H.R. 3004: USPS Services Enhancement and Regulatory Viability Expansion and Sustainability for the US Act

This bill, known as the USPS Services Enhancement and Regulatory Viability Expansion and Sustainability for the US Act (or USPS SERVES US Act), aims to amend various regulations governing the United States Postal Service (USPS) to enhance its operations and sustainability. Here are the key elements of the legislation:

Cost and Efficiency Reforms

The bill proposes changes to how the USPS can adjust postal rates. Specifically, it allows adjustments based on the Consumer Price Index (CPI) but requires that any increase be 0.5% less than the CPI's percentage change over the previous year. It also sets out that the Postal Regulatory Commission (PRC) must issue regulations within 60 days of the bill’s enactment to implement these changes.

Sanctions for Service Failures

The bill introduces consequences if the USPS fails to meet performance targets set by the PRC. If the USPS does not meet these targets without justifiable reasons, the PRC may reduce the maximum allowable rate adjustments for affected products. This aims to hold the USPS accountable for service quality and performance.

Change-in-Service Procedures

Improvements are proposed for how the USPS can change its services. The bill states that if the USPS initiates a plan that indicates a need for change but does not formally propose it, the PRC can require the USPS to justify why a proposal was not submitted. This ensures that any significant service changes are reviewed and justified before they take effect.

Rate Change Frequency

The bill stipulates that postal rates can only be changed once every 12 months, aimed at providing stability for consumers and businesses relying on USPS services.

Limits on Surcharges

There are provisions added that limit how much the USPS can charge above established limits for classes of mail that do not currently cover their costs. The USPS can only exceed these limits if specific criteria about cost measurement and performance targets have been met.

Committee on Customer Advocacy

The legislation establishes an Office of the Customer Advocate within the PRC to better represent public interests in decisions regarding postal services. This office will have the authority to initiate complaints and be involved in public proceedings, ensuring that customer perspectives are considered in regulatory discussions.

Improving the Complaint Process

Changes are introduced to streamline how complaints regarding USPS services are handled, making it mandatory for the PRC to act on complaints within a specific timeframe. This is intended to enhance the responsiveness of the postal regulatory process.

Reimbursement of Unlawful Rates

If the USPS is found to have set unlawful rates, the PRC can reduce future rate increase authority until the revenue foregone due to the unlawful rates is equalized with lawful revenue. Additionally, unreasonable delays by the USPS during such proceedings could result in further penalties.

Mail Volume Estimation

The PRC must develop a model to estimate demand for postal services and solicit public input on this model. This is aimed at improving the understanding of mail volume trends to aid decision-making.

Regulations for Retiree Health Benefits Funds

The bill directs the Secretary of the Treasury to invest a portion of the postal retiree health benefits funds in index funds with qualified managers. This aims to enhance the return on assets set aside for future retiree health benefits.

Additional Objectives

The USPS is encouraged to maintain and increase the volume of market-dominant mail, while considerations for service quality and public interest are emphasized throughout the bill. It introduces performance targets ensuring the USPS operates efficiently while meeting customer needs.

Relevant Companies

• UPS: As a major competitor to USPS, changes in postal rates, service requirements, and competition regulations may impact UPS's business model and pricing strategies.
• FDX (FedEx): Similar to UPS, FedEx may experience effects on its pricing and service offerings due to adjustments in postal rates and service standards stemming from this bill.