I
106TH CONGRESS
1ST SESSION
H. R. 22
To modernize the postal laws of the United States.
IN THE HOUSE OF REPRESENTATIVES
JANUARY 6, 1999
Mr. MCHUGH (for himself and Mr. BURTON of Indiana) introduced the follow-
ing bill; which was referred to the Committee on Government Reform,
and in addition to the Committee on the Judiciary, for a period to be
subsequently determined by the Speaker, in each case for consideration
of such provisions as fall within the jurisdiction of the committee con-
cerned
A BILL
To modernize the postal laws of the United States.
Be it enacted by the Senate and House of Representa-
tives 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 Modernization Act of 1999’’.
(b) TABLE OF CONTENTS.—The table of contents for
this Act is as follows:
Sec. 1. Short title; table of contents.
TITLE I—REDESIGNATION OF THE BOARD OF GOVERNORS, THE
POSTMASTER GENERAL, AND THE POSTAL RATE COMMISSION
Sec. 101. Redesignation of the Board of Governors.
Sec. 102. Redesignation of the Postmaster General.
Sec. 103. Redesignation of the Postal Rate Commission.
Sec. 104. Other references.
TITLE II—NEW SYSTEM RELATING TO POSTAL RATES, CLASSES,
AND SERVICES
Subtitle A—In General
Sec. 201. Establishment.
Sec. 202. Amendments to chapter 36.
Sec. 203. Postal Service Competitive Products Fund.
Sec. 204. USPS Corporation.
Sec. 205. Postal and nonpostal products.
Subtitle B—Related Provisions
Sec. 211. Authority for Postal Regulatory Commission to issue subpoenas.
Sec. 212. Qualification requirements for Commissioners and Directors.
Sec. 213. Appropriations for the Commission.
Sec. 214. Change-of-address order involving a commercial mail receiving agen-
cy.
Sec. 215. Rates for mail under former section 4358.
TITLE III—GENERAL AUTHORITY
Sec. 301. Rulemaking authority.
Sec. 302. General duties.
Sec. 303. Employment of postal police officers.
Sec. 304. Date of postmark to be treated as date of appeal in connection with
the closing or consolidation of post offices.
Sec. 305. Unfair competition prohibited.
Sec. 306. International postal arrangements.
Sec. 307. Suits by and against the Postal Service.
TITLE IV—MISCELLANEOUS PROVISIONS RELATING TO THE
BUDGET AND APPROPRIATIONS PROCESS
Sec. 401. Provisions relating to benefits under chapter 81 of title 5, United
States Code, for officers and employees of the former Post Of-
fice Department.
Sec. 402. Technical and conforming amendments.
TITLE V—PROVISIONS RELATING TO TRANSPORTATION,
CARRIAGE, OR DELIVERY OF MAIL
Sec. 501. Obsolete provisions.
Sec. 502. Expanded contracting authority.
Sec. 503. Private carriage of letters.
Sec. 504. Repeal of section 5403.
TITLE VI—STUDIES
Sec. 601. Employee-management relations.
Sec. 602. Recommendations on universal postal services.
Sec. 603. Study on equal application of laws to competitive products.
Sec. 604. Greater diversity in Postal Service executive and administrative
schedule management positions.
Sec. 605. Plan for assisting displaced workers.
Sec. 606. Contracts with women, minorities, and small businesses.
TITLE VII—INSPECTORS GENERAL
Sec. 701. Inspector General of the Postal Regulatory Commission.
Sec. 702. Inspector General of the United States Postal Service to be appointed
by the President.
TITLE VIII—LAW ENFORCEMENT
Subtitle A—Amendments to Title 39, United States Code
Sec. 801. Make Federal assault statutes applicable to postal contract employ-
ees.
Sec. 802. Sexually oriented advertising.
Sec. 803. Allow Postal Service to retain asset forfeiture recoveries.
Sec. 804. Hazardous matter.
Subtitle B—Other Provisions
Sec. 811. Stalking Federal officers and employees.
Sec. 812. Nonmailability of controlled substances.
Sec. 813. Enhanced penalties.
Sec. 814. Postal burglary provisions.
Sec. 815. Mail, money, or other property of the United States.
TITLE 
I—REDESIGNATION 
OF
THE BOARD OF GOVERNORS,
THE POSTMASTER GENERAL,
AND THE POSTAL RATE COM-
MISSION
SEC. 101. REDESIGNATION OF THE BOARD OF GOVERNORS.
(a) AMENDMENTS TO TITLE 39, UNITED STATES
CODE.—Title 39, United States Code, is amended—
(1) in sections 102, 202, 204, 205, 402, 414,
1005, 3604, 3621, 3623, 3624, 3625, 3628, 3641,
and 3684, in the analysis for chapter 2 (in the items
relating to sections 202 and 205, respectively), and
in the analysis for chapter 36 (in the item relating
to section 3625) by striking ‘‘Governors’’ each place
it appears and inserting ‘‘Directors’’; and
(2) in sections 202, 205, and 1002 by striking
‘‘Governor’’ each place it appears and inserting ‘‘Di-
rector’’.
(b) AMENDMENT TO THE FEDERAL SALARY ACT OF
1967.—Section 225(f)(E) of the Federal Salary Act of
1967 (2 U.S.C. 356(E)) is amended by striking ‘‘Gov-
ernors of the Board of Governors of the United States
Postal Service’’ and inserting ‘‘Directors of the Board of
Directors of the United States Postal Service’’.
(c) AMENDMENTS
TO TITLE 5, UNITED STATES
CODE.—Title 5, United States Code, is amended in sec-
tions 8344(e) and 8468(c) by striking ‘‘Governor of the
Board of Governors of the United States Postal Service’’
and inserting ‘‘Director of the Board of Directors of the
United States Postal Service’’.
(d) AMENDMENTS TO THE ETHICS IN GOVERNMENT
ACT OF 1978.—The Ethics in Government Act of 1978
(5 U.S.C. App.) is amended—
(1) in section 101(f)(6) by striking ‘‘Governor
of the Board of Governors of the United States
Postal Service’’ and inserting ‘‘Director of the Board
of Directors of the United States Postal Service’’;
and
(2) in sections 103(c) and 106(b)(6) by striking
‘‘Governors of the Board of Governors of the United
States Postal Service’’ and inserting ‘‘Directors of
the Board of Directors of the United States Postal
Service’’.
(e) AMENDMENTS TO TITLE 18, UNITED STATES
CODE.—Title 18, United States Code, is amended in sec-
tions 1735 and 3061 by striking ‘‘Governors’’ each place
it appears and inserting ‘‘Directors’’.
SEC. 102. REDESIGNATION OF THE POSTMASTER GENERAL.
(a) AMENDMENTS TO TITLE 39, UNITED STATES
CODE.—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 ‘‘; and’’, and by adding at the end the following:
‘‘(5) ‘Postmaster General’ means the Post-
master General and Chief Executive Officer of the
United States Postal Service appointed under sec-
tion 202(a) of this title.’’.
(b) AMENDMENTS TO THE ETHICS IN GOVERNMENT
ACT OF 1978.—The Ethics in Government Act of 1978
(5 U.S.C. App.) is amended in sections 101(f)(6), 103(c),
and 106(b)(6) by striking ‘‘Postmaster General’’ and in-
serting ‘‘Postmaster General and Chief Executive Officer
of the United States Postal Service’’.
(c) AMENDMENTS TO TITLE 18, UNITED STATES
CODE.—Title 18, United States Code, is amended in sec-
tions 501, 1703, 1704, and 1709 by striking ‘‘Postmaster
General’’ each place it appears and inserting ‘‘Postmaster
General and Chief Executive Officer of the United States
Postal Service’’.
SEC. 103. REDESIGNATION OF THE POSTAL RATE COMMIS-
SION.
(a) AMENDMENTS TO TITLE 39, UNITED STATES
CODE.—Title 39, United States Code, is amended in sec-
tions 404, 1001, 1002, 2003, 3601, 3602, 3603, 3604,
3622, 3623, 3624, 3625, 3628, 3641, and 3661, in the
analysis for chapter 36 (in the item relating to subchapter
I), and in the heading for subchapter I of chapter 36 by
striking ‘‘Postal Rate Commission’’ each place it appears
and inserting ‘‘Postal Regulatory Commission’’.
(b) AMENDMENTS
TO TITLE 5, UNITED STATES
CODE.—Title 5, United States Code, is amended in sec-
tions 104(1), 306(f), 2104(b), 3371(3), 5314 (in the item
relating to Chairman, Postal Rate Commission), 5315 (in
the item relating to Members, Postal Rate Commission),
5514(a)(5)(B), 
7342(a)(1)(A), 
7511(a)(1)(B)(ii),
8402(c)(1), 8423(b)(1)(B), and 8474(c)(4) by striking
‘‘Postal Rate Commission’’ and inserting ‘‘Postal Regu-
latory Commission’’.
(c) AMENDMENT TO THE ETHICS IN GOVERNMENT
ACT OF 1978.—Section 101(f)(6) of the Ethics in Govern-
ment Act of 1978 (5 U.S.C. App.) is amended by striking
‘‘Postal Rate Commission’’ and inserting ‘‘Postal Regu-
latory Commission’’.
(d) AMENDMENT TO THE REHABILITATION ACT OF
1973.—Section 501(b) of the Rehabilitation Act of 1973
(29 U.S.C. 791(b)) is amended by striking ‘‘Postal Rate
Office’’ and inserting ‘‘Postal Regulatory Commission’’.
(e) AMENDMENT
TO TITLE 44, UNITED STATES
CODE.—Section 3502(5) of title 44, United States Code,
is amended by striking ‘‘Postal Rate Commission’’ and in-
serting ‘‘Postal Regulatory Commission’’.
SEC. 104. OTHER REFERENCES.
(a) BOARD
OF GOVERNORS, ETC.—Whenever ref-
erence is made in any provision of law (other than this
Act or a provision of law amended by this Act), regulation,
rule, document, or other record of the United States to
the Board of Governors of the United States Postal Serv-
ice (or any Governor or Governors thereof), such reference
shall be considered a reference to the Board of Directors
of the United States Postal Service (or any Director or
Directors thereof, as appropriate).
(b) POSTMASTER GENERAL.—Whenever reference is
made in any provision of law (other than this Act or a
‘‘SUBCHAPTER III—RATES FOR PRODUCTS IN THE
NONCOMPETITIVE CATEGORY OF MAIL
‘‘3731. Applicability; definitions.
‘‘3732. Limitations on rates.
‘‘3733. Adjustment factor.
‘‘3734. Action of the Board.
‘‘SUBCHAPTER IV—RATES FOR PRODUCTS IN THE COMPETITIVE
CATEGORY OF MAIL
‘‘3741. Applicability; definition.
‘‘3742. Action of the Board.
‘‘3743. Provisions applicable to competitive products individually.
‘‘3744. Provisions applicable to competitive products collectively.
‘‘SUBCHAPTER V—MARKET TESTS OF EXPERIMENTAL PRODUCTS
‘‘3751. Market tests of experimental noncompetitive products.
‘‘3752. Market tests of experimental competitive products.
‘‘3753. Large-scale market tests.
‘‘3754. Adjustment for inflation.
‘‘3755. Conversion to permanence.
‘‘3756. Effective date.
‘‘SUBCHAPTER VI—PROVISIONS RELATING TO THE
INTRODUCTION AND CATEGORIZATION OF PRODUCTS
‘‘3761. Criteria for the identification of noncompetitive and competitive prod-
ucts.
‘‘3762. New noncompetitive products.
‘‘3763. New competitive products.
‘‘3764. Transfers of products between categories of mail.
‘‘3765. Transition provisions for new or transferred noncompetitive products.
‘‘SUBCHAPTER VII—REPORTING REQUIREMENTS AND RELATED
PROVISIONS
‘‘3771. Annual reports by the Commission.
‘‘3772. Annual reports to the Commission.
‘‘3773. Annual determination of compliance.
‘‘3774. Other reports.
‘‘SUBCHAPTER I—DEFINITIONS
‘‘§ 3701. Definitions
‘‘For purposes of this chapter:
‘‘(1) PRODUCT.—The term ‘product’ means a
class of mail or type of postal service, including—
‘‘(A) a subclass or other similar subordi-
nate unit thereof; and
‘‘(B) the next level of subordinate units
thereof (below the first level of subordinate
units, as referred to in subparagraph (A)).
‘‘(2) RATE.—The term ‘rate’, as used with re-
spect to any products, includes fees for postal serv-
ices.
‘‘(3) PRODUCT IN THE NONCOMPETITIVE CAT-
EGORY OF MAIL.—The term ‘product in the non-
competitive category of mail’ or ‘noncompetitive
product’ means a product subject to subchapter III.
‘‘(4) PRODUCT IN THE COMPETITIVE CATEGORY
OF MAIL.—The term ‘product in the competitive cat-
egory of mail’ or ‘competitive product’ means a
product subject to subchapter IV.
‘‘(5) CONSUMER
PRICE
INDEX.—The term
‘Consumer Price Index’ means the Consumer Price
Index for All Urban Consumers published monthly
by the Bureau of Labor Statistics of the Depart-
ment of Labor.
‘‘(6) YEAR.—The term ‘year’ means a fiscal
year.
‘‘§ 3702. Free mailing privileges unaffected
‘‘Nothing in this chapter shall be considered to affect
any free mailing privileges accorded under any of sections
3217 or 3403 through 3406.
‘‘SUBCHAPTER II—BASELINE RATES
‘‘§ 3721. Determination of baseline rates
‘‘(a) REQUIREMENT THAT A RATEMAKING REQUEST
BE MADE.—The Postal Service shall, during the 18-
month period beginning on the date of enactment of this
chapter, submit a request under section 3622 for a rec-
ommended decision by the Postal Regulatory Commission
on rates for all products in the noncompetitive category
of mail and all products in the competitive category of
mail.
‘‘(b) POLICIES AND CRITERIA.—The request under
subsection (a) shall be made in accordance with the same
policies and criteria as would otherwise apply in the case
of a request made under section 3622, except that—
‘‘(1) in applying section 3621, any determina-
tion of total estimated costs of the Postal Service
shall be made without including any provision for
contingencies; and
‘‘(2) to the extent that any class of mail or kind
of mailer under section 3626(a) is involved, such re-
quest shall be made in conformance with the re-
quirements of section 3722.
‘‘(c) PROCEDURES FOR CONSIDERATION.—
‘‘(1) IN GENERAL.—Except as otherwise pro-
vided in subsection (b) or any other provision of this
subchapter, the request made under subsection (a)
shall be considered and acted on in the same way as
any other request made under section 3622.
‘‘(2) ADDITIONAL
AUTHORITY.—For purposes
of the request made under subsection (a), section
3622(b) shall be applied as if it had been amended
by inserting after ‘the policies of this title’ the fol-
lowing: ‘(including the second sentence of section
3621)’.
‘‘(d) EFFECTIVE DATE
OF ANY RATES ESTAB-
LISHED PURSUANT TO REQUEST.—All rates established
pursuant to the request made under subsection (a) shall
take effect as of the same date, determined in accordance
with applicable provisions of chapter 36, but in no event
later than the last day of the 18-month period beginning
on the date on which such request is made.
‘‘(e) DEFINITION OF BASELINE RATES.—
‘‘(1) IN GENERAL.—Subject to section 3722(c),
for purposes of this title, the baseline rate for each
product shall be the rate in effect for such product
as of the applicable date under paragraph (2), irre-
spective of whether—
‘‘(A) any rate change is in fact requested
for such product under subsection (a);
‘‘(B) ratemaking proceedings are in fact
completed by such date; or
‘‘(C) the rate in effect for such product as
of such date is a permanent or temporary one.
‘‘(2) DATE AS OF WHICH BASELINE RATES ARE
TO
BE
DETERMINED.—The applicable date under
this paragraph shall be—
‘‘(A) the date as of which any baseline
rates, established pursuant to the request made
under subsection (a), are to take effect in ac-
cordance with subsection (d); or
‘‘(B) if subparagraph (A) does not apply
(whether because proceedings under chapter 36
are not completed before the deadline under
subsection (d) or otherwise), the last day of the
18-month period referred to in subsection (d).
‘‘§ 3722. Provisions relating to reduced-rate cat-
egories of mail
‘‘(a) DEFINITIONS.—For purposes of this section, the
terms ‘costs attributable’ and ‘regular-rate category’ have
the same meanings as are given them by section 3626(a).
‘‘(b) REQUIREMENT.—
‘‘(1) IN GENERAL.—Notwithstanding any other
provision of this title (but subject to paragraph (3)),
the rate established under this chapter for a product
within a reduced-rate category of mail (as referred
to in section 3721(b)(2)), including the baseline rate
therefor (if applicable), may not exceed—
‘‘(A) in the case of a competitive product,
the rate described in paragraph (2); or
‘‘(B) in the case of a noncompetitive prod-
uct, the lesser of—
‘‘(i) the rate described in paragraph
(2); or
‘‘(ii) the highest rate allowable for
such product under subsection (c) or (d) of
section 3732, whichever is less.
‘‘(2) RATE DESCRIBED.—The rate described in
this paragraph is, with respect to any product, the
rate that would then be in effect for such product
if established under section 3626(a) in conformance
with the requirement that—
‘‘(A) the estimated costs attributable (ex-
pressed on a per-unit basis) used in establishing
such rate, not exceed
‘‘(B) the estimated costs attributable
(similarly expressed) used in establishing the
rate that is to be concurrently in effect for the
same product within the most closely cor-
responding regular-rate category.
‘‘(3) NONCOMPETITIVE
PRODUCT
MINIMUM.—
Nothing in this subsection shall be considered to
waive the limitation set forth in section 3732(b) (re-
lating to the minimum rate required for a non-
competitive product).
‘‘(c) SELF-EXECUTING CORRECTION MECHANISM.—
If the baseline rate for a product would not otherwise be
in compliance with subsection (b), such rate shall be re-
duced by the minimum amount necessary in order to
achieve compliance.
‘‘§ 3723. Automatic termination of any rate case that
may be pending
‘‘To the extent that any proceedings relating to a re-
quest made under section 3622 before the date of enact-
ment of this chapter remain pending as of such date of
enactment, any further action taken in connection with
such request shall be null and void.
‘‘SUBCHAPTER III—RATES FOR PRODUCTS IN
THE NONCOMPETITIVE CATEGORY OF MAIL
‘‘§ 3731. Applicability; definitions
‘‘(a) APPLICABILITY.—This subchapter applies with
respect to the products in the first, second, third, and
fourth baskets of products, respectively.
‘‘(b) DEFINITIONS.—For purposes of this sub-
chapter:
‘‘(1) FIRST BASKET OF PRODUCTS.—The term
‘first basket of products’ means—
‘‘(A) single-piece first-class letters (both
domestic and international);
‘‘(B) single-piece first-class cards (both do-
mestic and international);
‘‘(C) single-piece parcels (both domestic
and international); and
‘‘(D) special services.
‘‘(2) SECOND
BASKET
OF
PRODUCTS.—The
term ‘second basket of products’ means all first-class
mail not in the first basket of products.
‘‘(3) THIRD BASKET OF PRODUCTS.—The term
‘third basket of products’ means periodicals.
‘‘(4) FOURTH
BASKET
OF
PRODUCTS.—The
term ‘fourth basket of products’ means standard
mail (except for parcel post).
‘‘(c) RULE OF CONSTRUCTION.—
‘‘(1) IN GENERAL.—Except as provided in para-
graph (2), mail matter referred to in paragraphs (1)
through (4) of subsection (b) shall, for purposes of
such paragraphs, be considered to have the respec-
tive meanings given them under the mail classifica-
tion schedule (as defined by section 3623) as of the
effective date of this chapter.
‘‘(2) UPDATES.—The Postal Regulatory Com-
mission shall, whenever any relevant change occurs
(whether pursuant to a product transfer under sec-
tion 3764, the reclassification of a product under
section 3623, or the introduction of a new non-
competitive product under section 3762), prescribe
new lists of products within the respective baskets
described in subsection (b). The revised lists shall
indicate how and when any previous lists (including
under subsection (b)) are superseded, and shall be
published in the Federal Register.
‘‘§ 3732. Limitations on rates
‘‘(a) IN GENERAL.—Except as otherwise provided in
this subchapter, the rate in effect for a noncompetitive
product may not, during any year in a ratemaking cycle
(as defined in section 3733(a))—
‘‘(1) be less than the minimum rate required
for such product in such year, as determined under
subsection (b);
‘‘(2) be greater than the maximum rate allow-
able for such product in such year, as determined
under subsection (c); or
‘‘(3) be changed by a percentage that would
cause such rate to fall outside of the range allowable
for such product in such year, as determined under
subsection (d).
Nothing in paragraph (3) shall be considered to authorize
the establishment of any rate less than the minimum rate
required under paragraph (1) or greater than the maxi-
mum rate allowable under paragraph (2).
‘‘(b) MINIMUM RATE REQUIRED.—For purposes of
this section, the minimum rate required for a product in
a year is the minimum rate which, if kept in effect for
such product throughout the year (or, if implemented after
the start of the year, throughout the remainder of the
year, but taking into account all revenues from such prod-
uct that are attributable to earlier periods in the same
year) will be sufficient to ensure that such product will
bear the direct and indirect postal costs attributable to
such product for such year.
‘‘(c) MAXIMUM RATE ALLOWABLE.—
‘‘(1) IN GENERAL.—For purposes of this sec-
tion, the maximum rate allowable for a product in
a year shall be equal to the rate determined by in-
creasing or decreasing (as applicable)—
‘‘(A) the maximum rate allowable for such
product under this subsection in the year pre-
ceding the year for which the maximum rate al-
lowable is being determined (disregarding any
rounding rules), by
‘‘(B) the percentage adjustment applicable
for the year for which the maximum rate allow-
able is being determined, as determined under
paragraph (2).
‘‘(2) 
PERCENTAGE
ADJUSTMENT
APPLICA-
BLE.—For purposes of this section, the percentage
adjustment applicable shall, for any year, be equal
to—
‘‘(A) the change in the Consumer Price
Index for such year, adjusted by
‘‘(B) the adjustment factor for such year.
‘‘(3) DEFINITIONS.—For purposes of this sec-
tion:
‘‘(A) CHANGE IN THE CONSUMER PRICE
INDEX.—The change in the Consumer Price
Index for a year shall be equal to the percent-
age (expressed as a positive value, a negative
value, or zero, as the case may be) by which the
Consumer Price Index for the preceding year
differs from the Consumer Price Index for the
second preceding year.
‘‘(B) CONSUMER
PRICE
INDEX
FOR
A
YEAR.—The Consumer Price Index for a year is
the average of the Consumer Price Index for
the 12-month period ending on June 30th of
such year.
‘‘(C) ADJUSTMENT FACTOR.—The adjust-
ment factor for any year shall be determined in
accordance with section 3733.
‘‘(4) SPECIAL RULE.—For purposes of deter-
mining the maximum rate allowable for any particu-
lar product during the first year of the first rate-
making cycle, paragraph (1)(A) shall be applied by
substituting ‘the baseline rate for such product’ for
‘the maximum rate allowable for such product under
this subsection in the year preceding the year for
which the maximum rate allowable is being deter-
mined (disregarding any rounding rules)’.
‘‘(5) ROUNDING RULE.—The maximum rate al-
lowable for a product within the first basket of prod-
ucts shall be equal to the rate determined for such
product under this subsection (disregarding this
paragraph), rounded to the nearest cent (rounding
1⁄2 of a cent to the next higher cent).
‘‘(d) RANGE ALLOWABLE.—For purposes of this sec-
tion, the range allowable for a product in any year is the
range delimited by—
‘‘(1) a maximum rate equal to the rate deter-
mined by increasing or decreasing (as applicable)—
‘‘(A) the rate last in effect for such prod-
uct before the start of such year, by
‘‘(B) the percentage equal to the percent-
age adjustment applicable with respect to such
product for such year, plus 2 percent; and
‘‘(2) a minimum rate equal to the rate deter-
mined by increasing or decreasing (as applicable)—
‘‘(A) the rate last in effect for such prod-
uct before the start of such year, by
‘‘(B) the percentage equal to the percent-
age adjustment applicable with respect to such
product for such year, minus 2 percent.
For purposes of applying paragraphs (1)(B) and (2)(B)
in any year, the Board of Directors may, in a manner con-
sistent with the policies of this title and the requirements
of this subchapter, establish a single percentage which
shall be lower than, and which shall be substituted for,
the percentage adjustment applicable that would otherwise
be applied under both of those paragraphs in such year.
Such single percentage shall be the same for every product
in the noncompetitive category.
‘‘§ 3733. Adjustment factor
‘‘(a) DEFINITION OF RATEMAKING CYCLE.—
‘‘(1) IN GENERAL.—For purposes of this title,
the term ‘ratemaking cycle’ means—
‘‘(A) the 5-year period beginning on the
first day of the second year beginning after the
date as of which the baseline rates are deter-
mined under section 3721(e)(2); and
‘‘(B) each 5-year period beginning on the
day after the last day of the immediately pre-
ceding 5-year period under this subsection.
‘‘(2) EARLIER
COMMENCEMENT
DATE.—The
Postal Regulatory Commission may advance the
commencement date of the first ratemaking cycle to
the date which occurs 1 year earlier than the date
that would otherwise apply under subparagraph
(1)(A), but only if that earlier date does not precede
the date as of which all requirements of this section
have been completed with respect to such cycle.
‘‘(b) PROCEDURES FOR DETERMINING ADJUSTMENT
FACTOR.—
‘‘(1) COMMENCEMENT OF PROCEEDINGS.—
‘‘(A) IN GENERAL.—Except as provided in
subparagraph (B), the Postal Regulatory Com-
mission shall, beginning in September of the
second year before the start of each ratemaking
cycle, provide the opportunity for a hearing on
the record under sections 556 and 557 of title
5 to the Postal Service, users of the mails, and
an officer of the Commission who shall be re-
quired to represent the interests of the general
public, with respect to the adjustment factor to
be established for the upcoming ratemaking
cycle.
‘‘(B) EXCEPTION.—For purposes of the
first hearing under this subsection, proceedings
shall be commenced during the second month
beginning on or after the date as of which the
baseline rates are determined under section
3721(e)(2).
‘‘(2) RULES
OF
PROCEEDINGS.—In order to
conduct its proceedings with utmost expedition con-
sistent with procedural fairness to the parties, the
Commission may (without limitation) adopt rules
which provide for—
‘‘(A) the advance submission of written di-
rect testimony;
‘‘(B) the conduct of prehearing conferences
to define issues, and for other purposes to in-
sure orderly and expeditious proceedings;
‘‘(C) discovery both from the Postal Serv-
ice and the parties to the proceedings;
‘‘(D) limitation of testimony; and
‘‘(E) the conduct of the entire proceedings
off the record with the consent of the parties.
‘‘(3) PRINTING AND NOTICE REQUIREMENTS.—
The Commission’s decision and the record of the
Commission’s hearings shall be made generally avail-
able at the time the decision is issued and shall be
printed and made available for sale by the Public
Printer within 10 days following the day the decision
is issued.
‘‘(4) TIMING.—
‘‘(A) IN GENERAL.—Except as provided in
subparagraph (B), all actions required of the
Commission under this section, including those
required under paragraph (3), shall be com-
pleted by the end of the year preceding the
commencement of the ratemaking cycle to
which the decision relates.
‘‘(B) EXCEPTION.—In any case in which
the Commission determines that the Postal
Service has unreasonably delayed any proceed-
ings under this section by failing to respond
within a reasonable time to any lawful order of
the Commission, the Commission may extend
the deadline described in subparagraph (A) by
one day for each day of such delay.
‘‘(C) EFFECT OF DELAY ON RATEMAKING
AUTHORITY.—No rate change for any non-
competitive product may take effect during any
period of delay. For purposes of the preceding
sentence, the term ‘period of delay’ means, in
the circumstance described in subparagraph
(B), the period beginning on the day following
the original deadline (as described in subpara-
graph (A)) and ending on the date of the new
deadline (as determined under subparagraph
(B)).
‘‘(c) REQUIREMENTS RELATING TO THE ESTABLISH-
MENT OF ADJUSTMENT FACTOR.—
‘‘(1) IN GENERAL.—An adjustment factor shall
be established in accordance with—
‘‘(A) the policies of this title; and
‘‘(B) the best evidence of likely Postal
Service productivity, and of specific sources of
cost savings to the Postal Service, during the
ratemaking cycle to which an adjustment factor
is to apply.
‘‘(2) REQUIREMENT THAT ADJUSTMENT FAC-
TOR BE A NEGATIVE VALUE OR ZERO.—
‘‘(A) IN GENERAL.—Except as provided in
subparagraph (B), an adjustment factor may be
no greater than zero.
‘‘(B) EXCEPTIONS.—A positive adjustment
factor may be established only upon a written
determination by the Postal Regulatory Com-
mission that an exception to subparagraph (A)
is necessary—
‘‘(i) because of any new and signifi-
cant statutorily imposed funding obliga-
tions not fully funded through appropria-
tions; or
‘‘(ii) because postal revenues during
the upcoming ratemaking cycle would oth-
erwise be insufficient to enable the Postal
Service, under best practices of honest, ef-
ficient, 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.
A determination under clause (ii) shall take into
account costs anticipated by the Postal Service
for the period of time involved, such as wages,
benefits, and transportation costs, consistent
with the provisions of subsection (g).
‘‘(d) SAME ADJUSTMENT FACTOR TO BE UNI-
FORMLY APPLIED TO ALL PRODUCTS.—For purposes of
each year in a ratemaking cycle, the same adjustment fac-
tor shall apply—
‘‘(1) to all baskets under section 3731; and
‘‘(2) to all products within each such basket.
‘‘(e) HOW AN ADJUSTMENT FACTOR IS TO BE EX-
PRESSED AND APPLIED.—
‘‘(1) HOW AN ADJUSTMENT FACTOR IS TO BE
EXPRESSED.—An 
adjustment 
factor 
established
under this section shall be expressed as a percent-
age.
‘‘(2) HOW AN ADJUSTMENT FACTOR IS TO BE
APPLIED.—To adjust a change in the Consumer
Price Index by an adjustment factor, the magnitude
of the adjustment factor shall—
‘‘(A) if the adjustment factor is a positive
value, be added to the change in the Consumer
Price Index; or
‘‘(B) if the adjustment factor is a negative
value, be subtracted from the change in the
Consumer Price Index.
‘‘(f) EXIGENT CIRCUMSTANCES.—
‘‘(1) IN GENERAL.—Notwithstanding subsection
(d), upon a majority vote of the members of the
Board of Directors then holding office, the Postal
Service may request the Postal Regulatory Commis-
sion to render a decision on changing the adjust-
ment factor to be applied during the then current
ratemaking cycle (after having previously been es-
tablished under this section for such cycle).
‘‘(2) CONDITIONS.—A request made under
paragraph (1) may be granted only upon a written
determination by the Commission that the change
requested is justified by one or more of the same
reasons as would justify the establishment of a posi-
tive adjustment factor (as set forth in subsection
(c)(2)(B)).
‘‘(3) EFFECT; DURATION.—A change granted
under this subsection—
‘‘(A) shall supersede the adjustment factor
that would otherwise apply under this section
(with appropriate changes to the respective lim-
itations under paragraphs (2) and (3) of section
3732(a)); and
‘‘(B) shall remain in effect for the rest of
the ratemaking cycle involved, subject to para-
graph (5).
‘‘(4) EXPEDITED CONSIDERATION.—A request
made under paragraph (1) shall be acted on under
this section in the same manner as if initiated under
subsection (b)(1), except that a decision on any such
request shall be rendered not later than 6 months
after the date on which the request is made.
‘‘(5) FREQUENCY.—Nothing in this section
shall be considered to limit the number of times this
subsection may be invoked during a ratemaking
cycle.
‘‘(g) POSTAL REGULATORY COMMISSION NOT TO
INTERFERE WITH COLLECTIVE BARGAINING.—It is the
sense of the Congress that nothing in this section should
restrict, expand, or otherwise affect any of the rights,
privileges, or benefits of either employees of the United
States Postal Service, or labor organizations representing
employees of the United States Postal Service, under
chapter 12 of this title, the National Labor Relations Act,
any handbook or manual affecting employee labor rela-
tions within the United States Postal Service, or any col-
lective bargaining agreement.
‘‘§ 3734. Action of the Board
‘‘(a) AUTHORITY
TO
ESTABLISH
RATES.—The
Board of Directors, with the written concurrence of a ma-
jority of all of the members of the Board then holding
office, shall establish rates for products in the noncompeti-
tive category of mail in accordance with the requirements
of this subchapter and the policies of this title.
‘‘(b) PROCEDURES.—
‘‘(1) IN GENERAL.—Rates shall be established
in writing, complete with a statement of explanation
and justification.
‘‘(2) PUBLICATION.—The Board shall cause
each such decision (complete with the accompanying
statement) and the record of the Board’s proceed-
ings to be published in the Federal Register at least
45 days before the rate or rates to which they per-
tain are to take effect.
‘‘(c) LIMITATIONS ON AUTHORITY.—
‘‘(1) IN GENERAL.—Except as provided in para-
graph (2)—
‘‘(A) FREQUENCY.—Ratemaking authority
under this section may not be exercised more
than once for purposes of any year.
‘‘(B) UNIFORM
EFFECTIVE
DATE.—All
changes in rates pursuant to this section in a
year shall take effect on the same date.
‘‘(2) EXCEPTION
FOR
CHANGE
DUE
TO
EXI-
GENT CIRCUMSTANCES.—
‘‘(A) IN GENERAL.—If the maximum rate
allowable for a product in a year changes pur-
suant to a request granted under section
3733(f), then, in the event that ratemaking au-
thority under this section was previously exer-
cised with respect to such product for such
year, such rate may be modified, not more than
once more in such year, based on the change in
the maximum rate allowable (and the cor-
responding change in the range allowable).
‘‘(B) UNIFORM
EFFECTIVE
DATE.—All
changes in rates pursuant to this paragraph
shall, to the extent based on the same set of
changes (as referred to in subparagraph (A)),
take effect beginning on the same date.
‘‘SUBCHAPTER IV—RATES FOR PRODUCTS IN
THE COMPETITIVE CATEGORY OF MAIL
‘‘§ 3741. Applicability; definition
‘‘(a) APPLICABILITY.—This subchapter applies with
respect to—
‘‘(1) priority mail;
‘‘(2) expedited mail;
‘‘(3) mailgrams;
‘‘(4) international mail; and
‘‘(5) parcel post;
except that this subchapter does not apply with respect
to any product then currently in the noncompetitive cat-
egory of mail.
‘‘(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.
‘‘(c) RULE OF CONSTRUCTION.—
‘‘(1) IN GENERAL.—Except as provided in para-
graph (2), mail matter referred to in paragraphs (1)
through (5) of subsection (a) shall, for purposes of
such paragraphs, be considered to have the respec-
tive meanings given them under the mail classifica-
tion schedule (as defined by section 3623) as of the
effective date of this chapter.
‘‘(2) UPDATES.—The Postal Regulatory Com-
mission shall, whenever any relevant change occurs
(whether pursuant to a product transfer under sec-
tion 3764 or an action taken under section 3763),
prescribe new lists of the products to which this sub-
chapter applies. The revised lists shall indicate how
and when any previous lists (including under sub-
section (a)) are superseded, and shall be published
in the Federal Register.
‘‘§ 3742. Action of the Board
‘‘(a) AUTHORITY
TO
ESTABLISH
RATES.—The
Board of Directors, with the written concurrence of a ma-
jority of all of the members of the Board then holding
office, shall establish rates for products in the competitive
category of mail in accordance with the requirements of
this subchapter and the policies of this title.
‘‘(b) PROCEDURES.—Section 3734(b) shall apply
with respect to rates and decisions under this section, ex-
cept that for purposes of this section, section 3734(b) shall
be applied by substituting ‘by such date before the effec-
tive date of any new rates as the Board considers appro-
priate’ for ‘at least 45 days before the rate or rates to
which they pertain are to take effect’.
‘‘(c) EFFECTIVE DATE.—
‘‘(1) IN GENERAL.—Except as provided in para-
graph (2), the ratemaking provisions of this sub-
chapter shall be effective beginning with the rates to
be established for the first year beginning on or
after the date as of which the baseline rates are de-
termined under section 3721(e)(2).
‘‘(2) EXCEPTION.—The ratemaking provisions
of this subchapter shall, with respect to all inter-
national mail as to which this subchapter applies, be
effective beginning on the date as of which the base-
line rates are determined under section 3721(e)(2),
subject (until the entirety of this subchapter be-
comes effective in accordance with paragraph (1))
only to the requirement under section 3743(a).
‘‘§ 3743. Provisions applicable to competitive prod-
ucts individually
‘‘(a) IN GENERAL.—Rates for products in the com-
petitive category of mail shall be established in a manner
such that each such product shall bear the costs attrib-
utable to such product in such year.
‘‘(b) TREATMENT OF SHORTFALLS.—If revenues de-
rived from a competitive product in any year are not suffi-
cient to meet the costs attributable to such product for
such year, the shortfall shall be made up in accordance
with section 3744(c)(1).
‘‘(c) MANDATORY DISCONTINUANCE OF LOSS-MAK-
ING PRODUCTS.—
‘‘(1) IN
GENERAL.—If a competitive product
persistently fails to cover the costs attributable to
such product, the Postal Regulatory Commission
may, in accordance with procedures which the Com-
mission shall prescribe and after considering all rel-
evant circumstances, order the Postal Service to dis-
continue such product permanently.
‘‘(2) PROCEDURES.—The procedures prescribed
to carry out this subsection—
‘‘(A) shall provide the opportunity for a
hearing on the record under sections 556 and
557 of title 5 to the Postal Service, users of the
mail, and an officer of the Commission who
shall be required to represent the interests of
the general public;
‘‘(B) may include rules of proceedings that
provide for any procedure or other matter listed
under section 3733(b)(2); and
‘‘(C) shall require that any final decision
be accompanied by a statement setting forth
the reasons therefor.
‘‘§ 3744. Provisions applicable to competitive prod-
ucts collectively
‘‘(a) COST-COVERAGE REQUIREMENT.—
‘‘(1) IN GENERAL.—Rates for competitive prod-
ucts shall be established in a manner such that the
cost-coverage ratio for all competitive products (col-
lectively) shall, for each year to which this sub-
chapter applies (as referred to in section 3742(c)),
be at least equal to the cost-coverage ratio for such
year for all competitive and noncompetitive products
(collectively).
‘‘(2) COST-COVERAGE RATIO.—For purposes of
this section, the term ‘cost-coverage ratio’ means,
for the products and year involved, the ratio that—
‘‘(A) total revenues from those products in
such year, bears to
‘‘(B) total costs attributable to those prod-
ucts in such year.
‘‘(b) ADJUSTMENT FOR SPECIAL CIRCUMSTANCES.—
The Postal Regulatory Commission may, by rule, and in
order to ensure that ratios under this section appro-
priately compensate for any significant and objective dif-
ferences in the nature and composition of costs attrib-
utable to competitive and noncompetitive products, respec-
tively, provide for the exclusion of such costs attributable
as the Commission considers to be uniquely or dispropor-
tionately associated with either category of products.
‘‘(c) SPECIAL RULES TO MAKE UP FOR CERTAIN
SHORTFALLS.—
‘‘(1) SUBTRACTION
TO
MAKE
UP
FOR
ANY
SHORTFALL
DESCRIBED
IN
SECTION
3743(b).—In
any year in which a shortfall described in section
3743(b) occurs in the case of any competitive prod-
uct, an amount equal to the amount of such shortfall
shall, for purposes of determining whether the re-
quirement under subsection (a) has been satisfied in
such year, be subtracted from total revenues derived
from all competitive products (collectively) in such
year. Nothing in the preceding sentence shall be con-
sidered to permit or require that the same amount
be concurrently subtracted from total revenues de-
rived from competitive and noncompetitive products
(collectively).
‘‘(2) SUBTRACTION
TO
MAKE
UP
FOR
ANY
SHORTFALL IN CONTRIBUTIONS TOWARD INSTITU-
TIONAL COSTS IN A PREVIOUS YEAR.—If, in any
year, the requirement under subsection (a) is not
met (determined applying the provisions of sub-
section (b), paragraph (1), and this paragraph based
on any failure to satisfy subsection (a) in the pre-
vious year), the difference between the total revenues
considered to have been derived from competitive
products in the year involved (determined applying
such provisions), and the minimum amount of total
revenues from competitive products which would
have been required in order to satisfy subsection (a)
(determined applying such provisions), shall, for pur-
poses of determining whether the requirement under
subsection (a) is met in the following year, be sub-
tracted from total revenues derived from competitive
products (collectively) in such following year. Noth-
ing in the preceding sentence shall be considered to
permit or require that the same amount be concur-
rently subtracted from total revenues derived from
competitive and noncompetitive products (collec-
tively).
‘‘(d) PHASEIN AUTHORITY.—If necessary in order to
afford the Postal Service an opportunity to increase effi-
ciency to competitive market levels, the Postal Regulatory
Commission may, by written determination made as part
of its first adjustment factor case under section 3733, pro-
vide for the phasein of subsection (a) over the course of
the first ratemaking cycle. If the Commission grants relief
under this subsection, it shall review the continuing need
for and the extent of such relief annually.
‘‘SUBCHAPTER V—MARKET TESTS OF
EXPERIMENTAL PRODUCTS
‘‘§ 3751. Market tests of experimental noncompetitive
products
‘‘(a) AUTHORITY.—
‘‘(1) IN
GENERAL.—The Postal Service may
conduct market tests of experimental noncompetitive
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 section 3623 (relating
to mail classification), section 3732 (relating to limi-
tations on rates), or section 3762 (relating to new
noncompetitive products).
‘‘(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 mail users,
significantly different from all products offered by
the Postal Service within the 2-year period preceding
the start of the test.
‘‘(2) DOLLAR-AMOUNT LIMITATION.—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 section 3754.
‘‘(3) MARKET DISRUPTION.—The introduction
or continued offering of the product will not cause
unreasonable market disruption (either for competi-
tive or noncompetitive products).
‘‘(4) CORRECT CATEGORIZATION.—The testing
of the product under this section is consistent with
the criteria under section 3761(b)(2).
‘‘(c) NOTICE.—At least 30 days before initiating a
market test under this section, the Postal Service shall
file with the Postal Regulatory Commission and publish
in the Federal Register a notice setting out the basis for
the Postal Service’s determination that the market test is
covered by this section and describing the nature and
scope of the market test.
‘‘(d) DURATION.—
‘‘(1) IN GENERAL.—A market test of a product
under this section may be conducted over a period
of not to exceed 24 months.
‘‘(2) EXTENSION AUTHORITY.—If necessary in
order to determine the feasibility or desirability of a
product being tested under this section, the Postal
Regulatory Commission may, upon written applica-
tion of the Postal Service (filed not later than 60
days before the date as of which the testing of such
product would otherwise be scheduled to terminate
under paragraph (1)), extend the testing of such
product for not to exceed an additional 12 months.
‘‘(e) CANCELLATION.—If the Postal Regulatory Com-
mission at any time determines that a market test under
this section fails, with respect to any particular product,
to meet one or more of the conditions set forth in sub-
section (b), it may issue any order that would be allowable
under section 3662(c)(6). A determination under this sub-
section shall be made in accordance with such procedures
as the Commission shall by regulation prescribe.
‘‘§ 3752. Market tests of experimental competitive
products
‘‘(a) AUTHORITY.—
‘‘(1) IN
GENERAL.—The Postal Service may
conduct market tests of experimental competitive
products in accordance with this section.
‘‘(2) PROVISIONS WAIVED.—Any noncompliance
with section 3743(a) (relating to costs-attributable
requirement) on the part of a product shall not, if
it occurs while such product is being tested under
this section, be taken into account for purposes of
any sanction or other action that might otherwise be
permitted or required under any of the following:
‘‘(A) Section 3662(c)(3) (relating to order-
ing the adjustment of rates to lawful levels pur-
suant to a rate complaint).
‘‘(B) Section 3743(c) (relating to manda-
tory discontinuance of loss-making products).
‘‘(C) Section 3773(e) (relating to use of
profits).
‘‘(3) PROVISIONS
NOT
WAIVED.—Nothing in
this section shall be considered to permit or require
the exclusion of any costs or revenues that are at-
tributable to a product that is being tested under
this section from any determination under section
3744 (relating to provisions applicable to competitive
products collectively).
‘‘(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 mail users,
significantly different from all products offered by
the Postal Service within the 2-year period preceding
the start of the test.
‘‘(2) DOLLAR-AMOUNT LIMITATION.—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 section 3754.
‘‘(3) MARKET DISRUPTION.—The introduction
or continued offering of the product will not cause
unreasonable market disruption (either for competi-
tive or noncompetitive products).
‘‘(4) CORRECT CATEGORIZATION.—The testing
of the product under this section is consistent with
the criteria under section 3761(b)(2).
‘‘(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 notice
setting out the basis for the Postal Service’s deter-
mination that the market test is covered by this sec-
tion and describing the nature and scope of the mar-
ket test.
‘‘(2) SAFEGUARDS.—The provisions of section
3604(g) shall be available with respect to any infor-
mation 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 3604(g)(1).
Nothing in paragraph (1) shall be considered to per-
mit or require the publication of any information as
to which confidential treatment is accorded under
the preceding sentence (subject to the same excep-
tion as set forth in section 3604(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 determine the feasibility or desirability of a
product being tested under this section, the Postal
Regulatory Commission may, upon written applica-
tion of the Postal Service (filed not later than 60
days before the date as of which the testing of such
product would otherwise be scheduled to terminate
under paragraph (1)), extend the testing of such
product for not to exceed an additional 12 months.
‘‘(e) CANCELLATION.—If the Postal Regulatory Com-
mission at any time determines that a market test under
this section fails, with respect to any particular product,
to meet one or more of the conditions set forth in sub-
section (b), it may issue any order that would be allowable
under section 3662(c)(6). A determination under this sub-
section shall be made in accordance with such procedures
as the Commission shall by regulation prescribe.
‘‘§ 3753. Large-scale market tests
‘‘(a) AUTHORITY.—The Postal Service may, in ac-
cordance with this section, conduct—
‘‘(1) market tests involving any experimental
noncompetitive product that would be allowable
under section 3751 but for subsection (b)(2) thereof;
and
‘‘(2) market tests involving any experimental
competitive product that would be allowable under
section 3752 but for subsection (b)(2) thereof.
‘‘(b) CONDITION.—Notwithstanding any other provi-
sion of this section, a product may not be tested under
this section unless the total revenues that are anticipated,
or in fact received, by the Postal Service from such prod-
uct do not exceed $100,000,000 in any year, subject to
section 3754.
‘‘(c) PROVISIONS WAIVED.—Section 3751(a)(2) shall
apply with respect to an experimental noncompetitive
product being tested under this section, and section
3752(a)(2) shall apply with respect to an experimental
competitive product being tested under this section, as if
such test were instead being conducted section 3751 or
3752, as the case may be.
‘‘(d) REGULATIONS.—The Postal Regulatory Com-
mission shall by regulation establish rules for the conduct
of market tests under this section, including rules for the
termination of any such test. In adopting rules under this
subsection, the Commission shall consider such matters
as—
‘‘(1) the Postal Service’s interest in the develop-
ment and testing of new products with a minimum
of regulatory impediments; and
‘‘(2) the public interest in preventing unfair or
disruptive competition.
‘‘(e) DURATION.—
‘‘(1) IN GENERAL.—A market test of a product
under this section may be conducted over a period
of not to exceed 24 months.
‘‘(2) EXTENSION AUTHORITY.—If necessary in
order to determine the feasibility or desirability of a
product being tested under this section, the Postal
Regulatory Commission may, upon written applica-
tion of the Postal Service (filed not later than 60
days before the date as of which the testing of such
product would otherwise be scheduled to terminate
under paragraph (1)), extend the testing of such
product for not to exceed an additional 12 months.
‘‘§ 3754. Adjustment for inflation
‘‘In the case of a year following the first year in which
any testing under this subchapter is permitted, the dollar
amount contained in sections 3751(b)(2), 3752(b)(2), and
3753(b), respectively, shall be adjusted at the same time
and by the same percentage adjustment as the maximum
rates allowable for noncompetitive products are adjusted
pursuant to 3732(c) (but deeming the adjustment factor
under paragraph (2)(B) thereof to be zero for purposes
of this section).
‘‘§ 3755. Conversion to permanence
‘‘A request to have an experimental product under
this chapter converted to a permanent one—
‘‘(1) shall be made and acted on in conformance
with applicable provisions of subchapter VI; and
‘‘(2) shall be made by the Postal Service.
‘‘§ 3756. Effective date
‘‘Market tests under this subchapter may be con-
ducted in any year beginning with the first year beginning
on or after the date as of which the baseline rates are
determined under section 3721(e)(2).
‘‘SUBCHAPTER VI—PROVISIONS RELATING TO
THE INTRODUCTION AND CATEGORIZATION
OF PRODUCTS
‘‘§ 3761. Criteria for the identification of noncompeti-
tive and competitive products
‘‘(a) IN GENERAL.—Except as provided in sub-
chapter V, no product may be offered until such product
has been assigned to the noncompetitive or competitive
category of mail, whichever is appropriate (and, if a non-
competitive product, its proper basket).
‘‘(b) CRITERIA.—
‘‘(1) IN GENERAL.—Determinations as to the
category of mail to which any particular product
should be assigned (whether in connection with a
new product under section 3762 or 3763, the pro-
posed transfer of a product under section 3764, or
the proposed reclassification of an existing product
under subchapter II of chapter 36) shall be made in
conformance with paragraph (2).
‘‘(2) CHARACTERISTICS
BY
CATEGORY.—The
noncompetitive category of products shall embrace
all products in the sale of which the Postal Service
exercises sufficient market power that it can effec-
tively set the price of such product substantially
above costs or raise prices significantly without risk
of losing business to other firms offering similar
products, or that it can effectively set the price
below competitive costs to forestall entry by new
competitors or to eliminate existing competitors. The
competitive category of products shall embrace all
other products.
‘‘(c) INITIAL AND UPDATED LISTS.—The respective
products which, as of any particular date, are within the
noncompetitive or competitive category of mail (and any
particular basket, if applicable) shall be as identified
under sections 3731 and 3741.
‘‘§ 3762. New noncompetitive products
‘‘(a) REQUEST.—The Postal Service—
‘‘(1) may from time to time request that the
Postal Regulatory Commission submit a rec-
ommended decision on the classification for a new
noncompetitive product; and
‘‘(2) shall, as part of any request made under
paragraph (1) (other than in the case of a trans-
ferred product), also request a recommended deci-
sion on the baseline rate for such product for pur-
poses of section 3765.
‘‘(b) HEARINGS.—In response to any request made
by the Postal Service under this section, the Postal Regu-
latory Commission shall promptly initiate a proceeding in
accordance with the procedures set out in section 3624.
‘‘(c) FACTORS AND RECOMMENDED DECISION.—The
Postal Regulatory Commission shall make a recommended
decision on (1) the baseline rate for the new product based
on the factors set out in section 3622(b), and (2) the clas-
sification for the new product based on the factors and
requirements under section 3623(b). Such recommended
decision shall be submitted to the Directors for action in
accordance with section 3625, and subject to review in ac-
cordance with section 3628(a).
‘‘§ 3763. New competitive products
‘‘(a) AUTHORITY.—The Postal Service may, in ac-
cordance with this section, offer a new competitive product
and, with respect to competitive products only, otherwise
make changes in the mail classification schedule.
‘‘(b) CONDITIONS.—An action under this section may
not be taken unless it satisfies each of the following:
‘‘(1) CRITERIA.—To the extent that the classi-
fication of a product is involved, the action would be
consistent 
with 
the 
criteria 
under 
section
3761(b)(2).
‘‘(2) COSTS
ATTRIBUTABLE.—To the extent
that the establishment of a rate for a competitive
product is involved, the requirement under section
3743(a) would be met.
‘‘(c) NOTICE.—
‘‘(1) IN GENERAL.—At least 30 days before it
offers a new competitive product or otherwise makes
any change in the mail classification schedule under
this section, the Postal Service shall file with the
Postal Regulatory Commission and publish in the
Federal Register a notice setting out the basis for
the Postal Service’s determination that the product
satisfies each of the conditions under subsection (b).
‘‘(2) SAFEGUARDS.—The provisions of section
3604(g) shall be available with respect to any infor-
mation 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 3604(g)(1).
Nothing in paragraph (1) shall be considered to per-
mit or require the publication of any information as
to which confidential treatment is accorded under
the preceding sentence (subject to the same excep-
tion as set forth in section 3604(g)(3)).
‘‘(d) CANCELLATION.—If the Postal Regulatory
Commission determines that an action proposed to be
taken under this section fails to meet either of the condi-
tions set forth in subsection (b), the Commission shall, be-
fore the proposed action is scheduled to be taken or to
commence (as applicable), order that the proposed action
be canceled. A determination under this subsection shall
be made in accordance with such procedures as the Com-
mission shall by regulation prescribe.
‘‘§ 3764. Transfers of products between categories of
mail
‘‘(a) IN GENERAL.—Upon request of the Postal Serv-
ice or users of the mails, or upon its own initiative, the
Postal Regulatory Commission may, after proceedings
conducted in conformity with subsection (d), transfer 1
or more products—
‘‘(1) from the noncompetitive category of mail
to the competitive category of mail; or
‘‘(2) from the competitive category of mail to
the noncompetitive category of mail.
‘‘(b) CRITERIA.—
‘‘(1) IN GENERAL.—A decision under this sec-
tion shall be made in accordance with the policies of
this title and the criteria set forth in section
3761(b)(2).
‘‘(2) EXCLUSION OF PRODUCTS COVERED BY
POSTAL MONOPOLY.—A product covered by the post-
al monopoly shall not be subject to transfer under
this section from the noncompetitive category of
mail. For purposes of the preceding sentence, the
term ‘product covered by the postal monopoly’
means any product the conveyance or transmission
of which, under section 1696 of title 18, is reserved
to the United States, subject to the same exception
as set forth in the last sentence of section 409(d)(1).
‘‘(3) ADDITIONAL CONSIDERATIONS.—In mak-
ing any decision under this section, due regard shall
be given to—
‘‘(A) the availability and nature of enter-
prises in the private sector engaged in the deliv-
ery of the product involved; and
‘‘(B) the views of those who use the prod-
uct involved on the appropriateness of the pro-
posed action.
‘‘(c) TRANSFERS OF SUBCLASSES AND OTHER SUB-
ORDINATE OR FURTHER SUBORDINATE UNITS ALLOW-
ABLE.—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 or further subordi-
nate units of the class of mail or type of postal service
involved.
‘‘(d) REQUIREMENTS.—Proceedings required to be
conducted in accordance with this subsection—
‘‘(1) shall provide the opportunity for a hearing
on the record under sections 556 and 557 of title 5
to the Postal Service, users of the mail, and an offi-
cer of the Postal Regulatory Commission who shall
be required to represent the interests of the general
public;
‘‘(2) may include rules of proceedings that pro-
vide for any procedure or other matter listed under
section 3733(b)(2); and
‘‘(3) shall require that any final decision be ac-
companied by a statement setting forth the reasons
therefor.
Paragraph (3) of section 3733(b) (relating to printing and
notice requirements) shall apply with respect to each Com-
mission decision and related record of Commission hear-
ings under this section.
‘‘§ 3765. Transition provisions for new or transferred
noncompetitive products
‘‘(a) IN GENERAL.—In the case of a product that be-
comes assigned to the noncompetitive category of mail
under section 3762 or that is transferred from the com-
petitive to the noncompetitive category of mail under sec-
tion 3764—
‘‘(1) the maximum rate initially allowable for
such product after that assignment or transfer shall
be determined in accordance with subsection (b);
and
‘‘(2) the initial range allowable for such product
after that assignment or transfer shall be deter-
mined in accordance with subsection (c).
‘‘(b) MAXIMUM RATE INITIALLY ALLOWABLE.—The
maximum rate allowable during the first year in which a
product subject to this subsection is offered shall be deter-
mined in a manner similar to the special rule under section
3732(c)(4), subject to the following:
‘‘(1) TRANSFERRED PRODUCTS.—In the case of
any product that becomes a noncompetitive product
pursuant to a transfer under section 3764, the rate
last in effect for such product (before the effective
date of its transfer) shall be treated as its ‘baseline
rate’.
‘‘(2) OTHER PRODUCTS.—In the case of any
product assigned to the noncompetitive category of
mail pursuant to section 3762, the ‘baseline rate’ for
such product shall be determined under subchapter
II of chapter 36 pursuant to the request made under
section 3762(a)(2) with respect thereto.
(c) RANGE INITIALLY ALLOWABLE.—The range al-
lowable during the first year in which a product subject
to this subsection is offered shall be determined in accord-
ance with section 3732(d), deeming the rate determined
for such product under subsection (b) of this section to
be the rate specified by paragraphs (1)(A) and (2)(A) of
section 3732(d).
‘‘SUBCHAPTER VII—REPORTING
REQUIREMENTS AND RELATED PROVISIONS
‘‘§ 3771. Annual reports by the Commission
‘‘(a) IN GENERAL.—The Postal Regulatory Commis-
sion shall render an annual report to the President and
the Congress concerning the operations of the Commission
under this title.
‘‘(b) ADDITIONAL INFORMATION.—In addition to the
information required under subsection (a), each report
under this section shall also include, with respect to the
period covered by such report, an estimate of the costs
incurred by the Postal Service in providing—
‘‘(1) postal services to areas of the Nation
where, in the judgment of the Postal Regulatory
Commission, the Postal Service either would not
provide services at all or would not provide such
services in accordance with the requirements of this
title if the Postal Service were not required to pro-
vide prompt, reliable, and efficient services to pa-
trons in all areas and all communities, including as
required under the first sentence of section 101(b);
‘‘(2) free or reduced rates for postal services as
required by this title; and
‘‘(3) other public services or activities which, in
the judgment of the Postal Regulatory Commission,
would not otherwise have been provided by the Post-
al Service but for the requirements of law.
The Commission shall detail the bases for its estimates
and the statutory requirements giving rise to the costs
identified in each report under this section.
‘‘(c) INFORMATION FROM POSTAL SERVICE.—The
Postal Service shall provide the Postal Regulatory Com-
mission with such information as may, in the judgment
of the Commission, be necessary in order for the Commis-
sion to prepare its reports under this section.
‘‘§ 3772. Annual reports to the Commission
‘‘(a) COSTS, REVENUES, AND RATES.—
‘‘(1) IN GENERAL.—Except as provided in sub-
section (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 (to-
gether with such nonpublic annex thereto as the
Commission may require under subsection (e)) ana-
lyzing costs, revenues, and rates in sufficient detail
to demonstrate that the rates in effect for all prod-
ucts during such year (including, for purposes of
section 3744, rates for all competitive products col-
lectively) complied with all applicable requirements
of this title.
‘‘(2) AUDITING REQUIREMENT.—Before submit-
ting a report (and any annex thereto) under para-
graph (1), the Postal Service shall have the informa-
tion contained in such report (and annex) audited by
the Inspector General. The results of any such audit
shall be submitted along with the report to which it
pertains.
‘‘(b) QUALITY OF SERVICES.—Except as provided in
subsection (c), the Postal Service shall, no later than 90
days after the end of each year, prepare and submit to
the Postal Regulatory Commission a report (together with
such nonpublic annex thereto as the Commission may re-
quire under subsection (e)) which shall, for each non-
competitive product provided in such year, provide—
‘‘(1) market information, including mail vol-
umes; and
‘‘(2) measures of the speed and reliability of
postal service, including—
‘‘(A) the service standard applicable to
such product;
‘‘(B) the actual level of service (described
in terms of speed of delivery and reliability)
provided; and
‘‘(C) the degree of customer satisfaction
with the service provided.
‘‘(c) MARKET TESTS.—In carrying out subsections
(a) and (b) with respect to experimental products offered
through market tests under subchapter V in a year—
‘‘(1) the Postal Service may, to the extent that
a test under section 3751 or 3752 is involved, report
summary data on the costs, revenues, and quality of
service by market test; and
‘‘(2) the Postal Service shall, to the extent that
a test under section 3753 is involved, report such
data as the Postal Regulatory Commission requires.
‘‘(d) SUPPORTING MATTER.—The Postal Regulatory
Commission shall have access, in accordance with such
regulations as the Commission shall prescribe, to the
working papers and any other supporting matter of the
Postal Service and the Inspector General in connection
with any information submitted under this section.
‘‘(e) CONTENT AND FORM OF REPORTS.—
‘‘(1) IN
GENERAL.—The Postal Regulatory
Commission shall, by regulation, prescribe the con-
tent and form of the public reports (and any non-
public annex and supporting matter relating thereto)
to be provided by the Postal Service under this sec-
tion. In carrying out this subsection, the Commis-
sion shall give due consideration to—
‘‘(A) providing the public with adequate in-
formation to assess the lawfulness of rates
charged;
‘‘(B) avoiding unnecessary or unwarranted
administrative effort and expense on the part of
the Postal Service; and
‘‘(C) protecting the confidentiality of com-
mercially sensitive information.
‘‘(2) REVISED REQUIREMENTS.—The Commis-
sion may, on its own motion or on request of an in-
terested party, initiate proceedings (to be conducted
in accordance with regulations that the Commission
shall prescribe) to improve the quality, accuracy, or
completeness of postal service data required by the
Commission under this subsection whenever it shall
appear that—
‘‘(A) the attribution of costs or revenues to
postal products has become significantly inac-
curate or can be significantly improved;
‘‘(B) the quality of service data has be-
come significantly inaccurate or can be signifi-
cantly improved; or
‘‘(C) such revisions are, in the judgment of
the Commission, otherwise necessitated by the
public interest.
‘‘(f) CONFIDENTIAL INFORMATION.—
‘‘(1) IN GENERAL.—If the Postal Service deter-
mines that any document or portion of a document,
or other matter, which it provides to the Postal Reg-
ulatory Commission in a nonpublic annex under this
section or pursuant to subsection (d) contains infor-
mation which is described in section 410(c) of this
title, or exempt from public disclosure under section
552(b) of title 5, the Postal Service shall, at the
time of providing such matter to the Commission,
notify the Commission of its determination, in writ-
ing, and describe with particularity the documents
(or portions of documents) or other matter for which
confidentiality is sought and the reasons therefor.
‘‘(2) TREATMENT.—Any information or other
matter described in paragraph (1) to which the
‘‘(b) OPPORTUNITY FOR PUBLIC COMMENT.—After
receiving the reports required under section 3772 for any
year, the Postal Regulatory Commission shall promptly
provide an opportunity for comment on such reports by
users of the mails, affected parties, and an officer of the
Commission who shall be required to represent the inter-
ests of the general public.
‘‘(c) DETERMINATION OF COMPLIANCE.—Not later
than 90 days after receiving the submissions required
under section 3772 with respect to a year, the Postal Reg-
ulatory Commission shall make a written determination as
to whether—
‘‘(1) any rates or fees in effect during such year
(for products individually or collectively) were not in
compliance with applicable provisions of this title;
‘‘(2) any performance goals established under
section 2803 or 2804 for such year were not met;
and
‘‘(3) any noncompetitive product failed to meet
any service standard during such year.
‘‘(d) IF NO NONCOMPLIANCE IS FOUND.—If, for a
year, no instance of noncompliance is determined under
subsection (c) (or no determination under subsection (c)
is timely made), then, up to 100 percent of the profits
attributable to such year (if any) may be used by the Post-
al Service for the purposes described in subsection (f).
‘‘(e) IF ANY NONCOMPLIANCE IS FOUND.—If, for a
year, a timely determination of noncompliance is made
under subsection (c)—
‘‘(1)(A) the Postal Regulatory Commission may
order, based on the nature, circumstances, extent,
and seriousness of the noncompliance, that a specific
percentage (not to exceed 50 percent) of the profits
attributable to such year (if any) be set aside for the
purposes described in subsection (g); and
‘‘(B) the remainder (or any portion) of those
profits may be used by the Postal Service for the
purposes described in subsection (f); and
‘‘(2) the Commission may, in the case of any
violation as to which a remedy could be ordered by
the Commission under section 3662(c), order any
such remedy under this section.
‘‘(f) BONUSES.—
‘‘(1) IN GENERAL.—The Postal Service shall es-
tablish a program under which cash bonuses may be
paid to officers and employees of the Postal Service
out of any profits which are available for that pur-
pose.
‘‘(2) REQUIREMENTS.—Under the program—
‘‘(A) bonuses may be paid to officers and
employees of the Postal Service under criteria
which shall be fair and equitable;
‘‘(B) the sole source of funding shall be
any profits from any year, subject to the appli-
cation of subsection (e)(1) with respect to such
year; and
‘‘(C) bonuses shall not be precluded (in
whole or in part) by the limitation on com-
pensation under the last sentence of section
1003(a) in a year, if—
‘‘(i) total profits attributable to the
preceding year, exceed
‘‘(ii) the amount equal to 1 percent of
total revenues of the Postal Service attrib-
utable to such preceding year.
‘‘(3) DISCRETIONARY NATURE OF PROGRAM.—
Nothing in this section shall be considered to create
any entitlement to receive bonuses or to require that
any portion of the profits from any year be used for
bonuses in excess of whatever amount the Postal
Service, in its sole discretion, considers appropriate.
‘‘(4) CONSIDERATIONS RELATING TO THE POR-
TION
OF
PROFITS
TO
BE
AVAILABLE
FOR
BO-
NUSES.—In any decision relating to what portion of
the available profits from any year shall be made
available or used for bonuses under this subsection,
there shall be taken into consideration—
‘‘(A) the obligation on the part of the
Postal Service to provide efficient and economi-
cal postal services in accordance with this title;
and
‘‘(B) the question of what portion of those
profits (if any) should be used—
‘‘(i) to retire debts or other obliga-
tions of the Postal Service;
‘‘(ii) to limit future increases in postal
rates or fees for products in the non-
competitive category of mail; or
‘‘(iii) to carry out any other purpose.
‘‘(g) DEDICATION OF FUNDS TOWARD REDUCING
RATES AND FEES.—
‘‘(1) IN GENERAL.—Any amounts ordered to be
set aside under subsection (e)(1)(A) may not be
used for any purpose other than to defray increases
in future rates and fees for products in the non-
competitive category of mail or to reduce the rates
and fees already in effect for such products.
‘‘(2) COMPLIANCE.—Whenever an order under
paragraph (1)(A) or (2) of subsection (e) is issued,
the Postal Service shall include in its next com-
prehensive statement under section 2401(e) (and
each subsequent statement thereunder until such
order has been fully complied with) a statement as
to—
‘‘(A) what measures have been or will be
implemented in order to comply with the order,
including the schedule in accordance with which
any amounts set aside pursuant to an order
issued under subsection (e)(1)(A) shall be used
or made available for the purposes described in
paragraph (1); and
‘‘(B) if (or to the extent that) an order
under subsection (e)(1)(A) is involved—
‘‘(i) the amount of savings actually
passed on to mailers during the reporting
period (whether through reduced rates and
fees or otherwise), as compared to the
amount of savings scheduled to have been
passed on to mailers during such period;
and
‘‘(ii) to the extent that the amount of
savings actually passed on to mailers is
less than the amount scheduled to have
been passed on to mailers during a report-
ing period, what measures (if any) have
been or will be implemented to reconcile
the difference.
‘‘(3) NONREDUNDANT INFORMATION.—Nothing
in paragraph (2) shall be considered to require that
the same information be reported if included in a
previous report under this subsection.
‘‘(h) REPORTING REQUIREMENT RELATING TO BO-
NUSES.—Included in its comprehensive statement under
section 2401(e) for any period shall be—
‘‘(1) the name of each person receiving a bonus
during such period which would not have been allow-
able but for the provisions of subsection (f)(2)(C);
‘‘(2) the amount of the bonus; and
‘‘(3) the amount by which the limitation re-
ferred to in subsection (f)(2)(C) was exceeded as a
result of such bonus.
‘‘§ 3774. Other reports
‘‘The Postal Regulatory Commission shall, at least
every 6 years, render a report to the President and the
Congress concerning—
‘‘(1) the operation of the system consisting of
chapter 36 and this chapter; and
‘‘(2) recommendations for any legislation or
other measures necessary to improve the effective-
ness or efficiency of that system.’’.
(b) CLERICAL AMENDMENT.—The table of chapters
for part IV of title 39, United States Code, is amended
by adding at the end the following:
‘‘37. New System for Establishing Postal Rates, Classes,
and Services ............................................................. 3701’’.
SEC. 202. AMENDMENTS TO CHAPTER 36.
(a) AUTHORITY TO FIX RATES AND CLASSES.—Sec-
tion 3621 of title 39, United States Code, is amended—
(1) in the first sentence by striking ‘‘this chap-
ter’’ and inserting ‘‘this chapter and chapter 37’’;
and
(2) by repealing the last 2 sentences.
(b) RATES AND FEES.—
(1) IN GENERAL.—The first sentence of section
3622(a) of title 39, United States Code, is amended
to read as follows: ‘‘Whenever necessary in order to
provide for the establishment of any baseline rate
needed for purposes of section 3762(a) (relating to
certain new noncompetitive products), the Postal
Service shall request the Postal Regulatory Commis-
sion to submit a recommended decision on changes
in a rate or rates of postage or in a fee or fees for
postal services in accordance with the policies of this
title and applicable provisions of chapter 37.’’.
(2) CONFORMING AMENDMENTS.—Such section
3622(a) is further amended—
(A) by striking ‘‘(a)’’ and inserting
‘‘(a)(1)’’; and
(B) by adding at the end the following:
‘‘(2) A request under this subsection may not be sub-
mitted except in the circumstance described in paragraph
(1).’’.
(c) MAIL CLASSIFICATION.—
(1) REPEAL.—Section 3623 of title 39, United
States Code, is amended by striking subsection (a)
and by redesignating subsections (b) through (d) as
subsections (a) through (c), respectively.
(2) MODIFIED AUTHORITY.—Subsection (a) of
section 3623 of title 39, United States Code, as so
redesignated by paragraph (1), is amended to read
as follows:
‘‘(a) The Postal Service may from time to time re-
quest that the Postal Regulatory Commission submit, or
the Commission may submit to the Directors on its own
initiative, a recommended decision on changes in the mail
classification schedule for noncompetitive products (within
the meaning of subchapter III of chapter 37).’’.
(d) RECOMMENDED DECISIONS OF COMMISSION.—
Subsection (c) of section 3624 of title 39, United States
Code, is amended—
(1) in paragraph (1) by striking ‘‘a request
under section 3622 of this title for a recommended
decision by the Commission on changes in a rate or
rates of postage or in a fee or fees for postal serv-
ices’’ and inserting ‘‘a request under section 3623
for a recommended decision by the Commission on
changes in the mail classification schedule or a re-
quest under section 3762 for a recommended deci-
sion by the Commission on the baseline rate and
classification for a new noncompetitive product,’’;
and
(2) in paragraph (2) by striking ‘‘3622’’ and in-
serting ‘‘3623 or 3762 (as applicable)’’.
(e) APPELLATE REVIEW.—
(1) APPEALABILITY OF ADJUSTMENT FACTOR
AND
PRODUCT
TRANSFER
DECISIONS.—The first
sentence of section 3628 of title 39, United States
Code, is amended—
(A) by striking ‘‘A decision’’ and inserting
‘‘(a) A decision’’;
(B) by inserting before ‘‘may be appealed’’
the following: ‘‘on a request made under section
3623 or 3762, and any final decision by the
Commission under section 3733 or 3764,’’; and
(C) by striking ‘‘3624(a) of this title’’ and
inserting 
‘‘3624(a), 
3733(b), 
3762(b), 
or
3764(d) (as the case may be)’’.
(2) APPEALS FROM ALL OTHER FINAL ORDERS
OF THE COMMISSION.—
(A) TITLE 39 AMENDMENT.—Section 3628
of title 39, United States Code, is amended by
adding at the end the following:
‘‘(b) Any proceeding to enjoin, set aside, annul, or
suspend any order of the Postal Regulatory Commission
(except any order appealable under subsection (a)) shall
be brought as provided by and in the manner prescribed
in chapter 158 of title 28.’’.
(B) TITLE 28 AMENDMENTS.—
(i) DEFINITIONS.—Subparagraph (A)
of section 2341(3) of title 28, United
States Code, is amended by inserting ‘‘the
Postal Regulatory Commission,’’ after ‘‘the
Federal Maritime Commission,’’.
(ii) ORDERS
APPEALABLE.—Section
2342 of title 28, United States Code, is
amended by striking ‘‘and’’ at the end of
paragraph (6), by striking the period at
the end of paragraph (7) and inserting ‘‘;
and’’, and by adding at the end the follow-
ing:
‘‘(8) all final orders of the Postal Regulatory
Commission made reviewable by section 3628(b) of
title 39.’’.
(3) 
CONFORMING
AMENDMENTS.—Sections
3625 and 3681 of title 39, United States Code, are
amended by striking ‘‘3628’’ each place it appears
and inserting ‘‘3628(a)’’.
(f) TEMPORARY RATES AND CLASSES.—
(1) NEGOTIATED SERVICE AGREEMENTS.—Sec-
tion 3641 of title 39, United States Code, is amend-
ed to read as follows:
‘‘§ 3641. Negotiated service agreements
‘‘(a) The Postal Service may enter into negotiated
service agreements with users of postal services in accord-
ance with this section. A negotiated service agreement
under this section shall—
‘‘(1) pertain exclusively to products in the non-
competitive category of mail (within the meaning of
subchapter III of chapter 37);
‘‘(2) require that the contracting mail user per-
form mail preparation, processing, transportation,
administration, or other functions that are in addi-
tion to or greater than those required of mailers
under provisions of the mail classification schedule
established pursuant to section 3623(b);
‘‘(3) provide for the payment by the contracting
mail user of liquidated damages to the Postal Serv-
ice for nonperformance or breach of any of the ma-
terial terms of the agreement, including any mini-
mum volume commitments; the amount of such liq-
uidated damages shall not be less than the difference
between postage and fees paid by such mail user
pursuant to the agreement and the amounts such
user would have paid under the otherwise applicable
schedule of rates and fees;
‘‘(4) be for a term of not to exceed 3 years; and
‘‘(5) provide that such agreement, and any
amendment or renewal thereof, shall not become ef-
fective until approved by the Postal Regulatory
Commission, and is subject to the cancellation au-
thority of the Commission under section 3662(c).
‘‘(b) Within 1 year after this subsection takes effect,
the Postal Regulatory Commission shall adopt rules for
the consideration of negotiated service agreements be-
tween the Postal Service and users of postal services,
which meet the requirements of subsections (c) and (d).
‘‘(c) Upon receipt of a proposed negotiated service
agreement entered into by the Postal Service under sub-
section (a), or any amendment or renewal thereof, the
Postal Regulatory Commission shall render a decision
upon review of the agreement, after notice and oppor-
tunity for comment by interested parties in accordance
with section 553 of title 5, pursuant to the regulations
adopted by the Commission under subsection (b). The
Commission shall approve and recommend implementation
of a proposed negotiated service agreement (or any
amendment or renewal thereof) unless, on the basis of the
written data, views, and arguments received, it finds, with-
in 90 days after receipt of the proposed agreement,
amendment, or renewal (subject to the same type of day-
for-day extension as set forth in section 3733(b)(4)(B) for
failure by the Postal Service to respond to any lawful
order of the Commission), that—
‘‘(1) the proposed agreement (or amendment or
renewal, as applicable)—
‘‘(A) does not satisfy the conditions and
requirements of subsection (a);
‘‘(B) precludes or materially hinders simi-
larly situated mail users from entering into
agreements with the Postal Service on the
same, or substantially the same, terms and con-
ditions; or
‘‘(C) cannot reasonably be expected to re-
sult in net benefits to the operation of a nation-
wide postal system;
‘‘(2) the Postal Service is unwilling or unable to
enter into such negotiated service agreements with
other similarly situated mail users; or
‘‘(3) rates and fees payable during the term of
the proposed negotiated service agreement are not
reasonably calculated to yield to the Postal Service
total revenues that equal or exceed the sum of—
‘‘(A) the direct and indirect postal costs
attributable to services performed by the Postal
Service under the agreement; and
‘‘(B) a portion of all other costs of the
Postal Service that are equal, on an average
unit basis, to the portion of such costs reason-
ably assignable to the classification or classi-
fications of mail service most similar to the
services performed under the agreement.
‘‘(d) Whenever it disapproves a proposed negotiated
service agreement, the Postal Regulatory Commission
shall provide written notice to that effect, together with
the reasons therefor.
‘‘(e) Any decision to approve or disapprove a pro-
posed negotiated service agreement (or amendment or re-
newal, as applicable) shall be subject to judicial review in
accordance with section 3628(b).
‘‘(f) Nothing in subsections (a) through (e) shall be
considered to limit or otherwise affect any authority avail-
able to the Postal Service under section 3763.’’.
(2) CONFORMING AMENDMENT.—The table of
sections at the beginning of chapter 36 of title 39,
United States Code, is amended by striking the item
relating to section 3641 and inserting the following:
‘‘3641. Negotiated service agreements.’’.
(g) RATE AND SERVICE COMPLAINTS.—Section 3662
of title 39, United States Code, is amended to read as
follows:
‘‘§ 3662. Rate and service complaints
‘‘(a) Interested parties (including an officer of the
Postal Regulatory Commission representing the interests
of the general public) who believe the Postal Service is
charging rates which do not conform to the policies set
out in this title, who believe that the Postal Service is not
providing postal service in accordance with the policies of
this title, or who believe that the Postal Service is other-
wise not acting in conformance with the policies of this
title, may lodge a complaint with the Postal Regulatory
Commission in such form and in such manner as it may
prescribe.
‘‘(b)(1) The Postal Regulatory Commission shall,
within 90 days after receiving a complaint under sub-
section (a), either—
‘‘(A) begin proceedings on such complaint in
conformity with section 3764(d)(1); or
‘‘(B) issue an order dismissing the complaint
(together with a statement of the reasons therefor).
‘‘(2) For purposes of section 3628(b), any complaint
under subsection (a) on which the Commission fails to act
in the time and manner required by paragraph (1) shall
be treated in the same way as if it had been dismissed
pursuant to an order issued by the Commission on the
last day allowable for the issuance of such order under
paragraph (1).
‘‘(c) If the Postal Regulatory Commission finds the
complaint to be justified, it shall—
‘‘(1) in a classification matter covered by sec-
tion 3623 or 3762, after proceedings in conformity
with section 3624, issue a recommended decision
which shall be acted upon in accordance with the
provisions of section 3625;
‘‘(2) in a matter involving a violation of any
limitation under section 3732 (relating to limitations
on rates for noncompetitive products), order the un-
lawful rates to be adjusted to lawful levels and the
taking of such other action as it deems appropriate;
‘‘(3) in a matter involving a violation of section
3743(a) (relating to costs-attributable requirement
for competitive products) or section 3763(b) (relat-
ing to conditions to be met by new competitive prod-
ucts), order the unlawful rates to be adjusted to law-
ful levels and the taking of such other action as it
deems appropriate;
‘‘(4) in a matter involving a violation of section
3641, order the payment of liquidated damages in
accordance with the provisions included in the agree-
ment involved pursuant to the requirements of sec-
tion 3641(a)(3) or the cancellation of such agree-
ment;
‘‘(5) in a matter involving a violation of section
403(c), order the taking of such action as it deems
appropriate;
‘‘(6) in a matter involving a violation of any
provision of subchapter V of chapter 37 (relating to
market tests of experimental products), order the
cancellation of the testing involved or the taking of
such other action as it deems appropriate;
‘‘(7) in a matter involving a violation of section
404a, order the rescission of any regulation involved
or the taking of such action as it deems appropriate;
‘‘(8) in a matter involving a violation of section
2012(f) (relating to the minimum amount to be
charged by the Postal Service for goods or services
provided to any corporation established under sec-
tion 2012), order that the Postal Service increase its
prices to at least the minimum levels required;
‘‘(9) in a matter involving the Postal Service’s
providing a nonpostal product that is not permitted
under paragraph (6) of section 404(a), order that
the Postal Service cease providing such product; and
‘‘(10) in a matter not otherwise covered by any
of the preceding provisions of this subsection, render
a public report thereon.
‘‘(d) In addition, in cases of deliberate noncompliance
with the requirements of this title, the Postal Regulatory
Commission may order, based on the nature, cir-
cumstances, extent, and seriousness of the noncompliance,
a fine (in the amount specified by the Commission in its
order) for each incidence of noncompliance. Fines result-
ing from the provision of competitive products (within the
meaning of subchapter IV of chapter 37) shall be paid
out of the Competitive Products Fund established in sec-
tion 2011. All receipts from fines imposed under this sub-
section shall be deposited in the general fund of the Treas-
ury of the United States.’’.
(h) LIMITATIONS.—Section 3684 of title 39, United
States Code, is amended—
(1) by inserting ‘‘and no provision of chapter
37’’ after ‘‘no provision of this chapter’’; and
(2) by striking ‘‘any provision of section 3682
or 3683 or chapter 30, 32, or 34 of this title.’’ and
inserting ‘‘any provision of this title.’’.
(i) REDUCED RATES.—Effective as of the date of en-
actment 
of 
this 
Act, 
subclause 
(VI) 
of 
section
3626(a)(3)(B)(ii) of title 39, United States Code, is
amended to read as follows:
‘‘(VI) one-half (or less, as the Postal Service
may prescribe), for any fiscal year after fiscal year
1998.’’.
(j) REGULATIONS OF THE COMMISSION.—Effective
as of the date of enactment of this Act, section 3603 of
title 39, United States Code, is amended by striking ‘‘this
chapter.’’ and inserting ‘‘this title.’’.
(k) EFFECTIVE DATE.—Except as provided in sub-
section (i) or (j), this section and the amendments made
by this section shall become effective on the date as of
which the baseline rates are determined under section
3721(e)(2) of title 39, United States Code (as amended
by section 201).
SEC. 
203. 
POSTAL 
SERVICE 
COMPETITIVE 
PRODUCTS
FUND.
(a) ESTABLISHMENT.—
(1) IN
GENERAL.—Chapter 20 of title 39,
United States Code, is amended by adding at the
end the following:
‘‘§ 2011. Postal Service Competitive Products Fund
‘‘(a) There is established in the Treasury of the
United States a revolving fund to be called the Postal
Service Competitive Products Fund which shall be avail-
able to the Postal Service without fiscal-year limitation for
the payment of all attributable costs, institutional costs,
and other expenses incurred by the Postal Service in pro-
viding competitive products.
‘‘(b) There shall be deposited in the Postal Service
Competitive Products Fund, subject to withdrawal by the
Postal Service—
‘‘(1) revenues from competitive products;
‘‘(2) amounts received from obligations issued
by the Postal Service under this section;
‘‘(3) interest which may be earned on invest-
ments of the Postal Service Competitive Products
Fund; and
‘‘(4) any amounts transferred from the Postal
Service Fund under subsection (j).
‘‘(c) The receipts and disbursements of the Postal
Service Competitive Products Fund shall be accorded the
same budgetary treatment as is accorded to receipts and
disbursements of the Postal Service Fund under section
2009a.
‘‘(d)(1) If the Postal Service determines that the
moneys of the Postal Service Competitive Products Fund
are in excess of current needs, it may invest such amounts
as it deems advisable in any of the following:
‘‘(A) A corporation established under section
2012.
‘‘(B) Such other investments as it considers ap-
propriate.
‘‘(2)(A) Nothing in paragraph (1)(B) shall be consid-
ered to constitute authority for the Postal Service to invest
in the obligations or securities of, or to make any other
investment with respect to, a commercial entity.
‘‘(B) For purposes of this paragraph, the term ‘com-
mercial entity’ means any corporation, company, associa-
tion, partnership, joint stock company, firm, society, or
other similar entity, as further defined under regulations
prescribed by the Postal Regulatory Commission.
‘‘(e) The Postal Service, in its sole discretion, may
provide that amounts which would otherwise be deposited
in the Postal Service Competitive Products Fund shall in-
stead be directly deposited in a Federal Reserve bank or
a depository for public funds selected by the Postal Serv-
ice, and may provide for transfers of amounts under this
subsection between or among such accounts and the Post-
al Service Competitive Products Fund.
‘‘(f) A judgment against the Postal Service or the
Government of the United States arising out of activities
of the Postal Service in the provision of competitive prod-
ucts (as determined under regulations which the Postal
Regulatory Commission shall prescribe, in consultation
with the Postal Service) shall be paid out of the Postal
Service Competitive Products Fund.
‘‘(g)(1) Subject to the limitations specified in section
2005(a) (applied in accordance with paragraph (2)), the
Postal Service is authorized to borrow money and to issue
and sell such obligations as it determines necessary to pro-
vide for competitive products and deposit such amounts
in the Postal Service Competitive Products Fund, except
that the Postal Service may pledge only the assets of the
Postal Service Competitive Products Fund and pledge and
use its revenues and receipts for the payment of the prin-
cipal of or interest on such obligations, for the purchase
or redemption thereof, and for other purposes incidental
thereto, including creation of reserve, sinking, and other
funds which may be similarly pledged and used, to such
extent and in such manner as it deems necessary or desir-
able.
‘‘(2) For purposes of applying any limitation under
section 2005(a), the aggregate amount of obligations
issued by the Postal Service which are outstanding at any
given time, and the net increase in the amount of obliga-
tions outstanding issued by the Postal Service for the pur-
pose of capital improvements or for the purpose of defray-
ing operating expenses of the Postal Service in any fiscal
year, shall be determined by aggregating all outstanding
obligations so issued by the Postal Service under section
2005 with all outstanding obligations so issued by the
Postal Service under this section.
‘‘(h) The Postal Service may enter into binding cov-
enants with the holders of such obligations, and with the
trustee, if any, under any agreement entered into in con-
nection with the issuance thereof with respect to the estab-
lishment of reserve, sinking, and other funds, application
and use of revenues and receipts of the Postal Service
Competitive Products Fund, stipulations concerning the
subsequent issuance of obligations or the execution of
leases or lease purchases relating to properties of the Post-
al Service and such other matters as the Postal Service
deems necessary or desirable to enhance the marketability
of such obligations.
‘‘(i) Obligations issued by the Postal Service under
this section shall—
‘‘(1) not be purchased by the Secretary of the
Treasury;
‘‘(2) not be exempt either as to principal or in-
terest from any taxation now or hereafter imposed
by any State or local taxing authority;
‘‘(3) not be obligations of, nor shall payment of
the principal thereof or interest thereon be guaran-
teed by, the Government of the United States, and
the obligations shall so plainly state; and
‘‘(4) notwithstanding the provisions of the Fed-
eral Financing Bank Act of 1973 or any other provi-
sion of law (except as may be specifically provided
by reference to this paragraph in any Act enacted
after this paragraph takes effect), not be eligible for
purchase by, or commitment to purchase by, or sale
or issuance to, the Federal Financing Bank.
‘‘(j) The Postal Service shall, on the first day of the
first year beginning on or after the date as of which the
baseline rates are determined under section 3721(e)(2),
transfer from the Postal Service Fund to the Postal Serv-
ice Competitive Products Fund an amount that, as deter-
mined by the Postal Regulatory Commission (after notice
and opportunity for comment by interested parties in ac-
cordance with section 553 of title 5), fairly reflects the
net value of assets and liabilities which may be attributed
wholly or primarily to competitive products.
‘‘(k) The Postal Service shall render an annual report
to the Secretary of the Treasury concerning the operation
of the Postal Service Competitive Products Fund, in which
it shall address such matters as risk limitations, reserve
balances, allocation or distribution of moneys, liquidity re-
quirements, and measures to safeguard against losses. A
copy of its then most recent report under this subsection
shall be included together with any other submission that
it is required to make to the Postal Regulatory Commis-
sion under section 3772(g).
‘‘(l) For purposes of this section, the term ‘competi-
tive product’ has the meaning given such term by section
3701.’’.
(2) CLERICAL AMENDMENT.—The table of sec-
tions at the beginning of chapter 20 of title 39,
United States Code, is amended by adding after the
item relating to section 2010 the following:
‘‘2011. Postal Service Competitive Products Fund.’’.
(b) TECHNICAL AND CONFORMING AMENDMENTS.—
(1) CAPITAL OF THE POSTAL SERVICE.—Sec-
tion 2002(b) of title 39, United States Code, is
amended by striking ‘‘Fund,’’ and inserting ‘‘Fund
and the balance in the Postal Service Competitive
Products Fund,’’.
(2) POSTAL SERVICE FUND.—
(A) PURPOSES FOR WHICH AVAILABLE.—
(i) IN GENERAL.—Section 2003(a) of
title 39, United States Code, is amended
by striking ‘‘title.’’ and inserting ‘‘title
(other than any of the purposes, functions,
or powers for which the Postal Service
Competitive Products Fund is available).’’.
(ii) CONFORMING AMENDMENT.—Sec-
tion 2003(e)(1) of title 39, United States
Code, is amended by inserting after ‘‘as
provided by law’’ the following: ‘‘(subject
to the same limitation as set forth in the
parenthetical 
matter 
under 
subsection
(a))’’.
(B) DEPOSITS.—Section 2003(b) of title
39, United States Code, is amended by striking
‘‘There’’ and inserting ‘‘Except as otherwise
provided in section 2011, there’’.
(3) INVESTMENTS.—Subsection (c) of section
2003 of title 39, United States Code, is amended—
(A) by striking ‘‘(c) If’’ and inserting
‘‘(c)(1) Except as provided in paragraph (2),
if’’; and
(B) by adding at the end the following:
‘‘(2) Nothing in this subsection shall be considered
to authorize any investment in any obligations or securi-
ties of a commercial entity (as defined by section
2011(d)(2)(B)), including any corporation established
under section 2012.’’.
(4) OBLIGATIONS.—
(A) PURPOSES FOR WHICH ISSUANCE IS
ALLOWED.—The 
first 
sentence 
of 
section
2005(a)(1) of title 39, United States Code, is
amended by striking ‘‘title.’’ and inserting ‘‘title
(other than any of the purposes for which the
corresponding authority is available to the Post-
al Service under section 2011).’’.
(B) SPECIAL RULE FOR APPLYING LIMITA-
TIONS.—Paragraph (1) of section 2005(a) of
title 39, United States Code, is amended by
adding at the end the following: ‘‘The limita-
tions under the second and third sentences of
this subsection shall be applied in accordance
with section 2011(g)(2).’’.
(5) RELATIONSHIP BETWEEN THE TREASURY
AND THE POSTAL SERVICE.—Section 2006(c) of title
39, United States Code, is amended by inserting
‘‘under section 2005’’ before ‘‘shall be obligations’’.
SEC. 204. USPS CORPORATION.
(a) ESTABLISHMENT.—Chapter 20 of title 39,
United States Code, is amended by adding after section
2011 (as added by section 203) the following:
‘‘§ 2012. USPS Corporation
‘‘(a) The Board of Directors may establish a private
for-profit corporation under the laws of a State to be
known as the USPS Corporation or such other corporate
name as may be duly adopted by the Corporation. The
Board of Directors may serve as incorporators of the Cor-
poration and take all steps necessary to establish the Cor-
poration, including the filing of articles of incorporation
consistent with the provisions of this section.
‘‘(b)(1) The Corporation shall not be an agency, in-
strumentality, or establishment of the United States, a
Government corporation, or a Government-controlled cor-
poration. Except as provided in this section, the Corpora-
tion shall not be considered part of the Postal Service. Fi-
nancial obligations of the Corporation shall not be obliga-
tions of, or guaranteed as to principal or interest by, the
Postal Service or the United States, and the obligations
shall so plainly state. No action shall be allowable against
the United States based on actions of the Corporation.
‘‘(2) The receipts and disbursements of the Corpora-
tion shall be accorded the same budgetary treatment as
is accorded to receipts and disbursements of the Postal
Service Fund under section 2009a.
‘‘(c) The Corporation is authorized to issue and have
outstanding, in such amounts as it shall determine, shares
of capital stock, without par value, which shall carry vot-
ing rights and be eligible for dividends. Such shares may
be purchased only by the Postal Service Competitive Prod-
ucts Fund, in such amounts as the Board of Directors
of the Postal Service may deem appropriate.
‘‘(d) Notwithstanding any provision of State law, the
articles of incorporation and bylaws of the Corporation
shall provide that its board of directors shall be named
by the Board of Directors of the Postal Service. The re-
strictions on postgovernment employment set out in sec-
tion 207 of title 18 shall not apply to the acts of an indi-
vidual taken in carrying out official duties as a director,
officer, or employee of the Corporation if the individual
was an officer or employee of the Postal Service (including
a Director) continuously for a period of 12 months or
longer during the 24 months prior to employment with
the Corporation.
‘‘(e) The Corporation shall have all of the powers con-
ferred upon it under the laws of the State or States in
which it is incorporated. The Corporation is specifically
authorized—
‘‘(1) to offer any postal or nonpostal product
(other than a product covered by the postal monop-
oly, as defined in section 3764(b)(2));
‘‘(2) acquire shares of individual private compa-
nies; and
‘‘(3) participate in joint ventures with individ-
ual private companies.
‘‘(f) The Corporation may purchase goods and serv-
ices from the Postal Service, except that the Corporation
must pay the Postal Service the same amount for such
goods or services as would be paid by similarly situated
mailers or, if the goods or services are not offered to the
public by the Postal Service, amounts which represent fair
market value.
‘‘(g)(1) Insofar as the Corporation offers postal prod-
ucts which depend in substantial part on the services of
the Postal Service, the Postal Service shall, to the extent
deemed appropriate by the Postal Regulatory Commission
(and subject to such requirements as the Commission may
specify as to form and content), include details of the ac-
tivities of the Corporation (including sufficient informa-
tion to demonstrate that the requirements of subsection
(f) are being complied with) in the annual reports to the
Commission required by section 3772.
‘‘(2) In the event that, based on its review of the in-
formation submitted to it by the Postal Service under
paragraph (1), the Commission determines that the re-
quirements of subsection (f) are not being complied with,
the Commission may issue any order allowable under sub-
section (c)(8) or (d) of section 3662.
‘‘(h) As used in this section, the term ‘State’ includes
the District of Columbia.’’.
(b) CLERICAL AMENDMENT.—The table of sections
at the beginning of chapter 20 of title 39, United States
Code, is amended by adding after the item relating to sec-
tion 2011 (as added by section 203) the following:
‘‘2012. USPS Corporation.’’.
(c) EFFECTIVE DATE.—No authority under section
2012 of title 39, United States Code (as amended by this
section) shall be available until the first day of the first
year beginning on or after the date as of which the base-
line rates are determined under section 3721(e)(2).
SEC. 205. POSTAL AND NONPOSTAL PRODUCTS.
(a) IN GENERAL.—Section 102 of title 39, United
States Code, as amended by section 102(a) of this Act,
is amended by striking ‘‘and’’ at the end of paragraph (4),
by striking the period at the end of paragraph (5) and
inserting a semicolon, and by adding at the end the follow-
ing:
‘‘(6) ‘postal product’ refers to any service that
provides for the physical delivery of letters, printed
matter, or packages weighing up to 70 pounds, in-
cluding physical acceptance, collection, sorting, or
transportation services ancillary thereto; and
‘‘(7) ‘nonpostal product’ means any product or
service offered by the Postal Service (or that could
have been offered by the Postal Service under sec-
tion 404(a)(6), as last in effect before the date of
enactment of the Postal Modernization Act of 1999)
that is not a postal product.’’.
(b) SPECIFIC POWERS.—
(1) IN
GENERAL.—Paragraph (6) of section
404(a) of title 39, United States Code, is amended
to read as follows:
‘‘(6)(A) to continue providing or to abolish any
nonpostal product first offered by the Postal Service
to the general public before January 1, 1994 (with
any nonpostal products not offered by the Postal
Service to the general public before January 1,
1994, to be provided by means of a private corpora-
tion organized under section 2012, if at all, instead
of the Postal Service); and
‘‘(B) with respect to any nonpostal products
first offered by the Postal Service to the general
public during the period beginning on January 1,
1994, and ending on the date of enactment of the
Postal Modernization Act of 1999, to continue to
offer such products, but only—
‘‘(i) subject to clause (ii), until such prod-
ucts are transferred to the private postal cor-
poration (referred to in subparagraph (A)) in
accordance with such schedule and procedures
as the Postal Regulatory Commission shall by
regulation prescribe; or
‘‘(ii) until the first day of the first year of
the first ratemaking cycle (within the meaning
of section 3733(a)), if the transfer described in
clause (i) has not been completed by such
date.’’.
(2) 
DEADLINE.—The 
regulations 
required
under section 404(a)(6)(B) of title 39, United States
Code, as amended by this subsection, shall be pre-
scribed in time to become effective by the commence-
ment of the first proceedings under section 3733 of
title 39, United States Code (relating to adjustment
factors), as added by section 201.
Subtitle B—Related Provisions
SEC. 211. AUTHORITY FOR POSTAL REGULATORY COMMIS-
SION TO ISSUE SUBPOENAS.
Section 3604 of title 39, United States Code, is
amended by adding at the end the following:
‘‘(f)(1) Any Commissioner of the Postal Regulatory
Commission, any administrative law judge appointed by
the Commission under section 3105 of title 5, and any
employee of the Commission designated by the Commis-
sion may administer oaths, examine witnesses, take depo-
sitions, and receive evidence.
‘‘(2) The Chairman of the Commission, any Commis-
sioner designated by the Chairman, and any administra-
tive law judge appointed by the Commission under section
3105 of title 5 may, with respect to any proceeding con-
ducted by the Commission under this title—
‘‘(A) issue subpoenas requiring the attendance
and presentation of testimony of any individual, and
the production of documentary or other evidence,
from any place in the United States, any territory
or possession of the United States, the Common-
wealth of Puerto Rico, or the District of Columbia;
and
‘‘(B) order the taking of depositions and re-
sponses to written interrogatories.
The written concurrence of a majority of the Commis-
sioners then holding office shall, with respect to each sub-
poena under subparagraph (A), be required in advance of
its issuance.
‘‘(3) In the case of contumacy or failure to obey a
subpoena issued under this subsection, upon application
by the Commission, the district court of the United States
for the district in which the person to whom the subpoena
is addressed resides or is served may issue an order requir-
ing such person to appear at any designated place to tes-
tify or produce documentary or other evidence. Any failure
to obey the order of the court may be punished by the
court as a contempt thereof.
‘‘(g)(1) If the Postal Service determines that any doc-
ument or other matter it provides to the Postal Regulatory
Commission pursuant to a subpoena issued under sub-
section (f), or otherwise at the request of the Commission
in connection with any proceeding or other purpose under
this chapter or chapter 37, contains information which is
described in section 410(c) of this title, or exempt from
public disclosure under section 552(b) of title 5, the Postal
Service shall, at the time of providing such matter to the
Commission, notify the Commission, in writing, of its de-
termination (and the reasons therefor).
‘‘(2) No officer or employee of the Commission may,
with respect to any information as to which the Commis-
sion has been notified under paragraph (1)—
‘‘(A) use such information for purposes other
than the purposes for which it is supplied; or
‘‘(B) permit anyone who is not an officer or
employee of the Commission to have access to any
such information.
‘‘(3) Paragraph (2) shall not prevent information
from being furnished under any process of discovery estab-
lished under this title in connection with a proceeding
under this chapter or chapter 37 which is conducted in
accordance with sections 556 and 557 of title 5. The Com-
mission shall, by regulations based on rule 26(c) of the
Federal Rules of Civil Procedure, establish procedures for
ensuring appropriate confidentiality for any information
furnished under the preceding sentence.’’.
SEC. 212. QUALIFICATION REQUIREMENTS FOR COMMIS-
SIONERS AND DIRECTORS.
(a) COMMISSIONERS.—Section 3601(a) of title 39,
United States Code, is amended by striking the third sen-
tence and inserting the following: ‘‘The Commissioners
shall be chosen solely on the basis of their technical quali-
fications, professional standing, and demonstrated exper-
tise in economics, accounting, law, or public administra-
tion, and may be removed by the President only for
cause.’’.
(b) DIRECTORS.—
(1) IN GENERAL.—Section 202(a) of title 39,
United States Code, is amended by striking ‘‘(a)’’
and inserting ‘‘(a)(1)’’ and by striking the fourth
sentence and inserting the following: ‘‘The Directors
shall represent the public interest generally, and
shall be chosen solely on the basis of their dem-
onstrated ability in managing organizations or cor-
porations, in either the public or the private sector,
similar in size or scope to the Postal Service. The
Directors shall not be representatives of specific in-
terests using the Postal Service, and may be re-
moved only for cause.’’.
(2) 
CONSULTATION
REQUIREMENT.—Sub-
section (a) of section 202 of title 39, United States
Code, is amended by adding at the end the follow-
ing:
‘‘(2) In selecting the individuals described in para-
graph (1) for nomination for appointment to the position
of Director, the President should consult with the Speaker
of the House of Representatives, the minority leader of
the House of Representatives, the majority leader of the
Senate, and the minority leader of the Senate.’’.
(3) RESTRICTION.—Subsection (b) of section
202 of title 39, United States Code, is amended by
striking ‘‘(b)’’ and inserting ‘‘(b)(1)’’, and by adding
at the end the following:
‘‘(2)(A) Notwithstanding any other provision of this
section, in the case of the office of the Director the term
of which is the first one scheduled to expire at least 4
months after the date of enactment of this paragraph—
‘‘(i) such office may not, in the case of any per-
son commencing service after that expiration date,
be filled by any person other than an individual cho-
sen from among persons nominated for such office
with the unanimous concurrence of all labor organi-
zations described in section 206(a)(1); and
‘‘(ii) instead of the term that would otherwise
apply under the first sentence of paragraph (1), the
term of any person so appointed to such office shall
be 3 years.
‘‘(B) Except as provided in subparagraph (A), an ap-
pointment under this paragraph shall be made in conform-
ance with all provisions of this section that would other-
wise apply.’’.