I 
113TH CONGRESS 
2D SESSION 
H. R. 4174 
To amend title 39, United States Code, to modernize and improve Alaska 
bypass freight mail transportation. 
IN THE HOUSE OF REPRESENTATIVES 
MARCH 6, 2014 
Mr. ISSA (for himself and Mr. FARENTHOLD) introduced the following bill; 
which was referred to the Committee on Oversight and Government Reform 
A BILL 
To amend title 39, United States Code, to modernize and 
improve Alaska bypass freight mail transportation. 
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled, 
SECTION 1. SHORT TITLE. 
This Act may be cited as the ‘‘Alaska Bypass Mod-
ernization Act of 2014’’. 
SEC. 2. ALASKA BYPASS MAIL TRANSPORTATION. 
(a) IN GENERAL.—Section 5402 of title 39, United 
States Code, is amended— 
(1) in the section heading by striking ‘‘Con-
tracts for transportation of mail by air’’ 
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and inserting ‘‘Alaska bypass mail transpor-
tation’’; 
(2) in subsection (a)— 
(A) by striking paragraphs (2), (7), and 
(9); and 
(B) by redesignating paragraphs (3), (4), 
(5), (6), (8), (10), (11), (12), (13), (14), (15), 
(16), (17), (18), (19), (20), (21), (22), (23), 
(24), and (25) as paragraphs (2) through (22), 
respectively; 
(3) by striking subsections (b) through (f); 
(4) by redesignating subsections (g) through (s) 
as subsections (c) through (o), respectively; 
(5) by inserting after subsection (a) the fol-
lowing: 
‘‘(b) EFFICIENT TRANSPORT
OF ALASKA BYPASS 
MAIL.—In selecting a carrier of nonpriority bypass mail 
to a point in the State of Alaska, the Postal Service 
shall— 
‘‘(1) ensure a minimum of 1 scheduled flight 
per week to each nonpriority bypass mail destination 
with guaranteed capacity for nonpriority bypass 
mail, subject to the condition that weather condi-
tions, lack of available service, or other extraor-
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dinary circumstances do not interfere with the ful-
fillment of this minimum requirement; and 
‘‘(2) ensure that any flight that transports non-
priority bypass mail to a nonpriority bypass mail 
destination and is in addition to the minimum 
flights required under paragraph (1)— 
‘‘(A) is necessary to the delivery of nonpri-
ority bypass mail; and 
‘‘(B) maximizes the cost efficiency to the 
Postal Service.’’; 
(6) in subsection (c)(2) (as redesignated by 
paragraph (4) of this subsection)— 
(A) in subparagraph (E) by striking 
‘‘(E)(i)’’ and all that follows through the end of 
clause (i) and inserting the following: 
‘‘(E)(i) may offer tender of nonpriority mainline 
bypass mail at mainline rates to a bush carrier oper-
ating from an acceptance point to a hub point in the 
State of Alaska, in addition to the terms of subpara-
graph (C); and’’; 
(B) by striking subparagraph (F) and in-
serting the following: 
‘‘(F) shall offer equitable tender of nonpriority 
bypass mail in proportion to passenger and nonmail 
freight pools described in this section between quali-
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fied passenger and nonmail freight carriers on a 
route from an acceptance point to a bush destination 
in the State of Alaska at a composite rate if— 
‘‘(i)(I) for a passenger carrier, the carrier 
receiving the composite rate provided passenger 
service in accordance with the requirements of 
subsection (d)(2); or 
‘‘(II) for a nonmail freight carrier, the car-
rier receiving the composite rate provided at 
least 25 percent of the nonmail freight service 
for the 12 months immediately preceding the 
date on which the carrier seeks tender of such 
mail; 
‘‘(ii) the carrier qualifies under subsection 
(d) to be tendered nonpriority bypass mail out 
of the hub point being bypassed; 
‘‘(iii) the tender of such mail will not de-
crease efficiency of delivery of nonpriority by-
pass mail service into or out of the hub point 
being bypassed; and 
‘‘(iv) such tender will result in reduced 
payments to the carrier by the Postal Service 
over flying the entire route; and’’; 
(C) in subparagraph (G) by striking ‘‘not-
withstanding subparagraph (F),’’; and 
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(D) in the matter following subparagraph 
(G) by striking ‘‘subparagraph (G)’’ and insert-
ing ‘‘subparagraphs (F) and (G)’’; and 
(7) in subparagraph (c)(4)(A) (as redesignated 
by paragraph (4) of this subsection) by striking 
‘‘subparagraph (B)’’ and inserting ‘‘subparagraph 
(B), paragraph (2)(E),’’. 
(b) CLERICAL AMENDMENT.—The table of sections 
for chapter 54 of such title is amended by striking the 
item relating to section 5402 and inserting the following: 
‘‘5402. Alaska bypass mail transportation.’’. 
(c) CONFORMING AMENDMENTS.—Section 5402 of 
such title is amended— 
(1) in subsection (a)— 
(A) in paragraph (4) by striking ‘‘sub-
section (g)(1)(A)(iv)(I)’’ and inserting ‘‘sub-
section (c)(1)(A)(iv)(I)’’; 
(B) in paragraph (5) by striking ‘‘sub-
section (g)(1)(A)(iv)(I)’’ and inserting ‘‘sub-
section (c)(1)(A)(iv)(I)’’; 
(C) in paragraph (13) by striking ‘‘sub-
section (g)(1)(A)(iv)(II)’’ and inserting ‘‘sub-
section (c)(1)(A)(iv)(II)’’; and 
(D) in paragraph (15)(A) by striking ‘‘sub-
section (g)(1)(A)(iv)’’ and inserting ‘‘subsection 
(c)(1)(A)(iv)’’; 
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(2) in subsection (c) (as redesignated by sub-
section (a)(4) of this section)— 
(A) in paragraph (2)— 
(i) in subparagraph (C)(ii) by striking 
‘‘subsection (h)(5)’’ and inserting ‘‘sub-
section (d)(5)’’; and 
(ii) in subparagraph (D)— 
(I) in clause (i)(II) by striking 
‘‘subsection (h)(5)’’ and inserting 
‘‘subsection (d)(5)’’; and 
(II) in clause (ii)(II) by striking 
‘‘subsection 
(i)(6)’’ 
and 
inserting 
‘‘subsection (e)(6)’’; and 
(B) in paragraph (5)— 
(i) in subparagraph (A)(i) by striking 
‘‘subsection (g)(1)(A)(iv)(II)’’ and insert-
ing ‘‘paragraph (1)(A)(iv)(II)’’; 
(ii) in subparagraph (B)(iii) by strik-
ing ‘‘subsection (h)(5)’’ and inserting 
‘‘subsection (d)(5)’’; 
(iii) in subparagraph (C) by striking 
‘‘subsection (h)(2)(B)’’ and inserting ‘‘sub-
section (d)(2)(B)’’; and 
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(iv) in subparagraph (D) by striking 
‘‘subsection (h)(5)’’ and inserting ‘‘sub-
section (d)(5)’’; 
(3) subsection (d) (as redesignated by sub-
section (a)(4) of this section)— 
(A) in paragraph (1)(A) by striking ‘‘sub-
section 
(g)(1)’’ 
and 
inserting 
‘‘subsection 
(c)(1)’’; 
(B) in paragraph (3)— 
(i) in subparagraph (A) by striking 
‘‘subsection (g)(1)’’ and inserting ‘‘sub-
section (c)(1)’’; and 
(ii) in subparagraph (B)(i)(II) by 
striking ‘‘subsection (i)(1)’’ and inserting 
‘‘subsection (e)(1)’’; 
(C) in paragraph (5)(A) by striking ‘‘sub-
section (k)’’ and inserting ‘‘subsection (g)’’; and 
(D) in paragraph (6) by striking ‘‘sub-
section (k)’’ each place it appears and inserting 
‘‘subsection (g)’’; 
(4) in subsection (e) (as redesignated by sub-
section (a)(4) of this section)— 
(A) in paragraph (3) by striking ‘‘sub-
section 
(g)(1)’’ 
and 
inserting 
‘‘subsection 
(c)(1)’’; 
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(B) in paragraph (4) by striking ‘‘sub-
section (h)’’ and inserting ‘‘subsection (d)’’; and 
(C) in paragraph (6) by striking ‘‘sub-
section (k)’’ and inserting ‘‘subsection (g)’’; 
(5) in subsection (f) (as redesignated by sub-
section (a)(4) of this section)— 
(A) in paragraph (1)— 
(i) by striking ‘‘subsection (g)(1)’’ and 
inserting ‘‘subsection (c)(1)’’; and 
(ii) by striking ‘‘subsection (h) or (i)’’ 
and inserting ‘‘subsection (d) or (e)’’; 
(B) in paragraph (2)— 
(i) in the matter preceding subpara-
graph (A) by striking ‘‘subsections (h) and 
(i)’’ and inserting ‘‘subsections (d) and 
(e)’’; 
(ii) in subparagraph (A) by striking 
‘‘subsection (h)’’ and inserting ‘‘subsection 
(d)’’; and 
(iii) in subparagraph (B) by striking 
‘‘subsection (i)’’ and inserting ‘‘subsection 
(e)’’; and 
(C) in paragraph (3)— 
(i) in subparagraph (B)— 
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(I) in clause (i) by striking ‘‘sub-
section (g)(1)’’ and inserting ‘‘sub-
section (c)(1)’’; and 
(II) in clause (ii) by striking 
‘‘subsection (h) or (i)’’ and inserting 
‘‘subsection (d) or (e)’’; and 
(ii) in subparagraph (C) by striking 
‘‘subsection (h) or (i)’’ and inserting ‘‘sub-
section (d) or (e)’’; 
(6) in subsection (h) (as redesignated by sub-
section (a)(4) of this section) by striking ‘‘sub-
sections (h) and (i)’’ and inserting ‘‘subsection (d) 
or (e)’’; 
(7) in subsection (i) (as redesignated by sub-
section (a)(4) of this section)— 
(A) in paragraph (1)— 
(i) by striking ‘‘subsections (h) and 
(i)’’ and inserting ‘‘subsections (d) and 
(e)’’; and 
(ii) by striking ‘‘subsection (h)’’ and 
inserting ‘‘subsection (d)’’; and 
(B) in paragraph (2)— 
(i) in the matter preceding subpara-
graph (A) by striking ‘‘subsection (i)’’ and 
inserting ‘‘subsection (e)’’; 
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(ii) in subparagraph (A) by striking 
‘‘subsections (h) and (i)’’ and inserting 
‘‘subsections (d) and (e)’’; and 
(iii) in subparagraph (B)— 
(I) by striking ‘‘subsection (h)’’ 
and inserting ‘‘subsection (d)’’; and 
(II) by striking ‘‘subsection (i)’’ 
and inserting ‘‘subsection (e)’’; 
(8) in subsection (l) (as redesignated by sub-
section (a)(4) of this section)— 
(A) in paragraph (1) by striking ‘‘sub-
section (g)(2), (h), or (i)’’ and inserting ‘‘sub-
section (c)(2), (d), or (e)’’; 
(B) in paragraph (2) by striking ‘‘sub-
section (h) or (i)’’ and inserting ‘‘subsection (d) 
or (e)’’; and 
(C) in paragraph (3)— 
(i) 
by 
striking 
‘‘subsection 
(g)(1)(A)(iv), (g)(2)(E), (g)(4), or (g)(5)’’ 
and inserting ‘‘subsection (c)(1)(A)(iv), 
(c)(2)(E), (c)(4), or (c)(5)’’; and 
(ii) by striking ‘‘subsection (h)’’ and 
inserting ‘‘subsection (d)’’; 
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used to identify a flight operated by another air car-
rier or foreign air carrier; and 
‘‘(4) the term ‘Secretary’ means the Secretary 
of Transportation. 
‘‘(b) INTERNATIONAL MAIL.— 
‘‘(1) IN GENERAL.— 
‘‘(A) USE
OF
CERTIFICATED
AIR
CAR-
RIERS; CODE-SHARE
RELATIONSHIPS.—Except 
as otherwise provided in this subsection, the 
Postal Service may contract for the transpor-
tation of mail by aircraft between any of the 
points in foreign air transportation only with 
certificated air carriers. A contract may be 
awarded to a certificated air carrier to trans-
port mail by air between any of the points in 
foreign air transportation that the Secretary 
has authorized the carrier to serve either di-
rectly or through a code-share relationship with 
1 or more foreign air carriers. 
‘‘(B) USE OF FOREIGN AIR CARRIERS.—If 
the Postal Service has sought offers or pro-
posals from certificated air carriers to transport 
mail in foreign air transportation between 
points, or pairs of points within a geographic 
region or regions, and has not received offers or 
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proposals that meet Postal Service requirements 
at a fair and reasonable price from at least 2 
such carriers, the Postal Service may seek of-
fers or proposals from foreign air carriers. 
Where service in foreign air transportation 
meeting the Postal Service’s requirements is 
unavailable at a fair and reasonable price from 
at least 2 certificated air carriers, either di-
rectly or through a code-share relationship with 
1 or more foreign air carriers, the Postal Serv-
ice may contract with foreign air carriers to 
provide the service sought if, when the Postal 
Service seeks offers or proposals from foreign 
air carriers, it also seeks an offer or proposal 
to provide that service from any certificated air 
carrier providing service between those points, 
or pairs of points within a geographic region or 
regions, on the same terms and conditions that 
are being sought from foreign air carriers. 
‘‘(C) METHODOLOGY
FOR
DETERMINING 
FAIR AND REASONABLE PRICES.—For purposes 
of this subsection, the Postal Service shall use 
a methodology for determining fair and reason-
able prices for the Postal Service designated re-
gion or regions developed in consultation with, 
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and with the concurrence of, certificated air 
carriers representing at least 51 percent of 
available ton miles in the markets of interest. 
‘‘(D) CEILING PRICES.—For purposes of 
this subsection, ceiling prices determined pursu-
ant to the methodology used under subpara-
graph (C) shall be presumed to be fair and rea-
sonable if they do not exceed the ceiling prices 
derived from— 
‘‘(i) a weighted average based on mar-
ket rate data furnished by the Inter-
national Air Transport Association or a 
subsidiary unit thereof; or 
‘‘(ii) if such data are not available 
from those sources, such other neutral, 
regularly updated set of weighted average 
market rates as the Postal Service, with 
the concurrence of certificated air carriers 
representing at least 51 percent of avail-
able ton miles in the markets of interest, 
may designate. 
‘‘(E) SITUATIONS
IN
WHICH
CONCUR-
RENCE
CANNOT
BE
ATTAINED.—If, for pur-
poses of subparagraph (D)(ii), concurrence can-
not be attained, the most recently available 
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market rate data described in this paragraph 
shall continue to apply for the relevant market 
or markets. 
‘‘(2) CONTRACT PROCESS.—The Postal Service 
shall contract for foreign air transportation as set 
forth in paragraph (1) through an open procurement 
process that will provide— 
‘‘(A) potential offerors with timely notice 
of business opportunities in sufficient detail to 
allow them to make a proposal; 
‘‘(B) requirements, proposed terms and 
conditions, and evaluation criteria to potential 
offerors; and 
‘‘(C) an opportunity for unsuccessful 
offerors to receive prompt feedback upon re-
quest. 
‘‘(3) EMERGENCY OR UNANTICIPATED CONDI-
TIONS; INADEQUATE LIFT SPACE.—The Postal Serv-
ice may enter into contracts to transport mail by air 
in foreign air transportation with a certificated air 
carrier or a foreign air carrier without complying 
with the requirements of paragraph (1) or (2) if— 
‘‘(A) emergency or unanticipated condi-
tions exist that make it impractical for the 
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Postal Service to comply with such require-
ments; or 
‘‘(B) the Postal Service’s demand for lift 
exceeds the space available to the Postal Service 
under existing contracts and— 
‘‘(i) there is insufficient time available 
to seek additional lift using procedures 
that comply with those requirements with-
out compromising the Postal Service’s 
service commitments to its own customers; 
and 
‘‘(ii) the Postal Service first offers 
any certificated air carrier holding a con-
tract to carry mail between the relevant 
points the opportunity to carry such excess 
volumes under the terms of its existing 
contract. 
‘‘(c) GOOD-FAITH EFFORT REQUIRED.—The Postal 
Service and potential offerors shall put a good-faith effort 
into resolving disputes concerning the award of contracts 
made under subsection (b). 
‘‘(d) SPECIAL CIRCUMSTANCES.—If the Postal Serv-
ice 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 
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purposes, the Postal Service may contract, without adver-
tising for bids, in such manner and under such terms and 
conditions as the Postal Service may deem appropriate, 
with any air taxi operator or combination thereof for such 
air transportation service. Contracts made under this sub-
section 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 in-
creased or decreased costs occasioned by changed condi-
tions occurring during the contract term. The Postal Serv-
ice shall cancel such a contract when the Secretary author-
izes 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. 
‘‘(e) TRANSPORTATION OF MAIL BY AIRCRAFT IN 
INTERSTATE AIR TRANSPORTATION.— 
‘‘(1) DETERMINATION
OF
RATES
AND
CON-
TRACT TERMS.—The Postal Service may determine 
rates and contract with any air carrier for the trans-
portation of mail by aircraft in interstate air trans-
portation either through negotiations or competitive 
bidding. 
‘‘(2) MAIL SHIPMENTS OF LIVE ANIMALS.— 
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‘‘(A) IN GENERAL.—In the exercise of its 
authority under paragraph (1), the Postal Serv-
ice may require any air carrier to accept mail 
shipments of day-old poultry, honeybees, and 
such other live animals as postal regulations 
allow to be transmitted as mail matter. The au-
thority of the Postal Service under this sub-
paragraph shall not apply in the case of any air 
carrier who commonly and regularly refuses to 
accept any live animals as cargo. 
‘‘(B) SURCHARGES.—Notwithstanding any 
other provision of law, the Postal Service is au-
thorized to assess, as postage to be paid by the 
mailers of any shipments covered by subpara-
graph (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 han-
dling such shipments. 
‘‘(f) APPLICABILITY TO POINTS WITHIN ALASKA.— 
The authority of the Secretary and the Postal Service 
under subsections (b), (c), and (d), as in effect on Sep-
tember 30, 2008, shall also apply, and the authority of 
the Postal Service under subsection (e) shall not apply, 
to the transportation of mail by aircraft between any 2 
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points both of which are within the State of Alaska and 
between which the air carrier is authorized by the Sec-
retary to engage in the transportation of mail.’’. 
(b) CLERICAL AMENDMENT.—The table of sections 
for chapter 54 of such title is amended by adding at the 
end the following: 
‘‘5404. Contracts for foreign and interstate air transportation.’’. 
SEC. 4. REDUCTION OF ALASKA BYPASS MAIL SUBSIDY. 
(a) IN GENERAL.—Chapter 54 of title 39, United 
States Code (as amended by this Act), is further amended 
by adding at the end the following: 
‘‘§ 5405. Reduction of Alaska bypass mail subsidy 
‘‘(a) COMPETITIVE PRODUCT CLASSIFICATION.— 
‘‘(1) IN GENERAL.—Except as provided in this 
section, Alaska bypass mail service under section 
5402 shall be treated as a separate competitive 
product for all purposes. 
‘‘(2) TRANSFER
PROHIBITED.—No part of 
Alaska bypass mail service may be transferred to the 
market-dominant category of mail under section 
3642. 
‘‘(3) LIMITATIONS.—Alaska bypass mail service 
shall not be treated as a competitive product for 
purposes of the implementation of sections 3633(a) 
and 3634. 
‘‘(b) MINIMUM COST COVERAGE.— 
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‘‘(1) IN GENERAL.—The Postal Service shall es-
tablish and maintain rates and fees for matter sent 
by Alaska bypass mail service— 
‘‘(A) for fiscal year 2015, that cover at 
least 30 percent of the costs attributable to 
Alaska bypass mail service in that fiscal year; 
‘‘(B) for fiscal year 2016, that cover at 
least 34 percent of the costs attributable to 
Alaska bypass mail service in that fiscal year; 
‘‘(C) for fiscal year 2017, that cover at 
least 38 percent of the costs attributable to 
Alaska bypass mail service in that fiscal year; 
‘‘(D) for fiscal year 2018, that cover at 
least 42 percent of the costs attributable to 
Alaska bypass mail service in that fiscal year; 
‘‘(E) for fiscal year 2019, that cover at 
least 46 percent of the costs attributable to 
Alaska bypass mail service in that fiscal year; 
and 
‘‘(F) for fiscal year 2020, and for each fis-
cal year thereafter, that cover at least 50 per-
cent of the costs attributable to Alaska bypass 
mail service in that fiscal year. 
‘‘(2) COSTS ATTRIBUTABLE.—The costs attrib-
utable to Alaska bypass mail service for a fiscal year 
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shall include all the direct and indirect costs of Alas-
ka bypass mail service during that fiscal year that 
are attributable to that service through reliably iden-
tified causal relationships. 
‘‘(3) INSTITUTIONAL COSTS.—Costs that can be 
attributed to Alaska bypass mail service may not be 
classified as institutional costs of the Postal Service. 
‘‘(4) RATE INCREASE LIMITATION.—For fiscal 
years 2014 through 2020, no rate for any type of 
Alaska bypass mail service may be increased in a fis-
cal year by more than the maximum permitted rate 
increase for market dominant products plus an addi-
tional 1 percent. 
‘‘(c) COMPLIANCE.— 
‘‘(1) ANNUAL REVIEW.—At least once each fis-
cal year, the Postal Regulatory Commission shall de-
termine whether the Postal Service is in compliance 
with the requirements under subsection (b). 
‘‘(2) REMEDIAL ACTIONS.—If, under paragraph 
(1), the Postal Regulatory Commission determines 
that the Postal Service has not complied with the re-
quirements under subsection (b) with respect to a 
fiscal year, the Commission shall prescribe, not later 
than 60 days after making such determination, ac-
tions to ensure— 
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‘‘(A) the establishment and maintenance of 
rates and fees for Alaska bypass mail service 
that recover any costs required to have been 
covered for such fiscal year under subsection 
(b), but that were not covered, by the date that 
is not later than the last day of the fiscal year 
that follows such fiscal year; and 
‘‘(B) compliance with the requirements 
under subsection (b) in subsequent fiscal years. 
‘‘(3) 
LIMITATION.—The 
Postal 
Regulatory 
Commission may not order the Postal Service to dis-
continue Alaska bypass mail service. 
‘‘(4) REGULATIONS.—Not later than 90 days 
after the date of enactment of this subsection, the 
Postal Regulatory Commission shall issue regula-
tions to implement this subsection.’’. 
(b) CLERICAL AMENDMENT.—The table of sections 
for chapter 54 of such title (as amended by this Act) is 
further amended by adding at the end the following: 
‘‘5405. Reduction of Alaska bypass mail subsidy.’’. 
Æ 
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