H.R. 3004 — USPS SERVES US Act

This section revises the annual limitation on U.S. Postal Service (USPS) rate increases under the ratemaking system to the percentage change in the Consumer Price Index for All Urban Consumers (CPI-U), unadjusted for seasonal variation, over the most recent 12-month period preceding the USPS rate increase notice minus 0.5% (or such other percentage as specified by the Postal Regulatory Commission (PRC) in an order describing the reasons and applicable to only one annual limitation); prohibits the PRC from revising the ratemaking system in a manner inconsistent with this limitation; and directs the PRC to issue implementing regulations within 60 days of enactment. (As background, the ratemaking system, established by the Postal Accountability and Enhancement Act of 2006, generally caps USPS price increases to promote financial stability while allowing limited exceptions.)

This section establishes sanctions in new 39 U.S.C. §3693 for certain failures by the U.S. Postal Service (USPS) to meet service performance targets established under section 3692. If the Postal Regulatory Commission (PRC) determines that such a failure is a "covered failure," the PRC may reduce—but not below zero—the maximum amount by which USPS may adjust rates for the affected market-dominant products under section 3622, considering evidence of losses incurred by users of those products. The reduction applies to the first rate adjustment implementation for the affected product(s) from the date of the PRC determination until the PRC finds USPS is meeting the target again, and to subsequent adjustments during that period as the PRC deems appropriate based on user losses. A covered failure is one that (1) is not due to a natural disaster or other uncontrollable event, (2) has persisted for at least one year, and (3) lacks a credible USPS plan to achieve and maintain the target within a reasonable time. (Thus, the provision incentivizes USPS service improvements by linking them to rate authority for market-dominant products, such as First-Class Mail.)

This section revises procedures under 39 U.S.C. 3661 for U.S. Postal Service (USPS) proposals to change the nature of postal services affecting service on a nationwide or substantially nationwide basis (previously requiring an advisory opinion from the Postal Regulatory Commission (PRC) after a hearing), by (1) redesignating existing subsection (b) as paragraph (1) and replacing the "advisory opinion" requirement with a "decision"; and (2) adding paragraph (2) directing the PRC, absent a USPS proposal under paragraph (1), to order the USPS to explain why a plan or initiative implying such a change was not proposed, with an explanation of the PRC's reasoning, and if the USPS explanation is insufficient, to require the USPS to justify the implied change (and underlying plan or initiative, if necessary) in a hearing under 5 U.S.C. §§ 556 and 557. The section further adds paragraph (3) requiring PRC decisions under subsection (b) to be transmitted to the USPS Board of Governors, who may accept the decision or reject it by unanimous written decision (adopting the original USPS proposal under paragraph (1) or approving the plan or initiative under paragraph (2)), with the Governors' decision (or the PRC decision, if no action within 60 days) constituting a final order for judicial review under 39 U.S.C. 3663. (As background, these procedures provide public and regulatory oversight of major USPS service changes.) This section also makes minor conforming and gender-neutral changes to subsection (c), specifying that the Commission officer representing the general public is designated under 39 U.S.C. 505.

This section authorizes the Postal Regulatory Commission to approve Postal Service rate increases for a non-compensatory class of mail (i.e., a class where attributable costs exceed attributable revenues) that exceed the annual limitation under 39 U.S.C. §3622(d)(1)(A) if three conditions are met: (1) the change in attributable cost per piece for the class does not exceed that annual limitation, using year-to-year comparable costing methodologies; (2) in the immediately preceding fiscal year, the Postal Service directly measured and reported—pursuant to 39 U.S.C. §3652 and without unapproved proxy data—compliance with service performance targets under 39 U.S.C. §3692 for each product in the class and met all such targets; and (3) no such target was reduced from the prior fiscal year.

This section modifies the objectives and factors considered by the Postal Regulatory Commission in regulating rates for market-dominant postal products (i.e., products such as First-Class Mail for which the Postal Service has protected monopoly status) by (1) requiring all objectives to apply to each class or type of mail service and product, and (2) applying the specified factors also when evaluating compliance of a class or type of mail service or product with applicable statutory provisions and regulations.

This section revises 39 U.S.C. 505 to establish an Office of the Customer Advocate within the Postal Regulatory Commission (PRC), replacing the prior requirement to designate a single officer to represent the general public in public proceedings. The Office represents general public interests—including those of customers of market-dominant postal products (i.e., products without substantial competition, such as First-Class Mail)—in all PRC proceedings; has the same rights as other interested parties to file complaints or petitions and is subject to standard ex parte communications rules; may represent conflicting public interests using separate representatives as needed; receives employment protections for its advocacy (except for cause); may conduct research (including non-proceeding-related work), hire experts or consultants subject to available funds, and consult external stakeholders; and may inquire into competitive product (i.e., parcels and similar products) rates and classifications only as needed to assess compliance with specified statutory rate protections. The PRC must provide the Office with sufficient staff.

This section revises Postal Regulatory Commission procedures for complaints alleging U.S. Postal Service noncompliance with statutory requirements (39 U.S.C. §3662). Specifically, in subsection (b), it (1) replaces the prior 90-day deadline to begin proceedings (if material issues of fact or law exist) or dismiss with a process allowing motions asserting no such issues within 25 days of complaint filing (or shorter period by regulation), requiring proceedings to begin immediately after the 25-day period if no motion is filed and issues exist, immediately after denying all such motions if denied by day 45, or by day 45 otherwise, and requiring dismissal within 45 days upon finding no issues after considering motions; and (2) in subsection (c), expands remedies for justified complaints to include, upon finding unreasonable Postal Service delay in the proceeding, ordering reimbursement consistent with 39 U.S.C. §3681. (Thus, the changes expedite resolution of meritless complaints and deter Postal Service delays in compliance proceedings overseen by the Commission.)

This section revises the prohibition on reimbursing mailers for amounts paid under postal rates or fees subsequently found unlawful (39 U.S.C. 3681(a)) by limiting it to determinations made solely under Postal Regulatory Commission (PRC) complaint proceedings pursuant to section 3662 (from prior law covering sections 3662 through 3664 or rates superseded by lower rates established under subchapter II). It further establishes a new subsection (b) requiring the PRC, upon determining a rate or fee unlawful in a periodic review under section 3653 or a section 3662 complaint, to reduce the U.S. Postal Service's (USPS) price increase authority for the affected product and all other products in that mail class (but not below zero) in the next and succeeding price adjustments until USPS foregoes revenue equal to what it collected above the lawful rate. (Thus, foregone revenue is the difference between projected revenue at the maximum lawful rate absent the order and actual revenue during the restriction period.) Additionally, subsection (b)(2) authorizes the PRC to impose further reductions in price increase authority, in addition to those under (b)(1), if USPS unreasonably delays a section 3662 complaint proceeding, with an explanation of the expected proceeding duration absent the delay.

This section amends the Postal Regulatory Commission's ratemaking objectives for market-dominant postal products (i.e., First-Class Mail, USPS Marketing Mail, Periodicals, and certain Package Services) by (1) redesignating paragraph (9) as paragraph (10); and (2) adding new paragraph (9) to maintain and, to the extent practicable, increase the volume of such mail, with due regard to total contribution to Postal Service institutional costs.

This section requires the Postal Regulatory Commission (PRC), as a criterion for defining a new product for market-dominant postal products under 39 U.S.C. § 3642(b)(3), to consider the importance of three specified pricing factors under 39 U.S.C. § 3622(c)—(7) the degree to which educational, cultural, scientific, and informational materials are not available through the private sector, (8) the degree of Postal Service competition with private mailers or delivery services, and (11) the value to the mailer of the time by which mail is scheduled to be received—in appropriately defining market-dominant products.

This section directs the Postal Regulatory Commission to develop, not later than 120 days after the date of enactment, an independent model for estimating demand for postal services without considering any models developed by the Postal Service. In developing the model, the Commission must solicit and provide adequate opportunity for public comment, may issue necessary regulations after notice and comment rulemaking under 5 U.S.C. 553, and may obtain temporary or intermittent services of experts or consultants.

This section requires the Secretary of the Treasury to invest 25% (up to 30%, as determined by a new investment committee not earlier than five years after enactment of the Postal Service Financial Improvement Act of 2019) of the portions of the Postal Service Retiree Health Benefits Fund (PSRHBF)—which finances health benefits costs for U.S. Postal Service annuitants not covered by their premiums—currently available and not immediately required for payments, using qualified professional asset managers in index funds that replicate, to the maximum extent practicable, the performance of the Thrift Savings Plan's (TSP) longest-term target date asset allocation investment fund (previously, the Secretary invested PSRHBF exclusively in non-marketable Treasury securities). The section further (1) establishes a Postal Service Retiree Health Benefits Fund Investment Committee—comprising the Secretary of the Treasury, the Chair of the U.S. Postal Service Board of Governors, the TSP Board Chair, and two presidentially appointed members representing postal employees and annuitants with relevant expertise serving three-year terms—to advise on manager selection and investment guidelines; (2) applies specified Thrift Savings Fund fiduciary duties and liability protections to the committee; and (3) mandates annual audits of the investments by an independent public accountant and annual reports to Congress, including audited financial statements, cash flows, and internal controls.