39 U.S.C. § 3622 — Modern rate regulation

Page 101 TITLE 39—POSTAL SERVICE § 3622 Pub. L. 103–31, § 8(h)(4), May 20, 1993, 107 Stat. 86, added item 3629. SUBCHAPTER I—PROVISIONS RELATING TO MARKET-DOMINANT PRODUCTS Editorial Notes PRIOR PROVISIONS A prior subchapter I of this chapter consisted of sec- tions 3601 to 3604, prior to amendment by Pub. L. 109–435, title VI, § 601(a)(2), (3), Dec. 20, 2006, 120 Stat. 3238, 3239, which struck out the subchapter heading ‘‘POSTAL RATE COMMISSION’’ and sections 3601 and 3602 and renumbered sections 3603 and 3604 as sections 503 and 504 of this title, respectively, and transferred those sections to chapter 5 of this title. Section 3601, Pub. L. 91–375, Aug. 12, 1970, 84 Stat. 759; Pub. L. 94–421, § 3(a), Sept. 24, 1976, 90 Stat. 1304; Pub. L. 103–123, title VII, § 708(c), Oct. 28, 1993, 107 Stat. 1273, re- lated to establishment of the Postal Rate Commission. Section 3602, Pub. L. 91–375, Aug. 12, 1970, 84 Stat. 759, related to terms of office of the Commissioners of the Postal Rate Commission. AMENDMENTS 2006—Pub. L. 109–435, title II, § 201(c), Dec. 20, 2006, 120 Stat. 3205, redesignated subchapter II of this chapter as this subchapter and substituted ‘‘PROVISIONS RE- LATING TO MARKET-DOMINANT PRODUCTS’’ for ‘‘PERMANENT RATES AND CLASSES OF MAIL’’ in subchapter heading. § 3621. Applicability; definitions (a) APPLICABILITY.—This subchapter shall apply with respect to— (1) first-class mail letters and sealed parcels; (2) first-class mail cards; (3) periodicals; (4) standard mail; (5) single-piece parcel post; (6) media mail; (7) bound printed matter; (8) library mail; (9) special services; and (10) single-piece international mail, subject to any changes the Postal Regulatory Commission may make under section 3642. (b) RULE OF CONSTRUCTION.—Mail matter re- ferred to in subsection (a) shall, for purposes of this subchapter, be considered to have the mean- ing given to such mail matter under the mail classification schedule. (Added Pub. L. 109–435, title II, § 201(a), Dec. 20, 2006, 120 Stat. 3200.) Editorial Notes PRIOR PROVISIONS A prior section 3621, Pub. L. 91–375, Aug. 12, 1970, 84 Stat. 760, authorized the Governors to fix rates and classes, prior to repeal by Pub. L. 109–435, title II, § 201(a), Dec. 20, 2006, 120 Stat. 3200. Statutory Notes and Related Subsidiaries RATEMAKING LIMITATIONS Pub. L. 103–123, title VII, § 704(b)(2), Oct. 28, 1993, 107 Stat. 1270, provided that: ‘‘(A) IN GENERAL.—Except as provided in subpara- graph (B), rates of postage may not be established, under subchapter II [now I] of chapter 36 of title 39, United States Code, in a manner designed to allow the United States Postal Service to receive through reve- nues any portion of the additional revenues (referred to in section 2401(d) of such title, as amended by para- graph (1)(E)) for which amounts are authorized to be appropriated under such section 2401(d). ‘‘(B) EXCEPTION.—If Congress fails to appropriate an amount authorized under section 2401(d) of title 39, United States Code (as amended by paragraph (1)(E)), rates for the various classes of mail may be adjusted in accordance with the provisions of subchapter II [now I] of chapter 36 of such title (excluding section 3627 there- of) such that the resulting increase in revenues will equal the amount that Congress so failed to appro- priate.’’ § 3622. Modern rate regulation (a) AUTHORITY GENERALLY.—The Postal Regu- latory Commission shall, within 18 months after the date of enactment of this section, by regula- tion establish (and may from time to time thereafter by regulation revise) a modern sys- tem for regulating rates and classes for market- dominant products. (b) OBJECTIVES.—Such system shall be de- signed to achieve the following objectives, each of which shall be applied in conjunction with the others: (1) To maximize incentives to reduce costs and increase efficiency. (2) To create predictability and stability in rates. (3) To maintain high quality service stand- ards established under section 3691. (4) To allow the Postal Service pricing flexi- bility. (5) To assure adequate revenues, including retained earnings, to maintain financial sta- bility. (6) To reduce the administrative burden and increase the transparency of the ratemaking process. (7) To enhance mail security and deter ter- rorism. (8) To establish and maintain a just and rea- sonable schedule for rates and classifications, however the objective under this paragraph shall not be construed to prohibit the Postal Service from making changes of unequal mag- nitude within, between, or among classes of mail. (9) To allocate the total institutional costs of the Postal Service appropriately between market-dominant and competitive products. (c) FACTORS.—In establishing or revising such system, the Postal Regulatory Commission shall take into account— (1) the value of the mail service actually provided each class or type of mail service to both the sender and the recipient, including but not limited to the collection, mode of transportation, and priority of delivery; (2) the requirement that each class of mail or type of mail service bear the direct and in- direct postal costs attributable to each class or type of mail service through reliably identi- fied causal relationships plus that portion of all other costs of the Postal Service reason- ably assignable to such class or type; (3) the effect of rate increases upon the gen- eral public, business mail users, and enter- prises in the private sector of the economy en- gaged in the delivery of mail matter other than letters; Page 102 TITLE 39—POSTAL SERVICE § 3622 (4) the available alternative means of send- ing and receiving letters and other mail mat- ter at reasonable costs; (5) the degree of preparation of mail for de- livery into the postal system performed by the mailer and its effect upon reducing costs to the Postal Service; (6) simplicity of structure for the entire schedule and simple, identifiable relationships between the rates or fees charged the various classes of mail for postal services; (7) the importance of pricing flexibility to encourage increased mail volume and oper- ational efficiency; (8) the relative value to the people of the kinds of mail matter entered into the postal system and the desirability and justification for special classifications and services of mail; (9) the importance of providing classifica- tions with extremely high degrees of reli- ability and speed of delivery and of providing those that do not require high degrees of reli- ability and speed of delivery; (10) the desirability of special classifications for both postal users and the Postal Service in accordance with the policies of this title, in- cluding agreements between the Postal Serv- ice and postal users, when available on public and reasonable terms to similarly situated mailers, that— (A) either— (i) improve the net financial position of the Postal Service through reducing Post- al Service costs or increasing the overall contribution to the institutional costs of the Postal Service; or (ii) enhance the performance of mail preparation, processing, transportation, or other functions; and (B) do not cause unreasonable harm to the marketplace. (11) the educational, cultural, scientific, and informational value to the recipient of mail matter; (12) the need for the Postal Service to in- crease its efficiency and reduce its costs, in- cluding infrastructure costs, to help maintain high quality, affordable postal services; (13) the value to the Postal Service and post- al users of promoting intelligent mail and of secure, sender-identified mail; and (14) the policies of this title as well as such other factors as the Commission determines appropriate. (d) REQUIREMENTS.— (1) IN GENERAL.—The system for regulating rates and classes for market-dominant prod- ucts shall— (A) include an annual limitation on the percentage changes in rates to be set by the Postal Regulatory Commission that will be equal to the change in the Consumer Price Index for All Urban Consumers unadjusted for seasonal variation over the most recent available 12-month period preceding the date the Postal Service files notice of its inten- tion to increase rates; (B) establish a schedule whereby rates, when necessary and appropriate, would change at regular intervals by predictable amounts; (C) not later than 45 days before the imple- mentation of any adjustment in rates under this section, including adjustments made under subsection (c)(10)— (i) require the Postal Service to provide public notice of the adjustment; (ii) provide an opportunity for review by the Postal Regulatory Commission; (iii) provide for the Postal Regulatory Commission to notify the Postal Service of any noncompliance of the adjustment with the limitation under subparagraph (A); and (iv) require the Postal Service to respond to the notice provided under clause (iii) and describe the actions to be taken to comply with the limitation under subpara- graph (A); (D) establish procedures whereby the Post- al Service may adjust rates not in excess of the annual limitations under subparagraph (A); and (E) notwithstanding any limitation set under subparagraphs (A) and (C), and pro- vided there is not sufficient unused rate au- thority under paragraph (2)(C), establish procedures whereby rates may be adjusted on an expedited basis due to either extraor- dinary or exceptional circumstances, pro- vided that the Commission determines, after notice and opportunity for a public hearing and comment, and within 90 days after any request by the Postal Service, that such ad- justment is reasonable and equitable and necessary to enable the Postal Service, under best practices of honest, efficient, and economical management, to maintain and continue the development of postal services of the kind and quality adapted to the needs of the United States. (2) LIMITATIONS.— (A) CLASSES OF MAIL.—Except as provided under subparagraph (C), the annual limita- tions under paragraph (1)(A) shall apply to a class of mail, as defined in the Domestic Mail Classification Schedule as in effect on the date of enactment of the Postal Ac- countability and Enhancement Act. (B) ROUNDING OF RATES AND FEES.—Nothing in this subsection shall preclude the Postal Service from rounding rates and fees to the nearest whole integer, if the effect of such rounding does not cause the overall rate in- crease for any class to exceed the Consumer Price Index for All Urban Consumers. (C) USE OF UNUSED RATE AUTHORITY.— (i) DEFINITION.—In this subparagraph, the term ‘‘unused rate adjustment author- ity’’ means the difference between— (I) the maximum amount of a rate ad- justment that the Postal Service is au- thorized to make in any year subject to the annual limitation under paragraph (1); and (II) the amount of the rate adjustment the Postal Service actually makes in that year. (ii) AUTHORITY.—Subject to clause (iii), the Postal Service may use any unused rate adjustment authority for any of the 5 years following the year such authority occurred. Page 103 TITLE 39—POSTAL SERVICE [§§ 3623 to 3625 (iii) LIMITATIONS.—In exercising the au- thority under clause (ii) in any year, the Postal Service— (I) may use unused rate adjustment au- thority from more than 1 year; (II) may use any part of the unused rate adjustment authority from any year; (III) shall use the unused rate adjust- ment authority from the earliest year such authority first occurred and then each following year; and (IV) for any class or service, may not exceed the annual limitation under para- graph (1) by more than 2 percentage points. (3) REVIEW.—Ten years after the date of en- actment of the Postal Accountability and En- hancement Act and as appropriate thereafter, the Commission shall review the system for regulating rates and classes for market-domi- nant products established under this section to determine if the system is achieving the ob- jectives in subsection (b), taking into account the factors in subsection (c). If the Commis- sion determines, after notice and opportunity for public comment, that the system is not achieving the objectives in subsection (b), tak- ing into account the factors in subsection (c), the Commission may, by regulation, make such modification or adopt such alternative system for regulating rates and classes for market-dominant products as necessary to achieve the objectives. (e) WORKSHARE DISCOUNTS.— (1) DEFINITION.—In this subsection, the term ‘‘workshare discount’’ refers to rate discounts provided to mailers for the presorting, prebarcoding, handling, or transportation of mail, as further defined by the Postal Regu- latory Commission under subsection (a). (2) SCOPE.—The Postal Regulatory Commis- sion shall ensure that such discounts do not exceed the cost that the Postal Service avoids as a result of workshare activity, unless— (A) the discount is— (i) associated with a new postal service, a change to an existing postal service, or with a new work share initiative related to an existing postal service; and (ii) necessary to induce mailer behavior that furthers the economically efficient operation of the Postal Service and the portion of the discount in excess of the cost that the Postal Service avoids as a re- sult of the workshare activity will be phased out over a limited period of time; (B) the amount of the discount above costs avoided— (i) is necessary to mitigate rate shock; and (ii) will be phased out over time; (C) the discount is provided in connection with subclasses of mail consisting exclu- sively of mail matter of educational, cul- tural, scientific, or informational value; or (D) reduction or elimination of the dis- count would impede the efficient operation of the Postal Service. (3) LIMITATION.—Nothing in this subsection shall require that a work share discount be re- duced or eliminated if the reduction or elimi- nation of the discount would— (A) lead to a loss of volume in the affected category or subclass of mail and reduce the aggregate contribution to the institutional costs of the Postal Service from the cat- egory or subclass subject to the discount below what it otherwise would have been if the discount had not been reduced or elimi- nated; or (B) result in a further increase in the rates paid by mailers not able to take advantage of the discount. (4) REPORT.—Whenever the Postal Service establishes a workshare discount rate, the Postal Service shall, at the time it publishes the workshare discount rate, submit to the Postal Regulatory Commission a detailed re- port that— (A) explains the Postal Service’s reasons for establishing the rate; (B) sets forth the data, economic analyses, and other information relied on by the Post- al Service to justify the rate; and (C) certifies that the discount will not ad- versely affect rates or services provided to users of postal services who do not take ad- vantage of the discount rate. (f) TRANSITION RULE.—For the 1-year period beginning on the date of enactment of this sec- tion, rates and classes for market-dominant products shall remain subject to modification in accordance with the provisions of this chapter and section 407, as such provisions were last in effect before the date of enactment of this sec- tion. Proceedings initiated to consider a request for a recommended decision filed by the Postal Service during that 1-year period shall be com- pleted in accordance with subchapter II of chap- ter 36 of this title and implementing regula- tions, as in effect before the date of enactment of this section. (Added Pub. L. 109–435, title II, § 201(a), Dec. 20, 2006, 120 Stat. 3201.) Editorial Notes REFERENCES IN TEXT The date of enactment of this section and the date of enactment of the Postal Accountability and Enhance- ment Act, referred to in subsecs. (a), (d)(2)(A), (3), and (f), are the date of enactment of Pub. L. 109–435, which was approved Dec. 20, 2006. PRIOR PROVISIONS A prior section 3622, Pub. L. 91–375, Aug. 12, 1970, 84 Stat. 760; Pub. L. 94–421, § 10, Sept. 24, 1976, 90 Stat. 1311; Pub. L. 105–241, § 5, Sept. 28, 1998, 112 Stat. 1573; Pub. L. 106–384, § 1(a), Oct. 27, 2000, 114 Stat. 1460, related to rates and fees, prior to repeal by Pub. L. 109–435, title II, § 201(a), Dec. 20, 2006, 120 Stat. 3200. [§§ 3623 to 3625. Repealed. Pub. L. 109–435, title II, § 201(b), Dec. 20, 2006, 120 Stat. 3205] Section 3623, Pub. L. 91–375, Aug. 12, 1970, 84 Stat. 761; Pub. L. 94–421, § 8, Sept. 24, 1976, 90 Stat. 1310, related to mail classification. Section 3624, Pub. L. 91–375, Aug. 12, 1970, 84 Stat. 761; Pub. L. 94–421, § 5(a), Sept. 24, 1976, 90 Stat. 1306, related