H. R. 6407
One Hundred Ninth Congress
of the
United States of America 
AT THE SECOND SESSION 
Begun and held at the City of Washington on Tuesday, 
the third day of January, two thousand and six 
An Act 
To reform the postal laws of the United States.
Be it enacted by the Senate and House of Representatives of 
the United States of America in Congress assembled,
SECTION 1. SHORT TITLE; TABLE OF CONTENTS. 
(a) SHORT TITLE.—This Act may be cited as the ‘‘Postal Account-
ability and Enhancement Act’’. 
(b) TABLE OF CONTENTS.—The table of contents for this Act 
is as follows:
Sec. 1. Short title; table of contents. 
TITLE I—DEFINITIONS; POSTAL SERVICES 
Sec. 101. Definitions. 
Sec. 102. Postal Services. 
TITLE II—MODERN RATE REGULATION 
Sec. 201. Provisions relating to market-dominant products. 
Sec. 202. Provisions relating to competitive products. 
Sec. 203. Provisions relating to experimental and new products. 
Sec. 204. Reporting requirements and related provisions. 
Sec. 205. Complaints; appellate review and enforcement. 
Sec. 206. Clerical amendment. 
TITLE III—MODERN SERVICE STANDARDS 
Sec. 301. Establishment of modern service standards. 
Sec. 302. Postal service plan. 
TITLE IV—PROVISIONS RELATING TO FAIR COMPETITION 
Sec. 401. Postal Service Competitive Products Fund. 
Sec. 402. Assumed Federal income tax on competitive products income. 
Sec. 403. Unfair competition prohibited. 
Sec. 404. Suits by and against the Postal Service. 
Sec. 405. International postal arrangements. 
TITLE V—GENERAL PROVISIONS 
Sec. 501. Qualification and term requirements for Governors. 
Sec. 502. Obligations. 
Sec. 503. Private carriage of letters. 
Sec. 504. Rulemaking authority. 
Sec. 505. Noninterference with collective bargaining agreements. 
Sec. 506. Bonus authority. 
TITLE VI—ENHANCED REGULATORY COMMISSION 
Sec. 601. Reorganization and modification of certain provisions relating to the Post-
al Regulatory Commission. 
Sec. 602. Authority for Postal Regulatory Commission to issue subpoenas. 
Sec. 603. Authorization of appropriations from the Postal Service Fund. 
Sec. 604. Redesignation of the Postal Rate Commission. 
Sec. 605. Inspector General of the Postal Regulatory Commission. 
TITLE VII—EVALUATIONS 
Sec. 701. Assessments of ratemaking, classification, and other provisions.
H. R. 6407—2
Sec. 702. Report on universal postal service and the postal monopoly. 
Sec. 703. Study on equal application of laws to competitive products. 
Sec. 704. Report on postal workplace safety and workplace-related injuries. 
Sec. 705. Study on recycled paper. 
Sec. 706. Greater diversity in Postal Service executive and administrative schedule 
management positions. 
Sec. 707. Contracts with women, minorities, and small businesses. 
Sec. 708. Rates for periodicals. 
Sec. 709. Assessment of certain rate deficiencies. 
Sec. 710. Assessment of future business model of the Postal Service. 
Sec. 711. Provisions relating to cooperative mailings. 
Sec. 712. Definition. 
TITLE VIII—POSTAL SERVICE RETIREMENT AND HEALTH BENEFITS 
FUNDING 
Sec. 801. Short title. 
Sec. 802. Civil Service Retirement System. 
Sec. 803. Health insurance. 
Sec. 804. Repeal of disposition of savings provision. 
Sec. 805. Effective dates. 
TITLE IX—COMPENSATION FOR WORK INJURIES 
Sec. 901. Temporary disability; continuation of pay. 
TITLE X—MISCELLANEOUS 
Sec. 1001. Employment of postal police officers. 
Sec. 1002. Obsolete provisions. 
Sec. 1003. Reduced rates. 
Sec. 1004. Sense of Congress regarding Postal Service purchasing reform. 
Sec. 1005. Contracts for transportation of mail by air. 
Sec. 1006. Date of postmark to be treated as date of appeal in connection with the 
closing or consolidation of post offices. 
Sec. 1007. Provisions relating to benefits under chapter 81 of title 5, United States 
Code, for officers and employees of the former Post Office Department. 
Sec. 1008. Hazardous matter. 
Sec. 1009. ZIP codes and retail hours. 
Sec. 1010. Technical and conforming amendments.
TITLE I—DEFINITIONS; POSTAL 
SERVICES 
SEC. 101. DEFINITIONS. 
Section 102 of title 39, United States Code, is amended by 
striking ‘‘and’’ at the end of paragraph (3), by striking the period 
at the end of paragraph (4) and inserting a semicolon, and by 
adding at the end the following: 
‘‘(5) ‘postal service’ refers to the delivery of letters, printed 
matter, or mailable packages, including acceptance, collection, 
sorting, transportation, or other functions 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 market-
dominant category of mail’ means a product subject to sub-
chapter 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; and 
‘‘(10) ‘year’, as used in chapter 36 (other than subchapters 
I and VI thereof), means a fiscal year.’’.
H. R. 6407—3
SEC. 102. POSTAL SERVICES. 
(a) IN GENERAL.—Section 404 of title 39, United States Code, 
is amended—
(1) in subsection (a), by striking paragraph (6) and by 
redesignating paragraphs (7) through (9) as paragraphs (6) 
through (8), respectively; and 
(2) by adding at the end the following: 
‘‘(c)(1) In this subsection, the term ‘nonpostal service’ means 
any service that is not a postal service defined under section 102(5). 
‘‘(2) Nothing in this section shall be considered to permit or 
require that the Postal Service provide any nonpostal service, except 
that the Postal Service may provide nonpostal services which were 
offered as of January 1, 2006, as provided under this subsection. 
‘‘(3) Not later than 2 years after the date of enactment of 
the Postal Accountability and Enhancement Act, the Postal Regu-
latory Commission shall review each nonpostal service offered by 
the Postal Service on the date of enactment of that Act and deter-
mine whether that nonpostal service shall continue, taking into 
account— 
‘‘(A) the public need for the service; and 
‘‘(B) the ability of the private sector to meet the public 
need for the service. 
‘‘(4) Any nonpostal service not determined to be continued by 
the Postal Regulatory Commission under paragraph (3) shall termi-
nate. 
‘‘(5) If the Postal Regulatory Commission authorizes the Postal 
Service to continue a nonpostal service under this subsection, the 
Postal Regulatory Commission shall designate whether the service 
shall be regulated under this title as a market dominant product, 
a competitive product, or an experimental product.’’. 
(b) CONFORMING AMENDMENTS.—Section 1402(b)(1)(B)(ii) of the 
Victims of Crime Act of 1984 (98 Stat. 2170; 42 U.S.C. 
10601(b)(1)(B)(ii)) is amended by striking ‘‘404(a)(8)’’ and inserting 
‘‘404(a)(7)’’. 
TITLE II—MODERN RATE REGULATION 
SEC. 201. PROVISIONS RELATING TO MARKET-DOMINANT PRODUCTS. 
(a) IN GENERAL.—Chapter 36 of title 39, United States Code, 
is amended by striking sections 3621 and 3622 and inserting the 
following: 
‘‘§ 3621. Applicability; definitions 
‘‘(a) APPLICABILITY.—This subchapter shall apply with respect 
to—
‘‘(1) first-class mail letters and sealed parcels; 
‘‘(2) first-class mail cards; 
‘‘(3) periodicals; 
‘‘(4) standard mail; 
‘‘(5) single-piece parcel post; 
‘‘(6) media mail; 
‘‘(7) bound printed matter; 
‘‘(8) library mail; 
‘‘(9) special services; and 
‘‘(10) single-piece international mail,
H. R. 6407—4
subject to any changes the Postal Regulatory Commission may 
make under section 3642. 
‘‘(b) RULE OF CONSTRUCTION.—Mail matter referred to in sub-
section (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 Commis-
sion shall, within 18 months after the date of enactment of this 
section, by regulation establish (and may from time to time there-
after 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, each of which shall be applied in conjunc-
tion with the others: 
‘‘(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 established 
under section 3691. 
‘‘(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 and increase the 
transparency of the ratemaking process. 
‘‘(7) To enhance mail security and deter terrorism. 
‘‘(8) To establish and maintain a just and reasonable 
schedule for rates and classifications, however the objective 
under this paragraph shall not be construed to prohibit the 
Postal Service from making changes of unequal magnitude 
within, between, or among classes of mail. 
‘‘(9) To allocate the total institutional costs of the Postal 
Service appropriately between market-dominant and competi-
tive products. 
‘‘(c) FACTORS.—In establishing or revising such system, the 
Postal Regulatory Commission shall take into account—
‘‘(1) 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 transpor-
tation, and priority of delivery; 
‘‘(2) the requirement that each class of mail or type of 
mail service bear the direct and indirect postal costs attrib-
utable to each class or type of mail service through reliably 
identified causal relationships plus that portion of all other 
costs of the Postal Service reasonably assignable to such class 
or type; 
‘‘(3) 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; 
‘‘(4) the available alternative means of sending and 
receiving letters and other mail matter at reasonable costs; 
‘‘(5) 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;
H. R. 6407—5
‘‘(6) 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; 
‘‘(7) the importance of pricing flexibility to encourage 
increased mail volume and operational efficiency; 
‘‘(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 for both postal 
users and the Postal Service in accordance with the policies 
of this title, including agreements between the Postal Service 
and postal users, when available on public and reasonable 
terms to similarly situated mailers, that—
‘‘(A) either—
‘‘(i) improve the net financial position of the Postal 
Service through reducing Postal Service costs or 
increasing the overall contribution to the institutional 
costs of the Postal Service; or 
‘‘(ii) enhance the performance of mail preparation, 
processing, transportation, or other functions; and 
‘‘(B) do not cause unreasonable harm to the market-
place. 
‘‘(11) the educational, cultural, scientific, and informational 
value to the recipient of mail matter; 
‘‘(12) the need for the Postal Service to increase its effi-
ciency and reduce its costs, including infrastructure costs, to 
help maintain high quality, affordable postal services; 
(13) the value to the Postal Service and postal users of 
promoting intelligent mail and of secure, sender-identified mail; 
and 
‘‘(14) the policies of this title as well as such other factors 
as the Commission determines appropriate. 
‘‘(d) REQUIREMENTS.—
‘‘(1) IN
GENERAL.—The system for regulating rates and 
classes for market-dominant products shall—
‘‘(A) include an annual limitation on the percentage 
changes in rates to be set by the Postal Regulatory Commis-
sion that will be equal to the change in the Consumer 
Price Index for All Urban Consumers unadjusted for sea-
sonal variation over the most recent available 12-month 
period preceding the date the Postal Service files notice 
of its intention to increase rates; 
‘‘(B) establish a schedule whereby rates, when nec-
essary and appropriate, would change at regular intervals 
by predictable amounts; 
‘‘(C) not later than 45 days before the implementation 
of any adjustment in rates under this section, including 
adjustments made under subsection (c)(10)—
‘‘(i) require the Postal Service to provide public 
notice of the adjustment; 
‘‘(ii) provide an opportunity for review by the Postal 
Regulatory Commission;
H. R. 6407—6
‘‘(iii) provide for the Postal Regulatory Commission 
to notify the Postal Service of any noncompliance of 
the adjustment with the limitation under subpara-
graph (A); and 
‘‘(iv) require the Postal Service to respond to the 
notice provided under clause (iii) and describe the 
actions to be taken to comply with the limitation under 
subparagraph (A); 
‘‘(D) establish procedures whereby the Postal Service 
may adjust rates not in excess of the annual limitations 
under subparagraph (A); and 
‘‘(E) notwithstanding any limitation set under subpara-
graphs (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 cir-
cumstances, provided that the Commission determines, 
after notice and opportunity for a public hearing and com-
ment, and within 90 days after any request by the Postal 
Service, that such adjustment 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. 
‘‘(2) LIMITATIONS.—
‘‘(A) CLASSES
OF
MAIL.—Except as provided under 
subparagraph (C), the annual limitations 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 increase 
for any class to exceed the Consumer Price Index for All 
Urban Consumers. 
‘‘(C) USE OF UNUSED RATE AUTHORITY.—
‘‘(i) DEFINITION.—In this subparagraph, the term 
‘unused rate adjustment authority’ means the dif-
ference between—
‘‘(I) the maximum amount of a rate adjustment 
that the Postal Service is authorized to make in 
any year subject to the annual limitation under 
paragraph (1); and 
‘‘(II) the amount of the rate adjustment the 
Postal Service actually makes in that year. 
‘‘(ii) AUTHORITY.—Subject to clause (iii), the Postal 
Service may use any unused rate adjustment authority 
for any of the 5 years following the year such authority 
occurred. 
‘‘(iii) LIMITATIONS.—In exercising the authority 
under clause (ii) in any year, the Postal Service—
‘‘(I) may use unused rate adjustment authority 
from more than 1 year;
H. R. 6407—7
‘‘(II) may use any part of the unused 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 enactment of 
the Postal Accountability and Enhancement Act and as appro-
priate thereafter, the Commission shall review the system for 
regulating rates and classes for market-dominant products 
established 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 provided to mailers for the 
presorting, prebarcoding, handling, or transportation of mail, 
as further defined by the Postal Regulatory Commission under 
subsection (a). 
‘‘(2) SCOPE.—The Postal Regulatory Commission 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 service, 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 behavior that fur-
thers 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 result 
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 sub-
classes of mail consisting exclusively of mail matter of 
educational, cultural, scientific, or informational value; or 
‘‘(D) reduction or elimination of the discount 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 affected 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
H. R. 6407—8
‘‘(B) result in a further increase in the rates paid 
by mailers not able to take advantage of the discount. 
‘‘(4) REPORT.—Whenever the Postal Service establishes a 
workshare discount rate, the Postal Service shall, at the time 
it publishes the workshare discount rate, submit to the Postal 
Regulatory Commission a detailed report that—
‘‘(A) explains the Postal Service’s reasons for estab-
lishing 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 provided to users of postal 
services who do not take advantage of the discount 
rate. 
‘‘(f) TRANSITION RULE.—For the 1-year period beginning on 
the date of enactment of this section, rates and classes for market-
dominant products shall remain subject to modification in accord-
ance with the provisions of this chapter and section 407, as such 
provisions were last in effect before the date of enactment of this 
section. Proceedings initiated to consider a request for a rec-
ommended decision filed by the Postal Service during that 1-year 
period 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 repealed. 
(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 PRODUCTS. 
Chapter 36 of title 39, United States Code, is amended by 
inserting after section 3629 the following: 
‘‘SUBCHAPTER II—PROVISIONS RELATING TO COMPETITIVE 
PRODUCTS 
‘‘§ 3631. Applicability; definitions and updates 
‘‘(a) APPLICABILITY.—This subchapter shall apply with respect 
to—
‘‘(1) priority mail; 
‘‘(2) expedited mail; 
‘‘(3) bulk parcel post; 
‘‘(4) bulk international mail; and 
‘‘(5) mailgrams; 
subject to subsection (d) and any changes the Postal Regulatory 
Commission may make under section 3642. 
‘‘(b) DEFINITION.—For purposes of this subchapter, the term 
‘costs attributable’, as used with respect to a product, means the 
direct and indirect postal costs attributable to such product through 
reliably identified causal relationships.
H. R. 6407—9
‘‘(c) RULE OF CONSTRUCTION.—Mail matter referred to in sub-
section (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 Gov-
ernors, 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 require-
ments 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 jus-
tification, and the date as of which each such rate or class 
takes effect. 
‘‘(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 connec-
tion 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 connec-
tion 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 enactment of this section. 
‘‘§ 3633. Provisions applicable to rates for competitive prod-
ucts 
‘‘(a) IN GENERAL.—The Postal Regulatory Commission shall, 
within 18 months after the date of enactment of this section, 
promulgate (and may from time to time thereafter revise) regula-
tions to—
‘‘(1) prohibit the subsidization of competitive products by 
market-dominant products; 
‘‘(2) ensure that each competitive product covers its costs 
attributable; and
H. R. 6407—10
‘‘(3) ensure that all competitive products collectively 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 deter-
mine whether the institutional costs contribution requirement under 
subsection (a)(3) should be retained in its current form, modified, 
or eliminated. In making its determination, the Commission shall 
consider all relevant circumstances, including the prevailing 
competitive conditions in the market, and the degree to which 
any costs are uniquely or disproportionately associated with any 
competitive products.’’. 
SEC. 203. PROVISIONS RELATING TO EXPERIMENTAL AND NEW PROD-
UCTS. 
Subchapter III of chapter 36 of title 39, United States Code, 
is amended to read as follows: 
‘‘SUBCHAPTER III—PROVISIONS RELATING TO 
EXPERIMENTAL AND NEW PRODUCTS 
‘‘§ 3641. Market tests of experimental products 
‘‘(a) AUTHORITY.—
‘‘(1) IN GENERAL.—The Postal Service may conduct market 
tests of experimental products in accordance with this section. 
‘‘(2) PROVISIONS
WAIVED.—A product shall not, while it 
is being tested under this section, be subject to the requirements 
of sections 3622, 3633, or 3642, or regulations promulgated 
under those sections. 
‘‘(b) CONDITIONS.—A product may not be tested under this 
section unless it satisfies each of the following: 
‘‘(1) SIGNIFICANTLY DIFFERENT PRODUCT.—The product is, 
from the viewpoint of the mail users, significantly different 
from all products offered by the Postal Service within the 
2-year period preceding the start of the test. 
‘‘(2) MARKET DISRUPTION.—The introduction or continued 
offering of the product will not create an unfair or otherwise 
inappropriate competitive advantage for the Postal Service or 
any mailer, particularly in regard to small business concerns 
(as defined under subsection (h)). 
‘‘(3) CORRECT CATEGORIZATION.—The Postal Service identi-
fies 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 attrib-
utable to a product identified as competitive shall be included 
in any determination under section 3633(3) (relating to provi-
sions applicable to competitive products collectively). Any test 
that solely affects products currently classified as competitive, 
or which provides services ancillary to only competitive prod-
ucts, 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 initiating a 
market test under this section, the Postal Service shall file
H. R. 6407—11
with the Postal Regulatory Commission and publish in the 
Federal Register a notice—
‘‘(A) setting out the basis for the Postal Service’s deter-
mination 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 para-
graph (1) shall be considered to permit or require the publica-
tion of any information as to which confidential treatment 
is accorded under the preceding sentence (subject to the same 
exception as set forth in section 504(g)(3)). 
‘‘(d) DURATION.—
‘‘(1) IN GENERAL.—A market test of a product under this 
section may be conducted over a period of not to exceed 24 
months. 
‘‘(2) EXTENSION AUTHORITY.—If necessary in order to deter-
mine 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 para-
graph (1)), extend the testing of such product for not to exceed 
an additional 12 months. 
‘‘(e) DOLLAR-AMOUNT LIMITATION.—
‘‘(1) IN GENERAL.—A product may only be tested under 
this section if the total revenues that are anticipated, or in 
fact received, by the Postal Service from such product do not 
exceed $10,000,000 in any year, subject to paragraph (2) and 
subsection (g). In carrying out the preceding sentence, the 
Postal Regulatory Commission may limit the amount of reve-
nues the Postal Service may obtain from any particular 
geographic market as necessary to prevent market disruption 
(as defined under 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 1 or more of the 
requirements of this section, it may order the cancellation of the
H. R. 6407—12
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 pre-
scribe. 
‘‘(g) ADJUSTMENT FOR INFLATION.—For purposes of each year 
following the year in which occurs the deadline for the Postal 
Service’s first report to the Postal Regulatory Commission under 
section 3652(a), each dollar amount contained in this section shall 
be adjusted by the change in the Consumer Price Index for such 
year (as determined under regulations of the Commission). 
‘‘(h) DEFINITION OF A SMALL BUSINESS CONCERN.—The criteria 
used in defining small business concerns or otherwise categorizing 
business concerns as small business concerns shall, for purposes 
of this section, be established by the Postal Regulatory Commission 
in conformance with the requirements of section 3 of the Small 
Business Act. 
‘‘(i) EFFECTIVE DATE.—Market tests under this subchapter may 
be conducted in any year beginning with the first year in which 
occurs the deadline for the Postal Service’s first report to the 
Postal Regulatory Commission under section 3652(a). 
‘‘§ 3642. New products and transfers of products between 
the market-dominant and competitive categories 
of mail 
‘‘(a) IN GENERAL.—Upon request of the Postal Service or users 
of the mails, or upon its own initiative, the Postal Regulatory 
Commission may change the list of market-dominant products under 
section 3621 and the list of competitive products under section 
3631 by adding new products to the lists, removing products from 
the lists, or transferring products between the lists. 
‘‘(b) CRITERIA.—All determinations by the Postal Regulatory 
Commission under subsection (a) shall be made in accordance with 
the following criteria: 
‘‘(1) The market-dominant category of products shall consist 
of each product in the sale of which the Postal Service exercises 
sufficient market power that it can effectively set the price 
of such product substantially above costs, raise prices signifi-
cantly, decrease quality, or decrease output, without risk of 
losing a significant level of business to other firms offering 
similar products. The competitive category of products shall 
consist of all other products. 
‘‘(2) 
EXCLUSION
OF
PRODUCTS
COVERED
BY
POSTAL 
MONOPOLY.—A product covered by the postal monopoly shall 
not be subject to transfer under this section from the market-
dominant category of mail. For purposes of the preceding sen-
tence, 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
H. R. 6407—13
‘‘(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 Commis-
sion and publish in the Federal Register a notice setting out 
the basis for its determination that the product satisfies the 
criteria under subsection (b) and, in the case of a request 
to add a product or transfer a product to the competitive 
category of mail, that the product meets the regulations promul-
gated by the Postal Regulatory Commission under section 3633. 
The provisions of section 504(g) shall be available with respect 
to any information required to be filed. 
‘‘(2) PUBLICATION
REQUIREMENT.—The Postal Regulatory 
Commission shall, whenever it changes the list of products 
in the market-dominant or competitive category of mail, pre-
scribe new lists of products. The revised lists shall indicate 
how and when any previous lists (including the lists under 
sections 3621 and 3631) are superseded, and shall be published 
in the Federal Register. 
‘‘(e) PROHIBITION.—Except as provided in section 3641, no 
product that involves the physical delivery of letters, printed matter, 
or packages may be offered by the Postal Service unless it has 
been assigned to the market-dominant or competitive category of 
mail (as appropriate) either—
‘‘(1) under this subchapter; or 
‘‘(2) by or under any other provision of law.’’. 
SEC. 204. REPORTING REQUIREMENTS AND RELATED PROVISIONS. 
(a) REDESIGNATION.—Chapter 36 of title 39, United States Code 
(as in effect before the amendment made by subsection (b)) is 
amended— 
(1) by striking the heading for subchapter IV and inserting 
the following: 
‘‘SUBCHAPTER V—POSTAL SERVICES, COMPLAINTS, AND 
JUDICIAL REVIEW’’; and 
(2) by striking the heading for subchapter V and inserting 
the following: 
‘‘SUBCHAPTER VI—GENERAL’’. 
(b) REPORTS AND COMPLIANCE.—Chapter 36 of title 39, United 
States Code, is amended by inserting after subchapter III the fol-
lowing:
H. R. 6407—14
‘‘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 con-
cerning 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.—
‘‘(1) IN GENERAL.—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—
‘‘(A) 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 serv-
ices to patrons in all areas and all communities, including 
as required under the first sentence of section 101(b); 
‘‘(B) free or reduced rates for postal services as required 
by this title; and 
‘‘(C) 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. 
‘‘(2) BASIS FOR ESTIMATES.—The Commission shall detail 
the basis 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 informa-
tion as may, in the judgment of the Commission, be necessary 
in order for the Commission to prepare its reports under this 
section. 
‘‘§ 3652. Annual reports to the Commission 
‘‘(a) COSTS, REVENUES, RATES, AND SERVICE.—Except as pro-
vided 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 non-
public annex to the report as the Commission may require under 
subsection (e))—
‘‘(1) which shall analyze costs, revenues, rates, and quality 
of service, using such methodologies as the Commission shall 
by regulation prescribe, and in sufficient detail to demonstrate 
that all products during such year complied with all applicable 
requirements of this title; and 
‘‘(2) which shall, for each market-dominant product pro-
vided in such year, provide—
‘‘(A) product information, including mail volumes; and 
‘‘(B) measures of the quality of service afforded by 
the Postal Service in connection with such product, 
including—