Experimental Services

Proposal:

Authorize the Postal Service to conduct market tests of experimental services, within the following limits:

A market test, for experimental purposes, could include variations in postal products, services, rates, or mail classifications. Examples of new services which might be tested include dated delivery of third-class mail, registered Express Mail, Sunday delivery of newspapers, and trackable parcel service.

A market test would be limited to two percent of the
revenue of a class, subclass, or rate category or to
one hundred million dollars, whichever is greater.

The Commission would certify that the experiment was
within the prescribed limits within thirty days from
receiving notice of the experiment. At the request of
the Postal Service, the Commission, within 120 days,
could approve a market test involving up to two percent
of the revenue of a class, subclass or rate category.

A market test would have a specified duration, in no case longer than two years.

A market test which arguably fostered unfair competition or favored one mailer at the expense of another could be challenged in a complaint proceeding before the Postal Rate Commission. The test would continue, pending resolution of the complaint, which the Commission could expedite through the use of the informal procedures already authorized under the Commission's rules.

Pricing Flexibility for Competitive Services

Proposal: Authorize the Postal Service to set and modify the prices for certain specific services which are subject to substantial competition, within the following constraints:

Prices for certain specific services which are subject to substantial competition, initially limited to parcel post, Express Mail, and heavier-weight Priority Mail, would be required to cover attributable costs, plus a markup for overhead.

Pricing for a competitive service which arguably fostered
unfair competition or reflected a cross-subsidy from
services protected by the postal monopoly could be
challenged in a complaint proceeding before the Postal Rate
Commission. The Commission could expedite resolution of the
complaint through the use of the informal procedures already
authorized under the Commission's rules.

Whether any other specific services were subject to substantial competition, and should be added to the list of services eligible for flexible pricing, would be determined in a special expedited proceeding before the Postal Rate Commission.

Expedited Mail Classification Changes

Proposal: Establish the following alternative mechanism to expedite minor changes in the mail classification schedule:

Use of alternative classification procedures would be
limited to relatively small adjustments in the mail
classification schedule, such as prescribing the minimum
number of pages for a book, changing the specifications for
post cards, refining the definition of "bill or statement of
account", changing the minimum weight restrictions for
pallets, or varying the eligibility requirements for on-site
meter setting.

The Postal Service would publish a notice of proposed
changes for comment in the Federal Register.

Depending on the volume and nature of public response to the Federal Register notice, the Postal Service would supplement the record of public comments through legislative-type hearings, conducted at times and locations to facilitate public participation.

The Postal Service would consider the views expressed by mailers and the public, and publish a final notice which adopted, modified, or withdrew the proposed changes.

A final notice adopting a proposed change would include a proposed implementation date.

Before the implementation date, a proposed change could be challenged in a complaint proceeding before the Postal Rate Commission. The Commission could expedite resolution of the complaint through the use of the informal procedures already authorized under the Commission's rules.

Rates for newly-created classes or types of service would be established through the ratemaking procedures normally applicable to that type of mail or service.

Expedited Service Changes

Proposal: Establish the following expedited procedures for considering changes in the "nature" of postal services:

The Postal Service would publish notice of a proposed change
for comment in the Federal Register.

The Postal Service would supplement the record of public
comments through legislative-type hearings, conducted at
times and locations to facilitate public participation.
The Postal Service would consider the views expressed by
mailers and the public, and publish a final notice which
adopted, modified, or withdrew the proposed change.

A final notice adopting a proposed change would include a
proposed implementation date.

Before the implementation date, a proposed change could be challenged in a complaint proceeding before the Postal Rate Commission. The Commission could expedite resolution of the complaint through the use of the informal procedures already authorized under the Commission's rules.

Simplified or Periodic Rate Adjustments

Proposal:

Establish the following mechanism which would give the Postal Service the option of increasing rates periodically, without formal proceedings before the Postal Rate

Commission:

The maximum indexed rate increase in each subclass would be
90% of the change in the Consumer Price Index (CPIU) since
the last general rate increase, cumulative to the end of the
Fiscal Year immediately before the indexed rate increase.
The percentage of rate increase would be approximately the
same for each subclass.

The amount of the indexed rate increase would be governed by the cost performance of the Postal Service. If the increase in the index of postal costs exceeded the increase in the CPIU, the indexed rate increase would be restricted.

If the index of postal costs increased less in a set period than the CPIU, the Postal Service would have the option to increase rates up to 90% of the increase in the CPIU.

If the index of postal costs increased more in a set period than the CPIU, the Postal Service would have the option to increase rates up to 90% of the increase in the CPIU, less twice the percentage by which the index of postal costs exceeded the CPIU.

The index of postal costs would include any inflation or
increase in postal costs, net of any extraordinary costs
imposed on the Postal Service which are not generally
reflective of the costs experienced by businesses within the
general economy, such as those resulting from legislation.
Rates over which the Postal Rate Commission does not have
jurisdiction would not be subject to indexed rate increases.
The Postal Rate Commission would certify the annual cost
performance figures of the Postal Service relative to the
CPIU. As part of this process, the Commission would allow a
30-day period for public comment.

The Postal Rate Commission would certify the annual service
performance figures of the Postal Service to assure that
cost control measures did not significantly impair service
levels. As part of this process, the Commission would allow
a 30-day period for public comment.

The Postal Rate Commission would certify the specific
indexed rates published by the Postal Service to assure that
the rates were properly developed. As part of this process,
the Commission would allow a 30-day period for public

comment.

An omnibus rate proceeding would be initiated with the
Postal Rate Commission within 5 years of the date that rates
were implemented in the last omnibus rate proceeding,
whether or not the Postal Service had exercised any indexed
rate options in that period.

Modification of commission Rate Recommendations

Proposal: Provide the Board of Governors of the Postal Service with increased flexibility to modify a recommended decision of the Postal Rate Commission:

With the changes outlined below, the full Board of
Governors, which includes the Postmaster General and the
Deputy Postmaster General, would exercise the same basic
options within the same procedural framework provided under
existing law for acting upon a recommended decision from the
Postal Rate Commission.

The full Board of Governors, and not the Governors acting in their separate capacity, would consider and vote upon any action regarding a recommended decision or further recommended decision from the Postal Rate Commission.

In the event that a recommended decision is returned to the Commission for reconsideration, the Commission would be allowed a maximum of 90 days to conclude its deliberations and transmit a further recommended decision to the Board of

Governors.

Any further recommended decision received from the Commission would be subject to modification by the Board of Governors, without regard to whether the original recommended decision was returned to the Commission after being rejected or after being allowed under protest.

The written concurrence of 75% of the members of the Board of Governors then holding office would be necessary to modify a further recommended decision of the Commission.

OPERATIONAL AND ADMINISTRATIVE FLEXIBILITY

Redirection of Financial Activities to Private Markets

Obligations: The Fostal Service would be able to borrow in the private markets according to its actual long- and short-term financial needs, and issue debt obligations with fixed price call or redemption options.

Investments: The Postal Service would be able to determine its own investment policy, and place excess cash directly in the types of high-grade marketable securities which are available to other businesslike enterprises.

Deposits: The Postal Service would be able to apply standard business practices to its disbursements by using the services of commercial banks.

Mitigation of Transportation Restrictions

Contract Duration: Expand the authorized terms of contracts for moving mail by highway, rail, water, or air taxi to ten years to enable the Postal Service to obtain more favorable terms.

Weight and Composition of shipments: Eliminate the 750pound and 5 percent letter mail minimums on foreign air shipments, and the 90-day DOT approval period for foreign air transportation, to give the Postal Service the flexibility, following normal business practices, to arrange for air transportation services on more timely and economical terms.

Foreign and Ancillary Services: Give the Postal Service explicit authority to contract as needed for air, surface, and inter-modal transporation of mail within and between foreign countries, or from foreign countries to the United States.

International Arrangements

Joint Ventures: Authorize the Postal Service to enter into partnerships with foreign postal administrations and their subsidiaries, including contracts to provide experimental or dedicated services, and the acquisition of interests in the legal entities established to further these purposes.