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[109th Congress Public Law 435]
[From the U.S. Government Printing Office]

[DOCID: f:publ435.109]

[[Page 3197]]

                POSTAL ACCOUNTABILITY AND ENHANCEMENT ACT

[[Page 120 STAT. 3198]]

Public Law 109-435
109th Congress

                                 An Act

 
    To reform the postal laws of the United States. <<NOTE: Dec. 20, 
                         2006 -  [H.R. 6407]>> 

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled, <<NOTE: Postal Account-
ability and Enhancement Act.>> 

SECTION 1. SHORT TITLE; TABLE OF CONTENTS.

    (a) Short Title.--This <<NOTE: 39 USC 101 note.>> Act may be cited 
as the ``Postal Accountability and Enhancement Act''.

    (b) Table of Contents.--The table of contents for this Act is as 
follows:

Sec. 1. Short title; table of contents.

                  TITLE I--DEFINITIONS; POSTAL SERVICES

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

                    TITLE II--MODERN RATE REGULATION

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

                   TITLE III--MODERN SERVICE STANDARDS

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

            TITLE IV--PROVISIONS RELATING TO FAIR COMPETITION

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

                       TITLE V--GENERAL PROVISIONS

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

                TITLE VI--ENHANCED REGULATORY COMMISSION

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

                         TITLE VII--EVALUATIONS

Sec. 701. Assessments of ratemaking, classification, and other 
           provisions.

[[Page 120 STAT. 3199]]

Sec. 702. Report on universal postal service and the postal monopoly.
Sec. 703. Study on equal application of laws to competitive products.
Sec. 704. Report on postal workplace safety and workplace-related 
           injuries.
Sec. 705. Study on recycled paper.
Sec. 706. Greater diversity in Postal Service executive and 
           administrative schedule management positions.
Sec. 707. Contracts with women, minorities, and small businesses.
Sec. 708. Rates for periodicals.
Sec. 709. Assessment of certain rate deficiencies.
Sec. 710. Assessment of future business model of the Postal Service.
Sec. 711. Provisions relating to cooperative mailings.
Sec. 712. Definition.

    TITLE VIII--POSTAL SERVICE RETIREMENT AND HEALTH BENEFITS FUNDING

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

                TITLE IX--COMPENSATION FOR WORK INJURIES

Sec. 901. Temporary disability; continuation of pay.

                         TITLE X--MISCELLANEOUS

Sec. 1001. Employment of postal police officers.
Sec. 1002. Obsolete provisions.
Sec. 1003. Reduced rates.
Sec. 1004. Sense of Congress regarding Postal Service purchasing reform.
Sec. 1005. Contracts for transportation of mail by air.
Sec. 1006. Date of postmark to be treated as date of appeal in 
           connection with the closing or consolidation of post offices.
Sec. 1007. Provisions relating to benefits under chapter 81 of title 5, 
           United States Code, for officers and employees of the former 
           Post Office Department.
Sec. 1008. Hazardous matter.
Sec. 1009. ZIP codes and retail hours.
Sec. 1010. Technical and conforming amendments.

                  TITLE I--DEFINITIONS; POSTAL SERVICES

SEC. 101. DEFINITIONS.

    Section 102 of title 39, United States Code, is amended by striking 
``and'' at the end of paragraph (3), by striking the period at the end 
of paragraph (4) and inserting a semicolon, and by adding at the end the 
following:
            ``(5) `postal service' refers to the 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.''.

[[Page 120 STAT. 3200]]

SEC. 102. POSTAL SERVICES.

    (a) In General.--Section 404 of title 39, United States Code, is 
amended--
            (1) in subsection (a), by striking paragraph (6) and by 
        redesignating paragraphs (7) through (9) as paragraphs (6) 
        through (8), respectively; and
            (2) by adding at the end the following:

    ``(c)(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.
    ``(3) <<NOTE: Deadline.>> 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.''.
    (b) Conforming Amendments.--Section 1402(b)(1)(B)(ii) of the Victims 
of Crime Act of 1984 (98 Stat. 2170; 42 U.S.C. 10601(b)(1)(B)(ii)) is 
amended by striking ``404(a)(8)'' and inserting ``404(a)(7)''.

                    TITLE II--MODERN RATE REGULATION

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

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

``Sec. 3621. Applicability; definitions

    ``(a) Applicability.--This subchapter shall apply with respect to--
            ``(1) first-class mail letters and sealed parcels;
            ``(2) first-class mail cards;
            ``(3) periodicals;
            ``(4) standard mail;
            ``(5) single-piece parcel post;
            ``(6) media mail;
            ``(7) bound printed matter;
            ``(8) library mail;
            ``(9) special services; and
            ``(10) single-piece international mail,

[[Page 120 STAT. 3201]]

subject to any changes the Postal Regulatory Commission may make under 
section 3642.
    ``(b) Rule of Construction.--Mail matter referred to in subsection 
(a) shall, for purposes of this subchapter, be considered to have the 
meaning given to such mail matter under the mail classification 
schedule.

``Sec. 3622. Modern rate regulation

    ``(a) Authority Generally.-- <<NOTE: Deadline.>> 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 predictability and stability in rates.
            ``(3) To maintain high quality service standards established 
        under section 3691.
            ``(4) To allow the Postal Service pricing flexibility.
            ``(5) To assure adequate revenues, including retained 
        earnings, to maintain financial stability.
            ``(6) To reduce the administrative burden and increase the 
        transparency of the ratemaking process.
            ``(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.

    ``(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;

[[Page 120 STAT. 3202]]

            ``(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.

    ``(d) Requirements.--
            ``(1) In general.--The system for regulating rates and 
        classes for market-dominant products shall--
                    ``(A) include an annual limitation on the percentage 
                changes in rates to be set by the Postal Regulatory 
                Commission that will be equal to the change in the 
                Consumer Price Index for All Urban Consumers unadjusted 
                for seasonal variation over the most recent available 
                12-month period preceding the date the Postal Service 
                files notice of its intention to increase rates;
                    ``(B) establish a schedule whereby rates, when 
                necessary and appropriate, would change at regular 
                intervals by predictable amounts;
                    ``(C) <<NOTE: Deadline.>> not later than 45 days 
                before the implementation of any adjustment in rates 
                under this section, including adjustments made under 
                subsection (c)(10)--
                          ``(i) require the Postal Service to provide 
                      public notice of the adjustment;
                          ``(ii) provide an opportunity for review by 
                      the Postal Regulatory Commission;

[[Page 120 STAT. 3203]]

                          ``(iii) <<NOTE: Notification.>> 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) <<NOTE: Procedures.>> establish procedures 
                whereby the Postal Service may adjust rates not in 
                excess of the annual limitations under subparagraph (A); 
                and
                    ``(E) <<NOTE: Deadline.>> notwithstanding any 
                limitation set under subparagraphs (A) and (C), 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;

[[Page 120 STAT. 3204]]

                                    ``(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) <<NOTE: Deadline.>> 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). <<NOTE: Public 
        comment.>> 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

[[Page 120 STAT. 3205]]

                    ``(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) <<NOTE: Certification.>> certifies that 
                      the discount will not adversely affect rates or 
                      services provided to users of postal services who 
                      do not take advantage of the discount rate.

    ``(f) Transition Rule.--For the 1-year period beginning on the date 
of enactment of this section, rates and classes for market-dominant 
products shall remain subject to modification in accordance with the 
provisions of this chapter and section 407, as such provisions were last 
in effect before the date of enactment of this section. Proceedings 
initiated to consider a request for a recommended decision filed by the 
Postal Service during that 1-year period shall be completed in 
accordance with subchapter II of chapter 36 of this title and 
implementing regulations, as in effect before the date of enactment of 
this section.''.
    (b) Repealed Sections.--Sections 3623, 3624, 3625, and 3628 of title 
39, United States Code, are repealed.
    (c) Redesignation.--Chapter 36 of title 39, United States Code (as 
in effect after the amendment made by section 601, but before the 
amendment made by section 202) is amended by striking the heading for 
subchapter II and inserting the following:

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

SEC. 202. PROVISIONS RELATING TO COMPETITIVE PRODUCTS.

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

      ``SUBCHAPTER II--PROVISIONS RELATING TO COMPETITIVE PRODUCTS

``Sec. 3631. Applicability; definitions and updates

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

subject to subsection (d) and any changes the Postal Regulatory 
Commission may make under section 3642.
    ``(b) Definition.--For purposes of this subchapter, the term `costs 
attributable', as used with respect to a product, means the direct and 
indirect postal costs attributable to such product through reliably 
identified causal relationships.

[[Page 120 STAT. 3206]]

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

``Sec. 3632. Action of the Governors

    ``(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) 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) <<NOTE: Federal Register, 
        publication. Deadline.>> 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 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 <<NOTE: Filing date.>> of rates or classes not of general 
        applicability in the Nation as a whole or in any substantial 
        region of the Nation, the Governors 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 appropriate, but in no case less than 15 days.
            ``(4) 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) 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.-- <<NOTE: Deadline. Regulations.>> 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

[[Page 120 STAT. 3207]]

            ``(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) <<NOTE: Deadline.>> Review of Minimum Contribution.--Five 
years after the date of enactment of this section, and every 5 years 
thereafter, the Postal Regulatory Commission shall conduct a review to 
determine whether the institutional costs contribution requirement under 
subsection (a)(3) should be retained in its current form, modified, or 
eliminated. In making its determination, the Commission shall consider 
all relevant circumstances, including the prevailing competitive 
conditions in the market, and the degree to which any costs are uniquely 
or disproportionately associated with any competitive products.''.

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

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

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

``Sec. 3641. Market tests of experimental products

    ``(a) Authority.--
            ``(1) In general.--The Postal Service may conduct market 
        tests of experimental products in accordance with this section.
            ``(2) Provisions waived.--A product shall not, while it is 
        being tested under this section, be subject to the requirements 
        of sections 3622, 3633, or 3642, or regulations promulgated 
        under those sections.

    ``(b) Conditions.--A product may not be tested under this section 
unless it satisfies each of the following:
            ``(1) Significantly different product.--The product is, from 
        the viewpoint of the mail users, significantly different from 
        all products offered by the Postal Service within the 2-year 
        period preceding the start of the test.
            ``(2) Market disruption.--The introduction or continued 
        offering of the product will not create an unfair or otherwise 
        inappropriate competitive advantage for the Postal Service or 
        any mailer, particularly in regard to small business concerns 
        (as defined under subsection (h)).
            ``(3) Correct categorization.--The Postal Service identifies 
        the product, for the purpose of a test under this section, as 
        either market-dominant or competitive, consistent with the 
        criteria under section 3642(b)(1). Costs and revenues 
        attributable to a product identified as competitive shall be 
        included in any determination under section 3633(3) (relating to 
        provisions applicable to competitive products collectively). Any 
        test that solely affects products currently classified as 
        competitive, or which provides services ancillary to only 
        competitive products, shall be presumed to be in the competitive 
        product category without regard to whether a similar ancillary 
        product exists for market-dominant products.

    ``(c) Notice.--
            ``(1) In general.-- <<NOTE: Deadline. Federal Register, 
        publication.>> At least 30 days before initiating a market test 
        under this section, the Postal Service shall file

[[Page 120 STAT. 3208]]

        with the Postal Regulatory Commission and publish in the Federal 
        Register a notice--
                    ``(A) setting out the basis for the Postal Service's 
                determination that the market test is covered by this 
                section; and
                    ``(B) describing the nature and scope of the market 
                test.
            ``(2) Safeguards.--For a competitive experimental product, 
        the provisions of section 504(g) shall be available with respect 
        to any information required to be filed under paragraph (1) to 
        the same extent and in the same manner as in the case of any 
        matter described in section 504(g)(1). Nothing in paragraph (1) 
        shall be considered to permit or require the publication of any 
        information as to which confidential treatment is accorded under 
        the preceding sentence (subject to the same exception as set 
        forth in section 504(g)(3)).

    ``(d) Duration.--
            ``(1) In general.--A market test of a product under this 
        section may be conducted over a period of not to exceed 24 
        months.
            ``(2) Extension authority.--If necessary in order to 
        determine the feasibility or desirability of a product being 
        tested under this section, the Postal Regulatory Commission may, 
        upon written application of the Postal Service (filed not later 
        than 60 days before the date as of which the testing of such 
        product would otherwise be scheduled to terminate under 
        paragraph (1)), extend the testing of such product for not to 
        exceed an additional 12 months.

    ``(e) Dollar-Amount Limitation.--
            ``(1) In general.--A product may only be tested under this 
        section if the total revenues that are anticipated, or in fact 
        received, by the Postal Service from such product do not exceed 
        $10,000,000 in any year, subject to paragraph (2) and subsection 
        (g). In carrying out the preceding sentence, the Postal 
        Regulatory Commission may limit the amount of revenues the 
        Postal Service may obtain from any particular geographic market 
        as necessary to prevent market disruption (as defined under 
        subsection (b)(2)).
            ``(2) Exemption authority.--The Postal Regulatory Commission 
        may, upon written application of the Postal Service, exempt the 
        market test from the limit in paragraph (1) if the total 
        revenues that are anticipated, or in fact received, by the 
        Postal Service from such product do not exceed $50,000,000 in 
        any year, subject to subsection (g). In reviewing an application 
        under this paragraph, the Postal Regulatory Commission shall 
        approve such application if it determines that--
                    ``(A) the product is likely to benefit the public 
                and meet an expected demand;
                    ``(B) the product is likely to contribute to the 
                financial stability of the Postal Service; and
                    ``(C) the product is not likely to result in unfair 
                or otherwise inappropriate competition.

    ``(f) Cancellation.--If the Postal Regulatory Commission at any time 
determines that a market test under this section fails, with respect to 
any particular product, to meet 1 or more of the requirements of this 
section, it may order the cancellation of the

[[Page 120 STAT. 3209]]

test involved or take such other action as it considers appropriate. A 
determination under this subsection shall be made in accordance with 
such procedures as the Commission shall by regulation prescribe.
    ``(g) Adjustment for Inflation.--For purposes of each year following 
the year in which occurs the deadline for the Postal Service's first 
report to the Postal Regulatory Commission under section 3652(a), each 
dollar amount contained in this section shall be adjusted by the change 
in the Consumer Price Index for such year (as determined under 
regulations of the Commission).
    ``(h) Definition of a Small Business Concern.--The criteria used in 
defining small business concerns or otherwise categorizing business 
concerns as small business concerns shall, for purposes of this section, 
be established by the Postal Regulatory Commission in conformance with 
the requirements of section 3 of the Small Business Act.
    ``(i) Effective Date.--Market tests under this subchapter may be 
conducted in any year beginning with the first year in which occurs the 
deadline for the Postal Service's first report to the Postal Regulatory 
Commission under section 3652(a).

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

    ``(a) In General.--Upon request of the Postal Service or users of 
the mails, or upon its own initiative, the Postal Regulatory Commission 
may change the list of market-dominant products under section 3621 and 
the list of competitive products under section 3631 by adding new 
products to the lists, removing products from the lists, or transferring 
products between the lists.
    ``(b) Criteria.--All determinations by the Postal Regulatory 
Commission under subsection (a) shall be made in accordance with the 
following criteria:
            ``(1) The market-dominant category of products shall consist 
        of each product in the sale of which the Postal Service 
        exercises sufficient market power that it can effectively set 
        the price of such product substantially above costs, raise 
        prices significantly, decrease quality, or decrease output, 
        without risk of losing a significant level of business to other 
        firms offering similar products. The competitive category of 
        products shall consist of all other products.
            ``(2) Exclusion of products covered by postal monopoly.--A 
        product covered by the postal monopoly shall not be subject to 
        transfer under this section from the market-dominant category of 
        mail. For purposes of the preceding sentence, the term `product 
        covered by the postal monopoly' means any product the conveyance 
        or transmission of which is reserved to the United States under 
        section 1696 of title 18, subject to the same exception as set 
        forth in the last sentence of section 409(e)(1).
            ``(3) Additional considerations.--In making any decision 
        under this section, due regard shall be given to--
                    ``(A) the availability and nature of enterprises in 
                the private sector engaged in the delivery of the 
                product involved;
                    ``(B) the views of those who use the product 
                involved on the appropriateness of the proposed action; 
                and

[[Page 120 STAT. 3210]]

                    ``(C) the likely impact of the proposed action on 
                small business concerns (within the meaning of section 
                3641(h)).

    ``(c) Transfers of Subclasses and Other Subordinate Units 
Allowable.--Nothing in this title shall be considered to prevent 
transfers under this section from being made by reason of the fact that 
they would involve only some (but not all) of the subclasses or other 
subordinate units of the class of mail or type of postal service 
involved (without regard to satisfaction of minimum quantity 
requirements standing alone).
    ``(d) Notification and Publication Requirements.--
            ``(1) <<NOTE: Federal Register, publication.>> Notification 
        requirement.--The Postal Service shall, whenever it requests to 
        add a product or transfer a product to a different category, 
        file with the Postal Regulatory Commission and publish in the 
        Federal Register a notice setting out the basis for its 
        determination that the product satisfies the criteria under 
        subsection (b) and, in the case of a request to add a product or 
        transfer a product to the competitive category of mail, that the 
        product meets the regulations promulgated by the Postal 
        Regulatory Commission under section 3633. The provisions of 
        section 504(g) shall be available with respect to any 
        information required to be filed.
            ``(2) Publication requirement.--The Postal Regulatory 
        Commission shall, whenever it changes the list of products in 
        the market-dominant or competitive category of mail, prescribe 
        new lists of products. <<NOTE: Federal Register, 
        publication.>> The revised lists shall indicate how and when any 
        previous lists (including the lists under sections 3621 and 
        3631) are superseded, and shall be published in the Federal 
        Register.

    ``(e) Prohibition.--Except as provided in section 3641, no product 
that involves the physical delivery of letters, printed matter, or 
packages may be offered by the Postal Service unless it has been 
assigned to the market-dominant or competitive category of mail (as 
appropriate) either--
            ``(1) under this subchapter; or
            ``(2) by or under any other provision of law.''.

SEC. 204. REPORTING REQUIREMENTS AND RELATED PROVISIONS.

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

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

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

                       ``SUBCHAPTER VI--GENERAL''.

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

[[Page 120 STAT. 3211]]

     ``SUBCHAPTER IV--REPORTING REQUIREMENTS AND RELATED PROVISIONS

``Sec. 3651. Annual reports by the Commission

    ``(a) In General.--The Postal Regulatory Commission shall submit an 
annual report to the President and the Congress concerning the 
operations of the Commission under this title, including the extent to 
which regulations are achieving the objectives under sections 3622 and 
3633, respectively.
    ``(b) Additional Information.--
            ``(1) In general.--In addition to the information required 
        under subsection (a), each report under this section shall also 
        include, with respect to the period covered by such report, an 
        estimate of the costs incurred by the Postal Service in 
        providing--
                    ``(A) postal services to areas of the Nation where, 
                in the judgment of the Postal Regulatory Commission, the 
                Postal Service either would not provide services at all 
                or would not provide such services in accordance with 
                the requirements of this title if the Postal Service 
                were not required to provide prompt, reliable, and 
                efficient services to patrons in all areas and all 
                communities, including as required under the first 
                sentence of section 101(b);
                    ``(B) free or reduced rates for postal services as 
                required by this title; and
                    ``(C) other public services or activities which, in 
                the judgment of the Postal Regulatory Commission, would 
                not otherwise have been provided by the Postal Service 
                but for the requirements of law.
            ``(2) Basis for estimates.--The Commission shall detail the 
        basis for its estimates and the statutory requirements giving 
        rise to the costs identified in each report under this section.

    ``(c) Information From Postal Service.--The Postal Service shall 
provide the Postal Regulatory Commission with such information as may, 
in the judgment of the Commission, be necessary in order for the 
Commission to prepare its reports under this section.

``Sec. 3652. Annual reports to the Commission

    ``(a) Costs, Revenues, Rates, and Service.--Except as provided in 
subsection (c), the Postal Service shall, no later than 90 days after 
the end of each year, prepare and submit to the Postal Regulatory 
Commission a report (together with such nonpublic annex to the report as 
the Commission may require under subsection (e))--
            ``(1) which shall analyze costs, revenues, rates, and 
        quality of service, 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--

[[Page 120 STAT. 3212]]

                          ``(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.
        The <<NOTE: Audits.>> 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) <<NOTE: Regulations.>> 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) <<NOTE: Regulations.>> 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) <<NOTE: Regulations.>> 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;

[[Page 120 STAT. 3213]]

                    ``(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) 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) of section 3662 (as if 
a complaint averring such noncompliance had been duly filed and found 
under such section to be justified).

[[Page 120 STAT. 3214]]

    ``(d) 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) Rebuttable Presumption.--A timely written determination 
described in the last sentence of subsection (b) shall, for purposes of 
any proceeding under section 3662, create a rebuttable presumption of 
compliance by the Postal Service (with regard to the matters described 
under paragraphs (1) and (2) of subsection (b)) during the year to which 
such determination relates.

``Sec. 3654. Additional financial reporting

    ``(a) Additional Financial Reporting.--
            ``(1) In general.--The Postal Service shall file with the 
        Postal Regulatory Commission beginning with the first full 
        fiscal year following the effective date of this section--
                    ``(A) within 40 days after the end of each fiscal 
                quarter, a quarterly report containing the information 
                required by the Securities and Exchange Commission to be 
                included in quarterly reports under sections 13 and 
                15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 
                78m, 78o(d)) on Form 10-Q, as such Form (or any 
                successor form) may be revised from time to time;
                    ``(B) within 60 days after the end of each fiscal 
                year, an annual report containing the information 
                required by the Securities and Exchange Commission to be 
                included in annual reports under such sections on Form 
                10-K, as such Form (or any successor form) may be 
                revised from time to time; and
                    ``(C) periodic reports within the time frame and 
                containing the information prescribed in Form 8-K of the 
                Securities and Exchange Commission, as such Form (or any 
                successor form) may be revised from time to time.
            ``(2) Registrant defined.--For purposes of defining the 
        reports required by paragraph (1), the Postal Service shall be 
        deemed to be the `registrant' described in the Securities and 
        Exchange Commission Forms, and references contained in such 
        Forms to Securities and Exchange Commission regulations are 
        incorporated herein by reference, as amended.
            ``(3) Internal control report.--For purposes of defining the 
        reports required by paragraph (1)(B), the Postal Service shall 
        comply with the rules prescribed by the Securities and Exchange 
        Commission implementing section 404 of the Sarbanes-Oxley Act of 
        2002 (15 U.S.C. 7262), beginning with the annual report for 
        fiscal year 2010.

    ``(b) Financial reporting.--
            ``(1) The reports required by subsection (a)(1)(B) shall 
        include, with respect to the Postal Service's pension and post-
        retirement health obligations--
                    ``(A) the funded status of the Postal Service's 
                pension and postretirement health obligations;
                    ``(B) components of the net change in the fund 
                balances and obligations and the nature and cause of any 
                significant changes;
                    ``(C) components of net periodic costs;

[[Page 120 STAT. 3215]]

                    ``(D) cost methods and assumptions underlying the 
                relevant actuarial valuations;
                    ``(E) the effect of a one-percentage point increase 
                in the assumed health care cost trend rate for each 
                future year on the service and interest costs components 
                of net periodic postretirement health cost and the 
                accumulated obligation;
                    ``(F) actual contributions to and payments from the 
                funds for the years presented and the estimated future 
                contributions and payments for each of the following 5 
                years;
                    ``(G) the composition of plan assets reflected in 
                the fund balances; and
                    ``(H) the assumed rate of return on fund balances 
                and the actual rates of return for the years presented.
            ``(2) The Office of Personnel Management shall provide the 
        data listed under paragraph (1) to the Postal Service not later 
        than 30 days after the end of each fiscal year.
            ``(3)(A) Beginning with reports for the fiscal year 2010, 
        for purposes of the reports required under subparagraphs (A) and 
        (B) of subsection (a)(1), the Postal Service shall include 
        segment reporting.
            ``(B) The Postal Service shall determine the appropriate 
        segment reporting under subparagraph (A) after consultation with 
        the Postal Regulatory Commission.

    ``(c) Treatment.--For purposes of the reports required by subsection 
(a)(1)(B), the Postal Service shall obtain an opinion from an 
independent auditor on whether the information listed in subsection (b) 
is fairly stated in all material respects, either in relation to the 
basic financial statements as a whole or on a stand-alone basis.
    ``(d) Supporting Matter.--The Postal Regulatory Commission shall 
have access to the audit documentation and any other supporting matter 
of the Postal Service and its independent auditor in connection with any 
information submitted under this section.
    ``(e) <<NOTE: Regulations.>> Revised Requirements.--The Postal 
Regulatory Commission may, on its own motion or on request of an 
interested party, initiate proceedings (to be conducted in accordance 
with regulations that the Commission shall prescribe) to improve the 
quality, accuracy, or completeness of Postal Service data required under 
this section whenever it shall appear that--
            ``(1) the data have become significantly inaccurate or can 
        be significantly improved; or
            ``(2) those 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 pursuant to 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.

[[Page 120 STAT. 3216]]

            ``(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).''.

SEC. 205. COMPLAINTS; APPELLATE REVIEW AND ENFORCEMENT.

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

``Sec. 3662. Rate and service complaints

    ``(a) In General.--Any interested person (including an officer of 
the Postal Regulatory Commission representing the interests of the 
general public) who believes the Postal Service is not operating in 
conformance with the requirements of the provisions of sections 101(d), 
401(2), 403(c), 404a, or 601, or this chapter (or regulations 
promulgated under any of those provisions) may lodge a complaint with 
the Postal Regulatory Commission in such form and manner as the 
Commission may prescribe.
    ``(b) Prompt Response Required.--
            ``(1) <<NOTE: Deadline.>> In general.--The Postal Regulatory 
        Commission shall, within 90 days after receiving a complaint 
        under subsection (a)--
                    ``(A) either--
                          ``(i) upon a finding that such complaint 
                      raises material issues of fact or law, begin 
                      proceedings on such complaint; or
                          ``(ii) issue an order dismissing the 
                      complaint; and
                    ``(B) with respect to any action taken under 
                subparagraph (A) (i) or (ii), issue a written statement 
                setting forth the bases of its determination.
            ``(2) Treatment of complaints not timely acted on.--For 
        purposes of section 3663, any complaint under subsection (a) on 
        which the Commission fails to act in the time and manner 
        required by paragraph (1) shall be treated in the same way as if 
        it had been dismissed pursuant to an order issued by the 
        Commission on the last day allowable for the issuance of such 
        order under paragraph (1).

    ``(c) Action Required if Complaint Found To Be Justified.--If the 
Postal Regulatory Commission finds the complaint to be justified, it 
shall order that the Postal Service take such action as the Commission 
considers appropriate in order to achieve compliance with the applicable 
requirements and to remedy the effects of any noncompliance (such as 
ordering unlawful rates to be adjusted to lawful levels, ordering the 
cancellation of market tests, ordering the Postal Service to discontinue 
providing loss-making products, or requiring the Postal Service to make 
up for revenue shortfalls in competitive products).
    ``(d) Authority To Order Fines in Cases of Deliberate 
Noncompliance.--In addition, in cases of deliberate noncompliance by the 
Postal Service with the requirements of this title, the Postal 
Regulatory Commission may order, based on the nature, circumstances, 
extent, and seriousness of the noncompliance, a fine (in the amount 
specified by the Commission in its order) for each incidence of 
noncompliance. Fines resulting from the provision of competitive 
products shall be paid from the Competitive Products

[[Page 120 STAT. 3217]]

Fund established in section 2011. All receipts from fines imposed under 
this subsection shall be deposited in the general fund of the Treasury 
of the United States.

``Sec. 3663. Appellate review

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

``Sec. 3664. Enforcement of orders

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

SEC. 206. CLERICAL AMENDMENT.

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

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

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

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

      ``SUBCHAPTER II--PROVISIONS RELATING TO COMPETITIVE PRODUCTS

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

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

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

     ``SUBCHAPTER IV--REPORTING REQUIREMENTS AND RELATED PROVISIONS

``3651. Annual reports by the Commission.
``3652. Annual reports to the Commission.
``3653. Annual determination of compliance.
``3654. Additional financial reporting.

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

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

[[Page 120 STAT. 3218]]

                        ``SUBCHAPTER VI--GENERAL

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

               ``SUBCHAPTER VII--MODERN SERVICE STANDARDS

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

                   TITLE III--MODERN SERVICE STANDARDS

SEC. 301. ESTABLISHMENT OF MODERN SERVICE STANDARDS.

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

               ``SUBCHAPTER VII--MODERN SERVICE STANDARDS

``Sec. 3691. Establishment of modern service standards

    ``(a) <<NOTE: Deadline.>> Authority Generally.--Not later than 12 
months after the date of enactment of this section, the Postal Service 
shall, in consultation with the Postal Regulatory Commission, by 
regulation establish (and may from time to time thereafter by regulation 
revise) a set of service standards for market-dominant products.

    ``(b) Objectives.--
            ``(1) In general.--Such standards shall be designed to 
        achieve the following objectives:
                    ``(A) To enhance the value of postal services to 
                both senders and recipients.
                    ``(B) To preserve regular and effective access to 
                postal services in all communities, including those in 
                rural areas or where post offices are not self-
                sustaining.
                    ``(C) To reasonably assure Postal Service customers 
                delivery reliability, speed and frequency consistent 
                with reasonable rates and best business practices.
                    ``(D) To provide a system of objective external 
                performance measurements for each market-dominant 
                product as a basis for measurement of Postal Service 
                performance.
            ``(2) Implementation of performance measurements.--With 
        respect to paragraph (1)(D), with the approval of the Postal 
        Regulatory Commission an internal measurement system may be 
        implemented instead of an external measurement system.

    ``(c) Factors.--In establishing or revising such standards, the 
Postal Service shall take into account--
            ``(1) the actual level of service that Postal Service 
        customers receive under any service guidelines previously 
        established by the Postal Service or service standards 
        established under this section;
            ``(2) the degree of customer satisfaction with Postal 
        Service performance in the acceptance, processing and delivery 
        of mail;
            ``(3) the needs of Postal Service customers, including those 
        with physical impairments;
            ``(4) mail volume and revenues projected for future years;

[[Page 120 STAT. 3219]]

            ``(5) the projected growth in the number of addresses the 
        Postal Service will be required to serve in future years;
            ``(6) the current and projected future cost of serving 
        Postal Service customers;
            ``(7) the effect of changes in technology, demographics, and 
        population distribution on the efficient and reliable operation 
        of the postal delivery system; and
            ``(8) the policies of this title and such other factors as 
        the Postal Service determines appropriate.

    ``(d) Review.--The regulations promulgated pursuant to this section 
(and any revisions thereto), and any violations thereof, shall be 
subject to review upon complaint under sections 3662 and 3663.''.

SEC. 302. <<NOTE: 39 USC 3691 note.>> POSTAL SERVICE PLAN.

    (a) <<NOTE: Deadline.>> In General.--Within 6 months after the 
establishment of the service standards under section 3691 of title 39, 
United States Code, as added by this Act, the Postal Service shall, in 
consultation with the Postal Regulatory Commission, develop and submit 
to Congress a plan for meeting those standards.

    (b) Contents.--The plan under this section shall--
            (1) establish performance goals;
            (2) describe any changes to the Postal Service's processing, 
        transportation, delivery, and retail networks necessary to allow 
        the Postal Service to meet the performance goals;
            (3) describe any changes to planning and performance 
        management documents previously submitted to Congress to reflect 
        new performance goals; and
            (4) describe the long-term vision of the Postal Service for 
        rationalizing its infrastructure and workforce, and how the 
        Postal Service intends to implement that vision.

    (c) Postal Facilities.--
            (1) Findings.--Congress finds that--
                    (A) the Postal Service has more than 400 logistics 
                facilities, separate from its post office network;
                    (B) as noted by the President's Commission on the 
                United States Postal Service, the Postal Service has 
                more facilities than it needs and the streamlining of 
                this distribution network can pave the way for the 
                potential consolidation of sorting facilities and the 
                elimination of excess costs;
                    (C) the Postal Service has always revised its 
                distribution network to meet changing conditions and is 
                best suited to address its operational needs; and
                    (D) Congress strongly encourages the Postal Service 
                to--
                          (i) expeditiously move forward in its 
                      streamlining efforts; and
                          (ii) keep unions, management associations, and 
                      local elected officials informed as an essential 
                      part of this effort and abide by any procedural 
                      requirements contained in the national bargaining 
                      agreements.
            (2) In general.--The Postal Service plan shall include a 
        description of--
                    (A) the long-term vision of the Postal Service for 
                rationalizing its infrastructure and workforce; and
                    (B) how the Postal Service intends to implement that 
                vision.

[[Page 120 STAT. 3220]]

            (3) Content of facilities plan.--The plan under this 
        subsection shall include--
                    (A) a strategy for how the Postal Service intends to 
                rationalize the postal facilities network and remove 
                excess processing capacity and space from the network, 
                including estimated timeframes, criteria, and processes 
                to be used for making changes to the facilities network, 
                and the process for engaging policy makers and the 
                public in related decisions;
                    (B) a discussion of what impact any facility changes 
                may have on the postal workforce and whether the Postal 
                Service has sufficient flexibility to make needed 
                workforce changes;
                    (C) an identification of anticipated costs, cost 
                savings, and other benefits associated with the 
                infrastructure rationalization alternatives discussed in 
                the plan; and
                    (D) procedures that the Postal Service will use to--
                          (i) provide adequate public notice to 
                      communities potentially affected by a proposed 
                      rationalization decision;
                          (ii) make available information regarding any 
                      service changes in the affected communities, any 
                      other effects on customers, any effects on postal 
                      employees, and any cost savings;
                          (iii) afford affected persons ample 
                      opportunity to provide input on the proposed 
                      decision; and
                          (iv) take such comments into account in making 
                      a final decision.
            (4) Annual reports.--
                    (A) In general.--Not later than 90 days after the 
                end of each fiscal year, the Postal Service shall 
                prepare and submit a report to Congress on how postal 
                decisions have impacted or will impact rationalization 
                plans.
                    (B) Contents.--Each report under this paragraph 
                shall include--
                          (i) an account of actions taken during the 
                      preceding fiscal year to improve the efficiency 
                      and effectiveness of its processing, 
                      transportation, and distribution networks while 
                      preserving the timely delivery of postal services, 
                      including overall estimated costs and cost 
                      savings;
                          (ii) an account of actions taken to identify 
                      any excess capacity within its processing, 
                      transportation, and distribution networks and 
                      implement savings through realignment or 
                      consolidation of facilities including overall 
                      estimated costs and cost savings;
                          (iii) an estimate of how postal decisions 
                      related to mail changes, security, automation 
                      initiatives, worksharing, information technology 
                      systems, excess capacity, consolidating and 
                      closing facilities, and other areas will impact 
                      rationalization plans;
                          (iv) identification of any statutory or 
                      regulatory obstacles that prevented or will 
                      prevent or hinder the Postal Service from taking 
                      action to realign or consolidate facilities; and
                          (v) such additional topics and recommendations 
                      as the Postal Service considers appropriate.

[[Page 120 STAT. 3221]]

            (5) <<NOTE: Effective date.>> Existing efforts.--Effective 
        on the date of enactment of this Act, the Postal Service may not 
        close or consolidate any processing or logistics facilities 
        without using procedures for public notice and input consistent 
        with those described under paragraph (3)(D).

    (d) Alternate Retail Options.--The Postal Service plan shall include 
plans to expand and market retail access to postal services, in addition 
to post offices, including--
            (1) vending machines;
            (2) the Internet;
            (3) postage meters;
            (4) Stamps by Mail;
            (5) Postal Service employees on delivery routes;
            (6) retail facilities in which overhead costs are shared 
        with private businesses and other government agencies;
            (7) postal kiosks; or
            (8) any other nonpost office access channel providing market 
        retail access to postal services.

    (e) Reemployment Assistance and Retirement Benefits.--The Postal 
Service plan shall include--
            (1) a comprehensive plan under which reemployment assistance 
        shall be afforded to employees displaced as a result of 
        automation of any of its functions, the closing and 
        consolidation of any of its facilities, or such other reasons as 
        the Postal Service may determine; and
            (2) a plan, developed in consultation with the Office of 
        Personnel Management, to offer early retirement benefits.

    (f) Continued Authority.--Nothing in this section shall be construed 
to prohibit the Postal Service from implementing any change to its 
processing, transportation, delivery, and retail networks under any 
authority granted to the Postal Service for those purposes.

            TITLE IV--PROVISIONS RELATING TO FAIR COMPETITION

SEC. 401. POSTAL SERVICE COMPETITIVE PRODUCTS FUND.

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

``Sec. 2011. Provisions relating to competitive products

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

    ``(b) There shall be deposited in the Competitive Products Fund, 
subject to withdrawal by the Postal Service--
            ``(1) revenues from competitive products;

[[Page 120 STAT. 3222]]

            ``(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;

[[Page 120 STAT. 3223]]

            ``(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) <<NOTE: Recommen- dations.>> 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--

[[Page 120 STAT. 3224]]

            ``(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) <<NOTE: Submission period.>> 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) <<NOTE: Reports.>> 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) <<NOTE: Deadline.>> 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) <<NOTE: Regulations.>> 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

[[Page 120 STAT. 3225]]

            ``(II) such revisions are, in the judgment of the 
        Commission, otherwise necessitated by the public interest.

    ``(D) A copy of each report described under subparagraph (B)(i)(III) 
shall be submitted by the Postal Service to the Secretary of the 
Treasury and the Inspector General of the United States Postal Service.
    ``(i)(1) <<NOTE: Reports.>> The Postal Service shall submit an 
annual report to the Secretary of the Treasury concerning the operation 
of the Competitive Products Fund. The report shall address such matters 
as risk limitations, reserve balances, allocation or distribution of 
moneys, liquidity requirements, and measures to safeguard against 
losses.

    ``(2) A copy of the most recent report submitted under paragraph (1) 
shall be included in the annual report submitted by the Postal 
Regulatory Commission under section 3652(g).''.
            (2) Clerical amendment.--The table of sections for chapter 
        20 of title 39, United States Code, is amended by adding after 
        the item relating to section 2010 the following:

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

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

[[Page 120 STAT. 3226]]

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

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

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

    ``(a) Definitions.--For purposes of this section--
            ``(1) the term `assumed Federal income tax on competitive 
        products income' means the net income tax that would be imposed 
        by chapter 1 of the Internal Revenue Code of 1986 on the Postal 
        Service's assumed taxable income from competitive products for 
        the year; and
            ``(2) the term `assumed taxable income from competitive 
        products', with respect to a year, refers to the amount 
        representing what would be the taxable income of a corporation 
        under the Internal Revenue Code of 1986 for the year, if--
                    ``(A) the only activities of such corporation were 
                the activities of the Postal Service allocable under 
                section 2011(h) to competitive products; and
                    ``(B) the only assets held by such corporation were 
                the assets of the Postal Service allocable under section 
                2011(h) to such activities.

    ``(b) Computation and Transfer Requirements.--The Postal Service 
shall, for each year beginning with the year in which occurs the 
deadline for the Postal Service's first report to the Postal Regulatory 
Commission under section 3652(a)--
            ``(1) compute its assumed Federal income tax on competitive 
        products income for such year; and
            ``(2) transfer from the Competitive Products Fund to the 
        Postal Service Fund the amount of that assumed tax.

    ``(c) Deadline for Transfers.--Any transfer required to be made 
under this section for a year shall be due on or before the January 15th 
next occurring after the close of such year.''.

SEC. 403. UNFAIR COMPETITION PROHIBITED.

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

``Sec. 404a. Specific limitations

    ``(a) Except as specifically authorized by law, the Postal Service 
may not--
            ``(1) establish any rule or regulation (including any 
        standard) the effect of which is to preclude competition or 
        establish the terms of competition unless the Postal Service 
        demonstrates that the regulation does not create an unfair 
        competitive advantage for itself or any entity funded (in whole 
        or in part) by the Postal Service;
            ``(2) compel the disclosure, transfer, or licensing of 
        intellectual property to any third party (such as patents, 
        copyrights, trademarks, trade secrets, and proprietary 
        information); or
            ``(3) obtain information from a person that provides (or 
        seeks to provide) any product, and then offer any postal service 
        that uses or is based in whole or in part on such information, 
        without the consent of the person providing that information, 
        unless substantially the same information is obtained (or

[[Page 120 STAT. 3227]]

        obtainable) from an independent source or is otherwise obtained 
        (or obtainable).

    ``(b) <<NOTE: Regulations.>> The Postal Regulatory Commission shall 
prescribe regulations to carry out this section.

    ``(c) Any party (including an officer of the Commission representing 
the interests of the general public) who believes that the Postal 
Service has violated this section may bring a complaint in accordance 
with section 3662.''.
    (b) Conforming Amendments.--
            (1) General powers.--Section 401 of title 39, United States 
        Code, is amended by striking ``The'' and inserting ``Subject to 
        the provisions of section 404a, the''.
            (2) Specific powers.--Section 404(a) of title 39, United 
        States Code, is amended by striking ``Without'' and inserting 
        ``Subject to the provisions of section 404a, but otherwise 
        without''.

    (c) Clerical Amendment.--The analysis for chapter 4 of title 39, 
United States Code, is amended by inserting after the item relating to 
section 404 the following:

``404a. Specific limitations.''.

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

    (a) In General.--Section 409 of title 39, United States Code, is 
amended by striking subsections (d) and (e) and inserting the following:
    ``(d)(1) For purposes of the provisions of law cited in paragraphs 
(2)(A) and (2)(B), respectively, the Postal Service--
            ``(A) shall be considered to be a `person', as used in the 
        provisions of law involved; and
            ``(B) shall not be immune under any other doctrine of 
        sovereign immunity from suit in Federal court by any person for 
        any violation of any of those provisions of law by any officer 
        or employee of the Postal Service.

    ``(2) <<NOTE: Applicability.>> This subsection applies with respect 
to--
            ``(A) the Act of July 5, 1946 (commonly referred to as the 
        `Trademark Act of 1946' (15 U.S.C. 1051 and following)); and
            ``(B) the provisions of section 5 of the Federal Trade 
        Commission Act to the extent that such section 5 applies to 
        unfair or deceptive acts or practices.

    ``(e)(1) To the extent that the Postal Service, or other Federal 
agency acting on behalf of or in concert with the Postal Service, 
engages in conduct with respect to any product which is not reserved to 
the United States under section 1696 of title 18, the Postal Service or 
other Federal agency (as the case may be)--
            ``(A) shall not be immune under any doctrine of sovereign 
        immunity from suit in Federal court by any person for any 
        violation of Federal law by such agency or any officer or 
        employee thereof; and
            ``(B) shall be considered to be a person (as defined in 
        subsection (a) of the first section of the Clayton Act) for 
        purposes of--
                    ``(i) the antitrust laws (as defined in such 
                subsection); and
                    ``(ii) section 5 of the Federal Trade Commission Act 
                to the extent that such section 5 applies to unfair 
                methods of competition.

[[Page 120 STAT. 3228]]

For purposes of the preceding sentence, any private carriage of mail 
allowable by virtue of section 601 shall not be considered a service 
reserved to the United States under section 1696 of title 18.
    ``(2) No damages, interest on damages, costs or attorney's fees may 
be recovered, and no criminal liability may be imposed, under the 
antitrust laws (as so defined) from any officer or employee of the 
Postal Service, or other Federal agency acting on behalf of or in 
concert with the Postal Service, acting in an official capacity.
    ``(3) This subsection shall not apply with respect to conduct 
occurring before the date of enactment of this subsection.
    ``(f)(1) Each building constructed or altered by the Postal Service 
shall be constructed or altered, to the maximum extent feasible as 
determined by the Postal Service, in compliance with 1 of the nationally 
recognized model building codes and with other applicable nationally 
recognized codes.
    ``(2) Each building constructed or altered by the Postal Service 
shall be constructed or altered only after consideration of all 
requirements (other than procedural requirements) of zoning laws, land 
use laws, and applicable environmental laws of a State or subdivision of 
a State which would apply to the building if it were not a building 
constructed or altered by an establishment of the Government of the 
United States.
    ``(3) For purposes of meeting the requirements of paragraphs (1) and 
(2) with respect to a building, the Postal Service shall--
            ``(A) in preparing plans for the building, consult with 
        appropriate officials of the State or political subdivision, or 
        both, in which the building will be located;
            ``(B) <<NOTE: Deadline.>> upon request, submit such plans in 
        a timely manner to such officials for review by such officials 
        for a reasonable period of time not exceeding 30 days; and
            ``(C) permit inspection by such officials during 
        construction or alteration of the building, in accordance with 
        the customary schedule of inspections for construction or 
        alteration of buildings in the locality, if such officials 
        provide to the Postal Service--
                    ``(i) a copy of such schedule before construction of 
                the building is begun; and
                    ``(ii) reasonable notice of their intention to 
                conduct any inspection before conducting such 
                inspection.
        Nothing in this subsection shall impose an obligation on any 
        State or political subdivision to take any action under the 
        preceding sentence, nor shall anything in this subsection 
        require the Postal Service or any of its contractors to pay for 
        any action taken by a State or political subdivision to carry 
        out this subsection (including reviewing plans, carrying out on-
        site inspections, issuing building permits, and making 
        recommendations).

    ``(4) Appropriate officials of a State or a political subdivision of 
a State may make recommendations to the Postal Service concerning 
measures necessary to meet the requirements of paragraphs (1) and (2). 
Such officials may also make recommendations to the Postal Service 
concerning measures which should be taken in the construction or 
alteration of the building to take into account local conditions. The 
Postal Service shall give due consideration to any such recommendations.

[[Page 120 STAT. 3229]]

    ``(5) <<NOTE: Procedures.>> In addition to consulting with local and 
State officials under paragraph (3), the Postal Service shall establish 
procedures for soliciting, assessing, and incorporating local community 
input on real property and land use decisions.

    ``(6) For purposes of this subsection, the term `State' includes the 
District of Columbia, the Commonwealth of Puerto Rico, and a territory 
or possession of the United States.
    ``(g)(1) Notwithstanding any other provision of law, legal 
representation may not be furnished by the Department of Justice to the 
Postal Service in any action, suit, or proceeding arising, in whole or 
in part, under any of the following:
            ``(A) Subsection (d) or (e) of this section.
            ``(B) Subsection (f) or (g) of section 504 (relating to 
        administrative subpoenas by the Postal Regulatory Commission).
            ``(C) Section 3663 (relating to appellate review).

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

SEC. 405. INTERNATIONAL POSTAL ARRANGEMENTS.

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

``Sec. 407. International postal arrangements

    ``(a) It is the policy of the United States--
            ``(1) to promote and encourage communications between 
        peoples by efficient operation of international postal services

[[Page 120 STAT. 3230]]

        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

[[Page 120 STAT. 3231]]

        with international postal services and international delivery 
        services.

    ``(3) <<NOTE: Establishment.>> 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

[[Page 120 STAT. 3232]]

States Trade Representative and the Commissioner of Customs in carrying 
out this paragraph.
    ``(4) <<NOTE: Effective date.>> 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.''.

    (b) <<NOTE: 39 USC 407 note.>> Effective Date.--Notwithstanding any 
provision of the amendment made by subsection (a), the authority of the 
United States Postal Service to establish the rates of postage or other 
charges on mail matter conveyed between the United States and other 
countries shall remain available to the Postal Service until--
            (1) with respect to market-dominant products, the date as of 
        which the regulations promulgated under section 3622 of title 
        39, United States Code (as amended by section 201(a)) take 
        effect; and
            (2) with respect to competitive products, the date as of 
        which the regulations promulgated under section 3633 of title 
        39, United States Code (as amended by section 202) take effect.

                       TITLE V--GENERAL PROVISIONS

SEC. 501. QUALIFICATION AND TERM REQUIREMENTS FOR GOVERNORS.

    (a) Qualifications.--
            (1) In general.--Section 202(a) of title 39, United States 
        Code, is amended by striking ``(a)'' and inserting ``(a)(1)'' 
        and by striking the fourth sentence and inserting the following: 
        ``The Governors shall represent the public interest generally, 
        and shall be chosen solely on the basis of their 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.''.
            (2) <<NOTE: 39 USC 202 note.>> Applicability.--The amendment 
        made by paragraph (1) shall not affect the appointment or tenure 
        of any person serving as a Governor of the United States Postal 
        Service under an appointment made before the date of enactment 
        of this Act however, when any such office becomes vacant, the 
        appointment of any person to fill that office shall be made in 
        accordance with such amendment. <<NOTE: Effective date.>> The 
        requirement set forth in the fourth sentence of section 
        202(a)(1) of title 39, United States Code (as amended by 
        subsection (a)) shall be met beginning not later than 9 years 
        after the date of enactment of this Act.

    (b) Consultation Requirement.--Section 202(a) of title 39, United 
States Code, is amended by adding at the end the following:
    ``(2) In selecting the individuals described in paragraph (1) for 
nomination for appointment to the position of Governor, the President 
should consult with the Speaker of the House of Representatives, the 
minority leader of the House of Representatives,

[[Page 120 STAT. 3233]]

the majority leader of the Senate, and the minority leader of the 
Senate.''.
    (c) 7-Year Terms.--
            (1) In general.--Section 202(b) of title 39, United States 
        Code, is amended in the first sentence by striking ``9 years'' 
        and inserting ``7 years''.
            (2) <<NOTE: 39 USC 202 note.>> Applicability.--
                    (A) Continuation by incumbents.--The amendment made 
                by paragraph (1) shall not affect the tenure of any 
                person serving as a Governor of the United States Postal 
                Service on the date of enactment of this Act and such 
                person may continue to serve the remainder of the 
                applicable term.
                    (B) Vacancy by incumbent before 7 years of 
                service.--If a person who is serving as a Governor of 
                the United States Postal Service on the date of 
                enactment of this Act resigns, is removed, or dies 
                before the expiration of the 9-year term of that 
                Governor, and that Governor has served less than 7 years 
                of that term, the resulting vacancy in office shall be 
                treated as a vacancy in a 7-year term.
                    (C) Vacancy by incumbent after 7 years of service.--
                If a person who is serving as a Governor of the United 
                States Postal Service on the date of enactment of this 
                Act resigns, is removed, or dies before the expiration 
                of the 9-year term of that Governor, and that Governor 
                has served 7 years or more of that term, that term shall 
                be deemed to have been a 7-year term beginning on its 
                commencement date for purposes of determining vacancies 
                in office. Any appointment to the vacant office shall be 
                for a 7-year term beginning at the end of the original 
                9-year term determined without regard to the deeming 
                under the preceding sentence. Nothing in this 
                subparagraph shall be construed to affect any action or 
                authority of any Governor or the Board of Governors 
                during any portion of a 9-year term deemed to be a 7-
                year term under this subparagraph.

    (d) Term Limitation.--
            (1) In general.--Section 202(b) of title 39, United States 
        Code, is amended--
                    (A) by inserting ``(1)'' after ``(b)''; and
                    (B) by adding at the end the following:
            ``(2) No person may serve more than 2 terms as a 
        Governor.''.
            (2) <<NOTE: 39 USC 202 note.>> Applicability.--The 
        amendments made by paragraph (1) shall not affect the tenure of 
        any person serving as a Governor of the United States Postal 
        Service on the date of enactment of this Act with respect to the 
        term which that person is serving on that date. Such person may 
        continue to serve the remainder of the applicable term, after 
        which the amendments made by paragraph (1) shall apply.

SEC. 502. OBLIGATIONS.

    (a) Purposes for Which Obligations May Be Issued.--The first 
sentence of section 2005(a)(1) of title 39, United States Code, is 
amended by striking ``title.'' and inserting ``title, other than

[[Page 120 STAT. 3234]]

any of the purposes for which the corresponding authority is available 
to the Postal Service under section 2011.''.
    (b) Limitation on Net Annual Increase in Obligations Issued for 
Certain Purposes.--The third sentence of section 2005(a)(1) of title 39, 
United States Code, is amended to read as follows: ``In any one fiscal 
year, the net increase in the amount of obligations outstanding issued 
for the purpose of capital improvements and the net increase in the 
amount of obligations outstanding issued for the purpose of defraying 
operating expenses of the Postal Service shall not exceed a combined 
total of $3,000,000,000.''.
    (c) Limitations on Obligations Outstanding.--
            (1) In general.--Subsection (a) of section 2005 of title 39, 
        United States Code, is amended by adding at the end the 
        following:

    ``(3) For purposes of applying the respective limitations under this 
subsection, the aggregate amount of obligations issued by the Postal 
Service which are outstanding as of any one time, and the net increase 
in the amount of obligations outstanding issued by the Postal Service 
for the purpose of capital improvements or for the purpose of defraying 
operating expenses of the Postal Service in any fiscal year, shall be 
determined by aggregating the relevant obligations issued by the Postal 
Service under this section with the relevant obligations issued by the 
Postal Service under section 2011.''.
            (2) Conforming amendment.--The second sentence of section 
        2005(a)(1) of title 39, United States Code, is amended by 
        striking ``any such obligations'' and inserting ``obligations 
        issued by the Postal Service which may be''.

    (d) Amounts Which May Be Pledged.--
            (1) Obligations to which provisions apply.--The first 
        sentence of section 2005(b) of title 39, United States Code, is 
        amended by striking ``such obligations,'' and inserting 
        ``obligations issued by the Postal Service under this 
        section,''.
            (2) Assets, revenues, and receipts to which provisions 
        apply.--Subsection (b) of section 2005 of title 39, United 
        States Code, is amended by striking ``(b)'' and inserting 
        ``(b)(1)'', and by adding at the end the following:

    ``(2) Notwithstanding any other provision of this section--
            ``(A) the authority to pledge assets of the Postal Service 
        under this subsection shall be available only to the extent that 
        such assets are not related to the provision of competitive 
        products (as determined under section 2011(h) or, for purposes 
        of any period before accounting practices and principles under 
        section 2011(h) have been established and applied, the best 
        information available from the Postal Service, including the 
        audited statements required by section 2008(e)); and
            ``(B) any authority under this subsection relating to the 
        pledging or other use of revenues or receipts of the Postal 
        Service shall be available only to the extent that they are not 
        revenues or receipts of the Competitive Products Fund.''.

SEC. 503. PRIVATE CARRIAGE OF LETTERS.

    (a) In General.--Section 601 of title 39, United States Code, is 
amended by striking subsection (b) and inserting the following:
    ``(b) A letter may also be carried out of the mails when--

[[Page 120 STAT. 3235]]

            ``(1) the amount paid for the private carriage of the letter 
        is at least the amount equal to 6 times the rate then currently 
        charged for the 1st ounce of a single-piece first class letter;
            ``(2) the letter weighs at least 12\1/2\ ounces; or
            ``(3) such carriage is within the scope of services 
        described by regulations of the United States Postal Service 
        (including, in particular, sections 310.1 and 320.2-320.8 of 
        title 39 of the Code of Federal Regulations, as in effect on 
        July 1, 2005) that purport to permit private carriage by 
        suspension of the operation of this section (as then in effect).

    ``(c) <<NOTE: Regulations.>> Any regulations necessary to carry out 
this section shall be promulgated by the Postal Regulatory 
Commission.''.

    (b) <<NOTE: 39 USC 601 note.>> Effective Date.--This section shall 
take effect on the date as of which the regulations promulgated under 
section 3633 of title 39, United States Code (as amended by section 202) 
take effect.

SEC. 504. RULEMAKING AUTHORITY.

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

SEC. 505. NONINTERFERENCE WITH COLLECTIVE BARGAINING AGREEMENTS.

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

``Sec. 1207. Labor <<NOTE: Deadlines.>> disputes

    ``(a) <<NOTE: Notice.>> If there is a collective-bargaining 
agreement in effect, no party to such agreement shall terminate or 
modify such agreement unless the party desiring such termination or 
modification serves written notice upon the other party to the agreement 
of the proposed termination or modification not less than 90 days prior 
to the expiration date thereof, or not less than 90 days prior to the 
time it is proposed to make such termination or 
modification. <<NOTE: Notification.>> The party serving such notice 
shall notify the Federal Mediation and Conciliation Service of the 
existence of a dispute within 45 days after such notice, if no agreement 
has been reached by that time.

    ``(b) If the parties fail to reach agreement or to adopt a procedure 
providing for a binding resolution of a dispute by the expiration date 
of the agreement in effect, or the date of the proposed termination or 
modification, the Director of the Federal Mediation and Conciliation 
Service shall within 10 days appoint a mediator of nationwide reputation 
and professional stature, and who is also a member of the National 
Academy of Arbitrators. The parties shall cooperate with the mediator in 
an effort to reach an agreement and shall meet and negotiate in good 
faith at such times and places that the mediator, in consultation with 
the parties, shall direct.
    ``(c)(1) If no agreement is reached within 60 days after the 
expiration or termination of the agreement or the date on which the 
agreement became subject to modification under subsection (a) of this 
section, or if the parties decide upon arbitration but do not agree upon 
the procedures therefore, an arbitration board

[[Page 120 STAT. 3236]]

shall be established consisting of 3 members, 1 of whom shall be 
selected by the Postal Service, 1 by the bargaining representative of 
the employees, and the third by the 2 thus selected. If either of the 
parties fails to select a member, or if the members chosen by the 
parties fail to agree on the third person within 5 days after their 
first meeting, the selection shall be made from a list of names provided 
by the Director. This list shall consist of not less then 9 names of 
arbitrators of nationwide reputation and professional nature, who are 
also members of the National Academy of Arbitrators, and whom the 
Director has determined are available and willing to serve.
    ``(2) The arbitration board shall give the parties a full and fair 
hearing, including an opportunity to present evidence in support of 
their claims, and an opportunity to present their case in person, by 
counsel or by other representative as they may elect. Decisions of the 
arbitration board shall be conclusive and binding upon the parties. The 
arbitration board shall render its decision within 45 days after its 
appointment.
    ``(3) Costs of the arbitration board and mediation shall be shared 
equally by the Postal Service and the bargaining representative.
    ``(d) In the case of a bargaining unit whose recognized collective-
bargaining representative does not have an agreement with the Postal 
Service, if the parties fail to reach the agreement within 90 days after 
the commencement of collective bargaining, a mediator shall be appointed 
in accordance with the terms in subsection (b) of this section, unless 
the parties have previously agreed to another procedure for a binding 
resolution of their differences. If the parties fail to reach agreement 
within 180 days after the commencement of collective bargaining, and if 
they have not agreed to another procedure for binding resolution, an 
arbitration board shall be established to provide conclusive and binding 
arbitration in accordance with the terms of subsection (c) of this 
section.''.
    (b) <<NOTE: 39 USC 1201 note.>> Noninterference With Collective 
Bargaining Agreements.--Except as otherwise provided by the amendment 
made by subsection (a), nothing in this Act shall restrict, expand, or 
otherwise affect any of the rights, privileges, or benefits of either 
employees of or labor organizations representing employees of the United 
States Postal Service under chapter 12 of title 39, United States Code, 
the National Labor Relations Act, any handbook or manual affecting 
employee labor relations within the United States Postal Service, or any 
collective bargaining agreement.

    (c) <<NOTE: 39 USC 1217 note.>> Free Mailing Privileges Continue 
Unchanged.--Nothing in this Act or any amendment made by this Act shall 
affect any free mailing privileges accorded under section 3217 or 
sections 3403 through 3406 of title 39, United States Code.

SEC. 506. BONUS AUTHORITY.

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

``Sec. 3686. Bonus authority

    ``(a) In General.--The Postal Service may establish 1 or more 
programs to provide bonuses or other rewards to officers and employees 
of the Postal Service in senior executive or equivalent positions to 
achieve the objectives of this chapter.
    ``(b) Limitation on Total Compensation.--

[[Page 120 STAT. 3237]]

            ``(1) In general.--Under any such program, the Postal 
        Service may award a bonus or other reward in excess of the 
        limitation set forth in the last sentence of section 1003(a), if 
        such program has been approved under paragraph (2). Any such 
        award or bonus may not cause the total compensation of such 
        officer or employee to exceed the total annual compensation 
        payable to the Vice President under section 104 of title 3 as of 
        the end of the calendar year in which the bonus or award is 
        paid.
            ``(2) Approval process.--If the Postal Service wishes to 
        have the authority, under any program described in subsection 
        (a), to award bonuses or other rewards in excess of the 
        limitation set forth in the last sentence of section 1003(a)--
                    ``(A) the Postal Service shall make an appropriate 
                request to the Board of Governors of the Postal Service 
                in such form and manner as the Board requires; and
                    ``(B) the Board of Governors shall approve any such 
                request if the Board certifies, for the annual appraisal 
                period involved, that the performance appraisal system 
                for affected officers and employees of the Postal 
                Service (as designed and applied) makes meaningful 
                distinctions based on relative performance.
            ``(3) Revocation authority.--If the Board of Governors of 
        the Postal Service finds that a performance appraisal system 
        previously approved under paragraph (2)(B) does not (as designed 
        and applied) make meaningful distinctions based on relative 
        performance, the Board may revoke or suspend the authority of 
        the Postal Service to continue a program approved under 
        paragraph (2) until such time as appropriate corrective measures 
        have, in the judgment of the Board, been taken.

    ``(c) Exceptions for Critical Positions.--Notwithstanding any other 
provision of law, the Board of Governors may allow up to 12 officers or 
employees of the Postal Service in critical senior executive or 
equivalent positions to receive total compensation in an amount not to 
exceed 120 percent of the total annual compensation payable to the Vice 
President under section 104 of title 3 as of the end of the calendar 
year in which such payment is 
received. <<NOTE: Notification. Deadline.>> For each exception made 
under this subsection, the Board shall provide written notification to 
the Director of the Office of Personnel Management and the Congress 
within 30 days after the payment is made setting forth the name of the 
officer or employee involved, the critical nature of his or her duties 
and responsibilities, and the basis for determining that such payment is 
warranted.

    ``(d) Information for Inclusion in Comprehensive Statement.--
Included in its comprehensive statement under section 2401(e) for any 
period shall be--
            ``(1) the name of each person receiving a bonus or other 
        payment during such period which would not have been allowable 
        but for the provisions of subsection (b) or (c);
            ``(2) the amount of the bonus or other payment; and
            ``(3) the amount by which the limitation set forth in the 
        last sentence of section 1003(a) was exceeded as a result of 
        such bonus or other payment.

    ``(e) Regulations.--The Board of Governors may prescribe regulations 
for the administration of this section.''.

[[Page 120 STAT. 3238]]

                TITLE VI--ENHANCED REGULATORY COMMISSION

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

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

                ``CHAPTER 5--POSTAL REGULATORY COMMISSION

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

``Sec. 501. Establishment

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

``Sec. 502. Commissioners

    ``(a) <<NOTE: President.>> The Postal Regulatory Commission is 
composed of 5 Commissioners, appointed by the President, by and with the 
advice and consent of the Senate. The Commissioners shall be chosen 
solely on the basis of their technical qualifications, professional 
standing, and demonstrated expertise in economics, accounting, law, or 
public administration, and may be removed by the President only for 
cause. Each individual appointed to the Commission shall have the 
qualifications and expertise necessary to carry out the enhanced 
responsibilities accorded Commissioners under the Postal Accountability 
and Enhancement Act. Not more than 3 of the Commissioners may be 
adherents of the same political party.

    ``(b) No Commissioner shall be financially interested in any 
enterprise in the private sector of the economy engaged in the delivery 
of mail matter.
    ``(c) A Commissioner may continue to serve after the expiration of 
his term until his successor has qualified, except that a Commissioner 
may not so continue to serve for more than 1 year after the date upon 
which his term otherwise would expire under subsection (f).
    ``(d) One of the Commissioners shall be designated as Chairman by, 
and shall serve in the position of Chairman at the pleasure of, the 
President.
    ``(e) The Commissioners shall by majority vote designate a Vice 
Chairman of the Commission. The Vice Chairman shall act as Chairman of 
the Commission in the absence of the Chairman.
    ``(f) The Commissioners shall serve for terms of 6 years.'';
            (2) <<NOTE: 39 USC 3601, 3602.>> by striking, in subchapter 
        I of chapter 36 (as in effect before the amendment made by 
        section 201(c)), the heading for such subchapter I and all that 
        follows through section 3602;

[[Page 120 STAT. 3239]]

            (3) by redesignating sections 3603 and 3604 as sections 503 
        and 504, respectively, and transferring such sections to the end 
        of chapter 5 (as inserted by paragraph (1)); and
            (4) by adding after such section 504 the following:

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

    ``The Postal Regulatory Commission shall designate an officer of the 
Postal Regulatory Commission in all public proceedings (such as 
developing rules, regulations, and procedures) who shall represent the 
interests of the general public.''.
    (b) <<NOTE: 39 USC 501 note.>> Applicability.--The amendment made by 
subsection (a)(1) shall not affect the appointment or tenure of any 
person serving as a Commissioner on the Postal Regulatory Commission (as 
so redesignated by section 604) under an appointment made before the 
date of enactment of this Act or any nomination made before that date, 
but, when any such office becomes vacant, the appointment of any person 
to fill that office shall be made in accordance with such amendment.

    (c) Clerical Amendment.--The analysis for part I of title 39, United 
States Code, is amended by inserting after the item relating to chapter 
4 the following:

``5. Postal Regulatory Commission                                  501''

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

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

The written concurrence of a majority of the Commissioners then holding 
office shall, with respect to each subpoena under subparagraph (A), be 
required in advance of its issuance.
    ``(3) In the case of contumacy or failure to obey a subpoena issued 
under this subsection, upon application by the Commission, the district 
court of the United States for the district in which the person to whom 
the subpoena is addressed resides or is served may issue an order 
requiring such person to appear at any designated place to testify or 
produce documentary or other evidence. Any failure to obey the order of 
the court may be punished by the court as a contempt thereof.

[[Page 120 STAT. 3240]]

    ``(4) For purposes of this subsection, the term `covered person' 
means an officer, employee, agent, or contractor of the Postal Service.
    ``(g)(1) <<NOTE: Notification.>> 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) <<NOTE: Confidentiality.>> 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. <<NOTE: Regulations.>> The Commission shall, 
        by regulations based on rule 26(c) of the Federal Rules of Civil 
        Procedure, establish procedures for ensuring appropriate 
        confidentiality for information furnished to any party.''.

SEC. 603. AUTHORIZATION OF APPROPRIATIONS FROM THE POSTAL SERVICE FUND.

    (a) Postal Regulatory Commission.--Subsection (d) of section 504 of 
title 39, United States Code (as so redesignated by section 601) is 
amended to read as follows:
    ``(d) There are authorized to be appropriated, out of the Postal 
Service Fund, such sums as may be necessary for the Postal Regulatory 
Commission. <<NOTE: Budget.>> In requesting an appropriation under this 
subsection for a fiscal year, the Commission shall prepare and submit to 
the Congress under section 2009 a budget of the Commission's expenses, 
including expenses for facilities, supplies, compensation, and employee 
benefits.''.

    (b) Office of Inspector General of the United States Postal 
Service.--Section 8G(f) of the Inspector General Act of 1978 (5 U.S.C. 
App.) <<NOTE: 5 USC app. 8G.>> is amended--
            (1) by redesignating paragraph (4) as paragraph (5);

[[Page 120 STAT. 3241]]

            (2) by redesignating the second paragraph (3) (relating to 
        employees and labor organizations) as paragraph (4); and
            (3) by adding at the end the following:
            ``(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.''.

    (c) Budget Program.--
            (1) In general.--The next to last sentence of section 2009 
        of title 39, United States Code, is amended to read as follows: 
        ``The budget program shall also include separate statements of 
        the amounts which (1) the Postal Service requests to be 
        appropriated under subsections (b) and (c) of section 2401, (2) 
        the Office of Inspector General of the United States Postal 
        Service requests to be appropriated, out of the Postal Service 
        Fund, under section 8G(f) of the Inspector General Act of 1978, 
        and (3) the Postal Regulatory Commission requests to be 
        appropriated, out of the Postal Service Fund, under section 
        504(d) of this title.''.
            (2) Conforming amendment.--Section 2003(e)(1) of title 39, 
        United States Code, is amended by striking the first sentence 
        and inserting the following: ``The Fund shall be available for 
        the payment of (A) all expenses incurred by the Postal Service 
        in carrying out its functions as provided by law, subject to the 
        same limitation as set forth in the parenthetical matter under 
        subsection (a); (B) all expenses of the Postal Regulatory 
        Commission, subject to the availability of amounts appropriated 
        under section 504(d); and (C) all expenses of the Office of 
        Inspector General, subject to the availability of amounts 
        appropriated under section 8G(f) of the Inspector General Act of 
        1978.''.

    (d) <<NOTE: 5 USC app. 8G note.>> Effective Date.--
            (1) In general.--The amendments made by this section shall 
        apply with respect to fiscal years beginning on or after October 
        1, 2008.
            (2) <<NOTE: Applicability.>> Savings provision.--The 
        provisions of title 39, United States Code, and the Inspector 
        General Act of 1978 (5 U.S.C. App.) that are amended by this 
        section shall, for purposes of any fiscal year before the first 
        fiscal year to which the amendments made by this section apply, 
        continue to apply in the same way as if this section had never 
        been enacted.

SEC. 604. REDESIGNATION OF THE POSTAL RATE COMMISSION.

    (a) Amendments to Title 39, United States Code.--Title 39, United 
States Code, is amended in sections 404, 503 and 504 (as so redesignated 
by section 601), 1001 and 1002, by striking ``Postal Rate Commission'' 
each place it appears and inserting ``Postal Regulatory Commission'';
    (b) Amendments to Title 5, United States Code.--Title 5, United 
States Code, is amended in sections 104(1), 306(f), 2104(b), 3371(3), 
5314 (in the item relating to Chairman, Postal Rate Commission), 5315 
(in the item relating to Members, Postal Rate Commission), 
5514(a)(5)(B), 7342(a)(1)(A), 7511(a)(1)(B)(ii), 8402(c)(1), 
8423(b)(1)(B), and 8474(c)(4) by striking ``Postal Rate Commission'' and 
inserting ``Postal Regulatory Commission''.
    (c) Amendment to the Ethics in Government Act of 1978.--Section 
101(f)(6) of the Ethics in Government Act of 1978 <<NOTE: 5 USC app. 
101.>> (5 U.S.C.

[[Page 120 STAT. 3242]]

App.) is amended by striking ``Postal Rate Commission'' and inserting 
``Postal Regulatory Commission''.
    (d) Amendment to the Rehabilitation Act of 1973.--Section 501(b) of 
the Rehabilitation Act of 1973 (29 U.S.C. 791(b)) is amended by striking 
``Postal Rate Office'' and inserting ``Postal Regulatory Commission''.
    (e) Amendment to Title 44, United States Code.--Section 3502(5) of 
title 44, United States Code, is amended by striking ``Postal Rate 
Commission'' and inserting ``Postal Regulatory Commission''.
    (f) <<NOTE: 39 USC 404 note.>> Other References.--Whenever a 
reference is made in any provision of law (other than this Act or a 
provision of law amended by this Act), regulation, rule, document, or 
other record of the United States to the Postal Rate Commission, such 
reference shall be considered a reference to the Postal Regulatory 
Commission.

SEC. 605. INSPECTOR GENERAL OF THE POSTAL REGULATORY COMMISSION.

    (a) In General.--Section 8G(a)(2) of the Inspector General Act of 
1978 <<NOTE: 5 USC app. 8G.>> is amended by inserting ``the Postal 
Regulatory Commission,'' after ``the United States International Trade 
Commission,''.

    (b) Administration.--Section 504 of title 39, United States Code (as 
so redesignated by section 601) is amended by adding after subsection 
(g) (as added by section 602) the following:
    ``(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.''.
    (c) <<NOTE: 5 USC app. 8G note.>> Deadline.--No later than 180 days 
after the date of the enactment of this Act--
            (1) the first Inspector General of the Postal Regulatory 
        Commission shall be appointed; and
            (2) <<NOTE: Establishment.>> the Office of Inspector General 
        of the Postal Regulatory Commission shall be established.

                         TITLE VII--EVALUATIONS

SEC. 701. <<NOTE: 39 USC 501 note.>> ASSESSMENTS OF RATEMAKING, 
            CLASSIFICATION, AND OTHER PROVISIONS.

    (a) In General.-- <<NOTE: Deadline. Reports.>> The Postal Regulatory 
Commission shall, at least every 5 years, submit a report to the 
President and Congress concerning--
            (1) the operation of the amendments made by this Act; and
            (2) recommendations for any legislation or other measures 
        necessary to improve the effectiveness or efficiency of the 
        postal laws of the United States.

[[Page 120 STAT. 3243]]

    (b) Postal Service Views.--A report under this section shall be 
submitted only after reasonable opportunity has been afforded to the 
Postal Service to review the report and to submit written comments on 
the report. Any comments timely received from the Postal Service under 
the preceding sentence shall be attached to the report submitted under 
subsection (a).

SEC. 702. <<NOTE: 39 USC 501 note.>> REPORT ON UNIVERSAL POSTAL SERVICE 
            AND THE POSTAL MONOPOLY.

    (a) Report by the Postal Regulatory Commission.--
            (1) In general.--Not later than 24 months after the date of 
        enactment of this Act, the Postal Regulatory Commission shall 
        submit a report to the President and Congress on universal 
        postal service and the postal monopoly in the United States (in 
        this section referred to as ``universal service and the postal 
        monopoly''), including the monopoly on the delivery of mail and 
        on access to mailboxes.
            (2) Contents.--The report under this subsection shall 
        include--
                    (A) a comprehensive review of the history and 
                development of universal service and the postal 
                monopoly, including how the scope and standards of 
                universal service and the postal monopoly have evolved 
                over time for the Nation and its urban and rural areas;
                    (B) the scope and standards of universal service and 
                the postal monopoly provided under current law 
                (including sections 101 and 403 of title 39, United 
                States Code), and current rules, regulations, policy 
                statements, and practices of the Postal Service;
                    (C) a description of any geographic areas, 
                populations, communities (including both urban and rural 
                communities), organizations, or other groups or entities 
                not currently covered by universal service or that are 
                covered but that are receiving services deficient in 
                scope or quality or both; and
                    (D) the scope and standards of universal service and 
                the postal monopoly likely to be required in the future 
                in order to meet the needs and expectations of the 
                United States public, including all types of mail users, 
                based on discussion of such assumptions, alternative 
                sets of assumptions, and analyses as the Postal Service 
                considers plausible.

    (b) Recommended Changes to Universal Service and the Monopoly.--The 
Postal Regulatory Commission shall include in the report under 
subsection (a), and in all reports submitted under section 701 of this 
Act--
            (1) any recommended changes to universal service and the 
        postal monopoly as the Commission considers appropriate, 
        including changes that the Commission may implement under 
        current law and changes that would require changes to current 
        law, with estimated effects of the recommendations on the 
        service, financial condition, rates, and security of mail 
        provided by the Postal Service;
            (2) with respect to each recommended change described under 
        paragraph (1)--

[[Page 120 STAT. 3244]]

                    (A) an estimate of the costs of the Postal Service 
                attributable to the obligation to provide universal 
                service under current law; and
                    (B) an analysis of the likely benefit of the current 
                postal monopoly to the ability of the Postal Service to 
                sustain the current scope and standards of universal 
                service, including estimates of the financial benefit of 
                the postal monopoly to the extent practicable, under 
                current law; and
            (3) such additional topics and recommendations as the 
        Commission considers appropriate, with estimated effects of the 
        recommendations on the service, financial condition, rates, and 
        the security of mail provided by the Postal Service.

    (c) Consultation.--In preparing the report required by this section, 
the Postal Regulatory Commission--
            (1) shall solicit written comments from the Postal Service 
        and consult with the Postal Service and other Federal agencies, 
        users of the mails, enterprises in the private sector engaged in 
        the delivery of the mail, and the general public; and
            (2) shall address in the report any written comments 
        received under this section.

    (d) Clarifying Provision.--Nothing in this section shall be 
considered to relate to any services that are not postal services within 
the meaning of section 102 of title 39, United States Code, as amended 
by section 101 of this Act.

SEC. 703. <<NOTE: 39 USC 3633 note.>> STUDY ON EQUAL APPLICATION OF LAWS 
            TO COMPETITIVE PRODUCTS.

    (a) In General.-- <<NOTE: Deadline. Reports.>> The Federal Trade 
Commission shall prepare and submit to the President and Congress, and 
to the Postal Regulatory Commission, within 1 year after the date of 
enactment of this Act, a comprehensive report identifying Federal and 
State laws that apply differently to the United States Postal Service 
with respect to the competitive category of mail (within the meaning of 
section 102 of title 39, United States Code, as amended by section 101) 
and to private companies providing similar products.

    (b) Recommendations.--The Federal Trade Commission shall include 
such recommendations as it considers appropriate for bringing such legal 
differences to an end, and in the interim, to account under section 3633 
of title 39, United States Code (as added by this Act), for the net 
economic effects provided by those laws.
    (c) Consultation.--In preparing its report, the Federal Trade 
Commission shall consult with the United States Postal Service, the 
Postal Regulatory Commission, other Federal agencies, mailers, private 
companies that provide delivery services, and the general public, and 
shall append to such report any written comments received under this 
subsection.
    (d) Competitive Product Regulation.--The Postal Regulatory 
Commission shall take into account the recommendations of the Federal 
Trade Commission, and subsequent events that affect the continuing 
validity of the estimate of the net economic effect, in promulgating or 
revising the regulations required under section 3633 of title 39, United 
States Code.

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

    (a) Report by the Inspector General.--

[[Page 120 STAT. 3245]]

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

    (b) Report by the Postal Service.--
            (1) Report to congress.--Not later than 6 months after 
        receiving the report under subsection (a), the Postal Service 
        shall submit a report to Congress detailing how it plans to 
        improve workplace safety and reduce workplace-related injuries 
        nationwide, including goals and metrics.
            (2) Problem areas.--The report under this subsection shall 
        also include plans, developed in consultation with the Inspector 
        General and employee representatives, including representatives 
        of each postal labor union and management association, for 
        addressing the problem areas identified by the Inspector General 
        in the report under subsection (a)(2)(C).

SEC. 705. STUDY ON RECYCLED PAPER.

    (a) In General.-- <<NOTE: Deadline. Reports.>> Within 12 months 
after the date of enactment of this Act, the Government Accountability 
Office shall study and submit to the Congress, the Board of Governors of 
the Postal Service, and to the Postal Regulatory Commission a report 
concerning--
            (1) a description and analysis of the accomplishments of the 
        Postal Service in each of the preceding 5 years involving 
        recycling activities, including efforts by the Postal Service to 
        recycle undeliverable and discarded mail and other materials and 
        its public affairs efforts to promote the increased recycling of 
        paper products; and
            (2) additional opportunities that may be available for the 
        United States Postal Service to engage in recycling initiatives, 
        including consultation with the paper recycling industry and 
        encouraging mailers to increase both the recycling of paper 
        products and the use of recycled paper, and the projected costs 
        and revenues of undertaking such opportunities.

    (b) Recommendations.--The report shall include recommendations for 
any administrative or legislative actions that may be appropriate.

[[Page 120 STAT. 3246]]

SEC. 706. GREATER DIVERSITY IN POSTAL SERVICE EXECUTIVE AND 
            ADMINISTRATIVE SCHEDULE MANAGEMENT POSITIONS.

    (a) In general.-- <<NOTE: Deadline. Reports.>> The Board of 
Governors shall study and, within 1 year after the date of the enactment 
of this Act, submit to the President and Congress a report concerning 
the extent to which women and minorities are represented in supervisory 
and management positions within the United States Postal Service. Any 
data included in the report shall be presented in the aggregate and by 
pay level.

    (b) <<NOTE: 39 USC 1001 note.>> Performance Evaluations.--The United 
States Postal Service shall, as soon as is practicable, take such 
measures as may be necessary to incorporate the affirmative action and 
equal opportunity criteria contained in 4313(5) of title 5, United 
States Code, into the performance appraisals of senior supervisory or 
managerial employees.

SEC. 707. CONTRACTS WITH WOMEN, MINORITIES, AND SMALL BUSINESSES.

     <<NOTE: Deadline. Reports.>> The Board of Governors shall study 
and, within 1 year after the date of the enactment of this Act, submit 
to the President and the Congress a report concerning the number and 
value of contracts and subcontracts the Postal Service has entered into 
with women, minorities, and small businesses.

SEC. 708. RATES FOR PERIODICALS.

    (a) <<NOTE: Reports.>> In General.--The United States Postal 
Service, acting jointly with the Postal Regulatory Commission, shall 
study and submit to the President and Congress a report concerning--
            (1) the quality, accuracy, and completeness of the 
        information used by the Postal Service in determining the direct 
        and indirect postal costs attributable to periodicals; and
            (2) any opportunities that might exist for improving 
        efficiencies in the collection, handling, transportation, or 
        delivery of periodicals by the Postal Service, including any 
        pricing incentives for mailers that might be appropriate.

    (b) Recommendations.--The report shall include recommendations for 
any administrative action or legislation that might be appropriate.

SEC. 709. ASSESSMENT OF CERTAIN RATE DEFICIENCIES.

    (a) In General.-- <<NOTE: Deadline. Reports.>> Within 12 months 
after the date of the enactment of this Act, the Office of Inspector 
General of the United States Postal Service shall study and submit to 
the President, the Congress, and the United States Postal Service, a 
report concerning the administration of section 3626(k) of title 39, 
United States Code.

    (b) Specific Requirements.--The study and report shall specifically 
address the adequacy and fairness of the process by which assessments 
under section 3626(k) of title 39, United States Code, are determined 
and appealable, including--
            (1) whether the Postal Regulatory Commission or any other 
        body outside the Postal Service should be assigned a role; and
            (2) whether a statute of limitations should be established 
        for the commencement of proceedings by the Postal Service 
        thereunder.

[[Page 120 STAT. 3247]]

SEC. 710. ASSESSMENT OF FUTURE BUSINESS MODEL OF THE POSTAL SERVICE.

    (a) Government Accountability Office <<NOTE: Reports.>> Mandate.--
The Comptroller General of the United States shall prepare and submit to 
the President and Congress a report that builds upon the work of the 
2002 President's Commission on the United States Postal Service by 
evaluating in-depth various options and strategies for the long-term 
structural and operational reforms of the United States Postal Service. 
The final report required by this section shall be submitted within 5 
years of the date of enactment of this Act.

    (b) Protection of Universal Service.--The Government Accountability 
Office may include such recommendations as it considers appropriate with 
respect to how the Postal Service's business model can be maintained or 
transformed in an orderly manner that will minimize adverse effects on 
all interested parties and assure continued availability of affordable, 
universal postal service throughout the United States. The Government 
Accountability Office shall not consider any strategy or other course of 
action that would pose a significant risk to the continued availability 
of affordable, universal postal service throughout the United States.
    (c) Elements of Report.--
            (1) Topics to address.--The report shall address at least 
        the following:
                    (A) Specification of nature and bases of one or more 
                sets of reasonable assumptions about the development of 
                the postal services market, to the extent that such 
                assumptions may be necessary or appropriate for each 
                strategy identified by the Government Accountability 
                Office.
                    (B) Specification of the nature and bases of one or 
                more sets of reasonable assumptions about the 
                development of the regulatory framework for postal 
                services, to the extent that such assumptions may be 
                necessary or appropriate for each strategy identified by 
                the Government Accountability Office.
                    (C) Qualitative and, to the extent possible, 
                quantitative effects that each strategy identified by 
                the Government Accountability Office may have on 
                universal service generally, the Postal Service, 
                mailers, postal employees, private companies that 
                provide delivery services, and the general public.
                    (D) Financial effects that each strategy identified 
                by the Government Accountability Office may have on the 
                Postal Service, postal employees, the Treasury of the 
                United States, and other affected parties, including the 
                American mailing consumer.
                    (E) Feasible and appropriate procedural steps and 
                timetables for implementing each strategy identified by 
                the Government Accountability Office.
                    (F) Such additional topics as the Comptroller 
                General shall consider necessary and appropriate.
            (2) Matters to consider.--For each strategy identified, the 
        Government Accountability Office shall assess how each business 
        model might--
                    (A) address the human-capital challenges facing the 
                Postal Service, including how employee-management 
                relations within the Postal Service may be improved;

[[Page 120 STAT. 3248]]

                    (B) optimize the postal infrastructure, including 
                the best methods for providing retail services that 
                ensure convenience and access to customers;
                    (C) ensure the safety and security of the mail and 
                of postal employees;
                    (D) minimize areas of inefficiency or waste and 
                improve operations involved in the collection, 
                processing, or delivery of mail; and
                    (E) impact other matters that the Comptroller 
                General determines are relevant to evaluating a viable 
                long-term business model for the Postal Service.
            (3) Experiences of other countries.--In preparing the report 
        required by subsection (a), the Government Accountability Office 
        shall comprehensively and quantitatively investigate the 
        experiences of other industrialized countries that have 
        transformed the national post office. The Government 
        Accountability Office shall undertake such original research as 
        it deems necessary. In each case, the Government Accountability 
        Office shall describe as fully as possible the costs and 
        benefits of transformation of the national post office on all 
        affected parties and shall identify any lessons that foreign 
        experience may imply for each strategy identified by the 
        research organization.

    (d) Outside experts.--In preparing its study, the Government 
Accountability Office may retain the services of additional experts and 
consultants.
    (e) Consultation.--In preparing its report, the Government 
Accountability Office shall consult fully with the Postal Service, the 
Postal Regulatory Commission, other Federal agencies, postal employee 
unions and management associations, mailers, private companies that 
provide delivery services, and the general public. The Government 
Accountability Office shall include with its final report a copy of all 
formal written comments received under this subsection.
    (f) Authorization of Appropriations.--There are authorized to be 
appropriated from the Postal Service Fund such sums as may be necessary 
to carry out this section.

SEC. 711. <<NOTE: 39 USC 501 note.>> PROVISIONS RELATING TO COOPERATIVE 
            MAILINGS.

    (a) Study.--
            (1) In general.--The Postal Regulatory Commission shall 
        examine section E670.5.3 of the Domestic Mail Manual to 
        determine whether it contains adequate safeguards to protect 
        against--
                    (A) abuses of rates for nonprofit mail; and
                    (B) deception of consumers.
            (2) Report.--The Commission shall report the results of its 
        examination to the Postal Service, along with any 
        recommendations that the Commission determines appropriate.

    (b) Failure to Act.--If the Postal Service fails to act on the 
recommendations of the Commission, the Commission may take such action 
as it determines necessary to prevent abuse of rates or deception of 
consumers.

SEC. 712. DEFINITION.

    For purposes of this title, the term ``Board of Governors'' has the 
meaning given such term by section 102 of title 39, United States Code.

[[Page 120 STAT. 3249]]

TITLE VIII-- <<NOTE: Postal Civil Service Retirement and Health Benefits 
   Funding Amendments of 2006.>> POSTAL SERVICE RETIREMENT AND HEALTH 
BENEFITS FUNDING

SEC. 801. <<NOTE: 5 USC 101 note.>> SHORT TITLE.

    This title may be cited as the ``Postal Civil Service Retirement and 
Health Benefits Funding Amendments of 2006''.

SEC. 802. CIVIL SERVICE RETIREMENT SYSTEM.

    (a) In General.--Chapter 83 of title 5, United States Code, is 
amended--
            (1) in section 8334(a)(1)(B), by striking clause (ii) and 
        inserting the following:

    ``(ii) In the case of an employee of the United States Postal 
Service, no amount shall be contributed under this subparagraph.''; and
            (2) by amending section 8348(h) to read as follows:

    ``(h)(1) In this subsection, the term `Postal surplus or 
supplemental liability' means the estimated difference, as determined by 
the Office, between--
            ``(A) the actuarial present value of all future benefits 
        payable from the Fund under this subchapter to current or former 
        employees of the United States Postal Service and attributable 
        to civilian employment with the United States Postal Service; 
        and
            ``(B) the sum of--
                    ``(i) the actuarial present value of deductions to 
                be withheld from the future basic pay of employees of 
                the United States Postal Service currently subject to 
                this subchapter under section 8334;
                    ``(ii) that portion of the Fund balance, as of the 
                date the Postal surplus or supplemental liability is 
                determined, attributable to payments to the Fund by the 
                United States Postal Service and its employees, minus 
                benefit payments attributable to civilian employment 
                with the United States Postal Service, plus the earnings 
                on such amounts while in the Fund; and
                    ``(iii) any other appropriate amount, as determined 
                by the Office in accordance with generally accepted 
                actuarial practices and principles.

    ``(2)(A) <<NOTE: Deadlines.>> 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) <<NOTE: Redetermination period.>> 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). <<NOTE: Effective 
date. Deadline.>> 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.

[[Page 120 STAT. 3250]]

    ``(C) As of the close of the fiscal years ending September 30, 2015, 
2025, 2035, and 2039, if the result is a surplus, that amount shall be 
transferred to the Postal Service Retiree Health Benefits Fund, and any 
prior amortization schedule for payments shall be terminated.
    ``(D) Amortization schedules established under this paragraph shall 
be set in accordance with generally accepted actuarial practices and 
principles, with interest computed at the rate used in the most recent 
valuation of the Civil Service Retirement System.
    ``(E) The United States Postal Service shall pay the amounts so 
determined to the Office, with payments due not later than the date 
scheduled by the Office.
    ``(3) Notwithstanding any other provision of law, in computing the 
amount of any payment under any other subsection of this section that is 
based upon the amount of the unfunded liability, such payment shall be 
computed disregarding that portion of the unfunded liability that the 
Office determines will be liquidated by payments under this 
subsection.''.
    (b) Credit Allowed for Military Service.--In the application of 
section 8348(g)(2) of title 5, United States Code, for the fiscal year 
2007, the Office of Personnel Management shall include, in addition to 
the amount otherwise computed under that paragraph, the amounts that 
would have been included for the fiscal years 2003 through 2006 with 
respect to credit for military service of former employees of the United 
States Postal Service as though the Postal Civil Service Retirement 
System Funding Reform Act of 2003 (Public Law 108-18) had not been 
enacted, and the Secretary of the Treasury shall make the required 
transfer to the Civil Service Retirement and Disability Fund based on 
that amount.
    (c) <<NOTE: 5 USC 8348 note.>> Review.--
            (1) In general.--
                    (A) Request for review.--Notwithstanding any other 
                provision of this section (including any amendment made 
                by this section), any determination or redetermination 
                made by the Office of Personnel Management under this 
                section (including any amendment made by this section) 
                shall, upon request of the United States Postal Service, 
                be subject to a review by the Postal Regulatory 
                Commission under this subsection.
                    (B) Report.--Upon receiving a request under 
                subparagraph (A), the Commission shall promptly procure 
                the services of an actuary, who shall hold membership in 
                the American Academy of Actuaries and shall be qualified 
                in the evaluation of pension obligations, to conduct a 
                review in accordance with generally accepted actuarial 
                practices and principles and to provide a report to the 
                Commission containing the results of the review. The 
                Commission, upon determining that the report satisfies 
                the requirements of this paragraph, shall approve the 
                report, with any comments it may choose to make, and 
                submit it with any such comments to the Postal Service, 
                the Office of Personnel Management, and Congress.
            (2) Reconsideration.--Upon receiving the report from the 
        Commission under paragraph (1), the Office of Personnel 
        Management shall reconsider its determination or redetermination 
        in light of such report, and shall make any appropriate 
        adjustments. <<NOTE: Reports.>> The Office shall submit a report 
        containing the

[[Page 120 STAT. 3251]]

        results of its reconsideration to the Commission, the Postal 
        Service, and Congress.

SEC. 803. HEALTH INSURANCE.

    (a) In General.--
            (1) Funding.--Chapter 89 of title 5, United States Code, is 
        amended--
                    (A) in section 8906(g)(2)(A), by striking ``shall be 
                paid by the United States Postal Service.'' and 
                inserting ``shall 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.''; and
                    (B) by inserting after section 8909 the following:

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

    ``(a) There is in the Treasury of the United States a Postal Service 
Retiree Health Benefits Fund which is administered by the Office of 
Personnel Management.
    ``(b) The Fund is available without fiscal year limitation for 
payments required under section 8906(g)(2)(A).
    ``(c) The Secretary of the Treasury shall immediately invest, in 
interest-bearing securities of the United States such currently 
available portions of the Fund as are not immediately required for 
payments from the Fund. Such investments shall be made in the same 
manner as investments for the Civil Service Retirement and Disability 
Fund under section 8348.
    ``(d)(1) <<NOTE: Deadlines.>> 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) 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.
    ``(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) $5,400,000,000, not later than September 30, 2009;
            ``(iv) $5,500,000,000, not later than September 30, 2010;

[[Page 120 STAT. 3252]]

            ``(v) $5,500,000,000, not later than September 30, 2011;
            ``(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, 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); 
        and
            ``(ii) any annual installment computed under paragraph 
        (2)(B).

    ``(4) Computations under this subsection shall be made consistent 
with the assumptions and methodology used by the Office for financial 
reporting under subchapter II of chapter 35 of title 31.
    ``(5)(A)(i) Any computation or other determination of the Office 
under this subsection shall, upon request of the United States Postal 
Service, be subject to a review by the Postal Regulatory Commission 
under this paragraph.
    ``(ii) <<NOTE: Reports.>> 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. <<NOTE: Reports.>> The Office shall submit a report 
containing the results of its reconsideration to the Commission, the 
Postal Service, and Congress.

    ``(6) <<NOTE: Regulatioins.>> After consultation with the United 
States Postal Service, the Office shall promulgate any regulations the 
Office determines necessary under this subsection.''.
            (2) Technical and conforming amendment.--The table of 
        sections for chapter 89 of title 5, United States Code, is 
        amended by inserting after the item relating to section 8909 the 
        following:

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

    (b) <<NOTE: 5 USC 8909a.>> Review.--
            (1) In general.--
                    (A) Request for review.--Any regulation established 
                under section 8909a(d)(5) of title 5, United States Code 
                (as added by subsection (a)), shall, upon request of the 
                United States Postal Service, be subject to a review by 
                the Postal Regulatory Commission under this paragraph.

[[Page 120 STAT. 3253]]

                    (B) Report.--Upon receiving a request under 
                subparagraph (A), the Commission shall promptly procure 
                the services of an actuary, who shall hold membership in 
                the American Academy of Actuaries and shall be qualified 
                in the evaluation of healthcare insurance obligations, 
                to conduct a review in accordance with generally 
                accepted actuarial practices and principles and to 
                provide a report to the Commission containing the 
                results of the review. The Commission, upon determining 
                that the report satisfies the requirements of this 
                paragraph, shall approve the report, with any comments 
                it may choose to make, and submit it with any such 
                comments to the Postal Service, the Office of Personnel 
                Management, and Congress.
            (2) Reconsideration.--Upon receiving the report under 
        paragraph (1), the Office of Personnel Management shall 
        reconsider its determination or redetermination in light of such 
        report, and shall make any appropriate 
        adjustments. <<NOTE: Reports.>> The Office shall submit a report 
        containing the results of its reconsideration to the Commission, 
        the Postal Service, and Congress.

SEC. 804. REPEAL OF DISPOSITION OF SAVINGS PROVISION.

    (a) In General.--Section 3 of the Postal Civil Service Retirement 
System Funding Reform Act of 2003 <<NOTE: 39 USC note prec. 
2001.>> (Public Law 108-18) is repealed.

    (b) Savings.--Savings accrued to the Postal Service as a result of 
enactment of Public Law 108-18 and attributable to fiscal year 2006 
shall be transferred to the Postal Service Retiree Health Benefits Fund 
established under section 8909a of title 5, United States Code, as added 
by section 803 of this Act.

SEC. 805. <<NOTE: 5 USC 8334 note.>> EFFECTIVE DATES.

    (a) In General.--Except as provided under subsection (b), this title 
shall take effect on October 1, 2006.
    (b) Termination of Employer Contribution.--The amendment made by 
paragraph (1) of section 802(a) shall take effect on the first day of 
the first pay period beginning on or after October 1, 2006.

                TITLE IX--COMPENSATION FOR WORK INJURIES

SEC. 901. TEMPORARY DISABILITY; CONTINUATION OF PAY.

    (a) Time of Accrual of Right.--Section 8117 of title 5, United 
States Code, is amended--
            (1) by striking ``An employee'' and inserting ``(a) An 
        employee other than a Postal Service employee''; and
            (2) by adding at the end the following:

    ``(b) A Postal Service employee is not entitled to compensation or 
continuation of pay for the first 3 days of temporary disability, except 
as provided under paragraph (3) of subsection (a). A Postal Service 
employee may use annual leave, sick leave, or leave without pay during 
that 3-day period, except that if the disability exceeds 14 days or is 
followed by permanent disability, the employee may have their sick leave 
or annual leave reinstated or receive pay for the time spent on leave 
without pay under this section.''.

[[Page 120 STAT. 3254]]

    (b) Technical and Conforming Amendment.--Section 8118(b)(1) of title 
5, United States Code, is amended to read as follows:
            ``(1) without a break in time, except as provided under 
        section 8117(b), unless controverted under regulations of the 
        Secretary;''.

                         TITLE X--MISCELLANEOUS

SEC. 1001. EMPLOYMENT OF POSTAL POLICE OFFICERS.

    Section 3061 of title 18, United States Code, is amended by adding 
at the end the following:
    ``(c)(1) The Postal Service may employ police officers for duty in 
connection with the protection of property owned or occupied by the 
Postal Service or under the charge and control of the Postal Service, 
and persons on that property, including duty in areas outside the 
property to the extent necessary to protect the property and persons on 
the property.
    ``(2) With respect to such property, such officers shall have the 
power to--
            ``(A) enforce Federal laws and regulations for the 
        protection of persons and property;
            ``(B) carry firearms; and
            ``(C) make arrests without a warrant for any offense against 
        the Unites States committed in the presence of the officer or 
        for any felony cognizable under the laws of the United States if 
        the officer has reasonable grounds to believe that the person to 
        be arrested has committed or is committing a felony.

    ``(3) With respect to such property, such officers may have, to such 
extent as the Postal Service may by regulations prescribe, the power 
to--
            ``(A) serve warrants and subpoenas issued under the 
        authority of the United States; and
            ``(B) conduct investigations, on and off the property in 
        question, of offenses that may have been committed against 
        property owned or occupied by the Postal Service or persons on 
        the property.

    ``(4)(A) As to such property, the Postmaster General may prescribe 
regulations necessary for the protection and administration of property 
owned or occupied by the Postal Service and persons on the property. The 
regulations may include reasonable penalties, within the limits 
prescribed in subparagraph (B), for violations of the regulations. The 
regulations shall be posted and remain posted in a conspicuous place on 
the property.
            ``(B) <<NOTE: Penalty.>> A person violating a regulation 
        prescribed under this subsection shall be fined under this 
        title, imprisoned for not more than 30 days, or both.''.

SEC. 1002. OBSOLETE PROVISIONS.

    (a) Repeal.--
            (1) In general.--Chapter 52 of title 39, United States 
        Code, <<NOTE: 39 USC 5201 et seq.>> is repealed.
            (2) Conforming amendments.--(A) Section 5005(a) of title 39, 
        United States Code, is amended--

[[Page 120 STAT. 3255]]

                    (i) by striking paragraph (1), and by redesignating 
                paragraphs (2) through (4) as paragraphs (1) through 
                (3), respectively; and
                    (ii) in paragraph (3) (as so designated by clause 
                (i)), by striking ``(as defined in section 5201(6) of 
                this title)''.
            (B) Section 5005(b) of such title 39 is amended by striking 
        ``(a)(4)'' each place it appears and inserting ``(a)(3)''.
            (C) Section 5005(c) of such title 39 is amended by striking 
        ``by carrier or person under subsection (a)(1) of this section, 
        by contract under subsection (a)(4) of this section, or'' and 
        inserting ``by contract under subsection (a)(3) of this section 
        or''.

    (b) Eliminating Restriction on Length of Contracts.--(1) Section 
5005(b)(1) of title 39, United States Code, is amended by striking ``(or 
where the Postal Service determines that special conditions or the use 
of special equipment warrants, not in excess of 6 years)'' and inserting 
``(or such longer period of time as may be determined by the Postal 
Service to be advisable or appropriate)''.
    (2) Section 5402(d) of such title 39 is amended by striking ``for a 
period of not more than 4 years''.
    (3) Section 5605 of such title 39 is amended by striking ``for 
periods of not in excess of 4 years''.
    (c) Technical and Conforming Amendment.--The table of chapters for 
part V of title 39, United States Code, is amended by repealing the item 
relating to chapter 52.

SEC. 1003. REDUCED RATES.

    Section 3626 of title 39, United States Code, is amended--
            (1) in subsection (a), by striking all before paragraph (4) 
        and inserting the following:

    ``(a)(1) Except as otherwise provided in this section, rates of 
postage for a class of mail or kind of mailer under former section 4358, 
4452(b), 4452(c), 4554(b), or 4554(c) of this title shall be established 
in accordance with section 3622.
    ``(2) For the purpose of this subsection, the term `regular-rate 
category' means any class of mail or kind of mailer, other than a class 
or kind referred to in section 2401(c).
    ``(3) Rates of postage for a class of mail or kind of mailer under 
former section 4358(a) through (c) of this title shall be established so 
that postage on each mailing of such mail reflects its preferred status 
as compared to the postage for the most closely corresponding regular-
rate category mailing.'';
            (2) in subsection (g), by adding at the end the following:

    ``(3) For purposes of this section and former section 4358(a) 
through (c) of this title, those copies of an issue of a publication 
entered within the county in which it is published, but distributed 
outside such county on postal carrier routes originating in the county 
of publication, shall be treated as if they were distributed within the 
county of publication.
    ``(4)(A) In the case of an issue of a publication, any number of 
copies of which are mailed at the rates of postage for a class of mail 
or kind of mailer under former section 4358(a) through (c) of this 
title, any copies of such issue which are distributed outside the county 
of publication (excluding any copies subject to paragraph (3)) shall be 
subject to rates of postage provided for under this paragraph.

[[Page 120 STAT. 3256]]

    ``(B) The rates of postage applicable to mail under this paragraph 
shall be established in accordance with section 3622.
    ``(C) This paragraph shall not apply with respect to an issue of a 
publication unless the total paid circulation of such issue outside the 
county of publication (not counting recipients of copies subject to 
paragraph (3)) is less than 5,000.''; and
            (3) by adding at the end the following:

    ``(n) In the administration of this section, matter that satisfies 
the circulation standards for requester publications shall not be 
excluded from being mailed at the rates for mail under former section 
4358 solely because such matter is designed primarily for free 
circulation or for circulation at nominal rates, or fails to meet the 
requirements of former section 4354(a)(5).''.

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

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

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

    (a) Definitions.--Section 5402(a) of title 39, United States Code, 
is amended--
            (1) in paragraph (4), by striking ``(g)(1)(D)(i)'' and 
        inserting ``(g)(1)(A)(iv)(I)'';
            (2) in paragraph (5), by striking ``(g)(1)(D)(i)'' and 
        inserting ``(g)(1)(A)(iv)(I)'';
            (3) in paragraph (8), by striking ``rates paid to a bush 
        carrier'' and inserting ``linehaul rates and a single terminal 
        handling payment at a bush terminal handling rate paid to a bush 
        carrier'';
            (4) in paragraph (11), by striking ``(g)(1)(D)(ii)'' and 
        inserting ``(g)(1)(A)(iv)(II)''; and
            (5) in paragraph (13)--
                    (A) in subparagraph (A)--
                          (i) by striking ``clause (i) or (ii) of 
                      subsection (g)(1)(D)'' and inserting ``subclause 
                      (I) or (II) of subsection (g)(1)(A)(iv)''; and
                          (ii) by striking ``and'' after the semicolon;
                    (B) in subparagraph (B), by adding ``and'' after the 
                semicolon; and
                    (C) by adding at the end the following:
                    ``(C) is not comprised of previously qualified 
                existing mainline carriers as a result of merger or 
                sale;''.

    (b) Nonpriority Bypass Mail.--Section 5402(g) of title 39, United 
States Code, is amended--
            (1) in paragraph (3), by adding at the end the following:
                    ``(C) When a new hub results from a change in a 
                determination under subparagraph (B), mail tender from 
                that hub during the 12-month period beginning on the

[[Page 120 STAT. 3257]]

                effective date of that change shall be based on the 
                passenger and freight shares to the destinations of the 
                affected hub or hubs resulting in the new hub.''; and
            (2) in paragraph (5)(A)(i), by striking ``(g)(1)(D)(ii)'' 
        and inserting ``(g)(1)(A)(iv)(II)''.

    (c) Equitable Tender.--Section 5402(h) of title 39, United States 
Code, is amended--
            (1) in paragraph (1), by inserting ``bush'' after 
        ``providing scheduled'';
            (2) by striking paragraph (3) and inserting the following:
            ``(3)(A) Except as provided under subparagraph (C), a new or 
        existing 121 bush passenger carrier qualified under subsection 
        (g)(1) shall be exempt from the requirements under paragraphs 
        (1)(B) and (2)(A) on a city pair route for a period which shall 
        extend for--
                    ``(i) 1 year;
                    ``(ii) 1 year in addition to the extension under 
                clause (i) if, as of the conclusion of the first year, 
                such carrier has been providing not less than 5 percent 
                of the passenger service on that route (as calculated 
                under paragraph (5)); and
                    ``(iii) 1 year in addition to the extension under 
                clause (ii) if, as of the conclusion of the second year, 
                such carrier has been providing not less than 10 percent 
                of the passenger service on that route (as calculated 
                under paragraph (5)).
            ``(B)(i) The first 3 121 bush passenger carriers entitled to 
        the exemptions under subparagraph (A) on any city pair route 
        shall divide no more than an additional 10 percent of the mail, 
        apportioned equally, comprised of no more than--
                    ``(I) 5 percent of the share of each qualified 
                passenger carrier servicing that route that is not a 121 
                bush passenger carrier; and
                    ``(II) 5 percent of the share of each nonpassenger 
                carrier servicing that route that transports 25 percent 
                or more of the total nonmail freight under subsection 
                (i)(1).
            ``(ii) Additional 121 bush passenger carriers entering 
        service on that city pair route after the first 3 shall not 
        receive any additional mail share.
            ``(iii) If any 121 bush passenger carrier on a city pair 
        route receiving an additional share of the mail under clause 
        (ii) discontinues service on that route, the 121 bush passenger 
        carrier that has been providing the longest period of service on 
        that route and is otherwise eligible but is not receiving a 
        share by reason of clause (ii), shall receive the share of the 
        carrier discontinuing service.
            ``(C) Notwithstanding the requirements of this subsection, 
        if only 1 passenger carrier or aircraft is qualified to be 
        tendered nonpriority bypass mail as a passenger carrier or 
        aircraft on a city pair route in the State of Alaska, the Postal 
        Service shall tender 20 percent of the nonpriority bypass mail 
        described under paragraph (1) to the passenger carrier or 
        aircraft providing at least 10 percent of the passenger service 
        on such route.'';
            (3) in paragraph (5)(A)--
                    (A) by striking ``(i)'' after ``(A)''; and
                    (B) by striking clause (ii).

[[Page 120 STAT. 3258]]

    (d) Percent of Nonmail Freight.--Section 5402(i)(6) of title 39, 
United States Code, is amended--
            (1) by striking ``(A)'' after ``(6)''; and
            (2) by striking subparagraph (B).

    (e) Percent of Tender Rate.--Section 5402(j)(3)(B) of title 39, 
United States Code, is amended by striking ``bush routes in the State of 
Alaska'' and inserting ``routes served exclusively by bush carriers in 
the State of Alaska''.
    (f) Determination of Rates.--Section 5402(k) of title 39, United 
States Code, is amended by striking paragraph (5).
    (g) Technical and Conforming Amendment.--Section 5402(p)(3) of title 
39, United States Code, is amended by striking ``(g)(1)(D)'' and 
inserting ``(g)(1)(A)(iv)''.
    (h) <<NOTE: 39 USC 5402 note.>> Effective Date.--
            (1) In general.--Except as provided under paragraph (2), 
        this section shall take effect on the date of enactment of this 
        Act.
            (2) Equitable tender.--Subsection (c) shall take effect on 
        December 1, 2006.

SEC. 1006. DATE OF POSTMARK TO BE TREATED AS DATE OF APPEAL IN 
            CONNECTION WITH THE CLOSING OR CONSOLIDATION OF POST 
            OFFICES.

    (a) In General.--Section 404(b) of title 39, United States Code, is 
amended by adding at the end the following:
    ``(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).''.

    (b) <<NOTE: 39 USC 404 note.>> Effective Date.--This section and the 
amendments made by this section shall apply with respect to any 
determination to close or consolidate a post office which is first made 
available, in accordance with paragraph (3) of section 404(b) of title 
39, United States Code, after the end of the 3-month period beginning on 
the date of the enactment of this Act.

SEC. 1007. PROVISIONS RELATING TO BENEFITS UNDER CHAPTER 81 OF TITLE 5, 
            UNITED STATES CODE, FOR OFFICERS AND EMPLOYEES OF THE FORMER 
            POST OFFICE DEPARTMENT.

    (a) In General.--Section 8 of the Postal Reorganization Act (39 
U.S.C. 1001 note) is amended by inserting ``(a)'' after ``8.'' and by 
adding at the end the following:
    ``(b) For purposes of chapter 81 of title 5, United States Code, the 
Postal Service shall, with respect to any individual receiving benefits 
under such chapter as an officer or employee of the former Post Office 
Department, have the same authorities and responsibilities as it has 
with respect to an officer or employee of the Postal Service receiving 
such benefits.''.
    (b) <<NOTE: 39 USC 1001 note.>> Effective Date.--This section and 
the amendments made by this section shall be effective as of the first 
day of the fiscal year in which this Act is enacted.

[[Page 120 STAT. 3259]]

SEC. 1008. HAZARDOUS MATTER.

    (a) Nonmailability Generally.--Section 3001 of title 39, United 
States Code, is amended--
            (1) by redesignating subsection (n) as subsection (o); and
            (2) by inserting after subsection (m) the following:

    ``(n)(1) Except as otherwise authorized by law or regulations of the 
Postal Service, hazardous material is nonmailable.
    ``(2) In this subsection, the term `hazardous material' means a 
substance or material designated by the Secretary of Transportation 
under section 5103(a) of title 49.''.
    (b) Mailability.--Chapter 30 of title 39, United States Code, is 
amended by adding at the end the following:

``Sec. 3018. Hazardous material

    ``(a) <<NOTE: Regulations.>> In General.--The Postal Service shall 
prescribe regulations for the safe transportation of hazardous material 
in the mail.

    ``(b) Prohibitions.--No person may--
            ``(1) mail or cause to be mailed hazardous material that has 
        been declared by statute or Postal Service regulation to be 
        nonmailable;
            ``(2) mail or cause to be mailed hazardous material in 
        violation of any statute or Postal Service regulation 
        restricting the time, place, or manner in which hazardous 
        material may be mailed; or
            ``(3) manufacture, distribute, or sell any container, 
        packaging kit, or similar device that--
                    ``(A) is represented, marked, certified, or sold by 
                such person for use in the mailing of hazardous 
                material; and
                    ``(B) fails to conform with any statute or Postal 
                Service regulation setting forth standards for a 
                container, packaging kit, or similar device used for the 
                mailing of hazardous material.

    ``(c) Civil Penalty; Clean-Up Costs and Damages.--
            ``(1) In general.--A person who knowingly violates this 
        section or a regulation prescribed under this section shall be 
        liable for--
                    ``(A) a civil penalty of at least $250, but not more 
                than $100,000, for each violation;
                    ``(B) the costs of any clean-up associated with each 
                violation; and
                    ``(C) damages.
            ``(2) Knowing action.--A person acts knowingly for purposes 
        of paragraph (1) when--
                    ``(A) the person has actual knowledge of the facts 
                giving rise to the violation; or
                    ``(B) a reasonable person acting in the 
                circumstances and exercising reasonable care would have 
                had that knowledge.
            ``(3) Separate violations.--
                    ``(A) Violations over time.--A separate violation 
                under this subsection occurs for each day hazardous 
                material, mailed or caused to be mailed in noncompliance 
                with this section, is in the mail.
                    ``(B) Separate items.--A separate violation under 
                this subsection occurs for each item containing 
                hazardous material that is mailed or caused to be mailed 
                in noncompliance with this section.

[[Page 120 STAT. 3260]]

    ``(d) Hearings.--The Postal Service may determine that a person has 
violated this section or a regulation prescribed under this section only 
after notice and an opportunity for a hearing. Proceedings under this 
section shall be conducted in accordance with section 3001(m).
    ``(e) Penalty Considerations.--In determining the amount of a civil 
penalty for a violation of this section, the Postal Service shall 
consider--
            ``(1) the nature, circumstances, extent, and gravity of the 
        violation;
            ``(2) with respect to the person who committed the 
        violation, the degree of culpability, any history of prior 
        violations, the ability to pay, and any effect on the ability to 
        continue in business;
            ``(3) the impact on Postal Service operations; and
            ``(4) any other matters that justice requires.

    ``(f) Civil Actions to Collect.--
            ``(1) In general.--In accordance with section 409(d), a 
        civil action may be commenced in an appropriate district court 
        of the United States to collect a civil penalty, clean-up costs, 
        and damages assessed under subsection (c).
            ``(2) Compromise.--The Postal Service may compromise the 
        amount of a civil penalty, clean-up costs, and damages assessed 
        under subsection (c) before commencing a civil action with 
        respect to such civil penalty, clean-up costs, and damages under 
        paragraph (1).

    ``(g) Civil Judicial Penalties.--
            ``(1) In general.--At the request of the Postal Service, the 
        Attorney General may bring a civil action in an appropriate 
        district court of the United States to enforce this section or a 
        regulation prescribed under this section.
            ``(2) Relief.--The court in a civil action under paragraph 
        (1) may award appropriate relief, including a temporary or 
        permanent injunction, civil penalties as determined in 
        accordance with this section, or punitive damages.
            ``(3) Construction.--A civil action under this subsection 
        shall be in lieu of civil penalties for the same violation under 
        subsection (c)(1)(A).

    ``(h) Deposit of Amounts Collected.--
            ``(1) Postal service fund.--Except as provided under 
        paragraph (2), amounts collected under subsection (c)(1)(B) and 
        (C) shall be deposited into the Postal Service Fund under 
        section 2003.
            ``(2) Treasury.--Amounts collected under subsection 
        (c)(1)(A) and any punitive damages collected under subsection 
        (c)(1)(C) shall be deposited into the Treasury of the United 
        States.''.

    (c) Conforming Amendments.--(1) Section 2003(b) of title 39, United 
States Code, is amended--
            (A) in paragraph (7), by striking ``and'' after the 
        semicolon;
            (B) in paragraph (8), by striking ``purposes.'' and 
        inserting ``purposes; and''; and
            (C) by adding at the end the following:
            ``(9) any amounts collected under section 3018.''.

    (2) The analysis for chapter 30 of title 39, United States Code, is 
amended by adding at the end the following:

``3018. Hazardous material.''.

[[Page 120 STAT. 3261]]

    (d) Injurious Articles as Nonmailable.--Section 1716(a) of title 18, 
United States Code, is amended by inserting after ``explosives,'' the 
following: ``hazardous materials,''.

SEC. 1009. <<NOTE: Deadlines.>> ZIP CODES AND RETAIL HOURS.

    (a) ZIP Codes.--Not later than September 30, 2007, the United States 
Postal Service shall assign a single, unified ZIP code to serve, as 
nearly as practicable, each of the following communities:
            (1) Auburn Township, Ohio.
            (2) Hanahan, South Carolina.
            (3) Bradbury, California.
            (4) Discovery Bay, California.

    (b) Retail Hours.--Not later than 60 days after the date of the 
enactment of this Act, the United States Postal Service shall provide 
the same window service hours for the Fairport Harbor Branch of the 
United States Post Office in Painesville, Ohio, as were in effect as of 
December 1, 2005.

SEC. 1010. TECHNICAL AND CONFORMING AMENDMENTS.

    (a) Reimbursement.--Section 3681 of title 39, United States Code, is 
amended by striking ``section 3628'' and inserting ``sections 3662 
through 3664''.
    (b) Size and Weight Limits.--Section 3682 of title 39, United States 
Code, is amended to read as follows:

``Sec. 3682. Size and weight limits

    ``The Postal Service may establish size and weight limitations for 
mail matter in the market-dominant category of mail consistent with 
regulations the Postal Regulatory Commission may prescribe under section 
3622. The Postal Service may establish size and weight limitations for 
mail matter in the competitive category of mail consistent with its 
authority under section 3632.''.
    (c) Revenue Foregone, Etc.--Title 39, United States Code, is 
amended--
            (1) in section 503 (as so redesignated by section 601), by 
        striking ``this chapter.'' and inserting ``this title.''; and
            (2) in section 2401(d), by inserting ``(as last in effect 
        before enactment of the Postal Accountability and Enhancement 
        Act)'' after ``3626(a)'' and after ``3626(a)(3)(B)(ii)''.

    (d) Appropriations and Reporting Requirements.--
            (1) Appropriations.--Subsection (e) of section 2401 of title 
        39, United States Code, is amended--
                    (A) by striking ``Committee on Post Office and Civil 
                Service'' each place it appears and inserting 
                ``Committee on Government Reform''; and
                    (B) by striking ``Not later than March 15 of each 
                year,'' and inserting ``Each year,''.
            (2) Reporting requirements.--Sections 2803(a) and 2804(a) of 
        title 39, United States Code, are amended by striking 
        ``2401(g)'' and inserting ``2401(e)''.

    (e) Authority to Fix Rates and Classes Generally; Requirement 
Relating to Letters Sealed Against Inspection.--Section 404 of title 39, 
United States Code (as amended by section 102) is further amended by 
redesignating subsections (b) and (c) as subsections (d) and (e), 
respectively, and by inserting after subsection (a) the following:
    ``(b) Except as otherwise provided, the Governors are authorized to 
establish reasonable and equitable classes of mail and reasonable

[[Page 120 STAT. 3262]]

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.''.
    (f) Limitations.--Section 3684 of title 39, United States Code, is 
amended by striking all that follows ``any provision'' and inserting 
``of this title.''.
    (g) Miscellaneous.--Title 39, United States Code, is amended--
            (1) in section 1005(d)(2)--
                    (A) by striking ``subsection (g) of section 5532,''; 
                and
                    (B) by striking ``8344,'' and inserting ``8344'';
            (2) in the analysis for part III, by striking the item 
        relating to chapter 28 and inserting the following:

``28. Strategic Planning and Performance Management..............2801'';

            (3) in section 3005(a)--
                    (A) in the matter before paragraph (1), by striking 
                all that follows ``nonmailable'' and precedes ``(h),'' 
                and inserting ``under section 3001(d),''; and
                    (B) in the sentence following paragraph (3), by 
                striking all that follows ``nonmailable'' and precedes 
                ``(h),'' and inserting ``under such section 3001(d),'';
            (4) in section 3210(a)(6)(C), by striking the matter after 
        ``if such mass mailing'' and before ``than 60 days'' and 
        inserting ``is postmarked fewer''; and

[[Page 120 STAT. 3263]]

            (5) by striking the heading for section 3627 and inserting 
        the following:

``Sec. 3627. Adjusting free rates''.

    Approved December 20, 2006.

LEGISLATIVE HISTORY--H.R. 6407 (S. 662):
---------------------------------------------------------------------------

CONGRESSIONAL RECORD, Vol. 152 (2006):
            Dec. 8, considered and passed House and Senate.
WEEKLY COMPILATION OF PRESIDENTIAL DOCUMENTS, Vol. 42 (2006):
            Dec. 20, Presidential statement.

                                  <all>
```