this section. 

ø(e) No carrier shall be required to serve territory it is not otherwise authorized to serve, to provide service for the Postal Service 

at a rate which is less than compensatory cost, or to provide service 

at a detriment to the carrier or its other customers. 

102 

ø(f) Any order or determination of the Postal Service providing 

for the transportation of mail by a motor carrier shall be filed with 

the Board. If the Board finds, within 90 days after the filing, that 

the order or determination will be detrimental to the motor carrier 

or its other customers, or that such carrier does not operate equipment suitable for the transportation of mail, the order or determination shall be terminated. 

ø(g) An order or determination of the Postal Service under this 

section shall be consistent with the orders of the Board under sections 5207 and 5208 of this title. 

ø§ 5204. Changes in service; placement of equipment 

ø(a) The Postal Service may authorize, according to the need 

therefor, new or additional mail transportation service by carriers 

at the rate or compensation fixed under this chapter. It may reduce 

or discontinue service with pro rata reductions in compensation 

and indemnity for the loss of reasonable investment in equipment 

used exclusively for mail. 

ø(b) A railroad shall place cars used for full or apartment post 

office service in position at such times before departure as the Postal Service directs. 

ø§ 5205. Evidence of service 

øA carrier shall submit evidence of its performance of mail transportation service, signed by an authorized official, in such form and 

at such times as the Postal Service requires. Mail transportation 

service is considered that of the carrier performing it regardless of 

the ownership of the property used by the carrier. 

ø§ 5206. Fines and deductions 

ø(a) The Postal Service may fine any carrier an amount not to exceed $500 for each day the carrier refuses to perform mail transportation services required by it at rates or compensation established under this chapter. 

ø(b) The Postal Service shall fine a carrier an amount it deems 

reasonable for failure or refusal by that carrier to transport mail 

as required by the Postal Service under section 5203 of this title. 

ø(c) The Board may make deductions from the compensation of 

a carrier for failure to perform mail transportation service as required under section 5203 of this title. If the failure to perform is 

due to the fault of the carrier, it may deduct a sum not exceeding 

twice the compensation applying to such service. Such deductions 

shall not be made prior to the expiration of 60 days following service upon the carrier by the Board of notice of intention to assess 

a fine or make a deduction and of the basis therefor. 

ø§ 5207. Surface Transportation Board to fix rates 

ø(a) The Board shall determine and fix the fair and reasonable 

rates or compensation for the transportation of mail by carrier and 

the service connected therewith, and shall prescribe the method of 

computing such rates or compensation. The Board shall publish its 

orders stating its determination under this section which shall remain in force until changed by it after notice and hearing. 

ø(b) For the purpose of determining and fixing rates or compensation under this section, the Board may make just and reasonVerDate Aug 04 2004 04:03 Sep 11, 2004 Jkt 029006 PO 00000 Frm 00102 Fmt 6659 Sfmt 9001 E:\HR\OC\HR672P1.XXX HR672P1
103 

able classifications of carriers and, where just and equitable, fix 

general rates applicable to carriers in the same classification. 

ø(c) In determining and fixing fair and reasonable rates or compensation under this section, the Board shall consider the relation 

between the Government and carriers as public service corporations, and the nature of public service as distinguished, if there is 

a distinction, from the ordinary transportation business of the carriers. 

ø(d) Initial rates or compensation for mail transportation service 

by any carrier or carriers shall be those agreed to by the Postal 

Service and the carrier or carriers, and such rates or compensation 

shall continue in effect until such time as the Board fixes the rates 

or compensation under subsection (a) of this section. 

ø§ 5208. Procedures 

ø(a) At any time after 6 months from the entry of an order stating the Board’s determination under section 5207 of this title, the 

Postal Service or an interested carrier may apply for a reexamination and substantially similar proceedings as have theretofore been 

had shall be followed with respect to the rates of compensation for 

services covered by the application. At the conclusion of the hearing the Board shall enter an order stating its determination. 

ø(b) Except as authorized by sections 5207(d), 5209, 5210, and 

5212 of this title, the Postal Service shall pay a carrier the rates 

or compensation so determined and fixed for application at such 

stated times as named in the order. 

ø(c) The Postal Service may file with the Board a comprehensive 

plan stating— 

ø(1) its requirements for the transportation of mail by carrier; 

ø(2) the character and speed of the trains or motor vehicles 

which are to carry the various kinds of mail; 

ø(3) the service, both terminal and en route, which carriers 

are to render; 

ø(4) what it believes to be the fair and reasonable rates or 

compensation for the services required; and 

ø(5) all other information which may be material to the inquiry, but such other information may be filed at any time in 

the discretion of the Board. 

ø(d) When a comprehensive plan is filed, the Board shall give notice of not less than 30 days to each carrier required by the Postal 

Service to transport mail pursuant to such plan. A carrier may file 

its answer at the time fixed by the Board, but not later than 30 

days after the expiration date fixed by the Board in the notice, and 

the Board shall proceed with the hearing. 

ø§ 5209. Special rates 

øUpon petition by the Postal Service, the Board shall determine 

and fix carload or truckload, or less than carload or truckload, 

rates for the transportation of mail not entitled to high priority in 

transportation. A carrier shall perform the service at the rates so 

determined when requested to do so and under the conditions prescribed by the Postal Service. 

104 

ø§ 5210. Intermodal transportation 

øThe Postal Service may permit a carrier to perform mail transportation by any form of transportation it deems appropriate at 

rates or compensation not exceeding those allowable for similar 

service by the designated form of transportation. 

ø§ 5211. Statistical studies 

øThe Postal Service may arrange for weighing and measuring 

mail transported on carrier mail routes and make other computations for statistical and administrative purposes to carry out the 

purposes of this chapter. 

ø§ 5212. Special contracts 

øThe Postal Service may enter into special contracts with any 

carrier or person, without advertising, for bids and for periods not 

in excess of 4 years. It may contract to pay lower rates or compensation or, where in its judgment conditions warrant, higher 

rates or compensation than those determined or fixed by the Board. 

The fact that the Board has not prescribed rates or compensation 

for the carrier involved, under section 5207 of this title, shall not 

preclude execution of a contract under this section. Such contracts 

may be negotiated only after reasonable notice has been posted in 

advance in post offices on the post roads to be served, and other 

carriers or persons have been given an opportunity to offer to negotiate for the transportation of mail. 

ø§ 5213. Carrier operations; receipts; expenditures 

øThe Postal Service shall request any carrier transporting the 

mails to furnish, under seal, such data relating to the operations, 

receipts, and expenditures of such carrier as may, in its judgment, 

be deemed necessary to enable it to ascertain the cost of mail 

transportation and the proper compensation to be paid for such 

service. 

ø§ 5214. Agreements with passenger common carriers by 

motor vehicle 

øThe Postal Service may enter into contracts under such terms 

and conditions as it shall prescribe and without advertising for bids 

for the transportation of mail, in passenger-carrying motor vehicles, by passenger common carriers, or by motor vehicles over the 

regular routes on which the carrier is permitted by law to transport passengers. 

ø§ 5215. Star route certification 

ø(a) Any person who was a contractor under a star route, mail 

messenger, or contract motor vehicle service contract on the effective date of this section (or successor in interest to any such person), shall, upon application to the Board for the territory within 

which such contractor operated on or before the effective date of 

this section be issued a certificate of public convenience and necessity as a motor carrier for the transportation of mail by the Board 

without the Board’s requiring further proof that the public convenience and necessity will be served by such operation and without 

further proceedings. 

105 

ø(b) Applications of persons who were not contractors on the effective date of this section shall be decided in accordance with applicable Board procedure. 

ø(c) For purposes of this section, the term ‘‘person’’ has the same 

meaning given that term under section 1 of title 1.¿ 

CHAPTER 54—TRANSPORTATION OF MAIL BY AIR 

Sec. 

5401. Authorization. 

* * * * * * * 

ø5403. Fines.¿ 

* * * * * * * 

§ 5402. Contracts for transportation of mail by air 

(a) * * * 

* * * * * * * 

ø(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 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. 

ø(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. 

ø(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. 

ø(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.¿ 

(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. 

106 

(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) 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. 

* * * * * * * 

ø§ 5403. Fines 

øThe Postal Service may impose or remit fines on carriers transporting mail by air on routes extending beyond the borders of the 

United States for— 

ø(1) unreasonable or unnecessary delay to mail; and 

ø(2) other delinquencies in the transportation of the mail.¿ 

* * * * * * * 

CHAPTER 56—TRANSPORTATION OF MAIL BY VESSEL 

* * * * * * * 

§ 5605. Contracts for transportation of mail by vessel 

The Postal Service may contract for the transportation of mail by 

vessel without advertising for bids øfor periods of not in excess of 

4 years¿. 

107 

SECTION 1402 OF THE VICTIMS OF CRIME ACT OF 1984 

CRIME VICTIMS FUND

SEC. 1402. (a) * * * 

(b) 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) * * * 

(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 

ø404(a)(8)¿ 404(a)(7) of such title 39; 

* * * * * * * 

TITLE 5, UNITED STATES CODE 

* * * * * * * 

PART I—THE AGENCIES GENERALLY 

* * * * * * * 

CHAPTER 1—ORGANIZATION 

* * * * * * * 

§ 104. Independent establishment 

For the purpose of this title, ‘‘independent establishment’’ 

means— 

(1) an establishment in the executive branch (other than the 

United States Postal Service or the øPostal Rate¿ Postal Regulatory Commission) which is not an Executive department, 

military department, Government corporation, or part thereof, 

or part of an independent establishment; and 

* * * * * * * 

CHAPTER 3—POWERS 

* * * * * * * 

§ 306. Strategic plans 

(a) * * * 

* * * * * * * 

(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 

108 

Panama Canal Commission, the United States Postal Service, and 

the øPostal Rate¿ Postal Regulatory Commission. 

* * * * * * * 

PART III—EMPLOYEES 

Subpart A—General Provisions 

* * * * * * * 

CHAPTER 21—DEFINITIONS 

* * * * * * * 

§ 2104. Officer 

(a) * * * 

(b) Except as otherwise provided by law, an officer of the United 

States Postal Service or of the øPostal Rate¿ 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 

§ 3371. Definitions 

For the purpose of this subchapter— 

(1) * * * 

* * * * * * * 

(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 

øPostal Rate¿ Postal Regulatory Commission, 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 

* * * * * * * 

109 

SUBCHAPTER II—EXECUTIVE SCHEDULE PAY RATES 

* * * * * * * 

§ 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, as 

adjusted by section 5318 of this title: 

Solicitor General of the United States. 

* * * * * * * 

Chairman, øPostal Rate¿ Postal Regulatory Commission. 

* * * * * * * 

§ 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, as 

adjusted by section 5318 of this title: 

Deputy Administrator of General Services. 

* * * * * * * 

Members, øPostal Rate¿ Postal Regulatory Commission (4). 

* * * * * * * 

CHAPTER 55—PAY ADMINISTRATION 

* * * * * * * 

SUBCHAPTER II—WITHHOLDING PAY 

* * * * * * * 

§ 5514. Installment deduction for indebtedness to the United 

States 

(a)(1) * * * 

* * * * * * * 

(5) For purposes of this subsection— 

(A) * * * 

(B) ‘‘agency’’ includes executive departments and agencies, the United States Postal Service, the øPostal Rate¿ 

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 

* * * * * * * 

110 

CHAPTER 73—SUITABILITY, SECURITY, AND CONDUCT 

* * * * * * * 

SUBCHAPTER IV—FOREIGN GIFTS AND DECORATIONS 

§ 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 øPostal Rate¿ 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 

§ 7511. Definitions; application 

(a) For the purpose of this subchapter— 

(1) ‘‘employee’’ means— 

(A) * * * 

(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 øPostal 

Rate¿ Postal Regulatory Commission; and 

* * * * * * * 

Subpart G—Insurance and Annuities 

* * * * * * * 

CHAPTER 83—RETIREMENT 

* * * * * * * 

SUBCHAPTER III—CIVIL SERVICE RETIREMENT 

* * * * * * * 

§ 8334. Deductions, contributions, and deposits 

(a)(1)(A) * * * 

(B)(i) * * * 

(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 øthe 

product derived by multiplying the employee’s basic pay by the percentage equal to— 

111 

ø(I) the normal-cost percentage for the applicable employee 

category listed in subparagraph (A), minus 

ø(II) the percentage deduction rate that applies with respect 

to such employee under subparagraph (A).¿ zero 

* * * * * * * 

§ 8348. Civil Service Retirement and Disability Fund 

(a) * * * 

* * * * * * * 

ø(h)(1)(A) For purposes of this subsection, ‘‘Postal supplemental 

liability’’ means the estimated excess, as determined by the Office, 

of— 

ø(i) the actuarial present value of all future benefits payable 

from the Fund under this subchapter attributable to the service of current or former employees of the United States Postal 

Service, over 

ø(ii) the sum of— 

ø(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 

pursuant to section 8334; 

ø(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; 

ø(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 

ø(IV) any other appropriate amount, as determined by 

the Office in accordance with generally accepted actuarial 

practices and principles. 

ø(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. 

ø(ii) Military service so included shall not be included in the computation of any amount under subsection (g)(2). 

ø(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. 

ø(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. 

112 

ø(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. 

ø(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. 

ø(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. 

ø(F) An amortization schedule established under subparagraph 

(B) or (C) shall supersede any amortization schedule previously established under this paragraph. 

ø(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. 

ø(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) For purposes of this subsection, the ‘‘Postal surplus or supplemental liability’’ means the estimated difference, as determined 

by the Office, between— 

(A) the actuarial present value of all future benefits which are 

payable from the Fund under this subchapter to current or 

former employees of the United States Postal Service, or their 

survivors, and attributable to civilian employment with the 

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 Postal 

Service currently subject to this subchapter pursuant to 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 Postal Service 

and its employees, 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)(i) Not later than June 15, 2006, the Office shall determine 

the Postal surplus or supplemental liability as of September 30, 

2005. 

(ii) If a supplemental liability is determined under this subparagraph for fiscal year 2005, the Office shall establish an amortizaVerDate Aug 04 2004 04:03 Sep 11, 2004 Jkt 029006 PO 00000 Frm 00112 Fmt 6659 Sfmt 6603 E:\HR\OC\HR672P1.XXX HR672P1
113 

tion schedule, including a series of equal annual installments commencing September 30, 2006, which provides for the liquidation of 

such liability by September 30, 2043. 

(iii) If a surplus is determined under this subparagraph for fiscal 

year 2005, the amount of the surplus shall be transferred to the 

Postal Service Retiree Health Benefits Fund by June 30, 2006. 

(B)(i) For each of fiscal years 2006 through 2038, the Office shall 

determine the Postal surplus or supplemental liability as of the close 

of such fiscal year, with each such determination to be made by 

June 15th of the following fiscal year. 

(ii) If a supplemental liability is determined under this subparagraph for a fiscal year, the Office shall establish an amortization 

schedule, including a series of equal annual installments commencing on September 30 of the following fiscal year, which provides for the liquidation of such liability by September 30, 2043. (iii)(I) If a surplus of $500,000,000 or more is determined under 

this subparagraph for a fiscal year, the amount of the surplus shall 

be transferred to the Postal Service Retiree Health Benefits Fund by 

June 30th of the following fiscal year. (II) If a surplus of less than $500,000,000 is determined under 

this subparagraph for a fiscal year, the surplus shall remain in the 

Fund, subject to transfer in a subsequent fiscal year under subclause (I) or subparagraph (C)(iii). 

(C)(i) Not later than June 15, 2040, the Office shall determine the 

Postal surplus or supplemental liability as of September 30, 2039. 

(ii) If a supplemental liability is determined under this subparagraph for fiscal year 2039, the Office shall establish an amortization schedule, including a series of equal annual installments commencing September 30, 2040, which provides for the liquidation of 

such liability by September 30, 2043. 

(iii) If a surplus is determined under this subparagraph for fiscal 

year 2039, the amount of the surplus— 

(I) shall be applied first toward reducing the amount of any 

supplemental liability described in section 8423(b)(1)(B); and 

(II) to the extent that any portion of such surplus remains 

after the application of subclause (I), shall, not later than June 

30, 2040, be transferred to the Postal Service Retiree Health 

Benefits Fund. 

(D) An amortization schedule under this paragraph— 

(i) shall be established 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; 

(ii) shall supersede any amortization schedule previously established under this paragraph; and 

(iii) shall not be taken into account, for purposes of any determination of Postal surplus or supplemental liability, except to 

the extent of any amounts under such schedule actually paid. 

(E) The Postal Service shall pay to the Office the amounts due 

under any amortization schedule established under this paragraph 

that has not been superseded. 

(3) Notwithstanding any other provision of law, in computing the 

amount of any payment under any other subsection of this section 

that is based on the amount of the unfunded liability, such payment 

shall be computed disregarding that portion of the unfunded liabilVerDate Aug 04 2004 04:03 Sep 11, 2004 Jkt 029006 PO 00000 Frm 00113 Fmt 6659 Sfmt 6603 E:\HR\OC\HR672P1.XXX HR672P1
114 

ity that the Office determines will be liquidated by payments under 

this subsection. 

(4) As used in this subsection, ‘‘Postal Service Retiree Health Benefits Fund’’ refers to the Postal Service Retiree Health Benefits 

Fund, as established by section 8909a. 

* * * * * * * 

CHAPTER 84—FEDERAL EMPLOYEES’ RETIREMENT 

SYSTEM 

* * * * * * * 

SUBCHAPTER I—GENERAL PROVISIONS 

* * * * * * * 

§ 8402. Federal Employees’ Retirement System; exclusions 

(a) * * * 

* * * * * * * 

(c)(1) The Office may exclude from the operation of this chapter 

an employee or group of employees in or under an Executive agency, the United States Postal Service, or the øPostal Rate¿ 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 

* * * * * * * 

§ 8423. Government contributions 

(a) * * * 

(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 øPostal Rate¿ Postal Regulatory 

Commission) and their survivors; 

as of the close of each fiscal year beginning after September 30, 

1987. 

* * * * * * * 

SUBCHAPTER VII—FEDERAL RETIREMENT THRIFT 

INVESTMENT MANAGEMENT SYSTEM 

* * * * * * * 

§ 8474. Executive Director 

(a) * * * 

* * * * * * * 

(c) The Executive Director may— 

115 

(1) * * * 

* * * * * * * 

(4) secure directly from an Executive agency, the United 

States Postal Service, or the øPostal Rate¿ Postal Regulatory 

Commission any information necessary to carry out the provisions of this subchapter or subchapter III of this chapter and 

policies of the Board; 

* * * * * * * 

CHAPTER 89—HEALTH INSURANCE 

Sec. 

8901. Definitions. 

* * * * * * * 

8909a. Postal Service Retiree Health Benefits Fund. 

* * * * * * * 

§ 8906. Contributions 

(a) * * * 

* * * * * * * 

(g)(1) * * * 

(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 øby the United States Postal Service.¿ first from the Postal 

Service Retiree Health Benefits Fund up to the amount contained 

therein, with any remaining amount paid by the United States Postal Service. 

* * * * * * * 

§ 8909a. Postal Service Retiree Health Benefits Fund 

(a) There is in the Treasury of the United States a Postal Service 

Retiree Health Benefits Fund (hereinafter in this section referred to 

as the ‘‘Fund’’) which is administered by the Office of Personnel 

Management. Any amounts transferred to the Fund under section 

8348(h)(2) shall yield interest at a rate equal to the weighted average yield of all the investments in the Civil Service Retirement and 

Disability Fund as of the date of transfer. All other investments of 

amounts in the Fund shall be made in accordance with subsections 

(c)–(e) of section 8348. 

(b) The Fund is available without fiscal year limitation for payments required by section 8906(g)(2). 

(c)(1) Not later than June 30, 2006, and by June 30 of each succeeding year, the Office of Personnel Management shall compute the 

net present value of the excess of future payments required by section 8906(g)(2)(A) for current and future United States Postal Service annuitants over the value of the assets of the Fund as of the end 

of the fiscal year ending on September 30 of that year. The actuarial 

costing method to be used by the Office and all actuarial assumptions shall be established by the Office after consultation with the 

116 

United States Postal Service and must be in accordance with generally accepted actuarial practices and principles. 

(2) Not later than September 30, 2006, and by September 30 of 

each succeeding year, the Office shall compute and the United 

States Postal Service shall pay into such Fund— 

(A) the portion of the net present value described in paragraph (1) attributable to the current year’s service of Postal 

Service employees; and 

(B) interest on the net present value described in paragraph 

(1) for that fiscal year, at the interest rate used in computing 

that net present value. 

(3)(A) Any computation or other determination of the Office under 

this subsection shall, upon request of the Postal Service, be subject 

to review by the Postal Regulatory Commission. The Commission 

shall submit a report containing the results of any such review to 

the Postal Service, the Office of Personnel Management, and the 

Congress. 

(B) Upon receiving the report of the Postal Regulatory Commission, the Office of Personnel Management shall reconsider its computation or other determination in light of such report, and shall 

make any appropriate adjustments. The Office shall submit a report 

containing the results of its reconsideration to the Commission, the 

Postal Service, and the Congress. 

(4) The Office shall promulgate, after consultation with the 

United States Postal Service, any regulations it deems necessary 

under this subsection. 

* * * * * * * 

SECTION 101 OF THE ETHICS IN GOVERNMENT ACT OF 

1978 

PERSONS REQUIRED TO FILE

SEC. 101. (a) * * * 

* * * * * * * 

(f) The officers and employees referred to in subsections (a), (d), 

and (e) are— 

(1) * * * 

* * * * * * * 

(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 øPostal Rate¿ 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; 

* * * * * * * 

117 

SECTION 501 OF THE REHABILITATION ACT OF 1973 

EMPLOYMENT OF INDIVIDUALS WITH DISABILITIES

SEC. 501. (a) * * * 

(b) Each department, agency, and instrumentality (including the 

United States Postal Service and the øPostal Rate Office¿ Postal 

Regulatory Commission) in the executive branch and the Smithsonian Institution shall, within one hundred and eighty days after 

the date of enactment of this Act, 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. 

* * * * * * * 

SECTION 3502 OF TITLE 44, UNITED STATES CODE 

§ 3502. Definitions 

As used in this subchapter— 

(1) * * * 

* * * * * * * 

(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 

øPostal Rate¿ Postal Regulatory Commission, the Securities 

and Exchange Commission, and any other similar agency designated by statute as a Federal independent regulatory agency 

or commission; 

* * * * * * * 

INSPECTOR GENERAL ACT OF 1978 

* * * * * * * 

118 

AUTHORITY; ADMINISTRATION PROVISIONS

SEC. 6. (a) * * * 

* * * * * * * 

(e)(1) * * * 

* * * * * * * 

(3) The Inspector General offices of the Department of Commerce, Department of Education, Department of Energy, Department of Health and Human Services, Department of Homeland Security, Department of Housing and Urban Development, Department of the Interior, Department of Justice, Department of Labor, 

Department of State, Department of Transportation, Department of 

the Treasury, Department of Veterans Affairs, Agency for International Development, Environmental Protection Agency, Federal 

Deposit Insurance Corporation, Federal Emergency Management 

Agency, General Services Administration, National Aeronautics 

and Space Administration, Nuclear Regulatory Commission, Office 

of Personnel Management, Railroad Retirement Board, Small Business Administration, Social Security Administration, øand the¿ 

Tennessee Valley Authority, and United States Postal Service are 

exempt from the requirement of paragraph (2) of an initial determination of eligibility by the Attorney General. 

* * * * * * * 

REQUIREMENTS FOR FEDERAL ENTITIES AND DESIGNATED FEDERAL

ENTITIES

SEC. 8G. (a) Notwithstanding section 11 of this Act, as used in 

this section— 

(1) * * * 

(2) the term ‘‘designated Federal entity’’ means Amtrak, the 

Appalachian Regional Commission, the Board of Governors of 

the Federal Reserve System, the Board for International 

Broadcasting, the Commodity Futures Trading Commission, 

the Consumer Product Safety Commission, the Corporation for 

Public Broadcasting, the Equal Employment Opportunity Commission, the Farm Credit Administration, the Federal Communications Commission, the Federal Deposit Insurance Corporation, the Federal Election Commission, the Election Assistance 

Commission, the Federal Housing Finance Board, the Federal 

Labor Relations Authority, the Federal Maritime Commission, 

the Federal Trade Commission, the Legal Services Corporation, 

the National Archives and Records Administration, the National Credit Union Administration, the National Endowment 

for the Arts, the National Endowment for the Humanities, the 

National Labor Relations Board, the National Science Foundation, the Panama Canal Commission, the Peace Corps, the 

Pension Benefit Guaranty Corporation, the Securities and Exchange Commission, the Smithsonian Institution, the United 

States International Trade Commissionø, and the United 

States Postal Service;¿ and the Postal Regulatory Commission; 

* * * * * * * 

(4) the term ‘‘head of the designated Federal entity’’ means 

any person or persons designated by statute as the head of a 

119 

designated Federal entity and if no such designation exists, the 

chief policymaking officer or board of a designated Federal entity as identified in the list published pursuant to subsection 

(h)(1) of this section, øexcept that— 

ø(A) with respect to the National Science Foundation, 

such term means the National Science Board; and 

ø(B) with respect to the United States Postal Service, 

such term means the Governors (within the meaning of 

section 102(3) of title 39, United States Code);¿ except that, 

with respect to the National Science Foundation, such term 

means the National Science Board; 

* * * * * * * 

(c) øExcept as provided under subsection (f) of this section, the¿ 

The Inspector General shall be appointed by the head of the designated Federal entity in accordance with the applicable laws and 

regulations governing appointments within the designated Federal 

entity. 

* * * * * * * 

ø(f)(1) For purposes of carrying out subsection (c) with respect 

to the United States Postal Service, the appointment provisions of 

section 202(e) of title 39, United States Code, shall be applied. 

ø(2) In carrying out the duties and responsibilities specified in 

this Act, the Inspector General of the United States Postal Service 

(hereinafter in this subsection referred to as the ‘‘Inspector General’’) shall have oversight responsibility for all activities of the 

Postal Inspection Service, including any internal investigation performed by the Postal Inspection Service. The Chief Postal Inspector 

shall promptly report the significant activities being carried out by 

the Postal Inspection Service to such Inspector General. 

ø(3)(A)(i) Notwithstanding subsection (d), the Inspector General shall be under the authority, direction, and control of the Governors with respect to audits or investigations, or the issuance of 

subpoenas, which require access to sensitive information concerning— 

ø(I) ongoing civil or criminal investigations or proceedings; 

ø(II) undercover operations; 

ø(III) the identity of confidential sources, including protected 

witnesses; 

ø(IV) intelligence or counterintelligence matters; or 

ø(V) other matters the disclosure of which would constitute 

a serious threat to national security. 

ø(ii) With respect to the information described under clause (i), 

the Governors may prohibit the Inspector General from carrying 

out or completing any audit or investigation, or from issuing any 

subpoena, after such Inspector General has decided to initiate, 

carry out, or complete such audit or investigation or to issue such 

subpoena, if the Governors determine that such prohibition is necessary to prevent the disclosure of any information described under 

clause (i) or to prevent the significant impairment to the national 

interests of the United States. 

ø(iii) If the Governors exercise any power under clause (i) or 

(ii), the Governors shall notify the Inspector General in writing 

stating the reasons for such exercise. Within 30 days after receipt 

of any such notice, the Inspector General shall transmit a copy of 

120 

such notice to the Committee on Governmental Affairs of the Senate and the Committee on Government Reform and Oversight of 

the House of Representatives, and to other appropriate committees 

or subcommittees of the Congress. 

ø(B) In carrying out the duties and responsibilities specified in 

this Act, the Inspector General— 

ø(i) may initiate, conduct and supervise such audits and investigations in the United States Postal Service as the Inspector General considers appropriate; and 

ø(ii) shall give particular regard to the activities of the Postal Inspection Service with a view toward avoiding duplication 

and insuring effective coordination and cooperation. 

ø(C) Any report required to be transmitted by the Governors 

to the appropriate committees or subcommittees of the Congress 

under section 5(d) shall also be transmitted, within the seven-day 

period specified under such section, to the Committee on Governmental Affairs of the Senate and the Committee on Government 

Reform and Oversight of the House of Representatives. 

ø(3) Nothing in this Act shall restrict, eliminate, or otherwise 

adversely affect any of the rights, privileges, or benefits of either 

employees of the United States Postal Service, or labor organizations representing employees of the United States Postal Service, 

under chapter 12 of title 39, United States Code, the National 

Labor Relations Act, any handbook or manual affecting employee 

labor relations with the United States Postal Service, or any collective bargaining agreement. 

ø(4) As used in this subsection, the term ‘‘Governors’’ has the 

meaning given such term by section 102(3) of title 39, United 

States Code.¿ 

* * * * * * * 

SPECIAL PROVISIONS CONCERNING THE UNITED STATES POSTAL

SERVICE

SEC. 8J. (a) In carrying out the duties and responsibilities specified in this Act, the Inspector General of the United States Postal 

Service shall have oversight responsibility for all activities of the 

Postal Inspection Service, including any internal investigation performed by the Postal Inspection Service. The Chief Postal Inspector 

shall promptly report any significant activities being carried out by 

the Postal Inspection Service to such Inspector General. The Postmaster General shall promptly report to such Inspector General all 

allegations of theft, fraud, or misconduct by Postal Service officers 

or employees, and entities or individuals doing business with the 

Postal Service. 

(b) In the case of any report that the Governors of the United 

States Postal Service (within the meaning of section 102(3) of title 

39, United States Code) are required to transmit under the second 

sentence of section 5(d), such sentence shall be applied by deeming 

the term ‘‘appropriate committees of Congress’’ to mean the Committee on Government Reform of the House of Representatives, the 

Committee on Governmental Affairs of the Senate, and such other 

committees or subcommittees of Congress as may be appropriate. 

(c) Notwithstanding any provision of paragraph (7) or (8) of section 6(a), the Inspector General of the United States Postal Service 

121 

may select, appoint, and employ such officers and employees as may 

be necessary for carrying out the functions, powers, and duties of 

the Office of Inspector General and to obtain the temporary or intermittent services of experts or consultants or an organization of experts or consultants, subject to the applicable laws and regulations 

that govern such selections, appointments, and employment, and the 

obtaining of such services, within the United States Postal Service. 

(d) Nothing in this Act shall restrict, eliminate, or otherwise adversely affect any of the rights, privileges, or benefits of employees 

of the United States Postal Service, or labor organizations representing employees of the United States Postal Service, under chapter 12 of title 39, United States Code, the National Labor Relations 

Act, any handbook or manual affecting employee labor relations 

with the United States Postal Service, or any collective bargaining 

agreement. 

(e) There are authorized to be appropriated, out of the Postal 

Service Fund, such sums as may be necessary for the Office of Inspector General of the United States Postal Service. 

RULE OF CONSTRUCTION OF SPECIAL PROVISIONS

SEC. ø8J.¿ 8K. The special provisions under section 8, 8A, 8B, 

8C, 8D, ø8E or 8F¿ 8E, 8F, 8H, or 8J of this Act relate only to the 

establishment named in such section and no inference shall be 

drawn from the presence or absence of a provision in any such section with respect to an establishment not named in such section or 

with respect to a designated Federal entity as defined under section 8G(a). 

* * * * * * * 

DEFINITIONS

SEC. 11. As used in this Act— 

(1) the term ‘‘head of the establishment’’ means the Secretary of Agriculture, Commerce, Defense, Education, Energy, 

Health and Human Services, Housing and Urban Development, the Interior, Labor, State, Transportation, Homeland Security, or the Treasury; the Attorney General; the Administrator of the Agency for International Development, Environmental Protection, General Services, National Aeronautics and 

Space, or Small Business, or Veterans’ Affairs; the Director of 

the Federal Emergency Management Agency, or the Office of 

Personnel Management; the Chairman of the Nuclear Regulatory Commission or the Railroad Retirement Board; the 

Chairperson of the Thrift Depositor Protection Oversight 

Board; the Chief Executive Officer of the Corporation for National and Community Service; the Administrator of the Community Development Financial Institutions Fund; the chief executive officer of the Resolution Trust Corporation; the Chairperson of the Federal Deposit Insurance Corporation; the Commissioner of Social Security, Social Security Administration; 

the Board of Directors of the Tennessee Valley Authority; øor¿ 

the President of the Export-Import Bank; or the Governors of 

the United States Postal Service (within the meaning of section 

102(3) of title 39, United States Code); as the case may be; 

122 

(2) the term ‘‘establishment’’ means the Department of Agriculture, Commerce, Defense, Education, Energy, Health and 

Human Services, Housing and Urban Development, the Interior, Justice, Labor, State, Transportation, Homeland Security, 

or the Treasury; the Agency for International Development, the 

Community Development Financial Institutions Fund, the Environmental Protection Agency, the Federal Emergency Management Agency, the General Services Administration, the National Aeronautics and Space Administration, the Nuclear Regulatory Commission, the Office of Personnel Management, the 

Railroad Retirement Board, the Resolution Trust Corporation, 

the Federal Deposit Insurance Corporation, the Small Business 

Administration, the Corporation for National and Community 

Service, or the Veterans’ Administration, the Social Security 

Administration, the Tennessee Valley Authority, øor¿ the Export-Import Bank, or the United States Postal Service, as the 

case may be; 

* * * * * * * 

SECTION 160 OF THE ENERGY POLICY ACT OF 1992 

SEC. 160. INSPECTOR GENERAL REVIEW AND AGENCY ACCOUNTABILITY. 

(a) AUDIT SURVEY.—Not later than 120 days after the date of the 

enactment of this Act, each Inspector General created to conduct 

and supervise audits and investigations relating to the programs 

and operations of the establishments listed in section 11(2) of the 

Inspector General Act of 1978 (5 U.S.C. App.)ø, and the Chief Postal Inspector of the United States Postal Service, in accordance with 

section 8E(f)(1) as established by section 8E(a)(2) of the Inspector 

General Act Amendments of 1988 (Public Law 100–504)¿ shall— 

(1) * * * 

* * * * * * * 

SECTION 8 OF THE POSTAL REORGANIZATION ACT 

TRANSFER OF POST OFFICE DEPARTMENT PERSONNEL

SEC. 8. (a) Officers and employees of the Post Office Department 

shall become officers and employees of the United States Postal 

Service on the effective date of this section. The provisions of this 

section shall not apply to persons occupying the positions of Postmaster General, Deputy Postmaster General, Assistant Postmasters General, General Counsel, or Judicial Officer. This section 

shall not be construed, however, to prohibit the appointment of 

such persons to positions in the Postal Service. 

(b) For purposes of chapter 81 of title 5, United States Code, the 

Postal Service shall, with respect to any individual receiving benefits under such chapter as an officer or employee of the former Post 

Office Department, have the same authorities and responsibilities as 

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it has with respect to an officer or employee of the Postal Service 

receiving such benefits. 

TITLE 49, UNITED STATES CODE 

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SUBTITLE VII—AVIATION PROGRAMS 

* * * * * * * 

SUBPART II—ECONOMIC REGULATION 

* * * * * * * 

CHAPTER 411—AIR CARRIER CERTIFICATES 

* * * * * * * 

§ 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 øin 

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 

* * * * * * * 

§ 41901. General authority 

ø(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 

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tation 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; 

* * * * * * * 

§ 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 øin 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); 

* * * * * * * 

§ 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 

øin foreign air transportation or¿ between places in Alaska shall— 

(1) * * * 

* * * * * * * 

(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 øin 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— 

(1) * * * 

* * * * * * * 

§ 41907. Prices for foreign transportation of mail 

ø(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 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 

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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. 

ø(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— 

ø(1) the prices paid for transportation of mail under the Universal Postal Union Convention as ratified by the United 

States Government; 

ø(2) the price-making elements used by the Universal Postal 

Union in prescribing its airmail prices; and 

ø(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.¿ 

* * * * * * * 

SECTION 3 OF THE POSTAL CIVIL SERVICE 

RETIREMENT SYSTEM FUNDING REFORM ACT OF 2003 

(Public Law 108–18) 

* * * * * * * 

øSEC. 3. DISPOSITION OF SAVINGS ACCRUING TO THE UNITED 

STATES POSTAL SERVICE. 

ø(a) IN GENERAL.—Savings accruing to the United States Postal 

Service as a result of the enactment of this Act— 

ø(1) shall, to the extent that such savings are attributable to 

fiscal year 2003 or 2004, be used to reduce the postal debt (in 

consultation with the Secretary of the Treasury), and the Postal Service shall not incur additional debt to offset the use of 

the savings to reduce the postal debt in fiscal years 2003 and 

2004; 

ø(2) shall, to the extent that such savings are attributable to 

fiscal year 2005, be used to continue holding postage rates unchanged and to reduce the postal debt, to such extent and in 

such manner as the Postal Service shall specify (in consultation with the Secretary of the Treasury); and 

ø(3) to the extent that such savings are attributable to any 

fiscal year after fiscal year 2005, shall be considered to be operating expenses of the Postal Service and, until otherwise provided for by law, shall be held in escrow and may not be obligated or expended. 

ø(b) AMOUNTS SAVED.— ø(1) IN GENERAL.—The amounts representing any savings accruing to the Postal Service in any fiscal year as a result of the 

enactment of this Act shall be computed by the Office of PerVerDate Aug 04 2004 04:03 Sep 11, 2004 Jkt 029006 PO 00000 Frm 00125 Fmt 6659 Sfmt 9001 E:\HR\OC\HR672P1.XXX HR672P1
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sonnel Management for each such fiscal year in accordance 

with paragraph (2). 

ø(2) METHODOLOGY.—Not later than July 31, 2003, the Office of Personnel Management shall— 

ø(A) formulate a plan specifically enumerating the actuarial methods and assumptions by which the Office shall 

make its computations under paragraph (1); and 

ø(B) submit such plan to the Committee on Government 

Reform of the House of Representatives and the Committee on Governmental Affairs of the Senate. 

ø(3) REQUIREMENTS.—The plan shall be formulated in consultation with the Postal Service and shall include the opportunity for the Postal Service to request reconsideration of computations under this subsection, and for the Board of Actuaries 

of the Civil Service Retirement System to review and make adjustments to such computations, to the same extent and in the 

same manner as provided under section 8423(c) of title 5, 

United States Code. 

ø(c) REPORTING REQUIREMENT.—The Postal Service shall include 

in each report rendered under section 2402 of title 39, United 

States Code, the amount applied toward reducing the postal debt, 

and the size of the postal debt before and after the application of 

subsection (a), during the period covered by such report. 

ø(d) SENSE OF CONGRESS.—It is the sense of the Congress that— 

ø(1) the savings accruing to the Postal Service as a result of 

the enactment of this Act will be sufficient to allow the Postal 

Service to fulfill its commitment to hold postage rates unchanged until at least 2006; 

ø(2) because the Postal Service still faces substantial obligations related to postretirement health benefits for its current 

and former employees, some portion of the savings referred to 

in paragraph (1) should be used to address those unfunded obligations; and 

ø(3) none of the savings referred to in paragraph (1) should 

be used in the computation of any bonuses for Postal Service 

executives. 

ø(e) POSTAL SERVICE PROPOSAL.— ø(1) IN GENERAL.—The United States Postal Service shall, by 

September 30, 2003, prepare and submit to the President, the 

Congress, and the General Accounting Office its proposal detailing how any savings accruing to the Postal Service as a result of the enactment of this Act, which are attributable to any 

fiscal year after fiscal year 2005, should be expended. 

ø(2) MATTERS TO CONSIDER.—In preparing its proposal under 

this subsection, the Postal Service shall consider— 

ø(A) whether, and to what extent, those future savings 

should be used to address— 

ø(i) debt repayment; 

ø(ii) prefunding of postretirement healthcare benefits for current and former postal employees; 

ø(iii) productivity and cost saving capital investments; 

ø(iv) delaying or moderating increases in postal 

rates; and 

ø(v) any other matter; and 

127 

ø(B) the work of the President’s Commission on the 

United States Postal Service under section 5 of Executive 

Order 13278 (67 Fed. Reg. 76672). 

ø(3) GAO REVIEW AND REPORT.—Not later than 60 days after 

the Postal Service submits its proposal pursuant to paragraph 

(1), the General Accounting Office shall prepare and submit a 

written evaluation of such proposal to the Committee on Government Reform of the House of Representatives and the Committee on Governmental Affairs of the Senate. 

ø(4) LEGISLATIVE ACTION.—Not later than 180 days after it 

has received both the proposal of the Postal Service and the 

evaluation of such proposal by the General Accounting Office 

under this subsection, Congress shall revisit the question of 

how the savings accruing to the Postal Service as a result of 

the enactment of this Act should be used. 

ø(f) DETERMINATION AND DISPOSITION OF SURPLUS.— 

ø(1) IN GENERAL.—If, as of the date under paragraph (2), the 

Office of Personnel Management determines (after consultation 

with the Postmaster General) that the computation under section 8348(h)(1)(A) of title 5, United States Code, yields a negative amount (hereinafter referred to as a ‘‘surplus’’)— 

ø(A) the Office shall inform the Postmaster General of 

its determination, including the size of the surplus so determined; and 

ø(B) the Postmaster General shall submit to the Congress a report describing how the Postal Service proposes 

that such surplus be used, including a draft of any legislation that might be necessary. 

ø(2) DETERMINATION DATE.—The date to be used for purposes 

of paragraph (1) shall be September 30, 2025, or such earlier 

date as, in the judgment of the Office, is the date by which all 

postal employees under the Civil Service Retirement System 

will have retired. 

ø(g) DEFINITIONS.—For purposes of this section— 

ø(1) the savings accruing to the Postal Service as a result of 

the enactment of this Act shall, for any fiscal year, be equal 

to the amount (if any) by which— 

ø(A) the contributions that the Postal Service would otherwise have been required to make to the Civil Service Retirement and Disability Fund for such fiscal year if this 

Act had not been enacted, exceed 

ø(B) the contributions made by the Postal Service to 

such Fund for such fiscal year; and 

ø(2) the term ‘‘postal debt’’ means the outstanding obligations of the Postal Service, as determined under chapter 20 of 

title 39, United States Code.¿ 

Æ