I
107TH CONGRESS
2D SESSION
H. R. 4661
To amend title 39, United States Code, to direct the Postal Service to
adhere to an equitable tender policy in selecting air carriers of nonpriority
bypass mail to certain points in the State of Alaska, and for other
purposes.
IN THE HOUSE OF REPRESENTATIVES
MAY 2, 2002
Mr. YOUNG of Alaska introduced the following bill; which was referred to the
Committee on Government Reform
A BILL
To amend title 39, United States Code, to direct the Postal
Service to adhere to an equitable tender policy in select-
ing air carriers of nonpriority bypass mail to certain
points in the State of Alaska, and for other purposes.
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled,
SECTION 1. RURAL SERVICE IMPROVEMENT.
(a) SHORT TITLE.—This Act may be cited as the
‘‘Rural Service Improvement Act of 2002’’.
(b) FINDINGS.—Congress makes the following find-
ings:
(1) The State of Alaska is the largest State in
the Union and has a very limited system of roads
connecting communities.
(2) Alaska has more pilots per capita than any
other State in the Union.
(3) Pilots flying in Alaska are often the most
skilled and best-prepared pilots in the world.
(4) Air travel within the State of Alaska is
often hampered by severe weather conditions and
treacherous terrain.
(5) The United States Government owns nearly
2⁄3 of Alaska’s landmass, including large tracts of
land separating isolated communities within the
State.
(6) Such Federal ownership has inhibited the
ability of Alaskans to build roads connecting isolated
communities.
(7) Most communities and a large portion of
the population within the State can only be reached
by air.
(8) The vast majority of food items and every-
day necessities destined for these isolated commu-
nities and populations can only be transported
through the air.
(9) The Intra-Alaska Bypass Mail system, cre-
ated by Congress and operated by the United States
Postal Service under section 5402 of title 39,
U.S.C., with input from the Department of Trans-
portation, connecting hundreds of rural and isolated
communities within the State, is a critical piece of
the Alaska and the national transportation system.
The system is like a 4-legged stool, designed to—
(A) provide the most affordable means of
delivering food and everyday necessities to these
rural and isolated communities;
(B) establish a system whereby the Postal
Service can meet its obligations to deliver mail
to every house and business in America;
(C) support affordable and reliable pas-
senger service; and
(D) 
support 
affordable 
and 
reliable
nonmail freight service.
(10) Without the Intra-Alaska Bypass Mail
system—
(A) it would be difficult and more expen-
sive for the Postal Service to meet its obligation
of delivering mail to every house and business
in America; and
(B) food, medicine, freight, and everyday
necessities and passenger service for these rural
and isolated communities would cost several
times the current level.
(11) Attempts by Congress to support pas-
senger and nonmail freight service in Alaska using
the Intra-Alaska Bypass Mail system have yielded
some positive results, but some carriers have been
manipulating the system by carrying few, if any,
passengers and little nonmail freight while earning
most of their revenues from the carriage of nonpri-
ority bypass mail.
(12) As long as the Federal Government con-
tinues to own large tracts of land within the State
of Alaska and forbids the building of roads across
these lands to connect isolated communities, it is in
the best interest of the Postal Service, the residents
of Alaska and the United States—
(A) to ensure that the Intra-Alaska Bypass
Mail system remains strong, viable, and afford-
able for the Postal Service;
(B) to ensure that residents of rural and
isolated communities in Alaska continue to have
affordable, reliable, and safe passenger service;
(C) to ensure that residents of rural and
isolated communities in Alaska continue to have
affordable, reliable, and safe nonmail freight
service;
(D) to encourage that intra-Alaska air car-
riers move toward safer, more secure, and more
reliable air transportation under the Federal
Aviation Administration’s guidelines and in ac-
cordance with part 121 of title 14, Code of
Federal Regulations, where such operations are
supported by the needs of the community; and
(E) that Congress make changes to the
Intra-Alaska Bypass Mail system to encourage
intra-Alaska air carriers to begin operating
under part 121, where applicable, and to ensure
that the Intra-Alaska Bypass Mail system con-
tinues to be used to support substantial pas-
senger and nonmail freight service.
(c) SELECTION OF CARRIERS OF NONPRIORITY BY-
PASS MAIL TO CERTAIN POINTS IN ALASKA.—
(1) DEFINITIONS.—Section 5402 of title 39,
United States Code, is amended—
(A) by striking subsection (e);
(B) 
by 
redesignating 
subsections 
(a)
through (d) as subsections (b) through (e), re-
spectively; and
(C) by inserting before subsection (b), as
redesignated, the following:
‘‘(a) In this section—
‘‘(1) the term ‘acceptance point’ means the
point at which nonpriority bypass mail originates;
‘‘(2) the terms ‘air carrier’, ‘interstate air
transportation’, and ‘foreign air transportation’ have
the meanings given such terms in section 40102(a)
of title 49, U.S.C.;
‘‘(3) the term ‘base fare’ is the fare paid to the
carrier issuing the passenger ticket or carrying
nonmail freight which may entail service being pro-
vided by more than 1 carrier;
‘‘(4) the term ‘bush carrier’ means a carrier op-
erating aircraft certificated within the payload ca-
pacity requirements of subsection (g)(1)(D)(i) on a
city pair route;
‘‘(5) the term ‘bush passenger carrier’ means a
passenger carrier that meets the requirements of
subsection (g)(1)(D)(i) and provides passenger serv-
ice on a city pair route;
‘‘(6) the term ‘bush route’ means an air route
in which only a bush carrier is tendered nonpriority
bypass mail between the origination point, being ei-
ther an acceptance point or a hub, as determined by
the Postal Service, and the destination city;
‘‘(7) the term ‘city pair’ means service between
an origin and destination city pair;
‘‘(8) the term ‘composite rate’—
‘‘(A) means a combination of mainline and
bush rates paid to a bush carrier for a direct
flight from an acceptance point to a bush des-
tination beyond a hub point; and
‘‘(B) shall be based on the mainline rate
paid to the hub, plus the lowest bush rate paid
to bush carriers in the State of Alaska;
‘‘(9) the term ‘equitable tender’ means the
practice of the Postal Service of equitably distrib-
uting mail on a fair and reasonable basis between
those air carriers that offer equivalent services and
costs between 2 communities in accordance with the
regulations of the Postal Service;
‘‘(10) the term ‘existing mainline carrier’ means
a mainline carrier (as defined in this section) that
on January 1, 2001, was—
‘‘(A) certified under part 121;
‘‘(B) qualified to provide mainline nonpri-
ority bypass mail service; and
‘‘(C) actually engaged in the carriage of
mainline nonpriority bypass mail through
scheduled service within the State of Alaska;
‘‘(11) the term ‘mainline carrier’ means a car-
rier operating aircraft under part 121 and certifi-
cated within the payload capacity requirements of
subsection (g)(1)(D)(ii) on a given city pair route;
‘‘(12) the term ‘mainline route’ means a city
pair in which a mainline carrier is tendered nonpri-
ority bypass mail;
‘‘(13) the term ‘new’, when referencing a car-
rier, means a carrier that—
‘‘(A) meets the respective requirements of
subsection (g)(1)(D)(i) or (ii), depending on the
type of route being served and the size of air-
craft being used to provide service; and
‘‘(B) began providing nonpriority bypass
mail service on a city pair route within the
State of Alaska after January 1, 2001;
‘‘(14) the term ‘part 121’ means part 121 of
title 14, Code of Federal Regulations;
‘‘(15) the term ‘part 135’ means part 135 of
title 14, Code of Federal Regulations;
‘‘(16) the term ‘scheduled service’ means—
‘‘(A) flights are operated in common car-
riage available to the general public under a
published schedule;
‘‘(B) flight schedules are announced in ad-
vance in systems specified by the Postal Serv-
ice, in addition to the Official Airline Guide or
the air cargo equivalent of that Guide;
‘‘(C) flights depart whether full or not; and
‘‘(D) customers contract for carriage sepa-
rately on a regular basis;
‘‘(17) the term ‘Secretary’ means the Secretary
of Transportation;
‘‘(18) the term ‘121 bush passenger carrier’
means a bush passenger carrier providing passenger
service on bush routes under part 121;
‘‘(19) the term ‘121 mainline passenger carrier’
means a mainline carrier providing passenger service
through scheduled service on routes under part 121;
‘‘(20) the term ‘121 passenger aircraft’ means
an aircraft flying passengers on a city pair route
that is operated under part 121;
‘‘(21) the term ‘121 passenger carrier’ means a
passenger carrier that provides scheduled service
under part 121;
‘‘(22) the term ‘135 bush passenger carrier’
means a bush passenger carrier providing passenger
service through scheduled service on bush routes
under part 135; and
‘‘(23) the term ‘135 passenger carrier’ means a
passenger carrier that provides scheduled service
under part 135.’’.
(2) REQUIREMENTS FOR SELECTION.—Section
5402(g)(1) of title 39, United States Code, is
amended—
(A) in the matter preceding subparagraph
(A), by inserting after ‘‘in the State of Alaska,’’
the following: ‘‘shall adhere to an equitable ten-
der policy within a qualified group of carriers,
in accordance with the regulations of the Postal
Service, and’’;
(B) in subparagraph (C) by striking ‘‘to
the best’’ and all that follows and inserting a
semicolon; and
(C) in subparagraph (D) by inserting
‘‘with at least 3 scheduled (non-contract) flights
per week between two points’’ after ‘‘scheduled
service’’.
(3) 
APPLICATION
OF
RATES.—Section
5402(g)(2) of title 39, United States Code, is
amended—
(A) by striking ‘‘and’’ at the end of sub-
paragraph (A);
(B) by striking the period at the end of
subparagraph (B) and inserting a semicolon;
and
(C) by adding at the end the following:
‘‘(C) shall offer a bush passenger carrier pro-
viding service on a route between an acceptance
point and a hub not served by a mainline carrier the
opportunity to receive equitable tender of nonpriority
bypass mail at mainline service rates when a main-
line carrier begins serving that route if the bush pas-
senger carrier—
‘‘(i) meets the requirements of paragraph
(1);
‘‘(ii) provided at least 20 percent of the
passenger service (as calculated in subsection
(h)(5)) between such city pair for the 6 months
immediately preceding the date on which the
bush carrier seeks such tender; and
‘‘(iii) continues to provide not less than 20
percent of the passenger service on the city pair
while seeking such tender;
‘‘(D) shall offer bush passenger carriers and
nonmail freight carriers the opportunity to receive
equitable tender of nonpriority bypass mail at main-
line service rates from a hub point to a destination
city if the city pair is also being served by a main-
line carrier and—
‘‘(i) for a passenger carrier—
‘‘(I) the carrier meets the require-
ments of paragraph (1);
‘‘(II) the carrier provided at least 20
percent of the passenger service (as cal-
culated in subsection (h)(5)) on the city
pair route for the 6 months immediately
preceding the date on which the carrier
seeks such tender; and
‘‘(III) the carrier continues to provide
not less than 20 percent of the passenger
service on the route; or
‘‘(ii) for a nonmail freight carrier—
‘‘(I) the carrier meets the require-
ments of paragraph (1); and
‘‘(II) the carrier provided at least 25
percent of the nonmail freight service (as
calculated in subsection (i)(6)) on the city
pair route for the 6 months immediately
preceding the date on which the carrier
seeks such tender;
‘‘(E)(i) shall not offer equitable tender of non-
priority mainline bypass mail at mainline rates to a
bush carrier operating from an acceptance point to
a hub point, except as described in subparagraph
(C); and
‘‘(ii) may tender nonpriority bypass mail at
bush rates to a bush carrier if the Postal Service de-
termines that—
‘‘(I) the bush carrier meets the require-
ments of paragraph (1);
‘‘(II) the service to be provided on such
route by the bush carrier is not otherwise avail-
able through direct mainline service; and
‘‘(III) tender of mail to such bush carrier
will not decrease the efficiency of nonpriority
bypass mail service (in terms of payments to all
carriers providing service on the city pair route
and timely delivery) for the route;
‘‘(F) may offer tender of nonpriority bypass
mail to a passenger carrier from an acceptance point
to a destination city beyond a hub point at a com-
posite rate if the Postal Service determines that—
‘‘(i) the carrier provides passenger service
in accordance with the requirements of sub-
section (h)(2);
‘‘(ii) the carrier qualifies under subsection
(h) 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
‘‘(G) notwithstanding subparagraph (F), shall
offer equitable tender of nonpriority bypass mail in
proportion to passenger and non-mail freight mail
pools described in this section between qualified pas-
senger and non-mail freight carriers on a route from
an acceptance point to a bush destination at a com-
posite rate if—
‘‘(i)(I) for a passenger carrier, the carrier
receiving the composite rate provided 20 per-
cent of the passenger service on the city pair
route for the 12 months immediately preceding
the date on which the carrier seeks tender of
such mail; 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; and
‘‘(ii)(I) nonpriority bypass mail was being
tendered to a passenger carrier or a nonmail
freight carrier at a composite rate on such city
pair route on January 1, 2000; or
‘‘(II) the hub being bypassed was not
served by a mainline carrier on January 1,
2000.
The tender of nonpriority bypass mail under subparagraph
(G) shall be on an equitable basis between the qualified
carriers that provide the direct service on the city pair
route and the qualified carriers that provide service be-
tween the hub point being bypassed and the destination
point, based on the volume of nonpriority bypass mail on
both routes.’’.
(4) 
SELECTION
OF
CARRIERS
TO
HUB
POINTS.—Section 5402(g) of title 39, United States
Code, is amended by adding at the end the fol-
lowing:
‘‘(4)(A) Except as provided under subparagraph (B)
and paragraph (5), the Postal Service shall select only ex-
isting mainline carriers to provide nonpriority bypass mail
service between an acceptance point and a hub point in
the State of Alaska.
‘‘(B) The Postal Service may select a carrier other
than an existing mainline carrier to provide nonpriority
bypass mail service on a mainline route in the State of
Alaska if—
‘‘(i) the Postal Service determines (in accord-
ance with criteria established in advance by the
Postal Service) that the mail service between the ac-
ceptance point and the hub point is deficient and
provides written notice of the determination to exist-
ing mainline carriers to the hub point; and
‘‘(ii) after the 30-day period following issuance
of notice under clause (i), including notice of inad-
equate capacity, the Postal Service determines that
deficiencies in service to the hub point have not been
eliminated.
‘‘(5)(A) The Postal Service shall offer equitable ten-
der of nonpriority bypass mail to a new 121 mainline pas-
senger carrier entering a mainline route in the State of
Alaska, if that carrier—
‘‘(i) meets the requirements of subsection
(g)(1)(D)(ii); and
‘‘(ii) has provided at least the same number of
insured passenger seats as the number of available
passenger seats being provided by the mainline pas-
senger carrier providing the greatest number of
available passenger seats on that route for the 6
months immediately preceding the date on which
such carrier seeks tender.
‘‘(B) A new 121 mainline passenger carrier that is
tendered nonpriority mainline bypass mail under subpara-
graph (A)—
‘‘(i) shall be eligible for equitable tender of such
mail only on city pair routes where the carrier meets
the conditions of subparagraph (A);
‘‘(ii) may not count the passenger service pro-
vided under subparagraph (A) toward the carrier
meeting the minimum requirements of this section;
and
‘‘(iii) shall provide at least 20 percent of the
passenger service (based on T–100 data) on such
route to remain eligible to be tendered nonpriority
mainline bypass mail.
‘‘(C) Notwithstanding paragraphs (1)(B) and (5)(A),
a new 121 mainline passenger carrier, otherwise qualified
under this subsection, may immediately receive equitable
tender of nonpriority mainline bypass mail to a hub point
if it meets the requirements of subsections (g)(1)(A), (C),
and (D) and (h)(2)(B) and—
‘‘(i) all qualified 121 mainline passenger car-
riers discontinue service on that city pair route; or
‘‘(ii) no 121 mainline passenger carrier serves
that city pair route.
‘‘(D) A carrier operating under a code share agree-
ment on the date of enactment of the Rural Service Im-
provement Act of 2002 that received tender of nonpriority
mainline bypass mail on a city pair route may count the
passenger service provided under the entire code share ar-
rangement on such route if the code share agreement ter-
minates. That carrier shall continue to provide at least
20 percent of the passenger service (based on T–100 data)
between the city pair as a 121 mainline passenger carrier
while seeking such tender.
‘‘(6)(A) Notwithstanding subsection (g)(1)(B), pas-
senger carriers providing Essential Air Service under a
Department of Transportation order issued under sub-
chapter II of chapter 417 of title 49, U.S.C., shall be ten-
dered all nonpriority mail, in addition to all nonpriority
bypass mail, by the Postal Service to destination cities
served by the Essential Air Service flights consistent with
that order unless the Postal Service finds that the Essen-
tial Air Service carrier’s service does not meet the needs
of the Postal Service.
‘‘(B) Service provided under this paragraph, includ-
ing service provided to points served in conjunction with
service being subsidized under the Essential Air Service
contract, may not be applied toward any of the minimum
eligibility requirements of this section.’’.
(5) 
SELECTION
OF
CARRIERS
TO
BUSH
POINTS.—Section 5402 of title 39, United States
Code, is amended by adding at the end the fol-
lowing:
‘‘(h)(1) Except as provided under paragraph (7), on
a given city pair route, the Postal Service shall offer equi-
table tender of 70 percent of the nonpriority bypass mail
on that route to all carriers providing scheduled passenger
service in accordance with part 121 or part 135 that—
‘‘(A) meet the requirements of subsection
(g)(1);
‘‘(B) provided 20 percent or more of the pas-
senger service (as calculated in paragraph (5)) be-
tween the city pair for the 12 months preceding the
date on which the 121 passenger aircraft or the 135
passenger carrier seek tender of nonpriority bypass
mail; and
‘‘(C) meet the requirements of paragraph (2).
‘‘(2) To remain eligible for equitable tender under
this subsection, the carrier or aircraft shall—
‘‘(A) continue to provide not less than 20 per-
cent of the passenger service on the city pair route
for which the carrier is seeking the tender of such
nonpriority bypass mail;
‘‘(B)(i) for operations under part 121, operate
aircraft type certificated to carry at least 19 pas-
sengers;
‘‘(ii) for operations under part 135, operate air-
craft type certificated to carry at least 5 passengers;
or
‘‘(iii) for operations under part 135 where only
a water landing is available, operate aircraft type
certificated to carry at least 3 passengers;
‘‘(C) insure all available passenger seats on the
city pair route on which the carrier seeks tender of
such mail; and
‘‘(D) operate flights under its published sched-
ule.
‘‘(3)(A) Except as provided under subparagraph (E),
if a 135 passenger carrier serves a city pair route and
meets the requirements of paragraph (1) or (2) when a
121 passenger carrier becomes qualified to be tendered
nonpriority bypass mail on such route with a 121 pas-
senger aircraft in accordance with paragraphs (1) and (2),
the qualifying 135 passenger carriers on that route shall
convert to operations with a 121 passenger aircraft within
5 years after the 121 passenger aircraft begins receiving
tender on that route in order to remain eligible for equi-
table tender under paragraph (1). The 135 carrier shall—
‘‘(i) begin the process of conversion not later
than 2 years after the 121 passenger aircraft begins
carrying nonpriority bypass mail on that route; and
‘‘(ii) submit a part 121 compliance statement
not later than 4 years after the 121 passenger air-
craft begins carrying nonpriority bypass mail on that
route.
‘‘(B) Completion of conversion under subparagraph
(A) shall not be required if all 121 passenger carriers dis-
continue the carriage of nonpriority bypass mail with 121
passenger aircraft on the city pair route.
‘‘(C) Any qualified carrier operating in the State of
Alaska under this section may request a waiver from sub-
paragraph (A). Such a request, at the discretion of the
Secretary, may be granted for good cause shown. The re-
questing party shall state the basis for such a waiver.
‘‘(D) If 6 years and 3 months after the date of enact-
ment of the Rural Service Improvement Act of 2002, a
135 passenger carrier is providing service on a city pair
route and a 121 passenger aircraft becomes eligible to re-
ceive tender of nonpriority bypass mail on that route, that
135 passenger carrier shall convert to operations under
part 121 within 12 months of the 121 passenger carrier
being tendered nonpriority bypass mail. The Postal Serv-
ice shall not continue the tender of nonpriority bypass mail
to a 135 passenger carrier that fails to convert to part
121 operations within 12 months after the 121 passenger
carrier being tendered such mail under this paragraph.
‘‘(E) Notwithstanding the requirements of this sub-
section, if only 1 passenger carrier or aircraft is qualified
to be tendered nonpriority bypass mail as a passenger car-
rier or aircraft on a city pair route, the Postal Service
shall tender 20 percent of the nonpriority bypass mail de-
scribed under paragraph (1) to the passenger carrier or
aircraft providing the next highest level of passenger serv-
ice on such route.
‘‘(4) Qualification for the tender of mail under this
subsection shall not be counted toward the minimum
qualifications necessary to be tendered nonpriority bypass
mail on any other route.
‘‘(5)(A)(i) In this section, the percent of the pas-
senger service shall be calculated using the data provided
as described under subsection (k).
‘‘(ii) The Postal Service shall compare the resulting
percentage under clause (i) to the lesser of—
‘‘(I) the amount of the passenger excise tax
paid by or on behalf of a carrier, as determined by
reviewing the collected amount of base fares for pas-
sengers actually flown by a carrier from the origina-
tion point to the destination point, divided by the
value of the total passenger excise taxes, as deter-
mined by reviewing the collected amount of base
fares paid by or on behalf of all passenger carriers
providing service from the hub point to the bush
destination point; or
‘‘(II) the amount of half of the passenger excise
tax paid by or on behalf of a carrier, as determined
by reviewing the collected amount of base fares for
passengers actually flown by a carrier on the city
pair route, divided by the value of the total pas-
senger excise taxes, as determined by reviewing the
collected amount of base fares paid by or on behalf
of all passenger carriers providing service between
the origination point and the destination point.
‘‘(B) For the purposes of calculating passenger serv-
ice as described under subparagraph (A), a bush pas-
senger carrier providing intervillage bush passenger serv-
ice may include the carriage of passengers carried along
any point of the route between the route’s origination
point and the final destination point. Such calculation
shall be based only on the carriage of passengers on regu-
larly scheduled flights and only on flights being flown in
a direction away from the hub point. Passenger service
provided on chartered flights shall not be included in the
carrier’s calculation of passenger service.
‘‘(6)(A) The Secretary shall establish new bush rates
for passenger carriers receiving tender of nonpriority by-
pass mail under this subsection.
‘‘(B) The Secretary shall establish a bush rate based
on data collected under subsection (k) from 121 bush pas-
senger carriers. Such rates shall be paid to all bush pas-
senger carriers operating on city pair routes where a 121
bush passenger carrier is tendered nonpriority bypass
mail.
‘‘(C) The Secretary shall establish a bush rate based
on data collected under subsection (k) from 135 bush pas-
senger carriers. Such rates shall be paid to all bush pas-
senger carriers operating on city pair routes where no 121
bush passenger carrier is tendered nonpriority bypass
mail.
‘‘(D) The Secretary shall establish a bush rate based
on data collected under subsection (k) from bush pas-
senger carriers operating aircraft on city pair routes where
only water landings are available. Such rates shall be paid
to all bush passenger carriers operating on the city pair
routes where only water landings are available.
‘‘(7) The percentage rate in paragraph (1) shall be
75 percent 3 years and 3 months after the date of enact-
ment of the Rural Service Improvement Act of 2002.
‘‘(i)(1) Except as provided under paragraph (7), on
a given city pair route, the Postal Service shall offer equi-
table tender of 20 percent of the nonpriority bypass mail
on such route to those carriers transporting 25 percent
or more of the total nonmail freight (in revenue or weight
as determined by the Postal Service), for the 12 months
immediately preceding the date on which the freight car-
rier seeks tender of nonpriority bypass mail.
‘‘(2) To remain eligible for equitable tender under
this subsection, a freight carrier shall continue to provide
not less than 25 percent of the nonmail freight service on
the city pair route for which the carrier is seeking tender
of such mail.
‘‘(3) If a new freight carrier enters a market, that
freight carrier shall meet the minimum requirements of
subsection (g)(1) and shall operate for 12 months on a
given city pair route before being eligible for equitable ten-
der of nonpriority bypass mail on that route.
‘‘(4) If no carrier qualifies for tender of nonpriority
bypass mail under this subsection, such mail to be divided
under this subsection, as described in paragraph (1), shall
be tendered to the nonmail freight carrier providing the
highest percentage of nonmail freight service (in terms of
revenue or weight as determined by the Postal Service as
calculated under paragraph (6)) on the city pair route. If
no nonmail freight carrier is present on a route to receive
tender of nonpriority bypass mail under this paragraph,
the nonpriority bypass mail to be divided under paragraph
(1) shall be divided equitably among carriers qualified
under subsection (h).
‘‘(5) Qualification for the tender of mail under this
subsection shall not be counted toward the minimum
qualifications necessary to be tendered nonpriority bypass
mail on any other route.
‘‘(6)(A) In this subsection, the percent of nonmail
freight shall be calculated, using the data provided pursu-
ant to subsection (k), by dividing the revenue of, or weight
of, (as determined by the Postal Service) nonmail freight
earned by or carried by a carrier from the transport of
nonmail freight from an origination point to a destination
point by the total amount of revenue earned, or the weight
of, nonmail freight carried (as determined by the Postal
Service) by all carriers from the transport of nonmail
freight from the origination point to the destination point.
‘‘(B) The Postal Service shall compare the resulting
percentage under subparagraph (A) to the lesser of—
‘‘(i) the amount of the freight excise tax paid
by or on behalf of a carrier, as determined by re-
viewing the collected amount of base fares for
nonmail freight actually flown by a carrier from the
origination point to the destination point, divided by
the value of the total nonmail freight excise taxes,
as determined by reviewing the collected amount of
base fares paid by or on behalf of all nonmail freight
carriers providing service from the origination point
to the destination point; or
‘‘(ii) the amount of half of the nonmail freight
excise tax paid by or on behalf of a carrier, as deter-
mined by reviewing the collected amount of base
fares for nonmail freight actually flown by a carrier
on the city pair route, divided by the value of the
total nonmail freight excise taxes, as determined by
reviewing the collected amount of base fares paid by
or on behalf of all nonmail freight carriers providing
service on the city pair route.
‘‘(7) The percentage rate in paragraph (1) shall be
25 percent 3 years and 3 months after the date of enact-
ment of the Rural Service Improvement Act of 2002.
‘‘(j)(1) Except as provided by paragraph (3), there
shall be equitable tender of 10 percent of the nonpriority
bypass mail to all carriers on each city pair route meeting
the requirements of subsection (g)(1) that do not other-
wise qualify for tender under subsection (h) or (i).
‘‘(2) If no carrier qualifies under this subsection with
respect to a city pair route, the 10 percent of nonpriority
bypass mail allocated under paragraph (1) shall be divided
evenly between the pools described under subsections (h)
and (i) to be equitably tendered among qualified carriers
under such subsections, such that—
‘‘(A) the amount of nonpriority bypass mail
available for tender among qualified carries under
subsection (h) shall be 75 percent; and
‘‘(B) the amount of nonpriority bypass mail
available for tender among qualified carries under
subsection (i) shall be 25 percent.
‘‘(3)(A) Except as provided by subparagraph (B), the
percentage rate under paragraph (1) shall be 0 percent
3 years and 3 months after the date of enactment of the
Rural Service Improvement Act of 2002.
‘‘(B) The percentage rate under paragraph (1) shall
remain 10 percent for equitable tender for 6 years and
3 months after the date of enactment of the Rural Service
Improvement Act of 2002 for a nonpriority bypass mail
carrier on bush routes originating from the main hub of
the carrier designated under subparagraph (C), if the car-
rier seeking the tender of such mail—
‘‘(i) meets the requirements of subsection
(g)(1);
‘‘(ii) is not qualified under subsection (h) or (i);
‘‘(iii) operates routes originating from the main
hub of the carrier designated under subparagraph
(C); and
‘‘(iv) has invested at least $500,000 in a phys-
ical hanger facility prior to January 1, 2002 in such
a hub city.
‘‘(C) For purposes of subparagraph (B), a carrier
may designate only one hub city as its main hub and once
such designation is transmitted to the Postal Service it
may not be changed. Such selection and transmission
must be transmitted to the Postal Service within 6 months
of the date of enactment of the Rural Service Improve-
ment Act of 2002. A carrier attempting to receive tender
of nonpriority bypass mail under this subsection shall not
be eligible for such tender after the carrier becomes quali-
fied for tender of nonpriority bypass mail under subsection
(h) or (i) on any route. The purchase of another carrier’s
hanger facility after such date of enactment shall not be
considered sufficient to meet the requirement of subpara-
graph (B)(iv).
‘‘(k)(1) Not less than every 2 years, in conjunction
with annual updates, the Secretary shall review the need
for a bush mail rate investigation. The Secretary shall use
show cause procedures to speedily and more accurately de-
termine the cost of providing bush mail service. In deter-
mining such rates, the Secretary shall not take into ac-
count the cost of passenger insurance rates or premiums
paid by the passenger carriers or other costs associated
with passenger service.
‘‘(2) In order to assure sufficient, reliable, and timely
traffic data to meet the requirements of this subsection,
the Secretary shall require—
‘‘(A) the monthly submission of the bush car-
rier’s data on T–100 diskettes, or any other suitable
form of data collection, as determined by the Sec-
retary; and
‘‘(B) the carriers to retain all books, records,
and other source and summary documentation to
support their reports and to preserve and maintain
such documentation in a manner that readily per-
mits the audit and examination by representatives of
the Postal Service or the Secretary.
‘‘(3) Documentation under paragraph (2) shall be re-
tained for 7 years or until the Secretary indicates that
the records may be destroyed. Copies of flight logs for air-
craft sold or disposed of shall be retained.
‘‘(4) Carriers qualified to be tendered nonpriority by-
pass mail shall submit to the Secretary the number and
type of aircraft in the carrier’s fleet, the level of passenger
insurance covering its fleet, and the name of the insurance
company providing such coverage.
‘‘(5) Not later than 30 days after the last day of each
calendar month, carriers shall report to the Secretary the
excise taxes paid by city pair to the Department of the
Treasury and the weight of and revenue earned by the
carriage of nonmail freight. Final compiled data shall be
made available to carriers providing service in the hub.
‘‘(2) The Postal Service or the Secretary may waive
any provision of subsection (h) or (i), if the carrier pro-
vides substantial passenger or nonmail freight service on
the route where the carrier seeks tender of nonpriority by-
pass mail.
‘‘(3) In granting waivers for or denying tender to car-
riers under this subsection, the Postal Service or the Sec-
retary shall consider—
‘‘(A) the passenger needs of the destination to
be served (including amount and level);
‘‘(B) the nonmail freight needs of the destina-
tion to be served;
‘‘(C) the mail needs of the destination to be
served;
‘‘(D) the amount or level of passenger service
already available to the destination;
‘‘(E) the amount of nonmail freight service al-
ready available to the destination;
‘‘(F) the amount of nonpriority bypass mail
service already available to the destination; and
‘‘(G) the savings to the Postal Service in terms
of payments made to carriers.
‘‘(q) The Secretary shall make a regular review of
carriers receiving, or attempting to qualify to receive, equi-
table tender of nonpriority bypass mail. If the Secretary
suspends or revokes an operating certificate, the Secretary
shall notify the Postal Service. Upon such notification, the
Postal Service shall cease tender of mail to such carrier
until the Secretary certifies the carrier is operating in a
safe manner. Upon such receipt, the carrier shall dem-
onstrate that it otherwise meets the minimum carriage re-
quirements of this section before being tendered mail
under this section.
‘‘(r) The Postal Service shall have the authority to
tender nonpriority bypass mail to any carrier that meets
the requirements of subsection (g)(1) on any route on an
emergency basis. Such emergency tender shall cease when
a carrier qualifies for tender on such route under the
terms of this section.
‘‘(s) Notwithstanding any other provision of law, and
except for written contracts authorized under subsections
(b), (c) and (d) of this section, tender by the Postal Serv-
ice of any category of mail to a carrier for transportation
between any two points within the State of Alaska shall
not give rise to any contract between the Postal Service
and a carrier, nor shall any such carrier acquire any right
in continued or future tender of such mail by virtue of
past or present receipt of such mail. This subsection shall
apply to any case commenced before, on, or after the date
of enactment of this subsection.’’.
(d) ACTIONS OF AIR CARRIERS TO QUALIFY.—Be-
ginning 6 months after the date of enactment of this Act,
if the Secretary determines, based on the Secretary’s find-
ings and recommendations of the Postal Service, that an
air carrier being tendered nonpriority bush bypass mail
is not taking actions to attempt to qualify as a bush pas-
senger or nonmail freight carrier under section 5402 of
title 39, United States Code, (as amended by this Act)
the Postal Service shall immediately cease tender of all
nonpriority bypass mail to such carrier.
(e) TECHNICAL AND CONFORMING AMENDMENTS.—
(1) TITLE 39.—Section 5402 of title 39, United
States Code, is amended—
(A) in subsections (b) through (e) (as re-
designated by this Act) and subsection (f) by
striking ‘‘Secretary of Transportation’’ each
place it appears and inserting ‘‘Secretary’’; and
(B) in subsection (f)—
(i) by striking ‘‘subsections (a), (b),
and (c)’’ and inserting ‘‘subsections (b),
(c), and (d)’’; and
(ii) by striking ‘‘subsection (d)’’ and
inserting ‘‘subsection (e)’’.
(2) TITLE
49.—Section 41901 of title 49,
United States Code, is amended in subsection (a), by
striking ‘‘5402(d)’’ and inserting ‘‘5402(e)’’.
(f) REPORTS
TO CONGRESS.—Not later than 12
months after the date of enactment of this Act, the Postal
Service and the Secretary of Transportation shall submit
a report to the Committee on Government Reform of the
House of Representatives and the Committee on Govern-
mental Affairs of the Senate on the progress of imple-
menting this Act.
(g) EFFECTIVE DATES.—
(1) IN GENERAL.—Except as provided under
paragraphs (2) and (3), this Act (including the
amendments made by this Act) shall take effect on
the date of enactment of this Act.
(2) 
SELECTION
OF
CARRIERS.—Subsection
(c)(5) shall take effect 15 months after the date of
enactment of this Act.
Æ