[Pages S898-S968]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

POSTAL ACCOUNTABILITY AND ENHANCEMENT ACT

Mr. FRIST. Mr. President, I ask unanimous consent that the Senate
proceed to the immediate consideration of Calendar No. 164, S. 662.
The PRESIDING OFFICER. The clerk will report the bill by title.
The assistant legislative clerk read as follows:

A bill (S. 662) to reform the postal laws of the United
States.

There being no objection, the Senate proceeded to consider the bill,
which had been reported from the Committee on Homeland Security and
Governmental Affairs, with an amendment.
(Strike the part shown in black brackets and insert the part shown in
italic.)

S. 662

Be it enacted by the Senate and House of Representatives
of the United States of America in Congress assembled,

[SECTION 1. SHORT TITLE; TABLE OF CONTENTS.

[(a) Short Title.--This Act may be cited as the ``Postal
Accountability and Enhancement Act''.
[(b) Table of Contents.--The table of contents for this Act
is as follows:

[Sec. 1. Short title; table of contents.

[TITLE I--DEFINITIONS; POSTAL SERVICES

[Sec. 101. Definitions.
[Sec. 102. Postal services.

[TITLE II--MODERN RATE REGULATION

[Sec. 201. Provisions relating to market-dominant products.
[Sec. 202. Provisions relating to competitive products.
[Sec. 203. Provisions relating to experimental and new products.
[Sec. 204. Reporting requirements and related provisions.
[Sec. 205. Complaints; appellate review and enforcement.
[Sec. 206. Clerical amendment.

[TITLE III--MODERN SERVICE STANDARDS

[Sec. 301. Establishment of modern service standards.
[Sec. 302. Postal service plan.

[TITLE IV--PROVISIONS RELATING TO FAIR COMPETITION

[Sec. 401. Postal Service Competitive Products Fund.
[Sec. 402. Assumed Federal income tax on competitive products income.
[Sec. 403. Unfair competition prohibited.
[Sec. 404. Suits by and against the Postal Service.
[Sec. 405. International postal arrangements.

[TITLE V--GENERAL PROVISIONS

[Sec. 501. Qualification and term requirements for Governors.
[Sec. 502. Obligations.
[Sec. 503. Private carriage of letters.
[Sec. 504. Rulemaking authority.
[Sec. 505. Noninterference with collective bargaining agreements.
[Sec. 506. Bonus authority.

[TITLE VI--ENHANCED REGULATORY COMMISSION

[Sec. 601. Reorganization and modification of certain provisions
relating to the Postal Regulatory Commission.
]Sec. 602. Authority for Postal Regulatory Commission to issue
subpoenas.
[Sec. 603. Appropriations for the Postal Regulatory Commission.
[Sec. 604. Redesignation of the Postal Rate Commission.
[Sec. 605. Financial transparency.

[TITLE VII--EVALUATIONS

[Sec. 701. Assessments of ratemaking, classification, and other
provisions.
[Sec. 702. Report on universal postal service and the postal monopoly.
[Sec. 703. Study on equal application of laws to competitive products.
[Sec. 704. Report on postal workplace safety and workplace-related
injuries.
[Sec. 705. Study on recycled paper.

[TITLE VIII--POSTAL SERVICE RETIREMENT AND HEALTH BENEFITS FUNDING

[Sec. 801. Short title.
[Sec. 802. Civil Service Retirement System.
[Sec. 803. Health insurance.
[Sec. 804. Repeal of disposition of savings provision.
[Sec. 805. Effective dates.

[TITLE IX--COMPENSATION FOR WORK INJURIES

[Sec. 901. Temporary disability; continuation of pay.

[[Page S899]]

[Sec. 902. Disability retirement for postal employees.

[TITLE X--MISCELLANEOUS

[Sec. 1001. Employment of postal police officers.
[Sec. 1002. Expanded contracting authority.
[Sec. 1003. Report on the United States Postal Inspection Service and
the Office of the Inspector General of the United States
Postal Service.
[Sec. 1004. Sense of Congress regarding Postal Service purchasing
reform.

[TITLE I--DEFINITIONS; POSTAL SERVICES

[SEC. 101. DEFINITIONS.

[Section 102 of title 39, United States Code, is amended by
striking ``and'' at the end of paragraph (3), by striking the
period at the end of paragraph (4) and inserting a semicolon,
and by adding at the end the following:
[``(5) `postal service' refers to the physical delivery of
letters, printed matter, or packages weighing up to 70
pounds, including physical acceptance, collection, sorting,
transportation, or other functions ancillary thereto;
[``(6) `product' means a postal service with a distinct
cost or market characteristic for which a rate or rates are
applied;
[``(7) `rates', as used with respect to products, includes
fees for postal services;
[``(8) `market-dominant product' or `product in the market-
dominant category of mail' means a product subject to
subchapter I of chapter 36; and
[``(9) `competitive product' or `product in the competitive
category of mail' means a product subject to subchapter II of
chapter 36; and
[``(10) `year', as used in chapter 36 (other than
subchapters I and VI thereof), means a fiscal year.''.

[SEC. 102. POSTAL SERVICES.

[(a) In General.--Section 404 of title 39, United States
Code, is amended--
[(1) in subsection (a), by striking paragraph (6) and by
redesignating paragraphs (7) through (9) as paragraphs (6)
through (8), respectively; and
[(2) by adding at the end the following:
[``(c) Except as provided in section 411, nothing in this
title shall be considered to permit or require that the
Postal Service provide any special nonpostal or similar
services.''.
[(b) Conforming Amendments.--(1) Section 1402(b)(1)(B)(ii)
of the Victims of Crime Act of 1984 (98 Stat. 2170; 42 U.S.C.
10601(b)(1)(B)(ii)) is amended by striking ``404(a)(8)'' and
inserting ``404(a)(7)''.
[(2) Section 2003(b)(1) of title 39, United States Code, is
amended by striking ``and nonpostal''.

[TITLE II--MODERN RATE REGULATION

[SEC. 201. PROVISIONS RELATING TO MARKET-DOMINANT PRODUCTS.

[(a) In General.--Chapter 36 of title 39, United States
Code, is amended by striking sections 3621 and 3622 and
inserting the following:

[``Sec. 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 referred to in
subsection (a) shall, for purposes of this subchapter, be
considered to have the meaning given to such mail matter
under the mail classification schedule.

[``Sec. 3622. Modern rate regulation

[``(a) Authority Generally.--The Postal Regulatory
Commission shall, within 12 months after the date of
enactment of this section, by regulation establish (and may
from time to time thereafter by regulation revise) a modern
system for regulating rates and classes for market-dominant
products.
[``(b) Objectives.--Such system shall be designed to
achieve the following objectives:
[``(1) To reduce the administrative burden and increase the
transparency of the ratemaking process while affording
reasonable opportunities for interested parties to
participate in that process.
[``(2) To create predictability and stability in rates.
[``(3) To maximize incentives to reduce costs and increase
efficiency.
[``(4) To enhance mail security and deter terrorism by
promoting secure, sender-identified mail.
[``(5) To allow the Postal Service pricing flexibility,
including the ability to use pricing to promote intelligent
mail and encourage increased mail volume during nonpeak
periods.
[``(6) To assure adequate revenues, including retained
earnings, to maintain financial stability and meet the
service standards established under section 3691.
[``(7) To allocate the total institutional costs of the
Postal Service equitably between market-dominant and
competitive products.
[``(c) Factors.--In establishing or revising such system,
the Postal Regulatory Commission shall take into account--
[``(1) the establishment and maintenance of a fair and
equitable schedule for rates and classification system;
[``(2) 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;
[``(3) the requirement that each class of mail or type of
mail service bear the direct and indirect postal costs
attributable to each class or type of mail service plus that
portion of all other costs of the Postal Service reasonably
assignable to such class or type;
[``(4) the effect of rate increases upon the general
public, business mail users, and enterprises in the private
sector of the economy engaged in the delivery of mail matter
other than letters;
[``(5) the available alternative means of sending and
receiving letters and other mail matter at reasonable costs;
[``(6) the degree of preparation of mail for delivery into
the postal system performed by the mailer and its effect upon
reducing costs to the Postal Service;
[``(7) 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;
[``(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 classifications with
extremely high degrees of reliability and speed of delivery
and of providing those that do not require high degrees of
reliability and speed of delivery;
[``(10) the desirability of special classifications from
the point of view of both the user and of the Postal Service;
[``(11) the educational, cultural, scientific, and
informational value to the recipient of mail matter;
[``(12) the need for the Postal Service to increase its
efficiency and reduce its costs, including infrastructure
costs, to help maintain high quality, affordable, universal
postal service; and
[``(13) 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 products shall--
[``(A) require the Postal Regulatory Commission to set
annual limitations on the percentage changes in rates based
on the Consumer Price Index for All Urban Consumers
unadjusted for seasonal variation over the 12-month period
preceding the date the Postal Service proposes 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 implementation of
any adjustment in rates under this section--
[``(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 subparagraph (A);
and
[``(D) notwithstanding any limitation set under
subparagraphs (A) and (C), establish procedures whereby rates
may be adjusted on an expedited basis due to unexpected and
extraordinary circumstances.
[``(2) Limitations.--
[``(A) Classes of mail.--The annual limitations 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 Accountability 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 increase for
any class to exceed the Consumer Price Index for All Urban
Consumers.
[``(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 Regulatory Commission
under subsection (a).
[``(2) Regulations.--As part of the regulations established
under subsection (a), the Postal Regulatory Commission shall
establish rules for workshare discounts that 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 workshare 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

[[Page S900]]

Postal Service avoids as a result of the workshare activity
will be phased out over a limited period of time;
[``(B) a reduction in the discount would--
[``(i) 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 category
or subclass subject to the discount below what it otherwise
would have been if the discount had not been reduced to costs
avoided;
[``(ii) result in a further increase in the rates paid by
mailers not able to take advantage of the discount; or
[``(iii) impede the efficient operation of the Postal
Service;
[``(C) the amount of the discount above costs avoided--
[``(i) is necessary to mitigate rate shock; and
[``(ii) will be phased out over time; or
[``(D) the discount is provided in connection with
subclasses of mail consisting exclusively of mail matter of
educational, cultural, scientific, or informational value.
[``(3) Report.--Whenever the Postal Service establishes or
maintains a workshare discount, the Postal Service shall, at
the time it publishes the workshare discount rate, submit to
the Postal Regulatory Commission a detailed report that--
[``(A) explains the Postal Service's reasons for
establishing or maintaining the rate;
[``(B) sets forth the data, economic analyses, and other
information relied on by the Postal Service to justify the
rate; and
[``(C) certifies that the discount will not adversely
affect rates or services provided to users of postal services
who do not take advantage of the discount rate.
[``(f) Transition Rule.--Until regulations under this
section first take effect, 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 section.''.
[(b) Repealed Sections.--Sections 3623, 3624, 3625, and
3628 of title 39, United States Code, are repealed.
[(c) Redesignation.--Chapter 36 of title 39, United States
Code (as in effect after the amendment made by section 601,
but before the amendment made by section 202) is amended by
striking the heading for subchapter II and inserting the
following:

[``SUBCHAPTER I--PROVISIONS RELATING TO MARKET-DOMINANT PRODUCTS''.

[SEC. 202. PROVISIONS RELATING TO COMPETITIVE PRODUCTS.

[Chapter 36 of title 39, United States Code, is amended by
inserting after section 3629 the following:

[``SUBCHAPTER II--PROVISIONS RELATING TO COMPETITIVE PRODUCTS

[``Sec. 3631. Applicability; definitions and updates

[``(a) Applicability.--This subchapter shall apply with
respect to--
[``(1) priority mail;
[``(2) expedited mail;
[``(3) bulk parcel post;
[``(4) bulk international mail; and
[``(5) mailgrams;

[subject to subsection (d) and any changes the Postal
Regulatory Commission may make under section 3642.
[``(b) Definition.--For purposes of this subchapter, the
term `costs attributable', as used with respect to a product,
means the direct and indirect postal costs attributable to
such product.
[``(c) Rule of Construction.--Mail matter referred to in
subsection (a) shall, for purposes of this subchapter, be
considered to have the meaning given to such mail matter
under the mail classification schedule.
[``(d) Limitation.--Notwithstanding any other provision of
this section, nothing in this subchapter shall be considered
to apply with respect to any product then currently in the
market-dominant category of mail.

[``Sec. 3632. Action of the Governors

[``(a) Authority To Establish Rates and Classes.--The
Governors, with the written concurrence of a majority of all
of the Governors then holding office, shall establish rates
and classes for products in the competitive category of mail
in accordance with the requirements of this subchapter and
regulations promulgated under section 3633.
[``(b) Procedures.--
[``(1) In general.--Rates and classes shall be established
in writing, complete with a statement of explanation and
justification, and the date as of which each such rate or
class takes effect.
[``(2) Public notice; review; and compliance.--Not later
than 30 days before the date of implementation of any
adjustment in rates under this section--
[``(A) the Governors shall provide public notice of the
adjustment and an opportunity for review by the Postal
Regulatory Commission;
[``(B) the Postal Regulatory Commission shall notify the
Governors of any noncompliance of the adjustment with section
3633; and
[``(C) the Governors shall respond to the notice provided
under subparagraph (B) and describe the actions to be taken
to comply with section 3633.
[``(c) Transition Rule.--Until regulations under section
3633 first take effect, rates and classes for competitive
products shall remain subject to modification in accordance
with the provisions of this chapter and section 407, as such
provisions were as last in effect before the date of
enactment of this section.

[``Sec. 3633. Provisions applicable to rates for competitive
products

[``(a) In General.--The Postal Regulatory Commission shall,
within 180 days after the date of enactment of this section,
promulgate (and may from time to time thereafter revise)
regulations to--
[``(1) prohibit the subsidization of competitive products
by market-dominant products;
[``(2) ensure that each competitive product covers its
costs attributable; and
[``(3) ensure that all competitive products collectively
cover their share of the institutional costs of the Postal
Service.
[``(b) Review of Minimum Contribution.--Five years after
the date of enactment of this section, and every 5 years
thereafter, the Postal Regulatory Commission shall conduct a
review to determine whether the institutional costs
contribution requirement under subsection (a)(3) should be
retained in its current form, modified, or eliminated. In
making its determination, the Commission shall consider all
relevant circumstances, including the prevailing competitive
conditions in the market, and the degree to which any costs
are uniquely or disproportionately associated with any
competitive products.''.

[SEC. 203. PROVISIONS RELATING TO EXPERIMENTAL AND NEW
PRODUCTS.

[Subchapter III of chapter 36 of title 39, United States
Code, is amended to read as follows:

[``SUBCHAPTER III--PROVISIONS RELATING TO EXPERIMENTAL AND NEW PRODUCTS

[``Sec. 3641. Market tests of experimental products

[``(a) Authority.--
[``(1) In general.--The Postal Service may conduct market
tests of experimental products in accordance with this
section.
[``(2) Provisions waived.--A product shall not, while it is
being tested under this section, be subject to the
requirements of sections 3622, 3633, or 3642, or regulations
promulgated under those sections.
[``(b) Conditions.--A product may not be tested under this
section unless it satisfies each of the following:
[``(1) Significantly different product.--The product is,
from the viewpoint of the mail users, significantly different
from all products offered by the Postal Service within the 2-
year period preceding the start of the test.
[``(2) Market disruption.--The introduction or continued
offering of the product will not create an unfair or
otherwise inappropriate competitive advantage for the Postal
Service or any mailer, particularly in regard to small
business concerns (as defined under subsection (h)).
[``(3) Correct categorization.--The Postal Service
identifies the product, for the purpose of a test under this
section, as either market-dominant or competitive, consistent
with the criteria under section 3642(b)(1). Costs and
revenues attributable to a product identified as competitive
shall be included in any determination under section
3633(3)(relating to provisions applicable to competitive
products collectively). Any test that solely affects products
currently classified as competitive, or which provides
services ancillary to only competitive products, shall be
presumed to be in the competitive product category without
regard to whether a similar ancillary product exists for
market-dominant products.
[``(c) Notice.--
[``(1) In general.--At least 30 days before initiating a
market test under this section, the Postal Service shall file
with the Postal Regulatory Commission and publish in the
Federal Register a notice--
[``(A) setting out the basis for the Postal Service's
determination that the market test is covered by this
section; and
[``(B) describing the nature and scope of the market test.
[``(2) Safeguards.--For a competitive experimental product,
the provisions of section 504(g) shall be available with
respect to any information required to be filed under
paragraph (1) to the same extent and in the same manner as in
the case of any matter described in section 504(g)(1).
Nothing in paragraph (1) shall be considered to permit or
require the publication of any information as to which
confidential treatment is accorded under the preceding
sentence (subject to the same exception as set forth in
section 504(g)(3)).
[``(d) Duration.--
[``(1) In general.--A market test of a product under this
section may be conducted over a period of not to exceed 24
months.
[``(2) Extension authority.--If necessary in order to
determine the feasibility or desirability of a product being
tested under this section, the Postal Regulatory Commission
may, upon written application of the Postal Service (filed
not later than 60 days before the date as of which the
testing of such product would otherwise be scheduled to
terminate under paragraph (1)), extend the testing of such
product for not to exceed an additional 12 months.
[``(e) Dollar-Amount Limitation.--
[``(1) In general.--A product may only be tested under this
section if the total revenues that are anticipated, or in
fact received, by the Postal Service from such product do not
exceed $10,000,000 in any year, subject to paragraph (2) and
subsection (g).
[``(2) Exemption authority.--The Postal Regulatory
Commission may, upon written application of the Postal
Service, exempt the market test from the limit in paragraph
(1)

[[Page S901]]

if the total revenues that are anticipated, or in fact
received, by the Postal Service from such product do not
exceed $50,000,000 in any year, subject to subsection (g). In
reviewing an application under this paragraph, the Postal
Regulatory Commission shall approve such application if it
determines that--
[``(A) the product is likely to benefit the public and meet
an expected demand;
[``(B) the product is likely to contribute to the financial
stability of the Postal Service; and
[``(C) the product is not likely to result in unfair or
otherwise inappropriate competition.
[``(f) Cancellation.--If the Postal Regulatory Commission
at any time determines that a market test under this section
fails to meet 1 or more of the requirements of this section,
it may order the cancellation of the test involved or take
such other action as it considers appropriate. A
determination under this subsection shall be made in
accordance with such procedures as the Commission shall by
regulation prescribe.
[``(g) Adjustment for Inflation.--For purposes of each year
following the year in which occurs the deadline for the
Postal Service's first report to the Postal Regulatory
Commission under section 3652(a), each dollar amount
contained in this section shall be adjusted by the change in
the Consumer Price Index for such year (as determined under
regulations of the Commission).
[``(h) Definition of a Small Business Concern.--The
criteria used in defining small business concerns or
otherwise categorizing business concerns as small business
concerns shall, for purposes of this section, be established
by the Postal Regulatory Commission in conformance with the
requirements of section 3 of the Small Business Act.
[``(i) Effective Date.--Market tests under this subchapter
may be conducted in any year beginning with the first year in
which occurs the deadline for the Postal Service's first
report to the Postal Regulatory Commission under section
3652(a).

[``Sec. 3642. New products and transfers of products between
the market-dominant and competitive categories of mail

[``(a) In General.--Upon request of the Postal Service or
users of the mails, or upon its own initiative, the Postal
Regulatory Commission may change the list of market-dominant
products under section 3621 and the list of competitive
products under section 3631 by adding new products to the
lists, removing products from the lists, or transferring
products between the lists.
[``(b) Criteria.--All determinations by the Postal
Regulatory Commission under subsection (a) shall be made in
accordance with the following criteria:
[``(1) The market-dominant category of products shall
consist of each product in the sale of which the Postal
Service exercises sufficient market power that it can
effectively set the price of such product substantially above
costs, raise prices significantly, decrease quality, or
decrease output, without risk of losing substantial business
to other firms offering similar products. The competitive
category of products shall consist of all other products.
[``(2) Exclusion of products covered by postal monopoly.--A
product covered by the postal monopoly shall not be subject
to transfer under this section from the market-dominant
category of mail. For purposes of the preceding sentence, the
term `product covered by the postal monopoly' means any
product the conveyance or transmission of which is reserved
to the United States under section 1696 of title 18, subject
to the same exception as set forth in the last sentence of
section 409(e)(1).
[``(3) Additional considerations.--In making any decision
under this section, due regard shall be given to--
[``(A) the availability and nature of enterprises in the
private sector engaged in the delivery of the product
involved;
[``(B) the views of those who use the product involved on
the appropriateness of the proposed action; and
[``(C) the likely impact of the proposed action on small
business concerns (within the meaning of section 3641(h)).
[``(c) Transfers of Subclasses and Other Subordinate Units
Allowable.--Nothing in this title shall be considered to
prevent transfers under this section from being made by
reason of the fact that they would involve only some (but not
all) of the subclasses or other subordinate units of the
class of mail or type of postal service involved (without
regard to satisfaction of minimum quantity requirements
standing alone).
[``(d) Notification and Publication Requirements.--
[``(1) Notification requirement.--The Postal Service shall,
whenever it requests to add a product or transfer a product
to a different category, file with the Postal Regulatory
Commission and publish in the Federal Register a notice
setting out the basis for its determination that the product
satisfies the criteria under subsection (b) and, in the case
of a request to add a product or transfer a product to the
competitive category of mail, that the product meets the
regulations promulgated by the Postal Regulatory Commission
under section 3633. [The provisions of section 504(g) shall
be available with respect to any information required to
be filed.
[``(2) Publication requirement.--The Postal Regulatory
Commission shall, whenever it changes the list of products in
the market-dominant or competitive category of mail,
prescribe new lists of products. The revised lists shall
indicate how and when any previous lists (including the lists
under sections 3621 and 3631) are superseded, and shall be
published in the Federal Register.
[``(e) Prohibition.--Except as provided in section 3641, no
product that involves the physical delivery of letters,
printed matter, or packages may be offered by the Postal
Service unless it has been assigned to the market-dominant or
competitive category of mail (as appropriate) either--
[``(1) under this subchapter; or
[``(2) by or under any other provision of law.''.

[SEC. 204. REPORTING REQUIREMENTS AND RELATED PROVISIONS.

[(a) Redesignation.--Chapter 36 of title 39, United States
Code (as in effect before the amendment made by subsection
(b)) is amended--
[(1) by striking the heading for subchapter IV and
inserting the following:

[``SUBCHAPTER V--POSTAL SERVICES, COMPLAINTS, AND JUDICIAL REVIEW'';
and

[(2) by striking the heading for subchapter V and inserting
the following:

[``SUBCHAPTER VI--GENERAL''.

[(b) Reports and Compliance.--Chapter 36 of title 39,
United States Code, is amended by inserting after subchapter
III the following:

[``SUBCHAPTER IV--REPORTING REQUIREMENTS AND RELATED PROVISIONS

[``Sec. 3651. Annual reports by the Commission

[``(a) In General.--The Postal Regulatory Commission shall
submit an annual report to the President and the Congress
concerning the operations of the Commission under this title,
including the extent to which regulations are achieving the
objectives under sections 3622, 3633, and 3691.
[``(b) Information From Postal Service.--The Postal Service
shall provide the Postal Regulatory Commission with such
information as may, in the judgment of the Commission, be
necessary in order for the Commission to prepare its reports
under this section.

[``Sec. 3652. Annual reports to the Commission

[``(a) Costs, Revenues, Rates, and Service.--Except as
provided in subsection (c), the Postal Service shall, no
later than 90 days after the end of each year, prepare and
submit to the Postal Regulatory Commission a report (together
with such nonpublic annex to the report as the Commission may
require under subsection (e))--
[``(1) which shall analyze costs, revenues, rates, and
quality of service in sufficient detail to demonstrate that
all products during such year complied with all applicable
requirements of this title; and
[``(2) which shall, for each market-dominant product
provided in such year, provide--
[``(A) product information, including mail volumes; and
[``(B) measures of the service afforded by the Postal
Service in connection with such product, including--
[``(i) the level of service (described in terms of speed of
delivery and reliability) provided; and
[``(ii) the degree of customer satisfaction with the
service provided.
[Before submitting a report under this subsection (including
any annex to the report and the information required under
subsection (b)), the Postal Service shall have the
information contained in such report (and annex) audited by
the Inspector General. The results of any such audit shall be
submitted along with the report to which it pertains.
[``(b) Information Relating to Workshare Discounts.--The
Postal Service shall include, in each report under subsection
(a), the following information with respect to each market-
dominant product for which a workshare discount was in effect
during the period covered by such report:
[``(1) The per-item cost avoided by the Postal Service by
virtue of such discount.
[``(2) The percentage of such per-item cost avoided that
the per-item workshare discount represents.
[``(3) The per-item contribution made to institutional
costs.
[``(c) Service Agreements and Market Tests.--In carrying
out subsections (a) and (b) with respect to service
agreements and experimental products offered through market
tests under section 3641 in a year, the Postal Service--
[``(1) may report summary data on the costs, revenues, and
quality of service by service agreement and market test; and
[``(2) shall report such data as the Postal Regulatory
Commission requires.
[``(d) Supporting Matter.--The Postal Regulatory Commission
shall have access, in accordance with such regulations as the
Commission shall prescribe, to the working papers and any
other supporting matter of the Postal Service and the
Inspector General in connection with any information
submitted under this section.
[``(e) Content and Form of Reports.--
[``(1) In general.--The Postal Regulatory Commission shall,
by regulation, prescribe the content and form of the public
reports (and any nonpublic annex and supporting matter
relating to the report) to be provided by the Postal Service
under this section. In carrying out this subsection, the
Commission shall give due consideration to--
[``(A) providing the public with timely, adequate
information to assess the lawfulness of rates charged;

[[Page S902]]

[``(B) avoiding unnecessary or unwarranted administrative
effort and expense on the part of the Postal Service; and
[``(C) protecting the confidentiality of commercially
sensitive information.
[``(2) Revised requirements.--The Commission may, on its
own motion or on request of an interested party, initiate
proceedings (to be conducted in accordance with regulations
that the Commission shall prescribe) to improve the quality,
accuracy, or completeness of Postal Service data required by
the Commission under this subsection whenever it shall appear
that--
[``(A) the attribution of costs or revenues to products has
become significantly inaccurate or can be significantly
improved;
[``(B) the quality of service data has become significantly
inaccurate or can be significantly improved; or
[``(C) such revisions are, in the judgment of the
Commission, otherwise necessitated by the public interest.
[``(f) Confidential Information.--
[``(1) In general.--If the Postal Service determines that
any document or portion of a document, or other matter, which
it provides to the Postal Regulatory Commission in a
nonpublic annex under this section or under subsection (d)
contains information which is described in section 410(c) of
this title, or exempt from public disclosure under section
552(b) of title 5, the Postal Service shall, at the time of
providing such matter to the Commission, notify the
Commission of its determination, in writing, and describe
with particularity the documents (or portions of documents)
or other matter for which confidentiality is sought and the
reasons therefor.
[``(2) Treatment.--Any information or other matter
described in paragraph (1) to which the Commission gains
access under this section shall be subject to paragraphs (2)
and (3) of section 504(g) in the same way as if the
Commission had received notification with respect to such
matter under section 504(g)(1).
[``(g) Other Reports.--The Postal Service shall submit to
the Postal Regulatory Commission, together with any other
submission that the Postal Service is required to make under
this section in a year, copies of its then most recent--
[``(1) comprehensive statement under section 2401(e);
[``(2) strategic plan under section 2802;
[``(3) performance plan under section 2803; and
[``(4) program performance reports under section 2804.

[``Sec. 3653. Annual determination of compliance

[``(a) Opportunity for Public Comment.--After receiving the
reports required under section 3652 for any year, the Postal
Regulatory Commission shall promptly provide an opportunity
for comment on such reports by users of the mails, affected
parties, and an officer of the Commission who shall be
required to represent the interests of the general public.
[``(b) Determination of Compliance or Noncompliance.--Not
later than 90 days after receiving the submissions required
under section 3652 with respect to a year, the Postal
Regulatory Commission shall make a written determination as
to--
[``(1) whether any rates or fees in effect during such year
(for products individually or collectively) were not in
compliance with applicable provisions of this chapter (or
regulations promulgated thereunder); or
[``(2) whether any service standards in effect during such
year were not met.
If, with respect to a year, no instance of noncompliance is
found under this subsection to have occurred in such year,
the written determination shall be to that effect.
[``(c) If Any Noncompliance Is Found.--If, for a year, a
timely written determination of noncompliance is made under
subsection (b), the Postal Regulatory Commission shall take
any appropriate remedial action authorized by section
3662(c).
[``(d) Rebuttable Presumption.--A timely written
determination described in the last sentence of subsection
(b) shall, for purposes of any proceeding under section 3662,
create a rebuttable presumption of compliance by the Postal
Service (with regard to the matters described under
paragraphs (1) and (2) of subsection (b)) during the year to
which such determination relates.''.

[SEC. 205. COMPLAINTS; APPELLATE REVIEW AND ENFORCEMENT.

[Chapter 36 of title 39, United States Code, is amended by
striking sections 3662 and 3663 and inserting the following:

[``Sec. 3662. Rate and service complaints

[``(a) In General.--Any person (including an officer of the
Postal Regulatory Commission representing the interests of
the general public) who believes the Postal Service is not
operating in conformance with the requirements of chapter 1,
4, or 6, or this chapter (or regulations promulgated under
any of those chapters) may lodge a complaint with the Postal
Regulatory Commission in such form and manner as the
Commission may prescribe.
[``(b) Prompt Response Required.--
[``(1) In general.--The Postal Regulatory Commission shall,
within 90 days after receiving a complaint under subsection
(a), either--
[``(A) begin proceedings on such complaint; [or
[``(B) issue an order dismissing the complaint (together
with a statement of the reasons therefor).
[``(2) Treatment of complaints not timely acted on.--For
purposes of section 3663, any complaint under subsection (a)
on which the Commission fails to act in the time and manner
required by paragraph (1) shall be treated in the same way as
if it had been dismissed under an order issued by the
Commission on the last day allowable for the issuance of such
order under paragraph (1).
[``(c) Action Required If Complaint Found To Be
Justified.--If the Postal Regulatory Commission finds the
complaint to be justified, it shall order that the Postal
Service take such action as the Commission considers
appropriate in order to achieve compliance with the
applicable requirements and to remedy the effects of any
noncompliance including ordering unlawful rates to be
adjusted to lawful levels, ordering the cancellation of
market tests, ordering the Postal Service to discontinue
providing loss-making products, and requiring the Postal
Service to make up for revenue shortfalls in competitive
products.
[``(d) Authority To Order Fines in Cases of Deliberate
Noncompliance.--In addition, in cases of deliberate
noncompliance by the Postal Service with the requirements of
this title, the Postal Regulatory Commission may order, based
on the nature, circumstances, extent, and seriousness of the
noncompliance, a fine (in the amount specified by the
Commission in its order) for each incidence of noncompliance.
Fines resulting from the provision of competitive products
shall be paid out of the Competitive Products Fund
established in section 2011. All receipts from fines imposed
under this subsection shall be deposited in the general fund
of the Treasury of the United States.

[``Sec. 3663. Appellate review

[``A person, including the Postal Service, adversely
affected or aggrieved by a final order or decision of the
Postal Regulatory Commission may, within 30 days after such
order or decision becomes final, institute proceedings for
review thereof by filing a petition in the United States
Court of Appeals for the District of Columbia. The court
shall review the order or decision in accordance with section
706 of title 5, and chapter 158 and section 2112 of title 28,
on the basis of the record before the Commission.

[``Sec. 3664. Enforcement of orders

[``The several district courts have jurisdiction
specifically to enforce, and to enjoin and restrain the
Postal Service from violating, any order issued by the Postal
Regulatory Commission.''.

[SEC. 206. CLERICAL AMENDMENT.

[Chapter 36 of title 39, United States Code, is amended by
striking the heading and analysis for such chapter and
inserting the following:

[``CHAPTER 36--POSTAL RATES, CLASSES, AND SERVICES

[``SUBCHAPTER I--PROVISIONS RELATING TO MARKET-DOMINANT PRODUCTS

[``Sec.
[``3621. Applicability; definitions.
[``3622. Modern rate regulation.
[``[3623. Repealed.]
[``[3624. Repealed.]
[``[3625. Repealed.]
[``3626. Reduced Rates.
[``3627. Adjusting free rates.
[``[3628. Repealed.]
[``3629. Reduced rates for voter registration purposes.

[``SUBCHAPTER II--PROVISIONS RELATING TO COMPETITIVE PRODUCTS

[``3631. Applicability; definitions and updates.
[``3632. Action of the Governors.
[``3633. Provisions applicable to rates for competitive products.
[``3634. Assumed Federal income tax on competitive products.

[``SUBCHAPTER III--PROVISIONS RELATING TO EXPERIMENTAL AND NEW PRODUCTS

[``3641. Market tests of experimental products.
[``3642. New products and transfers of products between the market-
dominant and competitive categories of mail.

[``SUBCHAPTER IV--REPORTING REQUIREMENTS AND RELATED PROVISIONS

[``3651. Annual reports by the Commission.
[``3652. Annual reports to the Commission.
[``3653. Annual determination of compliance.

[``SUBCHAPTER V--POSTAL SERVICES, COMPLAINTS, AND JUDICIAL REVIEW

[``3661. Postal Services.
[``3662. Rate and service complaints.
[``3663. Appellate review.
[``3664. Enforcement of orders.

[``SUBCHAPTER VI--GENERAL

[``3681. Reimbursement.
[``3682. Size and weight limits.
[``3683. Uniform rates for books; films, other materials.
[``3684. Limitations.
[``3685. Filing of information relating to periodical publications.
[``3686. Bonus authority.

[``SUBCHAPTER VII--MODERN SERVICE STANDARDS

[``3691. Establishment of modern service standards.''.

[TITLE III--MODERN SERVICE STANDARDS

[SEC. 301. ESTABLISHMENT OF MODERN SERVICE STANDARDS.

[Chapter 36 of title 39, United States Code, as amended by
this Act, is further amended by adding at the end the
following:

[[Page S903]]

[``SUBCHAPTER VII--MODERN SERVICE STANDARDS

[``Sec. 3691. Establishment of modern service standards

[``(a) Authority Generally.--Not later than 12 months after
the date of enactment of this section, the Postal Service
shall, in consultation with the Postal Regulatory Commission,
by regulation establish (and may from time to time thereafter
by regulation revise) a set of service standards for market-
dominant products consistent with the Postal Service's
universal service obligation as defined in sections 101 (a)
and (b) and 403.
[``(b) Objectives.--Such standards shall be designed to
achieve the following objectives:
[``(1) To enhance the value of postal services to both
senders and recipients.
[``(2) To preserve regular and effective access to postal
services in all communities, including those in rural areas
or where post offices are not self-sustaining.
[``(3) To reasonably assure Postal Service customers
delivery reliability, speed and frequency consistent with
reasonable rates and best business practices.
[``(4) To provide a system of objective external
performance measurements for each market-dominant product as
a basis for measurement of Postal Service performance.
[``(c) Factors.--In establishing or revising such
standards, the Postal Service shall take into account--
[``(1) the actual level of service that Postal Service
customers receive under any service guidelines previously
established by the Postal Service or service standards
established under this section;
[``(2) the degree of customer satisfaction with Postal
Service performance in the acceptance, processing and
delivery of mail;
[``(3) the needs of Postal Service customers, including
those with physical impairments;
[``(4) mail volume and revenues projected for future years;
[``(5) the projected growth in the number of addresses the
Postal Service will be required to serve in future years;
[``(6) the current and projected future cost of serving
Postal Service customers;
[``(7) the effect of changes in technology, demographics,
and population distribution on the efficient and reliable
operation of the postal delivery system; and
[``(8) the policies of this title and such other factors as
the Commission determines appropriate.
[``(d) Review.--The regulations promulgated pursuant to
this section (and any revisions thereto) shall be subject to
review upon complaint under sections 3662 and 3663.

[SEC. 302. POSTAL SERVICE PLAN.

[(a) In General.--Within 6 months after the establishment
of the service standards under section 3691 of title 39,
United States Code, as added by this Act, the Postal Service
shall, in consultation with the Postal Regulatory Commission,
develop and submit to Congress a plan for meeting those
standards.
[(b) Contents.--The plan under this section shall--
[(1) establish performance goals;
[(2) describe any changes to the Postal Service's
processing, transportation, delivery, and retail networks
necessary to allow the Postal Service to meet the performance
goals;
[(3) describe any changes to planning and performance
management documents previously submitted to Congress to
reflect new performance goals; and
[(4) contain the matters relating to postal facilities
provided under subsection (c).
[(c) Postal Facilities.--
[(1) Findings.--Congress finds that--
[(A) the Postal Service has more than 400 logistics
facilities, separate from its post office network;
[(B) as noted by the President's Commission on the United
States Postal Service, the Postal Service has more facilities
than it needs and the streamlining of this distribution
network can pave the way for the potential consolidation of
sorting facilities and the elimination of excess costs;
[(C) the Postal Service has always revised its distribution
network to meet changing conditions and is best suited to
address its operational needs; and
[(D) Congress strongly encourages the Postal Service to--
[(i) expeditiously move forward in its streamlining
efforts; and
[(ii) keep unions, management associations, and local
elected officials informed as an essential part of this
effort and abide by any procedural requirements contained in
the national bargaining agreements.
[(2) In general.--The Postal Service plan shall include a
description of--
[(A) the long-term vision of the Postal Service for
rationalizing its infrastructure and workforce; and
[(B) how the Postal Service intends to implement that
vision.
[(3) Content of facilities plan.--The plan under this
subsection shall include--
[(A) a strategy for how the Postal Service intends to
rationalize the postal facilities network and remove excess
processing capacity and space from the network, including
estimated timeframes, criteria, and processes to be used for
making changes to the facilities network, and the process for
engaging policy makers and the public in related decisions;
[(B) a discussion of what impact any facility changes may
have on the postal workforce and whether the Postal Service
has sufficient flexibility to make needed workforce changes;
and
[(C) an identification of anticipated costs, cost savings,
and other benefits associated with the infrastructure
rationalization alternatives discussed in the plan.
[(4) Annual reports.--
[(A) In general.--Not later than 90 days after the end of
each fiscal year, the Postal Service shall prepare and submit
a report to Congress on how postal decisions have impacted or
will impact rationalization plans.
[(B) Contents.--Each report under this paragraph shall
include--
[(i) an account of actions taken during the preceding
fiscal year to improve the efficiency and effectiveness of
its processing, transportation, and distribution networks
while preserving the timely delivery of postal services,
including overall estimated costs and cost savings;
[(ii) an account of actions taken to identify any excess
capacity within its processing, transportation, and
distribution networks and implement savings through
realignment or consolidation of facilities including overall
estimated costs and cost savings;
[(iii) an estimate of how postal decisions related to mail
changes, security, automation initiatives, worksharing,
information technology systems, excess capacity,
consolidating and closing facilities, and other areas will
impact rationalization plans;
[(iv) identification of any statutory or regulatory
obstacles that prevented or will prevent or hinder the Postal
Service from taking action to realign or consolidate
facilities; and
[(v) such additional topics and recommendations as the
Postal Service considers appropriate.
[(d) Alternate Retail Options.--The Postal Service plan
shall include plans to expand and market retail access to
postal services, in addition to post offices, including--
[(1) vending machines;
[(2) the Internet;
[(3) Postal Service employees on delivery routes;
[(4) retail facilities in which overhead costs are shared
with private businesses and other government agencies; or
[(5) any other nonpost office access channel providing
market retail access to postal services.
[(e) Reemployment Assistance and Retirement Benefits.--The
Postal Service plan shall include--
[(1) a plan under which reemployment assistance shall be
afforded to employees displaced as a result of the automation
of any of its functions or the closing and consolidation of
any of its facilities; and
[(2) a plan, developed in consultation with the Office of
Personnel Management, to offer early retirement benefits.
[(f) Inspector General Report.--
[(1) In general.--Before submitting the plan under
subsection (a) and each annual report under subsection (c) to
Congress, the Postal Service shall submit the plan and each
annual report to the Inspector General of the United States
Postal Service in a timely manner to carry out this
subsection.
[(2) Report.--The Inspector General shall prepare a report
describing the extent to which the Postal Service plan and
each annual report under subsection (c)--
[(A) are consistent with the continuing obligations of the
Postal Service under title 39, United States Code;
[(B) provide for the Postal Service to meet the service
standards established under section 3691 of title 39, United
States Code; and
[(C) allow progress toward improving overall efficiency and
effectiveness consistent with the need to maintain universal
postal service at affordable rates.
[(g) Continued Authority.--Nothing in this section shall be
construed to prohibit the Postal Service from implementing
any change to its processing, transportation, delivery, and
retail networks under any authority granted to the Postal
Service for those purposes.

[TITLE IV--PROVISIONS RELATING TO FAIR COMPETITION

[SEC. 401. POSTAL SERVICE COMPETITIVE PRODUCTS FUND.

[(a) Provisions Relating to Postal Service Competitive
Products Fund and Related Matters.--
[(1) In general.--Chapter 20 of title 39, United States
Code, is amended by adding at the end the following:

[``Sec. 2011. Provisions relating to competitive products

[``(a)(1) In this subsection, the term `costs attributable'
has the meaning given such term by section 3631.
[``(2) There is established in the Treasury of the United
States a revolving fund, to be called the Postal Service
Competitive Products Fund, which shall be available to the
Postal Service without fiscal year limitation for the payment
of--
[``(A) costs attributable to competitive products; and
[``(B) all other costs incurred by the Postal Service, to
the extent allocable to competitive products.
[``(b) There shall be deposited in the Competitive Products
Fund, subject to withdrawal by the Postal Service--
[``(1) revenues from competitive products;
[``(2) amounts received from obligations issued by Postal
Service under subsection (e);

[[Page S904]]

[``(3) interest and dividends earned on investments of the
Competitive Products Fund; and
[``(4) any other receipts of the Postal Service (including
from the sale of assets), to the extent allocable to
competitive products.
[``(c) If the Postal Service determines that the moneys of
the Competitive Products Fund are in excess of current needs,
the Postal Service may request the investment of such amounts
as the Postal Service determines advisable by the Secretary
of the Treasury in obligations of, or obligations guaranteed
by, the Government of the United States, and, with the
approval of the Secretary, in such other obligations or
securities as the Postal Service determines appropriate.
[``(d) With the approval of the Secretary of the Treasury,
the Postal Service may deposit moneys of the Competitive
Products Fund in any Federal Reserve bank, any depository for
public funds, or in such other places and in such manner as
the Postal Service and the Secretary may mutually agree.
[``(e)(1)(A) Subject to the limitations specified in
section 2005(a), the Postal Service is authorized to borrow
money and to issue and sell such obligations as the Postal
Service determines necessary to provide for competitive
products and deposit such amounts in the Competitive Products
Fund.
[``(B) Subject to paragraph (5), any borrowings by the
Postal Service under subparagraph (A) shall be supported and
serviced by--
[``(i) the revenues and receipts from competitive products
and the assets related to the provision of competitive
products (as determined under subsection (h)); or
[``(ii) for purposes of any period before accounting
practices and principles under subsection (h) have been
established and applied, the best information available from
the Postal Service, including the audited statements required
by section 2008(e).
[``(2) The Postal Service may enter into binding covenants
with the holders of such obligations, and with any trustee
under any agreement entered into in connection with the
issuance of such obligations with respect to--
[``(A) the establishment of reserve, sinking, and other
funds;
[``(B) application and use of revenues and receipts of the
Competitive Products Fund;
[``(C) stipulations concerning the subsequent issuance of
obligations or the execution of leases or lease purchases
relating to properties of the Postal Service; and
[``(D) such other matters as the Postal Service, considers
necessary or desirable to enhance the marketability of such
obligations.
[``(3) Obligations issued by the Postal Service under this
subsection--
[``(A) shall be in such forms and denominations;
[``(B) shall be sold at such times and in such amounts;
[``(C) shall mature at such time or times;
[``(D) shall be sold at such prices;
[``(E) shall bear such rates of interest;
[``(F) may be redeemable before maturity in such manner, at
such times, and at such redemption premiums;
[``(G) may be entitled to such relative priorities of claim
on the assets of the Postal Service with respect to principal
and interest payments; and
[``(H) shall be subject to such other terms and conditions,

[as the Postal Service determines.
[``(4) Obligations issued by the Postal Service under this
subsection--
[``(A) shall be negotiable or nonnegotiable and bearer or
registered instruments, as specified therein and in any
indenture or covenant relating thereto;
[``(B) shall contain a recital that such obligations are
issued under this subsection, and such recital shall be
conclusive evidence of the regularity of the issuance and
sale of such obligations and of their validity;
[``(C) shall be lawful investments and may be accepted as
security for all fiduciary, trust, and public funds, the
investment or deposit of which shall be under the authority
or control of any officer or agency of the Government of the
United States, and the Secretary of the Treasury or any other
officer or agency having authority over or control of any
such fiduciary, trust, or public funds, may at any time sell
any of the obligations of the Postal Service acquired under
this section;
[``(D) shall not be exempt either as to principal or
interest from any taxation now or hereafter imposed by any
State or local taxing authority; and
[``(E) except as provided in section 2006(c), shall not be
obligations of, nor shall payment of the principal thereof or
interest thereon be guaranteed by, the Government of the
United States, and the obligations shall so plainly state.
[``(5)(A) Subject to subparagraph (B), the Postal Service
shall make payments of principal, or interest, or both on
obligations issued under this subsection from--
[``(i) revenues and receipts from competitive products and
assets related to the provision of competitive products (as
determined under subsection (h)); or
[``(ii) for purposes of any period before accounting
practices and principles under subsection (h) have been
established and applied, the best information available,
including the audited statements required by section 2008(e).
[``(B) Based on the audited financial statements for the
most recently completed fiscal year, the total assets of the
Competitive Products Fund may not be less than the amount
determined by multiplying--
[``(i) the quotient resulting from the total revenue of the
Competitive Products Fund divided by the total revenue of the
Postal Service; and
[``(ii) the total assets of the Postal Service.
[``(f) The receipts and disbursements of the Competitive
Products Fund shall be accorded the same budgetary treatment
as is accorded to receipts and disbursements of the Postal
Service Fund under section 2009a.
[``(g) A judgment (or settlement of a claim) against the
Postal Service or the Government of the United States shall
be paid out of the Competitive Products Fund to the extent
that the judgment or claim arises out of activities of the
Postal Service in the provision of competitive products.
[``(h)(1)(A) The Secretary of the Treasury, in consultation
with the Postal Service and an independent, certified public
accounting firm and other advisors as the Secretary considers
appropriate, shall develop recommendations regarding--
[``(i) the accounting practices and principles that should
be followed by the Postal Service with the objectives of--
[``(I) identifying and valuing the assets and liabilities
of the Postal Service associated with providing competitive
products, including the capital and operating costs incurred
by the Postal Service in providing such competitive products;
and
[``(II) subject to subsection (e)(5), preventing the
subsidization of such products by market-dominant products;
and
[``(ii) the substantive and procedural rules that should be
followed in determining the assumed Federal income tax on
competitive products income of the Postal Service for any
year (within the meaning of section 3634).
[``(B) Not earlier than 6 months after the date of
enactment of this section, and not later than 12 months after
such date, the Secretary of the Treasury shall submit the
recommendations under subparagraph (A) to the Postal
Regulatory Commission.
[``(2)(A) Upon receiving the recommendations of the
Secretary of the Treasury under paragraph (1), the Commission
shall give interested parties, including the Postal Service,
users of the mails, and an officer of the Commission who
shall be required to represent the interests of the general
public, an opportunity to present their views on those
recommendations through submission of written data, views, or
arguments with or without opportunity for oral presentation,
or in such other manner as the Commission considers
appropriate.
[``(B)(i) After due consideration of the views and other
information received under subparagraph (A), the Commission
shall by rule--
[``(I) provide for the establishment and application of the
accounting practices and principles which shall be followed
by the Postal Service;
[``(II) provide for the establishment and application of
the substantive and procedural rules described under
paragraph (1)(A)(ii); and
[``(III) provide for the submission by the Postal Service
to the Postal Regulatory Commission of annual and other
periodic reports setting forth such information as the
Commission may require.
[``(ii) Final rules under this subparagraph shall be issued
not later than 12 months after the date on which
recommendations are submitted under paragraph (1) (or by such
later date on which the Commission and the Postal Service may
agree). The Commission may revise such rules.
[``(C)(i) Reports described under subparagraph (B)(i)(III)
shall be submitted at such time and in such form, and shall
include such information, as the Commission by rule requires.
[``(ii) The Commission may, on its own motion or on request
of an interested party, initiate proceedings (to be conducted
in accordance with such rules as the Commission shall
prescribe) to improve the quality, accuracy, or completeness
of Postal Service information under subparagraph (B)(i)(III)
whenever it shall appear that--
[``(I) the quality of the information furnished in those
reports has become significantly inaccurate or can be
significantly improved; or
[``(II) such revisions are, in the judgment of the
Commission, otherwise necessitated by the public interest.
[``(D) A copy of each report described under subparagraph
(B)(i)(III) shall be submitted by the Postal Service to the
Secretary of the Treasury and the Inspector General of the
United States Postal Service.
[``(i)(1) The Postal Service shall submit an annual report
to the Secretary of the Treasury concerning the operation of
the Competitive Products Fund. The report shall address such
matters as risk limitations, reserve balances, allocation or
distribution of moneys, liquidity requirements, and measures
to safeguard against losses.
[``(2) A copy of the most recent report submitted under
paragraph (1) shall be included in the annual report
submitted by the Postal Regulatory Commission under section
3652(g).''.
[(2) Clerical amendment.--The table of sections for chapter
20 of title 39, United States Code, is amended by adding
after the item relating to section 2010 the following:

[``2011. Provisions relating to competitive products.''.

[[Page S905]]

[(b) Technical and Conforming Amendments.--
[(1) Definition.--Section 2001 of title 39, United States
Code, is amended by striking ``and'' at the end of paragraph
(1), by redesignating paragraph (2) as paragraph (3), and by
inserting after paragraph (1) the following:
[``(2) Competitive products fund.--The term `Competitive
Products Fund' means the Postal Service Competitive Products
Fund established by section 2011; and''.
[(2) Capital of the postal service.--Section 2002(b) of
title 39, United States Code, is amended by striking
``Fund,'' and inserting ``Fund and the balance in the
Competitive Products Fund,''.
[(3) Postal service fund.--
[(A) Purposes for which available.--Section 2003(a) of
title 39, United States Code, is amended by striking
``title.'' and inserting ``title (other than any of the
purposes, functions, or powers for which the Competitive
Products Fund is available).''.
[(B) Deposits.--Section 2003(b) of title 39, United States
Code, is amended by striking ``There'' and inserting ``Except
as otherwise provided in section 2011, there''.
[(4) Relationship between the treasury and the postal
service.--Section 2006 of title 39, United States Code, is
amended--
[(A) in subsection (a), in the first sentence, by inserting
``or 2011'' after ``section 2005'';
[(B) in subsection (b)--
[(i) in the first sentence, by inserting ``under section
2005'' before ``in such amounts''; and
[(ii) in the second sentence, by inserting ``under section
2005'' before ``in excess of such amount.''; and
[(C) in subsection (c), by inserting ``or 2011(e)(4)(E)''
after ``section 2005(d)(5)''.

[SEC. 402. ASSUMED FEDERAL INCOME TAX ON COMPETITIVE PRODUCTS
INCOME.

[Subchapter II of chapter 36 of title 39, United States
Code, as amended by section 202, is amended by adding at the
end the following:

[``Sec. 3634. Assumed Federal income tax on competitive
products income

[``(a) Definitions.--For purposes of this section--
[``(1) the term `assumed Federal income tax on competitive
products income' means the net income tax that would be
imposed by chapter 1 of the Internal Revenue Code of 1986 on
the Postal Service's assumed taxable income from competitive
products for the year; and
[``(2) the term `assumed taxable income from competitive
products', with respect to a year, refers to the amount
representing what would be the taxable income of a
corporation under the Internal Revenue Code of 1986 for the
year, if--
[``(A) the only activities of such corporation were the
activities of the Postal Service allocable under section
2011(h) to competitive products; and
[``(B) the only assets held by such corporation were the
assets of the Postal Service allocable under section 2011(h)
to such activities.
[``(b) Computation and Transfer Requirements.--The Postal
Service shall, for each year beginning with the year in which
occurs the deadline for the Postal Service's first report to
the Postal Regulatory Commission under section 3652(a)--
[``(1) compute its assumed Federal income tax on
competitive products income for such year; and
[``(2) transfer from the Competitive Products Fund to the
Postal Service Fund the amount of that assumed tax.
[``(c) Deadline for Transfers.--Any transfer required to be
made under this section for a year shall be due on or before
the January 15th next occurring after the close of such
year.''.

[SEC. 403. UNFAIR COMPETITION PROHIBITED.

[(a) Specific Limitations.--Chapter 4 of title 39, United
States Code, is amended by adding after section 404 the
following:

[``Sec. 404a. Specific limitations

[``(a) Except as specifically authorized by law, the Postal
Service may not--
[``(1) establish any rule or regulation (including any
standard) the effect of which is to preclude competition or
establish the terms of competition unless the Postal Service
demonstrates that the regulation does not create an unfair
competitive advantage for itself or any entity funded (in
whole or in part) by the Postal Service;
[``(2) compel the disclosure, transfer, or licensing of
intellectual property to any third party (such as patents,
copyrights, trademarks, trade secrets, and proprietary
information); or
[``(3) obtain information from a person that provides (or
seeks to provide) any product, and then offer any postal
service that uses or is based in whole or in part on such
information, without the consent of the person providing that
information, unless substantially the same information is
obtained (or obtainable) from an independent source or is
otherwise obtained (or obtainable).
[``(b) The Postal Regulatory Commission shall prescribe
regulations to carry out this section.
[``(c) Any party (including an officer of the Commission
representing the interests of the general public) who
believes that the Postal Service has violated this section
may bring a complaint in accordance with section 3662.''.
[(b) Conforming Amendments.--
[(1) General powers.--Section 401 of title 39, United
States Code, is amended by striking ``The'' and inserting
``Subject to the provisions of section 404a, the''.
[(2) Specific powers.--Section 404(a) of title 39, United
States Code, is amended by striking ``Without'' and inserting
``Subject to the provisions of section 404a, but otherwise
without''.
[(c) Clerical Amendment.--The analysis for chapter 4 of
title 39, United States Code, is amended by inserting after
the item relating to section 404 the following:

[``404a. Specific limitations.''.

[SEC. 404. SUITS BY AND AGAINST THE POSTAL SERVICE.

[(a) In General.--Section 409 of title 39, United States
Code, is amended by striking subsections (d) and (e) and
inserting the following:
[``(d)(1) For purposes of the provisions of law cited in
paragraphs (2)(A) and (2)(B), respectively, the Postal
Service--
[``(A) shall be considered to be a `person', as used in the
provisions of law involved; and
[``(B) shall not be immune under any other doctrine of
sovereign immunity from suit in Federal court by any person
for any violation of any of those provisions of law by any
officer or employee of the Postal Service.
[``(2) This subsection applies with respect to--
[``(A) the Act of July 5, 1946 (commonly referred to as the
`Trademark Act of 1946' (15 U.S.C. 1051 and following)); and
[``(B) the provisions of section 5 of the Federal Trade
Commission Act to the extent that such section 5 applies to
unfair or deceptive acts or practices.
[``(e)(1) To the extent that the Postal Service, or other
Federal agency acting on behalf of or in concert with the
Postal Service, engages in conduct with respect to any
product which is not reserved to the United States under
section 1696 of title 18, the Postal Service or other Federal
agency (as the case may be)--
[``(A) shall not be immune under any doctrine of sovereign
immunity from suit in Federal court by any person for any
violation of Federal law by such agency or any officer or
employee thereof; and
[``(B) shall be considered to be a person (as defined in
subsection (a) of the first section of the Clayton Act) for
purposes of--
[``(i) the antitrust laws (as defined in such subsection);
and
[``(ii) section 5 of the Federal Trade Commission Act to
the extent that such section 5 applies to unfair methods of
competition.

[For purposes of the preceding sentence, any private carriage
of mail allowable by virtue of section 601 shall not be
considered a service reserved to the United States under
section 1696 of title 18.
[``(2) No damages, interest on damages, costs or attorney's
fees may be recovered, and no criminal liability may be
imposed, under the antitrust laws (as so defined) from any
officer or employee of the Postal Service, or other Federal
agency acting on behalf of or in concert with the Postal
Service, acting in an official capacity.
[``(3) This subsection shall not apply with respect to
conduct occurring before the date of enactment of this
subsection.
[``(f) To the extent that the Postal Service engages in
conduct with respect to the provision of competitive
products, it shall be considered a person for the purposes of
the Federal bankruptcy laws.
[``(g)(1) Each building constructed or altered by the
Postal Service shall be constructed or altered, to the
maximum extent feasible as determined by the Postal Service,
in compliance with 1 of the nationally recognized model
building codes and with other applicable nationally
recognized codes. To the extent practicable, model building
codes should meet the voluntary consensus criteria
established for codes and standards as required in the
National Technology Transfer and Advancement Act of 1995 as
defined in Office of Management and Budget Circular A1190.
For purposes of life safety, the Postal Service shall
continue to comply with the most current edition of the Life
Safety Code of the National Fire Protection Association (NFPA
101).
[``(2) Each building constructed or altered by the Postal
Service shall be constructed or altered only after
consideration of all requirements (other than procedural
requirements) of zoning laws, land use laws, and applicable
environmental laws of a State or subdivision of a State which
would apply to the building if it were not a building
constructed or altered by an establishment of the Government
of the United States.
[``(3) For purposes of meeting the requirements of
paragraphs (1) and (2) with respect to a building, the Postal
Service shall--
[``(A) in preparing plans for the building, consult with
appropriate officials of the State or political subdivision,
or both, in which the building will be located;
[``(B) upon request, submit such plans in a timely manner
to such officials for review by such officials for a
reasonable period of time not exceeding 30 days; and
[``(C) permit inspection by such officials during
construction or alteration of the building, in accordance
with the customary schedule of inspections for construction
or alteration of buildings in the locality, if such officials
provide to the Postal Service--
[``(i) a copy of such schedule before construction of the
building is begun; and
[``(ii) reasonable notice of their intention to conduct any
inspection before conducting such inspection.

[Nothing in this subsection shall impose an obligation on any
State or political subdivision to take any action under the
preceding

[[Page S906]]

sentence, nor shall anything in this subsection require the
Postal Service or any of its contractors to pay for any
action taken by a State or political subdivision to carry out
this subsection (including reviewing plans, carrying out on-
site inspections, issuing building permits, and making
recommendations).
[``(4) Appropriate officials of a State or a political
subdivision of a State may make recommendations to the Postal
Service concerning measures necessary to meet the
requirements of paragraphs (1) and (2). Such officials may
also make recommendations to the Postal Service concerning
measures which should be taken in the construction or
alteration of the building to take into account local
conditions. The Postal Service shall give due consideration
to any such recommendations.
[``(5) In addition to consulting with local and State
officials under paragraph (3), the Postal Service shall
establish procedures for soliciting, assessing, and
incorporating local community input on real property and land
use decisions.
[``(6) For purposes of this subsection, the term `State'
includes the District of Columbia, the Commonwealth of Puerto
Rico, and a territory or possession of the United States.
[``(h)(1) Notwithstanding any other provision of law, legal
representation may not be furnished by the Department of
Justice to the Postal Service in any action, suit, or
proceeding arising, in whole or in part, under any of the
following:
[``(A) Subsection (d) or (e) of this section.
[``(B) Subsection (f) or (g) of section 504 (relating to
administrative subpoenas by the Postal Regulatory
Commission).
[``(C) Section 3663 (relating to appellate review).

[The Postal Service may, by contract or otherwise, employ
attorneys to obtain any legal representation that it is
precluded from obtaining from the Department of Justice under
this paragraph.
[``(2) In any circumstance not covered by paragraph (1),
the Department of Justice shall, under section 411, furnish
the Postal Service such legal representation as it may
require, except that, with the prior consent of the Attorney
General, the Postal Service may, in any such circumstance,
employ attorneys by contract or otherwise to conduct
litigation brought by or against the Postal Service or its
officers or employees in matters affecting the Postal
Service.
[``(3)(A) In any action, suit, or proceeding in a court of
the United States arising in whole or in part under any of
the provisions of law referred to in subparagraph (B) or (C)
of paragraph (1), and to which the Commission is not
otherwise a party, the Commission shall be permitted to
appear as a party on its own motion and as of right.
[``(B) The Department of Justice shall, under such terms
and conditions as the Commission and the Attorney General
shall consider appropriate, furnish the Commission such legal
representation as it may require in connection with any such
action, suit, or proceeding, except that, with the prior
consent of the Attorney General, the Commission may employ
attorneys by contract or otherwise for that purpose.
[``(i) A judgment against the Government of the United
States arising out of activities of the Postal Service shall
be paid by the Postal Service out of any funds available to
the Postal Service, subject to the restriction specified in
section 2011(g).''.
[(b) Technical Amendment.--Section 409(a) of title 39,
United States Code, is amended by striking ``Except as
provided in section 3628 of this title,'' and inserting
``Except as otherwise provided in this title,''.

[SEC. 405. INTERNATIONAL POSTAL ARRANGEMENTS.

[(a) In General.--Section 407 of title 39, United States
Code, is amended to read as follows:

[``Sec. 407. International postal arrangements

[``(a) It is the policy of the United States--
[``(1) to promote and encourage communications between
peoples by efficient operation of international postal
services and other international delivery services for
cultural, social, and economic purposes;
[``(2) to promote and encourage unrestricted and
undistorted competition in the provision of international
postal services and other international delivery services,
except where provision of such services by private companies
may be prohibited by law of the United States;
[``(3) to promote and encourage a clear distinction between
governmental and operational responsibilities with respect to
the provision of international postal services; and
[``(4) to participate in multilateral and bilateral
agreements with other countries to accomplish these
objectives.
[``(b)(1) The Secretary of State shall be responsible for
formulation, coordination, and oversight of foreign policy
related to international postal services and shall have the
power to conclude postal treaties and conventions, except
that the Secretary may not conclude any postal treaty or
convention if such treaty or convention would, with respect
to any competitive product, grant an undue or unreasonable
preference to the Postal Service, a private provider of
international postal services, or any other person.
[``(2) In carrying out the responsibilities specified in
paragraph (1), the Secretary of State shall exercise primary
authority for the conduct of foreign policy with respect to
international postal services, including the determination of
United States positions and the conduct of United States
participation in negotiations with foreign governments and
international bodies. In exercising this authority, the
Secretary--
[``(A) shall coordinate with other agencies as appropriate,
and in particular, should consider the authority vested by
law or Executive order in the Postal Regulatory Commission,
the Department of Commerce, the Department of Transportation,
and the Office of the United States Trade Representative in
this area;
[``(B) shall maintain continuing liaison with other
executive branch agencies concerned with postal and delivery
services;
[``(C) shall maintain continuing liaison with the Committee
on Homeland Security and Governmental Affairs of the Senate
and the Committee on Government Reform of the House of
Representatives;
[``(D) shall maintain appropriate liaison with both
representatives of the Postal Service and representatives of
users and private providers of international postal services
and other international delivery services to keep informed of
their interests and problems, and to provide such assistance
as may be needed to ensure that matters of concern are
promptly considered by the Department of State or (if
applicable, and to the extent practicable) other executive
branch agencies; and
[``(E) shall assist in arranging meetings of such public
sector advisory groups as may be established to advise the
Department of State and other executive branch agencies in
connection with international postal services and
international delivery services.
[``(3) The Secretary of State shall establish an advisory
committee (within the meaning of the Federal Advisory
Committee Act) to perform such functions as the Secretary
considers appropriate in connection with carrying out
subparagraphs (A) through (D) of paragraph (2).
[``(c) Before concluding any postal treaty or convention
that establishes a rate or classification for a product
subject to subchapter I of chapter 36, the Secretary of State
shall request the Postal Regulatory Commission to submit its
views on whether such rate or classification is consistent
with the standards and criteria established by the Commission
under section 3622.
[``(d) Nothing in this section shall be considered to
prevent the Postal Service from entering into such commercial
or operational contracts related to providing international
postal services as it deems appropriate, except that--
[``(1) any such contract made with an agency of a foreign
government (whether under authority of this subsection or
otherwise) shall be solely contractual in nature and may not
purport to be binding under international law; and
[``(2) a copy of each such contract between the Postal
Service and an agency of a foreign government shall be
transmitted to the Secretary of State and the Postal
Regulatory Commission not later than the effective date of
such contract.
[``(e)(1) With respect to shipments of international mail
that are competitive products within the meaning of section
3631 that are exported or imported by the Postal Service, the
Customs Service and other appropriate Federal agencies shall
apply the customs laws of the United States and all other
laws relating to the importation or exportation of such
shipments in the same manner to both shipments by the Postal
Service and similar shipments by private companies.
[``(2) In exercising the authority under subsection (b) to
conclude new postal treaties and conventions related to
international postal services and to renegotiate such
treaties and conventions, the Secretary of State shall, to
the maximum extent practicable, take such measures as are
within the Secretary's control to encourage the governments
of other countries to make available to the Postal Service
and private companies a range of nondiscriminatory customs
procedures that will fully meet the needs of all types of
American shippers. The Secretary of State shall consult with
the United States Trade Representative and the Commissioner
of Customs in carrying out this paragraph.
[``(3) The provisions of this subsection shall take effect
6 months after the date of enactment of this subsection or
such earlier date as the Customs Service may determine in
writing.''.
[(b) Effective Date.--Notwithstanding any provision of the
amendment made by subsection (a), the authority of the United
States Postal Service to establish the rates of postage or
other charges on mail matter conveyed between the United
States and other countries shall remain available to the
Postal Service until--
[(1) with respect to market-dominant products, the date as
of which the regulations promulgated under section 3622 of
title 39, United States Code (as amended by section 201(a))
take effect; and
[(2) with respect to competitive products, the date as of
which the regulations promulgated under section 3633 of title
39, United States Code (as amended by section 202) take
effect.

[TITLE V--GENERAL PROVISIONS

[SEC. 501. QUALIFICATION AND TERM REQUIREMENTS FOR GOVERNORS.

[(a) Qualifications.--
[(1) In general.--Section 202(a) of title 39, United States
Code, is amended by striking ``(a)'' and inserting ``(a)(1)''
and by striking

[[Page S907]]

the fourth sentence and inserting the following: ``The
Governors shall represent the public interest generally, and
shall be chosen solely on the basis of their demonstrated
ability in managing organizations or corporations (in either
the public or private sector) of substantial size. Experience
in the fields of law and accounting shall be considered in
making appointments of Governors. The Governors shall not be
representatives of specific interests using the Postal
Service, and may be removed only for cause.''.
[(2) Applicability.--The amendment made by paragraph (1)
shall not affect the appointment or tenure of any person
serving as a Governor of the United States Postal Service
under an appointment made before the date of enactment of
this Act however, when any such office becomes vacant, the
appointment of any person to fill that office shall be made
in accordance with such amendment. The requirement set forth
in the fourth sentence of section 202(a)(1) of title 39,
United States Code (as amended by subsection (a)) shall be
met beginning not later than 9 years after the date of
enactment of this Act.
[(b) Consultation Requirement.--Section 202(a) of title 39,
United States Code, is amended by adding at the end the
following:
[``(2) In selecting the individuals described in paragraph
(1) for nomination for appointment to the position of
Governor, the President should consult with the Speaker of
the House of Representatives, the minority leader of the
House of Representatives, the majority leader of the Senate,
and the minority leader of the Senate.''.
[(c) 5-Year Terms.--
[(1) In general.--Section 202(b) of title 39, United States
code, is amended in the first sentence by striking ``9
years'' and inserting ``5 years''.
[(2) Applicability.--
[(A) Continuation by incumbents.--The amendment made by
paragraph (1) shall not affect the tenure of any person
serving as a Governor of the United States Postal Service on
the date of enactment of this Act and such person may
continue to serve the remainder of the applicable term.
[(B) Vacancy by incumbent before 5 years of service.--If a
person who is serving as a Governor of the United States
Postal Service on the date of enactment of this Act resigns,
is removed, or dies before the expiration of the 9-year term
of that Governor, and that Governor has served less than 5
years of that term, the resulting vacancy in office shall be
treated as a vacancy in a 5-year term.
[(C) Vacancy by incumbent after 5 years of service.--If a
person who is serving as a Governor of the United States
Postal Service on the date of enactment of this Act resigns,
is removed, or dies before the expiration of the 9-year term
of that Governor, and that Governor has served 5 years or
more of that term, that term shall be deemed to have been a
5-year term beginning on its commencement date for purposes
of determining vacancies in office. Any appointment to the
vacant office shall be for a 5-year term beginning at the end
of the original 9-year term determined without regard to the
deeming under the preceding sentence. Nothing in this
subparagraph shall be construed to affect any action or
authority of any Governor or the Board of Governors during
any portion of a 9-year term deemed to be 5-year term under
this subparagraph.
[(d) Term Limitation.--
[(1) In general.--Section 202(b) of title 39, United States
Code, is amended--
[(A) by inserting ``(1)'' after ``(b)''; and
[(B) by adding at the end the following:
[``(2) No person may serve more than 3 terms as a
Governor.''.
[(2) Applicability.--The amendments made by paragraph (1)
shall not affect the tenure of any person serving as a
Governor of the United States Postal Service on the date of
enactment of this Act with respect to the term which that
person is serving on that date. Such person may continue to
serve the remainder of the applicable term, after which the
amendments made by paragraph (1) shall apply.

[SEC. 502. OBLIGATIONS.

[(a) Purposes for Which Obligations May Be Issued.--The
first sentence of section 2005(a)(1) of title 39, United
States Code, is amended by striking ``title.'' and inserting
``title, other than any of the purposes for which the
corresponding authority is available to the Postal Service
under section 2011.''.
[(b) Increase Relating to Obligations Issued for Capital
Improvements.--Section 2005(a)(1) of title 39, United States
Code, is amended by striking the third sentence.
[(c) Amounts Which May Be Pledged.--
[(1) Obligations to which provisions apply.--The first
sentence of section 2005(b) of title 39, United States Code,
is amended by striking ``such obligations,'' and inserting
``obligations issued by the Postal Service under this
section,''.
[(2) Assets, revenues, and receipts to which provisions
apply.--Subsection (b) of section 2005 of title 39, United
States Code, is amended by striking ``(b)'' and inserting
``(b)(1)'', and by adding at the end the following:
[``(2) Notwithstanding any other provision of this
section--
[``(A) the authority to pledge assets of the Postal Service
under this subsection shall be available only to the extent
that such assets are not related to the provision of
competitive products (as determined under section 2011(h) or,
for purposes of any period before accounting practices and
principles under section 2011(h) have been established and
applied, the best information available from the Postal
Service, including the audited statements required by section
2008(e)); and
[``(B) any authority under this subsection relating to the
pledging or other use of revenues or receipts of the Postal
Service shall be available only to the extent that they are
not revenues or receipts of the Competitive Products Fund.''.

[SEC. 503. PRIVATE CARRIAGE OF LETTERS.

[(a) In General.--Section 601 of title 39, United States
Code, is amended by striking subsection (b) and inserting the
following:
[``(b) A letter may also be carried out of the mails when--
[``(1) the amount paid for the private carriage of the
letter is at least the amount equal to 6 times the rate then
currently charged for the 1st ounce of a single-piece first
class letter;
[``(2) the letter weighs at least 12\1/2\ ounces; or
[``(3) such carriage is within the scope of services
described by regulations of the United States Postal Service
(as in effect on July 1, 2001) that permit private carriage
by suspension of the operation of this section (as then in
effect).
[``(c) Any regulations necessary to carry out this section
shall be promulgated by the Postal Regulatory Commission.''.
[(b) Effective Date.--This section shall take effect on the
date as of which the regulations promulgated under section
3633 of title 39, United States Code (as amended by section
202) take effect.

[SEC. 504. RULEMAKING AUTHORITY.

[Paragraph (2) of section 401 of title 39, United States
Code, is amended to read as follows:
[``(2) to adopt, amend, and repeal such rules and
regulations, not inconsistent with this title, as may be
necessary in the execution of its functions under this title
and such other functions as may be assigned to the Postal
Service under any provisions of law outside of this title;''.

[SEC. 505. NONINTERFERENCE WITH COLLECTIVE BARGAINING
AGREEMENTS.

[(a) Labor Disputes.--Section 1207 of title 39, United
States Code, is amended to read as follows:

[``Sec. 1207. Labor disputes

[``(a) If there is a collective-bargaining agreement in
effect, no party to such agreement shall terminate or modify
such agreement unless the party desiring such termination or
modification serves written notice upon the other party to
the agreement of the proposed termination or modification not
less than 90 days prior to the expiration date thereof, or
not less than 90 days prior to the time it is proposed to
make such termination or modification. The party serving such
notice shall notify the Federal Mediation and Conciliation
Service of the existence of a dispute within 45 days after
such notice, if no agreement has been reached by that time.
[``(b) If the parties fail to reach agreement or to adopt a
procedure providing for a binding resolution of a dispute by
the expiration date of the agreement in effect, or the date
of the proposed termination or modification, the Director of
the Federal Mediation and Conciliation Service shall within
10 days appoint a mediator of nationwide reputation and
professional stature, and who is also a member of the
National Academy of Arbitrators. The parties shall cooperate
with the mediator in an effort to reach an agreement and
shall meet and negotiate in good faith at such times and
places that the mediator, in consultation with the parties,
shall direct.
[``(c)(1) If no agreement is reached within 60 days after
the expiration or termination of the agreement or the date on
which the agreement became subject to modification under
subsection (a) of this section, or if the parties decide upon
arbitration but do not agree upon the procedures therefore,
an arbitration board shall be established consisting of 3
members, 1 of whom shall be selected by the Postal Service, 1
by the bargaining representative of the employees, and the
third by the 2 thus selected. If either of the parties fails
to select a member, or if the members chosen by the parties
fail to agree on the third person within 5 days after their
first meeting, the selection shall be made from a list of
names provided by the Director. This list shall consist of
not less then 9 names of arbitrators of nationwide reputation
and professional nature, who are also members of the National
Academy of Arbitrators, and whom the Director has determined
are available and willing to serve.
[``(2) The arbitration board shall give the parties a full
and fair hearing, including an opportunity to present
evidence in support of their claims, and an opportunity to
present their case in person, by counsel or by other
representative as they may elect. Decisions of the
arbitration board shall be conclusive and binding upon the
parties. The arbitration board shall render its decision
within 45 days after its appointment.
[``(3) Costs of the arbitration board and mediation shall
be shared equally by the Postal Service and the bargaining
representative.
[``(d) In the case of a bargaining unit whose recognized
collective-bargaining representative does not have an
agreement with the Postal Service, if the parties fail to
reach the agreement within 90 days after the commencement of
collective bargaining, a mediator shall be appointed in
accordance with the terms in subsection (b) of this section,
unless the parties have previously

[[Page S908]]

agreed to another procedure for a binding resolution of their
differences. If the parties fail to reach agreement within
180 days after the commencement of collective bargaining, and
if they have not agreed to another procedure for binding
resolution, an arbitration board shall be established to
provide conclusive and binding arbitration in accordance with
the terms of subsection (c) of this section.''.
[(b) Noninterference With Collective Bargaining
Agreements.--Except as otherwise provided by the amendment
made by subsection (a), nothing in this Act shall restrict,
expand, or otherwise affect any of the rights, privileges, or
benefits of either employees of or labor organizations
representing employees of the United States Postal Service
under chapter 12 of title 39, United States Code, the
National Labor Relations Act, any handbook or manual
affecting employee labor relations within the United States
Postal Service, or any collective bargaining agreement.
[(c) Free Mailing Privileges Continue Unchanged.--Nothing
in this Act or any amendment made by this Act shall affect
any free mailing privileges accorded under section 3217 or
sections 3403 through 3406 of title 39, United States Code.

[SEC. 506. BONUS AUTHORITY.

[Chapter 36 of title 39, United States Code, is amended by
inserting after section 3685 the following:

[``Sec. 3686. Bonus authority

[``(a) In General.--The Postal Service may establish 1 or
more programs to provide bonuses or other rewards to officers
and employees of the Postal Service in senior executive or
equivalent positions to achieve the objectives of this
chapter.
[``(b) Limitation on Total Compensation.--
[``(1) In general.--Under any such program, the Postal
Service may award a bonus or other reward in excess of the
limitation set forth in the last sentence of section 1003(a),
if such program has been approved under paragraph (2). Any
such award or bonus may not cause the total compensation of
such officer or employee to exceed the total annual
compensation payable to the Vice President under section 104
of title 3 as of the end of the calendar year in which the
bonus or award is paid.
[``(2) Approval process.--If the Postal Service wishes to
have the authority, under any program described in subsection
(a), to award bonuses or other rewards in excess of the
limitation set forth in the last sentence of section
1003(a)--
[``(A) the Postal Service shall make an appropriate request
to the Board of Governors of the Postal Service in such form
and manner as the Board requires; and
[``(B) the Board of Governors shall approve any such
request if the Board certifies, for the annual appraisal
period involved, that the performance appraisal system for
affected officers and employees of the Postal Service (as
designed and applied) makes meaningful distinctions based on
relative performance.
[``(3) Revocation authority.--If the Board of Governors of
the Postal Service finds that a performance appraisal system
previously approved under paragraph (2)(B) does not (as
designed and applied) make meaningful distinctions based on
relative performance, the Board may revoke or suspend the
authority of the Postal Service to continue a program
approved under paragraph (2) until such time as appropriate
corrective measures have, in the judgment of the Board, been
taken.
[``(c) Reporting Requirement Relating to Bonuses or Other
Rewards.--Included in its comprehensive statement under
section 2401(e) for any period shall be--
[``(1) the name of each person receiving a bonus or other
reward during such period which would not have been allowable
but for the provisions of subsection (b);
[``(2) the amount of the bonus or other reward; and
[``(3) the amount by which the limitation referred to in
subsection (b)(1) was exceeded as a result of such bonus or
other reward.''.

[TITLE VI--ENHANCED REGULATORY COMMISSION

[SEC. 601. REORGANIZATION AND MODIFICATION OF CERTAIN
PROVISIONS RELATING TO THE POSTAL REGULATORY
COMMISSION.

[(a) Transfer and Redesignation.--Title 39, United States
Code, is amended--
[(1) by inserting after chapter 4 the following:

[``CHAPTER 5--POSTAL REGULATORY COMMISSION

[``Sec.
[``501. Establishment.
[``502. Commissioners.
[``503. Rules; regulations; procedures.
[``504. Administration.
[``505. Officer of the Postal Regulatory Commission representing the
general public.

[``Sec. 501. Establishment

[``The Postal Regulatory Commission is an independent
establishment of the executive branch of the Government of
the United States.

[``Sec. 502. Commissioners

[``(a) The Postal Regulatory Commission is composed of 5
Commissioners, appointed by the President, by and with the
advice and consent of the Senate. The Commissioners shall be
chosen solely on the basis of their technical qualifications,
professional standing, and demonstrated expertise in
economics, accounting, law, or public administration, and may
be removed by the President only for cause. Each individual
appointed to the Commission shall have the qualifications
and expertise necessary to carry out the enhanced
responsibilities accorded Commissioners under the Postal
Accountability and Enhancement Act. Not more than 3 of the
Commissioners may be adherents of the same political
party.
[``(b) No Commissioner shall be financially interested in
any enterprise in the private sector of the economy engaged
in the delivery of mail matter.
[``(c) A Commissioner may continue to serve after the
expiration of his term until his successor has qualified,
except that a Commissioner may not so continue to serve for
more than 1 year after the date upon which his term otherwise
would expire under subsection (f).
[``(d) One of the Commissioners shall be designated as
Chairman by, and shall serve in the position of Chairman at
the pleasure of, the President.
[``(e) The Commissioners shall by majority vote designate a
Vice Chairman of the Commission. The Vice Chairman shall act
as Chairman of the Commission in the absence of the Chairman.
[``(f) The Commissioners shall serve for terms of 6
years.'';
[(2) by striking, in subchapter I of chapter 36 (as in
effect before the amendment made by section 201(c)), the
heading for such subchapter I and all that follows through
section 3602;
[(3) by redesignating sections 3603 and 3604 as sections
503 and 504, respectively, and transferring such sections to
the end of chapter 5 (as inserted by paragraph (1)); and
[(4) by adding after such section 504 the following:

[``Sec. 505. Officer of the Postal Regulatory Commission
representing the general public

[``The Postal Regulatory Commission shall designate an
officer of the Postal Regulatory Commission in all public
proceedings who shall represent the interests of the general
public.''.
[(b) Applicability.--The amendment made by subsection
(a)(1) shall not affect the appointment or tenure of any
person serving as a Commissioner on the Postal Regulatory
Commission (as so redesignated by section 604) under an
appointment made before the date of enactment of this Act or
any nomination made before that date, but, when any such
office becomes vacant, the appointment of any person to fill
that office shall be made in accordance with such amendment.
[(c) Clerical Amendment.--The analysis for part I of title
39, United States Code, is amended by inserting after the
item relating to chapter 4 the following:

[``5. Postal Regulatory Commission..........................501''....

[SEC. 602. AUTHORITY FOR POSTAL REGULATORY COMMISSION TO
ISSUE SUBPOENAS.

[Section 504 of title 39, United States Code (as so
redesignated by section 601) is amended by adding at the end
the following:
[``(f)(1) Any Commissioner of the Postal Regulatory
Commission, any administrative law judge appointed by the
Commission under section 3105 of title 5, and any employee of
the Commission designated by the Commission may administer
oaths, examine witnesses, take depositions, and receive
evidence.
[``(2) The Chairman of the Commission, any Commissioner
designated by the Chairman, and any administrative law judge
appointed by the Commission under section 3105 of title 5
may, with respect to any proceeding conducted by the
Commission under this title or to obtain information to be
used to prepare a report under this title--
[``(A) issue subpoenas requiring the attendance and
presentation of testimony by, or the production of
documentary or other evidence in the possession of, any
covered person; and
[``(B) order the taking of depositions and responses to
written interrogatories by a covered person.

[The written concurrence of a majority of the Commissioners
then holding office shall, with respect to each subpoena
under subparagraph (A), be required in advance of its
issuance.
[``(3) In the case of contumacy or failure to obey a
subpoena issued under this subsection, upon application by
the Commission, the district court of the United States for
the district in which the person to whom the subpoena is
addressed resides or is served may issue an order requiring
such person to appear at any designated place to testify or
produce documentary or other evidence. Any failure to obey
the order of the court may be punished by the court as a
contempt thereof.
[``(4) For purposes of this subsection, the term `covered
person' means an officer, employee, agent, or contractor of
the Postal Service.
[``(g)(1) If the Postal Service determines that any
document or other matter it provides to the Postal Regulatory
Commission under a subpoena issued under subsection (f), or
otherwise at the request of the Commission in connection with
any proceeding or other purpose under this title, contains
information which is described in section 410(c) of this
title, or exempt from public disclosure under section 552(b)
of title 5, the Postal Service shall, at the time of
providing such matter to the Commission, notify the
Commission, in writing, of its determination (and the reasons
therefor).

[[Page S909]]

[``(2) Except as provided in paragraph (3), no officer or
employee of the Commission may, with respect to any
information as to which the Commission has been notified
under paragraph (1)--
[``(A) use such information for purposes other than the
purposes for which it is supplied; or
[``(B) permit anyone who is not an officer or employee of
the Commission to have access to any such information.
[``(3)(A) Paragraph (2) shall not prohibit the Commission
from publicly disclosing relevant information in furtherance
of its duties under this title, provided that the Commission
has adopted regulations under section 553 of title 5, that
establish a procedure for according appropriate
confidentiality to information identified by the Postal
Service under paragraph (1). In determining the appropriate
degree of confidentiality to be accorded information
identified by the Postal Service under paragraph (1), the
Commission shall balance the nature and extent of the likely
commercial injury to the Postal Service against the public
interest in maintaining the financial transparency of a
government establishment competing in commercial markets.
[``(B) Paragraph (2) shall not prevent the Commission from
requiring production of information in the course of any
discovery procedure established in connection with a
proceeding under this title. The Commission shall, by
regulations based on rule 26(c) of the Federal Rules of Civil
Procedure, establish procedures for ensuring appropriate
confidentiality for information furnished to any party.''.

[SEC. 603. APPROPRIATIONS FOR THE POSTAL REGULATORY
COMMISSION.

[(a) Authorization of Appropriations.--Subsection (d) of
section 504 of title 39, United States Code (as so
redesignated by section 601) is amended to read as follows:
[``(d) There are authorized to be appropriated, out of the
Postal Service Fund, such sums as may be necessary for the
Postal Regulatory Commission. In requesting an appropriation
under this subsection for a fiscal year, the Commission shall
prepare and submit to the Congress under section 2009 a
budget of the Commission's expenses, including expenses for
facilities, supplies, compensation, and employee benefits.''.
[(b) Budget Program.--
[(1) In general.--The next to last sentence of section 2009
of title 39, United States Code, is amended to read as
follows: ``The budget program shall also include separate
statements of the amounts which (1) the Postal Service
requests to be appropriated under subsections (b) and (c) of
section 2401, (2) the Office of Inspector General of the
United States Postal Service requests to be appropriated, out
of the Postal Service Fund, under section 8G(f) of the
Inspector General Act of 1978, and (3) the Postal Regulatory
Commission requests to be appropriated, out of the Postal
Service Fund, under section 504(d) of this title.''.
[(2) Conforming amendment.--Section 2003(e)(1) of title 39,
United States Code, is amended by striking the first sentence
and inserting the following: ``The Fund shall be available
for the payment of (A) all expenses incurred by the Postal
Service in carrying out its functions as provided by law,
subject to the same limitation as set forth in the
parenthetical matter under subsection (a); (B) all expenses
of the Postal Regulatory Commission, subject to the
availability of amounts appropriated under section 504(d);
and (C) all expenses of the Office of Inspector General,
subject to the availability of amounts appropriated under
section 8G(f) of the Inspector General Act of 1978.''.
[(c) Effective Date.--
[(1) In general.--The amendments made by this section shall
apply with respect to fiscal years beginning on or after
October 1, 2002.
[(2) Savings provision.--The provisions of title 39, United
States Code, that are amended by this section shall, for
purposes of any fiscal year before the first fiscal year to
which the amendments made by this section apply, continue to
apply in the same way as if this section had never been
enacted.

[SEC. 604. REDESIGNATION OF THE POSTAL RATE COMMISSION.

[(a) Amendments to Title 39, United States Code.--Title 39,
United States Code, is amended in sections 404, 503 and 504
(as so redesignated by section 601), 1001 and 1002, by
striking ``Postal Rate Commission'' each place it appears and
inserting ``Postal Regulatory Commission'';
[(b) Amendments to Title 5, United States Code.--Title 5,
United States Code, is amended in sections 104(1), 306(f),
2104(b), 3371(3), 5314 (in the item relating to Chairman,
Postal Rate Commission), 5315 (in the item relating to
Members, Postal Rate Commission), 5514(a)(5)(B),
7342(a)(1)(A), 7511(a)(1)(B)(ii), 8402(c)(1), 8423(b)(1)(B),
and 8474(c)(4) by striking ``Postal Rate Commission'' and
inserting ``Postal Regulatory Commission''.
[(c) Amendment to the Ethics in Government Act of 1978.--
Section 101(f)(6) of the Ethics in Government Act of 1978 (5
U.S.C. App.) is amended by striking ``Postal Rate
Commission'' and inserting ``Postal Regulatory Commission''.
[(d) Amendment to the Rehabilitation Act of 1973.--Section
501(b) of the Rehabilitation Act of 1973 (29 U.S.C. 791(b))
is amended by striking ``Postal Rate Office'' and inserting
``Postal Regulatory Commission''.
[(e) Amendment to Title 44, United States Code.--Section
3502(5) of title 44, United States Code, is amended by
striking ``Postal Rate Commission'' and inserting ``Postal
Regulatory Commission''.
[(f) Other References.--Whenever a reference is made in any
provision of law (other than this Act or a provision of law
amended by this Act), regulation, rule, document, or other
record of the United States to the Postal Rate Commission,
such reference shall be considered a reference to the Postal
Regulatory Commission.

[SEC. 605. FINANCIAL TRANSPARENCY.

[(a) In General.--Section 101 of title 39, United States
Code, is amended--
[(1) by redesignating subsections (d) through (g) as
subsections (e) through (h), respectively; and
[(2) by inserting after subsection (c) the following:
[``(d) As an independent establishment of the executive
branch of the Government of the United States, the Postal
Service shall be subject to a high degree of transparency to
ensure fair treatment of customers of the Postal Service's
market-dominant products and companies competing with the
Postal Service's competitive products.''.
[(b) Financial Reporting Requirements and Enforcement
Powers Applicable to Postal Service.--Section 503 of title
39, United States Code (as so redesignated by section 601 and
604) is amended by--
[(1) inserting ``(a)'' before ``The Postal Regulatory
Commission shall promulgate''; and
[(2) adding at the end the following:
[``(b)(1) Beginning with the first full fiscal year
following the date of enactment of the Postal Accountability
and Enhancement Act, the Postal Service shall file with the
Postal Regulatory Commission --
[``(A) within 35 days after the end of each fiscal quarter,
a quarterly report containing the information prescribed in
Form 10-Q of the Securities and Exchange Commission under
section 13 of the Securities Exchange Act of 1934 (15 U.S.C.
78m), or any revised or successor form;
[``(B) within 60 days after the end of each fiscal year, an
annual report containing the information prescribed in Form
10-K of the Securities and Exchange Commission under section
13 of the Securities Exchange Act of 1934 (15 U.S.C. 78m), or
any revised or successor form; and
[``(C) periodic reports within the time frame and
containing the information prescribed in Form 8-K of the
Securities and Exchange Commission under section 13 of the
Securities Exchange Act of 1934 (15 U.S.C. 78m), or any
revised or successor form.
[``(2) For purposes of preparing the reports required under
paragraph (1), the Postal Service shall be deemed to be the
registrant described in the Securities and Exchange
Commission forms, and references contained in such forms to
Securities and Exchange Commission regulations are
applicable.
[``(3) For purposes of preparing the reports required under
paragraph (1), the Postal Service shall comply with the rules
prescribed by the Securities and Exchange Commission
implementing section 404 of the Sarbanes-Oxley Act of 2002
(15 U.S.C. 7262; Public Law 107-204) beginning with fiscal
year 2007 and in each fiscal year thereafter.
[``(c)(1) The reports required under subsection (b)(1)(B)
shall include, with respect to the financial obligations of
the Postal Service under chapters 83, 84, and 89 of title 5
for retirees of the Postal Service--
[``(A) the funded status of such obligations of the Postal
Service;
[``(B) components of the net change in the fund balances
and obligations and the nature and cause of any significant
changes;
[``(C) components of net periodic costs;
[``(D) cost methods and assumptions underlying the relevant
actuarial valuations;
[``(E) the effect of a one-percentage point increase in the
assumed health care cost trend rate for each future year on
the service and interest costs components of net periodic
cost and the accumulated obligation of the Postal Service
under chapter 89 of title 5 for retirees of the Postal
Service;
[``(F) actual contributions to and payments from the funds
for the years presented and the estimated future
contributions and payments for each of the following 5 years;
[``(G) the composition of plan assets reflected in the fund
balances; and
[``(H) the assumed rate of return on fund balances and the
actual rates of return for the years presented.
[``(2)(A) Beginning with the fiscal year 2007 and in each
fiscal year thereafter, for purposes of the reports required
under subsection (b)(1) (A) and (B), the Postal Service shall
include segment reporting.
[``(B) The Postal Service shall determine the appropriate
segment reporting under subparagraph (A), after consultation
with the Postal Regulatory Commission.
[``(d) For purposes of the annual reports required under
subsection (b)(1)(B), the Postal Service shall obtain an
opinion from an independent auditor on whether the
information listed under subsection (c) is fairly stated in
all material respects, either in relation to the basic
financial statements as a whole or on a stand-alone basis.
[``(e) The Postal Regulatory Commission shall have access
to the audit documentation and any other supporting matter of
the Postal Service and its independent auditor in connection
with any information submitted under subsection (b)(1)(B).
[``(f) The Postal Regulatory Commission may, on its own
motion or on request of an interested party, initiate
proceedings (to be

[[Page S910]]

conducted in accordance with regulations that the Commission
shall prescribe) to improve the quality, accuracy, or
completeness of Postal Service data required by the
Commission under this section whenever it shall appear that
the data--
[``(1) have become significantly inaccurate;
[``(2) can be significantly improved; or
[``(3) are not cost beneficial.''.

[TITLE VII--EVALUATIONS

[SEC. 701. ASSESSMENTS OF RATEMAKING, CLASSIFICATION, AND
OTHER PROVISIONS.

[(a) In General.--The Postal Regulatory Commission shall,
at least every 3 years, submit a report to the President and
Congress concerning--
[(1) the operation of the amendments made by this Act; and
[(2) recommendations for any legislation or other measures
necessary to improve the effectiveness or efficiency of the
postal laws of the United States.
[(b) Postal Service Views.--A report under this section
shall be submitted only after reasonable opportunity has been
afforded to the Postal Service to review the report and to
submit written comments on the report. Any comments timely
received from the Postal Service under the preceding sentence
shall be attached to the report submitted under subsection
(a).

[SEC. 702. REPORT ON UNIVERSAL POSTAL SERVICE AND THE POSTAL
MONOPOLY.

[(a) Report by the Postal Regulatory Commission.--
[(1) In general.--Not later than 12 months after the date
of enactment of this Act, the Postal Regulatory Commission
shall submit a report to the President and Congress on
universal postal service and the postal monopoly in the
United States (in this section referred to as ``universal
service and the postal monopoly''), including the monopoly on
the delivery of mail and on access to mailboxes.
[(2) Contents.--The report under this subsection shall
include--
[(A) a comprehensive review of the history and development
of universal service and the postal monopoly, including how
the scope and standards of universal service and the postal
monopoly have evolved over time for the Nation and its urban
and rural areas;
[(B) the scope and standards of universal service and the
postal monopoly provided under current law (including
sections 101 and 403 of title 39, United States Code), and
current rules, regulations, policy statements, and practices
of the Postal Service;
[(C) a description of any geographic areas, populations,
communities (including both urban and rural communities),
organizations, or other groups or entities not currently
covered by universal service or that are covered but that are
receiving services deficient in scope or quality or both; and
[(D) the scope and standards of universal service and the
postal monopoly likely to be required in the future in order
to meet the needs and expectations of the United States
public, including all types of mail users, based on
discussion of such assumptions, alternative sets of
assumptions, and analyses as the Postal Service considers
plausible.
[(b) Recommended Changes to Universal Service and the
Monopoly.--The Postal Regulatory Commission shall include in
the report under subsection (a), and in all reports submitted
under section 701 of this Act--
[(1) any recommended changes to universal service and the
postal monopoly as the Commission considers appropriate,
including changes that the Commission may implement under
current law and changes that would require changes to current
law, with estimated effects of the recommendations on the
service, financial condition, rates, and security of mail
provided by the Postal Service;
[(2) with respect to each recommended change described
under paragraph (1)--
[(A) an estimate of the costs of the Postal Service
attributable to the obligation to provide universal service
under current law; and
[(B) an analysis of the likely benefit of the current
postal monopoly to the ability of the Postal Service to
sustain the current scope and standards of universal service,
including estimates of the financial benefit of the postal
monopoly to the extent practicable, under current law; and
[(3) such additional topics and recommendations as the
Commission considers appropriate, with estimated effects of
the recommendations on the service, financial condition,
rates, and the security of mail provided by the Postal
Service.

[SEC. 703. STUDY ON EQUAL APPLICATION OF LAWS TO COMPETITIVE
PRODUCTS.

[(a) In General.--The Federal Trade Commission shall
prepare and submit to the President and Congress, and to the
Postal Regulatory Commission, within 1 year after the date of
enactment of this Act, a comprehensive report identifying
Federal and State laws that apply differently to the United
States Postal Service with respect to the competitive
category of mail (within the meaning of section 102 of title
39, United States Code, as amended by section 101) and
similar products provided by private companies.
[(b) Recommendations.--The Federal Trade Commission shall
include such recommendations as it considers appropriate for
bringing such legal discrimination to an end, and in the
interim, to account under section 3633 of title 39, United
States Code (as added by this Act), for the net economic
advantages provided by those laws.
[(c) Consultation.--In preparing its report, the Federal
Trade Commission shall consult with the United States Postal
Service, the Postal Regulatory Commission, other Federal
agencies, mailers, private companies that provide delivery
services, and the general public, and shall append to such
report any written comments received under this subsection.
[(d) Competitive Product Regulation.--The Postal Regulatory
Commission shall take into account the recommendations of the
Federal Trade Commission in promulgating or revising the
regulations required under section 3633 of title 39, United
States Code.

[SEC. 704. REPORT ON POSTAL WORKPLACE SAFETY AND WORKPLACE-
RELATED INJURIES.

[(a) Report by the Inspector General.--
[(1) In general.--Not later than 6 months after the
enactment of this Act, the Inspector General of the United
States Postal Service shall submit a report to Congress and
the Postal Service that--
[(A) details and assesses any progress the Postal Service
has made in improving workplace safety and reducing
workplace-related injuries nationwide; and
[(B) identifies opportunities for improvement that remain
with respect to such improvements and reductions.
[(2) Contents.--The report under this subsection shall
also--
[(A) discuss any injury reduction goals established by the
Postal Service;
[(B) describe the actions that the Postal Service has taken
to improve workplace safety and reduce workplace-related
injuries, and assess how successful the Postal Service has
been in meeting its injury reduction goal; and
[(C) identify areas where the Postal Service has failed to
meet its injury reduction goals, explain the reasons why
these goals were not met, and identify opportunities for
making further progress in meeting these goals.
[(b) Report by the Postal Service.--
[(1) Report to congress.--Not later than 6 months after
receiving the report under subsection (a), the Postal Service
shall submit a report to Congress detailing how it plans to
improve workplace safety and reduce workplace-related
injuries nationwide, including goals and metrics.
[(2) Problem areas.--The report under this subsection shall
also include plans, developed in consultation with the
Inspector General and employee representatives, including
representatives of each postal labor union and management
association, for addressing the problem areas identified by
the Inspector General in the report under subsection
(a)(2)(C).

[SEC. 705. STUDY ON RECYCLED PAPER.

[(a) In General.--Within 12 months after the date of
enactment of this Act, the Government Accountability Office
shall study and submit to the Congress, the Board of
Governors of the Postal Service, and to the Postal Regulatory
Commission a report concerning--
[(1) the economic and environmental efficacy of
establishing rate incentives for mailers linked to the use of
recycled paper;
[(2) a description of the accomplishments of the Postal
Service in each of the preceding 5 years involving recycling
activities, including the amount of annual revenue generated
and savings achieved by the Postal Service as a result of its
use of recycled paper and other recycled products and its
efforts to recycle undeliverable and discarded mail and other
materials; and
[(3) additional opportunities that may be available for the
United States Postal Service to engage in recycling
initiatives and the projected costs and revenues of
undertaking such opportunities.
[(b) Recommendations.--The report shall include
recommendations for any administrative or legislative actions
that may be appropriate.

[TITLE VIII--POSTAL SERVICE RETIREMENT AND HEALTH BENEFITS FUNDING

[SEC. 801. SHORT TITLE.

[This title may be cited as the ``Postal Civil Service
Retirement and Health Benefits Funding Amendments of 2004''.

[SEC. 802. CIVIL SERVICE RETIREMENT SYSTEM.

[(a) In General.--Chapter 83 of title 5, United States
Code, is amended--
[(1) in section 8334(a)(1)(B), by striking clause (ii) and
inserting the following:
[``(ii) In the case of an employee of the United States
Postal Service, no amount shall be contributed under this
subparagraph.''; and
[(2) by amending section 8348(h) to read as follows:
[``(h)(1) In this subsection, the term `Postal surplus or
supplemental liability' means the estimated difference, as
determined by the Office, between--
[``(A) the actuarial present value of all future benefits
payable from the Fund under this subchapter to current or
former employees of the United States Postal Service and
attributable to civilian employment with the United States
Postal Service; and
[``(B) the sum of--
[``(i) the actuarial present value of deductions to be
withheld from the future basic pay of employees of the United
States Postal Service currently subject to this subchapter
under section 8334;
[``(ii) that portion of the Fund balance, as of the date
the Postal surplus or supplemental liability is determined,
attributable to payments to the Fund by the United

[[Page S911]]

States Postal Service and its employees, minus benefit
payments attributable to civilian employment with the United
States Postal Service, plus the earnings on such amounts
while in the Fund; and
[``(iii) any other appropriate amount, as determined by the
Office in accordance with generally accepted actuarial
practices and principles.
[``(2)(A) Not later than June 15, 2006, the Office shall
determine the Postal surplus or supplemental liability, as of
September 30, 2005. If that result is a surplus, the amount
of the surplus shall be transferred to the Postal Service
Retiree Health Benefits Fund established under section 8909a
by June 30, 2006. If the result is a supplemental liability,
the Office shall establish an amortization schedule,
including a series of annual installments commencing
September 30, 2006, which provides for the liquidation of
such liability by September 30, 2043.
[``(B) The Office shall redetermine the Postal surplus or
supplemental liability as of the close of the fiscal year,
for each fiscal year beginning after September 30, 2006,
through the fiscal year ending September 30, 2038. If the
result is a surplus, that amount shall remain in the Fund
until distribution is authorized under subparagraph (C), and
any prior amortization schedule for payments shall be
terminated. If the result is a supplemental liability, the
Office shall establish a new amortization schedule, including
a series of annual installments commencing on September 30 of
the subsequent fiscal year, which provides for the
liquidation of such liability by September 30, 2043.
[``(C) As of the close of the fiscal years ending September
30, 2015, 2025, 2035, and 2039, if the result is a surplus,
that amount shall be transferred to the Postal Service
Retiree Health Benefits Fund, and any prior amortization
schedule for payments shall be terminated.
[``(D) Amortization schedules established under this
paragraph shall be set in accordance with generally accepted
actuarial practices and principles, with interest computed at
the rate used in the most recent valuation of the Civil
Service Retirement System.
[``(E) The United States Postal Service shall pay the
amounts so determined to the Office, with payments due not
later than the date scheduled by the Office.
[``(3) Notwithstanding any other provision of law, in
computing the amount of any payment under any other
subsection of this section that is based upon the amount of
the unfunded liability, such payment shall be computed
disregarding that portion of the unfunded liability that the
Office determines will be liquidated by payments under this
subsection.''.
[(b) Credit Allowed for Military Service.--In the
application of section 8348(g)(2) of title 5, United States
Code, for the fiscal year 2006, the Office of Personnel
Management shall include, in addition to the amount otherwise
computed under that paragraph, the amounts that would have
been included for the fiscal years 2003 through 2005 with
respect to credit for military service of former employees of
the United States Postal Service as though the Postal Civil
Service Retirement System Funding Reform Act of 2003 (Public
Law 108-18) had not been enacted, and the Secretary of the
Treasury shall make the required transfer to the Civil
Service Retirement and Disability Fund based on that amount.

[SEC. 803. HEALTH INSURANCE.

[(a) In General.--
[(1) Funding.--Chapter 89 of title 5, United States Code,
is amended--
[(A) in section 8906(g)(2)(A), by striking ``shall be paid
by the United States Postal Service.'' and inserting ``shall
be paid first from the Postal Service Retiree Health Benefits
Fund up to the amount contained in the Fund, with any
remaining amount paid by the United States Postal Service.'';
and
[(B) by inserting after section 8909 the following:

[``Sec. 8909a. Postal Service Retiree Health Benefit Fund

[``(a) There is in the Treasury of the United States a
Postal Service Retiree Health Benefits Fund which is
administered by the Office of Personnel Management.
[``(b) The Fund is available without fiscal year limitation
for payments required under section 8906(g)(2)(A).
[``(c) The Secretary of the Treasury shall immediately
invest, in interest-bearing securities of the United States
such currently available portions of the Fund as are not
immediately required for payments from the Fund. Such
investments shall be made in the same manner as investments
for the Civil Service Retirement and Disability Fund under
section 8348.
[``(d)(1) Not later than June 30, 2006, and by June 30 of
each succeeding year, the Office shall compute the net
present value of the future payments required under section
8906(g)(2)(A) and attributable to the service of Postal
Service employees during the most recently ended fiscal year.
[``(2)(A) Not later than June 30, 2006, the Office shall
compute, and by June 30 of each succeeding year, the Office
shall recompute the difference between--
[``(i) the net present value of the excess of future
payments required under section 8906(g)(2)(A) for current and
future United States Postal Service annuitants as of the end
of the fiscal year ending on September 30 of that year; and
[``(ii)(I) the value of the assets of the Postal Retiree
Health Benefits Fund as of the end of the fiscal year ending
on September 30 of that year; and
[``(II) the net present value computed under paragraph (1).
[``(B) Not later than June 30, 2006, the Office shall
compute, and by June 30 of each succeeding year shall
recompute, an amortization schedule including a series of
annual installments which provide for the liquidation by
September 30, 2045, or within 15 years, whichever is later,
of the net present value determined under subparagraph (A),
including interest at the rate used in that computation.
[``(3) Not later than September 30, 2006, and by September
30 of each succeeding year, the United States Postal Service
shall pay into such Fund--
[``(A) the net present value computed under paragraph (1);
and
[``(B) the annual installment computed under paragraph
(2)(B).
[``(4) Computations under this subsection shall be made
consistent with the assumptions and methodology used by the
Office for financial reporting under subchapter II of chapter
35 of title 31.
[``(5) After consultation with the United States Postal
Service, the Office shall promulgate any regulations the
Office determines necessary under this subsection.''.
[(2) Technical and conforming amendment.--The table of
sections for chapter 89 of title 5, United States Code, is
amended by inserting after the item relating to section 8909
the following:

[``8909a. Postal Service Retiree Health Benefits Fund.''.

[(b) Transitional Adjustment for Fiscal Year 2006.--For
fiscal year 2006, the amounts paid by the Postal Service in
Government contributions under section 8906(g)(2)(A) of title
5, United States Code, for fiscal year 2006 contributions
shall be deducted from the initial payment otherwise due from
the Postal Service to the Postal Service Retiree Health
Benefits Fund under section 8909a(d)(3) of such title as
added by this section.

[SEC. 804. REPEAL OF DISPOSITION OF SAVINGS PROVISION.

[Section 3 of the Postal Civil Service Retirement System
Funding Reform Act of 2003 (Public Law 108-18) is repealed.

[SEC. 805. EFFECTIVE DATES.

[(a) In General.--Except as provided under subsection (b),
this title shall take effect on October 1, 2005.
[(b) Termination of Employer Contribution.--The amendment
made by paragraph (1) of section 802(a) shall take effect on
the first day of the first pay period beginning on or after
October 1, 2005.

[TITLE IX--COMPENSATION FOR WORK INJURIES

[SEC. 901. TEMPORARY DISABILITY; CONTINUATION OF PAY.

[(a) Time of Accrual of Right.--Section 8117 of title 5,
United States Code, is amended--
[(1) by striking ``An employee'' and inserting ``(a) An
employee other than a Postal Service employee''; and
[(2) by adding at the end the following:
[``(b) A Postal Service employee is not entitled to
compensation or continuation of pay for the first 3 days of
temporary disability, except as provided under paragraph (3)
of subsection (a). A Postal Service employee may use annual
leave, sick leave, or leave without pay during that 3-day
period, except that if the disability exceeds 14 days or is
followed by permanent disability, the employee may have their
sick leave or annual leave reinstated or receive pay for the
time spent on leave without pay under this section.''.
[(b) Technical and Conforming Amendment.--Section
8118(b)(1) of title 5, United States Code, is amended to read
as follows:
[``(1) without a break in time, except as provided under
section 8117(b), unless controverted under regulations of the
Secretary''.

[SEC. 902. DISABILITY RETIREMENT FOR POSTAL EMPLOYEES.

[(a) Total Disability.--Section 8105 of title 5, United
States Code, is amended--
[(1) in subsection (a), by adding at the end the following:
``This section applies to a Postal Service employee, except
as provided under subsection (c).''; and
[(2) by adding at the end the following:
[``(c)(1) In this subsection, the term `retirement age' has
the meaning given under section 216(l)(1) of the Social
Security Act (42 U.S.C. 416(l)(1)).
[``(2) Notwithstanding any other provision of law, for any
injury occurring on or after the date of enactment of the
Postal Accountability and Enhancement Act, and for any new
claim for a period of disability commencing on or after that
date, the compensation entitlement for total disability is
converted to 50 percent of the monthly pay of the employee on
the later of--
[``(A) the date on which the injured employee reaches
retirement age; or
[``(B) 1 year after the employee begins receiving
compensation.''.
[(b) Partial Disability.--Section 8106 of title 5, United
States Code, is amended--
[(1) in subsection (a), by adding at the end the following:
``This section applies to a Postal Service employee, except
as provided under subsection (d).''; and
[(2) by adding at the end the following:
[``(d)(1) In this subsection, the term `retirement age' has
the meaning given under section 216(l)(1) of the Social
Security Act (42 U.S.C. 416(l)(1)).

[[Page S912]]

[``(2) Notwithstanding any other provision of law, for any
injury occurring on or after the date of enactment of this
subsection, and for any new claim for a period of disability
commencing on or after that date, the compensation
entitlement for partial disability is converted to 50 percent
of the difference between the monthly pay of an employee and
the monthly wage earning capacity of the employee after the
beginning of partial disability on the later of--
[``(A) the date on which the injured employee reaches
retirement age; or
[``(B) 1 year after the employee begins receiving
compensation.''.

[TITLE X--MISCELLANEOUS

[SEC. 1001. EMPLOYMENT OF POSTAL POLICE OFFICERS.

[Section 404 of title 39, United States Code (as amended by
this Act), is further amended by adding at the end the
following:
[``(d) The Postal Service may employ guards for all
buildings and areas owned or occupied by the Postal Service
or under the charge and control of the Postal Service, and
may give such guards, with respect to such property, any of
the powers of special policemen provided under section 1315
of title 40. The Postmaster General, or the designee of the
Postmaster General, may take any action that the Secretary of
Homeland Security may take under section 1315 of title 40,
with respect to that property.

[SEC. 1002. EXPANDED CONTRACTING AUTHORITY.

[(a) Amendment to Title 39, United States Code.--
[(1) Contracts with air carriers.--Subsection (e) of
section 5402 of title 39, United States Code, is amended--
[(A) by striking the matter preceding paragraph (2) and
inserting the following:
[``(e)(1) The Postal Service may contract with any air
carrier for the transportation of mail by aircraft in
interstate air transportation, including the rates for that
transportation, either through negotiations or competitive
bidding.'';
[(B) by redesignating paragraph (2) as paragraph (4); and
[(C) by inserting after paragraph (1) the following:
[``(2) Notwithstanding subsections (b) through (d), the
Postal Service may contract with any air carrier or foreign
air carrier for the transportation of mail by aircraft in
foreign air transportation, including the rates for that
transportation, either through negotiations or competitive
bidding, except that--
[``(A) any such contract may be awarded only to--
[``(i) an air carrier holding a certificate required by
section 41101 of title 49 or an exemption therefrom issued by
the Secretary of Transportation;
[``(ii) a foreign air carrier holding a permit required by
section 41301 of title 49 or an exemption therefrom issued by
the Secretary of Transportation; or
[``(iii) a combination of such air carriers or foreign air
carriers (or both);
[``(B) mail transported under any such contract shall not
be subject to any duty-to-carry requirement imposed by any
provision of subtitle VII of title 49 or by any certificate,
permit, or corresponding exemption authority issued by the
Secretary of Transportation under that subtitle;
[``(C) during the 5-year period beginning 1 year after the
date of enactment of the Postal Accountability and
Enhancement Act, the Postal Service may not under this
paragraph--
[``(i) contract for service between a pair or combination
of pairs of points in foreign air transportation with--
[``(I) a foreign air carrier; or
[``(II) an air carrier to the extent that service provided
would be offered through a code sharing arrangement in which
the air carrier's designator code is used to identify a
flight operated by a foreign air carrier; or
[``(ii) tender mail in foreign air transportation under
contracts providing for the carriage of mail in foreign air
transportation over all (or substantially all, as determined
by the Postal Service) of a carrier's routes or all or
substantially all of a carrier's routes within a geographic
area determined by the Postal Service on the basis of a
common unit price per mile and a separate terminal price to--
[``(I) a foreign air carrier; or
[``(II) an air carrier to the extent that service provided
would be offered through a code sharing arrangement in which
the air carrier's designator code is used to identify a
flight operated by a foreign air carrier, unless--

[``(aa) with respect to clause (i) and this clause, fewer
than 2 air carriers capable of providing service to the
Postal Service adequate for its purposes between the pair or
combination of pairs of points in foreign air transportation
offer scheduled service between the pair or combination of
pairs of points in foreign air transportation which are the
subject of the contract or tender;
[``(bb) with respect to clause (i), after competitive
solicitation, the Postal Service has not received at least 2
offers from eligible air carriers capable of providing
service to the Postal Service adequate for its purposes
between the pair of combination of pairs of points in foreign
air transportation; or
[``(cc) with respect to this clause, after competitive
solicitation, fewer than 2 air carriers under contract with
the Postal Service offer service adequate for the Postal
Service's purposes between the pair or combination of pairs
of points in foreign air transportation for which tender is
being made;

[``(D) beginning 6 years after the date of enactment of the
Postal Accountability and Enhancement Act, every contract
that the Postal Service awards to a foreign air carrier under
this paragraph shall be subject to the continuing requirement
that air carriers shall be afforded the same opportunity to
carry the mail of the country to and from which the mail is
transported and the flag country of the foreign air carrier,
if different, as the Postal Service has afforded the foreign
air carrier; and
[``(E) the Postmaster General shall consult with the
Secretary of Defense concerning actions that affect the
carriage of military mail transported in foreign air
transportation.
[``(3) Paragraph (2) shall not be interpreted as suspending
or otherwise diminishing the authority of the Secretary of
Transportation under section 41310 of title 49.''.
[(2) Definitions.--Section 5402(a) of title 39, United
States Code, is amended by striking paragraph (2) and
inserting the following:
[``(2) The terms `air carrier', `air transportation',
`foreign air carrier', `foreign air transportation',
`interstate air transportation', and `mail' have the meanings
given such terms in section 40102(a) of title 49.''.
[(b) Amendments to Title 49, United States Code.--
[(1) Authority of postal service to provide for interstate
air transportation of mail.--Section 41901(a) of title 49,
United States Code, is amended to read as follows:
[``(a) Title 39.--The United States Postal Service may
provide for the transportation of mail by aircraft in air
transportation under this chapter and under chapter 54 of
title 39.''.
[(2) Schedules for certain transportation of mail.--Section
41902 of title 49, United States Code, is amended--
[(A) by striking subsection (b) and inserting the
following:
[``(b) Statements on Places and Schedules.--Every air
carrier shall file with the Secretary of Transportation and
the United States Postal Service a statement showing--
[``(1) the places between which the carrier is authorized
to transport mail in Alaska;
[``(2) every schedule of aircraft regularly operated by the
carrier between places described under paragraph (1) and
every change in each schedule; and
[``(3) for each schedule, the places served by the carrier
and the time of arrival at, and departure from, each
place.'';
[(B) in subsection (c), by striking ``(b)(3)'' and
inserting ``(b)''; and
[(C) in subsection (d), in the first sentence, by striking
``(b)(3)'' and inserting ``(b)''.
[(3) Prices for foreign transportation of mail.--Section
41907 of title 49, United States Code, is amended--
[(A) by striking ``(a) Limitations.--''; and
[(B) by striking subsection (b).
[(4) Technical and conforming amendments.--Sections 41107,
41901(b)(1), 41902(a), and 41903 (a) and (b) of title 49,
United States Code, are amended by striking ``in foreign air
transportation or''.
[(c) Effective Date.--The amendments made by this section
shall take effect 1 year after the date of enactment of this
Act.

[SEC. 1003. REPORT ON THE UNITED STATES POSTAL INSPECTION
SERVICE AND THE OFFICE OF THE INSPECTOR GENERAL
OF THE UNITED STATES POSTAL SERVICE.

[(a) In General.--Not later than 1 year after the date of
enactment of this Act, the Government Accountability Office
shall review the functions, responsibilities, and areas of
possible duplication of the United States Postal Inspection
Service and the Office of the Inspector General of the United
States Postal Service and submit a report on the review to
the Committee on Homeland Security and Governmental Affairs
of the Senate.
[(b) Contents.--The report under this section shall include
recommendations for legislative actions necessary to clarify
the roles of the United States Postal Inspection Service and
the Office of the Inspector General of the United States
Postal Service to strengthen oversight of postal operations.

[SEC. 1004. SENSE OF CONGRESS REGARDING POSTAL SERVICE
PURCHASING REFORM.

[It is the sense of Congress that the Postal Service
should--
[(1) ensure the fair and consistent treatment of suppliers
and contractors in its current purchasing policies and any
revision or replacement of such policies, such as through the
use of competitive contract award procedures, effective
dispute resolution mechanisms, and socioeconomic programs;
and
[(2) implement commercial best practices in Postal Service
purchasing policies to achieve greater efficiency and cost
savings as recommended in July 2003 by the President's
Commission on the United States Postal Service, in a manner
that is compatible with the fair and consistent treatment of
suppliers and contractors, as befitting an establishment in
the United States Government.]

SECTION 1. SHORT TITLE; TABLE OF CONTENTS.

(a) Short Title.--This Act may be cited as the ``Postal
Accountability and Enhancement Act''.
(b) Table of Contents.--The table of contents for this Act
is as follows:

Sec. 1. Short title; table of contents.

[[Page S913]]

TITLE I--DEFINITIONS; POSTAL SERVICES

Sec. 101. Definitions.
Sec. 102. Postal services.

TITLE II--MODERN RATE REGULATION

Sec. 201. Provisions relating to market-dominant products.
Sec. 202. Provisions relating to competitive products.
Sec. 203. Provisions relating to experimental and new products.
Sec. 204. Reporting requirements and related provisions.
Sec. 205. Complaints; appellate review and enforcement.
Sec. 206. Clerical amendment.

TITLE III--MODERN SERVICE STANDARDS

Sec. 301. Establishment of modern service standards.
Sec. 302. Postal service plan.

TITLE IV--PROVISIONS RELATING TO FAIR COMPETITION

Sec. 401. Postal Service Competitive Products Fund.
Sec. 402. Assumed Federal income tax on competitive products income.
Sec. 403. Unfair competition prohibited.
Sec. 404. Suits by and against the Postal Service.
Sec. 405. International postal arrangements.

TITLE V--GENERAL PROVISIONS

Sec. 501. Qualification and term requirements for Governors.
Sec. 502. Obligations.
Sec. 503. Private carriage of letters.
Sec. 504. Rulemaking authority.
Sec. 505. Noninterference with collective bargaining agreements.
Sec. 506. Bonus authority.

TITLE VI--ENHANCED REGULATORY COMMISSION

Sec. 601. Reorganization and modification of certain provisions
relating to the Postal Regulatory Commission.
Sec. 602. Authority for Postal Regulatory Commission to issue
subpoenas.
Sec. 603. Authorization of appropriations from the Postal Service Fund.
Sec. 604. Redesignation of the Postal Rate Commission.
Sec. 605. Financial transparency.

TITLE VII--EVALUATIONS

Sec. 701. Assessments of ratemaking, classification, and other
provisions.
Sec. 702. Report on universal postal service and the postal monopoly.
Sec. 703. Study on equal application of laws to competitive products.
Sec. 704. Report on postal workplace safety and workplace-related
injuries.
Sec. 705. Study on recycled paper.

TITLE VIII--POSTAL SERVICE RETIREMENT AND HEALTH BENEFITS FUNDING

Sec. 801. Short title.
Sec. 802. Civil Service Retirement System.
Sec. 803. Health insurance.
Sec. 804. Repeal of disposition of savings provision.
Sec. 805. Effective dates.

TITLE IX--COMPENSATION FOR WORK INJURIES

Sec. 901. Temporary disability; continuation of pay.
Sec. 902. Disability retirement for postal employees.

TITLE X--MISCELLANEOUS

Sec. 1001. Employment of postal police officers.
Sec. 1002. Obsolete provisions.
Sec. 1003. Reduced rates.
Sec. 1004. Sense of Congress regarding Postal Service purchasing
reform.

TITLE I--DEFINITIONS; POSTAL SERVICES

SEC. 101. DEFINITIONS.

Section 102 of title 39, United States Code, is amended by
striking ``and'' at the end of paragraph (3), by striking the
period at the end of paragraph (4) and inserting a semicolon,
and by adding at the end the following:
``(5) `postal service' refers to the physical delivery of
letters, printed matter, or packages weighing up to 70
pounds, including physical acceptance, collection, sorting,
transportation, or other functions ancillary thereto;
``(6) `product' means a postal service with a distinct cost
or market characteristic for which a rate or rates are
applied;
``(7) `rates', as used with respect to products, includes
fees for postal services;
``(8) `market-dominant product' or `product in the market-
dominant category of mail' means a product subject to
subchapter I of chapter 36; and
``(9) `competitive product' or `product in the competitive
category of mail' means a product subject to subchapter II of
chapter 36; and
``(10) `year', as used in chapter 36 (other than
subchapters I and VI thereof), means a fiscal year.''.

SEC. 102. POSTAL SERVICES.

(a) In General.--Section 404 of title 39, United States
Code, is amended--
(1) in subsection (a), by striking paragraph (6) and by
redesignating paragraphs (7) through (9) as paragraphs (6)
through (8), respectively; and
(2) by adding at the end the following:
``(c) Except as provided in section 411, nothing in this
title shall be considered to permit or require that the
Postal Service provide any special nonpostal or similar
services.''.
(b) Conforming Amendments.--(1) Section 1402(b)(1)(B)(ii)
of the Victims of Crime Act of 1984 (98 Stat. 2170; 42 U.S.C.
10601(b)(1)(B)(ii)) is amended by striking ``404(a)(8)'' and
inserting ``404(a)(7)''.
(2) Section 2003(b)(1) of title 39, United States Code, is
amended by striking ``and nonpostal''.

TITLE II--MODERN RATE REGULATION

SEC. 201. PROVISIONS RELATING TO MARKET-DOMINANT PRODUCTS.

(a) In General.--Chapter 36 of title 39, United States
Code, is amended by striking sections 3621 and 3622 and
inserting the following:

``Sec. 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 referred to in
subsection (a) shall, for purposes of this subchapter, be
considered to have the meaning given to such mail matter
under the mail classification schedule.

``Sec. 3622. Modern rate regulation

``(a) Authority Generally.--The Postal Regulatory
Commission shall, within 12 months after the date of
enactment of this section, by regulation establish (and may
from time to time thereafter by regulation revise) a modern
system for regulating rates and classes for market-dominant
products.
``(b) Objectives.--Such system shall be designed to achieve
the following objectives:
``(1) To reduce the administrative burden and increase the
transparency of the ratemaking process while affording
reasonable opportunities for interested parties to
participate in that process.
``(2) To create predictability and stability in rates.
``(3) To maximize incentives to reduce costs and increase
efficiency.
``(4) To enhance mail security and deter terrorism by
promoting secure, sender-identified mail.
``(5) To allow the Postal Service pricing flexibility,
including the ability to use pricing to promote intelligent
mail and encourage increased mail volume during nonpeak
periods.
``(6) To assure adequate revenues, including retained
earnings, to maintain financial stability and meet the
service standards established under section 3691.
``(7) To allocate the total institutional costs of the
Postal Service equitably between market-dominant and
competitive products.
``(c) Factors.--In establishing or revising such system,
the Postal Regulatory Commission shall take into account--
``(1) the establishment and maintenance of a fair and
equitable schedule for rates and classification system;
``(2) 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;
``(3) the requirement that each class of mail or type of
mail service bear the direct and indirect postal costs
attributable to each class or type of mail service through
reliably identified causal relationships plus that portion of
all other costs of the Postal Service reasonably assignable
to such class or type;
``(4) the effect of rate increases upon the general public,
business mail users, and enterprises in the private sector of
the economy engaged in the delivery of mail matter other than
letters;
``(5) the available alternative means of sending and
receiving letters and other mail matter at reasonable costs;
``(6) the degree of preparation of mail for delivery into
the postal system performed by the mailer and its effect upon
reducing costs to the Postal Service;
``(7) 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;
``(8) the importance of pricing flexibility to encourage
increased mail volume and operational efficiency;
``(9) 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;
``(10) the importance of providing classifications with
extremely high degrees of reliability and speed of delivery
and of providing those that do not require high degrees of
reliability and speed of delivery;
``(11) the desirability of special classifications from the
point of view of both the user and of the Postal Service;
``(12) the educational, cultural, scientific, and
informational value to the recipient of mail matter;
``(13) the need for the Postal Service to increase its
efficiency and reduce its costs, including infrastructure
costs, to help maintain high quality, affordable, universal
postal service; 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 products 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
intention 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 implementation of
any adjustment in rates under this section--

[[Page S914]]

``(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 subparagraph (A);
``(D) establish procedures whereby the Postal 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), establish procedures whereby rates
may be adjusted on an expedited basis due to unexpected and
extraordinary circumstances.
``(2) Limitations.--
``(A) Classes of mail.--The annual limitations 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 Accountability 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 increase for
any class to exceed the Consumer Price Index for All Urban
Consumers.
``(C) Banking unused pricing authority.--Notwithstanding
paragraph (1), for any class or service that failed to
recover its attributable costs in the previous fiscal year,
or for all classes and services when the Postal Service has
operated at a loss for the last 2 years, rate increases may
exceed Consumer Price Index for All Urban Consumers by the
amount rate increases in the previous year were less than
Consumer Price Index for All Urban Consumers.
``(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 Regulatory Commission
under subsection (a).
``(2) Regulations.--As part of the regulations established
under subsection (a), the Postal Regulatory Commission shall
establish rules for workshare discounts that 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 workshare 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 result of the workshare
activity will be phased out over a limited period of time;
``(B) a reduction in the discount would--
``(i) 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 category
or subclass subject to the discount below what it otherwise
would have been if the discount had not been reduced to costs
avoided;
``(ii) result in a further increase in the rates paid by
mailers not able to take advantage of the discount; or
``(iii) impede the efficient operation of the Postal
Service;
``(C) the amount of the discount above costs avoided--
``(i) is necessary to mitigate rate shock; and
``(ii) will be phased out over time; or
``(D) the discount is provided in connection with
subclasses of mail consisting exclusively of mail matter of
educational, cultural, scientific, or informational value.
``(3) Report.--Whenever the Postal Service establishes or
maintains a workshare discount, the Postal Service shall, at
the time it publishes the workshare discount rate, submit to
the Postal Regulatory Commission a detailed report that--
``(A) explains the Postal Service's reasons for
establishing or maintaining the rate;
``(B) sets forth the data, economic analyses, and other
information relied on by the Postal Service to justify the
rate; and
``(C) certifies that the discount will not adversely affect
rates or services provided to users of postal services who do
not take advantage of the discount rate.
``(f) Transition Rule.--Until regulations under this
section first take effect, 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 section.''.
(b) Repealed Sections.--Sections 3623, 3624, 3625, and 3628
of title 39, United States Code, are repealed.
(c) Redesignation.--Chapter 36 of title 39, United States
Code (as in effect after the amendment made by section 601,
but before the amendment made by section 202) is amended by
striking the heading for subchapter II and inserting the
following:

``SUBCHAPTER I--PROVISIONS RELATING TO MARKET-DOMINANT PRODUCTS''.

SEC. 202. PROVISIONS RELATING TO COMPETITIVE PRODUCTS.

Chapter 36 of title 39, United States Code, is amended by
inserting after section 3629 the following:

``SUBCHAPTER II--PROVISIONS RELATING TO COMPETITIVE PRODUCTS

``Sec. 3631. Applicability; definitions and updates

``(a) Applicability.--This subchapter shall apply with
respect to--
``(1) priority mail;
``(2) expedited mail;
``(3) bulk parcel post;
``(4) bulk international mail; and
``(5) mailgrams;
subject to subsection (d) and any changes the Postal
Regulatory Commission may make under section 3642.
``(b) Definition.--For purposes of this subchapter, the
term `costs attributable', as used with respect to a product,
means the direct and indirect postal costs attributable to
such product through reliably identified causal
relationships.
``(c) Rule of Construction.--Mail matter referred to in
subsection (a) shall, for purposes of this subchapter, be
considered to have the meaning given to such mail matter
under the mail classification schedule.
``(d) Limitation.--Notwithstanding any other provision of
this section, nothing in this subchapter shall be considered
to apply with respect to any product then currently in the
market-dominant category of mail.

``Sec. 3632. Action of the Governors

``(a) Authority To Establish Rates and Classes.--The
Governors, with the written concurrence of a majority of all
of the Governors then holding office, shall establish rates
and classes for products in the competitive category of mail
in accordance with the requirements of this subchapter and
regulations promulgated under section 3633.
``(b) Procedures.--
``(1) In general.--Rates and classes shall be established
in writing, complete with a statement of explanation and
justification, and the date as of which each such rate or
class takes effect.
``(2) Public notice; review; and compliance.--Not later
than 30 days before the date of implementation of any
adjustment in rates under this section--
``(A) the Governors shall provide public notice of the
adjustment and an opportunity for review by the Postal
Regulatory Commission;
``(B) the Postal Regulatory Commission shall notify the
Governors of any noncompliance of the adjustment with section
3633; and
``(C) the Governors shall respond to the notice provided
under subparagraph (B) and describe the actions to be taken
to comply with section 3633.
``(c) Transition Rule.--Until regulations under section
3633 first take effect, rates and classes for competitive
products shall remain subject to modification in accordance
with the provisions of this chapter and section 407, as such
provisions were as last in effect before the date of
enactment of this section.

``Sec. 3633. Provisions applicable to rates for competitive
products

``(a) In General.--The Postal Regulatory Commission shall,
within 180 days after the date of enactment of this section,
promulgate (and may from time to time thereafter revise)
regulations to--
``(1) prohibit the subsidization of competitive products by
market-dominant products;
``(2) ensure that each competitive product covers its costs
attributable; and
``(3) ensure that all competitive products collectively
cover their share of the institutional costs of the Postal
Service.
``(b) Review of Minimum Contribution.--Five years after the
date of enactment of this section, and every 5 years
thereafter, the Postal Regulatory Commission shall conduct a
review to determine whether the institutional costs
contribution requirement under subsection (a)(3) should be
retained in its current form, modified, or eliminated. In
making its determination, the Commission shall consider all
relevant circumstances, including the prevailing competitive
conditions in the market, and the degree to which any costs
are uniquely or disproportionately associated with any
competitive products.''.

SEC. 203. PROVISIONS RELATING TO EXPERIMENTAL AND NEW
PRODUCTS.

Subchapter III of chapter 36 of title 39, United States
Code, is amended to read as follows:

``SUBCHAPTER III--PROVISIONS RELATING TO EXPERIMENTAL AND NEW PRODUCTS

``Sec. 3641. Market tests of experimental products

[[Page S915]]

without regard to whether a similar ancillary product exists
for market-dominant products.
``(c) Notice.--
``(1) In general.--At least 30 days before initiating a
market test under this section, the Postal Service shall file
with the Postal Regulatory Commission and publish in the
Federal Register a notice--
``(A) setting out the basis for the Postal Service's
determination that the market test is covered by this
section; and
``(B) describing the nature and scope of the market test.
``(2) Safeguards.--For a competitive experimental product,
the provisions of section 504(g) shall be available with
respect to any information required to be filed under
paragraph (1) to the same extent and in the same manner as in
the case of any matter described in section 504(g)(1).
Nothing in paragraph (1) shall be considered to permit or
require the publication of any information as to which
confidential treatment is accorded under the preceding
sentence (subject to the same exception as set forth in
section 504(g)(3)).
``(d) Duration.--
``(1) In general.--A market test of a product under this
section may be conducted over a period of not to exceed 24
months.
``(2) Extension authority.--If necessary in order to
determine the feasibility or desirability of a product being
tested under this section, the Postal Regulatory
Commission may, upon written application of the Postal
Service (filed not later than 60 days before the date as
of which the testing of such product would otherwise be
scheduled to terminate under paragraph (1)), extend the
testing of such product for not to exceed an additional 12
months.
``(e) Dollar-Amount Limitation.--
``(1) In general.--A product may only be tested under this
section if the total revenues that are anticipated, or in
fact received, by the Postal Service from such product do not
exceed $10,000,000 in any year, subject to paragraph (2) and
subsection (g).
``(2) Exemption authority.--The Postal Regulatory
Commission may, upon written application of the Postal
Service, exempt the market test from the limit in paragraph
(1) if the total revenues that are anticipated, or in fact
received, by the Postal Service from such product do not
exceed $50,000,000 in any year, subject to subsection (g). In
reviewing an application under this paragraph, the Postal
Regulatory Commission shall approve such application if it
determines that--
``(A) the product is likely to benefit the public and meet
an expected demand;
``(B) the product is likely to contribute to the financial
stability of the Postal Service; and
``(C) the product is not likely to result in unfair or
otherwise inappropriate competition.
``(f) Cancellation.--If the Postal Regulatory Commission at
any time determines that a market test under this section
fails to meet 1 or more of the requirements of this section,
it may order the cancellation of the test involved or take
such other action as it considers appropriate. A
determination under this subsection shall be made in
accordance with such procedures as the Commission shall by
regulation prescribe.
``(g) Adjustment for Inflation.--For purposes of each year
following the year in which occurs the deadline for the
Postal Service's first report to the Postal Regulatory
Commission under section 3652(a), each dollar amount
contained in this section shall be adjusted by the change in
the Consumer Price Index for such year (as determined under
regulations of the Commission).
``(h) Definition of a Small Business Concern.--The criteria
used in defining small business concerns or otherwise
categorizing business concerns as small business concerns
shall, for purposes of this section, be established by the
Postal Regulatory Commission in conformance with the
requirements of section 3 of the Small Business Act.
``(i) Effective Date.--Market tests under this subchapter
may be conducted in any year beginning with the first year in
which occurs the deadline for the Postal Service's first
report to the Postal Regulatory Commission under section
3652(a).

``Sec. 3642. New products and transfers of products between
the market-dominant and competitive categories of mail

``(a) In General.--Upon request of the Postal Service or
users of the mails, or upon its own initiative, the Postal
Regulatory Commission may change the list of market-dominant
products under section 3621 and the list of competitive
products under section 3631 by adding new products to the
lists, removing products from the lists, or transferring
products between the lists.
``(b) Criteria.--All determinations by the Postal
Regulatory Commission under subsection (a) shall be made in
accordance with the following criteria:
``(1) The market-dominant category of products shall
consist of each product in the sale of which the Postal
Service exercises sufficient market power that it can
effectively set the price of such product substantially above
costs, raise prices significantly, decrease quality, or
decrease output, without risk of losing substantial business
to other firms offering similar products. The competitive
category of products shall consist of all other products.
``(2) Exclusion of products covered by postal monopoly.--A
product covered by the postal monopoly shall not be subject
to transfer under this section from the market-dominant
category of mail. For purposes of the preceding sentence, the
term `product covered by the postal monopoly' means any
product the conveyance or transmission of which is reserved
to the United States under section 1696 of title 18, subject
to the same exception as set forth in the last sentence of
section 409(e)(1).
``(3) Additional considerations.--In making any decision
under this section, due regard shall be given to--
``(A) the availability and nature of enterprises in the
private sector engaged in the delivery of the product
involved;
``(B) the views of those who use the product involved on
the appropriateness of the proposed action; and
``(C) the likely impact of the proposed action on small
business concerns (within the meaning of section 3641(h)).
``(c) Transfers of Subclasses and Other Subordinate Units
Allowable.--Nothing in this title shall be considered to
prevent transfers under this section from being made by
reason of the fact that they would involve only some (but not
all) of the subclasses or other subordinate units of the
class of mail or type of postal service involved (without
regard to satisfaction of minimum quantity requirements
standing alone).
``(d) Notification and Publication Requirements.--
``(1) Notification requirement.--The Postal Service shall,
whenever it requests to add a product or transfer a product
to a different category, file with the Postal Regulatory
Commission and publish in the Federal Register a notice
setting out the basis for its determination that the product
satisfies the criteria under subsection (b) and, in the case
of a request to add a product or transfer a product to the
competitive category of mail, that the product meets the
regulations promulgated by the Postal Regulatory Commission
under section 3633. The provisions of section 504(g) shall be
available with respect to any information required to be
filed.
``(2) Publication requirement.--The Postal Regulatory
Commission shall, whenever it changes the list of products in
the market-dominant or competitive category of mail,
prescribe new lists of products. The revised lists shall
indicate how and when any previous lists (including the lists
under sections 3621 and 3631) are superseded, and shall be
published in the Federal Register.
``(e) Prohibition.--Except as provided in section 3641, no
product that involves the physical delivery of letters,
printed matter, or packages may be offered by the Postal
Service unless it has been assigned to the market-dominant or
competitive category of mail (as appropriate) either--
``(1) under this subchapter; or
``(2) by or under any other provision of law.''.

SEC. 204. REPORTING REQUIREMENTS AND RELATED PROVISIONS.

(a) Redesignation.--Chapter 36 of title 39, United States
Code (as in effect before the amendment made by subsection
(b)) is amended--
(1) by striking the heading for subchapter IV and inserting
the following:

``SUBCHAPTER V--POSTAL SERVICES, COMPLAINTS, AND JUDICIAL REVIEW''; and

(2) by striking the heading for subchapter V and inserting
the following:

``SUBCHAPTER VI--GENERAL''.

(b) Reports and Compliance.--Chapter 36 of title 39, United
States Code, is amended by inserting after subchapter III the
following:

``SUBCHAPTER IV--REPORTING REQUIREMENTS AND RELATED PROVISIONS

``Sec. 3651. Annual reports by the Commission

``(a) In General.--The Postal Regulatory Commission shall
submit an annual report to the President and the Congress
concerning the operations of the Commission under this title,
including the extent to which regulations are achieving the
objectives under sections 3622, 3633, and 3691.
``(b) Information From Postal Service.--The Postal Service
shall provide the Postal Regulatory Commission with such
information as may, in the judgment of the Commission, be
necessary in order for the Commission to prepare its reports
under this section.

``Sec. 3652. Annual reports to the Commission

``(a) Costs, Revenues, Rates, and Service.--Except as
provided in subsection (c), the Postal Service shall, no
later than 90 days after the end of each year, prepare and
submit to the Postal Regulatory Commission a report (together
with such nonpublic annex to the report as the Commission may
require under subsection (e))--
``(1) which shall analyze costs, revenues, rates, and
quality of service in sufficient detail to demonstrate that
all products during such year complied with all applicable
requirements of this title; and
``(2) which shall, for each market-dominant product
provided in such year, provide--
``(A) product information, including mail volumes; and
``(B) measures of the service afforded by the Postal
Service in connection with such product, including--
``(i) the level of service (described in terms of speed of
delivery and reliability) provided; and
``(ii) the degree of customer satisfaction with the service
provided.
Before submitting a report under this subsection (including
any annex to the report and the information required under
subsection (b)), the Postal Service shall have the
information contained in such report (and annex) audited by
the Inspector General. The results of any such audit shall be
submitted along with the report to which it pertains.
``(b) Information Relating to Workshare Discounts.--The
Postal Service shall include, in each report under subsection
(a), the following information with respect to each market-
dominant product for which a workshare discount was in effect
during the period covered by such report:
``(1) The per-item cost avoided by the Postal Service by
virtue of such discount.

[[Page S916]]

``(2) The percentage of such per-item cost avoided that the
per-item workshare discount represents.
``(3) The per-item contribution made to institutional
costs.
``(c) Service Agreements and Market Tests.--In carrying out
subsections (a) and (b) with respect to service agreements
and experimental products offered through market tests under
section 3641 in a year, the Postal Service--
``(1) may report summary data on the costs, revenues, and
quality of service by service agreement and market test; and
``(2) shall report such data as the Postal Regulatory
Commission requires.
``(d) Supporting Matter.--The Postal Regulatory Commission
shall have access, in accordance with such regulations as the
Commission shall prescribe, to the working papers and any
other supporting matter of the Postal Service and the
Inspector General in connection with any information
submitted under this section.
``(e) Content and Form of Reports.--
``(1) In general.--The Postal Regulatory Commission shall,
by regulation, prescribe the content and form of the public
reports (and any nonpublic annex and supporting matter
relating to the report) to be provided by the Postal Service
under this section. In carrying out this subsection, the
Commission shall give due consideration to--
``(A) providing the public with timely, adequate
information to assess the lawfulness of rates charged;
``(B) avoiding unnecessary or unwarranted administrative
effort and expense on the part of the Postal Service; and
``(C) protecting the confidentiality of commercially
sensitive information.
``(2) Revised requirements.--The Commission may, on its own
motion or on request of an interested party, initiate
proceedings (to be conducted in accordance with regulations
that the Commission shall prescribe) to improve the quality,
accuracy, or completeness of Postal Service data required by
the Commission under this subsection whenever it shall appear
that--
``(A) the attribution of costs or revenues to products has
become significantly inaccurate or can be significantly
improved;
``(B) the quality of service data has become significantly
inaccurate or can be significantly improved; or
``(C) such revisions are, in the judgment of the
Commission, otherwise necessitated by the public interest.
``(f) Confidential Information.--
``(1) In general.--If the Postal Service determines that
any document or portion of a document, or other matter, which
it provides to the Postal Regulatory Commission in a
nonpublic annex under this section or under subsection (d)
contains information which is described in section 410(c) of
this title, or exempt from public disclosure under section
552(b) of title 5, the Postal Service shall, at the time of
providing such matter to the Commission, notify the
Commission of its determination, in writing, and describe
with particularity the documents (or portions of documents)
or other matter for which confidentiality is sought and the
reasons therefor.
``(2) Treatment.--Any information or other matter described
in paragraph (1) to which the Commission gains access under
this section shall be subject to paragraphs (2) and (3) of
section 504(g) in the same way as if the Commission had
received notification with respect to such matter under
section 504(g)(1).
``(g) Other Reports.--The Postal Service shall submit to
the Postal Regulatory Commission, together with any other
submission that the Postal Service is required to make under
this section in a year, copies of its then most recent--
``(1) comprehensive statement under section 2401(e);
``(2) strategic plan under section 2802;
``(3) performance plan under section 2803; and
``(4) program performance reports under section 2804.

``Sec. 3653. Annual determination of compliance

``(a) Opportunity for Public Comment.--After receiving the
reports required under section 3652 for any year, the Postal
Regulatory Commission shall promptly provide an opportunity
for comment on such reports by users of the mails, affected
parties, and an officer of the Commission who shall be
required to represent the interests of the general public.
``(b) Determination of Compliance or Noncompliance.--Not
later than 90 days after receiving the submissions required
under section 3652 with respect to a year, the Postal
Regulatory Commission shall make a written determination as
to--
``(1) whether any rates or fees in effect during such year
(for products individually or collectively) were not in
compliance with applicable provisions of this chapter (or
regulations promulgated thereunder); or
``(2) whether any service standards in effect during such
year were not met.
If, with respect to a year, no instance of noncompliance is
found under this subsection to have occurred in such year,
the written determination shall be to that effect.
``(c) If Any Noncompliance Is Found.--If, for a year, a
timely written determination of noncompliance is made under
subsection (b), the Postal Regulatory Commission shall take
any appropriate remedial action authorized by section
3662(c).
``(d) Rebuttable Presumption.--A timely written
determination described in the last sentence of subsection
(b) shall, for purposes of any proceeding under section 3662,
create a rebuttable presumption of compliance by the Postal
Service (with regard to the matters described under
paragraphs (1) and (2) of subsection (b)) during the year to
which such determination relates.''.

SEC. 205. COMPLAINTS; APPELLATE REVIEW AND ENFORCEMENT.

Chapter 36 of title 39, United States Code, is amended by
striking sections 3662 and 3663 and inserting the following:

``Sec. 3662. Rate and service complaints

``(a) In General.--Any person (including an officer of the
Postal Regulatory Commission representing the interests of
the general public) who believes the Postal Service is not
operating in conformance with the requirements of chapter 1,
4, or 6, or this chapter (or regulations promulgated under
any of those chapters) may lodge a complaint with the Postal
Regulatory Commission in such form and manner as the
Commission may prescribe.
``(b) Prompt Response Required.--
``(1) In general.--The Postal Regulatory Commission shall,
within 90 days after receiving a complaint under subsection
(a), either--
``(A) begin proceedings on such complaint; or
``(B) issue an order dismissing the complaint (together
with a statement of the reasons therefor).
``(2) Treatment of complaints not timely acted on.--For
purposes of section 3663, any complaint under subsection (a)
on which the Commission fails to act in the time and manner
required by paragraph (1) shall be treated in the same way as
if it had been dismissed under an order issued by the
Commission on the last day allowable for the issuance of such
order under paragraph (1).
``(c) Action Required If Complaint Found To Be Justified.--
If the Postal Regulatory Commission finds the complaint to be
justified, it shall order that the Postal Service take such
action as the Commission considers appropriate in order to
achieve compliance with the applicable requirements and to
remedy the effects of any noncompliance including ordering
unlawful rates to be adjusted to lawful levels, ordering the
cancellation of market tests, ordering the Postal Service to
discontinue providing loss-making products, and requiring the
Postal Service to make up for revenue shortfalls in
competitive products.
``(d) Authority To Order Fines in Cases of Deliberate
Noncompliance.--In addition, in cases of deliberate
noncompliance by the Postal Service with the requirements of
this title, the Postal Regulatory Commission may order, based
on the nature, circumstances, extent, and seriousness of the
noncompliance, a fine (in the amount specified by the
Commission in its order) for each incidence of noncompliance.
Fines resulting from the provision of competitive products
shall be paid out of the Competitive Products Fund
established in section 2011. All receipts from fines imposed
under this subsection shall be deposited in the general fund
of the Treasury of the United States.

``Sec. 3663. Appellate review

``A person, including the Postal Service, adversely
affected or aggrieved by a final order or decision of the
Postal Regulatory Commission may, within 30 days after such
order or decision becomes final, institute proceedings for
review thereof by filing a petition in the United States
Court of Appeals for the District of Columbia. The court
shall review the order or decision in accordance with
section 706 of title 5, and chapter 158 and section 2112
of title 28, on the basis of the record before the
Commission.

``Sec. 3664. Enforcement of orders

``The several district courts have jurisdiction
specifically to enforce, and to enjoin and restrain the
Postal Service from violating, any order issued by the Postal
Regulatory Commission.''.

SEC. 206. CLERICAL AMENDMENT.

Chapter 36 of title 39, United States Code, is amended by
striking the heading and analysis for such chapter and
inserting the following:

``CHAPTER 36--POSTAL RATES, CLASSES, AND SERVICES

``SUBCHAPTER I--PROVISIONS RELATING TO MARKET-DOMINANT PRODUCTS

``Sec.
``3621. Applicability; definitions.
``3622. Modern rate regulation.
``[3623. Repealed.]
``[3624. Repealed.]
``[3625. Repealed.]
``3626. Reduced Rates.
``3627. Adjusting free rates.
``[3628. Repealed.]
``3629. Reduced rates for voter registration purposes.

``SUBCHAPTER II--PROVISIONS RELATING TO COMPETITIVE PRODUCTS

``3631. Applicability; definitions and updates.
``3632. Action of the Governors.
``3633. Provisions applicable to rates for competitive products.
``3634. Assumed Federal income tax on competitive products.

``SUBCHAPTER III--PROVISIONS RELATING TO EXPERIMENTAL AND NEW PRODUCTS

``3641. Market tests of experimental products.
``3642. New products and transfers of products between the market-
dominant and competitive categories of mail.

``SUBCHAPTER IV--REPORTING REQUIREMENTS AND RELATED PROVISIONS

``3651. Annual reports by the Commission.
``3652. Annual reports to the Commission.
``3653. Annual determination of compliance.

``SUBCHAPTER V--POSTAL SERVICES, COMPLAINTS, AND JUDICIAL REVIEW

``3661. Postal Services.
``3662. Rate and service complaints.
``3663. Appellate review.
``3664. Enforcement of orders.

``SUBCHAPTER VI--GENERAL

``3681. Reimbursement.

[[Page S917]]

``3682. Size and weight limits.
``3683. Uniform rates for books; films, other materials.
``3684. Limitations.
``3685. Filing of information relating to periodical publications.
``3686. Bonus authority.

``SUBCHAPTER VII--MODERN SERVICE STANDARDS

``3691. Establishment of modern service standards.''.

TITLE III--MODERN SERVICE STANDARDS

SEC. 301. ESTABLISHMENT OF MODERN SERVICE STANDARDS.

Chapter 36 of title 39, United States Code, as amended by
this Act, is further amended by adding at the end the
following:

``SUBCHAPTER VII--MODERN SERVICE STANDARDS

``Sec. 3691. Establishment of modern service standards

``(a) Authority Generally.--Not later than 12 months after
the date of enactment of this section, the Postal Service
shall, in consultation with the Postal Regulatory Commission,
by regulation establish (and may from time to time thereafter
by regulation revise) a set of service standards for market-
dominant products consistent with the Postal Service's
universal service obligation as defined in sections 101 (a)
and (b) and 403.
``(b) Objectives.--Such standards shall be designed to
achieve the following objectives:
``(1) To enhance the value of postal services to both
senders and recipients.
``(2) To preserve regular and effective access to postal
services in all communities, including those in rural areas
or where post offices are not self-sustaining.
``(3) To reasonably assure Postal Service customers
delivery reliability, speed and frequency consistent with
reasonable rates and best business practices.
``(4) To provide a system of objective external performance
measurements for each market-dominant product as a basis for
measurement of Postal Service performance.
``(c) Factors.--In establishing or revising such standards,
the Postal Service shall take into account--
``(1) the actual level of service that Postal Service
customers receive under any service guidelines previously
established by the Postal Service or service standards
established under this section;
``(2) the degree of customer satisfaction with Postal
Service performance in the acceptance, processing and
delivery of mail;
``(3) the needs of Postal Service customers, including
those with physical impairments;
``(4) mail volume and revenues projected for future years;
``(5) the projected growth in the number of addresses the
Postal Service will be required to serve in future years;
``(6) the current and projected future cost of serving
Postal Service customers;
``(7) the effect of changes in technology, demographics,
and population distribution on the efficient and reliable
operation of the postal delivery system; and
``(8) the policies of this title and such other factors as
the Commission determines appropriate.
``(d) Review.--The regulations promulgated pursuant to this
section (and any revisions thereto) shall be subject to
review upon complaint under sections 3662 and 3663.

SEC. 302. POSTAL SERVICE PLAN.

(a) In General.--Within 6 months after the establishment of
the service standards under section 3691 of title 39, United
States Code, as added by this Act, the Postal Service shall,
in consultation with the Postal Regulatory Commission,
develop and submit to Congress a plan for meeting those
standards.
(b) Contents.--The plan under this section shall--
(1) establish performance goals;
(2) describe any changes to the Postal Service's
processing, transportation, delivery, and retail networks
necessary to allow the Postal Service to meet the performance
goals;
(3) describe any changes to planning and performance
management documents previously submitted to Congress to
reflect new performance goals; and
(4) contain the matters relating to postal facilities
provided under subsection (c).
(c) Postal Facilities.--
(1) Findings.--Congress finds that--
(A) the Postal Service has more than 400 logistics
facilities, separate from its post office network;
(B) as noted by the President's Commission on the United
States Postal Service, the Postal Service has more facilities
than it needs and the streamlining of this distribution
network can pave the way for the potential consolidation of
sorting facilities and the elimination of excess costs;
(C) the Postal Service has always revised its distribution
network to meet changing conditions and is best suited to
address its operational needs; and
(D) Congress strongly encourages the Postal Service to--
(i) expeditiously move forward in its streamlining efforts;
and
(ii) keep unions, management associations, and local
elected officials informed as an essential part of this
effort and abide by any procedural requirements contained in
the national bargaining agreements.
(2) In general.--The Postal Service plan shall include a
description of--
(A) the long-term vision of the Postal Service for
rationalizing its infrastructure and workforce; and
(B) how the Postal Service intends to implement that
vision.
(3) Content of facilities plan.--The plan under this
subsection shall include--
(A) a strategy for how the Postal Service intends to
rationalize the postal facilities network and remove excess
processing capacity and space from the network, including
estimated timeframes, criteria, and processes to be used for
making changes to the facilities network, and the process for
engaging policy makers and the public in related decisions;
(B) a discussion of what impact any facility changes may
have on the postal workforce and whether the Postal Service
has sufficient flexibility to make needed workforce changes;
and
(C) an identification of anticipated costs, cost savings,
and other benefits associated with the infrastructure
rationalization alternatives discussed in the plan.
(4) Annual reports.--
(A) In general.--Not later than 90 days after the end of
each fiscal year, the Postal Service shall prepare and submit
a report to Congress on how postal decisions have impacted or
will impact rationalization plans.
(B) Contents.--Each report under this paragraph shall
include--
(i) an account of actions taken during the preceding fiscal
year to improve the efficiency and effectiveness of its
processing, transportation, and distribution networks while
preserving the timely delivery of postal services, including
overall estimated costs and cost savings;
(ii) an account of actions taken to identify any excess
capacity within its processing, transportation, and
distribution networks and implement savings through
realignment or consolidation of facilities including overall
estimated costs and cost savings;
(iii) an estimate of how postal decisions related to mail
changes, security, automation initiatives, worksharing,
information technology systems, excess capacity,
consolidating and closing facilities, and other areas will
impact rationalization plans;
(iv) identification of any statutory or regulatory
obstacles that prevented or will prevent or hinder the Postal
Service from taking action to realign or consolidate
facilities; and
(v) such additional topics and recommendations as the
Postal Service considers appropriate.
(d) Alternate Retail Options.--The Postal Service plan
shall include plans to expand and market retail access to
postal services, in addition to post offices, including--
(1) vending machines;
(2) the Internet;
(3) postage meter;
(4) stamps by mail;
(5) Postal Service employees on delivery routes;
(6) retail facilities in which overhead costs are shared
with private businesses and other government agencies; or
(7) any other nonpost office access channel providing
market retail access to postal services.
(e) Reemployment Assistance and Retirement Benefits.--The
Postal Service plan shall include--
(1) a plan under which reemployment assistance shall be
afforded to employees displaced as a result of the automation
of any of its functions or the closing and consolidation of
any of its facilities; and
(2) a plan, developed in consultation with the Office of
Personnel Management, to offer early retirement benefits.
(f) Inspector General Report.--
(1) In general.--Before submitting the plan under
subsection (a) and each annual report under subsection (c) to
Congress, the Postal Service shall submit the plan and each
annual report to the Inspector General of the United States
Postal Service in a timely manner to carry out this
subsection.
(2) Report.--The Inspector General shall prepare a report
describing the extent to which the Postal Service plan and
each annual report under subsection (c)--
(A) are consistent with the continuing obligations of the
Postal Service under title 39, United States Code;
(B) provide for the Postal Service to meet the service
standards established under section 3691 of title 39, United
States Code; and
(C) allow progress toward improving overall efficiency and
effectiveness consistent with the need to maintain universal
postal service at affordable rates.
(g) Continued Authority.--Nothing in this section shall be
construed to prohibit the Postal Service from implementing
any change to its processing, transportation, delivery, and
retail networks under any authority granted to the Postal
Service for those purposes.

TITLE IV--PROVISIONS RELATING TO FAIR COMPETITION

SEC. 401. POSTAL SERVICE COMPETITIVE PRODUCTS FUND.

(a) Provisions Relating to Postal Service Competitive
Products Fund and Related Matters.--
(1) In general.--Chapter 20 of title 39, United States
Code, is amended by adding at the end the following:

``Sec. 2011. Provisions relating to competitive products

[[Page S918]]

``(b) There shall be deposited in the Competitive Products
Fund, subject to withdrawal by the Postal Service--
``(1) revenues from competitive products;
``(2) amounts received from obligations issued by Postal
Service under subsection (e);
``(3) interest and dividends earned on investments of the
Competitive Products Fund; and
``(4) any other receipts of the Postal Service (including
from the sale of assets), to the extent allocable to
competitive products.
``(c) If the Postal Service determines that the moneys of
the Competitive Products Fund are in excess of current needs,
the Postal Service may request the investment of such amounts
as the Postal Service determines advisable by the Secretary
of the Treasury in obligations of, or obligations guaranteed
by, the Government of the United States, and, with the
approval of the Secretary, in such other obligations or
securities as the Postal Service determines appropriate.
``(d) With the approval of the Secretary of the Treasury,
the Postal Service may deposit moneys of the Competitive
Products Fund in any Federal Reserve bank, any depository for
public funds, or in such other places and in such manner as
the Postal Service and the Secretary may mutually agree.
``(e)(1)(A) Subject to the limitations specified in section
2005(a), the Postal Service is authorized to borrow money and
to issue and sell such obligations as the Postal Service
determines necessary to provide for competitive products and
deposit such amounts in the Competitive Products Fund.
``(B) Subject to paragraph (5), any borrowings by the
Postal Service under subparagraph (A) shall be supported and
serviced by--
``(i) the revenues and receipts from competitive products
and the assets related to the provision of competitive
products (as determined under subsection (h)); or
``(ii) for purposes of any period before accounting
practices and principles under subsection (h) have been
established and applied, the best information available from
the Postal Service, including the audited statements required
by section 2008(e).
``(2) The Postal Service may enter into binding covenants
with the holders of such obligations, and with any trustee
under any agreement entered into in connection with the
issuance of such obligations with respect to--
``(A) the establishment of reserve, sinking, and other
funds;
``(B) application and use of revenues and receipts of the
Competitive Products Fund;
``(C) stipulations concerning the subsequent issuance of
obligations or the execution of leases or lease purchases
relating to properties of the Postal Service; and
``(D) such other matters as the Postal Service, considers
necessary or desirable to enhance the marketability of such
obligations.
``(3) Obligations issued by the Postal Service under this
subsection--
``(A) shall be in such forms and denominations;
``(B) shall be sold at such times and in such amounts;
``(C) shall mature at such time or times;
``(D) shall be sold at such prices;
``(E) shall bear such rates of interest;
``(F) may be redeemable before maturity in such manner, at
such times, and at such redemption premiums;
``(G) may be entitled to such relative priorities of claim
on the assets of the Postal Service with respect to principal
and interest payments; and
``(H) shall be subject to such other terms and conditions,
as the Postal Service determines.
``(4) Obligations issued by the Postal Service under this
subsection--
``(A) shall be negotiable or nonnegotiable and bearer or
registered instruments, as specified therein and in any
indenture or covenant relating thereto;
``(B) shall contain a recital that such obligations are
issued under this subsection, and such recital shall be
conclusive evidence of the regularity of the issuance and
sale of such obligations and of their validity;
``(C) shall be lawful investments and may be accepted as
security for all fiduciary, trust, and public funds, the
investment or deposit of which shall be under the authority
or control of any officer or agency of the Government of the
United States, and the Secretary of the Treasury or any other
officer or agency having authority over or control of any
such fiduciary, trust, or public funds, may at any time sell
any of the obligations of the Postal Service acquired under
this section;
``(D) shall not be exempt either as to principal or
interest from any taxation now or hereafter imposed by any
State or local taxing authority; and
``(E) except as provided in section 2006(c), shall not be
obligations of, nor shall payment of the principal thereof or
interest thereon be guaranteed by, the Government of the
United States, and the obligations shall so plainly state.
``(5)(A) Subject to subparagraph (B), the Postal Service
shall make payments of principal, or interest, or both on
obligations issued under this subsection from--
``(i) revenues and receipts from competitive products and
assets related to the provision of competitive products (as
determined under subsection (h)); or
``(ii) for purposes of any period before accounting
practices and principles under subsection (h) have been
established and applied, the best information available,
including the audited statements required by section 2008(e).
``(B) Based on the audited financial statements for the
most recently completed fiscal year, the total assets of the
Competitive Products Fund may not be less than the amount
determined by multiplying--
``(i) the quotient resulting from the total revenue of the
Competitive Products Fund divided by the total revenue of the
Postal Service; and
``(ii) the total assets of the Postal Service.
``(f) The receipts and disbursements of the Competitive
Products Fund shall be accorded the same budgetary treatment
as is accorded to receipts and disbursements of the Postal
Service Fund under section 2009a.
``(g) A judgment (or settlement of a claim) against the
Postal Service or the Government of the United States shall
be paid out of the Competitive Products Fund to the extent
that the judgment or claim arises out of activities of the
Postal Service in the provision of competitive products.
``(h)(1)(A) The Secretary of the Treasury, in consultation
with the Postal Service and an independent, certified public
accounting firm and other advisors as the Secretary considers
appropriate, shall develop recommendations regarding--
``(i) the accounting practices and principles that should
be followed by the Postal Service with the objectives of--
``(I) identifying and valuing the assets and liabilities of
the Postal Service associated with providing competitive
products, including the capital and operating costs incurred
by the Postal Service in providing such competitive products;
and
``(II) subject to subsection (e)(5), preventing the
subsidization of such products by market-dominant products;
and
``(ii) the substantive and procedural rules that should be
followed in determining the assumed Federal income tax on
competitive products income of the Postal Service for any
year (within the meaning of section 3634).
``(B) Not earlier than 6 months after the date of enactment
of this section, and not later than 12 months after such
date, the Secretary of the Treasury shall submit the
recommendations under subparagraph (A) to the Postal
Regulatory Commission.
``(2)(A) Upon receiving the recommendations of the
Secretary of the Treasury under paragraph (1), the Commission
shall give interested parties, including the Postal Service,
users of the mails, and an officer of the Commission who
shall be required to represent the interests of the general
public, an opportunity to present their views on those
recommendations through submission of written data, views, or
arguments with or without opportunity for oral presentation,
or in such other manner as the Commission considers
appropriate.
``(B)(i) After due consideration of the views and other
information received under subparagraph (A), the Commission
shall by rule--
``(I) provide for the establishment and application of the
accounting practices and principles which shall be followed
by the Postal Service;
``(II) provide for the establishment and application of the
substantive and procedural rules described under paragraph
(1)(A)(ii); and
``(III) provide for the submission by the Postal Service to
the Postal Regulatory Commission of annual and other periodic
reports setting forth such information as the Commission may
require.
``(ii) Final rules under this subparagraph shall be issued
not later than 12 months after the date on which
recommendations are submitted under paragraph (1) (or by such
later date on which the Commission and the Postal Service may
agree). The Commission may revise such rules.
``(C)(i) Reports described under subparagraph (B)(i)(III)
shall be submitted at such time and in such form, and shall
include such information, as the Commission by rule requires.
``(ii) The Commission may, on its own motion or on request
of an interested party, initiate proceedings (to be conducted
in accordance with such rules as the Commission shall
prescribe) to improve the quality, accuracy, or completeness
of Postal Service information under subparagraph (B)(i)(III)
whenever it shall appear that--
``(I) the quality of the information furnished in those
reports has become significantly inaccurate or can be
significantly improved; or
``(II) such revisions are, in the judgment of the
Commission, otherwise necessitated by the public interest.
``(D) A copy of each report described under subparagraph
(B)(i)(III) shall be submitted by the Postal Service to the
Secretary of the Treasury and the Inspector General of the
United States Postal Service.
``(i)(1) The Postal Service shall submit an annual report
to the Secretary of the Treasury concerning the operation of
the Competitive Products Fund. The report shall address such
matters as risk limitations, reserve balances, allocation or
distribution of moneys, liquidity requirements, and measures
to safeguard against losses.
``(2) A copy of the most recent report submitted under
paragraph (1) shall be included in the annual report
submitted by the Postal Regulatory Commission under section
3652(g).''.
(2) Clerical amendment.--The table of sections for chapter
20 of title 39, United States Code, is amended by adding
after the item relating to section 2010 the following:

``2011. Provisions relating to competitive products.''.
(b) Technical and Conforming Amendments.--
(1) Definition.--Section 2001 of title 39, United States
Code, is amended by striking ``and'' at the end of paragraph
(1), by redesignating paragraph (2) as paragraph (3), and by
inserting after paragraph (1) the following:
``(2) Competitive products fund.--The term `Competitive
Products Fund' means the Postal Service Competitive Products
Fund established by section 2011; and''.
(2) Capital of the postal service.--Section 2002(b) of
title 39, United States Code, is amended by striking
``Fund,'' and inserting ``Fund

[[Page S919]]

and the balance in the Competitive Products Fund,''.
(3) Postal service fund.--
(A) Purposes for which available.--Section 2003(a) of title
39, United States Code, is amended by striking ``title.'' and
inserting ``title (other than any of the purposes, functions,
or powers for which the Competitive Products Fund is
available).''.
(B) Deposits.--Section 2003(b) of title 39, United States
Code, is amended by striking ``There'' and inserting ``Except
as otherwise provided in section 2011, there''.
(4) Relationship between the treasury and the postal
service.--Section 2006 of title 39, United States Code, is
amended--
(A) in subsection (a), in the first sentence, by inserting
``or 2011'' after ``section 2005'';
(B) in subsection (b)--
(i) in the first sentence, by inserting ``under section
2005'' before ``in such amounts''; and
(ii) in the second sentence, by inserting ``under section
2005'' before ``in excess of such amount.''; and
(C) in subsection (c), by inserting ``or 2011(e)(4)(E)''
after ``section 2005(d)(5)''.

SEC. 402. ASSUMED FEDERAL INCOME TAX ON COMPETITIVE PRODUCTS
INCOME.

Subchapter II of chapter 36 of title 39, United States
Code, as amended by section 202, is amended by adding at the
end the following:

``Sec. 3634. Assumed Federal income tax on competitive
products income

``(a) Definitions.--For purposes of this section--
``(1) the term `assumed Federal income tax on competitive
products income' means the net income tax that would be
imposed by chapter 1 of the Internal Revenue Code of 1986 on
the Postal Service's assumed taxable income from competitive
products for the year; and
``(2) the term `assumed taxable income from competitive
products', with respect to a year, refers to the amount
representing what would be the taxable income of a
corporation under the Internal Revenue Code of 1986 for the
year, if--
``(A) the only activities of such corporation were the
activities of the Postal Service allocable under section
2011(h) to competitive products; and
``(B) the only assets held by such corporation were the
assets of the Postal Service allocable under section 2011(h)
to such activities.
``(b) Computation and Transfer Requirements.--The Postal
Service shall, for each year beginning with the year in which
occurs the deadline for the Postal Service's first report to
the Postal Regulatory Commission under section 3652(a)--
``(1) compute its assumed Federal income tax on competitive
products income for such year; and
``(2) transfer from the Competitive Products Fund to the
Postal Service Fund the amount of that assumed tax.
``(c) Deadline for Transfers.--Any transfer required to be
made under this section for a year shall be due on or before
the January 15th next occurring after the close of such
year.''.

SEC. 403. UNFAIR COMPETITION PROHIBITED.

(a) Specific Limitations.--Chapter 4 of title 39, United
States Code, is amended by adding after section 404 the
following:

``Sec. 404a. Specific limitations

``(a) Except as specifically authorized by law, the Postal
Service may not--
``(1) establish any rule or regulation (including any
standard) the effect of which is to preclude competition or
establish the terms of competition unless the Postal Service
demonstrates that the regulation does not create an unfair
competitive advantage for itself or any entity funded (in
whole or in part) by the Postal Service;
``(2) compel the disclosure, transfer, or licensing of
intellectual property to any third party (such as patents,
copyrights, trademarks, trade secrets, and proprietary
information); or
``(3) obtain information from a person that provides (or
seeks to provide) any product, and then offer any postal
service that uses or is based in whole or in part on such
information, without the consent of the person providing that
information, unless substantially the same information is
obtained (or obtainable) from an independent source or is
otherwise obtained (or obtainable).
``(b) The Postal Regulatory Commission shall prescribe
regulations to carry out this section.
``(c) Any party (including an officer of the Commission
representing the interests of the general public) who
believes that the Postal Service has violated this section
may bring a complaint in accordance with section 3662.''.
(b) Conforming Amendments.--
(1) General powers.--Section 401 of title 39, United States
Code, is amended by striking ``The'' and inserting ``Subject
to the provisions of section 404a, the''.
(2) Specific powers.--Section 404(a) of title 39, United
States Code, is amended by striking ``Without'' and inserting
``Subject to the provisions of section 404a, but otherwise
without''.
(c) Clerical Amendment.--The analysis for chapter 4 of
title 39, United States Code, is amended by inserting after
the item relating to section 404 the following:

``404a. Specific limitations.''.

SEC. 404. SUITS BY AND AGAINST THE POSTAL SERVICE.

(a) In General.--Section 409 of title 39, United States
Code, is amended by striking subsections (d) and (e) and
inserting the following:
``(d)(1) For purposes of the provisions of law cited in
paragraphs (2)(A) and (2)(B), respectively, the Postal
Service--
``(A) shall be considered to be a `person', as used in the
provisions of law involved; and
``(B) shall not be immune under any other doctrine of
sovereign immunity from suit in Federal court by any person
for any violation of any of those provisions of law by any
officer or employee of the Postal Service.
``(2) This subsection applies with respect to--
``(A) the Act of July 5, 1946 (commonly referred to as the
`Trademark Act of 1946' (15 U.S.C. 1051 and following)); and
``(B) the provisions of section 5 of the Federal Trade
Commission Act to the extent that such section 5 applies to
unfair or deceptive acts or practices.
``(e)(1) To the extent that the Postal Service, or other
Federal agency acting on behalf of or in concert with the
Postal Service, engages in conduct with respect to any
product which is not reserved to the United States under
section 1696 of title 18, the Postal Service or other Federal
agency (as the case may be)--
``(A) shall not be immune under any doctrine of sovereign
immunity from suit in Federal court by any person for any
violation of Federal law by such agency or any officer or
employee thereof; and
``(B) shall be considered to be a person (as defined in
subsection (a) of the first section of the Clayton Act) for
purposes of--
``(i) the antitrust laws (as defined in such subsection);
and
``(ii) section 5 of the Federal Trade Commission Act to the
extent that such section 5 applies to unfair methods of
competition.
For purposes of the preceding sentence, any private carriage
of mail allowable by virtue of section 601 shall not be
considered a service reserved to the United States under
section 1696 of title 18.
``(2) No damages, interest on damages, costs or attorney's
fees may be recovered, and no criminal liability may be
imposed, under the antitrust laws (as so defined) from any
officer or employee of the Postal Service, or other Federal
agency acting on behalf of or in concert with the Postal
Service, acting in an official capacity.
``(3) This subsection shall not apply with respect to
conduct occurring before the date of enactment of this
subsection.
``(f) To the extent that the Postal Service engages in
conduct with respect to the provision of competitive
products, it shall be considered a person for the purposes of
the Federal bankruptcy laws.
``(g)(1) Each building constructed or altered by the Postal
Service shall be constructed or altered, to the maximum
extent feasible as determined by the Postal Service, in
compliance with 1 of the nationally recognized model building
codes and with other applicable nationally recognized codes.
To the extent practicable, model building codes should meet
the voluntary consensus criteria established for codes and
standards as required in the National Technology Transfer and
Advancement Act of 1995 as defined in Office of Management
and Budget Circular A1190. For purposes of life safety, the
Postal Service shall continue to comply with the most current
edition of the Life Safety Code of the National Fire
Protection Association (NFPA 101).
``(2) Each building constructed or altered by the Postal
Service shall be constructed or altered only after
consideration of all requirements (other than procedural
requirements) of zoning laws, land use laws, and applicable
environmental laws of a State or subdivision of a State which
would apply to the building if it were not a building
constructed or altered by an establishment of the Government
of the United States.
``(3) For purposes of meeting the requirements of
paragraphs (1) and (2) with respect to a building, the Postal
Service shall--
``(A) in preparing plans for the building, consult with
appropriate officials of the State or political subdivision,
or both, in which the building will be located;
``(B) upon request, submit such plans in a timely manner to
such officials for review by such officials for a reasonable
period of time not exceeding 30 days; and
``(C) permit inspection by such officials during
construction or alteration of the building, in accordance
with the customary schedule of inspections for construction
or alteration of buildings in the locality, if such officials
provide to the Postal Service--
``(i) a copy of such schedule before construction of the
building is begun; and
``(ii) reasonable notice of their intention to conduct any
inspection before conducting such inspection.
Nothing in this subsection shall impose an obligation on any
State or political subdivision to take any action under the
preceding sentence, nor shall anything in this subsection
require the Postal Service or any of its contractors to pay
for any action taken by a State or political subdivision to
carry out this subsection (including reviewing plans,
carrying out on-site inspections, issuing building permits,
and making recommendations).
``(4) Appropriate officials of a State or a political
subdivision of a State may make recommendations to the Postal
Service concerning measures necessary to meet the
requirements of paragraphs (1) and (2). Such officials may
also make recommendations to the Postal Service concerning
measures which should be taken in the construction or
alteration of the building to take into account local
conditions. The Postal Service shall give due consideration
to any such recommendations.
``(5) In addition to consulting with local and State
officials under paragraph (3), the Postal Service shall
establish procedures for soliciting, assessing, and
incorporating local community input on real property and land
use decisions.
``(6) For purposes of this subsection, the term `State'
includes the District of Columbia, the Commonwealth of Puerto
Rico, and a territory or possession of the United States.

[[Page S920]]

``(h)(1) Notwithstanding any other provision of law, legal
representation may not be furnished by the Department of
Justice to the Postal Service in any action, suit, or
proceeding arising, in whole or in part, under any of the
following:
``(A) Subsection (d) or (e) of this section.
``(B) Subsection (f) or (g) of section 504 (relating to
administrative subpoenas by the Postal Regulatory
Commission).
``(C) Section 3663 (relating to appellate review).
The Postal Service may, by contract or otherwise, employ
attorneys to obtain any legal representation that it is
precluded from obtaining from the Department of Justice under
this paragraph.
``(2) In any circumstance not covered by paragraph (1), the
Department of Justice shall, under section 411, furnish the
Postal Service such legal representation as it may require,
except that, with the prior consent of the Attorney General,
the Postal Service may, in any such circumstance, employ
attorneys by contract or otherwise to conduct litigation
brought by or against the Postal Service or its officers or
employees in matters affecting the Postal Service.
``(3)(A) In any action, suit, or proceeding in a court of
the United States arising in whole or in part under any of
the provisions of law referred to in subparagraph (B) or (C)
of paragraph (1), and to which the Commission is not
otherwise a party, the Commission shall be permitted to
appear as a party on its own motion and as of right.
``(B) The Department of Justice shall, under such terms and
conditions as the Commission and the Attorney General shall
consider appropriate, furnish the Commission such legal
representation as it may require in connection with any such
action, suit, or proceeding, except that, with the prior
consent of the Attorney General, the Commission may employ
attorneys by contract or otherwise for that purpose.
``(i) A judgment against the Government of the United
States arising out of activities of the Postal Service shall
be paid by the Postal Service out of any funds available to
the Postal Service, subject to the restriction specified in
section 2011(g).''.
(b) Technical Amendment.--Section 409(a) of title 39,
United States Code, is amended by striking ``Except as
provided in section 3628 of this title,'' and inserting
``Except as otherwise provided in this title,''.

SEC. 405. INTERNATIONAL POSTAL ARRANGEMENTS.

(a) In General.--Section 407 of title 39, United States
Code, is amended to read as follows:

``Sec. 407. International postal arrangements

``(a) It is the policy of the United States--
``(1) to promote and encourage communications between
peoples by efficient operation of international postal
services and other international delivery services for
cultural, social, and economic purposes;
``(2) to promote and encourage unrestricted and undistorted
competition in the provision of international postal services
and other international delivery services, except where
provision of such services by private companies may be
prohibited by law of the United States;
``(3) to promote and encourage a clear distinction between
governmental and operational responsibilities with respect to
the provision of international postal services; and
``(4) to participate in multilateral and bilateral
agreements with other countries to accomplish these
objectives.
``(b)(1) The Secretary of State shall be responsible for
formulation, coordination, and oversight of foreign policy
related to international postal services and shall have the
power to conclude postal treaties and conventions, except
that the Secretary may not conclude any postal treaty or
convention if such treaty or convention would, with respect
to any competitive product, grant an undue or unreasonable
preference to the Postal Service, a private provider of
international postal services, or any other person.
``(2) In carrying out the responsibilities specified in
paragraph (1), the Secretary of State shall exercise primary
authority for the conduct of foreign policy with respect to
international postal services, including the determination of
United States positions and the conduct of United States
participation in negotiations with foreign governments and
international bodies. In exercising this authority, the
Secretary--
``(A) shall coordinate with other agencies as appropriate,
and in particular, should consider the authority vested by
law or Executive order in the Postal Regulatory Commission,
the Department of Commerce, the Department of Transportation,
and the Office of the United States Trade Representative in
this area;
``(B) shall maintain continuing liaison with other
executive branch agencies concerned with postal and delivery
services;
``(C) shall maintain continuing liaison with the Committee
on Homeland Security and Governmental Affairs of the Senate
and the Committee on Government Reform of the House of
Representatives;
``(D) shall maintain appropriate liaison with both
representatives of the Postal Service and representatives of
users and private providers of international postal services
and other international delivery services to keep informed of
their interests and problems, and to provide such assistance
as may be needed to ensure that matters of concern are
promptly considered by the Department of State or (if
applicable, and to the extent practicable) other executive
branch agencies; and
``(E) shall assist in arranging meetings of such public
sector advisory groups as may be established to advise the
Department of State and other executive branch agencies in
connection with international postal services and
international delivery services.
``(3) The Secretary of State shall establish an advisory
committee (within the meaning of the Federal Advisory
Committee Act) to perform such functions as the Secretary
considers appropriate in connection with carrying out
subparagraphs (A) through (D) of paragraph (2).
``(c) Before concluding any postal treaty or convention
that establishes a rate or classification for a product
subject to subchapter I of chapter 36, the Secretary of State
shall request the Postal Regulatory Commission to submit its
views on whether such rate or classification is consistent
with the standards and criteria established by the Commission
under section 3622.
``(d) Nothing in this section shall be considered to
prevent the Postal Service from entering into such commercial
or operational contracts related to providing international
postal services as it deems appropriate, except that--
``(1) any such contract made with an agency of a foreign
government (whether under authority of this subsection or
otherwise) shall be solely contractual in nature and may not
purport to be binding under international law; and
``(2) a copy of each such contract between the Postal
Service and an agency of a foreign government shall be
transmitted to the Secretary of State and the Postal
Regulatory Commission not later than the effective date of
such contract.
``(e)(1) With respect to shipments of international mail
that are competitive products within the meaning of section
3631 that are exported or imported by the Postal Service, the
Customs Service and other appropriate Federal agencies shall
apply the customs laws of the United States and all other
laws relating to the importation or exportation of such
shipments in the same manner to both shipments by the Postal
Service and similar shipments by private companies.
``(2) In exercising the authority under subsection (b) to
conclude new postal treaties and conventions related to
international postal services and to renegotiate such
treaties and conventions, the Secretary of State shall, to
the maximum extent practicable, take such measures as are
within the Secretary's control to encourage the governments
of other countries to make available to the Postal Service
and private companies a range of nondiscriminatory customs
procedures that will fully meet the needs of all types of
American shippers. The Secretary of State shall consult with
the United States Trade Representative and the Commissioner
of Customs in carrying out this paragraph.
``(3) The provisions of this subsection shall take effect 6
months after the date of enactment of this subsection or such
earlier date as the Customs Service may determine in
writing.''.
(b) Effective Date.--Notwithstanding any provision of the
amendment made by subsection (a), the authority of the United
States Postal Service to establish the rates of postage or
other charges on mail matter conveyed between the United
States and other countries shall remain available to the
Postal Service until--
(1) with respect to market-dominant products, the date as
of which the regulations promulgated under section 3622 of
title 39, United States Code (as amended by section 201(a))
take effect; and
(2) with respect to competitive products, the date as of
which the regulations promulgated under section 3633 of title
39, United States Code (as amended by section 202) take
effect.

TITLE V--GENERAL PROVISIONS

SEC. 501. QUALIFICATION AND TERM REQUIREMENTS FOR GOVERNORS.

[[Page S921]]

may continue to serve the remainder of the applicable term.
(B) Vacancy by incumbent before 5 years of service.--If a
person who is serving as a Governor of the United States
Postal Service on the date of enactment of this Act resigns,
is removed, or dies before the expiration of the 9-year term
of that Governor, and that Governor has served less than 5
years of that term, the resulting vacancy in office shall be
treated as a vacancy in a 5-year term.
(C) Vacancy by incumbent after 5 years of service.--If a
person who is serving as a Governor of the United States
Postal Service on the date of enactment of this Act resigns,
is removed, or dies before the expiration of the 9-year term
of that Governor, and that Governor has served 5 years or
more of that term, that term shall be deemed to have been a
5-year term beginning on its commencement date for purposes
of determining vacancies in office. Any appointment to the
vacant office shall be for a 5-year term beginning at the end
of the original 9-year term determined without regard to the
deeming under the preceding sentence. Nothing in this
subparagraph shall be construed to affect any action or
authority of any Governor or the Board of Governors during
any portion of a 9-year term deemed to be 5-year term under
this subparagraph.
(d) Term Limitation.--
(1) In general.--Section 202(b) of title 39, United States
Code, is amended--
(A) by inserting ``(1)'' after ``(b)''; and
(B) by adding at the end the following:
``(2) No person may serve more than 3 terms as a
Governor.''.
(2) Applicability.--The amendments made by paragraph (1)
shall not affect the tenure of any person serving as a
Governor of the United States Postal Service on the date of
enactment of this Act with respect to the term which that
person is serving on that date. Such person may continue to
serve the remainder of the applicable term, after which the
amendments made by paragraph (1) shall apply.

SEC. 502. OBLIGATIONS.

(a) Purposes for Which Obligations May Be Issued.--The
first sentence of section 2005(a)(1) of title 39, United
States Code, is amended by striking ``title.'' and inserting
``title, other than any of the purposes for which the
corresponding authority is available to the Postal Service
under section 2011.''.
(b) Increase Relating to Obligations Issued for Capital
Improvements.--Section 2005(a)(1) of title 39, United States
Code, is amended by striking the third sentence.
(c) Amounts Which May Be Pledged.--
(1) Obligations to which provisions apply.--The first
sentence of section 2005(b) of title 39, United States Code,
is amended by striking ``such obligations,'' and inserting
``obligations issued by the Postal Service under this
section,''.
(2) Assets, revenues, and receipts to which provisions
apply.--Subsection (b) of section 2005 of title 39, United
States Code, is amended by striking ``(b)'' and inserting
``(b)(1)'', and by adding at the end the following:
``(2) Notwithstanding any other provision of this section--
``(A) the authority to pledge assets of the Postal Service
under this subsection shall be available only to the extent
that such assets are not related to the provision of
competitive products (as determined under section 2011(h) or,
for purposes of any period before accounting practices and
principles under section 2011(h) have been established and
applied, the best information available from the Postal
Service, including the audited statements required by section
2008(e)); and
``(B) any authority under this subsection relating to the
pledging or other use of revenues or receipts of the Postal
Service shall be available only to the extent that they are
not revenues or receipts of the Competitive Products Fund.''.

SEC. 503. PRIVATE CARRIAGE OF LETTERS.

(a) In General.--Section 601 of title 39, United States
Code, is amended by striking subsection (b) and inserting the
following:
``(b) A letter may also be carried out of the mails when--
``(1) the amount paid for the private carriage of the
letter is at least the amount equal to 6 times the rate then
currently charged for the 1st ounce of a single-piece first
class letter;
``(2) the letter weighs at least 12\1/2\ ounces; or
``(3) such carriage is within the scope of services
described by regulations of the United States Postal Service
(as in effect on July 1, 2001) that permit private carriage
by suspension of the operation of this section (as then in
effect).
``(c) Any regulations necessary to carry out this section
shall be promulgated by the Postal Regulatory Commission.''.
(b) Effective Date.--This section shall take effect on the
date as of which the regulations promulgated under section
3633 of title 39, United States Code (as amended by section
202) take effect.

SEC. 504. RULEMAKING AUTHORITY.

Paragraph (2) of section 401 of title 39, United States
Code, is amended to read as follows:
``(2) to adopt, amend, and repeal such rules and
regulations, not inconsistent with this title, as may be
necessary in the execution of its functions under this title
and such other functions as may be assigned to the Postal
Service under any provisions of law outside of this title;''.

SEC. 505. NONINTERFERENCE WITH COLLECTIVE BARGAINING
AGREEMENTS.

(a) Labor Disputes.--Section 1207 of title 39, United
States Code, is amended to read as follows:

``Sec. 1207. Labor disputes

``(a) If there is a collective-bargaining agreement in
effect, no party to such agreement shall terminate or modify
such agreement unless the party desiring such termination or
modification serves written notice upon the other party to
the agreement of the proposed termination or modification not
less than 90 days prior to the expiration date thereof, or
not less than 90 days prior to the time it is proposed to
make such termination or modification. The party serving such
notice shall notify the Federal Mediation and Conciliation
Service of the existence of a dispute within 45 days after
such notice, if no agreement has been reached by that time.
``(b) If the parties fail to reach agreement or to adopt a
procedure providing for a binding resolution of a dispute by
the expiration date of the agreement in effect, or the date
of the proposed termination or modification, the Director of
the Federal Mediation and Conciliation Service shall within
10 days appoint a mediator of nationwide reputation and
professional stature, and who is also a member of the
National Academy of Arbitrators. The parties shall cooperate
with the mediator in an effort to reach an agreement and
shall meet and negotiate in good faith at such times and
places that the mediator, in consultation with the parties,
shall direct.
``(c)(1) If no agreement is reached within 60 days after
the expiration or termination of the agreement or the date on
which the agreement became subject to modification under
subsection (a) of this section, or if the parties decide upon
arbitration but do not agree upon the procedures therefore,
an arbitration board shall be established consisting of 3
members, 1 of whom shall be selected by the Postal Service, 1
by the bargaining representative of the employees, and the
third by the 2 thus selected. If either of the parties fails
to select a member, or if the members chosen by the parties
fail to agree on the third person within 5 days after their
first meeting, the selection shall be made from a list of
names provided by the Director. This list shall consist of
not less then 9 names of arbitrators of nationwide reputation
and professional nature, who are also members of the National
Academy of Arbitrators, and whom the Director has determined
are available and willing to serve.
``(2) The arbitration board shall give the parties a full
and fair hearing, including an opportunity to present
evidence in support of their claims, and an opportunity to
present their case in person, by counsel or by other
representative as they may elect. Decisions of the
arbitration board shall be conclusive and binding upon the
parties. The arbitration board shall render its decision
within 45 days after its appointment.
``(3) Costs of the arbitration board and mediation shall be
shared equally by the Postal Service and the bargaining
representative.
``(d) In the case of a bargaining unit whose recognized
collective-bargaining representative does not have an
agreement with the Postal Service, if the parties fail to
reach the agreement within 90 days after the commencement of
collective bargaining, a mediator shall be appointed in
accordance with the terms in subsection (b) of this section,
unless the parties have previously agreed to another
procedure for a binding resolution of their differences. If
the parties fail to reach agreement within 180 days after the
commencement of collective bargaining, and if they have not
agreed to another procedure for binding resolution, an
arbitration board shall be established to provide conclusive
and binding arbitration in accordance with the terms of
subsection (c) of this section.''.
(b) Noninterference With Collective Bargaining
Agreements.--Except as otherwise provided by the amendment
made by subsection (a), nothing in this Act shall restrict,
expand, or otherwise affect any of the rights, privileges, or
benefits of either employees of or labor organizations
representing employees of the United States Postal Service
under chapter 12 of title 39, United States Code, the
National Labor Relations Act, any handbook or manual
affecting employee labor relations within the United States
Postal Service, or any collective bargaining agreement.
(c) Free Mailing Privileges Continue Unchanged.--Nothing in
this Act or any amendment made by this Act shall affect any
free mailing privileges accorded under section 3217 or
sections 3403 through 3406 of title 39, United States Code.

SEC. 506. BONUS AUTHORITY.

Chapter 36 of title 39, United States Code, is amended by
inserting after section 3685 the following:

``Sec. 3686. Bonus authority

[[Page S922]]

annual appraisal period involved, that the performance
appraisal system for affected officers and employees of the
Postal Service (as designed and applied) makes meaningful
distinctions based on relative performance.
``(3) Revocation authority.--If the Board of Governors of
the Postal Service finds that a performance appraisal system
previously approved under paragraph (2)(B) does not (as
designed and applied) make meaningful distinctions based on
relative performance, the Board may revoke or suspend the
authority of the Postal Service to continue a program
approved under paragraph (2) until such time as appropriate
corrective measures have, in the judgment of the Board, been
taken.
``(c) Reporting Requirement Relating to Bonuses or Other
Rewards.--Included in its comprehensive statement under
section 2401(e) for any period shall be--
``(1) the name of each person receiving a bonus or other
reward during such period which would not have been allowable
but for the provisions of subsection (b);
``(2) the amount of the bonus or other reward; and
``(3) the amount by which the limitation referred to in
subsection (b)(1) was exceeded as a result of such bonus or
other reward.''.

TITLE VI--ENHANCED REGULATORY COMMISSION

SEC. 601. REORGANIZATION AND MODIFICATION OF CERTAIN
PROVISIONS RELATING TO THE POSTAL REGULATORY
COMMISSION.

(a) Transfer and Redesignation.--Title 39, United States
Code, is amended--
(1) by inserting after chapter 4 the following:

``CHAPTER 5--POSTAL REGULATORY COMMISSION

``Sec.
``501. Establishment.
``502. Commissioners.
``503. Rules; regulations; procedures.
``504. Administration.
``505. Officer of the Postal Regulatory Commission representing the
general public.

``Sec. 501. Establishment

``The Postal Regulatory Commission is an independent
establishment of the executive branch of the Government of
the United States.

``Sec. 502. Commissioners

``(a) The Postal Regulatory Commission is composed of 5
Commissioners, appointed by the President, by and with the
advice and consent of the Senate. The Commissioners shall be
chosen solely on the basis of their technical qualifications,
professional standing, and demonstrated expertise in
economics, accounting, law, or public administration, and may
be removed by the President only for cause. Each individual
appointed to the Commission shall have the qualifications
and expertise necessary to carry out the enhanced
responsibilities accorded Commissioners under the Postal
Accountability and Enhancement Act. Not more than 3 of the
Commissioners may be adherents of the same political
party.
``(b) No Commissioner shall be financially interested in
any enterprise in the private sector of the economy engaged
in the delivery of mail matter.
``(c) A Commissioner may continue to serve after the
expiration of his term until his successor has qualified,
except that a Commissioner may not so continue to serve for
more than 1 year after the date upon which his term otherwise
would expire under subsection (f).
``(d) One of the Commissioners shall be designated as
Chairman by, and shall serve in the position of Chairman at
the pleasure of, the President.
``(e) The Commissioners shall by majority vote designate a
Vice Chairman of the Commission. The Vice Chairman shall act
as Chairman of the Commission in the absence of the Chairman.
``(f) The Commissioners shall serve for terms of 6
years.'';
(2) by striking, in subchapter I of chapter 36 (as in
effect before the amendment made by section 201(c)), the
heading for such subchapter I and all that follows through
section 3602;
(3) by redesignating sections 3603 and 3604 as sections 503
and 504, respectively, and transferring such sections to the
end of chapter 5 (as inserted by paragraph (1)); and
(4) by adding after such section 504 the following:

``Sec. 505. Officer of the Postal Regulatory Commission
representing the general public

``The Postal Regulatory Commission shall designate an
officer of the Postal Regulatory Commission in all public
proceedings who shall represent the interests of the general
public.''.
(b) Applicability.--The amendment made by subsection (a)(1)
shall not affect the appointment or tenure of any person
serving as a Commissioner on the Postal Regulatory Commission
(as so redesignated by section 604) under an appointment made
before the date of enactment of this Act or any nomination
made before that date, but, when any such office becomes
vacant, the appointment of any person to fill that office
shall be made in accordance with such amendment.
(c) Clerical Amendment.--The analysis for part I of title
39, United States Code, is amended by inserting after the
item relating to chapter 4 the following:

``5. Postal Regulatory Commission...........................501''....

SEC. 602. AUTHORITY FOR POSTAL REGULATORY COMMISSION TO ISSUE
SUBPOENAS.

Section 504 of title 39, United States Code (as so
redesignated by section 601) is amended by adding at the end
the following:
``(f)(1) Any Commissioner of the Postal Regulatory
Commission, any administrative law judge appointed by the
Commission under section 3105 of title 5, and any employee of
the Commission designated by the Commission may administer
oaths, examine witnesses, take depositions, and receive
evidence.
``(2) The Chairman of the Commission, any Commissioner
designated by the Chairman, and any administrative law judge
appointed by the Commission under section 3105 of title 5
may, with respect to any proceeding conducted by the
Commission under this title or to obtain information to be
used to prepare a report under this title--
``(A) issue subpoenas requiring the attendance and
presentation of testimony by, or the production of
documentary or other evidence in the possession of, any
covered person; and
``(B) order the taking of depositions and responses to
written interrogatories by a covered person.
The written concurrence of a majority of the Commissioners
then holding office shall, with respect to each subpoena
under subparagraph (A), be required in advance of its
issuance.
``(3) In the case of contumacy or failure to obey a
subpoena issued under this subsection, upon application by
the Commission, the district court of the United States for
the district in which the person to whom the subpoena is
addressed resides or is served may issue an order requiring
such person to appear at any designated place to testify or
produce documentary or other evidence. Any failure to obey
the order of the court may be punished by the court as a
contempt thereof.
``(4) For purposes of this subsection, the term `covered
person' means an officer, employee, agent, or contractor of
the Postal Service.
``(g)(1) If the Postal Service determines that any document
or other matter it provides to the Postal Regulatory
Commission under a subpoena issued under subsection (f), or
otherwise at the request of the Commission in connection with
any proceeding or other purpose under this title, contains
information which is described in section 410(c) of this
title, or exempt from public disclosure under section 552(b)
of title 5, the Postal Service shall, at the time of
providing such matter to the Commission, notify the
Commission, in writing, of its determination (and the reasons
therefor).
``(2) Except as provided in paragraph (3), no officer or
employee of the Commission may, with respect to any
information as to which the Commission has been notified
under paragraph (1)--
``(A) use such information for purposes other than the
purposes for which it is supplied; or
``(B) permit anyone who is not an officer or employee of
the Commission to have access to any such information.
``(3)(A) Paragraph (2) shall not prohibit the Commission
from publicly disclosing relevant information in furtherance
of its duties under this title, provided that the Commission
has adopted regulations under section 553 of title 5, that
establish a procedure for according appropriate
confidentiality to information identified by the Postal
Service under paragraph (1). In determining the appropriate
degree of confidentiality to be accorded information
identified by the Postal Service under paragraph (1), the
Commission shall balance the nature and extent of the likely
commercial injury to the Postal Service against the public
interest in maintaining the financial transparency of a
government establishment competing in commercial markets.
``(B) Paragraph (2) shall not prevent the Commission from
requiring production of information in the course of any
discovery procedure established in connection with a
proceeding under this title. The Commission shall, by
regulations based on rule 26(c) of the Federal Rules of Civil
Procedure, establish procedures for ensuring appropriate
confidentiality for information furnished to any party.''.

SEC. 603. APPROPRIATIONS FOR THE POSTAL REGULATORY
COMMISSION.

(a) Authorization of Appropriations.--Subsection (d) of
section 504 of title 39, United States Code (as so
redesignated by section 601) is amended to read as follows:
``(d) There are authorized to be appropriated, out of the
Postal Service Fund, such sums as may be necessary for the
Postal Regulatory Commission. In requesting an appropriation
under this subsection for a fiscal year, the Commission shall
prepare and submit to the Congress under section 2009 a
budget of the Commission's expenses, including expenses for
facilities, supplies, compensation, and employee benefits.''.
(b) Budget Program.--
(1) In general.--The next to last sentence of section 2009
of title 39, United States Code, is amended to read as
follows: ``The budget program shall also include separate
statements of the amounts which (1) the Postal Service
requests to be appropriated under subsections (b) and (c) of
section 2401, (2) the Office of Inspector General of the
United States Postal Service requests to be appropriated, out
of the Postal Service Fund, under section 8G(f) of the
Inspector General Act of 1978, and (3) the Postal Regulatory
Commission requests to be appropriated, out of the Postal
Service Fund, under section 504(d) of this title.''.
(2) Conforming amendment.--Section 2003(e)(1) of title 39,
United States Code, is amended by striking the first sentence
and inserting the following: ``The Fund shall be available
for the payment of (A) all expenses incurred by the Postal
Service in carrying out its functions as provided by law,
subject to the same limitation as set forth in the
parenthetical matter under subsection (a); (B) all expenses
of the Postal Regulatory Commission, subject to the
availability of amounts appropriated under section 504(d);
and (C) all expenses of the Office of Inspector General,
subject to the availability of amounts appropriated under
section 8G(f) of the Inspector General Act of 1978.''.
(c) Effective Date.--
(1) In general.--The amendments made by this section shall
apply with respect to fiscal years beginning on or after
October 1, 2002.

[[Page S923]]

(2) Savings provision.--The provisions of title 39, United
States Code, that are amended by this section shall, for
purposes of any fiscal year before the first fiscal year to
which the amendments made by this section apply, continue to
apply in the same way as if this section had never been
enacted.

SEC. 604. REDESIGNATION OF THE POSTAL RATE COMMISSION.

(a) Amendments to Title 39, United States Code.--Title 39,
United States Code, is amended in sections 404, 503 and 504
(as so redesignated by section 601), 1001 and 1002, by
striking ``Postal Rate Commission'' each place it appears and
inserting ``Postal Regulatory Commission'';
(b) Amendments to Title 5, United States Code.--Title 5,
United States Code, is amended in sections 104(1), 306(f),
2104(b), 3371(3), 5314 (in the item relating to Chairman,
Postal Rate Commission), 5315 (in the item relating to
Members, Postal Rate Commission), 5514(a)(5)(B),
7342(a)(1)(A), 7511(a)(1)(B)(ii), 8402(c)(1), 8423(b)(1)(B),
and 8474(c)(4) by striking ``Postal Rate Commission'' and
inserting ``Postal Regulatory Commission''.
(c) Amendment to the Ethics in Government Act of 1978.--
Section 101(f)(6) of the Ethics in Government Act of 1978 (5
U.S.C. App.) is amended by striking ``Postal Rate
Commission'' and inserting ``Postal Regulatory Commission''.
(d) Amendment to the Rehabilitation Act of 1973.--Section
501(b) of the Rehabilitation Act of 1973 (29 U.S.C. 791(b))
is amended by striking ``Postal Rate Office'' and inserting
``Postal Regulatory Commission''.
(e) Amendment to Title 44, United States Code.--Section
3502(5) of title 44, United States Code, is amended by
striking ``Postal Rate Commission'' and inserting ``Postal
Regulatory Commission''.
(f) Other References.--Whenever a reference is made in any
provision of law (other than this Act or a provision of law
amended by this Act), regulation, rule, document, or other
record of the United States to the Postal Rate Commission,
such reference shall be considered a reference to the Postal
Regulatory Commission.

SEC. 605. FINANCIAL TRANSPARENCY.

(a) In General.--Section 101 of title 39, United States
Code, is amended--
(1) by redesignating subsections (d) through (g) as
subsections (e) through (h), respectively; and
(2) by inserting after subsection (c) the following:
``(d) As an independent establishment of the executive
branch of the Government of the United States, the Postal
Service shall be subject to a high degree of transparency to
ensure fair treatment of customers of the Postal Service's
market-dominant products and companies competing with the
Postal Service's competitive products.''.
(b) Financial Reporting Requirements and Enforcement Powers
Applicable to Postal Service.--Section 503 of title 39,
United States Code (as so redesignated by section 601 and
604) is amended by--
(1) inserting ``(a)'' before ``The Postal Regulatory
Commission shall promulgate''; and
(2) adding at the end the following:
``(b)(1) Beginning with the first full fiscal year
following the date of enactment of the Postal Accountability
and Enhancement Act, the Postal Service shall file with the
Postal Regulatory Commission --
``(A) within 35 days after the end of each fiscal quarter,
a quarterly report containing the information prescribed in
Form 10-Q of the Securities and Exchange Commission under
section 13 of the Securities Exchange Act of 1934 (15 U.S.C.
78m), or any revised or successor form;
``(B) within 60 days after the end of each fiscal year, an
annual report containing the information prescribed in Form
10-K of the Securities and Exchange Commission under section
13 of the Securities Exchange Act of 1934 (15 U.S.C. 78m), or
any revised or successor form; and
``(C) periodic reports within the time frame and containing
the information prescribed in Form 8-K of the Securities and
Exchange Commission under section 13 of the Securities
Exchange Act of 1934 (15 U.S.C. 78m), or any revised or
successor form.
``(2) For purposes of preparing the reports required under
paragraph (1), the Postal Service shall be deemed to be the
registrant described in the Securities and Exchange
Commission forms, and references contained in such forms to
Securities and Exchange Commission regulations are
applicable.
``(3) For purposes of preparing the reports required under
paragraph (1), the Postal Service shall comply with the rules
prescribed by the Securities and Exchange Commission
implementing section 404 of the Sarbanes-Oxley Act of 2002
(15 U.S.C. 7262; Public Law 107-204) beginning with fiscal
year 2007 and in each fiscal year thereafter.
``(c)(1) The reports required under subsection (b)(1)(B)
shall include, with respect to the financial obligations of
the Postal Service under chapters 83, 84, and 89 of title 5
for retirees of the Postal Service--
``(A) the funded status of such obligations of the Postal
Service;
``(B) components of the net change in the fund balances and
obligations and the nature and cause of any significant
changes;
``(C) components of net periodic costs;
``(D) cost methods and assumptions underlying the relevant
actuarial valuations;
``(E) the effect of a one-percentage point increase in the
assumed health care cost trend rate for each future year on
the service and interest costs components of net periodic
cost and the accumulated obligation of the Postal Service
under chapter 89 of title 5 for retirees of the Postal
Service;
``(F) actual contributions to and payments from the funds
for the years presented and the estimated future
contributions and payments for each of the following 5 years;
``(G) the composition of plan assets reflected in the fund
balances; and
``(H) the assumed rate of return on fund balances and the
actual rates of return for the years presented.
``(2)(A) Beginning with the fiscal year 2007 and in each
fiscal year thereafter, for purposes of the reports required
under subsection (b)(1) (A) and (B), the Postal Service shall
include segment reporting.
``(B) The Postal Service shall determine the appropriate
segment reporting under subparagraph (A), after consultation
with the Postal Regulatory Commission.
``(d) For purposes of the annual reports required under
subsection (b)(1)(B), the Postal Service shall obtain an
opinion from an independent auditor on whether the
information listed under subsection (c) is fairly stated in
all material respects, either in relation to the basic
financial statements as a whole or on a stand-alone basis.
``(e) The Postal Regulatory Commission shall have access to
the audit documentation and any other supporting matter of
the Postal Service and its independent auditor in connection
with any information submitted under subsection (b)(1)(B).
``(f) The Postal Regulatory Commission may, on its own
motion or on request of an interested party, initiate
proceedings (to be conducted in accordance with regulations
that the Commission shall prescribe) to improve the quality,
accuracy, or completeness of Postal Service data required by
the Commission under this section whenever it shall appear
that the data--
``(1) have become significantly inaccurate;
``(2) can be significantly improved; or
``(3) are not cost beneficial.''.

TITLE VII--EVALUATIONS

SEC. 701. ASSESSMENTS OF RATEMAKING, CLASSIFICATION, AND
OTHER PROVISIONS.

(a) In General.--The Postal Regulatory Commission shall, at
least every 3 years, submit a report to the President and
Congress concerning--
(1) the operation of the amendments made by this Act; and
(2) recommendations for any legislation or other measures
necessary to improve the effectiveness or efficiency of the
postal laws of the United States.
(b) Postal Service Views.--A report under this section
shall be submitted only after reasonable opportunity has been
afforded to the Postal Service to review the report and to
submit written comments on the report. Any comments timely
received from the Postal Service under the preceding sentence
shall be attached to the report submitted under subsection
(a).

SEC. 702. REPORT ON UNIVERSAL POSTAL SERVICE AND THE POSTAL
MONOPOLY.

(a) Report by the Postal Regulatory Commission.--
(1) In general.--Not later than 12 months after the date of
enactment of this Act, the Postal Regulatory Commission shall
submit a report to the President and Congress on universal
postal service and the postal monopoly in the United States
(in this section referred to as ``universal service and the
postal monopoly''), including the monopoly on the delivery of
mail and on access to mailboxes.
(2) Contents.--The report under this subsection shall
include--
(A) a comprehensive review of the history and development
of universal service and the postal monopoly, including how
the scope and standards of universal service and the postal
monopoly have evolved over time for the Nation and its urban
and rural areas;
(B) the scope and standards of universal service and the
postal monopoly provided under current law (including
sections 101 and 403 of title 39, United States Code), and
current rules, regulations, policy statements, and practices
of the Postal Service;
(C) a description of any geographic areas, populations,
communities (including both urban and rural communities),
organizations, or other groups or entities not currently
covered by universal service or that are covered but that are
receiving services deficient in scope or quality or both; and
(D) the scope and standards of universal service and the
postal monopoly likely to be required in the future in order
to meet the needs and expectations of the United States
public, including all types of mail users, based on
discussion of such assumptions, alternative sets of
assumptions, and analyses as the Postal Service considers
plausible.
(b) Recommended Changes to Universal Service and the
Monopoly.--The Postal Regulatory Commission shall include in
the report under subsection (a), and in all reports submitted
under section 701 of this Act--
(1) any recommended changes to universal service and the
postal monopoly as the Commission considers appropriate,
including changes that the Commission may implement under
current law and changes that would require changes to current
law, with estimated effects of the recommendations on the
service, financial condition, rates, and security of mail
provided by the Postal Service;
(2) with respect to each recommended change described under
paragraph (1)--
(A) an estimate of the costs of the Postal Service
attributable to the obligation to provide universal service
under current law; and
(B) an analysis of the likely benefit of the current postal
monopoly to the ability of the Postal Service to sustain the
current scope and standards of universal service, including
estimates of the financial benefit of the postal monopoly to
the extent practicable, under current law; and

[[Page S924]]

(3) such additional topics and recommendations as the
Commission considers appropriate, with estimated effects of
the recommendations on the service, financial condition,
rates, and the security of mail provided by the Postal
Service.

SEC. 703. STUDY ON EQUAL APPLICATION OF LAWS TO COMPETITIVE
PRODUCTS.

(a) In General.--The Federal Trade Commission shall prepare
and submit to the President and Congress, and to the Postal
Regulatory Commission, within 1 year after the date of
enactment of this Act, a comprehensive report identifying
Federal and State laws that apply differently to the United
States Postal Service with respect to the competitive
category of mail (within the meaning of section 102 of title
39, United States Code, as amended by section 101) and
similar products provided by private companies.
(b) Recommendations.--The Federal Trade Commission shall
include such recommendations as it considers appropriate for
bringing such legal discrimination to an end, and in the
interim, to account under section 3633 of title 39, United
States Code (as added by this Act), for the net economic
advantages provided by those laws.
(c) Consultation.--In preparing its report, the Federal
Trade Commission shall consult with the United States Postal
Service, the Postal Regulatory Commission, other Federal
agencies, mailers, private companies that provide delivery
services, and the general public, and shall append to such
report any written comments received under this subsection.
(d) Competitive Product Regulation.--The Postal Regulatory
Commission shall take into account the recommendations of the
Federal Trade Commission in promulgating or revising the
regulations required under section 3633 of title 39, United
States Code.

SEC. 704. REPORT ON POSTAL WORKPLACE SAFETY AND WORKPLACE-
RELATED INJURIES.

(a) Report by the Inspector General.--
(1) In general.--Not later than 6 months after the
enactment of this Act, the Inspector General of the United
States Postal Service shall submit a report to Congress and
the Postal Service that--
(A) details and assesses any progress the Postal Service
has made in improving workplace safety and reducing
workplace-related injuries nationwide; and
(B) identifies opportunities for improvement that remain
with respect to such improvements and reductions.
(2) Contents.--The report under this subsection shall
also--
(A) discuss any injury reduction goals established by the
Postal Service;
(B) describe the actions that the Postal Service has taken
to improve workplace safety and reduce workplace-related
injuries, and assess how successful the Postal Service has
been in meeting its injury reduction goal; and
(C) identify areas where the Postal Service has failed to
meet its injury reduction goals, explain the reasons why
these goals were not met, and identify opportunities for
making further progress in meeting these goals.
(b) Report by the Postal Service.--
(1) Report to congress.--Not later than 6 months after
receiving the report under subsection (a), the Postal Service
shall submit a report to Congress detailing how it plans to
improve workplace safety and reduce workplace-related
injuries nationwide, including goals and metrics.
(2) Problem areas.--The report under this subsection shall
also include plans, developed in consultation with the
Inspector General and employee representatives, including
representatives of each postal labor union and management
association, for addressing the problem areas identified by
the Inspector General in the report under subsection
(a)(2)(C).

SEC. 705. STUDY ON RECYCLED PAPER.

(a) In General.--Within 12 months after the date of
enactment of this Act, the Government Accountability Office
shall study and submit to the Congress, the Board of
Governors of the Postal Service, and to the Postal Regulatory
Commission a report concerning--
(1) the economic and environmental efficacy of establishing
rate incentives for mailers linked to the use of recycled
paper;
(2) a description of the accomplishments of the Postal
Service in each of the preceding 5 years involving recycling
activities, including the amount of annual revenue generated
and savings achieved by the Postal Service as a result of its
use of recycled paper and other recycled products and its
efforts to recycle undeliverable and discarded mail and other
materials; and
(3) additional opportunities that may be available for the
United States Postal Service to engage in recycling
initiatives and the projected costs and revenues of
undertaking such opportunities.
(b) Recommendations.--The report shall include
recommendations for any administrative or legislative actions
that may be appropriate.

TITLE VIII--POSTAL SERVICE RETIREMENT AND HEALTH BENEFITS FUNDING

SEC. 801. SHORT TITLE.

This title may be cited as the ``Postal Civil Service
Retirement and Health Benefits Funding Amendments of 2004''.

SEC. 802. CIVIL SERVICE RETIREMENT SYSTEM.

(a) In General.--Chapter 83 of title 5, United States Code,
is amended--
(1) in section 8334(a)(1)(B), by striking clause (ii) and
inserting the following:
``(ii) In the case of an employee of the United States
Postal Service, no amount shall be contributed under this
subparagraph.''; and
(2) by amending section 8348(h) to read as follows:
``(h)(1) In this subsection, the term `Postal surplus or
supplemental liability' means the estimated difference, as
determined by the Office, between--
``(A) the actuarial present value of all future benefits
payable from the Fund under this subchapter to current or
former employees of the United States Postal Service and
attributable to civilian employment with the United States
Postal Service; and
``(B) the sum of--
``(i) the actuarial present value of deductions to be
withheld from the future basic pay of employees of the United
States Postal Service currently subject to this subchapter
under section 8334;
``(ii) that portion of the Fund balance, as of the date the
Postal surplus or supplemental liability is determined,
attributable to payments to the Fund by the United States
Postal Service and its employees, minus benefit payments
attributable to civilian employment with the United States
Postal Service, plus the earnings on such amounts while in
the Fund; and
``(iii) any other appropriate amount, as determined by the
Office in accordance with generally accepted actuarial
practices and principles.
``(2)(A) Not later than June 15, 2006, the Office shall
determine the Postal surplus or supplemental liability, as of
September 30, 2005. If that result is a surplus, the amount
of the surplus shall be transferred to the Postal Service
Retiree Health Benefits Fund established under section 8909a
by June 30, 2006. If the result is a supplemental liability,
the Office shall establish an amortization schedule,
including a series of annual installments commencing
September 30, 2006, which provides for the liquidation of
such liability by September 30, 2043.
``(B) The Office shall redetermine the Postal surplus or
supplemental liability as of the close of the fiscal year,
for each fiscal year beginning after September 30, 2006,
through the fiscal year ending September 30, 2038. If the
result is a surplus, that amount shall remain in the Fund
until distribution is authorized under subparagraph (C), and
any prior amortization schedule for payments shall be
terminated. If the result is a supplemental liability, the
Office shall establish a new amortization schedule, including
a series of annual installments commencing on September 30 of
the subsequent fiscal year, which provides for the
liquidation of such liability by September 30, 2043.
``(C) As of the close of the fiscal years ending September
30, 2015, 2025, 2035, and 2039, if the result is a surplus,
that amount shall be transferred to the Postal Service
Retiree Health Benefits Fund, and any prior amortization
schedule for payments shall be terminated.
``(D) Amortization schedules established under this
paragraph shall be set in accordance with generally accepted
actuarial practices and principles, with interest computed at
the rate used in the most recent valuation of the Civil
Service Retirement System.
``(E) The United States Postal Service shall pay the
amounts so determined to the Office, with payments due not
later than the date scheduled by the Office.
``(3) Notwithstanding any other provision of law, in
computing the amount of any payment under any other
subsection of this section that is based upon the amount of
the unfunded liability, such payment shall be computed
disregarding that portion of the unfunded liability that the
Office determines will be liquidated by payments under this
subsection.''.
(b) Credit Allowed for Military Service.--In the
application of section 8348(g)(2) of title 5, United States
Code, for the fiscal year 2006, the Office of Personnel
Management shall include, in addition to the amount otherwise
computed under that paragraph, the amounts that would have
been included for the fiscal years 2003 through 2005 with
respect to credit for military service of former employees of
the United States Postal Service as though the Postal Civil
Service Retirement System Funding Reform Act of 2003 (Public
Law 108-18) had not been enacted, and the Secretary of the
Treasury shall make the required transfer to the Civil
Service Retirement and Disability Fund based on that amount.
(c) Review.--
(1) In general.--
(A) Request for review.--Notwithstanding any other
provision of this section (including any amendment made by
this section), any determination or redetermination made by
the Office of Personnel Management under this section
(including any amendment made by this section) shall, upon
request of the United States Postal Service, be subject to a
review by the Postal Regulatory Commission under this
subsection.
(B) Report.--Upon receiving a request under subparagraph
(A), the Commission shall promptly procure the services of an
actuary, who shall hold membership in the American Academy of
Actuaries and shall be qualified in the evaluation of pension
obligations, to conduct a review in accordance with generally
accepted actuarial practices and principles and to provide a
report to the Commission containing the results of the
review. The Commission, upon determining that the report
satisfies the requirements of this paragraph, shall approve
the report, with any comments it may choose to make, and
submit it with any such comments to the Postal Service, the
Office of Personnel Management, and Congress.
(2) Reconsideration.--Upon receiving the report from the
Commission under paragraph (1), the Office of Personnel
Management shall reconsider its determination or
redetermination in light of such report, and shall make any
appropriate adjustments. The Office shall submit a report
containing the results of its reconsideration to the
Commission, the Postal Service, and Congress.

SEC. 803. HEALTH INSURANCE.

(a) In General.--

[[Page S925]]

(1) Funding.--Chapter 89 of title 5, United States Code, is
amended--
(A) in section 8906(g)(2)(A), by striking ``shall be paid
by the United States Postal Service.'' and inserting ``shall
be paid first from the Postal Service Retiree Health Benefits
Fund up to the amount contained in the Fund, with any
remaining amount paid by the United States Postal Service.'';
and
(B) by inserting after section 8909 the following:

``Sec. 8909a. Postal Service Retiree Health Benefit Fund

``(a) There is in the Treasury of the United States a
Postal Service Retiree Health Benefits Fund which is
administered by the Office of Personnel Management.
``(b) The Fund is available without fiscal year limitation
for payments required under section 8906(g)(2)(A).
``(c) The Secretary of the Treasury shall immediately
invest, in interest-bearing securities of the United States
such currently available portions of the Fund as are not
immediately required for payments from the Fund. Such
investments shall be made in the same manner as investments
for the Civil Service Retirement and Disability Fund under
section 8348.
``(d)(1) Not later than June 30, 2006, and by June 30 of
each succeeding year, the Office shall compute the net
present value of the future payments required under section
8906(g)(2)(A) and attributable to the service of Postal
Service employees during the most recently ended fiscal year.
``(2)(A) Not later than June 30, 2006, the Office shall
compute, and by June 30 of each succeeding year, the Office
shall recompute the difference between--
``(i) the net present value of the excess of future
payments required under section 8906(g)(2)(A) for current and
future United States Postal Service annuitants as of the end
of the fiscal year ending on September 30 of that year; and
``(ii)(I) the value of the assets of the Postal Retiree
Health Benefits Fund as of the end of the fiscal year ending
on September 30 of that year; and
``(II) the net present value computed under paragraph (1).
``(B) Not later than June 30, 2006, the Office shall
compute, and by June 30 of each succeeding year shall
recompute, an amortization schedule including a series of
annual installments which provide for the liquidation by
September 30, 2045, or within 15 years, whichever is later,
of the net present value determined under subparagraph (A),
including interest at the rate used in that computation.
``(3) Not later than September 30, 2006, and by September
30 of each succeeding year, the United States Postal Service
shall pay into such Fund--
``(A) the net present value computed under paragraph (1);
and
``(B) the annual installment computed under paragraph
(2)(B).
``(4) Computations under this subsection shall be made
consistent with the assumptions and methodology used by the
Office for financial reporting under subchapter II of chapter
35 of title 31.
``(5)(A)(i) Any computation or other determination of the
Office under this subsection shall, upon request of the
United States Postal Service, be subject to a review by the
Postal Regulatory Commission under this paragraph.
``(ii) Upon receiving a request under clause (i), the
Commission shall promptly procure the services of an actuary,
who shall hold membership in the American Academy of
Actuaries and shall be qualified in the evaluation of
healthcare insurance obligations, to conduct a review in
accordance with generally accepted actuarial practices and
principles and to provide a report to the Commission
containing the results of the review. The Commission, upon
determining that the report satisfies the requirements of
this subparagraph, shall approve the report, with any
comments it may choose to make, and submit it with any such
comments to the Postal Service, the Office of Personnel
Management, and Congress.
``(B) Upon receiving the report under subparagraph (A), the
Office of Personnel Management shall reconsider its
determination or redetermination in light of such report, and
shall make any appropriate adjustments. The Office shall
submit a report containing the results of its reconsideration
to the Commission, the Postal Service, and Congress.
``(6) After consultation with the United States Postal
Service, the Office shall promulgate any regulations the
Office determines necessary under this subsection.''.
(2) Technical and conforming amendment.--The table of
sections for chapter 89 of title 5, United States Code, is
amended by inserting after the item relating to section 8909
the following:

``8909a. Postal Service Retiree Health Benefits Fund.''.
(b) Review.--
(1) In general.--
(A) Request for review.--Any regulation established under
section 8909a(d)(5) of title 5, United States Code (as added
by subsection (a)), shall, upon request of the United States
Postal Service, be subject to a review by the Postal
Regulatory Commission under this paragraph.
(B) Report.--Upon receiving a request under subparagraph
(A), the Commission shall promptly procure the services of an
actuary, who shall hold membership in the American Academy of
Actuaries and shall be qualified in the evaluation of
healthcare insurance obligations, to conduct a review in
accordance with generally accepted actuarial practices and
principles and to provide a report to the Commission
containing the results of the review. The Commission, upon
determining that the report satisfies the requirements of
this paragraph, shall approve the report, with any comments
it may choose to make, and submit it with any such comments
to the Postal Service, the Office of Personnel Management,
and Congress.
(2) Reconsideration.--Upon receiving the report under
paragraph (1), the Office of Personnel Management shall
reconsider its determination or redetermination in light of
such report, and shall make any appropriate adjustments. The
Office shall submit a report containing the results of its
reconsideration to the Commission, the Postal Service, and
Congress.
(c) Transitional Adjustment for Fiscal Year 2006.--For
fiscal year 2006, the amounts paid by the Postal Service in
Government contributions under section 8906(g)(2)(A) of title
5, United States Code, for fiscal year 2006 contributions
shall be deducted from the initial payment otherwise due from
the Postal Service to the Postal Service Retiree Health
Benefits Fund under section 8909a(d)(3) of such title as
added by this section.

SEC. 804. REPEAL OF DISPOSITION OF SAVINGS PROVISION.

Section 3 of the Postal Civil Service Retirement System
Funding Reform Act of 2003 (Public Law 108-18) is repealed.

SEC. 805. EFFECTIVE DATES.

(a) In General.--Except as provided under subsection (b),
this title shall take effect on October 1, 2005.
(b) Termination of Employer Contribution.--The amendment
made by paragraph (1) of section 802(a) shall take effect on
the first day of the first pay period beginning on or after
October 1, 2005.

TITLE IX--COMPENSATION FOR WORK INJURIES

SEC. 901. TEMPORARY DISABILITY; CONTINUATION OF PAY.

(a) Time of Accrual of Right.--Section 8117 of title 5,
United States Code, is amended--
(1) by striking ``An employee'' and inserting ``(a) An
employee other than a Postal Service employee''; and
(2) by adding at the end the following:
``(b) A Postal Service employee is not entitled to
compensation or continuation of pay for the first 3 days of
temporary disability, except as provided under paragraph (3)
of subsection (a). A Postal Service employee may use annual
leave, sick leave, or leave without pay during that 3-day
period, except that if the disability exceeds 14 days or is
followed by permanent disability, the employee may have their
sick leave or annual leave reinstated or receive pay for the
time spent on leave without pay under this section.''.
(b) Technical and Conforming Amendment.--Section 8118(b)(1)
of title 5, United States Code, is amended to read as
follows:
``(1) without a break in time, except as provided under
section 8117(b), unless controverted under regulations of the
Secretary''.

SEC. 902. DISABILITY RETIREMENT FOR POSTAL EMPLOYEES.

(a) Total Disability.--Section 8105 of title 5, United
States Code, is amended--
(1) in subsection (a), by adding at the end the following:
``This section applies to a Postal Service employee, except
as provided under subsection (c).''; and
(2) by adding at the end the following:
``(c)(1) In this subsection, the term `retirement age' has
the meaning given under section 216(l)(1) of the Social
Security Act (42 U.S.C. 416(l)(1)).
``(2) Notwithstanding any other provision of law, for any
injury occurring on or after the date of enactment of the
Postal Accountability and Enhancement Act, and for any new
claim for a period of disability commencing on or after that
date, the compensation entitlement for total disability is
converted to 50 percent of the monthly pay of the employee on
the later of--
``(A) the date on which the injured employee reaches
retirement age; or
``(B) 1 year after the employee begins receiving
compensation.''.
(b) Partial Disability.--Section 8106 of title 5, United
States Code, is amended--
(1) in subsection (a), by adding at the end the following:
``This section applies to a Postal Service employee, except
as provided under subsection (d).''; and
(2) by adding at the end the following:
``(d)(1) In this subsection, the term `retirement age' has
the meaning given under section 216(l)(1) of the Social
Security Act (42 U.S.C. 416(l)(1)).
``(2) Notwithstanding any other provision of law, for any
injury occurring on or after the date of enactment of this
subsection, and for any new claim for a period of disability
commencing on or after that date, the compensation
entitlement for partial disability is converted to 50 percent
of the difference between the monthly pay of an employee and
the monthly wage earning capacity of the employee after the
beginning of partial disability on the later of--
``(A) the date on which the injured employee reaches
retirement age; or
``(B) 1 year after the employee begins receiving
compensation.''.

TITLE X--MISCELLANEOUS

SEC. 1001. EMPLOYMENT OF POSTAL POLICE OFFICERS.

Section 404 of title 39, United States Code (as amended by
this Act), is further amended by adding at the end the
following:
``(d) The Postal Service may employ guards for all
buildings and areas owned or occupied by the Postal Service
or under the charge and control of the Postal Service, and
may give such guards, with respect to such property, any of
the powers of special policemen provided under section 1315
of title 40. The Postmaster General, or the designee of the
Postmaster General, may take any action that the Secretary of
Homeland

[[Page S926]]

Security may take under section 1315 of title 40, with
respect to that property.

SEC. 1002. OBSOLETE PROVISIONS.

(a) Repeal.--
(1) In general.--Chapter 52 of title 39, United States
Code, is repealed.
(2) Conforming amendments.--(A) Section 5005(a) of title
39, United States Code, is amended--
(i) by striking paragraph (1), and by redesignating
paragraphs (2) through (4) as paragraphs (1) through (3),
respectively; and
(ii) in paragraph (3) (as so designated by clause (i)), by
striking ``(as defined in section 5201(6) of this title)''.
(B) Section 5005(b) of such title 39 is amended by striking
``(a)(4)'' each place it appears and inserting ``(a)(3)''.
(C) Section 5005(c) of such title 39 is amended by striking
``by carrier or person under subsection (a)(1) of this
section, by contract under subsection (a)(4) of this section,
or'' and inserting ``by contract under subsection (a)(3) of
this section or''.
(b) Eliminating Restriction on Length of Contracts.--(1)
Section 5005(b)(1) of title 39, United States Code, is
amended by striking ``(or where the Postal Service determines
that special conditions or the use of special equipment
warrants, not in excess of 6 years)'' and inserting ``(or
such longer period of time as may be determined by the Postal
Service to be advisable or appropriate)''.
(2) Section 5402(d) of such title 39 is amended by striking
``for a period of not more than 4 years''.
(3) Section 5605 of such title 39 is amended by striking
``for periods of not in excess of 4 years''.
(c) Technical and Conforming Amendment.--The table of
chapters for part V of title 39, United States Code, is
amended by repealing the item relating to chapter 52.

SEC. 1003. REDUCED RATES.

Section 3626 of title 39, United States Code, is amended--
(1) in subsection (a), by striking all before paragraph (4)
and inserting the following:
``(a)(1) Except as otherwise provided in this section,
rates of postage for a class of mail or kind of mailer under
former section 4358, 4452(b), 4452(c), 4554(b), or 4554(c) of
this title shall be established in accordance with section
3622.
``(2) For the purpose of this subsection, the term
`regular-rate category' means any class of mail or kind of
mailer, other than a class or kind referred to in section
2401(c).
``(3) Rates of postage for a class of mail or kind of
mailer under former section 4358(a) through (c) of this title
shall be established so that postage on each mailing of such
mail reflects its preferred status as compared to the postage
for the most closely corresponding regular-rate category
mailing.'';
(2) in subsection (g), by adding at the end the following:
``(3) For purposes of this section and former section
4358(a) through (c) of this title, those copies of an issue
of a publication entered within the county in which it is
published, but distributed outside such county on postal
carrier routes originating in the county of publication,
shall be treated as if they were distributed within the
county of publication.
``(4)(A) In the case of an issue of a publication, any
number of copies of which are mailed at the rates of postage
for a class of mail or kind of mailer under former section
4358(a) through (c) of this title, any copies of such issue
which are distributed outside the county of publication
(excluding any copies subject to paragraph (3)) shall be
subject to rates of postage provided for under this
paragraph.
``(B) The rates of postage applicable to mail under this
paragraph shall be established in accordance with section
3622.
``(C) This paragraph shall not apply with respect to an
issue of a publication unless the total paid circulation of
such issue outside the county of publication (not counting
recipients of copies subject to paragraph (3)) is less than
5,000.''; and
(3) by adding at the end the following:
``(n) In the administration of this section, matter that
satisfies the circulation standards for requester
publications shall not be excluded from being mailed at the
rates for mail under former section 4358 solely because such
matter is designed primarily for free circulation or for
circulation at nominal rates, or fails to meet the
requirements of former section 4354(a)(5).''.

SEC. 1004. SENSE OF CONGRESS REGARDING POSTAL SERVICE
PURCHASING REFORM.

It is the sense of Congress that the Postal Service
should--
(1) ensure the fair and consistent treatment of suppliers
and contractors in its current purchasing policies and any
revision or replacement of such policies, such as through the
use of competitive contract award procedures, effective
dispute resolution mechanisms, and socioeconomic programs;
and
(2) implement commercial best practices in Postal Service
purchasing policies to achieve greater efficiency and cost
savings as recommended in July 2003 by the President's
Commission on the United States Postal Service, in a manner
that is compatible with the fair and consistent treatment of
suppliers and contractors, as befitting an establishment in
the United States Government.
Mr. FRIST. Mr. President, I ask unanimous consent that the amendments
at the desk be agreed to, the committee-reported amendment, as amended,
be agreed to, and the bill, as amended, be read a third time.
The PRESIDING OFFICER. Without objection, it is so ordered.
The amendments (Nos. 2750, 2751, 2752, and 2753) were agreed to, as
follows:

AMENDMENT NO. 2750

(Purpose: To modify provisions relating to objectives, unused rate
adjustment authority, transition rules, rate and service complaints,
and for other purposes)

On page 133, line 25, insert before the colon ``, each of
which shall be applied in conjunction with the others''.
On page 134, between lines 21 and 22, insert the following:
``(8) To establish and maintain a just and reasonable
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 magnitude
within, between, or among classes of mail.
On page 135, strike lines 1 through 3.
On page 135, line 4, strike ``(2)'' and insert ``(1)''.
On page 135, line 9, strike ``(3)'' and insert ``(2)''.
On page 135, line 15, strike ``(4)'' and insert ``(3)''.
On page 135, line 19, strike ``(5)'' and insert ``(4)''.
On page 135, line 22, strike ``(6)'' and insert ``(5)''.
On page 136, line 1, strike ``(7)'' and insert ``(6)''.
On page 136, line 5, strike ``(8)'' and insert ``(7)''.
On page 136, line 8, strike ``(9)'' and insert ``(8)''.
On page 136, line 12, strike ``(10)'' and insert ``(9)''.
On page 136, line 16, strike ``(11)'' and insert ``(10)''.
On page 136, line 19, strike ``(12)'' and insert ``(11)''.
On page 136, line 21, strike ``(13)'' and insert ``(12)''.
On page 137, line 1, strike ``(14)'' and insert ``(13)''.
On page 138, line 19, strike ``The'' and insert ``Except as
provided under subparagraph (C), the''.
On page 139, strike lines 8 through 17, and insert the
following:
``(C) Use of unused rate authority.--
``(i) Definition.--In this subparagraph, the term `unused
rate adjustment authority' means the difference between--

``(I) the maximum amount of a rate adjustment that the
Postal Service is authorized 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.
``(iii) Limitations.--In exercising the authority under
clause (ii) in any year, the Postal Service--

``(I) may use unused rate adjustment authority 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 adjustment 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 paragraph (1) by more than 2 percentage
points.

On page 142, strike lines 5 through 10, and insert the
following:
``(f) Transition Rule.--For the 1-year period beginning on
the date of enactment of this section, 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 section. Proceedings initiated to
consider a request for a recommended decision filed by the
Postal Service during that 1-year period shall be completed
in accordance with subchapter II of chapter 36 of this title
and implementing regulations, as in effect before the date of
enactment of this section.''.
On page 162, line 10, strike all through page 164, line 9,
and insert the following:

``Sec. 3662. Rate and service complaints

[[Page S927]]

Commission fails to act in the time and manner required by
paragraph (1) shall be treated in the same way as if it had
been dismissed under an order issued by the Commission on the
last day allowable for the issuance of such order under
paragraph (1).
``(c) Action Required if Complaint Found To Be Justified.--
If the Postal Regulatory Commission finds upon clear and
convincing evidence the complaint to be justified, it shall
order that the Postal Service take such action as is
necessary to achieve compliance with the applicable
requirements and to remedy the effects of any noncompliance.
``(d) Authority To Order Fines in Cases of Deliberate
Noncompliance.--In addition, in cases of deliberate
noncompliance by the Postal Service with the requirements of
this title, the Postal Regulatory Commission may order, based
on the nature, circumstances, extent, and seriousness of the
noncompliance, a fine (in the amount specified by the
Commission in its order) for each incidence of noncompliance.
Fines resulting from the provision of competitive products
shall be paid from the Competitive Products Fund established
in section 2011. All receipts from fines imposed under this
subsection shall be deposited in the general fund of the
Treasury of the United States.
On page 168, line 11, strike ``Commission'' and insert
``Postal Service''.

AMENDMENT NO. 2751

(Purpose: To provide for procedures by the Postal Service to give
notice on certain actions affecting communities)

On page 171, line 6, strike ``and''.
On page 171, line 10, strike the period and insert ``;
and''.
On page 171, between lines 10 and 11, insert the following:
(D) procedures that the Postal Service will use to--
(i) provide adequate public notice to communities
potentially affected by a proposed rationalization decision;
(ii) make available, upon request, any data, analyses, or
other information considered by the Postal Service in making
the proposed decision;
(iii) afford affected persons ample opportunity to provide
input on the proposed decision; and
(iv) take such comments into account in making a final
decision.
On page 172, between lines 22 and 23, insert the following:
(5) Existing efforts.--Effective on the date of enactment
of this Act, the Postal Service may not close or consolidate
any processing or logistics facilities without using
procedures for public notice and input consistent with those
described under paragraph (3)(D).

AMENDMENT NO. 2752

(Purpose: To modify qualifications and terms of Governors of the United
States Postal Service)

On page 202, lines 10 through 14, strike ``demonstrated
ability in managing organizations or corporations (in either
the public or private sector) of substantial size. Experience
in the fields of law and accounting shall be considered in
making appointments of Governors.'' and insert ``experience
in the fields of public service, law or accounting or on
their demonstrated ability in managing organizations or
corporations (in either the public or private sector) of
substantial size.''
On page 203, line 14, strike ``5'' and insert ``7''.
On page 203, line 17, strike ``5'' and insert ``7''.
On page 205, line 9, strike ``3'' and insert ``2''.

AMENDMENT NO. 2753

(Purpose: To modify contracts for the transportation of mail by air,
and for other purposes)

On page 256, add after line 3, the following:

SEC. 1005. CONTRACTS FOR TRANSPORTATION OF MAIL BY AIR.

(a) Definitions.--Section 5402(a) of title 39, United
States Code, is amended--
(1) in paragraph (4), by striking ``(g)(1)(D)(i)'' and
inserting ``(g)(1)(A)(iv)(I)'';
(2) in paragraph (5), by striking ``(g)(1)(D)(i)'' and
inserting ``(g)(1)(A)(iv)(I)'';
(3) in paragraph (6), by striking ``only'';
(4) in paragraph (8), by striking ``rates paid to a bush
carrier'' and inserting ``linehaul rates and a single
terminal handling payment at a bush terminal handling rate
paid to a bush carrier'';
(5) in paragraph (11), by striking ``(g)(1)(D)(ii)'' and
inserting ``(g)(1)(A)(iv)(II)'';
(6) in paragraph (13)--
(A) in subparagraph (A)--
(i) by striking ``clause (i) or (ii) of subsection
(g)(1)(D)'' and inserting ``subclause (I) or (II) of
subsection (g)(1)(A)(iv)''; and
(ii) by striking ``and'' after the semicolon;
(B) in subparagraph (B), by adding ``and'' after the
semicolon; and
(C) by adding at the end the following:
``(C) is not comprised of previously qualified existing
mainline carriers as a result of merger or sale;'';
(7) in paragraph (18), by striking ``bush routes'' and
inserting ``routes''; and
(8) in paragraph (22), by striking ``bush routes'' and
inserting ``routes''.
(b) Nonpriority Bypass Mail.--Section 5402(g) of title 39,
United States Code, is amended--
(1) in paragraph (2)(C), by inserting ``or a destination
city'' after ``acceptance point and a hub'';
(2) in paragraph (3), by adding at the end the following:
``(C) When a new hub results from a change in a
determination under subparagraph (B), mail tender from that
hub during the 12-month period beginning on the effective
date of that change shall be based on the passenger and
freight shares to the destinations of the affected hub or
hubs resulting in the new hub.''; and
(3) in paragraph (5)(A)(i), by striking ``(g)(1)(D)(ii)''
and inserting ``(g)(1)(A)(iv)(II)''.
(c) Equitable Tender.--Section 5402(h) of title 39, United
States Code, is amended--
(1) in paragraph (1), by inserting ``bush'' after
``providing scheduled'';
(2) by striking paragraph (3) and inserting the following:
``(3)(A) Except as provided under subparagraph (C), a new
or existing 121 bush passenger carrier qualified under
subsection (g)(1) shall be exempt from the requirements under
paragraphs (1)(B) and (2)(A) on a city pair route for a
period which shall extend for--
``(i) 1 year;
``(ii) 1 year in addition to the extension under clause (i)
if, as of the conclusion of the first year, such carrier has
been providing not less than 5 percent of the passenger
service on that route (as calculated under paragraph (5));
and
``(iii) 1 year in addition to the extension under clause
(ii) if, as of the conclusion of the second year, such
carrier has been providing not less than 10 percent of the
passenger service on that route (as calculated under
paragraph (5)).
``(B)(i) The first 3 121 bush passenger carriers entitled
to the exemptions under subparagraph (A) on any city pair
route shall divide no more than an additional 10 percent of
the mail, apportioned equally, comprised of no more than--
``(I) 5 percent of the share of each qualified passenger
carrier servicing that route that is not a 121 bush passenger
carrier; and
``(II) 5 percent of the share of each nonpassenger carrier
servicing that route that transports 25 percent or more of
the total nonmail freight under subsection (i)(1).
``(ii) Additional 121 bush passenger carriers entering
service on that city pair route after the first 3 shall not
receive any additional mail share.
``(iii) If any 121 bush passenger carrier on a city pair
route receiving an additional share of the mail under clause
(ii) discontinues service on that route, the 121 bush
passenger carrier that has been providing the longest period
of service on that route and is otherwise eligible but is not
receiving a share by reason of clause (ii), shall receive the
share of the carrier discontinuing service.
``(C) 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 in the State of Alaska, the
Postal Service shall tender 20 percent of the nonpriority
bypass mail described under paragraph (1) to the passenger
carrier or aircraft providing at least 10 percent of the
passenger service on such route.'';
(3) in paragraph (5)(A)--
(A) by striking ``(i)'' after ``(A)''; and
(B) by striking clause (ii).
(d) Percent of Nonmail Freight.--Section 5402(i)(6) of
title 39, United States Code, is amended--
(1) by striking ``(A)'' after ``(6)''; and
(2) by striking subparagraph (B).
(e) Percent of Tender Rate.--Section 5402(j)(3)(B) of title
39, United States Code, is amended by striking ``bush routes
in the State of Alaska'' and inserting ``routes served
exclusively by bush carriers in the State of Alaska''.
(f) Determination of Rates.--Section 5402(k) of title 39,
United States Code, is amended by striking paragraph (5).
(g) Technical and Conforming Amendment.--Section 5402(p)(3)
of title 39, United States Code, is amended by striking
``(g)(1)(D)'' and inserting ``(g)(1)(A)(iv)''.
(h) Effective Date.--
(1) In general.--Except as provided under paragraph (2),
this section shall take effect on the date of enactment of
this Act.
(2) Equitable tender.--Subsection (c) shall take effect on
July 1, 2006.
The committee amendment in the nature of a substitute, as amended,
was agreed to.
The bill was ordered to be engrossed for a third reading and was read
the third time.
Mr. FRIST. Mr. President, I further ask unanimous consent that the
Senate now proceed to Calendar No. 176, H.R. 22.
The PRESIDING OFFICER. The clerk will report the bill by title.
The assistant legislative clerk read as follows:

A bill (H.R. 22) to reform the postal laws of the United
States.

Mr. FRIST. Mr. President, I now ask consent that all after the
enacting clause be stricken, the text of S. 662, as amended, be
inserted in lieu thereof, and the bill, as amended, be read a third
time and passed, and the Senate insist on its amendment, request a
conference with the House, and the Chair

[[Page S928]]

be authorized to appoint conferees with a ratio of 5 to 3.
The PRESIDING OFFICER. Without objection, it is so ordered.
The bill (H.R. 22), as amended, was read the third time and passed,
as follows:

H.R. 22

Resolved, That the bill from the House of Representatives
(H.R. 22) entitled ``An Act to reform the postal laws of the
United States.'', do pass with the following amendment:
Strike out all after the enacting clause and insert:

SECTION 1. SHORT TITLE; TABLE OF CONTENTS.

(a) Short Title.--This Act may be cited as the ``Postal
Accountability and Enhancement Act''.
(b) Table of Contents.--The table of contents for this Act
is as follows:

Sec. 1. Short title; table of contents.

TITLE I--DEFINITIONS; POSTAL SERVICES

Sec. 101. Definitions.
Sec. 102. Postal Services.

TITLE II--MODERN RATE REGULATION

TITLE III--MODERN SERVICE STANDARDS

Sec. 301. Establishment of modern service standards.
Sec. 302. Postal service plan.

TITLE IV--PROVISIONS RELATING TO FAIR COMPETITION

TITLE V--GENERAL PROVISIONS

TITLE VI--ENHANCED REGULATORY COMMISSION

TITLE VII--EVALUATIONS

TITLE VIII--POSTAL SERVICE RETIREMENT AND HEALTH BENEFITS FUNDING

Sec. 801. Short title.
Sec. 802. Civil Service Retirement System.
Sec. 803. Health insurance.
Sec. 804. Repeal of disposition of savings provision.
Sec. 805. Effective dates.

TITLE IX--COMPENSATION FOR WORK INJURIES

Sec. 901. Temporary disability; continuation of pay.
Sec. 902. Disability retirement for postal employees.

TITLE X--MISCELLANEOUS

Sec. 1001. Employment of postal police officers.
Sec. 1002. Obsolete provisions.
Sec. 1003. Reduced rates.
Sec. 1004. Sense of Congress regarding Postal Service purchasing
reform.
Sec. 1005. Contracts for transportation of mail by air.

TITLE I--DEFINITIONS; POSTAL SERVICES

SEC. 101. DEFINITIONS.

SEC. 102. POSTAL SERVICES.

TITLE II--MODERN RATE REGULATION

SEC. 201. PROVISIONS RELATING TO MARKET-DOMINANT PRODUCTS.

(a) In General.--Chapter 36 of title 39, United States
Code, is amended by striking sections 3621 and 3622 and
inserting the following:

``Sec. 3621. Applicability; definitions

``Sec. 3622. Modern rate regulation

``(a) Authority Generally.--The Postal Regulatory
Commission shall, within 12 months after the date of
enactment of this section, by regulation establish (and may
from time to time thereafter by regulation revise) a modern
system for regulating rates and classes for market-dominant
products.
``(b) Objectives.--Such system shall be designed to achieve
the following objectives, each of which shall be applied in
conjunction with the others:
``(1) To reduce the administrative burden and increase the
transparency of the ratemaking process while affording
reasonable opportunities for interested parties to
participate in that process.
``(2) To create predictability and stability in rates.
``(3) To maximize incentives to reduce costs and increase
efficiency.
``(4) To enhance mail security and deter terrorism by
promoting secure, sender-identified mail.
``(5) To allow the Postal Service pricing flexibility,
including the ability to use pricing to promote intelligent
mail and encourage increased mail volume during nonpeak
periods.
``(6) To assure adequate revenues, including retained
earnings, to maintain financial stability and meet the
service standards established under section 3691.
``(7) To allocate the total institutional costs of the
Postal Service equitably between market-dominant and
competitive products.
``(8) To establish and maintain a just and reasonable
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 magnitude
within, between, or among classes of mail.
``(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 indirect postal costs
attributable to each class or type of mail service through
reliably identified causal relationships plus that portion of
all other costs of the Postal Service reasonably assignable
to such class or type;
``(3) the effect of rate increases upon the general public,
business mail users, and enterprises in the private sector of
the economy engaged in the delivery of mail matter other than
letters;
``(4) the available alternative means of sending and
receiving letters and other mail matter at reasonable costs;
``(5) the degree of preparation of mail for delivery 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 operational 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;

[[Page S929]]

``(9) the importance of providing classifications with
extremely high degrees of reliability and speed of delivery
and of providing those that do not require high degrees of
reliability and speed of delivery;
``(10) the desirability of special classifications from the
point of view of both the user and of the Postal Service;
``(11) the educational, cultural, scientific, and
informational value to the recipient of mail matter;
``(12) the need for the Postal Service to increase its
efficiency and reduce its costs, including infrastructure
costs, to help maintain high quality, affordable, universal
postal service; and
``(13) 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 products 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
intention 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 implementation of
any adjustment in rates under this section--
``(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 subparagraph (A);
``(D) establish procedures whereby the Postal 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), establish procedures whereby rates
may be adjusted on an expedited basis due to unexpected and
extraordinary circumstances.
``(2) Limitations.--
``(A) Classes of mail.--Except as provided under
subparagraph (C), the annual limitations 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 Accountability 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 increase 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 authority' means the difference between--

``(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 Regulatory Commission
under subsection (a).
``(2) Regulations.--As part of the regulations established
under subsection (a), the Postal Regulatory Commission shall
establish rules for workshare discounts that 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 workshare 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 result of the workshare
activity will be phased out over a limited period of time;
``(B) a reduction in the discount would--
``(i) 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 category
or subclass subject to the discount below what it otherwise
would have been if the discount had not been reduced to costs
avoided;
``(ii) result in a further increase in the rates paid by
mailers not able to take advantage of the discount; or
``(iii) impede the efficient operation of the Postal
Service;
``(C) the amount of the discount above costs avoided--
``(i) is necessary to mitigate rate shock; and
``(ii) will be phased out over time; or
``(D) the discount is provided in connection with
subclasses of mail consisting exclusively of mail matter of
educational, cultural, scientific, or informational value.
``(3) Report.--Whenever the Postal Service establishes or
maintains a workshare discount, the Postal Service shall, at
the time it publishes the workshare discount rate, submit to
the Postal Regulatory Commission a detailed report that--
``(A) explains the Postal Service's reasons for
establishing or maintaining the rate;
``(B) sets forth the data, economic analyses, and other
information relied on by the Postal Service to justify the
rate; and
``(C) certifies that the discount will not adversely affect
rates or services provided to users of postal services who do
not take advantage of the discount rate.
``(f) Transition Rule.--For the 1-year period beginning on
the date of enactment of this section, 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 section. Proceedings initiated to
consider a request for a recommended decision filed by the
Postal Service during that 1-year period shall be completed
in accordance with subchapter II of chapter 36 of this title
and implementing regulations, as in effect before the date of
enactment of this section.''.
(b) Repealed Sections.--Sections 3623, 3624, 3625, and 3628
of title 39, United States Code, are repealed.
(c) Redesignation.--Chapter 36 of title 39, United States
Code (as in effect after the amendment made by section 601,
but before the amendment made by section 202) is amended by
striking the heading for subchapter II and inserting the
following:

``SUBCHAPTER I--PROVISIONS RELATING TO MARKET-DOMINANT PRODUCTS''.

SEC. 202. PROVISIONS RELATING TO COMPETITIVE PRODUCTS.

Chapter 36 of title 39, United States Code, is amended by
inserting after section 3629 the following:

``SUBCHAPTER II--PROVISIONS RELATING TO COMPETITIVE PRODUCTS

``Sec. 3631. Applicability; definitions and updates

``(a) Applicability.--This subchapter shall apply with
respect to--
``(1) priority mail;
``(2) expedited mail;
``(3) bulk parcel post;
``(4) bulk international mail; and
``(5) mailgrams;

subject to subsection (d) and any changes the Postal
Regulatory Commission may make under section 3642.
``(b) Definition.--For purposes of this subchapter, the
term `costs attributable', as used with respect to a product,
means the direct and indirect postal costs attributable to
such product through reliably identified causal
relationships.
``(c) Rule of Construction.--Mail matter referred to in
subsection (a) shall, for purposes of this subchapter, be
considered to have the meaning given to such mail matter
under the mail classification schedule.
``(d) Limitation.--Notwithstanding any other provision of
this section, nothing in this subchapter shall be considered
to apply with respect to any product then currently in the
market-dominant category of mail.

``Sec. 3632. Action of the Governors

``Sec. 3633. Provisions applicable to rates for competitive
products

[[Page S930]]

``(2) ensure that each competitive product covers its costs
attributable; and
``(3) ensure that all competitive products collectively
cover their share of the institutional costs of the Postal
Service.
``(b) Review of Minimum Contribution.--Five years after the
date of enactment of this section, and every 5 years
thereafter, the Postal Regulatory Commission shall conduct a
review to determine whether the institutional costs
contribution requirement under subsection (a)(3) should be
retained in its current form, modified, or eliminated. In
making its determination, the Commission shall consider all
relevant circumstances, including the prevailing competitive
conditions in the market, and the degree to which any costs
are uniquely or disproportionately associated with any
competitive products.''.

SEC. 203. PROVISIONS RELATING TO EXPERIMENTAL AND NEW
PRODUCTS.

Subchapter III of chapter 36 of title 39, United States
Code, is amended to read as follows:

``SUBCHAPTER III--PROVISIONS RELATING TO EXPERIMENTAL AND NEW PRODUCTS

``Sec. 3641. Market tests of experimental products

``(a) Authority.--
``(1) In general.--The Postal Service may conduct market
tests of experimental products in accordance with this
section.
``(2) Provisions waived.--A product shall not, while it is
being tested under this section, be subject to the
requirements of sections 3622, 3633, or 3642, or regulations
promulgated under those sections.
``(b) Conditions.--A product may not be tested under this
section unless it satisfies each of the following:
``(1) Significantly different product.--The product is,
from the viewpoint of the mail users, significantly different
from all products offered by the Postal Service within the 2-
year period preceding the start of the test.
``(2) Market disruption.--The introduction or continued
offering of the product will not create an unfair or
otherwise inappropriate competitive advantage for the Postal
Service or any mailer, particularly in regard to small
business concerns (as defined under subsection (h)).
``(3) Correct categorization.--The Postal Service
identifies the product, for the purpose of a test under this
section, as either market-dominant or competitive, consistent
with the criteria under section 3642(b)(1). Costs and
revenues attributable to a product identified as competitive
shall be included in any determination under section
3633(3)(relating to provisions applicable to competitive
products collectively). Any test that solely affects products
currently classified as competitive, or which provides
services ancillary to only competitive products, shall be
presumed to be in the competitive product category without
regard to whether a similar ancillary product exists for
market-dominant products.
``(c) Notice.--
``(1) In general.--At least 30 days before initiating a
market test under this section, the Postal Service shall file
with the Postal Regulatory Commission and publish in the
Federal Register a notice--
``(A) setting out the basis for the Postal Service's
determination that the market test is covered by this
section; and
``(B) describing the nature and scope of the market test.
``(2) Safeguards.--For a competitive experimental product,
the provisions of section 504(g) shall be available with
respect to any information required to be filed under
paragraph (1) to the same extent and in the same manner as in
the case of any matter described in section 504(g)(1).
Nothing in paragraph (1) shall be considered to permit or
require the publication of any information as to which
confidential treatment is accorded under the preceding
sentence (subject to the same exception as set forth in
section 504(g)(3)).
``(d) Duration.--
``(1) In general.--A market test of a product under this
section may be conducted over a period of not to exceed 24
months.
``(2) Extension authority.--If necessary in order to
determine the feasibility or desirability of a product being
tested under this section, the Postal Regulatory Commission
may, upon written application of the Postal Service (filed
not later than 60 days before the date as of which the
testing of such product would otherwise be scheduled to
terminate under paragraph (1)), extend the testing of such
product for not to exceed an additional 12 months.
``(e) Dollar-Amount Limitation.--
``(1) In general.--A product may only be tested under this
section if the total revenues that are anticipated, or in
fact received, by the Postal Service from such product do not
exceed $10,000,000 in any year, subject to paragraph (2) and
subsection (g).
``(2) Exemption authority.--The Postal Regulatory
Commission may, upon written application of the Postal
Service, exempt the market test from the limit in paragraph
(1) if the total revenues that are anticipated, or in fact
received, by the Postal Service from such product do not
exceed $50,000,000 in any year, subject to subsection (g). In
reviewing an application under this paragraph, the Postal
Regulatory Commission shall approve such application if it
determines that--
``(A) the product is likely to benefit the public and meet
an expected demand;
``(B) the product is likely to contribute to the financial
stability of the Postal Service; and
``(C) the product is not likely to result in unfair or
otherwise inappropriate competition.
``(f) Cancellation.--If the Postal Regulatory Commission at
any time determines that a market test under this section
fails to meet 1 or more of the requirements of this section,
it may order the cancellation of the test involved or take
such other action as it considers appropriate. A
determination under this subsection shall be made in
accordance with such procedures as the Commission shall by
regulation prescribe.
``(g) Adjustment for Inflation.--For purposes of each year
following the year in which occurs the deadline for the
Postal Service's first report to the Postal Regulatory
Commission under section 3652(a), each dollar amount
contained in this section shall be adjusted by the change in
the Consumer Price Index for such year (as determined under
regulations of the Commission).
``(h) Definition of a Small Business Concern.--The criteria
used in defining small business concerns or otherwise
categorizing business concerns as small business concerns
shall, for purposes of this section, be established by the
Postal Regulatory Commission in conformance with the
requirements of section 3 of the Small Business Act.
``(i) Effective Date.--Market tests under this subchapter
may be conducted in any year beginning with the first year in
which occurs the deadline for the Postal Service's first
report to the Postal Regulatory Commission under section
3652(a).

``Sec. 3642. New products and transfers of products between
the market-dominant and competitive categories of mail

SEC. 204. REPORTING REQUIREMENTS AND RELATED PROVISIONS.

``SUBCHAPTER V--POSTAL SERVICES, COMPLAINTS, AND JUDICIAL REVIEW''; and

(2) by striking the heading for subchapter V and inserting
the following:

[[Page S931]]

``SUBCHAPTER VI--GENERAL''.

(b) Reports and Compliance.--Chapter 36 of title 39, United
States Code, is amended by inserting after subchapter III the
following:

``SUBCHAPTER IV--REPORTING REQUIREMENTS AND RELATED PROVISIONS

``Sec. 3651. Annual reports by the Commission

``Sec. 3652. Annual reports to the Commission

Before submitting a report under this subsection (including
any annex to the report and the information required under
subsection (b)), the Postal Service shall have the
information contained in such report (and annex) audited by
the Inspector General. The results of any such audit shall be
submitted along with the report to which it pertains.
``(b) Information Relating to Workshare Discounts.--The
Postal Service shall include, in each report under subsection
(a), the following information with respect to each market-
dominant product for which a workshare discount was in effect
during the period covered by such report:
``(1) The per-item cost avoided by the Postal Service by
virtue of such discount.
``(2) The percentage of such per-item cost avoided that the
per-item workshare discount represents.
``(3) The per-item contribution made to institutional
costs.
``(c) Service Agreements and Market Tests.--In carrying out
subsections (a) and (b) with respect to service agreements
and experimental products offered through market tests under
section 3641 in a year, the Postal Service--
``(1) may report summary data on the costs, revenues, and
quality of service by service agreement and market test; and
``(2) shall report such data as the Postal Regulatory
Commission requires.
``(d) Supporting Matter.--The Postal Regulatory Commission
shall have access, in accordance with such regulations as the
Commission shall prescribe, to the working papers and any
other supporting matter of the Postal Service and the
Inspector General in connection with any information
submitted under this section.
``(e) Content and Form of Reports.--
``(1) In general.--The Postal Regulatory Commission shall,
by regulation, prescribe the content and form of the public
reports (and any nonpublic annex and supporting matter
relating to the report) to be provided by the Postal Service
under this section. In carrying out this subsection, the
Commission shall give due consideration to--
``(A) providing the public with timely, adequate
information to assess the lawfulness of rates charged;
``(B) avoiding unnecessary or unwarranted administrative
effort and expense on the part of the Postal Service; and
``(C) protecting the confidentiality of commercially
sensitive information.
``(2) Revised requirements.--The Commission may, on its own
motion or on request of an interested party, initiate
proceedings (to be conducted in accordance with regulations
that the Commission shall prescribe) to improve the quality,
accuracy, or completeness of Postal Service data required by
the Commission under this subsection whenever it shall appear
that--
``(A) the attribution of costs or revenues to products has
become significantly inaccurate or can be significantly
improved;
``(B) the quality of service data has become significantly
inaccurate or can be significantly improved; or
``(C) such revisions are, in the judgment of the
Commission, otherwise necessitated by the public interest.
``(f) Confidential Information.--
``(1) In general.--If the Postal Service determines that
any document or portion of a document, or other matter, which
it provides to the Postal Regulatory Commission in a
nonpublic annex under this section or under subsection (d)
contains information which is described in section 410(c) of
this title, or exempt from public disclosure under section
552(b) of title 5, the Postal Service shall, at the time of
providing such matter to the Commission, notify the
Commission of its determination, in writing, and describe
with particularity the documents (or portions of documents)
or other matter for which confidentiality is sought and the
reasons therefor.
``(2) Treatment.--Any information or other matter described
in paragraph (1) to which the Commission gains access under
this section shall be subject to paragraphs (2) and (3) of
section 504(g) in the same way as if the Commission had
received notification with respect to such matter under
section 504(g)(1).
``(g) Other Reports.--The Postal Service shall submit to
the Postal Regulatory Commission, together with any other
submission that the Postal Service is required to make under
this section in a year, copies of its then most recent--
``(1) comprehensive statement under section 2401(e);
``(2) strategic plan under section 2802;
``(3) performance plan under section 2803; and
``(4) program performance reports under section 2804.

``Sec. 3653. Annual determination of compliance

If, with respect to a year, no instance of noncompliance is
found under this subsection to have occurred in such year,
the written determination shall be to that effect.
``(c) If Any Noncompliance Is Found.--If, for a year, a
timely written determination of noncompliance is made under
subsection (b), the Postal Regulatory Commission shall take
any appropriate remedial action authorized by section
3662(c).
``(d) Rebuttable Presumption.--A timely written
determination described in the last sentence of subsection
(b) shall, for purposes of any proceeding under section 3662,
create a rebuttable presumption of compliance by the Postal
Service (with regard to the matters described under
paragraphs (1) and (2) of subsection (b)) during the year to
which such determination relates.''.

SEC. 205. COMPLAINTS; APPELLATE REVIEW AND ENFORCEMENT.

Chapter 36 of title 39, United States Code, is amended by
striking sections 3662 and 3663 and inserting the following:

``Sec. 3662. Rate and service complaints

``(a) In General.--Any interested party (including an
officer of the Postal Regulatory Commission representing the
interests of the general public) who believes the Postal
Service is not operating in conformance with the requirements
of the provisions of chapter 1 (except section 101(c)),
sections 401, 403, 404, 404a, 601, or this chapter (or
regulations promulgated under any of those provisions) may
lodge a complaint with the Postal Regulatory Commission in
such form and manner as the Commission may prescribe.
``(b) Prompt Response Required.--
``(1) In general.--The Postal Regulatory Commission shall,
within 90 days after receiving a complaint under subsection
(a)--
``(A) either--
``(i) upon a finding that such complaint raises substantial
and material issues of fact or law, begin proceedings on such
complaint; or
``(ii) issue an order dismissing the complaint; and
``(B) with respect to any action taken under subparagraph
(A) (i) or (ii), issue a written statement setting forth the
bases of its determination.
``(2) Treatment of complaints not timely acted on.--For
purposes of section 3663, any complaint under subsection (a)
on which the Commission fails to act in the time and manner
required by paragraph (1) shall be treated in the same way as
if it had been dismissed under an order issued by the
Commission on the last day allowable for the issuance of such
order under paragraph (1).
``(c) Action Required if Complaint Found To Be Justified.--
If the Postal Regulatory Commission finds upon clear and
convincing evidence the complaint to be justified, it shall
order that the Postal Service take such action as is
necessary to achieve compliance with the applicable
requirements and to remedy the effects of any noncompliance.
``(d) Authority To Order Fines in Cases of Deliberate
Noncompliance.--In addition, in cases of deliberate
noncompliance by the Postal Service with the requirements of
this title, the Postal Regulatory Commission may order, based
on the nature, circumstances, extent, and seriousness of the
noncompliance, a fine (in the amount specified by the
Commission in its order) for each incidence of noncompliance.
Fines resulting from the provision of competitive products
shall be paid from the Competitive Products Fund established
in section 2011. All receipts from fines imposed under this
subsection shall be deposited in the general fund of the
Treasury of the United States.

``Sec. 3663. Appellate review

``A person, including the Postal Service, adversely
affected or aggrieved by a final order or decision of the
Postal Regulatory Commission may, within 30 days after such
order or decision

[[Page S932]]

becomes final, institute proceedings for review thereof by
filing a petition in the United States Court of Appeals for
the District of Columbia. The court shall review the order or
decision in accordance with section 706 of title 5, and
chapter 158 and section 2112 of title 28, on the basis of the
record before the Commission.