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114th Congress }                                           { Rept. 114-858
                        HOUSE OF REPRESENTATIVES
 2d Session    }                                           { Part 1

======================================================================
 
                   POSTAL SERVICE REFORM ACT OF 2016

                                _______
                                

December 5, 2016.--Committed to the Committee of the Whole House on the 
              State of the Union and ordered to be printed

                                _______
                                

 Mr. Chaffetz, from the Committee on Oversight and Government Reform, 
                        submitted the following

                              R E P O R T

                        [To accompany H.R. 5714]

      [Including cost estimate of the Congressional Budget Office]

    The Committee on Oversight and Government Reform, to whom 
was referred the bill (H.R. 5714) to restore the financial 
solvency and improve the governance of the United States Postal 
Service in order to ensure the efficient and affordable 
nationwide delivery of mail, and for other purposes, having 
considered the same, report favorably thereon without amendment 
and recommend that the bill do pass.

                                CONTENTS

                                                                   Page
Committee Statement and Views....................................     2
Section-by-Section...............................................    17
Explanation of Amendments........................................    30
Committee Consideration..........................................    30
Roll Call Votes..................................................    30
Application of Law to the Legislative Branch.....................    30
Statement of Oversight Findings and Recommendations of the 
  Committee......................................................    30
Statement of General Performance Goals and Objectives............    30
Duplication of Federal Programs..................................    31
Disclosure of Directed Rule Makings..............................    31
Federal Advisory Committee Act...................................    31
Unfunded Mandate Statement.......................................    31
Earmark Identification...........................................    31
Committee Estimate...............................................    31
Budget Authority and Congressional Budget Office Cost Estimate...    31
Changes in Existing Law Made by the Bill, as Reported............    47

                     Committee Statement and Views


                          PURPOSE AND SUMMARY

    H.R. 5714, the Postal Service Reform Act of 2016 (PSRA), 
would restore the solvency of the United States Postal Service 
and ensure the efficient and affordable nation-wide delivery of 
mail. To accomplish these goals, the legislation would make 
significant reforms in retiree health care, delivery 
efficiency, governance, innovation, and accounting.

                  BACKGROUND AND NEED FOR LEGISLATION

Background

    The United States Postal Service traces its beginning to 
July 26, 1775 when the Second Continental Congress created ``a 
line of posts'' under the administration of a Postmaster 
General of the ``United Colonies.''\1\ In the more than 200 
years since it was founded, the Postal Service's mission has 
been largely unchanged: ``to bind the Nation together through 
the personal, educational, literary, and business 
correspondence of the people.''\2\ To help fulfill this 
responsibility, the agency has also been granted two federal 
monopolies: one on First-Class Mail and a second on access to 
the mailbox.\3\
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    \1\U.S. Postal Serv., The History of the United States Postal 
Service, available at https://about.usps.com/publications/pub100/
pub100_001.htm.
    \2\39 U.S.C. Sec. 101(a).
    \3\18 U.S.C. Sec. Sec. 1693-1699, 1725 and 39 U.S.C. Sec. 601-06.
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    For almost one hundred years, from 1872 to 1970, the agency 
was organized as the cabinet-level Post Office Department 
(POD), postage rates were set by federal statute, and the 
agency was partially subsidized with federal tax dollars. As a 
result, the POD was dependent on both political management and 
the appropriations process, even as the challenges of 
delivering mail to a growing nation became more and more 
complex. By 1970, the nation's postal infrastructure was 
crumbling and in March of that year, postal strikes broke out 
across the nation.\4\ Eventually, more than 150,000 POD 
employees joined these strikes in protesting low wages and 
unsafe working conditions. The strikes accelerated work on 
legislation already in progress to overhaul the nation's postal 
system.\5\
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    \4\President's Comm'n. on Postal Organization, Towards Postal 
Excellence (June 1968), available at http://hdl.handle.net/2027/
mdp.39015078700625.
    \5\U.S. Postal Serv. Office of Inspector Gen., The Postal Strike of 
1970, available at https://www.uspsoig.gov/blog/postal-strike-1970.
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    On August 12, 1970, President Richard Nixon signed the 
Postal Reorganization Act (PRA) into law, just months after the 
two-week strike ended.\6\ This law transformed the POD into an 
independent establishment of the executive branch called the 
United States Postal Service. The PRA eliminated direct 
political control of the Postal Service, and required the new 
entity to be self-funding by the time taxpayer subsidies phased 
out 10 years after the bill's enactment. The PRA granted postal 
employees the right to bargain collectively and granted the 
Postal Service access to credit through the U.S. Department of 
the Treasury so it would have the ability to invest in long-
term infrastructure projects. The PRA also created the Postal 
Rate Commission to regulate the Postal Service and approve the 
Postal Service's rate proposals.
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    \6\Postal Reorganization Act, Pub. L. No. 91-375 (1970).
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    Following enactment of the PRA, the Postal Service improved 
postal working conditions and upgraded the agency's 
infrastructure. However, the PRA included insufficient 
incentives for the Postal Service to become more efficient and 
cost-effective over the long-term, as Postmasters General could 
simply request rate increases if revenue was insufficient.
    By the early 2000s, the spread of the Internet threatened 
the long-term solvency of the Postal Service as communications 
and other transactions were increasingly conducted in 
electronic formats. Although mail volume had risen for nearly 
200 years, by 2003, long-term projections began to show that 
the growth of the Internet could significantly reduce future 
mail volume.
    Further, the Postal Service did not have the resources to 
meet rising retiree health care costs in a time of diminishing 
mail volumes. While the Postal Service set aside funds 
necessary to pay the full projected costs of employee pensions, 
the Postal Service had never set aside the funds necessary to 
pay the full costs of retiree health care benefits. Instead, 
these costs were paid as they became due and the Postal Service 
began to accrue a large unfunded liability for the cost of 
retiree health care it was projected to be unable to meet.
    After nearly a decade of debate, the Postal Accountability 
and Enhancement Act (PAEA) was enacted into law in 2006 to 
address these challenges. The legislation required the Postal 
Service to begin paying down its largest unfunded liability, 
retiree health care, through annual installment payments over 
50 years.
    PAEA made other changes to postal governance. For example, 
in place of the negotiated rate system, PAEA instituted a 
postage rate cap intended to force the agency to eliminate 
unnecessary costs.
    Under PAEA, the Postal Service improved the efficiency of 
its operations, including reducing its workforce by 203,000 
career employees between 2006 and 2015. However, these 
efficiency gains have not been enough to offset steep decreases 
in mail volumes. Shortly after PAEA was enacted, the Great 
Recession contributed to steep drops in mail volumes. Mail 
volume dropped by nearly five percent in 2008, and by another 
almost 13 percent in 2009--a virtually unprecedented one-year 
decline. Since 2006, the total volume of mail handled by the 
Postal Service has declined by more than 28 percent.\7\ 
Unfunded liabilities have also continued to grow, and these 
trends have placed the Postal Service in a precarious financial 
position. The agency posted a net loss of $5.1 billion in 
fiscal year 2015.\8\ Over these last nine years, the Postal 
Service has lost a combined $56.8 billion.\9\ Even without a 
statutory requirement to prefund accrued retiree health care 
costs, the agency would still have lost $10.8 billion. As of 
September 30, 2015, the Postal Service also faced unfunded 
liabilities that are projected to cost more than $125 billion--
nearly double the agency's revenue of $69 billion.\10\
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    \7\U.S. Postal Serv., A decade of facts and figures, available at 
https://about.usps.com/who-we-are/postal-facts/decade-of-facts-and-
figures.htm (last visited Sept. 29, 2016).
    \8\U.S. Postal Serv., 2015 Report on Form 10-K, available at http:/
/about.usps.com/who-we-are/financials/10k-reports/fy2015.pdf (last 
visited Sept. 29, 2016).
    \9\Id. and U.S. Postal Serv., 2011 Report on Form 10-K, available 
at http://about.usps.com/who-we-are/financials/10k-reports/fy2011.pdf 
(last visited Sept. 29, 2016).
    \10\Laying Out the Reality of the United States Postal Service: 
Hearing Before the S. Comm. On Homeland Security and Governmental 
Affairs, 114th Cong. (Jan. 21, 2016) (statement of Lori Rectanus, Dir., 
Physical Infrastructure, U.S. Gov't. Accountability Office), available 
at http://www.gao.gov/assets/680/674728.pdf.
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The Postal Service Reform Act of 2016

    H.R. 5714, the Postal Service Reform Act (PSRA), is the 
product of more than a year of bipartisan negotiations and is 
designed to put the Postal Service on a path to fiscal 
stability. The bill includes a wide array of reforms that will 
provide measured financial relief to the agency, improve 
operations, enable cost-cutting, provide enhanced benefits to 
postal customers, and promote enhanced stability in postage 
rates in the near-term. While making these reforms, the bill 
protects: the agency's vital role as a tool for private 
commerce; the agency's utility for rural, low-income, and older 
Americans; and the benefits postal workers have earned during 
their careers. Critically, it also protects American taxpayers 
from being forced to bail out the agency at a potential cost of 
$100 billion, or provide a reinstituted annual operating 
subsidy.
    Even if PSRA legislation is enacted, the Postal Service 
will still be faced with $75 billion in unfunded liabilities 
and is likely to face continued declines in mail volume. 
However, the legislation will make critical adjustments in the 
Postal Service's operations and retiree health care benefits 
that are essential to ensuring that it continues as a self-
funding agency.
    The following sections discuss the rationale behind key 
reforms included in the legislation.

                Title I--Postal Service Benefits Reform


Health care reform

    Like most civilian federal agencies, the Postal Service 
currently provides health care benefits to its employees 
through the Federal Employees Health Benefits Program (FEHB). 
Managed by the Office of Personnel Management (OPM), FEHB 
currently offers enrollees the choice of more than 200 
individual health insurance plans. Under this program, the 
Postal Service pays roughly three-quarters of the premium costs 
for plans chosen by postal employees, as well as eligible 
postal retirees.\11\
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    \11\Postal retirees are eligible to retain FEHB coverage in 
retirement if the individual had been an FEHB enrollee for five 
consecutive years before retirement and if the retiree is eligible for 
an annuity immediately upon retirement. See Office of Personnel Mgmt., 
Frequently Asked Questions: Continuing FEHB Coverage into Retirement, 
available at https://www.opm.gov/faqs/topic/insure/?cid=880bfba8-8f8b-
4e64-9a72-fae98408fd0e.
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    Through fiscal year 2016, the Postal Service is responsible 
for paying both active and retiree health care premiums on a 
``pay-as-you-go'' basis and, since 2006, the Postal Service has 
also been statutorily required to prefund accrued liabilities 
for retiree health care. This mandate was included in PAEA, 
which required that by September 30, 2056, the Postal Service 
fully prefund its retiree health care liability just as the 
agency is required to prefund pension obligations.\12\ Under 
PAEA, payments to prefund the retiree health care liability 
were to average approximately $5.6 billion per year over the 
first ten years after the enactment of PAEA, and these funds 
were to be deposited into the Postal Service Retiree Health 
Benefits Funds (PSRHBF).
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    \12\Postal Accountability and Enhancement Act, Pub. L. No. 109-435 
Sec. 803 (2006).
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    Under PAEA, beginning in fiscal year 2017, the Postal 
Service will no longer be required to make ``pay-as-you-go'' 
payments for retiree health care premiums and it will no longer 
be required to make a specified prefunding payment. Instead, 
the premium payments will be drawn from the PSRHBF and the 
Postal Service will be responsible for making an annual normal 
cost payment to the fund equal to the amount of the new 
liability added to the fund in each year. The Postal Service 
will also be required to make an amortization payment to 
address the remaining existing unfunded liability.
    While PAEA sought to address the problem of long-term 
retiree health care costs, the legislation did not anticipate 
the significant and likely permanent decline in mail volume 
that began almost immediately after the enactment of the bill. 
As a result of these trends, the Postal Service has been unable 
to make most of the statutorily specified payments to prefund 
accrued liabilities for retiree health care costs. Currently, 
the agency faces $54 billion in unfunded retiree health care 
costs--the agency's single largest outstanding liability--and 
one worth nearly 80 percent of the agency's annual income.
    The PSRA would address this issue by reforming the Postal 
Service's health care benefits system for both current and 
retired employees. Specifically, the bill would create a new 
Postal Service Health Benefits Program (PSHB), which would 
operate within the framework of FEHB and be required to provide 
actuarially equivalent coverage compared to FEHB. Unlike FEHB, 
the PSHB would be open only to postal employees and retirees 
and would constitute a separate risk pool within FEHB.
    Importantly, postal employees and annuitants would not be 
forced to change their carrier or plan type once the PSHB is 
set up. Under the bill, if a current enrollee's carrier offers 
the same plan type in the PSHB, that enrollee will be required 
to sign up for coverage within the PSHB (although not 
necessarily for the same plan type or with the same carrier) 
and will no longer be eligible for enrollment in the rest of 
FEHB. If the current enrollee's carrier does not offer the same 
plan type in the PSHB, the enrollee will be allowed to remain 
in FEHB. However, if the enrollee elects to change plans, or if 
the enrollee's current plan is discontinued, the enrollee will 
be able to choose only those plans in the PSHB.
    Postal employees who are enrolled in FEHB at the time of 
their retirement will be required to enroll in a PSHB plan as 
part of the transition to retirement. However, both employees 
and annuitants are exempt from the requirement to enroll in the 
PSHB if they reside in an area where there is no PSHB plan 
available.
    Under this bill, employees will be allowed to retain their 
current carriers and plan types if they choose to do so, but 
they will likely be required to purchase that coverage through 
the PSHB instead of the FEHB.
    Additionally, the bill would require postal employees and 
retirees eligible for Medicare Part A and B enrollment to 
enroll in those programs in order to remain eligible for PSHB 
(or FEHB) coverage in retirement. Rather than requiring postal 
employees and retirees to enroll in individual Part D plans, 
the legislation directs PSHB plans to offer Part D benefits 
through an Employer Group Waiver Plan.
    While approximately three-quarters of eligible postal 
employees and retirees enroll in both Medicare Parts A and B 
upon reaching eligibility age, the remainder of postal 
employees and retirees do not enroll. As a result, this bill 
will result in a one-time addition of approximately 83,000 
individuals to the Medicare rolls, roughly the number of 
individuals who enroll in Medicare every eight days.\13\
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    \13\Dan Diamond, 10,000 People Are Now Enrolling in Medicare Every 
Day, Forbes, Jul. 13, 2015, http://www.forbes.com/sites/dandiamond/
2015/07/13/aging-in-america-10000-people-enroll-in-medicare-every-day/.
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    To minimize the overall impact of the Medicare-related 
changes on postal employees and retirees, the legislation makes 
a number of accommodations. First, the bill would automatically 
deem individuals who would need to enroll in Medicare Part A or 
Part B as enrolled in order to minimize the actions necessary 
for impacted individuals to retain PSHB coverage. The bill also 
waives the late enrollment penalty for those who will be 
enrolled in Medicare Parts A and B as a result of the bill. 
Finally, for those who would otherwise be subject to a late 
enrollment penalty, the legislation creates a three-year phase-
in period for Part B premiums. Under this phase-in period, 
during the first year of the PSHB, the Postal Service will pay 
for 75 percent of the Part B premiums for those who enroll as a 
result of the bill, 50 percent of the premiums in the second 
year, and 25 percent of the premiums in the third year. The 
Postal Service estimates that paying these premiums will cost 
$250 million over the life of the program and supports the 
provision.\14\
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    \14\E-mail from Ronald A. Stroman, Deputy Postmaster General, U.S. 
Postal Serv. to H. Comm. on Oversight & Gov't. Reform Minority Staff 
(June. 8, 2016, 12:57 p.m.) (on file with Committee).
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    Overall, the Postal Service estimates the creation of the 
PSHB and the enrollment of all retirees in Medicare Parts A and 
B will save the agency $3 billion annually. The majority of 
these savings will come from improved integration with Medicare 
and the resulting decrease in the Postal Service's unfunded 
liability for retiree health care. An analysis prepared for the 
Postal Service and shared with the Committee estimates that the 
health care reforms contained in this bill will reduce the 
Postal Service's unfunded retiree health care liability to 
approximately $400 million from its current level of $54 
billion.\15\
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    \15\Memorandum from Adam Reese, Tom Rand, and Sanjit Puri to Postal 
Management, Retiree Health Benefits (Aug. 14, 2015).
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    These changes will also address an inequity the Postal 
Service currently faces with Medicare. In 1983, as part of a 
wider Medicare reform, the Postal Service and its employees 
were required to begin paying the Medicare payroll tax. Over 
the last 33 years, the Postal Service and its employees have 
paid $29 billion in Medicare taxes into the Medicare Part A 
Trust Fund.\16\ Importantly, this figure does not take into 
account interest or inflation, making the current dollar total 
contribution much higher. Despite these contributions, the 
Postal Service is at a relative disadvantage compared to 
private sector companies. This is because private sector 
companies can require their retirees to fully enroll in 
Medicare in order to receive any additional health care 
benefits in retirement, but the Postal Service cannot require 
its retirees to enroll in Medicare. As a result, the agency is 
forced to contribute billions to Medicare for which it receives 
no benefit if its employees and retirees do not enroll in 
Medicare. By requiring full enrollment in Medicare going 
forward, the Postal Service will no longer be forced to provide 
a subsidy to Medicare and will be able to address its retiree 
health care costs like a private sector business.
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    \16\E-mail from Sheila T. Meyers, Manager, Gov't. Liaison, U.S. 
Postal Serv. to H. Comm. on Oversight & Gov't. Reform Majority Staff 
(Apr. 28, 2016, 9:48 a.m.) (on file with Committee).
---------------------------------------------------------------------------
    Without the reforms included in this bill, the Postal 
Service's retiree health care liability will continue to grow 
and the Postal Service will have no options for meeting this 
liability. It will continue to face this liability while also 
facing urgent unmet infrastructure needs and $70 billion in 
other unfunded liabilities. Without the retiree health care 
reforms in the PSRA, the Postal Service will almost certainly 
be unable to pay out all of the benefits it has promised to 
retirees over the next several decades, and if the Postal 
Service cannot pay, the result will almost certainly be an 
open-ended multi-billion-dollar annual taxpayer bailout of the 
Postal Service.

Pension reform

    H.R. 5714 would make two technical improvements to ensure 
the appropriate funding of the Postal Service's Civil Service 
Retirement System (CSRS) and Federal Employees Retirement 
System (FERS) pension liabilities. The first change would 
require that both CSRS and FERS Postal Service liabilities be 
calculated on the basis of factors specific to the Postal 
Service, rather than on the basis of the demographic and 
economic assumptions used to calculate the liabilities for the 
entire federal government.
    The second change would create a system to allow the Postal 
Service to access surplus funding, should it exist, in either 
its CSRS or FERS accounts. Under current law, if the Postal 
Service is found to be underfunded in either pension system, it 
is required to make annual amortization payments to make up for 
the shortfall within a period of 30 years for FERS and a 
slightly shorter period for CSRS, as the now-legacy pension 
program phases out. To account for possible surpluses, the PSRA 
will direct the Office of Personnel Management (OPM) to treat 
shortfalls and surpluses in the same manner. The status of 
funding will be calculated on an annual basis and if a 
shortfall is found, the Postal Service will have to make an 
amortization payment to OPM. If a surplus is found, OPM will 
make an amortization payment to the Postal Service.
    While these pension reforms are important to ensure 
accurate and fair accounting of the Postal Service's 
liabilities, they will have little short-term impact. As of the 
close of fiscal year 2015, the Postal Service had a net pension 
deficit of $24.1 billion, and these reforms are not expected to 
significantly alter the value of that deficit.\17\
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    \17\Supra note 8.
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               Title II--Postal Service Operations Reform


Governance reform

    The governing body of the Postal Service is the Board of 
Governors, which plays a similar role for the Postal Service as 
a board of directors does for a publicly held corporation. 
Under current law, the Board of Governors is comprised of 11 
members, which include nine Governors, the Postmaster General, 
and the Deputy Postmaster General. The President, with the 
advice and consent of the Senate, appoints the Governors. The 
Governors are responsible for appointing the Postmaster General 
and the Deputy Postmaster General.
    Currently, eight of the nine Governor positions are vacant, 
and the only remaining Governor's term is set to expire in 
December 2016. While timely confirmation of Governor nominees 
has become difficult in recent years, even those confirmed as 
Governors in the past often failed to meet the statutory 
requirements for Governors set forth in title 39.\18\
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    \18\39 U.S.C. Sec. 202(a)(1).
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    The PSRA would adjust that structure to make it easier to 
have a fully functioning Board. The bill would reduce the 
number of Governors to five from nine. The bill would also 
amend the duties of the Postmaster General to allow him or her 
to carry out the power of the Postal Service, although the 
power ultimately remains vested in the Board. As a result, the 
Postmaster General would be authorized to carry out day-to-day 
operations of the Postal Service while still subject to the 
overall supervision of the Board. In addition, these reforms 
ensure that vacancies on the Board of Governors do not impair 
the powers of the Board, which is permitted to act upon 
majority vote of the Board.
    The PSRA would also make small alterations in the 
eligibility requirements for appointees to the Board of 
Governors. The current statutory requirement that at least 
three Governors be ``chosen solely on the basis of their 
demonstrated ability in managing organizations or corporations 
(in either the public or private sector) that employs at least 
50,000 employees'' will be altered to an identical requirement, 
but will cite organizations of at least 10,000 employees 
instead of 50,000. The current provision overly limits the 
number of eligible individuals to a very small pool. It is the 
hope and intent of the Committee that this change will 
encourage future Presidents to nominate more individuals with 
experience in managing large organizations.
    The PSRA would also change the process for funding the 
negotiations of international postage rates for letters and 
small parcels. Currently, these rates are governed by a treaty 
developed at the Universal Postal Union, a United Nations 
organization. While the U.S. Department of State (State) is 
responsible for negotiating on behalf of the United States at 
the Universal Postal Union, the Postal Service provides full 
reimbursement for the costs incurred by State for these 
negotiations. However, by statute, the State Department is 
required to represent all American interests when negotiating a 
treaty, including those of the government, the Postal Service, 
and the private sector (including private providers of postal 
services). Given this requirement, the Postal Service's 
subsidization of State's negotiations at the Universal Postal 
Union creates the appearance of a conflict of interest.\19\ To 
eliminate this appearance, the PSRA modifies the payment 
structure to require the Postal Regulatory Commission (PRC) to 
approve the reimbursement sought by the State Department. This 
change will help ensure that the Postal Service has the same 
level of consultation authority granted to private providers of 
international delivery and postal services.
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    \19\39 U.S.C. Sec. 407(b)(2).
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    In addition, the PSRA also clarifies and confirms the PRC's 
authorities to oversee the Postal Service's compliance with its 
service standards. Specifically, the bill clarifies the PRC's 
authority to levy fines against the Postal Service, payable to 
the U.S. Treasury, for deliberate noncompliance with the 
provisions of title 39, including noncompliance with the 
service standards established by the Postal Service itself. 
This provision of the bill helps ensure that the PRC has the 
proper disciplinary authorities to enforce compliance by the 
Postal Service.

Secure mail delivery

    The primary cost savings measure included in the bill is 
found in the provisions related to delivery mode conversion. 
Specifically, the bill would require mandatory conversion of 
eligible business addresses to a more cost effective and secure 
centralized mode of delivery. The legislation also authorizes a 
program to voluntarily convert residential addresses to 
centralized delivery.
    According to the most recent U.S. Government Accountability 
Office (GAO) report on the topic of delivery mode conversions, 
the Postal Service reported that its estimated average annual 
costs for Fiscal Year 2012 varied significantly by mode of 
delivery.\20\ According to the Postal Service's reported 
figures, the average cost to deliver to each type of delivery 
point is as follows:
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    \20\U.S. Gov't Accountability Office, U.S. Postal Serv.: Delivery 
Mode Conversions Could Yield Large Savings, but More Current Data Are 
Needed (May 2014) (GAO-14-444).
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           Door delivery address: approximately $380 
        per year;
           Curbside delivery address: approximately 
        $240 per year;
           Centralized delivery address: approximately 
        $170 per year.\21\
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    \21\Id.
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    The GAO report identified certain limitations in the 
underlying data used to formulate these estimates: ``[The 
estimates] rely on data from a 1994 USPS study. In lieu of 
current data, USPS adjusted the 1994 data according to 
increases in the Consumer Price Index--an adjustment that may 
not have been the same as changes in USPS delivery costs [. . 
.].''\22\ Therefore, the bill requires that the Postal Service 
conduct a new study to ensure that accurate data is used to 
assess cost savings from delivery point conversions.
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    \22\Id.
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    Currently, in the United States 41 percent of mail delivery 
is made to curbside boxes, 30 percent of mail delivery is made 
to centralized delivery locations, and 28 percent of mail 
delivery is made to the door.\23\ The number of door delivery 
points declined by 308,000 from 2008 to 2013, while curbside 
delivery points increased by 1.4 million and centralized 
delivery points increased by 4.5 million.\24\ These shifts 
primarily reflect the construction of new delivery points over 
this period. While the Postal Service has been successful in 
providing centralized delivery service to most new addresses in 
recent years, there has been little effort to convert existing 
addresses.
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    \23\Id.
    \24\Id.
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    The Postal Service can likely realize savings by 
transitioning to a more efficient delivery mode. In its report 
on delivery methods, GAO noted that the Postal Service has 
taken the position that ``since the original [1994] study was 
conducted, [the Postal Service] has adopted work rules that 
disproportionately increase the cost of door delivery,'' 
thereby making the difference in cost between delivery modes 
even more significant.\25\
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    \25\Id.
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    The Committee also sees an important advantage for the 
consumer in expanding cluster box unit (CBU) delivery. Today, 
outside of CBUs, few mailboxes are secured and most mailboxes 
can accommodate only small packages. As a result, many packages 
are simply left unsecured near a door if the resident is not 
home at the time of delivery, putting them at risk of being 
stolen. Postal Service-approved CBUs meet stringent security 
requirements and contain secure parcel lockers as well as 
secure mail receptacles for individual addresses. When a 
customer served by a CBU receives a parcel that is too big for 
their mail receptacle (which itself is large enough to hold a 
side loading Postal Service Medium Flat Rate Box), their letter 
carrier will place a key to an attached parcel locker in the 
mail receptacle which the customer can use to open a larger 
parcel locker attached to the CBU. This ensures that parcels 
are kept in secure locations until they are retrieved by their 
intended recipients. In fact, the U.S. Postal Inspection 
Service, which is responsible for investigating mail theft, 
provides guidance on their website for protecting mail from 
thieves. The guidance lists a number of ways to protect mail 
from thieves, one of which is: ``Consult with your local 
Postmaster for the most up-to-date regulations on mailboxes, 
including the availability of locked centralized or curbside 
boxes.''\26\ A secure clusterbox will give postal customers 
greater peace of mind that high-value packages, such as 
medication and electronics, will be safely delivered to them 
through the mail.
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    \26\Protecting Your Mail, U.S. Postal Inspection Service, available 
at https://postalinspectors.uspis.gov/investigations/MailFraud/
fraudschemes/mailtheft/TipThieves.aspx (last visited Aug. 18, 2016).
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    The Committee recognizes that shifting to secure, 
centralized delivery may not be feasible for some addresses, 
but it would produce savings and value for some customers. The 
PSRA would direct the Postal Service to determine which door 
delivery points among both business and residential addresses 
are suitable for conversion to centralized delivery. The Postal 
Service would be required to convert business addresses deemed 
suitable to conversion to a more cost-effective mode of 
delivery over a period of five years, with centralized delivery 
as the preferred option. The Postal Service would also be 
directed to pursue voluntary conversions of residential 
addresses based on the number of addresses that opt for 
conversion in any given area. Both provisions are included in 
order to produce much-needed savings for the Postal Service 
while still maintaining its universal service obligation.
    The PSRA outlines a process for the Postal Service to 
identify and offer conversions to residential addresses, but 
ultimately it is the Postal Service's ability to demonstrate 
the value to customers that will enable substantial conversions 
that will pay for themselves almost immediately. Given the 
importance of outreach to induce voluntary conversions, the 
Postal Service cannot rely solely on local outreach to achieve 
maximum returns. The Postal Service is already engaged in a 
national advertising campaign on the value of the mail and can 
incorporate this new opportunity into that campaign by focusing 
on the benefits of conversion to consumers. For example, in 
addition to highlighting the security benefits of conversions 
to CBUs, outreach could focus on the reduced environmental 
impact of delivery to centralized delivery points, as 
conversions allow the Postal Service to shorten delivery routes 
and take vehicles off the road.
    Centralized delivery also offers a number of advantages to 
the Postal Service. Not only does centralized delivery offer 
immediate cost savings from reduced work hours for delivery, 
conversions to centralized delivery also enable one vehicle 
stop for multiple addresses, resulting in savings on fuel and 
wear and tear on delivery vehicles. Other cost savings could 
result from reductions in workers' compensation claims. 
According to a report by GAO, the Post Service's data 
``indicate that most injuries that occurred from 2009 through 
2012 on mail delivery routes were caused by falls and dog 
bites.''\27\ Presumably, the risk of falling lessens as the 
amount of walking required for delivery decreases, and the risk 
of dog bites lessens by minimizing the requirement to approach 
a home.
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    \27\Gov't Accountability Office, U.S. Postal Service: Information 
on Workforce Injuries Arising During Mail Delivery (Sept. 26, 2013) 
(GAO-13-847R), available at http://www.gao.gov/assets/660/658174.pdf.
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Postal rate modernization

    The reforms in PAEA reconstituted the Postal Rate 
Commission as the current Postal Regulatory Commission (PRC) 
and required it to establish a modern system for regulating 
rates and classes for the Postal Service's market-dominant 
products. This system was required to cap rate increases by the 
percentage increase in the Consumer Price Index for All Urban 
Consumers (CPI-U). Under this system, the Postal Service has 
the authority to set market-dominant rates, but in order for 
the rates to go into effect, the PRC must certify that they are 
consistent with the rate system requirements. Prior to the 
enactment of the PAEA, the ratemaking system was adversarial 
and the Postal Rate Commission was the final arbiter of 
specific rates.
    The regulation of market-dominant rates is essential 
because of the Postal Service's mail monopoly. The CPI cap has 
been a valuable component of the PAEA rate system. It has 
created stability and predictability of postal rates and, more 
importantly, the inflation-based price cap has simulated the 
effect of competition and forced the Postal Service to minimize 
costs while maintaining service. This was a positive step 
forward from the former system of cost-based pricing in which 
rates were based largely on the costs incurred and there was 
little pressure to reduce costs and increase efficiencies.
    To help ensure the rate system is flexible over time, the 
PAEA required the PRC to conduct a comprehensive review of the 
rate setting system in its entirety ten years after it was 
enacted. This review will start in December 2016. The review is 
statutorily required to evaluate whether the rate system is 
achieving a list of nine objectives, while taking into account 
a list of 14 factors. The PSRA adds four new factors to the 
list:
          1. The reliability of delivery timelines and the 
        extent to which the Postal Service is meeting its 
        service standard obligations;
          2. The need to ensure that the Postal Service has 
        adequate revenues and has taken appropriate cost-
        cutting measures to maintain financial stability and 
        meet all legal obligations;
          3. The extent to which the Postal Service has taken 
        actions to increase its efficiency and reduce its 
        costs; and
          4. The importance of stability and predictability of 
        rates to ratepayers.
    The PSRA also makes slight adjustments to the objectives 
and factors. The adjustments to the objectives language 
emphasizes ensuring predictability and stability in rates to 
enable business users and the general public to account for 
rate adjustments in their budget planning. The language also 
increases emphasis on the provision of high-quality service and 
delivery standards so that mailers can be certain that their 
mail will reach its destination by a specific date. Revised 
language also identifies the importance of appropriate levels 
of transparency when the Postal Service assigns expenditures to 
institutional costs.
    The new language also requires that negotiated service 
agreements improve the net financial position of the Postal 
Service and do not cause unreasonable disruption to the 
marketplace.
    The legislation also changes access to nonprofit mailing 
rates. Currently, national and state political committees 
receive the preferential rates available to nonprofit 
organizations. Given that the Postal Service must operate 
solely from its own revenues, it is not justifiable to ask 
ratepayers to subsidize political activity. The PSRA would 
repeal subsection (e) of section 3626 of title 39 to render 
national and state political committees ineligible for non-
profit rates.
    The PSRA also seeks to streamline the Postal Service's 
ability to secure Negotiated Service Agreements (NSAs) for its 
competitive products. As a result of PAEA, the Postal Service 
has been able to negotiate agreements that give individual 
companies reduced rates in exchange for guaranteed volume or 
better preparation for processing. While NSAs can be valuable 
tools, the current statutory framework can result in delays in 
the approval of even the most basic agreements. The PSRA would 
allow the PRC to conduct after-the-fact review of functionally 
equivalent NSAs and allow functionally equivalent NSAs to be 
reviewed as a group to ensure they meet the dual requirements 
of covering their attributable costs and improving the net 
financial position of the Postal Service. This reform will 
enable the Postal Service to offer ``on-the-spot'' NSAs for 
competitive products if they are similar to existing NSAs.

Nonpostal services

    The PSRA would not allow the Postal Service to engage in 
any new commercial activities. The bill would allow the Postal 
Service to provide some nonpostal services on behalf of state, 
local, and tribal entities. Under current law, the Postal 
Service is allowed to partner with federal agencies to provide 
services on behalf of those agencies. For example, the Postal 
Service has an arrangement with the U.S. Department of State 
under which it accepts passport applications at post offices. 
The Postal Service's revenues exceed the costs of providing 
this service, and the Department of State is able to accept 
applications at thousands of locations across the country 
without having to invest in physical infrastructure or 
personnel. The PSRA would authorize the Postal Service to 
partner in a similar manner with state, local, or tribal 
government entities to provide services to consumers.
    Products and services authorized under this section of the 
PSRA would be required to be non-commercial in nature, thus 
preventing unfair competition with the private sector. Any 
products or services offered by the Postal Service under this 
new authorization would be required to enhance value to the 
public, not interfere with or detract from the value of postal 
services, and provide a reasonable contribution to Postal 
Service overhead costs by covering at least 100 percent of 
their attributable costs. To ensure transparency and an 
opportunity for stakeholder input, the Postal Service would be 
required to publish its business plans for products and 
services it proposes to offer under this new authority and to 
allow for public comment. A majority of the presidentially-
appointed Postal Service Governors would be required to approve 
any new product and service by a publicly recorded vote before 
it could be offered.
    The PSRA enhances the Postal Service's ability to generate 
revenue by offering nonpostal endeavors that are appropriately 
pursued by a federal government entity. It also grandfathers in 
those specific products and services approved as a result of 
PAEA. Importantly, the Committee's decision not to allow the 
Postal Service to offer banking or Internet services recognizes 
the Postal Service's unique status as an establishment of the 
federal government. As a federal agency, the Postal Service 
enjoys a number of benefits the private sector does not. These 
benefits include exemptions from income and property tax, the 
ability to exercise eminent domain, preferential borrowing 
access, and implicit taxpayer backing in the event of a 
default. Fair competition issues would arise if the Postal 
Service is permitted to leverage its property and assets--
including property received for free from the federal 
government when the Postal Service was created in 1971--to 
compete in areas served by the private sector.

Exigent rate increase

    Title II allows the Postal Service to increase postal rates 
for market-dominant products by 2.15 percent, or 1 cent for a 
First-Class stamp. The 2.15 percent increase is half of the 
temporary rate surcharge, referred to as the ``exigent rate 
increase,'' that ended on April 10, 2016. This one-time rate 
increase is designed to put the Postal Service in a better 
financial position going into the PRC rate review that will 
begin in December 2016. The inclusion of a provision 
authorizing a rate increase in the PSRA does not indicate that 
Congress should set postal rates. Instead, the rate increase is 
intended to allow the Postal Service to implement much needed 
cost-savings initiatives and capital investments aimed at 
realizing cost savings over the long term. The financial 
challenges created by mail volume losses should not be met by 
raising prices but rather by cutting costs. This is why PSRA 
allows only a minimal rate increase and ties that increase to 
the Postal Service's implementation of measures that will 
increase efficiency and cut costs to support financial 
stability in the long term.

Completion of initial PRC rate review

    Title II would require the PRC to complete its full review 
of the market-dominant rate system by January 1, 2018. The 
inclusion of a hard deadline for the completion of the review 
will enable affected parties to plan accordingly.

PRC Cost attribution study

    The PRC's standard for reviewing the Postal Service's cost 
measurement methodology is based on attribution methodologies 
stemming from the Postal Reorganization Act of 1970.\28\ The 
makeup of the Postal Service's product volumes has changed 
significantly since these methodologies were originally put in 
place.\29\ Although it is difficult to quantify all of the 
effects of changes in product classes from 1970 through today, 
the substantial growth in package volume is unmistakable.
---------------------------------------------------------------------------
    \28\``Section 3633(a)(2) requires that each competitive product 
cover its attributable costs, which, in section 3631(b), are defined as 
the `direct and indirect postal costs attributable to such product 
through reliably identified causal relationships.' This standard 
codifies the Commission's long-standing method of attribution under the 
Postal Reorganization Act. For purposes of initially implementing 
regulations pursuant to section 3633, the Commission intends to employ 
this long-established attribution method to determine compliance with 
section 3633(a)(2).'' Postal Regulatory Commission, Order No. 26, Order 
Proposing Regulations to Establish a System of Ratemaking, Docket No. 
2007-1, Aug. 15, 2007, at 67-68, available at http://www.prc.gov/docs/
57/57348/RM2007-1FINAL.pdf.
    \29\Id.
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    The FY 1972 annual report provides a review of the volumes 
of specific product classes, making some comparisons with 
current product classes possible.\30\ In FY 1972, the products 
that would later be classified as competitive products 
(packages and priority mail) made up approximately 12.5 percent 
of the Postal Service's total revenue.\31\ The percentage of 
total Postal Service revenues comprised by competitive products 
remained relatively stagnant for the next three decades. In FY 
2006, these products comprised approximately 11.8 percent of 
total revenue.\32\ However, since FY 2006, the percentage of 
total postal revenue comprised by competitive products has 
nearly doubled. In FY 2015, revenue derived from competitive 
products made up nearly 22 percent of the Postal Service's 
total revenue.\33\
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    \30\U.S. Postal Serv., Annual Report of the Postmaster General (FY 
1972), at 26 [hereinafter ``FY 1972 Annual Report''].
    \31\Includes $653.1 million in revenue for Parcels (zone rate) and 
$348.3 million in revenue for Priority Mail. The FY 1972 Total revenue 
was $7,996.7 million. Id.
    \32\Includes $5,042.5 million in revenue for Priority Mail, 
$2,259.0 million in revenue for Package Services, and $918.1 million in 
revenue for Express Mail. Total revenue for FY 2006 was $69,144.0 
million. U.S. Postal Serv., 2007 Audited Financial Statements (FY 
2007), at 45, available at http://about.usps.com/who-we-are/financials/
10k-reports/fy2007.pdf.
    \33\Supra note 8.
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    The incredible growth in competitive products volume and 
revenue in recent years has created a new environment in which 
packages are more likely to be a major driver in the Postal 
Service's business decisions. In fact, Postmaster General Megan 
Brennan testified before the Committee: ``package volume has 
grown by more than 1 billion packages in the last three years. 
In FY 2015, [the Postal Service] delivered one-third of all 
domestic packages in the United States.''\34\ She confirmed 
that ``Continued innovation and growth in our package business 
is essential to our ability to provide universal postal service 
to the American people as First-Class Mail continues to 
decline.''\35\
---------------------------------------------------------------------------
    \34\Id.
    \35\Supra note 10.
---------------------------------------------------------------------------
    Given the growth in the Postal Service's competitive 
product sales and the accompanying shift toward competitive 
product investments instead of monopoly product investments, 
the PSRA requires the PRC to re-examine the methodologies used 
to calculate costs and to allocate costs between attributable 
costs and institutional costs, as well as between competitive 
and monopoly products to ensure they are the most accurate 
methodologies available. While the current methodologies may 
still be appropriate, they were created at a time when 
competitive products and their associated regulations did not 
exist and when package delivery and priority mail were 
effectively small side operations at the Postal Service rather 
than key drivers of operational decision-making. The PRC's 
study will re-evaluate these underlying methodologies to ensure 
that they are the most effective measure for understanding 
costs and whether the appropriate data collection, 
calculations, and methodologies are used to determine which 
portion of the business or products bear the associated costs.
    If the PRC determines that current methodologies are not 
the most accurate for determining which portion of the business 
and which products and services bear associated costs, the PRC 
will specify how the Postal Service should more accurately 
measure the costs of competitive and market-dominant products. 
However, nothing in this title shall be used to imply that the 
current costing attribution or costing allocation guidelines 
are incorrect or correct; instead, that determination is left 
to the PRC.

                  Title III--Postal Service Personnel


Postal Service Chief Innovation Officer

    Among its provisions, Title III would create in statute the 
position of Chief Innovation Officer (CIO) at the Postal 
Service. The goal of this provision is to ensure there is a 
position within the Postal Service whose sole function is to 
spearhead innovation and change in an effort to grow the 
agency's revenue. Given increased competition from the Internet 
and from other advertising media, the agency must develop 
postal product offerings that meet changing customer needs and 
increase profits for the agency. Importantly, however, the CIO 
does not have the authority to expand the Postal Service's 
product offerings in any non-postal lines of business beyond 
those currently offered by the Postal Service or authorized in 
the PSRA.

Inspector General of the Postal Community

    As the third largest office of inspector general (OIG) in 
the federal government, the Postal Service OIG has more than 
1,100 Full Time Equivalent employees and an annual budget of 
almost $250 million.\36\ Unlike other Inspectors General 
leading offices of comparable size, the position of Postal 
Service Inspector General does not require presidential 
appointment or Senate confirmation. In fact, the Postal Service 
OIG is currently the largest OIG not headed by a Senate-
confirmed individual. Title III of the bill would make the 
Postal Service Inspector General a presidentially appointed, 
Senate-confirmed position. In addition, title III would combine 
the Postal Service OIG with the OIG of the PRC, forming the new 
Office of Inspector General of the Postal Community. The bill 
requires that the President nominate an individual to the 
Inspector General position within 180 days of enactment of this 
bill.
---------------------------------------------------------------------------
    \36\U.S. Postal Serv. Office of Inspector Gen., Congressional 
Budget Justification FY 2017, available at https://www.uspsoig.gov/
sites/default/files/document-library-files/2016/
FY%202017%20Congressional%20Justification.pdf.
---------------------------------------------------------------------------
    Nothing about this section shall have any impact on the 
clear division between the Postal Service as the operator and 
the PRC as the regulator. The OIGs for these two entities would 
be combined by this bill only to achieve appropriate 
efficiencies.

                  Title IV--Postal Contracting Reform

    Title IV of the PSRA includes a number of reforms designed 
to improve the Postal Service's contracting process. When the 
Postal Service was first constituted as an independent 
establishment in 1970, the agency was granted an exemption from 
most federal rules and regulations governing the acquisition of 
goods and services. Unfortunately, lax internal controls have 
led to a number of problems in recent years, such as inadequate 
transparency, poor business practices, improper delegations of 
authority, and a lack of accountability. To help address many 
of these issues, the bill would create a more rigorous code of 
ethical standards for contracting officials, improve 
transparency for noncompetitive contracts, and clarify and 
narrow the framework for delegations of contracting authority.

                          LEGISLATIVE HISTORY

    H.R. 5714, the Postal Service Reform Act of 2016, was 
introduced on July 11, 2016 by Chairman Jason Chaffetz (R-UT) 
and referred to the Committee on Oversight and Government 
Reform, as well as the Committee on Energy and Commerce and the 
Committee on Ways and Means. On July 12, 2016, the Committee on 
Oversight and Government Reform ordered H.R. 5714 favorably 
reported, without amendment. Ranking Member Elijah E. Cummings 
(D-MD), Subcommittee on Government Operations Chairman Mark 
Meadows (R-NC), Subcommittee on Government Operations Ranking 
Member Gerald Connolly (D-VA), and Representative Stephen Lynch 
(D-MA) are original cosponsors.
    The legislation includes provisions similar to those 
included in H.R. 2748 in the 113th Congress, and H.R. 2309 in 
the 112th Congress. H.R. 2748, the Postal Reform Act of 2013, 
was introduced in the 113th Congress by then-Chairman Darrell 
Issa (R-CA) and Representatives Blake Farenthold (R-TX) and 
Dennis Ross (R-FL) on July 19, 2013. The legislation was 
considered before the Committee on July 24, 2013 and ordered 
favorably reported by a record vote of 22 to 17. In the 112th 
Congress, H.R. 2309, the Postal Reform Act of 2011, was 
introduced by then-Chairman Darrell Issa on June 30, 2011. It 
was subsequently ordered reported from the Subcommittee on 
Federal Workforce, U.S. Postal Service, and Labor Policy on 
September 21, 2011 by a record vote of 8 to 5 and ordered 
favorably reported by the Full Committee on October 13, 2011 by 
a record vote of 22 to 18. No further action was taken on 
either bill in the House.
    In addition, the legislation contains some provisions 
similar to those contained in S. 1486 introduced in the 113th 
Congress. That bill, the Postal Reform Act of 2014, was 
introduced by Senator Tom Carper (D-DE), then-Chairman of the 
Senate Committee on Homeland Security and Governmental Affairs, 
on August 1, 2013. The Committee considered S. 1486 at a 
business meeting on February 6, 2014 and ordered the bill 
reported by a record vote of 9 to 1. No further action was 
taken on the bill in the Senate.

                           Section-by-Section


Section 1. Short title; table of contents

    Designates the short title of the bill as the ``Postal 
Service Reform Act of 2016'' and delineates the table of 
contents of the bill.

Section 2. Definitions

    Defines the term ``Postal Service'' as the United States 
Postal Service, and the term ``postal retail facility'' as a 
post office, branch, station, or other facility operated by the 
Postal Service to provide retail post services for any 
references included in the legislation.

                TITLE I--POSTAL SERVICE BENEFITS REFORM

Section 101. Postal Service health benefits program

    Subsection (a) of section 101 creates section 8903c in 
Chapter 89 of title 5, United States Code.
    Subsection (a) of section 8903c defines the terms ``covered 
Medicare individual,'' ``initial contract year,'' ``initial 
participating carrier,'' ``Office'' (as the Office of Personnel 
Management, OPM), ``Postal Service annuitant,'' ``Postal 
Service employee,'' ``Postal Service Medicare covered 
annuitant,'' ``Program,'' and ``Program plan,'' for the 
section.
    Subsection (b) of section 8903c states that the 
requirements of this section apply for the initial contract 
year and each year thereafter and that those requirements 
supersede any other provisions of the chapter inconsistent with 
such requirements.
    Subsection (c) of section 8903c establishes the Postal 
Service Health Benefits Program (program). Specifically, it 
directs OPM to create a program to offer health benefits 
consistent with the requirements of section 8902 that includes, 
to the greatest extent practicable each carrier that provided 
health benefits to at least 1,500 postal employees or 
annuitants as of January 2017, as well as any other interested 
carriers. It also requires that the program be available to all 
postal employees and annuitants, provide for enrollment as 
individual, self plus one, and self and family, and not be 
available to individuals who are not postal employees or 
annuitants or their family members. The subsection further 
requires that the program use a separate risk pool for those 
enrolled in the program, that the plans offered under the 
program are actuarially equivalent to coverage carriers provide 
under plans offered under Chapter 89 that are not part of the 
program, and that continuation of coverage shall apply in the 
same manner as provided under section 8905a.
    Subsection (d) of section 8903c specifies election of 
coverage under the program. It requires postal employees and 
annuitants who elect to receive health benefits under Chapter 
89 to meet the requirements of the section and prohibits 
enrollment in other health benefit plans offered under other 
sections of the Chapter. It also creates an exemption to the 
requirements of the section for postal annuitants who are 
enrolled in a plan under this chapter that is not offered by an 
initial participating carrier under the program unless the 
annuitant voluntarily enrolls in a program plan, the plan in 
which the annuitant is enrolled ceases to be available, the 
plan in which the annuitant is enrolled becomes available under 
the plan, or the annuitant resides in a geographic area for 
which there is not a program plan in which the annuitant may 
enroll. It also requires that if a postal annuitant changes 
health plan enrollment, the annuitant may only enroll in a 
program plan. Finally, the subsection provides that a postal 
employee who is enrolled in a health benefits plan that is not 
offered by an initial participating carrier is exempt from this 
section unless the employee changes enrollment, the employee's 
plan becomes offered within the program, or the employee 
becomes an annuitant, unless as an annuitant the employee 
resides in a geographic area for which there is not a program 
plan that the annuitant may enroll.
    Subsection (e) of section 8903c allows postal Medicare-
eligible annuitants to obtain coverage under the section only 
if they, and any eligible family member covered through them, 
are enrolled in Medicare Part B. It also requires OPM to 
establish a process for affected postal annuitants and family 
members to ensure that they are informed of the requirement and 
automatically enrolled in Medicare Part B.
    Subsection (f) of section 8903c directs OPM to require each 
program plan to provide benefits for covered Medicare 
individuals pursuant to the standard coordination of benefits 
method, rather than the exclusion method or the carve-out 
method. It further requires each program plan to provide a 
Medicare Part D prescription drug benefit to eligible 
employees.
    Subsection (g) of section 8903c establishes the terms of 
the Postal Service contribution for premiums. Specifically, it 
directs OPM, by October 1 of each year, to determine the 
weighted average of the rates established for program plans for 
the following year for each category of enrollment (self, self 
plus one, self and family) and for the initial contract year to 
take into account the enrollment of postal employees and 
annuitants in plans offered by initial participating carriers 
as of March 31, 2017.
    Subsection (h) of section 8903c, requires OPM to ensure 
that each program plan maintains separate reserves with respect 
to enrollees in the program plan and that the reserves 
maintained by each plan be credited with a proportionate amount 
of the funds in the reserves for health benefit plans offered 
by the carrier. The subsection also requires, for a plan that 
is discontinued, that OPM credit the postal service contingency 
reserve established under this subsection only to the separate 
reserves of postal plans continuing under this section.
    Subsection (i) of section 8903c states that nothing in this 
section shall be construed as affecting section 1005(f) of 
title 39 regarding variations, additions, or substitutions to 
the provisions of this chapter.
    Subsection (j) of section 8903c requires the Postal Service 
to establish a Medicare Education Program not later than 180 
days after enactment of this section. Under that program, the 
Postal Service shall notify retirees and employees about the 
Postal Service Health Benefits Program, provide information 
regarding the benefits (including a description of health care 
options available under the program, the requirement for 
Medicare enrollment and the premium transition fund established 
under section 104 of the bill) and respond and provide answers 
to inquiries from employees and annuitants about the program or 
Medicare enrollment. The subsection also makes technical and 
conforming amendments to Chapter 89.
    Subsection (b) of section 101 amends provisions of title 
42, United States Code, to permit the automatic enrollment of 
postal annuitants and family members who are not enrolled in 
Medicare and waives any penalty premium increase to which the 
individual would otherwise have been subject.

Section 102. Postal Service Retiree Health Care Benefit Funding reform

    Subsection (a) amends section 8906(g) of title 5, United 
States Code, to require that the portion of the Government 
health care premium contributions that is equal to the net 
claims cost be paid first from the Postal Service Retiree 
Health Benefits Fund and any remaining amount to be paid by the 
Postal Service. Additionally, the subsection amends section 
8906(g) to define net claims cost as the difference between the 
sum of costs incurred by a carrier in providing and 
administering health services and the amount withheld from the 
annuity of, or paid by, an individual under the section.
    Subsection (b) amends section 8909a of title 5, United 
States Code, to eliminate the final six statutorily specified 
payments for retiree health care prefunding and require the 
retiree health premiums to be paid out of the Postal Service 
Retiree Health Benefits Fund beginning in fiscal year 2017, 
instead of fiscal year 2018. The subsection also requires the 
Postal Service to begin making amortization payments in 2017 
necessary to satisfy any remaining unfunded liability by 
September 30, 2055 and maintains the current law requirement 
that the Postal Service make additional annual payments of 
normal cost associated with new retiree health benefits earned 
by current employees.
    Subsection (c) cancels all statutorily specified payments 
for prefunding accrued retiree health care expenses that remain 
unpaid by the Postal Service on the date of enactment of this 
legislation.
    Subsection (d) contains a technical correction to add a 
missing letter to the section heading of section 8909a of title 
5, United States Code.

Section 103. Postal Service pension funding reform

    Subsection (a) amends 5 U.S.C. 8348(h) (the Civil Service 
Retirement System (CSRS)) to require OPM to determine annually 
whether the Postal Service has an actuarial funding surplus or 
liability for obligations to CSRS beneficiaries. Beginning in 
2017, OPM is directed to establish an amortization schedule for 
any surplus or liability, recalculated annually, such that any 
surplus or liability is liquidated by September 30, 2043. 
Starting by June 30, 2033, OPM shall revise the amortization 
period from its otherwise scheduled end of September 30, 2043 
to a period of no longer than 15 years, and revised as 
necessary, based on generally accepted actuarial practices and 
principles. The subsection also requires that when calculating 
CSRS liability OPM must use demographic and economic 
assumptions regarding wage and salary growth that are specific 
to current and former employees, as applicable, of the Postal 
Service.
    Subsection (b) amends 5 U.S.C. 8423 (the Federal Employees 
Retirement System (FERS)) to require that Postal Service 
specific assumptions, identical to those in subsection (a) are 
applied both to the normal cost payment for current postal 
employees and for the Postal Service's total FERS liability. If 
the Postal Service is determined to have a FERS projected 
funding surplus, the subsection provides for a return of the 
surplus on a 30-year amortization schedule, identical to the 
amortization period of a FERS liability.

Section 104. Medicare Part B premium transition for newly enrolling 
        Postal Service annuitants and family members

    Subsection (a) amends section 1395r of title 42, United 
States Code, to reduce the Medicare Part B premiums for 
individuals who have been automatically enrolled in Medicare 
under this bill by 75 percent in the first year, 50 percent in 
the second year, and 25 percent in the third year.
    Subsection (b) amends section 1395w of title 42, United 
States Code, to require the Postal Service to pay an amount 
equal to the reduced premiums under subsection (a) to place the 
Medicare Trust Fund in the same actuarial status as if the 
provisions of section 104 had not been enacted.

               TITLE II--POSTAL SERVICE OPERATIONS REFORM

Section 201. Governance reform

    This section changes the current structure of the Postal 
Service's governance system.
    Subsection (a) amends section 202 of title 39, United 
States Code, to reduce the composition of the Board of 
Governors to five Governors, the Postmaster General, and the 
Deputy Postmaster General. The Board of Governors is 
responsible for appointing, removing, and setting the terms of 
service and pay of both the Postmaster General and the Deputy 
Postmaster General.
    Subsection (b) amends section 203 of title 39, United 
States Code, to revise the duties of the Postmaster General to 
be the individual who carries out the power of the Postal 
Service vested in the Board of Governors, consistent with the 
directions of the Governors.
    Subsection (c) amends section 205 of title 39, United 
States Code to indicate that vacancies in the Board of 
Governors do not impair the powers of the Board and that the 
Board shall act upon majority vote of the Board.
    Subsection (d) allows the Postmaster General and the 
Governors to delegate responsibilities as they determine 
appropriate to carry out their functions and duties.
    Subsection (e) amends section 407 of title 39, United 
States Code, to require the Postal Regulatory Commission (PRC) 
to review and approve payment by the Postal Service to the 
Department of State to cover costs of negotiating international 
postal rates. This amendment does not take effect until October 
1 of the first fiscal year beginning after enactment of this 
Act.
    Subsection (f) makes a number of technical and conforming 
amendments. This subsection clarifies the PRC's existing 
authority to levy fines against the Postal Service, payable to 
the U.S. Treasury for deliberate noncompliance with the 
provisions of title 39, such as the service standards 
established by the Postal Service.

Section 202. Transition to more efficient and secure mail delivery

    Subsection (a) creates section 3692 in subchapter VII of 
chapter 36 of title 39, United States Code.
    Subsection (a) of section 3692 defines a ``delivery point'' 
as a mailbox or other receptacle to which mail is delivered. A 
delivery point's typical method of receiving Postal Service 
deliveries is referred to as the ``primary mode of mail 
delivery.'' The subsection defines the different kinds of 
primary modes of mail delivery: 1) ``Door delivery'' means the 
mail is placed into a slot or receptacle at or near the postal 
patron's door or hand delivered to the patron; 2) ``Centralized 
delivery'' means mail receptacles for a number of delivery 
points are grouped or clustered at a single location; 3) 
``Curbside delivery'' means the mail receptacle is situated at 
the edge of a sidewalk alongside the road or curb and can be 
served by a letter carrier from a motorized vehicle; 4) 
``Sidewalk delivery'' means the mail receptacle is situated at 
the edge of a sidewalk and can be served by the letter carrier 
from the sidewalk.
    Subsection (b) of section 3692 requires it to be the policy 
of the Postal Service to use the most cost-effective primary 
mode of mail delivery feasible and to provide access to secure, 
convenient mail and package delivery receptacles to the 
greatest number of postal patrons feasible.
    Subsection (c) of section 3692 requires that new delivery 
points established after December 31, 2016, utilize a primary 
mode of mail delivery other than door delivery, with a 
preference for secure, centralized delivery.
    Subsection (d) of section 3692 requires the incremental 
conversion to centralized, curbside, or sidewalk delivery of 
business addresses identified by the Postal Service. The Postal 
Service has one year after enactment of this Act to determine 
which door delivery points are appropriate for conversion to a 
more cost-effective means of delivery (e.g., centralized 
delivery, curbside delivery, or sidewalk delivery). The Postal 
Service then has five years to convert--at 20 percent a year--
100 percent of those delivery points that it deemed 
appropriate. All eligible delivery points must be converted by 
September 30, 2022. The Postal Service is required to notify 
postal customers affected by delivery point conversions at 
least 60 days prior to the conversion date.
    Subsection (e) of section 3692 requires the voluntary 
conversion to curbside, centralized, or cluster box delivery of 
residential addresses identified by the Postal Service where 
40% of the residents consent to conversion. Within one year of 
enactment of this bill, each Postal Service district office 
must identify delivery points that are appropriate for 
conversion to centralized delivery, such as cluster boxes, 
curbside delivery, or sidewalk delivery. The Postal Service 
will begin a program by October 1, 2017 to convert delivery 
points to more cost-effective means of delivery. The Postal 
Service has three months after the initial identification of 
delivery points appropriate for conversion to divide these 
delivery points into groups of no more than 50 delivery points, 
referred to here as an address unit. The Postal Service then 
has six months to notify in writing the residents of the 
appropriate delivery points of their eligibility for 
conversion. Notice of eligibility must include the following:
          1. Notice that the delivery point has been proposed 
        for conversion to a more efficient and cost-effective 
        mode of delivery in order for the Postal Service to 
        more economically provide universal service;
          2. A description of the new primary mode of delivery 
        proposed by the Postal Service, such as centralized 
        cluster boxes or curbside delivery, and a visual 
        example of the mode of delivery;
          3. A form that the resident can submit to indicate 
        consent for conversion to the proposed delivery mode, 
        as well as notice that the conversion is voluntary;
          4. Description of the benefits incentivizing 
        conversion, including but not limited to secure mail 
        and package delivery, and the benefits to the Postal 
        Service, such as a smaller environmental impact for 
        delivery;
          5. Description of how the conversion process would 
        work and the monetary costs (if any) to the postal 
        patron; and
          6. Any other information the Postal Service considers 
        necessary or helpful for incentivizing conversion.
    No delivery point may be converted unless prior written 
consent is provided to the Postal Service by a postal patron 
who is at least 18 years old. Prior to the actual conversion, 
an eligible postal patron may withdraw the written consent for 
conversion. The Postal Service will include on an easily 
accessible public Web site an option to request that the 
aforementioned consent form or a consent-withdrawal form be 
sent to any delivery point identified for conversion.
    Once the Postal Service receives a written consent form 
from 40 percent of the applicable address unit, the Postal 
Service has 90 days to convert the delivery points. At least 30 
days prior to conversion, the Postal Service shall provide 
written notice to each delivery point in the address unit that 
the threshold for conversion has been met and, depending on 
prior action by the postal patron served by that delivery 
point, the next steps and options for that delivery point.
    Any future or new residents moving into the address unit 
for which delivery points have been converted shall receive the 
converted delivery type.
    Subsection (f) of section 3692 requires the Postal Service 
to consider: 1) weather conditions, physical barriers, or other 
factors that impact the feasibility of the delivery mode and 
potential cost savings; 2) historic designation or historic 
value of property; and 3) population density and concentration 
of poverty when determining whether to convert the primary mode 
of mail delivery.
    Subsection (g) of section 3692 provides an exemption to 
centralized, curbside, or sidewalk delivery for mail recipients 
with physical hardships. In cases where door delivery is 
necessary to avoid causing significant physical hardship or 
physical safety risks to the postal patron, the Postal Service 
will grant a waiver to allow for door delivery at no cost to 
the postal patron.
    Subsection (h) of section 3692 instructs the Postal Service 
to establish procedures for: 1) collecting and considering 
external input; 2) calculating and making publicly available 
cost savings from conversions; and 3) situating centralized 
delivery points in locations that maximize efficiency and 
convenience.
    Subsection (i) of section 3692 establishes a voucher 
program whereby the Postal Service provides for the cost of all 
or any portion of the converted modes of delivery established 
under this section.
    Subsection (j) of section 3692 requires the Postal Service 
to produce an annual report from fiscal years 2017 through 2023 
on the implementation of the delivery conversions established 
under this section.
    Subsection (k) of section 3692 requires the Inspector 
General of the Postal Community (Inspector General) to conduct 
an annual audit to be completed 90 days after the Postal 
Service releases its annual report under subsection (j).
    Subsection (l) of section 3692 exempts the actions taken 
under this section from certain reviews required by other 
subchapters in chapter 36.
    Subsection (b) makes a clerical amendment to the table of 
sections.
    Subsection (c) requires that the Postal Service collect 
data on delivery mode costs and the potential savings of 
converting to more cost-effective delivery modes. The Postal 
Service shall submit a report on the updated delivery cost 
study to specified committees of Congress.
    Subsection (d) requires that the Inspector General conduct 
a study of the costs and benefits of the delivery mode 
conversions required under subsection (a) within two years of 
the commencement of the conversions. Within a year of 
commencing the study, the Inspector General is required to 
submit a report on the results of the study to specified 
committees of Congress.

Section 203. Modernizing postal rates

    Subsection (a) amends section 3622 of title 39, United 
States Code, to strengthen some objectives and factors for 
consideration in the Postal Regulatory Commission's (PRC's) 
ten-year review of the current postal rate system and to 
require that market-dominant negotiated service agreements not 
cause unreasonable disruption to the marketplace.
    Subsection (b) repeals section 3626 of title 39, United 
States Code, to render national and state political committees 
ineligible for rate preferences that are received by nonprofit 
organizations.
    Subsection (c) amends section 3633 of title 39, United 
States Code, to streamline review of negotiated service 
agreements for competitive products, including after-the-fact 
review for new agreements that are functionally equivalent to 
existing agreements that have collectively covered costs and 
improved the financial condition of the Postal Service.

Section 204. Nonpostal services

    This section amends part IV of title 39 to add ``Chapter 
37--Nonpostal Services.''
    Section 3701 of chapter 37 establishes the purpose of the 
chapter.
    Section 3702 of chapter 37 defines the terms ``nonpostal 
services,'' ``attributable costs,'' and ``year.''
    Section 3703 of chapter 37 authorizes the Postal Service to 
establish a program to provide property and services on behalf 
of an agency of any State government, local government, or 
tribal government. Products and services authorized under this 
section are subject to safeguards to ensure that they provide 
enhanced value to the public, do not interfere with or detract 
from the value of postal services, and provide a reasonable 
contribution to Postal Service overhead costs by covering at 
least 100 percent of costs. Products and services authorized 
under this provision must be non-commercial in nature, 
preventing unfair competition with the private sector. To 
provide transparency and an opportunity for stakeholder input, 
the Postal Service is required to publish its business plan for 
products and services it plans to offer as authorized under 
this section, followed by a public comment period and a 
published Postal Service response. A majority of the Postal 
Service Governors must approve the Postal Service providing 
specific products and services by a publicly recorded vote.
    Section 3704 of chapter 37 authorizes the Postal Service to 
continue providing property and services for other federal 
agencies and the Government Publishing Office, provided it 
receives reimbursement covering 100 percent of its costs. This 
cost-coverage requirement is intended to ensure that ratepayers 
do not subsidize services provided for other federal agencies.
    Section 3705 of chapter 37 requires the Postal Service to 
annually report financial results, rates, and the quality of 
its nonpostal services within 90 days after the end of each 
fiscal year, with proprietary data protected from disclosure. 
The PRC must annually review compliance that nonpostal services 
meet cost-coverage and other requirements; order remedial 
action to remedy any noncompliance; and can initiate 
proceedings to improve data quality and completeness. The 
Inspector General must regularly audit applicable data 
collection systems and procedures.
    These provisions are modeled after existing provisions for 
market-dominant products.
    Subsection (b) makes clear that all nonpostal services 
continued pursuant to 404(e) of title 39 are considered 
expressly authorized by chapter 37 of title 39 as added by this 
section and are subject to the same transparency and 
accountability requirements as other nonpostal services.

Section 205. Efficient and flexible universal Postal Service

    Subsection (a) amends section 404(d)(2)(A) of title 39, 
United States Code, to require the Postal Service, when 
considering a post office for potential closure, to take into 
account: 1) the distance, measured by public roads, to the 
nearest postal retail facility; 2) weather and terrain; 3) 
commercial mobile service; and 4) broadband internet access 
penetration.
    Subsection (b) amends section 404(d)(5) of title 39, United 
States Code, to reduce the deadline for PRC review of post 
office closures from 120 days to 60 days. This subsection 
includes an extension that can only be enacted for good cause 
and is limited to a period of up to an additional 60 days, or 
120 days total.
    Subsection (c) amends section 3661 of title 39, United 
States Code, to expedite PRC advisory opinions concerning 
Postal Service plans to close or consolidate post offices on a 
level affecting service on a nationwide basis and on matters 
that are identical to matters on which the PRC has issued an 
opinion within the preceding 5 years. The subsection includes 
an extension for good cause of an additional 30 days, or 120 
days total.
    Subsection (d) amends section 404(d) of title 39, United 
States Code, to require the Postal Service to consult with the 
community affected by a post office closure or consolidation on 
what type of alternate service they wish to receive. In order 
to accomplish this, the Postal Service must provide adequate 
notice of intentions to close or consolidate the facility at 
least 60 days prior to the proposed date of closing. The Postal 
Service shall conduct a nonbinding survey of the postal patrons 
served by that post office to determine their preferred 
alternative service.
    Subsection (e) amends section 404(d) of title 39, United 
States Code, to define ``post office'' in in this subsection as 
any Postal Service-operated retail facility as defined in this 
bill, which includes post offices, branches, and stations. This 
change is effective 60 days after enactment.
    Subsection (f) amends section 3652(a) of title 39, United 
States Code, to require the Postal Service to use a PRC-
recommended formula to determine changes in Postal Service 
productivity and the resulting effect on overall costs.
    Subsection (g) requires the Inspector General to conduct a 
review of the impacts of the Post Office Structure Plan 
(POSTPlan) on Postal Service expenses, revenue, and retail 
service provision. POSTPlan is a Postal Service initiative that 
restructured a number of post offices by reducing hours and 
altering the labor structure in an effort to reduce costs and 
ultimately produce savings. The Inspector General is required 
to evaluate the relative cost savings of POSTPlan initiatives 
by looking at both changes in costs and changes in revenue. The 
Inspector General will release a report of the results of the 
review and resulting recommendations. The Postal Service must 
consider these results and recommendations when determining 
further action related to POSTPlan initiative impacted post 
offices.

Section 206. Fair stamp-evidencing competition

    This section further amends section 404a(a) of title 39, 
United States Code, to require the Postal Service to follow the 
same rules and regulations as apply to private sector postage-
evidencing products and services.

Section 207. Market-dominant rates

    Subsection (a) allows the Postal Service to increase postal 
rates for market-dominant products by 2.15%, or 1 cent for a 
First-Class stamp. The 2.15 percent increase is half of the 
temporary rate surcharge, referred to as the ``exigent rate 
increase,'' that was in effect on April 9, 2016. The exigent 
rate increase was permitted under section 3622(d)(1)(E) 
(redesignated by this Act as section 3622(d)(1)(G)) of title 
39, United States Code), which allows for a rate adjustment for 
extraordinary or exceptional circumstances as long as such 
adjustment is reasonable and equitable and necessary to enable 
the Postal Service, under best practices of honest, efficient, 
and economical management, to maintain and continue the 
development of postal services of the kind and quality adapted 
to the needs of the United States. The subsection further 
requires that the 2.15% increase in rates be considered a part 
of the rate base for determining future rate increases.
    Subsection (b) clarifies that the rate increase permitted 
under subsection (a) does not impact any unused rate adjustment 
authority maintained by the Postal Service.
    Subsection (c) states that the rate increase allowed under 
subsection (a) does not affect the PRC's authority to review 
the current rate system and make adjustments to that system as 
are necessary and allowed for under section 3622 of title 39, 
United States Code.
    Subsection (d) terminates the Postal Service's current 
judicial appeal and removes the right for further judicial 
appeal by the Postal Service related to the exigent rate 
increase that ended on April 10, 2016.

Section 208. Completion of initial rate regulation review

    This section requires the PRC to complete its full review 
of the market-dominant rate system by January 1, 2018. Existing 
law allows for commencement of the review to begin on December 
20, 2016.

Section 209. Review of Postal Service cost attribution guidelines

    This section requires that the PRC initiate a review of the 
Postal Service's cost attribution and cost allocation 
guidelines. The review will determine whether revisions are 
necessary to the underlying assumptions for the current costing 
methodologies. This includes what costs are associated with 
market-dominant products and competitive products. In 
conducting this review, the PRC should examine whether the 
appropriate data collection, calculations, and methodologies 
are used to determine which portion of the business or products 
bear the associated costs. The Committee takes no position on 
whether the current costing attribution or costing allocation 
guidelines are incorrect or correct. That determination is left 
to the PRC.

Section 210. Aviation security for parcels

    This section creates section 5404 within chapter 54 of 
title 39, United States Code. Section 5404 requires that the 
Postal Service hold itself to the same standards it requires 
from industry regarding the safety and security of parcels 
shipped on commercial airplanes.

Section 211. ZIP Codes

    This section makes small changes and additions to the ZIP 
codes related to three specific communities.

                  TITLE III--POSTAL SERVICE PERSONNEL

Section 301. Postal Service Chief Innovation Officer

    Amends chapter 2 of title 39 to insert a new section, 
section 209.
    Subsection (a) of section 209 establishes the position of 
Chief Innovation Officer (CIO), appointed by the Postmaster 
General, and requires the CIO to manage the development of 
innovative postal and nonpostal products and services subject 
to existing law.
    Subsection (b) of section 209 establishes the duties of the 
CIO, including: 1) leading the development of postal and 
nonpostal products that maximize revenue to the Postal Service; 
2) monitoring the performance of innovative products and 
services; and 3) taking into consideration, if applicable, 
advisory opinions of the PRC.
    Subsection (c) of section 209 requires the CIO to be 
appointed no later than six months after enactment of this Act 
and clarifies that the CIO can be a current Postal Service 
employee, but, upon appointment, must leave any other position 
within the Postal Service.
    Subsection (d) of section 209 requires the Postmaster 
General, within 12 months of the CIO's appointment, to submit 
to Congress a report outlining a strategy for maximizing 
revenue from innovative products.
    The strategy must include specific innovative products to 
be developed, the nature of the market for each product, the 
likely offering date of each product, the cost of developing 
each product, the anticipated sales volume of each product, the 
anticipated revenue and profit generated by each product, the 
likelihood of success of each product, the market trends that 
may affect the success of each product, the metrics that will 
be utilized to assess the success of the innovation strategy, 
and specific ways in which innovative mailpiece design can be 
encouraged. The subsection requires an updated strategy on 
January 1, 2018 and every 3 years thereafter.
    Subsection (e) of section 209 requires the Postmaster 
General to submit to Congress an annual report that details the 
progress the Postal Service has made in implementing the 
innovation strategy described in subsection (d).
    Subsection (f) of section 209 requires the Comptroller 
General to conduct a study on the implementation of the 
innovation strategy not later than 4 years after the date of 
enactment of the section. The report is required to include: 1) 
an audit of the development costs for each innovative product; 
2) the sales volumes of each product; 3) the revenues and 
profits of each product; and 4) the likelihood of continued 
success of each product.

Section 302. Inspector General of the Postal Community

    This section creates a presidentially-appointed, Senate-
confirmed Inspector General of the Postal Community (Inspector 
General).
    Subsection (a) amends The Inspector General Act of 1978 (5 
U.S.C. App.), hereinafter referred to as the ``IG Act,'' to 
remove the PRC and the Postal Service from section 8G of the IG 
Act, which generally establishes Inspectors General in certain 
designated federal entities and requires those Inspectors 
General to be appointed by the head of such agency. The effect 
of this deletion, and the subsequent additions described below, 
is to require the new Inspector General of the Postal Community 
to be presidentially-appointed.
    Subsection (b) further amends the IG Act to create section 
8M, ``Special Provisions Concerning the United States Postal 
Service and Postal Regulatory Commission.'' This subsection 
creates the Inspector General of the Postal Community and 
requires appointment to that position within 180 days of 
enactment of this Act.
    Subsection (a) of section 8M creates a combined Inspector 
General for both the Postal Service and the PRC, which is 
called the Inspector General of the Postal Community (Inspector 
General).
    Subsection (b) of section 8M requires that in carrying out 
to the duties under the IG Act, the Inspector General shall 
have equal responsibility over both the PRC and the Postal 
Service.
    Subsection (c) of section 8M clarifies that for matters 
dealing with the PRC, the head of the establishment as defined 
under the IG Act shall be the Chairman of the PRC. For matters 
dealing with the Postal Service, the head of the establishment 
as defined under the IG Act shall be the Postmaster General.
    Subsection (d) of section 8M requires the Inspector General 
to treat the Postal Service and the PRC as separate 
establishments in carrying out the duties under section 5 of 
the IG Act and to prepare separate semiannual reports to 
Congress.
    Subsection (e) of section 8M instructs the Postal Service 
and the PRC to work jointly with one another in consultation 
with the Inspector General to ensure adequate and appropriate 
office space and related provision to the Office of the 
Inspector General.
    Subsection (f) of section 8M establishes procedures for the 
Inspector General's budget. For budgetary duties of the head of 
the establishment established under section 6(f) of the IG Act, 
the Postmaster General shall fulfill the role of the head of 
the establishment. Such procedures are for administrative ease 
and shall not be construed as granting any authority to the 
Postmaster General over the Postal Service.
    Subsection (g) of section 8M transfers to the Inspector 
General responsibilities regarding the Postal Inspection 
Service that were previously held by the Inspector General of 
the U.S. Postal Service.
    Subsection (h) of section 8M authorizes appropriations for 
the Office of Inspector General from the Postal Service Fund.
    Subsection (c) transfers the responsibilities, personnel, 
and other elements of the Office of the Inspector General of 
the PRC to the Inspector General of the Postal Community.
    Subsection (d) transfers the responsibilities, personnel, 
and other elements of the Office of the Inspector General of 
the U.S. Postal Service to the Inspector General of the Postal 
Community.
    Subsection (e) allows the Inspector General to delegate his 
or her functions to officers or employees of the Office of the 
Inspector General. This subsection does not relieve the 
Inspector General of responsibility for these functions.
    Subsection (f) clarifies that the transition of functions 
from the two offices of inspectors general to the one Office of 
Inspector General of the Postal Community does not terminate or 
impact existing legal documents, pending proceedings, or 
ongoing suits. This subsection also clarifies that any 
reference to the Inspector General of the PRC, the Inspector 
General of the U.S. Postal Service, or the respective offices 
in any other federal law, executive order, rule, regulation, 
delegation of authority, or other document related to the 
aforementioned entities shall be deemed to refer to the 
Inspector General of the Postal Community or the Office of the 
Inspector General of the Postal Community, as applicable.
    Subsection (g) transfers existing funds from the two 
separate offices of inspectors general to the Inspector General 
of the Postal Community.
    Subsection (h) amends title 39, United States Code, to 
conform with the amendments made under this section.
    Subsection (i) delays the effective date of the amendments 
made by this section to take affect 30 days after the Inspector 
General is confirmed by the Senate.

Section 303. Right of appeal to Merit Systems Protection Board

    This section amends section 1005(a)(4)(A)(ii)(I) of title 
39, United States Code, to allow certain Postal Service 
employees the right to appeal to the Merit Systems Protection 
Board.

                  TITLE IV--POSTAL CONTRACTING REFORM

Section 401. Contracting provisions

    This section adds a new chapter, 7--Contracting Provisions, 
to title 39:
    Sec. 701. Definitions--Defines terms used in the chapter. 
``Postal contract'' is defined as any contract for the 
procurement of goods or service, including any agreement or 
memorandum of understanding entered into by the Postal Service 
or the PRC. As applied to the PRC, postal contracts are defined 
as those in excess of the Simplified Acquisition Threshold, 
currently $150,000.
    Sec. 702. Delegation of contracting authority--The Postal 
Service and PRC must issue policies on contracting officer 
delegations of authority. Any delegation of authority for 
postal contracts outside the functional contracting unit must 
be made readily available and accessible on its website. A 
contracting officer is required to maintain an awareness of and 
engagement in the activities being performed on all postal 
contracts of which that officer has cognizance, including 
contracts involving delegations of authority. The senior 
procurement executive is given ultimate responsibility and 
accountability for the award and administration of postal 
contracts.
    Sec. 703. Posting of noncompetitive purchase requests for 
noncompetitive contracts--The Postal Service must publicly post 
the noncompetitive purchase request for any noncompetitive 
award for postal contracts of at least $250,000, with this 
amount adjusted annually based on inflation. These postings are 
subject to proprietary information exceptions and competitive 
disadvantage waivers. The PRC must post noncompetitive purchase 
requests of at least $20,000.
    Sec. 704. Review of ethical issues--Ethics officials at the 
Postal Service and PRC are required to review any ethical 
issues relating to a proposed contract before it is awarded and 
advise the contracting officer on their appropriate resolution.
    Sec. 705. Ethical restrictions on participation in certain 
contracting activity--The Postal Service and PRC are required 
to establish regulations that limit contracting officers from 
entering into a postal contract with any party with whom the 
contracting officer has a personal or business relationship, as 
defined in the Standards of Ethical Conduct for Employees of 
the Executive Branch. The heads of these entities may grant 
waivers for contracts in their respective organizations, but 
such waivers must be posted on their respective websites. They 
also may void any contract and recover amounts expended under 
the contract in any cases where there is a final conviction of 
bribery or conflict of interest.

Section 402. Technical amendment to definition

    Corrects a technical amendment made in the 2006 amendments 
to the Contract Disputes Act that inadvertently deleted the 
Postal Service and PRC from the definition of executive 
agencies covered by this Act. This correction will resolve any 
ambiguity and clarify that that Act applies to the Postal 
Service and the PRC, as it has since its enactment in 1978.

                       Explanation of Amendments

    No amendments to H.R. 5714 were offered or adopted during 
Full Committee consideration of the bill.

                        Committee Consideration

    On July 12, 2016 the Committee met in open session and 
ordered reported favorably the bill, H.R. 5714, by voice vote, 
a quorum being present.

                            Roll Call Votes

    No roll call votes were requested or conducted during Full 
Committee consideration of H.R. 5714.

              Application of Law to the Legislative Branch

    Section 102(b)(3) of Public Law 104-1 requires a 
description of the application of this bill to the legislative 
branch where the bill relates to the terms and conditions of 
employment or access to public services and accommodations. 
This bill restores the financial solvency and improve the 
governance of the United States Postal Service in order to 
ensure the efficient and affordable nationwide delivery of 
mail. As such this bill does not relate to employment or access 
to public services and accommodations.

  Statement of Oversight Findings And Recommendations of the Committee

    In compliance with clause 3(c)(1) of rule XIII and clause 
(2)(b)(1) of rule X of the Rules of the House of 
Representatives, the Committee's oversight findings and 
recommendations are reflected in the descriptive portions of 
this report.

         Statement of General Performance Goals and Objectives

    In accordance with clause 3(c)(4) of rule XIII of the Rules 
of the House of Representatives, the Committee's performance 
goals and objectives of the bill are to restore the financial 
solvency and improve the governance of the United States Postal 
Service in order to ensure the efficient and affordable 
nationwide delivery of mail.

                    Duplication of Federal Programs

    No provision of this bill establishes or reauthorizes a 
program of the Federal Government known to be duplicative of 
another Federal program, a program that was included in any 
report from the Government Accountability Office to Congress 
pursuant to section 21 of Public Law 111-139, or a program 
related to a program identified in the most recent Catalog of 
Federal Domestic Assistance.

                  Disclosure of Directed Rule Makings

    The Committee estimates that enacting this bill does direct 
the completion of specific rule makings within the meaning of 5 
U.S.C. 551. Specifically, section 208 of H.R. 5714 directs the 
Postal Regulatory Commission's completion of a final rule or 
rules regarding maintaining or revising the Postal Service's 
authority to increase market dominant rates not later than 
January 1, 2018.

                     Federal Advisory Committee Act

    The Committee finds that the legislation does not establish 
or authorize the establishment of an advisory committee within 
the definition of 5 U.S.C. App., Section 5(b).

                       Unfunded Mandate Statement

    Section 423 of the Congressional Budget and Impoundment 
Control Act (as amended by Section 101(a)(2) of the Unfunded 
Mandate Reform Act, P.L. 104-4) requires a statement as to 
whether the provisions of the reported include unfunded 
mandates. In compliance with this requirement the Committee has 
received a letter from the Congressional Budget Office included 
herein.

                         Earmark Identification

    This bill does not include any congressional earmarks, 
limited tax benefits, or limited tariff benefits as defined in 
clause 9 of rule XXI.

                           Committee Estimate

    Clause 3(d)(1) of rule XIII of the Rules of the House of 
Representatives requires an estimate and a comparison by the 
Committee of the costs that would be incurred in carrying out 
this bill. However, clause 3(d)(2)(B) of that Rule provides 
that this requirement does not apply when the Committee has 
included in its report a timely submitted cost estimate of the 
bill prepared by the Director of the Congressional Budget 
Office under section 402 of the Congressional Budget Act of 
1974.

     Budget Authority and Congressional Budget Office Cost Estimate

    With respect to the requirements of clause 3(c)(2) of rule 
XIII of the Rules of the House of Representatives and section 
308(a) of the Congressional Budget Act of 1974 and with respect 
to requirements of clause (3)(c)(3) of rule XIII of the Rules 
of the House of Representatives and section 402 of the 
Congressional Budget Act of 1974, the Committee has received 
the following cost estimate for this bill from the Director of 
Congressional Budget Office:

                                                 November 10, 2016.
Hon. Jason Chaffetz,
Chairman, Committee on Oversight and Government Reform,
House of Representatives, Washington, DC.
    Dear Mr. Chairman: The Congressional Budget Office has 
prepared the enclosed cost estimate for H.R. 5714, the Postal 
Service Reform Act of 2016.
    If you wish further details on this estimate, we will be 
pleased to provide them. The CBO staff contact is Mark 
Grabowicz.
            Sincerely,
                                                        Keith Hall.
    Enclosure.

H.R. 5714--Postal Service Reform Act of 2016

    Summary: H.R. 5714 would change the laws that govern the 
operation of the Postal Service (USPS), restructure how the 
federal government pays for health benefits for federal 
employees and annuitants, and alter how the federal government 
calculates the contributions that agencies make for retirement 
benefits. Major provisions of the bill would:
           Partially reinstate a postal rate increase 
        that expired in April 2016 (direct spending savings of 
        $8.4 billion);
           Change the requirements for the security of 
        parcels sent by air (direct spending costs of $3.2 
        billion);
           Authorize the Postal Service to phase out 
        delivery of mail directly to business customers' doors 
        (direct spending savings of $2.0 billion);
           Establish a new health benefits program for 
        Postal Service employees, annuitants, and their 
        dependents (net direct spending costs of $4.7 billion 
        and discretionary savings of $1.8 billion);
           Change the nature of the payments that the 
        Postal Service is required to make related to retiree 
        health benefits (no net effect on direct spending); and
           Require the use of demographic data specific 
        to Postal Service employees for the calculation of 
        certain retirement benefits, (no net effect on direct 
        spending, but discretionary costs totaling $5.9 
        billion).\1\
---------------------------------------------------------------------------
    \1\CBO estimates that this change would reduce costs to the Postal 
Service by $0.4 billion but increase the other federal retirement costs 
by the same amount. In addition, CBO estimates the Postal Service would 
spend half of the savings it would realize in lower retirement costs. 
Thus we estimate this policy would lead to a government-wide cost of 
$0.2 billion.
---------------------------------------------------------------------------

Effects on the federal budget

    CBO estimates that enacting H.R. 5714 would result in $2.2 
billion in direct spending savings over the 2017-2026 period; 
therefore, pay-as-you-go procedures apply. Enacting H.R. 5714 
would not affect revenues.
    The total changes in direct spending over the 2017-2026 
period are split between net off-budget savings of about $1.9 
billion and net on-budget savings of about $0.4 billion. (USPS 
cash flows are recorded in the federal budget in the Postal 
Service Fund and are classified as off-budget, while the cash 
flows of the other accounts affected by H.R. 5714 are 
classified as on-budget.)
    In addition, CBO estimates that implementing H.R. 5714 
would have a net discretionary cost of $4.1 billion over the 
next 10 years, subject to appropriation actions consistent with 
that estimate.
    CBO estimates that enacting the legislation would not 
increase net direct spending or on-budget deficits in any of 
the four consecutive 10-year periods beginning in 2027.

Effects on state, local, and tribal governments, and on the private 
        sector

    By increasing postal rates for public and private mailers, 
H.R. 5714 would impose intergovernmental and private-sector 
mandates, as defined in the Unfunded Mandates Reform Act 
(UMRA), on public and private entities that send certain types 
of mail through the USPS. Additionally, the bill would impose a 
private-sector mandate on some postal annuitants by requiring 
them to enroll in Part B of Medicare, if eligible. CBO 
estimates that the annual cost for public entities of 
increasing the postal rates would exceed the threshold 
established in UMRA for intergovernmental mandates ($77 million 
in 2016, adjusted annually for inflation) in four of the first 
five years after the rates became effective. CBO also estimates 
the aggregate annual cost for private entities of complying 
with the mandates would exceed the threshold established in 
UMRA private-sector mandates ($154 million in 2016, adjusted 
annually for inflation) in each of the first five years the 
mandates were effective.
    Estimated cost to the federal government: The estimated 
budgetary effects of HR. 5714 are shown in Table 1. The costs 
of this legislation fall within all budget functions that 
include salaries and expense accounts; most budgetary effects 
would occur in budget functions 370 (commerce and housing 
credit), 550 (health), 570 (Medicare), and 600 (income 
security).

                                TABLE I--SUMMARY OF BUDGETARY EFFECTS OF H.R. 5714, THE POSTAL SERVICE REFORM ACT OF 2016
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                         By fiscal year, in millions of dollars--
                                 -----------------------------------------------------------------------------------------------------------------------
                                   2017     2018      2019      2020      2021      2022      2023      2024      2025      2026    2017-2021  2017-2026
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                OFF-BUDGET INCREASES OR DECREASES (-) IN DIRECT SPENDINGa
 
Estimated Budget Authority......     746      -189      -259      -325      -391      -377      -353      -329      -235      -151       -417     -1,859
Estimated Outlays...............     746      -189      -259      -325      -391      -377      -353      -329      -235      -151       -417     -1,859
 
                                                 ON-BUDGET INCREASES OR DECREASES (-) IN DIRECT SPENDING
 
Estimated Budget Authority......      28       -13      -102       -10       -19       -13       -35       -83       -61       -79       -116       -361
Estimated Outlays...............      28       -13      -102       -10       -19       -13       -35       -83       -61       -79       -116       -361
 
                                             INCREASES OR DECREASES (-) IN DIRECT SPENDING (UNIFIED BUDGET)b
 
Estimated Budget Authority......     774      -202      -361      -335      -410      -364      -388      -412      -296      -230       -533     -2,220
Estimated Outlays...............     774      -202      -361      -335      -410      -364      -388      -412      -296      -230       -533     -2,220
 
                                                     INCREASES IN SPENDING SUBJECT TO APPROPRIATION
 
Estimated Authorization Level...     381       497       409       391       393       394       405       417       419       421      2,071      4,127
Estimated Outlays...............     381       497       409       391       393       394       405       417       419       421      2,071      4,127
--------------------------------------------------------------------------------------------------------------------------------------------------------
Note: Components may not add to totals because of rounding.
aCash flows of the Postal Service are classified as off-budget.
bThe federal unified budget is the sum of on-budget and off-budget accounts.

    Basis of estimate: For this estimate, CBO assumes that H.R. 
5714 will be enacted near the end of calendar year 2016. H.R. 
5714 would have effects on off-budget direct spending, on-
budget direct spending, and spending subject to appropriation. 
Provisions related to health care and retirement would 
simultaneously affect all three types of spending. In the next 
section we provide details about the budgetary effects for each 
of the three budget categories. The basis for estimates of the 
effects on spending for Postal Service operations, health 
benefits, and retirement benefits are discussed in separate 
sections devoted to those topics.

Budgetary effects

    Enacting H.R. 5714 would decrease net direct spending for 
the unified budget by $2.2 billion over the 2017-2026 period. 
Off-budget spending would decline by about $1.9 billion and on-
budget spending would decline by about $0.4 billion.
    Off-Budget Direct Spending (Postal Service Fund). CBO 
estimates that enacting H.R. 5714 would reduce net USPS 
spending by $1.9 billion over the 2017-2026 period (see Table 
2).
    Postal Service Operations. Three provisions would directly 
affect how the Postal Service operates and would decrease its 
net spending by $7.1 billion over the 2017-2026 period.
    Health Benefits. Several provisions would affect how the 
government pays for the health care expenses of workers and 
annuitants (both postal and nonpostal) and would increase 
direct spending by $5.5 billion over the 2017-2026 period.
    Retirement Benefits. One provision would affect how the 
USPS pays for retirement benefits for its annuitants and would, 
on net, decrease direct spending by $0.2 billion over the 2017-
2026 period.
    On-Budget Direct Spending. CBO estimates that enacting H.R. 
5714 would, on net, reduce on-budget direct spending by almost 
$0.4 billion over the 2017-2026 period.
    Health Benefits. Several provisions would affect how the 
government pays for the health care expenses of employees and 
annuitants (both postal and nonpostal) and would decrease 
direct spending by $0.8 billion over the 2017-2026 period.
    Use Postal-Specific Data for Retirement Benefits. One 
provision would affect how the government pays for retirement 
benefits for its annuitants. CBO estimates that enacting that 
provision would increase direct spending by $0.4 billion over 
the 2017-2026 period.
    Spending Subject to Appropriation. CBO estimates that 
implementing H.R. 5714 would increase discretionary spending by 
about $4.1 billion, assuming appropriation actions consistent 
with those estimates (see Table 3). Over the 2017-2026 period, 
implementing the bill would:

           Increase agency contributions for retirement 
        benefits by $5.9 billion; those contributions would be 
        recorded as offsetting receipts of an equal amount in 
        the Civil Service Retirement and Disability Fund 
        (CSRDF) and would have no net effect on spending,
           Decrease spending by agencies for the 
        Federal Employees Health Benefits (FEHB) program by 
        $1.8 billion, and
           Increase spending by the Inspector General 
        for the Postal Service by less than $0.1 billion.

                                      TABLE 2--OFF-BUDGET AND ON-BUDGET CHANGES IN DIRECT SPENDING UNDER H.R. 5714
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                        By fiscal year, in millions of dollars--
                               -------------------------------------------------------------------------------------------------------------------------
                                  2017      2018      2019      2020      2021      2022      2023      2024      2025      2026    2017-2021  2017-2026
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                INCREASES OR DECREASES (-) IN OFF-BUDGET DIRECT SPENDING
 
Postal Service Operations
    Rate Increase.............      -640      -900      -900      -900      -900      -875      -850      -825      -800      -775     -4,240     -8,365
    Enhanced Security.........     1,400       600       150       150       150       150       150       150       150       150      2,450      3,200
    Mail Delivery.............         0       -10       -50      -125      -200      -250      -300      -350      -340      -330       -385     -1,955
                               -------------------------------------------------------------------------------------------------------------------------
        Subtotal..............       760      -310      -800      -875      -950      -975    -1,000    -1,025      -990      -955     -2,175     -7,120
Health Benefits
    USPS payments to OPM......         0       140       580       620       670       720       770       830       890       950      2,010      6,170
    PSHB Employees Premiums...         0       -20       -80      -100      -100      -100      -100      -110      -110      -120       -300       -840
    Medicare Part B Premiums..         0        20        60        50        10         0         0         0         0         0        140        140
                               -------------------------------------------------------------------------------------------------------------------------
        Subtotal..............         0       140       560       570       580       620       670       720       780       830      1,850      5,470
Retirement Benefits
    Use Postal-Specific Data         -28       -37       -38       -40       -41       -43       -45       -47       -49       -51       -184       -419
     for Retirement Benefits..
    Capital Improvements......        14        19        19        20        21        22        23        24        25        26         92        209
                               -------------------------------------------------------------------------------------------------------------------------
        Subtotal..............       -14       -19       -19       -20       -21       -22       -23       -24       -25       -26        -92       -209
Total Changes.................       746      -189      -259      -325      -391      -377      -353      -329      -235      -151       -417     -1,859
                                                 INCREASES OR DECREASES (-) IN ON-BUDGET DIRECT SPENDING
 
Health Benefits
    Medicare..................         0       150       690       870       880       960       980     1,010     1,110     1,180      2,590      7,830
    Medicare Part B Premiums..         0       -20       -60       -50       -10         0         0         0         0         0       -140       -140
    PSRHBF Payments Based on           0      -140      -580      -620      -670      -720      -770      -830      -890      -950     -2,010     -6,170
     Claims...................
    PSHB Annuitant Premiums...         0       -20       -90      -110      -110      -110      -110      -120      -130      -140       -330       -940
    FEHB Annuitant Premiums...         0       -20      -100      -140      -150      -160      -180      -190      -200      -220       -410     -1,360
                               -------------------------------------------------------------------------------------------------------------------------
        Subtotal..............         0       -50      -140       -50       -60       -30       -80      -130      -110      -130       -300       -780
Use Postal-Specific Data for          28        37        38        40        41        43        45        47        49        51        184        419
 Retirement Benefits..........
Total Changes.................        28       -13      -102       -10       -19       -13       -35       -83       -61       -79       -116       -361
--------------------------------------------------------------------------------------------------------------------------------------------------------
Notes: Budget authority equals outlays for all estimates; Components may not add to totals because of rounding.
USPS = United States Postal Service; OPM = Office of Personnel Management; PSHB = Postal Service Health Benefits; PSRHBF = Postal Service Retiree Health
  Benefits Fund; FEHB = Federal Employee Health Benefits.


                                          TABLE 3--CHANGES IN SPENDING SUBJECT TO APPROPRIATION UNDER H.R. 5714
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                        By fiscal year, in millions of dollars--
                               -------------------------------------------------------------------------------------------------------------------------
                                  2017      2018      2019      2020      2021      2022      2023      2024      2025      2026    2017-2021  2017-2026
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                             INCREASES OR DECREASES (-) IN SPENDING SUBJECT TO APPROPRIATION
 
Use of Postal-Specific Data
 for Retirement Benefitsa
    Estimated Authorization          378       522       544       566       588       609       630       652       674       696      2,598      5,858
     Level....................
    Estimated Outlays.........       378       522       544       566       588       609       630       652       674       696      2,598      5,858
Health Care Premiums for
 Nonpostal Employees
    Estimated Authorization            0       -30      -140      -180      -200      -220      -230      -240      -260      -280       -550     -1,780
     Level....................
    Estimated Outlays.........         0       -30      -140      -180      -200      -220      -230      -240      -260      -280       -550     -1,780
USPS Office of Inspector
 General
    Estimated Authorization            3         5         5         5         5         5         5         5         5         5         23         48
     Level....................
        Estimated Outlays.....         3         5         5         5         5         5         5         5         5         5         23         48
    Total Changes.............
        Estimated                    381       497       409       391       393       394       405       417       419       421      2,071      4,127
         Authorization Level..
        Estimated Outlays.....       381       497       409       391       393       394       405       417       419       421      2,071      4,127
Memoranduma
Offsetting Receipts Resulting       -378      -522      -544      -566      -588      -609      -630      -652      -674      -696     -2,598     -5,858
 From Higher Employer
 Contributions................
--------------------------------------------------------------------------------------------------------------------------------------------------------
Notes: Components may not add to totals because of rounding; USPS = United States Postal Service.
aEmployer contributions are intragovernmental transactions that do not affect the deficit; negative numbers indicate an increase in such
  intragovemmental receipts. The receipts shown in the memorandum result from federal employer contributions financed by future appropriations; such
  receipts are not considered to be an offset to direct spending because they are contingent on future appropriation actions.

Postal Service operations

    Enacting H.R. 5714 would make several change to the 
operations of the USPS, including an increase in postage rates. 
In total, CBO estimates that enacting the bill would decrease 
net off-budget direct spending for those operations by $7.1 
billion over the 2017-2026 period (see Table 2).
    Rate Increase. In December 2013, the Postal Regulatory 
Commission approved a 4.3 percent rate hike for first-class 
mail and other services, including an increase in the price of 
a first-class stamp from $0.47 to $0.49, but that increase was 
temporary and expired in April 2016. H.R. 5714 would authorize 
the Postal Service to reinstate up to 50 percent of that 
increase.
    Based on an analysis of information from the Postal Service 
about the effects of rate increases on mail volume and revenue, 
CBO estimates that partially reinstating the recent rate hike 
would increase net collections of the USPS by $640 million in 
2017 and about $8.4 billion over the 2017-2026 period. (Those 
collections are recorded as offsetting receipts in the budget.) 
We expect that the increase in net receipts would begin to 
decline in 2022 and thereafter because of falling mail volume 
and because some of the savings would probably be spent by the 
Postal Service or returned to mailers in the form of lower 
rates rather than accumulated as annual surpluses in the Postal 
Service Fund.
    Enhanced Security. H.R. 5714 would require the Postal 
Service to improve security for parcels and packages that it 
transports by air by meeting certain federal standards for 
information security (Federal Information Processing Standards 
issued by the National Institute of Standards and Technology) 
or by requiring mailers to bring those items to post offices or 
other USPS retail sites and to verify their identity. In 2015 
the Postal Service shipped nearly $5 billion worth of parcels 
and packages by air. To meet the bill's requirements and 
maintain that revenue stream, the USPS would have to develop 
information technology systems and acquire new postage meters 
to replace most of the approximately 1 million meters currently 
used by the agency, commercial mailers, businesses, and other 
shippers. The Postal Service also would incur increased labor 
costs to verify the identities of customers who send packages 
and parcels from retail sites.
    In addition, under the provisions of H.R. 5714, CBO 
estimates that because of the additional security measures, 
some customers that currently use the Postal Service to deliver 
parcels and packages would shift their business to other 
delivery providers. Thus, we expect that the USPS would lose 
revenue during 2017 and 2018 and possibly in subsequent years.
    Based on information from the USPS and the costs of similar 
projects, we estimate that the forgone revenue and additional 
costs would increase net outlays of the Postal Service by $3.2 
billion over the 2017-2026 period. Costs would be higher in the 
first two years, mostly because of the need to acquire new 
postage meters. Annual spending of $150 million after 2018 
would mostly be for system maintenance and increased labor 
costs.
    Mail Delivery. USPS delivers mail to the doors of 
customers, to sidewalk and curbside receptacles, and to 
centralized mail receptacles that serve multiple addresses. 
H.R. 5714 would require the Postal Service to convert most 
business (but not residential) addresses with door delivery to 
sidewalk, curbside, or centralized delivery.
    In 2015, the Postal Service provided door delivery to about 
6 million business addresses. Upon enactment of H.R. 5714, the 
USPS expects that it would change the means of delivery for 
about 500,000 addresses in 2017 and an additional 1 million 
addresses annually over the 2018-2022 period. We anticipate 
that nearly all the conversions would be to centralized 
delivery for the affected businesses.
    Based on an analysis of information from the Postal Service 
about the savings per business address from implementing 
curbside and centralized delivery as compared to door delivery 
(about $80 per address for centralized delivery and $45 per 
address for curbside delivery), as well as the costs to install 
and maintain curbside and centralized mail receptacles (about 
$70 to $100 per business address for installation), CBO 
estimates that annual savings under H.R. 5714 would grow to 
$350 million by 2024 and would total nearly $2 billion over the 
2017-2026 period. Beginning in 2025, we expect that annual 
savings would gradually decline as the Postal Service increased 
spending or shared savings with its customers in the form of 
lower rates.
    Other Provisions. Several other provisions of H.R. 5714 
could help the Postal Service in its efforts to lower its net 
costs; however, CBO has not estimated additional savings for 
those provisions because it is not clear that any savings would 
exceed what we expect will be achieved under current law or 
under other provisions of the legislation.
    H.R. 5714 would authorize the Postal Service to establish a 
program to provide services for agencies of state, local, or 
tribal governments for a fee. Implementing this program would 
require the Postal Service to offer cost-effective alternatives 
for services to states or localities. This program might 
increase USPS revenues but also would add to its costs. CBO has 
no information that would allow us to predict the cost-
effectiveness of such new ventures.
    The bill also would reform certain Postal Service 
contracting practices. These changes might reduce USPS costs, 
but CBO expects that any net savings probably would be 
indistinguishable from savings that would result from the 
Postal Service's current efforts to improve procurement 
practices.

Health benefits

    Many of the changes in H.R. 5714 would affect how health 
care is provided to all federal annuitants and employees. As 
shown in Table 4, those changes would affect direct spending 
(both on- and off-budget) as well as spending subject to 
appropriation. CBO estimates that enacting the bill would, on 
net, increase direct spending (in the unified budget) by $4.7 
billion over the 2017-2026 period to provide health care to 
postal and other federal employees and annuitants. In addition, 
implementing the bill would reduce discretionary spending by 
$1.8 billion over the 2017-2026 period for providing health 
care to federal employees, assuming appropriation actions 
consistent with that estimate.

                               TABLE 4--CHANGES IN SPENDING FROM PROVISIONS OF H.R. 5714 THAT AFFECT HEALTH CARE SPENDING
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                    By fiscal year, outlays in millions of dollars--
                               -------------------------------------------------------------------------------------------------------------------------
                                  2017      2018      2019      2020      2021      2022      2023      2024      2025      2026    2017-2021  2017-2026
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                      INCREASES OR DECREASES (-) IN DIRECT SPENDING
 
Medicare
    Require Participation in           0       150       690       870       880       960       980     1,010     1,110     1,180      2,590      7,830
     Medicare (on-budget).....
    Medicare Part B Premiums           0        20        60        50        10         0         0         0         0         0        140        140
     Paid by USPS (off-budget)
    Medicare Part B Premiums           0       -20       -60       -50       -10         0         0         0         0         0       -140       -140
     Paid by USPS (on-budget).
Postal Service Health Benefits
    Premiums for USPS                  0       -20       -80      -100      -100      -100      -100      -110      -110      -120       -300       -840
     Employees (off-budget)...
    Premiums for USPS                  0       -20       -90      -110      -110      -110      -110      -120      -130      -140       -330       -940
     Annuitants (on-budget)...
    Payments Based on Claims           0      -140      -580      -620      -670      -720      -770      -830      -890      -950     -2,010     -6,170
     (on-budget)..............
    USPS Payments to OPM (off-         0       140       580       620       670       720       770       830       890       950      2,010      6,170
     budget)..................
Federal Employee Health
 Benefits
    Premiums for Nonpostal             0       -20      -100      -140      -150      -160      -180      -190      -200      -220       -410     -1,360
     Annuitants (on-budget)...
                               -------------------------------------------------------------------------------------------------------------------------
        Total Changes, Unified         0        90       420       520       520       590       590       590       670       700      1,550      4,690
         Budget...............
 
                                                     DECREASES IN SPENDING SUBJECT TO APPROPRIATION
 
FEHB Premiums for Nonpostal            0       -30      -140      -180      -200      -220      -230      -240      -260      -280       -550     -1,780
 Employees....................
--------------------------------------------------------------------------------------------------------------------------------------------------------
Notes: Budget authority equals outlays for all estimates; USPS = United States Postal Service; OPM = Office of Personnel Management; FEHB = Federal
  Employee Health Benefits;.

    Background. Under current law, USPS employees and 
annuitants receive health insurance benefits through the FEHB 
program, which also covers nonpostal civilian federal employees 
and annuitants. Insurance plans that participate in the FEHB 
program charge premiums that are the same for all participants, 
regardless of whether the participant is affiliated with the 
USPS or not, or is an employee or an annuitant. The Postal 
Service is obligated to contribute to the health insurance 
premiums of its current and retired employees who participate 
in the FEHB program. (Postal Service payments to FEHB are off-
budget direct spending.) In 2016 the agency made direct 
payments for retirees' premiums to the FEHB fund totaling 
nearly $3.5 billion.
    Under current law, the Postal Service also was required to 
make a payment in 2016 to the Postal Service Retiree Health 
Benefits Fund (PSRHBF) to prefund the health obligations of its 
future retirees. (Such payments have no effect on the unified 
budget because the off-budget payments are offset exactly by 
the on-budget receipt of the payments.) However, because of the 
Postal Service's poor financial condition, it has not made 
those statutorily specified payments since 2010, including $5.8 
billion for 2016.
    Starting in 2017, the Postal Service will no longer make 
payments directly to the FEHB fund for its annuitants. Rather, 
under current law, the Postal Service will be required to make 
payments to the PSRHBF to cover the future health care 
liabilities accruing to current employees (known as normal 
costs) and to eliminate the unfunded liability for retirees' 
health benefits (known as amortization payments). CBO estimates 
that required payments for normal costs and amortization 
payments will sum to nearly $7 billion in fiscal year 2017. The 
PSRHBF will then have to make payments to the FEHB program in 
2017 and thereafter for the Postal Service's share of premiums. 
Because of its poor financial condition, we expect that the 
Postal Service will not make any of those normal or 
amortization payments over the 2017-2026 period; nevertheless, 
CBO estimates that the PSRHBF will pay the required premiums 
through 2026. (If the Postal Service does not make those 
intragovernmental payments, CBO expects that it will spend that 
money on its current operations, including capital 
improvements, and thus increase federal outlays over the 
period.)
    Postal Service Health Benefits Program. H.R. 5714 would 
change how the federal government provides health insurance for 
USPS employees and annuitants. The legislation would direct OPM 
to establish a new Postal Service Health Benefits (PSHB) 
program in 2018 (similar to the FEHB program), under which 
Postal Service employees and annuitants could enroll to receive 
health insurance from qualifying plans. Premiums in the PSHB 
program would be set based on the expected health care costs of 
only those USPS employees, annuitants, and dependents who 
participate in the program. (Premiums in the FEHB program would 
be set based on the expected health care costs of the nonpostal 
enrollees that remained in that program.) In addition, the bill 
would require all eligible postal annuitants who participate in 
the PSHB program to enroll in Medicare. Finally, PSHB plans 
would be required to participate in Medicare Part D and would 
thereby receive subsidies related to prescription drugs.
    Postal Service employees and annuitants would be in the 
same risk pool, so premiums would be the same for both groups; 
however, H.R. 5714 would change the basis for providing funds 
to and making payments from the PSRHBF to cover the cost of 
health care claims of Postal Service annuitants. CBO expects 
that the cost of health care claims would be lower for 
annuitants than for USPS employees because the bill would 
effectively shift some spending to Medicare Parts B and D. 
Thus, that change would reduce both the amount that the USPS 
would have to pay into the PSRHBF and the amount that the 
PSRHBF would pay to PSHB plans.
    Medicare. Because H.R. 5714 would require Medicare-eligible 
annuitants who had been employed by the Postal Service to 
participate in Medicare Part B, Medicare would become the 
primary payer for certain services. The PSHB plans would pay 
cost-sharing for those beneficiaries' health care services. In 
addition, the bill would require the USPS to contribute towards 
the Medicare Part B premiums of annuitants that newly enroll in 
Medicare under the legislation. The mechanism by which the 
Centers for Medicare and Medicaid Services (CMS) would collect 
those premium payments is not specified, but for purposes of 
this estimate, CBO assumes that the USPS would make the 
required payments for Medicare premiums and that CMS would 
collect the remaining premiums from USPS annuitants. Finally, 
H.R. 5714 would require PSHB plans to participate in Medicare 
Part D. As a result, Medicare Part D would make certain 
payments to those PSHB plans.
    Based on an analysis of Medicare spending and an estimate 
of the number of annuitants who would gain Medicare coverage 
under the legislation, CBO estimates that enacting H.R. 5714 
would:
           Increase on-budget direct spending for 
        Medicare by about $7.8 billion over the 2017-2026 
        period, net of Medicare Part B premiums that would be 
        paid by postal annuitants;
           Increase off-budget direct spending by $0.1 
        billion over the 2017-2026 period for the portion of 
        Part B premiums that the USPS would pay under the bill; 
        and
           Decrease on-budget direct spending by $0.1 
        billion, reflecting receipts of Part B premiums paid by 
        the USPS.
    PSHB. CBO anticipates that shifting the primary 
responsibility for covering certain health care services from 
PSHB plans to the Medicare program would decrease costs to the 
Postal Service. As a result, CBO estimates that the PSHB 
premiums for postal employees and annuitants would be lower 
than the FEHB premiums those people will face under current 
law. The legislation is unclear whether PSHB plans would 
receive payments related to prescription drugs under the 
Retiree Drug Subsidy (RDS) program or the Employer Group Waiver 
Plan (EGWP) program. For purposes of this estimate, CBO assumes 
that plans would participate under the RDS program. Enacting 
H.R. 5714 would:
           Decrease net off-budget direct spending for 
        the Postal Service by $0.8 billion over the 2017-2026 
        period because of a reduction in premiums for current 
        postal workers; and
           Decrease on-budget direct spending $0.9 
        billion over the 2017-2026 period for payments from the 
        PSRHBF because of a reduction in premiums for 
        annuitants in the Postal Service.
    Under the bill, Medicare would pay most of the health care 
costs for eligible beneficiaries and PSHB plans would pay for 
the cost sharing (for example, copayments and deductibles) when 
those beneficiaries receive health care services. Consequently, 
the health claims paid by PSHB plans would be less for 
annuitants than for postal employees. Because premiums would be 
based on the expected claims for all people participating in 
PSHB plans (current USPS employees and annuitants), the 
premiums would be higher for annuitants and lower for employees 
than their expected health claims. As discussed previously, 
payments from the PSRHBF would only cover the health claims of 
USPS annuitants; therefore, the total payments into the PSHB 
fund would not be sufficient to cover the required payments for 
premiums for annuitants. Insurance plans probably would not 
agree to participate in the PSHB program if premiums were not 
paid in full--consequently, CBO expects that the USPS would 
have to make additional payments to cover the difference. For 
purposes of this estimate, CBO assumes the USPS would make 
those payments to OPM, and that OPM would make premium payments 
to PSHB plans. Based on an analysis of FEHB premiums and the 
health care spending of USPS annuitants, CBO estimates that 
enacting the bill would:
           Decrease on-budget direct spending by $6.2 
        billion over the 2017-2026 period, for payments from 
        the PSRHBF to PSHB plans; and
           Increase off-budget direct spending by the 
        same amount--$6.2 billion over the 2017-2026 period--
        for payments from the USPS to OPM.
    FEHB. Creating two different groups of federal employees 
for the purpose of calculating health insurance premiums (FEHB 
and PSHB) would effectively lower the cost of providing 
insurance to the nonpostal enrollees who remained in the FEHB 
program. Premiums charged to nonpostal enrollees in the FEHB 
program would be based on expected health costs of the 
employees, annuitants, and dependents remaining in the FEHB 
program. Because nonpostal enrollees cost FEHB plans slightly 
less than postal enrollees, on average, CBO estimates that 
premiums in the FEHB program would be lower than under current 
law.
    The estimated reduction in federal costs results from lower 
federal payments for the government's share of FEHB premiums. 
In 2015, the federal government contributions to the premiums 
of the nonpostal enrollees in the FEHB program averaged 71 
percent of premiums. In total, CBO estimates that:
           Enacting the bill would reduce on-budget 
        direct spending for the premiums of nonpostal 
        annuitants by about $1.4 billion over the 2017-2026 
        period. Premium payments for annuitants are classified 
        as direct spending; and
           Implementing the bill would reduce federal 
        outlays for health insurance premiums for nonpostal 
        employees by about $1.8 billion over the 2017-2026 
        period. The government's contributions for those 
        premiums for active employees are subject to 
        appropriation and thus classified as discretionary 
        spending.

Retirement benefits

    Enacting H.R. 5714 would affect the contributions for 
retirement benefits made by the Postal Service and other 
federal agencies (see Tables 2 and 3). In total, CBO estimates 
that enacting the bill would increase net direct spending for 
federal retirement benefits (in the unified budget) by $0.2 
billion over the 2017-2026 period. Additionally, implementing 
the bill would increase discretionary costs related to 
retirement benefits by $5.9 billion for increased contributions 
by federal agencies to the Civil Service Retirement and 
Disability Fund (CSRDF), subject to the availability of 
appropriations. (Those increased contributions would be 
recorded as offsetting receipts to the fund and would have no 
net budgetary impact.)
    Background. H.R. 5714 would direct OPM to use economic and 
demographic factors specific to Postal Service employees, 
rather than government-wide data, to calculate annual 
contributions that the USPS is required to make to federal 
retirement accounts under the Federal Employees Retirement 
System (FERS).
    For 2015, the Postal Service made about $3.5 billion in 
contributions to the CSRDF for FERS employees and also was 
required to make an amortization payment of about $240 million 
for those employees. The agency currently makes no 
contributions for employees in the Civil Service Retirement 
System (CSRS). Beginning in fiscal year 2017, the Postal 
Service is required to make annual payments, amortized over 27 
years, to liquidate any unfunded liability as estimated by OPM 
for retirees' CSRS pension benefits. (The unfunded liability is 
the total liability accrued to date for retirees' pension 
benefits minus the balance of the CSRDF attributable to Postal 
Service contributions.)
    Because of the Postal Service's poor financial condition, 
CBO expects that the USPS will not make the amortization 
payments for FERS or CSRS over the 2017-2026 period. We expect 
the Postal Service to continue to contribute to the CSRDF for 
FERS employees each year.
    CSRDF Payments. Based on an analysis conducted by OPM in 
2014, CBO estimates that enacting H.R. 5714 would lower the 
Postal Service's annual employer contribution for FERS 
employees by between 0.1 percent and 0.2 percent of salary 
because Postal Service employees tend to have lower salaries 
and higher mortality rates (when retired) compared with the 
averages for all federal employees. CBO estimates that enacting 
this provision would:
           Decrease off-budget direct spending for 
        Postal Service contributions to the CSRDF by about $420 
        million over the 2017-2026 period; and
           Increase on-budget direct spending by $420 
        million over the 2017-2026 period because offsetting 
        receipts in the CSRDF would decline by the same amount 
        the Postal Service saved.
    However, CBO expects that lowering retirement expenses for 
the USPS would lead the agency to modify its current efforts to 
reduce spending. In recent years, the agency has implemented 
severe measures such as curtailing capital spending, closing 
mail processing facilities, making major reductions in service 
standards, and either deferring or failing to make certain 
required payments to certain funds in the Treasury. CBO expects 
that enacting legislation to lower retirement expenses for the 
USPS would lead the agency to alter its cost-reduction program 
by cutting spending somewhat less severely than it would 
without the legislation. Thus, CBO estimates that under the 
proposal, the Postal Service would decrease off-budget spending 
by about half of the savings in retirement contributions--about 
$210 million over the 2017-2026 period.
    Payments by Federal Agencies. Because H.R. 5714 would 
require the use of postal-specific economic and demographic 
factors to calculate the employer contribution toward 
retirement that the USPS makes on behalf of its employees, the 
amount of employer contributions required from most other 
federal agencies would be increased. OPM expects that using 
economic and demographic factors that exclude postal workers 
from the calculation of the contributions required of other 
agencies would raise their contribution rates by about 0.3 
percent of salary. Based on that assumption, CBO estimates that 
such an increase in contributions would increase spending 
subject to appropriation by about $5.9 billion over the 2017-
2026 period. (That cost would be offset by additional receipts 
to the CSRDF and thus would have no net effect on future 
deficits.) However, the basis of such a disparate effect on the 
change in contribution rates between the USPS and nonpostal 
agencies is unclear to CBO. OPM has noted that their 
assumptions could change upon an updated analysis and review of 
the USPS and nonpostal experience.

USPS Office of Inspector General

    H.R. 5714 would merge the Office of Inspector General (OIG) 
of the USPS and the OIG of the Postal Regulatory Commission and 
would require the newly formed office to comply with certain 
hiring, employment, and contracting practices under Title 5 of 
the United States Code. This would increase costs for the 
administration of personnel benefits for about 1,200 employees. 
Based on an analysis of information from the OIG for the USPS, 
we estimate that total costs would be about $3 million in 2017 
and about $5 million annually thereafter, assuming 
appropriation of the necessary amounts (see Table 3).
    Pay-As-You-Go considerations: The Statutory Pay-As-You-Go 
Act of 2010 establishes budget-reporting and enforcement 
procedures for legislation affecting direct spending or 
revenues. Only on-budget changes to outlays or revenues are 
subject to pay-as-you-go procedures. The net changes in outlays 
that are subject to those pay-as-you-go procedures are shown in 
the following table.

   TABLE 5--CBO ESTIMATE OF PAY-AS-YOU-GO EFFECTS FOR H.R. 5714, THE POSTAL SERVICE REFORM ACT OF 2016, AS ORDERED REPORTED BY THE HOUSE COMMITTEE ON
                                                    OVERSIGHT AND GOVERNMENT REFORM ON JULY 12, 2016
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                 By fiscal year, in millions of dollars--
                                                 -------------------------------------------------------------------------------------------------------
                                                   2017    2018     2019     2020    2021    2022    2023    2024    2025    2026   2017-2021  2017-2026
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                  NET INCREASE OR DECREASE (-) IN THE ON-BUDGET DEFICIT
 
Statutory Pay-As-You-Go Impact..................      28     -13      -102     -10     -19      13     -35     -83     -61     -79       -116       -361
--------------------------------------------------------------------------------------------------------------------------------------------------------

    Increase in long-term direct spending and deficits: CBO 
estimates that enacting the legislation would not increase net 
direct spending or on-budget deficits in any of the four 
consecutive 10-year periods beginning in 2027.
    Intergovernmental and private-sector impact: By increasing 
postal rates for public and private mailers, H.R. 5714 would 
impose intergovernmental and private-sector mandates as defined 
in UMRA. The bill also would impose mandates on some postal 
annuitants by requiring them to enroll in Medicare, if 
eligible. CBO estimates that the annual costs to public 
entities of complying with the mandate that increases postal 
rates would exceed the threshold established in UMRA for 
intergovernmental mandates ($77 million in 2016, adjusted 
annually for inflation) in four of the first five years after 
the rate increase becomes effective. CBO estimates the 
aggregate annual costs of the mandates on private entities 
(including the rate increase) would exceed the threshold 
established in UMRA for private-sector mandates ($154 million 
in 2016, adjusted annually for inflation) in each of the first 
five years the mandates are in effect.

Mandates on public and private mailers

    Section 207 of H.R. 5714 would make permanent an increase 
in postal rates for certain products, including those for which 
the Postal Service has a statutory monopoly, increasing the 
postage rate for first-class mail and other market dominant 
products by 1 cent. Because the USPS holds a statutory monopoly 
on first class mail, standard mail, and periodicals placed in 
USPS mail boxes, an increase in postal rates would constitute a 
mandate on public and private entities that mail those items 
through the USPS. The cost of the mandate would be the 
additional cost of mailing those items.
    On the basis of projections of the amount of first class 
mail, standard mail, and periodicals that are expected to be 
sent at the increased rate, CBO estimates that the additional 
cost to public and private entities would total about $620 
million in 2017, increasing to about $870 million annually 
through 2021 and falling thereafter. (Those figures exclude 
additional amounts paid for other postal services and amounts 
paid by the federal government for postal services.) Taking 
into account the size of state and local governments as a 
percentage of the economy, CBO estimates that the 
intergovernmental mandate would cost about $70 million in 2017 
and increase to about $100 million annually over the next four 
years. For private mailers, CBO estimates that the increase in 
postal rates would total about $550 million in 2017 and 
increase to about $770 million annually over the next four 
years.
    The bill also would impose a private-sector mandate on 
national and state political committees by repealing their 
current discount on postal rates for third-class letters 
(standard mail). Based on the information from political 
committees and the USPS, CBO estimates that the cost of the 
mandate would average about $5 million annually.

Mandate on postal annuitants

    The bill would require all postal annuitants enrolled in 
Postal Service health plans to enroll in Medicare, if they are 
eligible. Those postal annuitants would be required to pay new 
premiums associated with mandatory Medicare enrollment and 
additional amounts for health care services. However, Postal 
Service health plans pay a share of the cost of annuitants' 
health care services, and CBO estimates that the aggregate 
additional cost for those annuitants would be offset by those 
contributions.
    Estimate prepared by: Federal costs: Paul Masi--Health care 
provisions; Amber Marcellino--Retirement (discretionary 
effect); Mark Grabowicz--All other. Impact on state, local, and 
tribal governments: Zachary Byrum. Impact on the private 
sector: Paige Piper/Bach.
    Estimate approved by: H. Samuel Papenfuss, Deputy Assistant 
Director for Budget Analysis.

         Changes in Existing Law Made by the Bill, as Reported

  In compliance with clause 3(e) of rule XIII of the Rules of 
the House of Representatives, changes in existing law made by 
the bill, as reported, are shown as follows (existing law 
proposed to be omitted is enclosed in black brackets, new 
matter is printed in italic, and existing law in which no 
change is proposed is shown in roman):

TITLE 5, UNITED STATES CODE

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PART III--EMPLOYEES

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SUBPART G--INSURANCE AND ANNUITIES

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CHAPTER 83--RETIREMENT

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SUBCHAPTER III--CIVIL SERVICE RETIREMENT

           *       *       *       *       *       *       *



Sec. 8348. Civil Service Retirement and Disability Fund

  (a) There is a Civil Service Retirement and Disability Fund. 
The Fund--
          (1) is appropriated for the payment of--
                  (A) benefits as provided by this subchapter 
                or by the provisions of chapter 84 of this 
                title which relate to benefits payable out of 
                the Fund; and
                  (B) administrative expenses incurred by the 
                Office of Personnel Management in placing in 
                effect each annuity adjustment granted under 
                section 8340 or 8462 of this title, in 
                administering survivor annuities and elections 
                providing therefor under sections 8339 and 8341 
                of this title or subchapters II and IV of 
                chapter 84 of this title, in administering 
                alternative forms of annuities under sections 
                8343a and 8420a (and related provisions of 
                law), in making an allotment or assignment made 
                by an individual under section 8345(h) or 
                8465(b) of this title, and in withholding taxes 
                pursuant to section 3405 of title 26 or section 
                8345(k) or 8469 of this title;
          (2) is made available, subject to such annual 
        limitation as the Congress may prescribe, for any 
        expenses incurred by the Office in connection with the 
        administration of this chapter, chapter 84 of this 
        title, and other retirement and annuity statutes; and
          (3) is made available, subject to such annual 
        limitation as the Congress may prescribe, for any 
        expenses incurred by the Merit Systems Protection Board 
        in the administration of appeals authorized under 
        sections 8347(d) and 8461(e) of this title.
  (b) The Secretary of the Treasury may accept and credit to 
the Fund money received in the form of a donation, gift, 
legacy, or bequest, or otherwise contributed for the benefit of 
civil-service employees generally.
  (c) The Secretary 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. The income derived from these 
investments constitutes a part of the Fund.
  (d) The purposes for which obligations of the United States 
may be issued under chapter 31 of title 31 are extended to 
authorize the issuance at par of public-debt obligations for 
purchase by the Fund. The obligations issued for purchase by 
the Fund shall have maturities fixed with due regard for the 
needs of the Fund and bear interest at a rate equal to the 
average market yield computed as of the end of the calendar 
month next preceding the date of the issue, borne by all 
marketable interest-bearing obligations of the United States 
then forming a part of the public debt which are not due or 
callable until after the expiration of 4 years from the end of 
that calendar month. If the average market yield is not a 
multiple of 1/8 of 1 percent, the rate of interest on the 
obligations shall be the multiple of 1/8 of 1 percent nearest 
the average market yield.
  (e) The Secretary may purchase other interest-bearing 
obligations of the United States, or obligations guaranteed as 
to both principal and interest by the United States, on 
original issue or at the market price only if he determines 
that the purchases are in the public interest.
  (f) Any statute which authorizes--
          (1) new or liberalized benefits payable from the 
        Fund, including annuity increases other than under 
        section 8340 of this title;
          (2) extension of the coverage of this subchapter to 
        new groups of employees; or
          (3) increases in pay on which benefits are computed;
is deemed to authorize appropriations to the Fund to finance 
the unfunded liability created by that statute, in 30 equal 
annual installments with interest computed at the rate used in 
the then most recent valuation of the Civil Service Retirement 
System and with the first payment thereof due as of the end of 
the fiscal year in which each new or liberalized benefit, 
extension of coverage, or increase in pay is effective.
  (g) At the end of each fiscal year, the Office shall notify 
the Secretary of the Treasury of the amount equivalent to (1) 
interest on the unfunded liability computed for that year at 
the interest rate used in the then most recent valuation of the 
System, and (2) that portion of disbursement for annuities for 
that year which the Office estimates is attributable to credit 
allowed for military service, less an amount determined by the 
Office to be appropriate to reflect the value of the deposits 
made to the credit of the Fund under section 8334(j) of this 
title. Before closing the accounts for each fiscal year, the 
Secretary shall credit to the Fund, as a Government 
contribution, out of any money in the Treasury of the United 
States not otherwise appropriated, the following percentages of 
such amounts: 10 percent for 1971; 20 percent for 1972; 30 
percent for 1973; 40 percent for 1974; 50 percent for 1975; 60 
percent for 1976; 70 percent for 1977; 80 percent for 1978; 90 
percent for 1979; and 100 percent for 1980 and for each fiscal 
year thereafter.
  (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, 2007, the Office shall 
determine the Postal surplus or supplemental liability, as of 
September 30, 2006. 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, 2007.
  [(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, 2007, 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). Beginning 
June 15, 2017, if the result is a supplemental liability, the 
Office shall establish an 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.]
  (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, 2015. Subject to 
subparagraph (C), beginning June 15, 2017, if the result is a 
surplus or a supplemental liability the Office shall establish 
an amortization schedule, including a series of annual 
installments commencing on September 30 of the subsequent 
fiscal year, which provides for the liquidation of such surplus 
or liability to the Postal Service or the Fund (as the case may 
be) by September 30, 2043.
  (C) No later than June 30, 2033, the Office shall determine, 
and thereafter redetermine as necessary, but not more 
frequently than once per year, the appropriate date to complete 
the liquidation of any remaining surplus or liability 
determined under this paragraph. The determination under this 
subparagraph shall be set in accordance with generally accepted 
actuarial practices and principles and shall not be longer than 
a period of 15 years from the date on which the determination 
is made.
  (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.
  (4) For the purpose of carrying out paragraph (1), for fiscal 
year 2013 and each fiscal year thereafter, the Office shall 
use--
          (A) demographic factors specific to current and 
        former employees of the United States Postal Service, 
        unless such data cannot be generated; and
          (B) economic assumptions regarding wage and salary 
        growth that reflect the specific past, and likely 
        future, pay for current employees of the United States 
        Postal Service.
  (i)(1) Notwithstanding any other provision of law, the Panama 
Canal Commission shall be liable for that portion of any 
estimated increase in the unfunded liability of the fund which 
is attributable to any benefits payable from the Fund to or on 
behalf of employees and their survivors to the extent 
attributable to the amendments made by sections 1241 and 1242, 
and the provisions of sections 1231(b) and 1243(a)(1), of the 
Panama Canal Act of 1979, and the amendments made by section 
3506 of the Panama Canal Commission Authorization Act for 
Fiscal Year 1991.
  (2) The estimated increase in the unfunded liability referred 
to in paragraph (1) of this subsection shall be determined by 
the Office of Personnel Management. The Panama Canal Commission 
shall pay to the Fund from funds available to it for that 
purpose the amount so determined in annual installments with 
interest computed at the rate used in the most recent valuation 
of the Civil Service Retirement System.
  (j)(1) Notwithstanding subsection (c) of this section, the 
Secretary of the Treasury may suspend additional investment of 
amounts in the Fund if such additional investment could not be 
made without causing the public debt of the United States to 
exceed the public debt limit.
  (2) Any amounts in the Fund which, solely by reason of the 
public debt limit, are not invested shall be invested by the 
Secretary of the Treasury as soon as such investments can be 
made without exceeding the public debt limit.
  (3) Upon expiration of the debt issuance suspension period, 
the Secretary of the Treasury shall immediately issue to the 
Fund obligations under chapter 31 of title 31 that 
(notwithstanding subsection (d) of this section) bear such 
interest rates and maturity dates as are necessary to ensure 
that, after such obligations are issued, the holdings of the 
Fund will replicate to the maximum extent practicable the 
obligations that would then be held by the Fund if the 
suspension of investment under paragraph (1) of this 
subsection, and any redemption or disinvestment under 
subsection (k) of this section for the purpose described in 
such paragraph, during such period had not occurred.
  (4) On the first normal interest payment date after the 
expiration of any debt issuance suspension period, the 
Secretary of the Treasury shall pay to the Fund, from amounts 
in the general fund of the Treasury of the United States not 
otherwise appropriated, an amount determined by the Secretary 
to be equal to the excess of--
          (A) the net amount of interest that would have been 
        earned by the Fund during such debt issuance suspension 
        period if--
                  (i) amounts in the Fund that were not 
                invested during such debt issuance suspension 
                period solely by reason of the public debt 
                limit had been invested, and
                  (ii) redemptions and disinvestments with 
                respect to the Fund which occurred during such 
                debt issuance suspension period solely by 
                reason of the public debt limit had not 
                occurred, over (B) the net amount of interest 
                actually earned by the Fund during such debt 
                issuance suspension period.
  (5) For purposes of this subsection and subsections (k) and 
(l) of this section--
          (A) the term ``public debt limit'' means the 
        limitation imposed by section 3101(b) of title 31; and
          (B) the term ``debt issuance suspension period'' 
        means any period for which the Secretary of the 
        Treasury determines for purposes of this subsection 
        that the issuance of obligations of the United States 
        may not be made without exceeding the public debt 
        limit.
  (k)(1) Subject to paragraph (2) of this subsection, the 
Secretary of the Treasury may sell or redeem securities, 
obligations, or other invested assets of the Fund before 
maturity in order to prevent the public debt of the United 
States from exceeding the public debt limit.
  (2) The Secretary may sell or redeem securities, obligations, 
or other invested assets of the Fund under paragraph (1) of 
this subsection only during a debt issuance suspension period, 
and only to the extent necessary to obtain any amount of funds 
not exceeding the amount equal to the total amount of the 
payments authorized to be made from the Fund under the 
provisions of this subchapter or chapter 84 of this title or 
related provisions of law during such period. A sale or 
redemption may be made under this subsection even if, before 
the sale or redemption, there is a sufficient amount in the 
Fund to ensure that such payments are made in a timely manner.
  (l)(1) The Secretary of the Treasury shall report to Congress 
on the operation and status of the Fund during each debt 
issuance suspension period for which the Secretary is required 
to take action under paragraph (3) or (4) of subsection (j) of 
this section. The report shall be submitted as soon as possible 
after the expiration of such period, but not later than the 
date that is 30 days after the first normal interest payment 
date occurring after the expiration of such period.
  (2) Whenever the Secretary of the Treasury determines that, 
by reason of the public debt limit, the Secretary will be 
unable to fully comply with the requirements of subsection (c) 
of this section, the Secretary shall immediately notify 
Congress of the determination. The notification shall be made 
in writing.

           *       *       *       *       *       *       *


CHAPTER 84--FEDERAL EMPLOYEES' RETIREMENT SYSTEM

           *       *       *       *       *       *       *


SUBCHAPTER II--BASIC ANNUITY

           *       *       *       *       *       *       *


Sec. 8423. Government contributions

  (a)(1) Each employing agency having any employees or Members 
subject to section 8422(a) shall contribute to the Fund an 
amount equal to the sum of--
          (A) the product of--
                  (i) the normal-cost percentage, as determined 
                for employees (other than employees covered by 
                [subparagraph (B)),] subparagraph (B) or (C)), 
                multiplied by
                  (ii) the aggregate amount of basic pay 
                payable by the agency, for the period involved, 
                to employees (under clause (i)) who are within 
                such agency; [and]
          (B) the product of--
                  (i) the normal-cost percentage, as determined 
                for Members, Congressional employees, law 
                enforcement officers, members of the Supreme 
                Court Police, firefighters, nuclear materials 
                couriers, customs and border protection 
                officers, air traffic controllers, military 
                reserve technicians, and employees under 
                sections 302 and 303 of the Central 
                Intelligence Agency Retirement Act, multiplied 
                by
                  (ii) the aggregate amount of basic pay 
                payable by the agency, for the period involved, 
                to employees and Members (under clause (i)) who 
                are within such agency[.]; and
          (C) the product of--
                  (i) the normal-cost percentage, as determined 
                for employees (other than employees covered by 
                subparagraph (B)) of the United States Postal 
                Service under paragraph (5), multiplied by
                  (ii) the aggregate amount of basic pay 
                payable by the United States Postal Service, 
                for the period involved, to employees of the 
                United States Postal Service.
  (2)(A) In determining any normal-cost percentage to be 
applied under this subsection, amounts provided for under 
section 8422 shall be taken into account.
  (B)(i) Subject to clauses (ii) and (iii), for purposes of any 
period in any year beginning after December 31, 2013, the 
normal-cost percentage under this subsection shall be 
determined and applied as if section 401(b) of the Bipartisan 
Budget Act of 2013 had not been enacted.
  (ii) Any contributions under this subsection in excess of the 
amounts which (but for clause (i)) would otherwise have been 
payable shall be applied toward reducing the unfunded liability 
of the Civil Service Retirement System.
  (iii) After the unfunded liability of the Civil Service 
Retirement System has been eliminated, as determined by the 
Office, Government contributions under this subsection shall be 
determined and made disregarding this subparagraph.
  (iv) The preceding provisions of this subparagraph shall be 
disregarded for purposes of determining the contributions 
payable by the United States Postal Service and the Postal 
Regulatory Commission.
  (3) Contributions under this subsection shall be paid--
          (A) in the case of law enforcement officers, members 
        of the Supreme Court Police, firefighters, nuclear 
        materials couriers, customs and border protection 
        officers, air traffic controllers, military reserve 
        technicians, and other employees, from the 
        appropriation or fund used to pay such law enforcement 
        officers, members of the Supreme Court Police, 
        firefighters, nuclear materials couriers, customs and 
        border protection officers, air traffic controllers, 
        military reserve technicians, or other employees, 
        respectively;
          (B) in the case of elected officials, from an 
        appropriation or fund available for payment of other 
        salaries of the same office or establishment; and
          (C) in the case of employees of the legislative 
        branch paid by the Chief Administrative Officer of the 
        House of Representatives, from the applicable accounts 
        of the House of Representatives.
  (4) A contribution to the Fund under this subsection shall be 
deposited under such procedures as the Comptroller General of 
the United States may prescribe.
  (5)(A) In determining the normal-cost percentage for 
employees of the United States Postal Service for purposes of 
paragraph (1)(C), the Office shall use--
          (i) demographic factors specific to such employees, 
        unless such data cannot be generated; and
          (ii) economic assumptions regarding wage and salary 
        growth that reflect the specific past, and likely 
        future, pay for such employees.
  (B) The United States Postal Service shall provide any data 
or projections the Office requires in order to determine the 
normal-cost percentage for employees of the United States 
Postal Service, consistent with subparagraph (A).
  (C) The Office shall review the determination of the normal-
cost percentage for employees of the United States Postal 
Service and make such adjustments as the Office considers 
necessary--
          (i) upon request of the United States Postal Service, 
        but not more frequently than once each fiscal year; and
          (ii) at such other times as the Office considers 
        appropriate.
  (6) For the purpose of carrying out subsection (b)(1)(B), and 
consistent with paragraph (5), for fiscal year 2013, and each 
fiscal year thereafter, the Office shall use--
          (A) demographic factors specific to current and 
        former employees of the United States Postal Service, 
        unless such data cannot be generated; and
          (B) economic assumptions regarding wage and salary 
        growth that reflect the specific past, and likely 
        future, pay for current employees of the United States 
        Postal Service.
  (b)(1) The Office shall compute--
          (A) the amount of the supplemental liability of the 
        Fund with respect to individuals other than those to 
        whom subparagraph (B) relates, and
          (B) the amount of the supplemental liability of the 
        Fund with respect to current or former employees of the 
        United States Postal Service (and the Postal Regulatory 
        Commission) and their survivors;
as of the close of each fiscal year beginning after September 
30, 1987.
  (2) The amount of any supplemental liability computed under 
paragraph (1)(A) or (1)(B) shall be amortized in 30 equal 
annual installments, with interest computed at the rate used in 
the most recent valuation of the System.
  (3) At the end of each fiscal year, the Office shall notify--
          (A) the Secretary of the Treasury of the amount of 
        the installment computed under this subsection for such 
        year with respect to individuals under paragraph 
        (1)(A); and
          (B) the Postmaster General of the United States of 
        the amount of the installment computed under this 
        subsection for such year with respect to individuals 
        under paragraph (1)(B).
  (4)(A) Before closing the accounts for a fiscal year, the 
Secretary of the Treasury shall credit to the Fund, as a 
Government contribution, out of any money in the Treasury of 
the United States not otherwise appropriated, the amount under 
paragraph (3)(A) for such year.
  (B) Upon receiving notification under paragraph (3)(B), the 
United States Postal Service shall pay the amount specified in 
such notification to the Fund.
  (5)(A) In this paragraph, the term ``postal funding surplus'' 
means the amount by which the amount of the supplemental 
liability computed under paragraph (1)(B) is less than zero.
  (B) If the amount of supplemental liability computed under 
paragraph (1)(B) as of the close of any fiscal year after the 
date of enactment of the Postal Service Reform Act of 2016 is 
less than zero, the Office shall establish an amortization 
schedule, including a series of equal annual installments 
that--
          (i) provide for the liquidation of the postal funding 
        surplus in 30 years, commencing on September 30 of the 
        subsequent fiscal year; and
          (ii) shall be transferred to the United States Postal 
        Service Fund.
  [(5)] (6) For the purpose of carrying out paragraph (1) with 
respect to any fiscal year, the Office may--
          (A) require the Board of Actuaries of the Civil 
        Service Retirement System to make actuarial 
        determinations and valuations, make recommendations, 
        and maintain records in the same manner as provided in 
        section 8347(f); and
          (B) use the latest actuarial determinations and 
        valuations made by such Board of Actuaries.
  (c) Under regulations prescribed by the Office, the head of 
an agency may request reconsideration of any amount determined 
to be payable with respect to such agency under subsection (a) 
or (b). Any such request shall be referred to the Board of 
Actuaries of the Civil Service Retirement System. The Board of 
Actuaries shall review the computations of the Office and may 
make any adjustment with respect to any such amount which the 
Board determines appropriate. A determination by the Board of 
Actuaries under this subsection shall be final.

           *       *       *       *       *       *       *


                      CHAPTER 89--HEALTH INSURANCE

Sec.
8901. Definitions.
     * * * * * * *
8903c. Postal Service Health Benefits Program.

           *       *       *       *       *       *       *


Sec. 8903. Health benefits plans

   The Office of Personnel Management may contract for or 
approve the following health benefits plans:
          (1) Service Benefit Plan.--One Government-wide plan, 
        which may be underwritten by participating affiliates 
        licensed in any number of States, offering [two levels 
        of benefits] 2 levels of benefits for enrollees under 
        this chapter generally and 2 levels of benefits for 
        enrollees under the Postal Service Health Benefits 
        Program established under section 8903c, under which 
        payment is made by a carrier under contracts with 
        physicians, hospitals, or other providers of health 
        services for benefits of the types described by section 
        8904(1) of this title given to employees, annuitants, 
        members of their families, former spouses, or persons 
        having continued coverage under section 8905a of this 
        title, or, under certain conditions, payment is made by 
        a carrier to the employee, annuitant, family member, 
        former spouse, or person having continued coverage 
        under section 8905a of this title.
          (2) Indemnity Benefit Plan.--One Government-wide 
        plan, offering two levels of benefits, under which a 
        carrier agrees to pay certain sums of money, not in 
        excess of the actual expenses incurred, for benefits of 
        the types described by section 8904(2) of this title.
          (3) Employee Organization Plans.--Employee 
        organization plans which offer benefits of the types 
        referred to by section 8904(3) of this title, which are 
        sponsored or underwritten, and are administered, in 
        whole or substantial part, by employee organizations 
        described in section 8901(8)(A) of this title, which 
        are available only to individuals, and members of their 
        families, who at the time of enrollment are members of 
        the organization.
          (4) Comprehensive Medical Plans.--
                  (A) Group-practice prepayment plans.--Group-
                practice prepayment plans which offer health 
                benefits of the types referred to by section 
                8904(4) of this title, in whole or in 
                substantial part on a prepaid basis, with 
                professional services thereunder provided by 
                physicians practicing as a group in a common 
                center or centers. The group shall include at 
                least 3 physicians who receive all or a 
                substantial part of their professional income 
                from the prepaid funds and who represent 1 or 
                more medical specialties appropriate and 
                necessary for the population proposed to be 
                served by the plan.
                  (B) Individual-practice prepayment plans.--
                Individual-practice prepayment plans which 
                offer health services in whole or substantial 
                part on a prepaid basis, with professional 
                services thereunder provided by individual 
                physicians who agree, under certain conditions 
                approved by the Office, to accept the payments 
                provided by the plans as full payment for 
                covered services given by them including, in 
                addition to in-hospital services, general care 
                given in their offices and the patients' homes, 
                out-of-hospital diagnostic procedures, and 
                preventive care, and which plans are offered by 
                organizations which have successfully operated 
                similar plans before approval by the Office of 
                the plan in which employees may enroll.
                  (C) Mixed model prepayment plans.--Mixed 
                model prepayment plans which are a combination 
                of the type of plans described in subparagraph 
                (A) and the type of plans described in 
                subparagraph (B).

           *       *       *       *       *       *       *


SEC. 8903C. POSTAL SERVICE HEALTH BENEFITS PROGRAM.

  (a) Definitions.--In this section--
          (1) the term ``covered Medicare individual'' means an 
        individual who is entitled to benefits under part A of 
        title XVIII of the Social Security Act (42 U.S.C. 1395c 
        et seq.), but excluding an individual who is eligible 
        to enroll under such part under section 1818 or 1818A 
        of the Social Security Act (42 U.S.C. 1395i-2, 1395i-
        2a);
          (2) the term ``initial contract year'' means the 
        contract year beginning in January of 2018;
          (3) the term ``initial participating carrier'' means 
        a carrier that enters into a contract with the Office 
        to participate in the Postal Service Health Benefits 
        Program during the initial contract year;
          (4) the term ``Office'' means the Office of Personnel 
        Management;
          (5) the term ``Postal Service'' means the United 
        States Postal Service;
          (6) the term ``Postal Service annuitant'' means an 
        annuitant enrolled in a health benefits plan under this 
        chapter whose Government contribution is paid pursuant 
        to the requirements of section 8906(g)(2);
          (7) the term ``Postal Service employee'' means an 
        employee of the Postal Service enrolled in a health 
        benefits plan under this chapter;
          (8) the term ``Postal Service Medicare covered 
        annuitant'' means an individual who--
                  (A) is a Postal Service annuitant; and
                  (B) is a covered Medicare individual;
          (9) the term ``Program'' means the Postal Service 
        Health Benefits Program established under subsection 
        (c) within the Federal Employees Health Benefit 
        Program; and
          (10) the term ``Program plan'' means a health 
        benefits plan offered under the Program.
  (b) Application.--The requirements under this section shall--
          (1) apply to the initial contract year and each 
        contract year thereafter; and
          (2) supersede any other provision of this chapter 
        inconsistent with such requirements, as determined by 
        the Office.
  (c) Establishment of the Postal Service Health Benefits 
Program.--
          (1) In general.--The Office shall establish the 
        Postal Service Health Benefits Program under which the 
        Office contracts with carriers to offer health benefits 
        plans as described under this section. Except as 
        otherwise provided under this section, any such 
        contract shall be consistent with the requirements of 
        this chapter for contracts under section 8902 with 
        carriers to offer health benefits plans other than 
        under this section. The Program shall--
                  (A) to the greatest extent practicable, 
                include plans offered by--
                          (i) each carrier for which the total 
                        enrollment in the plans provided under 
                        this chapter includes, in the contract 
                        year beginning in January 2017, 1,500 
                        or more enrollees who are Postal 
                        Service employees or Postal Service 
                        annuitants; and
                          (ii) any other carrier determined 
                        appropriate by the Office;
                  (B) be available for participation by all 
                Postal Service employees and Postal Service 
                annuitants, in accordance with subsection (d);
                  (C) provide for enrollment in a plan as an 
                individual, for self plus one, or for self and 
                family; and
                  (D) not be available for participation by an 
                individual who is not a Postal Service employee 
                or Postal Service annuitant (except as a family 
                member of such an employee or annuitant or as 
                provided under paragraph (5)).
          (2) Separate postal service risk pool.--The Office 
        shall ensure that each Program plan includes rates that 
        reasonably and equitably reflect the cost of benefits 
        provided to a risk pool consisting solely of Postal 
        Service employees and Postal Service annuitants (and 
        covered family members of such employees and 
        annuitants), taking into specific account the reduction 
        in benefits cost for the Program plan due to the 
        Medicare enrollment requirements under subsection (e) 
        and any savings or subsidies resulting from subsection 
        (f)(1).
          (3) Actuarially equivalent coverage.--The Office 
        shall ensure that each carrier participating in the 
        Postal Service Health Benefits Program provides 
        coverage under the Program plans offered by the carrier 
        that is actuarially equivalent, as determined by the 
        Office, to the coverage that the carrier provides under 
        the health benefits plans offered by the carrier under 
        this chapter that are not Program plans.
          (4) Applicability of federal employees health 
        benefits program requirements.--Except as otherwise set 
        forth in this section, all provisions of this chapter 
        applicable to health benefits plans offered by the 
        carrier under section 8903 or 8903a shall also apply to 
        plans offered under the Program.
          (5) Application of continuation coverage.--In 
        accordance with rules established by the Office, 
        section 8905a shall apply to health benefits plans 
        offered under this section in the same manner as such 
        section applies to other health benefits plans offered 
        under this chapter.
  (d) Election of Coverage.--
          (1) In general.--Except as provided in paragraphs (2) 
        and (3), each Postal Service employee and Postal 
        Service annuitant who elects to receive health benefits 
        coverage under this chapter--
                  (A) shall be subject to the requirements of 
                this section; and
                  (B) may not enroll in any other health 
                benefits plan offered under any other section 
                of this chapter.
          (2) Annuitants.--
                  (A) Application.--A Postal Service annuitant 
                shall not be subject to the requirements of 
                this section if the Postal Service annuitant--
                          (i) is enrolled in a health benefits 
                        plan under this chapter for the 
                        contract year immediately preceding the 
                        initial contract year that is not a 
                        health benefits plan offered by an 
                        initial participating carrier, unless--
                                  (I) the Postal Service 
                                annuitant voluntarily enrolls 
                                in a Program plan;
                                  (II) the health benefits plan 
                                in which such annuitant is 
                                enrolled for such contract year 
                                ceases to be available; or
                                  (III) the health benefits 
                                plan in which such annuitant is 
                                enrolled for such contract year 
                                becomes available as a Program 
                                plan; or
                          (ii) resides in a geographic area for 
                        which there is not a Program plan in 
                        which the Postal Service annuitant may 
                        enroll.
                  (B) Changed enrollment.--If a Postal Service 
                annuitant changes enrollment to a health 
                benefits plan under this chapter provided by a 
                different carrier than the health benefits plan 
                in which such annuitant is enrolled during the 
                previous contract year, the Postal Service 
                annuitant may only enroll in a Program plan.
          (3) Employees.--A Postal Service employee who is 
        enrolled in a health benefits plan under this chapter 
        for the contract year immediately preceding the initial 
        contract year that is not a health benefits plan 
        offered by an initial participating carrier shall not 
        be subject to the requirements of this section, except 
        that--
                  (A) if the Postal Service employee changes 
                enrollment to a different health benefits plan 
                under this chapter during the open season for 
                the initial contract year, or after the start 
                of the initial contract year, the Postal 
                Service employee may only enroll in a Program 
                plan;
                  (B) if the health benefits plan in which such 
                employee is enrolled for such contract year 
                becomes available as a Program plan, the Postal 
                Service employee may only enroll in a Program 
                plan;
                  (C) upon becoming a Postal Service annuitant, 
                if the Postal Service employee elects to 
                continue coverage under this chapter, the 
                Postal Service employee shall enroll in a 
                Program plan during the open season that is--
                          (i) being held when the Postal 
                        Service employee becomes a Postal 
                        Service annuitant; or
                          (ii) if the date on which the Postal 
                        Service employee becomes a Postal 
                        Service annuitant falls outside of an 
                        open season, the first open season 
                        following that date; and
                  (D) subparagraphs (A), (B), and (C) shall not 
                apply to an employee who resides in a 
                geographic area for which there is not a 
                Program plan in which the employee may enroll.
  (e) Requirement of Medicare Enrollment for Annuitants and 
Their Family Members.--
          (1) Postal service medicare covered annuitants.--A 
        Postal Service Medicare covered annuitant subject to 
        the requirements of this section may not obtain 
        coverage under this chapter unless the annuitant is 
        enrolled in part B of title XVIII of the Social 
        Security Act (42 U.S.C. 1395j et seq.).
          (2) Medicare covered family members.--If a family 
        member of a Postal Service annuitant who is subject to 
        the requirements of this section is a covered Medicare 
        individual, the family member may not be covered under 
        the Program as a family member of the Postal Service 
        annuitant unless the family member is enrolled in part 
        B of title XVIII of the Social Security Act (42 U.S.C. 
        1395j et seq.).
          (3) Process for coordinated election of enrollment 
        under medicare part b.--The Office shall establish a 
        process under which--
                  (A) Postal Service annuitants and family 
                members who are subject to the requirements of 
                paragraph (1) or (2)--
                          (i) are informed, at the time of 
                        enrollment under this chapter, of such 
                        requirement; and
                          (ii) as a consequence of such 
                        enrollment are deemed to have elected 
                        to be enrolled under Medicare part B 
                        (under section 1837(m)(1) of the Social 
                        Security Act) in connection with the 
                        enrollment in a Program plan under this 
                        chapter; and
                  (B) the Office provides the Secretary of 
                Health and Human Services and the Commissioner 
                of Social Security in a timely manner with such 
                information respecting such annuitants and 
                family members and such election as may be 
                required to effect their enrollment and 
                coverage under Medicare part B and this section 
                in a timely manner.
  (f) Medicare Coordination.--
          (1) In general.--The Office shall require each 
        Program plan to provide benefits for covered Medicare 
        individuals pursuant to the standard coordination of 
        benefits method used under this chapter, rather than 
        the exclusion method or the carve-out method.
          (2) Medicare part d prescription drug benefits.--The 
        Office shall require each Program plan to provide 
        prescription drug benefits for Postal Service 
        annuitants and family members who are eligible 
        individuals (as defined in section 1860D-1(a)(3)(A) of 
        the Social Security Act (42 U.S.C. 1395w-101(a)) in a 
        form and manner that satisfies the requirements for a 
        qualified retiree prescription drug plan under 
        subsection (a)(2) of section 1860D-22 of the Social 
        Security Act (42 U.S.C. 1395w-132)), for which plan a 
        waiver or modification of requirements may have been 
        applied pursuant to subsection (b) of such section. For 
        purposes of such section, a Program plan shall then be 
        deemed to be a qualified retiree prescription drug plan 
        and the Federal Government, through the Office, shall 
        be deemed the sponsor of such plan.
  (g) Postal Service Contribution.--
          (1) In general.--Subject to subsection (i), for 
        purposes of applying section 8906(b) to the Postal 
        Service, the weighted average shall be calculated in 
        accordance with paragraphs (2) and (3).
          (2) Weighted average calculation.--Not later than 
        October 1 of each year (beginning with 2017), the 
        Office shall determine the weighted average of the 
        rates established pursuant to subsection (c)(2) for 
        Program plans that will be in effect during the 
        following contract year with respect to--
                  (A) enrollments for self only;
                  (B) enrollments for self plus one; and
                  (C) enrollments for self and family.
          (3) Weighting in computing rates for initial contract 
        year.--In determining such weighted average of the 
        rates for the initial contract year, the Office shall 
        take into account (for purposes of section 8906(a)(2)) 
        the enrollment of Postal Service employees and 
        annuitants in the health benefits plans offered by the 
        initial participating carriers as of March 31, 2017.
  (h) Reserves.--
          (1) Separate reserves.--
                  (A) In general.--The Office shall ensure that 
                each Program plan maintains separate reserves 
                (including a separate contingency reserve) with 
                respect to the enrollees in the Program plan in 
                accordance with section 8909.
                  (B) References.--For purposes of the Program, 
                each reference to ``the Government'' in section 
                8909 shall be deemed to be a reference to the 
                Postal Service.
                  (C) Amounts to be credited.--The reserves 
                (including the separate contingency reserve) 
                maintained by each Program plan shall be 
                credited with a proportionate amount of the 
                funds in the reserves for health benefits plans 
                offered by the carrier.
          (2) Discontinuation of program plan.--In applying 
        section 8909(e) relating to a Program plan that is 
        discontinued, the Office shall credit the separate 
        Postal Service contingency reserve maintained under 
        paragraph (1) for that plan only to the separate Postal 
        Service contingency reserves of the Program plans 
        continuing under this chapter.
  (i) No Effect on Existing Law.--Nothing in this section shall 
be construed as affecting section 1005(f) of title 39 regarding 
variations, additions, or substitutions to the provisions of 
this chapter.
  (j) Medicare Education Program.--Not later than 180 days 
after the date of enactment of this section, the Postal Service 
shall establish a Medicare Education Program. Under the 
Program, the Postal Service shall--
          (1) notify retirees and employees of the Postal 
        Service about the Postal Service Health Benefits 
        Program established under subsection (c)(1);
          (2) provide information regarding the Postal Service 
        Health Benefits to such retirees and employees, 
        including a description of the health care options 
        available under such Program, the requirement that 
        retirees be enrolled in Medicare under subsection 
        (e)(1), and the operation of the premium transition 
        fund to be created under section 104 of the Postal 
        Service Reform Act of 2016; and
          (3) respond and provide answers to any inquiry from 
        such employees and retirees about the Postal Service 
        Health Benefits Program or Medicare enrollment.

           *       *       *       *       *       *       *


Sec. 8906. Contributions

  (a)(1) Not later than October 1 of each year, the Office of 
Personnel Management shall determine the weighted average of 
the subscription charges that will be in effect during the 
following contract year with respect to--
          (A) enrollments under this chapter for self alone;
          (B) enrollments under this chapter for self plus one; 
        and
          (C) enrollments under this chapter for self and 
        family.
  (2) In determining each weighted average under paragraph (1), 
the weight to be given to a particular subscription charge 
shall, with respect to each plan (and option) to which it is to 
apply, be commensurate with the number of enrollees enrolled in 
such plan (and option) as of March 31 of the year in which the 
determination is being made.
  (3) For purposes of paragraph (2), the term ``enrollee'' 
means any individual who, during the contract year for which 
the weighted average is to be used under this section, will be 
eligible for a Government contribution for health benefits.
  (b)(1) Except as provided in paragraphs (2) and (3), the 
biweekly Government contribution for health benefits for an 
employee or annuitant enrolled in a health benefits plan under 
this chapter is adjusted to an amount equal to 72 percent of 
the weighted average under subsection (a)(1) (A) or (B), as 
applicable. For an employee, the adjustment begins on the first 
day of the employee's first pay period of each year. For an 
annuitant, the adjustment begins on the first day of the first 
period of each year for which an annuity payment is made.
  (2) The biweekly Government contribution for an employee or 
annuitant enrolled in a plan under this chapter shall not 
exceed 75 percent of the subscription charge.
  (3) In the case of an employee who is occupying a position on 
a part-time career employment basis (as defined in section 
3401(2) of this title), the biweekly Government contribution 
shall be equal to the percentage which bears the same ratio to 
the percentage determined under this subsection (without regard 
to this paragraph) as the average number of hours of such 
employee's regularly scheduled workweek bears to the average 
number of hours in the regularly scheduled workweek of an 
employee serving in a comparable position on a full-time career 
basis (as determined under regulations prescribed by the 
Office).
  (4) In the case of persons who are enrolled in a health 
benefits plan as part of the demonstration project under 
section 1108 of title 10, the Government contribution shall be 
subject to the limitation set forth in subsection (i) of that 
section.
  (c) There shall be withheld from the pay of each enrolled 
employee and (except as provided in subsection (i) of this 
section) the annuity of each enrolled annuitant and there shall 
be contributed by the Government, amounts, in the same ratio as 
the contributions of the employee or annuitant and the 
Government under subsection (b) of this section, which are 
necessary for the administrative costs and the reserves 
provided for by section 8909(b) of this title.
  (d) The amount necessary to pay the total charge for 
enrollment, after the Government contribution is deducted, 
shall be withheld from the pay of each enrolled employee and 
(except as provided in subsection (i) of this section) from the 
annuity of each enrolled annuitant. The withholding for an 
annuitant shall be the same as that for an employee enrolled in 
the same health benefits plan and level of benefits.
  (e)(1)(A) An employee enrolled in a health benefits plan 
under this chapter who is placed in a leave without pay status 
may have his coverage and the coverage of members of his family 
continued under the plan for not to exceed 1 year under 
regulations prescribed by the Office.
  (B) During each pay period in which an enrollment continues 
under subparagraph (A)--
          (i) employee and Government contributions required by 
        this section shall be paid on a current basis; and
          (ii) if necessary, the head of the employing agency 
        shall approve advance payment, recoverable in the same 
        manner as under section 5524a(c), of a portion of basic 
        pay sufficient to pay current employee contributions.
  (C) Each agency shall establish procedures for accepting 
direct payments of employee contributions for the purposes of 
this paragraph.
  (2) An employee who enters on approved leave without pay to 
serve as a full-time officer or employee of an organization 
composed primarily of employees as defined by section 8901 of 
this title, within 60 days after entering on that leave without 
pay, may file with his employing agency an election to continue 
his health benefits enrollment and arrange to pay currently 
into the Employees Health Benefits Fund, through his employing 
agency, both employee and agency contributions from the 
beginning of leave without pay. The employing agency shall 
forward the enrollment charges so paid to the Fund. If the 
employee does not so elect, his enrollment will continue during 
nonpay status and end as provided by paragraph (1) of this 
subsection and implementing regulations.
  (3)(A) An employing agency may pay both the employee and 
Government contributions, and any additional administrative 
expenses otherwise chargeable to the employee, with respect to 
health care coverage for an employee described in subparagraph 
(B) and the family of such employee.
  (B) An employee referred to in subparagraph (A) is an 
employee who--
          (i) is enrolled in a health benefits plan under this 
        chapter;
          (ii) is a member of a reserve component of the armed 
        forces;
          (iii) is called or ordered to active duty in support 
        of a contingency operation (as defined in section 
        101(a)(13) of title 10);
          (iv) is placed on leave without pay or separated from 
        service to perform active duty; and
          (v) serves on active duty for a period of more than 
        30 consecutive days.
  (C) Notwithstanding the one-year limitation on coverage 
described in paragraph (1)(A), payment may be made under this 
paragraph for a period not to exceed 24 months.
  (f) The Government contribution, and any additional payments 
under subsection (e)(3)(A), for health benefits for an employee 
shall be paid---
          (1) in the case of employees generally, from the 
        appropriation or fund which is used to pay the 
        employee;
          (2) in the case of an elected official, from an 
        appropriation or fund available for payment of other 
        salaries of the same office or establishment;
          (3) in the case of an employee of the legislative 
        branch who is paid by the Chief Administrative Officer 
        of the House of Representatives, from the applicable 
        accounts of the House of Representatives; and
          (4) in the case of an employee in a leave without pay 
        status, from the appropriation or fund which would be 
        used to pay the employee if he were in a pay status.
  (g)(1) Except as provided in paragraphs (2) and (3), the 
Government contributions authorized by this section for health 
benefits for an annuitant shall be paid from annual 
appropriations which are authorized to be made for that purpose 
and which may be made available until expended.
  (2)(A)(i) The Government contributions authorized by this 
section for health benefits for an individual who first becomes 
an annuitant by reason of retirement from employment with the 
United States Postal Service on or after July 1, 1971, or for a 
survivor of such an individual or of an individual who died on 
or after July 1, 1971, while employed by the United States 
Postal Service, [shall through September 30, 2016, be paid by 
the United States Postal Service, and thereafter 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.] shall be paid as 
provided in clause (ii).
  (ii) With respect to the Government contributions required to 
be paid under clause (i)--
          (I) the portion of the contributions that is equal to 
        the amount of the net claims costs under the enrollment 
        of the individuals described in clause (i) shall be 
        paid from the Postal Service Retiree Health Benefits 
        Fund up to the amount contained in the Fund; and
          (II) any remaining amount shall be paid by the United 
        States Postal Service.
  (B) In determining any amount for which the Postal Service is 
liable under this paragraph, the amount of the liability shall 
be prorated to reflect only that portion of total service which 
is attributable to civilian service performed (by the former 
postal employee or by the deceased individual referred to in 
subparagraph (A), as the case may be) after June 30, 1971, as 
estimated by the Office of Personnel Management.
  (C) For purposes of this paragraph, the amount of the net 
claims costs under the enrollment of an individual described in 
subparagraph (A)(i) shall be the amount, as determined by the 
Office over any particular period of time, equal to the 
difference between--
          (i) the sum of--
                  (I) the costs incurred by a carrier in 
                providing health services to, paying for health 
                services provided to, or reimbursing expenses 
                for health services provided to, the individual 
                and any other person covered under the 
                enrollment of the individual; and
                  (II) an amount of indirect expenses 
                reasonably allocable to the provision, payment, 
                or reimbursement described in subclause (I), as 
                determined by the Office; and
          (ii) the amount withheld from the annuity of the 
        individual or otherwise paid by the individual under 
        this section.
  (3) The Government contribution for persons enrolled in a 
health benefits plan as part of the demonstration project under 
section 1108 of title 10 shall be paid as provided in 
subsection (i) of that section.
  (h) The Office shall provide for conversion of biweekly rates 
of contribution specified by this section to rates for 
employees and annuitants paid on other than a biweekly basis, 
and for this purpose may provide for the adjustment of the 
converted rate to the nearest cent.
  (i) An annuitant whose annuity is insufficient to cover the 
withholdings required for enrollment in a particular health 
benefits plan may enroll (or remain enrolled) in such plan, 
notwithstanding any other provision of this section, if the 
annuitant elects, under conditions prescribed by regulations of 
the Office, to pay currently into the Employees Health Benefits 
Fund, through the retirement system that administers the 
annuitant's health benefits enrollment, an amount equal to the 
withholdings that would otherwise be required under this 
section.

           *       *       *       *       *       *       *


Sec. 8909a. Postal Service Retiree Health [Benefit]  Benefits 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, 2007, 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)] 
required to be paid from the Postal Service Retiree Health 
Benefits Fund under section 8906(g)(2)(A)(ii)(I) and 
attributable to the service of Postal Service employees during 
the most recently ended fiscal year.
  [(2)(A) Not later than June 30, 2007, 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, 2017, the Office shall compute, 
and by June 30 of each succeeding year shall recompute, a 
schedule including a series of annual installments which 
provide for the liquidation of any liability or surplus by 
September 30, 2056, 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.]
  (2)(A) Not later than June 30, 2016, the Office shall 
compute, and by June 30 of each succeeding year, the Office 
shall recompute, a schedule including a series of annual 
installments which provide for the liquidation of the amount 
described under subparagraph (B) (regardless of whether the 
amount is a liability or surplus) by September 30, 2055, or 
within 15 years, whichever is later, including interest at the 
rate used in the computations under this subsection.
  (B) The amount described in this subparagraph is the amount, 
as of the date on which the applicable computation or 
recomputation under subparagraph (A) is made, that is equal to 
the difference between--
          (i) 100 percent of the Postal Service actuarial 
        liability as of September 30 of the preceding fiscal 
        year; and
          (ii) the value of the assets of the Postal Service 
        Retiree Health Benefits Fund as of September 30 of the 
        preceding fiscal year.
  (3)(A) The United States Postal Service shall pay into such 
Fund--
          (i) $5,400,000,000, not later than September 30, 
        2007;
          (ii) $5,600,000,000, not later than September 30, 
        2008;
          (iii) $1,400,000,000, not later than September 30, 
        2009; and
          (iv) $5,500,000,000, not later than September 30, 
        2010[;].
          [(v) $5,500,000,000, not later than August 1, 2012;
          [(vi) $5,600,000,000, not later than September 30, 
        2012;
          [(vii) $5,600,000,000, not later than September 30, 
        2013;
          [(viii) $5,700,000,000, not later than September 30, 
        2014;
          [(ix) $5,700,000,000, not later than September 30, 
        2015; and
          [(x) $5,800,000,000, not later than September 30, 
        2016.]
  (B) Not later than September 30, [2017] 2016, and by 
September 30 of each succeeding year, the United States Postal 
Service shall pay into such Fund the sum of--
          (i) the net present value computed under [paragraph 
        (1)] paragraph (1), except to the extent the payment 
        would cause the value of the assets in the Fund to 
        exceed the Postal Service actuarial liability; and
          (ii) any annual installment computed under [paragraph 
        (2)(B).] paragraph (2).
  [(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.]
  (4) Computations under this subsection shall be based on--
          (A) economic and actuarial methods and assumptions 
        consistent with the methods and assumptions used in 
        determining the Postal surplus or supplemental 
        liability under section 8348(h); and
          (B) any other methods and assumptions, including a 
        health care cost trend rate, that the Director of the 
        Office determines to be appropriate.
  (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.
  (7) In this subsection, the term ``Postal Service actuarial 
liability'' means the difference between--
          (A) the net present value of future payments required 
        to be paid from the Postal Service Retiree Health 
        Benefits Fund under section 8906(g)(2)(A)(ii)(I) for 
        current and future United States Postal Service 
        annuitants; and
          (B) the net present value as computed under paragraph 
        (1) attributable to the future service of United States 
        Postal Service employees.
  (8) For purposes of computing an amount under paragraph (1) 
or (7)(A), section 8906(g)(2)(A)(ii)(I) shall be applied as 
though ``up to the amount contained in the Fund'' were struck.
  (e) Subsections (a) through (d) of this section shall be 
subject to section 102 of the Postal Service Reform Act of 
2016.

           *       *       *       *       *       *       *

                              ----------                              


SOCIAL SECURITY ACT

           *       *       *       *       *       *       *


TITLE XVIII--HEALTH INSURANCE FOR THE AGED AND DISABLED

           *       *       *       *       *       *       *


   Part B--Supplementary Medical Insurance Benefits for the Aged and 
Disabled

           *       *       *       *       *       *       *


                           ENROLLMENT PERIODS

  Sec. 1837. (a) An individual may enroll in the insurance 
program established by this part only in such manner and form 
as may be prescribed by regulations, and only during an 
enrollment period prescribed in or under this section.
  (c) In the case of individuals who first satisfy paragraph 
(1) or (2) of section 1836 before March 1, 1966, the initial 
general enrollment period shall begin on the first day of the 
second month which begins after the date of enactment of this 
title and shall end on May 31, 1966. For purposes of this 
subsection and subsection (d), an individual who has attained 
age 65 and who satisfies paragraph (1) of section 1836 but not 
paragraph (2) of such section shall be treated as satisfying 
such paragraph (1) on the first day on which he is (or on 
filing application would have been) entitled to hospital 
insurance benefits under part A.
  (d) In the case of an individual who first satisfies 
paragraph (1) or (2) of section 1836 on or after March 1, 1966, 
his initial enrollment period shall begin on the first day of 
the third month before the month in which he first satisfies 
such paragraphs and shall end seven months later. Where the 
Secretary finds that an individual who has attained age 65 
failed to enroll under this part during his initial enrollment 
period (based on a determination by the Secretary of the month 
in which such individual attained age 65), because such 
individual (relying on documentary evidence) was mistaken as to 
his correct date of birth, the Secretary shall establish for 
such individual an initial enrollment period based on his 
attaining age 65 at the time shown in such documentary evidence 
(with a coverage period determined under section 1838 as though 
he had attained such age at that time).
  (e) There shall be a general enrollment period during the 
period beginning on January 1 and ending on March 31 of each 
year.
  (f) Any individual--
          (1) who is eligible under section 1836 to enroll in 
        the medical insurance program by reason of entitlement 
        to hospital insurance benefits as described in 
        paragraph (1) of such section, and
          (2) whose initial enrollment period under subsection 
        (d) begins after March 31, 1973, and
          (3) who is residing in the United States, exclusive 
        of Puerto Rico,
shall be deemed to have enrolled in the medical insurance 
program established by this part.
  (g) All of the provisions of this section shall apply to 
individuals satisfying subsection (f), except that--
          (1) in the case of an individual who satisfies 
        subsection (f) by reason of entitlement to disability 
        insurance benefits described in section 226(b), his 
        initial enrollment period shall begin on the first day 
        of the later of (A) April 1973 or (B) the third month 
        before the 25th month of such entitlement, and shall 
        reoccur with each continuous period of eligibility (as 
        defined in section 1839(d)) and upon attainment of age 
        65;
          (2)(A) in the case of an individual who is entitled 
        to monthly benefits under section 202 or 223 on the 
        first day of his initial enrollment period or becomes 
        entitled to monthly benefits under section 202 during 
        the first 3 months of such period, his enrollment shall 
        be deemed to have occurred in the third month of his 
        initial enrollment period, and
          (B) in the case of an individual who is not entitled 
        to benefits under section 202 on the first day of his 
        initial enrollment period and does not become so 
        entitled during the first 3 months of such period, his 
        enrollment shall be deemed to have occurred in the 
        month in which he files the application establishing 
        his entitlement to hospital insurance benefits provided 
        such filing occurs during the last 4 months of his 
        initial enrollment period; and
          (3) in the case of an individual who would otherwise 
        satisfy subsection (f) but does not establish his 
        entitlement to hospital insurance benefits until after 
        the last day of his initial enrollment period (as 
        defined in subsection (d) of this section), his 
        enrollment shall be deemed to have occurred on the 
        first day of the earlier of the then current or 
        immediately succeeding general enrollment period (as 
        defined in subsection (e) of this section).
  (h) In any case where the Secretary finds that an 
individual's enrollment or nonenrollment in the insurance 
program established by this part or part A pursuant to section 
1818 is unintentional, inadvertent, or erroneous and is the 
result of the error, misrepresentation, or inaction of an 
officer, employee, or agent of the Federal Government, or its 
instrumentalities, the Secretary may take such action 
(including the designation for such individual of a special 
initial or subsequent enrollment period, with a coverage period 
determined on the basis thereof and with appropriate 
adjustments of premiums) as may be necessary to correct or 
eliminate the effects of such error, misrepresentation, or 
inaction.
  (i)(1) In the case of an individual who--
          (A) at the time the individual first satisfies 
        paragraph (1) or (2) of section 1836, is enrolled in a 
        group health plan described in section 1862(b)(1)(A)(v) 
        by reason of the individual's (or the individual's 
        spouse's) current employment status, and
          (B) has elected not to enroll (or to be deemed 
        enrolled) under this section during the individual's 
        initial enrollment period,
there shall be a special enrollment period described in 
paragraph (3). In the case of an individual not described in 
the previous sentence who has not attained the age of 65, at 
the time the individual first satisfies paragraph (1) of 
section 1836, is enrolled in a large group health plan (as that 
term is defined in section 1862(b)(1)(B)(iii)) by reason of the 
individual's current employment status (or the current 
employment status of a family member of the individual), and 
has elected not to enroll (or to be deemed enrolled) under this 
section during the individual's initial enrollment period, 
there shall be a special enrollment period described in 
paragraph (3)(B).
  (2) In the case of an individual who--
          (A)(i) has enrolled (or has been deemed to have 
        enrolled) in the medical insurance program established 
        under this part during the individual's initial 
        enrollment period, or (ii) is an individual described 
        in paragraph (1)(A);
          (B) has enrolled in such program during any 
        subsequent special enrollment period under this 
        subsection during which the individual was not enrolled 
        in a group health plan described in section 
        1862(b)(1)(A)(v) by reason of the individual's (or 
        individual's spouse's) current employment status; and
          (C) has not terminated enrollment under this section 
        at any time at which the individual is not enrolled in 
        such a group health plan by reason of the individual's 
        (or individual's spouse's) current employment status,
there shall be a special enrollment period described in 
paragraph (3). In the case of an individual not described in 
the previous sentence who has not attained the age of 65, has 
enrolled (or has been deemed to have enrolled) in the medical 
insurance program established under this part during the 
individual's initial enrollment period, or is an individual 
described in the second sentence of paragraph (1), has enrolled 
in such program during any subsequent special enrollment period 
under this subsection during which the individual was not 
enrolled in a large group health plan (as that term is defined 
in section 1862(b)(1)(B)(iii)) by reason of the individual's 
current employment status (or the current employment status of 
a family member of the individual), and has not terminated 
enrollment under this section at any time at which the 
individual is not enrolled in such a large group health plan by 
reason of the individual's current employment status (or the 
current employment status of a family member of the 
individual), there shall be a special enrollment period 
described in paragraph (3)(B).
  (3)(A) The special enrollment period referred to in the first 
sentences of paragraphs (1) and (2) is the period including 
each month during any part of which the individual is enrolled 
in a group health plan described in section 1862(b)(1)(A)(v) by 
reason of current employment status ending with the last day of 
the eighth consecutive month in which the individual is at no 
time so enrolled.
  (B) The special enrollment period referred to in the second 
sentences of paragraphs (1) and (2) is the period including 
each month during any part of which the individual is enrolled 
in a large group health plan (as that term is defined in 
section 1862(b)(1)(B)(iii)) by reason of the individual's 
current employment status (or the current employment status of 
a family member of the individual) ending with the last day of 
the eighth consecutive month in which the individual is at no 
time so enrolled.
  (4)(A) In the case of an individual who is entitled to 
benefits under part A pursuant to section 226(b) and--
          (i) who at the time the individual first satisfies 
        paragraph (1) of section 1836--
                  (I) is enrolled in a group health plan 
                described in section 1862(b)(1)(A)(v) by reason 
                of the individual's current or former 
                employment or by reason of the current or 
                former employment status of a member of the 
                individual's family, and
                  (II) has elected not to enroll (or to be 
                deemed enrolled) under this section during the 
                individual's initial enrollment period; and
          (ii) whose continuous enrollment under such group 
        health plan is involuntarily terminated at a time when 
        the enrollment under the plan is not by reason of the 
        individual's current employment or by reason of the 
        current employment of a member of the individual's 
        family,
there shall be a special enrollment period described in 
subparagraph (B).
  (B) The special enrollment period referred to in subparagraph 
(A) is the 6-month period beginning on the first day of the 
month which includes the date of the enrollment termination 
described in subparagraph (A)(ii).
  (j) In applying this section in the case of an individual who 
is entitled to benefits under part A pursuant to the operation 
of section 226(h), the following special rules apply:
          (1) The initial enrollment period under subsection 
        (d) shall begin on the first day of the first month in 
        which the individual satisfies the requirement of 
        section 1836(1).
          (2) In applying subsection (g)(1), the initial 
        enrollment period shall begin on the first day of the 
        first month of entitlement to disability insurance 
        benefits referred to in such subsection.
  (k)(1) In the case of an individual who--
          (A) at the time the individual first satisfies 
        paragraph (1) or (2) of section 1836, is described in 
        paragraph (3), and has elected not to enroll (or to be 
        deemed enrolled) under this section during the 
        individual's initial enrollment period; or
          (B) has terminated enrollment under this section 
        during a month in which the individual is described in 
        paragraph (3),
there shall be a special enrollment period described in 
paragraph (2).
  (2) The special enrollment period described in this paragraph 
is the 6-month period beginning on the first day of the month 
which includes the date that the individual is no longer 
described in paragraph (3).
  (3) For purposes of paragraph (1), an individual described in 
this paragraph is an individual who--
          (A) is serving as a volunteer outside of the United 
        States through a program--
                  (i) that covers at least a 12-month period; 
                and
                  (ii) that is sponsored by an organization 
                described in section 501(c)(3) of the Internal 
                Revenue Code of 1986 and exempt from taxation 
                under section 501(a) of such Code; and
          (B) demonstrates health insurance coverage while 
        serving in the program.
  (l)(1) In the case of any individual who is a covered 
beneficiary (as defined in section 1072(5) of title 10, United 
States Code) at the time the individual is entitled to part A 
under section 226(b) or section 226A and who is eligible to 
enroll but who has elected not to enroll (or to be deemed 
enrolled) during the individual's initial enrollment period, 
there shall be a special enrollment period described in 
paragraph (2).
  (2) The special enrollment period described in this 
paragraph, with respect to an individual, is the 12-month 
period beginning on the day after the last day of the initial 
enrollment period of the individual or, if later, the 12-month 
period beginning with the month the individual is notified of 
enrollment under this section.
  (3) In the case of an individual who enrolls during the 
special enrollment period provided under paragraph (1), the 
coverage period under this part shall begin on the first day of 
the month in which the individual enrolls, or, at the option of 
the individual, the first month after the end of the 
individual's initial enrollment period.
  (4) An individual may only enroll during the special 
enrollment period provided under paragraph (1) one time during 
the individual's lifetime.
  (5) The Secretary shall ensure that the materials relating to 
coverage under this part that are provided to an individual 
described in paragraph (1) prior to the individual's initial 
enrollment period contain information concerning the impact of 
not enrolling under this part, including the impact on health 
care benefits under the TRICARE program under chapter 55 of 
title 10, United States Code.
  (6) The Secretary of Defense shall collaborate with the 
Secretary of Health and Human Services and the Commissioner of 
Social Security to provide for the accurate identification of 
individuals described in paragraph (1). The Secretary of 
Defense shall provide such individuals with notification with 
respect to this subsection. The Secretary of Defense shall 
collaborate with the Secretary of Health and Human Services and 
the Commissioner of Social Security to ensure appropriate 
follow up pursuant to any notification provided under the 
preceding sentence.
  (m)(1) In the case of an individual who--
          (A) is (i) a Postal Service Medicare covered 
        annuitant, or (ii) an individual who is a family member 
        of such an annuitant and is a covered Medicare 
        individual;
          (B) enrolls in a Program plan under section 8903c of 
        title 5, United States Code; and
          (C) is not enrolled under this part,
the individual is deemed, in accordance with section 
8903c(e)(3) of such title, to have elected to be enrolled under 
this part.
  (2) In the case of an individual who is deemed to be enrolled 
under paragraph (1), the coverage period under this part shall 
begin on the date that the individual first has coverage under 
the Program plan pursuant to the enrollment described in 
paragraph (1)(B).
  (3) The definitions in section 8903c(a) of title 5, United 
States Code, shall apply for purposes of this subsection.

           *       *       *       *       *       *       *


                          amounts of premiums

  Sec. 1839. (a)(1) The Secretary shall, during September of 
1983 and of each year thereafter, determine the monthly 
actuarial rate for enrollees age 65 and over which shall be 
applicable for the succeeding calendar year. Subject to 
paragraphs (5) and (6), such actuarial rate shall be the amount 
the Secretary estimates to be necessary so that the aggregate 
amount for such calendar year with respect to those enrollees 
age 65 and older will equal one-half of the total of the 
benefits and administrative costs which he estimates will be 
payable from the Federal Supplementary Medical Insurance Trust 
Fund for services performed and related administrative costs 
incurred in such calendar year with respect to such enrollees. 
In calculating the monthly actuarial rate, the Secretary shall 
include an appropriate amount for a contingency margin. In 
applying this paragraph there shall not be taken into account 
additional payments under section 1848(o) and section 
1853(l)(3) and the Government contribution under section 
1844(a)(3).
  (2) The monthly premium of each individual enrolled under 
this part for each month after December 1983 shall be the 
amount determined under paragraph (3), adjusted as required in 
accordance with subsections (b), (c), (f), and (i), and to 
reflect any credit provided under section 
1854(b)(1)(C)(ii)(III).
  (3) The Secretary, during September of each year, shall 
determine and promulgate a monthly premium rate for the 
succeeding calendar year that (except as provided in subsection 
(g)) is equal to 50 percent of the monthly actuarial rate for 
enrollees age 65 and over, determined according to paragraph 
(1), for that succeeding calendar year. Whenever the Secretary 
promulgates the dollar amount which shall be applicable as the 
monthly premium rate for any period, he shall, at the time such 
promulgation is announced, issue a public statement setting 
forth the actuarial assumptions and bases employed by him in 
arriving at the amount of an adequate actuarial rate for 
enrollees age 65 and older as provided in paragraph (1).
  (4) The Secretary shall also, during September of 1983 and of 
each year thereafter, determine the monthly actuarial rate for 
disabled enrollees under age 65 which shall be applicable for 
the succeeding calendar year. Such actuarial rate shall be the 
amount the Secretary estimates to be necessary so that the 
aggregate amount for such calendar year with respect to 
disabled enrollees under age 65 will equal one-half of the 
total of the benefits and administrative costs which he 
estimates will be payable from the Federal Supplementary 
Medical Insurance Trust Fund for services performed and related 
administrative costs incurred in such calendar year with 
respect to such enrollees. In calculating the monthly actuarial 
rate under this paragraph, the Secretary shall include an 
appropriate amount for a contingency margin.
  (5)(A) In applying this part (including subsection (i) and 
section 1833(b)), the monthly actuarial rate for enrollees age 
65 and over for 2016 shall be determined as if subsection (f) 
did not apply.
  (B) Subsection (f) shall continue to be applied to paragraph 
(6)(A) (during a repayment month, as described in paragraph 
(6)(B)) and without regard to the application of subparagraph 
(A).
  (6)(A) With respect to a repayment month (as described in 
subparagraph (B)), the monthly premium otherwise established 
under paragraph (3) shall be increased by, subject to 
subparagraph (D), $3.
  (B) For purposes of this paragraph, a repayment month is a 
month during a year, beginning with 2016, for which a balance 
due amount is computed under subparagraph (C) as greater than 
zero.
  (C) For purposes of this paragraph, the balance due amount 
computed under this subparagraph, with respect to a month, is 
the amount estimated by the Chief Actuary of the Centers for 
Medicare & Medicaid Services to be equal to--
          (i) the amount transferred under section 1844(d)(1); 
        plus
          (ii) the amount that is equal to the aggregate 
        reduction, for all individuals enrolled under this 
        part, in the income related monthly adjustment amount 
        as a result of the application of paragraph (5); minus
          (iii) the amounts payable under this part as a result 
        of the application of this paragraph for preceding 
        months.
  (D) If the balance due amount computed under subparagraph 
(C), without regard to this subparagraph, for December of a 
year would be less than zero, the Chief Actuary of the Centers 
for Medicare & Medicaid Services shall estimate, and the 
Secretary shall apply, a reduction to the dollar amount 
increase applied under subparagraph (A) for each month during 
such year in a manner such that the balance due amount for 
January of the subsequent year is equal to zero.
  (b) In the case of an individual whose coverage period began 
pursuant to an enrollment after his initial enrollment period 
(determined pursuant to subsection (c) or (d) of section 1837 
or pursuant to subsection (m) of such section) and not pursuant 
to a special enrollment period under subsection (i)(4) or (l) 
of section 1837, the monthly premium determined under 
subsection (a) (without regard to any adjustment under 
subsection (i)) shall be increased by 10 percent of the monthly 
premium so determined for each full 12 months (in the same 
continuous period of eligibility) in which he could have been 
but was not enrolled. For purposes of the preceding sentence, 
there shall be taken into account (1) the months which elapsed 
between the close of his initial enrollment period and the 
close of the enrollment period in which he enrolled, plus (in 
the case of an individual who reenrolls) (2) the months which 
elapsed between the date of termination of a previous coverage 
period and the close of the enrollment period in which he 
reenrolled, but there shall not be taken into account months 
for which the individual can demonstrate that the individual 
was enrolled in a group health plan described in section 
1862(b)(1)(A)(v) by reason of the individual's (or the 
individual's spouse's) current employment or months during 
which the individual has not attained the age of 65 and for 
which the individual can demonstrate that the individual was 
enrolled in a large group health plan as an active individual 
(as those terms are defined in section 1862(b)(1)(B)(iii)) or 
months for which the individual can demonstrate that the 
individual was an individual described in section 1837(k)(3). 
Any increase in an individual's monthly premium under the first 
sentence of this subsection with respect to a particular 
continuous period of eligibility shall not be applicable with 
respect to any other continuous period of eligibility which 
such individual may have. No increase in the premium shall be 
effected for a month in the case of an individual who enrolls 
under this part during 2001, 2002, 2003, or 2004 and who 
demonstrates to the Secretary before December 31, 2004, that 
the individual is a covered beneficiary (as defined in section 
1072(5) of title 10, United States Code). The Secretary of 
Health and Human Services shall consult with the Secretary of 
Defense in identifying individuals described in the previous 
sentence.
  (c) If any monthly premium determined under the foregoing 
provisions of this section is not a multiple of 10 cents, such 
premium shall be rounded to the nearest multiple of 10 cents.
  (d) For purposes of subsection (b) (and section 1837(g)(1)), 
an individual's ``continuous period of eligibility'' is the 
period beginning with the first day on which he is eligible to 
enroll under section 1836 and ending with his death; except 
that any period during all of which an individual satisfied 
paragraph (1) of section 1836 and which terminated in or before 
the month preceding the month in which he attained age 65 shall 
be a separate ``continuous period of eligibility'' with respect 
to such individual (and each such period which terminates shall 
be deemed not to have existed for purposes of subsequently 
applying this section).
  (e)(1) Upon the request of a State (or any appropriate State 
or local governmental entity specified by the Secretary), the 
Secretary may enter into an agreement with the State (or such 
entity) under which the State (or such entity) agrees to pay on 
a quarterly or other periodic basis to the Secretary (to be 
deposited in the Treasury to the credit of the Federal 
Supplementary Medical Insurance Trust Fund) an amount equal to 
the amount of the part B late enrollment premium increases with 
respect to the premiums for eligible individuals (as defined in 
paragraph (3)(A)).
  (2) No part B late enrollment premium increase shall apply to 
an eligible individual for premiums for months for which the 
amount of such an increase is payable under an agreement under 
paragraph (1).
  (3) In this subsection:
          (A) The term ``eligible individual'' means an 
        individual who is enrolled under this part B and who is 
        within a class of individuals specified in the 
        agreement under paragraph (1).
          (B) The term ``part B late enrollment premium 
        increase'' means any increase in a premium as a result 
        of the application of subsection (b).
  (f) For any calendar year after 1988, if an individual is 
entitled to monthly benefits under section 202 or 223 or to a 
monthly annuity under section 3(a), 4(a), or 4(f) of the 
Railroad Retirement Act of 1974 for November and December of 
the preceding year, if the monthly premium of the individual 
under this section for December and for January is deducted 
from those benefits under section 1840(a)(1) or section 
1840(b)(1), and if the amount of the individual's premium is 
not adjusted for such January under subsection (i), the monthly 
premium otherwise determined under this section for an 
individual for that year shall not be increased, pursuant to 
this subsection, to the extent that such increase would reduce 
the amount of benefits payable to that individual for that 
December below the amount of benefits payable to that 
individual for that November (after the deduction of the 
premium under this section). For purposes of this subsection, 
retroactive adjustments or payments and deductions on account 
of work shall not be taken into account in determining the 
monthly benefits to which an individual is entitled under 
section 202 or 223 or under the Railroad Retirement Act of 
1974.
  (g) In estimating the benefits and administrative costs which 
will be payable from the Federal Supplementary Medical 
Insurance Trust Fund for a year for purposes of determining the 
monthly premium rate under subsection (a)(3), the Secretary 
shall exclude an estimate of any benefits and administrative 
costs attributable to--
          (1) the application of section 1861(v)(1)(L)(viii) or 
        to the establishment under section 1861(v)(1)(L)(i)(V) 
        of a per visit limit at 106 percent of the median 
        (instead of 105 percent of the median), but only to the 
        extent payment for home health services under this 
        title is not being made under section 1895 (relating to 
        prospective payment for home health services); and
          (2) the medicare prescription drug discount card and 
        transitional assistance program under section 1860D-31.
  (h) Potential Application of Comparative Cost Adjustment in 
CCA Areas.--
          (1) In general.--Certain individuals who are residing 
        in a CCA area under section 1860C-1 who are not 
        enrolled in an MA plan under part C may be subject to a 
        premium adjustment under subsection (f) of such section 
        for months in which the CCA program under such section 
        is in effect in such area.
          (2) No effect on late enrollment penalty or income-
        related adjustment in subsidies.--Nothing in this 
        subsection or section 1860C-1(f) shall be construed as 
        affecting the amount of any premium adjustment under 
        subsection (b) or (i). Subsection (f) shall be applied 
        without regard to any premium adjustment referred to in 
        paragraph (1).
          (3) Implementation.--In order to carry out a premium 
        adjustment under this subsection and section 1860C-1(f) 
        (insofar as it is effected through the manner of 
        collection of premiums under section 1840(a)), the 
        Secretary shall transmit to the Commissioner of Social 
        Security--
                  (A) at the beginning of each year, the name, 
                social security account number, and the amount 
                of the premium adjustment (if any) for each 
                individual enrolled under this part for each 
                month during the year; and
                  (B) periodically throughout the year, 
                information to update the information 
                previously transmitted under this paragraph for 
                the year.
  (i) Reduction in Premium Subsidy Based on Income.--
          (1) In general.--In the case of an individual whose 
        modified adjusted gross income exceeds the threshold 
        amount under paragraph (2), the monthly amount of the 
        premium subsidy applicable to the premium under this 
        section for a month after December 2006 shall be 
        reduced (and the monthly premium shall be increased) by 
        the monthly adjustment amount specified in paragraph 
        (3).
          (2) Threshold amount.--For purposes of this 
        subsection, subject to paragraph (6), the threshold 
        amount is--
                  (A) except as provided in subparagraph (B), 
                $80,000 (or, beginning with 2018, $85,000), and
                  (B) in the case of a joint return, twice the 
                amount applicable under subparagraph (A) for 
                the calendar year.
          (3) Monthly adjustment amount.--
                  (A) In general.--Subject to subparagraph (B), 
                the monthly adjustment amount specified in this 
                paragraph for an individual for a month in a 
                year is equal to the product of the following:
                          (i) Sliding scale percentage.--
                        Subject to paragraph (6), the 
                        applicable percentage specified in the 
                        applicable table in subparagraph (C) 
                        for the individual minus 25 percentage 
                        points.
                          (ii) Unsubsidized part b premium 
                        amount.--
                          (I) 200 percent of the monthly 
                        actuarial rate for enrollees age 65 and 
                        over (as determined under subsection 
                        (a)(1) for the year); plus
                                  (II) 4 times the amount of 
                                the increase in the monthly 
                                premium under subsection (a)(6) 
                                for a month in the year.
                  (B)  3-year phase in.--The monthly adjustment 
                amount specified in this paragraph for an 
                individual for a month in a year before 2009 is 
                equal to the following percentage of the 
                monthly adjustment amount specified in 
                subparagraph (A):
                          (i) For 2007, 33 percent.
                          (ii) For 2008, 67 percent.
                  (C) Applicable percentage.--
                          (i) In general.--
                                  (I) Subject to paragraphs (5) 
                                and (6), for years before 2018:

If the modified adjusted gross income is:                 The applicable
                                                          percentage is:
    More than $80,000 but not more than $100,000.............35 percent 
    More than $100,000 but not more than $150,000............50 percent 
    More than $150,000 but not more than $200,000............65 percent 
    More than $200,000.......................................80 percent.

                                  (II) Subject to paragraph 
                                (5), for years beginning with 
                                2018:


 
If the modified adjusted gross income is:                The applicable
                                                                  percentage is:
  More than $85,000 but not more than $107,000.....            35 percent
  More than $107,000 but not more than $133,500....            50 percent
  More than $133,500 but not more than $160,000....            65 percent
  More than $160,000...............................            80 percent.

                          (ii) Joint returns.--In the case of a 
                        joint return, clause (i) shall be 
                        applied by substituting dollar amounts 
                        which are twice the dollar amounts 
                        otherwise applicable under clause (i) 
                        for the calendar year.
                          (iii) Married individuals filing 
                        separate returns.--In the case of an 
                        individual who--
                                  (I) is married as of the 
                                close of the taxable year 
                                (within the meaning of section 
                                7703 of the Internal Revenue 
                                Code of 1986) but does not file 
                                a joint return for such year, 
                                and
                                  (II) does not live apart from 
                                such individual's spouse at all 
                                times during the taxable year,
                        clause (i) shall be applied by reducing 
                        each of the dollar amounts otherwise 
                        applicable under such clause for the 
                        calendar year by the threshold amount 
                        for such year applicable to an 
                        unmarried individual.
          (4) Modified adjusted gross income.--
                  (A) In general.--For purposes of this 
                subsection, the term ``modified adjusted gross 
                income'' means adjusted gross income (as 
                defined in section 62 of the Internal Revenue 
                Code of 1986)--
                          (i) determined without regard to 
                        sections 135, 911, 931, and 933 of such 
                        Code; and
                          (ii) increased by the amount of 
                        interest received or accrued during the 
                        taxable year which is exempt from tax 
                        under such Code.
                In the case of an individual filing a joint 
                return, any reference in this subsection to the 
                modified adjusted gross income of such 
                individual shall be to such return's modified 
                adjusted gross income.
                  (B) Taxable year to be used in determining 
                modified adjusted gross income.--
                          (i) In general.--In applying this 
                        subsection for an individual's premiums 
                        in a month in a year, subject to clause 
                        (ii) and subparagraph (C), the 
                        individual's modified adjusted gross 
                        income shall be such income determined 
                        for the individual's last taxable year 
                        beginning in the second calendar year 
                        preceding the year involved.
                          (ii) Temporary use of other data.--
                        If, as of October 15 before a calendar 
                        year, the Secretary of the Treasury 
                        does not have adequate data for an 
                        individual in appropriate electronic 
                        form for the taxable year referred to 
                        in clause (i), the individual's 
                        modified adjusted gross income shall be 
                        determined using the data in such form 
                        from the previous taxable year. Except 
                        as provided in regulations prescribed 
                        by the Commissioner of Social Security 
                        in consultation with the Secretary, the 
                        preceding sentence shall cease to apply 
                        when adequate data in appropriate 
                        electronic form are available for the 
                        individual for the taxable year 
                        referred to in clause (i), and proper 
                        adjustments shall be made to the extent 
                        that the premium adjustments determined 
                        under the preceding sentence were 
                        inconsistent with those determined 
                        using such taxable year.
                          (iii) Non-filers.--In the case of 
                        individuals with respect to whom the 
                        Secretary of the Treasury does not have 
                        adequate data in appropriate electronic 
                        form for either taxable year referred 
                        to in clause (i) or clause (ii), the 
                        Commissioner of Social Security, in 
                        consultation with the Secretary, shall 
                        prescribe regulations which provide for 
                        the treatment of the premium adjustment 
                        with respect to such individual under 
                        this subsection, including regulations 
                        which provide for--
                                  (I) the application of the 
                                highest applicable percentage 
                                under paragraph (3)(C) to such 
                                individual if the Commissioner 
                                has information which indicates 
                                that such individual's modified 
                                adjusted gross income might 
                                exceed the threshold amount for 
                                the taxable year referred to in 
                                clause (i), and
                                  (II) proper adjustments in 
                                the case of the application of 
                                an applicable percentage under 
                                subclause (I) to such 
                                individual which is 
                                inconsistent with such 
                                individual's modified adjusted 
                                gross income for such taxable 
                                year.
                  (C) Use of more recent taxable year.--
                          (i) In general.--The Commissioner of 
                        Social Security in consultation with 
                        the Secretary of the Treasury shall 
                        establish a procedures under which an 
                        individual's modified adjusted gross 
                        income shall, at the request of such 
                        individual, be determined under this 
                        subsection--
                                  (I) for a more recent taxable 
                                year than the taxable year 
                                otherwise used under 
                                subparagraph (B), or
                                  (II) by such methodology as 
                                the Commissioner, in 
                                consultation with such 
                                Secretary, determines to be 
                                appropriate, which may include 
                                a methodology for aggregating 
                                or disaggregating information 
                                from tax returns in the case of 
                                marriage or divorce.
                          (ii) Standard for granting 
                        requests.--A request under clause 
                        (i)(I) to use a more recent taxable 
                        year may be granted only if--
                                  (I) the individual furnishes 
                                to such Commissioner with 
                                respect to such year such 
                                documentation, such as a copy 
                                of a filed Federal income tax 
                                return or an equivalent 
                                document, as the Commissioner 
                                specifies for purposes of 
                                determining the premium 
                                adjustment (if any) under this 
                                subsection; and
                                  (II) the individual's 
                                modified adjusted gross income 
                                for such year is significantly 
                                less than such income for the 
                                taxable year determined under 
                                subparagraph (B) by reason of 
                                the death of such individual's 
                                spouse, the marriage or divorce 
                                of such individual, or other 
                                major life changing events 
                                specified in regulations 
                                prescribed by the Commissioner 
                                in consultation with the 
                                Secretary.
          (5) Inflation adjustment.--
                  (A) In general.--In the case of any calendar 
                year beginning after 2007 (other than 2018 and 
                2019), each dollar amount in paragraph (2) or 
                (3) shall be increased by an amount equal to--
                          (i) such dollar amount, multiplied by
                          (ii) the percentage (if any) by which 
                        the average of the Consumer Price Index 
                        for all urban consumers (United States 
                        city average) for the 12-month period 
                        ending with August of the preceding 
                        calendar year exceeds such average for 
                        the 12-month period ending with August 
                        2006 (or, in the case of a calendar 
                        year beginning with 2020, August 2018).
                  (B) Rounding.--If any dollar amount after 
                being increased under subparagraph (A) is not a 
                multiple of $1,000, such dollar amount shall be 
                rounded to the nearest multiple of $1,000.
          (6) Temporary adjustment to income thresholds.--
        Notwithstanding any other provision of this subsection, 
        during the period beginning on January 1, 2011, and 
        ending on December 31, 2017--
                  (A) the threshold amount otherwise applicable 
                under paragraph (2) shall be equal to such 
                amount for 2010; and
                  (B) the dollar amounts otherwise applicable 
                under paragraph (3)(C)(i) shall be equal to 
                such dollar amounts for 2010.
          (7) Joint return defined.--For purposes of this 
        subsection, the term ``joint return'' has the meaning 
        given to such term by section 7701(a)(38) of the 
        Internal Revenue Code of 1986.
  (j) Transition for Newly Enrolling Postal Service Annuitants 
and Family Members.--With respect to each individual who is 
enrolled under this part pursuant to and during the open 
enrollment period established under section 1837(m) and who is 
not eligible for Medicare cost-sharing described in section 
1905(p)(3)(A)(ii) under a State plan under title XIX, the 
premium otherwise established under this part (taking into 
account any adjustments, including those under subsections (b) 
and (i)) for a month--
          (1) in the initial contract year (as defined in 
        section 8903c(a) of title 5, United States Code), shall 
        be reduced by 75 percent;
          (2) in the succeeding year, shall be reduced by 50 
        percent; and
          (3) in the second succeeding year, shall be reduced 
        by 25 percent.

           *       *       *       *       *       *       *


   appropriations to cover government contributions and contingency 
                                reserve

  Sec. 1844. (a) There are authorized to be appropriated from 
time to time, out of any moneys in the Treasury not otherwise 
appropriated, to the Federal Supplementary Medical Insurance 
Trust Fund--
          (1)(A) a Government contribution equal to the 
        aggregate premiums payable for a month for enrollees 
        age 65 and over under this part and deposited in the 
        Trust Fund, multiplied by the ratio of--
                  (i) twice the dollar amount of the 
                actuarially adequate rate per enrollee age 65 
                and over as determined under section 1839(a)(1) 
                for such month minus the dollar amount of the 
                premium per enrollee for such month, as 
                determined under section 1839(a)(3), to
                  (ii) the dollar amount of the premium per 
                enrollee for such month, plus
          (B) a Government contribution equal to the aggregate 
        premiums payable for a month for enrollees under age 65 
        under this part and deposited in the Trust Fund, 
        multiplied by the ratio of--
                  (i) twice the dollar amount of the 
                actuarially adequate rate per enrollee under 
                age 65 as determined under section 1839(a)(4) 
                for such month minus the dollar amount of the 
                premium per enrollee for such month, as 
                determined under section 1839(a)(3), to
                  (ii) the dollar amount of the premium per 
                enrollee for such month; minus
          (C) the aggregate amount of additional premium 
        payments attributable to the application of section 
        1839(i); plus
          (2) such sums as the Secretary deems necessary to 
        place the Trust Fund, at the end of any fiscal year 
        occurring after June 30, 1967, in the same position in 
        which it would have been at the end of such fiscal year 
        if (A) a Government contribution representing the 
        excess of the premiums deposited in the Trust Fund 
        during the fiscal year ending June 30, 1967, over the 
        Government contribution actually appropriated to the 
        Trust Fund during such fiscal year had been 
        appropriated to it on June 30, 1967, and (B) the 
        Government contribution for premiums deposited in the 
        Trust Fund after June 30, 1967, had been appropriated 
        to it when such premiums were deposited; plus
          (3) a Government contribution equal to the amount of 
        payment incentives payable under sections 1848(o) and 
        1853(l)(3).
In applying paragraph (1), the amounts transferred [under 
subsection (d)(1) with respect to enrollees described in 
subparagraphs (A) and (B) of such subsection] under subsections 
(d)(1) and (d)(4) with respect to enrollees described in 
subparagraphs (A) and (B) of such respective subsection shall 
be treated as premiums payable and deposited in the Trust Fund 
under subparagraphs (A) and (B), respectively, of paragraph 
(1).
  (b) In order to assure prompt payment of benefits provided 
under this part and the administrative expenses thereunder 
during the early months of the program established by this 
part, and to provide a contingency reserve, there is also 
authorized to be appropriated, out of any moneys in the 
Treasury not otherwise appropriated, to remain available 
through the calendar year 1969 for repayable advances (without 
interest) to the Trust Fund, an amount equal to $18 multiplied 
by the number of individuals (as estimated by the Secretary) 
who could be covered in July 1966 by the insurance program 
established by this part if they had theretofore enrolled under 
this part.
  (c) The Secretary shall determine the Government contribution 
under subparagraphs (A) and (B) of subsection (a)(1) without 
regard to any premium reduction resulting from an election 
under section 1854(f)(1)(E) or any credits provided under 
section 1854(b)(1)(C)(iv) and without regard to any premium 
adjustment effected under section 1839(i).
  (d)(1) For 2016, there shall be transferred from the General 
Fund to the Trust Fund an amount, as estimated by the Chief 
Actuary of the Centers for Medicare & Medicaid Services, equal 
to the reduction in aggregate premiums payable under this part 
for a month in such year (excluding any changes in amounts 
collected under section 1839(i)) that is attributable to the 
application of section 1839(a)(5)(A) with respect to--
  (A) enrollees age 65 and over; and
  (B) enrollees under age 65.
Such amounts shall be transferred from time to time as 
appropriate.
  (2) Premium increases affected under section 1839(a)(6) shall 
not be taken into account in applying subsection (a).
  (3) There shall be transferred from the Trust Fund to the 
General Fund of the Treasury amounts equivalent to the 
additional premiums payable as a result of the application of 
section 1839(a)(6), excluding the aggregate payments 
attributable to the application of section 
1839(i)(3)(A)(ii)(II).
  (4) For each year, there shall be transferred from the Postal 
Service Fund to the Trust Fund an amount, as estimated by the 
Chief Actuary of the Centers for Medicare & Medicaid Services, 
equal to the reduction in aggregate premiums payable under this 
part for a month in such year that is attributable to the 
application of section 1839(j) with respect to--
          (A) enrollees age 65 and over; and
          (B) enrollees under age 65.
Such amounts shall be transferred from time to time as 
appropriate but, to the extent practicable, on an annual basis 
and in a manner that places the Trust Fund in the same 
actuarial status as if this paragraph and section 1839(j) did 
not apply.

           *       *       *       *       *       *       *


Part E--Miscellaneous Provisions

           *       *       *       *       *       *       *


        exclusions from coverage and medicare as secondary payer

  Sec. 1862. (a) Notwithstanding any other provision of this 
title, no payment may be made under part A or part B for any 
expenses incurred for items or services--
          (1)(A) which, except for items and services described 
        in a succeeding subparagraph or additional preventive 
        services (as described in section 1861(ddd)(1)), are 
        not reasonable and necessary for the diagnosis or 
        treatment of illness or injury or to improve the 
        functioning of a malformed body member,
          (B) in the case of items and services described in 
        section 1861(s)(10), which are not reasonable and 
        necessary for the prevention of illness,
          (C) in the case of hospice care, which are not 
        reasonable and necessary for the palliation or 
        management of terminal illness,
          (D) in the case of clinical care items and services 
        provided with the concurrence of the Secretary and with 
        respect to research and experimentation conducted by, 
        or under contract with, the Medicare Payment Advisory 
        Commission or the Secretary, which are not reasonable 
        and necessary to carry out the purposes of section 
        1886(e)(6),
          (E) in the case of research conducted pursuant to 
        section 1142, which is not reasonable and necessary to 
        carry out the purposes of that section,
          (F) in the case of screening mammography, which is 
        performed more frequently than is covered under section 
        1834(c)(2) or which is not conducted by a facility 
        described in section 1834(c)(1)(B), in the case of 
        screening pap smear and screening pelvic exam, which is 
        performed more frequently than is provided under 
        section 1861(nn), and, in the case of screening for 
        glaucoma, which is performed more frequently than is 
        provided under section 1861(uu),
          (G) in the case of prostate cancer screening tests 
        (as defined in section 1861(oo)), which are performed 
        more frequently than is covered under such section,
          (H) in the case of colorectal cancer screening tests, 
        which are performed more frequently than is covered 
        under section 1834(d),
          (I) the frequency and duration of home health 
        services which are in excess of normative guidelines 
        that the Secretary shall establish by regulation,
          (J) in the case of a drug or biological specified in 
        section 1847A(c)(6)(C) for which payment is made under 
        part B that is furnished in a competitive area under 
        section 1847B, that is not furnished by an entity under 
        a contract under such section,
          (K) in the case of an initial preventive physical 
        examination, which is performed more than 1 year after 
        the date the individual's first coverage period begins 
        under part B,
          (L) in the case of cardiovascular screening blood 
        tests (as defined in section 1861(xx)(1)), which are 
        performed more frequently than is covered under section 
        1861(xx)(2),
          (M) in the case of a diabetes screening test (as 
        defined in section 1861(yy)(1)), which is performed 
        more frequently than is covered under section 
        1861(yy)(3),
          (N) in the case of ultrasound screening for abdominal 
        aortic aneurysm which is performed more frequently than 
        is provided for under section 1861(s)(2)(AA),
          (O) in the case of kidney disease education services 
        (as defined in paragraph (1) of section 1861(ggg)), 
        which are furnished in excess of the number of sessions 
        covered under paragraph (4) of such section, and
          (P) in the case of personalized prevention plan 
        services (as defined in section 1861(hhh)(1)), which 
        are performed more frequently than is covered under 
        such section;
          (2) for which the individual furnished such items or 
        services has no legal obligation to pay, and which no 
        other person (by reason of such individual's membership 
        in a prepayment plan or otherwise) has a legal 
        obligation to provide or pay for, except in the case of 
        Federally qualified health center services;
          (3) which are paid for directly or indirectly by a 
        governmental entity (other than under this Act and 
        other than under a health benefits or insurance plan 
        established for employees of such an entity), except in 
        the case of rural health clinic services, as defined in 
        section 1861(aa)(1), in the case of Federally qualified 
        health center services, as defined in section 
        1861(aa)(3), in the case of services for which payment 
        may be made under section 1880(e), and in such other 
        cases as the Secretary may specify;
          (4) which are not provided within the United States 
        (except for inpatient hospital services furnished 
        outside the United States under the conditions 
        described in section 1814(f) and, subject to such 
        conditions, limitations, and requirements as are 
        provided under or pursuant to this title, physicians' 
        services and ambulance services furnished an individual 
        in conjunction with such inpatient hospital services 
        but only for the period during which such inpatient 
        hospital services were furnished);
          (5) which are required as a result of war, or of an 
        act of war, occurring after the effective date of such 
        individual's current coverage under such part;
          (6) which constitute personal comfort items (except, 
        in the case of hospice care, as is otherwise permitted 
        under paragraph (1)(C));
          (7) where such expenses are for routine physical 
        checkups, eyeglasses (other than eyewear described in 
        section 1861(s)(8)) or eye examinations for the purpose 
        of prescribing, fitting, or changing eyeglasses, 
        procedures performed (during the course of any eye 
        examination) to determine the refractive state of the 
        eyes, hearing aids or examinations therefor, or 
        immunizations (except as otherwise allowed under 
        section 1861(s)(10) and subparagraph (B), (F), (G), 
        (H), (K), or (P) of paragraph (1));
          (8) where such expenses are for orthopedic shoes or 
        other supportive devices for the feet, other than shoes 
        furnished pursuant to section 1861(s)(12);
          (9) where such expenses are for custodial care 
        (except, in the case of hospice care, as is otherwise 
        permitted under paragraph (1)(C));
          (10) where such expenses are for cosmetic surgery or 
        are incurred in connection therewith, except as 
        required for the prompt repair of accidental injury or 
        for improvement of the functioning of a malformed body 
        member;
          (11) where such expenses constitute charges imposed 
        by immediate relatives of such individual or members of 
        his household;
          (12) where such expenses are for services in 
        connection with the care, treatment, filling, removal, 
        or replacement of teeth or structures directly 
        supporting teeth, except that payment may be made under 
        part A in the case of inpatient hospital services in 
        connection with the provision of such dental services 
        if the individual, because of his underlying medical 
        condition and clinical status or because of the 
        severity of the dental procedure, requires 
        hospitalization in connection with the provision of 
        such services;
          (13) where such expenses are for--
                  (A) the treatment of flat foot conditions and 
                the prescription of supportive devices 
                therefor,
                  (B) the treatment of subluxations of the 
                foot, or
                  (C) routine foot care (including the cutting 
                or removal of corns or calluses, the trimming 
                of nails, and other routine hygienic care);
          (14) which are other than physicians' services (as 
        defined in regulations promulgated specifically for 
        purposes of this paragraph), services described by 
        section 1861(s)(2)(K), certified nurse-midwife 
        services, qualified psychologist services, and services 
        of a certified registered nurse anesthetist, and which 
        are furnished to an individual who is a patient of a 
        hospital or critical access hospital by an entity other 
        than the hospital or critical access hospital, unless 
        the services are furnished under arrangements (as 
        defined in section 1861(w)(1)) with the entity made by 
        the hospital or critical access hospital;
          (15)(A) which are for services of an assistant at 
        surgery in a cataract operation (including subsequent 
        insertion of an intraocular lens) unless, before the 
        surgery is performed, the appropriate quality 
        improvement organization (under part B of title XI) or 
        a carrier under section 1842 has approved of the use of 
        such an assistant in the surgical procedure based on 
        the existence of a complicating medical condition, or
          (B) which are for services of an assistant at surgery 
        to which section 1848(i)(2)(B) applies;
          (16) in the case in which funds may not be used for 
        such items and services under the Assisted Suicide 
        Funding Restriction Act of 1997;
          (17) where the expenses are for an item or service 
        furnished in a competitive acquisition area (as 
        established by the Secretary under section 1847(a)) by 
        an entity other than an entity with which the Secretary 
        has entered into a contract under section 1847(b) for 
        the furnishing of such an item or service in that area, 
        unless the Secretary finds that the expenses were 
        incurred in a case of urgent need, or in other 
        circumstances specified by the Secretary;
          (18) which are covered skilled nursing facility 
        services described in section 1888(e)(2)(A)(i) and 
        which are furnished to an individual who is a resident 
        of a skilled nursing facility during a period in which 
        the resident is provided covered post-hospital extended 
        care services (or, for services described in section 
        1861(s)(2)(D), which are furnished to such an 
        individual without regard to such period), by an entity 
        other than the skilled nursing facility, unless the 
        services are furnished under arrangements (as defined 
        in section 1861(w)(1)) with the entity made by the 
        skilled nursing facility;
          (19) which are for items or services which are 
        furnished pursuant to a private contract described in 
        section 1802(b);
          (20) in the case of outpatient physical therapy 
        services, outpatient speech-language pathology 
        services, or outpatient occupational therapy services 
        furnished as an incident to a physician's professional 
        services (as described in section 1861(s)(2)(A)), that 
        do not meet the standards and conditions (other than 
        any licensing requirement specified by the Secretary) 
        under the second sentence of section 1861(p) (or under 
        such sentence through the operation of subsection (g) 
        or (ll)(2) of section 1861) as such standards and 
        conditions would apply to such therapy services if 
        furnished by a therapist;
          (21) where such expenses are for home health services 
        (including medical supplies described in section 
        1861(m)(5), but excluding durable medical equipment to 
        the extent provided for in such section) furnished to 
        an individual who is under a plan of care of the home 
        health agency if the claim for payment for such 
        services is not submitted by the agency;
          (22) subject to subsection (h), for which a claim is 
        submitted other than in an electronic form specified by 
        the Secretary;
          (23) which are the technical component of advanced 
        diagnostic imaging services described in section 
        1834(e)(1)(B) for which payment is made under the fee 
        schedule established under section 1848(b) and that are 
        furnished by a supplier (as defined in section 
        1861(d)), if such supplier is not accredited by an 
        accreditation organization designated by the Secretary 
        under section 1834(e)(2)(B);
          (24) where such expenses are for renal dialysis 
        services (as defined in subparagraph (B) of section 
        1881(b)(14)) for which payment is made under such 
        section unless such payment is made under such section 
        to a provider of services or a renal dialysis facility 
        for such services; or
          (25) not later than January 1, 2014, for which the 
        payment is other than by electronic funds transfer 
        (EFT) or an electronic remittance in a form as 
        specified in ASC X12 835 Health Care Payment and 
        Remittance Advice or subsequent standard.
Paragraph (7) shall not apply to Federally qualified health 
center services described in section 1861(aa)(3)(B). In making 
a national coverage determination (as defined in paragraph 
(1)(B) of section 1869(f)) the Secretary shall ensure 
consistent with subsection (l) that the public is afforded 
notice and opportunity to comment prior to implementation by 
the Secretary of the determination; meetings of advisory 
committees with respect to the determination are made on the 
record; in making the determination, the Secretary has 
considered applicable information (including clinical 
experience and medical, technical, and scientific evidence) 
with respect to the subject matter of the determination; and in 
the determination, provide a clear statement of the basis for 
the determination (including responses to comments received 
from the public), the assumptions underlying that basis, and 
make available to the public the data (other than proprietary 
data) considered in making the determination.
  (b) Medicare as Secondary Payer.--
          (1) Requirements of group health plans.--
                  (A) Working aged under group health plans.--
                          (i) In general.--A group health 
                        plan--
                                  (I) may not take into account 
                                that an individual (or the 
                                individual's spouse) who is 
                                covered under the plan by 
                                virtue of the individual's 
                                current employment status with 
                                an employer is entitled to 
                                benefits under this title under 
                                section 226(a), and
                                  (II) shall provide that any 
                                individual age 65 or older (and 
                                the spouse age 65 or older of 
                                any individual) who has current 
                                employment status with an 
                                employer shall be entitled to 
                                the same benefits under the 
                                plan under the same conditions 
                                as any such individual (or 
                                spouse) under age 65.
                          (ii) Exclusion of group health plan 
                        of a small employer.--Clause (i) shall 
                        not apply to a group health plan unless 
                        the plan is a plan of, or contributed 
                        to by, an employer that has 20 or more 
                        employees for each working day in each 
                        of 20 or more calendar weeks in the 
                        current calendar year or the preceding 
                        calendar year.
                          (iii) Exception for small employers 
                        in multiemployer or multiple employer 
                        group health plans.--Clause (i) also 
                        shall not apply with respect to 
                        individuals enrolled in a multiemployer 
                        or multiple employer group health plan 
                        if the coverage of the individuals 
                        under the plan is by virtue of current 
                        employment status with an employer that 
                        does not have 20 or more individuals in 
                        current employment status for each 
                        working day in each of 20 or more 
                        calendar weeks in the current calendar 
                        year and the preceding calendar year; 
                        except that the exception provided in 
                        this clause shall only apply if the 
                        plan elects treatment under this 
                        clause.
                          (iv) Exception for individuals with 
                        end stage renal disease.--Subparagraph 
                        (C) shall apply instead of clause (i) 
                        to an item or service furnished in a 
                        month to an individual if for the month 
                        the individual is, or (without regard 
                        to entitlement under section 226) would 
                        upon application be, entitled to 
                        benefits under section 226A.
                          (v) Group health plan defined.--In 
                        this subparagraph, and subparagraph 
                        (C), the term ``group health plan'' has 
                        the meaning given such term in section 
                        5000(b)(1) of the Internal Revenue Code 
                        of 1986, without regard to section 
                        5000(d) of such Code
                  (B) Disabled individuals in large group 
                health plans.--
                          (i) In general.--A large group health 
                        plan (as defined in clause (iii)) may 
                        not take into account that an 
                        individual (or a member of the 
                        individual's family) who is covered 
                        under the plan by virtue of the 
                        individual's current employment status 
                        with an employer is entitled to 
                        benefits under this title under section 
                        226(b).
                          (ii) Exception for individuals with 
                        end stage renal disease.--Subparagraph 
                        (C) shall apply instead of clause (i) 
                        to an item or service furnished in a 
                        month to an individual if for the month 
                        the individual is, or (without regard 
                        to entitlement under section 226) would 
                        upon application be, entitled to 
                        benefits under section 226A.
                          (iii) Large Group Health Plan 
                        Defined.--In this subparagraph, the 
                        term ``large group health plan'' has 
                        the meaning given such term in section 
                        5000(b)(2) of the Internal Revenue Code 
                        of 1986, without regard to section 
                        5000(d) of such Code.
                  (C) Individuals with end stage renal 
                disease.--A group health plan (as defined in 
                subparagraph (A)(v))--
                          (i) may not take into account that an 
                        individual is entitled to or eligible 
                        for benefits under this title under 
                        section 226A during the 12-month period 
                        which begins with the first month in 
                        which the individual becomes entitled 
                        to benefits under part A under the 
                        provisions of section 226A, or, if 
                        earlier, the first month in which the 
                        individual would have been entitled to 
                        benefits under such part under the 
                        provisions of section 226A if the 
                        individual had filed an application for 
                        such benefits; and
                          (ii) may not differentiate in the 
                        benefits it provides between 
                        individuals having end stage renal 
                        disease and other individuals covered 
                        by such plan on the basis of the 
                        existence of end stage renal disease, 
                        the need for renal dialysis, or in any 
                        other manner;
                except that clause (ii) shall not prohibit a 
                plan from paying benefits secondary to this 
                title when an individual is entitled to or 
                eligible for benefits under this title under 
                section 226A after the end of the 12-month 
                period described in clause (i). Effective for 
                items and services furnished on or after 
                February 1, 1991, and before the date of 
                enactment of the Balanced Budget Act of 1997 
                (with respect to periods beginning on or after 
                February 1, 1990), this subparagraph shall be 
                applied by substituting ``18- month'' for ``12-
                month'' each place it appears. Effective for 
                items and services furnished on or after the 
                date of enactment of the Balanced Budget Act of 
                1997, (with respect to periods beginning on or 
                after the date that is 18 months prior to such 
                date), clauses (i) and (ii) shall be applied by 
                substituting ``30-month'' for ``12-month'' each 
                place it appears.
                  (D) Treatment of certain members of religious 
                orders.--In this subsection, an individual 
                shall not be considered to be employed, or an 
                employee, with respect to the performance of 
                services as a member of a religious order which 
                are considered employment only by virtue of an 
                election made by the religious order under 
                section 3121(r) of the Internal Revenue Code of 
                1986.
                  (E) General Provisions.--For purposes of this 
                subsection:
                          (i) Aggregation Rules.--
                                  (I) All employers treated as 
                                a single employer under 
                                subsection (a) or (b) of 
                                section 52 of the Internal 
                                Revenue Code of 1986 shall be 
                                treated as a single employer.
                                  (II) All employees of the 
                                members of an affiliated 
                                service group (as defined in 
                                section 414(m) of such Code) 
                                shall be treated as employed by 
                                a single employer.
                                  (III) Leased employees (as 
                                defined in section 414(n)(2) of 
                                such Code) shall be treated as 
                                employees of the person for 
                                whom they perform services to 
                                the extent they are so treated 
                                under section 414(n) of such 
                                Code.
                        In applying sections of the Internal 
                        Revenue Code of 1986 under this clause, 
                        the Secretary shall rely upon 
                        regulations and decisions of the 
                        Secretary of the Treasury respecting 
                        such sections.
                          (ii) Current employment status 
                        defined.--An individual has ``current 
                        employment status'' with an employer if 
                        the individual is an employee, is the 
                        employer, or is associated with the 
                        employer in a business relationship.
                          (iii) Treatment of self-employed 
                        persons as employers.--The term 
                        ``employer'' includes a self-employed 
                        person.
                  (F) Limitation on beneficiary liability.--An 
                individual who is entitled to benefits under 
                this title and is furnished an item or service 
                for which such benefits are incorrectly paid is 
                not liable for repayment of such benefits under 
                this paragraph unless payment of such benefits 
                was made to the individual.
          (2) Medicare secondary payer.--
                  (A) In general.--Payment under this title may 
                not be made, except as provided in subparagraph 
                (B), with respect to any item or service to the 
                extent that--
                          (i) payment has been made, or can 
                        reasonably be expected to be made, with 
                        respect to the item or service as 
                        required under paragraph (1), or
                          (ii) payment has been made or can 
                        reasonably be expected to be made under 
                        a workmen's compensation law or plan of 
                        the United States or a State or under 
                        an automobile or liability insurance 
                        policy or plan (including a self-
                        insured plan) or under no fault 
                        insurance.
                In the subsection, the term ``primary plan'' 
                means a group health plan or large group health 
                plan, to the extent that clause (i) applies, 
                and a workmen's compensation law or plan, an 
                automobile or liability insurance policy or 
                plan (including a self-insured plan) or no 
                fault insurance, to the extent that clause (ii) 
                applies. An entity that engages in a business, 
                trade, or profession shall be deemed to have a 
                self-insured plan if it carries its own risk 
                (whether by a failure to obtain insurance, or 
                otherwise) in whole or in part.
                  (B) Conditional payment.--
                          (i) Authority to make conditional 
                        payment.--The Secretary may make 
                        payment under this title with respect 
                        to an item or service if a primary plan 
                        described in subparagraph (A)(ii) has 
                        not made or cannot reasonably be 
                        expected to make payment with respect 
                        to such item or service promptly (as 
                        determined in accordance with 
                        regulations). Any such payment by the 
                        Secretary shall be conditioned on 
                        reimbursement to the appropriate Trust 
                        Fund in accordance with the succeeding 
                        provisions of this subsection.
                          (ii) Repayment required.--Subject to 
                        paragraph (9), a primary plan, and an 
                        entity that receives payment from a 
                        primary plan, shall reimburse the 
                        appropriate Trust Fund for any payment 
                        made by the Secretary under this title 
                        with respect to an item or service if 
                        it is demonstrated that such primary 
                        plan has or had a responsibility to 
                        make payment with respect to such item 
                        or service. A primary plan's 
                        responsibility for such payment may be 
                        demonstrated by a judgment, a payment 
                        conditioned upon the recipient's 
                        compromise, waiver, or release (whether 
                        or not there is a determination or 
                        admission of liability) of payment for 
                        items or services included in a claim 
                        against the primary plan or the primary 
                        plan's insured, or by other means. If 
                        reimbursement is not made to the 
                        appropriate Trust Fund before the 
                        expiration of the 60-day period that 
                        begins on the date notice of, or 
                        information related to, a primary 
                        plan's responsibility for such payment 
                        or other information is received, the 
                        Secretary may charge interest 
                        (beginning with the date on which the 
                        notice or other information is 
                        received) on the amount of the 
                        reimbursement until reimbursement is 
                        made (at a rate determined by the 
                        Secretary in accordance with 
                        regulations of the Secretary of the 
                        Treasury applicable to charges for late 
                        payments).
                          (iii) Action by united states.--In 
                        order to recover payment made under 
                        this title for an item or service, the 
                        United States may bring an action 
                        against any or all entities that are or 
                        were required or responsible (directly, 
                        as an insurer or self-insurer, as a 
                        third-party administrator, as an 
                        employer that sponsors or contributes 
                        to a group health plan, or large group 
                        health plan, or otherwise) to make 
                        payment with respect to the same item 
                        or service (or any portion thereof) 
                        under a primary plan. The United States 
                        may, in accordance with paragraph 
                        (3)(A) collect double damages against 
                        any such entity. In addition, the 
                        United States may recover under this 
                        clause from any entity that has 
                        received payment from a primary plan or 
                        from the proceeds of a primary plan's 
                        payment to any entity. The United 
                        States may not recover from a third-
                        party administrator under this clause 
                        in cases where the third-party 
                        administrator would not be able to 
                        recover the amount at issue from the 
                        employer or group health plan and is 
                        not employed by or under contract with 
                        the employer or group health plan at 
                        the time the action for recovery is 
                        initiated by the United States or for 
                        whom it provides administrative 
                        services due to the insolvency or 
                        bankruptcy of the employer or plan. An 
                        action may not be brought by the United 
                        States under this clause with respect 
                        to payment owed unless the complaint is 
                        filed not later than 3 years after the 
                        date of the receipt of notice of a 
                        settlement, judgment, award, or other 
                        payment made pursuant to paragraph (8) 
                        relating to such payment owed.
                          (iv) Subrogation rights.--The United 
                        States shall be subrogated (to the 
                        extent of payment made under this title 
                        for such an item or service) to any 
                        right under this subsection of an 
                        individual or any other entity to 
                        payment with respect to such item or 
                        service under a primary plan.
                          (v) Waiver of rights.--The Secretary 
                        may waive (in whole or in part) the 
                        provisions of this subparagraph in the 
                        case of an individual claim if the 
                        Secretary determines that the waiver is 
                        in the best interests of the program 
                        established under this title.
                          (vi) Claims-filing period.--
                        Notwithstanding any other time limits 
                        that may exist for filing a claim under 
                        an employer group health plan, the 
                        United States may seek to recover 
                        conditional payments in accordance with 
                        this subparagraph where the request for 
                        payment is submitted to the entity 
                        required or responsible under this 
                        subsection to pay with respect to the 
                        item or service (or any portion 
                        thereof) under a primary plan within 
                        the 3-year period beginning on the date 
                        on which the item or service was 
                        furnished.
                          (vii) Use of website to determine 
                        final conditional reimbursement 
                        amount.--
                                  (I) Notice to secretary of 
                                expected date of a settlement, 
                                judgment, etc.--In the case of 
                                a payment made by the Secretary 
                                pursuant to clause (i) for 
                                items and services provided to 
                                the claimant, the claimant or 
                                applicable plan (as defined in 
                                paragraph (8)(F)) may at any 
                                time beginning 120 days before 
                                the reasonably expected date of 
                                a settlement, judgment, award, 
                                or other payment, notify the 
                                Secretary that a payment is 
                                reasonably expected and the 
                                expected date of such payment.
                                  (II) Secretarial providing 
                                access to claims information 
                                through a website.--The 
                                Secretary shall maintain and 
                                make available to individuals 
                                to whom items and services are 
                                furnished under this title (and 
                                to authorized family or other 
                                representatives recognized 
                                under regulations and to an 
                                applicable plan which has 
                                obtained the consent of the 
                                individual) access to 
                                information on the claims for 
                                such items and services 
                                (including payment amounts for 
                                such claims), including those 
                                claims that relate to a 
                                potential settlement, judgment, 
                                award, or other payment. Such 
                                access shall be provided to an 
                                individual, representative, or 
                                plan through a website that 
                                requires a password to gain 
                                access to the information. The 
                                Secretary shall update the 
                                information on claims and 
                                payments on such website in as 
                                timely a manner as possible but 
                                not later than 15 days after 
                                the date that payment is made. 
                                Information related to claims 
                                and payments subject to the 
                                notice under subclause (I) 
                                shall be maintained and made 
                                available consistent with the 
                                following:
                                          (aa) The information 
                                        shall be as complete as 
                                        possible and shall 
                                        include provider or 
                                        supplier name, 
                                        diagnosis codes (if 
                                        any), dates of service, 
                                        and conditional payment 
                                        amounts.
                                          (bb) The information 
                                        accurately identifies 
                                        those claims and 
                                        payments that are 
                                        related to a potential 
                                        settlement, judgment, 
                                        award, or other payment 
                                        to which the provisions 
                                        of this subsection 
                                        apply.
                                          (cc) The website 
                                        provides a method for 
                                        the receipt of secure 
                                        electronic 
                                        communications with the 
                                        individual, 
                                        representative, or plan 
                                        involved.
                                          (dd) The website 
                                        provides that 
                                        information is 
                                        transmitted from the 
                                        website in a form that 
                                        includes an official 
                                        time and date that the 
                                        information is 
                                        transmitted.
                                          (ee) The website 
                                        shall permit the 
                                        individual, 
                                        representative, or plan 
                                        to download a statement 
                                        of reimbursement 
                                        amounts (in this clause 
                                        referred to as a 
                                        ``statement of 
                                        reimbursement amount'') 
                                        on payments for claims 
                                        under this title 
                                        relating to a potential 
                                        settlement, judgment, 
                                        award, or other 
                                        payment.
                                  (III) Use of timely web 
                                download as basis for final 
                                conditional amount.--If an 
                                individual (or other claimant 
                                or applicable plan with the 
                                consent of the individual) 
                                obtains a statement of 
                                reimbursement amount from the 
                                website during the protected 
                                period as defined in subclause 
                                (V) and the related settlement, 
                                judgment, award or other 
                                payment is made during such 
                                period, then the last statement 
                                of reimbursement amount that is 
                                downloaded during such period 
                                and within 3 business days 
                                before the date of the 
                                settlement, judgment, award, or 
                                other payment shall constitute 
                                the final conditional amount 
                                subject to recovery under 
                                clause (ii) related to such 
                                settlement, judgment, award, or 
                                other payment.
                                  (IV) Resolution of 
                                discrepancies.--If the 
                                individual (or authorized 
                                representative) believes there 
                                is a discrepancy with the 
                                statement of reimbursement 
                                amount, the Secretary shall 
                                provide a timely process to 
                                resolve the discrepancy. Under 
                                such process the individual (or 
                                representative) must provide 
                                documentation explaining the 
                                discrepancy and a proposal to 
                                resolve such discrepancy. 
                                Within 11 business days after 
                                the date of receipt of such 
                                documentation, the Secretary 
                                shall determine whether there 
                                is a reasonable basis to 
                                include or remove claims on the 
                                statement of reimbursement. If 
                                the Secretary does not make 
                                such determination within the 
                                11 business-day period, then 
                                the proposal to resolve the 
                                discrepancy shall be accepted. 
                                If the Secretary determines 
                                within such period that there 
                                is not a reasonable basis to 
                                include or remove claims on the 
                                statement of reimbursement, the 
                                proposal shall be rejected. If 
                                the Secretary determines within 
                                such period that there is a 
                                reasonable basis to conclude 
                                there is a discrepancy, the 
                                Secretary must respond in a 
                                timely manner by agreeing to 
                                the proposal to resolve the 
                                discrepancy or by providing 
                                documentation showing with good 
                                cause why the Secretary is not 
                                agreeing to such proposal and 
                                establishing an alternate 
                                discrepancy resolution. In no 
                                case shall the process under 
                                this subclause be treated as an 
                                appeals process or as 
                                establishing a right of appeal 
                                for a statement of 
                                reimbursement amount and there 
                                shall be no administrative or 
                                judicial review of the 
                                Secretary's determinations 
                                under this subclause.
                                  (V) Protected period.--In 
                                subclause (III), the term 
                                ``protected period'' means, 
                                with respect to a settlement, 
                                judgment, award or other 
                                payment relating to an injury 
                                or incident, the portion (if 
                                any) of the period beginning on 
                                the date of notice under 
                                subclause (I) with respect to 
                                such settlement, judgment, 
                                award, or other payment that is 
                                after the end of a Secretarial 
                                response period beginning on 
                                the date of such notice to the 
                                Secretary. Such Secretarial 
                                response period shall be a 
                                period of 65 days, except that 
                                such period may be extended by 
                                the Secretary for a period of 
                                an additional 30 days if the 
                                Secretary determines that 
                                additional time is required to 
                                address claims for which 
                                payment has been made. Such 
                                Secretarial response period 
                                shall be extended and shall not 
                                include any days for any part 
                                of which the Secretary 
                                determines (in accordance with 
                                regulations) that there was a 
                                failure in the claims and 
                                payment posting system and the 
                                failure was justified due to 
                                exceptional circumstances (as 
                                defined in such regulations). 
                                Such regulations shall define 
                                exceptional circumstances in a 
                                manner so that not more than 1 
                                percent of the repayment 
                                obligations under this 
                                subclause would qualify as 
                                exceptional circumstances.
                                  (VI) Effective date.--The 
                                Secretary shall promulgate 
                                final regulations to carry out 
                                this clause not later than 9 
                                months after the date of the 
                                enactment of this clause.
                                  (VII) Website including 
                                successor technology.--In this 
                                clause, the term ``website'' 
                                includes any successor 
                                technology.
                          (viii) Right of appeal for secondary 
                        payer determinations relating to 
                        liability insurance (including self-
                        insurance), no fault insurance, and 
                        workers' compensation laws and plans.--
                        The Secretary shall promulgate 
                        regulations establishing a right of 
                        appeal and appeals process, with 
                        respect to any determination under this 
                        subsection for a payment made under 
                        this title for an item or service for 
                        which the Secretary is seeking to 
                        recover conditional payments from an 
                        applicable plan (as defined in 
                        paragraph (8)(F)) that is a primary 
                        plan under subsection (A)(ii), under 
                        which the applicable plan involved, or 
                        an attorney, agent, or third party 
                        administrator on behalf of such plan, 
                        may appeal such determination. The 
                        individual furnished such an item or 
                        service shall be notified of the plan's 
                        intent to appeal such determination
                  (C) Treatment of questionnaires.--The 
                Secretary may not fail to make payment under 
                subparagraph (A) solely on the ground that an 
                individual failed to complete a questionnaire 
                concerning the existence of a primary plan.
          (3) Enforcement.--
                  (A) Private cause of action.--There is 
                established a private cause of action for 
                damages (which shall be in an amount double the 
                amount otherwise provided) in the case of a 
                primary plan which fails to provide for primary 
                payment (or appropriate reimbursement) in 
                accordance with paragraphs (1) and (2)(A).
                  (B) Reference to excise tax with respect to 
                nonconforming group health plans.--For 
                provision imposing an excise tax with respect 
                to nonconforming group health plans, see 
                section 5000 of the Internal Revenue Code of 
                1986.
                  (C) Prohibition of financial incentives not 
                to enroll in a group health plan or a large 
                group health plan.--It is unlawful for an 
                employer or other entity to offer any financial 
                or other incentive for an individual entitled 
                to benefits under this title not to enroll (or 
                to terminate enrollment) under a group health 
                plan or a large group health plan which would 
                (in the case of such enrollment) be a primary 
                plan (as defined in paragraph (2)(A)). Any 
                entity that violates the previous sentence is 
                subject to a civil money penalty of not to 
                exceed $5,000 for each such violation. The 
                provisions of section 1128A (other than 
                subsections (a) and (b)) shall apply to a civil 
                money penalty under the previous sentence in 
                the same manner as such provisions apply to a 
                penalty or proceeding under section 1128A(a).
          (4) Coordination of benefits.--Where payment for an 
        item or service by a primary plan is less than the 
        amount of the charge for such item or service and is 
        not payment in full, payment may be made under this 
        title (without regard to deductibles and coinsurance 
        under this title) for the remainder of such charge, 
        but--
                  (A) payment under this title may not exceed 
                an amount which would be payable under this 
                title for such item or service if paragraph 
                (2)(A) did not apply; and
                  (B) payment under this title, when combined 
                with the amount payable under the primary plan, 
                may not exceed--
                          (i) in the case of an item or service 
                        payment for which is determined under 
                        this title on the basis of reasonable 
                        cost (or other cost-related basis) or 
                        under section 1886, the amount which 
                        would be payable under this title on 
                        such basis, and
                          (ii) in the case of an item or 
                        service for which payment is authorized 
                        under this title on another basis--
                                  (I) the amount which would be 
                                payable under the primary plan 
                                (without regard to deductibles 
                                and coinsurance under such 
                                plan), or
                                  (II) the reasonable charge or 
                                other amount which would be 
                                payable under this title 
                                (without regard to deductibles 
                                and coinsurance under this 
                                title),
                        whichever is greater.
          (5) Identification of secondary payer situations.--
                  (A) Requesting matching information.--
                          (i) Commissioner of social 
                        security.--The Commissioner of Social 
                        Security shall, not less often that 
                        annually, transmit to the Secretary of 
                        the Treasury a list of the names and 
                        TINs of medicare beneficiaries (as 
                        defined in section 6103(l)(12) of the 
                        Internal Revenue Code of 1986) and 
                        request that the Secretary disclose to 
                        the Commissioner the information 
                        described in subparagraph (A) of such 
                        section.
                          (ii) Administrator.--The 
                        Administrator of the Centers for 
                        Medicare & Medicaid Services shall 
                        request, not less often than annually, 
                        the Commissioner of the Social Security 
                        Administration to disclose to the 
                        Administrator the information described 
                        in subparagraph (B) of section 
                        6103(l)(12) of the Internal Revenue 
                        Code of 1986.
                  (B) Disclosure to fiscal intermediaries and 
                carriers.--In addition to any other information 
                provided under this title to fiscal 
                intermediaries and carriers, the Administrator 
                shall disclose to such intermediaries and 
                carriers (or to such a single intermediary or 
                carrier as the Secretary may designate) the 
                information received under subparagraph (A) for 
                purposes of carrying out this subsection.
                  (C) Contacting employers.--
                          (i) In general.--With respect to each 
                        individual (in this subparagraph 
                        referred to as an ``employee'') who was 
                        furnished a written statement under 
                        section 6051 of the Internal Revenue 
                        Code of 1986 by a qualified employer 
                        (as defined in section 
                        6103(l)(12)(E)(iii) of such Code), as 
                        disclosed under subparagraph (B), the 
                        appropriate fiscal intermediary or 
                        carrier shall contact the employer in 
                        order to determine during what period 
                        the employee or employee's spouse may 
                        be (or have been) covered under a group 
                        health plan of the employer and the 
                        nature of the coverage that is or was 
                        provided under the plan (including the 
                        name, address, and identifying number 
                        of the plan).
                          (ii) Employer response.--Within 30 
                        days of the date of receipt of the 
                        inquiry, the employer shall notify the 
                        intermediary or carrier making the 
                        inquiry as to the determinations 
                        described in clause (i). An employer 
                        (other than a Federal or other 
                        governmental entity) who willfully or 
                        repeatedly fails to provide timely and 
                        accurate notice in accordance with the 
                        previous sentence shall be subject to a 
                        civil money penalty of not to exceed 
                        $1,000 for each individual with respect 
                        to which such an inquiry is made. The 
                        provision of section 1128A (other than 
                        subsections (a) and (b)) shall apply to 
                        a civil money penalty under the 
                        previous sentence in the same manner as 
                        such provisions apply to a penalty or 
                        proceeding under section 1128A(a).
                  (D) Obtaining information from 
                beneficiaries.--Before an individual applies 
                for benefits under part A or enrolls under part 
                B, the Administrator shall mail the individual 
                a questionnaire to obtain information on 
                whether the individual is covered under a 
                primary plan and the nature of the coverage 
                provided under the plan, including the name, 
                address, and identifying number of the plan.
                  (E) End date.--The provisions of this 
                paragraph shall not apply to information 
                required to be provided on or after July 1, 
                2016.
          (6) Screening requirements for providers and 
        suppliers.--
                  (A) In general.--Notwithstanding any other 
                provision of this title, no payment may be made 
                for any item or service furnished under part B 
                unless the entity furnishing such item or 
                service completes (to the best of its knowledge 
                and on the basis of information obtained from 
                the individual to whom the item or service is 
                furnished) the portion of the claim form 
                relating to the availability of other health 
                benefit plans.
                  (B) Penalties.--An entity that knowingly, 
                willfully, and repeatedly fails to complete a 
                claim form in accordance with subparagraph (A) 
                or provides inaccurate information relating to 
                the availability of other health benefit plans 
                on a claim form under such subparagraph shall 
                be subject to a civil money penalty of not to 
                exceed $2,000 for each such incident. The 
                provisions of section 1128A (other than 
                subsections (a) and (b)) shall apply to a civil 
                money penalty under the previous sentence in 
                the same manner as such provisions apply to a 
                penalty or proceeding under section 1128A(a).
          (7) Required submission of information by group 
        health plans.--
                  (A) Requirement.--On and after the first day 
                of the first calendar quarter beginning after 
                the date that is 1 year after the date of the 
                enactment of this paragraph, an entity serving 
                as an insurer or third party administrator for 
                a group health plan, as defined in paragraph 
                (1)(A)(v), and, in the case of a group health 
                plan that is self-insured and self-
                administered, a plan administrator or 
                fiduciary, shall--
                          (i) secure from the plan sponsor and 
                        plan participants such information as 
                        the Secretary shall specify for the 
                        purpose of identifying situations where 
                        the group health plan is or has been a 
                        primary plan to the program under this 
                        title; and
                          (ii) submit such information to the 
                        Secretary in a form and manner 
                        (including frequency) specified by the 
                        Secretary.
                  (B) Enforcement.--
                          (i) In general.--An entity, a plan 
                        administrator, or a fiduciary described 
                        in subparagraph (A) that fails to 
                        comply with the requirements under such 
                        subparagraph shall be subject to a 
                        civil money penalty of $1,000 for each 
                        day of noncompliance for each 
                        individual for which the information 
                        under such subparagraph should have 
                        been submitted. The provisions of 
                        subsections (e) and (k) of section 
                        1128A shall apply to a civil money 
                        penalty under the previous sentence in 
                        the same manner as such provisions 
                        apply to a penalty or proceeding under 
                        section 1128A(a). A civil money penalty 
                        under this clause shall be in addition 
                        to any other penalties prescribed by 
                        law and in addition to any Medicare 
                        secondary payer claim under this title 
                        with respect to an individual.
                          (ii) Deposit of amounts collected.--
                        Any amounts collected pursuant to 
                        clause (i) shall be deposited in the 
                        Federal Hospital Insurance Trust Fund 
                        under section 1817.
                  (C) Sharing of information.--Notwithstanding 
                any other provision of law, under terms and 
                conditions established by the Secretary, the 
                Secretary--
                          (i) shall share information on 
                        entitlement under Part A and enrollment 
                        under Part B under this title with 
                        entities, plan administrators, and 
                        fiduciaries described in subparagraph 
                        (A);
                          (ii) may share the entitlement and 
                        enrollment information described in 
                        clause (i) with entities and persons 
                        not described in such clause; and
                          (iii) may share information collected 
                        under this paragraph as necessary for 
                        purposes of the proper coordination of 
                        benefits.
                  (D) Implementation.--Notwithstanding any 
                other provision of law, the Secretary may 
                implement this paragraph by program instruction 
                or otherwise.
          (8) Required submission of information by or on 
        behalf of liability insurance (including self-
        insurance), no fault insurance, and workers' 
        compensation laws and plans.--
                  (A) Requirement.--On and after the first day 
                of the first calendar quarter beginning after 
                the date that is 18 months after the date of 
                the enactment of this paragraph, an applicable 
                plan shall--
                          (i) determine whether a claimant 
                        (including an individual whose claim is 
                        unresolved) is entitled to benefits 
                        under the program under this title on 
                        any basis; and
                          (ii) if the claimant is determined to 
                        be so entitled, submit the information 
                        described in subparagraph (B) with 
                        respect to the claimant to the 
                        Secretary in a form and manner 
                        (including frequency) specified by the 
                        Secretary.
                  (B) Required information.--The information 
                described in this subparagraph is--
                          (i) the identity of the claimant for 
                        which the determination under 
                        subparagraph (A) was made; and
                          (ii) such other information as the 
                        Secretary shall specify in order to 
                        enable the Secretary to make an 
                        appropriate determination concerning 
                        coordination of benefits, including any 
                        applicable recovery claim.
                Not later than 18 months after the date of 
                enactment of this sentence, the Secretary shall 
                modify the reporting requirements under this 
                paragraph so that an applicable plan in 
                complying with such requirements is permitted 
                but not required to access or report to the 
                Secretary beneficiary social security account 
                numbers or health identification claim numbers, 
                except that the deadline for such modification 
                shall be extended by one or more periods 
                (specified by the Secretary) of up to 1 year 
                each if the Secretary notifies the committees 
                of jurisdiction of the House of Representatives 
                and of the Senate that the prior deadline for 
                such modification, without such extension, 
                threatens patient privacy or the integrity of 
                the secondary payer program under this 
                subsection. Any such deadline extension notice 
                shall include information on the progress being 
                made in implementing such modification and the 
                anticipated implementation date for such 
                modification.
                  (C) Timing.--Information shall be submitted 
                under subparagraph (A)(ii) within a time 
                specified by the Secretary after the claim is 
                resolved through a settlement, judgment, award, 
                or other payment (regardless of whether or not 
                there is a determination or admission of 
                liability).
                  (D) Claimant.--For purposes of subparagraph 
                (A), the term ``claimant'' includes--
                          (i) an individual filing a claim 
                        directly against the applicable plan; 
                        and
                          (ii) an individual filing a claim 
                        against an individual or entity insured 
                        or covered by the applicable plan.
                  (E) Enforcement.--
                          (i) In general.--An applicable plan 
                        that fails to comply with the 
                        requirements under subparagraph (A) 
                        with respect to any claimant may be 
                        subject to a civil money penalty of up 
                        to $1,000 for each day of noncompliance 
                        with respect to each claimant. The 
                        provisions of subsections (e) and (k) 
                        of section 1128A shall apply to a civil 
                        money penalty under the previous 
                        sentence in the same manner as such 
                        provisions apply to a penalty or 
                        proceeding under section 1128A(a). A 
                        civil money penalty under this clause 
                        shall be in addition to any other 
                        penalties prescribed by law and in 
                        addition to any Medicare secondary 
                        payer claim under this title with 
                        respect to an individual.
                          (ii) Deposit of amounts collected.--
                        Any amounts collected pursuant to 
                        clause (i) shall be deposited in the 
                        Federal Hospital Insurance Trust Fund.
                  (F) Applicable plan.--In this paragraph, the 
                term ``applicable plan'' means the following 
                laws, plans, or other arrangements, including 
                the fiduciary or administrator for such law, 
                plan, or arrangement:
                          (i) Liability insurance (including 
                        self-insurance).
                          (ii) No fault insurance.
                          (iii) Workers' compensation laws or 
                        plans.
                  (G) Sharing of information.--The Secretary 
                may share information collected under this 
                paragraph as necessary for purposes of the 
                proper coordination of benefits.
                  (H) Implementation.--Notwithstanding any 
                other provision of law, the Secretary may 
                implement this paragraph by program instruction 
                or otherwise.
                  (I) Regulations.--Not later than 60 days 
                after the date of the enactment of this 
                subparagraph, the Secretary shall publish a 
                notice in the Federal Register soliciting 
                proposals, which will be accepted during a 60-
                day period, for the specification of practices 
                for which sanctions will and will not be 
                imposed under subparagraph (E), including not 
                imposing sanctions for good faith efforts to 
                identify a beneficiary pursuant to this 
                paragraph under an applicable entity 
                responsible for reporting information. After 
                considering the proposals so submitted, the 
                Secretary, in consultation with the Attorney 
                General, shall publish in the Federal Register, 
                including a 60-day period for comment, proposed 
                specified practices for which such sanctions 
                will and will not be imposed. After considering 
                any public comments received during such 
                period, the Secretary shall issue final rules 
                specifying such practices.
          (9) Exception.--
                  (A) In general.--Clause (ii) of paragraph 
                (2)(B) and any reporting required by paragraph 
                (8) shall not apply with respect to any 
                settlement, judgment, award, or other payment 
                by an applicable plan arising from liability 
                insurance (including self-insurance) and from 
                alleged physical trauma-based incidents 
                (excluding alleged ingestion, implantation, or 
                exposure cases) constituting a total payment 
                obligation to a claimant of not more than the 
                single threshold amount calculated by the 
                Secretary under subparagraph (B) for the year 
                involved.
                  (B) Annual computation of threshold.--
                          (i) In general.--Not later than 
                        November 15 before each year, the 
                        Secretary shall calculate and publish a 
                        single threshold amount for 
                        settlements, judgments, awards, or 
                        other payments for obligations arising 
                        from liability insurance (including 
                        self-insurance) and for alleged 
                        physical trauma-based incidents 
                        (excluding alleged ingestion, 
                        implantation, or exposure cases) 
                        subject to this section for that year. 
                        The annual single threshold amount for 
                        a year shall be set such that the 
                        estimated average amount to be credited 
                        to the Medicare trust funds of 
                        collections of conditional payments 
                        from such settlements, judgments, 
                        awards, or other payments arising from 
                        liability insurance (including self-
                        insurance) and for such alleged 
                        incidents subject to this section shall 
                        equal the estimated cost of collection 
                        incurred by the United States 
                        (including payments made to 
                        contractors) for a conditional payment 
                        arising from liability insurance 
                        (including self-insurance) and for such 
                        alleged incidents subject to this 
                        section for the year. At the time of 
                        calculating, but before publishing, the 
                        single threshold amount for 2014, the 
                        Secretary shall inform, and seek review 
                        of, the Comptroller General of the 
                        United States with regard to such 
                        amount.
                          (ii) Publication.--The Secretary 
                        shall include, as part of such 
                        publication for a year--
                                  (I) the estimated cost of 
                                collection incurred by the 
                                United States (including 
                                payments made to contractors) 
                                for a conditional payment 
                                arising from liability 
                                insurance (including self-
                                insurance) and for such alleged 
                                incidents; and
                                  (II) a summary of the 
                                methodology and data used by 
                                the Secretary in computing such 
                                threshold amount and such cost 
                                of collection.
                  (C) Exclusion of ongoing expenses.--For 
                purposes of this paragraph and with respect to 
                a settlement, judgment, award, or other payment 
                not otherwise addressed in clause (ii) of 
                paragraph (2)(B) that includes ongoing 
                responsibility for medical payments (excluding 
                settlements, judgments, awards, or other 
                payments made by a workers' compensation law or 
                plan or no fault insurance), the amount 
                utilized for calculation of the threshold 
                described in subparagraph (A) shall include 
                only the cumulative value of the medical 
                payments made under this title.
                  (D) Report to congress.--Not later than 
                November 15 before each year, the Secretary 
                shall submit to the Congress a report on the 
                single threshold amount for settlements, 
                judgments, awards, or other payments for 
                conditional payment obligations arising from 
                liability insurance (including self-insurance) 
                and alleged incidents described in subparagraph 
                (A) for that year and on the establishment and 
                application of similar thresholds for such 
                payments for conditional payment obligations 
                arising from worker compensation cases and from 
                no fault insurance cases subject to this 
                section for the year. For each such report, the 
                Secretary shall--
                          (i) calculate the threshold amount by 
                        using the methodology applicable to 
                        certain liability claims described in 
                        subparagraph (B); and
                          (ii) include a summary of the 
                        methodology and data used in 
                        calculating each threshold amount and 
                        the amount of estimated savings under 
                        this title achieved by the Secretary 
                        implementing each such threshold.
          (10) Coordination of benefits with postal service 
        health benefits plans.--The previous provisions of this 
        subsection are superseded to the extent the Secretary 
        determines, in consultation with the Office of 
        Personnel Management, them to be inconsistent with 
        section 8903c(f) of title 5, United States Code.
  (c) No payment may be made under part B for any expenses 
incurred for--
          (1) a drug product--
                  (A) which is described in section 107(c)(3) 
                of the Drug Amendments of 1962,
                  (B) which may be dispensed only upon 
                prescription,
                  (C) for which the Secretary has issued a 
                notice of an opportunity for a hearing under 
                subsection (e) of section 505 of the Federal 
                Food, Drug, and Cosmetic Act on a proposed 
                order of the Secretary to withdraw approval of 
                an application for such drug product under such 
                section because the Secretary has determined 
                that the drug is less than effective for all 
                conditions of use prescribed, recommended, or 
                suggested in its labeling, and
                  (D) for which the Secretary has not 
                determined there is a compelling justification 
                for its medical need; and
          (2) any other drug product--
                  (A) which is identical, related, or similar 
                (as determined in accordance with section 310.6 
                of title 21 of the Code of Federal Regulations) 
                to a drug product described in paragraph (1), 
                and
                  (B) for which the Secretary has not 
                determined there is a compelling justification 
                for its medical need,
until such time as the Secretary withdraws such proposed order.
  (d) For purposes of subsection (a)(1)(A), in the case of any 
item or service that is required to be provided pursuant to 
section 1867 to an individual who is entitled to benefits under 
this title, determinations as to whether the item or service is 
reasonable and necessary shall be made on the basis of the 
information available to the treating physician or practitioner 
(including the patient's presenting symptoms or complaint) at 
the time the item or service was ordered or furnished by the 
physician or practitioner (and not on the patient's principal 
diagnosis). When making such determinations with respect to 
such an item or service, the Secretary shall not consider the 
frequency with which the item or service was provided to the 
patient before or after the time of the admission or visit.
  (e)(1) No payment may be made under this title with respect 
to any item or service (other than an emergency item or 
service, not including items or services furnished in an 
emergency room of a hospital) furnished--
          (A) by an individual or entity during the period when 
        such individual or entity is excluded pursuant to 
        section 1128, 1128A, 1156 or 1842(j)(2) from 
        participation in the program under this title; or
          (B) at the medical direction or on the prescription 
        of a physician during the period when he is excluded 
        pursuant to section 1128, 1128A, 1156 or 1842(j)(2) 
        from participation in the program under this title and 
        when the person furnishing such item or service knew or 
        had reason to know of the exclusion (after a reasonable 
        time period after reasonable notice has been furnished 
        to the person).
  (2) Where an individual eligible for benefits under this 
title submits a claim for payment for items or services 
furnished by an individual or entity excluded from 
participation in the programs under this title, pursuant to 
section 1128, 1128A, 1156, 1160 (as in effect on September 2, 
1982), 1842(j)(2), 1862(d) (as in effect on the date of the 
enactment of the Medicare and Medicaid Patient and Program 
Protection Act of 1987), or l866, and such beneficiary did not 
know or have reason to know that such individual or entity was 
so excluded, then, to the extent permitted by this title, and 
notwithstanding such exclusion, payment shall be made for such 
items or services. In each such case the Secretary shall notify 
the beneficiary of the exclusion of the individual or entity 
furnishing the items or services. Payment shall not be made for 
items or services furnished by an excluded individual or entity 
to a beneficiary after a reasonable time (as determined by the 
Secretary in regulations) after the Secretary has notified the 
beneficiary of the exclusion of that individual or entity.
  (f) The Secretary shall establish utilization guidelines for 
the determination of whether or not payment may be made, 
consistent with paragraph (1)(A) of subsection (a), under part 
A or part B for expenses incurred with respect to the provision 
of home health services, and shall provide for the 
implementation of such guidelines through a process of 
selective postpayment coverage review by intermediaries or 
otherwise.
  (g) The Secretary shall, in making the determinations under 
paragraphs (1) and (9) of subsection (a), and for the purposes 
of promoting the effective, efficient, and economical delivery 
of health care services, and of promoting the quality of 
services of the type for which payment may be made under this 
title, enter into contracts with quality improvement 
organizations pursuant to part B of title XI of this Act.
  (h)(1) The Secretary--
          (A) shall waive the application of subsection (a)(22) 
        in cases in which--
                  (i) there is no method available for the 
                submission of claims in an electronic form; or
                  (ii) the entity submitting the claim is a 
                small provider of services or supplier; and
          (B) may waive the application of such subsection in 
        such unusual cases as the Secretary finds appropriate.
  (2) For purposes of this subsection, the term ``small 
provider of services or supplier'' means--
          (A) a provider of services with fewer than 25 full-
        time equivalent employees; or
          (B) a physician, practitioner, facility, or supplier 
        (other than provider of services) with fewer than 10 
        full-time equivalent employees.
  (i) In order to supplement the activities of the Medicare 
Payment Advisory Commission under section 1886(e) in assessing 
the safety, efficacy, and cost-effectiveness of new and 
existing medical procedures, the Secretary may carry out, or 
award grants or contracts for, original research and 
experimentation of the type described in clause (ii) of section 
1886(e)(6)(E) with respect to such a procedure if the Secretary 
finds that--
          (1) such procedure is not of sufficient commercial 
        value to justify research and experimentation by a 
        commercial organization;
          (2) research and experimentation with respect to such 
        procedure is not of a type that may appropriately be 
        carried out by an institute, division, or bureau of the 
        National Institutes of Health; and
          (3) such procedure has the potential to be more cost-
        effective in the treatment of a condition than 
        procedures currently in use with respect to such 
        condition.
  (j)(1) Any advisory committee appointed to advise the 
Secretary on matters relating to the interpretation, 
application, or implementation of subsection (a)(1) shall 
assure the full participation of a nonvoting member in the 
deliberations of the advisory committee, and shall provide such 
nonvoting member access to all information and data made 
available to voting members of the advisory committee, other 
than information that--
          (A) is exempt from disclosure pursuant to subsection 
        (a) of section 552 of title 5, United States Code, by 
        reason of subsection (b)(4) of such section (relating 
        to trade secrets); or
          (B) the Secretary determines would present a conflict 
        of interest relating to such nonvoting member.
  (2) If an advisory committee described in paragraph (1) 
organizes into panels of experts according to types of items or 
services considered by the advisory committee, any such panel 
of experts may report any recommendation with respect to such 
items or services directly to the Secretary without the prior 
approval of the advisory committee or an executive committee 
thereof.
  (k)(1) Subject to paragraph (2), a group health plan (as 
defined in subsection (a)(1)(A)(v)) providing supplemental or 
secondary coverage to individuals also entitled to services 
under this title shall not require a medicare claims 
determination under this title for dental benefits specifically 
excluded under subsection (a)(12) as a condition of making a 
claims determination for such benefits under the group health 
plan.
  (2) A group health plan may require a claims determination 
under this title in cases involving or appearing to involve 
inpatient dental hospital services or dental services expressly 
covered under this title pursuant to actions taken by the 
Secretary.
  (l) National and Local Coverage Determination Process.--
          (1) Factors and evidence used in making national 
        coverage determinations.--The Secretary shall make 
        available to the public the factors considered in 
        making national coverage determinations of whether an 
        item or service is reasonable and necessary. The 
        Secretary shall develop guidance documents to carry out 
        this paragraph in a manner similar to the development 
        of guidance documents under section 701(h) of the 
        Federal Food, Drug, and Cosmetic Act (21 U.S.C. 
        371(h)).
          (2) Timeframe for decisions on requests for national 
        coverage determinations.--In the case of a request for 
        a national coverage determination that--
                  (A) does not require a technology assessment 
                from an outside entity or deliberation from the 
                Medicare Coverage Advisory Committee, the 
                decision on the request shall be made not later 
                than 6 months after the date of the request; or
                  (B) requires such an assessment or 
                deliberation and in which a clinical trial is 
                not requested, the decision on the request 
                shall be made not later than 9 months after the 
                date of the request.
          (3) Process for public comment in national coverage 
        determinations.--
                  (A) Period for proposed decision.--Not later 
                than the end of the 6-month period (or 9-month 
                period for requests described in paragraph 
                (2)(B)) that begins on the date a request for a 
                national coverage determination is made, the 
                Secretary shall make a draft of proposed 
                decision on the request available to the public 
                through the Internet website of the Centers for 
                Medicare & Medicaid Services or other 
                appropriate means.
                  (B)  30-day period for public comment.--
                Beginning on the date the Secretary makes a 
                draft of the proposed decision available under 
                subparagraph (A), the Secretary shall provide a 
                30-day period for public comment on such draft.
                  (C)  60-day period for final decision.--Not 
                later than 60 days after the conclusion of the 
                30-day period referred to under subparagraph 
                (B), the Secretary shall--
                          (i) make a final decision on the 
                        request;
                          (ii) include in such final decision 
                        summaries of the public comments 
                        received and responses to such 
                        comments;
                          (iii) make available to the public 
                        the clinical evidence and other data 
                        used in making such a decision when the 
                        decision differs from the 
                        recommendations of the Medicare 
                        Coverage Advisory Committee; and
                          (iv) in the case of a final decision 
                        under clause (i) to grant the request 
                        for the national coverage 
                        determination, the Secretary shall 
                        assign a temporary or permanent code 
                        (whether existing or unclassified) and 
                        implement the coding change.
          (4) Consultation with outside experts in certain 
        national coverage determinations.--With respect to a 
        request for a national coverage determination for which 
        there is not a review by the Medicare Coverage Advisory 
        Committee, the Secretary shall consult with appropriate 
        outside clinical experts.
          (5) Local coverage determination process.--
                  (A) Plan to promote consistency of coverage 
                determinations.--The Secretary shall develop a 
                plan to evaluate new local coverage 
                determinations to determine which 
                determinations should be adopted nationally and 
                to what extent greater consistency can be 
                achieved among local coverage determinations.
                  (B) Consultation.--The Secretary shall 
                require the fiscal intermediaries or carriers 
                providing services within the same area to 
                consult on all new local coverage 
                determinations within the area.
                  (C) Dissemination of information.--The 
                Secretary should serve as a center to 
                disseminate information on local coverage 
                determinations among fiscal intermediaries and 
                carriers to reduce duplication of effort.
          (6) National and local coverage determination 
        defined.--For purposes of this subsection--
                  (A) National coverage determination.--The 
                term ``national coverage determination'' means 
                a determination by the Secretary with respect 
                to whether or not a particular item or service 
                is covered nationally under this title.
                  (B) Local coverage determination.--The term 
                ``local coverage determination'' has the 
                meaning given that in section 1869(f)(2)(B).
  (m) Coverage of Routine Costs Associated With Certain 
Clinical Trials of Category A Devices.--
          (1) In general.--In the case of an individual 
        entitled to benefits under part A, or enrolled under 
        part B, or both who participates in a category A 
        clinical trial, the Secretary shall not exclude under 
        subsection (a)(1) payment for coverage of routine costs 
        of care (as defined by the Secretary) furnished to such 
        individual in the trial.
          (2) Category a clinical trial.--For purposes of 
        paragraph (1), a ``category A clinical trial'' means a 
        trial of a medical device if--
                  (A) the trial is of an experimental/
                investigational (category A) medical device (as 
                defined in regulations under section 405.201(b) 
                of title 42, Code of Federal Regulations (as in 
                effect as of September 1, 2003));
                  (B) the trial meets criteria established by 
                the Secretary to ensure that the trial conforms 
                to appropriate scientific and ethical 
                standards; and
                  (C) in the case of a trial initiated before 
                January 1, 2010, the device involved in the 
                trial has been determined by the Secretary to 
                be intended for use in the diagnosis, 
                monitoring, or treatment of an immediately 
                life-threatening disease or condition.
  (n) Requirement of a Surety Bond for Certain Providers of 
Services and Suppliers.--
          (1) In general.--The Secretary may require a provider 
        of services or supplier described in paragraph (2) to 
        provide the Secretary on a continuing basis with a 
        surety bond in a form specified by the Secretary in an 
        amount (not less than $50,000) that the Secretary 
        determines is commensurate with the volume of the 
        billing of the provider of services or supplier. The 
        Secretary may waive the requirement of a bond under the 
        preceding sentence in the case of a provider of 
        services or supplier that provides a comparable surety 
        bond under State law.
          (2) Provider of services or supplier described.--A 
        provider of services or supplier described in this 
        paragraph is a provider of services or supplier the 
        Secretary determines appropriate based on the level of 
        risk involved with respect to the provider of services 
        or supplier, and consistent with the surety bond 
        requirements under sections 1834(a)(16)(B) and 
        1861(o)(7)(C).
  (o) Suspension of Payments Pending Investigation of Credible 
Allegations of Fraud.--
          (1) In general.--The Secretary may suspend payments 
        to a provider of services or supplier under this title 
        pending an investigation of a credible allegation of 
        fraud against the provider of services or supplier, 
        unless the Secretary determines there is good cause not 
        to suspend such payments.
          (2) Consultation.--The Secretary shall consult with 
        the Inspector General of the Department of Health and 
        Human Services in determining whether there is a 
        credible allegation of fraud against a provider of 
        services or supplier.
          (3) Promulgation of regulations.--The Secretary shall 
        promulgate regulations to carry out this subsection and 
        section 1903(i)(2)(C).

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                              ----------                              


TITLE 39, UNITED STATES CODE

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                             PART I. GENERAL

Chapter                                                             Sec.
      Postal Policy and Definitions..................................101
      Organization...................................................201
      General Authority..............................................401
      Postal Regulatory Commission...................................501
      Private Carriage of Letters....................................601
      Contracting Provisions.........................................701
     * * * * * * *

PART I--GENERAL

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CHAPTER 1--POSTAL POLICY AND DEFINITIONS

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Sec. 102. Definitions

   As used in this title--
          (1) ``Postal Service'' means the United States Postal 
        Service established by section 201 of this title;
          (2) ``Board of Governors'', and ``Board'', unless the 
        context otherwise requires, mean the Board of Governors 
        established under section 202 of this title;
          (3) ``Governors'' means the [9 members] 5 members of 
        the Board of Governors appointed by the President, by 
        and with the advice and consent of the Senate, under 
        [section 202(a)] section 202(b)(1) of this title;
          (4) ``Inspector General'' means [the Inspector 
        General appointed under section 202(e) of this title] 
        the Inspector General of the Postal Community as 
        described in section 8M of the Inspector General Act of 
        1978 (5 U.S.C. App.);
          (5) ``postal service'' refers to the delivery of 
        letters, printed matter, or mailable packages, 
        including 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, or may reasonably be, 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;
          (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.

           *       *       *       *       *       *       *


                        CHAPTER 2--ORGANIZATION

Sec.
201. United States Postal Service.
     * * * * * * *
[203. Postmaster General; Deputy Postmaster General.]
203. Postmaster General.
     * * * * * * *
209. Chief Innovation Officer.

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[Sec. 202. Board of Governors

  [(a)(1) The exercise of the power of the Postal Service shall 
be directed by a Board of Governors composed of 11 members 
appointed in accordance with this section. Nine of the members, 
to be known as Governors, shall be appointed by the President, 
by and with the advice and consent of the Senate, not more than 
5 of whom may be adherents of the same political party. The 
Governors shall elect a Chairman from among the members of the 
Board. The Governors shall represent the public interest 
generally, and shall be chosen solely on the basis of their 
experience in the field 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; except that at least 4 of the Governors shall 
be chosen solely on the basis of their demonstrated ability in 
managing organizations or corporations (in either the public or 
private sector) that employ at least 50,000 employees. The 
Governors shall not be representatives of specific interests 
using the Postal Service, and may be removed only for cause. 
Each Governor shall receive a salary of $30,000 a year plus 
$300 a day for not more than 42 days of meetings each year and 
shall be reimbursed for travel and reasonable expenses incurred 
in attending meetings of the Board. Nothing in the preceding 
sentence shall be construed to limit the number of days of 
meetings each year to 42 days.
  [(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.
  [(b)(1) The terms of the 9 Governors shall be 7 years, except 
that the terms of the 9 Governors first taking office shall 
expire as designated by the President at the time of 
appointment, 1 at the end of 1 year, 1 at the end of 2 years, 1 
at the end of 3 years, 1 at the end of 4 years, 1 at the end of 
5 years, 1 at the end of 6 years, 1 at the end of 7 years, 1 at 
the end of 8 years, and 1 at the end of 9 years, following the 
appointment of the first of them. Any Governor appointed to 
fill a vacancy before the expiration of the term for which his 
predecessor was appointed shall serve for the remainder of such 
term. A Governor may continue to serve after the expiration of 
his term until his successor has qualified, but not to exceed 
one year.
  [(2) No person may serve more than 2 terms as a Governor.
  [(c) The Governors shall appoint and shall have the power to 
remove the Postmaster General, who shall be a voting member of 
the Board. His pay and term of service shall be fixed by the 
Governors.
  [(d) The Governors and the Postmaster General shall appoint 
and shall have the power to remove the Deputy Postmaster 
General, who shall be a voting member of the Board. His term of 
service shall be fixed by the Governors and the Postmaster 
General and his pay by the Governors.
  [(e)(1) The Governors shall appoint and shall have the power 
to remove the Inspector General.
  [(2) The Inspector General shall be appointed--
          [(A) for a term of 7 years;
          [(B) without regard to political affiliation; and
          [(C) solely on the basis of integrity and 
        demonstrated ability in accounting, auditing, financial 
        analysis, law, management analysis, public 
        administration, or investigations.
  [(3) The Inspector General may at any time be removed upon 
the written concurrence of at least 7 Governors, but only for 
cause. Nothing in this subsection shall be considered to exempt 
the Governors from the requirements of section 8G(e) of the 
Inspector General Act of 1978.

[Sec. 203. Postmaster General; Deputy Postmaster General

  [The chief executive officer of the Postal Service is the 
Postmaster General appointed under section 202(c) of this 
title. The alternate chief executive officer of the Postal 
Service is the Deputy Postmaster General appointed under 
section 202(d) of this title.]

Sec. 202. Board of Governors

  (a) In General.--There is established in the Postal Service a 
Board of Governors composed of 5 Governors, a Postmaster 
General, and a Deputy Postmaster General, all of whom shall be 
appointed in accordance with this section. The Governors shall 
have the power to--
          (1) exercise the powers of the Postal Service, 
        consistent with section 203(c);
          (2) appoint, fix the term of service of, and remove 
        the Postmaster General;
          (3) in consultation with the Postmaster General, 
        appoint, fix the term of service of, and remove the 
        Deputy Postmaster General;
          (4) set the strategic direction of postal operations 
        and approve the pricing and product strategy for the 
        Postal Service;
          (5) set the compensation of the Postmaster General 
        and the Deputy Postmaster General in accordance with 
        private sector best practices, as determined by the 
        Governors pursuant to section 3686; and
          (6) carry out any other duties specifically provided 
        for in this title.
  (b) Appointment; Pay.--
          (1) In general.--The Governors shall be appointed by 
        the President, by and with the advice and consent of 
        the Senate, not more than 3 of whom may be adherents of 
        the same political party. The Governors shall elect a 
        Chair from among their members. The Governors shall 
        represent the public interest generally, and shall be 
        chosen solely on the basis of their experience in the 
        field of public administration, law, or accounting, or 
        on their demonstrated ability in managing organizations 
        or corporations (in either the public or private 
        sector) of substantial size, except that at least 3 of 
        the Governors shall be chosen solely on the basis of 
        their demonstrated ability in managing organizations or 
        corporations (in either the public or private sector) 
        that employ at least 10,000 employees. The Governors 
        shall not be representatives of specific interests 
        using the Postal Service, and may be removed only for 
        cause.
          (2) Compensation.--Each Governor shall receive a 
        salary of $30,000 a year plus $300 a day for not more 
        than 42 days of meetings each year and shall be 
        reimbursed for travel and reasonable expenses incurred 
        in attending meetings of the Board. Nothing in the 
        preceding sentence shall be construed to limit the 
        number of days of meetings each year to 42 days.
          (3) Consultation.--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) Terms of Governors.--
          (1) In general.--The terms of the 5 Governors shall 
        be 7 years, except that the terms of the 5 Governors 
        first taking office shall expire as designated by the 
        President at the time of appointment, 1 at the end of 1 
        year, 1 at the end of 2 years, 1 at the end of 3 years, 
        1 at the end of 4 years, and 1 at the end of 5 years, 
        following the appointment of the first of them. Any 
        Governor appointed to fill a vacancy before the 
        expiration of the term for which the Governor's 
        predecessor was appointed shall serve for the remainder 
        of such term. A Governor may continue to serve after 
        the expiration of the Governor's term until his 
        successor has qualified, but not to exceed one year.
          (2) Limitation.--No individual may serve more than 2 
        terms as a Governor.
  (d) Staff.--The Chair of the Board of Governors shall ensure 
that the Board has appropriate independent staff to carry out 
the roles and responsibilities of the Board.

Sec. 203. Postmaster General

  (a) In General.--The chief executive officer of the Postal 
Service is the Postmaster General, appointed pursuant to 
section 202(a)(1). The alternate chief executive officer of the 
Postal Service is the Deputy Postmaster General, appointed 
pursuant to section 202(a)(2) of this title.
  (b) Powers.--Consistent with the requirements of this title, 
the exercise of the power of the Postal Service shall be vested 
in the Governors and carried out by the Postmaster General in a 
manner consistent with the strategic direction and pricing and 
product strategy approved by the Governors. The Postmaster 
General shall consult with the Governors and the Deputy 
Postmaster General in carrying out such power.

Sec. 204. General Counsel; Judicial Officer; Chief Postal Inspector

  There shall be within the Postal Service a General Counsel, 
such number of Assistant Postmasters General as [the Board] the 
Postmaster General shall consider appropriate, a Judicial 
Officer, and a Chief Postal Inspector. The General Counsel, the 
Assistant Postmasters General, the Judicial Officer, and the 
Chief Postal Inspector shall be appointed by, and serve at the 
pleasure of, the Postmaster General. The Judicial Officer shall 
perform such quasi-judicial duties, not inconsistent with 
chapter 36 of this title, as the Postmaster General may 
designate. The Judicial Officer shall be the agency for the 
purposes of the requirements of chapter 5 of title 5, to the 
extent that functions are delegated to him by the Postmaster 
General. The Chief Postal Inspector shall report to, and be 
under the general supervision of, the Postmaster General. The 
Postmaster General shall promptly notify [the Governors and] 
both Houses of Congress in writing if he or she removes the 
Chief Postal Inspector or transfers the Chief Postal Inspector 
to another position or location within the Postal Service, and 
shall include in any such notification the reasons for the 
removal or transfer.

[Sec. 205. Procedures of the Board of Governors

  [(a) The Board shall direct and control the expenditures and 
review the practices and policies of the Postal Service, and 
perform other functions and duties prescribed by this title.
  [(b) Vacancies in the Board, as long as there are sufficient 
members to form a quorum, shall not impair the powers of the 
Board under this title.
  [(c) The Board shall act upon majority vote of those members 
who are present, and any 6 members present shall constitute a 
quorum for the transaction of business by the Board, except--
          [(1) that in the appointment or removal of the 
        Postmaster General, and in setting the compensation of 
        the Postmaster General and Deputy Postmaster General, a 
        favorable vote of an absolute majority of the Governors 
        in office shall be required;
          [(2) that in the appointment or removal of the Deputy 
        Postmaster General, a favorable vote of an absolute 
        majority of the Governors in office and the member 
        serving as Postmaster General shall be required; and
          [(3) as otherwise provided in this title.
  [(d) No officer or employee of the United States may serve 
concurrently as a Governor. A Governor may hold any other 
office or employment not inconsistent or in conflict with his 
duties, responsibilities, and powers as an officer of the 
Government of the United States in the Postal Service.]

Sec. 205. Procedures of the Board of Governors

  (a) Vacancies.--Vacancies in the Board shall not impair the 
powers of the Board under this title.
  (b) Vote.--The Board shall act upon majority vote of those 
members who are present, subject to such quorum requirements as 
the Board may establish.
  (c) Limitation.--No officer or employee of the United States 
may serve concurrently as a Governor. A Governor may hold any 
other office or employment not inconsistent or in conflict with 
the Governor's duties, responsibilities, and powers as an 
officer of the Government of the United States in the Postal 
Service.

           *       *       *       *       *       *       *


Sec. 207. Seal

  The seal of the Postal Service shall be filed by [the Board] 
the Postal Service in the Office of the Secretary of State, 
judicially noticed, affixed to all commissions of officers of 
the Postal Service, and used to authenticate records of the 
Postal Service.

           *       *       *       *       *       *       *


Sec. 209. Chief Innovation Officer

  (a) In General.--There is established within the Postal 
Service the position of Chief Innovation Officer, appointed by 
the Postmaster General, who shall manage the Postal Service's 
development and implementation of innovative postal and 
nonpostal products and services.
  (b) Duties.--The primary duties of the Chief Innovation 
Officer are as follows:
          (1) Leading the development of innovative nonpostal 
        products and services that will maximize revenue to the 
        Postal Service.
          (2) Developing innovative postal products and 
        services, specifically those that utilize emerging 
        information technologies, to maximize revenue to the 
        Postal Service.
          (3) Implementing the innovation strategy described 
        under subsection (d).
          (4) Monitoring the performance of innovative products 
        and services and revising them as needed to meet 
        changing market trends.
          (5) Taking into consideration comments or advisory 
        opinions, if applicable, issued by the Postal 
        Regulatory Commission prior to the initial sale of 
        innovative postal or nonpostal products and services.
  (c) Appointment.--
          (1) Deadline.--As soon as practicable after the date 
        of enactment of the Postal Service Reform Act of 2016, 
        but no later than 6 months after such date, the 
        Postmaster General shall appoint a Chief Innovation 
        Officer.
          (2) Requirements.--Any individual appointed to serve 
        as the Chief Innovation Officer shall have proven 
        expertise and a record of success in at least 1 of the 
        following: postal and shipping industry; innovation 
        product research and development; marketing brand 
        strategy; emerging communications technology; or 
        business process management.
          (3) Current officer or employee eligible.--An officer 
        or employee of the Postal Service may be appointed to 
        the position of Chief Innovation Officer under this 
        chapter. Upon appointment to such position, such 
        officer or employee may not concurrently hold any other 
        position in the Postal Service.
  (d) Innovation Strategy.--
          (1) In general.--Not later than 12 months after the 
        date on which the Chief Innovation Officer is appointed 
        under subsection (c)(1), the Postmaster General shall 
        submit to the Committee on Oversight and Government 
        Reform of the House of Representatives, the Committee 
        on Homeland Security and Governmental Affairs of the 
        Senate, and the Postal Regulatory Commission a 
        comprehensive strategy for maximizing revenues through 
        innovative postal and nonpostal products and services.
          (2) Matters to be addressed.--The strategy submitted 
        under paragraph (1) shall address--
                  (A) the specific innovative postal and 
                nonpostal products and services to be developed 
                and offered by the Postal Service, including 
                the nature of the market to be filled by each 
                product and service and the likely date by 
                which each product and service will be 
                introduced;
                  (B) the cost of developing and offering each 
                product or service;
                  (C) the anticipated sales volume of each 
                product and service;
                  (D) the anticipated revenues and profits 
                expected to be generated by each product and 
                service;
                  (E) the likelihood of success of each product 
                and service as well as the risks associated 
                with the development and sale of each product 
                and service;
                  (F) the trends anticipated in market 
                conditions that may affect the success of each 
                product and service over the 5-year period 
                beginning on the date such strategy or update 
                is submitted;
                  (G) the metrics that will be utilized to 
                assess the effectiveness of the innovation 
                strategy; and
                  (H) the specific methods by which mailpiece 
                design analysis may be improved to speed the 
                approval process and promote the increased use 
                of innovative mailpiece design.
          (3) Strategy updates.--On January 1, 2018, and every 
        3 years thereafter, the Postal Service shall submit an 
        update to the innovation strategy submitted under 
        paragraph (1) to the Committee on Oversight and 
        Government Reform of the House of Representatives, the 
        Committee on Homeland Security and Governmental Affairs 
        of the Senate, and the Postal Regulatory Commission.
  (e) Report.--
          (1) In general.--On the date of submission of the 
        President's annual budget under section 1105(a) of 
        title 31, the Postmaster General shall submit to the 
        Committee on Oversight and Government Reform of the 
        House of Representatives, the Committee on Homeland 
        Security and Governmental Affairs of the Senate, and 
        the Postal Regulatory Commission a report that details 
        the Postal Service's progress in implementing the 
        innovation strategy described under subsection (d).
          (2) Matters to be addressed.--The report required 
        under paragraph (1) shall address--
                  (A) the revenue generated by each product and 
                service developed through the innovation 
                strategy and the costs of developing and 
                offering each such product and service for the 
                most recent fiscal year;
                  (B) the total sales volume and revenue 
                generated by each product and service on a 
                monthly basis for the preceding year;
                  (C) trends in the markets filled by each 
                product and service;
                  (D) products and services identified in the 
                innovation strategy that are to be 
                discontinued, the date on which the 
                discontinuance will occur, and the reasons for 
                the discontinuance;
                  (E) alterations in products and services 
                identified in the innovation strategy that will 
                be made to meet changing market conditions, and 
                an explanation of how these alterations will 
                ensure the success of the products and 
                services; and
                  (F) the performance of the innovation 
                strategy according to the metrics identified in 
                subsection (d)(2)(G).
  (f) Comptroller General Study.--
          (1) In general.--The Comptroller General shall 
        conduct a study on the implementation of the innovation 
        strategy described under subsection (d) not later than 
        4 years after the date of enactment of the Postal 
        Service Reform Act of 2016.
          (2) Contents.--The study required under paragraph (1) 
        shall assess the effectiveness of the Postal Service in 
        identifying, developing, and selling innovative postal 
        and nonpostal products and services. The study shall 
        also include--
                  (A) an audit of the costs of developing each 
                innovative postal and nonpostal product and 
                service developed or offered by the Postal 
                Service during the period beginning on the date 
                of enactment of the Postal Service Reform Act 
                of 2016 and ending 4 years after such date;
                  (B) the sales volume of each such product and 
                service;
                  (C) the revenues and profits generated by 
                each such product and service; and
                  (D) the likelihood of continued success of 
                each such product and service.
          (3) Submission.--The results of the study required 
        under this subsection shall be submitted to the 
        Committee on Oversight and Government Reform of the 
        House of Representatives, the Committee on Homeland 
        Security and Governmental Affairs of the Senate, and 
        the Postal Regulatory Commission.

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CHAPTER 4--GENERAL AUTHORITY

           *       *       *       *       *       *       *


[Sec. 402. Delegation of authority

  [Except for those powers, duties, or obligations specifically 
vested in the Governors, as distinguished from the Board of 
Governors, the Board may delegate the authority vested in it to 
the Postmaster General under such terms, conditions, and 
limitations, including the power of redelegation, as it deems 
desirable. The Board may establish such committees of the 
Board, and delegate such powers to any committee, as the Board 
determines appropriate to carry out its functions and duties. 
Delegations to the Postmaster General or committees shall be 
consistent with other provisions of this title, shall not 
relieve the Board of full responsibility for the carrying out 
of its duties and functions, and shall be revocable by the 
Governors in their exclusive judgment.]

Sec. 402. Delegation of authority

  (a) Postmaster General.--The Postmaster General may delegate 
his or her authority under such terms, conditions, and 
limitations, including the power of redelegation, as he or she 
determines desirable. The Postmaster General may establish such 
committees of officers and employees of the Postal Service, and 
delegate such powers to any committee, as the Postmaster 
General determines appropriate to carry out his or her 
functions and duties. Delegations under this section shall be 
consistent with other provisions of this title, shall not 
relieve the Postmaster General of full responsibility for the 
carrying out the Postmaster General's duties and functions, and 
shall be revocable by the Postmaster General.
  (b) Board of Governors.--The Board may establish such 
committees of the Board, and delegate such powers to any 
committee, as the Board determines appropriate to carry out its 
functions and duties. Delegations to committees shall be 
consistent with other provisions of this title, shall not 
relieve the Board of full responsibility for the carrying out 
of its duties and functions, and shall be revocable by the 
Board in its exclusive judgment.

           *       *       *       *       *       *       *


Sec. 404. Specific powers

  (a) Subject to the provisions of section 404a, but otherwise 
without limitation of the generality of its powers, the Postal 
Service shall have the following specific powers, among others:
          (1) to provide for the collection, handling, 
        transportation, delivery, forwarding, returning, and 
        holding of mail, and for the disposition of 
        undeliverable mail;
          (2) to prescribe, in accordance with this title, the 
        amount of postage and the manner in which it is to be 
        paid;
          (3) to determine the need for post offices, postal 
        and training facilities and equipment, and to provide 
        such offices, facilities, and equipment as it 
        determines are needed;
          (4) to provide and sell postage stamps and other 
        stamped paper, cards, and envelopes and to provide such 
        other evidences of payment of postage and fees as may 
        be necessary or desirable;
          (5) to provide philatelic services;
          (6) to investigate postal offenses and civil matters 
        relating to the Postal Service;
          (7) to offer and pay rewards for information and 
        services in connection with violation of the postal 
        laws, and, unless a different disposal is expressly 
        prescribed, to pay one-half of all penalties and 
        forfeitures imposed for violations of law affecting the 
        Postal Service, its revenues, or property, to the 
        person informing for the same, and to pay the other 
        one-half into the Postal Service Fund; and
          (8) to authorize the issuance of a substitute check 
        for a lost, stolen, or destroyed check of the Postal 
        Service.
  (b) Except as otherwise provided, the Governors are 
authorized to establish reasonable and equitable classes of 
mail and reasonable and equitable rates of postage and fees for 
postal services in accordance with the provisions of chapter 
36. Postal rates and fees shall be reasonable and equitable and 
sufficient to enable the Postal Service, under best practices 
of honest, efficient, and economical management, to maintain 
and continue the development of postal services of the kind and 
quality adapted to the needs of the United States.
  (c) The Postal Service shall maintain one or more classes of 
mail for the transmission of letters sealed against inspection. 
The rate for each such class shall be uniform throughout the 
United States, its territories, and possessions. One such class 
shall provide for the most expeditious handling and 
transportation afforded mail matter by the Postal Service. No 
letter of such a class of domestic origin shall be opened 
except under authority of a search warrant authorized by law, 
or by an officer or employee of the Postal Service for the sole 
purpose of determining an address at which the letter can be 
delivered, or pursuant to the authorization of the addressee.
  (d)[(1) The Postal Service, prior to making a determination 
under subsection (a)(3) of this section as to the necessity for 
the closing or consolidation of any post office, shall provide 
adequate notice of its intention to close or consolidate such 
post office at least 60 days prior to the proposed date of such 
closing or consolidation to persons served by such post office 
to ensure that such persons will have an opportunity to present 
their views.]
          (1) The Postal Service, prior to making a 
        determination under subsection (a)(3) as to the 
        necessity for the closing or consolidation of any post 
        office, shall--
                  (A) provide adequate notice of its intention 
                to close or consolidate such post office at 
                least 60 days prior to the proposed date of 
                such closing or consolidation to postal patrons 
                served by such post office;
                  (B) conduct a nonbinding survey on the 
                proposed closing or consolidation to allow 
                postal patrons served by such post office an 
                opportunity to indicate their preference 
                between or among--
                          (i) the closing or consolidation; and
                          (ii) 1 or more alternative options; 
                        and
                  (C) ensure that--
                          (i) should the closure or 
                        consolidation of a postal retail 
                        facility be deemed necessary, it shall 
                        be the policy of the Postal Service to 
                        provide alternative access to postal 
                        services to those served by the postal 
                        retail facility by the option chosen by 
                        the highest number of survey 
                        respondents under subparagraph (B)(ii); 
                        and
                          (ii) if the Postal Service is unable 
                        to provide alternative access through 
                        the option identified in clause (i), or 
                        if that option is cost prohibitive, the 
                        Postal Service may provide alternative 
                        access through a different means. Upon 
                        selection of an alternative access 
                        method other than the one identified by 
                        clause (i), the Postal Service must 
                        provide written notice to those patrons 
                        served by the postal retail facility 
                        identifying and explaining why the 
                        option identified by clause (i) was not 
                        possible or cost prohibitive.
  (2) The Postal Service, in making a determination whether or 
not to close or consolidate a post office--
          (A) shall consider--
                  [(i) the effect of such closing or 
                consolidation on the community served by such 
                post office;]
                  (i) the effect of such closing or 
                consolidation on the community served by such 
                post office, including through an analysis of--
                          (I) the distance (as measured by 
                        public roads) to the closest postal 
                        retail facility not proposed for 
                        closure or consolidation under such 
                        plan;
                          (II) the characteristics of such 
                        location, including weather and 
                        terrain;
                          (III) whether commercial mobile 
                        service (as defined in section 332 of 
                        the Communications Act of 1934) and 
                        commercial mobile data service (as 
                        defined in section 6001 of the Middle 
                        Class Tax Relief and Job Creation Act 
                        of 2012) are available in at least 80 
                        percent of the total geographic area of 
                        the ZIP codes served by the postal 
                        retail facility proposed for closure or 
                        consolidation; and
                          (IV) whether fixed broadband Internet 
                        access service is available to 
                        households in at least 80 percent of 
                        such geographic area at speeds not less 
                        than those sufficient for service to be 
                        considered broadband for purposes of 
                        the most recent report of the Federal 
                        Communications Commission under section 
                        706 of the Telecommunications Act of 
                        1996;
                  (ii) the effect of such closing or 
                consolidation on employees of the Postal 
                Service employed at such office;
                  (iii) whether such closing or consolidation 
                is consistent with the policy of the 
                Government, as stated in section 101(b) of this 
                title, that the Postal Service shall provide a 
                maximum degree of effective and regular postal 
                services to rural areas, communities, and small 
                towns where post offices are not self-
                sustaining;
                  (iv) the economic savings to the Postal 
                Service resulting from such closing or 
                consolidation; and
                  (v) such other factors as the Postal Service 
                determines are necessary; and
          (B) may not consider compliance with any provision of 
        the Occupational Safety and Health Act of 1970 (29 
        U.S.C. 651 et seq.).
  (3) Any determination of the Postal Service to close or 
consolidate a post office shall be in writing and shall include 
the findings of the Postal Service with respect to the 
considerations required to be made under paragraph (2) of this 
subsection. Such determination and findings shall be made 
available to persons served by such post office.
  (4) The Postal Service shall take no action to close or 
consolidate a post office until 60 days after its written 
determination is made available to persons served by such post 
office.
  (5) A determination of the Postal Service to close or 
consolidate any post office may be appealed by any person 
served by such office to the Postal Regulatory Commission 
within 30 days after such determination is made available to 
such person under paragraph (3). The Commission shall review 
such determination on the basis of the record before the Postal 
Service in the making of such determination. The Commission 
shall make a determination based upon such review no later than 
[120 days] 60 days, or a longer period for good cause shown but 
in no event longer than 120 days, after receiving any appeal 
under this paragraph. The Commission shall set aside any 
determination, findings, and conclusions found to be--
          (A) arbitrary, capricious, an abuse of discretion, or 
        otherwise not in accordance with the law;
          (B) without observance of procedure required by law; 
        or
          (C) unsupported by substantial evidence on the 
        record.
The Commission may affirm the determination of the Postal 
Service or order that the entire matter be returned for further 
consideration, but the Commission may not modify the 
determination of the Postal Service. The Commission may suspend 
the effectiveness of the determination of the Postal Service 
until the final disposition of the appeal. The provisions of 
section 556, section 557, and chapter 7 of title 5 shall not 
apply to any review carried out by the Commission under this 
paragraph.
  (6) For purposes of paragraph (5), any appeal received by the 
Commission shall--
          (A) if sent to the Commission through the mails, be 
        considered to have been received on the date of the 
        Postal Service postmark on the envelope or other cover 
        in which such appeal is mailed; or
          (B) if otherwise lawfully delivered to the 
        Commission, be considered to have been received on the 
        date determined based on any appropriate documentation 
        or other indicia (as determined under regulations of 
        the Commission).
  (7) For purposes of this subsection, the term ``post office'' 
means a post office and any other facility described in section 
2(2) of the Postal Service Reform Act of 2016.
  (e)(1) In this subsection, the term ``nonpostal service'' 
means any service that is not a postal service defined under 
section 102(5).
  (2) Nothing in this section shall be considered to permit or 
require that the Postal Service provide any nonpostal service, 
except that the Postal Service may provide nonpostal services 
which were offered as of January 1, 2006, as provided under 
this subsection, or any nonpostal products or services 
authorized by chapter 37.
  (3) Not later than 2 years after the date of enactment of the 
Postal Accountability and Enhancement Act, the Postal 
Regulatory Commission shall review each nonpostal service 
offered by the Postal Service on the date of enactment of that 
Act and determine whether that nonpostal service shall 
continue, taking into account--
          (A) the public need for the service; and
          (B) the ability of the private sector to meet the 
        public need for the service.
  (4) Any nonpostal service not determined to be continued by 
the Postal Regulatory Commission under paragraph (3) shall 
terminate.
  (5) If the Postal Regulatory Commission authorizes the Postal 
Service to continue a nonpostal service under this subsection, 
the Postal Regulatory Commission shall designate whether the 
service shall be regulated under this title as a market 
dominant product, a competitive product, or an experimental 
product.
  (6) Licensing which, before the date of enactment of this 
paragraph, has been authorized by the Postal Regulatory 
Commission for continuation as a nonpostal service may not be 
used for any purpose other than--
          (A) to continue to provide licensed mailing, 
        shipping, or stationery supplies offered as of June 23, 
        2011; or
          (B) to license other goods, products, or services, 
        the primary purpose of which is to promote and enhance 
        the image or brand of the Postal Service.
          (7) Nothing in this section shall be considered to 
        prevent the Postal Service from establishing nonpostal 
        products and services that are expressly authorized by 
        chapter 37.

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)[.]; or
          (4) offer to the public any postage-evidencing 
        product or service that does not comply with any rule 
        or regulation that would be applicable to such product 
        or service if the product or service were offered by a 
        private company.
  (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.

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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 other international delivery services by 
        the Government of the United States and by 
        intergovernmental organizations of which the United 
        States is a member; 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 other 
international delivery services and shall have the power to 
conclude postal treaties, conventions, and amendments related 
to international postal services and other international 
delivery services, except that the Secretary may not conclude 
any treaty, convention, or other international agreement 
(including those regulating international postal services) if 
such treaty, convention, or agreement would, with respect to 
any competitive product, grant an undue or unreasonable 
preference to the Postal Service, a private provider of 
international postal or delivery 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 and international delivery 
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, shall give full 
        consideration to 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)(1) Before concluding any treaty, convention, or amendment 
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.
  (2) The Secretary shall ensure that each treaty, convention, 
or amendment concluded under subsection (b) is consistent with 
the views submitted by the Commission pursuant to paragraph 
(1), except if, or to the extent, the Secretary determines, in 
writing, that it is not in the foreign policy or national 
security interest of the United States to ensure consistency 
with the Commission's views. Such written determination shall 
be provided to the Commission together with a full explanation 
of the reasons thereof, provided that the Secretary may 
designate which portions of the determination or explanation 
shall be kept confidential for reasons of foreign policy or 
national security.
  (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 and other international delivery 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 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) In this subsection, the term ``private company'' means 
a private company substantially owned or controlled by persons 
who are citizens of the United States.
  (2) 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.
  (3) 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 U.S. Customs and 
Border Protection in carrying out this paragraph.
  (4) The provisions of this subsection shall take effect 6 
months after the date of enactment of this subsection or such 
earlier date as the Bureau of Customs and Border Protection of 
the Department of Homeland Security may determine in writing.
  (f) After submission to the Postal Regulatory Commission by 
the Department of State of the budget detailing the estimated 
costs of carrying out the activities under this section, and 
the Commission's review and approval of such submission, the 
Postal Service shall transfer to the Department of State, from 
any funds available to the Postal Service, such sums as may be 
reasonable, documented, and auditable for the Department of 
State to carry out such activities.

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Sec. 411. Cooperation with other Government agencies

  Executive agencies within the meaning of section 105 of title 
5 and the Government Publishing Office are authorized to 
furnish property, both real and personal, and personal and 
nonpersonal services to the Postal Service, and the Postal 
Service is authorized to furnish property and services to them. 
The furnishing of property and services under this section 
shall be under such terms and conditions, [including 
reimbursability] including reimbursability within the 
limitations of chapter 37, as the Postal Service and the head 
of the agency concerned shall deem appropriate.

           *       *       *       *       *       *       *


Sec. 414. Special postage stamps

  (a) In order to afford the public a convenient way to 
contribute to funding for breast cancer research, the Postal 
Service shall establish a special rate of postage for first-
class mail under this section.
  (b) The rate of postage established under this section--
          (1) shall be equal to the regular first-class rate of 
        postage, plus a differential of not less than 15 
        percent;
          (2) shall be set by [the Governors] the Postal 
        Service in accordance with such procedures as [the 
        Governors] the Postal Service shall by regulation 
        prescribe (in lieu of the procedures under chapter 36); 
        and
          (3) shall be offered as an alternative to the regular 
        first-class rate of postage.
The use of the special rate of postage established under this 
section shall be voluntary on the part of postal patrons. The 
special rate of postage of an individual stamp under this 
section shall be an amount that is evenly divisible by 5.
  (c)(1) Of the amounts becoming available for breast cancer 
research pursuant to this section, the Postal Service shall 
pay--
          (A) 70 percent to the National Institutes of Health; 
        and
          (B) the remainder to the Department of Defense.
Payments under this paragraph to an agency shall be made under 
such arrangements as the Postal Service shall by mutual 
agreement with such agency establish in order to carry out the 
purposes of this section, except that, under those 
arrangements, payments to such agency shall be made at least 
twice a year. An agency that receives amounts from the Postal 
Service under this paragraph shall use the amounts for breast 
cancer research.
  (2) For purposes of this section, the term ``amounts becoming 
available for breast cancer research pursuant to this section'' 
means--
          (A) the total amounts received by the Postal Service 
        that it would not have received but for the enactment 
        of this section, reduced by
          (B) an amount sufficient to cover reasonable costs 
        incurred by the Postal Service in carrying out this 
        section, including those attributable to the printing, 
        sale, and distribution of stamps under this section, as 
        determined by the Postal Service under regulations that 
        it shall prescribe.
  (d) It is the sense of the Congress that nothing in this 
section should--
          (1) directly or indirectly cause a net decrease in 
        total funds received by the National Institutes of 
        Health, the Department of Defense, or any other agency 
        of the Government (or any component or program thereof) 
        below the level that would otherwise have been received 
        but for the enactment of this section; or
          (2) affect regular first-class rates of postage or 
        any other regular rates of postage.
  (e) Special postage stamps under this section shall be made 
available to the public beginning on such date as the Postal 
Service shall by regulation prescribe, but in no event later 
than 12 months after the date of the enactment of this section.
  (f) The Postmaster General shall include in each report 
rendered under section 2402 with respect to any period during 
any portion of which this section is in effect information 
concerning the operation of this section, except that, at a 
minimum, each shall include--
          (1) the total amount described in subsection 
        (c)(2)(A) which was received by the Postal Service 
        during the period covered by such report; and
          (2) of the amount under paragraph (1), how much (in 
        the aggregate and by category) was required for the 
        purposes described in subsection (c)(2)(B).
  (g) For purposes of section 416 (including any regulation 
prescribed under subsection (e)(1)(C) of that section), the 
special postage stamp issued under this section shall not apply 
to any limitation relating to whether more than 1 semipostal 
may be offered for sale at the same time.
  (h) This section shall cease to be effective after December 
31, 2019.

           *       *       *       *       *       *       *


Sec. 416. Authority to issue semipostals

  (a) Definitions.--For purposes of this section--
          (1) the term ``semipostal'' means a postage stamp 
        which is issued and sold by the Postal Service, at a 
        premium, in order to help provide funding for a cause 
        described in subsection (b); and
          (2) the term ``agency'' means an Executive agency 
        within the meaning of section 105 of title 5.
  (b) Discretionary Authority.--The Postal Service is hereby 
authorized to issue and sell semipostals under this section in 
order to advance such causes as the Postal Service considers to 
be in the national public interest and appropriate.
  (c) Rate of Postage.--The rate of postage on a semipostal 
issued under this section shall be established by [the 
Governors] the Postal Service, in accordance with such 
procedures as [they] the Postal Service shall by regulation 
prescribe (in lieu of the procedures under chapter 36), except 
that--
          (1) the rate established for a semipostal under this 
        section shall be equal to the rate of postage that 
        would otherwise regularly apply, plus a differential of 
        not less than 15 percent; and
          (2) no regular rates of postage or fees for postal 
        services under chapter 36 shall be any different from 
        what they otherwise would have been if this section had 
        not been enacted.
The use of any semipostal issued under this section shall be 
voluntary on the part of postal patrons. The special rate of 
postage of an individual stamp under this section shall be an 
amount that is evenly divisible by 5.
  (d) Amounts Becoming Available.--
          (1) In general.--The amounts becoming available from 
        the sale of a semipostal under this section shall be 
        transferred to the appropriate agency or agencies under 
        such arrangements as the Postal Service shall by mutual 
        agreement with each such agency establish.
          (2) Identification of appropriate causes and 
        agencies.--Decisions concerning the identification of 
        appropriate causes and agencies to receive amounts 
        becoming available from the sale of a semipostal under 
        this section shall be made in accordance with 
        applicable regulations under subsection (e).
          (3) Determination of amounts.--
                  (A) In general.--The amounts becoming 
                available from the sale of a semipostal under 
                this section shall be determined in a manner 
                similar to that provided for under section 
                414(c)(2) (as in effect on July 1, 2000).
                  (B) Administrative costs.--Regulations under 
                subsection (e) shall specifically address how 
                the costs incurred by the Postal Service in 
                carrying out this section shall be computed, 
                recovered, and kept to a minimum.
          (4) Other funding not to be affected.--Amounts which 
        have or may become available from the sale of a 
        semipostal under this section shall not be taken into 
        account in any decision relating to the level of 
        appropriations or other Federal funding to be furnished 
        to an agency in any year.
          (5) Recovery of costs.--Before transferring to an 
        agency in accordance with paragraph (1) any amounts 
        becoming available from the sale of a semipostal over 
        any period, the Postal Service shall ensure that it has 
        recovered the full costs incurred by the Postal Service 
        in connection with such semipostal through the end of 
        such period.
  (e) Regulations.--
          (1) In general.--Except as provided in subsection 
        (c), the Postal Service shall prescribe any regulations 
        necessary to carry out this section, including 
        provisions relating to--
                  (A) which office or other authority within 
                the Postal Service shall be responsible for 
                making the decisions described in subsection 
                (d)(2);
                  (B) what criteria and procedures shall be 
                applied in making those decisions; and
                  (C) what limitations shall apply, if any, 
                relating to the issuance of semipostals (such 
                as whether more than one semipostal may be 
                offered for sale at the same time).
          (2) Notice and comment.--Before any regulation is 
        issued under this section, a copy of the proposed 
        regulation shall be published in the Federal Register, 
        and an opportunity shall be provided for interested 
        parties to present written and, where practicable, oral 
        comment. All regulations necessary to carry out this 
        section shall be issued not later than 30 days before 
        the date on which semipostals are first made available 
        to the public under this section.
  (f) Annual Reports.--
          (1) In general.--The Postmaster General shall include 
        in each report rendered under section 2402, with 
        respect to any period during any portion of which this 
        section is in effect, information concerning the 
        operation of any program established under this 
        section.
          (2) Specific requirement.--If any semipostal ceases 
        to be offered during the period covered by such a 
        report, the information contained in that report shall 
        also include--
                  (A) the commencement and termination dates 
                for the sale of such semipostal;
                  (B) the total amount that became available 
                from the sale of such semipostal; and
                  (C) of that total amount, how much was 
                applied toward administrative costs.
        For each year before the year in which a semipostal 
        ceases to be offered, any report under this subsection 
        shall include, with respect to that semipostal (for the 
        year covered by such report), the information described 
        in subparagraphs (B) and (C).
  (g) Termination.--This section shall cease to be effective at 
the end of the 10-year period beginning on the date on which 
semipostals are first made available to the public under this 
section.

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CHAPTER 5--POSTAL REGULATORY COMMISSION

           *       *       *       *       *       *       *


Sec. 504. Administration

  (a) The Chairman of the Postal Regulatory Commission shall be 
the principal executive officer of the Commission. The Chairman 
shall exercise or direct the exercise of all the executive and 
administrative functions of the Commission, including functions 
of the Commission with respect to (1) the appointment of 
personnel employed under the Commission, except that the 
appointment of heads of major administrative units under the 
Commission shall require the approval of a majority of the 
members of the Commission, (2) the supervision of the personnel 
employed under the Commission and the distribution of business 
among them and among the Commissioners, and (3) the use and 
expenditure of funds.
  (b) In carrying out any of his functions under this section, 
the Chairman shall be governed by the general policies of the 
Commission.
  (c) The Chairman may obtain such facilities and supplies as 
may be necessary to permit the Commission to carry out its 
functions. Any officer or employee appointed under this section 
shall be paid at rates of compensation and shall be entitled to 
programs offering employee benefits established under chapter 
10 or chapter 12 of this title, as appropriate.
  (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.
  (e) The provisions of section 410 and chapter 10 of this 
title shall apply to the Commission, as appropriate.
  (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.
  [(h)(1) Notwithstanding any other provision of this title or 
of the Inspector General Act of 1978, the authority to select, 
appoint, and employ officers and employees of the Office of 
Inspector General of the Postal Regulatory Commission, and to 
obtain any temporary or intermittent services of experts or 
consultants (or an organization of experts or consultants) for 
such Office, shall reside with the Inspector General of the 
Postal Regulatory Commission.
  [(2) Except as provided in paragraph (1), any exercise of 
authority under this subsection shall, to the extent 
practicable, be in conformance with the applicable laws and 
regulations that govern selections, appointments, and 
employment, and the obtaining of any such temporary or 
intermittent services, within the Postal Regulatory 
Commission.]

           *       *       *       *       *       *       *


                   CHAPTER 7--CONTRACTING PROVISIONS

Sec.
701. Definitions.
702. Delegation of contracting authority.
703. Posting of noncompetitive purchase requests for noncompetitive 
          contracts.
704. Review of ethical issues.
705. Ethical restrictions on participation in certain contracting 
          activity.

Sec. 701. Definitions

  In this chapter--
          (1) the term ``contracting officer'' means an 
        employee of a covered postal entity who has authority 
        to enter into a postal contract;
          (2) the term ``covered postal entity'' means--
                  (A) the Postal Service; or
                  (B) the Postal Regulatory Commission;
          (3) the term ``head of a covered postal entity'' 
        means--
                  (A) in the case of the Postal Service, the 
                Postmaster General; or
                  (B) in the case of the Postal Regulatory 
                Commission, the Chairman of the Postal 
                Regulatory Commission;
          (4) the term ``postal contract'' means--
                  (A) in the case of the Postal Service, any 
                contract (including any agreement or memorandum 
                of understanding) entered into by the Postal 
                Service for the procurement of goods or 
                services; or
                  (B) in the case of the Postal Regulatory 
                Commission, any contract (including any 
                agreement or memorandum of understanding) in an 
                amount exceeding the simplified acquisition 
                threshold (as defined in section 134 of title 
                41 and adjusted under section 1908 of such 
                title) entered into by the Postal Regulatory 
                Commission for the procurement of goods or 
                services; and
          (5) the term ``senior procurement executive'' means 
        the senior procurement executive of a covered postal 
        entity.

Sec. 702. Delegation of contracting authority

  (a) In General.--
          (1) Policy.--Not later than 60 days after the date of 
        enactment of this chapter, the head of each covered 
        postal entity shall issue a policy on contracting 
        officer delegations of authority for postal contracts 
        for the covered postal entity.
          (2) Contents.--The policy issued under paragraph (1) 
        shall require that--
                  (A) notwithstanding any delegation of 
                authority with respect to postal contracts, the 
                ultimate responsibility and accountability for 
                the award and administration of postal 
                contracts resides with the senior procurement 
                executive; and
                  (B) a contracting officer shall maintain an 
                awareness of and engagement in the activities 
                being performed on postal contracts of which 
                that officer has cognizance, notwithstanding 
                any delegation of authority that may have been 
                executed.
  (b) Posting of Delegations.--
          (1) In general.--The head of each covered postal 
        entity shall make any delegation of authority for 
        postal contracts outside the functional contracting 
        unit readily available and accessible on the Web site 
        of the covered postal entity.
          (2) Effective date.--This paragraph shall apply to 
        any delegation of authority made on or after the date 
        that is 30 days after the date of enactment of this 
        chapter.

Sec. 703. Posting of noncompetitive purchase requests for 
                    noncompetitive contracts

  (a) Posting Required.--
          (1) Postal regulatory commission.--The Postal 
        Regulatory Commission shall make the noncompetitive 
        purchase request for any noncompetitive award for any 
        contract (including any agreement or memorandum of 
        understanding) entered into by the Postal Regulatory 
        Commission for the procurement of goods and services, 
        in an amount of $20,000 or more, including the 
        rationale supporting the noncompetitive award, publicly 
        available on the Web site of the Postal Regulatory 
        Commission--
                  (A) not later than 14 days after the date of 
                the award of the noncompetitive contract; or
                  (B) not later than 30 days after the date of 
                the award of the noncompetitive contract, if 
                the basis for the award was a compelling 
                business interest.
          (2) Postal service.--The Postal Service shall make 
        the noncompetitive purchase request for any 
        noncompetitive award of a postal contract in an amount 
        of $250,000 or more, including the rationale supporting 
        the noncompetitive award, publicly available on the Web 
        site of the Postal Service--
                  (A) not later than 14 days after the date of 
                the award; or
                  (B) not later than 30 days after the date of 
                the award, if the basis for the award was a 
                compelling business interest.
          (3) Adjustments to the posting threshold.--
                  (A) Review and determination.--Not later than 
                January 31 of each year, the Postal Service and 
                the Postal Regulatory Commission shall--
                          (i) review the applicable threshold 
                        established under paragraph (1) or (2); 
                        and
                          (ii) based on any change in the 
                        Consumer Price Index for All Urban 
                        Consumers of the Department of Labor, 
                        determine whether an adjustment to the 
                        threshold shall be made.
                  (B) Amount of adjustments.--An adjustment 
                under subparagraph (A) shall be made in 
                increments of $5,000. If the covered postal 
                entity determines that a change in the Consumer 
                Price Index for a year would require an 
                adjustment in an amount that is less than 
                $5,000, the Postal Service may not make an 
                adjustment to the threshold for the year.
          (4) Effective date.--This subsection shall apply to 
        any noncompetitive contract awarded on or after the 
        date that is 90 days after the date of enactment of 
        this chapter.
  (b) Public Availability.--
          (1) In general.--Subject to paragraph (2), the 
        information required to be made publicly available by a 
        covered postal entity under subsection (a) shall be 
        readily accessible on the Web site of the covered 
        postal entity.
          (2) Protection of proprietary information.--A covered 
        postal entity shall--
                  (A) carefully screen any description of the 
                rationale supporting a noncompetitive award 
                required to be made publicly available under 
                subsection (a) to determine whether the 
                description includes proprietary data 
                (including any reference or citation to the 
                proprietary data) or security-related 
                information; and
                  (B) remove any proprietary data or security-
                related information before making publicly 
                available a description of the rationale 
                supporting a noncompetitive award.
  (c) Waivers.--
          (1) Waiver permitted.--If the Postal Service 
        determines that making a noncompetitive purchase 
        request for a postal contract of the Postal Service 
        publicly available would risk placing the Postal 
        Service at a competitive disadvantage relative to a 
        private sector competitor, the senior procurement 
        executive, in consultation with the advocate for 
        competition of the Postal Service, may waive the 
        requirements under subsection (a).
          (2) Form and content of waiver.--
                  (A) Form.--A waiver under paragraph (1) shall 
                be in the form of a written determination 
                placed in the file of the contract to which the 
                noncompetitive purchase request relates.
                  (B) Content.--A waiver under paragraph (1) 
                shall include--
                          (i) a description of the risk 
                        associated with making the 
                        noncompetitive purchase request 
                        publicly available; and
                          (ii) a statement that redaction of 
                        sensitive information in the 
                        noncompetitive purchase request would 
                        not be sufficient to protect the Postal 
                        Service from being placed at a 
                        competitive disadvantage relative to a 
                        private sector competitor.
          (3) Delegation of waiver authority.--The Postal 
        Service may not delegate the authority to approve a 
        waiver under paragraph (1) to any employee having less 
        authority than the senior procurement executive.

Sec. 704. Review of ethical issues

  If a contracting officer identifies any ethical issues 
relating to a proposed contract and submits those issues and 
that proposed contract to the designated ethics official for 
the covered postal entity before the awarding of that contract, 
that ethics official shall--
          (1) review the proposed contract; and
          (2) advise the contracting officer on the appropriate 
        resolution of ethical issues.

Sec. 705. Ethical restrictions on participation in certain contracting 
                    activity

  (a) Definitions.--In this section--
          (1) the term ``covered employee'' means--
                  (A) a contracting officer; or
                  (B) any employee of a covered postal entity 
                whose decisionmaking affects a postal contract 
                as determined by regulations prescribed by the 
                head of a covered postal entity;
          (2) the term ``final conviction'' means a conviction, 
        whether entered on a verdict or plea, including a plea 
        of nolo contendere, for which a sentence has been 
        imposed; and
          (3) the term ``covered relationship'' means a covered 
        relationship described in section 2635.502(b)(1) of 
        title 5, Code of Federal Regulations, or any successor 
        thereto.
  (b) In General.--
          (1) Regulations.--The head of each covered postal 
        entity shall prescribe regulations that--
                  (A) require a covered employee to include in 
                the file of any noncompetitive purchase request 
                for a noncompetitive postal contract a written 
                certification that--
                          (i) discloses any covered 
                        relationship of the covered employee; 
                        and
                          (ii) states that the covered employee 
                        will not take any action with respect 
                        to the noncompetitive purchase request 
                        that affects the financial interests of 
                        a friend, relative, or person with whom 
                        the covered employee is affiliated in a 
                        nongovernmental capacity, or otherwise 
                        gives rise to an appearance of the use 
                        of public office for private gain, as 
                        described in section 2635.702 of title 
                        5, Code of Federal Regulations, or any 
                        successor thereto;
                  (B) require a contracting officer to consult 
                with the ethics counsel for the covered postal 
                entity regarding any disclosure made by a 
                covered employee under subparagraph (A)(i), to 
                determine whether participation by the covered 
                employee in the noncompetitive purchase request 
                would give rise to a violation of part 2635 of 
                title 5, Code of Federal Regulations (commonly 
                referred to as the Standards of Ethical Conduct 
                for Employees of the Executive Branch), or any 
                successor thereto;
                  (C) require the ethics counsel for a covered 
                postal entity to review any disclosure made by 
                a contracting officer under subparagraph (A)(i) 
                to determine whether participation by the 
                contracting officer in the noncompetitive 
                purchase request would give rise to a violation 
                of part 2635 of title 5, Code of Federal 
                Regulations (commonly referred to as the 
                Standards of Ethical Conduct for Employees of 
                the Executive Branch), or any successor 
                thereto;
                  (D) under subsections (d) and (e) of section 
                2635.502 of title 5, Code of Federal 
                Regulations, or any successor thereto, require 
                the ethics counsel for a covered postal entity 
                to--
                          (i) authorize a covered employee that 
                        makes a disclosure under subparagraph 
                        (A)(i) to participate in the 
                        noncompetitive postal contract; or
                          (ii) disqualify a covered employee 
                        that makes a disclosure under 
                        subparagraph (A)(i) from participating 
                        in the noncompetitive postal contract;
                  (E) require a contractor to timely disclose 
                to the contracting officer in a bid, 
                solicitation, award, or performance of a postal 
                contract any conflict of interest with a 
                covered employee; and
                  (F) include authority for the head of the 
                covered postal entity to grant a waiver or 
                otherwise mitigate any organizational or 
                personal conflict of interest, if the head of 
                the covered postal entity determines that the 
                waiver or mitigation is in the best interests 
                of the covered postal entity.
          (2) Posting of waivers.--Not later than 30 days after 
        the head of a covered postal entity grants a waiver 
        described in paragraph (1)(F), the head of the covered 
        postal entity shall make the waiver publicly available 
        on the Web site of the covered postal entity.
  (c) Contract Voidance and Recovery.--
          (1) Unlawful conduct.--In any case in which there is 
        a final conviction for a violation of any provision of 
        chapter 11 of title 18 relating to a postal contract, 
        the head of a covered postal entity may--
                  (A) void that contract; and
                  (B) recover the amounts expended and property 
                transferred by the covered postal entity under 
                that contract.
          (2) Obtaining or disclosing procurement 
        information.--
                  (A) In general.--In any case in which a 
                contractor under a postal contract fails to 
                timely disclose a conflict of interest to the 
                appropriate contracting officer as required 
                under the regulations promulgated under 
                subsection (b)(1)(E), the head of a covered 
                postal entity may--
                          (i) void that contract; and
                          (ii) recover the amounts expended and 
                        property transferred by the covered 
                        postal entity under that contract.
                  (B) Conviction or administrative 
                determination.--A case described under 
                subparagraph (A) is any case in which--
                          (i) there is a final conviction for 
                        an offense punishable under section 
                        2105 of title 41; or
                          (ii) the head of a covered postal 
                        entity determines, based upon a 
                        preponderance of the evidence, that the 
                        contractor or someone acting for the 
                        contractor has engaged in conduct 
                        constituting an offense punishable 
                        under section 2105 of such title.

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PART II--PERSONNEL

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CHAPTER 10--EMPLOYMENT WITHIN THE POSTAL SERVICE

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Sec. 1003. Employment policy

  (a) Except as provided under chapters 2 and 12 of this title, 
section 8G of the Inspector General Act of 1978, or other 
provision of law, the Postal Service shall classify and fix the 
compensation and benefits of all officers and employees in the 
Postal Service. It shall be the policy of the Postal Service to 
maintain compensation and benefits for all officers and 
employees on a standard of comparability to the compensation 
and benefits paid for comparable levels of work in the private 
sector of the economy. No officer or employee shall be paid 
compensation at a rate in excess of the rate for level I of the 
Executive Schedule under section 5312 of title 5.
  (b) Compensation and benefits for all officers and employees 
serving in or under [the Office of Inspector General of the 
United States Postal Service] the Office of Inspector General 
of the Postal Community shall be maintained on a standard of 
comparability to the compensation and benefits paid for 
comparable levels of work in the respective Offices of 
Inspector General of the various establishments named in 
section 11(2) of the Inspector General Act of 1978.
  (c) Compensation and benefits for all Postal Inspectors shall 
be maintained on a standard of comparability to the 
compensation and benefits paid for comparable levels of work in 
the executive branch of the Government outside of the Postal 
Service. As used in this subsection, the term ``Postal 
Inspector'' included any agent to whom any investigative powers 
are granted under section 3061 of title 18.
  (d) The Postal Service shall follow an employment policy 
designed, without compromising the policy of section 101(a) of 
this title, to extend opportunity to the disadvantaged and the 
handicapped.

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Sec. 1005. Applicability of laws relating to Federal employees

  (a)(1) Except as otherwise provided in this subsection, the 
provisions of chapter 75 of title 5 shall apply to officers and 
employees of the Postal Service except to the extent of any 
inconsistency with--
          (A) the provisions of any collective-bargaining 
        agreement negotiated on behalf of and applicable to 
        them; or
          (B) procedures established by the Postal Service and 
        approved by the Civil Service Commission.
  (2) The provisions of title 5 relating to a preference 
eligible (as that term is defined under section 2108(3) of such 
title) shall apply to an applicant for appointment and any 
officer or employee of the Postal Service in the same manner 
and under the same conditions as if the applicant, officer, or 
employee were subject to the competitive service under such 
title. The provisions of this paragraph shall not be modified 
by any program developed under section 1004 of this title or 
any collective-bargaining agreement entered into under chapter 
12 of this title.
  (3) The provisions of this subsection shall not apply to 
those individuals appointed under sections 202, 204, and 
1001(c) of this title.
  (4)(A) Subchapter II of chapter 75 of title 5 shall apply--
          (i) to any preference eligible in the Postal Service 
        who is an employee within the meaning of section 
        7511(a)(1)(B) of such title; and
          (ii) to any other individual who--
                  [(I) is in the position of a supervisor or a 
                management employee in the Postal Service, or 
                is an employee of the Postal Service engaged in 
                personnel work in other than a purely 
                nonconfidential clerical capacity; and]
                  (I) is an officer or employee of the Postal 
                Service who--
                          (aa) is not represented by a 
                        bargaining representative recognized 
                        under section 1203; and
                          (bb) is in a supervisory, 
                        professional, technical, clerical, 
                        administrative, or managerial position 
                        covered by the Executive and 
                        Administrative Schedule; and
                  (II) has completed 1 year of current 
                continuous service in the same or similar 
                positions.
  (B)(i) The second sentence of paragraph (2) of this 
subsection applies with respect to the provisions of 
subparagraph (A) of this paragraph, to the extent that such 
provisions relate to preference eligibles.
  (ii) The provisions of subparagraph (A) of this paragraph 
shall not, to the extent that such provisions relate to an 
individual under clause (ii) of such subparagraph, be modified 
by any program developed under section 1004 of this title.
  (b)(1) Except as provided under paragraph (2), section 5941 
of title 5 shall apply to the Postal Service. Except as 
provided under paragraph (2), for purposes of section 5941 of 
that title, the pay of officers and employees of the Postal 
Service shall be considered to be fixed by statute, and the 
basic pay of an employee shall be the pay (but not any 
allowance or benefit) of that officer or employee established 
in accordance with the provisions of this title.
  (2) On and after the date of enactment of the Non-Foreign 
Area Retirement Equity Assurance Act of 2009--
          (A) the provisions of that Act and section 5941 of 
        title 5 shall apply to officers and employees covered 
        by section 1003 (b) and (c) whose duty station is in a 
        nonforeign area; and
          (B) with respect to officers and employees of the 
        Postal Service (other than those officers and employees 
        described under subparagraph (A)) of section 1916(b)(2) 
        of that Act shall apply.
  (c) Officers and employees of the Postal Service shall be 
covered by subchapter I of chapter 81 of title 5, relating to 
compensation for work injuries.
  (d)(1) Officers and employees of the Postal Service (other 
than the Governors) shall be covered by chapters 83 and 84 of 
title 5. The Postal Service shall withhold from pay and shall 
pay into the Civil Service Retirement and Disability Fund the 
amounts specified in or determined under such chapter 83 and 
subchapter II of such chapter 84, respectively. The Postal 
Service shall pay into the Federal Retirement Thrift Savings 
Fund the amounts specified in or determined under subchapters 
III and VII of such chapter 84.
  (2) The provisions of subsections (i) and (m)(2) of section 
8344 and subsections (f) and (j)(2) of section 8468 of title 5 
shall apply with respect to the Postal Service. For purposes of 
so applying such provisions--
          (A) any reference in such provisions to the head of 
        an Executive agency shall be considered a reference to 
        the Postmaster General; and
          (B) any reference in such provisions to an employee 
        shall be considered a reference to an officer or 
        employee of the Postal Service.
  (e) Sick and annual leave, and compensatory time of officers 
and employees of the Postal Service, whether accrued prior to 
or after commencement of operations of the Postal Service, 
shall be obligations of the Postal Service under the provisions 
of this chapter.
  (f) Compensation, benefits, and other terms and conditions of 
employment in effect immediately prior to the effective date of 
this section, whether provided by statute or by rules and 
regulations of the former Post Office Department or the 
executive branch of the Government of the United States, shall 
continue to apply to officers and employees of the Postal 
Service, until changed by the Postal Service in accordance with 
this chapter and chapter 12 of this title. Subject to the 
provisions of this chapter and chapter 12 of this title, the 
provisions of subchapter I of chapter 85 and chapters 87, 89, 
89A, and 89B of title 5 shall apply to officers and employees 
of the Postal Service, unless varied, added to, or substituted 
for, under this subsection. No variation, addition, or 
substitution with respect to fringe benefits shall result in a 
program of fringe benefits which on the whole is less favorable 
to the officers and employees than fringe benefits in effect on 
the effective date of this section, and as to officers and 
employees for whom there is a collective-bargaining 
representative, no such variation, addition, or substitution 
shall be made except by agreement between the collective-
bargaining representative and the Postal Service.

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Sec. 1011. Oath of office

   Before entering upon their duties and before receiving any 
salary, all officers and employees of the Postal Service shall 
take and subscribe the following oath or affirmation:
           ``I, -- -- -- -- -- -- -- --, do solemnly swear (or 
        affirm) that I will support and defend the Constitution 
        of the United States against all enemies, foreign and 
        domestic; that I will bear true faith and allegiance to 
        the same; that I take this obligation freely, without 
        any mental reservation or purpose of evasion; and that 
        I will well and faithfully discharge the duties of the 
        office on which I am about to enter.''
A person authorized to administer oaths by the laws of the 
United States, including section 2903 of title 5, or of a State 
or territory, or an officer, civil or military, holding a 
commission under the United States, or any officer or employee 
of the Postal Service designated by [the Board] the Postal 
Service may administer and certify the oath or affirmation.

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PART III--MODERNIZATION AND FISCAL ADMINISTRATION

           *       *       *       *       *       *       *


CHAPTER 20--FINANCE

           *       *       *       *       *       *       *


Sec. 2003. The Postal Service Fund

  (a) There is established in the Treasury of the United States 
a revolving fund to be called the Postal Service Fund which 
shall be available to the Postal Service without fiscal-year 
limitation to carry out the purposes, functions, and powers 
authorized by this title (other than any of the purposes, 
functions, or powers for which the Competitive Products Fund is 
available).
  (b) Except as otherwise provided in section 2011, there shall 
be deposited in the Fund, subject to withdrawal by check by the 
Postal Service--
          (1) revenues from postal and nonpostal services 
        rendered by the Postal Service;
          (2) amounts received from obligations issued by the 
        Postal Service;
          (3) amounts appropriated for the use of the Postal 
        Service;
          (4) interest which may be earned on investments of 
        the Fund;
          (5) any other receipts of the Postal Service;
          (6) the balance in the Post Office Department Fund 
        established under former section 2202 of title 39 as of 
        the commencement of operations of the Postal Service;
          (7) amounts (including proceeds from the sale of 
        forfeited items) from any civil forfeiture conducted by 
        the Postal Service;
          (8) any transfers from the Secretary of the Treasury 
        from the Department of the Treasury Forfeiture Fund 
        which shall be available to the Postmaster General only 
        for Federal law enforcement related purposes; and
          (9) any amounts collected under section 3018.
  (c) If the Postal Service determines that the moneys of the 
Fund are in excess of current needs, it may request the 
investment of such amounts as it deems 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 it deems appropriate.
  (d) With the approval of the Secretary of the Treasury, the 
Postal Service may deposit moneys of the 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) 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.] the Office 
of Inspector General of the Postal Community The Postmaster 
General shall transfer from the Fund to the Secretary of the 
Treasury for deposit in the Department of the Treasury 
Forfeiture Fund amounts appropriate to reflect the degree of 
participation of Department of the Treasury law enforcement 
organizations (described in section 9705(o) of title 31) in the 
law enforcement effort resulting in the forfeiture pursuant to 
laws enforced or administered by the Postal Service. Neither 
the Fund nor any of the funds credited to it shall be subject 
to apportionment under the provisions of subchapter II of 
chapter 15 of title 31.
  (2) Funds appropriated to the Postal Service under section 
2401 of this title shall be apportioned as provided in this 
paragraph. From the total amounts appropriated to the Postal 
Service for any fiscal year under the authorizations contained 
in section 2401 of this title, the Secretary of the Treasury 
shall make available to the Postal Service 25 percent of such 
amount at the beginning of each quarter of such fiscal year.
  (f) Notwithstanding any other provision of this section, any 
amounts appropriated to the Postal Service under subsection (d) 
of section 2401 of this title and deposited into the Fund shall 
be expended by the Postal Service only for the purposes 
provided in such subsection.
  (g) Notwithstanding any provision of section 8147 of title 5, 
whenever the Secretary of Labor furnishes a statement to the 
Postal Service indicating an amount due from the Postal Service 
under subsection (b) of that section, the Postal Service shall 
make the deposit required pursuant to that statement (and any 
additional payment under subsection (c) of that section, to the 
extent that it relates to the period covered by such statement) 
not later than 30 days after the date on which such statement 
is so furnished. Any deposit (and any additional payment) which 
is subject to the preceding sentence shall, once made, remain 
available without fiscal year limitation.
  (h) Liabilities of the former Post Office Department to the 
Employees' Compensation Fund (appropriations for which were 
authorized by former section 2004, as in effect before the 
effective date of this subsection) shall be liabilities of the 
Postal Service payable out of the Fund.

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Sec. 2009. Annual budget

  The Postal Service shall cause to be prepared annually a 
budget program which shall be submitted to the Office of 
Management and Budget, under such rules and regulations as the 
President may establish as to the date of submission, the form 
and content, the classifications of data, and the manner in 
which such budget program shall be prepared and presented. The 
budget program shall be a business-type budget, or plan of 
operations, with due allowance given to the need for 
flexibility, including provision for emergencies and 
contingencies, in order that the Postal Service may properly 
carry out its activities as authorized by law. The budget 
program shall contain estimates of the financial condition and 
operations of the Postal Service for the current and ensuing 
fiscal years and the actual condition and results of operation 
for the last completed fiscal year. Such budget program shall 
include a statement of financial condition, a statement of 
income and expense, an analysis of surplus or deficit, a 
statement of sources and application of funds, and such other 
supplementary statements and information as are necessary or 
desirable to make known the financial condition and operations 
of the Postal Service. Such statements shall include estimates 
of operations by major types of activities, together with 
estimates of administrative expenses and estimates of 
borrowings. 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] the Office of Inspector General of the Postal 
Community requests to be appropriated out of the Postal Service 
Fund (3) the Postal Regulatory Commission requests to be 
appropriated, out of the Postal Service Fund, under section 
504(d) of this title. The President shall include these 
amounts, with his recommendations but without revision, in the 
budget transmitted to Congress under section 1105 of title 31.

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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);
          (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 section, 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) The Postal Service shall make payments of principal, or 
interest, or both on obligations issued under this section out 
of revenues and receipts from competitive products and assets 
related to the provision of competitive products (as determined 
under subsection (h)), or 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). 
For purposes of this subsection, the total assets of the 
Competitive Products Fund shall be the greater of--
          (A) the assets related to the provision of 
        competitive products as calculated under subsection 
        (h); or
          (B) the percentage of total Postal Service revenues 
        and receipts from competitive products times 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 is authorized to promulgate regulations revising 
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] the Inspector General of the 
Postal Community.
  (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).

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CHAPTER 24--APPROPRIATIONS AND ANNUAL REPORT

           *       *       *       *       *       *       *


[Sec. 2402. Annual report

  [The Postmaster General shall render an annual report to the 
Board concerning the operations of the Postal Service under 
this title. Upon approval thereof, or after making such changes 
as it considers appropriate, the Board shall transmit such 
reports to the President and the Congress.]

Sec. 2402. Annual report

  The Postmaster General shall render an annual report 
concerning the operations of the Postal Service under this 
title to the President and Congress.

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                          PART IV--MAIL MATTER

Chap.                                                               Sec.
      Nonmailable Matter............................................3001
     * * * * * * *
3701Nonpostal services................................................

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            CHAPTER 36--POSTAL RATES, CLASSES, AND SERVICES

      SUBCHAPTER I--PROVISIONS RELATING TO MARKET-DOMINANT PRODUCTS

Sec.
3621. Applicability; definitions.
     * * * * * * *

       SUBCHAPTER II--PROVISIONS RELATING TO COMPETITIVE PRODUCTS

     * * * * * * *
[3632. Action of the Governors.]
3632. Establishment of rates and classes of competitive products.
     * * * * * * *

                SUBCHAPTER VII--MODERN SERVICE STANDARDS

     * * * * * * *
3692. Delivery-point modernization.

SUBCHAPTER I--PROVISIONS RELATING TO MARKET-DOMINANT PRODUCTS

           *       *       *       *       *       *       *


Sec. 3622. Modern rate regulation

  (a) Authority Generally.--The Postal Regulatory Commission 
shall[, within 18 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 maximize incentives to reduce costs and 
        increase efficiency.
          (2) To create and ensure predictability and stability 
        in rates.
          (3) To maintain and meet high quality service 
        standards established under section 3691, with a focus 
        on achieving predictable and consistent delivery.
          (4) To allow the Postal Service pricing flexibility.
          (5) To assure adequate revenues, including retained 
        earnings, to establish and maintain financial 
        stability.
          (6) To reduce the administrative burden and increase 
        the transparency of the ratemaking [process] and cost 
        allocation processes.
          (7) To enhance mail security and deter terrorism.
          (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.
          (9) To allocate the total institutional costs of the 
        Postal Service appropriately between market-dominant 
        and competitive products (and to ensure appropriate 
        levels of transparency).
  [(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;
          [(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 for 
        both postal users and the Postal Service in accordance 
        with the policies of this title, including agreements 
        between the Postal Service and postal users, when 
        available on public and reasonable terms to similarly 
        situated mailers, that--
                  [(A) either--
                          [(i) improve the net financial 
                        position of the Postal Service through 
                        reducing Postal Service costs or 
                        increasing the overall contribution to 
                        the institutional costs of the Postal 
                        Service; or
                          [(ii) enhance the performance of mail 
                        preparation, processing, 
                        transportation, or other functions; and
                  [(B) do not cause unreasonable harm to the 
                marketplace.
          [(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 postal services;
          [(13) the value to the Postal Service and postal 
        users of promoting intelligent mail and of secure, 
        sender-identified mail; and
          [(14) the policies of this title as well as such 
        other factors as the Commission determines 
        appropriate.]
  (c) Factors.--In establishing or revising such system, the 
Postal Regulatory Commission shall take into account the 
following factors:
          (1) The effect of rate increases upon the general 
        public and business mail users.
          (2) The available alternative means of sending and 
        receiving written communications, information, and 
        letters and other mail matter at reasonable costs.
          (3) The reliability of delivery timelines and the 
        extent to which the Postal Service is meeting its 
        service standard obligations.
          (4) The need to ensure that the Postal Service has 
        adequate revenues and has taken appropriate cost-
        cutting measures to maintain financial stability and 
        meet all legal obligations.
          (5) The extent to which the Postal Service has taken 
        actions to increase its efficiency and reduce its 
        costs.
          (6) The value of the mail service actually provided 
        by 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.
          (7) 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.
          (8) The degree of preparation of mail for delivery 
        into the postal system performed by the mailer and its 
        effect upon improving efficiency and reducing costs to 
        the Postal Service.
          (9) 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.
          (10) The importance of pricing flexibility to 
        encourage increased mail volume and operational 
        efficiency.
          (11) 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.
          (12) 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.
          (13) The desirability of special classifications for 
        both postal users and the Postal Service in accordance 
        with the policies of this title, including agreements 
        between the Postal Service and postal users, when 
        available on public and reasonable terms to similarly 
        situated mailers, that--
                  (A) improve the net financial position of the 
                Postal Service by reducing Postal Service costs 
                or increasing the overall contribution to the 
                institutional costs of the Postal Service; and
                  (B) do not cause--
                          (i) unfair competitive advantage for 
                        the Postal Service or postal users 
                        eligible for the agreements; or
                          (ii) unreasonable disruption to the 
                        volume or revenues of other postal 
                        users.
          (14) The educational, cultural, scientific, and 
        informational value to the recipient of mail matter.
          (15) The need for the Postal Service to increase its 
        efficiency and reduce its costs, including 
        infrastructure costs, to help maintain high quality, 
        affordable postal services.
          (16) The value to the Postal Service and postal users 
        of promoting intelligent mail and of secure, sender-
        identified mail.
          (17) The importance of stability and predictability 
        of rates to ratepayers.
          (18) 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 postal rates for each group of 
                functionally equivalent agreements between the 
                Postal Service and users of the mail that--
                          (i) cover attributable cost;
                          (ii) improve the net financial 
                        position of the Postal Service; and
                          (iii) do not cause unreasonable 
                        disruption in the marketplace, 
                        consistent with subsection (c)(13)(B);
                for purposes of this subparagraph, a group of 
                functionally equivalent agreements shall 
                consist of all service agreements that are 
                functionally equivalent to each other within 
                the same market-dominant product, but shall not 
                include agreements within an experimental 
                product;
                  [(B)] (C) establish a schedule whereby rates, 
                when necessary and appropriate, would change at 
                regular intervals by predictable amounts;
                  [(C)] (D) not later than 45 days before the 
                implementation of any adjustment in rates under 
                this section, including adjustments made under 
                subsection [(c)(10)] (c)(H)--
                          (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)] (E) establish procedures whereby the 
                Postal Service may adjust rates not in excess 
                of the annual limitations under subparagraph 
                (A); and
                  [(E)] (F) notwithstanding any limitation set 
                under [subparagraphs (A) and (C)] subparagraphs 
                (A) and (D), and provided there is not 
                sufficient unused rate authority under 
                paragraph (2)(C), establish procedures whereby 
                rates may be adjusted on an expedited basis due 
                to either extraordinary or exceptional 
                circumstances, provided that the Commission 
                determines, after notice and opportunity for a 
                public hearing and comment, and within 90 days 
                after any request by the Postal Service, that 
                such adjustment is reasonable and equitable and 
                necessary to enable the Postal Service, under 
                best practices of honest, efficient, and 
                economical management, to maintain and continue 
                the development of postal services of the kind 
                and quality adapted to the needs of the United 
                States.
          (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--
                                  (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.
          (3) Review.--Ten years after the date of enactment of 
        the Postal Accountability and Enhancement Act and as 
        appropriate thereafter, the Commission shall review the 
        system for regulating rates and classes for market-
        dominant products established under this section to 
        determine if the system is achieving the objectives in 
        subsection (b), taking into account the factors in 
        subsection (c). If the Commission determines, after 
        notice and opportunity for public comment, that the 
        system is not achieving the objectives in subsection 
        (b), taking into account the factors in subsection (c), 
        the Commission may, by regulation, make such 
        modification or adopt such alternative system for 
        regulating rates and classes for market-dominant 
        products as necessary to achieve the objectives.
  (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) Scope.--The Postal Regulatory Commission shall 
        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 work share 
                        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) the amount of the discount above costs 
                avoided--
                          (i) is necessary to mitigate rate 
                        shock; and
                          (ii) will be phased out over time;
                  (C) the discount is provided in connection 
                with subclasses of mail consisting exclusively 
                of mail matter of educational, cultural, 
                scientific, or informational value; or
                  (D) reduction or elimination of the discount 
                would impede the efficient operation of the 
                Postal Service.
          (3) Limitation.--Nothing in this subsection shall 
        require that a work share discount be reduced or 
        eliminated if the reduction or elimination of the 
        discount would--
                  (A) 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 or eliminated; or
                  (B) result in a further increase in the rates 
                paid by mailers not able to take advantage of 
                the discount.
          (4) Report.--Whenever the Postal Service establishes 
        a workshare discount rate, 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 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.

           *       *       *       *       *       *       *


Sec. 3626. Reduced rates

  (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
  (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.
  (4)(A) Except as specified in subparagraph (B), rates of 
postage for a class of mail or kind of mailer under former 
section 4358 (d) or (e) of this title shall be established so 
that postage on each mailing of such mail shall be as nearly as 
practicable 5 percent lower than the postage for a 
corresponding regular-rate category mailing.
  (B) With respect to the postage for the advertising pound 
portion of any mail matter under former section 4358 (d) or (e) 
of this title, the 5-percent discount specified in subparagraph 
(A) shall not apply if the advertising portion exceeds 10 
percent of the publication involved.
  (5) The rates for any advertising under former section 
4358(f) of this title shall be equal to 75 percent of the rates 
for advertising contained in the most closely corresponding 
regular-rate category of mail.
  (6) The rates for mail matter under former sections 4452 (b) 
and (c) of this title shall be established as follows:
          (A) The estimated average revenue per piece to be 
        received by the Postal Service from each subclass of 
        mail under former sections 4452 (b) and (c) of this 
        title shall be equal, as nearly as practicable, to 60 
        percent of the estimated average revenue per piece to 
        be received from the most closely corresponding 
        regular-rate subclass of mail.
          (B) For purposes of subparagraph (A), the estimated 
        average revenue per piece of each regular-rate subclass 
        shall be calculated on the basis of expected volumes 
        and mix of mail for such subclass at current rates in 
        the test year of the proceeding.
          (C) Rate differentials within each subclass of mail 
        matter under former sections 4452 (b) and (c) shall 
        reflect the policies of this title, including the 
        factors set forth in section 3622(b) of this title.
  (7) The rates for mail matter under former sections 4554 (b) 
and (c) of this title shall be established so that postage on 
each mailing of such mail shall be as nearly as practicable 5 
percent lower than the postage for a corresponding regular-rate 
mailing.
  (b)(1) For the purposes of this title, the term ``periodical 
publications'', as used in former section 4351 of this title, 
includes (A) any catalog or other course listing, including 
mail announcements of legal texts which are part of post-bar 
admission education issued by any institution of higher 
education or by a nonprofit organization engaged in continuing 
legal education; and (B) any looseleaf page or report 
(including any index, instruction for filing, table, or 
sectional identifier which is an integral part of such report) 
which is designed as part of a looseleaf reporting service 
concerning developments in the law or public policy.
  (2) Any material described in paragraph (1) of this 
subsection shall qualify to be entered and mailed as second 
class mail in accordance with the applicable provisions of 
former section 4352 through former section 4357 of this title.
  (3) For purposes of this subsection, the term ``institution 
of higher education'' has the meaning given it by section 101 
of the Higher Education Act of 1965, and includes a nonprofit 
organization that coordinates a network of college-level 
courses that is sponsored primarily by nonprofit educational 
institutions for an older adult constituency.
  (c) In the administration of this section, one conservation 
publication published by an agency of a State which is 
responsible for management and conservation of the fish or 
wildlife resources of such State shall be considered a 
publication of a qualified nonprofit organization which 
qualifies for rates of postage under former section 4358(d) of 
this title.
  (d)(1) For purposes of this title, the term ``agricultural'', 
as used in former sections 4358(j)(2), 4452(d), and 
4554(b)(1)(B) of this title, includes the art or science of 
cultivating land, harvesting crops or marine resources, or 
raising of livestock.
  (2) In the administration of this section, and for purposes 
of former sections 4358(j)(2), 4452(d), and 4554(b)(1)(B) of 
this title, agricultural organizations or associations shall 
include any organization or association which collects and 
disseminates information or materials relating to agricultural 
pursuits.
  [(e)(1) In the administration of this section, the rates for 
third-class mail matter mailed by a qualified political 
committee shall be the rates currently in effect under former 
section 4452 of this title for third-class mail matter mailed 
by a qualified nonprofit organization.
  [(2) For purposes of this subsection--
          [(A) the term ``qualified political committee'' means 
        a national or State committee of a political party, the 
        Republican and Democratic Senatorial Campaign 
        Committees, the Democratic National Congressional 
        Committee, and the National Republican Congressional 
        Committee;
          [(B) the term ``national committee'' means the 
        organization which, by virtue of the bylaws of a 
        political party, is responsible for the day-to-day 
        operation of such political party at the national 
        level; and
          [(C) the term ``State committee'' means the 
        organization which, by virtue of the bylaws of a 
        political party, is responsible for the day-to-day 
        operation of such political party at the State level.]
  (f) In the administration of this chapter, the rates for mail 
under former section 4358(g) of this title shall be established 
without regard to either the provisions of such former section 
4358(g) or the provisions of this section.
  (g)(1) In the administration of this section, the rates for 
mail under subsections (a), (b), and (c) of former section 4358 
of this title shall not apply to an issue of a publication if 
the number of copies of such issue distributed within the 
county of publication is less than the number equal to the sum 
of 50 percent of the total paid circulation of such issue plus 
one.
  (2) Paragraph (1) of this subsection shall not apply to an 
issue of a publication if the total paid circulation of such 
issue is less than 10,000 copies.
  (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.
  (h) In the administration of this section, the number of 
copies of a subscription publication mailed to nonsubscribers 
during a calendar year at rates under subsections (a), (b), and 
(c) of former section 4358 of this title may not exceed 10 
percent of the number of copies of such publication mailed at 
such rates to subscribers.
  (j)(1) In the administration of this section, the rates for 
mail under former section 4452(b) or 4452(c) of this title 
shall not apply to mail which advertises, promotes, offers, or, 
for a fee or consideration, recommends, describes, or announces 
the availability of--
          (A) any credit, debit, or charge card, or similar 
        financial instrument or account, provided by or through 
        an arrangement with any person or organization not 
        authorized to mail at the rates for mail under former 
        section 4452(b) or 4452(c) of this title;
          (B) any insurance policy, unless the organization 
        which promotes the purchase of such policy is 
        authorized to mail at the rates for mail under former 
        section 4452(b) or 4452(c) of this title, the policy is 
        designed for and primarily promoted to the members, 
        donors, supporters, or beneficiaries of the 
        organization, and the coverage provided by the policy 
        is not generally otherwise commercially available;
          (C) any travel arrangement, unless the organization 
        which promotes the arrangement is authorized to mail at 
        the rates for mail under former section 4452(b) or 
        4452(c) of this title, the travel contributes 
        substantially (aside from the cultivation of members, 
        donors, or supporters, or the acquisition of income or 
        funds) to one or more of the purposes which constitutes 
        the basis for the organization's authorization to mail 
        at such rates, and the arrangement is designed for and 
        primarily promoted to the members, donors, supporters, 
        or beneficiaries of the organization; or
          (D) any product or service (other than any to which 
        subparagraph (A), (B), or (C) relates), if--
                  (i) the sale of such product or the providing 
                of such service is not substantially related 
                (aside from the need, on the part of the 
                organization promoting such product or service, 
                for income or funds or the use it makes of the 
                profits derived) to the exercise or performance 
                by the organization of one or more of the 
                purposes constituting the basis for the 
                organization's authorization to mail at such 
                rates; or
                  (ii) the mail matter involved is part of a 
                cooperative mailing (as defined under 
                regulations of the Postal Service) with any 
                person or organization not authorized to mail 
                at the rates for mail under former section 
                4452(b) or 4452(c) of this title;
except that--
                  (I) any determination under clause (i) that a 
                product or service is not substantially related 
                to a particular purpose shall be made under 
                regulations which shall be prescribed by the 
                Postal Service and which shall be consistent 
                with standards established by the Internal 
                Revenue Service and the courts with respect to 
                subsections (a) and (c) of section 513 of the 
                Internal Revenue Code of 1986; and
                  (II) clause (i) shall not apply if the 
                product involved is a periodical publication 
                described in subsection (m)(2) (including a 
                subscription to receive any such publication); 
                and
                  (III) clause (i) shall not apply to space 
                advertising in mail matter that otherwise 
                qualifies for rates under former section 
                4452(b) or 4452(c) of this title, and satisfies 
                the content requirements established by the 
                Postal Service for periodical publications: 
                Provided, That such changes in law shall take 
                effect immediately and shall stay in effect 
                hereafter unless the Congress enacts 
                legislation on this matter prior to October 1, 
                1995.
  (2) Matter shall not be excluded from being mail at the rates 
for mail under former section 4452(b) or 4452(c) of this title, 
by an organization authorized to mail at those rates solely 
because--
          (A) such matter contains, but is not primarily 
        devoted to, acknowledgements of organizations or 
        individuals who have made donations to the authorized 
        organization; or
          (B) such matter contains, but is not primarily 
        devoted to, references to and a response card or other 
        instructions for making inquiries concerning services 
        or benefits available as a result of membership in the 
        authorized organization: Provided, That advertising, 
        promotional, or application materials specifically 
        concerning such services or benefits are not included.
  (3)(A) Upon request, an organization authorized to mail at 
the rates for mail under former section 4452(b) or 4452(c) of 
this title shall furnish evidence to the Postal Service 
concerning the eligibility of any of its mail matter or 
mailings to be sent at those rates.
  (B) The Postal Service shall establish procedures to carry 
out this paragraph, including procedures for mailer 
certification of compliance with the conditions specified in 
paragraph (1)(D) or subsection (m), as applicable, and 
verification of such compliance.
  (k)(1) No person or organization shall mail, or cause to be 
mailed by contractual agreement or otherwise, at the rates for 
mail under former section 4452(b) or 4452(c) of this title, any 
matter to which those rates do not apply.
  (2) The Postal Service may assess a postage deficiency in the 
amount of the unpaid postage against any person or organization 
which violates paragraph (1) of this subsection. This 
assessment shall be deemed the final decision of the Postal 
Service, unless the party against whom the deficiency is 
assessed appeals it in writing within thirty days to the 
postmaster of the office where the mailing was entered. Such an 
appeal shall be considered by an official designated by the 
Postal Service, other than the postmaster of the office where 
the mailing was entered, who shall issue a decision as soon as 
practicable. This decision shall be deemed final unless the 
party against whom the deficiency was assessed appeals it in 
writing within thirty days to a further reviewing official 
designated by the Postal Service, who shall issue the final 
decision on the matter.
  (3) The Postal Service shall maintain procedures for the 
prompt collection of postage deficiencies arising from the 
violation of paragraph (1) of this subsection, and may in its 
discretion, follow the issuance of a final decision regarding a 
deficiency under paragraph (2) of this subsection deduct the 
amount of that deficiency incurred during the previous 12 
months from any postage accounts or other monies of the 
violator in its possession.
  (l) In the administration of this section, the term 
``advertising'', as used in former section 4358(j)(2) of this 
title, does not include the publisher's own advertising in a 
publication published by the official highway or development 
agency of a State.
  (m)(1) In the administration of this section, the rates for 
mail under former section 4452(b) or 4452(c) of this title 
shall not apply to mail consisting of products, unless such 
products--
          (A) were received by the organization as gifts or 
        contributions; or
          (B) are low cost articles (as defined by section 
        513(h)(2) of the Internal Revenue Code of 1986).
  (2) Paragraph (1) shall not apply with respect to a 
periodical publication of a qualified nonprofit organization.
  (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).

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SUBCHAPTER II--PROVISIONS RELATING TO COMPETITIVE PRODUCTS

           *       *       *       *       *       *       *


Sec. 3632. [Action of the Governors]  Establishment of rates and 
                    classes of competitive products

  [(a) Authority To Establish Rates and Classes.--The 
Governors, with the 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)] (a) 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) Rates or classes of general applicability.--In 
        the case of rates or classes of general applicability 
        in the Nation as a whole or in any substantial region 
        of the Nation, [the Governors] the Postal Service shall 
        cause each rate and class decision under this section 
        [and the record of the Governors' proceedings in 
        connection with such decision] to be published in the 
        Federal Register at least 30 days before the effective 
        date of any new rates or classes.
          (3) Rates or classes not of general applicability.--
        In the case of rates or classes not of general 
        applicability in the Nation as a whole or in any 
        substantial region of the Nation, [the Governors] the 
        Postal Service shall cause each rate and class decision 
        under this section [and the record of the proceedings 
        in connection with such decision] to be filed with the 
        Postal Regulatory Commission by such date before the 
        effective date of any new rates or classes as [the 
        Governors consider] the Postal Service considers 
        appropriate, but in no case less than 15 days.
          (4) Rates for streamlined review.--In the case of 
        rates not of general applicability for competitive 
        products that the Postmaster General considers eligible 
        for streamlined review under section 3633(c), the 
        Postmaster General shall cause the agreement to be 
        filed with the Postal Regulatory Commission by a date 
        that is on or before the effective date of any new rate 
        established under the agreement, as the Postmaster 
        General considers appropriate.
          [(4)] (5) Criteria.--As part of the regulations 
        required under section 3633, the Postal Regulatory 
        Commission shall establish criteria for determining 
        when a rate or class established under this subchapter 
        is or is not of general applicability in the Nation as 
        a whole or in any substantial region of the Nation.
  [(c)] (b) 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 18 months 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 what the Commission determines to be an 
        appropriate 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.
  (c) Streamlined Review.--Not later than 90 days after the 
date of enactment of this subsection, after notice and 
opportunity for comment, the Postal Regulatory Commission shall 
promulgate (and may from time to time thereafter revise) 
regulations for streamlined after-the-fact review of newly 
proposed agreements between the Postal Service and users of the 
mail that provide rates not of general applicability for 
competitive products. Streamlined review shall apply only if 
agreements are functionally equivalent to existing agreements 
that have collectively covered attributable costs and 
collectively improved the net financial position of the Postal 
Service. The regulations issued under this subsection shall 
provide that streamlined review shall be concluded not later 
than 5 business days after the date on which the agreement is 
filed with the Commission and shall be limited to approval or 
disapproval of the agreement as a whole based on the 
Commission's determination of its functional equivalence. 
Agreements not approved may be resubmitted without prejudice 
under section 3632.

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SUBCHAPTER IV--REPORTING REQUIREMENTS AND RELATED PROVISIONS

           *       *       *       *       *       *       *


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, using such methodologies as the 
        Commission shall by regulation prescribe, and 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 quality of 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[.]; and
          (3) which shall provide the overall change in Postal 
        Service productivity and the resulting effect of such 
        change on overall Postal Service costs during such 
        year, using such methodologies as the Commission shall 
        by regulation prescribe, if necessary.
The Inspector General shall regularly audit the data collection 
systems and procedures utilized in collecting information and 
preparing such report (including any annex thereto and the 
information required under subsection (b)). The results of any 
such audit shall be submitted to the Postal Service and the 
Postal Regulatory Commission.
  (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) Market Tests.--In carrying out subsections (a) and (b) 
with respect to experimental products offered through market 
tests under section 3641 in a year, the Postal Service shall--
          (1) report data on the costs, revenues, and quality 
        of service by market test, which may be reported in 
        summary form; and
          (2) 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) performance plan under section 2803; and
          (3) 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) Written Determination.--Each annual written determination 
of the Commission under this section shall include the 
following:
          (1) Requirements.--For each group of functionally 
        equivalent agreements between the Postal Service and 
        users of the mail, whether such group fulfilled 
        requirements to--
                  (A) cover costs attributable; and
                  (B) improve the net financial position of the 
                Postal Service.
          (2) Noncompliance.--Any group of functionally 
        equivalent agreements not meeting subparagraphs (A) and 
        (B) of paragraph (1) shall be determined to be in 
        noncompliance under this subsection.
          (3) Definition.--For purposes of this subsection, a 
        group of functionally equivalent agreements shall 
        consist of 1 or more service agreements that are 
        functionally equivalent to each other within the same 
        market-dominant or competitive product, but shall not 
        include agreements within an experimental product.
  [(c)] (d) Noncompliance With Regard to Rates or Services.--
If, for a year, a timely written determination of noncompliance 
is made under subsection (b), the Postal Regulatory Commission 
shall take appropriate action in accordance with [subsections 
(c) and (e)] subsections (c) and (d) of section 3662 (as if a 
complaint averring such noncompliance had been duly filed and 
found under such section to be justified).
  [(d)] (e) Review of Performance Goals.--The Postal Regulatory 
Commission shall also evaluate annually whether the Postal 
Service has met the goals established under sections 2803 and 
2804, and may provide recommendations to the Postal Service 
related to the protection or promotion of public policy 
objectives set out in this title.
  [(e)] (f) 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.

           *       *       *       *       *       *       *


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

Sec. 3661. Postal services

  (a) The Postal Service shall develop and promote adequate and 
efficient postal services.
  (b) When the Postal Service determines that there should be a 
change in the nature of postal services which will generally 
affect service on a nationwide or substantially nationwide 
basis, it shall submit a proposal, within a reasonable time 
prior to the effective date of such proposal, to the Postal 
Regulatory Commission requesting an advisory opinion on the 
change.
  (c) The Commission shall not issue its opinion on any 
proposal until an opportunity for hearing on the record under 
sections 556 and 557 of title 5 has been accorded to the Postal 
Service, users of the mail, and an officer of the Commission 
who shall be required to represent the interests of the general 
public. The opinion shall be in writing and shall include a 
certification by each Commissioner agreeing with the opinion 
that in his judgment the opinion conforms to the policies 
established under this title.
  (d)(1) The Commission shall issue its opinion within 90 days, 
or a longer period for good cause shown but in no event longer 
than 120 days, after the receipt of any proposal (as referred 
to in subsection (b)) concerning an identical or substantially 
identical proposal on which the Commission has issued an 
opinion within the preceding 5 years.
  (2) If necessary in order to comply with the 90-day 
requirement under paragraph (1), the Commission may apply 
expedited procedures which the Commission shall by regulation 
prescribe.

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SUBCHAPTER VII--MODERN SERVICE STANDARDS

           *       *       *       *       *       *       *


Sec. 3692. Delivery-point modernization

  (a) Definitions.--For purposes of this section--
          (1) the term ``delivery point'' means a mailbox or 
        other receptacle to which mail is delivered;
          (2) the term ``primary mode of mail delivery'' means 
        the typical method by which the Postal Service delivers 
        letter mail to the delivery point of a postal patron;
          (3) the term ``door delivery'' means a primary mode 
        of mail delivery whereby mail is placed into a slot or 
        receptacle at or near the postal patron's door or is 
        hand delivered to a postal patron, but does not include 
        centralized delivery, curbside delivery, or sidewalk 
        delivery;
          (4) the term ``centralized delivery'' means a primary 
        mode of mail delivery whereby mail receptacles of a 
        number of delivery points are grouped or clustered at a 
        single location;
          (5) the term ``curbside delivery'' means a primary 
        mode of mail delivery whereby a mail receptacle is 
        situated at the edge of a sidewalk abutting a road or 
        curb, at a road, or at a curb, and can be served by a 
        letter carrier from a motorized vehicle; and
          (6) the term ``sidewalk delivery'' means a primary 
        mode of mail delivery whereby a mail receptacle is 
        situated at the edge of a sidewalk and can be served by 
        a letter carrier from the sidewalk.
  (b) Policy.--It shall be the policy of the Postal Service--
          (1) to provide access to secure, convenient mail and 
        package delivery receptacles to the greatest number of 
        postal patrons feasible; and
          (2) to use the most cost-effective primary mode of 
        mail delivery feasible for postal patrons.
  (c) Phaseout of Door Delivery for New Addresses.--For any new 
delivery point established after December 31, 2016, the Postal 
Service shall provide a primary mode of mail delivery other 
than door delivery, with a preference for secure, centralized 
delivery.
  (d) Business Address Conversion.--
          (1) Identification.--Not later than 1 year after the 
        date of the Postal Service Reform Act of 2016, each 
        Postal Service district office shall identify the 
        business delivery points within its service area that 
        are appropriate candidates for conversion from door 
        delivery to centralized delivery, curbside delivery, or 
        sidewalk delivery.
          (2) Conversion requirement.--Beginning not later than 
        October 1, 2017, the Postal Service shall implement a 
        program to convert delivery points identified under 
        paragraph (1) to centralized delivery, curbside 
        delivery, or sidewalk delivery at a rate sufficient to 
        ensure that--
                  (A) not less than 20 percent of such delivery 
                points are converted by September 30, 2018;
                  (B) not less than 40 percent of such delivery 
                points are converted by September 30, 2019;
                  (C) not less than 60 percent of such delivery 
                points are converted by September 30, 2020;
                  (D) not less than 80 percent of such delivery 
                points are converted by September 30, 2021; and
                  (E) all such delivery points are converted by 
                September 30, 2022.
          (3) Notification.--In carrying out conversions under 
        paragraph (2), the Postal Service shall provide written 
        notice at least 60 days in advance of the 
        implementation date of a change in primary mode of mail 
        delivery to postal customers served by an applicable 
        delivery point.
  (e) Residential Address Conversion.--
          (1) Identification.--Not later than 1 year after the 
        date of the enactment of the Postal Service Reform Act 
        of 2016, each Postal Service district office shall 
        identify the residential delivery points within its 
        service area that are appropriate candidates for 
        conversion from door delivery to centralized delivery, 
        curbside delivery, or sidewalk delivery.
          (2) Voluntary conversion.--Not later than October 1, 
        2017, the Postal Service shall commence a program to 
        convert delivery points identified under paragraph (1) 
        to centralized delivery, curbside delivery, or sidewalk 
        delivery. Such program shall operate as follows:
                  (A) Not later than 3 months after the 
                identification of the delivery points under 
                paragraph (1), the Postal Service shall divide 
                such delivery points into geographically based 
                address units (such as street blocks or other 
                similar reasonably segregable units) not to 
                exceed 50 delivery points per unit.
                  (B) Not later than 6 months after such 
                identification, the Postal Service shall 
                provide written notification to postal patrons 
                served by each identified delivery point 
                containing the following:
                          (i) Notice that the delivery point 
                        has been proposed for conversion to a 
                        more efficient primary mode of mail 
                        delivery to more economically provide 
                        universal postal service and improve 
                        service.
                          (ii) A description of the new primary 
                        mode of delivery proposed by the Postal 
                        Service and a visual example of such 
                        mode.
                          (iii) A conversion consent form and 
                        notice that conversion for residential 
                        addresses is on a voluntary basis.
                          (iv) A description of benefits of 
                        conversion to the postal patron, 
                        including access to secure mail and 
                        package delivery, and benefits of 
                        conversion to the Postal Service, 
                        including a smaller environmental 
                        impact for delivery.
                          (v) A description of how the 
                        conversion process would work, and the 
                        monetary costs (if any) to the postal 
                        patron.
                          (vi) Any other information the Postal 
                        Service considers necessary.
                  (C) No delivery point may be converted under 
                this subsection unless prior written consent is 
                provided to the Postal Service by a postal 
                patron served by such delivery point who is at 
                least 18 years old. Prior to the conversion of 
                a delivery point under this section, any 
                written consent so provided may be withdrawn by 
                such patron or by any other postal patron 
                served by such delivery point who is at least 
                18 years old upon written notification to the 
                Postal Service. The Postal Service shall place 
                on the Postal Service's public Web site an 
                option to request that a consent form or 
                consent-withdrawal form be delivered to any 
                delivery point identified for conversion under 
                this subsection.
                  (D) Upon the receipt of written consent 
                applicable to at least 40 percent of the 
                delivery points within an address unit 
                described under subparagraph (A), the Postal 
                Service shall--
                          (i) not later than 30 days after the 
                        date that the requisite percentage is 
                        reached, provide written notice to each 
                        delivery point within such unit stating 
                        that the conversion threshold has been 
                        reached and that--
                                  (I) with respect to any 
                                delivery point for which a 
                                consent for conversion was 
                                received, that the primary mode 
                                of mail delivery for such 
                                address will be converted; and
                                  (II) with respect to any 
                                delivery point for which a 
                                consent for conversion was not 
                                received, that--
                                          (aa) a postal patron 
                                        served by such delivery 
                                        point may elect, by 
                                        written consent, at any 
                                        time to convert the 
                                        primary mode of mail 
                                        delivery to the same 
                                        form of delivery as the 
                                        converted delivery 
                                        points in such unit; 
                                        and
                                          (bb) if such a patron 
                                        provides such consent, 
                                        the primary mode of 
                                        mail delivery shall be 
                                        converted not later 
                                        than 30 days after the 
                                        date of such consent 
                                        or, in any case where 
                                        the conversion of 
                                        delivery points has not 
                                        yet occurred, upon 
                                        implementation of that 
                                        conversion;
                          (ii) not later than 90 days after the 
                        date that the requisite percentage is 
                        reached, but not less than 30 days 
                        following the written notice under 
                        clause (i), convert the delivery points 
                        for which consent was received to the 
                        applicable new primary mode of mail 
                        delivery; and
                          (iii) following the conversion of an 
                        address unit, ensure that the primary 
                        mode of mail delivery for any new 
                        residents to the address unit is the 
                        converted primary mode of mail, 
                        regardless of the primary mode of mail 
                        delivery for the previous occupant.
  (f) Considerations.--In making a determination to convert the 
primary mode of mail delivery under this section, the Postal 
Service shall consider--
          (1) the impact of weather conditions, physical 
        barriers, or any other factor that may impact the 
        feasibility of providing a primary mode of mail 
        delivery other than door delivery (such as a factor 
        that may significantly reduce the potential cost 
        savings associated with providing centralized delivery 
        or curbside delivery);
          (2) whether the address is in a registered historic 
        district (as that term is defined in section 
        47(c)(3)(B) of the Internal Revenue Code of 1986), is 
        listed on the National Register of Historic Places, is 
        designated as a National Historic Landmark, or is of 
        historic value; and
          (3) population density and the concentration of 
        poverty.
  (g) Waiver for Physical Hardship.--
          (1) In general.--The Postal Service shall establish 
        and maintain a waiver program under which, upon 
        application, door delivery may be continued, or 
        provided, for a delivery point identified under 
        subsection (d)(1) or (e)(1) at no cost to the applicant 
        in any case in which--
                  (A) centralized delivery, curbside delivery, 
                or sidewalk delivery would, but for this 
                paragraph, otherwise be the primary mode of 
                mail delivery; and
                  (B) door delivery is necessary in order to 
                avoid causing significant physical hardship or 
                physical safety risks to a postal patron.
          (2) Treatment of waiver.--An address receiving door 
        delivery pursuant to a waiver under this subsection--
                  (A) shall be counted, for purposes of the 
                reporting requirement under subsection (j), as 
                an address that receives the primary mode of 
                mail delivery which the address would be 
                subject to if not for the waiver; and
                  (B) shall, not later than 60 days after 
                ceasing to meet the requirements of paragraph 
                (1), be converted to the primary mode of mail 
                delivery which is otherwise applicable.
  (h) Procedures.--In carrying out conversions under this 
section, the Postal Service shall establish procedures to--
          (1) solicit, consider, and respond to input from the 
        general public, postal patrons, State and local 
        governments, local associations, and property owners;
          (2) calculate and make publicly accessible the cost 
        or savings of the conversion to the Postal Service as 
        well as the average conversion cost or savings to each 
        postal patron and any cost or savings to the State and 
        local government; and
          (3) place centralized delivery points in locations 
        that maximize delivery efficiency, ease of use for 
        postal patrons, and respect for private property 
        rights.
  (i) Voucher Program.--The Postal Service shall provide for a 
voucher program under which, upon application, the Postal 
Service may defray all or any portion of the costs associated 
with conversion from door delivery under this section which 
would otherwise be borne by postal patrons.
  (j) Annual Report.--Not later than 60 days after the end of 
each of fiscal years 2017 through 2023, the Postal Service 
shall submit to Congress and the Inspector General a report on 
the implementation of this section during the most recently 
completed fiscal year. Each such report shall include--
          (1) the number of residential and business addresses 
        that--
                  (A) receive door delivery as of the end of 
                the fiscal year preceding the most recently 
                completed fiscal year;
                  (B) receive door delivery as of the end of 
                the most recently completed fiscal year; and
                  (C) during the most recently completed fiscal 
                year, were converted from door delivery to--
                          (i) centralized delivery;
                          (ii) curbside delivery; and
                          (iii) any other primary mode of mail 
                        delivery;
          (2) the estimated cost savings from the conversions 
        described in paragraph (1)(C);
          (3) a description of the progress made by the Postal 
        Service toward meeting the requirements of the phaseout 
        under subsection (c); and
          (4) any other information which the Postal Service 
        considers appropriate.
  (k) Inspector General Audit.--The Inspector General shall 
issue an annual audit report on the implementation of this 
section not later than 90 days after the date on which the 
Postal Service releases its annual report under subsection (j). 
Such report shall include--
          (1) an audit of the data contained in the Postal 
        Service's report under subsection (j); and
          (2) an evaluation of the Postal Service's 
        implementation of the voucher program under subsection 
        (i).
  (l) Review.--Subchapters IV and V shall not apply with 
respect to any action taken by the Postal Service under this 
section.

                     CHAPTER 37--NONPOSTAL SERVICES

Sec.
3701. Purpose.
3702. Definitions.
3703. Postal service program for State governments.
3704. Postal service program for other government agencies.
3705. Transparency and accountability for nonpostal services.

Sec. 3701. Purpose

  The purpose of this chapter is to enable the Postal Service 
to increase its net revenues through specific nonpostal 
products and services that are expressly authorized by this 
chapter. Postal Service revenues and expenses under this 
chapter shall be funded through the Postal Service Fund.

Sec. 3702. Definitions

  In this chapter--
          (1) the term ``nonpostal services'' is limited to 
        services offered by the Postal Service that are 
        expressly authorized by this chapter and are not postal 
        products or services;
          (2) the term ``attributable costs'' has the meaning 
        given such term in section 3631; and
          (3) the term ``year'' means a fiscal year.

Sec. 3703. Postal service program for State governments

  (a) In General.--Notwithstanding any other provision of this 
title, the Postal Service may establish a program to enter into 
agreements with an agency of any State government, local 
government, or tribal government to provide property and 
services on behalf of such agencies for non-commercial products 
and services at Postal Service facilities within the United 
States, but only if such property and services--
          (1) provide enhanced value to the public, such as by 
        lowering the cost or raising the quality of such 
        services or by making such services more accessible;
          (2) do not interfere with or detract from the value 
        of postal services, including--
                  (A) the cost and efficiency of postal 
                services; and
                  (B) unreasonably restricting access to postal 
                retail service, such as customer waiting time 
                and access to parking; and
          (3) provide a reasonable contribution to the 
        institutional costs of the Postal Service, defined as 
        reimbursement that covers at least 100 percent of 
        attributable costs of all property and services 
        provided under each relevant agreement in each year.
  (b) Public Notice.--At least 90 days before offering a 
service under the program, the Postal Service shall make 
available to the public on its Web site--
          (1) the agreement with the agency regarding such 
        service; and
          (2) a business plan that describes the specific 
        service to be provided, the enhanced value to the 
        public, terms of reimbursement, the estimated annual 
        reimbursement to the Postal Service, and the estimated 
        percentage of attributable Postal Service costs that 
        will be covered by reimbursement (with documentation to 
        support the estimates).
  (c) Public Comment.--Before offering a service under the 
program, the Postal Service shall provide for a public comment 
period of at least 30 days that allows the public to post 
comments relating to the provision of such services on the 
Postal Service Web site. The Postal Service shall make 
reasonable efforts to provide written responses to the comments 
on such Web site at least 30 days before offering such 
services.
  (d) Approval Required.--The Postal Service may not establish 
the program under subsection (a) unless the Governors of the 
Postal Service approve such program by a recorded vote that is 
publicly disclosed on the Postal Service Web site with a 
majority of the total Governors voting for approval.
  (e) Application of Reporting Requirements.--For purposes of 
the reporting requirements under section 3705, the Postal 
Service shall submit a separate report for each agreement with 
an agency entered into under subsection (a) analyzing the 
costs, revenues, rates, and quality of service for the 
provision of all services under such agreement, including 
information demonstrating that the agreement satisfies the 
requirements of paragraphs (1) through (3) of subsection (a).
  (f) Regulations Required.--The Postal Regulatory Commission 
shall issue such regulations as are necessary to carry out this 
section.
  (g) Definitions.--For the purpose of this section--
          (1) the term ``local government'' means a county, 
        municipality, city, town, township, local public 
        authority, school district, special district, 
        intrastate district, council of governments, or 
        regional or interstate government entity;
          (2) the term ``State government'' includes the 
        government of the District of Columbia, the 
        Commonwealth of Puerto Rico, the United States Virgin 
        Islands, Guam, American Samoa, the Commonwealth of the 
        Northern Mariana Islands, and any other territory or 
        possession of the United States;
          (3) the term ``tribal government'' means the 
        government of an Indian tribe, as that term is defined 
        in section 4(e) of the Indian Self-Determination Act 
        (25 U.S.C. 450b(e)); and
          (4) the term ``United States'', when used in a 
        geographical sense, means the States, the District of 
        Columbia, the Commonwealth of Puerto Rico, the United 
        States Virgin Islands, Guam, American Samoa, the 
        Commonwealth of the Northern Mariana Islands, and any 
        other territory or possession of the United States.

Sec. 3704. Postal service program for other government agencies

  (a) In General.--The Postal Service may establish a program 
to provide property and services to other Government agencies 
within the meaning of section 411, but only if such program 
provides a reasonable contribution to the institutional costs 
of the Postal Service, defined as reimbursement by each agency 
that covers at least 100 percent of the attributable costs of 
all property and service provided by the Postal Service in each 
year to such agency.
  (b) Application of Reporting Requirements.--For purposes of 
the reporting requirements under section 3705, the Postal 
Service shall submit a separate report for each agreement with 
an agency entered into under subsection (a) analyzing the 
costs, revenues, rates, and quality of service for the 
provision of all services under such agreement, including 
information demonstrating that the agreement satisfies the 
requirements of subsection (a).

Sec. 3705. Transparency and accountability for nonpostal services

  (a) Annual Report to the Commission.--
          (1) In general.--Not later than 90 days after the 
        last day of each year, the Postal Service shall submit 
        to the Postal Regulatory Commission a report that 
        analyzes costs, revenues, rates, and quality of service 
        for each agreement for the provision of property and 
        services under this chapter, using such methodologies 
        as the Commission may prescribe, and in sufficient 
        detail to demonstrate compliance with the requirements 
        of this chapter.
          (2) Supporting matter.--A report submitted under 
        paragraph (1) shall include any nonpublic annex, the 
        working papers, and any other supporting matter of the 
        Postal Service and the Inspector General related to the 
        information submitted in such report.
  (b) Content and Form of Report.--
          (1) In general.--The Postal Regulatory Commission 
        shall, by regulation, prescribe the content and form of 
        the report required under subsection (a). In 
        prescribing such regulations, the Commission shall give 
        due consideration to--
                  (A) providing the public with timely, 
                adequate information to assess compliance;
                  (B) avoiding unnecessary or unwarranted 
                administrative effort and expense on the part 
                of the Postal Service; and
                  (C) protecting the confidentiality of 
                information that is commercially sensitive or 
                is exempt from public disclosure under section 
                552(b) of title 5.
          (2) Revised requirements.--The Commission may, on its 
        own motion or on request of any interested party, 
        initiate proceedings to improve the quality, accuracy, 
        or completeness of Postal Service data required by the 
        Commission if--
                  (A) the attribution of costs or revenues to 
                property or services under this chapter has 
                become significantly inaccurate or can be 
                significantly improved;
                  (B) the quality of service data provided to 
                the Commission for a report under this chapter 
                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.
  (c) Audits.--The Inspector General shall regularly audit the 
data collection systems and procedures used in collecting 
information and preparing the report required under subsection 
(a). The results of any such audit shall be submitted to the 
Postal Service and the Postal Regulatory Commission.
  (d) 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 
        contains information described in section 410(c), 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).
  (e) Annual Compliance Determination.--
          (1) Opportunity for public comment.--Upon receiving a 
        report required under subsection (a), the Postal 
        Regulatory Commission shall promptly--
                  (A) provide an opportunity for comment on 
                such report by any interested party; and
                  (B) appoint an officer of the Commission to 
                represent the interests of the general public.
          (2) Determination of compliance or noncompliance.--
        Not later than 90 days after receiving a report 
        required under subsection (a), the Postal Regulatory 
        Commission shall make a written determination as to 
        whether the nonpostal activities carried out during the 
        applicable year were or were not in compliance with the 
        provisions of this chapter. For purposes of this 
        paragraph, any case in which the requirements for 
        coverage of attributable costs have not been met shall 
        be considered to be a case of noncompliance. If, with 
        respect to a year, no instance of noncompliance is 
        found to have occurred, the determination shall be to 
        that effect. Such determination of noncompliance shall 
        be included with the annual compliance determination 
        required under section 3653.
          (3) Noncompliance.--If a timely written determination 
        of noncompliance is made under paragraph (2), the 
        Postal Regulatory Commission shall take the following 
        appropriate action. If the requirements for coverage of 
        attributable costs specified by this chapter are not 
        met, the Commission shall, within 60 days after the 
        determination, prescribe remedial action to restore 
        compliance as soon as practicable, including the full 
        restoration of revenue shortfalls during the following 
        year. The Commission may order the Postal Service to 
        discontinue a nonpostal service under section 3703 that 
        persistently fails to meet cost coverage requirements.
          (4) Deliberate noncompliance.--In the case of 
        deliberate noncompliance by the Postal Service with the 
        requirements of this chapter, 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 such 
        noncompliance. All receipts from fines imposed under 
        this subsection shall be deposited in the general fund 
        of the Treasury.
  (f) Regulations Required.--The Postal Regulatory Commission 
shall issue such regulations as are necessary to carry out this 
section.

           *       *       *       *       *       *       *


PART V--TRANSPORTATION OF MAIL

           *       *       *       *       *       *       *


               CHAPTER 54--TRANSPORTATION OF MAIL BY AIR

Sec.
5401. Authorization.
     * * * * * * *
5404. Aviation security for parcels.

Sec. 5401. Authorization

  (a) The Postal Service is authorized to provide for the safe 
and expeditious transportation of mail by aircraft.
  (b) Except as otherwise provided in section 5402 or 5404 of 
this title, the Postal Service may make such rules, 
regulations, and orders consistent with part A of subtitle VII 
of title 49, or any order, rule, or regulation made by the 
Secretary of Transportation thereunder, as may be necessary for 
such transportation.

           *       *       *       *       *       *       *


Sec. 5404. Aviation security for parcels

  A parcel carried by an air carrier or foreign air carrier (as 
those terms are defined in section 40102(a) of title 49) 
shall--
          (1) use postage that has been generated by a postage 
        evidencing system that has been validated under level 4 
        of the 140 series of the Federal Information Processing 
        Standards; or
          (2) be entered with in person sender verification.

           *       *       *       *       *       *       *

                              ----------                              


SECTION 633 OF THE TREASURY AND GENERAL GOVERNMENT APPROPRIATIONS ACT, 
                                  1999

  Sec. 633. (a) International Postal Arrangements.--[Omitted--
amends other Act]
  (b) Sense of Congress.--I t is the sense of Congress that any 
treaty, convention or amendment entered into under the 
authority of section 407 of title 39 of the United States Code, 
as amended by this section, should not grant any undue or 
unreasonable preference to the Postal Service, a private 
provider of postal services, or any other person.
  (c) Trade-In-Service Programs.--[Omitted--amends other Act]
  [(d) Transfer of Funds.--In fiscal year 1999 and each fiscal 
year hereafter, the Postal Service shall allocate to the 
Department of State from any funds available to the Postal 
Service such sums as may be reasonable, documented and 
auditable for the Department of State to carry out the 
activities of Section 407 of title 39 of the United States 
Code.]
                              ----------                              


INSPECTOR GENERAL ACT OF 1978

           *       *       *       *       *       *       *


   requirements for federal entities and designated federal entities

  Sec. 8G. (a) Notwithstanding section 12 of this Act, as used 
in this section--
          (1) the term ``Federal entity'' means any Government 
        corporation (within the meaning of section 103(1) of 
        title 5, United States Code), any Government controlled 
        corporation (within the meaning of section 103(2) of 
        such title), or any other entity in the Executive 
        branch of the Government, or any independent regulatory 
        agency, but does not include--
                  (A) an establishment (as defined under 
                section 12(2) of this Act) or part of an 
                establishment;
                  (B) a designated Federal entity (as defined 
                under paragraph (2) of this subsection) or part 
                of a designated Federal entity;
                  (C) the Executive Office of the President;
                  (D) the Central Intelligence Agency;
                  (E) the General Accounting Office; or
                  (F) any entity in the judicial or legislative 
                branches of the Government, including the 
                Administrative Office of the United States 
                Courts and the Architect of the Capitol and any 
                activities under the direction of the Architect 
                of the Capitol;
          (2) the term ``designated Federal entity'' means 
        Amtrak, the Appalachian Regional Commission, the Board 
        of Governors of the Federal Reserve System and the 
        Bureau of Consumer Financial Protection, the Board for 
        International Broadcasting, the Committee for Purchase 
        From People Who Are Blind or Severely Disabled, the 
        Commodity Futures Trading Commission, the Consumer 
        Product Safety Commission, the Corporation for Public 
        Broadcasting, the Defense Intelligence Agency, the 
        Equal Employment Opportunity Commission, the Farm 
        Credit Administration, the Federal Communications 
        Commission, the Federal Deposit Insurance Corporation, 
        the Federal Election Commission, the Election 
        Assistance Commission, the Federal Housing Finance 
        Board, the Federal Labor Relations Authority, the 
        Federal Maritime Commission, the Federal Trade 
        Commission, the Legal Services Corporation, the 
        National Archives and Records Administration, the 
        National Credit Union Administration, the National 
        Endowment for the Arts, the National Endowment for the 
        Humanities, the National Geospatial-Intelligence 
        Agency, the National Labor Relations Board, the 
        National Science Foundation, the Panama Canal 
        Commission, the Peace Corps, the Pension Benefit 
        Guaranty Corporation, the Securities and Exchange 
        Commission, the Smithsonian Institution, [the United 
        States International Trade Commission, the Postal 
        Regulatory Commission, and the United States Postal 
        Service] and the United States International Trade 
        Commission;
          (3) the term ``head of the Federal entity'' means any 
        person or persons designated by statute as the head of 
        a Federal entity, and if no such designation exists, 
        the chief policymaking officer or board of a Federal 
        entity as identified in the list published pursuant to 
        [subsection (h)(1)] subsection (g)(1) of this section;
          (4) the term ``head of the designated Federal 
        entity'' means the board or commission of the 
        designated Federal entity, or in the event the 
        designated Federal entity does not have a board or 
        commission, any person or persons designated by statute 
        as the head of a designated Federal entity and if no 
        such designation exists, the chief policymaking officer 
        or board of a designated Federal entity as identified 
        in the list published pursuant to [subsection (h)(1)] 
        subsection (g)(1) of this section, except that--
                  (A) with respect to the National Science 
                Foundation, such term means the National 
                Science Board;
                  [(B) with respect to the United States Postal 
                Service, such term means the Governors (within 
                the meaning of section 102(3) of title 39, 
                United States Code);]
                  [(C)] (B) with respect to the Federal Labor 
                Relations Authority, such term means the 
                members of the Authority (described under 
                section 7104 of title 5, United States Code);
                  [(D)] (C) with respect to the Committee for 
                Purchase From People Who Are Blind or Severely 
                Disabled, such term means the Chairman of the 
                Committee for Purchase From People Who Are 
                Blind or Severely Disabled;
                  [(E)] (D) with respect to the National 
                Archives and Records Administration, such term 
                means the Archivist of the United States;
                  [(F)] (E) with respect to the National Credit 
                Union Administration, such term means the 
                National Credit Union Administration Board 
                (described under section 102 of the Federal 
                Credit Union Act (12 U.S.C. 1752a);
                  [(G)] (F) with respect to the National 
                Endowment of the Arts, such term means the 
                National Council on the Arts;
                  [(H)] (G) with respect to the National 
                Endowment for the Humanities, such term means 
                the National Council on the Humanities; and
                  [(I)] (H) with respect to the Peace Corps, 
                such term means the Director of the Peace 
                Corps;
          (5) the term ``Office of Inspector General'' means an 
        Office of Inspector General of a designated Federal 
        entity; and
          (6) the term ``Inspector General'' means an Inspector 
        General of a designated Federal entity.
  (b) No later than 180 days after the date of the enactment of 
this section, there shall be established and maintained in each 
designated Federal entity an Office of Inspector General. The 
head of the designated Federal entity shall transfer to such 
office the offices, units, or other components, and the 
functions, powers, or duties thereof, that such head determines 
are properly related to the functions of the Office of 
Inspector General and would, if so transferred, further the 
purposes of this section. There shall not be transferred to 
such office any program operating responsibilities.
  (c) [Except as provided under subsection (f) of this section, 
the] The Inspector General shall be appointed by the head of 
the designated Federal entity in accordance with the applicable 
laws and regulations governing appointments within the 
designated Federal entity. Each Inspector General shall be 
appointed without regard to political affiliation and solely on 
the basis of integrity and demonstrated ability in accounting, 
auditing, financial analysis, law, management analysis, public 
administration, or investigations. For purposes of implementing 
this section, the Chairman of the Board of Governors of the 
Federal Reserve System shall appoint the Inspector General of 
the Board of Governors of the Federal Reserve System and the 
Bureau of Consumer Financial Protection. The Inspector General 
of the Board of Governors of the Federal Reserve System and the 
Bureau of Consumer Financial Protection shall have all of the 
authorities and responsibilities provided by this Act with 
respect to the Bureau of Consumer Financial Protection, as if 
the Bureau were part of the Board of Governors of the Federal 
Reserve System.
  (d)(1) Each Inspector General shall report to and be under 
the general supervision of the head of the designated Federal 
entity, but shall not report to, or be subject to supervision 
by, any other officer or employee of such designated Federal 
entity. Except as provided in paragraph (2), the head of the 
designated Federal entity shall not prevent or prohibit the 
Inspector General from initiating, carrying out, or completing 
any audit or investigation, or from issuing any subpena during 
the course of any audit or investigation.
  (2)(A) The Secretary of Defense, in consultation with the 
Director of National Intelligence, may prohibit the inspector 
general of an element of the intelligence community specified 
in subparagraph (D) from initiating, carrying out, or 
completing any audit or investigation if the Secretary 
determines that the prohibition is necessary to protect vital 
national security interests of the United States.
  (B) If the Secretary exercises the authority under 
subparagraph (A), the Secretary shall submit to the committees 
of Congress specified in subparagraph (E) an appropriately 
classified statement of the reasons for the exercise of such 
authority not later than 7 days after the exercise of such 
authority.
  (C) At the same time the Secretary submits under subparagraph 
(B) a statement on the exercise of the authority in 
subparagraph (A) to the committees of Congress specified in 
subparagraph (E), the Secretary shall notify the inspector 
general of such element of the submittal of such statement and, 
to the extent consistent with the protection of intelligence 
sources and methods, provide such inspector general with a copy 
of such statement. Such inspector general may submit to such 
committees of Congress any comments on a notice or statement 
received by the inspector general under this subparagraph that 
the inspector general considers appropriate.
  (D) The elements of the intelligence community specified in 
this subparagraph are as follows:
          (i) The Defense Intelligence Agency.
          (ii) The National Geospatial-Intelligence Agency.
          (iii) The National Reconnaissance Office.
          (iv) The National Security Agency.
  (E) The committees of Congress specified in this subparagraph 
are--
          (i) the Committee on Armed Services and the Select 
        Committee on Intelligence of the Senate; and
          (ii) the Committee on Armed Services and the 
        Permanent Select Committee on Intelligence of the House 
        of Representatives.
  (e)(1) In the case of a designated Federal entity for which a 
board, chairman of a committee, or commission is the head of 
the designated Federal entity, a removal under this subsection 
may only be made upon the written concurrence of a \2/3\ 
majority of the board, committee, or commission.''.
  (2) If an Inspector General is removed from office or is 
transferred to another position or location within a designated 
Federal entity, the head of the designated Federal entity shall 
communicate in writing the reasons for any such removal or 
transfer to both Houses of Congress, not later than 30 days 
before the removal or transfer. Nothing in this subsection 
shall prohibit a personnel action otherwise authorized by law, 
other than transfer or removal.
  [(f)(1) For purposes of carrying out subsection (c) with 
respect to the United States Postal Service, the appointment 
provisions of section 202(e) of title 39, United States Code, 
shall be applied.
  [(2) In carrying out the duties and responsibilities 
specified in this Act, the Inspector General of the United 
States Postal Service (hereinafter in this subsection referred 
to as the ``Inspector General'') shall have oversight 
responsibility for all activities of the Postal Inspection 
Service, including any internal investigation performed by the 
Postal Inspection Service. The Chief Postal Inspector shall 
promptly report the significant activities being carried out by 
the Postal Inspection Service to such Inspector General.
  [(3)(A)(i) Notwithstanding subsection (d), the Inspector 
General shall be under the authority, direction, and control of 
the Governors with respect to audits or investigations, or the 
issuance of subpoenas, which require access to sensitive 
information concerning--
          [(I) ongoing civil or criminal investigations or 
        proceedings;
          [(II) undercover operations;
          [(III) the identity of confidential sources, 
        including protected witnesses;
          [(IV) intelligence or counterintelligence matters; or
          [(V) other matters the disclosure of which would 
        constitute a serious threat to national security.
  [(ii) With respect to the information described under clause 
(i), the Governors may prohibit the Inspector General from 
carrying out or completing any audit or investigation, or from 
issuing any subpoena, after such Inspector General has decided 
to initiate, carry out, or complete such audit or investigation 
or to issue such subpoena, if the Governors determine that such 
prohibition is necessary to prevent the disclosure of any 
information described under clause (i) or to prevent the 
significant impairment to the national interests of the United 
States.
  [(iii) If the Governors exercise any power under clause (i) 
or (ii), the Governors shall notify the Inspector General in 
writing stating the reasons for such exercise. Within 30 days 
after receipt of any such notice, the Inspector General shall 
transmit a copy of such notice to the Committee on Governmental 
Affairs of the Senate and the Committee on Government Reform 
and Oversight of the House of Representatives, and to other 
appropriate committees or subcommittees of the Congress.
  [(B) In carrying out the duties and responsibilities 
specified in this Act, the Inspector General--
          [(i) may initiate, conduct and supervise such audits 
        and investigations in the United States Postal Service 
        as the Inspector General considers appropriate; and
          [(ii) shall give particular regard to the activities 
        of the Postal Inspection Service with a view toward 
        avoiding duplication and insuring effective 
        coordination and cooperation.
  [(C) Any report required to be transmitted by the Governors 
to the appropriate committees or subcommittees of the Congress 
under section 5(d) shall also be transmitted, within the seven-
day period specified under such section, to the Committee on 
Governmental Affairs of the Senate and the Committee on 
Government Reform and Oversight of the House of 
Representatives.
  [(4) Nothing in this Act shall restrict, eliminate, or 
otherwise adversely affect any of the rights, privileges, or 
benefits of either employees of the United States Postal 
Service, 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 with the 
United States Postal Service, or any collective bargaining 
agreement.
  [(5) As used in this subsection, the term ``Governors'' has 
the meaning given such term by section 102(3) of title 39, 
United States Code.
          [(6) There are authorized to be appropriated, out of 
        the Postal Service Fund, such sums as may be necessary 
        for the Office of Inspector General of the United 
        States Postal Service.]
  [(g)] (f)(1) Sections 4, 5, 6 (other than subsections (a)(7) 
and (a)(8) thereof), and 7 of this Act shall apply to each 
Inspector General and Office of Inspector General of a 
designated Federal entity and such sections shall be applied to 
each designated Federal entity and head of the designated 
Federal entity (as defined under subsection (a)) by 
substituting--
          (A) ``designated Federal entity'' for 
        ``establishment''; and
          (B) ``head of the designated Federal entity'' for 
        ``head of the establishment''.
  (2) In addition to the other authorities specified in this 
Act, an Inspector General is authorized to select, appoint, and 
employ such officers and employees as may be necessary for 
carrying out the functions, powers, and duties of the Office of 
Inspector General and to obtain the temporary or intermittent 
services of experts or consultants or an organization thereof, 
subject to the applicable laws and regulations that govern such 
selections, appointments, and employment, and the obtaining of 
such services, within the designated Federal entity.
  (3) Notwithstanding the last sentence of subsection (d) of 
this section, the provisions of subsection (a) of section 8C 
(other than the provisions of subparagraphs (A), (B), (C), and 
(E) of subsection (a)(1)) shall apply to the Inspector General 
of the Board of Governors of the Federal Reserve System and the 
Bureau of Consumer Financial Protection and the Chairman of the 
Board of Governors of the Federal Reserve System in the same 
manner as such provisions apply to the Inspector General of the 
Department of the Treasury and the Secretary of the Treasury, 
respectively.
  (4) Each Inspector General shall--
          (A) in accordance with applicable laws and 
        regulations governing appointments within the 
        designated Federal entity, appoint a Counsel to the 
        Inspector General who shall report to the Inspector 
        General;
          (B) obtain the services of a counsel appointed by and 
        directly reporting to another Inspector General on a 
        reimbursable basis; or
          (C) obtain the services of appropriate staff of the 
        Council of the Inspectors General on Integrity and 
        Efficiency on a reimbursable basis.
  [(h)] (g)(1) No later than April 30, 1989, and annually 
thereafter, the Director of the Office of Management and 
Budget, after consultation with the Comptroller General of the 
United States, shall publish in the Federal Register a list of 
the Federal entities and designated Federal entities and if the 
designated Federal entity is not a board or commission, include 
the head of each such entity (as defined under subsection (a) 
of this section).
  (2) Beginning on October 31, 1989, and on October 31 of each 
succeeding calendar year, the head of each Federal entity (as 
defined under subsection (a) of this section) shall prepare and 
transmit to the Director of the Office of Management and Budget 
and to each House of the Congress a report which--
          (A) states whether there has been established in the 
        Federal entity an office that meets the requirements of 
        this section;
          (B) specifies the actions taken by the Federal entity 
        otherwise to ensure that audits are conducted of its 
        programs and operations in accordance with the 
        standards for audit of governmental organizations, 
        programs, activities, and functions issued by the 
        Comptroller General of the United States, and includes 
        a list of each audit report completed by a Federal or 
        non-Federal auditor during the reporting period and a 
        summary of any particularly significant findings; and
          (C) summarizes any matters relating to the personnel, 
        programs, and operations of the Federal entity referred 
        to prosecutive authorities, including a summary 
        description of any preliminary investigation conducted 
        by or at the request of the Federal entity concerning 
        these matters, and the prosecutions and convictions 
        which have resulted.

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               rule of construction of special provisions

  Sec. 8J. [The special provisions under section 8, 8A, 8B, 8C, 
8D, 8E or 8F of this Act] The special provisions under section 
8, 8A, 8B, 8C, 8D, 8E, 8F, 8H, 8I, or 8M of this Act relate 
only to the establishment named in such section and no 
inference shall be drawn from the presence or absence of a 
provision in any such section with respect to an establishment 
not named in such section or with respect to a designated 
Federal entity as defined under section 8G(a).

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SEC. 8M. SPECIAL PROVISIONS CONCERNING THE UNITED STATES POSTAL SERVICE 
                    AND POSTAL REGULATORY COMMISSION.

  (a) Office of Inspector General of the Postal Community.--The 
Inspector General for the United States Postal Service and the 
Postal Regulatory Commission shall be referred to as the 
``Inspector General of the Postal Community''.
  (b) Responsibilities.--In carrying out the duties and 
responsibilities specified in this Act, the Inspector General 
of the Postal Community shall have equal responsibility over 
the United States Postal Service and the Postal Regulatory 
Commission.
  (c) Applicable Head of the Establishment.--For purposes of 
the applicability of this Act to the Inspector General of the 
Postal Community--
          (1) the ``head of the establishment'' shall mean the 
        Postmaster General of the United States for activities 
        by the Office related to the United States Postal 
        Service; and
          (2) the ``head of the establishment'' shall mean the 
        Chairman of the Postal Regulatory Commission for 
        activities by the Office related to the Postal 
        Regulatory Commission.
  (d) Applicability of Establishment for Reports.--In carrying 
out the duties and responsibilities under section 5--
          (1) the term ``establishment'' shall include as 
        separate establishments--
                  (A) the United States Postal Service; and
                  (B) the Postal Regulatory Commission; and
          (2) the Inspector General of the Postal Community 
        shall prepare separate semiannual reports for the 
        United States Postal Service and the Postal Regulatory 
        Commission.
  (e) Office Space.--In carrying out the duties and 
responsibilities under section 6(c), the heads of the 
establishments for the United States Postal Service and the 
Postal Regulatory Commission shall work jointly with one 
another and in consultation with the Inspector General of the 
Postal Community to ensure adequate and appropriate provision 
to the Office of the Inspector General of the Postal Community 
under section 6(c).
  (f) Budget.--In carrying out the duties and responsibilities 
under section 6(f)--
          (1) the ``head of the establishment'' shall mean the 
        Postmaster General of the United States; and
          (2) designation of the Postmaster General of the 
        United States as ``head of the establishment'' under 
        this subsection shall not be construed as granting any 
        authorities to the Postmaster General of the United 
        States with regard to the Postal Regulatory Commission.
  (g) General Duties and Responsibilities.--In carrying out the 
duties and responsibilities specified in this Act--
          (1) the Inspector General of the Postal Community 
        shall have oversight responsibility for all activities 
        of the Postal Inspection Service, including any 
        internal investigation performed by the Postal 
        Inspection Service;
          (2) the Inspector General of the Postal Community 
        shall give particular regard to the activities of the 
        Postal Inspection Service with a view toward avoiding 
        duplication and insuring effective coordination and 
        cooperation; and
          (3) the Chief Postal Inspector shall promptly report 
        the significant activities being carried out by the 
        Postal Inspection Service to the Inspector General of 
        the Postal Community.
  (h) Authorization of Appropriations.--There are authorized to 
be appropriated, out of the Postal Service Fund, such sums as 
may be necessary for the Office of Inspector General of the 
Postal Community.

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                              definitions

  Sec. 12. As used in this Act--
          (1) the term ``head of the establishment'' means the 
        Secretary of Agriculture, Commerce, Defense, Education, 
        Energy, Health and Human Services, Housing and Urban 
        Development, the Interior, Labor, State, 
        Transportation, Homeland Security, or the Treasury; the 
        Attorney General; the Administrator of the Agency for 
        International Development, Environmental Protection, 
        General Services, National Aeronautics and Space, or 
        Small Business, or Veterans' Affairs; the Director of 
        the Federal Emergency Management Agency, or the Office 
        of Personnel Management; the Chairman of the Nuclear 
        Regulatory Commission or the Railroad Retirement Board; 
        the Chairperson of the Thrift Depositor Protection 
        Oversight Board; the Chief Executive Officer of the 
        Corporation for National and Community Service; the 
        Administrator of the Community Development Financial 
        Institutions Fund; the chief executive officer of the 
        Resolution Trust Corporation; the Chairperson of the 
        Federal Deposit Insurance Corporation; the Commissioner 
        of Social Security, Social Security Administration; the 
        Director of the Federal Housing Finance Agency; the 
        Board of Directors of the Tennessee Valley Authority; 
        the President of the Export-Import Bank; the Postmaster 
        General of the United States; the Chairman of the 
        Postal Regulatory Commission; the Federal 
        Cochairpersons of the Commissions established under 
        section 15301 of title 40, United States Code; the 
        Director of the National Security Agency;or the 
        Director of the National Reconnaissance Office; as the 
        case may be;
          (2) the term ``establishment'' means the Department 
        of Agriculture, Commerce, Defense, Education, Energy, 
        Health and Human Services, Housing and Urban 
        Development, the Interior, Justice, Labor, State, 
        Transportation, Homeland Security, or the Treasury; the 
        Agency for International Development, the Community 
        Development Financial Institutions Fund, the 
        Environmental Protection Agency, the Federal Emergency 
        Management Agency, the General Services Administration, 
        the National Aeronautics and Space Administration, the 
        Nuclear Regulatory Commission, the Office of Personnel 
        Management, the Railroad Retirement Board, the 
        Resolution Trust Corporation, the Federal Deposit 
        Insurance Corporation, the Small Business 
        Administration, the Corporation for National and 
        Community Service, or the Veterans' Administration, the 
        Social Security Administration, the Federal Housing 
        Finance Agency, the Tennessee Valley Authority, the 
        Export-Import Bank, the United States Postal Service, 
        the Postal Regulatory Commission, the Commissions 
        established under section 15301 of title 40, United 
        States Code, the National Security Agency,or the 
        National Reconnaissance Office, as the case may be;
          (3) the term ``Inspector General'' means the 
        Inspector General of an establishment;
          (4) the term ``Office'' means the Office of Inspector 
        General of an establishment; and
          (5) the term ``Federal agency'' means an agency as 
        defined in section 552(f) of title 5 (including an 
        establishment as defined in paragraph (2)), United 
        States Code, but shall not be construed to include the 
        General Accounting Office.

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                              ----------                              


TITLE 41, UNITED STATES CODE

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SUBTITLE III--CONTRACT DISPUTES

           *       *       *       *       *       *       *


                     CHAPTER 71--CONTRACT DISPUTES

Sec. 7101. Definitions

   In this chapter:
          (1) Administrator.--The term ``Administrator'' means 
        the Administrator for Federal Procurement Policy 
        appointed pursuant to section 1102 of this title.
          (2) Agency board or agency board of contract 
        appeals.--The term ``agency board'' or ``agency board 
        of contract appeals'' means--
                  (A) the Armed Services Board;
                  (B) the Civilian Board;
                  (C) the board of contract appeals of the 
                Tennessee Valley Authority; or
                  (D) the Postal Service Board established 
                under section 7105(d)(1) of this title.
          (3) Agency head.--The term ``agency head'' means the 
        head and any assistant head of an executive agency. The 
        term may include the chief official of a principal 
        division of an executive agency if the head of the 
        executive agency so designates that chief official.
          (4) Armed Services Board.--The term ``Armed Services 
        Board'' means the Armed Services Board of Contract 
        Appeals established under section 7105(a)(1) of this 
        title.
          (5) Civilian Board.--The term ``Civilian Board'' 
        means the Civilian Board of Contract Appeals 
        established under section 7105(b)(1) of this title.
          (6) Contracting officer.--The term ``contracting 
        officer''--
                  (A) means an individual who, by appointment 
                in accordance with applicable regulations, has 
                the authority to make and administer contracts 
                and to make determinations and findings with 
                respect to contracts; and
                  (B) includes an authorized representative of 
                the contracting officer, acting within the 
                limits of the representative's authority.
          (7) Contractor.--The term ``contractor'' means a 
        party to a Federal Government contract other than the 
        Federal Government.
          (8) Executive agency.--The term ``executive agency'' 
        means--
                  (A) an executive department as defined in 
                section 101 of title 5;
                  (B) a military department as defined in 
                section 102 of title 5;
                  (C) an independent establishment as defined 
                in section 104 of title 5, except that the term 
                does not include the Government Accountability 
                Office; [and]
                  (D) a wholly owned Government corporation as 
                defined in section 9101(3) of title 31[.]; and
                  (E) the United States Postal Service and the 
                Postal Regulatory Commission.
          (9) Misrepresentation of fact.--The term 
        ``misrepresentation of fact'' means a false statement 
        of substantive fact, or conduct that leads to a belief 
        of a substantive fact material to proper understanding 
        of the matter in hand, made with intent to deceive or 
        mislead.

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