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[House Report 109-66]
[From the U.S. Government Publishing Office]

109th Congress                                             Rept. 109-66
                        HOUSE OF REPRESENTATIVES
 1st Session                                                     Part 1

======================================================================

 
               POSTAL ACCOUNTABILITY AND ENHANCEMENT ACT

                                _______
                                

                 April 28, 2005.--Ordered to be printed

                                _______
                                

  Mr. Tom Davis of Virginia, from the Committee on Government Reform, 
                        submitted the following

                              R E P O R T

                         [To accompany H.R. 22]

      [Including cost estimate of the Congressional Budget Office]

  The Committee on Government Reform, to whom was referred the 
bill (H.R. 22) to reform the postal laws of the United States, 
having considered the same, report favorably thereon with an 
amendment and recommend that the bill as amended do pass.

                                CONTENTS

Committee Statement And Views....................................    42
Section-by-Section Analysis......................................    45
Explanation Of Amendments........................................    71
Committee Consideration..........................................    73
Rollcall Vote....................................................    75
Correspondence...................................................    75
Application Of Law To The Legislative Branch.....................    76
Statement Of Oversight Findings And Recommendations Of The 
  Committee......................................................    77
Statement Of General Performance Goals And Objectives............    77
Constitutional Authority Statement...............................    77
Federal Advisory Committee Act...................................    77
Unfunded Mandate Statement.......................................    77
Committee Estimate...............................................    77
Budget Authority And Congressional Budget Office Cost Estimate...    77
Changes In Existing Law Made By The Bill As Reported.............    87

  The amendment is as follows:
  Strike all after the enacting clause and insert the 
following:

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.
Sec. 103. Financial transparency.

                    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. Workshare discounts.
Sec. 207. Clerical amendment.

           TITLE III--PROVISIONS RELATING TO FAIR COMPETITION

Sec. 301. Postal Service Competitive Products Fund.
Sec. 302. Assumed Federal income tax on competitive products income.
Sec. 303. Unfair competition prohibited.
Sec. 304. Suits by and against the Postal Service.
Sec. 305. International postal arrangements.
Sec. 306. Redesignation.

                      TITLE IV--GENERAL PROVISIONS

Sec. 401. Qualification requirements for Governors.
Sec. 402. Obligations.
Sec. 403. Private carriage of letters.
Sec. 404. Rulemaking authority.
Sec. 405. Noninterference with collective bargaining agreements, etc.
Sec. 406. Bonus and compensation authority.
Sec. 407. Mediation in collective-bargaining disputes.

                TITLE V--ENHANCED REGULATORY COMMISSION

Sec. 501. Reorganization and modification of certain provisions 
relating to the Postal Regulatory Commission.
Sec. 502. Authority for Postal Regulatory Commission to issue 
subpoenas.
Sec. 503. Appropriations for the Postal Regulatory Commission.
Sec. 504. Redesignation of the Postal Rate Commission.
Sec. 505. Officer of the Postal Regulatory Commission representing the 
general public.

                      TITLE VI--INSPECTORS GENERAL

Sec. 601. Inspector General of the Postal Regulatory Commission.
Sec. 602. Inspector General of the United States Postal Service to be 
appointed by the President.

                         TITLE VII--EVALUATIONS

Sec. 701. Universal postal service study.
Sec. 702. Assessments of ratemaking, classification, and other 
provisions.
Sec. 703. Study on equal application of laws to competitive products.
Sec. 704. Greater diversity in Postal Service Executive and 
administrative schedule management positions.
Sec. 705. Plan for assisting displaced workers.
Sec. 706. Contracts with women, minorities, and small businesses.
Sec. 707. Rates for periodicals.
Sec. 708. Assessment of certain rate deficiencies.
Sec. 709. Network optimization.
Sec. 710. Assessment of future business model of the postal service.
Sec. 711. Study on certain proposed amendments.
Sec. 712. Definition.

     TITLE VIII--MISCELLANEOUS; TECHNICAL AND CONFORMING AMENDMENTS

Sec. 801. Employment of postal police officers.
Sec. 802. Date of postmark to be treated as date of appeal in 
connection with the closing or consolidation of post offices.
Sec. 803. Provisions relating to benefits under chapter 81 of title 5, 
United States Code, for officers and employees of the former Post 
Office Department.
Sec. 804. Obsolete provisions.
Sec. 805. Investments.
Sec. 806. Reduced rates.
Sec. 807. Hazardous matter.
Sec. 808. Provisions relating to cooperative mailings.
Sec. 809. Technical and conforming amendments.

           TITLE IX--POSTAL PENSION FUNDING REFORM AMENDMENTS

Sec. 901. Civil Service Retirement System.
Sec. 902. Health insurance.
Sec. 903. Repealer.
Sec. 904. Ensuring appropriate use of escrow and military savings.
Sec. 905. Effective dates.

                 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' means the carriage of letters, printed 
        matter, or mailable packages, including acceptance, collection, 
        processing, delivery, or other functions supportive or 
        ancillary thereto;
          ``(6) `product' means a postal service with a distinct cost 
        or market characteristic for which a rate or rates are, or may 
        reasonably be, applied;
          ``(7) `rates', as used with respect to products, includes 
        fees for postal services;
          ``(8) `market-dominant product' or `product in the market-
        dominant category of mail' means a product subject to 
        subchapter I of chapter 36;
          ``(9) `competitive product' or `product in the competitive 
        category of mail' means a product subject to subchapter II of 
        chapter 36;
          ``(10) `Consumer Price Index' means the Consumer Price Index 
        for All Urban Consumers published monthly by the Bureau of 
        Labor Statistics of the Department of Labor; and
          ``(11) `year', as used in chapter 36 (other than subchapters 
        I and VI thereof), means a fiscal year.''.

SEC. 102. POSTAL SERVICES.

  (a) In General.--Section 404 of title 39, United States Code, is 
amended--
          (1) in subsection (a), by striking paragraph (6) and by 
        redesignating paragraphs (7) through (9) as paragraphs (6) 
        through (8), respectively; and
          (2) by adding at the end the following:
  ``(c) Nothing in this title shall be considered to permit or require 
that the Postal Service provide any special nonpostal or similar 
services, except that nothing in this subsection shall prevent the 
Postal Service from providing any special nonpostal or similar services 
provided by the Postal Service as of January 4, 2005.''.
  (b) Conforming Amendment.--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)''.

SEC. 103. FINANCIAL TRANSPARENCY.

  (a) In General.--Section 101 of title 39, United States Code, is 
amended by redesignating subsections (d) through (g) as subsections (e) 
through (h), respectively, and by inserting after subsection (c) the 
following:
  ``(d) As an establishment that provides both market-dominant and 
competitive products, the Postal Service shall be subject to a high 
degree of transparency, including in its finances and operations, to 
ensure fair treatment of customers of the Postal Service's market-
dominant products and companies competing with the Postal Service's 
competitive products.''.
  (b) Conforming Amendment.--Section 5001 of title 39, United States 
Code, is amended by striking ``101(e) and (f)'' and inserting ``101(f) 
and (g)''.

                    TITLE II--MODERN RATE REGULATION

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

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

``Sec. 3621. Applicability; definitions

  ``(a) Applicability.--This subchapter shall apply with respect to--
          ``(1)(A) single piece first-class letters (both domestic and 
        international);
          ``(B) single piece first-class cards (both domestic and 
        international); and
          ``(C) special services;
          ``(2) all first-class mail not included under paragraph (1);
          ``(3) periodicals;
          ``(4) standard mail;
          ``(5) media mail;
          ``(6) library mail; and
          ``(7) bound printed matter,
subject to any changes the Postal Regulatory Commission may make under 
section 3642.
  ``(b) Rule of Construction.--Mail matter referred to in subsection 
(a) shall, for purposes of this subchapter, be considered to have the 
meaning given to such mail matter under the mail classification 
schedule.

``Sec. 3622. Modern rate regulation

  ``(a) Authority Generally.--The Postal Regulatory Commission shall, 
within 24 months after the date of the enactment of this section, by 
regulation establish (and may from time to time thereafter by 
regulation revise) a modern system for regulating rates and classes for 
market-dominant products.
  ``(b) Objectives.--Such system shall be designed to achieve the 
following objectives:
          ``(1) To establish and maintain a fair and equitable schedule 
        for rates and classification.
          ``(2) To maximize incentives to reduce costs and increase 
        efficiency.
          ``(3) To create predictability and stability in rates.
          ``(4) To maintain high quality service standards.
          ``(5) To allow the Postal Service pricing flexibility.
          ``(6) To assure adequate revenues, including retained 
        earnings, to maintain financial stability.
          ``(7) To reduce the administrative burden of the ratemaking 
        process.
  ``(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 direct and indirect postal costs attributable to 
        each class or type of mail service plus that portion of all 
        other costs of the Postal Service reasonably assignable to such 
        class or type;
          ``(3) the effect of rate increases upon the general public, 
        business mail users, and enterprises in the private sector of 
        the economy engaged in the delivery of mail matter other than 
        letters;
          ``(4) the available alternative means of sending and 
        receiving letters and other mail matter at reasonable costs;
          ``(5) the degree of preparation of mail for delivery into the 
        postal system performed by the mailer and its effect upon 
        reducing costs to the Postal Service;
          ``(6) simplicity of structure for the entire schedule and 
        simple, identifiable relationships between the rates or fees 
        charged the various classes of mail for postal services;
          ``(7) the 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;
          ``(8) 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;
          ``(9) the desirability of special classifications from the 
        point of view of both the user and of the Postal Service;
          ``(10) the educational, cultural, scientific, and 
        informational value to the recipient of mail matter; and
          ``(11) the policies of this title as well as such other 
        factors as the Commission deems appropriate.
  ``(d) Allowable Provisions.--The system for regulating rates and 
classes for market-dominant products may include one or more of the 
following:
          ``(1) Price caps, revenue targets, or other form of incentive 
        regulation.
          ``(2) Cost-of-service regulation.
          ``(3) Such other form of regulation as the Commission 
        considers appropriate to achieve, consistent with subsection 
        (c), the objectives of subsection (b).
  ``(e) Limitation.--In the administration of this section, the 
Commission shall not permit the average rate in any subclass of mail to 
increase at an annual rate greater than the comparable increase in the 
Consumer Price Index, unless it has, after notice and opportunity for a 
public hearing and comment, determined that such increase 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.
  ``(f) Transition Rule.--Until regulations under this section first 
take effect, rates and classes for market-dominant products shall 
remain subject to modification in accordance with the provisions of 
this chapter and section 407, as such provisions were last in effect 
before the date of the 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 501(a)(2), but before the 
amendment made by section 202) is amended by striking the heading for 
subchapter II and inserting the following:

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

SEC. 202. PROVISIONS RELATING TO COMPETITIVE PRODUCTS.

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

      ``SUBCHAPTER II--PROVISIONS RELATING TO COMPETITIVE PRODUCTS

``Sec. 3631. Applicability; definitions and updates

  ``(a) Applicability.--This subchapter shall apply with respect to--
          ``(1) priority mail;
          ``(2) expedited mail;
          ``(3) mailgrams;
          ``(4) international mail; and
          ``(5) parcel post,
subject to any changes the Postal Regulatory Commission may make under 
section 3642.
  ``(b) Definition.--For purposes of this subchapter, the term `costs 
attributable', as used with respect to a product, means the direct and 
indirect postal costs attributable to such product.
  ``(c) Rule of Construction.--Mail matter referred to in subsection 
(a) shall, for purposes of this subchapter, be considered to have the 
meaning given to such mail matter under the mail classification 
schedule.

``Sec. 3632. Action of the Governors

  ``(a) Authority To Establish Rates and Classes.--The Governors 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 the enactment of this section.

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

  ``The Postal Regulatory Commission shall, within 18 months after the 
date of the enactment of this section, promulgate (and may from time to 
time thereafter revise) regulations--
          ``(1) to prohibit the subsidization of competitive products 
        by market-dominant products;
          ``(2) to ensure that each competitive product covers its 
        costs attributable; and
          ``(3) to ensure that all competitive products collectively 
        make a reasonable contribution to the institutional costs of 
        the Postal Service.''.

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

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

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

``Sec. 3641. Market tests of experimental products

  ``(a) Authority.--
          ``(1) In general.--The Postal Service may conduct market 
        tests of experimental products in accordance with this section.
          ``(2) Provisions waived.--A product shall not, while it is 
        being tested under this section, be subject to the requirements 
        of sections 3622, 3633, or 3642, or regulations promulgated 
        under those sections.
  ``(b) Conditions.--A product may not be tested under this section 
unless it satisfies each of the following:
          ``(1) Significantly different product.--The product is, from 
        the viewpoint of the mail users, significantly different from 
        all products offered by the Postal Service within the 2-year 
        period preceding the start of the test.
          ``(2) Market disruption.--The introduction or continued 
        offering of the product will not create an unfair or otherwise 
        inappropriate competitive advantage for the Postal Service or 
        any mailer, particularly in regard to small business concerns 
        (as defined under subsection (h)).
          ``(3) Correct categorization.--The Postal Service identifies 
        the product, for the purpose of a test under this section, as 
        either market dominant or competitive, consistent with the 
        criteria under section 3642(b)(1). Costs and revenues 
        attributable to a product identified as competitive shall be 
        included in any determination under section 3633(3) (relating 
        to provisions applicable to competitive products collectively).
  ``(c) Notice.--
          ``(1) In general.--At least 30 days before initiating a 
        market test under this section, the Postal Service shall file 
        with the Postal Regulatory Commission and publish in the 
        Federal Register a notice--
                  ``(A) setting out the basis for the Postal Service's 
                determination that the market test is covered by this 
                section; and
                  ``(B) describing the nature and scope of the market 
                test.
          ``(2) Safeguards.--For a competitive experimental product, 
        the provisions of section 504(g) shall be available with 
        respect to any information required to be filed under paragraph 
        (1) to the same extent and in the same manner as in the case of 
        any matter described in section 504(g)(1). Nothing in paragraph 
        (1) shall be considered to permit or require the publication of 
        any information as to which confidential treatment is accorded 
        under the preceding sentence (subject to the same exception as 
        set forth in section 504(g)(3)).
  ``(d) Duration.--
          ``(1) In general.--A market test of a product under this 
        section may be conducted over a period of not to exceed 24 
        months.
          ``(2) Extension authority.--If necessary in order to 
        determine the feasibility or desirability of a product being 
        tested under this section, the Postal Regulatory Commission 
        may, upon written application of the Postal Service (filed not 
        later than 60 days before the date as of which the testing of 
        such product would otherwise be scheduled to terminate under 
        paragraph (1)), extend the testing of such product for not to 
        exceed an additional 12 months.
  ``(e) Dollar-Amount Limitation.--
          ``(1) In general.--A product may be tested under this section 
        only if the total revenues that are anticipated, or in fact 
        received, by the Postal Service from such product do not exceed 
        $10,000,000 nationwide 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 in 
        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 one or more of the requirements of this 
section, it may order the cancellation of the test involved or take 
such other action as it considers appropriate. A determination under 
this subsection shall be made in accordance with such procedures as the 
Commission shall by regulation prescribe.
  ``(g) Adjustment for Inflation.--For purposes of each year following 
the year in which occurs the deadline for the Postal Service's first 
report to the Postal Regulatory Commission under section 3652(a), each 
dollar amount contained in this section shall be adjusted by the change 
in the Consumer Price Index for such year (as determined under 
regulations of the Commission).
  ``(h) Definition of a Small Business Concern.--The criteria used in 
defining small business concerns or otherwise categorizing business 
concerns as small business concerns shall, for purposes of this 
section, be established by the Postal Regulatory Commission in 
conformance with the requirements of section 3 of the Small Business 
Act.
  ``(i) Effective Date.--Market tests under this subchapter may be 
conducted in any year beginning with the first year in which occurs the 
deadline for the Postal Service's first report to the Postal Regulatory 
Commission under section 3652(a).

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

  ``(a) In General.--Upon request of the Postal Service or users of the 
mails, or upon its own initiative, the Postal Regulatory Commission may 
change the list of market-dominant products under section 3621 and the 
list of competitive products under section 3631 by adding new products 
to the lists, removing products from the lists, or transferring 
products between the lists.
  ``(b) Criteria.--All determinations by the Postal Regulatory 
Commission under subsection (a) shall be made in accordance with the 
following criteria:
          ``(1) The market-dominant category of products shall consist 
        of each product in the sale of which the Postal Service 
        exercises sufficient market power that it can effectively set 
        the price of such product substantially above costs, raise 
        prices significantly, decrease quality, or decrease output, 
        without risk of losing business to other firms offering similar 
        products. The competitive category of products shall consist of 
        all other products.
          ``(2) Exclusion of products covered by postal monopoly.--A 
        product covered by the postal monopoly shall not be subject to 
        transfer under this section from the market-dominant category 
        of mail. For purposes of the preceding sentence, the term 
        `product covered by the postal monopoly' means any product the 
        conveyance or transmission of which is reserved to the United 
        States under section 1696 of title 18, subject to the same 
        exception as set forth in the last sentence of section 
        409(e)(1).
          ``(3) Additional considerations.--In making any decision 
        under this section, due regard shall be given to--
                  ``(A) the availability and nature of enterprises in 
                the private sector engaged in the delivery of the 
                product involved;
                  ``(B) the views of those who use the product involved 
                on the appropriateness of the proposed action; and
                  ``(C) the likely impact of the proposed action on 
                small business concerns (within the meaning of section 
                3641(h)).
  ``(c) Transfers of Subclasses and Other Subordinate Units 
Allowable.--Nothing in this title shall be considered to prevent 
transfers under this section from being made by reason of the fact that 
they would involve only some (but not all) of the subclasses or other 
subordinate units of the class of mail or type of postal service 
involved (without regard to satisfaction of minimum quantity 
requirements standing alone).
  ``(d) Notification and Publication Requirements.--
          ``(1) Notification requirement.--The Postal Service shall, 
        whenever it requests to add a product or transfer a product to 
        a different category, file with the Postal Regulatory 
        Commission and publish in the Federal Register a notice setting 
        out the basis for its determination that the product satisfies 
        the criteria under subsection (b) and, in the case of a request 
        to add a product or transfer a product to the competitive 
        category of mail, that the product meets the regulations 
        promulgated by the Postal Regulatory Commission pursuant to 
        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) Notification Requirement.--The Postal Regulatory Commission 
shall, whenever it reaches a conclusion that a product or products 
should be transferred between the list of market-dominant products 
under section 3621 and the list of competitive products under section 
3631, immediately notify the appropriate committees of the Congress. No 
such transfer may take effect less than 12 months after such 
conclusion.
  ``(f) Prohibition.--Except as provided in section 3641, no product 
that involves the carriage of letters, printed matter, or mailable 
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 by 
striking the heading for subchapter IV and inserting the following:

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

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

     ``SUBCHAPTER IV--REPORTING REQUIREMENTS AND RELATED PROVISIONS

``Sec. 3651. Annual reports by the Commission

  ``(a) In General.--The Postal Regulatory Commission shall submit an 
annual report to the President and the Congress concerning the 
operations of the Commission under this title, including the extent to 
which regulations are achieving the objectives under sections 3622 and 
3633, respectively.
  ``(b) Additional Information.--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--
          ``(1) 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);
          ``(2) free or reduced rates for postal services as required 
        by this title; and
          ``(3) 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.
The Commission shall detail the bases for its estimates and the 
statutory requirements giving rise to the costs identified in each 
report under this section.
  ``(c) Information From Postal Service.--The Postal Service shall 
provide the Postal Regulatory Commission with such information as may, 
in the judgment of the Commission, be necessary in order for the 
Commission to prepare its reports under this section.

``Sec. 3652. Annual reports to the Commission

  ``(a) Costs, Revenues, and Rates.--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 thereto as the Commission 
may require under subsection (e))--
          ``(1) which shall analyze costs, revenues, and rates, using 
        such methodologies as the Commission shall by regulation 
        prescribe, and in sufficient detail to demonstrate that the 
        rates in effect for 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) market information, including mail volumes; and
                  ``(B) measures of the quality of service afforded by 
                the Postal Service in connection with such product, 
                including--
                          ``(i) the service standard applicable to such 
                        product;
                          ``(ii) the level of service (described in 
                        terms of speed of delivery and reliability) 
                        provided; and
                          ``(iii) 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.--
          ``(1) In general.--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:
                  ``(A) The per-item cost avoided by the Postal Service 
                by virtue of such discount.
                  ``(B) The percentage of such per-item cost avoided 
                that the per-item workshare discount represents.
                  ``(C) The per-item contribution made to institutional 
                costs.
          ``(2) Workshare discount defined.--For purposes of this 
        subsection, the term `workshare discount' has the meaning given 
        such term under section 3687.
  ``(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--
          ``(1) may report summary data on the costs, revenues, and 
        quality of service by market test; and
          ``(2) shall report such data as the Postal Regulatory 
        Commission requires.
  ``(d) Supporting Matter.--The Postal Regulatory Commission shall have 
access, in accordance with such regulations as the Commission shall 
prescribe, to the working papers and any other supporting matter of the 
Postal Service and the Inspector General in connection with any 
information submitted under this section.
  ``(e) Content and Form of Reports.--
          ``(1) In general.--The Postal Regulatory Commission shall, by 
        regulation, prescribe the content and form of the public 
        reports (and any nonpublic annex and supporting matter relating 
        thereto) 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 adequate information 
                to assess the lawfulness of rates charged;
                  ``(B) avoiding unnecessary or unwarranted 
                administrative effort and expense on the part of the 
                Postal Service; and
                  ``(C) protecting the confidentiality of commercially 
                sensitive information.
          ``(2) Revised requirements.--The Commission may, on its own 
        motion or on request of an interested party, initiate 
        proceedings (to be conducted in accordance with regulations 
        that the Commission shall prescribe) to improve the quality, 
        accuracy, or completeness of Postal Service data required by 
        the Commission under this subsection whenever it shall appear 
        that--
                  ``(A) the attribution of costs or revenues to 
                products has become significantly inaccurate or can be 
                significantly improved;
                  ``(B) the quality of service data has become 
                significantly inaccurate or can be significantly 
                improved; or
                  ``(C) 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.
          ``(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 it is 
required to make under this section in a year, copies of its then most 
recent--
          ``(1) comprehensive statement under section 2401(e);
          ``(2) performance plan under section 2803; and
          ``(3) program performance reports under section 2804.

``Sec. 3653. Annual determination of compliance

  ``(a) Opportunity for Public Comment.--After receiving the reports 
required under section 3652 for any year, the Postal Regulatory 
Commission shall promptly provide an opportunity for comment on such 
reports by users of the mails, affected parties, and an officer of the 
Commission who shall be required to represent the interests of the 
general public.
  ``(b) Determination of Compliance or Noncompliance.--Not later than 
90 days after receiving the submissions required under section 3652 
with respect to a year, the Postal Regulatory Commission shall make a 
written determination as to--
          ``(1) whether any rates or fees in effect during such year 
        (for products individually or collectively) were not in 
        compliance with applicable provisions of this chapter (or 
        regulations promulgated thereunder);
          ``(2) whether any performance goals established under section 
        2803 or 2804 for such year were not met; and
          ``(3) whether any market-dominant product failed to meet any 
        service standard during such year.
If, with respect to a year, no instance of noncompliance is found under 
this subsection to have occurred in such year, the written 
determination shall be to that effect.
  ``(c) If Any Noncompliance Is Found.--If, for a year, a timely 
written determination of noncompliance is made under subsection (b), 
the Postal Regulatory Commission shall take appropriate action in 
accordance with subsections (c)-(e) of section 3662 (as if a complaint 
averring such noncompliance had been duly filed and found under such 
section to be justified).
  ``(d) Rebuttable Presumption.--A timely written determination 
described in the last sentence of subsection (b) shall, for purposes of 
any proceeding under section 3662, create a rebuttable presumption of 
compliance by the Postal Service (with regard to the matters described 
in paragraphs (1) through (3) of subsection (b)) during the year to 
which such determination relates.

``Sec. 3654. Additional financial reporting

  ``(a) Additional Financial Reporting.--
          ``(1) In general.--The Postal Service shall file with the 
        Postal Regulatory Commission beginning with the first full 
        fiscal year following the effective date of this section--
                  ``(A) within 35 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 2007.
  ``(b) Financial reporting.--
          ``(1) The reports required by subsection (a)(1)(B) shall 
        include, with respect to the Postal Service's pension and post-
        retirement health obligations--
                  ``(A) the funded status of the Postal Service's 
                pension and --postretirement health obligations;
                  ``(B) components of the net change in the fund 
                balances and obligations and the nature and cause of 
                any significant changes;
                  ``(C) components of net periodic costs;
                  ``(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)(A) Beginning with reports for the fiscal year 2007, 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.
          ``(2) Treatment.--Any information or other matter described 
        in paragraph (1) to which the Commission gains access under 
        this section shall be subject to paragraphs (2) and (3) of 
        section 504(g) in the same way as if the Commission had 
        received notification with respect to such matter under section 
        504(g)(1).''.

SEC. 205. COMPLAINTS; APPELLATE REVIEW AND ENFORCEMENT.

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

``Sec. 3662. Rate and service complaints

  ``(a) In General.--Interested persons (including an officer of the 
Postal Regulatory Commission representing the interests of the general 
public) who believe the Postal Service is not operating in conformance 
with the requirements of chapter 1, 4, or 6, or this chapter (or 
regulations promulgated under any of those chapters) may lodge a 
complaint with the Postal Regulatory Commission in such form and manner 
as the Commission may prescribe.
  ``(b) Prompt Response Required.--
          ``(1) In general.--The Postal Regulatory Commission shall, 
        within 90 days after receiving a complaint under subsection 
        (a), either--
                  ``(A) begin proceedings on such complaint; or
                  ``(B) issue an order dismissing the complaint 
                (together with a statement of the reasons therefor).
          ``(2) Treatment of complaints not timely acted on.--For 
        purposes of section 3663, any complaint under subsection (a) on 
        which the Commission fails to act in the time and manner 
        required by paragraph (1) shall be treated in the same way as 
        if it had been dismissed 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) Suspension Authority.--The Postal Regulatory Commission may 
suspend implementation of rates or classifications under section 
3632(b)(3) for a limited period of time pending expedited proceedings 
under this section. In evaluating whether circumstances warrant 
suspension, the Commission shall consider factors such as (1) whether 
there is a substantial likelihood that such rate or classification will 
violate the requirements of chapter 1, 4, or 6, or this chapter (or 
regulations promulgated under any of those chapters), (2) whether any 
persons would suffer substantial injury, loss, or damage absent a 
suspension, (3) whether the Postal Service or any other persons would 
suffer substantial injury, loss, or damage under a suspension, and (4) 
the public interest.
  ``(e) Authority to Order Fines in Cases of Deliberate 
Noncompliance.--In addition, in cases of deliberate noncompliance by 
the Postal Service with the requirements of this title, the Postal 
Regulatory Commission may order, based on the nature, circumstances, 
extent, and seriousness of the noncompliance, a fine (in the amount 
specified by the Commission in its order) for each incidence of 
noncompliance. Fines resulting from the provision of competitive 
products shall be paid out of the Competitive Products Fund established 
in section 2011. All receipts from fines imposed under this subsection 
shall be deposited in the general fund of the Treasury of the United 
States.

``Sec. 3663. Appellate review

  ``A person 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. For 
purposes of this section, the term `person' includes the Postal 
Service.

``Sec. 3664. Enforcement of orders

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

SEC. 206. WORKSHARE DISCOUNTS.

  (a) In General.--Title 39, United States Code, is amended by adding 
after section 3686 (as added by section 406) the following:

``Sec. 3687. Workshare discounts

  ``(a) In General.--As part of the regulations established under 
section 3622(a), the Postal Regulatory Commission shall establish rules 
for workshare discounts that ensure that such discounts do not exceed 
the cost that the Postal Service avoids as the result of workshare 
activity, unless--
          ``(1) the discount is--
                  ``(A) associated with a new postal service, a change 
                to an existing postal service, or a new workshare 
                initiative related to an existing postal service; and
                  ``(B) 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;
          ``(2) a reduction in 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 to costs avoided;
                  ``(B) result in a further increase in the rates paid 
                by mailers not able to take advantage of the discount; 
                or
                  ``(C) impede the efficient operation of the Postal 
                Service;
          ``(3) the amount of the discount above costs avoided--
                  ``(A) is necessary to mitigate rate shock; and
                  ``(B) will be phased out over time; or
          ``(4) the discount is provided in connection with subclasses 
        of mail consisting exclusively of mail matter of educational, 
        cultural, scientific, or informational value.
  ``(b) Report.--Whenever the Postal Service establishes or maintains a 
workshare discount, the Postal Service shall, at the time it publishes 
the workshare discount rate, submit to the Postal Regulatory Commission 
a detailed report that--
          ``(1) explains the Postal Service's reasons for establishing 
        or maintaining the rate;
          ``(2) sets forth the data, economic analyses, and other 
        information relied on by the Postal Service to justify the 
        rate; and
          ``(3) 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.
  ``(c) Definition.--For purposes of this section, 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 section 
3622(a).''.
  (b) Clerical Amendment.--The analysis for chapter 36 of title 39, 
United States Code (as amended by section 207) is amended by adding 
after the item relating to section 3686 the following:

``3687. Workshare discounts.''.

SEC. 207. 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.
``3626. Reduced rates.
``3627. Adjusting free rates.
``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.

                         ``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.''.

           TITLE III--PROVISIONS RELATING TO FAIR COMPETITION

SEC. 301. POSTAL SERVICE COMPETITIVE PRODUCTS FUND.

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

``Sec. 2011. Provisions relating to competitive products

  ``(a) 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--
          ``(1) costs attributable to competitive products; and
          ``(2) all other costs incurred by the Postal Service, to the 
        extent allocable to competitive products.
For purposes of this subsection, the term `costs attributable' has the 
meaning given such term by section 3631.
  ``(b) There shall be deposited in the Competitive Products Fund, 
subject to withdrawal by the Postal Service--
          ``(1) revenues from competitive products;
          ``(2) amounts received from obligations issued by the 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, it may 
request the investment of such amounts as it deems advisable by the 
Secretary of the Treasury in obligations of, or obligations guaranteed 
by, the Government of the United States, and, with the approval of the 
Secretary, in such other obligations or securities as it deems 
appropriate.
  ``(d) With the approval of the Secretary of the Treasury, the Postal 
Service may deposit moneys of the 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) 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 it determines necessary to provide for competitive 
products and deposit such amounts in the Competitive Products Fund. Any 
such borrowings by the Postal Service shall be supported and serviced 
by the revenues and receipts from competitive products and the 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 from the Postal Service, 
including the audited statements required by section 2008(e), but in 
either case subject to paragraph (5)).
  ``(2) The Postal Service may enter into binding covenants with the 
holders of such obligations, and with the trustee, if any, under any 
agreement entered into in connection with the issuance thereof 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) The obligations issued by the Postal Service under this 
section--
          ``(A) shall be in such forms and denominations;
          ``(B) shall be sold at such times and in such amounts;
          ``(C) shall mature at such time or times;
          ``(D) shall be sold at such prices;
          ``(E) shall bear such rates of interest;
          ``(F) may be redeemable before maturity in such manner, at 
        such times, and at such redemption premiums;
          ``(G) may be entitled to such relative priorities of claim on 
        the assets of the Postal Service with respect to principal and 
        interest payments; and
          ``(H) shall be subject to such other terms and conditions;
as the Postal Service determines.
  ``(4) Obligations issued by the Postal Service under this 
subsection--
          ``(A) shall be negotiable or nonnegotiable and bearer or 
        registered instruments, as specified therein and in any 
        indenture or covenant relating thereto;
          ``(B) shall contain a recital that they 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) of this title, 
        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; 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 against the Postal Service or the Government of the 
United States (or settlement of a claim) shall, to the extent that it 
arises out of activities of the Postal Service in the provision of 
competitive products, be paid out of the Competitive Products Fund.
  ``(h)(1) The Secretary of the Treasury, in consultation with the 
Postal Service and an independent, certified public accounting firm and 
such other advisors as the Secretary considers appropriate, shall 
develop recommendations regarding--
          ``(A) 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, and the capital and 
        operating costs incurred by the Postal Service in providing, 
        competitive products, and (ii) subject to subsection (e)(5), 
        preventing the subsidization of such products by market-
        dominant products; and
          ``(B) the substantive and procedural rules that should be 
        followed in determining the Postal Service's assumed Federal 
        income tax on competitive products income for any year (within 
        the meaning of section 3634).
Such recommendations shall be submitted to the Postal Regulatory 
Commission no earlier than 6 months, and no later than 12 months, after 
the effective date of this section.
  ``(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) 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 in paragraph (1)(B); 
        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.
Final rules under this subparagraph shall be issued not later than 12 
months after the date on which the Secretary of the Treasury makes his 
submission to the Commission under paragraph (1) (or by such later date 
as the Commission and the Postal Service may agree to). The Commission 
is authorized to promulgate regulations revising such rules.
  ``(C) Reports described in subparagraph (B)(iii) shall be submitted 
at such time and in such form, and shall include such information, as 
the Commission by rule requires. 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 data under such subparagraph whenever it shall appear that--
          ``(i) the quality of the information furnished in those 
        reports has become significantly inaccurate or can be 
        significantly improved; or
          ``(ii) those revisions are, in the judgment of the 
        Commission, otherwise necessitated by the public interest.
  ``(D) A copy of each report described in subparagraph (B)(iii) shall 
also be transmitted by the Postal Service to the Secretary of the 
Treasury and the Inspector General of the United States Postal Service.
  ``(i) The Postal Service shall render an annual report to the 
Secretary of the Treasury concerning the operation of the Competitive 
Products Fund, in which it shall address such matters as risk 
limitations, reserve balances, allocation or distribution of moneys, 
liquidity requirements, and measures to safeguard against losses. A 
copy of its then most recent report under this subsection shall be 
included with any other submission that it is required to make to the 
Postal Regulatory Commission under section 3652(g).''.
          (2) Clerical amendment.--The analysis 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' 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), by inserting ``or section 
                2011'' before ``of this title,'';
                  (B) in subsection (b), by inserting ``under section 
                2005'' before ``in such amounts'' in the first sentence 
                and before ``in excess of such amount.'' in the second 
                sentence; and
                  (C) in subsection (c), by inserting ``or section 
                2011(e)(4)(E)'' before ``of this title,''.

SEC. 302. ASSUMED FEDERAL INCOME TAX ON COMPETITIVE PRODUCTS INCOME.

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

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

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

SEC. 303. UNFAIR COMPETITION PROHIBITED.

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

``Sec. 404a. Specific Limitations

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

``404a. Specific limitations.''.

SEC. 304. 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 competitive product, 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.
  ``(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 the 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 one 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.
  ``(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. 305. INTERNATIONAL POSTAL ARRANGEMENTS.

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

``Sec. 407. International postal arrangements

  ``(a) It is the policy of the United States--
          ``(1) to promote and encourage communications between peoples 
        by efficient operation of international postal services and 
        other international delivery services for cultural, social, and 
        economic purposes;
          ``(2) to promote and encourage unrestricted and undistorted 
        competition in the provision of international postal services 
        and other international delivery services, except where 
        provision of such services by private companies may be 
        prohibited by law of the United States;
          ``(3) to promote and encourage a clear distinction between 
        governmental and operational responsibilities with respect to 
        the provision of international postal services and 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 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 
        Government Reform of the House of Representatives and the 
        Committee on Governmental Affairs of the Senate;
          ``(D) shall maintain appropriate liaison with both 
        representatives of the Postal Service and representatives of 
        users and private providers of international postal services 
        and other international delivery services to keep informed of 
        their interests and problems, and to provide such assistance as 
        may be needed to ensure that matters of concern are promptly 
        considered by the Department of State or (if applicable, and to 
        the extent practicable) other executive branch agencies; and
          ``(E) shall assist in arranging meetings of such public 
        sector advisory groups as may be established to advise the 
        Department of State and other executive branch agencies in 
        connection with international postal services and international 
        delivery services.
  ``(3) The Secretary of State shall establish an advisory committee 
(within the meaning of the Federal Advisory Committee Act) to perform 
such functions as the Secretary considers appropriate in connection 
with carrying out subparagraphs (A) through (D) of paragraph (2).
  ``(c)(1) Before concluding any treaty, convention, or amendment that 
establishes a rate or classification for a product subject to 
subchapter I of chapter 36, the Secretary of State shall request the 
Postal Regulatory Commission to submit a decision 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 a decision 
of the Commission adopted under paragraph (1), except if, or to the 
extent, the Secretary determines, by written order, that considerations 
of foreign policy or national security require modification of the 
Commission's decision.
  ``(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) 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 Bureau of Customs and 
Border Protection of the Department of Homeland Security and other 
appropriate Federal agencies shall apply the customs laws of the United 
States and all other laws relating to the importation or exportation of 
such shipments in the same manner to both shipments by the Postal 
Service and similar shipments by private companies.
  ``(2) For purposes of this subsection, the term `private company' 
means a private company substantially owned or controlled by persons 
who are citizens of the United States.
  ``(3) In exercising the authority pursuant to subsection (b) to 
conclude new treaties, conventions and amendments related to 
international postal services and to renegotiate such treaties, 
conventions and amendments, the Secretary of State shall, to the 
maximum extent practicable, take such measures as are within the 
Secretary's control to encourage the governments of other countries to 
make available to the Postal Service and private companies a range of 
nondiscriminatory customs procedures that will fully meet the needs of 
all types of American shippers. The Secretary of State shall consult 
with the United States Trade Representative and the Commissioner of 
Customs, Department of Homeland Security in carrying out this 
paragraph.
  ``(4) The provisions of this subsection shall take effect 6 months 
after the date of the 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.

SEC. 306. REDESIGNATION.

  Chapter 36 of title 39, United States Code (as in effect before the 
amendment made by section 204(a)) is amended by striking the heading 
for subchapter V and inserting the following:

                      ``SUBCHAPTER VI--GENERAL''.

                      TITLE IV--GENERAL PROVISIONS

SEC. 401. QUALIFICATION REQUIREMENTS FOR GOVERNORS.

  (a) 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 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) of substantial size; for purposes of this sentence, 
an organization or corporation shall be considered to be of substantial 
size if it employs 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.''.
  (b) Consultation Requirement.--Section 202(a) of title 39, United 
States Code, is amended by adding at the end the following:
  ``(2) In selecting the individuals described in paragraph (1) for 
nomination for appointment to the position of Governor, the President 
should consult with the Speaker of the House of Representatives, the 
minority leader of the House of Representatives, the majority leader of 
the Senate, and the minority leader of the Senate.''.
  (c) Restriction.--Section 202(b) of title 39, United States Code, is 
amended by striking ``(b)'' and inserting ``(b)(1)'', and by adding at 
the end the following:
  ``(2)(A) Notwithstanding any other provision of this section, in the 
case of the office of the Governor the term of which is the first one 
scheduled to expire at least 4 months after the date of the enactment 
of this paragraph--
          ``(i) such office may not, in the case of any person 
        commencing service after that expiration date, be filled by any 
        person other than an individual chosen from among persons 
        nominated for such office with the unanimous concurrence of all 
        labor organizations described in section 206(a)(1); and
          ``(ii) instead of the term that would otherwise apply under 
        the first sentence of paragraph (1), the term of any person so 
        appointed to such office shall be 3 years.
  ``(B) Except as provided in subparagraph (A), an appointment under 
this paragraph shall be made in conformance with all provisions of this 
section that would otherwise apply.''.
  (d) Applicability.--The amendment made by subsection (a) shall not 
affect the appointment or tenure of any person serving as a Governor of 
the Board of Governors of the United States Postal Service pursuant to 
an appointment made before the date of the enactment of this Act, or, 
except as provided in the amendment made by subsection (c), any 
nomination made before that date; 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 the enactment of this Act.

SEC. 402. OBLIGATIONS.

  (a) Purposes for Which Obligations May Be Issued.--The first sentence 
of section 2005(a)(1) of title 39, United States Code, is amended by 
striking ``title.'' and inserting ``title, other than any of the 
purposes for which the corresponding authority is available to the 
Postal Service under section 2011.''.
  (b) 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, Etc.--
          (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. 403. PRIVATE CARRIAGE OF LETTERS.

  (a) In General.--Section 601 of title 39, United States Code, is 
amended by striking subsection (b) and inserting the following:
  ``(b) A letter may also be carried out of the mails when--
          ``(1) the amount paid for the private carriage of the letter 
        is at least the amount equal to 6 times the rate then currently 
        charged for the 1st ounce of a single-piece first class letter;
          ``(2) the letter weighs at least 12\1/2\ ounces; or
          ``(3) such carriage is within the scope of services described 
        by regulations of the 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, 2004) 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. 404. 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. 405. NONINTERFERENCE WITH COLLECTIVE BARGAINING AGREEMENTS, ETC.

  (a) Noninterference With Collective Bargaining Agreements.--Except as 
provided in section 407, nothing in this Act or any amendment made by 
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.
  (b) 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. 406. BONUS AND COMPENSATION AUTHORITY.

  Subchapter VI of chapter 36 of title 39, United States Code (as so 
redesignated by section 306) is amended by adding at the end the 
following:

``Sec. 3686. Bonus authority

  ``(a) In General.--The Postal Service may establish one or more 
programs to provide bonuses or other rewards to officers and employees 
of the Postal Service in senior executive or equivalent positions to 
achieve the objectives of this chapter.
  ``(b) Limitation on Total Compensation.--
          ``(1) In general.--Under any such program, the Postal Service 
        may award a bonus or other reward in excess of the limitation 
        set forth in the last sentence of section 1003(a), if such 
        program has been approved under paragraph (2). Any such award 
        or bonus may not cause the total compensation of such officer 
        or employee to exceed the total annual compensation payable to 
        the Vice President under section 104 of title 3 as of the end 
        of the calendar year in which the bonus or award is paid.
          ``(2) Approval process.--If the Postal Service wishes to have 
        the authority, under any program described in subsection (a), 
        to award bonuses or other rewards in excess of the limitation 
        set forth in the last sentence of section 1003(a)--
                  ``(A) the Postal Service shall make an appropriate 
                request to the Board of Governors in such form and 
                manner as the Board requires; and
                  ``(B) the Board of Governors shall approve any such 
                request if it 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 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.''.

SEC. 407. MEDIATION IN COLLECTIVE-BARGAINING DISPUTES.

  (a) In General.--Section 1207(b) of title 39, United States Code, is 
amended by striking all that follows ``the Director of the Federal 
Mediation and Conciliation Service shall'' and inserting ``, 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.''.
  (b) Provisions Relating to Arbitration Boards.--Section 1207(c) of 
title 39, United States Code, is amended--
          (1) in paragraph (1)--
                  (A) by striking ``90'' and inserting ``60'';
                  (B) by striking ``not members of the factfinding 
                panel,''; and
                  (C) by striking all that follows ``shall be made'' 
                and inserting ``from a list of names provided by the 
                Director. This list shall consist of not less than 9 
                names of arbitrators of nationwide reputation and 
                professional stature, who are also members of the 
                National Academy of Arbitrators, and whom the Director 
                has determined are available and willing to serve.''; 
                and
          (2) in paragraph (3), by striking ``factfinding panel'' and 
        inserting ``mediation''.
  (c) Conforming Amendment.--Section 1207(d) of title 39, United States 
Code, is amended by striking ``factfinding panel will be established'' 
and inserting ``mediator shall be appointed''.

                TITLE V--ENHANCED REGULATORY COMMISSION

SEC. 501. 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.

``Sec. 501. Establishment

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

``Sec. 502. Commissioners

  ``(a) The Postal Regulatory Commission is composed of 5 
Commissioners, appointed by the President, by and with the advice and 
consent of the Senate. The Commissioners shall be chosen solely on the 
basis of their technical qualifications, professional standing, and 
demonstrated expertise in economics, accounting, law, or public 
administration, and may be removed by the President only for cause. 
Each individual appointed to the Commission shall have the 
qualifications and expertise necessary to carry out the 
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) 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 (e).
  ``(c) One of the Commissioners shall be designated as Chairman by, 
and shall serve in the position of Chairman at the pleasure of, the 
President.
  ``(d) 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.
  ``(e) The Commissioners shall serve for terms of 6 years.'';
          (2) in subchapter I of chapter 36 (as in effect before the 
        amendment made by section 201(c)), by striking the heading for 
        such subchapter I and all that follows through section 3602; 
        and
          (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)).
  (b) Determinations.--Section 503 of title 39, United States Code, as 
so redesignated by subsection (a)(3), is amended by adding at the end 
the following: ``Such rules shall include procedures which balance, 
inter alia, the need for protecting due process rights and ensuring 
expeditious decision-making.''.
  (c) 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 504) pursuant to an appointment made before the date of the 
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.
  (d) 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. 502. AUTHORITY FOR POSTAL REGULATORY COMMISSION TO ISSUE 
                    SUBPOENAS.

  Section 504 of title 39, United States Code (as so redesignated by 
section 501) 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--
          ``(A) issue subpoenas requiring the attendance and 
        presentation of testimony by, or the production of documentary 
        or other evidence in the possession of, any covered person; and
          ``(B) order the taking of depositions and responses to 
        written interrogatories by a covered person.
The written concurrence of a majority of the Commissioners then holding 
office shall, with respect to each subpoena under subparagraph (A), be 
required in advance of its issuance.
  ``(3) In the case of contumacy or failure to obey a subpoena issued 
under this subsection, upon application by the Commission, the district 
court of the United States for the district in which the person to whom 
the subpoena is addressed resides or is served may issue an order 
requiring such person to appear at any designated place to testify or 
produce documentary or other evidence. Any failure to obey the order of 
the court may be punished by the court as a contempt thereof.
  ``(4) For purposes of this subsection, the term `covered person' 
means an officer, employee, agent, or contractor of the Postal Service.
  ``(g)(1) If the Postal Service determines that any document or other 
matter it provides to the Postal Regulatory Commission pursuant to 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 prevent the Commission from publicly 
disclosing relevant information in furtherance of its duties under this 
title if 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, as required by section 101(d) of this title for financial 
transparency of a government establishment.
  ``(B) Paragraph (2) shall not prevent information from being 
furnished under any process of discovery established under this title 
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 any information furnished under the preceding 
sentence.''.

SEC. 503. APPROPRIATIONS FOR THE POSTAL REGULATORY COMMISSION.

  (a) Authorization of Appropriations.--Subsection (d) of section 504 
of title 39, United States Code (as so redesignated by section 501) is 
amended to read as follows:
  ``(d) There are authorized to be appropriated, out of the Postal 
Service Fund, such sums as may be necessary for the Postal Regulatory 
Commission. In requesting an appropriation under this subsection for a 
fiscal year, the Commission shall prepare and submit to the Congress 
under section 2009 a budget of the Commission's expenses, including 
expenses for facilities, supplies, compensation, and employee 
benefits.''.
  (b) Budget Program.--
          (1) In general.--The next to last sentence of section 2009 of 
        title 39, United States Code, is amended to read as follows: 
        ``The budget program shall also include separate statements of 
        the amounts which (1) the Postal Service requests to be 
        appropriated under subsections (b) and (c) of section 2401, (2) 
        the Office of Inspector General of the United States Postal 
        Service requests to be appropriated, out of the Postal Service 
        Fund, under section 8L(e) 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 
        pursuant to section 504(d); and (C) all expenses of the Office 
        of Inspector General, subject to the availability of amounts 
        appropriated pursuant to section 8L(e) of the Inspector General 
        Act of 1978.''.
  (c) Effective Date.--
          (1) In general.--The amendments made by this section shall 
        apply with respect to fiscal years beginning on or after 
        October 1, 2005.
          (2) Savings provision.--The provisions of title 39, United 
        States Code, that are amended by this section shall, for 
        purposes of any fiscal year before the first fiscal year to 
        which the amendments made by this section apply, continue to 
        apply in the same way as if this section had never been 
        enacted.

SEC. 504. REDESIGNATION OF THE POSTAL RATE COMMISSION.

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

SEC. 505. OFFICER OF THE POSTAL REGULATORY COMMISSION REPRESENTING THE 
                    GENERAL PUBLIC.

  (a) In General.--Chapter 5 of title 39, United States Code (as added 
by this Act) is amended by adding after section 504 the following:

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

  ``The Postal Regulatory Commission shall designate an officer of the 
Postal Regulatory Commission in all public proceedings (such as 
developing rules, regulations, and procedures) who shall represent the 
interests of the general public.''.
  (b) Clerical Amendment.--The analysis for chapter 5 of title 39, 
United States Code (as amended by section 501(a)(1)) is amended by 
adding after the item relating to section 504 the following:

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

                      TITLE VI--INSPECTORS GENERAL

SEC. 601. INSPECTOR GENERAL OF THE POSTAL REGULATORY COMMISSION.

  (a) In General.--Paragraph (2) of section 8G(a) 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 501) is amended by adding after subsection 
(g) (as added by section 502) 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.

SEC. 602. INSPECTOR GENERAL OF THE UNITED STATES POSTAL SERVICE TO BE 
                    APPOINTED BY THE PRESIDENT.

  (a) Definitional Amendments to the Inspector General Act of 1978.--
Section 11 of the Inspector General Act of 1978 is amended--
          (1) in paragraph (1)--
                  (A) by striking ``or'' before ``the President of the 
                Export-Import Bank;'' and
                  (B) by inserting ``or the Governors of the United 
                States Postal Service (within the meaning of section 
                102(3) of title 39, United States Code);'' after ``the 
                President of the Export-Import Bank;''; and
          (2) in paragraph (2)--
                  (A) by striking ``or'' before ``the Export-Import 
                Bank,''; and
                  (B) by inserting ``or the United States Postal 
                Service,'' after ``the Export-Import Bank,''.
  (b) Special Provisions Concerning the United States Postal Service.--
          (1) In general.--The Inspector General Act of 1978 is amended 
        by inserting after section 8K the following:
    ``special provisions concerning the united states postal service
  ``Sec. 8L.  (a) In carrying out the duties and responsibilities 
specified in this Act, the Inspector General of the United States 
Postal Service shall have oversight responsibility for all activities 
of the Postal Inspection Service, including any internal investigation 
performed by the Postal Inspection Service. The Chief Postal Inspector 
shall promptly report any significant activities being carried out by 
the Postal Inspection Service to such Inspector General. The Postmaster 
General shall promptly report to such Inspector General all allegations 
of theft, fraud, or misconduct by Postal Service officers or employees, 
and entities or individuals doing business with the Postal Service.
  ``(b) In the case of any report that the Governors of the United 
States Postal Service (within the meaning of section 102(3) of title 
39, United States Code) are required to transmit under the second 
sentence of section 5(d), such sentence shall be applied by deeming the 
term `appropriate committees of Congress' to mean the Committee on 
Government Reform of the House of Representatives, the Committee on 
Governmental Affairs of the Senate, and such other committees or 
subcommittees of Congress as may be appropriate.
  ``(c) Notwithstanding any provision of paragraph (7) or (8) of 
section 6(a), the Inspector General of the United States Postal Service 
may select, appoint, and employ such officers and employees as may be 
necessary for carrying out the functions, powers, and duties of the 
Office of Inspector General and to obtain the temporary or intermittent 
services of experts or consultants or an organization of experts or 
consultants, subject to the applicable laws and regulations that govern 
such selections, appointments, and employment, and the obtaining of 
such services, within the United States Postal Service.
  ``(d) Nothing in this Act shall restrict, eliminate, or otherwise 
adversely affect any of the rights, privileges, or benefits of 
employees of the United States Postal Service, or labor organizations 
representing employees of the United States Postal Service, under 
chapter 12 of title 39, United States Code, the National Labor 
Relations Act, any handbook or manual affecting employee labor 
relations with the United States Postal Service, or any collective 
bargaining agreement.
  ``(e) 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.''.
          (2) Related provisions.--For certain related provisions, see 
        section 503(b).
  (c) Exercise of Certain Powers.--Section 6(e)(3) of the Inspector 
General Act of 1978 is amended--
          (1) by striking ``and the'' before ``Tennessee Valley 
        Authority''; and
          (2) by inserting ``, and United States Postal Service'' after 
        ``Tennessee Valley Authority''.
  (d) Public Contracts.--
          (1) Additional provisions applicable.--Section 410(b)(5) of 
        title 39, United States Code, is amended--
                  (A) in subparagraph (A), by striking ``and'' after 
                the semicolon; and
                  (B) by adding after subparagraph (B) the following:
                  ``(C) the Anti-Kickback Act of 1986 (41 U.S.C. 51 and 
                following), other than subsections (a) and (b) of 7 and 
                section 8 of that Act; and
                  ``(D) section 315 of the Federal Property and 
                Administrative Services Act of 1949 (41 U.S.C. 265) 
                (relating to protecting contractor employees from 
                reprisal for disclosure of certain information);''.
          (2) Regulations on allowable costs.--Section 410 of title 39, 
        United States Code, is amended by adding at the end the 
        following:
  ``(e) The Postal Service shall develop and issue purchasing 
regulations that prohibit contract costs not allowable under section 
5.2.5 of the United States Postal Service Procurement Manual 
(Publication 41), as in effect on July 12, 1995.''.
  (e) Reports.--Section 3013 of title 39, United States Code, is 
amended by striking ``Postmaster General'' each place it appears and 
inserting ``Chief Postal Inspector''.
  (f) Technical and Conforming Amendments.--
          (1) Relating to the inspector general act of 1978.--(A) 
        Subsection (a) of section 8G of the Inspector General Act of 
        1978 (as amended by section 601(a)) is further amended--
                  (i) in paragraph (2), by striking ``the Postal 
                Regulatory Commission, and the United States Postal 
                Service;'' and inserting ``and the Postal Regulatory 
                Commission;'' and
                  (ii) in paragraph (4), by striking ``except that'' 
                and all that follows through ``Code);'' and inserting 
                ``except that, with respect to the National Science 
                Foundation, such term means the National Science 
                Board;''.
          (B)(i) Subsection (f) of section 8G of such Act is repealed.
          (ii) Subsection (c) of section 8G of such Act is amended by 
        striking ``Except as provided under subsection (f) of this 
        section, the'' and inserting ``The''.
          (C) Section 8J of such Act is amended by striking the matter 
        after ``8D,'' and before ``of this Act'' and inserting ``8E, 
        8F, 8H, or 8L''.
          (2) Relating to title 39, united states code.--(A) Subsection 
        (e) of section 202 of title 39, United States Code, is 
        repealed.
          (B) Paragraph (4) of section 102 of such title 39 (as amended 
        by section 101) is amended to read as follows:
          ``(4) `Inspector General' means the Inspector General of the 
        United States Postal Service, appointed under section 3(a) of 
        the Inspector General Act of 1978;''.
          (C) The first sentence of section 1003(a) of such title 39 is 
        amended by striking ``chapters 2 and 12 of this title, section 
        8G of the Inspector General Act of 1978, or other provision of 
        law,'' and inserting ``chapter 2 or 12 of this title, 
        subsection (b) or (c) of this section, or any other provision 
        of law,''.
          (D) Section 1003(b) of such title 39 is amended by striking 
        ``respective'' and inserting ``other''.
          (E) Section 1003(c) of such title 39 is amended by striking 
        ``included'' and inserting ``includes''.
          (3) Relating to the energy policy act of 1992.--Section 
        160(a) of the Energy Policy Act of 1992 (42 U.S.C. 8262f(a)) is 
        amended (in the matter before paragraph (1)) by striking all 
        that follows ``(5 U.S.C. App.)'' and before ``shall--''.
  (g) Effective Date; Transition Provisions.--
          (1) Effective date.--Except as provided in paragraph (2) or 
        subsection (c), this section and the amendments made by this 
        section shall take effect on the date of the enactment of this 
        Act.
          (2) Transition provisions.--
                  (A) Presidential appointment authority available 
                immediately.--The authority to appoint an Inspector 
                General of the United States Postal Service in 
                accordance with the amendments made by this section 
                shall be available as of the effective date of this 
                section.
                  (B) Continuation in office.--Pending the appointment 
                of an Inspector General of the United States Postal 
                Service in accordance with the amendments made by this 
                section, the individual serving as the Inspector 
                General of the United States Postal Service on the day 
                before the effective date of this section may continue 
                to serve--
                          (i) in accordance with applicable provisions 
                        of the Inspector General Act of 1978 and 
                        (except as provided in clause (ii)) of title 
                        39, United States Code, as last in effect 
                        before the effective date of this Act; but
                          (ii) subject to the provisions of such title 
                        39 as amended by subsection (e) of this section 
                        (deeming any reference to the ``Inspector 
                        General'' in such provisions, as so amended, to 
                        refer to the individual continuing to serve 
                        under authority of this subparagraph) and 
                        subparagraph (C).
                  (C) Authorization of appropriations.--
                          (i) In general.--Notwithstanding any other 
                        provision of this subsection, section 8L(e) of 
                        the Inspector General Act of 1978 (as amended 
                        by this section) shall be effective for 
                        purposes of fiscal years beginning on or after 
                        October 1, 2005.
                          (ii) Savings provision.--For purposes of the 
                        fiscal year ending on September 30, 2005, 
                        funding for the Office of Inspector General of 
                        the United States Postal Service shall be made 
                        available in the same manner as if this Act had 
                        never been enacted.
                  (D) Eligibility of prior inspector general.--Nothing 
                in this Act shall prevent any individual who has served 
                as Inspector General of the United States Postal 
                Service at any time before the date of the enactment of 
                this Act from being appointed to that position pursuant 
                to the amendments made by this section.

                         TITLE VII--EVALUATIONS

SEC. 701. UNIVERSAL POSTAL SERVICE STUDY.

  (a) Report by the Postal Service.--The United States Postal Service 
shall, within 12 months after the date of the enactment of this Act, 
submit to the President, the Congress, and the Postal Regulatory 
Commission, a written report on universal postal service in the United 
States (hereinafter in this section referred to as ``universal 
service''). Such report shall include at least the following:
          (1) A comprehensive review of the history and development of 
        universal service, including how the scope and standards of 
        universal service have evolved over time.
          (2) The scope and standards of universal service 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.
          (3) A description of any geographic areas, populations, 
        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.
          (4) The scope and standards of universal service likely to be 
        required in the future in order to meet the needs and 
        expectations of the American public, including all types of 
        mail users, based on such assumptions or alternative sets of 
        assumptions as the Postal Service considers plausible.
          (5) Such recommendations as the Postal Service considers 
        appropriate.
  (b) Report by the Postal Regulatory Commission.--The Postal 
Regulatory Commission shall, within 12 months after receiving the 
report of the Postal Service under subsection (a), submit to the 
President and the Congress a written report evaluating the report of 
the Postal Service. The report of the Commission shall include at least 
the following:
          (1) Such comments and observations relating to the matters 
        addressed in the Postal Service's report as the Commission 
        considers appropriate.
          (2) An estimate of the cost attributable to the obligation to 
        provide universal service under prior and current law, 
        respectively.
          (3) An estimate of the likely cost of fulfilling the 
        obligation to provide universal service under--
                  (A) the assumptions or respective sets of assumptions 
                of the Postal Service described in subsection (a)(4); 
                and
                  (B) such other assumptions or sets of assumptions as 
                the Commission considers plausible.
          (4) Such additional topics and recommendations as the 
        Commission considers appropriate.
  (c) Consultation.--In preparing the reports required by this section, 
the Postal Service and the Postal Regulatory Commission--
          (1) shall consult with each other, other Federal agencies, 
        users of the mails, enterprises in the private sector engaged 
        in the delivery of mail, and the general public; and
          (2) shall address in their respective reports 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).

SEC. 702. 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 the Congress 
concerning--
          (1) the operation of the amendments made by the Postal 
        Accountability and Enhancement Act; and
          (2) recommendations for any legislation or other measures 
        necessary to improve the effectiveness or efficiency of the 
        postal laws of the United States.
  (b) Postal Service Views.--A report under this section shall be 
submitted only after reasonable opportunity has been afforded to the 
Postal Service to review such report and to submit written comments 
thereon. Any comments timely received from the Postal Service under the 
preceding sentence shall be attached to the report submitted under 
subsection (a).
  (c) Specific Information Required.--The Postal Regulatory Commission 
shall include, as part of at least its first report under subsection 
(a), the following:
          (1) Cost-coverage requirement relating to competitive 
        products collectively.--With respect to section 3633 of title 
        39, United States Code (as amended by this Act)--
                  (A) a description of how such section has operated; 
                and
                  (B) recommendations as to whether or not such section 
                should remain in effect and, if so, any suggestions as 
                to how it might be improved.
          (2) Competitive products fund.--With respect to the Postal 
        Service Competitive Products Fund (under section 2011 of title 
        39, United States Code, as amended by section 301), in 
        consultation with the Secretary of the Treasury--
                  (A) a description of how such Fund has operated;
                  (B) any suggestions as to how the operation of such 
                Fund might be improved; and
                  (C) a description and assessment of alternative 
                accounting or financing mechanisms that might be used 
                to achieve the objectives of such Fund.
          (3) Assumed federal income tax on competitive products 
        fund.--With respect to section 3634 of title 39, United States 
        Code (as amended by this Act), in consultation with the 
        Secretary of the Treasury--
                  (A) a description of how such section has operated; 
                and
                  (B) recommendations as to whether or not such section 
                should remain in effect and, if so, any suggestions as 
                to how it might be improved.

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, the Congress, and the Postal Regulatory 
Commission, within 1 year after the date of the 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 private 
companies providing similar products.
  (b) Recommendations; Adjustments.--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, 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 Rate 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 by section 3633 of title 39, United 
States Code.

SEC. 704. GREATER DIVERSITY IN POSTAL SERVICE EXECUTIVE AND 
                    ADMINISTRATIVE SCHEDULE MANAGEMENT POSITIONS.

  (a) Study.--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 practicable, take such measures as may be necessary to 
ensure that, for purposes of conducting performance appraisals of 
supervisory or managerial employees, appropriate consideration shall be 
given to meeting affirmative action goals, achieving equal employment 
opportunity requirements, and implementation of plans designed to 
achieve greater diversity in the workforce.

SEC. 705. PLAN FOR ASSISTING DISPLACED WORKERS.

  (a) Plan.--The United States Postal Service shall, before the 
deadline specified in subsection (b), develop and be prepared to 
implement, whenever necessary, a comprehensive plan under which 
reemployment assistance shall be afforded to employees displaced as a 
result of the automation or privatization of any of its functions.
  (b) Report.--Not later than 1 year after the date of the enactment of 
this Act, the United States Postal Service shall submit to the Board of 
Governors and to Congress a written report describing its plan under 
this section.

SEC. 706. 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. 707. 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. 708. 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.

SEC. 709. NETWORK OPTIMIZATION.

  (a) In General.--The Postal Service shall, within 90 days after the 
end of each fiscal year, prepare and submit to the Postal Regulatory 
Commission, the Congress, and the Board of Governors a written report 
on the postal processing, transportation, and distribution networks. 
Such report shall include at least the following:
          (1) An account of actions taken during the preceding fiscal 
        year to improve the efficiency and effectiveness of the 
        processing, transportation, and distribution networks, while 
        preserving the timely delivery of postal services.
          (2) An account of--
                  (A) actions taken to identify any excess capacity 
                within the processing, transportation, and distribution 
                networks; and
                  (B) actions taken to implement savings through 
                realignment or consolidation of facilities.
          (3) Identification of statutory or regulatory obstacles that 
        prevented or will prevent the Postal Service from taking action 
        to realign or consolidate facilities.
          (4) Such additional topics and recommendations as the Postal 
        Service considers appropriate.
  (b) Treatment as Performance Goals.--The Postal Service shall 
establish and report the matters set forth in subsection (a) as 
performance goals in the reports required by sections 2803 and 2804.
  (c) Actions To Be Taken.--The Postal Service shall take such actions 
it considers, in its sole discretion, necessary and appropriate to 
provide the Nation with a modern and efficient network for the 
processing, transportation, and distribution of mail. Nothing in this 
section shall prevent the Postal Service from making such improvements 
in the efficiency and effectiveness of the network as it deems 
appropriate.

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

  (a) Appointment of Research Organization.--Not later than 90 days 
after the date of the enactment of this Act, the Comptroller General of 
the United States shall appoint, in such manner and under such terms as 
he in his sole discretion determines appropriate, an independent, 
impartial, and expert research organization (hereinafter in this 
section referred to as the ``research organization'') to prepare and 
submit to the President and to Congress a comprehensive report that 
evaluates what business model would best promote an efficient, 
reliable, innovative, and viable Postal Service that can meet the needs 
of the Nation and its citizens in the 21st century. The final report 
required by this section shall be submitted within 27 months of the 
date of the enactment of this Act. The final report shall identify 
costs, benefits, and feasible options, if any, associated with one or 
more strategies for--
          (1) maintaining the Postal Service in its current form as an 
        independent establishment in the executive branch of the 
        Government; and
          (2) transforming the Postal Service into an ordinary 
        corporation, owned wholly by the Government, wholly by private 
        shareholders, or partly by the Government and partly by private 
        shareholders.
  (b) Protection of Universal Service.--The research organization 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 (based on the 
reports required by section 701). The research organization 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 research organization.
                  (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 research organization.
                  (C) Qualitative and, to the extent possible, 
                quantitative effects that each strategy identified by 
                the research organization 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 research organization 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 research organization.
                  (F) Such additional topics as the Comptroller General 
                or the research organization shall consider necessary 
                and appropriate.
          (2) Matters to consider.--For each strategy identified, the 
        research organization 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;
                  (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 
                or the research organization 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 research organization shall 
        comprehensively and quantitatively investigate the experiences 
        of other industrialized countries that have transformed the 
        national post office. The research organization shall undertake 
        such original research as it deems necessary. In each case, the 
        research organization 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 research 
organization may retain the services of additional experts and 
consultants.
  (e) Consultation.--In preparing its report, the research organization 
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 research organization 
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. STUDY ON CERTAIN PROPOSED AMENDMENTS.

  The Government Accountability Office shall study and, within 12 
months after the date of the enactment of this Act, submit to the 
Congress a report on sections 805 and 807 of H.R. 22 (109th Congress), 
as introduced. Such report shall include the following:
          (1) A description of the efficiencies of the current system 
        under section 5402 of title 39, United States Code.
          (2) The potential for cost savings to the United States 
        Postal Service if the Postal Service, rather than the 
        Department of Transportation, were to administer international 
        mail carriage.
          (3) The potential for harm to domestic air carriers and 
        American workers currently employed by domestic air carriers.
          (4) The potential loss of revenue to domestic air carriers 
        and American workers currently employed by domestic air 
        carriers.
          (5) The process by which the United States Postal Service 
        would administer any changes in current law.
          (6) The process by which the Department of Transportation 
        administers current law.
          (7) The potential for change in protection of national 
        security by carriage by foreign carriers of international mail 
        to and from the United States.

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.

     TITLE VIII--MISCELLANEOUS; TECHNICAL AND CONFORMING AMENDMENTS

SEC. 801. 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 the 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 United 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. 802. 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. 803. 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.

SEC. 804. OBSOLETE PROVISIONS.

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

SEC. 805. INVESTMENTS.

  Subsection (c) of section 2003 of title 39, United States Code, is 
amended--
          (1) by striking ``(c) If'' and inserting ``(c)(1) Except as 
        provided in paragraph (2), if''; and
          (2) by adding at the end the following:
  ``(2)(A) Nothing in this section shall be considered to authorize any 
investment in any obligations or securities of a commercial entity.
  ``(B) For purposes of this paragraph, the term `commercial entity' 
means any corporation, company, association, partnership, joint stock 
company, firm, society, or other similar entity, as further defined 
under regulations prescribed by the Postal Regulatory Commission.''.

SEC. 806. REDUCED RATES.

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

SEC. 807. HAZARDOUS MATTER.

  (a) Nonmailability Generally.--Section 3001 of title 39, United 
States Code, is amended--
          (1) by redesignating subsection (n) as subsection (o); and
          (2) by inserting after subsection (m) the following:
  ``(n)(1) Except as otherwise authorized by law or regulations of the 
Postal Service, hazardous material is nonmailable.
  ``(2) In this subsection, the term `hazardous material' means a 
substance or material designated by the Secretary of Transportation 
under section 5103(a) of title 49.''.
  (b) Mailability.--Chapter 30 of title 39, United States Code, is 
amended by adding at the end the following:

``Sec. 3018. Hazardous material

  ``(a) 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.
  ``(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.''.

  (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. 808. PROVISIONS RELATING TO COOPERATIVE MAILINGS.

  (a) Determination.--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 (1) abuses of rates for 
nonprofit mail and (2) deception of consumers.
  (b) Regulations.--If the Postal Regulatory Commission determines that 
section E670.5.3 of the Domestic Mail Manual does not contain adequate 
safeguards as described in the preceding subsection, the Commission 
shall promulgate such regulations as may be necessary to ensure such 
safeguards.
  (c) Timing.--The Postal Regulatory Commission shall complete the 
examination required by subsection (a) and the promulgation of any 
necessary regulations required by subsection (b) within one year after 
the date of the enactment of this section.

SEC. 809. TECHNICAL AND CONFORMING AMENDMENTS.

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

``Sec. 3682. Size and weight limits

  ``The Postal Service may establish size and weight limitations for 
mail matter in the market-dominant category of mail consistent with 
regulations the Postal Regulatory Commission may prescribe under 
section 3622. The Postal Service may establish size and weight 
limitations for mail matter in the competitive category of mail 
consistent with its authority under section 3632.''.
  (c) Revenue Foregone, Etc.--Title 39, United States Code, is 
amended--
          (1) in section 503 (as so redesignated by section 501), 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 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
          (5) by striking the heading for section 3627 and inserting 
        the following:

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

           TITLE IX--POSTAL PENSION FUNDING REFORM AMENDMENTS

SEC. 901. CIVIL SERVICE RETIREMENT SYSTEM.

  (a) Termination of Obligation to Pay Government Contributions.--
Section 8334(a)(1)(B)(ii) of title 5, United States Code, is amended by 
striking all that follows ``be equal to'' and inserting ``zero.''.
  (b) Determination and Disposition of Postal Surplus or Supplemental 
Liability.--Section 8348(h) of title 5, United States Code, is amended 
to read as follows:
  ``(h)(1) For purposes of this subsection, a Postal surplus (or 
supplemental liability) is the amount, as estimated by the Office, by 
which--
          ``(A) the actuarial present value of all future benefits 
        which are payable from the Fund under this subchapter to 
        current or former employees of the United States Postal 
        Service, or their survivors, and attributable to civilian 
        employment with the Postal Service, is less than (or greater 
        than)
          ``(B) the sum of--
                  ``(i) the actuarial present value of deductions to be 
                withheld from the future basic pay of employees of the 
                Postal Service currently subject to this subchapter 
                pursuant to section 8334;
                  ``(ii) that portion of the Fund balance, as of the 
                date such surplus or supplemental liability is 
                determined, attributable to payments to the Fund by the 
                Postal Service and its employees, 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)(i) Not later than June 15, 2006, the Office shall determine 
the Postal surplus or supplemental liability as of September 30, 2005.
  ``(ii) If a supplemental liability is determined under this 
subparagraph for fiscal year 2005, the Office shall establish an 
amortization schedule, including a series of equal annual installments 
commencing September 30, 2006, which provides for the liquidation of 
such liability by September 30, 2043.
  ``(iii) If a surplus is determined under this subparagraph for fiscal 
year 2005, the amount of the surplus shall be transferred to the Postal 
Service Retiree Health Benefits Fund by June 30, 2006.
  ``(B)(i) For each of fiscal years 2006 through 2038, the Office shall 
determine the Postal surplus or supplemental liability as of the close 
of such fiscal year, with each such determination to be made by June 
15th of the following fiscal year.
  ``(ii) If a supplemental liability is determined under this 
subparagraph for a fiscal year, the Office shall establish an 
amortization schedule, including a series of equal annual installments 
commencing on September 30 of the following fiscal year, which provides 
for the liquidation of such liability by September 30, 2043.
  ``(iii)(I) If a surplus of $500,000,000 or more is determined under 
this subparagraph for a fiscal year, the amount of the surplus shall be 
transferred to the Postal Service Retiree Health Benefits Fund by June 
30th of the following fiscal year.
  ``(II) If a surplus of less than $500,000,000 is determined under 
this subparagraph for a fiscal year, the surplus shall remain in the 
Fund, subject to transfer in a subsequent fiscal year under subclause 
(I) or subparagraph (C)(iii).
  ``(C)(i) Not later than June 15, 2040, the Office shall determine the 
Postal surplus or supplemental liability as of September 30, 2039.
  ``(ii) If a supplemental liability is determined under this 
subparagraph for fiscal year 2039, the Office shall establish an 
amortization schedule, including a series of equal annual installments 
commencing September 30, 2040, which provides for the liquidation of 
such liability by September 30, 2043.
  ``(iii) If a surplus is determined under this subparagraph for fiscal 
year 2039, the amount of the surplus--
          ``(I) shall be applied first toward reducing the amount of 
        any supplemental liability described in section 8423(b)(1)(B); 
        and
          ``(II) to the extent that any portion of such surplus remains 
        after the application of subclause (I), shall, not later than 
        June 30, 2040, be transferred to the Postal Service Retiree 
        Health Benefits Fund.
  ``(D) An amortization schedule under this paragraph--
          ``(i) shall be established 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;
          ``(ii) shall supersede any amortization schedule previously 
        established under this paragraph; and
          ``(iii) shall not be taken into account, for purposes of any 
        determination of Postal surplus or supplemental liability, 
        except to the extent of any amounts under such schedule 
        actually paid.
  ``(E)(i) The Postal Service shall pay to the Office the amounts due 
under any amortization schedule established under this paragraph, to 
the extent not superseded or canceled.
  ``(ii) A determination under subparagraph (B)(i) or (C)(i) that no 
supplemental liability exists shall cancel any amortization schedule 
previously established under this paragraph, to the extent of any 
amounts first coming due after the close of the fiscal year to which 
such determination relates.
  ``(3) Notwithstanding any other provision of law, in computing the 
amount of any payment under any other subsection of this section that 
is based on the amount of the unfunded liability, such payment shall be 
computed disregarding that portion of the unfunded liability that the 
Office determines will be liquidated by payments under this subsection.
  ``(4) As used in this subsection, `Postal Service Retiree Health 
Benefits Fund' refers to the Postal Service Retiree Health Benefits 
Fund, as established by section 8909a.''.
  (c) Provisions Relating to Amounts for Military Service.--In the 
application of paragraph (2) of section 8348(g) of title 5, United 
States Code, for fiscal year 2006, the Office of Personnel Management 
shall include, in addition to the amount otherwise computed under that 
paragraph, the amounts that would have been included for fiscal years 
2003 through 2005 with respect to credit for military service of former 
employees of the United States Postal Service if Public Law 108-18 had 
not been enacted (including earnings thereon) and the Secretary of the 
Treasury shall make the required transfer to the Civil Service 
Retirement and Disability Fund based on that amount.
  (d) Review.--
          (1) In general.--Notwithstanding any other provision of this 
        section, any determination or redetermination made by the 
        Office of Personnel Management under this section shall, upon 
        request of the United States Postal Service, be subject to 
        review by the Postal Regulatory Commission. The Commission 
        shall submit a report containing the results of any such review 
        to the Postal Service, the Office of Personnel Management, and 
        the Congress.
          (2) Response.--Upon receiving the report of the Postal 
        Regulatory Commission, 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 the 
        Congress.

SEC. 902. HEALTH INSURANCE.

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

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

  ``(a) There is in the Treasury of the United States a Postal Service 
Retiree Health Benefits Fund (hereinafter in this section referred to 
as the `Fund') which is administered by the Office of Personnel 
Management. Any amounts transferred to the Fund under section 
8348(h)(2) shall yield interest at a rate equal to the weighted average 
yield of all the investments in the Civil Service Retirement and 
Disability Fund as of the date of transfer. All other investments of 
amounts in the Fund shall be made in accordance with subsections (c)-
(e) of section 8348.
  ``(b) The Fund is available without fiscal year limitation for 
payments required by section 8906(g)(2).
  ``(c)(1) Not later than June 30, 2006, and by June 30 of each 
succeeding year, the Office of Personnel Management shall compute the 
net present value of the excess of future payments required by section 
8906(g)(2)(A) for current and future United States Postal Service 
annuitants over the value of the assets of the Fund as of the end of 
the fiscal year ending on September 30 of that year. The actuarial 
costing method to be used by the Office and all actuarial assumptions 
shall be established by the Office after consultation with the United 
States Postal Service and must be in accordance with generally accepted 
actuarial practices and principles.
  ``(2) Not later than September 30, 2006, and by September 30 of each 
succeeding year, the Office shall compute and the United States Postal 
Service shall pay into such Fund--
          ``(A) the portion of the net present value described in 
        paragraph (1) attributable to the current year's service of 
        Postal Service employees; and
          ``(B) interest on the net present value described in 
        paragraph (1) for that fiscal year, at the interest rate used 
        in computing that net present value;
except that the amount otherwise payable by the Postal Service under 
the preceding provisions of this paragraph by not later than September 
30, 2006, shall be reduced by the total contributions made by the 
Postal Service under section 8906(g)(2) and attributable to fiscal year 
2006 (as determined by the Office).
  ``(3)(A) Any computation or other determination of the Office under 
this subsection shall, upon request of the Postal Service, be subject 
to review by the Postal Regulatory Commission. The Commission shall 
submit a report containing the results of any such review to the Postal 
Service, the Office of Personnel Management, and the Congress.
  ``(B) Upon receiving the report of the Postal Regulatory Commission, 
the Office of Personnel Management shall reconsider its computation or 
other determination 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 the Congress.
  ``(4) The Office shall promulgate, after consultation with the United 
States Postal Service, any regulations it deems necessary under this 
subsection.''; and
          (3) in the analysis by inserting after the item relating to 
        section 8909 the following:

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

  (b) Review.--
          (1) In general.--Any regulation established under section 
        8909a(c)(4) of title 5, United States Code (as amended by 
        subsection (a)) shall, upon request of the Postal Service, be 
        subject to review by the Postal Regulatory Commission. The 
        Commission shall submit a report containing the results of any 
        such review to the Postal Service, the Office of Personnel 
        Management, and the Congress.
          (2) Response.--Upon receiving the report of the Postal 
        Regulatory Commission, the Office of Personnel Management shall 
        reconsider its regulation in light of such report, and shall 
        take such action as it considers appropriate. The Office shall 
        submit a report containing the results of its reconsideration 
        to the Commission, the Postal Service, and the Congress.

SEC. 903. REPEALER.

   Section 3 of Public Law 108-18 is repealed.

SEC. 904. ENSURING APPROPRIATE USE OF ESCROW AND MILITARY SAVINGS.

  (a) Definition.--For purposes of this section, the term ``total 
savings'' means, for any fiscal year, the amount equal to--
          (1) the amount of contributions that the Postal Service would 
        otherwise have been required to make to the Civil Service 
        Retirement and Disability Fund under subchapter III of chapter 
        83 of title 5, United States Code, for such fiscal year if 
        Public Law 108-18 and this Act had not been enacted, minus
          (2) the amount of amortization payments (if any) required 
        under section 8348(h)(2) of title 5, United States Code, for 
        such fiscal year.
  (b) Calculations.--The following calculations shall be made for each 
of fiscal years 2006 through 2015:
          (1) Not later than January 31 of the fiscal year following 
        the fiscal year involved, the Office of Personnel Management 
        (in consultation with the Postal Service) shall determine the 
        total savings for the fiscal year.
          (2) On the date of making its determination under paragraph 
        (1), the Office shall also determine (in consultation with the 
        Postal Service) the amount by which--
                  (A) the amount the Postal Service paid for that 
                fiscal year into the Postal Service Retiree Health 
                Benefits Fund in accordance with 8909a(c)(2) of title 
                5, United States Code, exceeds (if at all)
                  (B) the amount of payments made by the Postal Service 
                for that fiscal year from such Fund in order to satisfy 
                the requirements of section 8906(g)(2) of such title 5.
  (c) Requirements.--
          (1) If threshold is met.--If the amount calculated under 
        subsection (b)(2) for a fiscal year is greater than or equal to 
        two-thirds of the total savings in such fiscal year, no further 
        action under this section is necessary with respect to such 
        fiscal year.
          (2) If threshold is not met.--
                  (A) In general.--If the amount calculated under 
                subsection (b)(2) for a fiscal year is less than two-
                thirds of the total savings in such fiscal year, the 
                Postal Service shall pay into the Postal Service 
                Retiree Health Benefits Fund, by June 30 of the 
                following fiscal year, an amount equal to the 
                difference.
                  (B) Allowable alternative.--
                          (i) In general.--Notwithstanding subparagraph 
                        (A), and subject to clause (ii), the Postal 
                        Service may instead use the amount that it 
                        would otherwise be required to pay into the 
                        Postal Service Retiree Health Benefits Fund for 
                        a year (or any portion thereof) to reduce the 
                        postal debt.
                          (ii) Limitation.--Amounts used to reduce the 
                        postal debt under this subparagraph may not 
                        exceed a total of $3,000,000,000.
          (3) Aggregation allowed.--Notwithstanding paragraph (2), if 
        the amount calculated under subsection (b)(2) for a fiscal year 
        is less than two-thirds of the total savings in such fiscal 
        year, but the sum of the amounts calculated under subsection 
        (b)(2) for all fiscal years from 2006 to the fiscal year 
        involved is greater than or equal to two-thirds of the sum of 
        the total savings for such years, no further action under this 
        section is necessary with respect to such fiscal year.
  (d) Reporting Requirement.--The Office of Personnel Management shall 
submit a report containing the results of its calculations under 
subsection (b) to the Postal Service, the Postal Regulatory Commission, 
and the Congress.
  (e) Waiver Authority.--The requirements of subsection (c)(2)(A) may, 
upon application of the Postal Service, be waived by the Postal 
Regulatory Commission, to the extent that the Commission determines 
that such waiver 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.

SEC. 905. EFFECTIVE DATES.

  (a) In General.--Except as otherwise provided, this title shall take 
effect on October 1, 2005.
  (b) Government Contributions.--Section 901(a) shall take effect on 
the first day of the first pay period beginning on or after October 1, 
2005.

                     Committee Statement and Views

                  BACKGROUND AND NEED FOR LEGISLATION

    The United States Postal Service (USPS) processes and 
delivers over 200 billion pieces of mail to more than 130 
million households and businesses in the United States each 
year. The agency's mission, outlined in the Postal 
Reorganization Act of 1970, is to provide postal services that 
bind the Nation together through the correspondence of the 
people, to provide access in all communities, and to offer 
prompt, reliable postal services at uniform prices.\1\ The 1970 
law was designed to transform the Postal Service from a 
bureaucracy subsidized by tax revenue to a self-supporting, 
businesslike entity supported by the fees (e.g., stamp revenue) 
paid by its users. Today the Postal Service is the center of a 
$900 billion industry employing 9 million workers nationwide.
---------------------------------------------------------------------------
    \1\ 39 U.S.C. 101 et seq.
---------------------------------------------------------------------------
    The mission of the USPS is being challenged by a variety of 
factors including decreasing volume, insufficient revenue, 
mounting debts, and electronic communications alternatives such 
as Internet advertising, electronic bill payments, emails and 
faxes.
    In January, the Comptroller General maintained the Postal 
Service on its list of high risk areas, stating that 
``comprehensive postal reform is urgently needed. The Postal 
Service's financial viability is at risk because its business 
model--which relies on mail volume growth to cover the costs of 
its expanding delivery network--is not aligned with 21st 
century realities.'' The Comptroller General outlined the 
trends that are creating the need for reform:
           declining mail volume, particularly for 
        First-Class Mail, which is critical to generating 
        sufficient revenues to maintain affordable, high-
        quality, universal postal service;
           changes in the mail mix from high-margin to 
        lower-margin products;
           increased competition from private delivery 
        companies;
           projected revenue declines and increases in 
        expenses;
           significant financial liabilities and 
        obligations that continue to exceed assets (e.g., $60 
        billion in unfunded retiree health obligations and a 
        multibillion-dollar escrow account);
           uncertain funding for emergency preparedness 
        (the Postal Service has received almost $800 million in 
        emergency response funds from Congress to help cover 
        its security costs for 2005);
           changing demographics of the aging postal 
        workforce; and
           challenges in restructuring infrastructure 
        and workforce to become more efficient and performance 
        based.

                         PRESIDENT'S COMMISSION

    On July 31, 2003, the President's Commission on the Postal 
Service released its recommendations for maintaining the 
viability of the Postal Service. Roughly half of the 
recommendations require legislative change. Most of these 
concerns have been addressed in earlier postal reform 
proposals, although some specific recommendations differ. New 
issues raised by the Commission include reform of the 
collective bargaining process and legislative changes making it 
easier to close post offices and processing centers. In 
addition, the Commission recommended that the Postal Service 
not be responsible for funding the portion of Civil Service 
Retirement System (CSRS) employees' pensions that are 
attributable to their prior military service, for which no 
other agency is responsible under CSRS.

             ADMINISTRATION'S PRINCIPLES FOR POSTAL REFORM

    On December 8, 2003, the Department of the Treasury 
released a set of 5 principles, based on the recommendations of 
the President's Commission that should guide Congress's effort 
to reform the Postal Service. The principles are:
           Implement Best Practices: Ensure that the 
        Postal Service's governing body is equipped to meet the 
        responsibilities and objectives of an enterprise of its 
        size and scope.
           Transparency: Ensure that important factual 
        information on the Postal Service's product costs and 
        performance is accurately measured and made available 
        to the public in a timely manner.
           Flexibility: Ensure that the Postal 
        Service's governing body and management have the 
        authority to reduce costs, set rates, and adjust key 
        aspects of its business in order to meet its 
        obligations to customers in a dynamic marketplace.
           Accountability: Ensure that a Postal Service 
        operating with greater flexibility has appropriate 
        independent oversight to protect consumer welfare and 
        universal mail service.
           Self-Financing: Ensure that a Postal Service 
        operating with greater flexibility is financially self-
        sufficient, covering all of its obligations.

               POSTAL ACCOUNTABILITY AND ENHANCEMENT ACT

    The ``Postal Accountability and Enhancement Act'', 
introduced as H.R. 22 by Mr. McHugh on January 4, 2005, with 
Chairman Davis, Ranking Member Waxman, and Mr. Danny Davis as 
original cosponsors, affirmatively responds to all of the 
Administration's five principles for postal reform, and 
incorporates most of the seventeen legislative recommendations 
made by the President's Commission on the U.S. Postal Service. 
The bill mandates transparency in the Service's finances, 
costs, and operations. The legislation creates a modern system 
of rate regulation, establishes fair competition rules and a 
powerful new regulator, addresses the Postal Service's 
universal service obligation and the scope of the mail 
monopoly, and institutes improvements to the collective 
bargaining process. However, unlike the unconstrained pricing 
flexibility recommendedby the President's Commission for 
competitive products, the bill imposes limited but important controls 
to protect the public interest from unfair competition.
    The objective of the bill is to position the Postal Service 
to operate in a more business-like manner. To achieve this 
goal, the system must be responsive to market considerations 
and must provide clear incentives for postal management and the 
Postal Service as an institution. The Postal Service would no 
longer operate under a break-even mandate. By maximizing gains 
and minimizing costs, the Postal Service could generate 
earnings that would be retained, and which could be distributed 
as incentives to management as well as to employees through 
collective bargaining. In the same way, losses could not be 
recovered by increasing rates beyond specific parameters 
without regulatory approval.
    On April 8, 2005, the Postal Service filed a request with 
the Postal Rate Commission for an across-the-board rate 
increase of 5.4 percent, or 2 cents on a first class stamp.\2\ 
According to the Postal Service, this rate increase is only 
necessary to meet the escrow requirement of Public Law 108-18, 
the Postal Civil Service Retirement System Funding Reform Act 
of 2003. The Postal Accountability and Enhancement Act 
eliminates the P.L. 108-18 escrow requirement, which should 
substantially mitigate the need for this rate increase.
---------------------------------------------------------------------------
    \2\ Postal Rate Commission Docket No. R2005-1, ``Postal Rate and 
Fee Changes Pursuant to Public Law 108-18.''
---------------------------------------------------------------------------
    Highlights of the Postal Accountability and Enhancement Act 
include:
    Preservation of Universal Service: Maintenance of a 
universal postal system must be the cornerstone of any postal 
reform measure, and the bill preserves this mandate by giving 
the Postal Service the ability to remain viable and effective. 
The statutory mission of the Postal Service is focused strictly 
on postal services. A study will be required to recommend 
concrete standards for universal service. In addition, the 
Postal Regulatory Commission will develop an annual estimate of 
the costs of universal service so that Congress can better 
understand how to provide the necessary protections in the 
future.
    Promotion of Efficiency and Flexibility: The bill gives 
postal management and employees the tools to adapt and survive 
in the face of enormous challenges caused by changing 
technology and a dynamic communications marketplace. The bill 
encourages innovation and efficiency by permitting the Postal 
Service to distribute earnings as bonuses to all employees. In 
the same way, losses could not be recovered by increasing rates 
beyond specified parameters without regulatory approval. The 
bill also allows the Postal Service to better react to market 
conditions by streamlining the rate setting process, and 
permitting rates that are better tailored to consumers' needs.
    Ensuring Fair Competition and Accountability: Under the 
legislation, the Postal Service will compete on a level playing 
field, under many of the same terms and conditions as faced by 
its private sector competitors, albeit with stronger controls, 
oversight, and limitations in recognition of its governmental 
status. The Postal Service will be given flexibility to price 
competitive products, but competitive products and services 
will have to pay their own costs without subsidy from market-
dominant mail revenues. A ``Postal Regulatory Commission'' is 
created from the existing Postal Rate Commission to oversee and 
regulate the Postal Service. The bill clarifies the distinction 
between competitive and market-dominant products and imposes 
prohibitions on the Postal Service's ability to regulate areas 
in which it competes. In addition, the bill, for the first 
time, subjects the Postal Service's competitive products to 
many of the same laws as private companies, such as--
          Antitrust laws
          Fair-trade laws
          Equal customs procedures
          An assumed federal income tax payment
    Basis for Future Reforms: The legislation mandates several 
studies, including a comprehensive assessment of the scope and 
standards for universal service. Other evaluations address:
          Equal application of laws
          Plans for assisting displaced workers
          Quality of ratemaking data for Periodicals' costs
          An assessment of the revenue deficiency process
          The future business model and legal status of the 
        Postal Service

                      Section-by-Section Analysis

                 TITLE I--DEFINITIONS; POSTAL SERVICES

Sec. 101. Definitions

    Section 101 of the bill proposes, for the first time, a 
clear definition of ``postal services'' as the carriage of 
letters, printed matter, or mailable packages, including 
acceptance, collection, processing, delivery, or other 
functions supportive or ancillary thereto. The definition of 
``postal service'' will clarify the scope of activities that 
the Postal Service is authorized to pursue.
    Section 101 also defines the term ``product'' to mean ``any 
postal service with a distinct cost or market characteristic 
for which a rate or rates are, or may reasonably be, applied.''
    Section 101 further clarifies that ``rates,'' as used with 
respect to products, ``includes fees for postal services.'' It 
defines ``market-dominant product'' as ``a product subject to 
subchapter I of chapter 36'' and ``competitive product'' as ``a 
product subject to subchapter II of chapter 36.'' Section 101 
defines ``Consumer Price Index'' to mean the Consumer Price 
Index for All Urban Consumers published monthly by the Bureau 
of Labor Statistics of the Department of Labor. Finally, 
section 101 defines ``year'' to refer to a fiscal year for most 
purposes of rate regulation.

Sec. 102. Postal Services

    Section 102 declares that the Postal Service's authority to 
offer products and services is limited to postal services. 
Current law is unclear in this respect. The section strikes a 
provision that gave the Postal Service the specific power ``to 
provide, establish, change, or abolish special nonpostal or 
similar services.'' If the Service unlawfully offers a 
nonpostal service or product, the Postal Regulatory Commission 
may order that the Postal Service cease providing the product 
under the complaint procedures outlined in section 202 of the 
bill. An exception is made for ``special nonpostal or similar 
services'' provided as of January 4, 2005.
    The changes made by this section should not be interpreted 
to limit the Postal Service's ability to furnish government 
services to the public, such as acceptance of passport 
applications and sale of duck stamps, in accordance with 
section 411 of title 39.

Sec. 103. Transparency 

    Recognizing the recommendations of the President's 
Commission on the U.S. Postal Service as well as the 
Administration's key principles for reform, including the need 
for a more open and accountable executive branch, the nation's 
postal laws will now include a clear mandate that the Postal 
Service must be subject to a high degree of transparency, 
including in its finances and operations. This is a key 
foundation for ensuring fair treatment of both customers and 
competitors.

                    TITLE II--MODERN RATE REGULATION

    In the new regulatory regime proposed in the bill, the 
classes of mail and services are classified as either Market 
Dominant or Competitive products. In general, the bill requires 
the Postal Regulatory Commission to design, within 24 months, a 
new system of rate regulation for Market Dominant products. The 
new system will, for the most part, continue the ratemaking 
factors found in current law while providing increased 
flexibility, predictability, incentives for efficiency, and 
long term financial stability. The Commission is required to 
ensure that price increases of subclasses in the Market 
Dominant category do not exceed the rise in the Consumer Price 
Index (CPI) unless such an increase is reasonable and equitable 
and necessary for 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.
    With respect to Competitive products, the Postal Regulatory 
Commission must issue regulations within 18 months to guard 
against subsidization by market-dominant products and ensure 
that competitive products cover their attributable costs and, 
as a group, make a reasonable contribution to institutional 
costs. Once the Commission has issued its regulations, the 
Postal Service is given pricing flexibility somewhat comparable 
to that exercised by private competitors. The changes regarding 
competitive products will be complemented by title III, which 
provides for a level playing field for such products in several 
important respects.

Sec. 201. Provisions relating to market-dominant products 

    Section 201 of the bill establishes a new, modern system 
for regulation of Market Dominant products, which account for 
almost 90 percent of current Postal Service revenues. In 
current title 39, chapter 36 deals with regulation of postal 
rates. The bill redesignates subchapter I of chapter 36 
(establishing the Postal Rate Commission) as chapter 5 (see 
section 501, below). Section 201 revises subchapter II, which 
currently sets out the process of rate regulation, and 
redesignates it as subchapter I. As amended, subchapter I 
relates only to regulation of Market Dominant products. Section 
201 adds two new provisions to title 39, sections 3621 and 
3622, as follows.
    Section 3621 lists certain postal products to be regulated 
as Market Dominant products immediately after enactment: First-
Class mail (but not priority and express mail, which are deemed 
competitive products), Periodical mail, Standard mail, media 
mail, library mail, and bound printed matter. This list 
specifically includes ``Aunt Minnie'' or ``individual 
consumer'' mail, that is, domestic and international single 
piece First-Class letters and cards. Special services (e.g., 
post office boxes in rural areas, certificates of mailing and 
delivery, etc.) are also regarded as Market Dominant products. 
The products listed have the same meaning given them in the 
Mail Classification Schedule (39 CFR pt. 3001, Subpt. C, App. 
A) as of the date of enactment. After enactment, the Commission 
may revise the list of Market Dominant products. See new 
section 3642 set out in section 203 of the bill.
    Subsection 3622(a) requires the Postal Regulatory 
Commission to establish within 24 months a new system for 
regulating postage rates and classes for Market Dominant 
products. The Commission may subsequently revise the system.
    Subsection 3622(b) provides that the objectives of the new 
system shall be:
          1. Establish and maintain a fair and equitable 
        schedule for rates and classification;
          2. Maximize incentives to reduce costs and increase 
        efficiency;
          3. Create predictability and stability in rates;
          4. Maintain high quality service standards;
          5. Allow the Postal Service pricing flexibility;
          6. Assure adequate revenues, including retained 
        earnings, to maintain financial stability; and
          7. Reduce the administrative burden of the ratemaking 
        process.
    Subsection 3622(c) requires that, in establishing or 
revising the new system, the Commission shall take into account 
certain factors, which are modeled after the rate and 
classification factors found in sections 3622 and 3623 of 
current law. These factors include the value of the mail 
service actually provided for each class or type of mail to 
both the sender and recipient; the direct and indirect postal 
costs attributable to each class or type of mail service and 
that portion of all other Postal Service costs 
reasonablyassignable to the class or type; the effect of rate increases 
on certain groups; available alternative means to sending and receiving 
letters or other mail matter at reasonable costs; the degree of 
preparation of mail for delivery into the system performed by the 
mailer and its effect upon reducing Postal Service costs; simplicity of 
structure for the entire schedule, along with simple, identifiable 
relationships between rates or fees charged the various classes of mail 
for postal services; the relative value to the people of the kinds of 
mail matter entered in the postal system and the desirability and 
justification for special classifications and services; the importance 
of providing classifications with extremely high degrees of reliability 
and speed of delivery, and of providing classifications without such 
requirements; the desirability of special classifications; the 
educational, cultural, scientific, and informational value to the 
recipient; and the policies of this title as well as such other factors 
as the Commission deems appropriate.
    Subsection 3622(d) declares that the new system may include 
price caps, revenue targets, cost-of-service regulation, or 
such other forms of regulation as the Commission considers 
appropriate. This subsection lists potential approaches and is 
not intended to limit the options of the Commission to a 
particular result.
    Subsection 3622(e) requires that the Postal Regulatory 
Commission ensure that the average rate for any subclass does 
not increase by more than the annual increase in the Consumer 
Price Index unless the Commission has determined, after notice 
and opportunity for a public hearing and comment, that such an 
increase is ``reasonable and equitable and necessary to enable 
the Postal Service, under best practices of honest, efficient, 
and economical management, to maintain and continue the 
development of postal services of the kind and quality adapted 
to the needs of the United States.''
    The current rate-setting process provides little or no 
incentive for the Postal Service to control its costs because 
all costs are ultimately passed through to the consumer 
regardless of how efficiently or inefficiently the Postal 
Service operates. Under the new system, the Postal Regulatory 
Commission will have the flexibility to design a system that 
will improve efficiency and control costs. The details of such 
a system have been left to the Commission so that this 
regulatory body will be able to respond to changes in mail 
volume, technologies, and other factors. To ensure fairness, 
the new system provides that rates from any one subclass should 
not increase faster than CPI, unless the Commission finds such 
increase ``reasonable and equitable and necessary'' to maintain 
services and quality.

Sec. 202. Provisions relating to competitive products 

    Section 202 of the bill adds a new subchapter II to chapter 
36 of title 39. Subchapter II establishes a flexible system for 
regulation of Competitive products, which currently account for 
about 10 percent of current Postal Service revenues. Section 
202 adds three new sections to title 39, as follows.
    Section 3631 lists the present mail classes and products to 
be included within the Competitive category immediately after 
enactment. This list includes Priority mail, Express mail, 
mailgrams, international mail not included in the market-
dominant category, and parcel post. After enactment, the 
Commission may revise the list of Competitive products. See new 
section 3642 set out in section 203 of the bill. Further the 
section defines ``costs attributable'', as the direct and 
indirect costs attributable to a postal product. Although 
single piece parcels are assigned to the competitive category, 
the Committee expects the Postal Regulatory Commission to 
monitor package delivery services of the Postal Service. If 
there is not effective competition in rural areas or elsewhere, 
the Postal Regulatory Commission should consider appropriate 
changes, including transfers of single piece parcels to the 
market dominant category.
    Section 3632 provides that the Governors of the Postal 
Service may establish rates and classes for all products in the 
Competitive category of mail after giving notice in the Federal 
Register at least 30 days in advance, for rates or classes of 
general applicability in the Nation as a whole or in any 
substantial region. For rates and classes not in that category, 
the Governors must file their decision at least 15 days in 
advance with the Postal Regulatory Commission, which shall 
establish the criteria for determining when rate or class falls 
within this 15 day category. The Governors' new pricing 
authority for competitive products does not take effect until 
the Postal Regulatory Commission promulgates regulations under 
section 3633.
    Section 3633 requires the Postal Regulatory Commission to 
promulgate regulations within 18 months of enactment 
prohibiting subsidization of competitive products by market 
dominant products. The Commission shall ensure that each 
competitive product covers its attributable costs, and in 
addition ensure that competitive products collectively make a 
``reasonable contribution'' to the institutional costs of the 
Postal Service. The committee expects that the Commission, like 
the courts, will take into account the inherent differences 
between market dominant and competitive markets.
    In addressing the attributable costs, the Commission should 
continue to focus on the need to have reliable indicators of 
cost causality. This committee heard testimony from differing 
viewpoints, with some urging a higher attribution of costs. The 
goal of the Commission should be a technically correct result, 
placing accuracy above achieving a particular outcome of higher 
or lower attribution.
    With respect to the requirement that competitive products 
collectively make a reasonable contribution to overhead, it 
should be noted that the broad standard contains inherent 
flexibility. It is not intended to dictate a particular 
approach that the Postal Regulatory Commission should follow.

Sec. 203. Provisions relating to experimental and new products 

    Section 203 of the bill adds a new subchapter III to 
chapter 36 of title 39. Subchapter III provides rules for 
market tests of experimental products and for shifting products 
between the Market Dominant and Competitive categories. The new 
subchapter III replaces, and thus repeals, the current 
subchapter III dealing with temporary rates and classes. 
Section 203 adds two new provisions to title 39 as follows.
    Section 3641 authorizes the Postal Service to conduct 
limited market tests, which are exempt from the statutory 
criteria for market-dominant and competitive products. Market 
tests under this section are restricted to periods that last no 
more than two years (whichmay be increased to three years by 
the Commission) and to products that earn less than $10 million 
annually nationwide (which may be raised to $50 million by the 
Commission). Regardless of duration or size, a market test may not be 
conducted under this section if it will ``create an unfair or otherwise 
inappropriate competitive advantage for the Postal Service or any 
mailer, particularly in regard to small business concerns.'' Under this 
section, the Commission retains substantial oversight authority over 
market tests. Under section 3652, the Postal Service is obliged to 
provide summary information in annual reports to the Postal Regulatory 
Commission about market tests.
    Section 3642 authorizes the Postal Regulatory Commission to 
classify new products as falling in either the Market Dominant 
category or Competitive category, to transfer existing products 
between the two categories, and to remove a product from a list 
for a category. Subsection (b) adopts criteria for the two 
categories that reflect the Federal Communications Commission's 
(FCC) approach to defining ``dominant'' carriers for the 
purpose of regulation. Paragraph (b)(1) provides that: ``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 business to other firms offering similar 
products. The competitive category of products shall consist of 
all other products.'' Products covered by the postal monopoly 
may not be transferred to the Competitive category. Paragraph 
(b)(3) requires the Postal Regulatory Commission to consider in 
addition (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 action; and (c) the likely impact of the 
proposed action on small business concerns. The Commission is 
also allowed to transfer a subclass or other subordinate unit 
of a class of mail or type of postal service.
    Subsection 3642(d) provides that the Postal Regulatory 
Commission must ensure that any change in the lists of products 
in the Market Dominant and Competitive categories is published 
in the Federal Register. Subsection (e) requires that Congress 
be notified when the Commission has concluded a product should 
be transferred and that such transfer may not take effect for 
one year. Subsection (f) provides that the Postal Service may 
not offer any product involving the carriage of letters, 
printed matter, or packages until it is categorized as falling 
in either the Market Dominant or Competitive Category (except 
for an experimental product).

Sec. 204. Reporting requirements and related provisions

    Section 204 of the bill adds a new subchapter IV to chapter 
36 of title 39. In general, subchapter IV provides for annual 
audits of Postal Service operations by the Postal Regulatory 
Commission to ensure compliance with the ratemaking criteria of 
the act.
    Section 3651 requires that the Postal Regulatory Commission 
provide an annual report to the President and the Congress 
concerning its operations, including an assessment of whether 
its regulations for Market Dominant and Competitive products 
are meeting legislative policy. As part of this report, the 
Commission is directed to prepare an estimate of public service 
costs borne by the Postal Service including universal service 
costs, revenue-forgone costs, and other costs (e.g., law 
enforcement activities). The Postal Service must give the 
Commission such information as the Commission deems necessary 
to prepare the reports.
    Subsection 3652(a) requires that the Postal Service submit 
information to the Postal Regulatory Commission no later than 
three months after the last day of each fiscal year, which 
demonstrates that the rates in effect for all Market Dominant 
and Competitive products during the year are in compliance with 
the requirements of this title. In addition, information must 
be provided on each product in the Market Dominant category 
including volume and market information, along with measures of 
quality of service, including service standards, the level of 
service (in terms of speed and reliability), and customer 
satisfaction. In this manner, the bill mandates that the Postal 
Service must develop measures for and report on, among other 
things, the speed and reliability of postal services in all 
classes of mail in the Market Dominant category. The Postal 
Service Inspector General is required to regularly audit the 
data collection systems and procedures that the Postal Service 
uses in the report prepared for Postal Regulatory Commission 
review.
    Subsection 3652(b) requires annual reporting on work-
sharing discounts, including the per-item cost avoided by the 
Postal Service by virtue of such discount; the percentage of 
such per-item cost avoided that the per-item discount 
represents; and the per-item contribution made to institutional 
costs.
    Subsection 3652(c) provides that the Service must provide 
such data as the Commission requires for market tests but may 
provide summary data on the required costs, revenues, and 
quality of service for market tests for which the Commission 
has not required specific information.
    Subsection 3652(d) states that the Commission will have 
access to all the working papers and supporting materials of 
the Postal Service and the Inspector General in connection with 
the required reports.
    Subsection 3652(e) provides that the Commission must 
develop regulations prescribing the content and form of the 
required annual reports. In doing so, the Commission shall give 
due consideration to providing the public with adequate 
information to assess the lawfulness of rates charged, avoiding 
unnecessary or unwarranted administrative effort or expense on 
the part of the Postal Service, and protecting the 
confidentiality of commercially sensitive information. The 
Commission may specify what information will be provided as 
either (1) public reports or (2) non-public annexes and 
supporting matter. The subsection also contains a provision for 
the Commission, on its own motion or on request from an 
interested party, to initiate a proceeding to improve the 
quality, accuracy, or completeness of Postal Service data 
required by the Commission.
    Subsection 3652(f) provides that the Postal Service may 
obtain confidential treatment for information that is protected 
from disclosure under current law, in accordance with 
provisions outlined in new section 504. See section 502 of the 
bill.
    Subsection 3652(g) requires the Postal Service to provide 
the Commission, as part of information to be examined in the 
annual audit, specific reports that are submitted to Congress, 
including the comprehensive statement required under section 
2401 and the performance plan and program reports required 
under the Government Performance and Results Act.
    Section 3653 provides that, after receiving annual reports 
from the Postal Service in accordance with section 3652, the 
Postal Regulatory Commission shall provide an opportunity for 
public comment. The Commission will then, within 90 days, make 
a written determination whether any rates and fees were not in 
compliance with the law or whether performance goals or any 
service standards were not met. If any noncompliance is found, 
the Commission is required to take appropriate action under the 
revised complaint procedure, section 3662 (section 205 of the 
bill, below). On the other hand, a determination of compliance 
creates a rebuttable presumption of compliance in any complaint 
proceeding on the specific matters reviewed in the annual 
audit.
    Section 3654(a) requires the Postal Service to file with 
the Postal Regulatory Commission the quarterly, annual, and 
periodic reports required of Securities and Exchange Commission 
registrants, and to comply with the internal control 
requirements of Sarbanes-Oxley. Section 3654(b) and (c) require 
the Postal Service to include in such reports information 
regarding their pension and postretirement health obligations, 
segment reporting (after consultation with the Postal 
Regulatory Commission on the appropriate manner of such 
reporting), and that such reports be independently audited. 
Section 3654(d) requires that the Postal Regulatory Commission 
have access to audit documentation and other supporting matter 
of such reports. Section 3654(e) allows the Postal Regulatory 
Commission to revise the requirements of Section 3654 when the 
data required by the reports have become significantly 
inaccurate or can be significantly improved, or when such 
revisions are otherwise necessitated by the public interest. 
Section 3654(f) provides for confidential treatment of 
information provided to the Postal Regulatory Commission under 
certain circumstances.

Sec. 205. Complaints; appellate review and enforcement

    Section 205 of the bill revises the complaint and appellate 
review provisions set out in subchapter V of chapter 36, title 
39 (as redesignated by the bill). In general, the bill 
strengthens the authority of the Postal Regulatory Commission 
to act on complaints. Section 205 repeals current sections 3662 
(rate and service complaints) and 3663 (annual report on 
international services) and adds three sections in title 39 as 
follows:
    Section 3662 provides the Postal Regulatory Commission with 
enhanced authority to respond to complaints of pricing, 
service, or other actions by the Postal Service in violation of 
law. As revised, this section would require the Commission to 
begin proceedings on or dismiss complaints within 90 days and 
if not acted on, the complaint 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). In subsection 3662(c), the amendment 
gives the Commission broad authority to correct violations by 
ordering the Postal Service to take whatever steps the 
Commission considers appropriate. For instance, the Commission 
may order the Postal Service to adjust the rates of Competitive 
products to lawful levels if they are set below attributable 
costs (the Commission has no such authority under current law). 
The Commission is authorized to suspend Competitive product 
rates or classifications under section 3632(b)(3) that are not 
of general applicability in the Nation as a whole or in any 
substantial region of the Nation. This suspension is permitted 
for only a limited period of time pending expedited proceedings 
under 3662, and four key factors are outlined in subsection (d) 
that the Commission must consider in evaluating whether this 
authority may be exercised. The Committee does not intend this 
provision to restrain the ability of the Postal Service to 
compete fully and fairly against private sector competitors in 
competitive markets. Under subsection (e), for cases of 
deliberate noncompliance with law, the Commission is authorized 
to levy fines based on the seriousness, nature, circumstances, 
and extent of the noncompliance. Fines resulting from provision 
of Competitive products must be paid out of the Competitive 
Products Fund, and all fines are paid into the general Treasury 
fund.
    Section 3663 provides for appeals of any order or decision 
of the Postal Regulatory Commission to the United States Court 
of Appeals for the District of Columbia Circuit in accordance 
with chapter 706 of title 5 and chapter 158 of title 28.
    Section 3664 gives any United States District Court 
jurisdiction to enforce orders of the Postal Regulatory 
Commission and issue injunctions or restraining orders.

Sec. 206. Workshare discounts

    Section 206 amends Title 39 by adding section 3687, 
requiring the Postal Regulatory Commission to establish rules 
for workshare discounts that ensure that workshare discounts do 
not exceed the cost that the Postal Service avoids as the 
result of private sector workshare activity, except (1) where 
the discount is associated with a new product or service or 
with a change to an existing product or service and is 
necessary to induce certain mailer behavior, although such 
discount must be phased out over a limited period of time; (2) 
to the extent that a reduction in the discount would lead to a 
loss of volume in the affected category and reduce the 
aggregate contribution to institutional costs of the Postal 
Service, from the mail matter subject to the discount, below 
what it otherwise would have been if the discount had not been 
reduced to costs avoided; would result in a further increase in 
the rates paid by mailers not able to take advantage of the 
discount; or would impede the efficient operation of the Postal 
Service; (3) where the amount of the discount above costs 
avoided is necessary to mitigate rate shock and will be phased 
out over time; or (4) where the workshare discount is provided 
in connection with subclasses of mail consisting exclusively of 
mail matter of educational, cultural, scientific, or 
informational value.
    Section 206 also requires the Postal Service to submit to 
the Postal Regulatory Commission reports justifying each 
worksharing discount.

Sec. 207. Clerical amendment

    Section 207 of the bill revises the analysis of chapter 36, 
title 39, in accordance with the changes made by the bill.

           TITLE III--PROVISIONS RELATING TO FAIR COMPETITION

Sec. 301. Postal Service Competitive Products Fund

    Section 301 of the bill adds a new section 2011 to title 
39. Section 2011 establishes an off-budget fund within the 
Treasury for revenues and expenditures associated with 
competitive products. The ``Competitive Products Fund'' is in 
addition to the current Postal Service Fund. The intent of this 
section is to level the playing field for the Postal Service 
and its competitors in the Competitive product market by 
requiring the Postal Service to keep separate financial 
accounts for Market Dominant and Competitive products. 
Separation of accounts also protects the interests of postal 
consumers in the Market Dominant category and taxpayers.
    Subsection 2011 essentially permits the Postal Service to 
manage the Competitive Products Fund in its discretion. The new 
fund can borrow money from Treasury to support competitive 
products by pledging the assets of the fund and its revenues 
and receipts.
    Subsection 2011(h) requires that the Secretary of the 
Treasury, in consultation with the Postal Service, an 
independent accountant, and other appropriate advisors, develop 
recommendations for rules such as accounting practices and 
principles that will identify and value the assets, 
liabilities, capital, and operating costs, associated with 
Competitive products. Treasury's recommendations must be 
submitted to the Postal Regulatory Commission, which must then 
provide an opportunity for all other interested parties to 
present their views. The Postal Service, among others, will 
therefore be able to present its own recommendations and 
counterarguments. While Treasury will have the first 
opportunity to make recommendations, the Committee expects the 
Commission to give consideration to all input from interested 
parties, without a presumption that the Treasury 
recommendations are correct. After taking into account all 
views and information presented, the Commission must issue 
rules providing for the establishment and application of 
accounting practices and principles, certain substantive and 
procedural rules, and submission by the Postal Service of 
annual and periodic reports. The Commission is authorized to 
update the rules as necessary.
    The Postal Service must report to the Postal Regulatory 
Commission on the Competitive Products Fund periodically, as 
may be required by the Commission. In addition, the Postal 
Service must prepare an annual report for the Secretary of the 
Treasury concerning the operation of this Fund. This report 
shall address such matters as risk limitations, reserve 
balances, allocation or distribution of moneys, liquidity 
requirements, and measures to safeguard against losses. A copy 
of the report must also be provided to the Commission as part 
of the required annual reports.

Sec. 302. Assumed Federal income tax on competitive products income

    Section 302 of the bill adds a new section 3634 to title 
39. Section 3634 requires the Postal Service each year to 
compute an assumed Federal income tax on income from 
Competitive products and to transfer from the Competitive 
Products Fund to the Postal Service Fund the amount of that 
assumed tax.

Sec. 303. Unfair competition prohibited

    Section 303 of the bill adds a new section 404a to title 
39. Section 404a prohibits the Postal Service from (1) 
establishing rules or regulations which preclude competition or 
give the Postal Service an unfair competitive advantage; (2) 
compelling disclosure, transfer, or licensing of intellectual 
property to any third party; or (3) offering any product or 
service that makes use of information obtained from a person 
that provides or seeks to provide a product to the Postal 
Service (unless the person has consented to such use or 
substantially the same information is otherwise obtainable). 
The Postal Regulatory Commission is required to prescribe 
regulations to carry out the purposes of this section, and the 
prohibitions are enforced through the Commission's strengthened 
complaint process and remedies, which include ordering 
rescission of any regulation.

Sec. 304. Suits by and against the Postal Service

    Section 304 of the bill amends section 409 of title 39 to 
make the Postal Service more amenable to other laws regulating 
the conduct of commercial activities.
    First, the amendment subjects all Postal Service activities 
to federal laws prohibiting the conduct of business in a 
fraudulent manner (the Lanham Act and certain parts of the 
Federal Trade Commission Act).
    Second, the amendment subjects Postal Service conduct with 
respect to competitive products to federal antitrust laws and 
unfair competition prohibitions and eliminates sovereign 
immunity protection from suits in Federal court for violations 
of Federal law. The amended section 409 allows injunctive 
relief against officers and employees of the Postal Service in 
case of violation of the antitrust laws, while the Postal 
Service itself would be subject to all available remedies.
    Fourth, the amendment would require the Postal Service to 
consider local zoning, planning, or land use regulations and 
building codes when constructing or altering buildings.
    As amended, section 409 further requires the Postal Service 
to represent itself in most legal proceedings permitted by the 
amendment as well as in cases involving administrative 
subpoenas issued by the Postal Regulatory Commission and 
appeals of decisions by the Commission or the Governors. The 
amendment requires that judgments arising out of activities of 
the Postal Service must be paid by the Postal Service, and 
judgments arising out of violations of law involving 
competitive products must be paid from revenues from 
competitive products.

Sec. 305. International postal arrangements

    Section 305 of the bill replaces section 407 of title 39. 
Section 407 deals with international postal arrangements.
    New subsection 407(a) establishes a policy framework for 
future international postal agreements that stresses separation 
of regulatory and operational functions.
    Subsection 407(b) vests the Secretary of State with 
authority to lead U.S. delegations in intergovernmental 
meetings devoted to postal matters. The Secretary is barred 
fromconcluding agreements with respect to any competitive 
product that give preference to any entity, either public or private, 
including the Postal Service. The subsection provides the Secretary in 
carrying out his responsibilities under this section shall maintain 
continuing liaison with other federal agencies and the Congress, and 
appropriate liaison with the Postal Service and affected members of the 
public. The subsection further declares that the Secretary of State 
shall establish an advisory committee, under the Federal Advisory 
Committee Act, to help perform such functions as the Secretary 
considers appropriate in connection with the necessary coordination and 
liaison with entities in the public and private sectors as the 
Secretary develops U.S. foreign policy related to international postal 
services and other international delivery services.
    Subsection 407(c) provides that, before concluding an 
international agreement that establishes a rate or 
classification for a market-dominant product, the Secretary 
shall request a decision from the Postal Regulatory Commission 
to determine whether the proposed rate or classification is 
consistent with the Commission standards and criteria for 
market dominant products. The Secretary must ensure that 
international agreements are consistent with the Commission's 
decision except to the extent that modification may be required 
by considerations of foreign policy or national security.
    Subsection 407(d) authorizes the Postal Service to enter 
into agreements or contracts as it deems appropriate for 
international postal services or other international delivery 
services without the consent of the Secretary as long as any 
agreements with agencies or subsidiaries of foreign governments 
are contractual in nature and do not purport to be 
international law. The Postal Service must notify the Secretary 
and the Commission of agreements with agencies of foreign 
governments.
    In light of studies conducted by the General Accounting 
Office and the former U.S. Customs Service, subsection 407(e) 
requires the Bureau of Customs and Border Protection of the 
Department of Homeland Security to afford non-discriminatory 
access to U.S. customs procedures for both the Postal Service's 
Competitive products and similar products of U.S.-owned private 
carriers. Since some foreign governments currently limit access 
to simplified customs procedures to government post offices--
thus discriminating between the Postal Service and U.S. private 
carriers--the subsection requires the Secretary of State ``to 
the maximum extent practicable'' to negotiate with other 
countries to make available customs procedures that do not 
discriminate between the Postal Service and U.S. private 
carriers while fully meeting the needs of all types of American 
shippers.

Sec. 306. Redesignation

    Section 306 redesignates a subchapter heading in chapter 36 
of title 39 to reflect various amendments in the bill.

                      TITLE IV--GENERAL PROVISIONS

Sec. 401. Qualification requirements for Governors

    Section 401 of the bill amends section 202 of title 39. 
Section 202 establishes the Board of Governors and provides 
that the nine Governors shall represent the public interest 
generally. The amendment adds a requirement that the President 
shall select at least four Governors based solely on their 
demonstrated ability in managing organizations or corporations, 
in either the public or the private sector, of substantial size 
(employing at least 50,000 employees). The amendment requires 
the President to consult with the Speaker and minority leader 
of the House and the majority and minority leaders of the 
Senate in selecting individuals to nominate to the Board.
    The amendment also has a provision that one of the nine 
Governors must be chosen from among persons unanimously 
nominated by all labor unions recognized by law as collective-
bargaining representatives for employees of the Postal Service 
in one or more bargaining units. The term of office for this 
Governor is three years (instead of nine).
    Section 401 recognizes the bill vests enhanced powers and 
responsibilities in the Governors. A majority of current and 
former Board members have indicated support for well-defined 
qualification requirements for Board appointments. The 
qualification provisions in the bill are modeled on the 
appointment criteria for the Amtrak Board of Directors. Those 
Governors currently serving or nominated before enactment are 
not affected by this change.

Sec. 402. Obligations

    Current law imposes a $2 billion annual cap on borrowing 
for capital investments and a $1 billion annual cap on 
borrowing for operating expenses. As recommended by the 
President's Commission on the U.S. Postal Service, section 402 
of the bill amends section 2005 of title 39 to eliminate these 
annual sub-limits, but still maintains the overall $3 billion 
cap on the annual net increase in borrowed funds. Current law 
also remains unchanged regarding the aggregate $15 billion 
limit of obligations outstanding at any one time, and this cap 
would apply in the aggregate to the Postal Service Fund and the 
Competitive Products Fund.

Sec. 403. Private carriage of letters

    Section 405 of the bill amends section 601 of title 39 to 
provide limited additional statutory exemptions to the postal 
monopoly. In summary, this section provides that a letter may 
be carried outside the mail under three new circumstances: (1) 
when the amount paid to a private carrier is at least 6 times 
the rate then currently charged for the first ounce of a 
single-piece first-class letter, (2) when the letter weighs at 
least 12 and a half ounces, and (3) when private carriage is 
within the scope of current Postal Service regulations that 
purport to suspend the operation of current law.
    The proposed price and weight limits for the postal 
monopoly, 6 times the first-class stamp price and 12 and a half 
ounces, remain significantly more protective of the Postal 
Service than postal monopoly limits enacted in other 
industrialized nations that have concluded smaller monopolies 
will promote greater efficiency without jeopardizing universal 
service. For example, in 1997, the European Union limited 
European postal monopolies to 5 times the stamp price or 12 and 
a half ounces. In 2002, the European Union adopted a second 
postal directive that reduced last year the limits on postal 
monopoly laws to 3 times the stamp price or 3 and a half 
ounces. Canada's postal monopoly has been limited to 3 times 
the stamp price since 1981; Australia's monopolyis limited to 4 
times the stamp price or 8 ounces. Indeed, several countries have 
abolished their postal monopolies or are in the process of doing so, 
including Germany, Sweden, New Zealand, and the United Kingdom. In 
comments submitted to the Committee in August 1998, the Department of 
Justice stated its support for limiting the scope of the statutory 
monopoly with a bright-line test for identifying products falling 
within it. In that August 1998 correspondence, the Department also 
noted that the Postal Service's entry into competitive markets 
suggested that economic theory did not justify the postal monopoly as 
it existed under current law. In April 1997, the General Accounting 
Office testified that the ``impact of reducing the scope of the letter 
mail monopoly to $2 would not significantly affect the Postal Service's 
ability to provide affordable universal service because little of the 
first-class mail volumes that are currently protected by the postal 
monopoly would become subject to competition. * * * Available data 
indicate that less than 3 percent of the first-class mail revenues are 
currently derived from first-class mail that falls outside the proposed 
reduced limit of $2.'' By setting the limit at 6 times the first-class 
stamp price, the amended section 601 provides that the price limit on 
the postal monopoly will rise as the stamp price increases.
    As predicted by the Postal Rate Commission Chairman's 
testimony in 1996, the Postal Service subsequently testified 
that year that it would interpret current Section 601(b) of 
Title 39 to allow it to repeal the changes proposed by the 
bill. Subsection (b) is derived from section 7 of an 1864 
postal act, and the revision repeals it as obsolete--this 
suspension power has never been used as provided; in fact, no 
occasion is known of the Post Office or the Postal Service 
suspending the exception for postage paid mail. Current 
subsection (b) of 601 simply authorizes the Postal Service to 
suspend the exception of paragraph (a) and thereby forbid the 
private carriage of letters even if postage is paid. The Postal 
Service's authority to reapply the postal monopoly to stamped 
letters is unnecessary and antiquated; it is repealed by the 
bill. Some entities in both the government and the private 
sector have testified that since 1974, the Postal Service has 
often misused the suspension power of 601(b). Since 1974, the 
Postal Service has, under color of subsection (b), issued 
regulations that rather than suspend the exception to the 
monopoly for stamped letters set out in subsection (a), instead 
suspend the postal monopoly itself (i.e., the criminal 
prohibitions set out in chapter 83 of title 18, U.S. Code). 
Indeed, when the Postal Service first proposed these 
regulations in 1973 that purported to derive a suspension power 
for the private express statutes contained in Title 18 of the 
U.S. Code, the Postal Rate Commission's General Counsel 
concluded that use of the suspension authority in this way 
violated the legislative language and intent. The ``grandfather 
clause'' provided in the bill will authorize the continuation 
of private activities that the Postal Service has permitted 
under color of this section. In this way, the bill protects 
mailers and private carriers who have relied upon regulations 
that the Postal Service has adopted to date in apparent 
misinterpretation of the current subsection (b).
    By establishing boundaries for the postal monopoly while 
providing the Postal Service more commercial freedom, the bill 
clarifies the scope of the statutory monopoly that historically 
has been defined solely by the Service.
    The suspension for outgoing international mail would be 
continued, to the extent that it involves the uninterrupted 
carriage of letters from a point within the United States to a 
foreign country for delivery to an ultimate destination outside 
the United States. However, the requirement that a shipper or 
carrier submit to an inspection or audit or face a presumption 
of violation would not be continued. At the time this 
regulation (section 320.8 of title 39 of the Code of Federal 
Regulations) was promulgated, the carriage and delivery of mail 
was generally the preserve of government-owned or sponsored 
postal administrations in foreign countries. The Committee 
intends the suspension to incorporate more recent changes in 
the laws of destinating countries, so that it would not 
prohibit delivery outside a foreign government-owned or 
sponsored post if such delivery is permitted by the laws of the 
foreign country.
    The Postal Regulatory Commission is authorized to adopt 
regulations necessary to carry out the exceptions to the postal 
monopoly set out in section 601 as amended. This amendment does 
not take effect until the Postal Regulatory Commission 
promulgates regulations for the competitive pricing system 
under section 3633.

Sec. 404. Rulemaking authority

    Section 404 of the bill amends section 401(2) of title 39 
to clarify the rulemaking function of the Postal Service. As 
amended, section 401(2) authorizes the Postal Service ``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.'' This amendment is 
intended to make clear that the Postal Service is not, unless 
explicitly authorized by Congress, empowered to adopt 
regulations implementing other parts of the U.S. code, e.g., 
the criminal laws. This amendment is fully consistent with the 
legislative history of this provision (which originated in the 
1960 codification) and is modeled on the Federal Communications 
Commission's rulemaking authority, 47 USC 154(i). The amendment 
recognizes that the rulemaking authority of the Postal Service 
is affected by its obligations under title 5 and certain other 
limited provisions of law outside title 39.

Sec. 405. Noninterference with collective bargaining agreements, etc.

    Section 405 of the bill addresses two specific issues. 
First, subsection (a) mandates that, except for section 407, 
nothing in the bill, or amendments made by the bill to current 
law, can affect any of the rights, privileges, or benefits of 
postal employees or the labor organizations representing them. 
Second, subsection (b) clarifies that nothing in the bill will 
affect free mail as currently provided by law for (1) 
correspondence of members of the diplomatic corps and consuls 
of the countries of the Postal Union of Americas and Spain; (2) 
people who are blind and other people with a physical 
impairment preventing them from using or reading conventionally 
printed material; and (3) mailing of balloting materials under 
the Uniformed and Overseas Citizens Absentee Voting Act.

Sec. 406. Bonus authority

    Section 406 of the bill adds a new section 3686 to title 
39. Section 3686 authorizes the Postal Service to establish one 
or more bonus or reward programs in furtherance of the 
objectives of chapter 36. The Board of Governors must review 
any such program prior toimplementation and may approve any 
program that it finds ``makes meaningful distinctions based on relative 
performance.'' The section states that bonus payments may exceed the 
salary cap for postal employees established in section 1003(a) of title 
39 so long as the total compensation of such employees does not exceed 
the annual compensation of the Vice President of the United States. The 
Board of Governors may also allow up to twelve officers or employees of 
the Postal Service to receive total compensation of up to 120 percent 
of the Vice President's annual compensation, but report to Congress and 
the Office of Personnel Management within 30 days of a payment made 
under this exception. For each employee whose compensation exceeds the 
salary cap by virtue of a bonus or other payment awarded under this 
section, the Postal Service is required to list in its annual 
comprehensive statement the name of the employee, the amount of the 
bonus, the limitation of the salary cap, and amount by which the cap 
was exceeded. Nothing in this new section is intended to modify 
existing statutory authority for employment in the Postal Service under 
chapter 10 of title 39, particularly in regard to section 1001(c) 
(i.e., authority for the Postal Service to hire individuals as 
executives under employment contracts).

Sec. 407. Mediation in collective bargaining disputes

    Section 407 is intended to expedite the resolution of 
collective bargaining disputes. It would replace the fact-
finding panel that currently conducts the first step in the 
dispute resolution process with a mediator appointed by the 
Director of the Federal Mediation and Conciliation Service. If 
the parties are unable to agree and determine to submit the 
dispute to arbitration, the existing process of an arbitration 
board remains in place. This new step in the current bargaining 
process reflects a joint suggestion by the Postal Service and 
its four postal unions, and is based upon a recommendation by 
the President's Commission on the U.S. Postal Service. It 
should assist disagreeing parties in forging a final agreement, 
or limiting the issues that must be addressed if interest 
arbitration becomes necessary.

                TITLE V--ENHANCED REGULATORY COMMISSION

Sec. 501. Reorganization and modification of certain provisions 
        relating to the Postal Regulatory Commission

    Section 501 of the bill creates a new chapter 5 in title 39 
to establish the Postal Regulatory Commission. Chapter 5 
consists of four sections as follows.
    Section 501 of title 39 establishes the Postal Regulatory 
Commission. Section 3601 of current law, establishing the 
Postal Rate Commission, is repealed.
    Section 502 of title 39 sets out the qualifications and 
terms of office for the five Commissioners. This section 
provides that ``Commissioners shall be chosen solely on the 
basis of their technical qualifications, professional standing, 
and demonstrated expertise in economics, accounting, law, or 
public administration.'' Section 3602, establishing terms of 
office for Commissioners of the Postal Rate Commission, is 
repealed. Commissioners currently serving or nominated before 
enactment are not affected by this change.
    Section 503 of title 39 authorizes and directs the 
Commission to issue rules and regulations. Section 503 is a 
redesignation of current section 3603.
    Section 504 of title 39 sets out rules governing the 
administration of the Commission. Section 504 is a 
redesignation of current section 3604.
    In sum, section 501 of the bill recognizes the Commission's 
enhanced responsibilities by establishing the Commission in 
provisions set out in a chapter located in part I of title 39, 
dealing with general matters, rather than, as in current law, 
provisions set out in a subchapter of chapter 36, and dealing 
with rate regulation.

Sec. 502. Authority for Postal Regulatory Commission to issue subpoenas

    Section 502 of the bill amends section 504 of title 39 
(i.e., section 3604 of current law as redesignated by section 
501 of the bill). As amended, section 504 provides that 
Commissioners, any administrative law judge appointed by the 
Commission, and any designated employee of the Commission may 
administer oaths, examine witnesses, take depositions, and 
receive evidence. In addition, the Chairman of the Commission, 
any Commissioner designated by the Chairman, and any 
administrative law judge appointed by the Commission may issue 
subpoenas requiring the attendance and presentation of 
testimony by, or production of documentary or other evidence in 
the possession of, officers, employees, agents, or contractors 
of the Postal Service and to order the taking of depositions of 
and responses to written interrogatories by such persons. Such 
subpoena or order is allowed with respect to any proceeding 
conducted by the Commission under this title. Any subpoena 
requires the written concurrence of a majority of Commissioners 
then holding office in advance of its issuance. Failure to obey 
a subpoena may be referred to the appropriate United States 
District Court, and failure to obey a court order is punishable 
as a contempt of court.
    The amendment also provides for the handling of information 
the Postal Service views as proprietary that is requested from 
the Postal Service by the Commission. As amended, section 504 
provides that, if the Postal Service determines requested 
information is proprietary and so notifies the Commission in 
writing, the Commission may use the information only for the 
purpose supplied and must restrict access to the information to 
Commission officers and employees. However, the amendment 
authorizes the Commission to publicly disclose relevant 
information it deems necessary in furtherance of its duties, as 
long as it has adopted regulations establishing a procedure for 
affording appropriate confidentiality; this authority includes 
a mandate to the Commission to balance the nature and extent of 
likely commercial injury with the mandate for financial 
transparency of 101(d) of this Title. The amendment further 
provides for the possibility of discovery of such information 
by interested parties and requires the Commission to adopt 
rules to protect the confidentiality of such information 
similar to the rules that govern protective orders issued by 
the federal courts under the Federal Rules of Civil Procedure.

Sec. 503. Appropriations for the Postal Regulatory Commission

    Section 503 of the bill further amends section 504 of title 
39 to ensure the financial independence of the Postal 
Regulatory Commission. Under the amendment, funding for the 
Commission will be paid out of the Postal Service Fund, as 
under current law, but the budget of the Commission will no 
longer be subject to disapproval by the Governors.

Sec. 504. Redesignation of the Postal Rate Commission

    Section 504 of the bill changes ``Postal Rate Commission'' 
to the ``Postal Regulatory Commission'' in various statutes.

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

    Section 505 ensures that the existing role of a Consumer 
Advocate is maintained in all proceedings of the new Postal 
Regulatory Commission, to ensure that the interests of the 
general public are represented.

                      TITLE VI--INSPECTORS GENERAL

Sec. 601. Inspector General of the Postal Regulatory Commission

    Section 601 of the bill amends the Inspector General Act of 
1978 to provide for an Inspector General for the Postal 
Regulatory Commission.

Sec. 602. Inspector General of the United States Postal Service to be 
        appointed by the President

    Section 602 of the bill amends the Inspector General Act of 
1978 to require appointment of the Postal Service's Inspector 
General by the President with Senate confirmation, in the same 
manner as the other presidentially appointed Inspectors General 
at major federal departments and agencies. In keeping with the 
intent of the Inspector General Act, the Inspector General is 
required to investigate internal criminal activity committed by 
Postal Service employees, including Inspection Service 
employees. By clarifying the investigative responsibilities of 
the Inspector General, this section complies with the Inspector 
General Act's requirement to avoid duplication and insure 
effective coordination and cooperation between the Inspection 
Service and the Office of the Inspector General. Section 602 
provides that the current Inspector General will remain in 
office until the President appoints one pursuant to the new 
authority, although the Section makes clear that nothing in 
this act shall prevent the current Inspector General from being 
appointed by the President. In addition, the provision 
authorizes an appropriation for the Office of Inspector General 
rather than leaving its budget to the discretion of the agency 
it is charged with overseeing, consistent with the similar 
manner in which the Federal Deposit Insurance Corporation 
(FDIC) Inspector General receives a congressional appropriation 
from the FDIC's fund. Such a change is critical to recognizing 
the independence and objectivity of this key watchdog entity.
    The bill also subjects the Postal Service, for the first 
time, to provisions of the Anti-Kickback Act, gives Postal 
Service contractor employees whistleblower protection, and 
requires the Postal Service to develop and issue purchasing 
regulations prohibiting the reimbursement of certain contractor 
costs. Under the Anti-Kickback Act, major postal contractors 
would have to maintain compliance systems that would detect and 
prevent kickbacks. In addition, whistleblower protection would 
apply to postal contractors' employees. Finally, the Postal 
Service would be required to develop and issuepurchasing 
regulations that prohibit the reimbursement of contract costs not 
allowable under the Postal Service Procurement Manual.

                         TITLE VII--EVALUATIONS

Sec. 701. Universal Postal Service Study

    Recognizing that the concept of universal postal service 
has never been defined in the United States, and yet is a 
critical component of assessing the future role of a national 
post office, section 701 directs the Postal Service to submit a 
report on universal postal service in the United States to the 
President, Congress, and the Postal Regulatory Commission. The 
report must include a review of the history and development of 
universal service, an explanation of the current scope and 
standards of universal service and what will likely be required 
in the future, a description of groups not currently covered by 
universal service or receiving deficient service or quality, 
and such recommendations as the Postal Service deems 
appropriate. The Postal Regulatory Commission must then 
evaluate the Postal Service's study and issue its own report to 
the President and the Congress. That report must include, 
according to paragraph (b): (1) comments and observations on 
the matters raised in the Postal Service's report as the 
Commission considers appropriate; (2) an estimate of the cost 
attributable to the obligation to provide universal service 
under prior and current law; (3) an estimate of the likely cost 
of fulfilling the obligation to provide universal service; and 
(4) additional topics and recommendations as the Commission 
considers appropriate. According to paragraph (c), in preparing 
the reports required by section 701 the Postal Service and the 
Postal Regulatory Commission (1) shall consult with each other, 
other Federal agencies, users of the mails, enterprises in the 
private sector engaged in the delivery of mail, and the general 
public; and (2) shall address in their respective reports any 
written comments received under this section.

Sec. 702. Assessments of ratemaking, classification and other 
        provisions

    Section 702 of the bill requires the Postal Regulatory 
Commission to report, in conjunction with the views of the 
Postal Service, to the President and the Congress, at least 
every 5 years, on the operation of the amendments made by this 
bill, with recommendations for any legislative or other 
measures necessary to improve the effectiveness or efficiency 
of the nation's postal laws. Specifically, at least the first 
report must include, under paragraph (c), information on (1) 
the operation of the Commission regulations applicable to rates 
for competitive products and relevant recommendations; (2) the 
competitive products fund; and (3) the assumed Federal income 
tax on the competitive products fund.

Sec. 703. Study on equal application of laws to competitive products

    Section 703 of the bill requires the Federal Trade 
Commission to prepare a report detailing how federal and state 
laws apply differently to the Postal Service with respect to 
competitive products and private companies providing similar 
products. The Commission is directed to report within one year 
after enactment and to include recommendations for resolving 
any identified disparities in legal treatment. The Federal 
Trade Commission is to consult in preparing its report with the 
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.

Sec. 704. Greater diversity in Postal Service executive and 
        administrative schedule management positions

    Section 704 of the bill directs the Board of Governors to 
study and report to the President and Congress on the extent of 
representation by women and minorities in supervisory and 
management positions within the Postal Service. In addition, 
the Postal Service is required, as part of its performance 
evaluations of supervisory and management employees, to give 
appropriate consideration to meeting affirmative action goals, 
achieving equal employment opportunity requirements, and 
implementation of plans to achieve greater workforce diversity.

Sec. 705. Plan for assisting displaced workers

    Section 705 of the bill requires the Postal Service to 
develop and be prepared to implement a plan for affording 
reemployment assistance to employees displaced by automation or 
privatization. The plan is to be provided to the Board of 
Governors and Congress within one year of enactment.

Sec. 706. Contracts with women, minorities and small businesses

    Section 706 of the bill requires the Board of Governors, 
within one year, to study and report to the President and 
Congress on the number and value of contracts and subcontracts 
entered into with women, minorities, and small businesses.

Sec. 707. Rates for periodicals

    Section 707 of the bill requires the Postal Service, acting 
jointly with the Postal Regulatory Commission and the General 
Accounting Office, to 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. The report shall include recommendations 
for any administrative action or legislation that might be 
appropriate.

Sec. 708. Assessment of certain rate deficiencies

    Section 708 of the bill requires the Office of Inspector 
General of the Postal Service to study and submit to the 
President, the Congress, and the Postal Service a report 
concerning the Postal Service's administration of the reduced 
rate provisions of section 3626(k) of title 39. The study must 
specifically address the adequacy and fairness of the process 
by which assessments are determined and appealable, including 
whether the Postal Regulatory Commission or any other body 
outside the Postal Service should be assigned a role, and 
whether a statute of limitations should be established for the 
commencement of proceedings by the Postal Service.

Sec. 709. Postal processing and distribution network study

    Section 709 requires the Postal Service to provide an 
annual report to the Postal Regulatory Commission, the 
Congress, and the Board of Governors on the processing, 
transportation, and distribution network of the Service, with 
an eye toward recommendations on improving the system's 
efficiency and effectiveness. Per subsection (b), the annual 
report would be publicly incorporated into the reports and 
plans required by the Government Performance and Results Act, 
whose reports are reviewed each year by the Postal Regulatory 
Commission under its annual determination of compliance 
required by new Sections 3652(g) and 3653. Subsection (c) 
emphasizes that the Postal Service shall take such actions it 
considers, in its sole discretion, necessary and appropriate to 
provide the Nation with a modern and efficient network for the 
processing, transportation, and distribution of mail. Nothing 
in this section shall prevent the Postal Service from making 
such improvements in the efficiency and effectiveness of the 
network, as it deems appropriate.

Sec. 710. Assessment of future business model of the Postal Service

    Section 710 requires a comprehensive, two year study by an 
independent, impartial, and expert research organization 
appointed by the Comptroller General to assess the costs, 
benefits, effects, and future strategies for maintaining the 
Postal Service as wholly part of the Executive Branch, or 
transforming it into a private corporation in whole or in part. 
This should provide Congress the proper foundation to evaluate 
the appropriate long term business model for the Postal 
Service.
    Section (a) outlines the process to be undertaken by the 
Comptroller General in selecting the research organization. 
Section (b) makes clear that the research organization 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. Section (c) specifies the topics and matters to 
consider that will compromise the elements of the report. 
Subsection (d) permits the use of outside experts by the 
research organization, while Subsection (f) requires 
consultation with the wide range of postal stakeholders and 
inclusion of such comments in the final report. Subsection (e) 
provides funding from the Postal Service for the study.

Sec. 711. Study on certain proposed amendments

    Section 711 of the bill directs the Government 
Accountability Office to study proposals in H.R. 22 (109th 
Congress), as introduced section 805, that would move to a 
market-based system for establishing rates for the carriage of 
international mail. The list of matters to evaluate are not 
intended to limit the GAO from considering additional issues 
that it deems appropriate to analyze.

Sec. 712. Definition

    Section 712 of the bill declares that the term ``Board of 
Governors'' as used in this title shall have the same meaning 
as given in section 102 of title 39.

     TITLE VIII--MISCELLANEOUS; TECHNICAL AND CONFORMING AMENDMENTS

Sec. 801. Employment of Postal Police Officers

    Section 801 of the bill further amends section 404 and 
makes permanent the authority for the Postal Service to employ 
postal police officers to protect property owned or occupied by 
the Postal Service or under the charge and control of the 
Postal Service and to protect persons on the property. The 
Postal Service currently employs more than one thousand 
uniformed Postal Police Officers who are assigned to critical 
postal facilities throughout the country. The officers provide 
perimeter security, escort high-value mail shipments, and 
perform other essential protective functions. To date, Congress 
has provided temporary authority for such officers each year in 
appropriations bills.

Sec. 802. Date of postmark to be treated as date of appeal in 
        connection with the closing or consolidation of post offices

    Section 802 of the bill further amends section 404 of title 
39 to provide that the appeal to the Postal Regulatory 
Commission of a post office closing by any person shall be 
considered timely if it is postmarked within 30 days of 
notification of the closure to the appellant. The Commission 
testified that current law, which requires the appeal to be 
received by the Commission within 30 days, precludes adequate 
consideration of certain post office closings.

Sec. 803. Provisions relating to benefits under chapter 81 of title 5, 
        United States Code, for officers and employees of the former 
        Post Office Department

    Section 803 of the bill amends section 8 of the Postal 
Reorganization Act of 1970 (39 U.S.C. 1001 note) and addresses 
the administrative status of employees affected by change made 
by Public Law105-33 (repealing the authority for transitional 
appropriations) by clarifying their status as officers and 
employees of the U.S. Postal Service with respect to 
compensation for work injuries.

Sec. 804. Obsolete provisions

    Subsection 804(a) of the bill repeals chapter 52 of title 
39, relating to contracts for the surface transportation of 
mail. Such contracts are now allowed under section 5005 of 
title 39.
    Subsection 804(b) authorizes the Postal Service to lengthen 
the statutory four-year limitation on postal transportation 
contracts as it deems appropriate or advisable. The four-year 
limitations in current postal law date from President Grant's 
Administration and reflect the spoils system of that era by 
allowing a new President to assume control of the Post Office 
Department and its accompanying patronage.
    The Committee has spent the last 10 years examining all 
aspects of the Postal Service with the thought of giving it the 
flexibility and the authority it needs to survive as a viable 
public institution well into the future. During our extensive 
review we have discovered some sound policies and programs of 
the Postal Service that have been quite successful, and the 
Committee recommends the Postal Service continue that which 
works for it. One such sound policy is the Postal Service's 
relationship with its Highway Contractors (Star Routes). For 
the last 56 years, the Postal Service has contracted with 
Highway Contractors for periods up to four years. Such 
contracts may be renewed for successive contract terms and may 
be adjusted, with the consent of the Contractor, for increased 
or decreased costs resulting from changed conditions occurring 
during the contract term.
    The Postal Service has also provided indemnity payments for 
contracts cancelled for reasons other than default. This 
program has returned corresponding benefits to both the Postal 
Service and its Highway Contractors. The Postal Service has had 
the benefit of continuity of service from a dedicated group of 
highway transportation suppliers, and the contractors have been 
able to amortize their costs over a longer period of time thus 
keeping their rates economic and efficient. These Highway 
Contractors have also provided efficient and reliable service 
in times of unanticipated increases in Postal mail volume. As a 
result of this program's highly successful history, the 
Committee recommends that the Postal Service maintain its 56 
year old policy of renewing and adjusting Highway Contractors 
with indemnity provisions or liquidated damages. As noted, the 
Committee has included in this bill a provision that permits 
the Postal Service to contract for longer terms than 4 years.
    The Postal Service is in the midst of a major 
transformation to improve and modernize its operations. The 
Postal Service has identified the procurement area, 
particularly improvements in its supply chain management, as an 
area in need of change and improvement.
    The Committee requested that the Government Accountability 
Office (GAO) determine the Postal Service's progress in 
implementing supply chain management initiatives and whether 
these initiatives have had an effect on small businesses. 
Supply chain management is a process that has helped successful 
private-sector companies leverage their buying power and 
identify more efficient ways to procure goods and services.
    In its report entitled ``Progress in Implementing Supply 
Chain Management Initiatives,'' GAO-04-540, the GAO recommended 
that the Postal Service improve implementation of its bulk fuel 
program, consider adjustments to reverse auction procedures, 
and focus more attention on small, minority-owned, and woman-
owned businesses in carrying out supply chain management 
initiatives. GAO also believes that the Postal Service should 
have a mechanism in place to ensure accountability and 
transparency in its small business contracting.
    The Committee will continue its oversight of these programs 
and urges the Postal Service to move quickly to address issues 
identified by GAO in its report.

Sec. 805. Investments

    Section 805 of the bill amends section 2003 of title 39 to 
prohibit the Postal Service from using funds from the Postal 
Service Fund to invest in ``obligations or securities of a 
commercial entity.'' Under the bill's establishment of new 
section 2011(c) of title 39, such investments are permitted 
using funds from the Competitive Products Fund with the 
approval of the Secretary of the Treasury.

Sec. 806. Reduced rates

    Section 806 makes changes related to the rates provided for 
``within county publications''--publications within the county 
in which they are published. These types of publications are 
predominantly small-circulation, local newspapers--family-owned 
or small group weeklies targeted toward the news and 
advertising needs of small communities or counties. Before the 
Postal Reorganization Act, within county publications, along 
with other classes of mail and types of mailers such as 
nonprofit periodicals and library matter, were allowed to mail 
at reduced rates of postage. In 1970, the Postal Reorganization 
Act required that the products cover their attributable costs, 
but their institutional costs were paid for by annual 
appropriation. In 1993, Congress phased in rate increases so 
that after five years the reduced rate mailers would eventually 
pay half the institutional costs that comparable commercial 
mailers paid. Following the realization of some practical 
difficulties related to this ``fifty percent markup rule,'' the 
law was changed in 2000 with respect to certain publications. 
Within county publications, however, remained subject to the 
fifty percent markup rule.
    This bill correctly discontinues the fifty percent markup 
rule for within county publications. Continuing such a rule 
could unduly limit the flexibility available to the Postal 
Regulatory Commission in creating a new rate-setting approach. 
This section at the same time preserves the preferred status of 
within county publication rates by tracking the phrasing of the 
current statute. The intent of the change is to maintain the 
special status of within county publications while replacing 
the fifty percent markup rule with a more general statement 
that within county rates should reflect the mail's ``preferred 
status.'' Because of the local nature of within county 
publications, they have low costs compared to many national 
publications. As a result, the current approach toward within 
county publications is for them to have their own subclass 
status, which keeps them from having their costs averaged 
together with more costly national mail. This section is not 
intended to require the Commission or Postal Service to delete 
the within county subclass; rather, it is intended to maintain 
authority for preferred treatment of within county publications 
in terms of rates.

Sec. 807. Hazardous matter

    Section 807 provides for penalties regarding illegal use of 
the mails to transport hazardous matter. It adds a new section 
3018 to title 39 that prohibits the mailing of hazardous 
material, the causing of hazardous material to be mailed, and 
the manufacture, distribution, or sale of containers, packaging 
kits or other devices (for use in mailing hazardous materials) 
that fail to conform with relevant standards. Subsection (c) 
states that persons knowingly violating hazardous material 
mailing provisions shall be liable for civil penalties, clean 
up charges, and damages. Subsection (d) states that there must 
be notice and an opportunity for hearing before the Postal 
Service can determine a violation to the hazardous material 
provisions has occurred. Subsection (e) states what matters the 
Postal Service shall consider before determining the amount of 
civil penalties to violators of the hazardous material 
provisions. Subsections (f), (g) and (h) outline the procedures 
for collecting and depositing such penalties, costs and 
damages.

Sec. 808. Provisions relating to cooperative mailings

    Section 808 directs the Postal Regulatory Commission to 
study the Postal Service's Cooperative Mail Rule to determine 
whether it contains adequate safeguards to protect against 
abuses of rates for nonprofit mail and deception of consumers. 
The Cooperative Mail Rule is a long-standing postal regulation 
designed to prevent the commercial exploitation of the 
nonprofit rate by prohibiting for-profit mail matter such as 
advertisements for products and services from being sent at the 
nonprofit rate. It has alsobeen applied to prevent abusive 
relationships between commercial fundraisers and nonprofits, and to 
otherwise regulate those relationships. If the Postal Regulatory 
Commission determines that the Cooperative Mail Rule does not 
adequately safeguard against abuse of the nonprofit rate, section 810 
authorizes the Commission to promulgate such regulations as it deems 
necessary.

Sec. 809. Technical and conforming amendments

    Miscellaneous technical and conforming amendments required 
by the bill's changes to Title 39.

           TITLE IX--POSTAL PENSION FUNDING REFORM AMENDMENTS

    In 2003, the Postal Civil Service Retirement System Funding 
Reform Act of 2003 (P.L. 108-18 or the Act) was enacted to 
change the calculation of Postal Service contributions to the 
Civil Service Retirement System (CSRS). The Act credited the 
Postal Service for the real value of contributions it had made 
in the past and changed how contributions would be computed in 
the future. The Act provided immediate financial relief to the 
Postal Service, allowing the Postal Service to use the savings 
resulting from the change in FY 2003-2005 to reduce its debt 
and hold postage rates steady. After FY 2005, the Act required 
that the savings go into an escrow account, absent any 
additional congressional action.
    P.L. 108-18 was enacted quickly to avert a financial crisis 
at the Postal Service, which had indicated that, absent a 
change, a rate increase would have been necessary within a 
year. However, the Act left two issues unresolved. First, the 
Act did not address whether the escrow account would be used to 
pay down debt, prefund retiree health benefits, or for some 
other purpose. Second, there was disagreement about what entity 
should be responsible for paying the costs of retirement 
benefits related to military service. Under previous law, the 
Treasury Department had paid those benefits for CSRS retirees. 
P.L. 108-18 shifted the responsibility for these military costs 
to the Postal Service, both prospectively and retrospectively.
    This bill addresses both of these issues. The bill removes 
the requirement in P.L. 108-18 that funds be collected and 
placed in an escrow account, and requires the Treasury 
Department to pay the costs of retirement benefits related to 
military service. Returning the responsibility for military 
costs to Treasury will result in an immediate overfunding of 
the CSRS fund. The bill directs the Postal Service to use that 
overfunding and other savings to address both its short- and 
long-term financial needs and ensures that the Postal Service 
reduces its growing unfunded liability for retiree health 
benefits. In its 2003 annual report, the Postal Service 
estimated that liability as being between $47 and $57 billion.

Sec. 901. Civil Service Retirement System

    Section 901 restores the responsibility to the Treasury 
Department for paying retirement costs related to military 
service. Because such a change will result in an immediate 
overfunding of the Postal Service's portion of the CSRS Fund, 
the section terminates the Postal Service's obligation to make 
CSRS contributions. The Office of Personnel Management is 
required to determine whether there is a postal surplus or a 
supplemental liability by June 15, 2006. If there is a surplus, 
as anticipated, the Office must transfer that amount to the 
Postal Service Retiree Health Benefits Fund. If there is a 
supplemental liability, the Office must establish an 
amortization schedule to liquidate the liability by the end of 
FY 2043. All determinations and redeterminations made by the 
Office are subject to review by the Postal Regulatory 
Commission at the Postal Service's request. The Commission must 
submit the results of its review to the Office, the Postal 
Service, and Congress. The Office must reconsider its decision 
in light of the Commission's review and make appropriate 
adjustments.
    Subsection (c) ensures that the monetary impact of 
restoring to Treasury the responsibility for military costs is 
retroactive, as if the relevant provision of P.L. 108-18 had 
not been enacted. It directs the Office to transfer to the CSRS 
Fund amounts that it would otherwise have paid for FY 2003-2005 
and earnings on those amounts.

Sec. 902. Health insurance

    Section 902 would change the way the Postal Service 
finances its share of the cost of providing health care to 
retirees. The Postal Service must pay a portion of health care 
premiums for currently retired employees eligible to 
participate in the Federal Employees Health Benefits (FEHB) 
program. Currently, the Postal Service pays only its portion of 
the health premiums incurred by current retirees each year. 
Under section 902, the Postal Service would begin paying for 
estimated costs of retiree health care as such costs are 
accrued by current workers.
    The bill creates a new on-budget account, the Postal 
Service Retiree Health Benefits Fund (PSRHBF), which would earn 
interest at the same rate as the CSRS Fund. The bill also 
requires calculation of the unfunded liability for health care 
costs of current and future retirees, which would be the 
difference between the assets held in the PSRHBF and the net 
present value of accrued liabilities projected for retiree 
health care.
    Starting in 2006, the bill requires the Postal Service to 
make payments equal to the annual increase in the unfunded 
liability attributable to current employees. The Postal Service 
also would pay annual interest costs on the unfunded liability 
(attributable to current and future retirees). These payments, 
made at the end of each fiscal year, would be deposited into 
the PSRHBF. The Postal Service's share of health care premiums 
for current retirees would be paid out of the PSRHBF as soon as 
adequate funds are available in the account to do so.
    The bill directs the Office of Personnel Management to 
compute the required prefunding and interest payments after 
consultation with the Postal Service. All computations or other 
determinations made by the Office, along with any relevant 
regulations established by the office, are subject to review by 
the Postal Regulatory Commission at the Postal Service's 
request. The Commission must submit the results of its review 
to the Office, the Postal Service, and Congress. The Office 
must reconsider its decision in light of the Commission's 
review and make appropriate adjustments.

Sec. 903. Repealer

    Section 903 repeals section 3 of the Postal Civil Service 
Retirement System Funding Reform Act, related to the 
disposition of savings accruing to the Postal Service. This 
change removes the requirement that savings be placed in an 
escrow account.

Sec. 904. Ensuring appropriate use of escrow and military savings

    Section 904 requires that for the ten years beginning in FY 
2006, two-thirds of the ``total savings''--the amount of money 
the Postal Service would have had to pay to the CSRS Fund if 
P.L. 108-18 and this bill had not been enacted, less any 
amortization payments required to the CSRS Fund for any 
supplemental liability as described above--be used to address 
the Postal Service's long-term needs of prefunding retiree 
health benefits and paying down its debt. Amounts that would 
otherwise have been paid into the Fund established under 
8909a(a) under this paragraph, but that are used to reduce the 
postal debt may not exceed a total of $3 billion for fiscal 
years 2006-2015.
    A safety valve is also put in place to allow the Postal 
Service to appeal to the Postal Regulatory Commission for 
relief from the requirement that two-thirds of the savings be 
allocated for such purposes.
    After FY 2015, there is not a specific statutory 
requirement related to the total savings. Instead, the 
Committee expects that the Postal Service will use its best 
judgment in promoting its long-term viability (by further 
reducing the unfunded liability for retiree health benefits, 
debt repayment, and other measures) while moderating postage 
rate increases. The absence of a specific requirement after FY 
2015 should not be interpreted by the Postal Service as a sign 
that it no longer needs to be concerned with the outstanding 
unfunded liability for retiree health benefits.

Sec. 905. Effective dates

    Title IX will take effect on October 1, 2005.

                       Explanation of Amendments

    The Committee adopted an amendment in the nature of a 
substitute offered by Chairman Davis when it considered the 
bill on April 13, 2005. The amendment contained the following 
changes to H.R. 22, as introduced:
           Required SEC-like financial reporting by the 
        Postal Service: The substitute amendment requires the 
        Postal Service to file with the PRC the same public 
        financial statements and reports required of private 
        companies by the Securities and Exchange Commission, 
        including a breakdown of costs and revenues by segment 
        as defined by USPS in consultation with the PRC.
           Network Optimization: The substitute 
        amendment requires annual assessment of network 
        optimization, which would be publicly incorporated into 
        the reports and plans required by the Government 
        Performance and Results Act.
           Worksharing: The substitute amendment 
        conforms H.R. 22 with S. 662 (109th Congress), as 
        introduced, eliminating the House bill's four-year 
        limit on new worksharing discounts that exceed the 
        costs avoided by the Postal Service and instead 
        requiring such discounts to apply for only a limited 
        time period.
           Banking, Borrowing and Investing: The 
        substitute amendment limits the Postal Service's 
        Competitive Products fund to banking, borrowing and 
        investing with the U.S. Treasury, rather than with the 
        private sector.
           Treatment of Confidential Information: The 
        substitute amendment provides the Postal Regulatory 
        Commission, rather than the Postal Service, with the 
        authority to decide what regulatory information will be 
        protected from public disclosure on grounds of 
        commercial sensitivity.
           Rate Discrimination: The substitute 
        amendment maintains the current law prohibition on 
        undue or unreasonable rate discrimination.
           Salary Cap Flexibility: The substitute 
        amendment establishes a more efficient process for the 
        Postal Service's authority to offer bonuses and other 
        compensation to its employees, consistent with similar 
        performance incentive programs in other sectors.
           Business Model Study: The substitute 
        amendment requires the Government Accountability Office 
        to assess the costs, benefits, effects, and future 
        strategies for maintaining the Postal Service as wholly 
        part of the Executive Branch, or transforming it into a 
        private corporation in whole or in part.
           Outside Auditor: The substitute amendment 
        removes a provision from H.R. 22 that would have 
        required the Inspector General--rather than an 
        independent accounting firm selected by the Board--to 
        certify the Postal Service's annual financial 
        statements.
           Technical Changes: The substitute amendment 
        makes a technical change to the definition of a 
        ``postal service,'' and moves the directive that the 
        PRC take the fairness and equity of the rate structure 
        into account from the list of the factors to be 
        considered in regulation to the list of objectives.
    In addition, two sections of the bill were struck following 
adoption of an amendment offered by Mr. LaTourette. Mr. 
LaTourette's amendment struck sections 805 and 807 of the 
legislation and instead created a new study in Title VII of 
H.R. 22 for the Government Accountability Office (GAO) to 
evaluate aspects of the matter. Mr. LaTourette's amendment was 
adopted by voice vote.
    For more than 20 years, the air transportation of U.S. mail 
to domestic destinations has been open to competitive bidding. 
However, air transport of international mail is subject to the 
same regulatory control of the U.S. Department of 
Transportation (DOT) that has been in place since the late 
1970s. Section 805 would have permitted the Postal Servicethe 
same opportunity to contract for the transportation of international 
mail that it has had domestically for decades. Also, Section 805 
protected domestic carriers from unfair competition by ensuring that 
any foreign carrier competing for a contract must be from a country 
whose nation provides the same opportunity for U.S. carriers to deliver 
its mail. Fifty-one countries already contract with U.S. carriers to 
move mail for their post offices, and in fact, the Postal Service pays 
more for the air transportation of mail to the U.S. carriers than what 
those same U.S. carriers charge a foreign post to transport their mail. 
Section 807 of the bill, which would have repealed the Postal Service's 
ability to unilaterally fine air carriers for delays in moving 
international mail because such authority would be inappropriate in a 
negotiated contracting environment, was also deleted under Mr. 
LaTourette's amendment in order to reflect the amendment's repeal of 
the flexibilities that would have been provided by section 805.
    Mr. LaTourette's amendment replaces these sections with a 
section mandating a Government Accountability Office study of 
the matter, including an assessment of the impact of such 
reforms on the domestic airlines. This study should build on 
the GAO's April 8, 2005 report on this subject.

                        Committee Consideration

    H.R. 22 is derived from H.R. 3717, introduced in the 104th 
Congress, H.R. 22, introduced in the 105th and 106th 
Congresses, H.R. 4970 introduced in the 107th Congress, and 
H.R. 4341 introduced in the 108th Congress.
    In the 104th Congress, the former Postal Service 
Subcommittee, chaired by Mr. McHugh, held oversight hearings on 
the Postal Service and, in particular, its calls for greater 
commercial flexibility, on February 23, March 2 and 8, May 23, 
June 7, 14, and 28, and November 15, 1995, and January 25 (with 
the Senate Committee on Governmental Affairs) and March 13 and 
19, 1996. In addition, on November 15, 1995, the Subcommittee 
held a legislative hearing on H.R. 210, a bill to provide for 
privatization of the Postal Service.
    On June 25, 1996, Subcommittee Chairman McHugh introduced 
H.R. 3717, the Postal Reform Act of 1996. The Subcommittee held 
legislative hearings on H.R. 3717 on July 10 and 18 and 
September 17 and 26, 1996.
    In the 105th Congress, on January 7, 1997, Subcommittee 
Chairman McHugh reintroduced former H.R. 3717 as H.R. 22, the 
Postal Reform Act of 1997. The Subcommittee held a legislative 
hearing on H.R. 22 on April 16, 1997. The Subcommittee also 
held a general oversight hearing on April 24, 1997. On December 
12, 1997, Mr. McHugh issued a comprehensive, section-by-section 
plan for revision of H.R. 22. In late February 1998, Mr. McHugh 
announced that the Subcommittee was actively soliciting written 
comments through early April on proposed revisions to H.R. 22. 
The Subcommittee received 47 written submissions. The 47 
comments subsequently received were shared with all 
Subcommittee Members for review, and they were posted on the 
Subcommittee's web page for public examination. In addition, 
the Subcommittee received extensive additional comments more 
informally from representatives of interested parties. Through 
this process, the Subcommittee attempted to ensure that the 
public and all postal stakeholders had repeated opportunities 
to provide input on the revisions as proposed December 1997.
    After carefully evaluating all of the comments received, 
Postal Service Subcommittee Chairman McHugh released the text 
of a comprehensive amendment to H.R. 22 on September 2, 1998, 
which was also posted on the Subcommittee's web page. On 
September 24, 1998, the Subcommittee on the Postal Service 
voted to approve H.R. 22, renamed the Postal Modernization Act 
of 1998, as amended by the comprehensive amendment announced by 
Subcommittee Chairman McHugh on September 2, 1998, and to send 
it to the Committee on Government Reform and Oversight for 
further consideration, which did not occur before the 105th 
Congress adjourned.
    With the beginning of the 106th Congress, Postal Service 
Subcommittee Chairman McHugh introduced a revised version of 
H.R. 22, and the Subcommittee convened a final round of 
hearings on the bill on February 11 and March 4, 1999. After 
incorporating further modifications from these hearings, on 
April 29, 1999, the Postal Service Subcommittee approved H.R. 
22 again and reported it to the Committee on Government Reform. 
However, the Committee did not consider the bill before the 
106th Congress expired. The Subcommittee did convene additional 
hearings throughout 1999 and 2000 that continued to explore and 
underscore the need for reform.
    In the 107th Congress, the Postal Service Subcommittee was 
abolished and postal issues became the focus of the full 
Government Reform Committee. After several full Committee 
hearings on the Postal Service's worsening financial 
situation--the General Accounting Office added the Service to 
its watch-list of ``high risk'' agencies--the Committee marked 
up a revised postal reform bill, H.R. 4970, introduced by Mr. 
McHugh. H.R. 4970, the Postal Accountability and Enhancement 
Act, was the product of a nearly year long bipartisan effort of 
the Committee staff to address remaining concerns and 
objections that certain stakeholders expressed with previous 
versions of the postal reform legislation. Despite support for 
the legislation, there was disagreement among some Committee 
members over the timing of moving the bill forward. As a 
result, in a mark-up on June 20, 2002, H.R. 4970 failed on a 
vote of 6 ayes, 20 no, and 9 voting ``present.'' Nine Members 
did not vote.
    In the 108th Congress, the Government Reform Committee's 
Special Panel on Postal Reform and Oversight, chaired by Mr. 
McHugh, held three hearings in a two week period to examine the 
need to modernize our nation's postal laws following the work 
of the President's Commission. On January 28, 2004, the Panel 
heard from the Treasury Department, the Postal Service, the 
Postal Rate Commission, and the General Accounting Office. On 
February 5, the Panel traveled to Chicago, Illinois for a 
hearing in which the Presidents of all postal unions and 
employee groups testified. The Panel held a final hearing on 
February 11 in which nine CEOs of competitors, commercial and 
nonprofit mailers, and postal reliant businesses testified. On 
March 23, 2004, the Committee held a joint hearing with the 
Senate Governmental Affairs Committee, in which it heard 
testimony from the Secretary of the Treasury and the Postal 
Service.
    All witnesses stated support for the Administration's broad 
principles on postal reform, and the hearings underscored that 
universal postal service is at risk and reform is urgently 
needed to minimize the danger of significant taxpayer bailout 
or dramatic postal rate increases. As the General Accounting 
Office emphasized, the Postal Service's current business model, 
formulated as it was in 1970, is no longer sustainable in the 
21st century.
    On May 12, 2004, the Committee met in open session and 
ordered reported favorably the bill introduced by Mr. McHugh, 
H.R. 4341, by roll call vote, a quorum being present, with a 
vote of 40 yeas and 0 nays. The Committee filed its report to 
accompany H.R. 4341 on September 8, 2004, as Report 108-672 
Part I. The Judiciary Committee then sought referral of the 
bill to address matters within its jurisdiction. On September 
15, 2004, the Judiciary Committee considered H.R. 4341 and 
ordered the bill reported with several amendments by voice vote 
(see Report 108-672 Part II filed September 23, 2004). The bill 
was then placed on the Union Calendar, Calendar No. 427. The 
108th Congress adjourned before further action was taken on 
H.R. 4341.
    On January 4, 2005, Mr. McHugh and Chairman Davis 
introduced H.R. 22. On April 13, 2005, the Committee on 
Government Reform ordered the bill reported to the House, as 
amended, by a recorded vote.

                             Rollcall Vote

----------------------------------------------------------------------------------------------------------------
        Representatives             Aye       Nay     Present          Dem.           Aye       Nay     Present
----------------------------------------------------------------------------------------------------------------
Mr. Davis (VA), (chairman).....        X   ........  .........  Mr. Waxman.......        X   ........  .........
Mr. Shays......................        X   ........  .........  Mr. Lantos.......        X   ........  .........
Mr. Burton.....................        X   ........  .........  Mr. Owens........        X   ........  .........
Mrs. Ros-Lehtinen..............        X   ........  .........  Mr. Towns........        X   ........  .........
Mr. McHugh.....................        X   ........  .........  Mr. Kanjorski....        X   ........  .........
Mr. Mica.......................        X   ........  .........  Mr. Sanders......        X   ........  .........
Mr. Gutknecht..................        X   ........  .........  Mrs. Maloney.....        X   ........  .........
Mr. Souder.....................        X   ........  .........  Mr. Cummings.....        X   ........  .........
Mr. LaTourette.................        X   ........  .........  Mr. Kucinich.....        X   ........  .........
Mr. Platts.....................        X   ........  .........  Mr. Davis (IL)...        X   ........  .........
Mr. Cannon.....................        X   ........  .........  Mr. Clay.........        X   ........  .........
Mr. Duncan.....................        X   ........  .........  Ms. Watson.......        X   ........  .........
Mrs. Miller (MI)...............        X   ........  .........  Mr. Lynch........        X   ........  .........
Mr. Turner (OH)................        X   ........  .........  Mr. Van Hollen...        X   ........  .........
Mr. Issa.......................        X   ........  .........  Ms. Sanchez......        X   ........  .........
Mrs. Brown-Waite...............        X   ........  .........  Mr. Ruppersberger  ........  ........  .........
Mr. Porter.....................        X   ........  .........  Mr. Higgins......        X   ........  .........
Mr. Marchant...................        X   ........  .........  Ms. Norton.......        X   ........  .........
Mr. Westmoreland...............        X   ........  .........  .................  ........  ........  .........
Mr. McHenry....................        X   ........  .........  .................  ........  ........  .........
Mr. Dent.......................        X   ........  .........  .................  ........  ........  .........
Mrs. Foxx......................        X   ........  .........  .................  ........  ........
Vacancy
----------------------------------------------------------------------------------------------------------------
Totals: Ayes 39, Nays 0, Present 0.

                             Correspondence

                     U.S. House of Representatives,
            Committee on Transportation and Infrastructure,
                                    Washington, DC, April 25, 2005.
Hon. Tom Davis,
Chairman, Committee on Government Reform,
Rayburn Building, Washington, DC.
    Dear Mr. Chairman: I am writing to you concerning the 
jurisdictional interest of the Transportation and 
Infrastructure Committee in matters being considered in H.R. 
22, the Postal Accountability and Enhancement Act.
    Our committee recognizes the importance of H.R. 22 and the 
need for the legislation to move expeditiously. Therefore, 
while we have a valid claim to jurisdiction over certain 
provisions of the bill, I will agree not to request a 
sequential referral. This, of course, is conditional on our 
mutual understanding that nothing in this legislation or my 
decision to forego a sequential referral waives, reduces or 
otherwise affects the jurisdiction of the Transportation and 
Infrastructure Committee, and that a copy of this letter and of 
your response acknowledging our valid jurisdictional interest 
will be included in the Committee report and in the 
Congressional Record when the bill is considered on the House 
Floor.
    The Committee on Transportation and Infrastructure also 
asks that you support our request to be conferees on the 
provisions over which we have jurisdiction during any House-
Senate conference.
    Thank you for your cooperation in this matter.
            Sincerely,
                                                 Don Young,
                                                          Chairman.
                                ------                                

Hon. Don Young,
Chairman, Committee on Transportation and Infrastructure,
House of Representatives, Washington, DC.
    Dear Mr. Chairman: Thank you for your recent letter 
regarding the Committee on Transportation and Infrastructure's 
jurisdictional interest in H.R. 22, the Postal Accountability 
and Enhancement Act, and your willingness to forego 
consideration of H.R. 22 by the Committee on Transportation and 
Infrastructure.
    I agree that the Committee on Transportation and 
Infrastructure has a valid jurisdictional interest in H.R. 22 
and that the committee's jurisdiction will not be adversely 
affected by your decision to not request a sequential referral 
of H.R. 22. In addition, I will support your request for the 
appointment of outside conferees from the Committee on 
Transportation and Infrastructure to a House-Senate conference 
committee on this or similar legislation should such a 
conference be convened.
    As you have requested, I will include a copy of your letter 
and this response in the Government Reform Committee's report 
on H.R. 22 and in the Congressional Record during consideration 
of the legislation on the House floor. Thank you for your 
assistance as I work towards the enactment of H.R. 22.
            Sincerely,
                                                 Tom Davis,
                                                          Chairman.

              Application of Law to the Legislative Branch

    Section 102(b)(3) of Public Law 104-1 requires a 
description of the application of this bill to the legislative 
branch where the bill relates to the terms and conditions of 
employment or access to public services and accommodations. 
This bill creates a modern system of rate regulation, 
establishes fair competition rules and a powerful new 
regulator, addresses the Postal Service's universal service 
obligation and the scope of the mail monopoly, and institutes 
improvements to the collective bargaining process.
    Legislative branch employees and their families, to the 
extent that they are otherwise eligible for the benefits 
provided by this legislation, have equal access to its 
benefits.

  Statement of Oversight Findings and Recommendations of the Committee

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

         Statement of General Performance Goals and Objectives

    In accordance with clause 3(c)(4) of rule XIII of the Rules 
of the House of Representatives, the Committee's performance 
goals and objectives are reflected in the descriptive portions 
of this report.

                   Constitutional Authority Statement

    Under clause 3(d)(1) of rule XIII of the Rules of the House 
of Representatives, the Committee must include a statement 
citing the specific powers granted to Congress to enact the law 
proposed by H.R. 22. Article I, Section 8, Clause 7 of the 
Constitution of the United States grants the Congress the power 
to establish post offices.

                     Federal Advisory Committee Act

    Section 305 of H.R. 22 establishes an advisory committee 
within the meaning of the Federal Advisory Committee Act (5 
U.S.C. Appendix 2). The functions of the advisory committee are 
reflected in the descriptive portions of this report.

                       Unfunded Mandate Statement

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

                           Committee Estimate

    Clause 3(d)(2) of rule XIII of the Rules of the House of 
Representatives requires an estimate and a comparison by the 
Committee of the costs that would be incurred in carrying out 
H.R. 22. However, clause 3(d)(3)(B) of that rule provides that 
this requirement does not apply when the Committee has included 
in its report a timely submitted cost estimate of the bill 
prepared by the Director of the Congressional Budget Office 
under section 402 of the Congressional Budget Act.

     Budget Authority and Congressional Budget Office Cost Estimate

    With respect to the requirements of clause 3(c)(2) of rule 
XIII of the Rules of the House of Representatives and section 
308(a) of the Congressional Budget Act of 1974 and with respect 
to requirements of clause 3(c)(3) of rule XIII of the Rules of 
the House of Representatives and section 402 of the 
Congressional Budget Act of 1974, the Committee has received 
the following cost estimate for H.R. 22 from the Director of 
the Congressional Budget Office:

                                     U.S. Congress,
                               Congressional Budget Office,
                                    Washington, DC, April 25, 2005.
Hon. Tom Davis,
Chairman, Committee on Government Reform,
House of Representatives, Washington, DC.
    Dear Mr. Chairman: The Congressional Budget Office has 
prepared the enclosed cost estimate for H.R. 22, the Postal 
Accountability and Enhancement Act.
    If you wish further details on this estimate, we will be 
pleased to provide them. The CBO staff contacts are Mark 
Grabowicz (for Postal Service costs), Geoffrey Gerhardt (for 
retirement costs), and Julie Christensen (for health care 
costs).
        Sincerely,
                                     Douglas Holtz-Eakin, Director.
    Enclosure.

H.R. 22--Postal Accountability and Enhancement Act

    Summary: H.R. 22 would change the laws that govern the 
operation of the United States Postal Service (USPS), 
particularly those regarding the cost of pensions and health 
care benefits of retired workers and the requirement to hold 
certain funds in escrow. CBO estimates that enacting this 
legislation would result in on-budget savings of $35.7 billion 
and off-budget costs of $41.6 billion over the 2006-2015 
period. (The net expenditures of the USPS are classified as 
``off-budget.'') Thus, CBO estimates the net cost to the 
unified budget would be $5.9 billion over the 2006-2015 period. 
All of those effects reflect changes in direct spending. In 
addition, we estimate that implementing H.R. 22 would have 
discretionary costs of about $1.6 billion over the 2006-2015 
period, assuming appropriation of the necessary amounts. 
(Enacting the bill would not affect federal revenues.)
    Enacting H.R. 22 would not affect how much the federal 
government spends on pension or health care benefits for USPS 
retirees. By increasing how much the Postal Service pays to 
finance those benefits and by eliminating the current-law 
escrow account requirements, however, the bill would increase 
future budget deficits as measured by the unified federal 
budget. Eliminating the escrow account requirement for the USPS 
would allow that agency to increase spending for capital 
improvements or other projects, pay down its outstanding debt, 
postpone or diminish future rate increases, or some combination 
of these options. Enacting the bill also would reduce direct 
spending by making the costs of the Postal Rate Commission and 
the USPS Office of the Inspector General subject to 
appropriation.
    H.R. 22 contains no intergovernmental or private-sector 
mandates as defined in the Unfunded Mandates Reform Act (UMRA) 
and would impose no costs on state, local, or tribal 
governments.
    Major provisions of H.R. 22 would:
          Eliminate a requirement in Public Law 108-18 (P.L. 
        108-18), the Postal Civil Service Retirement Funding 
        Reform Act of 2003, that the Postal Service place 
        savings from reduced pension contributions in escrow.
          Transfer from the Postal Service to the Department of 
        the Treasury responsibility for paying pension costs 
        associated with military service credits.
          Replace direct payments the Postal Service is making 
        for retiree health care costs with payments designed to 
        prefund some of the health care costs of current 
        employees when they retire.
          Revise the procedure for raising postal rates.
          Strengthen the USPS Board of Governors and the Postal 
        Rate Commission, which would be redesignated the Postal 
        Regulatory Commission (PRC).
          Make other changes designed to increase the Postal 
        Service's competitiveness with private industry.
    Estimated cost to the Federal Government: The estimated 
budgetary impact of H.R. 22 is summarized in Table 1. The costs 
of this legislation fall within budget functions 370 (commerce 
and housing credit), 550 (health), 900 (net interest), and 950 
(undistributed offsetting receipts).

                                TABLE 1.--ESTIMATED BUDGETARY EFFECTS OF H.R. 22
----------------------------------------------------------------------------------------------------------------
                                                     By fiscal year, in billions of dollars--
                                 -------------------------------------------------------------------------------
                                   2006    2007    2008    2009    2010    2011    2012    2013    2014    2015
----------------------------------------------------------------------------------------------------------------
                                           CHANGES IN DIRECT SPENDING

On-Budget Effects:
    Estimated Budget Authority..    -2.9    -3.0    -3.1    -3.3    -3.4    -3.6    -3.8    -4.0    -4.2    -4.4
    Estimated Outlays...........    -2.9    -3.0    -3.1    -3.3    -3.4    -3.6    -3.8    -4.0    -4.2    -4.4
Off-Budget Effects:
    Estimated Budget Authority..     2.9     3.2     3.5     3.6     3.9     4.3     4.5     4.9     5.3     5.6
    Estimated Outlays...........     2.9     3.2     3.5     3.6     3.9     4.3     4.5     4.9     5.3     5.6
Total Unified Budget Effect:
    Estimated Budget Authority..     0.0     0.2     0.3     0.4     0.5     0.7     0.7     0.9     1.1     1.1
    Estimated Outlays...........     0.0     0.2     0.3     0.4     0.5     0.7     0.7     0.9     1.1     1.1

                                  CHANGES IN SPENDING SUBJECT TO APPROPRIATION

Estimated Authorization Level...     0.1     0.1     0.2     0.2     0.2     0.2     0.2     0.2     0.2     0.2
Estimated Outlays...............     0.1     0.1     0.2     0.2     0.2     0.2     0.2     0.2     0.2    0.2
----------------------------------------------------------------------------------------------------------------
Note.--Components may not add to totals because of rounding.

Basis of estimate

    For this estimate, CBO assumes that H.R. 22 will be enacted 
near the start of fiscal year 2006. For direct spending, CBO 
estimates that enacting the bill would result in on-budget 
savings of $35.7 billion and off-budget costs of $41.6 billion 
over the 2006-2015 period, for a net cost to the unified budget 
of $5.9 billion over the 10-year period. In addition, we 
estimate that implementing H.R. 22 would cost about $1.6 
billion over the 2006-2015 period, assuming appropriation of 
the necessary amounts, mostly to fund the USPS Office of the 
Inspector General.
            Background
    The following paragraphs present background information 
relating to the major provisions of H.R. 22, mostly for postal 
finances affected by the bill.
    Budgetary Treatment of USPS. Although the Postal Service is 
a federal agency, its financial operations are classified as 
off-budget. Despite this treatment, federal budget documents 
present the net income (gross income minus expenses) of the 
agency in the unified budgetary totals for the federal 
government. The Postal Service is required by law to set 
postage rates to cover its full costs, although from year to 
year its net income may be positive or negative. In fiscal year 
2004, the Postal Service generated $69.6 billion in 
collections, mostly from postage and user fees, and had $65.5 
billion in expenses, for a net cash surplus of $4.1 billion in 
that year. CBO projects that the USPS will end 2005 with a cash 
surplus of $3.8 billion.
    USPS and Federal Retirement Plans. Postal Service employees 
participate in the federal government's two main defined 
benefit pension programs. Those workers initially hired prior 
to 1984 are covered by the Civil Service Retirement System 
(CSRS) while those initially hired after 1983, as well as 
former CSRS workers who elected to change federal retirement 
plans in 1987 or 1998, participate in the Federal Employees' 
Retirement System (FERS). In 2004, about 25 percent of the USPS 
workforce was covered by CSRS, and the rest were under FERS.
    The Postal Service and its employees each make payroll 
contributions toward the civilian retirement system (CSRS and 
FERS). Unlike other agencies, the agency contribution rate for 
most CSRS employees is 17.4 percent of basic pay (most other 
agencies contribute 7 percent), while the employee contribution 
rate is 7 percent.\1\ For FERS employees, the agency 
contribution rate for most employees is 10.7 percent, while the 
employee rate is 0.8 percent, plus Social Security payroll 
taxes on both employers and employees. Workers in CSRS receive 
generally higher benefits than those in FERS, but unlike FERS, 
those in CSRS do not participate in Social Security and do not 
receive agency contributions toward the Thrift Savings Plan. In 
addition to its payroll contributions, the Postal Service also 
makes annual amortization payments toward an unfunded liability 
within CSRS. In 2004, that payment was about $250 million.
---------------------------------------------------------------------------
    \1\ P.L. 108-18 increased the contribution rate the Postal Service 
pays for its CSRS employees from 7 percent to 17.4 percent. That 
legislation also eliminated a series of amortization payments the 
Postal Service was required to make for unfunded CSRS liabilities. For 
more details, see CBO's cost estimates of the Postal Civil Service 
Retirement System Funding Reform Act of 2003 (S. 380 and H.R. 735 from 
the 108th Congress). These estimates are posted on www.cbo.gov.
---------------------------------------------------------------------------
    USPS and Federal Health Benefits. The Postal Service also 
pays a portion of health care premiums for currently retired 
USPS employees who are eligible to participate in the Federal 
Employees Health Benefits (FEHB) program. Currently, there are 
over 400,000 Postal Service retirees who participate in the 
FEHB program. On average, the Postal Service currently pays 
about 45 percent of the health care premiums for its retirees. 
Retirees pay about 30 percent of their FEHB premiums with 
general revenues accounting for the remaining amount, roughly 
25 percent. In 2004, the Postal Service paid $1.3 billion to 
FEHB for premiums for current retirees.
    USPS Escrow Fund. Starting in fiscal year 2006, the Postal 
Service will be required under current law to begin holding 
funds in an escrow account equal to the difference between what 
the Postal Service currently pays toward CSRS and what it would 
have paid for CSRS benefits prior to the enactment P.L. 108-18. 
Under current law, CBO estimates the Postal Service will need 
to hold in escrow nearly $3 billion in 2006 and $43 billion 
over the 2006-2015 period. H.R. 22 would eliminate the 
requirement that USPS collect and hold such funds in escrow.
            Effects on the unified budget
    H.R. 22 would not affect how much the federal government 
spends on pension or health benefits for USPS retirees. 
However, by increasing how much the Postal Service pays to 
finance those benefits and by eliminating the current-law 
escrow requirements, the bill would increase future budget 
deficits as measured by the unified federal budget.
    Off-budget payments made by the Postal Service for CSRS and 
FEHB are transfers to on-budget federal accounts, and are 
counted as offsetting receipts (a credit against direct 
spending). Eliminating the USPS transfer to CSRS would reduce 
on-budget offsetting receipts by $11.7 billion over the 2006-
2015 period. Under the bill, that reduction would be more than 
offset by a $47.4 billion increase in on-budget offsetting 
receipts paid by the Postal Service for the new health benefits 
fund. Thus, the bill would increase on-budget offsetting 
receipts by $35.7 billion over the 2006-2015 period.
    The collection of funds to be held in escrow by the Postal 
Service is recorded as an off-budget offsetting receipt (i.e., 
simply reflecting the payment by the USPS into escrow). 
Eliminating the requirement to fund the escrow account would 
allow the USPS to pay down debt, increase spending for capital 
improvements or other projects, postpone or diminish future 
rate increases, or some combination of these activities. CBO 
estimates that this provision would increase off-budget 
spending by $43.2 billion over the 2006-2015 period. Making the 
costs of the PRC and the USPS Office of the Inspector General 
subject to appropriation would reduce direct spending by the 
Postal Service by $1.6 billion over the next 10 years.
    The combined effect of the $35.7 billion net increase in 
on-budget receipts, the $43.2 billion reduction in off-budget 
offsetting receipts, and a $1.6 billion reduction in USPS 
direct spending would produce a $5.9 billion cost to the 
unified budget deficit over the 2006-2015 period. Those effects 
are presented in Table 2 and explained in more detail below.

                           TABLE 2.--ESTIMATED CHANGES IN DIRECT SPENDING FOR H.R. 22
----------------------------------------------------------------------------------------------------------------
                                                 By fiscal year, outlays in billions of dollars--
                                 -------------------------------------------------------------------------------
                                   2006    2007    2008    2009    2010    2011    2012    2013    2014    2015
----------------------------------------------------------------------------------------------------------------
                                           CHANGES IN DIRECT SPENDING

        On-Budget Effects

Civil Service Retirement System.     1.8     1.7     1.6     1.4     1.3     1.1     1.0     0.8     0.6     0.4
Postal Service Retiree Health       -4.7    -4.7    -4.7    -4.7    -4.7    -4.7    -4.7    -4.8    -4.8    -4.8
 Benefits Fund net of retiree
 premium payments to FEHB a.....
                                 -------------------------------------------------------------------------------
    Total On-Budget Effects.....    -2.9    -3.0    -3.1    -3.3    -3.4    -3.6    -3.8    -4.0    -4.2    -4.4
                                 ===============================================================================
       Off-Budget Effects

Eliminate Escrow Account........     3.1     3.3     3.6     3.8     4.1     4.4     4.6     5.0     5.4     5.7
Funding for PRC and USPS            -0.1    -0.1    -0.2    -0.2    -0.2    -0.2    -0.2    -0.2    -0.2    -0.2
 Inspector General Office Costs
 Subject to Appropriation.......
                                 -------------------------------------------------------------------------------
Total Off-Budget Effects........     2.9     3.2     3.5     3.6     3.9     4.3     4.5     4.9     5.3     5.6
                                 ===============================================================================
        Total Unified Budget         0.0     0.2     0.3     0.4     0.5     0.7     0.7     0.9     1.1     1.1
         Effects................
----------------------------------------------------------------------------------------------------------------
           Memorandum
Payments from the Postal Service    -5.2    -6.7    -7.0    -7.3    -7.6    -7.9    -8.2    -8.6    -9.0    -9.4
 received by PSRHBF.............
FEHB premiums paid from PSRHBF..     0.4     2.0     2.3     2.6     2.9     3.2     3.5     3.8     4.2     4.6
                                 -------------------------------------------------------------------------------
    Net outlays of PSRHBF.......    -4.7    -4.7    -4.7    -4.7    -4.7    -4.7    -4.7    -4.8    -4.8   -4.8
----------------------------------------------------------------------------------------------------------------
a. Starting in July 2006, CBO assumes that payments of FEHB premiums for Postal Service retirees would be paid
  out of the Postal Service Retiree Health Benefits Fund instead of being paid directly by the Postal Service as
  under current law. The bill would have no effect on spending by the FEHB program for health benefits for
  Postal Service annuitants.
NotesEHB = Federal Employees Health Benefits program; PSRHBF = Postal Service Retiree Health Benefits Fund; PRC
  = Postal Regulatory Commission; USPS = United States Postal Service.
Components may not add to totals because of rounding.
Amounts in the table represent net changes in offsetting receipts, which are recorded in the budget as changes
  in direct spending. A positive sign indicates lower offsetting receipts, thus an increase in outlays; negative
  numbers represent increased offsetting receipts, or a reduction in net outlays.

            On-budget effects (direct spending)
    CBO estimates the on-budget effect of the pension and 
health care provisions in H.R. 22 would be a net increase in 
offsetting receipts of $2.9 billion in 2006, $15.8 billion over 
the 2006-2010 period, and $35.7 billion over the 2006-2015 
period. That increase in on-budget collections (i.e., reduction 
in direct spending) would come from increased transfers (off-
budget outlays) coming from the USPS. (The off-budget effects 
are discussed in the following section.)
    Civil Service Retirement Contributions. H.R. 22 would 
change the way the Postal Service finances retirement benefits 
for current and retired employees. Starting in October 2005, 
the bill would transfer financial responsibility for military 
service credits earned by Postal Service employees and retirees 
participating in CSRS from the Postal Service to the Department 
of the Treasury. Military service credits represent time served 
in the U.S. military that is credited toward benefits under the 
civilian retirement system. Most federal agencies are not 
responsible for the cost to the pension system of the military 
service credits incurred by their CSRS employees, but P.L. 108-
18 transferred responsibility for military service credits from 
the Treasury to the Postal Service beginning in June 2004.
    The Office of Personnel Management (OPM) estimates that 
transferring responsibility for military service credits from 
the Postal Service back to the Treasury would cause the Postal 
Service to have overfunded its obligation to CSRS by about 
$20.3 billion through September 2005.\2\ Consequently, under 
H.R. 22 the Postal Service would no longer be obligated to make 
either agency contributions or any further annual amortization 
payments for CSRS. (Employee contributions would continue at 7 
percent of basic pay and retirement benefits under CSRS would 
not change.)
---------------------------------------------------------------------------
    \2\ This overfunding, which is calculated on a net-present-value 
basis, represents an estimate of the total amount of money the Postal 
Service will have contributed toward CSRS from 1971 through September 
30, 2005, minus the agency's CSRS liabilities if USPS bears no 
financial responsibility for the pension costs associated with military 
service credits. The projected overfunding is due primarily to larger-
than-expected returns on assets held in the CSRDF.
---------------------------------------------------------------------------
    Spending by the Postal Service--including amounts paid into 
other federal accounts--is considered off-budget spending. 
However, the Civil Service Retirement and Disability Fund 
(CSRDF) is an on-budget account, so the amounts the CSRDF 
collects from the PostalService are on-budget offsetting 
receipts. Reducing payments the Postal Service makes to the CSRDF would 
result in a reduction in off-budget spending and a reduction in on-
budget offsetting receipts. CBO estimates transferring responsibility 
for military service credits, and the attendant reduction in CSRS 
contributions such a change would bring, would reduce onbudget receipts 
by $1.8 billion in 2006 and $11.7 billion over the 2006-2015 period. 
Although the Treasury Department would then be responsible for the 
costs associated with those pension liabilities under the bill, the 
Treasury payment and receipt by CSRDF are both on-budget 
intragovernmental transactions. That is, the bill would replace one 
intragovernmental transfer with another. Instead of a transfer from the 
off-budget Postal Service to the on-budget CSRDF, there would be a 
transfer from the Treasury to the CSRDF.
    Postal Service Retiree Health Benefits Fund. H.R. 22 also 
would change the way the Postal Service finances its share of 
the cost of providing health care to retirees. Instead of 
directly paying a portion of the health premiums incurred by 
current retirees each year, the USPS would begin paying for 
estimated costs of retiree health care as such costs are 
accrued by current workers. Starting in 2006, H.R. 22 would 
require the USPS to make payments equal to the annual increase 
in retiree health care liabilities accrued by current 
employees. These payments would be deposited into a new on-
budget account, the Postal Service Retiree Health Benefits Fund 
(PSRHBF), which would earn interest at the same rate as the 
CSRDF. CBO currently projects that the CSRDF fund will earn 
about 5.75 percent next year. The Postal Service's share of 
health care premiums for current retirees would be paid out of 
the PSRHBF as soon as adequate funds are available in the 
account to do so.
    Under H.R. 22, any overfunding toward CSRS liabilities 
(after financial responsibility for military service credits 
reverts to the Treasury) would be transferred from the CSRDF to 
the PSRHBF by June 30, 2006. Based on information provided by 
OPM, CBO anticipates that the transfer to the new fund would 
total $21.2 billion and would occur in June 2006. This amount 
reflects the $20.3 billion in estimated CSRS overfunding plus 
interest that would accrue between the end of the valuation 
period in September 2005 and when CBO assumes the asset 
transfer would take place in June 2006.
    Under the bill, the Postal Service also would pay annual 
interest costs on the unfunded liabilities for health care 
costs of both current and future retirees. The unfunded 
liability would be the difference between the assets held in 
the PSRHBF and the net present value of accrued liabilities 
projected for retiree health care. The bill would direct OPM to 
compute the required prefunding and interest payments after 
consultation with the Postal Service, subject to review by the 
PRC. The bill specifies that payments would be made at the end 
of each fiscal year.
    Based on information provided by OPM and using CBO's 
current projections of long-term interest rates, CBO 
anticipates the net present value of the unfunded liability for 
the health care costs of retirees would amount to about $49 
billion at the end of 2006 and remain roughly at that level 
through the end of 2015. CBO estimates that payments by the 
Postal Service for prefunding health care costs of retirees and 
interest on the remaining unfunded liability would be $5.2 
billion in 2006 (net of the 2006 premium adjustment described 
below), $33.8 billion over the 2006-2010 period, and $76.8 
billion over the 2006-2015 period. Those amounts could change 
significantly if future rates are much different than currently 
projected by CBO.
    For fiscal year 2006, H.R. 22 would reduce the initial 
prefunding and interest payments otherwise due at the end of 
the year under the bill. The reduction would reflect all 
contributions directly paid to the FEHB program by the Postal 
Service in fiscal year 2006 for its share of premiums for 
current annuitants--about $1.3 billion in that year. (Such 
contributions would be made by June 30, 2006, prior to the 
transfer of assets from the CSRDF into the PSRHBF.) Before 
applying the offset, CBO estimates that the total payments 
required under the bill for prefunding retiree health costs and 
interest on the remaining unfunded liability would be $6.5 
billion in 2006. The final payment required under the bill, net 
of the adjustment for specified 2006 premium contributions, 
would be $5.2 billion in 2006 as stated above.
    CBO expects that the transfer of $21.2 billion from the 
CSRDF to the PSRHBF resulting from the shift in responsibility 
for military service credits would occur in June 2006. 
Therefore, the Postal Service would cease making payments under 
current law for its share of FEHB premiums for annuitants 
beginning in July 2006; with those premium payments instead 
being drawn from the PSRHBF. (As mentioned earlier, the bill 
also would direct the Postal Service to deduct all fiscal year 
2006 contributions toward its share of health premiums for 
current retirees made prior to July 2006 from initial 
prefunding and interest payments otherwise due under the bill 
for fiscal year 2006.) CBO estimates that change in the funding 
mechanism for retiree health benefits would reduce off-budget 
payments by the Postal Service for FEHB premiums by $0.4 
billion in 2006 (which reflects premium payments, under current 
law, for the last three months of 2006), $10.2 billion over the 
2006-2010 period, and $29.4 billion over the 2006-2015 period. 
On-budget payments for those amounts would then be transferred 
from the PSRHBF to the FEHB program to pay the Postal Service's 
share of health care costs for retirees.
    The bill would require a minimum level of prefunding by the 
Postal Service through 2015, after accounting for disbursements 
for health premiums from the PSRHBF. To achieve the annual or 
cumulative prefunding target, payments from the Postal Service 
to the PSRHBF--net of premiums paid by the PSRHBF--must total 
at least two-thirds of the amount the Postal Service would have 
paid toward CSRS prior to the enactment of P.L. 108-18. If the 
threshold is not met, additional prefunding payments would be 
required to make up the shortfall. Those payments also could be 
used to reduce postal debt (up to$3 billion) in lieu of 
contributions to the fund. The requirement could be waived completely 
by the PRC under certain conditions. CBO anticipates that the threshold 
established under the bill would be met and no additional payments 
would be required through 2015.
    Health premiums paid by the Postal Service for FEHB and any 
payments that would be made into the new PSRHBF would be 
considered on-budget offsetting receipts. CBO estimates the 
increase in on-budget receipts as a result of changes in how 
the Postal Service finances its health care obligations would 
be $4.7 billion in 2006, $23.6 billion over the 2006-2010 
period, and $47.4 billion over the 2006-2015 period.
            Off-budget effects (direct spending)
    CBO estimates that enacting H.R. 22 would result in net 
off-budget costs $2.9 billion in fiscal year 2006, $17.2 
billion over the 2006-2010 period, and $41.6 billion over the 
2006-2015 period. Those amounts reflect the effects of allowing 
the Postal Service to increase other spending, reduce postal 
rates, or some combination of these actions because the bill 
would eliminate the requirement for the Postal Service to fund 
the escrow account. The net costs also reflect off-budget 
savings from a provision in the bill to make the costs of the 
PRC and the USPS Office of the Inspector General subject to 
appropriation, thus reducing direct spending by about $1.6 
billion over the next 10 years. The bill contains many other 
provisions that could affect USPS cash flows in each year, but 
we estimate they would not have a significant net effect on the 
USPS over the long term.
    Elimination of Escrow Fund. P.L. 108-18 permanently reduced 
payments by the USPS to the CSRDF. As a result of that act, 
USPS payments to the CSRDF declined by $2.5 billion to $5.5 
billion annually, beginning in 2003. For fiscal years starting 
in 2006, P.L. 108-18 requires that savings resulting from 
reduced payments to the CSRDF be considered an operating 
expense of the Postal Service and held in escrow, remaining 
unavailable for obligation unless authorized by subsequent 
legislation.
    H.R. 22 would amend P.L. 108-18 to eliminate the escrow 
fund requirement. As a result of this provision, the Postal 
Service could lower rates and thus reduce its revenues from the 
levels expected under current law, or maintain rates and 
increase spending, or some combination of these actions. The 
net outlays of the Postal Service would increase because 
collections would not be deposited in escrow. CBO estimates 
that eliminating the escrow requirement would increase net off-
budget spending by about $3.1 billion in 2006, $17.9 billion 
over the 2006-2010 period, and $43.2 billion over the 2006-2015 
period. Much of the spending would go toward making new 
payments to the on-budget account for health care costs.
    Make Cost of PRC and USPS IG Subject to Appropriation. 
Under current law, the PRC and the Inspector General of the 
Postal Service are funded from the Postal Service Fund without 
annual Congressional appropriation. In total, these offices 
spent about $140 million in 2004. H.R. 22 would authorize the 
appropriation of such sums as may be necessary from the Postal 
Service Fund for these offices. Thus, enacting this legislation 
would reduce direct spending--and therefore, increase spending 
subject to appropriation--by about $140 million annually 
beginning in fiscal year 2006.
    Changes to USPS Rate-Setting Procedures. Under the bill the 
Postal Service would be directed to define the cost basis for 
the different products and services it supplies. These products 
and services would broadly be categorized as market-dominant 
products and competitive products. Different rate-setting 
procedures would apply to these different categories of 
products and services.
    Market-Dominant Products. Under H.R. 22, market-dominant 
products would include: first class mail, special services, 
periodicals, standard mail, media mail, library mail, and bound 
printed matter.
    H.R. 22 would require the PRC to establish, within two 
years of enactment, a new system for regulating postage rates 
for market-dominant products. The bill would permit the new 
system to involve price caps, revenue targets, or other forms 
of incentive or cost-of-service regulation. However, the 
legislation would mandate that the average rate for any market 
dominant product could not rise more than the annual increase 
in the Consumer Price Index (CPI), unless a larger increase 
would be necessary to ensure the viability of the Postal 
Service.
    Since 1970, increases in postage rates have largely tracked 
the rate of inflation. Over the past 10 years, rates were 
increased in 1995, 1999, 2001, and 2002 as a result of rate 
cases, and the Postal Service has begun preparation for a rate 
increase in 2006. Under the bill, we expect that the Postal 
Service would increase rates for market-dominant mail services 
more frequently than under current law, but by smaller 
increments (as limited by the CPI). Over the long term, CBO 
does not expect that enacting H.R. 22 would significantly 
change the revenues from market-dominant products that the 
Postal Service would be expected to receive under current law.
    Competitive Products. Under H.R. 22, competitive products 
would include the following: priority mail, express mail, 
mailgrams, international mail, and parcel post. Currently, the 
competitive products contribute less than 15 percent of total 
postal revenues.
    H.R. 22 would direct the PRC to prohibit subsidizing 
competitive products by market dominant products, ensure that 
each competitive product covers its attributable costs, and 
ensure that all competitive products collectively make a 
reasonable contribution to the institutional costs of the 
Postal Service. After these requirements have been implemented, 
the USPS could change rates for competitive products without 
consulting the PRC, as long as the cost coverage requirements 
are met. The Postal Service, however, would have to provide 
public notice and justification of changes in rates.
    In addition, H.R. 22 would require the Postal Service to 
establish a new off-budget fund, the Competitive Products Fund, 
solely for revenues and expenditures associated with 
competitive products. We expect that it could be difficult to 
differentiate postal expenses related only to competitive 
products, as USPS uses the same employees and facilities to 
handle both market dominant and competitive products.
    CBO cannot predict the bill's effect on Postal Service 
revenues from competitive products because the agency could set 
and change prices with few restrictions, although we would 
expect that yearly cash flows under the bill would differ from 
those estimated under current law. CBO also cannot predict how 
successfully the Postal Service might compete in the open 
market. However, the highly competitive nature of the mailing 
industry would tend to keep prices and revenues down, while the 
labor-intensive cost structure of the USPS would maintain 
upward pressure on expenses. Thus, over the long term under 
this legislation, CBO expects the Postal Service to attempt to 
recover its costs and break even as it did before the enactment 
of P.L. 108-18.
    Other Off-Budget Effects. H.R. 22 would make many other 
changes to the laws governing the Postal Service, the PRC, and 
the delivery of mail and other postal products. Some of these 
provisions, such as the expansion of USPS contracting authority 
for the interstate air transportation of mail, would yield 
savings. Other provisions, including the requirement for 
additional USPS reports and the establishment of an inspector 
general for the PRC, would increase costs. In total, CBO does 
not expect the net effects of these provisions to be 
significant.
            Spending subject to appropriation
    H.R. 22 would authorize the appropriation of such sums as 
may be necessary, out of the Postal Service Fund, for the PRC 
and the Inspector General of the Postal Service. (Currently, 
these offices are funded out the Postal Service Fund without 
Congressional action.) Beginning in 2006, this provision would 
entail about $140 million a year in spending, subject to 
appropriation of the necessary amounts. (Spending after 2006 
would increase to reflect anticipated inflation.) Enacting the 
bill would reduce direct spending by the same amounts. Spending 
on these activities would likely still be considered off-
budget, since funds would come from the Postal Service Fund.
    In addition, H.R. 22 would require OPM to make actuarial 
computations related to the CSRS and PSRHBF trust funds and 
would increase OPM' s administrative workload to comply with 
the requirements under the bill. CBO estimates that such 
activities would cost less than $500,000 annually, assuming the 
availability of appropriated funds.
    Intergovernmental and private-sector impact: H.R. 22 
contains no intergovemmental or private-sector mandates as 
defined in UMRA and would impose no costs on state, local, or 
tribal governments.
    Estimate prepared by: Federal costs: Mark Grabowicz for 
USPS costs; Geoffrey Gerhardt for retirement costs; and Julia 
Christensen for health care costs; impact on state, local, and 
tribal governments: Sarah Puro; impact on the private sector: 
Paige Piper/Bach.
    Estimate approved by: Peter H. Fontaine, Deputy Assistant 
Director for Budget Analysis.

         Changes in Existing Law Made by the Bill, as Reported

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

TITLE 39, UNITED STATES CODE

           *       *       *       *       *       *       *

                             PART I--GENERAL

Chap.                                                               Sec.
1. Postal Policy and Definitions..................................   101
     * * * * * * *
5. Postal Regulatory Commission...................................   501

CHAPTER 1--POSTAL POLICY AND DEFINITIONS

           *       *       *       *       *       *       *

Sec. 101. Postal policy

  (a) * * *

           *       *       *       *       *       *       *

  (d) As an establishment that provides both market-dominant 
and competitive products, the Postal Service shall be subject 
to a high degree of transparency, including in its finances and 
operations, to ensure fair treatment of customers of the Postal 
Service's market-dominant products and companies competing with 
the Postal Service's competitive products.
  [(d)] (e) Postal rates shall be established to apportion the 
costs of all postal operations to all users of the mail on a 
fair and equitable basis.
  [(e)] (f) In determining all policies for postal services, 
the Postal Service shall give the highest consideration to the 
requirement for the most expeditious collection, 
transportation, and delivery of important letter mail.
  [(f)] (g) In selecting modes of transportation, the Postal 
Service shall give highest consideration to the prompt and 
economical delivery of all mail and shall make a fair and 
equitable distribution of mail business to carriers providing 
similar modes of transportation services to the Postal Service. 
Modern methods of transporting mail by containerization and 
programs designed to achieve overnight transportation to the 
destination of important letter mail to all parts of the Nation 
shall be a primary goal of postal operations.
  [(g)] (h) In planning and building new postal facilities, the 
Postal Service shall emphasize the need for facilities and 
equipment designed to create desirable working conditions for 
its officers and employees, a maximum degree of convenience for 
efficient postal services, proper access to existing and future 
air and surface transportation facilities, and control of costs 
to the Postal Service.

Sec. 102. Definitions

  As used in this title--
          (1) * * *

           *       *       *       *       *       *       *

          (3) ``Governors'' means the 9 members of the Board of 
        Governors appointed by the President, by and with the 
        advice and consent of the Senate, under section 202(a) 
        of this title; [and]
          [(4) ``Inspector General'' means the Inspector 
        General appointed under section 202(e) of this title;]
          (4) ``Inspector General'' means the Inspector General 
        of the United States Postal Service, appointed under 
        section 3(a) of the Inspector General Act of 1978;
          (5) ``postal service'' means the carriage of letters, 
        printed matter, or mailable packages, including 
        acceptance, collection, processing, delivery, or other 
        functions supportive or ancillary thereto;
          (6) ``product'' means a postal service with a 
        distinct cost or market characteristic for which a rate 
        or rates are, or may reasonably be, applied;
          (7) ``rates'', as used with respect to products, 
        includes fees for postal services;
          (8) ``market-dominant product'' or ``product in the 
        market-dominant category of mail'' means a product 
        subject to subchapter I of chapter 36;
          (9) ``competitive product'' or ``product in the 
        competitive category of mail'' means a product subject 
        to subchapter II of chapter 36;
          (10) ``Consumer Price Index'' means the Consumer 
        Price Index for All Urban Consumers published monthly 
        by the Bureau of Labor Statistics of the Department of 
        Labor; and
          (11) ``year'', as used in chapter 36 (other than 
        subchapters I and VI thereof), means a fiscal year.

CHAPTER 2--ORGANIZATION

           *       *       *       *       *       *       *

Sec. 202. Board of Governors

  (a)(1) The exercise of the power of the Postal Service shall 
be directed by a Board of Governors composed of 11 members 
appointed in accordance with this section. Nine of the members, 
to be known as Governors, shall be appointed by the President, 
by and with the advice and consent of the Senate, not more than 
5 of whom may be adherents of the same political party. The 
Governors shall elect a Chairman from among the members of the 
Board. [The Governors shall be chosen to represent the public 
interest generally, and shall not be representatives of 
specific interests using the Postal Service, and may be removed 
only for cause.] The Governors shall represent the public 
interest generally, and 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) of substantial size; for purposes of this 
sentence, an organization or corporation shall be considered to 
be of substantial size if it employs at least 50,000 employees. 
The Governors shall not be representatives of specific 
interests using the Postal Service, and may be removed only for 
cause. Each Governor shall receive a salary of $30,000 a year 
plus $300 a day for not more than 42 days of meetings each year 
and shall be reimbursed for travel and reasonable expenses 
incurred in attending meetings of the Board. Nothing in the 
preceding sentence shall be construed to limit the number of 
days of meetings each year to 42 days.
  (2) In selecting the individuals described in paragraph (1) 
for nomination for appointment to the position of Governor, the 
President should consult with the Speaker of the House of 
Representatives, the minority leader of the House of 
Representatives, the majority leader of the Senate, and the 
minority leader of the Senate.
  (b)(1) The terms of the 9 Governors shall be 9 years, except 
that the terms of the 9 Governors first taking office shall 
expire as designated by the President at the time of 
appointment, 1 at the end of 1 year, 1 at the end of 2 years, 1 
at the end of 3 years, 1 at the end of 4 years, 1 at the end of 
5 years, 1 at the end of 6 years, 1 at the end of 7 years, 1 at 
the end of 8 years, and 1 at the end of 9 years, following the 
appointment of the first of them. Any Governor appointed to 
fill a vacancy before the expiration of the term for which his 
predecessor was appointed shall serve for the remainder of such 
term. A Governor may continue to serve after the expiration of 
his term until his successor has qualified, but not to exceed 
one year.
  (2)(A) Notwithstanding any other provision of this section, 
in the case of the office of the Governor the term of which is 
the first one scheduled to expire at least 4 months after the 
date of the enactment of this paragraph--
          (i) such office may not, in the case of any person 
        commencing service after that expiration date, be 
        filled by any person other than an individual chosen 
        from among persons nominated for such office with the 
        unanimous concurrence of all labor organizations 
        described in section 206(a)(1); and
          (ii) instead of the term that would otherwise apply 
        under the first sentence of paragraph (1), the term of 
        any person so appointed to such office shall be 3 
        years.
  (B) Except as provided in subparagraph (A), an appointment 
under this paragraph shall be made in conformance with all 
provisions of this section that would otherwise apply.

           *       *       *       *       *       *       *

  [(e)(1) The Governors shall appoint and shall have the power 
to remove the Inspector General.
  [(2) The Inspector General shall be appointed--
          [(A) for a term of 7 years;
          [(B) without regard to political affiliation; and
          [(C) solely on the basis of integrity and 
        demonstrated ability in accounting, auditing, financial 
        analysis, law, management analysis, public 
        administration, or investigations.
  [(3) The Inspector General may at any time be removed upon 
the written concurrence of at least 7 Governors, but only for 
cause. Nothing in this subsection shall be considered to exempt 
the Governors from the requirements of section 8G(e) of the 
Inspector General Act of 1978.]

           *       *       *       *       *       *       *

                      CHAPTER 4--GENERAL AUTHORITY

Sec.
401. General powers of the Postal Service.
     * * * * * * *
404a. Specific limitations.

           *       *       *       *       *       *       *

Sec. 401. General powers of the Postal Service

  [The] Subject to the provisions of section 404a, the Postal 
Service shall have the following general powers:
          (1) * * *
          [(2) to adopt, amend, and repeal such rules and 
        regulations as it deems necessary to accomplish the 
        objectives of this title;]
          (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. 404. Specific powers

  (a) [Without] Subject to the provisions of section 404a, but 
otherwise without limitation of the generality of its powers, 
the Postal Service shall have the following specific powers, 
among others:
          (1) * * *

           *       *       *       *       *       *       *

          [(6) to provide, establish, change, or abolish 
        special nonpostal or similar services;]
          [(7)] (6) to investigate postal offenses and civil 
        matters relating to the Postal Service;
          [(8)] (7) to offer and pay rewards for information 
        and services in connection with violation of the postal 
        laws, and, unless a different disposal is expressly 
        prescribed, to pay one-half of all penalties and 
        forfeitures imposed for violations of law affecting the 
        Postal Service, its revenues, or property, to the 
        person informing for the same, and to pay the other 
        one-half into the Postal Service Fund; and
          [(9)] (8) to authorize the issuance of a substitute 
        check for a lost, stolen, or destroyed check of the 
        Postal Service.
  (b) Except as otherwise provided, the Governors are 
authorized to establish reasonable and equitable classes of 
mail and reasonable and equitable rates of postage and fees for 
postal services in accordance with the provisions of chapter 
36. Postal rates and fees shall be reasonable and equitable and 
sufficient to enable the Postal Service, under best practices 
of honest, efficient, and economical management, to maintain 
and continue the development of postal services of the kind and 
quality adapted to the needs of the United States.
  (c) The Postal Service shall maintain one or more classes of 
mail for the transmission of letters sealed against inspection. 
The rate for each such class shall be uniform throughout the 
United States, its territories, and possessions. One such class 
shall provide for the most expeditious handling and 
transportation afforded mail matter by the Postal Service. No 
letter of such a class of domestic origin shall be opened 
except under authority of a search warrant authorized by law, 
or by an officer or employee of the Postal Service for the sole 
purpose of determining an address at which the letter can be 
delivered, or pursuant to the authorization of the addressee.
  [(b)] (d)(1) * * *

           *       *       *       *       *       *       *

  (5) A determination of the Postal Service to close or 
consolidate any post office may be appealed by any person 
served by such office to the [Postal Rate] Postal Regulatory 
Commission within 30 days after such determination is made 
available to such person under paragraph (3). The Commission 
shall review such determination on the basis of the record 
before the Postal Service in the making of such determination. 
The Commission shall make a determination based upon such 
review no later than 120 days after receiving any appeal under 
this paragraph. The Commission shall set aside any 
determination, findings, and conclusions found to be--
          (A) * * *

           *       *       *       *       *       *       *

  (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).
  (e) Nothing in this title shall be considered to permit or 
require that the Postal Service provide any special nonpostal 
or similar services, except that nothing in this subsection 
shall prevent the Postal Service from providing any special 
nonpostal or similar services provided by the Postal Service as 
of January 4, 2005.

Sec. 404a. Specific Limitations

  (a) Except as specifically authorized by law, the Postal 
Service may not--
          (1) establish any rule or regulation (including any 
        standard) the effect of which is to preclude 
        competition or establish the terms of competition 
        unless the Postal Service demonstrates that the 
        regulation does not create an unfair competitive 
        advantage for itself or any entity funded (in whole or 
        in part) by the Postal Service;
          (2) compel the disclosure, transfer, or licensing of 
        intellectual property to any third party (such as 
        patents, copyrights, trademarks, trade secrets, and 
        proprietary information); or
          (3) obtain information from a person that provides 
        (or seeks to provide) any product, and then offer any 
        product or service that uses or is based in whole or in 
        part on such information, without the consent of the 
        person providing that information, unless substantially 
        the same information is obtained (or obtainable) from 
        an independent source or is otherwise obtained (or 
        obtainable).
  (b) The Postal Regulatory Commission shall prescribe 
regulations to carry out this section.
  (c) Any party (including an officer of the Commission 
representing the interests of the general public) who believes 
that the Postal Service has violated this section may bring a 
complaint in accordance with section 3662.

           *       *       *       *       *       *       *

[Sec. 407. International Postal Arrangements.

  [(a)(1) The Secretary of State shall have primary 
responsibility for formulation, coordination and oversight of 
policy with respect to United States participation in the 
Universal Postal Union, including the Universal Postal 
Convention and other Acts of the Universal Postal Union, 
amendments thereto, and all postal treaties and conventions 
concluded within the framework of the Convention and such Acts.
  [(2) Subject to subsection (d), the Secretary may, with the 
consent of the President, negotiate and conclude treaties, 
conventions and amendments referred to in paragraph (1).
  [(b)(1) Subject to subsections (a), (c), and (d), the Postal 
Service may, with the consent of the President, negotiate and 
conclude postal treaties and conventions.
  [(2) The Postal Service may, with the consent of the 
President, establish rates of postage or other charges on mail 
matter conveyed between the United States and other countries.
  [(3) The Postal Service shall transmit a copy of each postal 
treaty or convention concluded with other governments under the 
authority of this subsection to the Secretary of State, who 
shall furnish a copy to the Public Printer for publication.
  [(c) The Postal Service shall not conclude any treaty or 
convention under the authority of this section or any other 
arrangement related to the delivery of international postal 
services that is inconsistent with any policy developed 
pursuant to subsection (a).
  [(d) In carrying out their responsibilities under this 
section, the Secretary and the Postal Service shall consult 
with such federal agencies as the Secretary or the Postal 
Service considers appropriate, private providers of 
international postal services, users of international postal 
services, the general public, and such other persons as the 
Secretary or the Postal Service considers appropriate.]

Sec. 407. International postal arrangements

  (a) It is the policy of the United States--
          (1) to promote and encourage communications between 
        peoples by efficient operation of international postal 
        services and other international delivery services for 
        cultural, social, and economic purposes;
          (2) to promote and encourage unrestricted and 
        undistorted competition in the provision of 
        international postal services and other international 
        delivery services, except where provision of such 
        services by private companies may be prohibited by law 
        of the United States;
          (3) to promote and encourage a clear distinction 
        between governmental and operational responsibilities 
        with respect to the provision of international postal 
        services and other international delivery services by 
        the Government of the United States and by 
        intergovernmental organizations of which the United 
        States is a member; and
          (4) to participate in multilateral and bilateral 
        agreements with other countries to accomplish these 
        objectives.
  (b)(1) The Secretary of State shall be responsible for 
formulation, coordination, and oversight of foreign policy 
related to international postal services and other 
international delivery services, and shall have the power to 
conclude 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 Government Reform of the House of 
        Representatives and the Committee on Governmental 
        Affairs of the Senate;
          (D) shall maintain appropriate liaison with both 
        representatives of the Postal Service and 
        representatives of users and private providers of 
        international postal services and other international 
        delivery services to keep informed of their interests 
        and problems, and to provide such assistance as may be 
        needed to ensure that matters of concern are promptly 
        considered by the Department of State or (if 
        applicable, and to the extent practicable) other 
        executive branch agencies; and
          (E) shall assist in arranging meetings of such public 
        sector advisory groups as may be established to advise 
        the Department of State and other executive branch 
        agencies in connection with international postal 
        services and international delivery services.
  (3) The Secretary of State shall establish an advisory 
committee (within the meaning of the Federal Advisory Committee 
Act) to perform such functions as the Secretary considers 
appropriate in connection with carrying out subparagraphs (A) 
through (D) of paragraph (2).
  (c)(1) Before concluding any treaty, convention, or amendment 
that establishes a rate or classification for a product subject 
to subchapter I of chapter 36, the Secretary of State shall 
request the Postal Regulatory Commission to submit a decision 
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 
a decision of the Commission adopted under paragraph (1), 
except if, or to the extent, the Secretary determines, by 
written order, that considerations of foreign policy or 
national security require modification of the Commission's 
decision.
  (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) 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 Bureau 
of Customs and Border Protection of the Department of Homeland 
Security and other appropriate Federal agencies shall apply the 
customs laws of the United States and all other laws relating 
to the importation or exportation of such shipments in the same 
manner to both shipments by the Postal Service and similar 
shipments by private companies.
  (2) For purposes of this subsection, the term ``private 
company'' means a private company substantially owned or 
controlled by persons who are citizens of the United States.
  (3) In exercising the authority pursuant to subsection (b) to 
conclude new treaties, conventions and amendments related to 
international postal services and to renegotiate such treaties, 
conventions and amendments, the Secretary of State shall, to 
the maximum extent practicable, take such measures as are 
within the Secretary's control to encourage the governments of 
other countries to make available to the Postal Service and 
private companies a range of nondiscriminatory customs 
procedures that will fully meet the needs of all types of 
American shippers. The Secretary of State shall consult with 
the United States Trade Representative and the Commissioner of 
Customs, Department of Homeland Security in carrying out this 
paragraph.
  (4) The provisions of this subsection shall take effect 6 
months after the date of the 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.

           *       *       *       *       *       *       *

Sec. 409. Suits by and against the Postal Service

  (a) [Except as provided in section 3628 of this title,] 
Except as otherwise provided in this title, the United States 
district courts shall have original but not exclusive 
jurisdiction over all actions brought by or against the Postal 
Service. Any action brought in a State court to which the 
Postal Service is a party may be removed to the appropriate 
United States district court under the provisions of chapter 89 
of title 28.

           *       *       *       *       *       *       *

  [(d) The Department of Justice shall furnish, under section 
411 of this title, the Postal Service such legal representation 
as it may require, but with the prior consent of the Attorney 
General the Postal Service may 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.
  [(e) 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.]
  (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 
competitive product, 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.
  (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 the 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 one 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.
  (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).

           *       *       *       *       *       *       *

Sec. 410. Application of other laws

  (a) * * *
  (b) The following provisions shall apply to the Postal 
Service:
          (1) * * *

           *       *       *       *       *       *       *

          (5) the following provisions of title 41:
                  (A) sections 35-45 (known as the Walsh-Healey 
                Act, relating to wages and hours); [and]
                  (B) chapter 6 (the Service Contract Act of 
                1965);
                  (C) the Anti-Kickback Act of 1986 (41 U.S.C. 
                51 and following), other than subsections (a) 
                and (b) of 7 and section 8 of that Act; and
                  (D) section 315 of the Federal Property and 
                Administrative Services Act of 1949 (41 U.S.C. 
                265) (relating to protecting contractor 
                employees from reprisal for disclosure of 
                certain information);

           *       *       *       *       *       *       *

  (e) The Postal Service shall develop and issue purchasing 
regulations that prohibit contract costs not allowable under 
section 5.2.5 of the United States Postal Service Procurement 
Manual (Publication 41), as in effect on July 12, 1995.

           *       *       *       *       *       *       *

                CHAPTER 5--POSTAL REGULATORY COMMISSION

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

Sec. 501. Establishment

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

Sec. 502. Commissioners

  (a) The Postal Regulatory Commission is composed of 5 
Commissioners, appointed by the President, by and with the 
advice and consent of the Senate. The Commissioners shall be 
chosen solely on the basis of their technical qualifications, 
professional standing, and demonstrated expertise in economics, 
accounting, law, or public administration, and may be removed 
by the President only for cause. Each individual appointed to 
the Commission shall have the qualifications and expertise 
necessary to carry out the 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) 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 (e).
  (c) One of the Commissioners shall be designated as Chairman 
by, and shall serve in the position of Chairman at the pleasure 
of, the President.
  (d) 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.
  (e) The Commissioners shall serve for terms of 6 years.

[Sec. 3603.] Sec. 503. Rules; regulations; procedures

  The [Postal Rate] Postal Regulatory Commission shall 
promulgate rules and regulations and establish procedures, 
subject to chapters 5 and 7 of title 5, and take any other 
action they deem necessary and proper to carry out their 
functions and obligations to the Government of the United 
States and the people as prescribed under this [chapter] title. 
Such rules, regulations, procedures, and actions shall not be 
subject to any change or supervision by the Postal Service. 
Such rules shall include procedures which balance, inter alia, 
the need for protecting due process rights and ensuring 
expeditious decision-making.

[Sec. 3604.] Sec. 504. Administration

  (a) The Chairman of the [Postal Rate] Postal Regulatory 
Commission shall be the principal executive officer of the 
Commission. The Chairman shall exercise or direct the exercise 
of all the executive and administrative functions of the 
Commission, including functions of the Commission with respect 
to (1) the appointment of personnel employed under the 
Commission, except that the appointment of heads of major 
administrative units under the Commission shall require the 
approval of a majority of the members of the Commission, (2) 
the supervision of the personnel employed under the Commission 
and the distribution of business among them and among the 
Commissioners, and (3) the use and expenditure of funds.

           *       *       *       *       *       *       *

  [(d)(1) The Commission shall periodically prepare and submit 
to the Postal Service a budget of the Commission's expenses, 
including, but not limited to, expenses for facilities, 
supplies, compensation, and employee benefits. The budget shall 
be considered approved--
          [(A) as submitted if the Governors fail to act in 
        accordance with subparagraph (B) of this paragraph; or
          [(B) as adjusted if the Governors holding office, by 
        unanimous written decision, adjust the total amount of 
        money requested in the budget.
Subparagraph (B) shall not be construed to authorize the 
Governors to adjust any item included within the budget.
  [(2) Expenses incurred under any budget approved under 
paragraph (1) of this subsection shall be paid out of the 
Postal Service fund established under section 2003 of this 
title.]
  (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.

           *       *       *       *       *       *       *

  (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--
          (A) issue subpoenas requiring the attendance and 
        presentation of testimony by, or the production of 
        documentary or other evidence in the possession of, any 
        covered person; and
          (B) order the taking of depositions and responses to 
        written interrogatories by a covered person.
The written concurrence of a majority of the Commissioners then 
holding office shall, with respect to each subpoena under 
subparagraph (A), be required in advance of its issuance.
  (3) In the case of contumacy or failure to obey a subpoena 
issued under this subsection, upon application by the 
Commission, the district court of the United States for the 
district in which the person to whom the subpoena is addressed 
resides or is served may issue an order requiring such person 
to appear at any designated place to testify or produce 
documentary or other evidence. Any failure to obey the order of 
the court may be punished by the court as a contempt thereof.
  (4) For purposes of this subsection, the term ``covered 
person'' means an officer, employee, agent, or contractor of 
the Postal Service.
  (g)(1) If the Postal Service determines that any document or 
other matter it provides to the Postal Regulatory Commission 
pursuant to 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 prevent the Commission from 
publicly disclosing relevant information in furtherance of its 
duties under this title if 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, as required by section 
101(d) of this title for financial transparency of a government 
establishment.
  (B) Paragraph (2) shall not prevent information from being 
furnished under any process of discovery established under this 
title 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 any information 
furnished under the preceding sentence.
  (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.

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

  The Postal Regulatory Commission shall designate an officer 
of the Postal Regulatory Commission in all public proceedings 
(such as developing rules, regulations, and procedures) who 
shall represent the interests of the general public.

CHAPTER 6--PRIVATE CARRIAGE OF LETTERS

           *       *       *       *       *       *       *

Sec. 601. Letters carried out of the mail

  (a) * * *
  [(b) The Postal Service may suspend the operation of any part 
of this section upon any mail route where the public interest 
requires the suspension.]
  (b) A letter may also be carried out of the mails when--
          (1) the amount paid for the private carriage of the 
        letter is at least the amount equal to 6 times the rate 
        then currently charged for the 1st ounce of a single-
        piece first class letter;
          (2) the letter weighs at least 12\1/2\ ounces; or
          (3) such carriage is within the scope of services 
        described by regulations of the 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, 2004) 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.

           *       *       *       *       *       *       *

PART II--PERSONNEL

           *       *       *       *       *       *       *

CHAPTER 10--EMPLOYMENT WITHIN THE POSTAL SERVICE

           *       *       *       *       *       *       *

Sec. 1001. Appointment and status

  (a) * * *

           *       *       *       *       *       *       *

  (d) Notwithstanding section 5533, 5535, or 5536 of title 5, 
or any other provision of law, any officer or employee of the 
Government of the United States is eligible to serve and 
receive pay concurrently as an officer or employee of the 
Postal Service (other than as a member of the Board or of the 
[Postal Rate] Postal Regulatory Commission) and as an officer 
or employee of any other department, agency, or establishment 
of the Government of the United States.

           *       *       *       *       *       *       *

Sec. 1002. Political recommendations

  (a) Except as provided in subsection (e) of this section, 
each appointment, promotion, assignment, transfer, or 
designation, interim or otherwise, of an officer or employee in 
the Postal Service (except a Governor or member of the [Postal 
Rate] Postal Regulatory Commission) shall be made without 
regard to any recommendation or statement, oral or written, 
with respect to any person who requests or is under 
consideration for such appointment, promotion, assignment, 
transfer, or designation, made by--
          (1) * * *

           *       *       *       *       *       *       *

Sec. 1003. Employment policy

  (a) Except as provided under [chapters 2 and 12 of this 
title, section 8G of the Inspector General Act of 1978, or 
other provision of law,] chapter 2 or 12 of this title, 
subsection (b) or (c) of this section, or any other provision 
of law, the Postal Service shall classify and fix the 
compensation and benefits of all officers and employees in the 
Postal Service. It shall be the policy of the Postal Service to 
maintain compensation and benefits for all officers and 
employees on a standard of comparability to the compensation 
and benefits paid for comparable levels of work in the private 
sector of the economy. No officer or employee shall be paid 
compensation at a rate in excess of the rate for level I of the 
Executive Schedule under section 5312 of title 5.
    (b) Compensation and benefits for all officers and 
employees serving in or under the Office of Inspector General 
of the United States Postal Service shall be maintained on a 
standard of comparability to the compensation and benefits paid 
for comparable levels of work in the [respective] other Offices 
of Inspector General of the various establishments named in 
section 11(2) of the Inspector General Act of 1978.
    (c) Compensation and benefits for all Postal Inspectors 
shall be maintained on a standard of comparability to the 
compensation and benefits paid for comparable levels of work in 
the executive branch of the Government outside of the Postal 
Service. As used in this subsection, the term ``Postal 
Inspector'' [included] includes any agent to whom any 
investigative powers are granted under section 3061 of title 
18.

           *       *       *       *       *       *       *

Sec. 1005. Applicability of laws relating to Federal employees

  (a) * * *

           *       *       *       *       *       *       *

  (d)(1) * * *
  (2) The provisions of [subsection (g) of section 5532,] 
subsections (i) and (l)(2) of section 8344[,] and subsections 
(f) and (i)(2) of section 8468 of title 5 shall apply with 
respect to the Postal Service. For purposes of so applying such 
provisions--
          (A) * * *

           *       *       *       *       *       *       *

CHAPTER 12--EMPLOYEE-MANAGEMENT AGREEMENTS

           *       *       *       *       *       *       *

Sec. 1207. Labor disputes

  (a) * * *
  (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 [direct the 
establishment of a factfinding panel consisting of 3 persons. 
For this purpose, he shall submit to the parties a list of not 
less than 15 names, from which list each party, within 10 days, 
shall select 1 person. The 2 so selected shall then choose from 
the list a third person who shall serve as chairman of the 
factfinding panel. If either of the parties fails to select a 
person or if the 2 members are unable to agree on the third 
person within 3 days, the selection shall be made by the 
Director. The factfinding panel shall issue after due 
investigation a report of its findings, with or without 
recommendations, to the parties no later than 45 days from the 
date the list of names is submitted.], 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 [90] 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 therefor, an 
arbitration board shall be established consisting of 3 members, 
[not members of the factfinding panel,] 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 [by the Director. If the parties do not agree on 
the framing of the issues to be submitted, the factfinding 
panel shall frame the issues and submit them to the arbitration 
board.] from a list of names provided by the Director. This 
list shall consist of not less than 9 names of arbitrators of 
nationwide reputation and professional stature, who are also 
members of the National Academy of Arbitrators, and whom the 
Director has determined are available and willing to serve.

           *       *       *       *       *       *       *

  (3) Costs of the arbitration board and [factfinding panel] 
mediation shall be shared equally by the Postal Service and the 
bargaining representative.
  (d) In the case of a bargaining unit whose recognized 
collective-bargaining representative does not have an agreement 
with the Postal Service, if the parties fail to reach agreement 
within 90 days of the commencement of collective bargaining, a 
[factfinding panel will be established] mediator shall be 
appointed in accordance with the terms of 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 of 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.

           *       *       *       *       *       *       *

           PART III--MODERNIZATION AND FISCAL ADMINISTRATION

Chap.                                                               Sec.
20. Finance.......................................................  2001
     * * * * * * *
[28. Strategic planning and performance management................ 2801]
2801rategic Planning and Performance Management.................

           *       *       *       *       *       *       *

                          CHAPTER 20--FINANCE

Sec.
2001. Definitions.
     * * * * * * *
2011. Provisions relating to competitive products.

Sec. 2001. Definitions

  As used in this chapter--
          (1) ``Fund'' means the Postal Service Fund 
        established by section 2003 of this chapter; [and]
          (2) ``Competitive Products Fund'' means the Postal 
        Service Competitive Products Fund established by 
        section 2011; and
          [(2)] (3) ``obligations'', when referring to debt 
        instruments issued by the Postal Service, means notes, 
        bonds, debentures, mortgages, and any other evidence of 
        indebtedness.

Sec. 2002. Capital of the Postal Service

  (a) * * *
  (b) The capital of the Postal Service at any time shall 
consist of its assets, including the balance in the [Fund,] 
Fund and the balance in the Competitive Products Fund, less its 
liabilities.

           *       *       *       *       *       *       *

Sec. 2003. The Postal Service Fund

  (a) There is established in the Treasury of the United States 
a revolving fund to be called the Postal Service Fund which 
shall be available to the Postal Service without fiscal-year 
limitation to carry out the purposes, functions, and powers 
authorized by this [title.] title (other than any of the 
purposes, functions, or powers for which the Competitive 
Products Fund is available).
  (b) [There] Except as otherwise provided in section 2011, 
there shall be deposited in the Fund, subject to withdrawal by 
check by the Postal Service--
          (1) * * *

           *       *       *       *       *       *       *

          (7) amounts (including proceeds from the sale of 
        forfeited items) from any civil forfeiture conducted by 
        the Postal Service; [and]
          (8) any transfers from the Secretary of the Treasury 
        from the Department of the Treasury Forfeiture Fund 
        which shall be available to the Postmaster General only 
        for Federal law enforcement related purposes[.]; and
          (9) any amounts collected under section 3018.
  [(c) If] (c)(1) Except as provided in paragraph (2), if the 
Postal Service determines that the moneys of the Fund are in 
excess of current needs, it may request the investment of such 
amounts as it deems advisable by the Secretary of the Treasury 
in obligations of, or obligations guaranteed by, the Government 
of the United States, and, with the approval of the Secretary, 
in such other obligations or securities as it deems 
appropriate.
  (2)(A) Nothing in this section shall be considered to 
authorize any investment in any obligations or securities of a 
commercial entity.
  (B) For purposes of this paragraph, the term ``commercial 
entity'' means any corporation, company, association, 
partnership, joint stock company, firm, society, or other 
similar entity, as further defined under regulations prescribed 
by the Postal Regulatory Commission.

           *       *       *       *       *       *       *

  (e)(1) [The Fund shall be available for the payment of all 
expenses incurred by the Postal Service in carrying out its 
functions as provided by law and, subject to the provisions of 
section 3604 of this title, all of the expenses of the Postal 
Rate Commission.] 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 
pursuant to section 504(d); and (C) all expenses of the Office 
of Inspector General, subject to the availability of amounts 
appropriated pursuant to section 8L(e) of the Inspector General 
Act of 1978. The Postmaster General shall transfer from the 
Fund to the Secretary of the Treasury for deposit in the 
Department of the Treasury Forfeiture Fund amounts appropriate 
to reflect the degree of participation of Department of the 
Treasury law enforcement organizations (described in section 
9703(p) of title 31) in the law enforcement effort resulting in 
the forfeiture pursuant to laws enforced or administered by the 
Postal Service. Neither the Fund nor any of the funds credited 
to it shall be subject to apportionment under the provisions of 
subchapter II of chapter 15 of title 31.

           *       *       *       *       *       *       *

Sec. 2005. Obligations

  (a)(1) The Postal Service is authorized to borrow money and 
to issue and sell such obligations as it determines necessary 
to carry out the purposes of this [title.] title, other than 
any of the purposes for which the corresponding authority is 
available to the Postal Service under section 2011. The 
aggregate amount of [any such obligations] obligations issued 
by the Postal Service which may be outstanding at any one time 
shall not exceed the maximum amount then allowable under 
paragraph (2) of this subsection. [In any one fiscal year the 
net increase in the amount of obligations outstanding issued 
for the purpose of capital improvements shall not exceed 
$2,000,000,000, 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 
$1,000,000,000.] 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.

           *       *       *       *       *       *       *

  (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.
  (b)(1) The Postal Service may pledge the assets of the Postal 
Service and pledge and use its revenues and receipts for the 
payment of the principal of or interest on [such obligations,] 
obligations issued by the Postal Service under this section, 
for the purchase or redemption thereof, and for other purposes 
incidental thereto, including creation of reserve, sinking, and 
other funds which may be similarly pledged and used, to such 
extent and in such manner as it deems necessary or desirable. 
The Postal Service is authorized to enter into binding 
covenants with the holders of such obligations, and with the 
trustee, if any, under any agreement entered into in connection 
with the issuance thereof with respect to the establishment of 
reserve, sinking, and other funds, application and use of 
revenues and receipts of the Postal Service, stipulations 
concerning the subsequent issuance of obligations or the 
execution of leases or lease purchases relating to properties 
of the Postal Service and such other matters as the Postal 
Service deems necessary or desirable to enhance the 
marketability of such obligations.
  (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. 2006. Relationship between the Treasury and the Postal Service

  (a) At least 15 days before selling any issue of obligations 
under section 2005 or section 2011 of this title, the Postal 
Service shall advise the Secretary of the Treasury of the 
amount, proposed date of sale, maturities, terms and 
conditions, and expected maximum rates of interest of the 
proposed issue in appropriate detail and shall consult with him 
or his designee thereon. The Secretary may elect to purchase 
such obligations under such terms, including rates of interest, 
as he and the Postal Service may agree, but at a rate of yield 
no less than the prevailing yield on outstanding marketable 
Treasury securities of comparable maturity, as determined by 
the Secretary. If the Secretary does not purchase such 
obligations, the Postal Service may proceed to issue and sell 
them to a party or parties other than the Secretary upon notice 
to the Secretary and upon consultation as to the date of 
issuance, maximum rates of interest, and other terms and 
conditions.
  (b) Subject to the conditions of subsection (a) of this 
section, the Postal Service may require the Secretary of the 
Treasury to purchase obligations of the Postal Service under 
section 2005 in such amounts as will not cause the holding by 
the Secretary of the Treasury resulting from such required 
purchases to exceed $2,000,000,000 at any one time. This 
subsection shall not be construed as limiting the authority of 
the Secretary to purchase obligations of the Postal Service 
under section 2005 in excess of such amount.
  (c) Notwithstanding section 2005(d)(5) or section 
2011(e)(4)(E) of this title, obligations issued by the Postal 
Service under section 2005 shall be obligations of the 
Government of the United States, and payment of principal and 
interest thereon shall be fully guaranteed by the Government of 
the United States, such guaranty being expressed on the face 
thereof, if and to the extent that--
          (1) * * *

           *       *       *       *       *       *       *

Sec. 2009. Annual budget

  The Postal Service shall cause to be prepared annually a 
budget program which shall be submitted to the Office of 
Management and Budget, under such rules and regulations as the 
President may establish as to the date of submission, the form 
and content, the classifications of data, and the manner in 
which such budget program shall be prepared and presented. The 
budget program shall be a business-type budget, or plan of 
operations, with due allowance given to the need for 
flexibility, including provision for emergencies and 
contingencies, in order that the Postal Service may properly 
carry out its activities as authorized by law. The budget 
program shall contain estimates of the financial condition and 
operations of the Postal Service for the current and ensuing 
fiscal years and the actual condition and results of operation 
for the last completed fiscal year. Such budget program shall 
include a statement of financial condition, a statement of 
income and expense, an analysis of surplus or deficit, a 
statement of sources and application of funds, and such other 
supplementary statements and information as are necessary or 
desirable to make known the financial condition and operations 
of the Postal Service. Such statements shall include estimates 
of operations by major types of activities, together with 
estimates of administrative expenses and estimates of 
borrowings. [The budget program shall also include separate 
statements of the amounts which the Postal Service requests to 
be appropriated under subsections (b) and (c) of section 2401 
of this title.] 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 8L(e) 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. The President shall include these 
amounts, with his recommendations but without revision, in the 
budget transmitted to Congress under section 1105 of title 31.

           *       *       *       *       *       *       *

Sec. 2011. Provisions relating to competitive products

  (a) 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--
          (1) costs attributable to competitive products; and
          (2) all other costs incurred by the Postal Service, 
        to the extent allocable to competitive products.
For purposes of this subsection, the term ``costs 
attributable'' has the meaning given such term by section 3631.
  (b) There shall be deposited in the Competitive Products 
Fund, subject to withdrawal by the Postal Service--
          (1) revenues from competitive products;
          (2) amounts received from obligations issued by the 
        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, it 
may request the investment of such amounts as it deems 
advisable by the Secretary of the Treasury in obligations of, 
or obligations guaranteed by, the Government of the United 
States, and, with the approval of the Secretary, in such other 
obligations or securities as it deems appropriate.
  (d) With the approval of the Secretary of the Treasury, the 
Postal Service may deposit moneys of the 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) 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 it determines necessary 
to provide for competitive products and deposit such amounts in 
the Competitive Products Fund. Any such borrowings by the 
Postal Service shall be supported and serviced by the revenues 
and receipts from competitive products and the 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 from 
the Postal Service, including the audited statements required 
by section 2008(e), but in either case subject to paragraph 
(5)).
  (2) The Postal Service may enter into binding covenants with 
the holders of such obligations, and with the trustee, if any, 
under any agreement entered into in connection with the 
issuance thereof 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) The obligations issued by the Postal Service under this 
section--
          (A) shall be in such forms and denominations;
          (B) shall be sold at such times and in such amounts;
          (C) shall mature at such time or times;
          (D) shall be sold at such prices;
          (E) shall bear such rates of interest;
          (F) may be redeemable before maturity in such manner, 
        at such times, and at such redemption premiums;
          (G) may be entitled to such relative priorities of 
        claim on the assets of the Postal Service with respect 
        to principal and interest payments; and
          (H) shall be subject to such other terms and 
        conditions;
as the Postal Service determines.
  (4) Obligations issued by the Postal Service under this 
subsection--
          (A) shall be negotiable or nonnegotiable and bearer 
        or registered instruments, as specified therein and in 
        any indenture or covenant relating thereto;
          (B) shall contain a recital that they 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) of this 
        title, 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; 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 against the Postal Service or the Government 
of the United States (or settlement of a claim) shall, to the 
extent that it arises out of activities of the Postal Service 
in the provision of competitive products, be paid out of the 
Competitive Products Fund.
  (h)(1) The Secretary of the Treasury, in consultation with 
the Postal Service and an independent, certified public 
accounting firm and such other advisors as the Secretary 
considers appropriate, shall develop recommendations 
regarding--
          (A) 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, and the capital and operating costs incurred 
        by the Postal Service in providing, competitive 
        products, and (ii) subject to subsection (e)(5), 
        preventing the subsidization of such products by 
        market-dominant products; and
          (B) the substantive and procedural rules that should 
        be followed in determining the Postal Service's assumed 
        Federal income tax on competitive products income for 
        any year (within the meaning of section 3634).
Such recommendations shall be submitted to the Postal 
Regulatory Commission no earlier than 6 months, and no later 
than 12 months, after the effective date of this section.
  (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) 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 in 
        paragraph (1)(B); 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.
Final rules under this subparagraph shall be issued not later 
than 12 months after the date on which the Secretary of the 
Treasury makes his submission to the Commission under paragraph 
(1) (or by such later date as the Commission and the Postal 
Service may agree to). The Commission is authorized to 
promulgate regulations revising such rules.
  (C) Reports described in subparagraph (B)(iii) shall be 
submitted at such time and in such form, and shall include such 
information, as the Commission by rule requires. 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 data under 
such subparagraph whenever it shall appear that--
          (i) the quality of the information furnished in those 
        reports has become significantly inaccurate or can be 
        significantly improved; or
          (ii) those revisions are, in the judgment of the 
        Commission, otherwise necessitated by the public 
        interest.
  (D) A copy of each report described in subparagraph (B)(iii) 
shall also be transmitted by the Postal Service to the 
Secretary of the Treasury and the Inspector General of the 
United States Postal Service.
  (i) The Postal Service shall render an annual report to the 
Secretary of the Treasury concerning the operation of the 
Competitive Products Fund, in which it shall address such 
matters as risk limitations, reserve balances, allocation or 
distribution of moneys, liquidity requirements, and measures to 
safeguard against losses. A copy of its then most recent report 
under this subsection shall be included with any other 
submission that it is required to make to the Postal Regulatory 
Commission under section 3652(g).

           *       *       *       *       *       *       *

CHAPTER 24--APPROPRIATIONS AND ANNUAL REPORT

           *       *       *       *       *       *       *

Sec. 2401. Appropriations

  (a) * * *

           *       *       *       *       *       *       *

  (d) As reimbursement to the Postal Service for losses which 
it incurred as a result of insufficient amounts appropriated 
under section 2401(c) for fiscal years 1991 through 1993, and 
to compensate for the additional revenues it is estimated the 
Postal Service would have received under the provisions of 
section 3626(a) (as last in effect before enactment of the 
Postal Accountability and Enhancement Act), for the period 
beginning on October 1, 1993, and ending on September 30, 1998, 
if the fraction specified in subclause (VI) of section 
3626(a)(3)(B)(ii) (as last in effect before enactment of the 
Postal Accountability and Enhancement Act) were applied with 
respect to such period (instead of the respective fractions 
specified in subclauses (I) through (V) thereof), there are 
authorized to be appropriated to the Postal Service $29,000,000 
for each of fiscal years 1994 through 2035.
  (e) The Postal Service shall present to the Committee on 
Governmental Affairs of the Senate and the [Committee on Post 
Office and Civil Service] Committee on Government Reform of the 
House of Representatives and the Committees on Appropriations 
of the Senate and the House of Representatives, at the same 
time it submits its annual budget under section 2009 of this 
title, sufficient copies of the budget of the Postal Service 
for the fiscal year for which funds are requested to be 
appropriated, and a comprehensive statement relating to the 
following matters:
          (1) * * *

           *       *       *       *       *       *       *

[Not later than March 15 of each year,] Each year, the Postal 
Service shall appear before the Committee on Governmental 
Affairs of the Senate and the [Committee on Post Office and 
Civil Service] Committee on Government Reform of the House of 
Representatives to submit information which any such committee 
considers necessary to determine the amount of funds to be 
appropriated for the operation of the Postal Service, and to 
present testimony and respond to questions with respect to such 
budget and statement. Each such committee shall take such 
action as it considers appropriate and shall advise the Postal 
Service of such action.

           *       *       *       *       *       *       *

CHAPTER 28--STRATEGIC PLANNING AND PERFORMANCE MANAGEMENT

           *       *       *       *       *       *       *

Sec. 2803. Performance plans

  (a) The Postal Service shall prepare an annual performance 
plan covering each program activity set forth in the Postal 
Service budget, which shall be included in the comprehensive 
statement presented under section [2401(g)] 2401(e) of this 
title. Such plan shall--
          (1) * * *

           *       *       *       *       *       *       *

Sec. 2804. Program performance reports

  (a) The Postal Service shall prepare a report on program 
performance for each fiscal year, which shall be included in 
the annual comprehensive statement presented under section 
[2401(g)] 2401(e) of this title.

           *       *       *       *       *       *       *

PART IV--MAIL MATTER

           *       *       *       *       *       *       *

                     CHAPTER 30--NONMAILABLE MATTER

Sec.
3001. Nonmailable matter.
     * * * * * * *
3018. Hazardous material.

Sec. 3001. Nonmailable matter

  (a) * * *

           *       *       *       *       *       *       *

  (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.
  [(n)] (o) The district courts, together with the District 
Court of the Virgin Islands and the District Court of Guam, 
shall have jurisdiction, upon cause shown, to enjoin violations 
of section 1716 of title 18.

           *       *       *       *       *       *       *

Sec. 3005. False representations; lotteries

  (a) Upon evidence satisfactory to the Postal Service that any 
person is engaged in conducting a scheme or device for 
obtaining money or property through the mail by means of false 
representations, including the mailing of matter which is 
nonmailable [under 3001(d),] under section 3001(d), (h), (i), 
(j), or (k) of this title, or is engaged in conducting a 
lottery, gift enterprise, or scheme for the distribution of 
money or of real or personal property, by lottery, chance, or 
drawing of any kind, the Postal Service may issue an order 
which--
          (1) * * *

           *       *       *       *       *       *       *

          (3) requires the person or his representative to 
        cease and desist from engaging in any such scheme, 
        device, lottery, or gift enterprise.
For purposes of the preceding sentence, the mailing of matter 
which is nonmailable [under such 3001(d),] under such section 
3001(d), (h), (i), (j), or (k) by any person shall constitute 
prima facie evidence that such person is engaged in conducting 
a scheme or device for obtaining money or property through the 
mail by false representations.

           *       *       *       *       *       *       *

Sec. 3013. Semiannual reports on investigative activities of the Postal 
                    Service

  The [Postmaster General] Chief Postal Inspector shall submit 
semiannual reports to the Inspector General summarizing the 
investigative activities of the Postal Service. One semiannual 
report shall be submitted for the reporting period beginning on 
October 1 and ending on March 31, and the other semiannual 
report shall be submitted for the reporting period beginning on 
April 1 and ending on September 30. Each such report shall be 
submitted within 1month (or such shorter length of time as the 
Inspector General may specify) after the close of the reporting period 
involved and shall include with respect to such reporting period--
          (1) * * *

           *       *       *       *       *       *       *

The information in a report submitted under this section to the 
Inspector General with respect to a reporting period shall be 
included as part of the semiannual report prepared by the 
Inspector General under section 5 of the Inspector General Act 
of 1978 for the same reporting period. Nothing in this section 
shall be considered to permit or require that any report by the 
[Postmaster General] Chief Postal Inspector under this section 
include any information relating to activities of the Inspector 
General.

           *       *       *       *       *       *       *

Sec. 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.
  (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.

CHAPTER 32--PENALTY AND FRANKED MAIL

           *       *       *       *       *       *       *

Sec. 3210. Franked mail transmitted by the Vice President, Members of 
                    Congress, and congressional officials

  (a)(1) * * *

           *       *       *       *       *       *       *

  (6)(A) * * *

           *       *       *       *       *       *       *

  (C) No Member of the Senate may mail any mass mailing as 
franked mail if such mass mailing [is mailed fewer] is 
postmarked fewer than 60 days immediately before the date of 
any primary election or general election (whether regular, 
special, or runoff) for any national, State or local office in 
which such Member is a candidate for election.

           *       *       *       *       *       *       *

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

                  [SUBCHAPTER I--POSTAL RATE COMMISSION

[Sec.
[3601. Establishment.
[3602. Terms of office.
[3603. Rules; regulations; procedures.
[3604. Administration.

           [SUBCHAPTER II--PERMANENT RATES AND CLASSES OF MAIL

[3621. Authority to fix rates and classes.
[3622. Rates and fees.
[3623. Mail classification.
[3624. Recommended decisions of Commission.
[3625. Action of the Governors.
[3626. Reduced rates.
[3627. Adjusting free rates.
[3628. Appellate review.
[3629. Reduced rates for voter registration purposes.

              [SUBCHAPTER III--TEMPORARY RATES AND CLASSES

[3641. Temporary changes in rates and classes.
[3642. Special authority relating to reduced-rate categories of mail.

             [SUBCHAPTER IV--POSTAL SERVICES AND COMPLAINTS

[3661. Postal services.
[3662. Rate and service complaints.
[3663. Annual report on international services.

                         [SUBCHAPTER V--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.

                 [SUBCHAPTER I--POSTAL RATE COMMISSION

[Sec. 3601. Establishment

  [(a) The Postal Rate Commission is an independent 
establishment of the executive branch of the Government of the 
United States. The 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 on the basis 
of their professional qualifications and may be removed by the 
President only for cause. Not more than 3 of the Commissioners 
may be adherents of the same political party.
  [(b) 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 section 3602 of this title.
  [(c) One of the Commissioners shall be designated as Chairman 
by, and shall serve in the position of Chairman at the pleasure 
of, the President.
  [(d) 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.

[Sec. 3602. Terms of office

  [The Commissioners of the Postal Rate Commission shall serve 
for terms of 6 years except that--
          [(1) the terms of the Commissioners first taking 
        office shall expire as designated by the President at 
        the time of appointment, 1 at the end of 2 years, 2 at 
        the end of 4 years, and 2 at the end of 6 years, 
        following the appointment of the first of them; and
          [(2) any Commissioner appointed to fill a vacancy 
        occurring before the expiration of the term for which 
        his predecessor was appointed shall serve for the 
        remainder of such term.

          [SUBCHAPTER II--PERMANENT RATES AND CLASSES OF MAIL

[Sec. 3621. Authority to fix rates and classes

  [Except as otherwise provided, the Governors are authorized 
to establish reasonable and equitable classes of mail and 
reasonable and equitable rates of postage and fees for postal 
services in accordance with the provisions of this chapter. 
Postal rates and fees shall be reasonable and equitable and 
sufficient to enable the Postal Service under 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. Postal rates and 
fees shall provide sufficient revenues so that the total 
estimated income and appropriations to the Postal Service will 
equal as nearly as practicable total estimated costs of the 
Postal Service. For purposes of this section, ``total estimated 
costs'' shall include (without limitation) operating expenses, 
depreciation on capital facilities and equipment, debt service 
(including interest, amortization of debt discount and expense, 
and provision for sinking funds or other retirements of 
obligations to the extent that such provision exceeds 
applicable depreciation charges), and a reasonable provision 
for contingencies.

[Sec. 3622. Rates and fees

  [(a) From time to time the Postal Service shall request the 
Postal Rate Commission to submit a recommended decision on 
changes in a rate or rates of postage or in a fee or fees for 
postal services if the Postal Service determines that such 
changes would be in the public interest and in accordance with 
the policies of this title. The Postal Service may submit such 
suggestions for rate adjustments as it deems suitable.
  [(b) Upon receiving a request, the Commission shall make a 
recommended decision on the request for changes in rates or 
fees in each class of mail or type of service in accordance 
with the policies of this title and the following factors:
          [(1) the establishment and maintenance of a fair and 
        equitable schedule;
          [(2) the value of the mail service actually provided 
        each class or type of mail service to both the sender 
        and the recipient, including but not limited to the 
        collection, mode of transportation, and priority of 
        delivery;
          [(3) the requirement that each class of mail or type 
        of mail service bear the direct and indirect postal 
        costs attributable to that class or type plus that 
        portion of all other costs of the Postal Service 
        reasonably assignable to such class or type;
          [(4) the effect of rate increases upon the general 
        public, business mail users, and enterprises in the 
        private sector of the economy engaged in the delivery 
        of mail matter other than letters;
          [(5) the available alternative means of sending and 
        receiving letters and other mail matter at reasonable 
        costs;
          [(6) the degree of preparation of mail for delivery 
        into the postal system performed by the mailer and its 
        effect upon reducing costs to the Postal Service;
          [(7) simplicity of structure for the entire schedule 
        and simple, identifiable relationships between the 
        rates or fees charged the various classes of mail for 
        postal services;
          [(8) the educational, cultural, scientific, and 
        informational value to the recipient of mail matter; 
        and
          [(9) such other factors as the Commission deems 
        appropriate.
  [(c) Regular rates for each class or subclass of mail that 
includes 1 or more special rate categories for mail under 
former section 4358 (d) or (e), 4452 (b) or (c), or 4554 (b) or 
(c) of this title shall be established by applying the policies 
of this title, including the factors of section 3622(b) of this 
title, to the costs attributable to the regular rate mail in 
each class or subclass combined with the mail in the 
corresponding special rate categories authorized by former 
section 4358 (d) or (e), 4452 (b) or (c), or 4554 (b) or (c) of 
this title.
  [(d) Compliance with any provision of the Occupational Safety 
and Health Act of 1970 (29 U.S.C. 651 et seq.) shall not be 
considered by the Commission in determining whether to increase 
rates and shall not otherwise affect the service of the Postal 
Service.

[Sec. 3623. Mail classification

  [(a) Within 2 years after the effective date of this 
subchapter, the Postal Service shall request the Postal Rate 
Commission to make a recommended decision on establishing a 
mail classification schedule in accordance with the provisions 
of this section.
  [(b) Following the establishment of the mail classification 
schedule requested under subsection (a) of this section, the 
Postal Service may from time to time request that the 
Commission submit, or the Commission may submit to the 
Governors on its own initiative, a recommended decision on 
changes in the mail classification schedule.
  [(c) The Commission shall make a recommended decision on 
establishing or changing the schedule in accordance with the 
policies of this title and the following factors:
          [(1) the establishment and maintenance of a fair and 
        equitable classification system for all mail;
          [(2) 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;
          [(3) the importance of providing classifications with 
        extremely high degrees of reliability and speed of 
        delivery;
          [(4) the importance of providing classifications 
        which do not require an extremely high degree of 
        reliability and speed of delivery;
          [(5) the desirability of special classifications from 
        the point of view of both the user and of the Postal 
        Service; and
          [(6) such other factors as the Commission may deem 
        appropriate.
  [(d) 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.

[Sec. 3624. Recommended decisions of Commission

  [(a) The Postal Rate Commission shall promptly consider a 
request made under section 3622 or 3623 of this title, except 
that the Commission shall not recommend a decision until the 
opportunity for a hearing on the record under sections 556 and 
557 of title 5 has been accorded to 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.
  [(b) In order to conduct its proceedings with utmost 
expedition consistent with procedural fairness to the parties, 
the Commission may (without limitation) adopt rules which 
provide for--
          [(1) the advance submission of written direct 
        testimony;
          [(2) the conduct of prehearing conferences to define 
        issues, and for other purposes to insure orderly and 
        expeditious proceedings;
          [(3) discovery both from the Postal Service and the 
        parties to the proceedings;
          [(4) limitation of testimony; and
          [(5) the conduct of the entire proceedings off the 
        record with the consent of the parties.
  [(c)(1) Except as provided by paragraph (2) of this 
subsection, in any case in which the Postal Service makes a 
request under section 3622 of this title for a recommended 
decision by the Commission on changes in a rate or rates of 
postage or in a fee or fees for postal services the Commission 
shall transmit its recommended decision to the Governors under 
subsection (d) of this section no later than 10 months after 
receiving any such request from the Postal Service.
  [(2) In any case in which the Commission determines that the 
Postal Service has unreasonably delayed consideration of a 
request made by the Postal Service under section 3622 by 
failing to respond within a reasonable time to any lawful order 
of the Commission, the Commission may extend the 10-month 
period described in paragraph (1) of this subsection by one day 
for each day of such delay.
  [(d) The Commission shall transmit its recommended decision 
in a rate, fee, or classification matter to the Governors. The 
recommended decision shall include a statement specifically 
responsive to the criteria established under section 3622 or 
3623, as the case may be.

[Sec. 3625. Action of the Governors

  [(a) Upon receiving a recommended decision from the Postal 
Rate Commission, the Governors may approve, allow under 
protest, reject, or modify that decision in accordance with the 
provisions of this section.
  [(b) The Governors may approve the recommended decision and 
order the decision placed in effect.
  [(c) The Governors may, under protest, allow a recommended 
decision of the Commission to take effect and (1) seek judicial 
review thereof under section 3628 of this title, or (2) return 
the recommended decision to the Commission for reconsideration 
and a further recommended decision, which shall be acted upon 
under this section and subject to review in accordance with 
section 3628 of this title.
  [(d) The Governors may reject the recommended decision of the 
Commission and the Postal Service may resubmit its request to 
the Commission for reconsideration. Upon resubmission, the 
request shall be reconsidered, and a further recommended 
decision of the Commission shall be acted upon under this 
section and subject to review in accordance with section 3628 
of this title. However, with the unanimous written concurrence 
of all of the Governors then holding office, the Governors may 
modify any such further recommended decision of the Commission 
under this subsection if the Governors expressly find that (1) 
such modification is in accord with the record and the policies 
of this chapter, and (2) the rates recommended by the 
Commission are not adequate to provide sufficient total 
revenues so that total estimated income and appropriations will 
equal as nearly as practicable estimated total costs.
  [(e) The decision of the Governors to approve, allow under 
protest, reject, or modify a recommended decision of the 
Commission shall be in writing and shall include an estimate of 
anticipated revenue and a statement of explanation and 
justification. The decision, the record of the Commission's 
hearings, and the Commission's recommended decision shall be 
made generally available at the time the decision is issued and 
shall be printed and made available for sale by the Public 
Printer within 10 days following the day the decision is 
issued.
  [(f) The Board shall determine the date on which the new 
rates, fees, the mail classification schedule, and changes in 
such schedule under this subchapter shall become effective.]

             CHAPTER 36--POSTAL RATES, CLASSES AND SERVICES

       Subchapter I--Provisions relating to market-dominant products

Sec.
3621. Applicability; definitions.
3622. Modern rate regulation.
3626. Reduced rates.
3627. Adjusting free rates.
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.

                          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.
3687. Workshare discounts.

     SUBCHAPTER I--PROVISIONS RELATING TO MARKET-DOMINANT PRODUCTS

Sec. 3621. Applicability; definitions

  (a) Applicability.--This subchapter shall apply with respect 
to--
          (1)(A) single piece first-class letters (both 
        domestic and international);
          (B) single piece first-class cards (both domestic and 
        international); and
          (C) special services;
          (2) all first-class mail not included under paragraph 
        (1);
          (3) periodicals;
          (4) standard mail;
          (5) media mail;
          (6) library mail; and
          (7) bound printed matter,
subject to any changes the Postal Regulatory Commission may 
make under section 3642.
  (b) Rule of Construction.--Mail matter referred to in 
subsection (a) shall, for purposes of this subchapter, be 
considered to have the meaning given to such mail matter under 
the mail classification schedule.

Sec. 3622. Modern rate regulation

  (a) Authority Generally.--The Postal Regulatory Commission 
shall, within 24 months after the date of the enactment of this 
section, by regulation establish (and may from time to time 
thereafter by regulation revise) a modern system for regulating 
rates and classes for market-dominant products.
  (b) Objectives.--Such system shall be designed to achieve the 
following objectives:
          (1) To establish and maintain a fair and equitable 
        schedule for rates and classification.
          (2) To maximize incentives to reduce costs and 
        increase efficiency.
          (3) To create predictability and stability in rates.
          (4) To maintain high quality service standards.
          (5) To allow the Postal Service pricing flexibility.
          (6) To assure adequate revenues, including retained 
        earnings, to maintain financial stability.
          (7) To reduce the administrative burden of the 
        ratemaking process.
  (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 direct and indirect postal costs attributable 
        to each class or type of mail service plus that portion 
        of all other costs of the Postal Service reasonably 
        assignable to such class or type;
          (3) the effect of rate increases upon the general 
        public, business mail users, and enterprises in the 
        private sector of the economy engaged in the delivery 
        of mail matter other than letters;
          (4) the available alternative means of sending and 
        receiving letters and other mail matter at reasonable 
        costs;
          (5) the degree of preparation of mail for delivery 
        into the postal system performed by the mailer and its 
        effect upon reducing costs to the Postal Service;
          (6) simplicity of structure for the entire schedule 
        and simple, identifiable relationships between the 
        rates or fees charged the various classes of mail for 
        postal services;
          (7) the 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;
          (8) 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;
          (9) the desirability of special classifications from 
        the point of view of both the user and of the Postal 
        Service;
          (10) the educational, cultural, scientific, and 
        informational value to the recipient of mail matter; 
        and
          (11) the policies of this title as well as such other 
        factors as the Commission deems appropriate.
  (d) Allowable Provisions.--The system for regulating rates 
and classes for market-dominant products may include one or 
more of the following:
          (1) Price caps, revenue targets, or other form of 
        incentive regulation.
          (2) Cost-of-service regulation.
          (3) Such other form of regulation as the Commission 
        considers appropriate to achieve, consistent with 
        subsection (c), the objectives of subsection (b).
  (e) Limitation.--In the administration of this section, the 
Commission shall not permit the average rate in any subclass of 
mail to increase at an annual rate greater than the comparable 
increase in the Consumer Price Index, unless it has, after 
notice and opportunity for a public hearing and comment, 
determined that such increase 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.
  (f) Transition Rule.--Until regulations under this section 
first take effect, rates and classes for market-dominant 
products shall remain subject to modification in accordance 
with the provisions of this chapter and section 407, as such 
provisions were last in effect before the date of the enactment 
of this section.

Sec. 3626. Reduced rates

  [(a)(1) Except as otherwise provided in this section, rates 
of postage for a class of mail or kind of mailer under former 
section 4358, 4452(b), 4452(c), 4554(b), or 4554(c) of this 
title shall be established in accordance with the applicable 
provisions of this chapter.
  [(2) For the purpose of this subsection--
          [(A) the term ``costs attributable'', as used with 
        respect to a class of mail or kind of mailer, means the 
        direct and indirect postal costs attributable to such 
        class of mail or kind of mailer (excluding any other 
        costs of the Postal Service);
          [(B) the term ``regular-rate category'' means any 
        class of mail or kind of mailer, other than a class or 
        kind referred to in paragraph (3)(A) or section 
        2401(c); and
          [(C) the term ``institutional-costs contribution'', 
        as used with respect to a class of mail or kind of 
        mailer, means that portion of the estimated revenues to 
        the Postal Service from such class of mail or kind of 
        mailer which remains after subtracting an amount equal 
        to the estimated costs attributable to such class of 
        mail or kind of mailer.
  [(3)(A) Except as provided in paragraph (4) or (5), rates of 
postage for a class of mail or kind of mailer under former 
section 4358 of this title shall be established in a manner 
such that the estimated revenues to be received by the Postal 
Service from such class of mail or kind of mailer shall be 
equal to the sum of--
          [(i) the estimated costs attributable to such class 
        of mail or kind of mailer; and
          [(ii) the product derived by multiplying the 
        estimated costs referred to in clause (i) by the 
        applicable percentage under subparagraph (B).
  [(B) The applicable percentage for any class of mail or kind 
of mailer referred to in subparagraph (A) shall be the product 
derived by multiplying--
          [(i) the percentage which, for the most closely 
        corresponding regular-rate category, the institutional-
        costs contribution for such category represents 
        relative to the estimated costs attributable to such 
        category of mail, times
          [(ii)(I) one-twelfth, for fiscal year 1994;
          [(II) one-sixth, for fiscal year 1995;
          [(III) one-fourth, for fiscal year 1996;
          [(IV) one-third, for fiscal year 1997;
          [(V) five-twelfths, for fiscal year 1998; and
          [(VI) one-half, for any fiscal year after fiscal year 
        1998.
  [(C) Temporary special authority to permit the timely 
implementation of the preceding provisions of this paragraph is 
provided under section 3642.
  [(D) For purposes of establishing rates of postage under this 
subchapter for any of the classes of mail or kinds of mailers 
referred to in subparagraph (A), subclauses (I) through (V) of 
subparagraph (B)(ii) shall be deemed amended by striking the 
fraction specified in each such subclause and inserting ``one-
half''.]
  (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.

           *       *       *       *       *       *       *

  (g)(1) * * *

           *       *       *       *       *       *       *

  (3) For purposes of this section and former section 4358(a) 
through (c) of this title, those copies of an issue of a 
publication entered within the county in which it is published, 
but distributed outside such county on postal carrier routes 
originating in the county of publication, shall be treated as 
if they were distributed within the county of publication.
  (4)(A) In the case of an issue of a publication, any number 
of copies of which are mailed at the rates of postage for a 
class of mail or kind of mailer under former section 4358(a) 
through (c) of this title, any copies of such issue which are 
distributed outside the county of publication (excluding any 
copies subject to paragraph (3)) shall be subject to rates of 
postage provided for under this paragraph.
  (B) The rates of postage applicable to mail under this 
paragraph shall be established in accordance with section 3622.
  (C) This paragraph shall not apply with respect to an issue 
of a publication unless the total paid circulation of such 
issue outside the county of publication (not counting 
recipients of copies subject to paragraph (3)) is less than 
5,000.

           *       *       *       *       *       *       *

  (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. 3627. Adjusting free and reduced rates]

Sec. 3627. Adjusting free rates

  If Congress fails to appropriate an amount authorized under 
section 2401(c) of this title for any class of mail sent free 
of postage under section 3217 or 3403-3406 the rate for that 
class may be adjusted in accordance with the provisions of this 
subchapter so that the increased revenues received from the 
users of such class will equal the amount for that class that 
the Congress was to appropriate.

[Sec. 3628. Appellate review

  [A decision of the Governors to approve, allow under protest, 
or modify the recommended decision of the Postal Rate 
Commission may be appealed to any court of appeals of the 
United States, within 15 days after its publication by the 
Public Printer, by an aggrieved party who appeared in the 
proceedings under section 3624(a) of this title. The court 
shall review the decision, in accordance with section 706 of 
title 5, and chapter 158 and section 2112 of title 28, except 
as otherwise provided in this section, on the basis of the 
record before the Commission and the Governors. The court may 
affirm the decision or order that the entire matter be returned 
for further consideration, but the court may not modify the 
decision. The court may not suspend the effectiveness of the 
changes, or otherwise prevent them from taking effect until 
final disposition of the suit by the court. No court shall have 
jurisdiction to review a decision made by the Commission or 
Governors under this chapter except as provided in this 
section.]

           *       *       *       *       *       *       *

       SUBCHAPTER II--PROVISIONS RELATING TO COMPETITIVE PRODUCTS

Sec. 3631. Applicability; definitions and updates

  (a) Applicability.--This subchapter shall apply with respect 
to--
          (1) priority mail;
          (2) expedited mail;
          (3) mailgrams;
          (4) international mail; and
          (5) parcel post,
subject to any changes the Postal Regulatory Commission may 
make under section 3642.
  (b) Definition.--For purposes of this subchapter, the term 
``costs attributable'', as used with respect to a product, 
means the direct and indirect postal costs attributable to such 
product.
  (c) Rule of Construction.--Mail matter referred to in 
subsection (a) shall, for purposes of this subchapter, be 
considered to have the meaning given to such mail matter under 
the mail classification schedule.

Sec. 3632. Action of the Governors

  (a) Authority To Establish Rates and Classes.--The Governors 
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 the enactment of this 
section.

Sec. 3633. Provisions applicable to rates for competitive products

  The Postal Regulatory Commission shall, within 18 months 
after the date of the enactment of this section, promulgate 
(and may from time to time thereafter revise) regulations--
          (1) to prohibit the subsidization of competitive 
        products by market-dominant products;
          (2) to ensure that each competitive product covers 
        its costs attributable; and
          (3) to ensure that all competitive products 
        collectively make a reasonable contribution to the 
        institutional costs of the Postal Service.

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

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

              [SUBCHAPTER III--TEMPORARY RATES AND CLASSES

[Sec. 3641. Temporary changes in rates and classes

  [(a) In any case in which the Postal Rate Commission fails to 
transmit a recommended decision on a change in rates of postage 
or in fees for postal services to the Governors in accordance 
with section 3624(c) of this title, the Postal Service may 
establish temporary changes in rates of postage and in fees for 
postal services in accordance with the proposed changes under 
consideration by the Commission. Such temporary changes may 
take effect upon such date as the Postal Service may determine, 
except that such temporary changes may take effect only after 
10 days' notice in the Federal Register.
  [(b) Any temporary rate or fee established by the Postal 
Service under subsection (a) of this section shall be in 
accordance with the policies of this title and shall not exceed 
such amount as may be necessary for sufficient revenues to 
assure that the total estimated income, including 
appropriations, of the Postal Service shall, to the extent 
practicable, be equal to the total estimated costs of the 
Postal Service.
  [(c) Notwithstanding the provisions of subsection (b) of this 
section, the Postal Service may not establish any temporary 
rate for a class of mail or any temporary fee for a postal 
service which is more than the permanent rate or fee requested 
for such class or postal service by the Postal Service under 
section 3622 of this title.
  [(d) Any temporary change in rates of postage or in fees for 
postal services made by the Postal Service under this section 
shall remain in effect no longer than 150 days after the date 
on which the Commission transmits its recommended decision to 
the Governors under section 3624(d) of this title, unless such 
temporary change is terminated by the Governors before the 
expiration of such period.
  [(e) If the Postal Rate Commission does not transmit to the 
Governors within 90 days after the Postal Service has 
submitted, or within 30 days after the Postal Service has 
resubmitted, to the Commission a request for a recommended 
decision on a change in the mail classification schedule (after 
such schedule is established under section 3623 of this title), 
the Postal Service, upon 10 days' notice in the Federal 
Register, may place into effect temporary changes in the mail 
classification schedule in accordance with proposed changes 
under consideration by the Commission. Any temporary change 
shall be effective for a period ending not later than 30 days 
after the Commission has transmitted its recommended decision 
to the Governors.
  [(f) If, under section 3628 of this title, a court orders a 
matter returned to the Commission for further consideration, 
the Postal Service, with the consent of the Commission, may 
place into effect temporary changes in rates of postage, and 
fees for postal services, or in the mail classification 
schedule.

[Sec. 3642. Special authority relating to reduced-rate categories of 
                    mail

  [(a) In order to permit the timely implementation of section 
3626(a)(3), the Postal Service may establish temporary rates of 
postage for any class of mail or kind of mailer referred to in 
section 3626(a)(3)(A).
  [(b) Any exercise of authority under this section shall be in 
conformance with the requirements of section 3626(a), subject 
to the following:
          [(1) All attributable costs and institutional-costs 
        contributions assumed shall be the same as those which 
        were assumed for purposes of the then most recent 
        proceedings under subchapter II pursuant to which rates 
        of postage for the class of mail or kind of mailer 
        involved were last adjusted.
          [(2) Any temporary rate established under this 
        section shall take effect upon such date as the Postal 
        Service may determine, except that--
                  [(A) such a rate may take effect only after 
                10 days' notice in the Federal Register; and
                  [(B) no such rate may take effect after 
                September 30, 1998.
          [(3) A temporary rate under this section may remain 
        in effect no longer than the last day of the fiscal 
        year in which it first takes effect.
          [(4) Authority under this section may not be 
        exercised in a manner that would result in more than 1 
        change taking effect under this section, during the 
        same fiscal year, in the rates of postage for a 
        particular class of mail or kind of mailer, except as 
        provided in paragraph (5).
          [(5) Nothing in paragraph (4) shall prevent an 
        adjustment under this section in rates for a class of 
        mail or kind of mailer with respect to which any rates 
        took effect under this section earlier in the same 
        fiscal year if--
                  [(A) the rates established for such class of 
                mail or kind of mailer by the earlier 
                adjustment are superseded by new rates 
                established under subchapter II; and
                  [(B) authority under this paragraph has not 
                previously been exercised with respect to such 
                class of mail or kind of mailer based on the 
                new rates referred to in subparagraph (A).
  [(c) The Postal Service may prescribe any regulations which 
may be necessary to carry out this section, including 
provisions governing the coordination of adjustments under this 
section with any other adjustments under this title.
  [(d) Notwithstanding any provision of section 3626(a)(3)(B) 
or subsection (a) of this section, any temporary rates 
established under this section for non-letter-shaped mail under 
former section 4452(b) or 4452(c) of this title shall not be 
lower than the rates in effect for such mail on September 30, 
1993.]

  SUBCHAPTER III--PROVISIONS RELATING TO EXPERIMENTAL AND NEW PRODUCTS

Sec. 3641. Market tests of experimental products

  (a) Authority.--
          (1) In general.--The Postal Service may conduct 
        market tests of experimental products in accordance 
        with this section.
          (2) Provisions waived.--A product shall not, while it 
        is being tested under this section, be subject to the 
        requirements of sections 3622, 3633, or 3642, or 
        regulations promulgated under those sections.
  (b) Conditions.--A product may not be tested under this 
section unless it satisfies each of the following:
          (1) Significantly different product.--The product is, 
        from the viewpoint of the mail users, significantly 
        different from all products offered by the Postal 
        Service within the 2-year period preceding the start of 
        the test.
          (2) Market disruption.--The introduction or continued 
        offering of the product will not create an unfair or 
        otherwise inappropriate competitive advantage for the 
        Postal Service or any mailer, particularly in regard to 
        small business concerns (as defined under subsection 
        (h)).
          (3) Correct categorization.--The Postal Service 
        identifies the product, for the purpose of a test under 
        this section, as either market dominant or competitive, 
        consistent with the criteria under section 3642(b)(1). 
        Costs and revenues attributable to a product identified 
        as competitive shall be included in any determination 
        under section 3633(3) (relating to provisions 
        applicable to competitive products collectively).
  (c) Notice.--
          (1) In general.--At least 30 days before initiating a 
        market test under this section, the Postal Service 
        shall file with the Postal Regulatory Commission and 
        publish in the Federal Register a notice--
                  (A) setting out the basis for the Postal 
                Service's determination that the market test is 
                covered by this section; and
                  (B) describing the nature and scope of the 
                market test.
          (2) Safeguards.--For a competitive experimental 
        product, the provisions of section 504(g) shall be 
        available with respect to any information required to 
        be filed under paragraph (1) to the same extent and in 
        the same manner as in the case of any matter described 
        in section 504(g)(1). Nothing in paragraph (1) shall be 
        considered to permit or require the publication of any 
        information as to which confidential treatment is 
        accorded under the preceding sentence (subject to the 
        same exception as set forth in section 504(g)(3)).
  (d) Duration.--
          (1) In general.--A market test of a product under 
        this section may be conducted over a period of not to 
        exceed 24 months.
          (2) Extension authority.--If necessary in order to 
        determine the feasibility or desirability of a product 
        being tested under this section, the Postal Regulatory 
        Commission may, upon written application of the Postal 
        Service (filed not later than 60 days before the date 
        as of which the testing of such product would otherwise 
        be scheduled to terminate under paragraph (1)), extend 
        the testing of such product for not to exceed an 
        additional 12 months.
  (e) Dollar-Amount Limitation.--
          (1) In general.--A product may be tested under this 
        section only if the total revenues that are 
        anticipated, or in fact received, by the Postal Service 
        from such product do not exceed $10,000,000 nationwide 
        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 in 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 one or more of 
the requirements of this section, it may order the cancellation 
of the test involved or take such other action as it considers 
appropriate. A determination under this subsection shall be 
made in accordance with such procedures as the Commission shall 
by regulation prescribe.
  (g) Adjustment for Inflation.--For purposes of each year 
following the year in which occurs the deadline for the Postal 
Service's first report to the Postal Regulatory Commission 
under section 3652(a), each dollar amount contained in this 
section shall be adjusted by the change in the Consumer Price 
Index for such year (as determined under regulations of the 
Commission).
  (h) Definition of a Small Business Concern.--The criteria 
used in defining small business concerns or otherwise 
categorizing business concerns as small business concerns 
shall, for purposes of this section, be established by the 
Postal Regulatory Commission in conformance with the 
requirements of section 3 of the Small Business Act.
  (i) Effective Date.--Market tests under this subchapter may 
be conducted in any year beginning with the first year in which 
occurs the deadline for the Postal Service's first report to 
the Postal Regulatory Commission under section 3652(a).

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

  (a) In General.--Upon request of the Postal Service or users 
of the mails, or upon its own initiative, the Postal Regulatory 
Commission may change the list of market-dominant products 
under section 3621 and the list of competitive products under 
section 3631 by adding new products to the lists, removing 
products from the lists, or transferring products between the 
lists.
  (b) Criteria.--All determinations by the Postal Regulatory 
Commission under subsection (a) shall be made in accordance 
with the following criteria:
          (1) The market-dominant category of products shall 
        consist of each product in the sale of which the Postal 
        Service exercises sufficient market power that it can 
        effectively set the price of such product substantially 
        above costs, raise prices significantly, decrease 
        quality, or decrease output, without risk of losing 
        business to other firms offering similar products. The 
        competitive category of products shall consist of all 
        other products.
          (2) Exclusion of products covered by postal 
        monopoly.--A product covered by the postal monopoly 
        shall not be subject to transfer under this section 
        from the market-dominant category of mail. For purposes 
        of the preceding sentence, the term ``product covered 
        by the postal monopoly'' means any product the 
        conveyance or transmission of which is reserved to the 
        United States under section 1696 of title 18, subject 
        to the same exception as set forth in the last sentence 
        of section 409(e)(1).
          (3) Additional considerations.--In making any 
        decision under this section, due regard shall be given 
        to--
                  (A) the availability and nature of 
                enterprises in the private sector engaged in 
                the delivery of the product involved;
                  (B) the views of those who use the product 
                involved on the appropriateness of the proposed 
                action; and
                  (C) the likely impact of the proposed action 
                on small business concerns (within the meaning 
                of section 3641(h)).
  (c) Transfers of Subclasses and Other Subordinate Units 
Allowable.--Nothing in this title shall be considered to 
prevent transfers under this section from being made by reason 
of the fact that they would involve only some (but not all) of 
the subclasses or other subordinate units of the class of mail 
or type of postal service involved (without regard to 
satisfaction of minimum quantity requirements standing alone).
  (d) Notification and Publication Requirements.--
          (1) Notification requirement.--The Postal Service 
        shall, whenever it requests to add a product or 
        transfer a product to a different category, file with 
        the Postal Regulatory Commission and publish in the 
        Federal Register a notice setting out the basis for its 
        determination that the product satisfies the criteria 
        under subsection (b) and, in the case of a request to 
        add a product or transfer a product to the competitive 
        category of mail, that the product meets the 
        regulations promulgated by the Postal Regulatory 
        Commission pursuant to 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) Notification Requirement.--The Postal Regulatory 
Commission shall, whenever it reaches a conclusion that a 
product or products should be transferred between the list of 
market-dominant products under section 3621 and the list of 
competitive products under section 3631, immediately notify the 
appropriate committees of the Congress. No such transfer may 
take effect less than 12 months after such conclusion.
  (f) Prohibition.--Except as provided in section 3641, no 
product that involves the carriage of letters, printed matter, 
or mailable 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.

      SUBCHAPTER IV--REPORTING REQUIREMENTS AND RELATED PROVISIONS

Sec. 3651. Annual reports by the Commission

  (a) In General.--The Postal Regulatory Commission shall 
submit an annual report to the President and the Congress 
concerning the operations of the Commission under this title, 
including the extent to which regulations are achieving the 
objectives under sections 3622 and 3633, respectively.
  (b) Additional Information.--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--
          (1) 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);
          (2) free or reduced rates for postal services as 
        required by this title; and
          (3) 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.
The Commission shall detail the bases for its estimates and the 
statutory requirements giving rise to the costs identified in 
each report under this section.
  (c) Information From Postal Service.--The Postal Service 
shall provide the Postal Regulatory Commission with such 
information as may, in the judgment of the Commission, be 
necessary in order for the Commission to prepare its reports 
under this section.

Sec. 3652. Annual reports to the Commission

  (a) Costs, Revenues, and Rates.--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 thereto as the Commission may require under subsection 
(e))--
          (1) which shall analyze costs, revenues, and rates, 
        using such methodologies as the Commission shall by 
        regulation prescribe, and in sufficient detail to 
        demonstrate that the rates in effect for 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) market information, including mail 
                volumes; and
                  (B) measures of the quality of service 
                afforded by the Postal Service in connection 
                with such product, including--
                          (i) the service standard applicable 
                        to such product;
                          (ii) the level of service (described 
                        in terms of speed of delivery and 
                        reliability) provided; and
                          (iii) 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.--
          (1) In general.--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:
                  (A) The per-item cost avoided by the Postal 
                Service by virtue of such discount.
                  (B) The percentage of such per-item cost 
                avoided that the per-item workshare discount 
                represents.
                  (C) The per-item contribution made to 
                institutional costs.
          (2) Workshare discount defined.--For purposes of this 
        subsection, the term ``workshare discount'' has the 
        meaning given such term under section 3687.
  (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--
          (1) may report summary data on the costs, revenues, 
        and quality of service by market test; and
          (2) shall report such data as the Postal Regulatory 
        Commission requires.
  (d) Supporting Matter.--The Postal Regulatory Commission 
shall have access, in accordance with such regulations as the 
Commission shall prescribe, to the working papers and any other 
supporting matter of the Postal Service and the Inspector 
General in connection with any information submitted under this 
section.
  (e) Content and Form of Reports.--
          (1) In general.--The Postal Regulatory Commission 
        shall, by regulation, prescribe the content and form of 
        the public reports (and any nonpublic annex and 
        supporting matter relating thereto) 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 adequate 
                information to assess the lawfulness of rates 
                charged;
                  (B) avoiding unnecessary or unwarranted 
                administrative effort and expense on the part 
                of the Postal Service; and
                  (C) protecting the confidentiality of 
                commercially sensitive information.
          (2) Revised requirements.--The Commission may, on its 
        own motion or on request of an interested party, 
        initiate proceedings (to be conducted in accordance 
        with regulations that the Commission shall prescribe) 
        to improve the quality, accuracy, or completeness of 
        Postal Service data required by the Commission under 
        this subsection whenever it shall appear that--
                  (A) the attribution of costs or revenues to 
                products has become significantly inaccurate or 
                can be significantly improved;
                  (B) the quality of service data has become 
                significantly inaccurate or can be 
                significantly improved; or
                  (C) 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.
          (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 it is required to make under this section in a 
year, copies of its then most recent--
          (1) comprehensive statement under section 2401(e);
          (2) performance plan under section 2803; and
          (3) program performance reports under section 2804.

Sec. 3653. Annual determination of compliance

  (a) Opportunity for Public Comment.--After receiving the 
reports required under section 3652 for any year, the Postal 
Regulatory Commission shall promptly provide an opportunity for 
comment on such reports by users of the mails, affected 
parties, and an officer of the Commission who shall be required 
to represent the interests of the general public.
  (b) Determination of Compliance or Noncompliance.--Not later 
than 90 days after receiving the submissions required under 
section 3652 with respect to a year, the Postal Regulatory 
Commission shall make a written determination as to--
          (1) whether any rates or fees in effect during such 
        year (for products individually or collectively) were 
        not in compliance with applicable provisions of this 
        chapter (or regulations promulgated thereunder);
          (2) whether any performance goals established under 
        section 2803 or 2804 for such year were not met; and
          (3) whether any market-dominant product failed to 
        meet any service standard during such year.
If, with respect to a year, no instance of noncompliance is 
found under this subsection to have occurred in such year, the 
written determination shall be to that effect.
  (c) If Any Noncompliance Is Found.--If, for a year, a timely 
written determination of noncompliance is made under subsection 
(b), the Postal Regulatory Commission shall take appropriate 
action in accordance with subsections (c)-(e) of section 3662 
(as if a complaint averring such noncompliance had been duly 
filed and found under such section to be justified).
  (d) Rebuttable Presumption.--A timely written determination 
described in the last sentence of subsection (b) shall, for 
purposes of any proceeding under section 3662, create a 
rebuttable presumption of compliance by the Postal Service 
(with regard to the matters described in paragraphs (1) through 
(3) of subsection (b)) during the year to which such 
determination relates.

Sec. 3654. Additional financial reporting

  (a) Additional Financial Reporting.--
          (1) In general.--The Postal Service shall file with 
        the Postal Regulatory Commission beginning with the 
        first full fiscal year following the effective date of 
        this section--
                  (A) within 35 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 2007.
  (b) Financial reporting.--
          (1) The reports required by subsection (a)(1)(B) 
        shall include, with respect to the Postal Service's 
        pension and post-retirement health obligations--
                  (A) the funded status of the Postal Service's 
                pension and postretirement health obligations;
                  (B) components of the net change in the fund 
                balances and obligations and the nature and 
                cause of any significant changes;
                  (C) components of net periodic costs;
                  (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)(A) Beginning with reports for the fiscal year 
        2007, 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.
          (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).

            [SUBCHAPTER IV--POSTAL SERVICES AND COMPLAINTS]

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

           *       *       *       *       *       *       *

[Sec. 3662. Rate and service complaints

  [Interested parties who believe the Postal Service is 
charging rates which do not conform to the policies set out in 
this title or who believe that they are not receiving postal 
service in accordance with the policies of this title may lodge 
a complaint with the Postal Rate Commission in such form and in 
such manner as it may prescribe. The Commission may in its 
discretion hold hearings on such complaint. If the Commission, 
in a matter covered by subchapter II of this chapter, 
determines the complaint to be justified, it shall, after 
proceedings in conformity with section 3624 of this title, 
issue a recommended decision which shall be acted upon in 
accordance with the provisions of section 3625 of this title 
and subject to review in accordance with the provisions of 
section 3628 of this title. If a matter not covered by 
subchapter II of this chapter is involved, and the Commission 
after hearing finds the complaint to be justified, it shall 
render a public report thereon to the Postal Service which 
shall take such action as it deems appropriate.

[Sec. 3663. Annual report on international services

  [(a) Not later than July 1 of each year, the Postal Rate 
Commission shall transmit to each House of Congress a 
comprehensive report of the costs, revenues, and volumes 
accrued by the Postal Service in connection with mail matter 
conveyed between the United States and other countries for the 
previous fiscal year.
  [(b) Not later than March 15 of each year, the Postal Service 
shall provide to the Postal Rate Commission such data as the 
Commission may require to prepare the report required under 
subsection (a) of this section. Data shall be provided in 
sufficient detail to enable the Commission to analyze the 
costs, revenues, and volumes for each international mail 
product or service, under the methods determined appropriate by 
the Commission for the analysis of rates for domestic mail.]

Sec. 3662. Rate and service complaints

  (a) In General.--Interested persons (including an officer of 
the Postal Regulatory Commission representing the interests of 
the general public) who believe the Postal Service is not 
operating in conformance with the requirements of chapter 1, 4, 
or 6, or this chapter (or regulations promulgated under any of 
those chapters) may lodge a complaint with the Postal 
Regulatory Commission in such form and manner as the Commission 
may prescribe.
  (b) Prompt Response Required.--
          (1) In general.--The Postal Regulatory Commission 
        shall, within 90 days after receiving a complaint under 
        subsection (a), either--
                  (A) begin proceedings on such complaint; or
                  (B) issue an order dismissing the complaint 
                (together with a statement of the reasons 
                therefor).
          (2) Treatment of complaints not timely acted on.--For 
        purposes of section 3663, any complaint under 
        subsection (a) on which the Commission fails to act in 
        the time and manner required by paragraph (1) shall be 
        treated in the same way as if it had been dismissed 
        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) Suspension Authority.--The Postal Regulatory Commission 
may suspend implementation of rates or classifications under 
section 3632(b)(3) for a limited period of time pending 
expedited proceedings under this section. In evaluating whether 
circumstances warrant suspension, the Commission shall consider 
factors such as (1) whether there is a substantial likelihood 
that such rate or classification will violate the requirements 
of chapter 1, 4, or 6, or this chapter (or regulations 
promulgated under any of those chapters), (2) whether any 
persons would suffer substantial injury, loss, or damage absent 
a suspension, (3) whether the Postal Service or any other 
persons would suffer substantial injury, loss, or damage under 
a suspension, and (4) the public interest.
  (e) Authority To Order Fines in Cases of Deliberate 
Noncompliance.--In addition, in cases of deliberate 
noncompliance by the Postal Service with the requirements of 
this title, the Postal Regulatory Commission may order, based 
on the nature, circumstances, extent, and seriousness of the 
noncompliance, a fine (in the amount specified by the 
Commission in its order) for each incidence of noncompliance. 
Fines resulting from the provision of competitive products 
shall be paid out of the Competitive Products Fund established 
in section 2011. All receipts from fines imposed under this 
subsection shall be deposited in the general fund of the 
Treasury of the United States.

Sec. 3663. Appellate review

  A person 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. For 
purposes of this section, the term ``person'' includes the 
Postal Service.

Sec. 3664. Enforcement of orders

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

                        [SUBCHAPTER V--GENERAL]

                         SUBCHAPTER VI--GENERAL

Sec. 3681. Reimbursement

  No mailer may be reimbursed for any amount paid under any 
rate or fee which, after such payment, is determined to have 
been unlawful after proceedings in accordance with the 
provisions of [section 3628] sections 3662 through 3664 of this 
title, or is superseded by a lower rate or fee established 
under subchapter II of this chapter.

[Sec. 3682. Size and weight limits

  [The Postal Service may establish size and weight limitations 
for mail matter in the same manner as prescribed for changes in 
mail classification under subchapter II of this chapter.]

Sec. 3682. Size and weight limits

  The Postal Service may establish size and weight limitations 
for mail matter in the market-dominant category of mail 
consistent with regulations the Postal Regulatory Commission 
may prescribe under section 3622. The Postal Service may 
establish size and weight limitations for mail matter in the 
competitive category of mail consistent with its authority 
under section 3632.

           *       *       *       *       *       *       *

Sec. 3684. Limitations

  Except as provided in section 3627 of this title, no 
provision of this chapter shall be construed to give authority 
to the Governors to make any change in any provision [of 
section 3682 or 3683 or chapter 30, 32, or 34 of this title.] 
of this title.

           *       *       *       *       *       *       *

Sec. 3686. Bonus authority

  (a) In General.--The Postal Service may establish one or more 
programs to provide bonuses or other rewards to officers and 
employees of the Postal Service in senior executive or 
equivalent positions to achieve the objectives of this chapter.
  (b) Limitation on Total Compensation.--
          (1) In general.--Under any such program, the Postal 
        Service may award a bonus or other reward in excess of 
        the limitation set forth in the last sentence of 
        section 1003(a), if such program has been approved 
        under paragraph (2). Any such award or bonus may not 
        cause the total compensation of such officer or 
        employee to exceed the total annual compensation 
        payable to the Vice President under section 104 of 
        title 3 as of the end of the calendar year in which the 
        bonus or award is paid.
          (2) Approval process.--If the Postal Service wishes 
        to have the authority, under any program described in 
        subsection (a), to award bonuses or other rewards in 
        excess of the limitation set forth in the last sentence 
        of section 1003(a)--
                  (A) the Postal Service shall make an 
                appropriate request to the Board of Governors 
                in such form and manner as the Board requires; 
                and
                  (B) the Board of Governors shall approve any 
                such request if it 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 
        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.

Sec. 3687. Workshare discounts

  (a) In General.--As part of the regulations established under 
section 3622(a), the Postal Regulatory Commission shall 
establish rules for workshare discounts that ensure that such 
discounts do not exceed the cost that the Postal Service avoids 
as the result of workshare activity, unless--
          (1) the discount is--
                  (A) associated with a new postal service, a 
                change to an existing postal service, or a new 
                workshare initiative related to an existing 
                postal service; and
                  (B) 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;
          (2) a reduction in 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 to costs avoided;
                  (B) result in a further increase in the rates 
                paid by mailers not able to take advantage of 
                the discount; or
                  (C) impede the efficient operation of the 
                Postal Service;
          (3) the amount of the discount above costs avoided--
                  (A) is necessary to mitigate rate shock; and
                  (B) will be phased out over time; or
          (4) the discount is provided in connection with 
        subclasses of mail consisting exclusively of mail 
        matter of educational, cultural, scientific, or 
        informational value.
  (b) Report.--Whenever the Postal Service establishes or 
maintains a workshare discount, the Postal Service shall, at 
the time it publishes the workshare discount rate, submit to 
the Postal Regulatory Commission a detailed report that--
          (1) explains the Postal Service's reasons for 
        establishing or maintaining the rate;
          (2) sets forth the data, economic analyses, and other 
        information relied on by the Postal Service to justify 
        the rate; and
          (3) 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.
  (c) Definition.--For purposes of this section, 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 section 3622(a).

                     PART V--TRANSPORTATION OF MAIL

Chap.                                                               Sec.
50. General.......................................................  5001
[52. Transportation of Mail by Surface Carrier.................... 5201]
     * * * * * * *

CHAPTER 50--GENERAL

           *       *       *       *       *       *       *

Sec. 5001. Provisions for carrying mail

  The Postal Service shall provide for the transportation of 
mail in accordance with the policies established under section 
[101(e) and (f)] 101(f) and (g) of this title and the 
provisions of this chapter. Notwithstanding any other provision 
of this title, the Postal Service may make arrangements on a 
temporary basis for the transportation of mail when, as 
determined by the Postal Service, an emergency arises. Such 
arrangements shall terminate when the emergency ceases and the 
Postal Service is promptly able to secure transportation 
services under other provisions of this title.

           *       *       *       *       *       *       *

Sec. 5005. Mail transportation

  (a) The Postal Service may obtain mail transportation 
service--
          [(1) from common carriers by rail and motor vehicle 
        or persons as provided in chapter 52 of this title;]
          [(2)] (1) from air carriers as provided in chapter 54 
        of this title;
          [(3)] (2) from water carriers as provided in chapter 
        56 of this title; and
          [(4)] (3) by contract from any person [(as defined in 
        section 5201(6) of this title)] or carrier for surface 
        and water transportation under such terms and 
        conditions as it deems appropriate, subject to the 
        provisions of this section.
  (b)(1) Contracts for the transportation of mail procured 
under subsection [(a)(4)] (a)(3) of this section shall be for 
periods not in excess of 4 years [(or where the Postal Service 
determines that special conditions or the use of special 
equipment warrants, not in excess of 6 years)] (or such longer 
period of time as may be determined by the Postal Service to be 
advisable or appropriate) and shall be entered into only after 
advertising a sufficient time previously for proposals. The 
Postal Service, with the consent of the holder of any such 
contract, may adjust the compensation allowed under that 
contract for increased or decreased costs resulting from 
changed conditions occurring during the term of the contract.
  (2) A contract under subsection [(a)(4)] (a)(3) of this 
section may be renewed at the existing rate by mutual agreement 
between the contractor or subcontractor and the Postal Service.

           *       *       *       *       *       *       *

  (c) The Postal Service, in determining whether to obtain 
transportation of mail [by carrier or person under subsection 
(a)(1) of this section, by contract under subsection (a)(4) of 
this section, or] by contract under subsection (a)(3) of this 
section or by Government motor vehicle, shall use the mode of 
transportation which best serves the public interest, due 
consideration being given to the cost of the transportation 
service under each mode.

           *       *       *       *       *       *       *

         [CHAPTER 52--TRANSPORTATION OF MAIL BY SURFACE CARRIER

[Sec.
[5201. Definitions.
[5202. Applicability.
[5203. Authorization of service by carrier.
[5204. Changes in service; placement of equipment.
[5205. Evidence of service.
[5206. Fines and deductions.
[5207. Surface Transportation Board to fix rates.
[5208. Procedures.
[5209. Special rates.
[5210. Intermodal transportation.
[5211. Statistical studies.
[5212. Special contracts.
[5213. Carrier operations; receipts; expenditures.
[5214. Agreements with passenger common carriers by motor vehicle.
[5215. Star route certification.

[Sec. 5201. Definitions

  [For purposes of this chapter--
          [(1) ``Board'' means the Surface Transportation 
        Board;
          [(2) ``carrier'' and ``regulated surface carrier'' 
        mean a railroad, a freight forwarder, or a motor 
        carrier;
          [(3) ``railroad'' means a railway common carrier, 
        including an electric urban and interurban railway 
        common carrier;
          [(4) ``freight forwarder'' means any regulated 
        freight forwarder which holds itself out to the general 
        public as a carrier to transport or provide 
        transportation of property as authorized by a 
        registration issued by the Board;
          [(5) ``motor carrier'' means a motor carrier, except 
        a passenger-carrying motor vehicle of such a carrier, 
        within the meaning of section 13102(12) of title 49, 
        that holds a registration issued by the Board;
          [(6) ``person'' includes any person other than a 
        carrier holding a certificate or registration issued by 
        the Board; and
          [(7) ``mail'' includes equipment and supplies of the 
        Postal Service.

[Sec. 5202. Applicability

  [This chapter applies to mail transportation performed by any 
person or carrier or carrier combination regardless of the mode 
of transportation actually used to provide the service.

[Sec. 5203. Authorization of service by carrier

  [(a) The Postal Service may establish mail routes and 
authorize mail transportation service thereon.
  [(b) A carrier shall transport mail offered for 
transportation by the Postal Service in the manner, under the 
conditions, and with the service prescribed by the Postal 
Service. A carrier is entitled to receive fair and reasonable 
compensation for the transportation and service connected 
therewith.
  [(c) The Postal Service shall determine the trains or motor 
vehicles upon which mail shall be transported, except that no 
carrier shall be compelled to transport mail on any train or 
vehicle which is operated exclusively for the transportation of 
passengers and their baggage.
  [(d) A carrier shall transport with due speed such mail as 
the Postal Service directs under this section.
  [(e) No carrier shall be required to serve territory it is 
not otherwise authorized to serve, to provide service for the 
Postal Service at a rate which is less than compensatory cost, 
or to provide service at a detriment to the carrier or its 
other customers.
  [(f) Any order or determination of the Postal Service 
providing for the transportation of mail by a motor carrier 
shall be filed with the Board. If the Board finds, within 90 
days after the filing, that the order or determination will be 
detrimental to the motor carrier or its other customers, or 
that such carrier does not operate equipment suitable for the 
transportation of mail, the order or determination shall be 
terminated.
  [(g) An order or determination of the Postal Service under 
this section shall be consistent with the orders of the Board 
under sections 5207 and 5208 of this title.

[Sec. 5204. Changes in service; placement of equipment

  [(a) The Postal Service may authorize, according to the need 
therefor, new or additional mail transportation service by 
carriers at the rate or compensation fixed under this chapter. 
It may reduce or discontinue service with pro rata reductions 
in compensation and indemnity for the loss of reasonable 
investment in equipment used exclusively for mail.
  [(b) A railroad shall place cars used for full or apartment 
post office service in position at such times before departure 
as the Postal Service directs.

[Sec. 5205. Evidence of service

  [A carrier shall submit evidence of its performance of mail 
transportation service, signed by an authorized official, in 
such form and at such times as the Postal Service requires. 
Mail transportation service is considered that of the carrier 
performing it regardless of the ownership of the property used 
by the carrier.

[Sec. 5206. Fines and deductions

  [(a) The Postal Service may fine any carrier an amount not to 
exceed $500 for each day the carrier refuses to perform mail 
transportation services required by it at rates or compensation 
established under this chapter.
  [(b) The Postal Service shall fine a carrier an amount it 
deems reasonable for failure or refusal by that carrier to 
transport mail as required by the Postal Service under section 
5203 of this title.
  [(c) The Board may make deductions from the compensation of a 
carrier for failure to perform mail transportation service as 
required under section 5203 of this title. If the failure to 
perform is due to the fault of the carrier, it may deduct a sum 
not exceeding twice the compensation applying to such service. 
Such deductions shall not be made prior to the expiration of 60 
days following service upon the carrier by the Board of notice 
of intention to assess a fine or make a deduction and of the 
basis therefor.

[Sec. 5207. Surface Transportation Board to fix rates

  [(a) The Board shall determine and fix the fair and 
reasonable rates or compensation for the transportation of mail 
by carrier and the service connected therewith, and shall 
prescribe the method of computing such rates or compensation. 
The Board shall publish its orders stating its determination 
under this section which shall remain in force until changed by 
it after notice and hearing.
  [(b) For the purpose of determining and fixing rates or 
compensation under this section, the Board may make just and 
reasonable classifications of carriers and, where just and 
equitable, fix general rates applicable to carriers in the same 
classification.
  [(c) In determining and fixing fair and reasonable rates or 
compensation under this section, the Board shall consider the 
relation between the Government and carriers as public service 
corporations, and the nature of public service as 
distinguished, if there is a distinction, from the ordinary 
transportation business of the carriers.
  [(d) Initial rates or compensation for mail transportation 
service by any carrier or carriers shall be those agreed to by 
the Postal Service and the carrier or carriers, and such rates 
or compensation shall continue in effect until such time as the 
Board fixes the rates or compensation under subsection (a) of 
this section.

[Sec. 5208. Procedures

  [(a) At any time after 6 months from the entry of an order 
stating the Board's determination under section 5207 of this 
title, the Postal Service or an interested carrier may apply 
for a reexamination and substantially similar proceedings as 
have theretofore been had shall be followed with respect to the 
rates of compensation for services covered by the application. 
At the conclusion of the hearing the Board shall enter an order 
stating its determination.
  [(b) Except as authorized by sections 5207(d), 5209, 5210, 
and 5212 of this title, the Postal Service shall pay a carrier 
the rates or compensation so determined and fixed for 
application at such stated times as named in the order.
  [(c) The Postal Service may file with the Board a 
comprehensive plan stating--
          [(1) its requirements for the transportation of mail 
        by carrier;
          [(2) the character and speed of the trains or motor 
        vehicles which are to carry the various kinds of mail;
          [(3) the service, both terminal and en route, which 
        carriers are to render;
          [(4) what it believes to be the fair and reasonable 
        rates or compensation for the services required; and
          [(5) all other information which may be material to 
        the inquiry, but such other information may be filed at 
        any time in the discretion of the Board.
  [(d) When a comprehensive plan is filed, the Board shall give 
notice of not less than 30 days to each carrier required by the 
Postal Service to transport mail pursuant to such plan. A 
carrier may file its answer at the time fixed by the Board, but 
not later than 30 days after the expiration date fixed by the 
Board in the notice, and the Board shall proceed with the 
hearing.

[Sec. 5209. Special rates

  [Upon petition by the Postal Service, the Board shall 
determine and fix carload or truckload, or less than carload or 
truckload, rates for the transportation of mail not entitled to 
high priority in transportation. A carrier shall perform the 
service at the rates so determined when requested to do so and 
under the conditions prescribed by the Postal Service.

[Sec. 5210. Intermodal transportation

  [The Postal Service may permit a carrier to perform mail 
transportation by any form of transportation it deems 
appropriate at rates or compensation not exceeding those 
allowable for similar service by the designated form of 
transportation.

[Sec. 5211. Statistical studies

  [The Postal Service may arrange for weighing and measuring 
mail transported on carrier mail routes and make other 
computations for statistical and administrative purposes to 
carry out the purposes of this chapter.

[Sec. 5212. Special contracts

  [The Postal Service may enter into special contracts with any 
carrier or person, without advertising, for bids and for 
periods not in excess of 4 years. It may contract to pay lower 
rates or compensation or, where in its judgment conditions 
warrant, higher rates or compensation than those determined or 
fixed by the Board. The fact that the Board has not prescribed 
rates or compensation for the carrier involved, under section 
5207 of this title, shall not preclude execution of a contract 
under this section. Such contracts may be negotiated only after 
reasonable notice has been posted in advance in post offices on 
the post roads to be served, and other carriers or persons have 
been given an opportunity to offer to negotiate for the 
transportation of mail.

[Sec. 5213. Carrier operations; receipts; expenditures

  [The Postal Service shall request any carrier transporting 
the mails to furnish, under seal, such data relating to the 
operations, receipts, and expenditures of such carrier as may, 
in its judgment, be deemed necessary to enable it to ascertain 
the cost of mail transportation and the proper compensation to 
be paid for such service.

[Sec. 5214. Agreements with passenger common carriers by motor vehicle

  [The Postal Service may enter into contracts under such terms 
and conditions as it shall prescribe and without advertising 
for bids for the transportation of mail, in passenger-carrying 
motor vehicles, by passenger common carriers, or by motor 
vehicles over the regular routes on which the carrier is 
permitted by law to transport passengers.

[Sec. 5215. Star route certification

  [(a) Any person who was a contractor under a star route, mail 
messenger, or contract motor vehicle service contract on the 
effective date of this section (or successor in interest to any 
such person), shall, upon application to the Board for the 
territory within which such contractor operated on or before 
the effective date of this section be issued a certificate of 
public convenience and necessity as a motor carrier for the 
transportation of mail by the Board without the Board's 
requiring further proof that the public convenience and 
necessity will be served by such operation and without further 
proceedings.
  [(b) Applications of persons who were not contractors on the 
effective date of this section shall be decided in accordance 
with applicable Board procedure.
  [(c) For purposes of this section, the term ``person'' has 
the same meaning given that term under section 1 of title 1.]

               CHAPTER 54--TRANSPORTATION OF MAIL BY AIR

          * * * * * * *

Sec. 5402. Contracts for transportation of mail by air

  (a) * * *
          * * * * * * *
  (d) If the Postal Service determines that service by 
certificated air carriers or combination of air carriers 
between any pair or pairs of points in foreign air 
transportation is not adequate for its purposes, it may 
contract [for a period of not more than 4 years], without 
advertising for bids, in such manner and under such terms and 
conditions as it may deem appropriate, with any air taxi 
operator or combination thereof for such air transportation 
service. Contracts made under this subsection may be renewed at 
the existing rate by mutual agreement between the holder and 
the Postal Service. The Postal Service, with the consent of the 
air taxi operator, may adjust the compensation under such 
contracts for increased or decreased costs occasioned by 
changed conditions occurring during the contract term. The 
Postal Service shall cancel such a contract when the Secretary 
authorizes an additional certificated carrier or carriers to 
provide service between any pair or pairs of points covered by 
the contract, and such carrier or carriers inaugurate schedules 
adequate for its purposes.
          * * * * * * *

              CHAPTER 56--TRANSPORTATION OF MAIL BY VESSEL

          * * * * * * *

Sec. 5605. Contracts for transportation of mail by vessel

  The Postal Service may contract for the transportation of 
mail by vessel without advertising for bids [for periods of not 
in excess of 4 years].
                              ----------                              

            SECTION 1402 OF THE VICTIMS OF CRIME ACT OF 1984

                           crime victims fund
  Sec. 1402. (a) * * *
  (b) Except as limited by subsection (c), there shall be 
deposited in the Fund--
          (1) all fines that are collected from persons 
        convicted of offenses against the United States 
        except--
                  (A) * * *
                  (B) fines to be paid into--
                          (i) * * *
                          (ii) the Postal Service Fund pursuant 
                        to sections 2601(a)(2) and 2003 of 
                        title 39 of the United States Code and 
                        for the purposes set forth in section 
                        [404(a)(8)] 404(a)(7) of such title 39;
          * * * * * * *
                              ----------                              

TITLE 5, UNITED STATES CODE

           *       *       *       *       *       *       *

PART I--THE AGENCIES GENERALLY

           *       *       *       *       *       *       *

CHAPTER 1--ORGANIZATION

           *       *       *       *       *       *       *

Sec. 104. Independent establishment

  For the purpose of this title, ``independent establishment'' 
means--
          (1) an establishment in the executive branch (other 
        than the United States Postal Service or the [Postal 
        Rate] Postal Regulatory Commission) which is not an 
        Executive department, military department, Government 
        corporation, or part thereof, or part of an independent 
        establishment; and

           *       *       *       *       *       *       *

CHAPTER 3--POWERS

           *       *       *       *       *       *       *

Sec. 306. Strategic plans

  (a) * * *

           *       *       *       *       *       *       *

  (f) For purposes of this section the term ``agency'' means an 
Executive agency defined under section 105, but does not 
include the Central Intelligence Agency, the General Accounting 
Office, the Panama Canal Commission, the United States Postal 
Service, and the [Postal Rate] Postal Regulatory Commission.

           *       *       *       *       *       *       *

                          PART III--EMPLOYEES

Subpart A--General Provisions

           *       *       *       *       *       *       *

CHAPTER 21--DEFINITIONS

           *       *       *       *       *       *       *

Sec. 2104. Officer

  (a) * * *
  (b) Except as otherwise provided by law, an officer of the 
United States Postal Service or of the [Postal Rate] Postal 
Regulatory Commission is deemed not an officer for purposes of 
this title.

           *       *       *       *       *       *       *

Subpart B--Employment and Retention

           *       *       *       *       *       *       *

CHAPTER 33--EXAMINATION, SELECTION, AND PLACEMENT

           *       *       *       *       *       *       *

             SUBCHAPTER VI--ASSIGNMENTS TO AND FROM STATES

Sec. 3371. Definitions

  For the purpose of this subchapter--
          (1) * * *

           *       *       *       *       *       *       *

          (3) ``Federal agency'' means an Executive agency, 
        military department, a court of the United States, the 
        Administrative Office of the United States Courts, the 
        Library of Congress, the Botanic Garden, the Government 
        Printing Office, the Congressional Budget Office, the 
        United States Postal Service, the [Postal Rate] Postal 
        Regulatory Commission, the Office of the Architect of 
        the Capitol, the Office of Technology Assessment, and 
        such other similar agencies of the legislative and 
        judicial branches as determined appropriate by the 
        Office of Personnel Management; and

           *       *       *       *       *       *       *

Subpart D--Pay and Allowances

           *       *       *       *       *       *       *

CHAPTER 53--PAY RATES AND SYSTEMS

           *       *       *       *       *       *       *

SUBCHAPTER II--EXECUTIVE SCHEDULE PAY RATES

           *       *       *       *       *       *       *

Sec. 5314. Positions at level III

  Level III of the Executive Schedule applies to the following 
positions, for which the annual rate of basic pay shall be the 
rate determined with respect to such level under chapter 11 of 
title 2, as adjusted by section 5318 of this title:
          Solicitor General of the United States.

           *       *       *       *       *       *       *

          Chairman, [Postal Rate] Postal Regulatory Commission.

           *       *       *       *       *       *       *

Sec. 5315. Positions at level IV

  Level IV of the Executive Schedule applies to the following 
positions, for which the annual rate of basic pay shall be the 
rate determined with respect to such level under chapter 11 of 
title 2, as adjusted by section 5318 of this title:
          Deputy Administrator of General Services.

           *       *       *       *       *       *       *

          Members, [Postal Rate] Postal Regulatory Commission 
        (4).

           *       *       *       *       *       *       *

CHAPTER 55--PAY ADMINISTRATION

           *       *       *       *       *       *       *

SUBCHAPTER II--WITHHOLDING PAY

           *       *       *       *       *       *       *

Sec. 5514. Installment deduction for indebtedness to the United States

  (a)(1) * * *

           *       *       *       *       *       *       *

  (5) For purposes of this subsection--
          (A) * * *
                  (B) ``agency'' includes executive departments 
                and agencies, the United States Postal Service, 
                the [Postal Rate] Postal Regulatory Commission, 
                the United States Senate, the United States 
                House of Representatives, and any court, court 
                administrative office, or instrumentality in 
                the judicial or legislative branches of the 
                Government, and government corporations.

           *       *       *       *       *       *       *

Subpart F--Labor-Management and Employee Relations

           *       *       *       *       *       *       *

CHAPTER 73--SUITABILITY, SECURITY, AND CONDUCT

           *       *       *       *       *       *       *

              SUBCHAPTER IV--FOREIGN GIFTS AND DECORATIONS

Sec. 7342. Receipt and disposition of foreign gifts and decorations

  (a) For the purpose of this section--
          (1) ``employee'' means--
                  (A) an employee as defined by section 2105 of 
                this title and an officer or employee of the 
                United States Postal Service or of the [Postal 
                Rate] Postal Regulatory Commission;

           *       *       *       *       *       *       *

CHAPTER 75--ADVERSE ACTIONS

           *       *       *       *       *       *       *

SUBCHAPTER II--REMOVAL, SUSPENSION FOR MORE THAN 14 DAYS, REDUCTION IN 
             GRADE OR PAY, OR FURLOUGH FOR 30 DAYS OR LESS

Sec. 7511. Definitions; application

  (a) For the purpose of this subchapter--
          (1) ``employee'' means--
                  (A) * * *
                  (B) a preference eligible in the excepted 
                service who has completed 1 year of current 
                continuous service in the same or similar 
                positions--
                          (i) in an Executive agency; or
                          (ii) in the United States Postal 
                        Service or [Postal Rate] Postal 
                        Regulatory Commission; and

           *       *       *       *       *       *       *

Subpart G--Insurance and Annuities

           *       *       *       *       *       *       *

CHAPTER 83--RETIREMENT

           *       *       *       *       *       *       *

SUBCHAPTER III--CIVIL SERVICE RETIREMENT

           *       *       *       *       *       *       *

Sec. 8334. Deductions, contributions, and deposits

  (a)(1)(A) * * *
  (B)(i) * * *
  (ii) In the case of an employee of the United States Postal 
Service, the amount to be contributed under this subparagraph 
shall (instead of the amount described in clause (i)) be equal 
to [the product derived by multiplying the employee's basic pay 
by the percentage equal to--
          [(I) the normal-cost percentage for the applicable 
        employee category listed in subparagraph (A), minus
          [(II) the percentage deduction rate that applies with 
        respect to such employee under subparagraph (A).] zero.

           *       *       *       *       *       *       *

Sec. 8348. Civil Service Retirement and Disability Fund

  (a) * * *

           *       *       *       *       *       *       *

  [(h)(1)(A) For purposes of this subsection, ``Postal 
supplemental liability'' means the estimated excess, as 
determined by the Office, of--
          [(i) the actuarial present value of all future 
        benefits payable from the Fund under this subchapter 
        attributable to the service of current or former 
        employees of the United States Postal Service, over
          [(ii) 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 
                pursuant to section 8334;
                  [(II) the actuarial present value of the 
                future contributions to be made pursuant to 
                section 8334 with respect to employees of the 
                United States Postal Service currently subject 
                to this subchapter;
                  [(III) that portion of the Fund balance, as 
                of the date the Postal supplemental liability 
                is determined, attributable to payments to the 
                Fund by the United States Postal Service and 
                its employees, including earnings on those 
                payments; and
                  [(IV) any other appropriate amount, as 
                determined by the Office in accordance with 
                generally accepted actuarial practices and 
                principles.
  [(B)(i) In computing the actuarial present value of future 
benefits, the Office shall include the full value of benefits 
attributable to military and volunteer service for United 
States Postal Service employees first employed after June 30, 
1971, and a prorated share of the value of benefits 
attributable to military and volunteer service for United 
States Postal Service employees first employed before July 1, 
1971.
  [(ii) Military service so included shall not be included in 
the computation of any amount under subsection (g)(2).
  [(2)(A) Not later than June 30, 2004, the Office shall 
determine the Postal supplemental liability as of September 30, 
2003. The Office shall establish an amortization schedule, 
including a series of equal annual installments commencing 
September 30, 2004, which provides for the liquidation of such 
liability by September 30, 2043.
  [(B) The Office shall redetermine the Postal supplemental 
liability as of the close of the fiscal year, for each fiscal 
year beginning after September 30, 2003, through the fiscal 
year ending September 30, 2038, and shall establish a new 
amortization schedule, including a series of equal annual 
installments commencing on September 30 of the subsequent 
fiscal year, which provides for the liquidation of such 
liability by September 30, 2043.
  [(C) The Office shall redetermine the Postal supplemental 
liability as of the close of the fiscal year for each fiscal 
year beginning after September 30, 2038, and shall establish a 
new amortization schedule, including a series of equal annual 
installments commencing on September 30 of the subsequent 
fiscal year, which provides for the liquidation of such 
liability over 5 years.
  [(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 dynamic actuarial 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.
  [(F) An amortization schedule established under subparagraph 
(B) or (C) shall supersede any amortization schedule previously 
established under this paragraph.
  [(3) Notwithstanding any other provision of law, in computing 
the amount of any payment under any other subsection of this 
section that is based upon the amount of the unfunded 
liability, such payment shall be computed disregarding that 
portion of the unfunded liability that the Office determines 
will be liquidated by payments under this subsection.
  [(4) Notwithstanding any other provision of this subsection, 
any determination or redetermination made by the Office under 
this subsection shall, upon request of the Postal Service, be 
subject to reconsideration and review (including adjustment by 
the Board of Actuaries of the Civil Service Retirement System) 
to the same extent and in the same manner as provided under 
section 8423(c).]
  (h)(1) For purposes of this subsection, a Postal surplus (or 
supplemental liability) is the amount, as estimated by the 
Office, by which--
          (A) the actuarial present value of all future 
        benefits which are payable from the Fund under this 
        subchapter to current or former employees of the United 
        States Postal Service, or their survivors, and 
        attributable to civilian employment with the Postal 
        Service, is less than (or greater than)
          (B) the sum of--
                  (i) the actuarial present value of deductions 
                to be withheld from the future basic pay of 
                employees of the Postal Service currently 
                subject to this subchapter pursuant to section 
                8334;
                  (ii) that portion of the Fund balance, as of 
                the date such surplus or supplemental liability 
                is determined, attributable to payments to the 
                Fund by the Postal Service and its employees, 
                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)(i) Not later than June 15, 2006, the Office shall 
determine the Postal surplus or supplemental liability as of 
September 30, 2005.
  (ii) If a supplemental liability is determined under this 
subparagraph for fiscal year 2005, the Office shall establish 
an amortization schedule, including a series of equal annual 
installments commencing September 30, 2006, which provides for 
the liquidation of such liability by September 30, 2043.
  (iii) If a surplus is determined under this subparagraph for 
fiscal year 2005, the amount of the surplus shall be 
transferred to the Postal Service Retiree Health Benefits Fund 
by June 30, 2006.
  (B)(i) For each of fiscal years 2006 through 2038, the Office 
shall determine the Postal surplus or supplemental liability as 
of the close of such fiscal year, with each such determination 
to be made by June 15th of the following fiscal year.
  (ii) If a supplemental liability is determined under this 
subparagraph for a fiscal year, the Office shall establish an 
amortization schedule, including a series of equal annual 
installments commencing on September 30 of the following fiscal 
year, which provides for the liquidation of such liability by 
September 30, 2043.
  (iii)(I) If a surplus of $500,000,000 or more is determined 
under this subparagraph for a fiscal year, the amount of the 
surplus shall be transferred to the Postal Service Retiree 
Health Benefits Fund by June 30th of the following fiscal year.
  (II) If a surplus of less than $500,000,000 is determined 
under this subparagraph for a fiscal year, the surplus shall 
remain in the Fund, subject to transfer in a subsequent fiscal 
year under subclause (I) or subparagraph (C)(iii).
  (C)(i) Not later than June 15, 2040, the Office shall 
determine the Postal surplus or supplemental liability as of 
September 30, 2039.
  (ii) If a supplemental liability is determined under this 
subparagraph for fiscal year 2039, the Office shall establish 
an amortization schedule, including a series of equal annual 
installments commencing September 30, 2040, which provides for 
the liquidation of such liability by September 30, 2043.
  (iii) If a surplus is determined under this subparagraph for 
fiscal year 2039, the amount of the surplus--
          (I) shall be applied first toward reducing the amount 
        of any supplemental liability described in section 
        8423(b)(1)(B); and
          (II) to the extent that any portion of such surplus 
        remains after the application of subclause (I), shall, 
        not later than June 30, 2040, be transferred to the 
        Postal Service Retiree Health Benefits Fund.
  (D) An amortization schedule under this paragraph--
          (i) shall be established 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;
          (ii) shall supersede any amortization schedule 
        previously established under this paragraph; and
          (iii) shall not be taken into account, for purposes 
        of any determination of Postal surplus or supplemental 
        liability, except to the extent of any amounts under 
        such schedule actually paid.
  (E)(i) The Postal Service shall pay to the Office the amounts 
due under any amortization schedule established under this 
paragraph, to the extent not superseded or canceled.
  (ii) A determination under subparagraph (B)(i) or (C)(i) that 
no supplemental liability exists shall cancel any amortization 
schedule previously established under this paragraph, to the 
extent of any amounts first coming due after the close of the 
fiscal year to which such determination relates.
  (3) Notwithstanding any other provision of law, in computing 
the amount of any payment under any other subsection of this 
section that is based on the amount of the unfunded liability, 
such payment shall be computed disregarding that portion of the 
unfunded liability that the Office determines will be 
liquidated by payments under this subsection.
  (4) As used in this subsection, ``Postal Service Retiree 
Health Benefits Fund'' refers to the Postal Service Retiree 
Health Benefits Fund, as established by section 8909a.

           *       *       *       *       *       *       *

CHAPTER 84--FEDERAL EMPLOYEES' RETIREMENT SYSTEM

           *       *       *       *       *       *       *

SUBCHAPTER I--GENERAL PROVISIONS

           *       *       *       *       *       *       *

Sec. 8402. Federal Employees' Retirement System; exclusions

  (a) * * *

           *       *       *       *       *       *       *

  (c)(1) The Office may exclude from the operation of this 
chapter an employee or group of employees in or under an 
Executive agency, the United States Postal Service, or the 
[Postal Rate] Postal Regulatory Commission, whose employment is 
temporary or intermittent, except an employee whose employment 
is part-time career employment (as defined in section 3401(2)).

           *       *       *       *       *       *       *

SUBCHAPTER II--BASIC ANNUITY

           *       *       *       *       *       *       *

Sec. 8423. Government contributions

  (a) * * *
  (b)(1) The Office shall compute--
          (A) the amount of the supplemental liability of the 
        Fund with respect to individuals other than those to 
        whom subparagraph (B) relates, and
          (B) the amount of the supplemental liability of the 
        Fund with respect to current or former employees of the 
        United States Postal Service (and the [Postal Rate] 
        Postal Regulatory Commission) and their survivors;
as of the close of each fiscal year beginning after September 
30, 1987.

           *       *       *       *       *       *       *

SUBCHAPTER VII--FEDERAL RETIREMENT THRIFT INVESTMENT MANAGEMENT SYSTEM

           *       *       *       *       *       *       *

Sec. 8474. Executive Director

  (a) * * *

           *       *       *       *       *       *       *

  (c) The Executive Director may--
          (1) * * *

           *       *       *       *       *       *       *

          (4) secure directly from an Executive agency, the 
        United States Postal Service, or the [Postal Rate] 
        Postal Regulatory Commission any information necessary 
        to carry out the provisions of this subchapter or 
        subchapter III of this chapter and policies of the 
        Board;

           *       *       *       *       *       *       *

                      CHAPTER 89--HEALTH INSURANCE

Sec.
8901.  Definitions.
     * * * * * * *
8909a. Postal Service Retiree Health Benefits Fund.

           *       *       *       *       *       *       *

Sec. 8906. Contributions

  (a) * * *

           *       *       *       *       *       *       *

  (g)(1) * * *
  (2)(A) The Government contributions authorized by this 
section for health benefits for an individual who first becomes 
an annuitant by reason of retirement from employment with the 
United States Postal Service on or after July 1, 1971, or for a 
survivor of such an individual or of an individual who died on 
or after July 1, 1971, while employed by the United States 
Postal Service, shall be paid [by the United States Postal 
Service.] first from the Postal Service Retiree Health Benefits 
Fund up to the amount contained therein, with any remaining 
amount paid by the United States Postal Service.

           *       *       *       *       *       *       *

Sec. 8909a. Postal Service Retiree Health Benefits Fund

  (a) There is in the Treasury of the United States a Postal 
Service Retiree Health Benefits Fund (hereinafter in this 
section referred to as the ``Fund'') which is administered by 
the Office of Personnel Management. Any amounts transferred to 
the Fund under section 8348(h)(2) shall yield interest at a 
rate equal to the weighted average yield of all the investments 
in the Civil Service Retirement and Disability Fund as of the 
date of transfer. All other investments of amounts in the Fund 
shall be made in accordance with subsections (c)-(e) of section 
8348.
  (b) The Fund is available without fiscal year limitation for 
payments required by section 8906(g)(2).
  (c)(1) Not later than June 30, 2006, and by June 30 of each 
succeeding year, the Office of Personnel Management shall 
compute the net present value of the excess of future payments 
required by section 8906(g)(2)(A) for current and future United 
States Postal Service annuitants over the value of the assets 
of the Fund as of the end of the fiscal year ending on 
September 30 of that year. The actuarial costing method to be 
used by the Office and all actuarial assumptions shall be 
established by the Office after consultation with the United 
States Postal Service and must be in accordance with generally 
accepted actuarial practices and principles.
  (2) Not later than September 30, 2006, and by September 30 of 
each succeeding year, the Office shall compute and the United 
States Postal Service shall pay into such Fund--
          (A) the portion of the net present value described in 
        paragraph (1) attributable to the current year's 
        service of Postal Service employees; and
          (B) interest on the net present value described in 
        paragraph (1) for that fiscal year, at the interest 
        rate used in computing that net present value;
except that the amount otherwise payable by the Postal Service 
under the preceding provisions of this paragraph by not later 
than September 30, 2006, shall be reduced by the total 
contributions made by the Postal Service under section 
8906(g)(2) and attributable to fiscal year 2006 (as determined 
by the Office).
  (3)(A) Any computation or other determination of the Office 
under this subsection shall, upon request of the Postal 
Service, be subject to review by the Postal Regulatory 
Commission. The Commission shall submit a report containing the 
results of any such review to the Postal Service, the Office of 
Personnel Management, and the Congress.
  (B) Upon receiving the report of the Postal Regulatory 
Commission, the Office of Personnel Management shall reconsider 
its computation or other determination 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 the Congress.
  (4) The Office shall promulgate, after consultation with the 
United States Postal Service, any regulations it deems 
necessary under this subsection.

           *       *       *       *       *       *       *

                              ----------                              

          SECTION 101 OF THE ETHICS IN GOVERNMENT ACT OF 1978

                        PERSONS REQUIRED TO FILE

  Sec. 101. (a) * * *

           *       *       *       *       *       *       *

  (f) The officers and employees referred to in subsections 
(a), (d), and (e) are--
          (1) * * *

           *       *       *       *       *       *       *

          (6) the Postmaster General, the Deputy Postmaster 
        General, each Governor of the Board of Governors of the 
        United States Postal Service and each officer or 
        employee of the United States Postal Service or [Postal 
        Rate] Postal Regulatory Commission who occupies a 
        position for which the rate of basic pay is equal to or 
        greater than 120 percent of the minimum rate of basic 
        pay payable for GS-15 of the General Schedule;

           *       *       *       *       *       *       *

                              ----------                              

             SECTION 501 OF THE REHABILITATION ACT OF 1973

              EMPLOYMENT OF INDIVIDUALS WITH DISABILITIES

  Sec. 501. (a) * * *
  (b) Each department, agency, and instrumentality (including 
the United States Postal Service and the [Postal Rate Office] 
Postal Regulatory Commission) in the executive branch and the 
Smithsonian Institution shall, within one hundred and eighty 
days after the date of enactment of this Act, submit to the 
Commission and to the Committee an affirmative action program 
plan for the hiring, placement, and advancement of individuals 
with disabilities in such department, agency, instrumentality, 
or Institution. Such plan shall include a description of the 
extent to which and methods whereby the special needs of 
employees who are individuals with disabilities are being met. 
Such plan shall be updated annually, and shall be reviewed 
annually and approved by the Commission, if the Commission 
determines, after consultation with the Committee, that such 
plan provides sufficient assurances, procedures, and 
commitments to provide adequate hiring, placement, and 
advancement opportunities for individuals with disabilities.

           *       *       *       *       *       *       *

                              ----------                              

              SECTION 3502 OF TITLE 44, UNITED STATES CODE

Sec. 3502. Definitions

  As used in this subchapter--
          (1) * * *

           *       *       *       *       *       *       *

          (5) the term ``independent regulatory agency'' means 
        the Board of Governors of the Federal Reserve System, 
        the Commodity Futures Trading Commission, the Consumer 
        Product Safety Commission, the Federal Communications 
        Commission, the Federal Deposit Insurance Corporation, 
        the Federal Energy Regulatory Commission, the Federal 
        Housing Finance Board, the Federal Maritime Commission, 
        the Federal Trade Commission, the Interstate Commerce 
        Commission, the Mine Enforcement Safety and Health 
        Review Commission, the National Labor Relations Board, 
        the Nuclear Regulatory Commission, the Occupational 
        Safety and Health Review Commission, the [Postal Rate] 
        Postal Regulatory Commission, the Securities and 
        Exchange Commission, and any other similar agency 
        designated by statute as a Federal independent 
        regulatory agency or commission;

           *       *       *       *       *       *       *

                              ----------                              

INSPECTOR GENERAL ACT OF 1978

           *       *       *       *       *       *       *

                  AUTHORITY; ADMINISTRATION PROVISIONS

  Sec. 6. (a) * * *

           *       *       *       *       *       *       *

  (e)(1) * * *

           *       *       *       *       *       *       *

  (3) The Inspector General offices of the Department of 
Commerce, Department of Education, Department of Energy, 
Department of Health and Human Services, Department of Homeland 
Security, Department of Housing and Urban Development, 
Department of the Interior, Department of Justice, Department 
of Labor, Department of State, Department of Transportation, 
Department of the Treasury, Department of Veterans Affairs, 
Agency for International Development, Environmental Protection 
Agency, Federal Deposit Insurance Corporation, Federal 
Emergency Management Agency, General Services Administration, 
National Aeronautics and Space Administration, Nuclear 
Regulatory Commission, Office of Personnel Management, Railroad 
Retirement Board, Small Business Administration, Social 
Security Administration, [and the] Tennessee Valley Authority, 
and United States Postal Service are exempt from the 
requirement of paragraph (2) of an initial determination of 
eligibility by the Attorney General.

           *       *       *       *       *       *       *

   REQUIREMENTS FOR FEDERAL ENTITIES AND DESIGNATED FEDERAL ENTITIES

  Sec. 8G. (a) Notwithstanding section 11 of this Act, as used 
in this section--
          (1) * * *
          (2) the term ``designated Federal entity'' means 
        Amtrak, the Appalachian Regional Commission, the Board 
        of Governors of the Federal Reserve System, the Board 
        for International Broadcasting, the Commodity Futures 
        Trading Commission, the Consumer Product Safety 
        Commission, the Corporation for Public Broadcasting, 
        the Equal Employment Opportunity Commission, the Farm 
        Credit Administration, the Federal Communications 
        Commission, the Federal Deposit Insurance Corporation, 
        the Federal Election Commission, the Election 
        Assistance Commission, the Federal Housing Finance 
        Board, the Federal Labor Relations Authority, the 
        Federal Maritime Commission, the Federal Trade 
        Commission, the Legal Services Corporation, the 
        National Archives and Records Administration, the 
        National Credit Union Administration, the National 
        Endowment for the Arts, the National Endowment for the 
        Humanities, the National Labor Relations Board, the 
        National Science Foundation, the Panama Canal 
        Commission, the Peace Corps, the Pension Benefit 
        Guaranty Corporation, the Securities and Exchange 
        Commission, the Smithsonian Institution, the United 
        States International Trade Commission, [and the United 
        States Postal Service;] and the Postal Regulatory 
        Commission;

           *       *       *       *       *       *       *

          (4) the term ``head of the designated Federal 
        entity'' means any person or persons designated by 
        statute as the head of a designated Federal entity and 
        if no such designation exists, the chief policymaking 
        officer or board of a designated Federal entity as 
        identified in the list published pursuant to subsection 
        (h)(1) of this section, [except that--
                  [(A) with respect to the National Science 
                Foundation, such term means the National 
                Science Board; and
                  [(B) with respect to the United States Postal 
                Service, such term means the Governors (within 
                the meaning of section 102(3) of title 39, 
                United States Code);] except that, with respect 
                to the National Science Foundation, such term 
                means the National Science Board;

           *       *       *       *       *       *       *

  (c) [Except as provided under subsection (f) of this section, 
the] The Inspector General shall be appointed by the head of 
the designated Federal entity in accordance with the applicable 
laws and regulations governing appointments within the 
designated Federal entity.

           *       *       *       *       *       *       *

    [(f)(1) For purposes of carrying out subsection (c) with 
respect to the United States Postal Service, the appointment 
provisions of section 202(e) of title 39, United States Code, 
shall be applied.
    [(2) In carrying out the duties and responsibilities 
specified in this Act, the Inspector General of the United 
States Postal Service (hereinafter in this subsection referred 
to as the ``Inspector General'') shall have oversight 
responsibility for all activities of the Postal Inspection 
Service, including any internal investigation performed by the 
Postal Inspection Service. The Chief Postal Inspector shall 
promptly report the significant activities being carried out by 
the Postal Inspection Service to such Inspector General.
    [(3)(A)(i) Notwithstanding subsection (d), the Inspector 
General shall be under the authority, direction, and control of 
the Governors with respect to audits or investigations, or the 
issuance of subpoenas, which require access to sensitive 
information concerning--
          [(I) ongoing civil or criminal investigations or 
        proceedings;
          [(II) undercover operations;
          [(III) the identity of confidential sources, 
        including protected witnesses;
          [(IV) intelligence or counterintelligence matters; or
          [(V) other matters the disclosure of which would 
        constitute a serious threat to national security.
    [(ii) With respect to the information described under 
clause (i), the Governors may prohibit the Inspector General 
from carrying out or completing any audit or investigation, or 
from issuing any subpoena, after such Inspector General has 
decided to initiate, carry out, or complete such audit or 
investigation or to issue such subpoena, if the Governors 
determine that such prohibition is necessary to prevent the 
disclosure of any information described under clause (i) or to 
prevent the significant impairment to the national interests of 
the United States.
    [(iii) If the Governors exercise any power under clause (i) 
or (ii), the Governors shall notify the Inspector General in 
writing stating the reasons for such exercise. Within 30 days 
after receipt of any such notice, the Inspector General shall 
transmit a copy of such notice to the Committee on Governmental 
Affairs of the Senate and the Committee on Government Reform 
and Oversight of the House of Representatives, and to other 
appropriate committees or subcommittees of the Congress.
    [(B) In carrying out the duties and responsibilities 
specified in this Act, the Inspector General--
          [(i) may initiate, conduct and supervise such audits 
        and investigations in the United States Postal Service 
        as the Inspector General considers appropriate; and
          [(ii) shall give particular regard to the activities 
        of the Postal Inspection Service with a view toward 
        avoiding duplication and insuring effective 
        coordination and cooperation.
    [(C) Any report required to be transmitted by the Governors 
to the appropriate committees or subcommittees of the Congress 
under section 5(d) shall also be transmitted, within the seven-
day period specified under such section, to the Committee on 
Governmental Affairs of the Senate and the Committee on 
Government Reform and Oversight of the House of 
Representatives.
    [(3) Nothing in this Act shall restrict, eliminate, or 
otherwise adversely affect any of the rights, privileges, or 
benefits of either employees of the United States Postal 
Service, or labor organizations representing employees of the 
United States Postal Service, under chapter 12 of title 39, 
United States Code, the National Labor Relations Act, any 
handbook or manual affecting employee labor relations with the 
United States Postal Service, or any collective bargaining 
agreement.
    [(4) As used in this subsection, the term ``Governors'' has 
the meaning given such term by section 102(3) of title 39, 
United States Code.]

           *       *       *       *       *       *       *

               RULE OF CONSTRUCTION OF SPECIAL PROVISIONS

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

           *       *       *       *       *       *       *

     SPECIAL PROVISIONS CONCERNING THE UNITED STATES POSTAL SERVICE

  Sec. 8L.  (a) In carrying out the duties and responsibilities 
specified in this Act, the Inspector General of the United 
States Postal Service shall have oversight responsibility for 
all activities of the Postal Inspection Service, including any 
internal investigation performed by the Postal Inspection 
Service. The Chief Postal Inspector shall promptly report any 
significant activities being carried out by the Postal 
Inspection Service to such Inspector General. The Postmaster 
General shall promptly report to such Inspector General all 
allegations of theft, fraud, or misconduct by Postal Service 
officers or employees, and entities or individuals doing 
business with the Postal Service.
  (b) In the case of any report that the Governors of the 
United States Postal Service (within the meaning of section 
102(3) of title 39, United States Code) are required to 
transmit under the second sentence of section 5(d), such 
sentence shall be applied by deeming the term ``appropriate 
committees of Congress'' to mean the Committee on Government 
Reform of the House of Representatives, the Committee on 
Governmental Affairs of the Senate, and such other committees 
or subcommittees of Congress as may be appropriate.
  (c) Notwithstanding any provision of paragraph (7) or (8) of 
section 6(a), the Inspector General of the United States Postal 
Service may select, appoint, and employ such officers and 
employees as may be necessary for carrying out the functions, 
powers, and duties of the Office of Inspector General and to 
obtain the temporary or intermittent services of experts or 
consultants or an organization of experts or consultants, 
subject to the applicable laws and regulations that govern such 
selections, appointments, and employment, and the obtaining of 
such services, within the United States Postal Service.
  (d) Nothing in this Act shall restrict, eliminate, or 
otherwise adversely affect any of the rights, privileges, or 
benefits of employees of the United States Postal Service, or 
labor organizations representing employees of the United States 
Postal Service, under chapter 12 of title 39, United States 
Code, the National Labor Relations Act, any handbook or manual 
affecting employee labor relations with the United States 
Postal Service, or any collective bargaining agreement.
  (e) 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.

           *       *       *       *       *       *       *

                              DEFINITIONS

  Sec. 11. As used in this Act--
          (1) the term ``head of the establishment'' means the 
        Secretary of Agriculture, Commerce, Defense, Education, 
        Energy, Health and Human Services, Housing and Urban 
        Development, the Interior, Labor, State, 
        Transportation, Homeland Security, or the Treasury; the 
        Attorney General; the Administrator of the Agency for 
        International Development, Environmental Protection, 
        General Services, National Aeronautics and Space, or 
        Small Business, or Veterans' Affairs; the Director of 
        the Federal Emergency Management Agency, or the Office 
        of Personnel Management; the Chairman of the Nuclear 
        Regulatory Commission or the Railroad Retirement Board; 
        the Chairperson of the Thrift Depositor Protection 
        Oversight Board; the Chief Executive Officer of the 
        Corporation for National and Community Service; the 
        Administrator of the Community Development Financial 
        Institutions Fund; the chief executive officer of the 
        Resolution Trust Corporation; the Chairperson of the 
        Federal Deposit Insurance Corporation; the Commissioner 
        of Social Security, Social Security Administration; the 
        Board of Directors of the Tennessee Valley Authority; 
        [or] the President of the Export-Import Bank; or the 
        Governors of the United States Postal Service (within 
        the meaning of section 102(3) of title 39, United 
        States Code); as the case may be;
          (2) the term ``establishment'' means the Department 
        of Agriculture, Commerce, Defense, Education, Energy, 
        Health and Human Services, Housing and Urban 
        Development, the Interior, Justice, Labor, State, 
        Transportation, Homeland Security, or the Treasury; the 
        Agency for International Development, the Community 
        Development Financial Institutions Fund, the 
        Environmental Protection Agency, the Federal Emergency 
        Management Agency, the General Services Administration, 
        the National Aeronautics and Space Administration, the 
        Nuclear Regulatory Commission, the Office of Personnel 
        Management, the Railroad Retirement Board, the 
        Resolution Trust Corporation, the Federal Deposit 
        Insurance Corporation, the Small Business 
        Administration, the Corporation for National and 
        Community Service, or the Veterans' Administration, the 
        Social Security Administration, the Tennessee Valley 
        Authority, [or] the Export-Import Bank, or the United 
        States Postal Service, as the case may be;

           *       *       *       *       *       *       *

                              ----------                              

              SECTION 160 OF THE ENERGY POLICY ACT OF 1992

SEC. 160. INSPECTOR GENERAL REVIEW AND AGENCY ACCOUNTABILITY.

  (a) Audit Survey.--Not later than 120 days after the date of 
the enactment of this Act, each Inspector General created to 
conduct and supervise audits and investigations relating to the 
programs and operations of the establishments listed in section 
11(2) of the Inspector General Act of 1978 (5 U.S.C. App.)[, 
and the Chief Postal Inspector of the United States Postal 
Service, in accordance with section 8E(f)(1) as established by 
section 8E(a)(2) of the Inspector General Act Amendments of 
1988 (Public Law 100-504)] shall--
          (1) * * *

           *       *       *       *       *       *       *

                              ----------                              

TITLE 18, UNITED STATES CODE

           *       *       *       *       *       *       *

PART I--CRIMES

           *       *       *       *       *       *       *

CHAPTER 83--POSTAL SERVICE

           *       *       *       *       *       *       *

Sec. 1716. Injurious articles as nonmailable

  (a) All kinds of poison, and all articles and compositions 
containing poison, and all poisonous animals, insects, 
reptiles, and all explosives, hazardous materials, inflammable 
materials, infernal machines, and mechanical, chemical, or 
other devices or compositions which may ignite or explode, and 
all disease germs or scabs, and all other natural or artificial 
articles, compositions, or material which may kill or injure 
another, or injure the mails or other property, whether or not 
sealed as first-class matter, are nonmailable matter and shall 
not be conveyed in the mails or delivered from any post office 
or station thereof, nor by any officer or employee of the 
Postal Service.

           *       *       *       *       *       *       *

PART II--CRIMINAL PROCEDURE

           *       *       *       *       *       *       *

CHAPTER 203--ARREST AND COMMITMENT

           *       *       *       *       *       *       *

Sec. 3061. Investigative powers of Postal Service personnel

  (a) * * *

           *       *       *       *       *       *       *

  (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 the 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 United 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.

           *       *       *       *       *       *       *

                              ----------                              

               SECTION 8 OF THE POSTAL REORGANIZATION ACT

              TRANSFER OF POST OFFICE DEPARTMENT PERSONNEL

  Sec. 8. (a) Officers and employees of the Post Office 
Department shall become officers and employees of the United 
States Postal Service on the effective date of this section. 
The provisions of this section shall not apply to persons 
occupying the positions of Postmaster General, Deputy 
Postmaster General, Assistant Postmasters General, General 
Counsel, or Judicial Officer. This section shall not be 
construed, however, to prohibit the appointment of such persons 
to positions in the Postal Service.
  (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.
                              ----------                              

SECTION 3 OF THE POSTAL CIVIL SERVICE RETIREMENT SYSTEM FUNDING REFORM 
                              ACT OF 2003

                          (Public Law 108-18)

           *       *       *       *       *       *       *
[SEC. 3. DISPOSITION OF SAVINGS ACCRUING TO THE UNITED STATES POSTAL 
                    SERVICE.

  [(a) In General.--Savings accruing to the United States 
Postal Service as a result of the enactment of this Act--
          [(1) shall, to the extent that such savings are 
        attributable to fiscal year 2003 or 2004, be used to 
        reduce the postal debt (in consultation with the 
        Secretary of the Treasury), and the Postal Service 
        shall not incur additional debt to offset the use of 
        the savings to reduce the postal debt in fiscal years 
        2003 and 2004;
          [(2) shall, to the extent that such savings are 
        attributable to fiscal year 2005, be used to continue 
        holding postage rates unchanged and to reduce the 
        postal debt, to such extent and in such manner as the 
        Postal Service shall specify (in consultation with the 
        Secretary of the Treasury); and
          [(3) to the extent that such savings are attributable 
        to any fiscal year after fiscal year 2005, shall be 
        considered to be operating expenses of the Postal 
        Service and, until otherwise provided for by law, shall 
        be held in escrow and may not be obligated or expended.
  [(b) Amounts Saved.--
          [(1) In general.--The amounts representing any 
        savings accruing to the Postal Service in any fiscal 
        year as a result of the enactment of this Act shall be 
        computed by the Office of Personnel Management for each 
        such fiscal year in accordance with paragraph (2).
          [(2) Methodology.--Not later than July 31, 2003, the 
        Office of Personnel Management shall--
                  [(A) formulate a plan specifically 
                enumerating the actuarial methods and 
                assumptions by which the Office shall make its 
                computations under paragraph (1); and
                  [(B) submit such plan to the Committee on 
                Government Reform of the House of 
                Representatives and the Committee on 
                Governmental Affairs of the Senate.
          [(3) Requirements.--The plan shall be formulated in 
        consultation with the Postal Service and shall include 
        the opportunity for the Postal Service to request 
        reconsideration of computations under this subsection, 
        and for the Board of Actuaries of the Civil Service 
        Retirement System to review and make adjustments to 
        such computations, to the same extent and in the same 
        manner as provided under section 8423(c) of title 5, 
        United States Code.
  [(c) Reporting Requirement.--The Postal Service shall include 
in each report rendered under section 2402 of title 39, United 
States Code, the amount applied toward reducing the postal 
debt, and the size of the postal debt before and after the 
application of subsection (a), during the period covered by 
such report.
  [(d) Sense of Congress.--It is the sense of the Congress 
that--
          [(1) the savings accruing to the Postal Service as a 
        result of the enactment of this Act will be sufficient 
        to allow the Postal Service to fulfill its commitment 
        to hold postage rates unchanged until at least 2006;
          [(2) because the Postal Service still faces 
        substantial obligations related to postretirement 
        health benefits for its current and former employees, 
        some portion of the savings referred to in paragraph 
        (1) should be used to address those unfunded 
        obligations; and
          [(3) none of the savings referred to in paragraph (1) 
        should be used in the computation of any bonuses for 
        Postal Service executives.
  [(e) Postal Service Proposal.--
          [(1) In general.--The United States Postal Service 
        shall, by September 30, 2003, prepare and submit to the 
        President, the Congress, and the General Accounting 
        Office its proposal detailing how any savings accruing 
        to the Postal Service as a result of the enactment of 
        this Act, which are attributable to any fiscal year 
        after fiscal year 2005, should be expended.
          [(2) Matters to consider.--In preparing its proposal 
        under this subsection, the Postal Service shall 
        consider--
                  [(A) whether, and to what extent, those 
                future savings should be used to address--
                          [(i) debt repayment;
                          [(ii) prefunding of postretirement 
                        healthcare benefits for current and 
                        former postal employees;
                          [(iii) productivity and cost saving 
                        capital investments;
                          [(iv) delaying or moderating 
                        increases in postal rates; and
                          [(v) any other matter; and
                  [(B) the work of the President's Commission 
                on the United States Postal Service under 
                section 5 of Executive Order 13278 (67 Fed. 
                Reg. 76672).
          [(3) GAO review and report.--Not later than 60 days 
        after the Postal Service submits its proposal pursuant 
        to paragraph (1), the General Accounting Office shall 
        prepare and submit a written evaluation of such 
        proposal to the Committee on Government Reform of the 
        House of Representatives and the Committee on 
        Governmental Affairs of the Senate.
          [(4) Legislative action.--Not later than 180 days 
        after it has received both the proposal of the Postal 
        Service and the evaluation of such proposal by the 
        General Accounting Office under this subsection, 
        Congress shall revisit the question of how the savings 
        accruing to the Postal Service as a result of the 
        enactment of this Act should be used.
  [(f) Determination and Disposition of Surplus.--
          [(1) In general.--If, as of the date under paragraph 
        (2), the Office of Personnel Management determines 
        (after consultation with the Postmaster General) that 
        the computation under section 8348(h)(1)(A) of title 5, 
        United States Code, yields a negative amount 
        (hereinafter referred to as a ``surplus'')--
                  [(A) the Office shall inform the Postmaster 
                General of its determination, including the 
                size of the surplus so determined; and
                  [(B) the Postmaster General shall submit to 
                the Congress a report describing how the Postal 
                Service proposes that such surplus be used, 
                including a draft of any legislation that might 
                be necessary.
          [(2) Determination date.--The date to be used for 
        purposes of paragraph (1) shall be September 30, 2025, 
        or such earlier date as, in the judgment of the Office, 
        is the date by which all postal employees under the 
        Civil Service Retirement System will have retired.
  [(g) Definitions.--For purposes of this section--
          [(1) the savings accruing to the Postal Service as a 
        result of the enactment of this Act shall, for any 
        fiscal year, be equal to the amount (if any) by which--
                  [(A) the contributions that the Postal 
                Service would otherwise have been required to 
                make to the Civil Service Retirement and 
                Disability Fund for such fiscal year if this 
                Act had not been enacted, exceed
                  [(B) the contributions made by the Postal 
                Service to such Fund for such fiscal year; and
          [(2) the term ``postal debt'' means the outstanding 
        obligations of the Postal Service, as determined under 
        chapter 20 of title 39, United States Code.]
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