[Congressional Bills 107th Congress]
[From the U.S. Government Publishing Office]
[H.R. 4661 Introduced in House (IH)]
107th CONGRESS
2d Session
H. R. 4661
To amend title 39, United States Code, to direct the Postal Service to
adhere to an equitable tender policy in selecting air carriers of
nonpriority bypass mail to certain points in the State of Alaska, and
for other purposes.
_______________________________________________________________________
IN THE HOUSE OF REPRESENTATIVES
May 2, 2002
Mr. Young of Alaska introduced the following bill; which was referred
to the Committee on Government Reform
_______________________________________________________________________
A BILL
To amend title 39, United States Code, to direct the Postal Service to
adhere to an equitable tender policy in selecting air carriers of
nonpriority bypass mail to certain points in the State of Alaska, and
for other purposes.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. RURAL SERVICE IMPROVEMENT.
(a) Short Title.--This Act may be cited as the ``Rural Service
Improvement Act of 2002''.
(b) Findings.--Congress makes the following findings:
(1) The State of Alaska is the largest State in the Union
and has a very limited system of roads connecting communities.
(2) Alaska has more pilots per capita than any other State
in the Union.
(3) Pilots flying in Alaska are often the most skilled and
best-prepared pilots in the world.
(4) Air travel within the State of Alaska is often hampered
by severe weather conditions and treacherous terrain.
(5) The United States Government owns nearly \2/3\ of
Alaska's landmass, including large tracts of land separating
isolated communities within the State.
(6) Such Federal ownership has inhibited the ability of
Alaskans to build roads connecting isolated communities.
(7) Most communities and a large portion of the population
within the State can only be reached by air.
(8) The vast majority of food items and everyday
necessities destined for these isolated communities and
populations can only be transported through the air.
(9) The Intra-Alaska Bypass Mail system, created by
Congress and operated by the United States Postal Service under
section 5402 of title 39, U.S.C., with input from the
Department of Transportation, connecting hundreds of rural and
isolated communities within the State, is a critical piece of
the Alaska and the national transportation system. The system
is like a 4-legged stool, designed to--
(A) provide the most affordable means of delivering
food and everyday necessities to these rural and
isolated communities;
(B) establish a system whereby the Postal Service
can meet its obligations to deliver mail to every house
and business in America;
(C) support affordable and reliable passenger
service; and
(D) support affordable and reliable nonmail freight
service.
(10) Without the Intra-Alaska Bypass Mail system--
(A) it would be difficult and more expensive for
the Postal Service to meet its obligation of delivering
mail to every house and business in America; and
(B) food, medicine, freight, and everyday
necessities and passenger service for these rural and
isolated communities would cost several times the
current level.
(11) Attempts by Congress to support passenger and nonmail
freight service in Alaska using the Intra-Alaska Bypass Mail
system have yielded some positive results, but some carriers
have been manipulating the system by carrying few, if any,
passengers and little nonmail freight while earning most of
their revenues from the carriage of nonpriority bypass mail.
(12) As long as the Federal Government continues to own
large tracts of land within the State of Alaska and forbids the
building of roads across these lands to connect isolated
communities, it is in the best interest of the Postal Service,
the residents of Alaska and the United States--
(A) to ensure that the Intra-Alaska Bypass Mail
system remains strong, viable, and affordable for the
Postal Service;
(B) to ensure that residents of rural and isolated
communities in Alaska continue to have affordable,
reliable, and safe passenger service;
(C) to ensure that residents of rural and isolated
communities in Alaska continue to have affordable,
reliable, and safe nonmail freight service;
(D) to encourage that intra-Alaska air carriers
move toward safer, more secure, and more reliable air
transportation under the Federal Aviation
Administration's guidelines and in accordance with part
121 of title 14, Code of Federal Regulations, where
such operations are supported by the needs of the
community; and
(E) that Congress make changes to the Intra-Alaska
Bypass Mail system to encourage intra-Alaska air
carriers to begin operating under part 121, where
applicable, and to ensure that the Intra-Alaska Bypass
Mail system continues to be used to support substantial
passenger and nonmail freight service.
(c) Selection of Carriers of Nonpriority Bypass Mail to Certain
Points in Alaska.--
(1) Definitions.--Section 5402 of title 39, United States
Code, is amended--
(A) by striking subsection (e);
(B) by redesignating subsections (a) through (d) as
subsections (b) through (e), respectively; and
(C) by inserting before subsection (b), as
redesignated, the following:
``(a) In this section--
``(1) the term `acceptance point' means the point at which
nonpriority bypass mail originates;
``(2) the terms `air carrier', `interstate air
transportation', and `foreign air transportation' have the
meanings given such terms in section 40102(a) of title 49,
U.S.C.;
``(3) the term `base fare' is the fare paid to the carrier
issuing the passenger ticket or carrying nonmail freight which
may entail service being provided by more than 1 carrier;
``(4) the term `bush carrier' means a carrier operating
aircraft certificated within the payload capacity requirements
of subsection (g)(1)(D)(i) on a city pair route;
``(5) the term `bush passenger carrier' means a passenger
carrier that meets the requirements of subsection (g)(1)(D)(i)
and provides passenger service on a city pair route;
``(6) the term `bush route' means an air route in which
only a bush carrier is tendered nonpriority bypass mail between
the origination point, being either an acceptance point or a
hub, as determined by the Postal Service, and the destination
city;
``(7) the term `city pair' means service between an origin
and destination city pair;
``(8) the term `composite rate'--
``(A) means a combination of mainline and bush
rates paid to a bush carrier for a direct flight from
an acceptance point to a bush destination beyond a hub
point; and
``(B) shall be based on the mainline rate paid to
the hub, plus the lowest bush rate paid to bush
carriers in the State of Alaska;
``(9) the term `equitable tender' means the practice of the
Postal Service of equitably distributing mail on a fair and
reasonable basis between those air carriers that offer
equivalent services and costs between 2 communities in
accordance with the regulations of the Postal Service;
``(10) the term `existing mainline carrier' means a
mainline carrier (as defined in this section) that on January
1, 2001, was--
``(A) certified under part 121;
``(B) qualified to provide mainline nonpriority
bypass mail service; and
``(C) actually engaged in the carriage of mainline
nonpriority bypass mail through scheduled service
within the State of Alaska;
``(11) the term `mainline carrier' means a carrier
operating aircraft under part 121 and certificated within the
payload capacity requirements of subsection (g)(1)(D)(ii) on a
given city pair route;
``(12) the term `mainline route' means a city pair in which
a mainline carrier is tendered nonpriority bypass mail;
``(13) the term `new', when referencing a carrier, means a
carrier that--
``(A) meets the respective requirements of
subsection (g)(1)(D)(i) or (ii), depending on the type
of route being served and the size of aircraft being
used to provide service; and
``(B) began providing nonpriority bypass mail
service on a city pair route within the State of Alaska
after January 1, 2001;
``(14) the term `part 121' means part 121 of title 14, Code
of Federal Regulations;
``(15) the term `part 135' means part 135 of title 14, Code
of Federal Regulations;
``(16) the term `scheduled service' means--
``(A) flights are operated in common carriage
available to the general public under a published
schedule;
``(B) flight schedules are announced in advance in
systems specified by the Postal Service, in addition to
the Official Airline Guide or the air cargo equivalent
of that Guide;
``(C) flights depart whether full or not; and
``(D) customers contract for carriage separately on
a regular basis;
``(17) the term `Secretary' means the Secretary of
Transportation;
``(18) the term `121 bush passenger carrier' means a bush
passenger carrier providing passenger service on bush routes
under part 121;
``(19) the term `121 mainline passenger carrier' means a
mainline carrier providing passenger service through scheduled
service on routes under part 121;
``(20) the term `121 passenger aircraft' means an aircraft
flying passengers on a city pair route that is operated under
part 121;
``(21) the term `121 passenger carrier' means a passenger
carrier that provides scheduled service under part 121;
``(22) the term `135 bush passenger carrier' means a bush
passenger carrier providing passenger service through scheduled
service on bush routes under part 135; and
``(23) the term `135 passenger carrier' means a passenger
carrier that provides scheduled service under part 135.''.
(2) Requirements for selection.--Section 5402(g)(1) of
title 39, United States Code, is amended--
(A) in the matter preceding subparagraph (A), by
inserting after ``in the State of Alaska,'' the
following: ``shall adhere to an equitable tender policy
within a qualified group of carriers, in accordance
with the regulations of the Postal Service, and'';
(B) in subparagraph (C) by striking ``to the best''
and all that follows and inserting a semicolon; and
(C) in subparagraph (D) by inserting ``with at
least 3 scheduled (non-contract) flights per week
between two points'' after ``scheduled service''.
(3) Application of rates.--Section 5402(g)(2) of title 39,
United States Code, is amended--
(A) by striking ``and'' at the end of subparagraph
(A);
(B) by striking the period at the end of
subparagraph (B) and inserting a semicolon; and
(C) by adding at the end the following:
``(C) shall offer a bush passenger carrier providing
service on a route between an acceptance point and a hub not
served by a mainline carrier the opportunity to receive
equitable tender of nonpriority bypass mail at mainline service
rates when a mainline carrier begins serving that route if the
bush passenger carrier--
``(i) meets the requirements of paragraph (1);
``(ii) provided at least 20 percent of the
passenger service (as calculated in subsection (h)(5))
between such city pair for the 6 months immediately
preceding the date on which the bush carrier seeks such
tender; and
``(iii) continues to provide not less than 20
percent of the passenger service on the city pair while
seeking such tender;
``(D) shall offer bush passenger carriers and nonmail
freight carriers the opportunity to receive equitable tender of
nonpriority bypass mail at mainline service rates from a hub
point to a destination city if the city pair is also being
served by a mainline carrier and--
``(i) for a passenger carrier--
``(I) the carrier meets the requirements of
paragraph (1);
``(II) the carrier provided at least 20
percent of the passenger service (as calculated
in subsection (h)(5)) on the city pair route
for the 6 months immediately preceding the date
on which the carrier seeks such tender; and
``(III) the carrier continues to provide
not less than 20 percent of the passenger
service on the route; or
``(ii) for a nonmail freight carrier--
``(I) the carrier meets the requirements of
paragraph (1); and
``(II) the carrier provided at least 25
percent of the nonmail freight service (as
calculated in subsection (i)(6)) on the city
pair route for the 6 months immediately
preceding the date on which the carrier seeks
such tender;
``(E)(i) shall not offer equitable tender of nonpriority
mainline bypass mail at mainline rates to a bush carrier
operating from an acceptance point to a hub point, except as
described in subparagraph (C); and
``(ii) may tender nonpriority bypass mail at bush rates to
a bush carrier if the Postal Service determines that--
``(I) the bush carrier meets the requirements of
paragraph (1);
``(II) the service to be provided on such route by
the bush carrier is not otherwise available through
direct mainline service; and
``(III) tender of mail to such bush carrier will
not decrease the efficiency of nonpriority bypass mail
service (in terms of payments to all carriers providing
service on the city pair route and timely delivery) for
the route;
``(F) may offer tender of nonpriority bypass mail to a
passenger carrier from an acceptance point to a destination
city beyond a hub point at a composite rate if the Postal
Service determines that--
``(i) the carrier provides passenger service in
accordance with the requirements of subsection (h)(2);
``(ii) the carrier qualifies under subsection (h)
to be tendered nonpriority bypass mail out of the hub
point being bypassed;
``(iii) the tender of such mail will not decrease
efficiency of delivery of nonpriority bypass mail
service into or out of the hub point being bypassed;
and
``(iv) such tender will result in reduced payments
to the carrier by the Postal Service over flying the
entire route; and
``(G) notwithstanding subparagraph (F), shall offer
equitable tender of nonpriority bypass mail in proportion to
passenger and non-mail freight mail pools described in this
section between qualified passenger and non-mail freight
carriers on a route from an acceptance point to a bush
destination at a composite rate if--
``(i)(I) for a passenger carrier, the carrier
receiving the composite rate provided 20 percent of the
passenger service on the city pair route for the 12
months immediately preceding the date on which the
carrier seeks tender of such mail; or
``(II) for a nonmail freight carrier, the carrier
receiving the composite rate provided at least 25
percent of the nonmail freight service for the 12
months immediately preceding the date on which the
carrier seeks tender of such mail; and
``(ii)(I) nonpriority bypass mail was being
tendered to a passenger carrier or a nonmail freight
carrier at a composite rate on such city pair route on
January 1, 2000; or
``(II) the hub being bypassed was not served by a
mainline carrier on January 1, 2000.
The tender of nonpriority bypass mail under subparagraph (G) shall be
on an equitable basis between the qualified carriers that provide the
direct service on the city pair route and the qualified carriers that
provide service between the hub point being bypassed and the
destination point, based on the volume of nonpriority bypass mail on
both routes.''.
(4) Selection of carriers to hub points.--Section 5402(g)
of title 39, United States Code, is amended by adding at the
end the following:
``(4)(A) Except as provided under subparagraph (B) and paragraph
(5), the Postal Service shall select only existing mainline carriers to
provide nonpriority bypass mail service between an acceptance point and
a hub point in the State of Alaska.
``(B) The Postal Service may select a carrier other than an
existing mainline carrier to provide nonpriority bypass mail service on
a mainline route in the State of Alaska if--
``(i) the Postal Service determines (in accordance with
criteria established in advance by the Postal Service) that the
mail service between the acceptance point and the hub point is
deficient and provides written notice of the determination to
existing mainline carriers to the hub point; and
``(ii) after the 30-day period following issuance of notice
under clause (i), including notice of inadequate capacity, the
Postal Service determines that deficiencies in service to the
hub point have not been eliminated.
``(5)(A) The Postal Service shall offer equitable tender of
nonpriority bypass mail to a new 121 mainline passenger carrier
entering a mainline route in the State of Alaska, if that carrier--
``(i) meets the requirements of subsection (g)(1)(D)(ii);
and
``(ii) has provided at least the same number of insured
passenger seats as the number of available passenger seats
being provided by the mainline passenger carrier providing the
greatest number of available passenger seats on that route for
the 6 months immediately preceding the date on which such
carrier seeks tender.
``(B) A new 121 mainline passenger carrier that is tendered
nonpriority mainline bypass mail under subparagraph (A)--
``(i) shall be eligible for equitable tender of such mail
only on city pair routes where the carrier meets the conditions
of subparagraph (A);
``(ii) may not count the passenger service provided under
subparagraph (A) toward the carrier meeting the minimum
requirements of this section; and
``(iii) shall provide at least 20 percent of the passenger
service (based on T-100 data) on such route to remain eligible
to be tendered nonpriority mainline bypass mail.
``(C) Notwithstanding paragraphs (1)(B) and (5)(A), a new 121
mainline passenger carrier, otherwise qualified under this subsection,
may immediately receive equitable tender of nonpriority mainline bypass
mail to a hub point if it meets the requirements of subsections
(g)(1)(A), (C), and (D) and (h)(2)(B) and--
``(i) all qualified 121 mainline passenger carriers
discontinue service on that city pair route; or
``(ii) no 121 mainline passenger carrier serves that city
pair route.
``(D) A carrier operating under a code share agreement on the date
of enactment of the Rural Service Improvement Act of 2002 that received
tender of nonpriority mainline bypass mail on a city pair route may
count the passenger service provided under the entire code share
arrangement on such route if the code share agreement terminates. That
carrier shall continue to provide at least 20 percent of the passenger
service (based on T-100 data) between the city pair as a 121 mainline
passenger carrier while seeking such tender.
``(6)(A) Notwithstanding subsection (g)(1)(B), passenger carriers
providing Essential Air Service under a Department of Transportation
order issued under subchapter II of chapter 417 of title 49, U.S.C.,
shall be tendered all nonpriority mail, in addition to all nonpriority
bypass mail, by the Postal Service to destination cities served by the
Essential Air Service flights consistent with that order unless the
Postal Service finds that the Essential Air Service carrier's service
does not meet the needs of the Postal Service.
``(B) Service provided under this paragraph, including service
provided to points served in conjunction with service being subsidized
under the Essential Air Service contract, may not be applied toward any
of the minimum eligibility requirements of this section.''.
(5) Selection of carriers to bush points.--Section 5402 of
title 39, United States Code, is amended by adding at the end
the following:
``(h)(1) Except as provided under paragraph (7), on a given city
pair route, the Postal Service shall offer equitable tender of 70
percent of the nonpriority bypass mail on that route to all carriers
providing scheduled passenger service in accordance with part 121 or
part 135 that--
``(A) meet the requirements of subsection (g)(1);
``(B) provided 20 percent or more of the passenger service
(as calculated in paragraph (5)) between the city pair for the
12 months preceding the date on which the 121 passenger
aircraft or the 135 passenger carrier seek tender of
nonpriority bypass mail; and
``(C) meet the requirements of paragraph (2).
``(2) To remain eligible for equitable tender under this
subsection, the carrier or aircraft shall--
``(A) continue to provide not less than 20 percent of the
passenger service on the city pair route for which the carrier
is seeking the tender of such nonpriority bypass mail;
``(B)(i) for operations under part 121, operate aircraft
type certificated to carry at least 19 passengers;
``(ii) for operations under part 135, operate aircraft type
certificated to carry at least 5 passengers; or
``(iii) for operations under part 135 where only a water
landing is available, operate aircraft type certificated to
carry at least 3 passengers;
``(C) insure all available passenger seats on the city pair
route on which the carrier seeks tender of such mail; and
``(D) operate flights under its published schedule.
``(3)(A) Except as provided under subparagraph (E), if a 135
passenger carrier serves a city pair route and meets the requirements
of paragraph (1) or (2) when a 121 passenger carrier becomes qualified
to be tendered nonpriority bypass mail on such route with a 121
passenger aircraft in accordance with paragraphs (1) and (2), the
qualifying 135 passenger carriers on that route shall convert to
operations with a 121 passenger aircraft within 5 years after the 121
passenger aircraft begins receiving tender on that route in order to
remain eligible for equitable tender under paragraph (1). The 135
carrier shall--
``(i) begin the process of conversion not later than 2
years after the 121 passenger aircraft begins carrying
nonpriority bypass mail on that route; and
``(ii) submit a part 121 compliance statement not later
than 4 years after the 121 passenger aircraft begins carrying
nonpriority bypass mail on that route.
``(B) Completion of conversion under subparagraph (A) shall not be
required if all 121 passenger carriers discontinue the carriage of
nonpriority bypass mail with 121 passenger aircraft on the city pair
route.
``(C) Any qualified carrier operating in the State of Alaska under
this section may request a waiver from subparagraph (A). Such a
request, at the discretion of the Secretary, may be granted for good
cause shown. The requesting party shall state the basis for such a
waiver.
``(D) If 6 years and 3 months after the date of enactment of the
Rural Service Improvement Act of 2002, a 135 passenger carrier is
providing service on a city pair route and a 121 passenger aircraft
becomes eligible to receive tender of nonpriority bypass mail on that
route, that 135 passenger carrier shall convert to operations under
part 121 within 12 months of the 121 passenger carrier being tendered
nonpriority bypass mail. The Postal Service shall not continue the
tender of nonpriority bypass mail to a 135 passenger carrier that fails
to convert to part 121 operations within 12 months after the 121
passenger carrier being tendered such mail under this paragraph.
``(E) Notwithstanding the requirements of this subsection, if only
1 passenger carrier or aircraft is qualified to be tendered nonpriority
bypass mail as a passenger carrier or aircraft on a city pair route,
the Postal Service shall tender 20 percent of the nonpriority bypass
mail described under paragraph (1) to the passenger carrier or aircraft
providing the next highest level of passenger service on such route.
``(4) Qualification for the tender of mail under this subsection
shall not be counted toward the minimum qualifications necessary to be
tendered nonpriority bypass mail on any other route.
``(5)(A)(i) In this section, the percent of the passenger service
shall be calculated using the data provided as described under
subsection (k).
``(ii) The Postal Service shall compare the resulting percentage
under clause (i) to the lesser of--
``(I) the amount of the passenger excise tax paid by or on
behalf of a carrier, as determined by reviewing the collected
amount of base fares for passengers actually flown by a carrier
from the origination point to the destination point, divided by
the value of the total passenger excise taxes, as determined by
reviewing the collected amount of base fares paid by or on
behalf of all passenger carriers providing service from the hub
point to the bush destination point; or
``(II) the amount of half of the passenger excise tax paid
by or on behalf of a carrier, as determined by reviewing the
collected amount of base fares for passengers actually flown by
a carrier on the city pair route, divided by the value of the
total passenger excise taxes, as determined by reviewing the
collected amount of base fares paid by or on behalf of all
passenger carriers providing service between the origination
point and the destination point.
``(B) For the purposes of calculating passenger service as
described under subparagraph (A), a bush passenger carrier providing
intervillage bush passenger service may include the carriage of
passengers carried along any point of the route between the route's
origination point and the final destination point. Such calculation
shall be based only on the carriage of passengers on regularly
scheduled flights and only on flights being flown in a direction away
from the hub point. Passenger service provided on chartered flights
shall not be included in the carrier's calculation of passenger
service.
``(6)(A) The Secretary shall establish new bush rates for passenger
carriers receiving tender of nonpriority bypass mail under this
subsection.
``(B) The Secretary shall establish a bush rate based on data
collected under subsection (k) from 121 bush passenger carriers. Such
rates shall be paid to all bush passenger carriers operating on city
pair routes where a 121 bush passenger carrier is tendered nonpriority
bypass mail.
``(C) The Secretary shall establish a bush rate based on data
collected under subsection (k) from 135 bush passenger carriers. Such
rates shall be paid to all bush passenger carriers operating on city
pair routes where no 121 bush passenger carrier is tendered nonpriority
bypass mail.
``(D) The Secretary shall establish a bush rate based on data
collected under subsection (k) from bush passenger carriers operating
aircraft on city pair routes where only water landings are available.
Such rates shall be paid to all bush passenger carriers operating on
the city pair routes where only water landings are available.
``(7) The percentage rate in paragraph (1) shall be 75 percent 3
years and 3 months after the date of enactment of the Rural Service
Improvement Act of 2002.
``(i)(1) Except as provided under paragraph (7), on a given city
pair route, the Postal Service shall offer equitable tender of 20
percent of the nonpriority bypass mail on such route to those carriers
transporting 25 percent or more of the total nonmail freight (in
revenue or weight as determined by the Postal Service), for the 12
months immediately preceding the date on which the freight carrier
seeks tender of nonpriority bypass mail.
``(2) To remain eligible for equitable tender under this
subsection, a freight carrier shall continue to provide not less than
25 percent of the nonmail freight service on the city pair route for
which the carrier is seeking tender of such mail.
``(3) If a new freight carrier enters a market, that freight
carrier shall meet the minimum requirements of subsection (g)(1) and
shall operate for 12 months on a given city pair route before being
eligible for equitable tender of nonpriority bypass mail on that route.
``(4) If no carrier qualifies for tender of nonpriority bypass mail
under this subsection, such mail to be divided under this subsection,
as described in paragraph (1), shall be tendered to the nonmail freight
carrier providing the highest percentage of nonmail freight service (in
terms of revenue or weight as determined by the Postal Service as
calculated under paragraph (6)) on the city pair route. If no nonmail
freight carrier is present on a route to receive tender of nonpriority
bypass mail under this paragraph, the nonpriority bypass mail to be
divided under paragraph (1) shall be divided equitably among carriers
qualified under subsection (h).
``(5) Qualification for the tender of mail under this subsection
shall not be counted toward the minimum qualifications necessary to be
tendered nonpriority bypass mail on any other route.
``(6)(A) In this subsection, the percent of nonmail freight shall
be calculated, using the data provided pursuant to subsection (k), by
dividing the revenue of, or weight of, (as determined by the Postal
Service) nonmail freight earned by or carried by a carrier from the
transport of nonmail freight from an origination point to a destination
point by the total amount of revenue earned, or the weight of, nonmail
freight carried (as determined by the Postal Service) by all carriers
from the transport of nonmail freight from the origination point to the
destination point.
``(B) The Postal Service shall compare the resulting percentage
under subparagraph (A) to the lesser of--
``(i) the amount of the freight excise tax paid by or on
behalf of a carrier, as determined by reviewing the collected
amount of base fares for nonmail freight actually flown by a
carrier from the origination point to the destination point,
divided by the value of the total nonmail freight excise taxes,
as determined by reviewing the collected amount of base fares
paid by or on behalf of all nonmail freight carriers providing
service from the origination point to the destination point; or
``(ii) the amount of half of the nonmail freight excise tax
paid by or on behalf of a carrier, as determined by reviewing
the collected amount of base fares for nonmail freight actually
flown by a carrier on the city pair route, divided by the value
of the total nonmail freight excise taxes, as determined by
reviewing the collected amount of base fares paid by or on
behalf of all nonmail freight carriers providing service on the
city pair route.
``(7) The percentage rate in paragraph (1) shall be 25 percent 3
years and 3 months after the date of enactment of the Rural Service
Improvement Act of 2002.
``(j)(1) Except as provided by paragraph (3), there shall be
equitable tender of 10 percent of the nonpriority bypass mail to all
carriers on each city pair route meeting the requirements of subsection
(g)(1) that do not otherwise qualify for tender under subsection (h) or
(i).
``(2) If no carrier qualifies under this subsection with respect to
a city pair route, the 10 percent of nonpriority bypass mail allocated
under paragraph (1) shall be divided evenly between the pools described
under subsections (h) and (i) to be equitably tendered among qualified
carriers under such subsections, such that--
``(A) the amount of nonpriority bypass mail available for
tender among qualified carries under subsection (h) shall be 75
percent; and
``(B) the amount of nonpriority bypass mail available for
tender among qualified carries under subsection (i) shall be 25
percent.
``(3)(A) Except as provided by subparagraph (B), the percentage
rate under paragraph (1) shall be 0 percent 3 years and 3 months after
the date of enactment of the Rural Service Improvement Act of 2002.
``(B) The percentage rate under paragraph (1) shall remain 10
percent for equitable tender for 6 years and 3 months after the date of
enactment of the Rural Service Improvement Act of 2002 for a
nonpriority bypass mail carrier on bush routes originating from the
main hub of the carrier designated under subparagraph (C), if the
carrier seeking the tender of such mail--
``(i) meets the requirements of subsection (g)(1);
``(ii) is not qualified under subsection (h) or (i);
``(iii) operates routes originating from the main hub of
the carrier designated under subparagraph (C); and
``(iv) has invested at least $500,000 in a physical hanger
facility prior to January 1, 2002 in such a hub city.
``(C) For purposes of subparagraph (B), a carrier may designate
only one hub city as its main hub and once such designation is
transmitted to the Postal Service it may not be changed. Such selection
and transmission must be transmitted to the Postal Service within 6
months of the date of enactment of the Rural Service Improvement Act of
2002. A carrier attempting to receive tender of nonpriority bypass mail
under this subsection shall not be eligible for such tender after the
carrier becomes qualified for tender of nonpriority bypass mail under
subsection (h) or (i) on any route. The purchase of another carrier's
hanger facility after such date of enactment shall not be considered
sufficient to meet the requirement of subparagraph (B)(iv).
``(k)(1) Not less than every 2 years, in conjunction with annual
updates, the Secretary shall review the need for a bush mail rate
investigation. The Secretary shall use show cause procedures to
speedily and more accurately determine the cost of providing bush mail
service. In determining such rates, the Secretary shall not take into
account the cost of passenger insurance rates or premiums paid by the
passenger carriers or other costs associated with passenger service.
``(2) In order to assure sufficient, reliable, and timely traffic
data to meet the requirements of this subsection, the Secretary shall
require--
``(A) the monthly submission of the bush carrier's data on
T-100 diskettes, or any other suitable form of data collection,
as determined by the Secretary; and
``(B) the carriers to retain all books, records, and other
source and summary documentation to support their reports and
to preserve and maintain such documentation in a manner that
readily permits the audit and examination by representatives of
the Postal Service or the Secretary.
``(3) Documentation under paragraph (2) shall be retained for 7
years or until the Secretary indicates that the records may be
destroyed. Copies of flight logs for aircraft sold or disposed of shall
be retained.
``(4) Carriers qualified to be tendered nonpriority bypass mail
shall submit to the Secretary the number and type of aircraft in the
carrier's fleet, the level of passenger insurance covering its fleet,
and the name of the insurance company providing such coverage.
``(5) Not later than 30 days after the last day of each calendar
month, carriers shall report to the Secretary the excise taxes paid by
city pair to the Department of the Treasury and the weight of and
revenue earned by the carriage of nonmail freight. Final compiled data
shall be made available to carriers providing service in the hub.
``(l) No qualified carrier may be tendered nonpriority bypass mail
under subsections (h) and (i) simultaneously on a route unless no other
carrier is tendered mail under either subsection.
``(m)(1) Carriers qualifying for tender under subsections (h) and
(i) simultaneously shall be tendered nonpriority bypass mail under
subsection (h).
``(2) A carrier shall be tendered nonpriority bypass mail under
subsection (i) if that carrier--
``(A) was qualified under both subsections (h) and (i)
simultaneously; and
``(B) becomes unqualified under subsection (h) but remains
qualified under subsection (i).
``(n)(1) A carrier operation resulting from a merger or acquisition
between any 2 carriers operating between points in Alaska shall have
the passenger and nonmail freight of all such merged or acquired
carriers on the applicable route counted toward meeting the resulting
carrier's minimum requirements to receive equitable tender of
nonpriority bypass mail on such route for the 6-month period following
the merger or acquisition.
``(2) After the 6-month period described under paragraph (1), the
carrier resulting from the merger or acquisition shall demonstrate that
the carrier meets the minimum passenger or nonmail freight carriage
requirements of this section to continue receiving tender of such mail.
``(o) In addition to any penalties applied to a carrier by the
Federal Aviation Administration or the Secretary, any carrier that
significantly misstates passenger or nonmail freight data required to
be reported under this section on any route, in an attempt to qualify
for tender of nonpriority bypass mail, shall receive--
``(1) a 1-month suspension of tender of nonpriority bypass
mail on the route where the data was misstated for the first
offense;
``(2) a 6-month suspension of tender of nonpriority bypass
mail on the route where the data was misstated for the second
offense;
``(3) a 1-year suspension of tender of all nonpriority
bypass mail in the entire State of Alaska for the third offense
in the State; and
``(4) a permanent suspension of tender of all nonpriority
bypass mail in the entire State of Alaska for the fourth
offense in the State.
``(p)(1) The Postal Service or the Secretary, in carrying out
subsection (g)(2), (h), or (i), may deny equitable tender to an
otherwise qualified carrier who does not operate under this section in
good faith.
``(2) The Postal Service or the Secretary may waive any provision
of subsection (h) or (i), if the carrier provides substantial passenger
or nonmail freight service on the route where the carrier seeks tender
of nonpriority bypass mail.
``(3) In granting waivers for or denying tender to carriers under
this subsection, the Postal Service or the Secretary shall consider--
``(A) the passenger needs of the destination to be served
(including amount and level);
``(B) the nonmail freight needs of the destination to be
served;
``(C) the mail needs of the destination to be served;
``(D) the amount or level of passenger service already
available to the destination;
``(E) the amount of nonmail freight service already
available to the destination;
``(F) the amount of nonpriority bypass mail service already
available to the destination; and
``(G) the savings to the Postal Service in terms of
payments made to carriers.
``(q) The Secretary shall make a regular review of carriers
receiving, or attempting to qualify to receive, equitable tender of
nonpriority bypass mail. If the Secretary suspends or revokes an
operating certificate, the Secretary shall notify the Postal Service.
Upon such notification, the Postal Service shall cease tender of mail
to such carrier until the Secretary certifies the carrier is operating
in a safe manner. Upon such receipt, the carrier shall demonstrate that
it otherwise meets the minimum carriage requirements of this section
before being tendered mail under this section.
``(r) The Postal Service shall have the authority to tender
nonpriority bypass mail to any carrier that meets the requirements of
subsection (g)(1) on any route on an emergency basis. Such emergency
tender shall cease when a carrier qualifies for tender on such route
under the terms of this section.
``(s) Notwithstanding any other provision of law, and except for
written contracts authorized under subsections (b), (c) and (d) of this
section, tender by the Postal Service of any category of mail to a
carrier for transportation between any two points within the State of
Alaska shall not give rise to any contract between the Postal Service
and a carrier, nor shall any such carrier acquire any right in
continued or future tender of such mail by virtue of past or present
receipt of such mail. This subsection shall apply to any case commenced
before, on, or after the date of enactment of this subsection.''.
(d) Actions of Air Carriers To Qualify.--Beginning 6 months after
the date of enactment of this Act, if the Secretary determines, based
on the Secretary's findings and recommendations of the Postal Service,
that an air carrier being tendered nonpriority bush bypass mail is not
taking actions to attempt to qualify as a bush passenger or nonmail
freight carrier under section 5402 of title 39, United States Code, (as
amended by this Act) the Postal Service shall immediately cease tender
of all nonpriority bypass mail to such carrier.
(e) Technical and Conforming Amendments.--
(1) Title 39.--Section 5402 of title 39, United States
Code, is amended--
(A) in subsections (b) through (e) (as redesignated
by this Act) and subsection (f) by striking ``Secretary
of Transportation'' each place it appears and inserting
``Secretary''; and
(B) in subsection (f)--
(i) by striking ``subsections (a), (b), and
(c)'' and inserting ``subsections (b), (c), and
(d)''; and
(ii) by striking ``subsection (d)'' and
inserting ``subsection (e)''.
(2) Title 49.--Section 41901 of title 49, United States
Code, is amended in subsection (a), by striking ``5402(d)'' and
inserting ``5402(e)''.
(f) Reports to Congress.--Not later than 12 months after the date
of enactment of this Act, the Postal Service and the Secretary of
Transportation shall submit a report to the Committee on Government
Reform of the House of Representatives and the Committee on
Governmental Affairs of the Senate on the progress of implementing this
Act.
(g) Effective Dates.--
(1) In general.--Except as provided under paragraphs (2)
and (3), this Act (including the amendments made by this Act)
shall take effect on the date of enactment of this Act.
(2) Selection of carriers.--Subsection (c)(5) shall take
effect 15 months after the date of enactment of this Act.
<all>