‘‘(E) notwithstanding any limitation set 
under subparagraphs (A) and (C), and provided 
there is not sufficient unused rate authority 
under paragraph (2)(C), establish procedures 
whereby rates may be adjusted on an expedited 
basis due to either extraordinary or exceptional 
circumstances, provided that the Commission 
determines, after notice and opportunity for a 
public hearing and comment, and within 90 
days after any request by the Postal Service, 
that such adjustment is reasonable and equi-
table and necessary to enable the Postal Serv-
ice, 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. 
‘‘(2) LIMITATIONS.—
‘‘(A) CLASSES OF MAIL.—Except as pro-
vided under subparagraph (C), the annual limi-
tations under paragraph (1)(A) shall apply to a 
class of mail, as defined in the Domestic Mail 
Classification Schedule as in effect on the date 
of enactment of the Postal Accountability and 
Enhancement Act.
‘‘(B) ROUNDING OF RATES AND FEES.—
Nothing in this subsection shall preclude the 
Postal Service from rounding rates and fees to 
the nearest whole integer, if the effect of such 
rounding does not cause the overall rate in-
crease for any class to exceed the Consumer 
Price Index for All Urban Consumers. 
‘‘(C) USE OF UNUSED RATE AUTHORITY.—
‘‘(i) DEFINITION.—In this subpara-
graph, the term ‘unused rate adjustment 
authority’ means the difference between—
‘‘(I) the maximum amount of a 
rate adjustment that the Postal Serv-
ice is authorized to make in any year 
subject to the annual limitation under 
paragraph (1); and 
‘‘(II) the amount of the rate ad-
justment the Postal Service actually 
makes in that year. 
‘‘(ii) AUTHORITY.—Subject to clause 
(iii), the Postal Service may use any un-
used rate adjustment authority for any of 
the 5 years following the year such author-
ity occurred.
‘‘(iii) LIMITATIONS.—In exercising the 
authority under clause (ii) in any year, the 
Postal Service—
‘‘(I) may use unused rate adjust-
ment authority from more than 1 
year; 
‘‘(II) may use any part of the un-
used rate adjustment authority from 
any year; 
‘‘(III) shall use the unused rate 
adjustment authority from the earliest 
year such authority first occurred and 
then each following year; and 
‘‘(IV) for any class or service, 
may not exceed the annual limitation 
under paragraph (1) by more than 2 
percentage points. 
‘‘(3) REVIEW.—Ten years after the date of en-
actment of the Postal Accountability and Enhance-
ment Act and as appropriate thereafter, the Com-
mission shall review the system for regulating rates 
and classes for market-dominant products estab-
lished under this section to determine if the system 
is achieving the objectives in subsection (b), taking 
into account the factors in subsection (c). If the
Commission determines, after notice and opportunity 
for public comment, that the system is not achieving 
the objectives in subsection (b), taking into account 
the factors in subsection (c), the Commission may, 
by regulation, make such modification or adopt such 
alternative system for regulating rates and classes 
for market-dominant products as necessary to 
achieve the objectives. 
‘‘(e) WORKSHARE DISCOUNTS.—
‘‘(1) DEFINITION.—In this subsection, the term 
‘workshare discount’ refers to rate discounts pro-
vided to mailers for the presorting, prebarcoding, 
handling, or transportation of mail, as further de-
fined by the Postal Regulatory Commission under 
subsection (a). 
‘‘(2) SCOPE.—The Postal Regulatory Commis-
sion shall ensure that such discounts do not exceed 
the cost that the Postal Service avoids as a result 
of workshare activity, unless—
‘‘(A) the discount is—
‘‘(i) associated with a new postal serv-
ice, a change to an existing postal service, 
or with a new work share initiative related 
to an existing postal service; and
‘‘(ii) necessary to induce mailer behav-
ior that furthers the economically efficient 
operation of the Postal Service and the 
portion of the discount in excess of the 
cost that the Postal Service avoids as a re-
sult of the workshare activity will be 
phased out over a limited period of time; 
‘‘(B) the amount of the discount above 
costs avoided—
‘‘(i) is necessary to mitigate rate 
shock; and 
‘‘(ii) will be phased out over time; 
‘‘(C) the discount is provided in connection 
with subclasses of mail consisting exclusively of 
mail matter of educational, cultural, scientific, 
or informational value; or 
‘‘(D) reduction or elimination of the dis-
count would impede the efficient operation of 
the Postal Service. 
‘‘(3) LIMITATION.—Nothing in this subsection 
shall require that a work share discount be reduced 
or eliminated if the reduction or elimination of the 
discount would—
‘‘(A) lead to a loss of volume in the af-
fected category or subclass of mail and reduce
the aggregate contribution to the institutional 
costs of the Postal Service from the category or 
subclass subject to the discount below what it 
otherwise would have been if the discount had 
not been reduced or eliminated; or 
‘‘(B) result in a further increase in the 
rates paid by mailers not able to take advan-
tage of the discount. 
‘‘(4) REPORT.—Whenever the Postal Service es-
tablishes a workshare discount rate, the Postal Serv-
ice shall, at the time it publishes the workshare dis-
count rate, submit to the Postal Regulatory Com-
mission a detailed report that—
‘‘(A) explains the Postal Service’s rea-
sons for establishing the rate; 
‘‘(B) sets forth the data, economic 
analyses, and other information relied on 
by the Postal Service to justify the rate; 
and 
‘‘(C) certifies that the discount will 
not adversely affect rates or services pro-
vided to users of postal services who do not 
take advantage of the discount rate. 
‘‘(f) TRANSITION RULE.—For the 1-year period be-
ginning on the date of enactment of this section, 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 enactment of this section. Pro-
ceedings initiated to consider a request for a recommended 
decision filed by the Postal Service during that 1-year pe-
riod shall be completed in accordance with subchapter II 
of chapter 36 of this title and implementing regulations, 
as in effect before the date of enactment of this section.’’. 
(b) REPEALED SECTIONS.—Sections 3623, 3624, 
3625, and 3628 of title 39, United States Code, are re-
pealed. 
(c) REDESIGNATION.—Chapter 36 of title 39, United 
States Code (as in effect after the amendment made by 
section 601, but before the amendment made by section 
202) is amended by striking the heading for subchapter 
II and inserting the following: 
‘‘SUBCHAPTER I—PROVISIONS RELATING TO 
MARKET-DOMINANT PRODUCTS’’. 
SEC. 202. PROVISIONS RELATING TO COMPETITIVE PROD-
UCTS. 
Chapter 36 of title 39, United States Code, is amend-
ed by inserting after section 3629 the following:
‘‘SUBCHAPTER II—PROVISIONS RELATING TO 
COMPETITIVE PRODUCTS 
‘‘§ 3631. Applicability; definitions and updates 
‘‘(a) APPLICABILITY.—This subchapter shall apply 
with respect to—
‘‘(1) priority mail; 
‘‘(2) expedited mail; 
‘‘(3) bulk parcel post; 
‘‘(4) bulk international mail; and 
‘‘(5) mailgrams; 
subject to subsection (d) and any changes the Postal Reg-
ulatory 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 attrib-
utable to such product through reliably identified causal 
relationships. 
‘‘(c) RULE
OF CONSTRUCTION.—Mail matter re-
ferred to in subsection (a) shall, for purposes of this sub-
chapter, 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 CLASS-
ES.—The Governors, with the concurrence of a majority 
of all of the Governors then holding office, shall establish
rates and classes for products in the competitive category 
of mail in accordance with the requirements of this sub-
chapter and regulations promulgated under section 3633. 
‘‘(b) PROCEDURES.—
‘‘(1) IN GENERAL.—Rates and classes shall be 
established in writing, complete with a statement of 
explanation and justification, and the date as of 
which each such rate or class takes effect. 
‘‘(2) RATES OR CLASSES OF GENERAL APPLICA-
BILITY.—In the case of rates or classes of general 
applicability in the Nation as a whole or in any sub-
stantial region of the Nation, the Governors shall 
cause each rate and class decision under this section 
and the record of the Governors’ proceedings in con-
nection 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 AP-
PLICABILITY.—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 connec-
tion with such decision to be filed with the Postal 
Regulatory Commission by such date before the ef-
fective date of any new rates or classes as the Gov-
ernors consider appropriate, but in no case less than 
15 days. 
‘‘(4) CRITERIA.—As part of the regulations re-
quired under section 3633, the Postal Regulatory 
Commission shall establish criteria for determining 
when a rate or class established under this sub-
chapter 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 com-
petitive 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 enactment of this section. 
‘‘§ 3633. Provisions applicable to rates for competitive 
products 
‘‘(a) IN GENERAL.—The Postal Regulatory Commis-
sion shall, within 18 months after the date of enactment 
of this section, promulgate (and may from time to time 
thereafter revise) regulations to—
‘‘(1) prohibit the subsidization of competitive 
products by market-dominant products;
‘‘(2) ensure that each competitive product cov-
ers its costs attributable; and 
‘‘(3) ensure that all competitive products collec-
tively cover what the Commission determines to be 
an appropriate share of the institutional costs of the 
Postal Service. 
‘‘(b) REVIEW
OF MINIMUM CONTRIBUTION.—Five 
years after the date of enactment of this section, and every 
5 years thereafter, the Postal Regulatory Commission 
shall conduct a review to determine whether the institu-
tional costs contribution requirement under subsection 
(a)(3) should be retained in its current form, modified, 
or eliminated. In making its determination, the Commis-
sion shall consider all relevant circumstances, including 
the prevailing competitive conditions in the market, and 
the degree to which any costs are uniquely or dispropor-
tionately associated with any competitive products.’’. 
SEC. 203. PROVISIONS RELATING TO EXPERIMENTAL AND 
NEW PRODUCTS. 
Subchapter III of chapter 36 of title 39, United 
States Code, is amended to read as follows: 
‘‘SUBCHAPTER III—PROVISIONS RELATING TO 
EXPERIMENTAL AND NEW PRODUCTS 
‘‘§ 3641. Market tests of experimental products 
‘‘(a) AUTHORITY.—
‘‘(1) IN
GENERAL.—The Postal Service may 
conduct market tests of experimental products in ac-
cordance 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 ad-
vantage for the Postal Service or any mailer, par-
ticularly in regard to small business concerns (as de-
fined 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 sec-
tion 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 col-
lectively). Any test that solely affects products cur-
rently classified as competitive, or which provides 
services ancillary to only competitive products, shall 
be presumed to be in the competitive product cat-
egory without regard to whether a similar ancillary 
product exists for market-dominant products. 
‘‘(c) NOTICE.—
‘‘(1) IN GENERAL.—At least 30 days before ini-
tiating a market test under this section, the Postal 
Service shall file with the Postal Regulatory Com-
mission and publish in the Federal Register a no-
tice—
‘‘(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 experi-
mental product, the provisions of section 504(g) 
shall be available with respect to any information re-
quired to be filed under paragraph (1) to the same