PUBLIC LAW 109–435—DEC. 20, 2006

POSTAL ACCOUNTABILITY AND

ENHANCEMENT ACT

120 STAT. 3198 PUBLIC LAW 109–435—DEC. 20, 2006

Public Law 109–435

109th Congress

An Act

To reform the postal laws of the United States.

Be it enacted by the Senate and House of Representatives of

the United States of America in Congress assembled,

SECTION 1. SHORT TITLE; TABLE OF CONTENTS.

(a) SHORT TITLE.—This Act may be cited as the ‘‘Postal Accountability and Enhancement Act’’.

(b) TABLE OF CONTENTS.—The table of contents for this Act

is as follows:

Sec. 1. Short title; table of contents.

TITLE I—DEFINITIONS; POSTAL SERVICES

Sec. 101. Definitions.

Sec. 102. Postal Services.

TITLE II—MODERN RATE REGULATION

Sec. 201. Provisions relating to market-dominant products.

Sec. 202. Provisions relating to competitive products.

Sec. 203. Provisions relating to experimental and new products.

Sec. 204. Reporting requirements and related provisions.

Sec. 205. Complaints; appellate review and enforcement.

Sec. 206. Clerical amendment.

TITLE III—MODERN SERVICE STANDARDS

Sec. 301. Establishment of modern service standards.

Sec. 302. Postal service plan.

TITLE IV—PROVISIONS RELATING TO FAIR COMPETITION

Sec. 401. Postal Service Competitive Products Fund.

Sec. 402. Assumed Federal income tax on competitive products income.

Sec. 403. Unfair competition prohibited.

Sec. 404. Suits by and against the Postal Service.

Sec. 405. International postal arrangements.

TITLE V—GENERAL PROVISIONS

Sec. 501. Qualification and term requirements for Governors.

Sec. 502. Obligations.

Sec. 503. Private carriage of letters.

Sec. 504. Rulemaking authority.

Sec. 505. Noninterference with collective bargaining agreements.

Sec. 506. Bonus authority.

TITLE VI—ENHANCED REGULATORY COMMISSION

Sec. 601. Reorganization and modification of certain provisions relating to the Postal Regulatory Commission. Sec. 602. Authority for Postal Regulatory Commission to issue subpoenas.

Sec. 603. 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.

39 USC 101 note.

Postal Accountability and

Enhancement

Act.

Dec. 20, 2006

[H.R. 6407]

PUBLIC LAW 109–435—DEC. 20, 2006 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 marketdominant 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.’’.

120 STAT. 3200 PUBLIC LAW 109–435—DEC. 20, 2006

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) 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:

‘‘§ 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,

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PUBLIC LAW 109–435—DEC. 20, 2006 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.

‘‘§ 3622. Modern rate regulation

‘‘(a) AUTHORITY GENERALLY.—The Postal Regulatory Commission shall, within 18 months after the date of enactment of this

section, by regulation establish (and may from time to time thereafter by regulation revise) a modern system for regulating rates

and classes for market-dominant products.

‘‘(b) OBJECTIVES.—Such system shall be designed to achieve

the following objectives, each of which shall be applied in conjunction with the others:

‘‘(1) To maximize incentives to reduce costs and increase

efficiency.

‘‘(2) To create 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;

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120 STAT. 3202 PUBLIC LAW 109–435—DEC. 20, 2006

‘‘(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) 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;

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PUBLIC LAW 109–435—DEC. 20, 2006 120 STAT. 3203

‘‘(iii) provide for the Postal Regulatory Commission

to notify the Postal Service of any noncompliance of

the adjustment with the limitation under subparagraph (A); and

‘‘(iv) require the Postal Service to respond to the

notice provided under clause (iii) and describe the

actions to be taken to comply with the limitation under

subparagraph (A);

‘‘(D) establish procedures whereby the Postal Service

may adjust rates not in excess of the annual limitations

under subparagraph (A); and

‘‘(E) notwithstanding any limitation set under subparagraphs (A) and (C), 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;

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120 STAT. 3204 PUBLIC LAW 109–435—DEC. 20, 2006

‘‘(II) may use any part of the unused rate

adjustment authority from any year;

‘‘(III) shall use the unused rate adjustment

authority from the earliest year such authority

first occurred and then each following year; and

‘‘(IV) for any class or service, may not exceed

the annual limitation under paragraph (1) by more

than 2 percentage points.

‘‘(3) REVIEW.—Ten years after the date of enactment of

the Postal Accountability and Enhancement Act and as appropriate thereafter, the Commission shall review the system for

regulating rates and classes for market-dominant products

established under this section to determine if the system is

achieving the objectives in subsection (b), taking into account

the factors in subsection (c). If the Commission determines,

after notice and opportunity for public comment, that the

system is not achieving the objectives in subsection (b), taking

into account the factors in subsection (c), the Commission may,

by regulation, make such modification or adopt such alternative

system for regulating rates and classes for market-dominant

products as necessary to achieve the objectives.

‘‘(e) WORKSHARE DISCOUNTS.—

‘‘(1) DEFINITION.—In this subsection, the term ‘workshare

discount’ refers to rate discounts provided to mailers for the

presorting, prebarcoding, handling, or transportation of mail,

as further defined by the Postal Regulatory Commission under

subsection (a).

‘‘(2) SCOPE.—The Postal Regulatory Commission shall

ensure that such discounts do not exceed the cost that the

Postal Service avoids as a result of workshare activity, unless—

‘‘(A) the discount is—

‘‘(i) associated with a new postal service, a change

to an existing postal service, or with a new work share

initiative related to an existing postal service; and

‘‘(ii) necessary to induce mailer behavior that furthers the economically efficient operation of the Postal

Service and the portion of the discount in excess of

the cost that the Postal Service avoids as a result

of the workshare activity will be phased out over a

limited period of time;

‘‘(B) the amount of the discount above costs avoided—

‘‘(i) is necessary to mitigate rate shock; and

‘‘(ii) will be phased out over time;

‘‘(C) the discount is provided in connection with subclasses of mail consisting exclusively of mail matter of

educational, cultural, scientific, or informational value; or

‘‘(D) reduction or elimination of the discount would

impede the efficient operation of the Postal Service.

‘‘(3) LIMITATION.—Nothing in this subsection shall require

that a work share discount be reduced or eliminated if the

reduction or elimination of the discount would—

‘‘(A) lead to a loss of volume in the affected category

or subclass of mail and reduce the aggregate contribution

to the institutional costs of the Postal Service from the

category or subclass subject to the discount below what

it otherwise would have been if the discount had not been

reduced or eliminated; or

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PUBLIC LAW 109–435—DEC. 20, 2006 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) 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 marketdominant 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 MARKETDOMINANT 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

‘‘§ 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.

Certification.

120 STAT. 3206 PUBLIC LAW 109–435—DEC. 20, 2006

‘‘(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.

‘‘§ 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) 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 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.

‘‘§ 3633. Provisions applicable to rates for competitive products

‘‘(a) IN GENERAL.—The Postal Regulatory Commission shall,

within 18 months after the date of enactment of this section,

promulgate (and may from time to time thereafter revise) regulations to—

‘‘(1) prohibit the subsidization of competitive products by

market-dominant products;

‘‘(2) ensure that each competitive product covers its costs

attributable; and

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Regulations.

Filing date.

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PUBLIC LAW 109–435—DEC. 20, 2006 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) 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

‘‘§ 3641. Market tests of experimental products

‘‘(a) AUTHORITY.—

‘‘(1) IN GENERAL.—The Postal Service may conduct market

tests of experimental products in accordance with this section.

‘‘(2) PROVISIONS WAIVED.—A product shall not, while it

is being tested under this section, be subject to the requirements

of sections 3622, 3633, or 3642, or regulations promulgated

under those sections.

‘‘(b) CONDITIONS.—A product may not be tested under this

section unless it satisfies each of the following:

‘‘(1) SIGNIFICANTLY DIFFERENT PRODUCT.—The product is,

from the viewpoint of the mail users, significantly different

from all products offered by the Postal Service within the

2-year period preceding the start of the test.

‘‘(2) MARKET DISRUPTION.—The introduction or continued

offering of the product will not create an unfair or otherwise

inappropriate competitive advantage for the Postal Service or

any mailer, particularly in regard to small business concerns

(as defined under subsection (h)).

‘‘(3) CORRECT CATEGORIZATION.—The Postal Service identifies the product, for the purpose of a test under this section,

as either market-dominant or competitive, consistent with the

criteria under section 3642(b)(1). Costs and revenues attributable to a product identified as competitive shall be included

in any determination under section 3633(3) (relating to provisions applicable to competitive products collectively). Any test

that solely affects products currently classified as competitive,

or which provides services ancillary to only competitive products, shall be presumed to be in the competitive product category without regard to whether a similar ancillary product

exists for market-dominant products.

‘‘(c) NOTICE.—

‘‘(1) IN GENERAL.—At least 30 days before initiating a

market test under this section, the Postal Service shall file

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Federal Register,

publication.

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120 STAT. 3208 PUBLIC LAW 109–435—DEC. 20, 2006

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

PUBLIC LAW 109–435—DEC. 20, 2006 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).

‘‘§ 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 marketdominant 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

120 STAT. 3210 PUBLIC LAW 109–435—DEC. 20, 2006

‘‘(C) the likely impact of the proposed action on small

business concerns (within the meaning of section 3641(h)).

‘‘(c) TRANSFERS OF SUBCLASSES AND OTHER SUBORDINATE UNITS

ALLOWABLE.—Nothing in this title shall be considered to prevent

transfers under this section from being made by reason of the

fact that they would involve only some (but not all) of the subclasses

or other subordinate units of the class of mail or type of postal

service involved (without regard to satisfaction of minimum quantity

requirements standing alone).

‘‘(d) NOTIFICATION AND PUBLICATION REQUIREMENTS.—

‘‘(1) NOTIFICATION REQUIREMENT.—The Postal Service shall,

whenever it requests to add a product or transfer a product

to a different category, file with the Postal Regulatory Commission and publish in the Federal Register a notice setting out

the basis for its determination that the product satisfies the

criteria under subsection (b) and, in the case of a request

to add a product or transfer a product to the competitive

category of mail, that the product meets the regulations promulgated by the Postal Regulatory Commission under section 3633.

The provisions of section 504(g) shall be available with respect

to any information required to be filed.

‘‘(2) PUBLICATION REQUIREMENT.—The Postal Regulatory

Commission shall, whenever it changes the list of products

in the market-dominant or competitive category of mail, prescribe new lists of products. The revised lists shall indicate

how and when any previous lists (including the lists under

sections 3621 and 3631) are superseded, and shall be published

in the Federal Register.

‘‘(e) PROHIBITION.—Except as provided in section 3641, no

product that involves the physical delivery of letters, printed matter,

or packages may be offered by the Postal Service unless it has

been assigned to the market-dominant or competitive category of

mail (as appropriate) either—

‘‘(1) under this subchapter; or

‘‘(2) by or under any other provision of law.’’.

SEC. 204. REPORTING REQUIREMENTS AND RELATED PROVISIONS.

(a) REDESIGNATION.—Chapter 36 of title 39, United States Code

(as in effect before the amendment made by subsection (b)) is

amended—

(1) by striking the heading for subchapter IV and inserting

the following:

‘‘SUBCHAPTER V—POSTAL SERVICES, COMPLAINTS, AND

JUDICIAL REVIEW’’; and

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

the following:

‘‘SUBCHAPTER VI—GENERAL’’.

(b) REPORTS AND COMPLIANCE.—Chapter 36 of title 39, United

States Code, is amended by inserting after subchapter III the following:

Federal Register,

publication.

Federal Register,

publication.

PUBLIC LAW 109–435—DEC. 20, 2006 120 STAT. 3211

‘‘SUBCHAPTER IV—REPORTING REQUIREMENTS AND

RELATED PROVISIONS

‘‘§ 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.

‘‘§ 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—

120 STAT. 3212 PUBLIC LAW 109–435—DEC. 20, 2006

‘‘(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 Inspector General shall regularly audit the data collection

systems and procedures utilized in collecting information and

preparing such report (including any annex thereto and the

information required under subsection (b)). The results of any

such audit shall be submitted to the Postal Service and the

Postal Regulatory Commission.

‘‘(b) INFORMATION RELATING TO WORKSHARE DISCOUNTS.—The

Postal Service shall include, in each report under subsection (a),

the following information with respect to each market-dominant

product for which a workshare discount was in effect during the

period covered by such report:

‘‘(1) The per-item cost avoided by the Postal Service by

virtue of such discount.

‘‘(2) The percentage of such per-item cost avoided that

the per-item workshare discount represents.

‘‘(3) The per-item contribution made to institutional costs.

‘‘(c) MARKET TESTS.—In carrying out subsections (a) and (b)

with respect to experimental products offered through market tests

under section 3641 in a year, the Postal Service shall—

‘‘(1) report data on the costs, revenues, and quality of

service by market test, which may be reported in summary

form; and

‘‘(2) report such data as the Postal Regulatory Commission

requires.

‘‘(d) SUPPORTING MATTER.—The Postal Regulatory Commission

shall have access, in accordance with such regulations as the

Commission shall prescribe, to the working papers and any other

supporting matter of the Postal Service and the Inspector General

in connection with any information submitted under this section.

‘‘(e) CONTENT AND FORM OF REPORTS.—

‘‘(1) IN GENERAL.—The Postal Regulatory Commission shall,

by regulation, prescribe the content and form of the public

reports (and any nonpublic annex and supporting matter

relating to the report) to be provided by the Postal Service

under this section. In carrying out this subsection, the Commission shall give due consideration to—

‘‘(A) providing the public with timely, adequate

information to assess the lawfulness of rates charged;

‘‘(B) avoiding unnecessary or unwarranted administrative effort and expense on the part of the Postal Service;

and

‘‘(C) protecting the confidentiality of commercially sensitive information.

‘‘(2) REVISED REQUIREMENTS.—The Commission may, on

its own motion or on request of an interested party, initiate

proceedings (to be conducted in accordance with regulations

that the Commission shall prescribe) to improve the quality,

accuracy, or completeness of Postal Service data required by

the Commission under this subsection whenever it shall appear

that—

‘‘(A) the attribution of costs or revenues to products

has become significantly inaccurate or can be significantly

improved;

Regulations.

Regulations.

Regulations.

Audits.

PUBLIC LAW 109–435—DEC. 20, 2006 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.

‘‘§ 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).

120 STAT. 3214 PUBLIC LAW 109–435—DEC. 20, 2006

‘‘(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.

‘‘§ 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 postretirement 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;

PUBLIC LAW 109–435—DEC. 20, 2006 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) 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.

Regulations.

120 STAT. 3216 PUBLIC LAW 109–435—DEC. 20, 2006

‘‘(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:

‘‘§ 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) 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

Deadline.

PUBLIC LAW 109–435—DEC. 20, 2006 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.

‘‘§ 3663. Appellate review

‘‘A person, including the Postal Service, adversely affected or

aggrieved by a final order or decision of the Postal Regulatory

Commission may, within 30 days after such order or decision

becomes final, institute proceedings for review thereof by filing

a petition in the United States Court of Appeals for the District

of Columbia. The court shall review the order or decision in accordance with section 706 of title 5, and chapter 158 and section

2112 of title 28, on the basis of the record before the Commission.

‘‘§ 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.

Deadline.

120 STAT. 3218 PUBLIC LAW 109–435—DEC. 20, 2006

‘‘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

‘‘§ 3691. Establishment of modern service standards

‘‘(a) AUTHORITY GENERALLY.—Not later than 12 months after

the date of enactment of this section, the Postal Service shall,

in consultation with the Postal Regulatory Commission, by regulation establish (and may from time to time thereafter by regulation

revise) a set of service standards for market-dominant products.

‘‘(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;

Deadline.

PUBLIC LAW 109–435—DEC. 20, 2006 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. POSTAL SERVICE PLAN.

(a) IN GENERAL.—Within 6 months after the establishment

of the service standards under section 3691 of title 39, United

States Code, as added by this Act, the Postal Service shall, in

consultation with the Postal Regulatory Commission, develop and

submit to Congress a plan for meeting those standards.

(b) CONTENTS.—The plan under this section shall—

(1) establish performance goals;

(2) describe any changes to the Postal Service’s processing,

transportation, delivery, and retail networks necessary to allow

the Postal Service to meet the performance goals;

(3) describe any changes to planning and performance

management documents previously submitted to Congress to

reflect new performance goals; and

(4) 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.

Deadline.

39 USC 3691

note.

120 STAT. 3220 PUBLIC LAW 109–435—DEC. 20, 2006

(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.

PUBLIC LAW 109–435—DEC. 20, 2006 120 STAT. 3221

(5) EXISTING EFFORTS.—Effective on the date of enactment

of this Act, the Postal Service may not close or consolidate

any processing or logistics facilities without using procedures

for public notice and input consistent with those described

under paragraph (3)(D).

(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:

‘‘§ 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;

Effective date.

120 STAT. 3222 PUBLIC LAW 109–435—DEC. 20, 2006

‘‘(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;

PUBLIC LAW 109–435—DEC. 20, 2006 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) 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—

Recommendations.

120 STAT. 3224 PUBLIC LAW 109–435—DEC. 20, 2006

‘‘(i) the accounting practices and principles that should

be followed by the Postal Service with the objectives of—

‘‘(I) identifying and valuing the assets and liabilities

of the Postal Service associated with providing competitive

products, including the capital and operating costs incurred

by the Postal Service in providing such competitive products; and

‘‘(II) subject to subsection (e)(5), preventing the subsidization of such products by market-dominant products;

and

‘‘(ii) the substantive and procedural rules that should be

followed in determining the assumed Federal income tax on

competitive products income of the Postal Service for any year

(within the meaning of section 3634).

‘‘(B) Not earlier than 6 months after the date of enactment

of this section, and not later than 12 months after such date,

the Secretary of the Treasury shall submit the recommendations

under subparagraph (A) to the Postal Regulatory Commission.

‘‘(2)(A) Upon receiving the recommendations of the Secretary

of the Treasury under paragraph (1), the Commission shall give

interested parties, including the Postal Service, users of the mails,

and an officer of the Commission who shall be required to represent

the interests of the general public, an opportunity to present their

views on those recommendations through submission of written

data, views, or arguments with or without opportunity for oral

presentation, or in such other manner as the Commission considers

appropriate.

‘‘(B)(i) After due consideration of the views and other information received under subparagraph (A), the Commission shall by

rule—

‘‘(I) provide for the establishment and application of the

accounting practices and principles which shall be followed

by the Postal Service;

‘‘(II) provide for the establishment and application of the

substantive and procedural rules described under paragraph

(1)(A)(ii); and

‘‘(III) provide for the submission by the Postal Service

to the Postal Regulatory Commission of annual and other periodic reports setting forth such information as the Commission

may require.

‘‘(ii) Final rules under this subparagraph shall be issued not

later than 12 months after the date on which recommendations

are submitted under paragraph (1) (or by such later date on which

the Commission and the Postal Service may agree). The Commission

is authorized to promulgate regulations revising such rules.

‘‘(C)(i) Reports described under subparagraph (B)(i)(III) shall

be submitted at such time and in such form, and shall include

such information, as the Commission by rule requires.

‘‘(ii) The Commission may, on its own motion or on request

of an interested party, initiate proceedings (to be conducted in

accordance with such rules as the Commission shall prescribe)

to improve the quality, accuracy, or completeness of Postal Service

information under subparagraph (B)(i)(III) whenever it shall appear

that—

‘‘(I) the quality of the information furnished in those reports

has become significantly inaccurate or can be significantly

improved; or

Regulations.

Deadline.

Reports.

Submission

period.

PUBLIC LAW 109–435—DEC. 20, 2006 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) 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)’’.

Reports.

120 STAT. 3226 PUBLIC LAW 109–435—DEC. 20, 2006

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:

‘‘§ 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:

‘‘§ 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

PUBLIC LAW 109–435—DEC. 20, 2006 120 STAT. 3227

obtainable) from an independent source or is otherwise obtained

(or obtainable).

‘‘(b) The Postal Regulatory Commission shall prescribe regulations to carry out this section.

‘‘(c) Any party (including an officer of the Commission representing the interests of the general public) who believes that

the Postal Service has violated this section may bring a complaint

in accordance with section 3662.’’.

(b) CONFORMING AMENDMENTS.— (1) GENERAL POWERS.—Section 401 of title 39, United

States Code, is amended by striking ‘‘The’’ and inserting ‘‘Subject to the provisions of section 404a, the’’.

(2) SPECIFIC POWERS.—Section 404(a) of title 39, United

States Code, is amended by striking ‘‘Without’’ and inserting

‘‘Subject to the provisions of section 404a, but otherwise without’’.

(c) CLERICAL AMENDMENT.—The analysis for chapter 4 of title

39, United States Code, is amended by inserting after the item

relating to section 404 the following:

‘‘404a. Specific limitations.’’.

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

(a) IN GENERAL.—Section 409 of title 39, United States Code,

is amended by striking subsections (d) and (e) and inserting the

following:

‘‘(d)(1) For purposes of the provisions of law cited in paragraphs

(2)(A) and (2)(B), respectively, the Postal Service—

‘‘(A) shall be considered to be a ‘person’, as used in the

provisions of law involved; and

‘‘(B) shall not be immune under any other doctrine of

sovereign immunity from suit in Federal court by any person

for any violation of any of those provisions of law by any

officer or employee of the Postal Service.

‘‘(2) This subsection applies with respect to—

‘‘(A) the Act of July 5, 1946 (commonly referred to as

the ‘Trademark Act of 1946’ (15 U.S.C. 1051 and following));

and

‘‘(B) the provisions of section 5 of the Federal Trade

Commission Act to the extent that such section 5 applies to

unfair or deceptive acts or practices.

‘‘(e)(1) To the extent that the Postal Service, or other Federal

agency acting on behalf of or in concert with the Postal Service,

engages in conduct with respect to any product which is not reserved

to the United States under section 1696 of title 18, the Postal

Service or other Federal agency (as the case may be)—

‘‘(A) shall not be immune under any doctrine of sovereign

immunity from suit in Federal court by any person for any

violation of Federal law by such agency or any officer or

employee thereof; and

‘‘(B) shall be considered to be a person (as defined in

subsection (a) of the first section of the Clayton Act) for purposes of—

‘‘(i) the antitrust laws (as defined in such subsection);

and

‘‘(ii) section 5 of the Federal Trade Commission Act

to the extent that such section 5 applies to unfair methods

of competition.

Applicability.

Regulations.

120 STAT. 3228 PUBLIC LAW 109–435—DEC. 20, 2006

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) 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.

Deadline.

PUBLIC LAW 109–435—DEC. 20, 2006 120 STAT. 3229

‘‘(5) In addition to consulting with local and State officials

under paragraph (3), the Postal Service shall establish procedures

for soliciting, assessing, and incorporating local community input

on real property and land use decisions.

‘‘(6) For purposes of this subsection, the term ‘State’ includes

the District of Columbia, the Commonwealth of Puerto Rico, and

a territory or possession of the United States.

‘‘(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:

‘‘§ 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

Procedures.

120 STAT. 3230 PUBLIC LAW 109–435—DEC. 20, 2006

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

PUBLIC LAW 109–435—DEC. 20, 2006 120 STAT. 3231

with international postal services and international delivery

services.

‘‘(3) The Secretary of State shall establish an advisory committee (within the meaning of the Federal Advisory Committee

Act) to perform such functions as the Secretary considers appropriate in connection with carrying out subparagraphs (A) through

(D) of paragraph (2).

‘‘(c)(1) Before concluding any treaty, convention, or amendment

that establishes a rate or classification for a product subject to

subchapter I of chapter 36, the Secretary of State shall request

the Postal Regulatory Commission to submit its views on whether

such rate or classification is consistent with the standards and

criteria established by the Commission under section 3622.

‘‘(2) The Secretary shall ensure that each treaty, convention,

or amendment concluded under subsection (b) is consistent with

the views submitted by the Commission pursuant to paragraph

(1), except if, or to the extent, the Secretary determines, in writing,

that it is not in the foreign policy or national security interest

of the United States to ensure consistency with the Commission’s

views. Such written determination shall be provided to the Commission together with a full explanation of the reasons thereof, provided

that the Secretary may designate which portions of the determination or explanation shall be kept confidential for reasons of foreign

policy or national security.

‘‘(d) Nothing in this section shall be considered to prevent

the Postal Service from entering into such commercial or operational

contracts related to providing international postal services and other

international delivery services as it deems appropriate, except

that—

‘‘(1) any such contract made with an agency of a foreign

government (whether under authority of this subsection or

otherwise) shall be solely contractual in nature and may not

purport to be international law; and

‘‘(2) a copy of each such contract between the Postal Service

and an agency of a foreign government shall be transmitted

to the Secretary of State and the Postal Regulatory Commission

not later than the effective date of such contract.

‘‘(e)(1) In this subsection, the term ‘private company’ means

a private company substantially owned or controlled by persons

who are citizens of the United States.

‘‘(2) With respect to shipments of international mail that are

competitive products within the meaning of section 3631 that are

exported or imported by the Postal Service, the Customs Service

and other appropriate Federal agencies shall apply the customs

laws of the United States and all other laws relating to the importation or exportation of such shipments in the same manner to both

shipments by the Postal Service and similar shipments by private

companies.

‘‘(3) In exercising the authority under subsection (b) to conclude

new postal treaties and conventions related to international postal

services and to renegotiate such treaties and conventions, the Secretary of State shall, to the maximum extent practicable, take

such measures as are within the Secretary’s control to encourage

the governments of other countries to make available to the Postal

Service and private companies a range of nondiscriminatory customs

procedures that will fully meet the needs of all types of American

shippers. The Secretary of State shall consult with the United

Establishment.

120 STAT. 3232 PUBLIC LAW 109–435—DEC. 20, 2006

States Trade Representative and the Commissioner of Customs

in carrying out this paragraph.

‘‘(4) The provisions of this subsection shall take effect 6 months

after the date of enactment of this subsection or such earlier date

as the Bureau of Customs and Border Protection of the Department

of Homeland Security may determine in writing.’’.

(b) EFFECTIVE DATE.—Notwithstanding any provision of the

amendment made by subsection (a), the authority of the United

States Postal Service to establish the rates of postage or other

charges on mail matter conveyed between the United States and

other countries shall remain available to the Postal Service until—

(1) with respect to market-dominant products, the date

as of which the regulations promulgated under section 3622

of title 39, United States Code (as amended by section 201(a))

take effect; and

(2) with respect to competitive products, the date as of

which the regulations promulgated under section 3633 of title

39, United States Code (as amended by section 202) take effect.

TITLE V—GENERAL PROVISIONS

SEC. 501. QUALIFICATION AND TERM REQUIREMENTS FOR GOVERNORS.

(a) QUALIFICATIONS.—

(1) IN GENERAL.—Section 202(a) of title 39, United States

Code, is amended by striking ‘‘(a)’’ and inserting ‘‘(a)(1)’’ and

by striking 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) APPLICABILITY.—The amendment made by paragraph

(1) shall not affect the appointment or tenure of any person

serving as a Governor of the United States Postal Service

under an appointment made before the date of enactment of

this Act however, when any such office becomes vacant, the

appointment of any person to fill that office shall be made

in accordance with such amendment. The requirement set forth

in the fourth sentence of section 202(a)(1) of title 39, United

States Code (as amended by subsection (a)) shall be met beginning not later than 9 years after the date of enactment of

this Act.

(b) CONSULTATION REQUIREMENT.—Section 202(a) of title 39,

United States Code, is amended by adding at the end the following:

‘‘(2) In selecting the individuals described in paragraph (1)

for nomination for appointment to the position of Governor, the

President should consult with the Speaker of the House of Representatives, the minority leader of the House of Representatives,

Effective date.

39 USC 202 note.

39 USC 407 note.

Effective date.

PUBLIC LAW 109–435—DEC. 20, 2006 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) 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) 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

39 USC 202 note.

39 USC 202 note.

120 STAT. 3234 PUBLIC LAW 109–435—DEC. 20, 2006

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—

PUBLIC LAW 109–435—DEC. 20, 2006 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 121⁄2 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) Any regulations necessary to carry out this section shall

be promulgated by the Postal Regulatory Commission.’’.

(b) EFFECTIVE DATE.—This section shall take effect on the

date as of which the regulations promulgated under section 3633

of title 39, United States Code (as amended by section 202) take

effect.

SEC. 504. RULEMAKING AUTHORITY.

Paragraph (2) of section 401 of title 39, United States Code,

is amended to read as follows:

‘‘(2) to adopt, amend, and repeal such rules and regulations,

not inconsistent with this title, as may be necessary in the

execution of its functions under this title and such other functions as may be assigned to the Postal Service under any

provisions of law outside of this title;’’.

SEC. 505. NONINTERFERENCE WITH COLLECTIVE BARGAINING AGREEMENTS.

(a) LABOR DISPUTES.—Section 1207 of title 39, United States

Code, is amended to read as follows:

‘‘§ 1207. Labor disputes

‘‘(a) If there is a collective-bargaining agreement in effect, no

party to such agreement shall terminate or modify such agreement

unless the party desiring such termination or modification serves

written notice upon the other party to the agreement of the proposed

termination or modification not less than 90 days prior to the

expiration date thereof, or not less than 90 days prior to the

time it is proposed to make such termination or modification. The

party serving such notice shall notify the Federal Mediation and

Conciliation Service of the existence of a dispute within 45 days

after such notice, if no agreement has been reached by that time.

‘‘(b) If the parties fail to reach agreement or to adopt a procedure providing for a binding resolution of a dispute by the expiration

date of the agreement in effect, or the date of the proposed termination or modification, the Director of the Federal Mediation and

Conciliation Service shall within 10 days appoint a mediator of

nationwide reputation and professional stature, and who is also

a member of the National Academy of Arbitrators. The parties

shall cooperate with the mediator in an effort to reach an agreement

and shall meet and negotiate in good faith at such times and

places that the mediator, in consultation with the parties, shall

direct.

‘‘(c)(1) If no agreement is reached within 60 days after the

expiration or termination of the agreement or the date on which

the agreement became subject to modification under subsection

(a) of this section, or if the parties decide upon arbitration but

do not agree upon the procedures therefore, an arbitration board

Notification.

Notice.

Deadlines.

39 USC 601 note.

Regulations.

120 STAT. 3236 PUBLIC LAW 109–435—DEC. 20, 2006

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 collectivebargaining representative does not have an agreement with the

Postal Service, if the parties fail to reach the agreement within

90 days after the commencement of collective bargaining, a mediator

shall be appointed in accordance with the terms in subsection

(b) of this section, unless the parties have previously agreed to

another procedure for a binding resolution of their differences.

If the parties fail to reach agreement within 180 days after the

commencement of collective bargaining, and if they have not agreed

to another procedure for binding resolution, an arbitration board

shall be established to provide conclusive and binding arbitration

in accordance with the terms of subsection (c) of this section.’’.

(b) NONINTERFERENCE WITH COLLECTIVE BARGAINING AGREEMENTS.—Except as otherwise provided by the amendment made

by subsection (a), nothing in this Act shall restrict, expand, or

otherwise affect any of the rights, privileges, or benefits of either

employees of or labor organizations representing employees of the

United States Postal Service under chapter 12 of title 39, United

States Code, the National Labor Relations Act, any handbook or

manual affecting employee labor relations within the United States

Postal Service, or any collective bargaining agreement.

(c) FREE MAILING PRIVILEGES CONTINUE UNCHANGED.—Nothing

in this Act or any amendment made by this Act shall affect any

free mailing privileges accorded under section 3217 or sections

3403 through 3406 of title 39, United States Code.

SEC. 506. BONUS AUTHORITY.

Chapter 36 of title 39, United States Code, is amended by

inserting after section 3685 the following:

‘‘§ 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.—

39 USC 1217

note.

39 USC 1201

note.

PUBLIC LAW 109–435—DEC. 20, 2006 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. 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.’’.

Notification.

Deadline.

120 STAT. 3238 PUBLIC LAW 109–435—DEC. 20, 2006

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.

‘‘§ 501. Establishment

‘‘The Postal Regulatory Commission is an independent

establishment of the executive branch of the Government of the

United States.

‘‘§ 502. Commissioners

‘‘(a) The Postal Regulatory Commission is composed of 5

Commissioners, appointed by the President, by and with the advice

and consent of the Senate. The Commissioners shall be chosen

solely on the basis of their technical qualifications, professional

standing, and demonstrated expertise in economics, accounting,

law, or public administration, and may be removed by the President

only for cause. Each individual appointed to the Commission shall

have the qualifications and expertise necessary to carry out the

enhanced responsibilities accorded Commissioners under the Postal

Accountability and Enhancement Act. Not more than 3 of the

Commissioners may be adherents of the same political party.

‘‘(b) No Commissioner shall be financially interested in any

enterprise in the private sector of the economy engaged in the

delivery of mail matter.

‘‘(c) A Commissioner may continue to serve after the expiration

of his term until his successor has qualified, except that a Commissioner may not so continue to serve for more than 1 year after

the date upon which his term otherwise would expire under subsection (f).

‘‘(d) One of the Commissioners shall be designated as Chairman

by, and shall serve in the position of Chairman at the pleasure

of, the President.

‘‘(e) The Commissioners shall by majority vote designate a

Vice Chairman of the Commission. The Vice Chairman shall act

as Chairman of the Commission in the absence of the Chairman.

‘‘(f) The Commissioners shall serve for terms of 6 years.’’;

(2) by striking, in subchapter I of chapter 36 (as in effect

before the amendment made by section 201(c)), the heading

for such subchapter I and all that follows through section

3602;

39 USC 3601,

3602.

President.

PUBLIC LAW 109–435—DEC. 20, 2006 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:

‘‘§ 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) 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.

39 USC 501 note.

120 STAT. 3240 PUBLIC LAW 109–435—DEC. 20, 2006

‘‘(4) For purposes of this subsection, the term ‘covered person’

means an officer, employee, agent, or contractor of the Postal

Service.

‘‘(g)(1) If the Postal Service determines that any document

or other matter it provides to the Postal Regulatory Commission

under a subpoena issued under subsection (f), or otherwise at the

request of the Commission in connection with any proceeding or

other purpose under this title, contains information which is

described in section 410(c) of this title, or exempt from public

disclosure under section 552(b) of title 5, the Postal Service shall,

at the time of providing such matter to the Commission, notify

the Commission, in writing, of its determination (and the reasons

therefor).

‘‘(2) Except as provided in paragraph (3), no officer or employee

of the Commission may, with respect to any information as to

which the Commission has been notified under paragraph (1)—

‘‘(A) use such information for purposes other than the purposes for which it is supplied; or

‘‘(B) permit anyone who is not an officer or employee of

the Commission to have access to any such information.

‘‘(3)(A) Paragraph (2) shall not prohibit the Commission

from publicly disclosing relevant information in furtherance

of its duties under this title, provided that the Commission

has adopted regulations under section 553 of title 5, that establish a procedure for according appropriate confidentiality to

information identified by the Postal Service under paragraph

(1). In determining the appropriate degree of confidentiality

to be accorded information identified by the Postal Service

under paragraph (1), the Commission shall balance the nature

and extent of the likely commercial injury to the Postal Service

against the public interest in maintaining the financial transparency of a government establishment competing in commercial markets.

‘‘(B) Paragraph (2) shall not prevent the Commission from

requiring production of information in the course of any discovery procedure established in connection with a proceeding

under this title. The Commission shall, by regulations based

on rule 26(c) of the Federal Rules of Civil Procedure, establish

procedures for ensuring appropriate confidentiality for information furnished to any party.’’.

SEC. 603. 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. 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.) is amended—

(1) by redesignating paragraph (4) as paragraph (5);

5 USC app. 8G.

Budget.

Regulations.

Confidentiality.

Notification.

PUBLIC LAW 109–435—DEC. 20, 2006 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) 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) 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 (5 U.S.C. 5 USC app. 101.

Applicability.

5 USC app. 8G

note.

120 STAT. 3242 PUBLIC LAW 109–435—DEC. 20, 2006

App.) is amended by striking ‘‘Postal Rate Commission’’ and

inserting ‘‘Postal Regulatory Commission’’.

(d) AMENDMENT TO THE REHABILITATION ACT OF 1973.—Section

501(b) of the Rehabilitation Act of 1973 (29 U.S.C. 791(b)) is

amended by striking ‘‘Postal Rate Office’’ and inserting ‘‘Postal

Regulatory Commission’’.

(e) AMENDMENT TO TITLE 44, UNITED STATES CODE.—Section

3502(5) of title 44, United States Code, is amended by striking

‘‘Postal Rate Commission’’ and inserting ‘‘Postal Regulatory

Commission’’.

(f) OTHER REFERENCES.—Whenever a reference is made in any

provision of law (other than this Act or a provision of law amended

by this Act), regulation, rule, document, or other record of the

United States to the Postal Rate Commission, such reference shall

be considered a reference to the Postal Regulatory Commission.

SEC. 605. INSPECTOR GENERAL OF THE POSTAL REGULATORY

COMMISSION.

(a) IN GENERAL.—Section 8G(a)(2) of the Inspector General

Act of 1978 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) 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) the Office of Inspector General of the Postal Regulatory

Commission shall be established.

TITLE VII—EVALUATIONS

SEC. 701. ASSESSMENTS OF RATEMAKING, CLASSIFICATION, AND

OTHER PROVISIONS.

(a) IN GENERAL.—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.

Deadline.

Reports.

39 USC 501 note.

Establishment.

5 USC app. 8G

note.

5 USC app. 8G.

39 USC 404 note.

PUBLIC LAW 109–435—DEC. 20, 2006 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. 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)—

39 USC 501 note.

120 STAT. 3244 PUBLIC LAW 109–435—DEC. 20, 2006

(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. STUDY ON EQUAL APPLICATION OF LAWS TO COMPETITIVE

PRODUCTS.

(a) IN GENERAL.—The Federal Trade Commission shall prepare

and submit to the President and Congress, and to the Postal Regulatory Commission, within 1 year after the date of enactment of

this Act, a comprehensive report identifying Federal and State

laws that apply differently to the United States Postal Service

with respect to the competitive category of mail (within the meaning

of section 102 of title 39, United States Code, as amended by

section 101) and 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 WORKPLACERELATED INJURIES.

(a) REPORT BY THE INSPECTOR GENERAL.—

Deadline.

Reports.

39 USC 3633

note.

PUBLIC LAW 109–435—DEC. 20, 2006 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 workplacerelated injuries, and assess how successful the Postal

Service has been in meeting its injury reduction goal; and

(C) identify areas where the Postal Service has failed

to meet its injury reduction goals, explain the reasons

why these goals were not met, and identify opportunities

for making further progress in meeting these goals.

(b) REPORT BY THE POSTAL SERVICE.—

(1) REPORT TO CONGRESS.—Not later than 6 months after

receiving the report under subsection (a), the Postal Service

shall submit a report to Congress detailing how it plans to

improve workplace safety and reduce workplace-related injuries

nationwide, including goals and metrics.

(2) PROBLEM AREAS.—The report under this subsection

shall also include plans, developed in consultation with the

Inspector General and employee representatives, including representatives of each postal labor union and management

association, for addressing the problem areas identified by the

Inspector General in the report under subsection (a)(2)(C).

SEC. 705. STUDY ON RECYCLED PAPER.

(a) IN GENERAL.—Within 12 months after the date of enactment

of this Act, the Government Accountability Office shall study and

submit to the Congress, the Board of Governors of the Postal

Service, and to the Postal Regulatory Commission a report

concerning—

(1) 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.

Deadline.

Reports.

120 STAT. 3246 PUBLIC LAW 109–435—DEC. 20, 2006

SEC. 706. GREATER DIVERSITY IN POSTAL SERVICE EXECUTIVE AND

ADMINISTRATIVE SCHEDULE MANAGEMENT POSITIONS.

(a) IN GENERAL.—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) 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.

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) 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.—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.

Deadline.

Reports.

Reports.

Deadline.

Reports.

39 USC 1001

note.

Deadline.

Reports.

PUBLIC LAW 109–435—DEC. 20, 2006 120 STAT. 3247

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

SERVICE.

(a) GOVERNMENT ACCOUNTABILITY OFFICE 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;

Reports.

120 STAT. 3248 PUBLIC LAW 109–435—DEC. 20, 2006

(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. 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.

39 USC 501 note.

PUBLIC LAW 109–435—DEC. 20, 2006 120 STAT. 3249

TITLE VIII—POSTAL SERVICE RETIREMENT AND HEALTH BENEFITS FUNDING

SEC. 801. SHORT TITLE.

This title may be cited as the ‘‘Postal Civil Service Retirement

and Health Benefits Funding Amendments of 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) Not later than June 15, 2007, the Office shall determine

the Postal surplus or supplemental liability, as of September 30,

2006. If that result is a surplus, the amount of the surplus shall

be transferred to the Postal Service Retiree Health Benefits Fund

established under section 8909a by June 30, 2007.

‘‘(B) The Office shall redetermine the Postal surplus or supplemental liability as of the close of the fiscal year, for each fiscal

year beginning after September 30, 2007, through the fiscal year

ending September 30, 2038. If the result is a surplus, that amount

shall remain in the Fund until distribution is authorized under

subparagraph (C). Beginning June 15, 2017, if the result is a

supplemental liability, the Office shall establish an amortization

schedule, including a series of annual installments commencing

on September 30 of the subsequent fiscal year, which provides

for the liquidation of such liability by September 30, 2043.

Effective date.

Deadline.

Redetermination

period.

Deadlines.

5 USC 101 note.

Postal Civil

Service

Retirement and

Health Benefits

Funding

Amendments of

2006.

120 STAT. 3250 PUBLIC LAW 109–435—DEC. 20, 2006

‘‘(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) 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

Reports. adjustments. The Office shall submit a report containing the

5 USC 8348 note.

PUBLIC LAW 109–435—DEC. 20, 2006 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:

‘‘§ 8909a. Postal Service Retiree Health Benefit Fund

‘‘(a) There is in the Treasury of the United States a Postal

Service Retiree Health Benefits Fund which is administered by

the Office of Personnel Management.

‘‘(b) The Fund is available without fiscal year limitation for

payments required under section 8906(g)(2)(A).

‘‘(c) The Secretary of the Treasury shall immediately invest,

in interest-bearing securities of the United States such currently

available portions of the Fund as are not immediately required

for payments from the Fund. Such investments shall be made

in the same manner as investments for the Civil Service Retirement

and Disability Fund under section 8348.

‘‘(d)(1) Not later than June 30, 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;

Deadlines.

120 STAT. 3252 PUBLIC LAW 109–435—DEC. 20, 2006

‘‘(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) Upon receiving a request under clause (i), the Commission

shall promptly procure the services of an actuary, who shall hold

membership in the American Academy of Actuaries and shall be

qualified in the evaluation of healthcare insurance obligations, to

conduct a review in accordance with generally accepted actuarial

practices and principles and to provide a report to the Commission

containing the results of the review. The Commission, upon determining that the report satisfies the requirements of this subparagraph, shall approve the report, with any comments it may choose

to make, and submit it with any such comments to the Postal

Service, the Office of Personnel Management, and Congress.

‘‘(B) Upon receiving the report under subparagraph (A), the

Office of Personnel Management shall reconsider its determination

or redetermination in light of such report, and shall make any

appropriate adjustments. The Office shall submit a report containing the results of its reconsideration to the Commission, the

Postal Service, and Congress.

‘‘(6) After consultation with the United States Postal Service,

the Office shall promulgate any regulations the Office determines

necessary under this subsection.’’.

(2) TECHNICAL AND CONFORMING AMENDMENT.—The table

of sections for chapter 89 of title 5, United States Code, is

amended by inserting after the item relating to section 8909

the following:

‘‘8909a. Postal Service Retiree Health Benefits Fund.’’.

(b) REVIEW.—

(1) IN GENERAL.—

(A) REQUEST FOR REVIEW.—Any regulation established

under section 8909a(d)(5) of title 5, United States Code

(as added by subsection (a)), shall, upon request of the

United States Postal Service, be subject to a review by

the Postal Regulatory Commission under this paragraph.

5 USC 8909a.

Regulatioins.

Reports.

Reports.

PUBLIC LAW 109–435—DEC. 20, 2006 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. 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 (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. 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.’’.

5 USC 8334 note.

39 USC note

prec. 2001.

Reports.

120 STAT. 3254 PUBLIC LAW 109–435—DEC. 20, 2006

(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) 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, is repealed.

(2) CONFORMING AMENDMENTS.—(A) Section 5005(a) of title

39, United States Code, is amended—

39 USC 5201 et

seq.

Penalty.

PUBLIC LAW 109–435—DEC. 20, 2006 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.

120 STAT. 3256 PUBLIC LAW 109–435—DEC. 20, 2006

‘‘(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

PUBLIC LAW 109–435—DEC. 20, 2006 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).

120 STAT. 3258 PUBLIC LAW 109–435—DEC. 20, 2006

(d) PERCENT OF NONMAIL FREIGHT.—Section 5402(i)(6) of title

39, United States Code, is amended—

(1) by striking ‘‘(A)’’ after ‘‘(6)’’; and

(2) by striking subparagraph (B).

(e) PERCENT OF TENDER RATE.—Section 5402(j)(3)(B) of title

39, United States Code, is amended by striking ‘‘bush routes in

the State of Alaska’’ and inserting ‘‘routes served exclusively by

bush carriers in the State of Alaska’’.

(f) DETERMINATION OF RATES.—Section 5402(k) of title 39,

United States Code, is amended by striking paragraph (5).

(g) TECHNICAL AND CONFORMING AMENDMENT.—Section

5402(p)(3) of title 39, United States Code, is amended by striking

‘‘(g)(1)(D)’’ and inserting ‘‘(g)(1)(A)(iv)’’.

(h) EFFECTIVE DATE.— (1) IN GENERAL.—Except as provided under paragraph (2),

this section shall take effect on the date of enactment of this

Act.

(2) EQUITABLE TENDER.—Subsection (c) shall take effect

on 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) 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) 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.

39 USC 1001

note.

39 USC 404 note.

39 USC 5402

note.

PUBLIC LAW 109–435—DEC. 20, 2006 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:

‘‘§ 3018. Hazardous material

‘‘(a) 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.

Regulations.

120 STAT. 3260 PUBLIC LAW 109–435—DEC. 20, 2006

‘‘(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.’’.

PUBLIC LAW 109–435—DEC. 20, 2006 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. 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:

‘‘§ 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

Deadlines.

120 STAT. 3262 PUBLIC LAW 109–435—DEC. 20, 2006

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

PUBLIC LAW 109–435—DEC. 20, 2006 120 STAT. 3263

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.

Æ

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

the following:

‘‘§ 3627. Adjusting free rates’’.

Approved December 20, 2006.