U.S. GOVERNMENT PRINTING OFFICE

WASHINGTON : 

1 

39–010 

" ! SENATE 113TH CONGRESS

2d Session 

REPORT

2014

113–237 

Calendar No. 523 

POSTAL REFORM ACT OF 2013 

R E P O R T 

OF THE

COMMITTEE ON HOMELAND SECURITY AND 

GOVERNMENTAL AFFAIRS 

UNITED STATES SENATE 

WITH ADDITIONAL VIEWS 

TO ACCOMPANY

S. 1486 

TO IMPROVE, SUSTAIN, AND TRANSFORM THE UNITED STATES 

POSTAL SERVICE 

JULY 31, 2014.—Ordered to be printed 


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(II) 

COMMITTEE ON HOMELAND SECURITY AND GOVERNMENTAL AFFAIRS 

THOMAS R. CARPER, Delaware, Chairman 

CARL LEVIN, Michigan 

MARK L. PRYOR, Arkansas 

MARY L. LANDRIEU, Louisiana 

CLAIRE MCCASKILL, Missouri 

JON TESTER, Montana 

MARK BEGICH, Alaska 

TAMMY BALDWIN, Wisconsin 

HEIDI HEITKAMP, North Dakota 

TOM COBURN, Oklahoma 

JOHN MCCAIN, Arizona 

RON JOHNSON, Wisconsin 

ROB PORTMAN, Ohio 

RAND PAUL, Kentucky 

MICHAEL B. ENZI, Wyoming 

KELLY AYOTTE, New Hampshire 

GABRIELLE A. BATKIN, Staff Director 

JOHN P. KILVINGTON, Deputy Staff Director 

BETH M. GROSSMAN, Chief Counsel 

LAWRENCE B. NOVEY, Chief Counsel for Governmental Affairs 

KATHERINE C. SYBENGA, Senior Counsel 

ROBERT H. BRADLEY, Legislative Assistant 

KEITH B. ASHDOWN, Minority Staff Director 

CHRISTOPHER J. BARKLEY, Minority Deputy Staff Director 

ANDREW C. DOCKHAM, Minority Chief Counsel 

JOSEPH D. MOELLER, Minority U.S. Postal Service Office of the Inspector General Detailee 

LAURA W. KILBRIDE, Chief Clerk 


tjames on DSK5VPTVN1PROD with REPORTS
Calendar No. 523 

113th Congress SENATE REPORT " ! 2d Session 113–237 

POSTAL REFORM ACT OF 2013 

JULY 31, 2014.—Ordered to be printed 

Mr. CARPER, from the Committee on Homeland Security and 

Governmental Affairs, submitted the following 

R E P O R T 

together with 

ADDITIONAL VIEWS 

[To accompany S. 1486] 

The Committee on Homeland Security and Governmental Affairs, 

to which was referred the bill (S. 1486), to improve, sustain and 

transform the United States Postal Service, having considered the 

same, reports favorably thereon with an amendment and recommends that the bill as amended do pass. 

CONTENTS 

Page 

I. Purpose and Summary .................................................................................. 1 

II. Background and Need for the Legislation ................................................... 2 

III. Legislative History ......................................................................................... 21 

IV. Section-by-Section Analysis .......................................................................... 26 

V. Evaluation of Regulatory Impact .................................................................. 44 

VI. Congressional Budget Office Estimate ......................................................... 44 

VII. Changes in Existing Law Made by the Bill, as Reported ........................... 70 

Appendix A—Postal Service Financial Projections ..................................... 167 

I. PURPOSE AND SUMMARY

S. 1486, the Postal Reform Act of 2014, seeks to address the 

United States Postal Service’s short-term financial challenges while 

putting into place reforms intended to strengthen its long-term financial and commercial viability. 


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1 ‘‘21st Century Postal Service Act of 2012,’’ Report of the Senate Committee on Homeland 

Security and Governmental Affairs to accompany S.1789, Senate Report no. 112–143 (Jan. 31, 

2012), at pages 1–4. 2 Congressional Record, S.2695–S2696 (April 25, 2012). 3 Standard Mail is the largest-volume mail class, consisting of nearly 81 billion pieces in 

2013. According to figures provided by the Postal Service, Standard Mail volume plummeted by 

nearly 17% in 2009 compared to the previous year, but, since then, volume has gone through 

only relatively minor fluctuations: up by 0.1 percent in 2010, up an additional 2.6% in 2011, 

back down by 5.3% in 2012, and back up by 1.8% in 2013. 4 The Postal Service’s shipping and package services declined in 2009 by 8.0% in volume from 

the previous year, saw an additional slight drop of 0.6% in 2010, and since then has seen steady 

growth: 6.6% in 2011, and additional 7.5% in 2012, and a further 6.0% in 2013. See United 

States Postal Service Form 10–K for Fiscal Year 2013 at p. 25, available at http:// 

about.usps.com/who-we-are/financials/10k-reports/fy2013.pdf. 

II. BACKGROUND AND NEED FOR THE LEGISLATION

A. GENERAL BACKGROUND

In 2012, the Committee on Homeland Security and Governmental Affairs reported out legislation, S. 1789, intended to update 

the Postal Service’s business model and take steps to address the 

financial challenges it faced as a result of the recent recession and 

of a decline in the use of hard-copy mail. The Committee’s report 

on that bill described the vital role the Postal Service plays in the 

U.S. economy, summarized the current legal framework of the 

Postal Service, and explained how recent trends have imperiled the 

long-term viability of the Postal Service as it currently exits.1 Then 

on April 25, 2012, after several days of debate and the adoption of 

several amendments, the full Senate passed S.1789 by a vote of 62 

to 37.2 The House never considered the Senate bill or passed any 

comparable legislation, however, and comprehensive postal reform 

legislation was not enacted during the 112th Congress. 

The improving economy and the growing package delivery market have somewhat improved the Postal Service’s short-term financial outlook since the Committee last acted on postal reform. In recent years, the volume of Standard Mail (a class of commercial 

mail that is lower-priority than First-Class Mail) has stabilized,3

and the Postal Service has seen a dramatic increase in package volume.4 In addition, the Postal Service has generated significant cost 

savings through dramatic and aggressive cost-cutting efforts. Postmaster General Patrick Donahoe described for this Committee the 

operational and workforce initiatives that the Postal Service has 

implemented to better align capacity and cost with reduced mail 

volumes: 

These initiatives include the accelerated consolidation of 

mail processing and delivery networks, and the reduction 

in hours at 13,000 Post Offices, in conjunction with the expansion of alternative retail access. . . . This realignment 

of mail processing, retail, and delivery operations is expected to generate $6 billion in annual cost reductions by 

the year 2016. 

The Postal Service also continues to implement efficiency measures by aligning staffing levels with projected 

mail volume. These staffing level reductions will be 

achieved primarily through attrition . . . . [The Postal 

Service is also increasing the use of lower-cost non-career 

employees], which will facilitate the realignment of staffing and workload levels and the reduction of costs. The 

Postal Service’s current career workforce of 492,000 is the 


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5 ‘‘Outside the Box: Reforming and Renewing the Postal Service, Part I—Maintaining Services, Reducing Costs and Increasing Revenue Through Innovation and Modernization,’’ hearing 

before the Senate Committee on Homeland Security and Governmental Affairs, 113th Cong. 

(Sept. 19, 2013) (Testimony of Postmaster General Patrick R. Donahoe). 6 See U.S. Postal Service, ‘‘Five-Year Business Plan’’, April 2013, http://about.usps.com/strategic-planning/five-year-business-plan-2012–2017.pdf. 7 See United States Postal Service Form 10–Q for Fiscal Year 2014, Quarter 2 at p. 8, available at http://about.usps.com/who-we-are/financials/financial-conditions-results-reports/ 

fy2014-q2.pdf. 8 U.S. Postal Service Records Second Quarter Loss of $1.9 Billion: Urges Congress to Pass 

Comprehensive Postal Legislation,’’ May 09, 2014, http://about.usps.com/news/national-releases/2014/pr14l031.htm. U.S. Postal Service Records Second Quarter Loss of $1.9 Billion. 9 ‘‘Outside the Box: Reforming and Renewing the Postal Service, Part I—Maintaining Services, Reducing Costs and Increasing Revenue Through Innovation and Modernization,’’ hearing 

before the Senate Committee on Homeland Security and Governmental Affairs, 113th Cong. 

(Sept. 19, 2013). 10 ‘‘Solutions to the Crisis Facing the U.S. Postal Service,’’ hearing before the Senate Committee on Homeland Security and Governmental Affairs, 113th Cong. (Feb. 13, 2013), 

http://www.gpo.gov/fdsys/pkg/CHRG–113shrg80219/pdf/CHRG–113shrg80219.pdf. 11 ‘‘Outside the Box: Reforming and Renewing the Postal Service, Part I—Maintaining Services, Reducing Costs and Increasing Revenue Through Innovation and Modernization,’’ hearing 

before the Senate Committee on Homeland Security and Governmental Affairs, 113th Cong. 

(Sept. 19, 2013); ‘‘Outside the Box: Reforming and Renewing the Postal Service, Part II—Promoting a 21st Century Workforce,’’ hearing before the Senate Committee on Homeland Security 

and Governmental Affairs, 113th Cong. (Oct. 19, 2013). 

smallest it has been in decades and is down nearly 26 percent in the past five years. 5

However, the fundamental structural problems this Committee 

sought to address in 2012 remain unabated. The Postal Service 

continues to face serious financial challenges that threaten its 

short-term and long-term viability. First-Class Mail—the class of 

mail that makes the largest contribution to the Postal Service’s bottom line—continues to decline. For example, Postal Service data 

show a persistent decline in First-Class Mail volume over the past 

five years: by 8.8 percent in 2009, a further 6.2 percent decline 

2010, another 6.5 percent in 2011, another 5.3 percent decline in 

2012, and yet another decline of 4.2 percent in 2013. The Postal 

Service’s last-published 5-year plan projects First-Class Mail volumes continuing to drop by 5 to 6 percent each year.6

As of the end of the second quarter of Fiscal Year 2014, the Postal Service was carrying $3.7 billion in cash-on-hand 7—barely 

enough to cover two of its $1.75-billion bi-weekly payrolls, not to 

mention its other obligations during the period. Moreover, the Postal Service has borrowed the full $15 billion it is permitted under 

law to borrow from the Treasury. In addition, the Postal Service’s 

financial condition has made it difficult to invest in needed capital 

projects. Chief Financial Officer Joseph Corbett explained: ‘‘Our liabilities exceed our assets by $42 billion and we have a need for 

more than $10 billion to invest in new delivery vehicles, package 

sortation equipment, and other deferred investments.’’ 8 The Postmaster General has also stated that ‘‘legislative action is required 

to give the Postal Service authority to generate new revenue and 

adapt to changing business conditions, as the scope of products and 

services that the Postal Service can offer is currently limited by 

law.’’ 9

The Committee held an initial hearing to discuss these and other 

issues facing the Postal Service on February 13, 2013.10 Senators 

Carper and Coburn introduced S. 1486 on August 1, 2013, and the 

Committee held further hearings on September 19 and September 

26, 2013.11 Then on February 6, 2014, after extensive debate and 


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the consideration of nearly 30 amendments, the Committee ordered 

the bill reported favorably to the full Senate by a vote of 9 to 1. 

The bill approved by the Committee contains a comprehensive 

package of reforms to protect key postal operations and services, 

shore up the Postal Service’s finances, set aside enough funding to 

cover postal retirees’ future benefits, and increase Postal Service 

revenues by making ratemaking more realistic and by encouraging 

innovation. Key elements of the bill include— 

• Protect Saturday mail delivery until at least 2017. Impose a 

two-year moratorium on processing plant closures and on changes 

to delivery service standards. Require the Postal Service to seek 

additional local input before closing post offices, and place a fiveyear moratorium on closing rural post offices. 

• Stop overcharging the Postal Service for the cost of its employees’ pensions, by requiring calculations of the Postal Service’s obligations be based on the actual characteristics of the postal workforce. Restructure the Postal Service’s burdensome healthcare prefunding requirements, replacing them with a payment plan that 

enables the Postal Service to honor its commitments to its retirees 

without leaving taxpayers on the hook. Maintain the high-quality 

healthcare coverage for postal workers and retirees under the Federal Employee Health Benefits Program (FEHBP), plus better utilize the Postal Service’s participation in the Medicare program to 

both enhance retiree healthcare coverage and reduce the cost to the 

Postal Service. 

• Encourage innovation and generate revenue for the Postal 

Service by allowing it to offer a broader range of ‘‘non-postal’’ products and services, within appropriate boundaries. Establish a commission to explore new business models for the Postal Service to increase revenues and reduce costs. Adjust the rules on postal rates 

to enable the Postal Service to generate more revenue, while preserving both Postal Regulatory Commission oversight and the existing Consumer Price Index (CPI) rate cap. 

The Postal Service has indicated that the provisions of the bill 

as ordered reported by the Committee would, if enacted this year, 

allow it to pay down its debt to Treasury by Fiscal Year 2016, substantially reduce or eliminate its unfunded retiree health care obligation and the need to pre-fund it, lead to increased revenue over 

time, allow for needed capital expenditures in the coming years, 

and result in a positive cash balance of $7.1 billion after ten years. 

(See Appendix A of this Report, which presents financial projections developed by the Postal Service, showing the impact on the 

Postal Service’s finances if S.1486 is enacted.) 

B. DISCUSSION OF LEGISLATIVE ISSUES

1. FERS surplus; Postal-specific assumptions for FERS and CSRS 

funding 

United States Postal Service (USPS) employees, like federal employees, participate in the Federal Employees Retirement System 

(FERS) or, for employees who began federal service before the end 

of 1986, the Civil Service Retirement System (CSRS). Thus, the 

Postal Service is required to make the biweekly employer contributions for postal employees participating in FERS and CSRS. Also, 

the Office of Personnel Management (OPM) finds that the amounts 


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12See 5.U.S.C. 8348(h). OPM has found that the Postal Service has paid more than enough 

to fund its employees’ annuities under FERS, but, if OPM ever finds a liability, the Postal Service would be obligated to make annual payments to liquidate that liability as well. See 5.U.S.C. 

8423(b). 13 USPS OIG, Using U.S. Postal Service-Specific Assumptions for Calculating the Federal Employees Retirement System Liability: Management Advisory Report (Report Number FT–MA–13– 

024) (Sept. 27, 2013), https://www.uspsoig.gov/sites/default/files/document-library-files/2013/ 

ft-ma-13-024.pdf. 14 ‘‘Outside the Box: Reforming and Renewing the Postal Service, Part II—Promoting a 21st 

Century Workforce,’’ hearing Before the Senate Committee on Homeland Security and Governmental Affairs, 113th Cong. (Sept. 26, 2013) (Statement submitted by Postmaster General Patrick R. Donahoe); FY 2015 Budget of the U.S. Government, Appendix pages 1232 and 1362. 15P.L. 109–435. 

paid to fund postal workers’ future annuities under CSRS are insufficient, and the Postal Service must make annual payments to 

liquidate the liability starting in 2018.12

S. 1486 would require that, in calculating the amounts that the 

Postal Service must pay for postal workers’ annuities, OPM must 

use the demographic and salary-growth characteristics of the Postal Service’s actual workforce, rather than the general characteristics of both postal and non-postal federal employees combined, as 

OPM does today. This provision responds to findings reported by 

the Postal Service’s Office of Inspector General (USPS OIG), based 

on findings by the Hay Group (an actuarial consulting firm), that 

OPM’s current approach substantially over-estimates the amount 

that postal retirees’ annuities will actually cost the FERS and 

CSRS programs.13 Both the Postal Service and the President in his 

budget recommendations for Fiscal Year 2015 have also called for 

legislation to require the use of postal-specific assumptions for determining the Postal Service’s pension obligations.14

Moreover, if OPM finds that the Postal Service has paid more 

into the FERS system than its employees’ annuities will actually 

cost, this legislation provides an orderly process by which the surplus can be returned for use by the Postal Service. If a surplus existed as of September 30, 2013, the Postal Service may request not 

more than $6 billion of the amount and use it to retire debt. The 

bill also establishes rules for the Postal Service to gain access to 

and use of any surplus that may remain or develop in subsequent 

years. 

OPM has estimated that, if demographic factors specific to the 

postal workforce were used, the surplus in the FERS system available to fund postal workers’ annuities would amount to about $ 2.4 

billion as of September 30, 2013. S. 1486 would provide the Postal 

Service with the option of having some or all of that amount applied to retire the Postal Service’s debt. 

2. Retiree health pre-funding payments 

The Postal Service is under various statutory mandates concerning its funding of the retirement health benefits for its current 

and former employees. While it is critical that the Postal Service 

behave responsibly with respect to these retirement obligations, 

this bill seeks to recalibrate these mandates in order to lessen their 

immediate burden while still ensuring that the Postal Service will 

contribute sufficiently to meet realistic estimates of future needs. 

The Postal Accountability and Enhancement Act of 2006 15 required the Postal Service to make a series of ten payments beginning in Fiscal Year 2007 to pre-fund its future retiree health obligations. The amount of each payment is set in statute and ranges 


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16P.L. 111–68, § 164. 17 5 U.S.C. § 8909a(d)(2)(B). 18 United States Postal Service Form 10–K for Fiscal Year 2013 at p. 38, available at 

http://about.usps.com/who-we-are/financials/10k-reports/fy2013.pdf. 

from $5.4 billion to $5.8 billion annually, although Congress decreased the size of the payment due in Fiscal Year 2009 from $5.4 

billion to $1.4 billion in an effort to ease the financial strain on the 

Postal Service.16 Under current law, the Postal Service is scheduled in Fiscal Year 2017 to begin paying down whatever retiree 

health obligations remain over a period of 40 years.17

As of the end of Fiscal Year 2013, the Postal Service Retiree 

Health Benefits Fund (the Fund) had a balance of over $47 billion 

and the Postal Service had a remaining liability to the Fund of just 

over $48 billion.18 For the past few years, the Postal Service has 

been unable to make its annual pre-funding payment and defaulted 

on its last three statutory payments, a $5.5 billion payment due on 

August 1, 2012 that was delayed from September 2011, a $5.6 payment due on September 30, 2012, and a $5.6 billion payment due 

on September 30, 2013. The Postal Service is expected to default 

on the 2014 payment of $5.7 billion on September 30, 2014, and absent comprehensive reform, will likely also default on the payments 

due in 2015 and 2016. 

The Postal Service is also obligated to make premium payments 

each year on behalf of current retirees. According to data provided 

to the Committee by the Postal Service, those premium payments 

totaled $2.85 billion in Fiscal Year 2013 and are projected to reach 

$3.6 billion annually by Fiscal Year 2016. 

The Committee recognizes that the statutorily mandated retiree 

health prefunding payment schedule has been difficult to meet due 

to the declining revenues of the Postal Service as a result of the 

electronic diversion of the mail and a major recession that significantly affected mail volume. At the same time, the Committee is 

aware that easing or eliminating the pre-funding obligation could 

one day either break promises made to retirees, or leave taxpayers 

with a significant financial obligation in the event that the Postal 

Service becomes unable to make the payments itself. 

In order to provide the Postal Service with financial relief while 

maintaining its responsibility for the costs related to its employees, 

S. 1486 would make four major reforms to the Postal Service’s current retiree health payment schedule and structure: 

1. It would cancel any outstanding payments owed by the 

Postal Service. 

2. It would replace the existing payment schedule—the statutory annual payments and the 40-year amortization schedule 

that will start in Fiscal Year 2017—with a new 40-year amortization schedule that would start in Fiscal Year 2016. 

3. It would set the pre-funding goal underlying the new amortization schedule at 80 percent of the obligation (rather than 

the current 100 percent), in recognition of the fact that the 

Postal Service, if necessary, has additional assets it could draw 

upon to meet these obligations. 

4. It would allow the Postal Service’s contribution towards 

current retirees’ premiums to be paid out of the Fund in the 

Treasury in which the Postal Service’s pre-funding payments 

have been deposited since Fiscal Year 2007. That Fund curVerDate Mar 15 2010 02:45 Aug 09, 2014 Jkt 039010 PO 00000 Frm 00008 Fmt 6659 Sfmt 6602 E:\HR\OC\SR237.XXX SR237

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19 5 U.S.C. § 8906(g)(2)(A). 20See, e.g., ‘‘Solutions to the Crisis Facing the U.S. Postal Service,’’ hearing Before the Senate 

Committee on Homeland Security and Governmental Affairs, 113th Cong. (February 13, 2013) 

(testimony of Patrick R. Donahoe, Postmaster General and CEO, U.S. Postal Service) available at http://www.hsgac.senate.gov/hearings/solutions-to-the-crisis-facing-the-us-postal-service [hereinafter Donahoe Testimony at HSGAC Hearing Feb. 13, 2013]. 

rently includes just over $47 billion. (Under current statute, 

the Postal Service’s contribution to current retirees’ premiums 

may be paid from the Fund beginning on September 30, 

2017.) 19

3. Postal service health benefits program 

In order to ensure the future financial viability of the Postal 

Service, the Committee recognizes that the Postal Service must be 

able to address its healthcare costs and future healthcare liabilities. The Postal Service has for a number of years proposed to provide postal employees and annuitants with a separate Postal Service administered health care plan that is fully integrated with 

Medicare, as a way to reduce health care costs and reduce their future retiree health care liability.20 While the Committee did not 

choose to create an entirely separate health plan run by the Postal 

Service, S. 1486 does create a new postal-only health program 

within Federal Employees Health Benefits Program (FEHBP) for 

all postal employees and annuitants that is integrated with Medicare parts A, B, and D. 

S. 1486 would authorize OPM to establish the Postal Service 

Health Benefits Program (PSHBP) within the FEHBP. OPM would 

be required to contract with carriers of current FEHBP plans that 

have over 5,000 postal employees and retirees enrolled in its 

FEHBP plans for the 2015 contract year, but all FEHBP carriers 

would be eligible to bid to participate in the PSHBP. Requiring 

plans with more than 5,000 postal enrollees to participate ensures 

the participation of at least the insurance carriers that currently 

cover over 90 percent of the postal community, but participation is 

not limited to only those plans. The bill would authorize OPM to 

add, after 2016, to the PSHBP only those health plans that meet 

the requirements and criteria to be offered through the FEHBP 

and carriers participating in the FEHBP. However, it is the intent 

of the Committee that carriers that are exclusive collective bargaining representatives with the Postal Service may terminate 

their participation in the civil service segment of the FEHBP and 

still continue to participate in the PSHBP subject to FEHBP requirements. 

One key difference between the current FEHBP and the new 

PSHBP is that the PSHBP would require Medicare enrollment for 

postal annuitants who are eligible for Medicare parts A, B and D 

and provide postal annuitants with prescription drugs through a 

Medicare Part D Employee Group Waiver plan. Currently, Postal 

Service annuitants, like all other federal annuitants, receive full 

FEHBP coverage in retirement. Like all Americans, they have also 

paid into and are eligible for Medicare. However, unlike other businesses that provide health coverage to their retirees, the Postal 

Service is unable to require its Medicare-eligible annuitants to enroll in Medicare. In fact, approximately 8 percent of Medicare-eligible postal annuitants do not participate in Medicare part A and apVerDate Mar 15 2010 02:45 Aug 09, 2014 Jkt 039010 PO 00000 Frm 00009 Fmt 6659 Sfmt 6602 E:\HR\OC\SR237.XXX SR237

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21Government Accountability Office (GAO), U.S. Postal Service: Proposed Health Plan Could 

Improve Financial Condition, but Impact on Medicare and Other Issues Should Be Weighed before Approval, GAO–13–658, at p. 8 (July 2013). 22 39 U.S.C. § 1005(f), chapter 12. 23 39 U.S.C. § 1207. 24 39 U.S.C. § 1005(f). 

proximately 22 percent do not participate in Medicare part B.21 In 

addition, postal annuitants, like all other federal employees and 

annuitants, do not receive prescription drug coverage through 

Medicare part D. This results in higher costs for the FEHBP that 

translate to higher costs for the Postal Service. 

S. 1486 would require Medicare-eligible postal annuitants to enroll in Medicare parts A, B and D as a condition of their enrollment 

in the PSHBP. Since the PSHBP would be a separate risk pool 

from the rest of the FEHBP, any savings, whether from higher 

Medicare enrollment or otherwise, would be seen by the Postal 

Service, its employees and its annuitants. This new program 

should provide the Postal Service with significant savings over time 

and further decrease its future retiree health care liability, reducing its retiree health prefunding requirements. 

According to data provided to the Committee by the Postal Service, implementation of this new Postal Service Health Benefits Program, combined with the restructuring under this legislation of the 

Postal Service’s obligation to prefund its retirees healthcare, could 

substantially reduce or eliminate the Postal Service’s unfunded liability to the Postal Service Retiree Health Benefits Fund. (See Appendix A of this Report, which presents financial projections developed by the Postal Service, showing the impact on the Postal Service’s finances if S. 1486 is enacted. Also included in Appendix A is 

a letter from the Postal Service to the Chairman of this Committee, 

conveying a memorandum that reconciles the Postal Service’s estimates and CBO’s scoring of S. 1486, and restating the Postal Service’s belief that the analysis of the cost savings associated with the 

Medicare integration provision of S. 1486 is accurate and correct.). 

4. Postal unions and collective bargaining 

Postal unions date back to the 19th Century and postal employees won the right to bargain collectively with the Postal Service in 

1970. Unlike most federal agencies and their employees, which are 

governed by government-wide civil service rules, the Postal Service 

generally sets compensation and other terms and conditions of employment for workers represented by unions through a process of 

collective bargaining between postal management and postal 

unions.22 In addition to wages and working conditions, the Postal 

Service also establishes leave and holidays through collective bargaining, as well as the amounts of the biweekly contribution by the 

Postal Service to the cost of employees’ health insurance. Postal 

workers are forbidden to strike, but instead, if the parties are unable to reach a timely agreement, the dispute must be resolved by 

binding arbitration.23

Retirement benefits for new employees. Retirement benefits for 

postal employees are currently excluded from collective bargaining 

and are provided to postal employees under the same statutes that 

grant these benefits to federal employees generally.24 S. 1486 

would modify that approach prospectively by allowing unions and 


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25 ‘‘Outside the Box: Reforming and Renewing the Postal Service, Part II—Promoting a 21st 

Century Workforce,’’ hearing Before the Senate Committee on Homeland Security and Governmental Affairs, 113th Cong. (Sept. 26, 2013) (Statement of Postmaster General Patrick R. 

Donahoe). 26 39 U.S.C. § 1207(c). 

management to reconsider the retirement package for newly hired 

postal workers. 

In testimony before this Committee, Postmaster General 

Donahoe proposed that postal employees be removed from coverage 

under the retirement program that applies to federal employees 

generally, and that instead the Postal Service be authorized to establish a new retirement program consisting of a defined contribution retirement system for future postal employees.25 He stated 

that such a retirement system would be preferable for a number of 

reasons, including that the FERS system is not comparable to pension programs in the private sector and is more costly, and that the 

emerging workforce is less likely to stay with one employer for a 

career and therefore wants a more flexible and portable program 

like a defined contribution system. 

The Committee did not decide that the FERS annuity for new 

employees should be ended, however, but S. 1486 would, instead, 

allow the Postal Service and the postal unions to bargain over the 

question of whether new employees will earn credit towards a 

FERS annuity, and to bargain over the size of the Postal Service’s 

financial contribution towards its new employees’ retirement. Specifically, the legislation provides that a union’s collective bargaining agreement may—(1) provide that some or all new employees represented by the union will not receive a FERS annuity for 

their service at the Postal Service; (2) adjust the amounts that the 

Postal Service would contribute to the FERS plan for the employees; (3) offer alternative retirement benefit plans for new employees 

represented by the union; and (4) adjust the amounts that the 

Postal Service would contribute towards the new employees’ Thrift 

Savings Plan (TSP) accounts. It is anticipated that bargaining over 

the retirement program would generally take place between the 

Postal Service and each union separately, in connection with the 

general collective bargaining agreement entered into between the 

Postal Service and each union. (With respect to the TSP program, 

the bill allows the amount of the Postal Service’s contributions to 

new employees’ accounts to be modified only by a collective bargaining agreement with all four postal unions.) 

The Committee expects the Postal Service to use these flexibilities prudently, to continue recruiting and maintaining a high-skill 

and high-morale workforce. 

Binding arbitration in resolution of labor disputes. If a dispute 

between postal unions and management cannot be resolved and is 

sent to binding arbitration, statute provides that a three-member 

arbitration board be convened to give the parties a full and fair 

hearing, to provide parties an opportunity to present evidence in 

support of their claims, and to render a conclusive and binding decision.26 Postmaster General Donahoe has requested an amendment to this statute requiring specifically that the arbitration 

board must consider the Postal Service’s financial health, explaining: ‘‘While some interest arbitrators [who resolve bargaining disputes between the Postal Service and its unions] do consider the 


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27 ‘‘Outside the Box: Reforming and Renewing the Postal Service, Part II—Promoting a 21st 

Century Workforce,’’ hearing Before the Senate Committee on Homeland Security and Governmental Affairs, 113th Cong. (Sept. 26, 2013) (Statement submitted by Postmaster General Patrick R. Donahoe). 28 ‘‘Finding Solutions to Challenges Facing the U.S. Postal Service,’’ hearing Before the 

Subcomm. on Federal Financial Management, Government Information, Federal Services and 

International Security of the Senate Committee on Homeland Security and Governmental Affairs, 

111th Cong. (Dec. 2, 2010) (‘‘U.S. Postal Service: Legislation Needed to Address Key Challenges,’’ statement submitted by Phillip Herr, Director for Physical Infrastructure Issues, Government Accountability Office, GAO–11–244T, at p.9). 29S. 1789, 112th Congress, § 106 of the bill as passed by the Senate. 30Public Law 100–90 (Aug. 18, 1987). 

Postal Service’s financial condition, there is no legal requirement to 

do so.’’ 27 The Government Accountability Office (GAO) has also recommended such a change to statute for similar reasons.28

The Committee believes that in this period when the Postal Service faces such dire financial difficulties, arbitrators should consider 

the financial condition of the Postal Service and S. 1486 should say 

so explicitly. The provision in S. 1486 is identical to the provision 

passed by the Senate as part of S. 1789 in the 112th Congress.29

5. Other workforce issues 

Appeal Rights for Certain Mid-Level Managers. In 1987, Congress allowed postal supervisors to appeal firings and other adverse 

personnel actions to the Merit Systems Protection Board (MSPB),30

which is an independent adjudicatory agency that generally reviews cases brought by federal employees who claim that personnel 

actions being taken against them are not lawful or that proposed 

penalties are not appropriate. Meanwhile, front-line postal workers 

retained the right to use the grievance procedures established 

under their union contracts. That left approximately 7,500 midlevel postal managers without any way to appeal ordinary personnel cases outside of the Postal Service. S. 1486 would fill that 

gap by allowing these managers to appeal firings and other adverse 

personnel actions to the MSPB. 

Managers’ Organizations. Current law requires that the Postal 

Service provide reasonable differentials in rates of pay between 

front-line workers and managers, and that managers’ organizations 

have an opportunity, on behalf of their members, to consult with 

the Postal Service about pay and benefits. S. 1486 would clarify 

and strengthen this process, in several ways. Current law requires 

the Postal Service to provide reasonable differentials in pay between front-line employees and managers, and the legislation clarifies that the Postal Service must take benefits into account as well 

as salary in providing the differential. Moreover, the legislation 

clarifies that changes to pay and/or benefits, including the termination of a benefit, for managers cannot occur outside the designated time period for pay consultation between the managers’ organizations and the Postal Service unless mutually agreed upon. 

FECA Prefunding. For workers’ compensation payments to be 

paid under the Federal Employees’ Compensation Act (FECA) for 

on-the-job injuries to postal workers, the Postal Service carries on 

its books an unfunded liability in excess of $17 billion. S.1486 

would establish a process under which the Postal Service will begin 

to pay down this unfunded liability. And to make sure that this requirement does not create new financial difficulties for the Postal 

Service, it would only be required to make a prefunding payment 

in any year when the Postal Service has net income exceeding $1 


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31See U.S. Postal Service, News Link, ‘‘Network Rationalization Update: USPS to resume efforts early next year.’’ June 30, 2014. https://liteblue.usps.gov/news/link/2014/07jul/ 

news01s1.htm. 32 Id. 33 Id. 

billion. The amortization schedule is modeled on the schedule now 

in the bill for Retiree Health Benefits: an 80% target and an amortization period extending 40 years, or a rolling period of 15 years, 

whichever period ends later. Under this plan, the Postal Service 

would keep the first $1 billion of annual net income, which the 

Postal Service could use for capital investment or any other appropriate purposes, but would need to make any amount above $1 billion available, to the extent necessary, for making the amortization 

payment. Also, to foster greater transparency and accountability, 

the Postal Service would be required to report about its unfunded 

liability for workers’ compensation payment and about its progress 

in paying down the liability in the USPS’s annual audited Form 

10–K reports. 

6. Mail processing facility closures 

On July 1, 2012, in order to reduce its costs and respond to the 

declining volume of First-Class Mail, the Postal Service implemented changes to its First-Class Mail delivery standard. The 

change in the delivery standard reduced the areas in which the 

Postal Service provides overnight delivery of First-Class Mail and 

thereby lengthens the delivery window for some First-Class Mail. 

At the same time, the Postal Service began the process of closing 

or consolidating mail processing facilities; by reducing overnight 

delivery service, the Postal Service reduced its need for processing 

facilities to support the delivery times. This first phase of closures 

has now been completed, during which the Postal Services consolidated 141 mail processing facilities during 2012 and 2013 and estimates that it thereby generated annualized cost savings of $865 

million thus far as a result.31 The Postal Service also announced 

on June 30, 2014 that it plans to resume the network rationalization in 2015, by closing or consolidating up to 82 additional facilities beginning in January and concluding before the heavy-mailing 

season in the fall of the year.32 The Postal Service expects this second phase of closings to generate an additional $750 million in 

annualized savings.33

While the Postal Service maintains that its new delivery service 

standards, together with its greater efficiencies allow it to continue 

providing satisfactory service with a smaller processing network, 

some have raised concerns about whether the closure of processing 

plants has contributed to an excessive and unanticipated lengthening in delivery times, particularly in rural areas. There have also 

been related questions raised about how the Postal Service calculates delivery time in determining whether its revised delivery 

service standards are being met. To help answer these latter questions, the bill directs GAO to conduct a study assessing the Postal 

Service’s method for calculating delivery times. 

Notwithstanding the concerns that have been raised, the Committee recognizes the general need for the Postal Service to rightsize its network, and has chosen not to curtail or eliminate the 

Postal Service’s existing authority to modify service standards and, 


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34Press Release, U.S. Postal Service, Postal Service Takes Next Steps in Optimizing Retail 

Network (July 26, 2011) available at http://about.usps.com/news/national-releases/2011/pr11- 

089.htm. 35The PRC issued an advisory opinion on December 23, 2011 stating that the Postal Service’s 

approach failed to provide adequate retail access in the event of a post office closure. Postal Regulatory Commission, Advisory Opinion on Retail Access Optimization Initiative, Docket No. 

N2011–1, at p.1 (Dec. 23, 2011). 36Press Release, U.S. Postal Service, Statement on Delay of Closing or Consolidation of Post 

Offices and Mail Processing Facilities (December 13, 2011), available at http://about.usps.com/ 

news/national-releases/2011/pr11l1213closings-v2.pdf. 

in the process, restructure its processing footprint. However, the 

bill does place a temporary moratorium on additional plant closures or changes in delivery standards for a period of two years (or 

until the completion of the GAO report on delivery times, whichever is later). This is to allow time to understand the full impact 

of the closures that have already occurred, to assess whether additional closures can be accomplished without harming service, and 

to see if alternative measures to decrease costs and increase revenues may make further closures unnecessary. 

The Committee seeks to ensure, moreover, that employees, customers, and representatives of communities that could be affected 

by the closure or consolidation of a mail processing facility have an 

adequate opportunity to provide input before the Postal Service 

makes a final decision about such a closure or consolidation. S. 

1486 would make the process used for facility closures or consolidations more transparent and would ensure interested parties a 

meaningful role in the decision. Specifically, section 202 of S. 1486 

would mandate that the Postal Service provide at least 45 days’ advance notice before making a final decision to close or consolidate 

a facility; that it provide adequate opportunities for public comment; and that it conduct an area mail processing study that includes consideration of a plan to reduce the capacity of the postal 

facility rather than close it. Before finalizing a closure, the Postal 

Service would have to publish a written justification for the decision that responds to the public comments and describes the actions the Postal Service intends to take to mitigate any significant 

negative effects from the closure. The Postal Service would also be 

required to make reasonable efforts to provide alternatives for 

those customers who would be affected by the closure of the processing facility. Finally, the bill provides for appeals of plant closures to the Postal Regulatory Commission (PRC) in the same 

manner that post office closings can be appealed. 

7. Post offices 

In July 2011, the Postal Service announced that it would conduct 

studies of approximately 3,700 post offices, retail annexes, stations, 

and branches nationwide for possible closure.34 The PRC expressed 

concerns about this plan,35 as did some Members of Congress. Most 

importantly, there was significant community concern about the 

proposal, particularly the impact of potential post office closings on 

small and rural communities, and questions about whether such 

impacts were worth the relatively modest projected savings. In response, the Postal Service in December 2011 announced that it 

would delay the closing or consolidation of post offices and mail 

processing facilities until May 15, 2012.36

In May 2012, the Postal Service announced a new strategy to reduce costs associated with post offices while at the same time enVerDate Mar 15 2010 02:45 Aug 09, 2014 Jkt 039010 PO 00000 Frm 00014 Fmt 6659 Sfmt 6602 E:\HR\OC\SR237.XXX SR237

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37Press Release, U.S. Postal Service, New Strategy to Preserve the Nation’s Smallest Post Offices (May 9, 2012), available at http://about.usps.com/news/national-releases/2012/ 

pr12l054.htm. 38 39 U.S.C. § 404(d)(2)(A). 39 39 U.S.C. § 404(d)(1). 

suring that postal customers receive adequate access to retail services. Under this Post Office Structure (‘‘POSt’’) Plan, the Postal 

Service conducts meetings in affected communities and gets community input on providing alternate means of retail access, such as 

allowing a private contractor to establish a so-called ‘‘Village Post 

Office’’ in a local business or providing retail services through a 

rural letter carrier, or keeping the local post office open but operating it for a reduced number of hours. The Postal Service estimates that, once fully implemented, the POSt Plan will save approximately half a billion dollars annually.37

Current law requires the Postal Service to consider several factors in determining whether to close a post office, such as the effect 

of the closing on the community, the effect on postal employees, 

whether the closing would undermine effective service for rural 

communities, and the amount of the projected savings.38

The Postal Service must notify the affected public of its intent to 

close or consolidate a particular post office and hold a 60-day comment period prior to the proposed date of such closure or consolidation.39 The public may appeal the Postal Service’s decision to the 

PRC within 30 days after USPS has made its determination to 

close such post office. The Commission then has 120 days to make 

a determination about whether proper procedures were followed 

during the closure process. 

Section 203 of S. 1486 builds on these existing legal protections 

as well as codifying and enhancing the practices under the POSt 

plan, allowing the Postal Service to provide retail alternatives to 

dedicated post offices while also putting in place safeguards against 

premature or inappropriate closures. These safeguards are particularly important for individuals in small towns and rural areas. 

Among other things, S. 1486 requires the Postal Service to consider 

several options prior to closing a post office, such as consolidating 

two post offices within a reasonable distance, reducing the number 

of operating hours at a particular post office instead of closing it, 

permitting a contractor or rural carrier to provide retail services in 

the community served by the post office, or implementing another 

alternative that may be proposed by the community. S. 1486 also 

requires the Postal Service to consider certain factors before making a final decision to close a post office or reduce its hours. 

In addition, S. 1486 also includes additional protections for 

small, rural post offices, prohibiting the closure of such post offices 

for a year after enactment and requiring that, thereafter, the Postal Service make certain determinations about the effect of the closing before going ahead. 

Finally, S. 1486 requires the Postal Service to establish minimum standards for retail postal services, to make clear the level 

of retail access that customers can expect, whether that retail access is provided through a traditional post office or alternative 

means. 


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40 U.S. Congressional Research Service, The U.S. Postal Service and Six-Day Delivery: History, 

Issues, and Current Legislation (R40626) by Wendy Ginsberg, at pp.6–7 (October 17, 2012); see, 

e.g., P.L. 112–74 (Consolidated Appropriations Act, 2012). 41 U.S. Congressional Research Service, The U.S. Postal Service and Six-Day Delivery: History, 

Issues, and Current Legislation (R40626) by Wendy Ginsberg, at pp.4–7, 14–20 (October 17, 

2012). 42Office of Management and Budget, Living Within Our Means and Investing in the Future: 

The President’s Plan for Economic Growth and Deficit Reduction, at p.23 (Sept. 2011). 43Office of Management and Budget, Budget of the United States Government, Fiscal Year 

2015, Appendix at page 1362. 44The Postal Service proposes that mail be delivered to street addresses Monday through Friday. Mail addressed to P.O. Boxes would continue to be delivered on Saturdays, and Post Offices 

already open on Saturdays would not be affected by this proposal. In addition, packages would 

continue to be delivered six days per week, and Priority Mail Express, currently delivered seven 

days per week, would not be affected. See Statement of Postmaster General and Chief Executive 

Officer Patrick R. Donahoe, pages 11–12, at ‘‘Outside the Box: Reforming and Renewing the 

Postal Service, Part II—Promoting a 21st Century Workforce,’’ hearing Before the Senate Committee on Homeland Security and Governmental Affairs, 113th Cong. (Sept. 26, 2013). 45See, id. 

8. Changes to mail delivery schedule 

Mail is currently delivered six days a week to most homes and 

businesses in the United States, and Congress includes language in 

annual appropriation bills intended to preserve six-day-per-week 

delivery service.40 However, beginning in 1976, there have been a 

series of proposals to reduce mail delivery to five days a week as 

a means of reducing operating costs and avoiding rate increases.41

President Obama proposed allowing the Postal Service to move to 

five-day delivery as part of the Administration’s deficit reduction 

package,42 and has included it in the FY 2015 budget.43

Faced with steep declines in mail volume, an increase in the 

number of delivery addresses, and difficult financial circumstances, 

the Postal Service has argued for some time that it is essential for 

it to have the authority to move to a five-days-per-week delivery 

schedule for mail.44 The Postal Service has estimated that it will 

save about $2 billion dollars annually by switching to five-day delivery 45—and notes that this is more than it can save through any 

other single operational change. 

It is clear that a shift to five-day mail delivery has the potential 

to save the Postal Service a substantial amount of money (even if 

there is some dispute about what the precise cost savings are likely 

to be). However, because reducing the days of delivery involves difficult tradeoffs, including the potential to reduce mail volume further and to diminish an advantage that the Postal Service has over 

certain of its competitors, it is appropriate to be cautious. 

S. 1486 therefore takes a careful and balanced approach to the 

question of delivery frequency. It provides the Postal Service with 

the ultimate authority to establish a nationwide delivery schedule 

of five-days per week if it determines that such a delivery schedule 

would contribute to the achievement of the Postal Service’s longterm solvency. The bill also, however, imposes temporary limitations on this authority, allowing a shift to five-day delivery only 

when mail volume has fallen to fewer than 140 billion pieces annually (mail volume in FY 2013 was approximately 158 billion pieces), 

evidencing a continuing decline in mail volume that might necessitate such a substantial change. And in no event would the Postal 

Service be permitted to move to five-day delivery before October 1, 

2017. Together, these restrictions provide some room to see if other 

measures the Postal Service is undertaking, on its own or pursuant 

to provisions in this bill, to reduce costs and, at least as imporVerDate Mar 15 2010 02:45 Aug 09, 2014 Jkt 039010 PO 00000 Frm 00016 Fmt 6659 Sfmt 6602 E:\HR\OC\SR237.XXX SR237

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46The Postal Service has estimated, for Fiscal Year 2012, average annual costs of about $380 per delivery point for door delivery, compared with about $240 for delivery to the curb, and 

about $170 for delivery to a central location. In a recent report, GAO casts doubt on the accuracy of these figures, noting that they are based on 20-year-old data. Government Accountability 

Office, Delivery Mode Conversions Could Yield Large Savings, but More Current Data Are Needed, GAO–14–444, (May 12, 2014). Regardless of the specific dollar amounts, however, it is generally agreed that door delivery is considerably more expensive than other delivery modes. 

tantly, to innovate and increase revenues, might mitigate the need 

to reduce delivery frequency. 

In addition, if the Postal Service is seeking to switch to five-day 

delivery, the bill directs the Comptroller General to report to Congress on the extent to which a change in delivery schedule would 

improve the financial condition of the Postal Service and assist in 

the efforts of the Postal Service to achieve long-term solvency. If 

the Comptroller General finds that the proposed change in delivery 

schedule would not substantially improve the financial condition of 

the Postal Service and assist in the efforts of the Postal Service to 

achieve long-term solvency, the Postal Service may still proceed 

with its plan, but it is first required to submit a response to Congress indicating its justification for proceeding so in light of the 

Comptroller General’s findings, and then wait 60 days, to allow for 

Congressional review. 

In authorizing five-day mail delivery, the bill does not affect the 

days and times that post offices operate, the frequency of delivery 

to post office boxes, or the delivery schedule for competitive (i.e., 

non-market dominant) products, such as Priority Mail Express 

(overnight delivery, formerly called Express Mail). The bill also 

provides for six-day delivery of packages for at least five years after 

the date of enactment. Package delivery—a growth area for the 

Postal Service—is typically a competitive product and therefore 

would be expected to cover its costs. 

9. Conversion of door delivery points 

The mode of mail delivery plays an important role in the efficiency and cost of delivery operations. The primary modes of delivery points for the Postal Service are door, curbside, and centralized 

delivery. Door delivery refers to delivering mail to slots or receptacles at a customer’s door. The Postal Service provides curbside 

delivery to customers who have mailboxes at the curb and that 

mail carriers can service from their vehicles. Centralized delivery 

includes cluster boxes and other mail receptacles in a single location, whether at the entrance to an apartment building or grouped 

together at the end of a block. Door delivery is the most time-consuming, and therefore the most expensive, form of delivery.46

S. 1486 encourages the Postal Service in its efforts to convert 

more addresses from door delivery to less expensive delivery 

modes. Codifying the Postal Service’s existing practice, section 205 

would require that the Postal Service provide centralized delivery 

(e.g., cluster boxes) for all new addresses established after the date 

of enactment, or, if centralized delivery is not practicable, curbside 

delivery. The Postal Service also would be required to carry out a 

program to convert existing business addresses receiving door delivery to centralized or curbside delivery. The Postal Service would 

further be required to seek out opportunities to convert existing 

residential addresses, by identifying existing residences that receive door delivery and that are appropriate candidates for converVerDate Mar 15 2010 02:45 Aug 09, 2014 Jkt 039010 PO 00000 Frm 00017 Fmt 6659 Sfmt 6602 E:\HR\OC\SR237.XXX SR237

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47Postal Regulatory Commission, Final Rule, ‘‘Administrative Practice and Procedure, Postal 

Service,’’ 72 Federal Register 217 (November 9, 2007), at pp. 63662–63704. 48See 39 U.S.C. § 3622(d)(1), enacted by section 201(a) of the PEAE, Public Law 109–435 (Dec. 

20, 2006). The rate cap went into effect under a final rule of the Postal Regulatory Commission, 

72 Fed.Reg. 63662–63704 (Nov. 9, 2007). 49 39 U.S.C. § 3622(d)(1)(E). 50See Postal Regulatory Commission Press Release, ‘‘PRC Approves Postal Service Request 

for Exigent rate Increase; Rejects Permanent Price Increases’’ (December 24, 2013), http:// 

www.prc.gov/prc-docs/Newsroom/PressReleases/ 

Exigent%20Rate%20Increase%202%2024%2013%20(2)l3429.pdf; Postal Regulatory Commission, 

Order Granting Exigent Price Increase, (Order no. 1926, Docket No. R2013–11, December 24, 

2013), http://www.prc.gov/Docs/88/88645/Orderl1926.pdf. 51 Id. 52See id. at page 181. 

sion and beginning implementation of a program to convert, on a 

voluntary basis, those addresses to a more cost-effective method of 

delivery. Customer resistance can sometimes be a barrier to such 

voluntary conversions, but the Postal Service also reports some 

success in outreach efforts that have emphasized the environmental benefits and the additional security (where packages left in 

a locked box rather than on, say, the front steps of a home) that 

centralized delivery can provide. 

10. Postal rates 

Since November 9, 2007, when the postal ratemaking system required by the Postal Accountability and Enhancement Act (PAEA) 

went into effect,47 the Postal Service’s ability to raise its prices has 

been constrained by a rate cap applied at the class level and based 

on the Consumer Price Index for All Urban Consumers (CPI–U).48

(The rate cap applies to mail and other ‘‘market dominant products,’’ for which the Postal Service has significant market power.) 

For about six years, the Postal Regulatory Commission has allowed 

rate increases only within the inflation-based cap. However, the 

PAEA also authorizes the Postal Service to adjust rates in excess 

of the rate cap on an expedited basis if justified due to ‘‘extraordinary or exceptional circumstances’’ 49—known as an ‘‘exigent’’ 

rate increase. On December 24, 2013, the Commission granted rate 

relief based on a conclusion that the mail-volume losses arising 

from the Great Recession of 2008–2009 were such an exigent circumstance.50 Specifically, the Commission allowed a temporary 4.3 

percent exigent rate increase above inflation, which the Postal 

Service implemented on January 26, 2014, but to be phased out 

once the revenues lost because of the Great Recession are recovered.51 The Postal Service’s projections indicate that the lost revenues are likely to have been recovered, and that the exigent rate 

increase is likely to end, sometime during 2015.52

However, given that mail volume has declined over the years at 

the same time that Congress has decided not to dramatically curtail the Postal Service’s service obligations, the Committee is concerned that the rate cap does not and will not provide the Postal 

Service with sufficient revenue to fund its capital needs, maintain 

statutory service levels, and remain financially viable. 

To give the Postal Service at least some of the revenue it needs 

to meet its current and future service and financial obligations, the 

Committee considered several options, including replacing the CPI– 

U rate cap with a cap based on another inflation measure, or even 

eliminating the cap altogether. However, the Committee ultimately 

decided, through the adoption of a Carper-Coburn amendment, to 


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53The bill states that the rate base, which would remain in effect until adjusted under the 

rate cap, would be the rates in effect on the date of enactment. Since the 4.3 percent exigent 

rate increase is projected to remain in effect until well into 2014, after the end of the 113th 

Congress, enactment of the bill would make the exigent rate increase permanent. 54 39 U.S.C. § 3662(d)(2). 55See 39 U.S.C. § 3662 (authorizing rate and service complaints to be lodged with the Postal 

Regulatory Commission); 39 U.S.C. § 3653 (requiring the Commission to make an annual written assessment of the Postal Service’s rates and service and their compliance with applicable 

requirements.) 

maintain the existing rate cap, but apply it to a baseline consisting 

of the rate now in effect, which includes the 4.3 percent exigent 

rate increase above inflation approved by the Commission.53 With 

that rate increase permanently included in the rate base from 

which future inflation-based adjustments will be determined, the 

Postal Service would not be forced to decrease prices, and customers would have the assurance that the prices they pay now will 

remain as they are, subject to any increases permitted under the 

CPI–U rate cap in future years. The bill would also apply the rate 

cap to all market-dominant products considered together, rather 

than to each class of mail separately, as is done under the current 

statute.54

According to data provided by the Postal Service, the Postal 

Service would be in significantly worse financial condition if S. 

1486 were enacted without the Carper-Coburn amendment and the 

CPI–U rate cap were applied without accounting for the 4.3 percent 

exigent rate increase. Chart 1 included in the Appendix to this report assumes enactment of S. 1486 with the Carper-Coburn rates 

amendment. Chart 2 included in the Appendix assumes the bill is 

enacted without the amendment, meaning the exigent rate increase 

would expire after Fiscal Year 2015 and the rate cap would be applied to a lower baseline. In the first chart, Total Revenue at the 

Postal Service would remain above $68 billion and grow to $73 billion in Fiscal Year 2023, leaving the Postal Service with $7.1 billion in net cash. In the second chart, the non-rate projections in 

each category are identical to those on the first chart but, because 

rates would go down in Fiscal Year 2016, Total Revenue would decline significantly that year and only reach $71.4 billion in Fiscal 

Year 2023. With this lower level of revenue over time, the Postal 

Service would have $4.8 billion in debt at the end of the ten-year 

projection rather than a positive cash balance. 

In addition to establishing the current postal rates approved by 

the Commission as the statutory baseline for calculating future adjustment, S. 1486 would also make two key changes to the ratemaking process: 

1. It would make the ratemaking process less cumbersome, 

by not requiring that every Postal Service rate increase within 

the CPI–U cap be submitted to the Postal Regulatory Commission for formal review. Instead, the Committee believes the 

Commission should only be required to review and affirmatively approve emergency requests to increase rates above the 

cap, while maintaining the ability of the Commission to review 

and render a decision on other rate increases pursuant to complaints filed by interested parties or through the Commission’s 

annual compliance review.55

2. It would give the Postal Service a role in the review and 

revision of the ratemaking system. Under current law, the 

Postal Regulatory Commission would conduct this review in 


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56 39 U.S.C. § 3662(d)(3). 57For example, the USPS Office of Inspector General reported in July 2012: ‘‘The Postal Service could increase the value of Post Office retail facilities and address community needs by evaluating and offering non-postal products and services. New non-postal products are not currently 

authorized, but pending legislation could provide additional opportunities.’’ USPS Office of Inspector General, ‘‘21st Century Post Office: Non-Postal Products and Services,’’ Management Advisory (Report Number DA–MA–12–005, July 16, 2012), https://www.uspsoig.gov/sites/default/ 

files/document-library-files/2013/DA-MA-12-005.pdf. This July 2012 review offered a wide 

range of non-postal products and services that the Postal Service might appropriately offer, to 

the benefit of the public as well as to add to the Postal Service’s financial viability, and recommended that the Postal Service develop a strategy to identify, evaluate, and offer the most 

promising non-postal products and services ‘‘when legislation permits.’’ Id. 58 5 U.S.C. §§ 8101 et seq. 59See Federal Employee Compensation Act of September 7, 1916 60See P.L. 93–416. 

2017 (and as appropriate thereafter) and may change the ratemaking system by majority vote of its members.56 The Committee is concerned that this arrangement gives the members 

of the Commission too much power over the Postal Service’s 

business decisions regarding the prices of its products in the 

coming years, and therefore gives the Postal Service too little 

say. Instead, S. 1486 would authorize the Postal Service, not 

earlier than January 1, 2017, to propose revisions to the ratemaking system, which the Commission would review and could 

veto and send back to the Postal Service. The Committee believes this process has the potential to force the Postal Service 

and the Commission to come to consensus on any new or revised ratemaking system that might need to be put into place. 

11. Postal service innovation 

Current law prohibits the Postal Service, with a few narrow exceptions, from offering anything other than ‘‘postal’’ products. This 

essentially limits it to hard-copy mail and packages and prohibits 

it from experimenting in other areas. The Committee is concerned 

that this restriction is too constraining and prevents the Postal 

Service from better capitalizing on its assets.57

In order to give the Postal Service more authority to make the 

best and most lucrative use of its unique retail, processing, and delivery network, S. 1486 would relax the restrictions currently 

placed on the Postal Service while setting up a number of safeguards intended to protect the private sector from unfair and unnecessary competition from the federal government. It would also 

establish a leadership structure at the Postal Service intended to 

drive innovation initiatives through the creation of a ‘‘Chief Innovation Officer’’ and set up a temporary independent commission that 

would examine areas where the Postal Service could find new 

sources of revenue. 

12. Federal Employees’ Compensation Act (FECA) 

S. 1486 includes the Worker’s Compensation Reform Act of 2014 

to update and reform FECA,58 which is the statute governing the 

worker’s compensation program for federal civilian employees and 

postal employees. The bill would update and reform FECA in several respects—the first time this 96-year-old law 59 has been substantially updated since 1974.60 The provisions of the Worker’s 

Compensation Reform Act that are incorporated into S. 1486 are 

essentially identical to those approved by the Senate on April 25, 

2012 as part of S. 1789, the 21st Century Postal Service Act of 


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61S.1789, 112th Cong. The only amendment to the Workers’ Compensation Reform Act made 

by the Senate in 2012 was to add provisions—(1) providing those injured while deployed in 

armed combat additional time to file a claim for FECA benefits; (2) ensuring that deployed employees injured in a terrorist attack overseas while off-duty would receive FECA benefits; and 

(3) creating an exception from benefit-reduction under the legislation for hardship if someone 

would be eligible for food stamps if their benefits are reduced. See Congressional Record, 112th 

Cong., at S2690—S2691 (April 25, 2012). 

2012, and very similar to the provisions that this committee had 

approved and reported on January 1, 2012, as part of that bill.61

The most significant FECA reform in the legislation would make 

for certain reductions in benefit levels. Under current statute, the 

FECA program pays a basic benefit for a total disability equal to 

662⁄3 of an injured worker’s pre-disability wage if the worker has 

no dependents; for those with dependents, the benefit rises to 75 

percent (called ‘‘augmented compensation’’). For a partial disability, 

the benefit is in proportion to the wage-earning capacity that the 

worker lost. These benefits are adjusted for inflation and are taxfree and continue for as long as the injury or illness renders the 

individual unable to work. Because those benefits are now generally larger than federal retirement benefits, the program now creates a financial incentive for insured workers to remain on the 

FECA rule up to and beyond retirement age. Under this legislation, 

injured worker’s FECA benefits would be set at 50 percent of lost 

wages when workers reach Social Security retirement age. In addition, the augmented compensation under FECA for workers with 

dependents is out of line with other compensation programs and 

would be eliminated—under the legislation, injured workers before 

retirement age who have dependents would receive the same rate 

of compensation (i.e., 662⁄3 percent of lost wages) as those without 

dependents. 

Other key provisions in the Workers’ Compensation Reform Act 

of 2014 include— 

• Strengthened back-to-work programs. In addition to removing 

certain financial disincentives to returning to work, this legislation 

strengthens several existing programs to help injured workers get 

back to work. 

• Waiting period. Since minor workplace injuries often heal very 

quickly, the legislation establishes a uniform 3-day waiting period 

after injury, before FECA compensation is paid; except if the period 

of disability exceeds 14 days, then the injured worker may receive 

FECA compensation for those initial three days. (This 3-day waiting provision currently applies to injured postal workers only, and 

S. 1486 would extend the same provision to all FECA beneficiaries.) 

• Increased amount of certain statutory benefits. The legislation 

would significantly increase the amount of compensation for severe 

disfigurement and funeral expenses, which amounts are fixed in 

statute and have not been significantly changed since 1949. 

• Independent medical examinations. The legislation would require an independent medical assessment of disability and potential for return to work for beneficiaries after six months in the program and on a regularly scheduled basis thereafter, but no less frequently than every three years. (This assessment must be conducted by a medical professional other than the beneficiary’s own 

doctor, who would remain responsible for treatment and for the initial assessment.) 


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62Department of Labor, Occupational Safety and Health Administration, Federal Injury and 

Illness Statistics for Fiscal Year 2013, available at https://www.osha.gov/dep/fap/statistics/ 

fedprgmslstats13lfinal.html. 63Department of Labor, Office of Workers’ Compensation Programs, Protecting Our Workers 

and Ensuring Reemployment (POWER) Initiative statistics, available at http://www.dol.gov/ 

owcp/dfec/power/index.htm. 

• Program integrity and compliance. The legislation would require beneficiaries to report any outside income that they receive, 

would enable cross-matching of FECA records with Social Security 

data, and contains several additional provisions to strengthen integrity and compliance efforts under FECA. 

In considering the provisions to include in S. 1486 (as in S. 1789 

in the 112th Congress), the Committee found that FECA reform is 

necessarily intertwined with the effort to stabilize the Postal Service’s finances. Employees of the Postal Service represent a disproportionate number of FECA beneficiaries, and are responsible 

for a larger share of FECA benefits than are the employees of any 

federal department or agency. Specifically, approximately 41 percent of injuries, illnesses, and fatalities that resulted in FECA 

claims during Fiscal Year 2013 involved Postal Service employees.62 According to the Department of Labor (DOL), in Fiscal Year 

2013, injuries and illnesses of USPS employees resulted in 221.5 

lost production days per 100 employees, compared with the rest of 

the federal government that lost 74.4 days per 100 employees.63

Because FECA costs are so expensive for the Postal Service, the 

Committee determined that cost-cutting FECA reforms must be included in this legislation to place the Postal Service on a sound financial footing. 

Moreover, the Committee determined that applying FECA reforms only to the Postal Service would cause harmful fragmentation and confusion within the FECA program, and also that these 

reforms would be as valuable and appropriate for non-postal agencies as they are for the Postal Service. Accordingly, the provisions 

in S. 1486 that reform the federal workers’ compensation program 

apply government-wide. 

A more thorough discussion of the need for FECA reform and the 

key provisions included in the Workers’ Compensation Reform Act 

of 2014 can be found in this Committee’s report on S. 1789 in the 

112th Congress and in Senate debate on that bill. 

13. Property management and expedited disposal of real property 

The Committee decided to incorporate into S. 1486 the entire 

text of the Federal Real Property Asset Management Reform Act 

of 2014 (Federal Real Property Act), which the Committee earlier 

approved and reported on November 19, 2013 as S. 1398. The purpose of the Federal Real Property Act is to improve the efficiency 

and effectiveness of the federal government’s management of real 

property. 

Effectively and efficiently managing the government’s extensive 

real property holdings has posed serious and longstanding challenges for the federal government. Problems related to real property management include ineffective management of excess and underutilized property and an overreliance on costly leasing. 

Compounding these management problems is the fact that agencies 

that no longer need particular parcels of property face a lengthy 

and costly disposal process, often causing agencies to keep 


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64 United States Postal Service Office of the Inspector General (USPS OIG), Nationwide Facility Optimization Audit Report (Report Number DA–AR–11–09) (August 26, 2011), http:// 

www.uspsoig.gov/sites/default/ files/document-library-files/2013/DA-AR-11-009.pdf 65Federal Real Property Asset Management Reform Act of 2013, Report of the Senate Committee on Homeland Security and Governmental Affairs, to accompany S.1398, S. Rep. 113–122, 

113th Cong., 1st Sess. (Nov. 19, 2013), http://www.gpo.gov/fdsys/pkg/CRPT-113srpt122/pdf/ 

CRPT-113srpt122.pdf 

unneeded property, and, as a result, the federal government as a 

whole continues to retain more real property than it needs. The 

Federal Real Property Act would strengthen the federal government’s management of real property by requiring agencies to maintain an up-to-date inventory of real property, establishing an interagency Federal Real Property Council to develop guidance on real 

property management and ensure its implementation, and authorizing a pilot program to expedite the disposal of surplus real property. 

The Postal Service, like many other parts of the federal government, has a number of underutilized and excess properties. The 

Postal Service Inspector General has estimated that the Postal 

Service possesses 67 million square feet of underutilized or excess 

space that can either be better utilized for cost savings or sold for 

revenue.64 The Federal Real Property Act provides that the Postmaster General may identify a list of postal properties with space 

available for use by federal agencies and submit that list to the 

Federal Real Property Council established in the legislation. Then 

federal agencies must review the list submitted by the Postmaster 

General and recommend colocations as appropriate. 

A full explanation of the Federal Real Property Act, including the 

weaknesses in the government’s management of real property and 

the ways in which the legislation would improve such management, 

are provided in the Committee’s report on S. 1398.65

III. LEGISLATIVE HISTORY

On August 1, 2013, Senators Carper and Coburn introduced S. 

1486, which was referred to the Senate Homeland Security and 

Governmental Affairs Committee. 

Prior to the bill’s introduction, the Committee held a hearing on 

February 13, 2013, titled ‘‘Solutions to the Crisis Facing the U.S. 

Postal Service.’’ The purpose of the hearing was to examine the financial and other challenges facing the Postal Service, and solutions that had been put forward to address those challenges, both 

proposals by Postal Service management and legislative proposals 

being considered by Congress. Representatives Darrell Issa and 

Elijah Cummings, the Chairman and Ranking Member, respectively, of the Committee on Oversight and Government Reform of 

the House of Representatives, both testified, as did Patrick 

Donahoe, the Postmaster General of the United States, and Eugene 

Dodaro, the Comptroller General of the United States. Other witnesses who appeared before the Committee included the Presidents 

of the American Postal Workers Union, the National Rural Letter 

Carriers’ Association, and the National Association of Postmasters 

of the United States; and representatives from the private sector 

and academia. 

After the bill’s introduction, the Committee held two additional 

hearings under the heading ‘‘Outside the Box: Reforming and Renewing the Postal Service.’’ Part I of this series, subtitled ‘‘MainVerDate Mar 15 2010 02:45 Aug 09, 2014 Jkt 039010 PO 00000 Frm 00023 Fmt 6659 Sfmt 6602 E:\HR\OC\SR237.XXX SR237

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66 A number of additional amendments were offered but not adopted. These include a Tester 

amendment to strike Title V of the bill, dealing with the Federal Employees’ Compensation Act, 

which was not adopted by a roll call vote of 6–7; a Tester amendment to limit application of 

the bill’s changes to the Federal Employees’ Compensation Act to Federal employees hired after 

the date of enactment of the Postal Reform Act, which was not adopted by a roll call vote of 

7–8; a McCain amendment that would allow the Postal Service to immediately move to a fiveday-per-week mail delivery schedule, which was not adopted by voice vote; and a Paul amendment that would prohibit the Postal Service from entering into collective bargaining agreements 

or agreeing to no-layoff clauses in contracts, and allow the Postal Service to file for bankruptcy, 

which was not adopted by a roll call vote of 4–11. In addition, Senator Paul withdrew an amendment that would have allowed the carrying of firearms into post offices where otherwise permitted by state or local law after a Carper second degree amendment that would have first required a joint report and recommendations of relevant federal agencies was adopted by a roll 

call vote of 9–6. A subsequent agreement, entered into by unanimous consent, provided for a 

vote on an amendment identical to the amendment originally filed by Senator Paul; that Paul 

amendment was not adopted by a roll call vote of 6–9. 

taining Services, Reducing Costs, and Increasing Revenue through 

Innovation and Modernization,’’ was held on September 19, 2013, 

and focused on postal services, including delivery schedules, delivery standards, and post office services; potential changes in the 

postal ratemaking system; and innovation, including the potential 

offering of new products and services. Postmaster General 

Donahoe; Ruth Goldway, the Chairman of the Postal Regulatory 

Commission (PRC); and David Williams, the Inspector General of 

the Postal Service, appeared as witnesses. The Presidents of the 

American Postal Workers Unions and the National Rural Letter 

Carriers’ Association also testified, as did executives of three private sector companies and/or associations. 

Part II of the series, subtitled ‘‘Promoting a 21st Century Workforce,’’ was held on September 26, 2013, and focused on issues related to the postal workforce, including matters related to health 

care and pensions for postal workers and the manner in which the 

Postal Service calculates and funds these obligations; and the 

evolving role of postal workers in the digital age. Postmaster General Donahoe again testified, as did Jonathan Foley, the Director 

of Planning and Policy Analysis at the Office of Personnel Management (OPM), and two representatives of the Government Accountability Office (GAO), including the Chief Actuary and a director on 

GAO’s health care team, the Presidents of the National Association 

of Letter Carriers, the National Mail Handlers Union, and National 

Association of Postmasters of the United States, as well as two policy institute leaders. 

The Committee considered S. 1486 at a business meeting that 

was begun on January 29, 2014 and was continued on February 6, 

2014. The legislation was ordered reported favorably by a roll call 

vote with several adopted amendments 66: 

A Carper-Coburn substitute amendment makes a number of 

changes to the bill as introduced. These include changes to provisions about how the Postal Service’s Civil Service Retirement System (CSRS) and Federal Employees Retirement System (FERS) 

pension obligations are calculated (to reflect postal-specific demographic information); how future FERS surpluses would be handled; negotiations over pension benefits with respect to TSP; the 

postal service-only health care program and its coordination with 

Medicare; funding of the Postal Service’s liability for workers’ compensation payments; the timing of the moratorium against changes 

in delivery service standards; procedural requirements for closing 

of processing plants; procedural protections before closing or reducing the hours for post offices; the circumstances under which the 


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Postal Service would be permitted to move from six-day to five-day 

delivery of mail; the PRC’s review of major service changes; and 

the Postal Service’s authority to modify the postal rate system. The 

substitute was adopted by unanimous consent. Senators Carper, 

Levin, Pryor, McCaskill, Tester, Baldwin, Coburn, McCain, Johnson, Paul, Enzi, and Ayotte were present. 

A Levin amendment prohibits the Postal Service from entering 

into contracts that restrict Congressional oversight. The amendment was adopted by voice vote. Senators Carper, Levin, Pryor, 

McCaskill, Tester, Baldwin, Coburn, McCain, Johnson, Paul, Enzi, 

and Ayotte were present for the vote. 

Another Levin amendment, as modified, provides for notification 

and local participation in the expedited disposal process for real 

property in Title VI of the bill. The amendment was adopted by 

voice vote. Senators Carper, Levin, McCaskill, Begich, Baldwin, 

Heitkamp, Coburn, Johnson, Enzi, and Ayotte were present. 

A Pryor amendment provides certain postal employees the right 

to appeal significant personnel actions to the Merit Systems Protection Board. The amendment was adopted by voice vote. Senators 

Carper, Levin, Pryor, McCaskill, Tester, Begich, Heitkamp, Johnson, and Ayotte were present. 

An additional Pryor amendment clarifies that those who apply 

for waivers based on physical hardships in order to continue to receive door delivery of mail will not be charged for either the waiver 

application or the actual waiver. The amendment was adopted by 

voice vote. Senators Carper, Levin, Pryor, McCaskill, Tester, 

Begich, Baldwin, Coburn, McCain, Johnson, Paul, Enzi, and Ayotte 

were present. 

A Landrieu amendment requires the Postmaster General to submit a report on the feasibility of a pilot program to implement the 

use of natural gas and propane for its heavy-duty, over-the-road 

trucks. The amendment was adopted by voice vote. Senators Carper, Levin, Pryor, McCaskill, Tester, Begich, Baldwin, Coburn, 

McCain, Johnson, Paul, Enzi, and Ayotte were present. 

A McCaskill amendment imposes a one-year moratorium on closing rural post offices; amends the additional determinations necessary for closing a rural post office and makes the requirement for 

the additional determinations permanent; and, for 10 years, requires that the Inspector General of the Postal Service report on 

the projected and actual cost savings from closing rural post offices. 

The amendment was adopted by voice vote. Senators Carper, 

Levin, Pryor, McCaskill, Tester, Begich, Baldwin, Heitkamp, 

Coburn, McCain, Johnson, Paul, Enzi, and Ayotte were present. 

A Tester amendment conditions the end of the two-year moratorium on changes in delivery standards on GAO’s completion of the 

report on delivery times required by section 201(b). The amendment was adopted by voice vote en bloc. Senators Carper, Levin, 

Pryor, McCaskill, Begich, Heitkamp, Coburn, Johnson, Paul, and 

Ayotte were present. 

Another Tester amendment, as modified, reinstitutes the delivery 

service standards for First-Class Mail and periodicals in effect on 

June 30, 2012 for routes on which such mail was transported under 

Alternate Means of Transportation contracts, and require that such 

service standards be maintained for two years after enactment of 

this Act. The amendment also puts in place additional requireVerDate Mar 15 2010 02:45 Aug 09, 2014 Jkt 039010 PO 00000 Frm 00025 Fmt 6659 Sfmt 6602 E:\HR\OC\SR237.XXX SR237

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67 As modified, the underlying Baldwin-McCaskill amendment would have kept the exigent 

rate increase in effect for one year and then permitted rate increases of up to one percentage 

point above the Consumer Price Index until a new rate system was put in place, scheduled 

under existing law for 2017. 

ments before service under Alternate Means of Transportation contracts can be discontinued. The amendment was adopted by a roll 

call vote of 8–7, with Senators Levin, Pryor, Landrieu, McCaskill, 

Tester, Begich, Baldwin, and Heitkamp recorded as a yes vote, and 

Senators Carper, Coburn, McCain, Johnson, Paul, Enzi, and Ayotte 

recorded as a no vote. Senators Carper, Levin, Tester, Begich, 

Heitkamp, Coburn, Johnson, and Paul were present. 

A Begich amendment makes two changes in the rules governing 

pay and benefits for managerial and supervisory employees. First, 

it clarifies that changes to pay and/or benefits, including the termination of a benefit, for managers cannot occur outside the designated time period for pay consultation between the managers’ organizations and the Postal Service unless mutually agreed upon. 

Second, it requires that the mandated differential in rates of pay 

between craft employees and managers be calculated based on both 

pay and benefits. The amendment was adopted by voice vote. Senators Carper, Levin, McCaskill, Begich, Heitkamp, Coburn, and 

Johnson were present. 

A second Begich amendmentclarifies that shipments of alcohol, 

as permitted under section 303, must comply with state, local and 

tribal laws.The amendment was adopted by voice vote. Senators 

Carper, Levin, McCaskill, Begich, Heitkamp, Coburn, Johnson and 

Ayotte were present. 

A third Begich amendment requires the PRC to examine how the 

recent reclassification of Parcel Post to a competitive product may 

affect certain communities that are largely inaccessible by road and 

which rely on the Postal Service for delivery of basic goods, and 

whether the Postal Service still exercises monopoly power with respect to these communities. The amendment was adopted by voice 

vote. Senators Carper, Levin, McCaskill, Begich, Baldwin, 

Heitkamp, Coburn, Johnson, Enzi, and Ayotte were present. 

A fourth Begich amendment permits the carrying or storing of a 

firearm in a parking lot of a post office in a manner not inconsistent with State or local law and not in violation of any lease 

terms. The amendment was adopted by a roll call vote of 15–0, 

with Senators Carper, Levin, Pryor, Landrieu, McCaskill, Tester, 

Begich, Baldwin, Heitkamp, Coburn, McCain, Johnson, Paul, Enzi 

and Ayotte recorded as voting in favor. Senators Carper, Levin, 

Pryor, McCaskill, Tester, Begich, Heitkamp, Coburn, Johnson, 

Paul, and Ayotte were present. 

A Baldwin-McCaskill amendment, as modified, was offered and 

was amended by a Carper-Coburn second degree amendment, 

which fully replaced the text of the underlying amendment.67 As 

amended by the second degree amendment, the amendment makes 

permanent the temporary exigent rate increase approved by the 

PRC in December 2013 and permits the Postal Service to raise 

rates beyond that baseline up to the amount of any increase in the 

Consumer Price Index. It also allows the Postal Service to propose 

changes to the postal rate system starting in 2017, but only with 

the review and approval of the PRC. The Carper-Coburn second degree amendment was adopted by a roll call vote of 10–5, with SenVerDate Mar 15 2010 02:45 Aug 09, 2014 Jkt 039010 PO 00000 Frm 00026 Fmt 6659 Sfmt 6602 E:\HR\OC\SR237.XXX SR237

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ators Carper, Levin, McCaskill, Begich, Heitkamp, Coburn, 

McCain, Johnson, Enzi, and Ayotte voting yes, and Senators Pryor, 

Landrieu, Tester, Baldwin, and Paul voting no. The BaldwinMcCaskill amendment, as amended by the second degree amendment, was adopted by voice vote. Senators Carper, Levin, Pryor, 

Tester, Begich, Baldwin, Heitkamp, Coburn, Johnson, and Paul 

were present for both votes. 

A Heitkamp amendment adds the efforts by the Postal Service 

to recruit and retain a workforce sufficient to meet the strategic 

needs of the Postal Service to the matters the Strategic Advisory 

Commission is directed to study and develop a strategic blueprint 

to address. The amendment was adopted by voice vote en bloc. Senators Carper, Levin, Pryor, McCaskill, Begich, Heitkamp, Coburn, 

Johnson, Paul and Ayotte were present. 

Another Heitkamp amendment, as modified and as amended by 

two second degree amendments offered by Senator Levin, provides 

for an appeal process to the PRC in the case of the proposed closing 

of a mail processing plant that is the same as the process used for 

post office closings. It also directs the Postal Service to respond to 

the required GAO report evaluating whether any proposed change 

in delivery schedule from six to five days per week would improve 

the financial condition of the Postal Service and assist it in achieving long-term solvency and prohibits implementation of a proposed 

change in schedule until after the Postal Service has submitted its 

response. The first Levin second degree amendment prohibits the 

Postal Service from adopting a five-day-per-week delivery schedule 

before October 1, 2017, and was adopted by voice vote. The second 

Levin second degree amendment extends the time during which the 

Postal Service must wait to implement a change in delivery schedule until 60 days after the date on which the Postal Service responds to the GAO report; it was adopted by unanimous consent. 

The Heitkamp amendment, as amended, was adopted by voice vote. 

Senators Carper, Levin, Tester, Begich, Heitkamp, Coburn, Johnson, and Paul were present for all three votes. 

A McCain amendment requires a study on the environmental impact of moving to five-day-per week mail delivery. The amendment 

was adopted by voice vote en bloc. Senators Carper, Levin, Pryor, 

McCaskill, Begich, Heitkamp, Coburn, Johnson, Paul, and Ayotte 

were present. 

A Paul amendment limits the number of post offices that may be 

located in the U.S. Capitol Complex to one in the Houseof Representatives office buildings and one in the Senate office buildings. 

The amendment was adopted by voice vote en bloc. Senators Carper, Levin, Pryor, McCaskill, Begich, Heitkamp, Coburn, Johnson, 

Paul, and Ayotte were present. 

An Enzi amendment, as modified, requires the Postal Service, 

when proposing to discontinue a post office, to provide affected 

communities with relevant information on the costs of operating 

the post office; to allow local governments to present alternative 

proposals for providing postal services to the community; and to 

consider whether to implement such an alternative proposal. The 

amendment was adopted by voice vote. Senators Carper, Levin, 

Pryor, McCaskill, Tester, Begich, Baldwin, Heitkamp, Coburn, 

McCain, Johnson, Paul, Enzi, and Ayotte were present. 


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The Committee ordered the bill, as amended, favorably reported 

by a roll call vote of 9–1. Senators Carper, Levin, Pryor, McCaskill, 

Begich, Heitkamp, Coburn, Johnson and Ayotte voted in favor of 

the bill, while Senator Tester voted against the bill. Senators 

McCain and Enzi asked to be recorded in favor of the bill by proxy, 

while Senators Landrieu, Baldwin, Portman, and Paul asked to be 

recorded against the bill by proxy. 

IV. SECTION-BY-SECTION ANALYSIS

Section 1 — Short title 

This section establishes the title of the legislation as the—Postal 

Reform Act of 2014.’’ 

Section 2 — Table of Contents 

This section sets forth the table of contents for the Act. 

Section 3 — Definitions 

This section provides definitions of terms used in the Act. 

TITLE I: POSTAL SERVICE WORKFORCE

Section 101—Annual Federal Employee Retirement System and 

Civil Service Retirement System Assessments 

This section would require that, in annually calculating the 

amounts that the Postal Service must pay to fund postal workers’ 

annuities under the Federal Employees Retirement System (FERS) 

and the Civil Service Retirement System (CSRS), the Office of Personnel Management (OPM) must use the demographic and salarygrowth characteristics of the Postal Service’s actual workforce, 

rather than the general characteristics of both postal and non-postal federal employees combined, as OPM does today. 

Moreover, if OPM finds that the Postal Service has paid more 

into the Federal Employees Retirement System (FERS) system 

than its employees’ annuities under that system will actually cost, 

this section provides an orderly process by which the surplus can 

be returned for use by the Postal Service. If the initial calculation 

shows a surplus as of the end of the fiscal year ending September 

30, 2013, the Postal Service may request and receive not more than 

$6 billion of the calculated surplus, and must use the refund in 

2014 to retire its debt obligations. If the second-year calculation 

shows a surplus, the Postal Service could request the return of no 

more than two-thirds of the surplus. Then starting with the third 

year and for each subsequent year, any overfunding of its FERS account would be refunded to the Postal Service by a series of annual 

installments through 2047. After the first-year refund, the Postal 

Service would use these annual refund payments to pay down unfunded liabilities (for retiree health benefits, CSRS, or workers’ 

compensation under the Federal Employees’ Compensation Act 

(FECA)) or to pay off Treasury debt. Once all of these liabilities 

and debts are retired, the Postal Service could use an annual refund for any appropriate other purpose. 

Finally, this section modifies the schedule under which the Postal Service must make up for the amount by which it has paid less 

than its employees’ annuities under the CSRS system will actually 

cost. Under current law, the Postal Service would need to pay off 


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that CSRS unfunded liability by a series of annual payments starting on September 30, 2018 and ending on September 30, 2043. This 

section of the bill requires the Postal Service to make the series of 

annual payments starting on September 30, 2015 and ending on 

September 30, 2054. 

Section 102—Postal service authority to negotiate retirement benefit 

terms for new employees 

This section would allow the Postal Service and each postal labor 

union to bargain over the retirement package for newly hired postal workers represented by the union. Specifically, the Postal Service and each union would be able to agree to the following kinds 

of modifications: (1) whether to cease giving some or all new employees credit towards an annuity under the Federal Employee Retirement System (FERS); (2) whether to offer one or more additional retirement benefit plans, for the benefit of some or all new 

employees; (3) whether and how to adjust the relative amounts 

that the Postal Service and an employee would contribute to the 

FERS annuity plan, for those new employees who continue to receive credit towards the annuity; (4) the amounts that an employee 

and the Postal Service would contribute for a new employee’s participation in an additional retirement plan established under the 

agreement; and (5) whether and how to adjust the amount that the 

Postal Service would contribute towards new employees’ Thrift 

Savings Plan (TSP) accounts. The bargaining would generally take 

place between the Postal Service and each union in connection with 

the general collective bargaining agreement entered into between 

the Postal Service and the union. However, under this section of 

the bill, the Postal Service’s contribution to new employees’ TSP accounts may be modified only by a collective bargaining agreement 

among the Postal Service and all four unions, and could result in 

no more than a single Postal-only alternative to the TSP contribution program that applies under statute for federal employees generally. 

Section 103—restructuring of payments for retiree health benefits 

This section would restructure the Postal Service’s retiree health 

pre-funding schedule. The bill would eliminate the existing statutory payment schedule, cancel any outstanding payments owed by 

the Postal Service, suspend payments until Fiscal Year 2016, and 

then begin a new payment schedule amortized over 40 years. It 

would also reduce the pre-funding goal to 80 percent of projected 

obligations. The bill also recognizes that the amount of these payments should be reduced further as a result of the implementation 

of the Postal Service Health Benefits Program in section 104. 

Section 104—Postal service health benefits program 

This section would create a new Postal Service Health Benefits 

Program (PSHBP) within the Federal Employees Health Benefits 

Program (FEHBP) in which all postal employees and annuitants 

would participate. The new program would be implemented and administered by the Office of Personnel Management. 

The program would require Medicare-eligible postal annuitants 

enrolled in the PSHBP to also enroll in Medicare, including parts 

A, B and D. Current annuitants who did not enroll in Medicare 


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when they became eligible would be allowed to enroll without penalty during a specified period. FEHBP insurers with more than 

5,000 postal enrollees would be required to participate in this new 

postal only program by offering policies that are actuarially equivalent in value to those policies that they offer for other federal employees who receive FEHBP coverage. 

This section would provide a small number of employees and annuitants with the option to opt-out the new PSHBP. These opt-out 

provisions would apply only to—(a) postal employees who are enrolled in plans that will not be offered in the new PSHBP, but at 

retirement they would have to switch to a plan in the PSHBP and 

enroll in Medicare parts A, B and D; (b) annuitants who are enrolled in plans that will not be offered in the new PSHBP; and (c) 

annuitants for whom plans in the PSHBP are not available due to 

their geographic location. 

Section 105—Arbitration; labor disputes 

This section would require that arbitrators deciding a contract 

dispute between the Postal Service and one of its recognized unions 

to take into consideration such relevant factors as the financial 

condition of the Postal Service, and would state that nothing in the 

section may be construed to limit the relevant factors that the arbitration board may take into consideration in rendering a decision. 

Section 106—Prefunding and financial reporting with respect to 

workers’ compensation liability 

This section would establish a process under which the Postal 

Service begins to pay down its unfunded liability for workers’ compensation payments that will be owed in future years. The amortization schedule would be calculated with a target of liquidating 

80% of the unfunded liability over an amortization period of 40 

years, or a rolling period of 15 years, whichever period ends later. 

Under this plan, the Postal Service would not be required to make 

an amortization payment in a year when the annual net income 

does not exceed $1 billion, and even then, the amount of an amortization payment may not exceed the increment between $1 billion 

and the total net income for the year. Also, to foster greater transparency and accountability, the Postal Service would be required to 

report about its unfunded liability for workers’ compensation payment and about its progress in paying down the liability in the 

United States Postal Service’s (USPS) annual audited Form 10–K 

reports. 

Section 107—Right of appeal to Merit Systems Protection Board 

This section would allow certain mid-level managers at the Postal Service to appeal firings and other adverse personnel actions to 

the Merit Systems Protection Board. Supervisors and management 

employees at the Postal Service generally have such appeal rights 

already, but certain mid-level managers do not, and this section 

would fill the gap by extending appeal rights to them. 

Section 108—Supervisory and other managerial organizations 

This section clarifies that, when the Postal Service provides reasonable differentials in compensation between front-line employees 


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and managers, the Postal Service takes benefits, as well as salary, 

into account. 

Second, this section clarifies that changes to pay and/or benefits 

for managers cannot occur outside the designated time period for 

pay consultations between the managers’ organizations and the 

Postal Service unless mutually agreed upon. 

Third, the law is clarified to say that such consultation must 

occur before a benefit program is terminated, just as consultation 

must occur before a benefit program is changed. 

TITLE II: POSTAL SERVICE OPERATIONS

Section 201—Maintenance of delivery service standards 

Subsection (a) of this section would require the Postal Service to 

maintain the delivery service standards for First-Class Mail and 

periodicals in effect as of October 1, 2013 for a period of two years 

from the date of enactment, or until the Government Accountability 

Office (GAO) report required by subsection (b) is submitted, whichever is later. 

Subsection (b) would direct GAO to conduct a study about the 

how the Postal Service measures delivery times for the purpose of 

determining whether service standards have been met and whether 

this method of measurement accurately reflects the total period of 

time that it takes for a mailed item to travel from the postal customer to its final destination. The Comptroller General would be 

required to submit a report of GAO’s findings and its recommendations no later than one year after the date of enactment. 

Subsection (c) addresses Alternate Means of Transportation 

(AMOT) contracts, through which the Postal Service contracts with 

private air carriers to provide delivery on certain routes. After putting into effect revised delivery service standards in July 2012, 

which allowed for longer delivery times in certain cases, the Postal 

Service reduced or eliminated its use of AMOT contracts on some 

routes. This subsection would reinstitute the delivery service standards for First-Class Mail and periodicals in effect on June 30, 2012 

for routes on which such mail was transported under AMOT contracts, and require that such service standards be maintained for 

two years after enactment of this Act. This subsection would also 

put in place restrictions on discontinuing AMOT contracts, requiring that, on routes on which mail is transported under AMOT contracts, that the Postal Service consider specific factors before deciding to transport mail by other means, including the effect on the 

communities and businesses served by the route. A determination 

by the Postal Service to discontinue service under an AMOT contract and transport mail on a previously served route by other 

means is required to be in writing, accompanied by findings on the 

factors required to be considered, and made available to the public 

at least 60 days before the Postal Service discontinues AMOT service. Finally, this subsection would require the Postal Service, not 

later than 2 years after the date of enactment of this Act to submit 

a report on potential cost savings resulting from any decision made 

in the 2-year period to transport mail using a means other than 

under an AMOT contract. 


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Section 202—Preserving mail processing capacity 

This section would prohibit the Postal Service from closing or 

consolidating a mail processing facility that was open on October 

1, 2013 for a period of two years from the date of enactment, or 

until the GAO report required by section 201(b) is submitted, 

whichever is later. In addition, this section would specify certain 

procedural steps the Postal Service must take and factors it must 

consider before closing or consolidating a plant, including codifying 

the current practice whereby the Postal Service conducts an Area 

Mail Processing study (with the additional requirement that the 

study look at the possibility of reducing capacity rather than closing a plant) and provides notice, a public meeting, and an opportunity for public comment. Finally, this section provides an opportunity for those served by a postal facility to appeal the decision 

to close or consolidate the facility to the Postal Regulatory Commission (PRC) in the same manner that post office closings can currently be appealed. 

Section 203—Preserving community post offices 

This section establishes procedures that the Postal Service would 

be required to follow before deciding whether to discontinue a post 

office, including soliciting input from communities regarding post 

office operational changes that could result in financial savings 

without closings or consolidations. This section builds on the socalled ‘‘POSt’’ plan adopted by the Postal Service in 2012 and that 

is currently in effect. 

Under these procedures, the Postal Service would be required to 

consider alternatives to discontinuing the post office, including—(1) 

reducing office hours; (2) contracting out retail services in the area; 

(3) co-locating retail services with a commercial or governmental 

entity in the area; (4) providing retail services to affected customers through letter carriers; or (5) an alternative proposal put 

forward by a local government. 

In addition, in making a determination whether or not to discontinue a post office, the Postal Service would be required to consider a range of factors, such as the effect of discontinuing the post 

office on the community, on businesses in the area, and on postal 

employees; the proximity and accessibility of other post offices; and 

whether the discontinuance would result in substantial economic 

savings to the Postal Service. 

This section also requires that the Postal Service make certain 

additional determinations before discontinuing rural post offices. 

These include that postal customers served by the post office would 

continue to receive substantially similar access to essential items, 

such as prescription drugs; that there is unlikely to be undue economic loss to the community as a result of the closing; that the 

area served by the post office has adequate access to broadband 

Internet service; and that there is a road with year-round access 

connecting the community to another post office that is within a 

reasonable distance. 

If the Postal Service decides, after making the above considerations, to discontinue a post office (rural or otherwise), it would be 

required to provide a written determination and findings 60 days 

before closing the post office. 


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This section would also require that the Postal Service consider 

certain factors before reducing the number of hours a day a post 

office operates, including the effect on the community, the proximity of other post offices, and the ability to hire qualified employees, and that it consider which alternative schedules would most 

effectively mitigate potential negative impacts. The Postal Service 

would be required to make available a summary of its findings and 

an explanation of the change in hours during which the post office 

would be open. 

In addition, for a period of 10 years after enactment, any time 

a rural post office is discontinued under this section, the Inspector 

General of the Postal Service would be required to examine the actual cost savings resulting from the discontinuance and compare 

that to the cost savings that the Postal Service had projected would 

result from the discontinuance. The section directs the Inspector 

General to report on the findings to the PRC, the Postal Board of 

Governors, and Congress not later than two years after the date of 

the discontinuance of the post office. 

Finally, this section requires that the Postal Service establish 

minimum standards for retail postal services. 

Section 204—Changes to mail delivery schedule 

This section would allow the Postal Service to establish a nationwide delivery schedule of five days per week if the Postal Service 

determines that such a delivery schedule would contribute to the 

achievement of long-term solvency and if total mail volume during 

any period of four consecutive quarters drops below 140 billion 

pieces. In no event, however, may the Postal Service establish a 

five-day delivery schedule earlier than October 1, 2017. 

If the Postal Service intends to move to 5-day per week delivery, 

it is required to identify customers and communities that might be 

particularly affected by the scheduled change; to develop measures 

intended to ameliorate any disproportionately negative impacts associated with the change; to implement measures to increase revenues and reduce costs; and report to Congress, the PRC and GAO 

on these efforts not earlier than two years and not later than six 

months before the effective date for the change in delivery service. 

The Comptroller General would be required to report to Congress 

within three months of receiving a report from the Postal Service 

on the extent to which a change in delivery schedule would improve the financial condition of the Postal Service and assist in the 

efforts of the Postal Service to achieve long-term solvency, as well 

as on whether the Postal Service has complied with the measures 

required of it under this section. If the Comptroller General finds 

that the proposed change in delivery schedule would not substantially improve the financial condition of the Postal Service and assist in the efforts of the Postal Service to achieve long-term solvency or that the Postal Service has not complied with the relevant 

statutory requirements, the Postal Service is required to submit a 

response to Congress indicating whether it agrees with the Comptroller General’s findings; whether it intends to reevaluate its decision to establish a change in delivery schedule; and, if the Postal 

Service still intends to establish a change in delivery schedule, the 

justification for doing so in light of the Comptroller General’s findings. The Postal Service would be prohibited from implementing a 


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change in delivery schedule until 60 days after it submits its response to the GAO report to Congress. 

This section also makes clear that it is not intended to affect the 

delivery frequency on any route for which the Postal Service currently delivers less frequently than six days per week; does not require the Postal Service to deliver mail on Federal holidays; and 

does not affect the days and times that post offices operate, the frequency of delivery to post office boxes or the delivery schedule for 

competitive (i.e., non-market dominant) products, such as Priority 

Mail Express (overnight delivery). 

In addition, this section would require that, for five years after 

the date of enactment, the Postal Service deliver packages six days 

per week delivery to areas that received six-day package delivery, 

as of October 1, 2013 and optionally seven days per week where the 

Postal Service determines it is economically beneficial to the Postal 

Service to do so. It also requires that, if the Postal Service adopts 

a delivery schedule of 5 days per week, the Postal Service provide 

mailers that currently have access to customers’ mailboxes on Sundays with the same access on all days on which the Postal Service 

chooses not to provide mail delivery. 

Finally, this section requires that, not later than 180 days after 

enactment, the Chief Sustainability Officer of the Postal Service 

conduct an assessment of the environmental impact of moving to 

a 5-day-per-week delivery schedule and publish the results on the 

Postal Services website. 

Section 205—Delivery point modernization 

This section would require that the Postal Service use the method of delivery that is most cost-effective and in the best long-term 

interest of the Postal Service. For all new addresses established 

after the date of enactment, the Postal Service would be required 

to provide centralized delivery (e.g., cluster boxes) or, if centralized 

delivery is not practicable, curbside delivery. The Postal Service 

also would be required to carry out a program to convert existing 

business addresses receiving door delivery to centralized or 

curbside delivery. With respect to existing residential addresses, 

the Postal Service would be required, within nine months of enactment, to identify existing residential addresses that receive door 

delivery and that are appropriate candidates for conversion and to 

begin implementation of a program to convert, on a voluntary 

basis, those addresses to a more cost-effective method of delivery. 

In determining the appropriate method of delivery for a new or 

existing address, the Postal Service would be allowed to provide 

door delivery if a physical barrier precludes the efficient use of centralized or curbside delivery; if the address is in a registered historic district; or the Postal Service determines that the provision of 

centralized or curbside delivery would be impractical, not cost effective or otherwise not in the best long-term interest of the Postal 

Service. In addition, the Postal Service would be required to provide a waiver program for customers for whom door delivery is necessary due to a physical hardship. The Postal Service would be prohibited from charging a fee to apply for a physical hardship waiver 

or to receive mail through door delivery if a waiver has been granted. 


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68 39 U.S.C. § 3622(d)(1), enacted by section 201(a), Public Law 109–435 (Dec. 20, 2006). 

Section 206—Postal services for market-dominant products 

When the Postal Service proposes to change the nature of postal 

services relating to market-dominant products, this section would 

establish a default timeline of 90 days for the PRC to issue an advisory opinion on the proposal, unless an alternative schedule is 

agreed to between the PRC and the Postal Service. Before issuing 

its opinion, the PRC must provide notice and an opportunity for 

public comment and may hold a public hearing on the Postal Service’s proposal. The Postal Service would be required to formally respond to the advisory opinion, and generally it would not be allowed to act on its proposed service change until after submitting 

its response. 

Section 207—Report on pilot program for use of natural gas and 

propane for postal trucks 

This section would require the Postmaster General, within 180 

days after enactment of this Act, to submit a report on the feasibility of a pilot program to implement the use of natural gas and 

propane as fuels for its heavy-duty, over-the-road trucks, in addition to those natural gas-fueled vehicles already in the postal fleet, 

as a fuel cost-saving measure. 

Section 208—Capitol complex post offices 

This section would limit the number of post offices that may be 

located in the U.S. Capitol Complex to one in the House of Representatives office buildings and one in the Senate office buildings. 

Section 209—Lawful possession of firearms in post office parking 

lots 

This section would permit the carrying or storing of a firearm in 

a parking lot of a post office in a manner not inconsistent with 

State or local law and not in violation of any lease terms for the 

use of the parking lot or the postal facility that the parking lot 

serves. It would require the Postal Service to amend its regulations 

accordingly and to post signage in each post office parking lot notifying the public of this change in law. The section makes clear that 

it does not apply to parking lots that also serve other Federal office 

buildings or courthouses (e.g., when a post office is located in a 

Federal office building) and that it does not limit the authority of 

the Postmaster General to establish workplace rules for Postal 

Service employees or regulations regarding nonpublic areas of postal facilities. 

TITLE III: POSTAL SERVICE REVENUE

Section 301—Postal rates 

Under current law, the Postal Service’s pricing authority is restricted by a Consumer Price Index (CPI) rate cap on each individual class of mail established in 2006 through the Postal Accountability and Enhancement Act, or PAEA.68 The PAEA also laid 

out a set of objectives and factors intended to guide the creation of 

the current ratemaking system and Postal Service pricing decisions. Finally, the PAEA established that, beginning in 2017, the 


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69See Postal Regulatory Commission Press Release, ‘‘PRC Approves Postal Service Request 

for Exigent rate Increase; Rejects Permanent Price Increases’’ (December 24, 2013), http:// 

www.prc.gov/prc-docs/Newsroom/PressReleases/ 

Exigent%20Rate%20Increase%202%2024%2013%20(2)l3429.pdf; Postal Regulatory Commission, 

Order Granting Exigent Price Increase, (Order no. 1926, Docket No. R2013–11, December 24, 

2013), http://www.prc.gov/Docs/88/88645/Orderl1926.pdf. 70 3See id. at page 181. 

PRC must review the ratemaking system and may revise it if it determines that doing so is necessary. There is no requirement that 

any revised ratemaking system include a rate cap or any other restriction on Postal Service pricing authority. 

This section of the bill would adjust the pricing limitations by 

stating that the rates in effect at the time of enactment, including 

any exigent rate increase, would become the new base rate for future rate increases. In fact, on December 24, 2013, the Postal Regulatory Commission allowed a temporary 4.3 percent exigent rate increase to make up for the mail-volume losses arising from the 

Great Recession,69 and, since the rate increase is projected to end 

sometime during 2015, the provision will make the 4.3 percent rate 

increase a permanent part of the base rate.70 In addition, the bill 

would apply the rate cap to all market-dominant products considered in aggregate, rather than each product class separately. 

That rate structure would remain in place until at least the end 

of 2016. Beginning in 2017, and as appropriate thereafter, the Postal Service would be permitted, by majority vote of the Board of 

Governors, to propose a new or revised ratemaking system consistent with the objectives and factors laid out in the provision. 

Any proposal made by the Board would be submitted to the PRC, 

which could either adopt it or reject it. No new or revised ratemaking system could be implemented without the approval of the 

PRC. 

Finally, this section would repeal the rate preference that currently allows political committees to pay lower rates for mail. 

Section 302—Nonpostal Services 

Under current law, the Postal Service is generally limited to offering ‘‘postal’’ products. The definition of ‘‘postal’’ essentially limits 

the Postal Service to the processing and transportation of hardcopy mail. The only exceptions are 27 non-postal products that 

were offered before the enactment of the PAEA and its prospective 

ban on new non-postal products. This section would modify that 

ban, giving the Postal Service limited authority to offer non-postal 

products again. The limitations on this new authority would make 

it clear that any non-postal products offered by the Postal Service 

must make use of the Postal Service’s mail processing and distribution network, must be in the public interest, must demonstrate a 

likely public demand, must not create unfair competition with the 

private sector; and should be reasonably expected to improve the 

Postal Service’s net financial condition. Further, it would make 

clear that non-postal products are subject to the same Federal and 

state laws and regulations as the private sector. Finally, non-postal 

products would, like the Postal Service’s competitive products, be 

required to cover all of their costs. 

This section would also permit the Postal Service to offer services 

on behalf of Federal, state, local, and tribal governmental agencies 

under appropriate terms, and would require that the Postal Service 


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report to the Postal Regulatory Commission on the costs and revenues of such services. 

Section 303—Shipping of wine, beer, and distilled spirits 

Under current law, private shippers are permitted to ship alcoholic beverages but the Postal Service is not. This section would 

authorize the Postal Service to ship wine, beer, and distilled spirits 

when they are mailed in accordance with the state and local laws 

that apply to the sender where the product is mailed and that 

apply to the recipient where the delivery is made. The provision 

also specifically requires that the recipient be at least 21 years old 

and present government-issued proof of identity. 

TITLE IV: POSTAL SERVICE GOVERNANCE

Section 401—Board of Governors of the Postal Service 

Under current law, the Postal Service is governed by an elevenmember Board of Governors made up of nine part-time, Senate-confirmed Governors, the Postmaster General, and the Deputy Postmaster General. This section would reduce the size of the Board to 

nine members and eliminate the Deputy Postmaster General from 

the Board. It would retain partisan balance among the Governors, 

and would provide for revised qualifications for Governors. At least 

one of the Governors who is appointed to fill a position that is vacant on the date of enactment would also be required to have a 

demonstrated ability to manage and improve financially troubled 

organizations. Governors would continue to be limited to two 

terms, and the Chairman of the Board would continue to be elected 

by the Governors from among the Board members. Individuals currently serving as Governors would be permitted to serve until the 

expiration of their terms. 

In addition, this section would give the Board of Governors the 

authority to establish an Executive Committee made up of the 

elected Chairman of the Board and two additional Governors, with 

no more than two members of the Executive Committee being a 

member of any one political party. If created, the Executive Committee would be responsible for developing and overseeing the longterm financial solvency of the Postal Service, developing and overseeing the financial plan and budget, and making recommendations 

on postal operations. 

Section 402—Strategic Advisory Commission on Postal Service solvency and innovation 

This section would establish an independent advisory commission 

that would provide guidance to the President, Congress, and the 

Postal Service on enhancing the long-term solvency of the Postal 

Service and fostering innovative thinking there. The commission 

would be made up of seven prominent individuals, three of them 

appointed by the President and one each appointed by each party’s 

leader in the House and Senate. Commissioners may not be current 

elected officials or officers or employees of the federal government. 

The Commission would be charged specifically with studying the 

current state of the Postal Service; the Postal Service’s governance 

and its organizational and management structures; alternative 

business models for the Postal Service; potential postal and nonVerDate Mar 15 2010 02:45 Aug 09, 2014 Jkt 039010 PO 00000 Frm 00037 Fmt 6659 Sfmt 6602 E:\HR\OC\SR237.XXX SR237

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postal products that the Postal Service could offer; innovations that 

have been implemented by foreign posts; and efforts to recruit and 

retain a workforce capable of meeting the strategic needs of the 

Postal Service, including in rural areas. The Commission would be 

required to issue a Strategic Blueprint for Long-Term Solvency. It 

would also be required to conduct a study concerning the advisability of the Postal Service entering into interagency agreements 

with Federal, State and local agencies. The Commission would terminate 60 days after submission of its Strategic Blueprint and the 

study on interagency agreements, but in no event later than one 

year after enactment. 

Section 403—Long term solvency plan; annual financial plan and 

budget 

This section would require that, within 90 days of enactment, the 

Postal Service prepare and submit a plan to the Board of Governors describing the actions the Postal Service intends to take to 

achieve long-term solvency. The Board of Governors is to review it, 

may request changes, and then is to submit it within 60 days to 

Congress. The Postmaster General is required to submit updated 

versions of the long-term solvency plan to the Board of Governors 

at least annually for five years after enactment, and the Board is 

required to review each updated version and submit it to Congress. 

This section would further require that, for each of the first five 

fiscal years after enactment, the Postmaster General submit to the 

Board a financial plan and budget for the fiscal year that is consistent with the goal of promoting the long-term solvency of the 

Postal Service. The Board is required to review the plan and budget and either approve the plan and budget or direct the Postmaster 

General to make appropriate revisions, before the budget is submitted to Office of Management and Budget (OMB) as part of the 

annual budget process. 

Section 404—Chief innovation officer; innovation strategy 

This section would require the Postal Service, within 90 days of 

enactment, to designate a Chief Innovation Officer. This individual 

must have expertise and a record of accomplishment in certain key 

areas, such as the shipping industry, marketing, or new and 

emerging technology. The Chief Innovation Officer would be 

charged with leading the development at the Postal Service of new 

postal and non-postal products and must, within nine months of 

enactment, publish an innovation strategy for the Postal Service 

detailing new products to be tested and launched. The Chief Innovation Officer would also be required to submit an annual report 

on implementation of the innovation strategy for the subsequent 10 

years. 

Section 405—Area and district office structure 

This section would require the Postal Service to issue a plan 

within one year of enactment for reducing the number of area and 

district offices. 

Section 406—Inspector General of the postal service 

This section provides that the Inspector General of the Postal 

Service would be appointed by the President subject to confirmaVerDate Mar 15 2010 02:45 Aug 09, 2014 Jkt 039010 PO 00000 Frm 00038 Fmt 6659 Sfmt 6602 E:\HR\OC\SR237.XXX SR237

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tion by the Senate. Under present law, the Inspector General is appointed by the Postal Board of Governors. 

Section 407—Postal regulatory commission 

The section would limit members of the Postal Regulatory Commission to two full terms. In addition, this section would require 

that the Commission, by majority vote, adopt policies that govern 

the functions of the Commission, including the finances, operations 

and administration of the Commission, and that the Commission is 

to review and, if necessary, revise those policies not less than every 

four years. The section further provides that the Chairman’s dayto-day authority to direct executive and administrative functions 

would be subject to the policies adopted by the Commission. 

TITLE V: FEDERAL EMPLOYEES COMPENSATION ACT

Sction 501—Short title; references 

This section says that title V of the bill may be cited as the 

‘‘Workers’ Compensation Reform Act of 2014.’’ The section also provides that, whenever a provision in title V of the bill refers to a 

statutory section being amended, the provision is in reference to 

title 5 of the United States Code unless noted otherwise. 

Section 502—Federal workers’ compensation reforms for retirementage employees 

This section would reduce Federal Employees’ Compensation Act 

(FECA) benefits for totally disabled enrollees to 50 percent of the 

pre-disability wage upon the enrollee reaching full retirement age, 

as defined in the Social Security Act. For partially disabled enrollees, the benefits would generally be reduced to 50 percent of the 

pre-disability wage, multiplied by the percentage of wage-earning 

capacity lost due to the injury. 

For individuals whose workplace injury occurred before the date 

of enactment, section 502 contains provisions that would delay application of the reduced benefit level and provide full exemption for 

those most severely injured and those already over retirement age. 

Specifically— 

(1) Those who are permanently, totally disabled and unable 

to return to work would be exempt from this section (‘‘grandfathered’’), and their benefit rate would not be reduced to 50 

percent. This category of grandfathered individuals is defined 

under the legislation as those who satisfy any one of the following criteria: (a) lost the use of 2 appendages (e.g., arms/ 

legs); (b) receiving custodial home nursing care or full nursing 

home care for at least 1 year prior to enactment; or (c) receiving ‘‘total disability’’ wage-loss compensation for at least 3 

years prior to enactment or will have done so within the first 

3 years after enactment. 

(2) Those who are already at the age of retirement on the 

date of enactment are also exempt from this section. 

(3) Those who do not qualify as permanently, totally disabled 

(‘‘grandfathered’’) and are not already over the retirement age, 

the benefit level will be reduced to 50 percent upon reaching 

retirement age or 3 years after the date of enactment, whichever is later. 


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Section 503—Augmented compensation for dependents 

This section would eliminate the additional (‘‘augmented’’) compensation in current law for beneficiaries who have dependents. 

Also, for individuals whose workplace injury occurred before the 

date of enactment, section 503 contains provisions to delay application of the reduced benefit level and to provide full exemption for 

those most severely injured. Specifically— 

(1) Those who are permanently, totally disabled and unable 

to return to work would be exempt from this section (‘‘grandfathered’’), and they would continue to receive the additional 

level of compensation if they have dependents. This definition 

of grandfathered individuals is the same as the definition of 

those grandfathered under section 302. 

(2) Those who are not permanently, totally disabled (‘‘grandfathered’’) would become ineligible to receive augmented compensation 3 years after the bill is enacted. 

Section 504—Schedule compensation payments 

This section would allow individuals receiving workers’ compensation benefits for total or partial disability to simultaneously 

receive schedule compensation payments if their disability benefits 

are reduced under sections 502 or 503 of this bill. Schedule compensation payments are specific payments authorized under existing law for certain injuries, such as loss of use of a limb. Under 

current law, an injured individual is not eligible to receive a schedule compensation payment for an injury simultaneously with benefits for total or partial disability. 

Section 505—Vocational rehabilitation 

This section includes several provisions to strengthen existing 

programs that help injured workers get back to work: 

(1) It would extend existing vocational rehabilitation opportunities, which are now available under FECA for workers who 

are totally disabled, to be available to those who are partially 

disabled as well. 

(2) It would authorize the Department of Labor (DOL) to pay 

a federal employer the salary of a beneficiary for up to 3 years 

as an incentive to hire workers off of the FECA program rolls. 

Current law permits these payments only to non-federal employers. 

(3) It would make compliance with the Return to Work plan 

developed between the program and the beneficiary a condition 

of receiving continued benefits (except this condition would not 

apply to beneficiaries who are over the age of retirement). 

Section 506—Reporting requirements 

This section would mandate that beneficiaries report any outside 

income they receive to DOL. An employee who fails to comply will 

lose the right to receive compensation. 

Section 507—Disability management review; independent medical 

examinations 

This section would require an independent medical assessment of 

disability and potential for return to work for beneficiaries after 6 

months in the program and on a regularly scheduled basis thereVerDate Mar 15 2010 02:45 Aug 09, 2014 Jkt 039010 PO 00000 Frm 00040 Fmt 6659 Sfmt 6602 E:\HR\OC\SR237.XXX SR237

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after, but no less frequently than every 3 years. This would not 

change existing law allowing a FECA beneficiary to choose to see 

his or her own doctor for treatment and initial assessment. In addition, employing agencies may request that DOL obtain an independent medical examination at any time, and DOL must grant the 

agency’s request if DOL has not already conducted such an examination. 

Section 508—Waiting period 

Because minor workplace injuries often heal quickly, FECA provides a 3-day waiting period before compensation begins. For postal 

employees, FECA’s 3-day waiting period comes immediately after 

the injury, but for non-postal workers the waiting period does not 

come until after the end of the 45-day continuation-of-pay period. 

This section would begin the 3-day waiting period immediately 

after a work-related injury for all injured employees. As under current law, injured employees may subsequently receive FECA compensation for those 3 days if the period of disability exceeds 14 

days. 

Section 509—Election of benefits 

If an individual is simultaneously eligible for compensation benefits both under FECA and under a retirement system for federal 

employees (such as FERS or CSRS), the individual must elect 

which benefits to receive, and the election will be irrevocable. This 

section would prevent an injured worker from retroactively claiming workers’ compensation benefits after having declined such benefits in favor of federal retirement benefits. This provision is intended to prevent a claimant from electing federal retirement benefits as a means of avoiding required participation in vocational rehabilitation or acceptance of an offered suitable job and then later 

retroactively electing the potentially more generous workers’ compensation benefits. 

Section 510—Sanctions for non-cooperation with field nurses 

This section would suspend benefits when an injured worker fails 

to cooperate with a field nurse. A ‘‘field nurse’’ is defined as a registered nurse who assists DOL in the medical management of disability claims and assists claimants in coordinating medical care, 

and DOL is authorized to use field nurses to coordinate medical 

services and vocational rehabilitation services. 

Section 511—Subrogation of continuation of pay 

This section would allow the federal government to recover ‘‘continuation of pay’’ (e.g., salary that’s continued to be paid to the beneficiary during the 45-day period between the injury and the initiation of FECA disability benefits) from third parties that are liable 

for the beneficiary’s work-related injury. 

Section 512—Integrity and compliance 

This section includes several provisions to strengthen integrity 

and compliance efforts within the FECA program. It would require 

that, no later than 270 days after enactment, the Secretary of 

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tained by fraud) for the FECA program. The section would also direct the Secretary to cooperate with other agencies, including the 

Postal Service, and the agency inspectors general, to prevent, identify, and recover improper payments. 

The section would also require the Secretary of Health and 

Human Services to make the National Directory of New Hires 

available to the Secretary of Labor, the Postmaster General, the 

DOL Inspector General, the USPS Inspector General, and GAO, so 

that they can cross-match that data with claimant data under the 

FECA program. The Comptroller General is granted access to the 

National Directory of New Hires under this provision for any audit, 

evaluation, or investigation, including any audit, evaluation, or investigation relating to program integrity. 

Section 513—Amount of compensation 

This section would increase the amount an injured worker receives for a severe disfigurement of the face, head or neck from a 

maximum of $3,500 to a maximum of $50,000. This section would 

also increase the amount allowed to reimburse funeral expenses incurred due to a death from a work-related injury from $800 to a 

maximum of $6,000. The limits in the current law have not been 

significantly changed since 1949. 

Section 514—Terrorism injuries; zones of armed conflict 

This section would provide that a disability or death as a result 

of ‘‘an attack by a terrorist or terrorist organization, either known 

or unknown,’’ is ‘‘deemed to have resulted from personal injury sustained while in the performance of duty,’’ under FECA’s ‘‘war-risk 

hazard’’ provision. This would also codify the current Office of 

Workers’ Compensation Programs (OWCP) practice of covering 

such disabilities or deaths as ‘‘war-risk hazards.’’ 

This section would also provide continuation of pay for wage loss 

due to traumatic injury in performance of duty in a designated 

zone of armed conflict for a period not to exceed 135 days, so long 

as the employee files a claim for such benefit no longer than 45 

days after terminating service in the zone of armed conflict or the 

employee’s return to the United States, whichever occurs later. 

Section 515—Technical and conforming amendments 

This section contains technical and conforming amendments to 

the FECA statute in title 5 of the United States Code. 

Section 516—Regulations 

This section would require the DOL to issue regulations to carry 

out this title of the legislation. 

Section 517—Effective date 

This section would provide that the provisions of this title are to 

take effect 60 days after the date of enactment, except as otherwise 

provided. 


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TITLE VI: PROPERTY MANAGEMENT AND EXPEDITED DISPOSAL OF REAL

PROPERTY

Section 601—Short title 

This section gives the legislation in title VI the short title of the 

‘‘Federal Real Property Asset Management Reform Act of 2014.’’ 

Section 602—Purpose 

This section states that the bill’s purpose is to increase the efficiency and effectiveness of the federal government in managing its 

real property by—(1) requiring agencies to maintain an up-to-date 

inventory of real property; (2) establishing a Federal Real Property 

Council to develop guidance and ensure the implementation of 

strategies for better managing federal real property; and (3) authorizing a pilot program to expedite the disposal of surplus real 

property. 

Section 603—Property management and expedited disposal of real 

property 

This section adds a new subchapter VII to Chapter 5 of subtitle 

I of title 40, United States Code. 

§ 621. Definitions, added to title 40, United States Code, by section 603 of the bill, defines important terms for the bill, including— 

‘‘Council’’ means the Federal Real Property Council established 

under this legislation. 

‘‘Disposal’’ means any action that constitutes the removal of any 

real property from the federal inventory, including sale, deed, demolition, or exchange. 

‘‘Excess property’’ is defined as property under the control of a 

federal agency that the head of the agency determines is not required to meet the agency’s needs or responsibilities. This term 

does not include postal property. 

‘‘Postal property’’ means any building owned by the United States 

Postal Service. 

‘‘Surplus property’’ is defined generally to mean excess property 

that is not required to meet the needs or responsibilities of any federal agency. However, the term surplus property does not include— 

(1) any military installation; (2) Indian and Native Eskimo property held in trust by the federal government; (3) real property operated and maintained by the Tennessee Valley Authority; (4) any 

real property the Director of the Office of Management and Budget 

excludes for reasons of national security; (5) any public lands administered by the Secretary of Interior through the Director of the 

Bureau of Land Management, the Director of the National Park 

Service, the Commissioner of Reclamation, or the Director of the 

United States Fish and Wildlife Service; (6) any public lands administered by the Secretary of Agriculture acting through the Chief 

of the Forest Service; and (7) any property operated and maintained by the United States Postal Service. 

• ‘‘Underutilized property’’ means an entire or a portion of a 

property, including any improvements, that is used—(1) irregularly 

or intermittently by the accountable federal agency for program 

purposes of that agency, or (2) for program purposes that can be 

satisfied only with a portion of that property. 


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§ 622. Duties of Federal agencies, added to title 40, United States 

Code, by section 603 of the bill, details actions agencies must take 

in order to improve the management of their real property. Under 

this section each agency must conduct an inventory of real property 

under its control and provide detailed information about the inventoried property to the Administrator of the General Services Administration (GSA Administrator) and the Federal Real Property 

Council (the Council). Additionally, agencies are required to continuously survey their real property to identify excess and underutilized property, report any excess or underutilized property to the 

GSA Administrator, identify opportunities for colocation with other 

federal agencies where appropriate, and establish goals that will 

lead to a reduction of the agency’s excess and underutilized real 

property. Agencies must also provide the Council and the GSA Administrator information on their real property assets to be used for 

the establishment and maintenance of a government-wide real 

property database. 

§ 623. Colocation among United States Postal Service properties, 

added to title 40, United States Code, by section 603 of the bill, 

provides that the Postmaster General may identify a list of postal 

properties with space available for use by federal agencies and submit that list to the Federal Real Property Council. Under this provision, agencies must review this list and recommend colocations if 

appropriate. 

§ 624. Establishment of a Federal Real Property Council, added to 

title 40, United States Code, by section 603 of the bill, would establish the Federal Real Property Council, to be comprised of senior 

real property officers from each of 24 designated federal agencies, 

the Controller at the Office of Management and Budget, and the 

GSA Administrator. The Deputy Director for Management at OMB 

would chair the Council and designate an Executive Director to assist the Council in carrying out its duties. This provision would require the Council to establish an annual real property asset management plan and to include in that plan performance measures 

that will enable Congress to track progress in achieving real property goals government-wide and compare the performance of landholding agencies against industry and other public sector agencies. 

Additionally, this provision would direct the Council to develop a 

strategy to reduce federal agencies reliance on leasing when building ownership would be more cost-effective. Finally, the Council 

would be expected to provide guidance to agencies so that property 

assessments can be uniform across the government. 

§ 625. Federal real property inventory and database, added to 

title 40, United States Code, by section 603 of the bill, would direct 

the GSA Administrator to establish and maintain a single, comprehensive, and descriptive database of all real property under the 

custody and control of federal agencies. The database must contain 

the results of agencies’ inventory of their real property as described 

in the first part of this section as well as a list of real property disposals that have been completed within the past year. The Administrator would be required to make the database accessible to the 

public at no cost within three years of the date of enactment of this 

bill. 

§ 626. Limitation on certain leasing authorities, added to title 40, 

United States Code, by section 603 of the bill, would impose a reVerDate Mar 15 2010 02:45 Aug 09, 2014 Jkt 039010 PO 00000 Frm 00044 Fmt 6659 Sfmt 6602 E:\HR\OC\SR237.XXX SR237

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porting requirement on agencies with independent leasing authority, so that the executive branch and Congress can better monitor 

whether those agencies’ leases reflect the best use of federal resources. (Although GSA is responsible for leasing property on behalf of most federal agencies, certain agencies have independent 

leasing authority, under which they may enter into leases on their 

own.) Agencies with independent leasing authority would be required to submit a yearly report to the Council providing detailed 

information regarding their leasing activity. This section would not 

apply to the United States Postal Service, the Department of Veterans Affairs, or any property that the President excludes for reasons of national security. 

§ 627. Expedited disposal pilot program, added to title 40, United 

States Code, by section 603 of the bill, would establish a pilot program to expedite the disposal of surplus properties. Under this provision, the Director of OMB could authorize the disposal of up to 

200 surplus properties each year with priority going to those properties that have the highest fair market value and the greatest potential for disposal. The OMB Director would have to notify the appropriate state or local government when a property in its jurisdiction has been selected for the pilot program. The OMB Director 

would also be able to remove a property from the pilot and replace 

it with another property at the Director’s discretion. Agencies 

would be required to make property available for sale within 18 

months after receiving a determination from the OMB Director 

that the property is surplus and has been selected for the pilot program. Failure to do so would prevent the agency from acquiring additional property unless the square footage of the increase is offset 

through consolidation, colocation, or disposal of another building 

space from the inventory of that agency. 

Under the pilot program, after GSA is reimbursed for the costs 

of identifying and preparing property for disposal, any proceeds 

would be distributed as follows: 80 percent would be returned to 

the Treasury for debt reduction; the lesser of 18 percent or the 

share of proceeds otherwise authorized to be retained under law 

would be retained by the agency that owned the property; and up 

to two percent would be used to fund the homeless assistance 

grants under § 628. This section would permit the Secretary of the 

Department of Housing and Urban Development to use funds made 

available through sales proceeds for grants to eligible private nonprofit organizations through the continuum care program established under title IV of the McKinney-Vento Homeless Assistance 

Act (42 U.S.C. § 11381 et seq.). If a property that has been selected 

for disposal under the pilot program has not been disposed of after 

two years in the program, it may be conveyed to state and local 

governments or non-profit organizations for certain public purposes, unless the predominant use of the property is not for housing, the area of the property is not less than 25,000 square feet, 

or the appraised fair market value of the property is greater than 

$1 million. 

§ 628. Homeless assistance grants, added to title 40, United 

States Code, by section 603 of the bill, would require the Secretary 

of Housing and Urban Development, using funds from the disposal 

pilot program under § 628, to make grants to eligible private nonprofit organizations to purchase real property suitable for use to 


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purchase or rehabilitate real property to provide housing or temporary shelter to the homeless. The Secretary would give preference to areas in which Federal real property is sold under the 

disposal program under § 626. 

Section 604—Report of the comptroller general 

This section would require the Comptroller General of the United 

States, within five years of enactment, to submit a report to Congress on the expedited disposal program established in this legislation. 

Section 605—Technical and conforming amendment 

This section contains a technical and conforming amendment to 

the table of contents for chapter 5 of subtitle I of Title 40, United 

States Code. 

V. EVALUATION OF REGULATORY IMPACT

Pursuant to the requirements of paragraph 11(b) of rule XXVI of 

the Standing Rules of the Senate, the Committee has considered 

the regulatory impact of S. 1789. The Congressional Budget Office 

states that the bill contains no intergovernmental or private-sector 

mandates as defined in the Unfunded Mandate Reform Act and 

would impose no costs on state, local, or tribal governments, or private entities. The enactment of this legislation will not have significant regulatory impact. 

VI. CONGRESSIONAL BUDGET OFFICE COST ESTIMATE

JULY 14, 2014. 

Hon. TOM CARPER, Chairman, 

Committee on Homeland Security and Governmental Affairs, 

U.S. Senate, Washington, DC. 

DEAR MR. CHAIRMAN: The Congressional Budget Office has prepared the enclosed cost estimate for S. 1486, the Postal Reform Act 

of 2014. 

If you wish further details on this estimate, we will be pleased 

to provide them. The CBO staff contact is Mark Grabowicz. 

Sincerely, 

DOUGLAS W. ELMENDORF. 

Enclosure. 

S. 1486—Postal Reform Act of 2014 

Summary: S. 1486 would change the laws that govern the operation of the United States Postal Service (USPS). Major provisions 

of the bill would: • Extend a rate increase that would expire under current law; • Permit the Postal Service to reduce mail delivery from six 

days per week to five; 

• Authorize the Postal Service to phase out delivery of mail directly to customers’ doors (for business addresses only); 

• Change the payments that the Postal Service is required to 

make relating to the Postal Service Retiree Health Benefits 

Fund (PSRHBF); 

• Direct the Postal Service to make payments to liquidate its 

liability for workers’ compensation obligations; 


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• Transfer $2.4 billion in surplus retirement contributions 

from the Civil Service Retirement and Disability Fund 

(CSRDF) to the Postal Service Fund; 

• Prohibit the Postal Service from closing mail processing facilities for two years; 

• Require the use of demographic data specific to Postal Service employees for the calculation of certain retirement benefits; 

• Establish a new health benefits program for Postal Service 

employees, annuitants, and their dependents; and 

• Reduce payments to most federal workers receiving benefits 

under the Federal Employees’ Compensation Act (FECA) and 

modify the administration of that act. 

In addition, other provisions of S. 1486 would aim to help the 

Postal Service reduce its operating costs and increase its revenues. 

Effect on the federal budget: CBO estimates that enacting the bill would result in off-budget savings of about $36 billion over the 

2015–2024 period and on-budget costs of about $19 billion over the 

same period. (USPS cash flows are recorded in the federal budget 

in the Postal Service Fund and are classified as off-budget, while 

the cash flows of the PSRHBF and the CSRDF are on-budget.) 

Combining those effects, CBO estimates that the net budgetary savings from enacting S. 1486 would be about $17 billion over the 

2015–2024 period. All of those effects reflect changes in direct 

spending. Enacting S. 1486 would not affect revenues. Pay-as-yougo procedures apply because enacting the legislation would increase on-budget direct spending. 

Finally, CBO estimates that implementing S. 1486 would have a discretionary cost of $3.3 billion over the next 10 years, subject to 

appropriation of the necessary amounts. 

Effects on state, local, and tribal governments, and on the private sector: By making a temporary rate increase for mail services 

permanent and repealing a discount on postal rates for political 

committees, S. 1486 would impose intergovernmental and private 

sector mandates, as defined in the Unfunded Mandates Reform Act 

(UMRA), on entities that send certain mail through the USPS. The 

bill also would impose a private-sector mandate by requiring postal 

annuitants who receive health insurance through USPS and are eligible for Medicare to enroll in that program. CBO estimates that 

the aggregate annual costs of complying with the mandates would 

exceed both the intergovernmental and private-sector thresholds 

established in UMRA ($76 million and $152 million, respectively, 

in 2014, adjusted annually for inflation). 

Estimated cost to the Federal Government: The estimated budgetary impact of S. 1486 is shown in Table 1. The costs of this legislation fall within budget functions 370 (commerce and housing 

credit), 550 (health), 570 (Medicare), 600 (income security), and 800 

(general government). 


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TABLE 1—SUMMARY OF BUDGETARY EFFECTS OF S. 1486, THE POSTAL REFORM ACT OF 2014 

By fiscal year, in millions of dollars— 

2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2015–2019 2015–2024 

OFF BUDGET CHANGES IN DIRECT SPENDING a

Estimated Budget Authority ... ¥2,972 ¥2,504 ¥2,830 ¥2,966 ¥4,037 ¥4,157 ¥4,174 ¥4,139 ¥4,007 ¥3,877 ¥15,309 ¥35,664 

Estimated Outlays .................. ¥2,972 ¥2,504 ¥2,830 ¥2,966 ¥4,037 ¥4,157 ¥4,174 ¥4,139 ¥4,007 ¥3,877 ¥15,309 ¥35,664 

ON BUDGET CHANGES IN DIRECT SPENDING 

Estimated Budget Authority ... 4,693 2,601 1,585 1,652 1,259 1,307 1,353 1,473 1,461 1,453 11,789 18,836 Estimated Outlays .................. 4,693 2,601 1,585 1,652 1,259 1,307 1,353 1,473 1,461 1,453 11,789 18,836 

TOTAL CHANGES IN DIRECT SPENDING 

Estimated Budget Authority ... 1,720 96 ¥1,246 ¥1,313 ¥2,778 ¥2,857 ¥2,820 ¥2,667 ¥2,547 ¥2,424 ¥3,521 ¥16,829 Estimated Outlays .................. 1,720 96 ¥1,246 ¥1,313 ¥2,778 ¥2,857 ¥2,820 ¥2,667 ¥2,547 ¥2,424 ¥3,521 ¥16,829 

CHANGES IN SPENDING SUBJECT TO APPROPRIATION 

Estimated Authorization Level 505 483 352 296 294 281 279 281 271 266 1,930 3,308 Estimated Outlays .................. 502 483 354 300 296 285 281 282 274 268 1,935 3,325 

Note: Components may not add to totals because of rounding. Positive numbers indicate increases in costs; negative numbers indicate reductions in costs. a cash flows of the Postal Service are classified as off-budget. 


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Basis of estimate: For this estimate, CBO assumes that S. 1486 

will be enacted near the end of fiscal year 2014. The bill would affect outlays of the Postal Service Fund, which is off-budget, and the 

on-budget PSRHBF and CSRDF. CBO estimates that the net direct 

spending savings (combining the off-budget and on-budget effects) 

would total $16.8 billion over the 2015–2024 period. 

Off-Budget changes in direct spending (Postal Service Fund): 

CBO estimates that enacting S. 1486 would reduce net USPS 

spending by $35.7 billion over the 2015–2024 period; as noted 

above, USPS spending is classified as off-budget. Details of changes 

in spending from the Postal Service Fund are summarized in Table 

2 and discussed in the following subsections. 


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TABLE 2—DETAILS OF OFF-BUDGET CHANGES IN DIRECT SPENDING UNDER S. 1486 

By fiscal year, outlays in millions of dollars— 

2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2015–2024 

Extend Rate Increase .................................................................................. 0 ¥1,900 ¥1,900 ¥1,800 ¥1,800 ¥1,750 ¥1,700 ¥1,650 ¥1,600 ¥1,550 ¥15,650 

Reduction in the Frequency of Mail Delivery .............................................. 0 0 0 0 ¥1,500 ¥1,500 ¥1,450 ¥1,400 ¥1,350 ¥1,300 ¥8,500 

Other Changes in Mail Delivery .................................................................. ¥30 ¥150 ¥300 ¥500 ¥550 ¥700 ¥800 ¥850 ¥800 ¥750 ¥5,430 

Changes in USPS Payments for Retiree Health Benefits (See Memorandum for details.) ............................................................................... ¥1,621 ¥1,720 ¥252 ¥254 ¥255 ¥256 ¥258 ¥260 ¥261 ¥263 ¥5,399 

Prefunding for Workers Compensation Obligations .................................... 0 0 0 0 500 500 500 500 500 500 3,000 Transfer of Surplus Postal Retirement Contributions ................................ ¥2,400 0 0 0 0 0 0 0 0 0 ¥2,400 Prohibition on Closing Mail Processing Facilities ...................................... 600 800 0 0 0 0 0 0 0 0 1,400 Use of Postal Specific Data for Retirement Benefits ................................. 478 478 ¥333 ¥334 ¥334 ¥335 ¥336 ¥337 ¥339 ¥340 ¥1,731 

Establish PSHB program for USPS ............................................................. 0 ¥11 ¥37 ¥53 ¥60 ¥65 ¥69 ¥74 ¥79 ¥85 ¥531 

Effect of Changes in Workers’ Compensation on USPS ............................. 0 ¥2 ¥8 ¥26 ¥38 ¥52 ¥61 ¥69 ¥79 ¥89 ¥424 

Total Off-Budget Changes ................................................................. ¥2,972 ¥2,504 ¥2,830 ¥2,966 ¥4,037 ¥4,157 ¥4,174 ¥4,139 ¥4,007 ¥3,877 ¥35,664 

MEMORANDUM: DETAILS OF CHANGES IN USPS PAYMENTS FOR RETIREE HEALTH BENEFITS 

Under Current Law: 

Estimated Payments to FEHB ............................................................ 3,241 3,439 0 0 0 0 0 0 0 0 6,680 Specified Payments to PSRHBF a ....................................................... 0 0 0 0 0 0 0 0 0 0 0 

Estimated Payments for Normal Costs b c ......................................... 0 0 2,458 2,574 2,679 2,819 2,991 3,174 3,364 3,566 23,625 

Estimated Amortization Paymentsc ................................................... 0 0 3,490 3,490 3,490 3,490 3,490 3,490 3,490 3,490 27,920 

Total, Current Law .................................................................... 3,241 3,439 5,948 6,064 6,169 6,309 6,481 6,664 6,854 7,056 58,225 

Under S. 1486: 

Estimated Payments to FEHB ............................................................ 0 0 0 0 0 0 0 0 0 0 0 Specified Payments to PSRHBF a ....................................................... 0 0 0 0 0 0 0 0 0 0 0 

Estimated Payment for Normal Costs d ............................................. 0 0 2,409 2,523 2,625 2,763 2,931 3,111 3,297 3,495 23,153 

Estimated Amortization Payments d ................................................... 0 0 3,034 3,034 3,034 3,034 3,034 3,034 3,034 3,034 24,275 

Subtotal ..................................................................................... 0 0 5,443 5,557 5,660 5,797 5,966 6,145 6,331 6,529 47,428 

Changes in Other USPS Spending ..................................................... 1,621 1,720 252 254 255 256 258 260 261 263 5,399 

Total, S. 1486 ........................................................................... 1,621 1,720 5,696 5,810 5,914 6,053 6,223 6,404 6,593 6,793 52,826 

Changes in Payments for Retiree Health Benefits ..................................... ¥1,621 ¥1,720 ¥252 ¥254 ¥255 ¥256 ¥258 ¥260 ¥261 ¥263 ¥5,399 

Notes: Components may not add to totals because of rounding; USPS = United States Postal Service; PSHB = Postal Service Health Benefits; FEHB = Federal Employees Health Benefits; PSRHBF = Postal Service Retiree Health Benefits 

Fund. 


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a Under current law, the Postal Service is required to pay a total of $11.5 billion to the PSRHBF in 2015 and 2016. However, CBO expects that the agency will not make any of those payments. b Those payments are equal to the annual increase in retiree health care liabilities attributable to current employees. c Those costs are based on information provided by the Office of Personnel Management. d S. 1486 would require the Postal Service to make normal and amortization payments in 2016, but CBO expects the Postal Service would not make those payments. 


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1http://www.prc.gov/prc-docs/home/whatsnew/Swiss%20Economics%20Model%20- 

%20Saturday%20delivery%20Final%20Report%20V3l3545.pdf. 

Extend rate increase. In December 2013, the Postal Regulatory 

Commission (PRC) approved a 4.3 percent rate hike for first-class 

mail and other services, including an increase in the price of a 

first-class stamp from $0.47 to $0.49, but limited the effect of this 

change to a period of about two years. S. 1486 would make that 

increase permanent. 

Based on information from the Postal Service, CBO estimates 

that extending the recent rate hike would increase USPS net revenues by $1.9 billion in 2016 and by $15.7 billion over the 2016– 

2024 period. We expect that annual savings would decline in 2018 

and subsequent years because of falling mail volume and because 

some of the savings would probably be spent by the Postal Service 

or returned to mailers in the form of lower rates rather than accumulated as large annual surpluses in the Postal Service Fund. 

Reduction in the frequency of mail delivery. Beginning in fiscal 

year 2018, S. 1486 would permit the Postal Service to deliver mail 

five days a week, but only if the total volume of first-class mail and 

periodicals falls below 140 billion pieces over a 12-month period. 

The aggregate first-class and periodicals volume was about 147 billion in 2013 and has been declining for many years. The Postal 

Service anticipates that volume will drop below 140 billion pieces 

sometime in 2018. 

Under the bills provisions, the Postal Service expects that beginning in 2019 it would eliminate most mail delivery on Saturdays 

but continue to deliver packages six days a week. The Postal Service estimates that this reduction in service would yield net savings 

of $1.9 billion annually, mostly in personnel and transportation 

costs. The agency assumes that most mail currently delivered on 

Saturdays could be delivered on Mondays with minimal increased 

costs. 

The PRC has not prepared an estimate of savings from this proposal. However, in 2011 the PRC estimated that reducing both mail 

and package delivery from six to five days per week would save 

$1.7 billion a year—compared to the USPS estimate of $3.1 billion 

in annual savings for that proposal—largely because it disagreed 

with the Postal Service’s assumption that Saturday mail could be 

delivered on Mondays with minimal increased costs. In addition, 

earlier this year an independent firm estimated savings for ending 

Saturday delivery of mail (but not packages) that were roughly 50 

percent lower than the USPS estimate of that proposal.1

Based on the current estimates prepared by USPS and considering the past disparity in estimates made by USPS and other entities, CBO estimates that reducing mail delivery from six to five 

days per week under S. 1486 would save about $1.5 billion (or 

roughly 80 percent of the USPS estimate) annually beginning in 

fiscal year 2019. Beginning in 2021, we expect that annual savings 

would gradually decline as some of those funds would probably be 

spent by the Postal Service or returned to mailers in the form of 

lower rates rather than accumulating as large annual surpluses in 

the Postal Service Fund. We estimate that net annual savings 

would fall to $1.3 billion by 2024. 


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Other changes in mail delivery. USPS delivers mail to the doors 

of customers, to curbside receptacles, and to centralized mail receptacles that serve multiple addresses. S. 1486 would require the 

Postal Service to convert all business (but not residential) addresses with door delivery to curbside or centralized delivery. 

In 2013, the Postal Service provided door delivery for about 6 

million business addresses. Upon enactment of S. 1486, the USPS 

expects that it would change the means of delivery for about 

500,000 addresses in 2015 and about a million addresses annually 

over the 2016–2020 period. We anticipate that nearly all the conversions would be to centralized delivery for the affected businesses. 

Based on information from the Postal Service about the savings 

per business address from implementing curbside and centralized 

delivery as compared to door delivery, netted against costs to install and maintain curbside and centralized mail receptacles, CBO 

estimates that annual savings under S. 1486 would grow to about 

$850 million by 2022 and would total $5.4 billion over the 2015– 

2024 period. Beginning in 2023, we expect that annual savings 

would gradually decline as some of those funds would probably be 

spent by the Postal Service or returned to mailers in the form of 

lower rates. This estimate of savings reflects the assumption that 

mail would be delivered five days a week as authorized by the bill. 

Changes in USPS payments for retiree health benefits. CBO estimates that the bill’s provisions that would change payments relating to the PSRHBF would result in off-budget savings of $5.4 billion over the 2015–2024 period, as discussed below and shown in 

detail in the memorandum section of Table 2. 

Background on Postal Service Obligations for Retiree Health 

Care. The Postal Service is obligated to contribute toward the 

health insurance premiums of its retired employees who participate 

in the Federal Employees Health Benefits (FEHB) program. Under 

current law, CBO expects that the agency will make direct payments for retirees’ premiums to the on-budget FEHB fund for 2015 

and 2016 totaling $6.7 billion. Over the same period, the Postal 

Service also is required to make statutorily specified payments to 

the on-budget PSRHBF to prefund future retiree health obligations. Because of the Postal Service’s poor financial condition, however, it has not made those statutorily specified payments since 

2010, and CBO expects that the agency will not make the remaining specified payments for 2015 and 2016. 

Beginning in 2017, the PSRHBF is expected to start making payments to the FEHB program for the Postal Service’s share of those 

premiums. Under current law, the Postal Service is required to 

make payments to the PSRHBF, starting in 2017, to cover the future health care liabilities accruing to current employees (‘‘normal 

costs’’) and to liquidate the unfunded liability for retirees’ health 

benefits (‘‘amortization payments’’). CBO estimates that prefunding 

payments for normal costs and amortization will sum to $51.5 billion over the 2017–2024 period. 

Changes in USPS Payments for Retiree Health Benefits Under S. 

1486. The bill would make several changes in the timing and 

source of funds for payments for retiree health benefits. 

In particular, S. 1486 would:


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• Eliminate the requirement for the USPS to make direct payments to the FEHB fund in 2015 and 2016 and would authorize PSRHBF payments for the agency’s share of FEHB retiree 

premiums in 2015 and 2016 instead; 

• Eliminate the requirement for the USPS to make specified 

payments to the PSRHBF for 2015 and 2016 to prefund retiree 

health benefits; and 

• Require the USPS to begin making annual payments to the 

PSRHBF for normal and amortization costs in 2016 instead of 

beginning in 2017 (though the new amortization payments 

would need to cover just 80 percent of the unfunded liability 

for retirees’ health benefits). 

Because of the Postal Service’s poor financial condition, CBO 

does not expect that the Postal Service would make the normal and 

amortization payments to the PSRHBF required by the bill in 2016 

(though we expect that such payments will occur under current law 

and under the bill in subsequent years). 

CBO estimates that eliminating the requirement to make direct 

payments to FEHB would reduce USPS spending on retiree health 

benefits by $6.7 billion over the 2015–092024 period. 

As a result of the PSRHBF payments to the FEHB fund in 2015 

and 2016, the bill is expected to reduce the PSRHBF balance relative to current law and to increase the estimated unfunded liability for USPS retiree health benefits by the end of 2016. However, 

that effect would be offset by the bill’s requirement to fund 80 percent rather than 100 percent of the unfunded liability and by a relatively small decrease in PSRHBF spending resulting from the new 

Postal Service Health Benefits (PSHB) program discussed below. 

After amortizing the lower unfunded liability over a 40-year period, 

we expect that the Postal Service would be charged lower amortization payments over the 2017 2024 period. In addition, we estimate 

there would be a small decrease in normal payments stemming 

from the new PSHB program. CBO estimates that USPS costs associated with those payments would decrease from $51.5 billion to 

$47.4 billion, or $4.1 billion less, over the 2017–2024 period. 

Changes in Other USPS Spending. CBO expects that lowering 

health care expenses for the USPS would lead the agency to modify 

its ongoing efforts under current law to reduce spending. In 2009, 

the Postal Service began cost-cutting actions including closing administrative offices, halting construction of new facilities, and 

freezing salaries for certain employees. More recently, the agency 

has implemented more-severe measures such as closing mail processing facilities, making major reductions in service, and either deferring or failing to make certain required payments to the Treasury. 

CBO expects that enacting legislation to lower health care expenses for the USPS would lead the agency to alter its cost-reduction program by cutting spending less aggressively than it would 

without the legislation. We estimate that the net increase in such 

USPS outlays over the 2015–2024 period would be about half of the 

potential gross savings—about $5.4 billion. 

Prefunding for workers’ compensation obligations. The bill would 

require the Postal Service, beginning in fiscal year 2017, to calculate the actuarial liability of its workers’ compensation obligations and to make a series of annual payments that would liquidate 


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80 percent of the liability over a 40-year period. The agency would 

start making those annual payments in fiscal year 2018 and subsequent years to a new fund, known as the Postal Service Workers’ 

Compensation Accrued Liability Fund, unless its net income for the 

previous year (computed on an accrual accounting basis) was less 

than or equal to $1 billion. For this estimate, CBO anticipates that 

the fund would be classified as on-budget, consistent with past 

precedents, and thus that payments from USPS to the fund would 

represent off-budget costs and on-budget receipts. 

Based on USPS projections of net accrual income under current 

law, and considering the total savings to the agency anticipated 

from enactment of S. 1486, we expect that the Postal Service’s net 

accrual income would exceed $1 billion for each year over the 

2019–2024 period. Based on information provided by the Postal 

Service on its anticipated liability for workers’ compensation obligations in 2019 and subsequent years, we estimate that the agency 

would make amortization payments of $500 million each year beginning in 2019. 

Transfer of surplus postal retirement contributions. S. 1486 

would authorize the Postal Service Fund to receive a transfer of 

any surplus in the USPS Federal Employees Retirement System 

(FERS) account within the CSRDF as of the end of fiscal year 2013. 

Any funds transferred would have to be used to pay off USPS debt 

to the Treasury. The bill would require the Office of Personnel 

Management (OPM) to use economic and demographic factors (such 

as salary growth and retirement rates) specific to Postal Service 

employees, rather than government-wide data, to calculate any 

such surplus. 

Using data specific to the Postal Service, OPM estimates that the 

USPS surplus for its FERS account in the CSRDF was $2.4 billion 

as of September 30, 2013. Under the bill, CBO estimates that $2.4 

billion would be transferred from the CSRDF to the Postal Service 

Fund in fiscal year 2015. That intragovernmental transfer would 

be classified as a savings of $2.4 billion in off-budget direct spending for the Postal Service Fund in 2015. (The transfer also would 

result in a cost of $2.4 billion to the on-budget CSRDF as discussed 

later.) 

Prohibition on closing mail processing facilities. S. 1486 would 

require the Postal Service to maintain the delivery service standards for first-class mail and periodicals that were in effect on October 1, 2013, for at least two years after the bill’s enactment. The 

bill also would block the Postal Service from closing or consolidating any postal facility that was open on October 1, 2013, for at 

least two years after the bill’s enactment. Based on information 

from the Postal Service, we estimate that those new requirements 

would cost $1.4 billion over the 2015–2016 period by delaying the 

agency’s plans to close facilities and implement slower mail delivery service. 

Use of postal-specific data for retirement benefits. S. 1486 would 

direct OPM to use economic and demographic factors specific to 

Postal Service employees, rather than government-wide data, to 

calculate the annual employer contribution that USPS is required 

to make to federal retirement accounts under FERS and the Civil 

Service Retirement System (CSRS). The bill also would change the 


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schedule of CSRS amortization payments currently required of the 

Postal Service. 

For 2013, the Postal Service made nearly $2.9 billion in contributions to the CSRDF for FERS employees. The agency currently 

makes no contributions for CSRS employees; under current law, beginning in fiscal year 2017, the Postal Service will make annual 

payments, amortized over 27 years, to liquidate any unfunded liability as estimated by OPM for retirees’ CSRS pension benefits. 

(The unfunded liability is the total liability accrued to date for retirees’ pension benefits minus the portion of the CSRDF attributable to Postal Service contributions.) S. 1486 would require the 

Postal Service to begin annual payments in 2015, amortized over 

40 years, to liquidate the unfunded liability. 

Based on information from OPM, CBO estimates that enacting S. 

1486 would lower the Postal Service’s annual employer contribution to FERS by about $35 million beginning in 2015 and would 

lower the amortization payment the agency will make to the 

CSRDF beginning in 2017 by $630 million per year (the bill would 

lower the anticipated amortization payment from $1.62 billion to 

$990 million). Those reductions would occur because Postal Service 

employees tend to have lower salaries and higher mortality rates 

(when retired) compared to the averages for all federal employees 

and because the CSRS amortization period would be longer. In addition, CBO estimates that, under the bill’s provisions, the Postal 

Service would make annual CSRS amortization payments of about 

$990 million in 2015 and 2016, thus significantly increasing its 

costs in those years compared to current law. 

Over the 2015–2024 period we estimate this provision would re- sult in potential savings of $3.4 billion. As with some of the bill’s 

other provisions, however, we anticipate that lowering retirement 

costs would lead the Postal Service to cut expenses less aggressively than it otherwise would. Thus, we estimate net savings to 

the Postal Service of about $1.7 billion over the 2015–2024 period, 

or about half of the potential gross savings. 

Establish a Postal Service Health Benefits program. Section 104 

of S. 1486 would make several changes to the health insurance program for USPS employees and annuitants. The legislation would 

direct OPM to establish a new PSHB program in 2016, under 

which USPS employees and annuitants could enroll to receive 

health insurance from qualifying plans. Premiums in the PSHB 

program would be set based on expected health costs of only the 

USPS employees, annuitants, and dependents participating in the 

program. In addition, the bill would require all eligible postal annuitants who participate in the PSHB program to enroll in the 

Medicare program. 

CBO estimates that those changes would reduce USPS spending 

for health insurance premiums by $1.1 billion over the 2015–2024 

period. CBO expects that lowering health care expenses for the 

USPS would lead the agency to reduce other spending less aggressively than it would without the legislation. Thus, we estimate the 

net reduction in USPS spending over the same period would be 

about $0.5 billion, or about half of the potential gross savings from 

this policy. 

CBO anticipates that savings to USPS under section 104 of the 

legislation would result, in part, from shifting the primary responVerDate Mar 15 2010 02:45 Aug 09, 2014 Jkt 039010 PO 00000 Frm 00056 Fmt 6659 Sfmt 6602 E:\HR\OC\SR237.XXX SR237

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sibility for certain Medicare-covered services from the PSHB plans 

to the Medicare program. In addition, PSHB plans would be required to participate in Medicare Part D (in an aspect of the program that other employer sponsored plans can participate in) and 

would thereby receive subsidies and discounts related to prescription drugs. As a result of both that shift to Medicare and the subsidies and discounts for prescription drugs, CBO estimates that 

PSHB premiums for postal employees and annuitants would be 

lower than the FEHB premiums those people would face under current law. (The resulting shift of such costs to Medicare is discussed 

below under On-Budget Changes in Direct Spending.) 

Effect of changes in workers’ compensation on the USPS. The bill 

would make several changes to the Federal Employees Compensation Act, which provides wage replacement and medical benefits to 

federal employees who are injured in the course of their work. 

Under FECA, agencies reimburse the Department of Labor (DOL) 

for expenses incurred on behalf of their employees. 

Based on information from DOL, CBO estimates that the 

changes in S. 1486 (which are discussed below in greater detail in 

the section on On-Budget Changes in Direct Spending) would reduce gross outlays under FECA by $1.2 billion over the 2015–2024 

period. Those gross savings would be mostly offset by reduced reimbursements from federal agencies of $1.1 billion during that period, 

for net savings to the FECA account over 10 years of $172 million. 

Based on historical spending patterns under FECA, CBO estimates that about 40 percent of the gross FECA savings (and, accordingly, the reduced reimbursements) would accrue to the USPS. 

Thus, CBO estimates that, under provisions of S. 1486, the USPS 

would pay about $0.4 billion less in reimbursements to the FECA 

account over the 10-year period. 

On-budget changes in direct spending: CBO estimates that enact- ing S. 1486 would increase on-budget direct spending by $18.8 billion over the 2015–2024 period. Those costs result mostly from 

changes in the cash flows of the CSRDF, which reflects expenditures for civil service retirement benefits, and the PSRHBF, which 

reflects expenditures on health care benefits for USPS retirees, as 

shown in Table 3 and discussed below. 

Changes in PSRHBF spending. As discussed previously, the bill 

would change payments that the Postal Service makes for retiree 

health benefits, and CBO estimates that those changes would increase net on-budget direct spending by about $10.8 billion over the 

2015–2024 period. Those costs result from changes in cash flows of 

the PSRHBF as displayed in the memorandum to Table 3. 

Under the bill, CBO estimates that the PSRHBF would pay the 

FEHB fund $3.2 billion in 2015 and $3.4 billion in 2016 toward 

health premiums for postal annuitants enrolled in those years. 

CBO does not expect that the Postal Service will make any of the 

currently specified payments into the PSRHBF in 2015 or 2016, or 

that it would begin making payments to cover normal and amortization costs before 2017. Thus, we estimate that the bill’s provisions to eliminate the specified payments and require normal and 

amortization payments in 2016 would have no effect on the 

PSRHBF. Beginning in 2017, however, we estimate that amortization payments to the PSRHBF would decrease by about $450 million annually—mostly because the bill would require liquidation of 


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80 percent of the unfunded liability for retirees health benefits 

(rather than 100 percent as required under current law). Normal 

payments to the fund also would decrease as a result of the new 

Postal Service Health Benefits program. 


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TABLE 3—DETAILS OF ON BUDGET CHANGES IN DIRECT SPENDING UNDER S. 1486 

By fiscal year, outlays in millions of dollars— 

2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2015– 2024 

Changes in PSRHBF Spending (See Memorandum) ................................... 3,241 3,439 505 507 509 512 515 519 523 527 10,797 Postal Service Health Benefits Program ..................................................... 0 124 429 516 601 642 683 788 781 764 5,328 Use of Postal-Specific Data for Retirement Benefits ................................. ¥957 ¥956 666 667 669 670 672 675 677 680 3,463 

Prefunding for USPS Workers Compensation Obligations 0 0 0 0 ¥500 ¥500 ¥500 ¥500 ¥500 ¥500 ¥3,000 

Effect of Changes in Workers Compensation on Non-Postal Agencies ..... 6 ¥8 ¥17 ¥40 ¥22 ¥19 ¥19 ¥11 ¥22 ¥20 ¥172 

Transfer of Surplus Postal Retirement Contributions ................................ 2,400 0 0 0 0 0 0 0 0 0 2,400 Federal Property Asset Management Reform .............................................. 2 2 2 2 2 2 2 2 2 2 20 

Total Changes .................................................................................... 4,693 2,601 1,585 1,652 1,259 1,307 1,353 1,473 1,461 1,453 18,836 

MEMORANDUM: PSRHBF CASH FLOWS 

Under Current Law: 

Specified Payment from USPS a ........................................................ 0 0 0 0 0 0 0 0 0 0 0 

Normal Payments ............................................................................... 0 0 ¥2,458 ¥2,574 ¥2,679 ¥2,819 ¥2,991 ¥3,174 ¥3,364 ¥3,566 ¥23,625 

Amortization Payments ....................................................................... 0 0 ¥3,490 ¥3,490 ¥3,490 ¥3,490 ¥3,490 ¥3,490 ¥3,490 ¥3,490 ¥27,920 

Total, Current Law .................................................................... 0 0 ¥5,948 ¥6,064 ¥6,169 ¥6,309 ¥6,481 ¥6,664 ¥6,854 ¥7,056 ¥51,545 

Under S. 1486: 

FEHB Payment b d ............................................................................... 3,241 3,439 0 0 0 0 0 0 0 0 6,680 

Normal Payments c ............................................................................. 0 0 ¥2,409 ¥2,523 ¥2,625 ¥2,763 ¥2,931 ¥3,111 ¥3,297 ¥3,495 ¥23,153 

Amortization Payments c .................................................................... 0 0 ¥3,034 ¥3,034 ¥3,034 ¥3,034 ¥3,034 ¥3,034 ¥3,034 ¥3,034 ¥24,275 

Total, S. 1486 ........................................................................... 3,241 3,439 ¥5,443 ¥5,557 ¥5,660 ¥5,797 ¥5,966 ¥6,145 ¥6,331 ¥6,529 ¥40,748 

Changes in PSRHBF Spending .................................................................... 3,241 3,439 505 507 509 512 515 519 523 527 10,797 

Notes: Components may not add to totals because of rounding. USPS = United States Postal Service; PSRHBF = Postal Service Retiree Health Benefits Fund; FEHB = Federal Employees Health Benefits. a For fiscal years 2015 and 2016, the Postal Service is required to pay a total of $11.5 billion to the PSRHBF. However, CBO expects that the agency will not make any payments. b Under current law, the FEHB payment would be made from the PSRHBF beginning in 2017, so S. 1486 would not affect cash flows over the 2017 2024 period. c 1AS. 1486 would require the Postal Service to make normal and amortization payments in 2016, but CBO expects the agency will not make those payments. d Section 104 would also reduce payments from the PSRHBF for health premiums for postal annuitants enrolled in the new PSHB program. Those effects are included in Table 3 under effects from the Postal Service Health Benefits Program. 


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Postal Service Health Benefits program. CBO estimates that establishing the new PSHB program, requiring USPS annuitants 

who enroll in the PSHB program to participate in Medicare, and 

requiring PSHB plans to participate in Medicare Part D would, on 

net, increase on-budget direct spending by about $5.3 billion over 

the 2015–2024 period. 

The provisions of S. 1486 that require certain USPS annuitants 

to participate in Medicare would increase Medicare spending by 

about $7.9 billion over the 2015–2024 period, CBO estimates. 

Under the legislation, Medicare would become the primary payer 

for Medicare-covered services for USPS annuitants who enroll in 

Medicare Part B (medical insurance). However, the PSHB plans 

would pay cost-sharing for those beneficiaries health care services. 

Additionally, Medicare Part D would make certain payments to 

PSHB plans because those plans would be required to participate 

in the Employer Group Waiver Program under Part D. 

The effect of the legislation on federal on-budget payments for 

health insurance premiums in the FEHB program would partially 

offset the increase in Medicare spending. Premiums charged to 

non-postal enrollees in the FEHB program would be based on expected health costs of the employees, annuitants, and dependents 

remaining in the FEHB program after the health care costs of 

USPS workers, annuitants, and their dependents are shifted to the 

PSHB program. Because non-postal enrollees cost FEHB plans 

slightly less than postal enrollees, on average, CBO estimates that 

premiums in the FEHB program would be lower than under current law. Thus, the amount the federal government would contribute toward its share of annuitant premiums would be lower. 

CBO estimates that federal payments for health insurance premiums for non-postal annuitants enrolled in the FEHB program 

would be reduced by about $1.6 billion over the 2015–2024 period. 

(The government’s share of FEHB premiums for annuitants is classified as direct spending. Federal spending for active workers participating in the FEHB program is included in the appropriations 

for federal agencies and, therefore, is classified as discretionary.) 

In addition, CBO estimates that the bill would reduce payments 

from the on-budget PSRHBF for USPS annuitants health insurance premiums by about $1.0 billion over the 2015–2024 period. 

That is because CBO expects premiums for USPS annuitants to be 

lower under the legislation because of the requirement that they 

enroll in Medicare if they enroll in the PSHB. 

Use of postal-specific data for retirement benefits. As discussed 

above, S. 1486 would direct OPM to use economic and demographic 

factors specific to Postal Service employees, rather than government-wide data, to calculate the annual employer contribution that 

USPS makes to federal retirement accounts under FERS and 

CSRS. The bill also would require the Postal Service to begin making amortization payments to liquidate any unfunded liability for 

retirees’ CSRS benefits in 2015 rather than in 2017. 

Based on information from OPM, CBO estimates that the Postal 

Service would make higher payments to the CSRDF in 2015 and 

2016 of about $960 million per year, but the lower payments allowed under the bill from 2017 to 2024 would result in net costs 

for the CSRDF of nearly $3.5 billion over the 2015–2024 period as 

a whole. 


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Prefunding for USPS workers’ compensation obligations: As discussed above, the bill would require the Postal Service, if certain 

financial conditions are met, to make a series of annual payments 

designed to liquidate 80 percent of the estimated liability for its 

workers compensation obligations over a 40-year period. We expect 

the agency would begin making those payments in 2019 to the 

Postal Service Workers’ Compensation Accrued Liability Fund. 

CBO estimates that the new fund would receive payments from the 

Postal Service of $3 billion over the 2019–2024 period. 

Effect of changes in workers compensation on agencies other 

than USPS: The bill would make several changes to the Federal 

Employees’ Compensation Act, which provides wage replacement 

and medical benefits to federal employees who are injured in the 

course of their work. The Department of Labor administers the program, and federal agencies reimburse DOL for expenses incurred 

on behalf of their employees. 

Under current law, FECA provides compensation of up to 75 percent of a worker’s pre-injury salary if that person can no longer 

work because of debilitating injuries sustained on the job. (Injured 

workers without dependents receive two-thirds of their salary as a 

wage-replacement benefit; those with dependents receive the higher, augmented benefit.) In addition, the worker may receive medical benefits and certain death benefits. Most of the expenses incurred on behalf of the worker are charged back to the employing 

agency. In 2013, both gross FECA benefits and reimbursements 

from agencies totaled about $3.0 billion, resulting in net FECA outlays that year of only $20 million. 

Enacting the bill would result in a number of changes to the 

FECA program; most of those changes would reduce benefits, 

though some of the changes would increase them. The changes include: • Reducing benefits to 50 percent of a claimant’s pre-injury 

salary when that claimant reaches full retirement age (as defined by the Social Security Act); 

• Eliminating augmented benefits for most claimants who 

have dependents (so that claimants below the retirement age 

would receive a benefit equal to two-thirds of their pre-injury 

salary); 

• Increasing benefits under the disfigurement compensation 

schedule and for funeral expenses; 

• Establishing a schedule for managing disability reviews, including requiring periodic medical exams; 

• Improving the ability of the government to recapture compensation costs from responsible parties; and 

• Enhancing cross-matching of data to identify cases where 

payments are being made inappropriately. 

Based on information from DOL, CBO estimates that the 

changes in S. 1486 would reduce gross FECA outlays by $1.2 billion over the 2015–2024 period. Those savings would be partially 

offset by reduced reimbursements from employing agencies of about 

$1.0 billion during that period, resulting in net savings to the 

FECA account of $172 million over the 2015–2024 period. 

Transfer of surplus postal retirement contributions: S. 1486 

would transfer to the Postal Service Fund any surplus in the USPS 

FERS account within the CSRDF as of September 30, 2013. Based 


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on information from OPM, CBO estimates that $2.4 billion would 

be transferred from the CSRDF to the Postal Service Fund in fiscal 

year 2015. That transfer would increase on-budget direct spending 

from the CSRDF by $2.4 billion in 2015, but is matched by offbudget savings in the Postal Service Fund (as discussed above). 

Federal property asset management reform. S. 1486 would 

amend the Federal Property and Administrative Services Act (property act) to facilitate the disposal of federal real property. The legislation would expand the duties and responsibilities of the Federal 

Real Property Council, provide new authorities to the General 

Services Administration (GSA), and establish a five-year pilot program with the goal of expediting the disposal of surplus federal 

property. CBO estimates that enacting the bill would increase direct spending by $20 million over the 2015–2024 period because the 

legislation would authorize GSA to spend proceeds from the sale of 

federal property that are expected to be collected but not spent 

under current law. 

Based on information from GAO, the Office of Management and 

Budget, GSA, and other landholding agencies, CBO expects that 

little additional property would be sold under this program. That 

expected result reflects a variety of factors, including: (1) many of 

the largest landholding agencies would opt to continue to use their 

own enhanced-use authorities, (2) the new financial incentive provided to non-GSA agencies to sell real property would not be significant, and (3) since 2010, the President has directed agencies to 

dispose of unneeded property, reduce operating costs, and adopt 

more efficient real estate management practices. It is not clear how 

the new authorities would accelerate disposal of properties beyond 

what would occur under current law. 

Other provisions that could affect direct spending: Several other 

provisions of S. 1486 could help the Postal Service in its efforts to 

lower its net costs; however, CBO has not estimated additional savings for those provisions because it is not clear that any savings 

would exceed what we expect would be achieved under current law 

or under other provisions of the legislation. 

S. 1486 would authorize the Postal Service to ship alcoholic beverages and to establish a program to provide services for agencies 

of state, local, or tribal governments for a fee. Implementing these 

programs would require the Postal Service to compete with private 

businesses that currently ship alcoholic beverages and to offer costeffective alternatives for services to states or localities. Those proposed programs might increase USPS revenues but also would add 

to costs. CBO has no information to predict the cost-effectiveness 

of such new ventures that may be undertaken by the Postal Service 

under the bill. 

The bill also would direct arbitrators involved in future labor negotiations to consider the financial condition of the Postal Service 

when mediating disputes between USPS and its labor unions and 

would reform certain Postal Service contracting practices. Those 

provisions might reduce USPS costs, but CBO expects that any net 

savings probably would be indistinguishable from savings that 

would result from the Postal Service’s current efforts to negotiate 

more favorable labor contracts and improve procurement practices. 

Spending subject to appropriation: CBO estimates that S. 1486 

also would affect discretionary spending, which is subject to future 


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appropriation actions. We estimate that implementing the bill 

would have net discretionary costs of about $3.3 billion over the 10- 

year period, assuming the necessary amounts are appropriated. 


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TABLE 4—SPENDING SUBJECT TO APPROPRIATION UNDER S. 1486 

By fiscal year, outlays in millions of dollars— 

2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2015–2024 

Use of Postal-Specific Data for Retirement 

Benefits: 

Estimated Authorization Level ...... 483 502 524 547 571 596 622 649 677 704 5,875 Estimated Outlays ......................... 483 502 524 547 571 596 622 649 677 704 5,875 

Postal Service Health Benefits Program: 

Estimated Authorization Level ...... 0 ¥38 ¥177 ¥229 ¥242 ¥256 ¥272 ¥289 ¥308 ¥327 ¥2,138 

Estimated Outlays ......................... 0 ¥38 ¥177 ¥229 ¥242 ¥256 ¥272 ¥289 ¥308 ¥327 ¥2,138 

Effects of Changes in Workers’ Compensation 

on Non-Postal Agencies: 

Estimated Authorization Level ...... 19 19 5 ¥22 ¥35 ¥59 ¥71 ¥79 ¥98 ¥111 ¥432 

Estimated Outlays ......................... 16 19 7 ¥18 ¥33 ¥55 ¥69 ¥78 ¥95 ¥109 ¥415 

New Commission: 

Estimated Authorization Level ...... 3 0 0 0 0 0 0 0 0 0 3 Estimated Outlays ......................... 3 0 0 0 0 0 0 0 0 0 3 

Total Change: 

Estimated Authorization Level ...... 505 485 352 296 294 281 279 281 271 266 3,308 Estimated Outlays ......................... 502 483 354 300 296 285 281 282 274 268 3,325 

Memorandum: a

Increase in Offsetting Receipts Resulting 

From Higher Employer Contributions .......... ¥483 ¥502 ¥524 ¥547 ¥571 ¥596 ¥622 ¥649 ¥677 ¥704 ¥5,875 

a Employer contributions are intragovernmental transactions that do not affect the deficit; negative numbers indicate an increase in such intragovernmental receipts. The receipts shown in the memorandum result from federal employer contributions financed by future appropriations; such receipts are not considered to be an offset to direct spending because they are contingent on future appropriation actions. 


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Use of postal-specific data for retirement benefits. Under the provisions of S. 1486 that would require the use of postal-specific economic and demographic factors to calculate the employer contribution toward retirement that USPS makes on behalf of its employees, the amount of employer contributions required from most other 

federal agencies also would be adjusted. OPM estimates that the 

use of economic and demographic factors that exclude postal workers for calculating the contributions required of other agencies 

would raise the contribution rate paid by other federal agencies by 

0.1 percent to 0.2 percent of salary; CBO projects that such an increase in contributions would increase spending subject to appropriation by about $5.9 billion over the 2015–2024 period. However, 

that cost would be offset by additional receipts to the Civil Service 

Retirement and Disability Trust Fund and thus would have no net 

effect on future deficits. 

Postal service health benefits program. CBO estimates that section 104 of the bill would reduce federal outlays for health insurance premiums for non-postal employees enrolled in the FEHB program by about $2.1 billion over the 2015–2024 period. The government’s contributions for those premiums for active employees are 

subject to appropriation and thus classified as discretionary spending. 

The estimated reduction in costs results from lower federal payments for the government’s share of health insurance premiums for 

federal employees not employed by USPS. Currently, the federal 

government makes contributions to the premiums of employees 

that participate in the FEHB program, and in 2013 those contributions averaged 71 percent of premiums. Under the bill, as discussed 

above, premiums charged to non-postal employees in the FEHB 

program would reflect the expected health care costs of non-postal 

employees, non-postal annuitants, and their dependents. On a perenrollee basis, those costs would be lower than the expected health 

care costs including postal beneficiaries. CBO estimates that federal spending to cover the government’s share of premiums would 

be lower than under current law. 

Effect on changes in workers’ compensation on agencies other 

than USPS. The changes to FECA in S. 1486 would result in agencies paying $1.0 billion less in reimbursements to DOL for expenses 

incurred on behalf of their employees over the 2015–2024 period. 

Based on historical spending patterns, CBO estimates that about 

$0.4 billion of the reduction in reimbursements would be from the 

USPS. The balance of those payment reductions—about $0.6 billion—would be from federal agencies discretionary salaries and expenses accounts. 

Those savings would be partially offset by additional discretionary costs of about $0.2 billion over the same period. Most of 

those costs would be incurred by DOL to institute and manage the 

disability review process and other administrative provisions required by the bill. 

In addition, provisions in the bill that would extend the period 

of time that injured workers in zones of armed conflict would be 

in ‘‘continuation of pay’’ status would result in small increases in 

discretionary costs to agencies that employ such workers. 

New commission. S. 1486 would authorize the appropriation of 

$3 million from the Postal Service Fund for fiscal year 2015 to esVerDate Mar 15 2010 02:45 Aug 09, 2014 Jkt 039010 PO 00000 Frm 00065 Fmt 6659 Sfmt 6602 E:\HR\OC\SR237.XXX SR237

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tablish a Strategic Advisory Commission on Postal Service Solvency and Innovation. The commission would offer guidance to improve USPS finances. CBO estimates that the commission would 

spend $3 million in 2015, assuming appropriation of the authorized 

amounts. 

Pay As-You-Go considerations: The Statutory Pay-As-You-Go Act 

of 2010 establishes budget-reporting and enforcement procedures 

for legislation affecting direct spending or revenues. The net 

changes in outlays that are subject to those pay-as-you-go procedures are shown in the following table. Only on-budget changes to 

outlays or revenues are subject to pay-as-you-go procedures. 


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CBO ESTIMATE OF PAY-AS-YOU-GO EFFECTS FOR S. 1486, THE POSTAL REFORM ACT OF 2014, AS ORDERED REPORTED BY THE SENATE COMMITTEE ON HOMELAND 

SECURITY AND GOVERNMENTAL AFFAIRS ON FEBRUARY 6, 2014 

By fiscal year, in millions of dollars— 

2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2014–2019 2014–2024 

NET INCREASE IN THE ON-BUDGET DEFICIT 

Statutory Pay-As-You-Go Impact ................................................................................. 0 4,693 2,601 1,585 1,652 1,259 1,307 1,353 1,473 1,461 1,453 11,789 18,836 


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Intergovernmental and private sector impact: By increasing postal rates for public and private mailers, S. 1486 would impose intergovernmental and private-sector mandates, as defined in UMRA. 

The bill also would impose mandates on some postal annuitants by 

requiring them to enroll in Medicare, if eligible. CBO estimates 

that the aggregate annual costs to comply with the mandates in 

the bill would exceed both the intergovernmental and private-sector thresholds established in UMRA ($76 million and $152 million, 

respectively, in 2014, adjusted annually for inflation). 

Mandates on public and private mailers 

S. 1486 would make permanent an increase in postal rates for 

certain products, including those for which the Postal Service has 

a statutory monopoly. That increase is set to expire near the end 

of 2015. Because the USPS holds a statutory monopoly on first 

class mail, standard mail, and periodicals placed in USPS mail 

boxes, an increase in postal rates would constitute a mandate on 

public and private entities that mail those items through the 

USPS. The cost of the mandate would be the incremental cost of 

mailing those items. Based on projections from the USPS of the 

amount of first class mail, standard mail, and periodicals that are 

expected to be sent at the increased rate, CBO estimates that the 

additional cost to public and private entities would amount to 

about $1.8 billion in the first year of the extension of the higher 

rates. (That figure excludes additional amounts paid for other postal services and amounts paid by the federal government for postal 

services.) Of the $1.8 billion, CBO estimates that the permanent increase in postal rates would cost state and local governments approximately $200 million in the first year, with slightly lower costs 

in subsequent years. Similarly, CBO estimates that the increase in 

postal rates would cost private mailers about $1.6 billion in the 

first year, with slightly lower costs in later years. 

The bill also would impose a private-sector mandate on national 

and state political committees by repealing their current discount 

on postal rates for third-class letters (standard mail). Based on information from a political committee and the USPS, CBO estimates 

that the cost of the mandate would average about $4 million annually. 

Mandate on postal annuitants: The bill would require all postal 

annuitants enrolled in Postal Service health plans to enroll in 

Medicare if they are eligible. Those postal annuitants would be required to pay new premiums associated with mandatory Medicare 

enrollment and additional amounts for health care services. However, Postal Service health plans pay a share of the cost of annuitants’ health care services, and CBO estimates that the aggregate 

additional costs for those annuitants would be offset by those contributions. 

Previous CBO estimate: On June 23, 2014, CBO transmitted a 

cost estimate for H.R. 2748, the Postal Reform Act of 2013, as ordered reported by the House Committee on Oversight and Government Reform on July 24, 2013. Nearly all the off-budget savings of 

H.R. 2748 would result from two provisions: reducing mail delivery 

to five days per week and phasing out delivery of mail to customers’ doors. In contrast, the largest contributor to off-budget savVerDate Mar 15 2010 02:45 Aug 09, 2014 Jkt 039010 PO 00000 Frm 00068 Fmt 6659 Sfmt 6602 E:\HR\OC\SR237.XXX SR237

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ings for S. 1486 would be the bill’s provision to permanently extend 

a 2013 postal rate increase. 

Table 5 compares CBO’s estimates of the major budgetary effects 

of the two bills over the next 10 years, showing that both bills 

would have net budgetary savings of about $17 billion over the 

2015–2024 period—although the on-budget and off-budget effects 

for the two bills would be significantly different. S. 1486’s significantly higher on-budget cost, as compared to H.R. 2748, primarily 

reflects the differences in the two bills’ provisions related to health 

care benefits for USPS workers and retirees. 

TABLE 5—SUMMARY OF CBO COST ESTIMATES FOR S. 1486 AND H.R. 2748 

By fiscal year, in billions of dollars— 

Off-Budget 

2015–2024 

On-Budget 

2015–2024 

Total 2015–2024 

S. 1486 ................................................................................................................... ¥35.7 18.8 ¥16.8 

H.R. 2748 ................................................................................................................ ¥23.6 6.6 ¥17.0 

Estimate prepared by: Federal costs: Paul Masi—Health care 

provisions; Amber Marcellino—Retirement; Christi Hawley Anthony—Federal employees compensation; Mark Grabowicz—All 

other; Impact on state, local, and tribal governments: Michael 

Hirsch; Impact on the private sector: Marin Burnett. 

Estimate approved by: Peter H. Fontaine, Assistant Director for 

Budget Analysis. 


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ADDITIONAL VIEWS OF SENATOR JON TESTER 

While some of the provisions in this legislation would meaningfully improve the financial situation of the Postal Service, we oppose several sections of the bill that are outlined in the Committee 

report: Retiree Health Pre-Funding Payments, Postal Unions and 

Collective Bargaining, Mail Processing Facility Closures, and 

changes to the Federal Employees’ Compensation Act (FECA). 

RETIREE HEALTH PRE-FUNDING PAYMENTS

While S. 1486 would improve the existing retiree health prefunding schedule to make the requirement less onerous on the U.S. 

Postal Service, the legislation fails to restructure the investment of 

those assets. In order to maximize the returns on those payments 

made into the Postal Service Retiree Health Benefits Fund 

(PSRHBF), these investments should be made in a more progressive fashion. Currently, retiree health assets are invested in Treasury securities that produce low yields. Investing these assets into 

low-cost index funds that contain stocks, bonds, and cash equivalents would lead to higher returns. These higher returns would 

lead to greater improvement in the PSRHBF’s funding status, 

which would ultimately result in further reduction of pre-funding 

costs. 

Additionally, while this legislation would reduce USPS’s projected pre-funding obligations from 100 percent to 80 percent over 

40 years, it would still require USPS to make annual amortization 

and normal cost payments into the PSRHBF—whether or not the 

80 percent funding target is met in a given year. If the funding 

level of the PSRHBF is over 80 percent, USPS should not be required to make these payments. USPS should be obligated to make 

these payments only when it is necessary to achieve the 80 percent 

funding level. By making this change, USPS would have the flexibility to invest the money that is saved in new postal vehicles, new 

post office facilities, and new technology. 

POSTAL UNIONS AND COLLECTIVE BARGAINING

This legislation would remove the guaranteed right of participation in the Federal Employee Retirement System (FERS) and 

matching Thrift Savings Plan (TSP) for newly hired postal workers. 

The Committee recommendation would force new employees to bargain for these long-held federal employee rights. Under the current 

law, postal employees’ eligibility for FERS and TSP contributions 

is a basic employee benefit, as it is for all other federal workers. 

Postal employees would not only have to bargain for a benefit given 

to every other federal worker under this bill, but they would also 

have to rely on the Postal Service to use its new ‘‘flexibilities prudently,’’ as the S. 1486 Committee report states. This legislation 


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could ultimately result in new employees being completely excluded 

from FERS/TSP eligibility as a result of these new collective bargaining provisions. 

MAIL PROCESSING FACILITY CLOSURES

S. 1486 requires the Postal Service to maintain the service standards for First Class mail and periodicals that were in effect on October 1, 2013. A more appropriate date to use would be July 1, 

2012—when new service standards first went into effect after the 

original wave of mail processing facility closures. The postal network was weakened significantly in the 14 months between July 

2012 and October 2013, with a lower volume of mail being delivered overnight. Anecdotally, businesses and postal labor organizations have reported that, since October 2013, mail delivery regularly occurs at a far slower rate than USPS-reported data. By using 

the October 2013 date, the Committee accepts a service standard 

that is simply not as strong as the alternative option. If we are to 

maintain our mail processing facilities to the best of our ability, we 

must not slow down mail delivery even further. 

FEDERAL EMPLOYEES’ COMPENSATION ACT

The legislation makes sweeping changes to the Federal Employee 

Compensation Act (FECA), which affects all federal employees, yet 

it also succeeds in discriminatorily singling out the Postal Service. 

By requiring the USPS to mandate a new pre-funding initiative for 

projected workers’ compensation liability benefits, the bill creates 

a burden that is placed on no other private company or government 

agency. Similar to the proposed retiree health pre-funding payments, these requirements would also force investment in lowyielding Treasury securities to finance future FECA benefits. A 

more appropriate investment mechanism would be in an appropriate mix of stock and bonds so that sufficient earnings could be 

created to cover future costs. Furthermore, these changes were 

written into S. 1486 without the Committee having held a single 

hearing on the topic in the last five years. 


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71These amendments to 5 U.S.C. chapter 81 are made by title V of the bill. 

VII. CHANGES IN EXISTING LAW MADE BY THE BILL, AS REPORTED

In compliance with paragraph 12 of rule XXVI of the Standing 

Rules of the Senate, changes in existing law made by S. 54, as reported, are shown as follows (existing law proposed to be omitted 

is enclosed in black brackets, new matter is printed in italic, and 

existing law in which no change is proposed is shown in roman): 

UNITED STATES CODE 

TITLE 5—GOVERNMENT ORGANIZATION AND 

EMPLOYEES 

* * * * * * * 

PART III—EMPLOYEES 

* * * * * * * 

Subpart G—Insurance and Annuities 

CHAPTER 81—COMPENSATION FOR WORK INJURIES 71

* * * * * * * 

Sec. 

8101. Definitions. 

* * * * * * * 

8106. Partial disability 

8106a. Reporting requirements. 

* * * * * * * 

ø8117. Time of accrual of right.¿ 

ø8118. Election to use annual or sick leave.¿ 

8117. Waiting period. 

8118. Continuation of pay. 

* * * * * * * 

8152. Annual report. 

8153. Integrity and compliance program. 

* * * * * * * 

Subchapter I—Generally 

* * * * * * * 

§ 8101. Definitions 

For the purpose of this subchapter— 

(1) ‘‘employee’’ means— 

(A) * * * 

* * * * * * * 

(D) an individual employed by the government of the 

District of Columbia for an injury that occurred before the 


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effective date of section 204(e) of the District of Columbia 

Self-Government and Governmental Reorganization Act 

(Public Law 93—198; 87 Stat. 783; 5 U.S.C. 8101 note); 

and

* * * * * * * 

(18) ‘‘price index’’ means the Consumer Price Index (all 

items—United States city average) published monthly by the 

Bureau of Labor Statistics; øand¿ 

(19) ‘‘organ’’ means a part of the body that performs a special 

function, and for purposes of this subchapter excludes the 

brain, heart, and back; øand¿ 

(20) ‘‘United States medical officers and hospitals’’ includes 

medical officers and hospitals of the Army, Navy, Air Forces, 

Department of Veterans Affairs, and United States Public 

Health Service, and any other medical officer or hospital designated as a United States medical officer or hospital by the 

Secretary of Labor;ø.¿ 

(21) ‘‘retirement age’’ has the meaning given that term under 

section 216(l)(1) of the Social Security Act (42 U.S.C. 416(l)(1)); 

(22) ‘‘covered claim for total disability’’ means a claim for a 

period of total disability that commenced before the date of enactment of the Workers Compensation Reform Act of 2014; 

(23) ‘‘covered claim for partial disability’’ means a claim for 

a period of partial disability that commenced before the date of 

enactment of the Workers Compensation Reform Act of 2014; 

and 

(24) ‘‘individual who has an exempt disability condition’’ 

means an individual— 

(A) who— 

(i) is eligible to receive continuous periodic compensation for total disability under section 8105 on the 

date of enactment of the Workers Compensation Reform 

Act of 2014; and 

(ii) meets the criteria under section 8105(c); 

(B) who, on the date of enactment of the Workers Compensation Reform Act of 2014— 

(i) is eligible to receive continuous periodic compensation for total disability under section 8105; and 

(ii) has sustained a currently irreversible severe mental or physical disability for which the Secretary of 

Labor has authorized, for at least the 1-year period 

ending on the date of enactment of the Workers’ Compensation Reform Act of 2014, constant in-home care or 

custodial care, such as placement in a nursing home; 

or 

(C) who is eligible to receive continuous periodic compensation for total disability under section 8105— 

(i) for not less than the 3-year period ending on the 

date of enactment of the Workers’ Compensation Reform Act of 2014; or 

(ii) if the individual became eligible to receive continuous periodic compensation for total disability under 

section 8105 during the period beginning on the date 

that is 3 years before the date of enactment of the 


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Workers’ Compensation Reform Act of 2014 and ending 

on such date of enactment, for not less than the 3-year 

period beginning on the date on which the individual 

became eligible. 

* * * * * * * 

§ 8102. Compensation for disability or death of employee 

* * * * * * * 

(b) Disability or death from a war-risk hazard or during or as a 

result of capture, detention, or other restraint by a hostile force or 

individual, or from an attack by a terrorist or terrorist organization, 

either known or unknown, suffered by an employee who is employed outside the continental United States or in Alaska or in the 

areas and installations in the Republic of Panama made available 

to the United States pursuant to the Panama Canal Treaty of 1977 

and related agreements (as described in section 3(a) of the Panama 

Canal Act of 1979), is deemed to have resulted from personal injury 

sustained while in the performance of his duty, whether or not the 

employee was engaged in the course of employment when the disability or disability resulting in death occurred or when he was 

taken by the hostile force or individual. This subsection does not 

apply to an individual— 

* * * * * * * 

§ 8104. Vocational rehabilitation 

(a) øThe Secretary of Labor may direct a permanently disabled 

individual whose disability is compensable under this subchapter to 

undergo vocational rehabilitation.¿ IN GENERAL.— 

(1) DIRECTION.—Except as provided in paragraph (2), not 

earlier than the date that is 6 months after the date on which 

an individual eligible for wage-loss compensation under section 

8105 or 8106 is injured, or by such other date as the Secretary 

of Labor determines it would be reasonable under the circumstances for the individual to begin vocational rehabilitation, and if vocational rehabilitation may enable the individual 

to become capable of more gainful employment, the Secretary of 

Labor shall direct the individual to participate in developing a 

comprehensive return to work plan and to undergo vocational 

rehabilitation at a location a reasonable distance from the residence of the individual. The Secretary shall provide for furnishing the vocational rehabilitation services. In providing for 

these services, the Secretary, insofar as practicable, shall use 

the services or facilities of State agencies and corresponding 

agencies which cooperate with the øSecretary of Health, Education, and Welfare in carrying out the purposes of chapter 4 

of title 29¿ the Secretary of Education in carrying out the purposes of the Rehabilitation Act of 1973 (29 U.S.C. 701 et seq.), 

except to the extent that the Secretary of Labor provides for 

furnishing these services under section 8103 of this title. The 

cost of providing these services to individuals undergoing vocational rehabilitation under this section shall be paid from the 

Employees’ Compensation Fund. However, in reimbursing a 

State or corresponding agency under an arrangement pursuant 


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to this section the cost to the agency reimbursable in full 

øunder section 32(b)(1) of title 29¿ under section 5 of the Rehabilitation Act of 1973 (29 U.S.C. 704) is excluded. 

(2) EXCEPTION.—The Secretary of Labor may not direct an individual who has attained retirement age to participate in developing a comprehensive return to work plan or to undergo vocational rehabilitation. 

(b) CONTENTS OF RETURN TO WORK PLAN.—A return to work 

plan developed under subsection (a)— 

(1) shall— 

(A) set forth specific measures designed to increase the 

wage-earning capacity of an individual; 

(B) take into account the prior training and education of 

the individual and the training, educational, and employment opportunities reasonably available to the individual; 

and 

(C) provide that any employment undertaken by the individual under the return to work plan be at a location a reasonable distance from the residence of the individual; 

(2) may provide that the Secretary will pay out of amounts 

in the Employees’ Compensation Fund reasonable expenses of 

vocational rehabilitation (which may include tuition, books, 

training fees, supplies, equipment, and child or dependent care) 

during the course of the plan; and 

(3) may not be for a period of more than 2 years, unless the 

Secretary finds good cause to grant an extension, which may be 

for not more than 2 years. 

ø(b)¿(c) COMPENSATION.—Notwithstanding section 8106, individuals directed to undergo vocational rehabilitation by the Secretary 

shall, while undergoing such rehabilitation, receive compensation 

at the rate provided in sections 8105 and 8110 of this title, less the 

amount of any earnings received from remunerative employment ø, 

other than employment undertaken pursuant to such rehabilitation¿. 

(d) ASSISTED REEMPLOYMENT AGREEMENTS.— 

(1) IN GENERAL.—The Secretary may enter into an assisted 

reemployment agreement with an agency or instrumentality of 

any branch of the Federal Government or a State or local government or a private employer that employs an individual eligible for wage-loss compensation under section 8105 or 8106 to 

enable the individual to return to productive employment. 

(2) CONTENTS.—An assisted reemployment agreement under 

paragraph (1)— 

(A) may provide that the Secretary will use amounts in 

the Employees’ Compensation Fund to reimburse an employer in an amount equal to not more than 100 percent of 

the compensation the individual would otherwise receive 

under section 8105 or 8106; and 

(B) may not be for a period of more than 3 years. 

(e) LIST.—To facilitate the hiring of individuals eligible for wageloss compensation under section 8105 or 8106, the Secretary shall 

provide a list of such individuals to the Office of Personnel ManageVerDate Mar 15 2010 02:45 Aug 09, 2014 Jkt 039010 PO 00000 Frm 00075 Fmt 6604 Sfmt 6603 E:\HR\OC\SR237.XXX SR237

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ment, which the Office of Personnel Management shall provide to 

all agencies and instrumentalities of the Federal Government. 

* * * * * * * 

§ 8105. Total Disability 

(a) øIf¿ IN GENERAL.—Subject to subsection (b), if the disability 

is total, the United States shall pay the employee during the disability monthly monetary compensation equal to 66 2/3 percent of 

his monthly pay, which is known as his basic compensation for 

total disability. 

(b) CONVERSION OF ENTITLEMENT AT RETIREMENT AGE.— 

(1) IN GENERAL.—Except as provided in paragraph (2), the 

basic compensation for total disability for an employee who has 

attained retirement age shall be 50 percent of the monthly pay 

of the employee. 

(2) EXCEPTIONS.— 

(A) COVERED RECIPIENTS WHO ARE RETIREMENT AGE OR

HAVE AN EXEMPT DISABILITY CONDITION.—Paragraph (1) 

shall not apply to a covered claim for total disability by an 

employee if the employee— 

(i) on the date of enactment of the Workers’ Compensation Reform Act of 2014, has attained retirement 

age; or 

(ii) is an individual who has an exempt disability 

condition. 

(B) TRANSITION PERIOD FOR CERTAIN EMPLOYEES.—For a 

covered claim for total disability by an employee who is not 

an employee described in subparagraph (A), the employee 

shall receive the basic compensation for total disability provided under subsection (a) until the later of— 

(i) the date on which the employee attains retirement 

age; and 

(ii) the date that is 3 years after the date of enactment of the Workers’ Compensation Reform Act of 

2014. 

ø(b)¿(c) The loss of use of both hands, both arms, both feet, or 

both legs, or the loss of sight of both eyes, is prima facie permanent 

total disability. 

* * * * * * * 

§ 8106. Partial Disability 

(a) øIf¿ IN GENERAL.—Subject to subsection (b), if the disability 

is partial, the United States shall pay the employee during the disability monthly monetary compensation equal to 66 2/3 percent of 

the difference between his monthly pay and his monthly wageearning capacity after the beginning of the partial disability, which 

is known as his basic compensation for partial disability. 

(b) CONVERSION OF ENTITLEMENT AT RETIREMENT AGE.— 

(1) IN GENERAL.—Except as provided in paragraph (2), the 

basic compensation for partial disability for an employee who 

has attained retirement age shall be 50 percent of the difference 

between the monthly pay of the employee and the monthly 


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75 

wage-earning capacity of the employee after the beginning of the 

partial disability. 

(2) EXCEPTIONS.— (A) COVERED RECIPIENTS WHO ARE RETIREMENT AGE.— Paragraph (1) shall not apply to a covered claim for partial 

disability by an employee if, on the date of enactment of the 

Workers’ Compensation Reform Act of 2014, the employee 

has attained retirement age. 

(B) TRANSITION PERIOD FOR CERTAIN EMPLOYEES.—For a 

covered claim for partial disability by an employee who is 

not an employee described in subparagraph (A), the employee shall receive basic compensation for partial disability in accordance with subsection (a) until the later of— 

(i) the date on which the employee attains retirement 

age; and 

(ii) the date that is 3 years after the date of enactment of the Workers’ Compensation Reform Act of 

2014. 

ø(b)¿(c) The Secretary of Labor may require a partially disabled 

employee to report his earnings from employment or self-employment, by affidavit or otherwise, in the manner and at the times the 

Secretary specifies. The employee shall include in the affidavit or 

report the value of housing, board, lodging, and other advantages 

which are part of his earnings in employment or self-employment 

and which can be estimated in money. An employee who— 

* * * * * * * 

ø(c)¿(d) A partially disabled employee who— 

* * * * * * * 

§ 8106a. Reporting requirements 

(a) DEFINITION.—In this section, the term ‘‘employee receiving 

compensation’’ means an employee who— 

(1) is paid compensation under section 8105 or 8106; and 

(2) has not attained retirement age. 

(b) AUTHORITY.—The Secretary of Labor shall require an employee receiving compensation to report the earnings of the employee 

receiving compensation from employment or self-employment, by affidavit or otherwise, in the manner and at the times the Secretary 

specifies. 

(c) CONTENTS.—An employee receiving compensation shall include 

in a report required under subsection (a) the value of housing, 

board, lodging, and other advantages which are part of the earnings of the employee receiving compensation in employment or selfemployment and the value of which can be estimated. 

(d) FAILURE TO REPORT AND FALSE REPORTS.— 

(1) IN GENERAL.—An employee receiving compensation who 

fails to make an affidavit or other report required under subsection (b) or who knowingly omits or understates any part of 

the earnings of the employee in such an affidavit or other report 

shall forfeit the right to compensation with respect to any period for which the report was required. 

(2) FORFEITED COMPENSATION.—Compensation forfeited 

under this subsection, if already paid to the employee receiving 


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compensation, shall be recovered by a deduction from the compensation payable to the employee or otherwise recovered under 

section 8129, unless recovery is waived under that section. 

* * * * * * * 

§ 8107. Compensation schedule 

(a) If there is permanent disability involving the loss, or loss of 

use, of a member or function of the body or involving disfigurement, the employee is entitled to basic compensation for the disability, as provided by the schedule in subsection (c) of this section, 

øat the rate of 66 2/3 percent of his monthly pay¿ at the rate specified under subsection (d). The basic compensation is— 

(1) * * * 

(2) payable regardless of whether the disability also involves 

another impairment of the body; and 

* * * * * * * 

(c) The compensation schedule is as follows: 

(1) * * * 

* * * * * * * 

(21) For serious disfigurement of the face, head, or neck of 

a character likely to handicap an individual in securing or 

maintaining employment, proper and equitable compensation 

ønot to exceed $3,500¿ in proportion to the severity of the dis- figurement, not to exceed $50,000 shall be awarded in addition 

to any other compensation payable under this schedule. The 

maximum amount of compensation under this paragraph shall 

be increased on March 1 of each year by the amount determined 

by the Secretary of Labor to represent the percent change in the 

price index published for December of the preceding year over 

the price index published for the December of the year prior to 

the preceding year, adjusted to the nearest one-tenth of 1 percent. 

* * * * * * * 

(d) RATE FOR COMPENSATION.— 

(1) ANNUAL SALARY.— 

(A) IN GENERAL.—Except as provided in paragraph (2), 

the rate under subsection (a) shall be the rate of 66 2⁄3 percent of the annual salary level established under subparagraph (B), in a lump sum equal to the present value (as 

calculated under subparagraph (C)) of the amount of compensation payable under the schedule. 

(B) ESTABLISHMENT.— 

(i) IN GENERAL.—The Secretary of Labor shall establish an annual salary for purposes of subparagraph (A) 

in the amount the Secretary determines will result in 

the aggregate cost of payments made under this section 

being equal to what would have been the aggregate cost 

of payments under this section if the amendments 

made by section 304(a) of the Workers’ Compensation 

Reform Act of 2014 had not been enacted. 

(ii) COST OF LIVING ADJUSTMENT.—The annual salary established under clause (i) shall be increased on 


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March 1 of each year by the amount determined by the 

Secretary of Labor to represent the percent change in 

the price index published for December of the preceding 

year over the price index published for the December of 

the year prior to the preceding year, adjusted to the 

nearest one-tenth of 1 percent. 

(C) PRESENT VALUE.—The Secretary of Labor shall calculate the present value for purposes of subparagraph (A) 

using a rate of interest equal to the average market yield 

for outstanding marketable obligations of the United States 

with a maturity of 2 years on the first business day of the 

month in which the compensation is paid or, in the event 

that such marketable obligations are not being issued on 

such date, at an equivalent rate selected by the Secretary 

of Labor, true discount compounded annually. 

(2) CERTAIN INJURIES.—For an injury that occurred before 

the date of enactment of the Workers’ Compensation Reform Act 

of 2014, the rate under subsection (a) shall be 662⁄3 percent of 

the employee’s monthly pay. 

(e) SIMULTANEOUS RECEIPT.— (1) TOTAL DISABILITY.—An employee who receives compensation for total disability under section 8105 may only receive the 

lump sum of schedule compensation under this section in addition to and simultaneously with the benefits for total disability 

after the earlier of— 

(A) the date on which the basic compensation for total 

disability of the employee becomes 50 percent of the monthly pay of the employee under section 8105(b); or 

(B) the date on which augmented compensation of the 

employee terminates under section 8110(b)(2)(A)(ii), if the 

employee receives such compensation. 

(2) PARTIAL DISABILITY.—An employee who receives benefits 

for partial disability under section 8106 may only receive the 

lump sum of schedule compensation under this section in addition to and simultaneously with the benefits for partial disability after the earlier of— 

(A) the date on which the basic compensation for partial 

disability of the employee becomes 50 percent of the difference between the monthly pay of the employee and the 

monthly wage-earning capacity of the employee after the beginning of the partial disability under section 8106(b); or 

(B) the date on which augmented compensation of the 

employee terminates under section 8110(b)(2)(B), if the employee receives such compensation. 

* * * * * * * 

§ 8110. Augmented compensation for dependents 

(a) * * * 

(b) TERMINATION OF AUGMENTED COMPENSATION.— 

(1) IN GENERAL.—Subject to paragraph (2), augmented compensation for dependants under subsection (c) shall not be provided. 

(2) EXCEPTIONS.— 


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(A) TOTAL DISABILITY.—For a covered claim for total disability by an employee— 

(i) the employee shall receive augmented compensation under subsection (c) if the employee is an individual who has an exempt disability condition; and 

(ii) the employee shall receive augmented compensation under subsection (c) until the date that is 3 years 

after the date of enactment of the Workers’ Compensation Reform Act of 2014 if the employee is not an employee described in clause (i). 

(B) PARTIAL DISABILITY.—For a covered claim for partial 

disability by an employee, the employee shall receive augmented compensation under subsection (c) until the date 

that is 3 years after the date of enactment of the Workers’ 

Compensation Reform Act of 2014. 

(C) PERMANENT DISABILITY COMPENSATED BY A SCHED- ULE.—For a claim for a permanent disability described in 

section 8107(a) by an employee that commenced before the 

date of enactment of the Workers’ Compensation Reform Act 

of 2014, the employee shall receive augmented compensation under subsection (c). 

ø(b)¿ (c) A disabled employee with one or more dependents is entitled to have his basic compensation for disability augmented— 

* * * * * * * 

§ 8112. Maximum and minimum monthly payments 

(a) Except as provided by subsections (b) and (c) and section 8138 

of this title, the monthly rate of compensation for disability, øincluding augmented compensation under section 8110 of this title 

but¿ not including additional compensation under section 8111 of 

this title, may not be more than ø75 percent¿ 662⁄3 percent of the 

monthly pay of the maximum rate of basic pay for GS–15, and in 

case of total disability may not be less than ø75 percent¿ 662⁄3 percent of the monthly pay of the minimum rate of basic pay for GS– 

2 or the amount of the monthly pay of the employee, whichever is 

less. 

(b) EXCEPTIONS.— 

(1) COVERED DISABILITY CONDITION.—For a covered claim for 

total disability by an employee, if the employee is an individual 

who has an exempt disability condition— 

(A) the monthly rate of compensation for disability that 

is subject to the maximum and minimum monthly amounts 

under subsection (a) shall include any augmented compensation under section 8110; and 

(B) subsection (a) shall be applied by substituting ‘‘75 

percent’’ for ‘‘662⁄3 percent’’ each place it appears. 

(2) PARTIAL DISABILITY.—For a covered claim for partial disability by an employee, until the date that is 3 years after the 

date of enactment of the Workers’ Compensation Reform Act of 

2014— 

(A) the monthly rate of compensation for disability that 

is subject to the maximum and minimum monthly amounts 


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under subsection (a) shall include any augmented compensation under section 8110; and 

(B) subsection (a) shall be applied by substituting ‘‘75 

percent’’ for ’’662⁄3 percent’’ each place it appears. 

ø(b)¿ (c) The provisions of øsubsection (a)¿ subsections (a) and 

(b) shall not apply to any employee whose disability is a result of 

an assault which occurs during an assassination or attempted assassination of a Federal official described under section 351(a) or 

1751(a) of title 18, and was sustained in the performance of duty. 

* * * * * * * 

§ 8113. Increase or decrease of basic compensation 

(a) * * * 

(b) If an individual without good cause fails to apply for and undergo vocational rehabilitation when so directed under section 8104 

of this title, the Secretary, on review under section 8128 of this 

title and after finding that in the absence of the failure the wageearning capacity of the individual would probably have substantially increased, ømay reduce¿ shall reduce prospectively the monetary compensation of the individual in accordance with what would 

probably have been his wage-earning capacity in the absence of the 

failure, until the individual in good faith complies with the direction of the Secretary. An individual who has attained retirement 

age may not be required to undergo vocational rehabilitation. 

* * * * * * * 

§ 8116. Limitations on right to receive compensation 

(a) * * * 

* * * * * * * 

(e) RETIREMENT BENEFITS.— 

(1) IN GENERAL.—An individual entitled to compensation benefits payable under this subchapter and under chapter 83 or 84 

or any other retirement system for employees of the Government, 

for the same period, shall elect which benefits the individual 

will receive. 

(2) ELECTION.— 

(A) DEADLINE.—An individual shall make an election 

under paragraph (1) in accordance with such deadlines as 

the Secretary of Labor shall establish, which shall be a reasonable period after the individual has received notice of a 

final determination that the individual is entitled to compensation benefits payable under this subchapter. 

(B) REVOCABILITY.—An election under paragraph (1) 

shall be revocable, notwithstanding any other provision of 

law, except for any period during which an individual— 

(i) was qualified for benefits payable under both this 

subchapter and under a retirement system described in 

paragraph (1); and 

(ii) was paid benefits under the retirement system 

after having been notified of eligibility for benefits 

under this subchapter. 


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(3) INFORMED CHOICE.—The Secretary of Labor shall provide 

information, and shall ensure that information is provided, to 

an individual described in paragraph (1) about the benefits 

available to the individual under this subchapter or under 

chapter 83 or 84 or any other retirement system referred to in 

paragraph (1) the individual may elect to receive. 

* * * * * * * 

§ 8117. øTime of accrual of right¿ Waiting period 

(a) øAn employee other than a Postal Service employee is not entitled¿ IN GENERAL.—An employee is not entitled to continuation of 

pay within the meaning of section 8118 for the first 3 days of temporary disability or, if section 8118 does not apply, is not entitled 

to compensation for the first 3 days of temporary disability, except— 

(1) when the disability exceeds 14 days; or 

ø(2) when the disability is followed by permanent disability; 

or¿ 

ø(3)¿ (2) as provided by sections 8103 and 8104 of this title. 

(b) øA Postal Service employee is not entitled to compensation or 

continuation of pay for the first 3 days of temporary disability, except as provided under paragraph (3) of subsection (a). A Postal 

Service¿ USE OF LEAVE.—AN employee may use annual leave, sick 

leave, or leave without pay during øthat 3-day period¿ the first 3 

days of temporary disability, except that if the disability exceeds 14 

days øor is followed by permanent disability¿, the employee may 

have their sick leave or annual leave reinstated or receive pay for 

the time spent on leave without pay under this section. 

* * * * * * * 

§ 8118. Continuation of payø; election to use annual or sick 

leave¿ 

(a) * * * 

(b) øContinuation¿ Except as provided under subsection (d)(2), 

continuation of pay under this subchapter shall be furnished— 

(1) without a break in time, except as provided under øsection 8117(b)¿ section 8117, unless controverted under regulations of the Secretary; 

(2) * * * 

(3) under accounting procedures and such other regulations 

as the Secretary may require. 

ø(c) An employee may use annual or sick leave to his credit at 

the time the disability begins, but his compensation for disability 

does not begin, and the time periods specified by section 8117 of 

this title do not begin to run, until termination of pay as set forth 

in subsections (a) and (b) or the use of annual or sick leave ends.¿ 

ø(d)¿ (c) If a claim under øsubsection (a)¿ subsection (a) or (d) 

is denied by the Secretary, payments under this section shall, at 

the option of the employee, be charged to sick or annual leave or 

shall be deemed overpayments of pay within the meaning of section 

5584 of title 5, United States Code. 

(d) CONTINUATION OF PAY IN A ZONE OF ARMED CONFLICT.— 


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(1) IN GENERAL.—Notwithstanding subsection (a), the United 

States shall authorize the continuation of pay of an employee 

described in subparagraph (A), (C), (D), or (F) of section 

8101(1), who— 

(A) files a claim for a period of wage loss due to an injury in performance of duty in a zone of armed conflict (as 

determined by the Secretary of Labor under paragraph (3)); 

and 

(B) files the claim for such wage loss benefit with the immediate superior of the employee not later than 45 days 

after the later of— 

(i) the termination of the assignment of the employee 

to the zone of armed conflict; or 

(ii) the return of the employee to the United States. 

(2) CONTINUATION OF PAY.—Notwithstanding subsection (b), 

continuation of pay under this subsection shall be furnished for 

a period not to exceed 135 days without any break in time or 

waiting period, unless controverted under regulations prescribed by the Secretary of Labor. 

(3) DETERMINATION OF ZONES OF ARMED CONFLICT.—For purposes of this subsection, the Secretary of Labor, in consultation 

with the Secretary of State and the Secretary of Defense, shall 

determine whether a foreign country or other foreign geographic 

area outside of the United States (as defined in section 

202(a)(7) of the State Department Basic Authorities Act of 1956 

(22 U.S.C. 4302(a)(7)) is a zone of armed conflict based on 

whether— 

(A) the Armed Forces of the United States are involved 

in hostilities in the country or area; 

(B) the incidence of civil insurrection, civil war, terrorism, or wartime conditions threatens physical harm or 

imminent danger to the health or well-being of United 

States civilian employees in the country or area; 

(C) the country or area has been designated a combat 

zone by the President under section 112(c) of the Internal 

Revenue Code of 1986; 

(D) a contingency operation involving combat operations 

directly affects civilian employees in the country or area; or 

(E) there exist other relevant conditions and factors. 

* * * * * * * 

§ 8123. Physical examinations 

(a) * * * 

* * * * * * * 

(e) DISABILITY MANAGEMENT REVIEW.— 

(1) DEFINITIONS.—In this subsection— 

(A) the term ‘‘covered employee’’ means an employee who 

is in continuous receipt of compensation for total disability 

under section 8105 for a period of not less than 6 months; 

and 

(B) the term ‘‘disability management review process’’ 

means the disability management review process established under paragraph (2)(A). 


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(2) ESTABLISHMENT.—The Secretary of Labor shall— 

(A) establish a disability management review process for 

the purpose of certifying and monitoring the disability status and extent of injury of each covered employee; and 

(B) promulgate regulations for the administration of the 

disability management review process. 

(3) PHYSICAL EXAMINATIONS REQUIRED.—Under the disability 

management review process, the Secretary of Labor shall periodically require covered employees to submit to physical examinations 

under subsection (a) by physicians selected by the Secretary. A physician conducting a physical examination of a covered employee 

shall submit to the Secretary a report regarding the nature and extent of the injury to and disability of the covered employee. 

(4) FREQUENCY.— 

(A) IN GENERAL.—The regulations promulgated under 

paragraph (2)(B) shall specify the process and criteria for 

determining when and how frequently a physical examination should be conducted for a covered employee. 

(B) MINIMUM FREQUENCY.— 

(i) INITIAL.—An initial physical examination shall be 

conducted not more than a brief period after the date 

on which a covered employee has been in continuous 

receipt of compensation for total disability under section 8015 for 6 months. 

(ii) SUBSEQUENT EXAMINATIONS.—After the initial 

physical examination, physical examinations of a covered employee shall be conducted not less than once 

every 3 years. 

(5) EMPLOYING AGENCY OR INSTRUMENTALITY REQUESTS.— 

(A) IN GENERAL.—The agency or instrumentality employing an employee who has made a claim for compensation 

for total disability under section 8105 may at any time submit a request for the Secretary of Labor to promptly require 

the employee to submit to a physical examination under 

this subsection. 

(B) REQUESTING OFFICER.—A request under subparagraph (A) shall be made on behalf of an agency or instrumentality by— 

(i) the head of the agency or instrumentality; 

(ii) the Chief Human Capital Officer of the agency or 

instrumentality; or 

(iii) if the agency or instrumentality does not have a 

Chief Human Capital Officer, an officer with responsibilities similar to those of a Chief Human Capital Officer designated by the head of the agency or instrumentality to make requests under this paragraph. 

(C) INFORMATION.—A request under subparagraph (A) 

shall be in writing and accompanied by— 

(i) a certification by the officer making the request 

that the officer has reviewed the relevant material in 

the employee’s file; 

(ii) an explanation of why the officer has determined, 

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amination of the employee under this subsection is necessary; and 

(iii) copies of the materials relating to the employee that 

are relevant to the officer’s determination and request, unless the agency or instrumentality has a reasonable basis 

for not providing the materials. 

(D) EXAMINATION.—If the Secretary of Labor receives a 

request under this paragraph before an employee has undergone an initial physical examination under paragraph 

(4)(B)(i), the Secretary shall promptly require the physical 

examination of the employee. A physical examination under 

this subparagraph shall satisfy the requirement under 

paragraph (4)(B)(i) that an initial physical examination be 

conducted. 

(E) AFTER INITIAL EXAMINATION.— 

(i) IN GENERAL.—If the Secretary of Labor receives a 

request under this paragraph after an employee has 

undergone an initial physical examination under paragraph (4)(B)(i), the Secretary shall— 

(I) review the request and the information, explanation, and other materials submitted with the request; and 

(II) determine whether to require the physical examination of the employee who is the subject of the 

request. 

(ii) NOT GRANTED.—If the Secretary determines not 

to grant a request described in clause (i), the Secretary 

shall promptly notify the officer who made the request 

and provide an explanation of the reasons why the request was denied. 

(f) FIELD NURSES.— 

(1) DEFINITION.—In this subsection, the term ‘‘field nurse’’ 

means a registered nurse that assists the Secretary in the medical management of disability claims under this subchapter and 

provides claimants with assistance in coordinating medical 

care. 

(2) AUTHORIZATION.—The Secretary may use field nurses to 

coordinate medical services and vocational rehabilitation programs for injured employees under this subchapter. If an employee refuses to cooperate with a field nurse or obstructs a field 

nurse in the performance of duties under this subchapter, the 

right to compensation under this subchapter shall be suspended 

until the refusal or obstruction stops. 

* * * * * * * 

§ 8131. Subrogation of the United States 

(a) If an injury or death for which continuation of pay or compensation is payable under this subchapter is caused under circumstances creating a legal liability on a person other than the 

United States to pay damages, the Secretary of Labor may require 

the beneficiary to— 

* * * * * * * 


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(b) A beneficiary who refuses to assign or prosecute an action in 

his own name when required by the Secretary is not entitled to 

continuation of pay or compensation under this subchapter. 

(c) The Secretary may prosecute or compromise a cause of action 

assigned to the United States. When the Secretary realizes on the 

cause of action, he shall deduct therefrom and place to the credit 

of the Employees’ Compensation Fund the amount of continuation 

of pay or compensation already paid to the beneficiary and the expense of realization or collection. Any surplus shall be paid to the 

beneficiary and credited on future payments of continuation of pay 

or compensation payable for the same injury. However, the beneficiary is entitled to not less than one-fifth of the net amount of a 

settlement or recovery remaining after the expenses thereof have 

been deducted. 

* * * * * * * 

§ 8132. Adjustment after recovery from a third person 

If an injury or death for which continuation of pay or compensation is payable under this subchapter is caused under circumstances creating a legal liability in a person other than the 

United States to pay damages, and a beneficiary entitled to continuation of pay or compensation from the United States for that 

injury or death receives money or other property in satisfaction of 

that liability as the result of suit or settlement øby him or in his 

behalf¿ by the beneficiary or on behalf of the beneficiary, the beneficiary, after deducting therefrom the costs of suit and a reasonable 

attorney’s fee, shall refund to the United States the amount of continuation of pay and compensation paid by the United States and 

credit any surplus on future payments of øcompensation payable to 

him¿ continuation of pay or compensation payable to the beneficiary 

for the same injury. No court, insurer, attorney, or other person 

shall pay or distribute to the beneficiary or øhis designee¿ the designee of the beneficiary the proceeds of such suit or settlement without first satisfying or assuring satisfaction of the interest of the 

United States. The amount refunded to the United States shall be 

credited to the Employees’ Compensation Fund. øIf compensation 

has not been paid to the beneficiary, he shall credit the money or 

property on compensation payable to him by the United States¿ If 

continuation of pay or compensation has not been paid to the beneficiary, the money or property shall be credited against continuation 

of pay or compensation payable to the beneficiary by the United 

States for the same injury. However, the beneficiary is entitled to 

retain, as a minimum, at least one-fifth of the net amount of the 

money or other property remaining after the expenses of a suit or 

settlement have been deducted; and in addition to this minimum 

and at the time of distribution, an amount equivalent to a reasonable attorney’s fee proportionate to the refund to the United States. 

* * * * * * * 

§ 8133. Compensation in case of death 

(a) If death results from an injury sustained in the performance 

of duty, the United States shall pay a monthly compensation equal 


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to a percentage of the monthly pay of the deceased employee in accordance with the following schedule: 

(1) * * * 

(2) To the widow or widower, if there is a child, 45 percent 

and in addition 15 percent for each child not to exceed a total 

of 662⁄3 percent (except as provided in subsection (g)) for the 

widow or widower and children. 

(3) To the children, if there is no widow or widower, 40 percent for one child and 15 percent additional for each additional 

child not to exceed a total of ø75 percent¿ 662⁄3 percent (except 

as provided in subsection (g)), divided among the children 

share and share alike. 

* * * * * * * 

If there is a widow, widower, or child, so much of the percentages 

are payable as, when added to the total percentages payable to the 

widow, widower, and children, will not exceed a total of ø75 percent¿ 662⁄3 percent (except as provided in subsection (g)). 

(5) To the brothers, sisters, grandparents, and grandchildren, 

if there is no widow, widower, child, or dependent parent as 

follows: 

(A) * * * 

* * * * * * * 

If there is a widow, widower, or child, or dependent parent, so much of the percentages are payable as, when 

added to the total percentages payable to the widow, widower, children, and dependent parents, will not exceed a 

total of ø75 percent¿ 662⁄3 percent (except as provided in 

subsection (g)). 

* * * * * * * 

(e) In computing compensation under this section, the monthly 

pay is deemed not less than the minimum rate of basic pay for GS 

2. However, the total monthly compensation may not exceed— 

(1) * * * 

(2) ø75 percent¿ 662⁄3 percent (except as provided in subsection (g)) of the monthly pay of the maximum rate of basic 

pay for GS–15. 

(f) * * * 

(g) If the death occurred before the date of enactment of the Workers’ Compensation Reform Act of 2014, subsections (a) and (e) shall 

be applied by substituting ‘‘75 percent’’ for ‘‘662⁄3 percent’’ each place 

it appears. 

* * * * * * * 

§ 8134. Funeral expenses; transportation of body 

(a) If death results from an injury sustained in the performance 

of duty, the United States shall pay, to the personal representative 

of the deceased or otherwise, funeral and burial expenses not to exceed ø$800¿ $6,000, in the discretion of the Secretary of Labor. The 

maximum amount of compensation under this subsection shall be 

increased on March 1 of each year by the amount determined by the 

Secretary of Labor to represent the percent change in the price index 

published for December of the preceding year over the price index 


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published for the December of the year prior to the preceding year, 

adjusted to the nearest one-tenth of 1 percent. 

(b) * * * 

* * * * * * * 

§ 8139. Employees of the District of Columbia 

Compensation awarded under this subchapter to an employee of 

the government of the District of Columbia shall be paid in the 

manner provided by statute for the payment of the general expenses of the government of the District of Columbia. 

* * * * * * * 

§ 8141. Civil Air Patrol volunteers 

(a) * * * 

(b) In administering this subchapter for a member of the Civil 

Air Patrol covered by this section— 

(1) * * * 

(2) the percentages applicable to payments under section 

8133 of this title are— 

(A) * * * 

(B) 20 percent for section 8133(a)(3) of this title for one 

child and 10 percent additional for each additional child, 

but not to exceed a total of ø75 percent¿ 662⁄3 percent (except as provided in subsection (c)), if the member died fully 

or currently insured under subchapter II of chapter 7 of 

title 42; and 

* * * * * * * 

(c) If the death occurred before the date of enactment of the Workers’ Compensation Reform Act of 2014, subsection (b)(2)(B) shall be 

applied by substituting ‘‘75 percent’’ for ‘‘662⁄3 percent’’. 

ø(c)¿ (d) The Secretary of Labor or his designee may inform the 

Secretary of the Air Force or his designee when a claim is filed. 

The Secretary of the Air Force, on request of the Secretary of 

Labor, shall advise him of the facts concerning the injury and 

whether or not the member was rendering service, or engaged in 

travel to or from service, in performance or support of an operational mission of the Civil Air Patrol at the time of injury. This 

subsection does not dispense with the report of the immediate superior of the member required by section 8120 of this title, or other 

reports agreed on under that section. 

* * * * * * * 

§ 8147. Employees’ Compensation Fund 

(a) * * * 

* * * * * * * 

(d) Notwithstanding subsection (b), any benefits or other payments paid to or on behalf of an employee under this subchapter or 

any extension or application thereof for a recurrence of injury, consequential injury, aggravation of injury, or increase in percentage of 

impairment to a member for which compensation is provided under 

the schedule under section 8107 suffered in a permanent position 


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with an agency or instrumentality of the United States while the 

employment with the agency or instrumentality is covered under an 

assisted reemployment agreement entered into under section 8104(d) 

shall not be included in total cost of benefits and other payments 

in the statement provided to the agency or instrumentality under 

subsection (b) if the injury was originally incurred in a position not 

covered by an assisted reemployment agreement. 

* * * * * * * 

§ 8148. Forfeiture of benefits by convicted felons 

(a) Any individual convicted of a violation of section 1920 of title 

18, or any other Federal or State criminal statute relating to fraud 

in the application for or receipt of any benefit under this subchapter or subchapter III of this chapter, shall forfeit (as of the 

date of such conviction) any entitlement to any benefit such individual would otherwise be entitled to under this subchapter or subchapter III (5 USCS §§ 8101 et seq. or 8191 et seq.) for any injury 

occurring on or before the date of such conviction. Such forfeiture 

shall be in addition to any action the Secretary may take under 

øsection 8106¿ section 8106a or 8129. 

* * * * * * * 

§ 8153. Integrity and Compliance Program 

(a) DEFINITIONS.—In this section— 

(1) the term ‘‘FECA program’’ means the Federal Employees 

Compensation Program administered under this subchapter; 

(2) the term ‘‘Integrity and Compliance Program’’ means the 

Integrity and Compliance Program established under subsection (b); 

(3) the term ‘‘provider’’ means a provider of medical or other 

services under the FECA program; and 

(4) the term ‘‘Secretary’’ means the Secretary of Labor. 

(b) INTEGRITY AND COMPLIANCE PROGRAM.—Not later than 270 

days after the date of enactment of this section, the Secretary shall 

establish an Integrity and Compliance Program for the purpose of 

preventing, identifying, and recovering improper payments (including improper payments obtained by fraud) for the FECA program, 

which shall include— 

(1) procedures for identifying potentially improper payments 

(including improper payments obtained by fraud) before payment is made to claimants and providers, including, where appropriate, predictive analytics; 

(2) reviews after payment is made to identify potentially improper payments (including improper payments obtained by 

fraud) to claimants and providers; 

(3) on-going screening and verification procedures to ensure 

the continued eligibility of medical providers to provide services 

under the FECA program, including licensure, Federal disbarment, and the existence of relevant criminal convictions; 

(4) provision of appropriate information, education, and 

training to claimants and providers on requirements to ensure 

the integrity of the FECA program, including payments under 

the FECA program; 


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(5) appropriate controls and audits to ensure that providers 

adopt internal controls and procedures for compliance with requirements under the FECA program; 

(6) procedures to ensure— 

(A) initial and continuing eligibility of claimants for 

compensation, benefits, or services under the FECA program; and 

(B) ongoing verification of databases of information relating to claimants to ensure accuracy and completeness; and 

(7) appropriately sharing and accessing data and information 

with other agencies and instrumentalities of the United States, 

including the United States Postal Service. 

(c) INTERAGENCY COOPERATION ON ANTI-FRAUD EFFORTS.— 

(1) IN GENERAL.—In administering the FECA program, including the Integrity and Compliance Program, the Secretary 

shall cooperate with other agencies and instrumentalities of the 

United States (including the United States Postal Service) and 

the Inspectors General of such agencies and instrumentalities to 

prevent, identify, and recover improper payments (including improper payments obtained by fraud) under the FECA program. 

(2) TASK FORCE.— 

(A) IN GENERAL.—There is established a task force, which 

shall be known as the FECA Integrity and Compliance 

Task Force (in this paragraph referred to as the ‘‘Task 

Force’’). 

(B) MEMBERSHIP.—The members of the Task Force shall 

be— 

(i) the Secretary, who shall serve as the Chairperson 

of the Task Force; 

(ii) the Postmaster General, who shall serve as the 

Vice Chairperson of the Task Force; 

(iii) the Attorney General; 

(iv) the Director of the Office of Management and 

Budget; 

(v) the Inspector General of the Department of Labor; 

(vi) the Inspector General of the United States Postal 

Service; 

(vii) the Inspectors General of other appropriate 

agencies and instrumentalities of the United States 

that employ a significant number of individuals receiving compensation, benefits, or services under the FECA 

program, as determined by the Chairperson and Vice 

Chairperson of the Task Force; and 

(viii) other appropriate Federal officials, as determined by the Chairperson and Vice Chairperson of the 

Task Force. 

(C) DUTIES.—The Task Force shall— 

(i) set forth, in writing, a description of the respective 

roles and responsibilities in preventing, identifying, recovering, and prosecuting fraud under, and otherwise 

ensuring integrity and compliance of, the FECA program of— 


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(I) the Secretary (including subordinate officials 

such as the Director of the Office of Workers’ Compensation Programs); 

(II) the Inspector General of the Department of 

Labor; 

(III) the Inspectors General of agencies and instrumentalities of the United States that employ 

claimants under the FECA program; 

(IV) the Attorney General; and 

(V) any other relevant officials; 

(ii) develop procedures for sharing information of 

possible fraud under the FECA program or other intentional misstatements by claimants or providers under 

the FECA program, including procedures addressing— 

(I) notification of appropriate officials of the Department of Labor of potential fraud or intentional 

misstatements, including provision of supporting 

information; 

(II ) timely and appropriate response by officials 

of the Department of Labor to notifications described in subclause (I); 

(III) the inclusion of information and evidence 

relating to fraud and other intentional 

misstatements in criminal, civil, and administrative proceedings relating to the provision of compensation, benefits, or medical services (including 

payments to providers) under the FECA program; 

(IV) the coordination of criminal investigations 

with the administration of the FECA program; 

and 

(V) the protection of information relating to an 

investigation of possible fraud under the FECA 

program from potential disclosure, including requirements that enable investigative files to be appropriately separated from case management files; 

(iii) not later than 1 year after the date of enactment 

of this section, submit to the Committee on Homeland 

Security and Governmental Affairs of the Senate and 

the Committee on Oversight and Government Reform 

and the Committee on Education and the Workforce of 

the House of Representatives a report that includes the 

description and procedures required under clauses (i) 

and (ii). 

(d) IMPROVEMENTS TO ACCESS OF FEDERAL DATABASES.— 

(1) IN GENERAL.—The Secretary, the Postmaster General, the 

Inspector General of the United States Postal Service, and the 

Inspector General of the Department of Labor shall have access 

to and make use of the agency databases described in this subsection in order to improve compliance with the requirements 

under and the integrity of the FECA program. 

(2) SOCIAL SECURITY EARNINGS INFORMATION.— (A) IN GENERAL.—Notwithstanding section 552a or any 

other provision of Federal or State law, upon written request, the Commissioner of Social Security shall make 


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available to the Secretary, the Inspector General of the Department of Labor, the Postmaster General, and the Inspector General of the United States Postal Service the Social 

Security earnings information of a living or deceased employee required by the Secretary to carry out this subchapter. 

(B) PROCEDURES.—The Secretary shall establish procedures for correlating the identity and status of recipients of 

compensation, benefits, or services under this subchapter 

with Social Security earnings information described in subparagraph (A). 

(3) OFFICE OF PERSONNEL MANAGEMENT FEDERAL RETIREE

DATABASE.—Notwithstanding section 552a or any other provision of Federal or State law, upon written request, the Director 

of the Office of Personnel Management shall make available to 

the Secretary, the Inspector General of the Department of Labor, 

the Postmaster General, and the Inspector General of the 

United States Postal Service the information in the databases 

of Federal employees and retirees maintained by the Director. 

(4) DEPARTMENT OF VETERANS AFFAIRS BENEFICIARIES DATA- BASE.—Notwithstanding section 552a or any other provision of 

Federal or State law, upon written request, the Secretary of Veterans Affairs shall make available to the Secretary, the Inspector General of the Department of Labor, the Postmaster General, and the Inspector General of the United States Postal 

Service the information in the database of disabled individuals 

maintained by the Secretary of Veterans Affairs. 

(5) NATIONAL DIRECTORY OF NEW HIRES.—Notwithstanding 

section 552a, section 453(j) of the Social Security Act (42 U.S.C. 

653(j)), or any other provision of Federal or State law, upon 

written request, the Secretary of Health and Human Services 

shall make available to the Secretary, the Inspector General of 

the Department of Labor, the Postmaster General, the Inspector 

General of the United States Postal Service, and the Comptroller General of the United States the information in the National Directory of New Hires. The Comptroller General may 

obtain information from the National Directory of New Hires 

under this paragraph for any audit, evaluation, or investigation, including any audit, evaluation, or investigation relating 

to program integrity. 

(6) PROVISION.—Information requested under this subsection 

shall be provided— 

(A) in a timely manner; 

(B) at a reasonable cost to the Secretary, the Inspector 

General of the Department of Labor, the Postmaster General, the Inspector General of the United States Postal 

Service, or the Comptroller General of the United States; 

and 

(C) in the manner, frequency, and form reasonably specified by the officer making the request, which, upon request, 

shall include electronic form. 

(7) ASSESSMENT OF DATA COST-EFFECTIVENESS.— (A) IN GENERAL.—The Secretary shall consider and assess procedures for correlating the identity and status of reVerDate Mar 15 2010 02:45 Aug 09, 2014 Jkt 039010 PO 00000 Frm 00092 Fmt 6604 Sfmt 6603 E:\HR\OC\SR237.XXX SR237

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cipients of compensation, benefits, or services under this 

subchapter with information relating to employees, retirees, 

and individuals described in paragraphs (3), (4), and (5). 

(B) REPORT.—Not later than 1 year after the date of enactment of this section, the Secretary shall submit to the 

Committee on Homeland Security and Governmental Affairs of the Senate and the Committee on Oversight and 

Government Reform and the Committee on Education and 

the Workforce of the House of Representatives a report on 

the cost-effectiveness of the use of the databases described 

in paragraphs (3), (4), and (5) for program compliance and 

integrity. The report required under this subparagraph 

may be included as part of the report required under subsection (f). 

(8) UNITED STATES POSTAL SERVICE FECA ENROLLEE DATABASE.—Not later than 180 days after the date of enactment of 

this section, in order to track, verify, and communicate with the 

Secretary and other relevant entities, the Postmaster General 

shall establish an electronic database of information relating to 

employees of the United States Postal Service who have applied 

for or are receiving compensation, benefits, or services under 

this subchapter. 

(e) GENERAL PROTOCOLS AND SECURITY.— 

(1) ESTABLISHMENT.— 

(A) IN GENERAL.—In order to ensure strong information 

security and privacy standards, the Secretary, the Postmaster General, the Inspector General of the Department of 

Labor, and the Inspector General of the United States Postal Service shall establish protocols for the secure transfer 

and storage of any information provided to an individual 

or entity under this section. 

(B) CONSIDERATIONS.—In establishing protocols under 

subparagraph (A), the Secretary, the Postmaster General, 

the Inspector General of the Department of Labor, and the 

Inspector General of the United States Postal Service shall 

consider any recommendations submitted to the Secretary 

by the Inspector General of the Department of Health and 

Human Services with respect to the secure transfer and 

storage of information, and to comply with privacy laws 

and best practices. 

(C) FRAUD CASE PROTECTION.—The Secretary, the Postmaster General, the Inspector General of the Department of 

Labor, and the Inspector General of the United States Postal Service shall establish protocols and procedures to enable information and materials relating to an active investigation of possible fraud relating to the FECA program to 

be appropriately kept separate from the files for employees 

relating to the provision of compensation, benefits, or services under the FECA program. 

(2) COMPLIANCE.—The Secretary, the Postmaster General, the 

Inspector General of the Department of Labor, and the Inspector 

General of the United States Postal Service shall ensure that 

any information provided to an individual or entity under this 


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72 This amendment to 5 U.S.C. 8337 is made by section 509(b) of the bill. 73 These amendments to 5 U.S.C. 8348 are made by section 101(b)(2)(B) of the bill. 

section is provided in accordance with protocols established 

under paragraph (1). 

(f) REPORT.—Not later than 1 year after the date of enactment of 

this section, and annually thereafter for 5 years, the Secretary shall 

submit a report on the activities of the Secretary under this section, 

including implementation of the Integrity and Compliance Program, 

to— 

(1) the Committee on Homeland Security and Governmental 

Affairs of the Senate; and 

(2) the Committee on Oversight and Government Reform and 

the Committee on Education and the Workforce of the House of 

Representatives. 

(g) GAO REVIEW.—The Comptroller General of the United States 

shall— 

(1) conduct periodic reviews of the Integrity and Compliance 

Program; and 

(2) submit reports on the results of the reviews under paragraph (1) to the Committee on Homeland Security and Governmental Affairs of the Senate and the Committee on Oversight 

and Government Reform and the Committee on Education and 

the Workforce of the House of Representatives not later than— 

(A) 2 years after the date of enactment of this section; 

and 

(B) 3 years after submission of the report under subparagraph (A). 

* * * * * * * 

CHAPTER 83—RETIREMENT 

* * * * * * * 

Subchapter III—Civil Service Retirement 

* * * * * * * 

§ 8337. Disability retirement 72

(a) * * * 

* * * * * * * 

(f)(1) * * * 

* * * * * * * 

(3) øParagraphs¿ Except as provided under chapter 81, paragraphs (1) and (2) do not bar the right of a claimant to the greater 

benefit conferred by either this subchapter or subchapter I of chapter 81. 

* * * * * * * 

§ 8348. Civil Service Retirement and Disability Fund 73

* * * * * * * 

(h)(1) * * * 

* * * * * * * 


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93 

(2)(A) * * * 

* * * * * * * 

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

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

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

remain in the Fund until distribution is authorized under subparagraph (C). Beginning June 15, 2017, if the result is a supplemental 

liability, the Office shall establish an amortization schedule, including a series of annual installments commencing on September 30 

of the subsequent fiscal year, which provides for the liquidation of 

such liability by September 30, 2043.¿ 

(B)(i)(I) Not later than the date on which the Office determines 

the normal-cost percentage under section 101(a)(2) of the Postal Reform Act of 2014, the Office shall redetermine the Postal surplus or 

supplemental liability as of the close of the fiscal year ending on 

September 30, 2013, in accordance with the requirements under 

paragraph (4). 

(II) If the result of the redetermination under subclause (I) is a 

surplus, that amount shall remain in the Fund until distribution is 

authorized under subparagraph (C). 

(III) If the result of the redetermination under subclause (I) is a 

supplemental liability, the Office shall establish an amortization 

schedule, including a series of annual installments commencing on 

September 30, 2015, which provides for the liquidation of such liability by September 30, 2054. 

(ii)(I) The Office shall redetermine the Postal surplus or supplemental liability as of the close of each fiscal year beginning after 

September 30, 2013, in accordance with the requirements under 

paragraph (4). 

(II) If the result of the redetermination under subclause (I) is a 

surplus, that amount shall remain in the Fund until distribution is 

authorized under subparagraph (C). 

(III) On and after June 15, 2015, if the result of the redetermination under subclause (I) is a supplemental liability, the Office shall 

establish an amortization schedule, including a series of annual installments commencing on September 30 of the subsequent fiscal 

year, which provides for the liquidation of such liability by September 30, 2054. 

* * * * * * * 

(3) * * * 

* * * * * * * 

(4)(A) For the purpose of carrying out paragraphs (1) and (2), the 

Office shall, consistent with section 8423(a)(5)(B), use— 

(i) demographic factors specific to current and former employees of the United States Postal Service; and 

(ii) appropriate economic assumptions, as determined by the 

Office, regarding wage and salary trends specific to the employees. 


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94 

74These amendments to 5 U.S.C. § 8423 are made by section 101 of the bill. 

(B) The United States Postal Service shall provide any data or 

projections the Office requires in order to carry out paragraphs (1) 

and (2) consistent with subparagraph (A) of this paragraph. 

* * * * * * * 

CHAPTER 84—FEDERAL EMPLOYEES RETIREMENT 

SYSTEM 

* * * * * * * 

Sec. 

8401. Definitions 

* * * * * * * 

8425. Mandatory separation. 

8426. Postal Service retirement 

* * * * * * * 

Subchapter II—Basic Annuity 

* * * * * * * 

§ 8423. Government contributions 74

(a)(1) Each employing agency other than the United States Postal 

Service having any employees or Members subject to section 

8422(a) shall contribute to the Fund an amount equal to the sum 

of— 

* * * * * * * 

(5)(A) The United States Postal Service shall contribute to the 

Fund an amount equal to the product of— 

(i) the normal-cost percentage, as determined for employees of 

the United States Postal Service under subparagraph (B), multiplied by 

(ii) the aggregate amount of basic pay payable by the United 

States Postal Service, for the period involved, to employees of 

the United States Postal Service. 

(B)(i) In determining the normal-cost percentage for employees of 

the United States Postal Service, the Office shall use— 

(I) demographic factors specific to the employees; and 

(II) appropriate economic assumptions, as determined by the 

Office, regarding wage and salary trends specific to the employees. 

(ii) The United States Postal Service shall provide any data or 

projections the Office requires in order to determine the normal-cost 

percentage for employees of the United States Postal Service consistent with clause (i). 

(iii) Notwithstanding paragraph (2), in determining the normalcost percentage to be applied for employees of the United States 

Postal Service, the Office shall take into account amounts provided 

under section 8422 and amounts provided under section 

1005(g)(3)(A)(i) of title 39. 

(iv) The Office shall review the determination of the normal-cost 

percentage for employees of the United States Postal Service and 

make such adjustments as the Office determines are necessary— 


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95 

(I) upon request of the United States Postal Service, but no 

more frequently than once each fiscal year; and 

(II) at any additional times, as the Office considers appropriate. 

(b)(1) * * * 

* * * * * * * 

(5)(A) In this paragraph, the term ‘‘postal funding surplus’’ means 

the amount by which the amount of supplemental liability computed 

under paragraph (1)(B) is less than zero. 

(B) After the date on which the Office determines under paragraph (7)(C) the amount of supplemental liability computed under 

paragraph (1)(B) as of the close of the fiscal year ending on September 30, 2013, not later than the date on which the Postmaster 

General makes a request under subparagraph (C) of this paragraph, 

and if the amount determined under paragraph (7)(C) is less than 

zero, the Postmaster General may request that some or all of the 

amount of the postal funding surplus, not to exceed $6,000,000,000, 

be returned to the United States Postal Service, and not later than 

10 days after the request, the Director shall transfer to the United 

States Postal Service from the Fund an amount equal to the portion 

of the postal funding surplus requested, for use in accordance with 

subparagraph (E)(i). 

(C)(i) Subject to clause (ii), after the date on which the Office computes the amount of supplemental liability under paragraph (1)(B) 

as of the close of the fiscal year ending on September 30, 2014, and 

if such amount is less than zero, the Postmaster General may request that some of the amount of the postal funding surplus, not to 

exceed 2⁄3 of the amount, be returned to the United States Postal 

Service, and not later than 10 days after the request, the Director 

shall transfer to the United States Postal Service from the Fund an 

amount equal to the portion of the postal funding surplus requested, 

for use in accordance with subparagraph (E)(ii). 

(ii) If any amount requested by the Postmaster General under 

subparagraph (B) is not transferred from the Fund as of the close 

of the fiscal year ending on September 30, 2014, for purposes of this 

subparagraph, the Office shall recompute the amount of supplemental liability computed under paragraph (1)(B) as of the close of 

that fiscal year by subtracting from the balance of the Fund the 

amount requested under subparagraph (B) of this paragraph. 

(D) If the amount of supplemental liability computed under paragraph (1)(B) as of the close of any fiscal year commencing after September 30, 2014, is less than zero, the Office shall establish an amortization schedule, including a series of equal annual installments 

that— 

(i) provide for the liquidation of the postal funding surplus 

in 40 years, commencing on September 30 of the subsequent fiscal year; and 

(ii) shall be transferred to the United States Postal Service 

from the Fund for use in accordance with subparagraph (E)(ii). 

(E)(i) The United States Postal Service may use an amount transferred under subparagraph (B) only for the purpose of repaying any 

obligation issued under section 2005(a) of title 39. 

(ii) The United States Postal Service may use an amount transferred under subparagraph (C) or (D) only— 


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96 

75This new 5 U.S.C. § 8426 is added by section 102 of the bill. 

(I) by directing that some or all of the amount be transferred 

to the Postal Service Retiree Health Benefits Fund for the purpose of reducing any Postal Service actuarial liability referred 

to under section 8909a; 

(II) by directing that some or all of the amount be transferred 

to the Civil Service Retirement and Disability Fund for the purpose of reducing any supplemental liability under section 

8348(h); 

(III) by directing that some or all of the amount be transferred to the Civil Service Retirement and Disability Fund for 

the purpose of reducing any supplemental liability under section 8423(b)(1)(B); 

(IV) by directing that some or all of the amount be transferred to the Postal Service Workers Compensation Accrued Liability Fund for the purpose of reducing any Postal Service actuarial liability under section 2012 of title 39; or 

(V) as described in clause (i), if none of the liabilities referred 

to in subclause (I), (II), (III), or (IV) remain unpaid. 

ø(5)¿(6) øFor the purpose¿ Subject to paragraph (7), for the purpose of carrying out paragraph (1) with respect to any fiscal year, 

the Office may— 

* * * * * * * 

(7)(A) For the purpose of carrying out paragraph (1)(B) with respect to the fiscal year ending September 30, 2013, and each fiscal 

year thereafter, the Office shall, consistent with subsection (a)(5)(B), 

use— 

(i) demographic factors specific to current and former employees of the United States Postal Service; and 

(ii) appropriate economic assumptions, as determined by the 

Office, regarding wage and salary trends specific to current employees of the United States Postal Service. 

(B) The United States Postal Service shall provide any data or 

projections the Office requires in order to carry out paragraph (1)(B) 

consistent with subparagraph (A) of this paragraph. 

(C) Not later than 180 days after the later of the date on which 

the Office receives the appropriate data or projections from the 

United States Postal Service under subparagraph (B) or the date of 

enactment of the Postal Reform Act of 2014, the Office shall determine or redetermine whether there is a postal funding surplus (as 

defined in paragraph (5)) or a supplemental liability described in 

paragraph (1)(B) (and the amount thereof) as of the close of the fiscal year ending on September 30, 2013, in accordance with the requirements under subparagraph (A) of this paragraph. 

* * * * * * * 

§ 8426. Postal Service retirement 75

(1) The application of sections 8422 and 8423 of this title 

and subchapters III and VII of this chapter with respect to an 

officer or employee of the Postal Service may be modified as 

provided under section 1005(g) of title 39. 


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76 This amendment to 5 U.S.C. § 8432 is made by section 102 of the bill. 77This amendment to 5 U.S.C. § 8464a is made by section 509(b) of the bill. 

Subchapter III—Thrift Savings Plan 

* * * * * * * 

§ 8432. Contributions 76

(a) * * * 

* * * * * * * 

(b)(1) * * * 

* * * * * * * 

(2)(A) * * * 

* * * * * * * 

(D)(i) Except as provided in øclause (ii)¿ clauses (ii) and (iii), for 

purposes of this paragraph, the term ‘‘eligible individual’’ means 

any individual who, after any regulations under subparagraph (A) 

first take effect, is appointed, transferred, or reappointed to a position in which that individual becomes eligible to contribute to the 

Thrift Savings Fund. 

(ii) Members of the uniformed services shall not be eligible individuals for purposes of this paragraph. 

(iii) An individual for whom a collective bargaining agreement 

authorized under section 1005(g)(4) of title 39 establishes whether 

the Postal Service shall make contributions to the Thrift Savings 

Fund for the benefit of the individual and the amount of the contributions shall not be an eligible individual for purposes of this 

paragraph. 

* * * * * * * 

Subchapter VI —General and Administration Provisions 

* * * * * * * 

§ 8464a. Relationship between annuity and workers compensation77

(a)(1) * * * 

* * * * * * * 

(3) øParagraphs¿ Except as provided under chapter 81, paragraphs (1) and (2) do not bar the right of a claimant to the greater 

benefit conferred by either this chapter or subchapter I of chapter 

81. 

* * * * * * * 

CHAPTER 89—HEALTH INSURANCE 

Sec. 

8901. Definitions 

* * * * * * * 

8903b. Authority to readmit an employee organization plan. 

8903c. Postal Service Health Benefits Program. 

* * * * * * * 


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78 This amendment to 5 U.S.C. § 8903 is made by section 104(a)(2)(A) of the bill. 79 This new section 5 U.S.C. § 8903c is added by section 104(a)(1) of the bill. 

§ 8903. Health Benefits Plans78

The Office of Personnel Management may contract for or approve 

the following health benefits plans: 

(1) SERVICE BENEFIT PLAN.—One Government-wide plan, 

which may be underwritten by participating affiliates licensed 

in any number of States, offering øtwo levels of benefits¿ 2 levels of benefits for enrollees under this chapter generally and 2 

levels of benefits for enrollees under the Postal Service Health 

Benefits Program established under section 8903c, under which 

payment is made by a carrier under contracts with physicians, 

hospitals, or other providers of health services for benefits of 

the types described by section 8904(1) of this title given to employees, annuitants, members of their families, former spouses, 

or persons having continued coverage under section 8905a of 

this title, or, under certain conditions, payment is made by a 

carrier to the employee, annuitant, family member, former 

spouse, or person having continued coverage under section 

8905a of this title. 

* * * * * * * 

§ 8903c. Postal Service Health Benefits Program79

(a) DEFINITIONS.—In this section— 

(1) the term ‘‘initial participating carrier’’ means a carrier 

that enters into a contract with the Office to participate in the 

Postal Service Health Benefits Program during the contract 

year beginning in January 2016; 

(2) the term ‘‘Medicare eligible individual’’ means an individual who— 

(A) is entitled to Medicare part A, but excluding an individual who is eligible to enroll under such part under section 1818 of the Social Security Act (42 U.S.C. 1395i–2); 

and 

(B) is eligible to enroll in Medicare part B; 

(3) the term ‘‘Medicare part A’’ means the Medicare program 

for hospital insurance benefits under part A of title XVIII of the 

Social Security Act (42 U.S.C. 1395c et seq.); 

(4) the term ‘‘Medicare part B’’ means the Medicare program 

for supplementary medical insurance benefits under part B of 

title XVIII of the Social Security Act (42 U.S.C. 1395j et seq.); 

(5) the term ‘‘Medicare part D’’ means the Medicare insurance 

program established under part D of title XVIII of the Social 

Security Act (42 U.S.C. 1395w–101 et seq.); 

(6) the term ‘‘Office’’ means the Office of Personnel Management; 

(7) the term ‘‘Postal Service’’ means the United States Postal 

Service; 

(8) the term ‘‘Postal Service annuitant’’ means an annuitant 

enrolled in a health benefits plan under this chapter whose 

Government contribution is paid by the Postal Service or the 

Postal Service Retiree Health Benefits Fund under section 

8906(g)(2); 


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(9) the term ‘‘Postal Service employee’’ means an employee of 

the Postal Service enrolled in a health benefits plan under this 

chapter; 

(10) the term ‘‘Postal Service Health Benefits Program’’ means 

the program of health benefits plans established under subsection (c); 

(11) the term ‘‘Postal Service Medicare eligible annuitant’’ 

means an individual who— 

(A) is a Postal Service annuitant; and 

(B) is a Medicare eligible individual; 

(12) the term ‘‘PSHBP plan’’ means a health benefits plan offered under the Postal Service Health Benefits Program; and 

(13) the term ‘‘qualified carrier’’ means a carrier for which 

the total enrollment in the plans provided under this chapter 

includes, in the contract year beginning in January 2015, 5,000 

or more enrollees who are— 

(A) Postal Service employees; or 

(B) Postal Service annuitants. 

(b) APPLICATION OF SECTION.—The requirements under this section shall— 

(1) apply to the contract year beginning in January 2016, and 

each contract year thereafter; and 

(2) supersede other provisions of this chapter to the extent of 

any specific inconsistency, as determined by the Office. 

(c) ESTABLISHMENT OF THE POSTAL SERVICE HEALTH BENEFITS

PROGRAM.— (1) IN GENERAL.—The Office shall establish the Postal Service 

Health Benefits Program, which shall— 

(A) consist of health benefit plans offered under this 

chapter; 

(B) include plans offered by— 

(i) each qualified carrier; and 

(ii) any other carrier determined appropriate by the 

Office; 

(C) be available for participation by all Postal Service 

employees, in accordance with subsection (d); 

(D) be available for participation by all Postal Service 

annuitants, in accordance with subsection (d); 

(E) not be available for participation by an individual 

who is not a Postal Service employee or Postal Service annuitant (except as a family member of such an employee or 

annuitant); and 

(F) be implemented and administered by the Office. 

(2) SEPARATE POSTAL SERVICE RISK POOL.—The Office shall 

ensure that each PSHBP plan includes rates, one for enrollment 

as an individual, one for enrollment for self plus one, and one 

for enrollment for self and family within each option in the 

PSHBP plan, that reasonably and equitably reflect the cost of 

benefits provided to a risk pool consisting solely of Postal Service employees and Postal Service annuitants (and family members of such employees and annuitants), taking into specific account the reduction in benefits cost for the PSHBP plan due to 

the Medicare enrollment requirements under subsection (e) and 

any savings or subsidies resulting from subsection (f). 


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(3) ACTUARIALLY EQUIVALENT COVERAGE.—The Office shall 

ensure that each carrier participating in the Postal Service 

Health Benefits Program provides coverage under the PSHBP 

plans offered by the carrier that is actuarially equivalent, as determined by the Director of the Office, to the coverage that the 

carrier provides under the health benefits plans offered by the 

carrier under the Federal Employee Health Benefits Program 

that are not PSHBP plans. 

(d) ELECTION OF COVERAGE.— 

(1) IN GENERAL.—Except as provided in paragraphs (2) and 

(3), each Postal Service employee and Postal Service annuitant 

who elects to receive health benefits coverage under this chapter— 

(A) shall be subject to the requirements under this section; and 

(B) may only enroll in a PSHBP plan. 

(2) ANNUITANTS.—A Postal Service annuitant shall not be 

subject to this section if the Postal Service annuitant— 

(A) is enrolled in a health benefits plan under this chapter for the contract year beginning in January 2015 that is 

not a health benefits plan offered by an initial participating 

carrier, unless the Postal Service annuitant voluntarily enrolls in a PSHBP plan; or 

(B) resides in a geographic area for which there is not a 

PSHBP plan in which the Postal Service annuitant may 

enroll. 

(3) EMPLOYEES.—A Postal Service employee who is enrolled 

in a health benefits plan under this chapter for the contract 

year beginning in January 2015 that is not a health benefits 

plan offered by an initial participating carrier shall not be subject to the requirements under this section, except that— 

(A) if the Postal Service employee changes enrollment to 

a different health benefits plan under this chapter after the 

start of the contract year beginning in January 2016, the 

Postal Service employee may only enroll in a PSHBP plan; 

and 

(B) upon becoming a Postal Service annuitant, if the 

Postal Service employee elects to continue coverage under 

this chapter, the Postal Service employee shall enroll in a 

PSHBP plan during the open season that is— 

(i) being held when the Postal Service employee becomes a Postal Service annuitant; or 

(ii) if the date on which the Postal Service employee 

becomes a Postal Service annuitant falls outside of an 

open season, the first open season following that date. 

(e) REQUIREMENT OF MEDICARE ENROLLMENT.— 

(1) POSTAL SERVICE MEDICARE ELIGIBLE ANNUITANTS.—A 

Postal Service Medicare eligible annuitant subject to this section may not continue coverage under the Postal Service Health 

Benefits Program unless the Postal Service Medicare eligible 

annuitant enrolls in Medicare part A, Medicare part B, and 

Medicare part D (as part of a prescription drug plan described 

in subsection (f)). 


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(2) MEDICARE ELIGIBLE FAMILY MEMBERS.—If a family member of a Postal Service annuitant who is subject to this section 

is a Medicare eligible individual, the family member may not 

be covered under the Postal Service Health Benefits Program as 

a family member of the Postal Service annuitant unless the 

family member enrolls in Medicare part A, Medicare part B, 

and Medicare part D (as part of a prescription drug plan described in subsection (f)). 

(f) MEDICARE PART D PRESCRIPTION DRUG BENEFITS.—The 

Office shall require each PSHBP plan to provide prescription 

drug benefits for Postal Service annuitants and family members 

who are eligible for Medicare part D through a prescription 

drug plan offered under a waiver under section 1860D—22 of 

the Social Security Act (42 U.S.C. 1395w—132). 

(g) POSTAL SERVICE CONTRIBUTION.— 

(1) IN GENERAL.—Subject to subsection (i), for purposes of applying section 8906(b) to the Postal Service, the weighted average shall be calculated in accordance with paragraph (2). 

(2) WEIGHTED AVERAGE CALCULATION.—Not later than October 1 of each year, the Office shall determine the weighted average of the rates established pursuant to subsection (c)(2) for 

PSHBP plans that will be in effect during the following contract year with respect to— 

(A) enrollments for self only; 

(B) enrollments for self plus one; and 

(C) enrollments for self and family. 

(h) RESERVES.— 

(1) SEPARATE RESERVES.— 

(A) IN GENERAL.—The Office shall ensure that each 

PSHBP plan maintains separate reserves (including a separate contingency reserve) with respect to the enrollees in 

the PSHBP plan in accordance with section 8909. 

(B) REFERENCES.—For purposes of the Postal Service 

Health Benefits Program, each reference to ’’the Government’’ in section 8909 shall be deemed to be a reference to 

the Postal Service. 

(C) AMOUNTS TO BE CREDITED.—The reserves (including 

the separate contingency reserve) maintained by each 

PSHBP plan shall be credited with a proportionate amount 

of the funds in the existing reserves for health benefits 

plans offered by an initial participating carrier. 

(2) DISCONTINUATION OF PSHBP PLAN.—In applying section 

8909(e) relating to a PSHBP plan that is discontinued, the Office shall credit the separate Postal Service contingency reserve 

maintained under paragraph (1) for that plan only to the separate Postal Service contingency reserves of the PSHBP plans 

continuing under this chapter. 

(i) NO EFFECT ON EXISTING LAW.—Nothing in this section shall 

be construed as affecting section 1005(f) of title 39 regarding variations, additions, or substitutions to the provisions of this chapter. 

* * * * * * * 


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80 This amendment to 5 U.S.C. § 8906 is made by section 103(a) of the bill. 81 These amendments to 5 U.S.C. § 8909a are made by section 103(b) and (d) of the bill. 82 

These amendments to the Inspector General Act of 1978 are made by section 406 of the bill. 

§ 8906. Contribution80

(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 

[through September 30, 2016, be paid by the United States Postal 

Service, and thereafter shall] after the date of enactment of the 

Postal Reform Act of 2014 be paid first from the Postal Service Retiree Health Benefits Fund up to the amount contained in the 

Fund, with any remaining amount paid by the United States Postal 

Service. 

* * * * * * * 

§ 8909a. Postal Service Retiree Health [Benefit] Benefits 

Fund 81

(a) * * * 

* * * * * * * 

(d)(1) * * * 

ø(2)(A) Not later than June 30, 2007, the Office shall compute, 

and by June 30 of each succeeding year, the Office shall recompute 

the difference between— 

ø(i) the net present value of the excess of future payments 

required under section 8906(g)(2)(A) for current and future 

United States Postal Service annuitants as of the end of the 

fiscal year ending on September 30 of that year; and 

ø(ii)(I) the value of the assets of the Postal Retiree Health 

Benefits Fund as of the end of the fiscal year ending on September 30 of that year; and 

ø(II) the net present value computed under paragraph (1). 

ø(B) Not later than June 30, 2017, the Office shall compute, and 

by June 30 of each succeeding year shall recompute, a schedule including a series of annual installments which provide for the liquidation of any liability or surplus by September 30, 2056, or within 15 years, whichever is later, of the net present value determined 

under subparagraph (A), including interest at the rate used in that 

computation.¿ 

(2)(A) Not later than June 30, 2016, the Office shall compute, and 

by June 30 of each succeeding year, the Office shall recompute, a 

schedule including a series of annual installments which provide 

for the liquidation of the amount described under subparagraph (B) 

(regardless of whether the amount is a liability or surplus) by September 30, 2052, or within 15 years, whichever is later, including 

interest at the rate used in the computations under this subsection. 


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(B) The amount described in this subparagraph is the amount, as 

of the date on which the applicable computation or recomputation 

under subparagraph (A) is made, that is equal to the difference between— 

(i) 80 percent of the Postal Service actuarial liability as of 

September 30 of the most recently ended fiscal year; and 

(ii) the value of the assets of the Postal Retiree Health Benefits Fund as of September 30 of the most recently ended fiscal 

year. 

(3)(A) The United States Postal Service shall pay into such 

Fund— 

(i) * * * 

* * * * * * * 

(iii) $1,400,000,000, not later than September 30, 2009; and 

(iv) $5,500,000,000, not later than September 30, 2010[;]. 

ø(v) $5,500,000,000, not later than October 4, 2011; 

ø(vi) $5,600,000,000, not later than September 30, 2012; 

ø(vii) $5,600,000,000, not later than September 30, 2013; 

ø(viii) $5,700,000,000, not later than September 30, 2014; 

ø(ix) $5,700,000,000, not later than September 30, 2015; and 

ø(x) $5,800,000,000, not later than September 30, 2016. 

(B) Not later than September 30, ø2017¿ 2016, and by September 

30 of each succeeding year, the United States Postal Service shall 

pay into such Fund the sum of— 

(i) the net present value computed under paragraph (1); and 

(ii) any annual installment computed under øparagraph 

(2)(B).¿ paragraph (2). 

ø(4) Computations under this subsection shall be made consistent with the assumptions and methodology used by the Office 

for financial reporting under subchapter II of chapter 35 of title 

31.¿ 

(4) Computations under this subsection shall be based on— 

(A) economic and actuarial methods and assumptions consistent with the methods and assumptions used in determining 

the Postal surplus or supplemental liability under section 

8348(h); and 

(B) any other methods and assumptions, including a health 

care cost trend rate, that the Director of the Office determines 

to be appropriate. 

* * * * * * * 

(7) In this subsection, the term ‘‘Postal Service actuarial liability’’ 

means the difference between— 

(A) the net present value of future payments required under 

section 8906(g)(2)(A) for current and future United States Postal Service annuitants; and 

(B) the net present value as computed under paragraph (1) 

attributable to the future service of United States Postal Service 

employees. 

(e) Subsections (a) through (d) shall be subject to section 104 of 

the Postal Reform Act of 2014. 

* * * * * * * 


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82These amendments to the Inspector General Act of 1978 are made by section 406 of the 

bill. 

INSPECTOR GENERAL ACT OF 1978 82

(5 U.S.C. App.) 

* * * * * * * 

§ 8G. Requirements for Federal entities and designated Federal entities 

(a) Notwithstanding section 12 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 and the Bureau of Consumer Financial Protection, the Board for International Broadcasting, 

the Commodity Futures Trading Commission, the Consumer 

Product Safety Commission, the Corporation for Public Broadcasting, the Defense Intelligence Agency, the Denali Commission, the Equal Employment Opportunity Commission, the 

Farm Credit Administration, the Federal Communications 

Commission, the Federal Election Commission, the Election 

Assistance Commission, the Federal Housing Finance Board, 

the Federal Labor Relations Authority, the Federal Maritime 

Commission, the Federal Trade Commission, the Legal Services Corporation, the National Archives and Records Administration, the National Credit Union Administration, the National Endowment for the Arts, the National Endowment for 

the Humanities, the National Geospatial-Intelligence Agency, 

the National Labor Relations Board, the National Reconnaissance Office, the National Security Agency, 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, øthe Postal 

Regulatory Commission, and the United States Postal Service¿ 

and the Postal Regulatory Commission; 

(3) the term ‘‘head of the Federal entity’’ means any person 

or persons designated by statute as the head of a Federal entity, and if no such designation exists, the chief policymaking officer or board of a Federal entity as identified in the list published pursuant to øsubsection (h)(1)¿ subsection (g)(1) of this 

section; 

(4) the term ‘‘head of the designated Federal entity’’ means 

the board or commission of the designated Federal entity, or in 

the event the designated Federal entity does not have a board 

or commission, any person or persons designated by statute as 

the head of a designated Federal entity and if no such designation exists, the chief policymaking officer or board of a designated Federal entity as identified in the list published pursuant to øsubsection (h)(1)¿ subsection (g)(1) of this section, except that— 


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(A) * * * 

ø(B) with respect to the United States Postal Service, 

such term means the Governors (within the meaning 

ofsection 102(3) of title 39, United States Code);¿ 

ø(C)¿(B) with respect to the Federal Labor Relations Authority, such term means the members of the Authority 

(described under section 7104 of title 5, United States 

Code); 

ø(D)¿(C) with respect to the National Archives and 

Records Administration, such term means the Archivist of 

the United States; 

ø(E)¿(D) with respect to the National Credit Union Administration, such term means the National Credit Union 

Administration Board (described under section 102 of the 

Federal Credit Union Act (12 U.S.C. 1752a); 

ø(F)¿(E) with respect to the National Endowment of the 

Arts, such term means the National Council on the Arts; 

ø(G)¿(F) with respect to the National Endowment for the 

Humanities, such term means the National Council on the 

Humanities; and 

ø(H)¿(G) with respect to the Peace Corps, such term 

means the Director of the Peace Corps; 

* * * * * * * 

(c) øExcept as provided under subsection (f) of this section, the¿ 

The Inspector General shall be appointed by the head of the designated Federal entity in accordance with the applicable laws and 

regulations governing appointments within the designated Federal 

entity. Each Inspector General shall be appointed without regard 

to political affiliation and solely on the basis of integrity and demonstrated ability in accounting, auditing, financial analysis, law, 

management analysis, public administration, or investigations. For 

purposes of implementing this section, the Chairman of the Board 

of Governors of the Federal Reserve System shall appoint the Inspector General of the Board of Governors of the Federal Reserve 

System and the Bureau of Consumer Financial Protection. The Inspector General of the Board of Governors of the Federal Reserve 

System and the Bureau of Consumer Financial Protection shall 

have all of the authorities and responsibilities provided by this Act 

with respect to the Bureau of Consumer Financial Protection, as if 

the Bureau were part of the Board of Governors of the Federal Reserve System. 

* * * * * * * 

ø(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. 

ø(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. 


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ø(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— 

ø(I) ongoing civil or criminal investigations or proceedings; 

ø(II) undercover operations; 

ø(III) the identity of confidential sources, including protected 

witnesses; 

ø(IV) intelligence or counterintelligence matters; or 

ø(V) other matters the disclosure of which would constitute a 

serious threat to national security. 

ø(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. 

ø(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. 

ø(B) In carrying out the duties and responsibilities specified in 

this Act, the Inspector General— 

ø(i) may initiate, conduct and supervise such audits and investigations in the United States Postal Service as the Inspector General considers appropriate; and 

ø(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. 

ø(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. 

ø(4) Nothing in this Act shall restrict, eliminate, or otherwise adversely affect any of the rights, privileges, or benefits of either employees of the United States Postal Service, or labor organizations 

representing employees of the United States Postal Service, under 

chapter 12 of title 39, United States Code, the National Labor Relations Act, any handbook or manual affecting employee labor relations with the United States Postal Service, or any collective bargaining agreement. 

ø(5) As used in this subsection, the term Governors’’ has the 

meaning given such term by section 102(3) of title 39, United 

States Code. 


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ø(6) There are authorized to be appropriated, out of the Postal 

Service Fund, such sums as may be necessary for the Office of Inspector General of the United States Postal Service.¿ 

øg¿(f)(1) Sections 4, 5, 6 (other than subsections (a)(7) and (a)(8) 

thereof), and 7 of this Act shall apply to each Inspector General 

and Office of Inspector General of a designated Federal entity and 

such sections shall be applied to each designated Federal entity 

and head of the designated Federal entity (as defined under subsection (a)) by substituting— 

* * * * * * * 

øh¿(g)(1) No later than April 30, 1989, and annually thereafter, 

the Director of the Office of Management and Budget, after consultation with the Comptroller General of the United States, shall 

publish in the Federal Register a list of the Federal entities and 

designated Federal entities and if the designated Federal entity is 

not a board or commission, include the head of each such entity (as 

defined under subsection (a) of this section). 

* * * * * * * 

§ 8N. Special Provisions Concerning The Inspector General of 

the United States Postal Service 

(a) In this section— 

(1) the term ‘‘Governors’’ has the meaning given that term in 

section 102(3) of title 39, United States Code; and 

(2) the term ‘‘Inspector General’’ means the Inspector General 

of the United States Postal Service. 

(b) In carrying out the duties and responsibilities specified in this 

Act, 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 the Inspector 

General. 

(c)(1)(A) 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. 

(B) With respect to the information described under subparagraph 

(A), the Governors may prohibit the Inspector General from carrying 

out or completing any audit or investigation, or from issuing any 

subpoena, after the 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 subparagraph (A) or to prevent the significant impairment to the national interests of the United States. 


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(C) If the Governors exercise any power under subparagraph (A) 

or (B), the Governors shall notify the Inspector General in writing 

of the reasons for the exercise of such power. Not later than 30 days 

after receipt of any such notice, the Inspector General shall transmit 

a copy of the notice to the Committee on Homeland Security and 

Governmental Affairs of the Senate and the Committee on Oversight 

and Government Reform of the House of Representatives, and to 

other appropriate committees or subcommittees of the Congress. 

(2) In carrying out the duties and responsibilities specified in this 

Act, the Inspector General— 

(A) may initiate, conduct, and supervise such audits and investigations of the United States Postal Service as the Inspector 

General considers appropriate; and 

(B) shall give particular regard to the activities of the Postal 

Inspection Service with a view toward avoiding duplication and 

ensuring effective coordination and cooperation. 

(3) 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 7-day period specified 

under that section, to the Committee on Homeland Security and 

Governmental Affairs of the Senate and the Committee on Oversight 

and Government Reform of the House of Representatives. 

(d) 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 (29 U.S.C. 151 et seq.), 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.’’; 

* * * * * * * 

§ 12. Definitions 

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, Small Business, or Veterans’ Affairs; the Administrator 

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 ChairVerDate Mar 15 2010 02:45 Aug 09, 2014 Jkt 039010 PO 00000 Frm 00110 Fmt 6604 Sfmt 6602 E:\HR\OC\SR237.XXX SR237

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83These amendments to title 18, United States Code, are made by section 303(a) of the bill. 

person of the Federal Deposit Insurance Corporation; the Commissioner of Social Security, Social Security Administration; 

the Director of the Federal Housing Finance Agency; the Board 

of Directors of the Tennessee Valley Authority; the President 

of the Export-Import Bank; øor the Federal Cochairpersons of 

the Commissions established under section 15301 of title 40, 

United States Code¿ the Federal Cochairpersons of the Commissions established under section 15301 of title 40, United 

States Code; or the Board of Governors of the United States 

Postal Service; 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, the Veterans’ Administration, the Social Security Administration, the Federal Housing Finance Agency, the Tennessee Valley Authority, the Export-Import Bank, øor the 

Commissions established under section 15301 of title 40, 

United States Code¿ the Commissions established under section 

15301 of title 40, United States Code, or the United States Postal Service, as the case may be; 

* * * * * * * 

TITLE 18—CRIMES AND CRIMINAL PROCEDURE 83

* * * * * * * 

PART I—CRIMES 

* * * * * * * 

CHAPTER 53—INDIANS 

* * * * * * * 

§ 1161. Application of Indian liquor laws 

The provisions of sections 1154, 1156, 3113, 3488, and 3669, of 

this title, shall not apply within any area that is not Indian country, nor to any act or transaction within any area of Indian country 

provided such act or transaction is in conformity both with the 

laws of the State in which such act or transaction occurs and with 

an ordinance duly adopted by the tribe having jurisdiction over 


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84This new section 31 U.S.C. § 1538 is added by section 505(e) of the bill. 

such area of Indian country, certified by the Secretary of the Interior, and published in the Federal Register, and, with respect to the 

mailing of distilled spirits, wine, or malt beverages (as those terms 

are defined in section 117 of the Federal Alcohol Administration Act 

(27 U.S.C. 211)), is in conformity with section 3001(p) of title 39. 

* * * * * * * 

CHAPTER 83—POSTAL SERVICE 

* * * * * * * 

§ 1716. Injurious articles as nonmailable 

(a) * * * 

* * * * * * * 

(f) All spirituous, vinous, malted, fermented, or other intoxicating 

liquors of any kind are nonmailable and shall not be deposited in 

or carried through the [mails] mails, except to the extent that the 

mailing is allowable under section 3001(p) of title 39. 

* * * * * * * 

TITLE 31—MONEY AND FINANCE 

* * * * * * * 

Subtitle II—The Budget Process 

* * * * * * * 

CHAPTER 15—APPROPRIATION ACCOUNTING 

* * * * * * * 

Sec. 

1501. Documentary evidence requirement for Government obligations. 

* * * * * * * 

1537. Services between the United States Government and the District of Columbia 

government. 

1538. Authorization for assisted reemployment. 

* * * * * * * 

Subchapter III—Transfers and Reimbursements 

* * * * * * * 

§ 1538. Authorization for assisted reemployment 84

Funds may be transferred from the Employees’ Compensation 

Fund established under section 8147 of title 5 to the applicable appropriations account for an agency or instrumentality of any branch 

of the Federal Government for the purposes of reimbursing the agency or instrumentality in accordance with an assisted reemployment 

agreement entered into under section 8104 of title 5. 

* * * * * * * 


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85 In 39 U.S.C. § 102, the amendment to paragraph (3) is made by section 401(d) of the bill, 

and the amendment to paragraph (4) is made by section 406(b)(1) of the bill. 86This amendment to 39 U.S.C. § 202 is made by section 401(a) of the bill. 

TITLE 39—POSTAL SERVICE 

* * * * * * * 

PART I—GENERAL 

* * * * * * * 

CHAPTER 1—POSTAL POLICY AND DEFINITIONS 

* * * * * * * 

§ 102. Definitions 85

As used in this title— 

(1) * * * 

* * * * * * * 

(3) ‘‘Governors’’ means the [9] 8 members of the Board of 

Governors appointed by the President, by and with the advice 

and consent of the Senate, under section [202(a)] 202(b)(1)(C) 

of this title. 

(4) ‘‘Inspector General’’ means the Inspector General appointed under [section 202(e) of this title] section 3 of the Inspector General Act of 1978 (5 U.S.C. App.); 

* * * * * * * 

CHAPTER 2—ORGANIZATION 

Sec. 

201. United States Postal Service 

* * * * * * * 

208. Reservation of powers. 

209. Chief Innovation Officer 

* * * * * * * 

[§ 202. Board of Governors 86

ø(a)(1) The exercise of the power of the Postal Service shall be 

directed by a Board of Governors composed of 11 members appointed in accordance with this section. Nine of the members, to be 

known as Governors, shall be appointed by the President, by and 

with the advice and consent of the Senate, not more than 5 of 

whom may be adherents of the same political party. The Governors 

shall elect a Chairman from among the members of the Board. The 

Governors shall represent the public interest generally, and shall 

be chosen solely on the basis of their experience in the field of public service, law or accounting or on their demonstrated ability in 

managing organizations or corporations (in either the public or private sector) of substantial size; except that at least 4 of the Governors shall be chosen solely on the basis of their demonstrated 

ability in managing organizations or corporations (in either the 

public or private sector) that employ at least 50,000 employees. The 

Governors shall not be representatives of specific interests using 

the Postal Service, and may be removed only for cause. Each GovVerDate Mar 15 2010 02:45 Aug 09, 2014 Jkt 039010 PO 00000 Frm 00113 Fmt 6604 Sfmt 6602 E:\HR\OC\SR237.XXX SR237

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ernor 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. 

ø(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. 

ø(b)(1) The terms of the 9 Governors shall be 7 years, except that 

the terms of the 9 Governors first taking office shall expire as designated by the President at the time of appointment, 1 at the end 

of 1 year, 1 at the end of 2 years, 1 at the end of 3 years, 1 at the 

end of 4 years, 1 at the end of 5 years, 1 at the end of 6 years, 

1 at the end of 7 years, 1 at the end of 8 years, and 1 at the end 

of 9 years, following the appointment of the first of them. Any Governor appointed to fill a vacancy before the expiration of the term 

for which his predecessor was appointed shall serve for the remainder of such term. A Governor may continue to serve after the expiration of his term until his successor has qualified, but not to exceed one year. 

ø(2) No person may serve more than 2 terms as a Governor. 

ø(c) The Governors shall appoint and shall have the power to remove the Postmaster General, who shall be a voting member of the 

Board. His pay and term of service shall be fixed by the Governors. 

ø(d) The Governors and the Postmaster General shall appoint 

and shall have the power to remove the Deputy Postmaster General, who shall be a voting member of the Board. His term of service shall be fixed by the Governors and the Postmaster General and 

his pay by the Governors. 

ø(e)(1) The Governors shall appoint and shall have the power to 

remove the Inspector General. 

ø(2) The Inspector General shall be appointed— 

ø(A) for a term of 7 years; 

ø(B) without regard to political affiliation; and 

ø(C) solely on the basis of integrity and demonstrated ability 

in accounting, auditing, financial analysis, law, management 

analysis, public administration, or investigations. 

ø(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.¿ 

§ 202. Board of Governors 

(a) IN GENERAL.—The exercise of the power of the Postal Service 

shall be directed by a Board of Governors composed of 9 members 

appointed in accordance with this section, each of whom shall be a 

voting member of the Board. 

(b) MEMBERSHIP.— (1) COMPOSITION.—The Board shall be composed of— 

(A) the Postmaster General; and 


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(B) 8 members, to be known as Governors, who shall be 

appointed by the President, by and with the advice and 

consent of the Senate. 

(2) AFFILIATION.—Not more than 4 of the Governors may be 

members of any 1 political party. 

(3) CHAIRPERSON.—The Governors shall elect a Chairperson 

from among the members of the Board. 

(c) QUALIFICATIONS.— 

(1) IN GENERAL.—The Governors shall represent the public interest generally, and shall be chosen solely on the basis of experience in public service, law, or accounting, or on a demonstrated ability to manage organizations or corporations (in either the public or private sector) of substantial size. 

(2) NO SPECIFIC INTEREST.—A Governor may not be a representative of a specific interest using the Postal Service. 

(3) INITIAL APPOINTMENTS.—At least 1 of the Governors who 

is appointed to fill a position that is vacant on the date of enactment of the Postal Reform Act of 2014 shall, in addition to 

the qualifications set forth in paragraph (1), be appointed based 

on the demonstrated ability of that individual to manage and 

improve financially troubled organizations. 

(d) REMOVAL.—A Governor may be removed only for cause. 

(e) COMPENSATION.— 

(1) SALARY.—Each Governor shall receive a salary of $30,000 

each year, plus $300 for each day, for not more than 42 days, 

on which the Governor attends a meeting of the Board. Nothing 

in this paragraph shall be construed to limit the number of 

days of meetings each year to 42 days. 

(2) REIMBURSEMENT FOR MEETINGS.—Each Governor shall be 

reimbursed for travel and reasonable expenses incurred in attending meetings of the Board. 

(f) TERMS.— 

(1) IN GENERAL.—Each Governor shall serve for a term of 7 

years. 

(2) VACANCIES.—A Governor appointed to fill a vacancy occurring before the expiration of the term to which the predecessor of that Governor was appointed shall serve for the remainder of that term. 

(3) CONTINUATION OF SERVICE.—A Governor may continue to 

serve after the expiration of the term of that Governor until a 

successor has been appointed, except that a Governor may not 

continue to serve for more than 1 year after the date on which 

the term of that Governor would have otherwise expired. 

(4) LIMIT.—A Governor may serve for not more than 2 terms. 

(g) POSTMASTER GENERAL.— 

(1) APPOINTMENT AND REMOVAL.—The Governors shall appoint and shall have the power to remove the Postmaster General. 

(2) PAY AND TERM OF SERVICE.—The pay and term of service 

of the Postmaster General shall be determined by the Governors. 

(h) DEPUTY POSTMASTER GENERAL.— 


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87This amendment to 39 U.S.C. § 203 is made by section 401(d)(2) of the bill. 88This amendment to 39 U.S.C. § 205 is made by section 401(b) of the bill. 

(1) APPOINTMENT AND REMOVAL.—The Governors and the 

Postmaster General shall appoint and shall have the power to 

remove the Deputy Postmaster General. 

(2) PAY.—The pay of the Deputy Postmaster General shall be 

determined by the Governors. 

(3) TERM OF SERVICE.—The term of service of the Deputy 

Postmaster General shall be determined by the Governors and 

the Postmaster General. 

(i) EXECUTIVE COMMITTEE.— ‘‘(1) AUTHORITY TO ESTABLISH.—The Board, by a vote of a 

majority of its members, may establish an Executive Committee 

of the Board, consistent with paragraph (2). 

‘‘(2) BOARD MEMBERSHIP AND RESPONSIBILITIES.—If established by the Board, the Executive Committee shall— 

(A) be composed of the Chairperson of the Board and 2 

additional Governors designated by the Board, except that 

not more than 2 members of the Executive Committee may 

be members of any 1 political party; 

(B) develop and oversee implementation of strategies and 

measures to ensure the long-term financial solvency of the 

Postal Service; 

(C) develop and oversee the implementation of the financial plan and budget required under section 403 of the 

Postal Reform Act of 2014 and updates to the financial 

plan and budget; 

(D) make recommendations to the Board regarding aspects of postal operations; and 

(E) assume such other responsibilities as the Board determines appropriate. 

(3) QUORUM.—2 members of the Executive Committee shall 

constitute a quorum for the transaction of business by the Executive Committee. 

(4) TERMINATION.—The Executive Committee may be terminated by a vote of the majority of the members of the Board. 

* * * * * * * 

§ 203. Postmaster General; Deputy Postmaster General 87

The chief executive officer of the Postal Service is the Postmaster 

General appointed under section ø202(c)¿ 202(g) of this title. The 

alternate chief executive officer of the Postal Service is the Deputy 

Postmaster General appointed under section ø202(d)¿ 202(h) of this 

title. 

* * * * * * * 

§ 205. Procedures of the Board of Governors 88

(a) * * * 

* * * * * * * 

(c) The Board shall act upon majority vote of those members who 

are present, and any ø6 members¿ 5 members present shall conVerDate Mar 15 2010 02:45 Aug 09, 2014 Jkt 039010 PO 00000 Frm 00116 Fmt 6604 Sfmt 6602 E:\HR\OC\SR237.XXX SR237

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89This new 39 U.S.C. § 209 is added by section 404(a) of the bill. 90 In 39 U.S.C. § 404, the amendments to subsection (a) are made by section 302(a)(1)(A) of 

the bill, the amendments to subsection (d) are made by section 203 of the bill, the amendments 

to subsection (e) are made by sections 302(a)(1)(B) and (c)(1) of the bill, the new subsection (f) 

is added by section 202(b) of the bill, the new subsections (g) and (h) are added by section 

302(1)(c) of the bill, and the new subsection (i) is added by section 201(c)(2) of the bill. 

stitute a quorum for the transaction of business by the Board, except— 

* * * * * * * 

§ 209. Chief innovation officer 89

(a) ESTABLISHMENT.—There shall be in the Postal Service a Chief 

Innovation Officer appointed by the Postmaster General. 

(b) QUALIFICATIONS.—The Chief Innovation Officer shall have 

proven expertise and a record of accomplishment in areas such as— 

(1) the postal and shipping industry; 

(2) innovative product research and development; 

(3) brand marketing strategy; 

(4) new and emerging technology, including communications 

technology; or 

(5) business process management. 

(c) DUTIES.—The Chief Innovation Officer shall lead the development and implementation of— 

(1) innovative postal products and services, particularly products and services that use new and emerging technology, including communications technology, to improve the net financial position of the Postal Service; and 

(2) nonpostal services authorized under section 404(a)(6) that 

have the potential to improve the net financial position of the 

Postal Service. 

(d) DEADLINE.—The Postmaster General shall appoint a Chief Innovation Officer not later than 90 days after the date of enactment 

of the Postal Reform Act of 2014. 

* * * * * * * 

CHAPTER 4—GENERAL AUTHORITY 

Sec. 

401. General powers of the Postal Service. 

* * * * * * * 

416. Authority to issue semipostals. 

417. Postal Service contracts and congressional oversight authority. 

* * * * * * * 

§ 404. Specific powers 90

(a) * * * 

(1) * * * 

* * * * * * * 

(6) on and after the date of enactment of the Postal Reform 

Act of 2014, except as provided in subsection (e) and subject to 

subsection (h)— 

(A) to provide other services that are not postal services, 

if the provision of such services— 


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(i) uses the processing, transportation, delivery, retail 

network, or technology of the Postal Service; 

(ii) is consistent with the public interest and demonstrated likely public demand for— 

(I) the Postal Service, rather than another entity, 

to provide the services; or 

(II) the Postal Service, in addition to or in partnership with another entity, to provide the services; 

(iii) would not create unfair competition with the private sector, taking into consideration the extent to 

which the Postal Service will not, either by legal obligation or voluntarily, comply with any State or local 

laws or requirements generally applicable to the provision of such services; 

(iv) does not unreasonably interfere with or detract 

from the value of postal services, including— 

(I) the cost and efficiency of postal services; and 

(II) access to postal retail service; 

(v) will be undertaken in accordance with all Federal 

laws and regulations applicable to the provision of 

such services; and 

(vi) is reasonably expected to improve the net financial position of the Postal Service, based on a market 

analysis conducted by or on behalf of the Postal Service; and 

(B) to classify a service provided under subparagraph (A) 

as an experimental product subject to section 3641; 

ø(6)¿(7) to investigate postal offenses and civil matters relating to the Postal Service; 

ø(7)¿(8) 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 

ø(8)¿(9) to authorize the issuance of a substitute check for a 

lost, stolen, or destroyed check of the Postal Service. 

* * * * * * * 

ø(d)(1) The Postal Service, prior to making a determination 

under subsection (a)(3) of this section as to the necessity for the 

closing or consolidation of any post office, shall provide adequate 

notice of its intention to close or consolidate such post office at 

least 60 days prior to the proposed date of such closing or consolidation to persons served by such post office to ensure that such 

persons will have an opportunity to present their views. 

ø(2) The Postal Service, in making a determination whether or 

not to close or consolidate a post office— 

ø(A) shall consider— 

ø(i) the effect of such closing or consolidation on the community served by such post office; 

ø(ii) the effect of such closing or consolidation on employees of the Postal Service employed at such office; 


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ø(iii) whether such closing or consolidation is consistent 

with the policy of the Government, as stated in section 

101(b) of this title, that the Postal Service shall provide a 

maximum degree of effective and regular postal services to 

rural areas, communities, and small towns where post offices are not self-sustaining; 

ø(iv) the economic savings to the Postal Service resulting 

from such closing or consolidation; and 

ø(v) such other factors as the Postal Service determines 

are necessary; and 

ø(B) may not consider compliance with any provision of the 

Occupational Safety and Health Act of 1970 (29 U.S.C. 651 et 

seq.). 

ø(3) Any determination of the Postal Service to close or consolidate a post office shall be in writing and shall include the findings 

of the Postal Service with respect to the considerations required to 

be made under paragraph (2) of this subsection. Such determination and findings shall be made available to persons served by such 

post office. 

ø(4) The Postal Service shall take no action to close or consolidate a post office until 60 days after its written determination is 

made available to persons served by such post office.¿ 

(d) DISCONTINUANCE OF POST OFFICES.— (1) DEFINITIONS.—In this subsection— 

(A) the term ‘‘discontinuance’’ has the meaning given the 

term in section 241.3 of title 39, Code of Federal Regulations, as in effect on November 1, 2013; 

(B) the term ‘‘local government’’ means— 

(i) a county, municipality, city, town, township, local 

public authority, special district, intrastate district, 

council of government, or regional or interstate government entity; 

(ii) an agency or instrumentality of an entity described in clause (i); or 

(iii) a rural community, an unincorporated town or 

village, or an instrumentality of a rural community or 

an unincorporated town or village; 

(C) the term ‘‘post office’’ means a post office, post office 

branch, post office classified station, or other facility that 

is operated by the Postal Service, the primary function of 

which is to provide retail postal services; and 

(D) the term ‘‘rural post office’’ means a post office that 

is— 

(i) in a rural area, as defined by the Census Bureau; 

and 

(ii) within the K or L cost ascertainment grouping, as 

classified by the Postal Service. 

(2) PRELIMINARY CONSIDERATIONS.—The Postal Service, prior 

to making a determination under subsection (a)(3) of this section as to the necessity for the discontinuance of any post office, 

and, with respect to a determination to discontinue a rural post 

office, prior to making the determinations required under paragraph (5), shall— 

(A) consider whether— 


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(i) to discontinue the post office and combine it with 

another post office located within a reasonable distance; 

(ii) instead of discontinuing the post office— 

(I) to reduce the number of hours a day that the 

post office operates; or 

(II) to continue operating the post office for the 

same number of hours a day; 

(iii) to procure a contract providing full, or less than 

full, retail postal services in the community served by 

the post office; or 

(iv) to provide postal services to the community 

served by the post office— 

(I) through a letter carrier or by Alternate Means 

of Transportation delivery contract; 

(II) by colocating postal services at a commercial 

or government entity; or 

(III) by implementing an alternative proposal 

made by a local government under subparagraph 

(B)(iii); 

(B) provide— 

(i) relevant information on financial costs associated 

with the operations of the post office to postal customers and local governments served by the post office; 

(ii) postal customers served by the post office an opportunity to present their views, which may be by nonbinding survey conducted by mail; and 

(iii) local governments served by the post office an 

opportunity to present alternative proposals for providing postal services to the community; and 

(C) if the Postal Service determines to discontinue the 

post office, provide adequate public notice of its intention to 

discontinue the post office at least 60 days prior to the proposed date of the discontinuance to persons and local governments served by the post office. 

(3) CONSIDERATIONS.—The Postal Service, in making a determination whether or not to discontinue a post office— 

(A) shall consider— 

(i) the effect of the discontinuance on the community 

served by the post office; 

(ii) the effect of the discontinuance on businesses, including small businesses, in the area; 

(iii) the effect of the discontinuance on employees of 

the Postal Service employed at the post office; 

(iv) whether the discontinuance would have a significant adverse effect on regular postal services to rural 

areas, communities, and small towns where post offices 

are not self-sustaining; 

(v) the extent to which the community served by the 

post office lacks access to Internet, broadband, or cellular telephone service; 

(vi) the extent to which postal customers served by 

the post office would continue after the discontinuance 

to receive substantially similar access to essential 


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items, such as prescription drugs and time-sensitive 

communications; 

(vii) the proximity and accessibility of other post offices; 

(viii) whether substantial economic savings to the 

Postal Service would result from the discontinuance; 

and 

(ix) any other factors that the Postal Service determines are necessary; and 

(B) may not consider compliance with any provision of 

the Occupational Safety and Health Act of 1970 (29 U.S.C. 

651 et seq.). 

(4) WRITTEN DETERMINATION AND FINDINGS.— 

(A) IN GENERAL.—Any determination of the Postal Service to discontinue a post office shall— 

(i) be in writing; 

(ii) include the findings of the Postal Service with respect to the considerations required to be made under 

paragraph (3); and 

(iii) with respect to a determination to discontinue a 

rural post office, include a summary of the determinations required under paragraph (5). 

(B) AVAILABILITY OF FINDINGS.—The Postal Service shall 

make available, to persons served by a post office that the 

Postal Service determines to discontinue, any determination 

and findings under subparagraph (A) with respect to that 

post office. 

(C) NOTICE BEFORE DISCONTINUANCE.—The Postal Service may not take any action to discontinue a post office 

until 60 days after the date on which the Postal Service 

makes available, to persons served by the post office, the 

written determination and findings with respect to the post 

office as required under subparagraph (B). 

(5) RURAL POST OFFICES.— 

(A) MORATORIUM ON DISCONTINUANCE OF RURAL POST

OFFICES.—The Postal Service may not discontinue a rural 

post office during the 1-year period beginning on the date 

of enactment of the Postal Reform Act of 2014. 

(B) REQUIREMENTS FOR DISCONTINUANCE OF RURAL POST

OFFICES.—The Postal Service may not make a determination under subsection (a)(3) to discontinue a rural post office unless the Postal Service— 

(i)(I) determines that postal customers served by the 

post office would continue after the discontinuance to 

receive substantially similar access to essential items, 

such as prescription medications and time-sensitive 

communications, that are sent through the mails; or 

(II) takes action to substantially ameliorate any projected reduction in access to essential items described 

in subclause (I); and 

(ii) determines that— 

(I) there is unlikely to be substantial economic 

loss to the community served by the post office as 

a result of the discontinuance; 


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(II) the area served by the post office has adequate access to broadband Internet service, as 

identified on the National Broadband Map of the 

National Telecommunications and Information 

Administration; and 

(III) there is a road with year-round access connecting the community to another post office that 

is within 10 miles from the post office proposed to 

be discontinued. 

(C) STUDY AND REPORT.— 

(i) STUDY.—The Inspector General shall conduct a 

study after the discontinuance of a rural post office 

under this section, which shall include— 

(I) the actual cost savings resulting from the discontinuance; and 

(II) a comparison between the findings described 

in subclause (I) and the cost savings that the Postal Service predicted would result from the discontinuance. 

(ii) REPORT.—Not later than 2 years after the date of 

the discontinuance of a rural post office under this section, the Inspector General shall submit a report on the 

findings of the study conducted under clause (i) with 

respect to the rural post office to— 

‘‘(I) the Postal Regulatory Commission; 

‘‘(II) the Board of Governors; 

‘‘(III) the Committee on Homeland Security and 

Governmental Affairs of the Senate; 

‘‘(IV) the Committee on Oversight and Government Reform of the House of Representatives; 

‘‘(V) the Member of the House of Representatives 

in whose district the rural post office was located; 

and 

‘‘(VI) the Senators in whose State the rural post 

office was located. 

‘‘(iii) SUNSET.—This subparagraph is repealed effective 10 years after the date of enactment of the Postal 

Reform Act of 2014. 

(6) REDUCTIONS IN HOURS OF OPERATION.— 

(A) CONSIDERATIONS.—The Postal Service, prior to making a determination under paragraph (2)(A)(ii)(I) to reduce 

the number of hours per day that a post office operates, 

shall consider— 

(i) the impact of the proposed reduction in hours on 

local businesses; 

(ii) the effect of the proposed reduction in hours on 

the community served by the post office; 

(iii) the ability of the Postal Service to hire qualified 

employees to operate the post office during the reduced 

hours; 

(iv) the proximity and accessibility of other post offices within 15 miles of the post office, and the hours 

those post offices are open; 


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(v) the impact of the proposed reduction in hours on 

the elderly and other vulnerable populations; and 

(vi) the impact of alternative schedules on the community served by the post office, including consideration of which schedules would most effectively mitigate any negative impacts identified under clauses (i) 

through (v). 

(B) FINDINGS.—If the Postal Service determines, after 

considering the factors under subparagraph (A), to reduce 

the number of hours per day that a post office operates, the 

Postal Service shall make available to persons served by 

the post office— 

(i) a summary of the findings of the Postal Service 

under subparagraph (A); 

(ii) the hours during which the post office will be 

open; and 

(iii) an explanation of the change in hours referred 

to in clause (ii). 

ø(5) A determination¿ 

(7) APPEALS.—A determination of the Postal Service to øclose 

or consolidate¿ discontinue any post office may be appealed by 

any person served by such office to the Postal Regulatory Commission within 30 days after such determination is made available to such person øunder paragraph (3)¿ under paragraph 

(4). 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— 

ø(A) * * * 

ø(B) * * * 

ø(C) * * *¿ 

(A) * * * 

(B) * * * 

(C) * * * 

øThe * * *¿ 

The * * * 

ø(6) For purposes of paragraph (5)¿ 

(8) DATE OF RECEIPT OF APPEALS.—For purposes of paragraph (7), any appeal received by the Commission shall— 

ø(A) * * * 

ø(B) * * *¿ 

(A) * * * 

(B) * * * 

(9) MINIMUM RETAIL STANDARDS.—The Postal Service shall 

establish minimum standards for retail postal services. 

ø(e)(1) In this¿ (e) PREVIOUSLY OFFERED NONPOSTAL SERVICES.— (1) DEFINITION.—In this subsection, the term ‘‘nonpostal 

service’’ means any service that is not a postal service defined 

under section 102(5) and that was offered by the Postal Service 

on the date of enactment of the Postal Reform Act of 2014. 

ø(2) Nothing¿ 


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(2) ELIGIBLE NONPOSTAL SERVICES.—Nothing in this section 

shall be considered to permit or require that the Postal Service 

provide any nonpostal service, except that the Postal Service 

may provide nonpostal services which were offered as of January 1, 2006, as provided under this subsection. 

ø(3) Not¿ 

(3) REVIEW OF NONPOSTAL SERVICES.—Not later than 2 years 

after the date of enactment of the Postal Accountability and 

Enhancement Act, the Postal Regulatory Commission shall review each nonpostal service offered by the Postal Service on 

the date of enactment of that Act and determine whether that 

nonpostal service shall continue, taking into account— 

ø(A) * * * 

ø(B) * * *¿ 

(A) * * * 

(B) * * * 

ø(4) Any¿ 

(4) TERMINATION.—Any nonpostal service not determined to 

be continued by the Postal Regulatory Commission under paragraph (3) shall terminate. 

ø(5) If the Postal Regulatory Commission authorizes the Postal 

Service to continue a nonpostal service under this subsection, the 

Postal Regulatory Commission shall designate whether the service 

shall be regulated under this title as a market dominant product, 

a competitive product, or an experimental product.¿ 

(5) DESIGNATION.—Each nonpostal service authorized under 

this subsection shall be designated as market-dominant or competitive based on the designation of the nonpostal service in the 

Mail Classification Schedule as in effect on the date of enactment of the Postal Reform Act of 2014. 

(6) RULE OF CONSTRUCTION.—Nothing in this subsection 

shall be construed to prevent the Postal Service from providing 

nonpostal services under subsection (a)(6). 

(f) CLOSING OR CONSOLIDATION OF CERTAIN POSTAL FACILITIES.— 

(1) DEFINITION.—In this subsection, the term ‘‘postal facility’’ 

means a processing and distribution center, processing and distribution facility, network distribution center, or other facility 

that is operated by the Postal Service, the primary function of 

which is to sort and process mail. 

(2) AREA MAIL PROCESSING STUDIES.— 

(A) APPLICABILITY.—In this paragraph— 

(i) the term ‘‘area mail processing study’’ means an 

area mail processing feasibility study described in section 2–1 of Handbook PO–408 of the Postal Service, entitled ‘‘Area Mail Processing Guidelines’’, as in effect on 

October 1, 2013; 

(ii) the term ‘‘closing’’, with respect to a covered postal facility, means the transfer of all incoming and outgoing mail sortation and processing operations of the 

covered postal facility to a different covered postal facility; 

(iii) the term ‘‘consolidate’’, with respect to a covered 

postal facility, means the transfer of either all incoming or all outgoing mail sortation and processing operVerDate Mar 15 2010 02:45 Aug 09, 2014 Jkt 039010 PO 00000 Frm 00124 Fmt 6604 Sfmt 6603 E:\HR\OC\SR237.XXX SR237

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ations of the covered postal facility to a different covered postal facility; and 

(iv) the term ‘‘covered postal facility’’ means a postal 

facility, the primary function of which is to sort and 

process first-class mail originating or designating within a defined geographic area. 

(B) NEW AREA MAIL PROCESSING STUDIES.—Before making a determination under subsection (a)(3) as to the necessity for the closing or consolidation of a covered postal facility, the Postal Service shall— 

(i) conduct an area mail processing study relating to 

the covered postal facility that includes consideration 

of a plan to reduce the capacity of the covered postal 

facility without closing the covered postal facility; and 

(ii) upon completing the study under clause (i)— 

(I) publish the results of the study on the website 

of the Postal Service; and 

(II) publish a notice that the study is complete 

and the results of the study are available to the 

public, including on the website of the Postal Service. 

(C) COMPLETED OR ONGOING AREA MAIL PROCESSING

STUDIES.— 

(i) IN GENERAL.—In the case of a covered postal facility described in clause (ii), the Postal Service shall— 

(I) consider a plan to reduce the capacity of the 

covered postal facility without closing the covered 

postal facility; and 

(II) publish the results of the consideration 

under subclause (I) with or as an amendment to 

the area mail processing study relating to the covered postal facility. 

(ii) POSTAL FACILITIES.—A covered postal facility described in this clause is a covered postal facility— 

(I) for which, as of the date of enactment of this 

subsection, an area mail processing study— 

(aa) has been completed but does not include 

a plan to reduce the capacity of the covered 

postal facility without closing the covered postal facility; or 

(bb) is in progress; and 

(II) which, as of the date of enactment of this 

subsection, has not been closed or consolidated. 

(3) NOTICE, PUBLIC COMMENT, AND PUBLIC HEARING.—If the 

Postal Service makes a determination under subsection (a)(3) to 

close or consolidate a postal facility, the Postal Service shall— 

(A) provide notice of the determination to— 

(i) Congress; and 

(ii) the Postal Regulatory Commission; 

(B) provide adequate public notice of the intention of the 

Postal Service to close or consolidate the postal facility; 

(C) ensure that interested persons have an opportunity to 

submit public comments during a 45-day period after the 


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Postal Service provides the notice of intention under subparagraph (B); 

(D) before the 45-day period described in subparagraph 

(C), provide public notice of the opportunity under subparagraph (C) to submit public comments during that period 

by— 

(i) publication on the website of the Postal Service; 

(ii) posting at the affected postal facility; and 

(iii) publicizing the date and location of the public 

community meeting under subparagraph (E); and 

(E) during the 45-day period described in subparagraph 

(C), conduct a public meeting that provides an opportunity 

for comments to be submitted verbally or in writing. 

(4) FURTHER CONSIDERATIONS.—The Postal Service, in making a determination under subsection (a)(3) to close or consolidate a postal facility, shall consider— 

(A) the views presented by interested persons under paragraph (3); 

(B) the effect of the closing or consolidation on the affected community, including the impact the closing or consolidation may have on a State, region, or locality; 

(C) the effect of the closing or consolidation on the travel 

times and distances for affected customers to access services 

under the proposed closing or consolidation; 

(D) the effect of the closing or consolidation on delivery 

times for all classes of mail and packages; 

(E) any characteristics of certain geographical areas, 

such as remoteness, broadband internet availability with a 

lower rates of access than the average rate of access in 

other geographical areas of the United States, and weatherrelated obstacles, that may result in the closing or consolidation having a unique effect; 

(F) the effect of the closing or consolidation on small 

businesses in the area, including shipping and communications with customers and suppliers and the corresponding 

impact on revenues, operations, and growth; 

(G) the extent to which significant changes in delivery 

service resulting from the closure or consolidation of the 

postal facility would affect the ability of individuals and 

businesses in the region served by the postal facility to participate in the national economy; 

(H) the ability of the Postal Service to maintain a safe 

working environment at each postal facility that, as a result of the closing or consolidation, would process the mail 

that had been processed by the closed or consolidated postal 

facility, including by examining— 

(i) the capacity of each affected postal facility to process a greater volume of mail; 

(ii) the ability of the workforce at each affected postal 

facility to handle a larger workload; and 

(iii) whether the Postal Service would need to hire 

additional employees at affected postal facilities to 

process the increased volume of mail; 


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(I) the extent to which the Postal Service can take action 

to mitigate significant negative impacts identified through 

the considerations under this paragraph; and 

(J) any other factor the Postal Service determines is necessary. 

(5) NOTICE OF FINAL DETERMINATION; JUSTIFICATION STATEMENT.—If the Postal Service determines to close or consolidate 

a postal facility, the Postal Service shall post on the website of 

the Postal Service— 

(A) notice of the final determination to close or consolidate the postal facility; and 

(B) a closing or consolidation justification statement that 

includes— 

(i) a response to the public comments received with 

respect to the considerations described under paragraph (4); 

(ii) a description of the considerations made by the 

Postal Service under paragraph (4); and 

(iii) the actions that the Postal Service will take to 

mitigate any significant negative effects identified 

under paragraph (4). 

(6) CLOSING OR CONSOLIDATION OF POSTAL FACILITIES.— 

(A) IN GENERAL.—Not earlier than 15 days after the date 

on which the Postal Service posts notice of a final determination and a justification statement under paragraph (5) 

with respect to a postal facility, the Postal Service may 

close or consolidate the postal facility. 

(B) ALTERNATIVE INTAKE OF MAIL.—If the Postal Service 

closes or consolidates a postal facility under subparagraph 

(A), the Postal Service shall make reasonable efforts to ensure continued mail receipt from customers of the closed or 

consolidated postal facility at the same location or at another appropriate location in close geographic proximity to 

the closed or consolidated postal facility. 

(7) PROTECTION OF CERTAIN INFORMATION.—Nothing in this 

subsection shall be construed to require the Postal Service to 

disclose any— 

(A) proprietary data; 

(B) information relating to the security of a postal facility; or 

(C) information that is exempt from disclosure under section 552 of title 5. 

(8) POSTAL REGULATORY COMMISSION APPEALS.— 

(A) RIGHT TO APPEAL.—A determination of the Postal 

Service to close or consolidate any postal facility may be 

appealed by any person served by the postal facility to the 

Postal Regulatory Commission not later than 30 days after 

the date on which the determination is posted on the Postal 

Service website under paragraph (5). 

(B) REVIEW BASED ON RECORD.—The Commission shall 

review a determination appealed under this paragraph on 

the basis of the record before the Postal Service in the making of the determination. 


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(C) DEADLINE FOR COMMISSION DETERMINATION.—The 

Commission shall make a determination based upon a review conducted under subparagraph (B) not later than 90 

days after the date on which the Commission receives the 

appeal of the determination under subparagraph (A). 

(D) BASES FOR SETTING ASIDE POSTAL SERVICE DETERMINATIONS.—In making a determination under subparagraph (C), the Commission shall set aside any determination, finding, or conclusion of the Postal Service that the 

Commission determines— 

(i) is arbitrary, capricious, an abuse of discretion, or 

otherwise not in accordance with the law; 

(ii) is without observance of the procedures required 

under this subsection or any other applicable law; or 

(iii) is unsupported by substantial evidence on the 

record. 

(E) OPTION TO AFFIRM OR REMAND.—The Commission— 

(i) may affirm a determination of the Postal Service 

appealed under this paragraph or order that the entire 

matter be returned for further consideration; and 

(ii) may not modify the determination of the Postal 

Service. 

(F) TEMPORARY SUSPENSION.—The Commission may suspend the effectiveness of a determination of the Postal Service appealed under this paragraph until the final disposition of the appeal. 

(G) APPLICABILITY OF OTHER LAWS.—The provisions of 

section 556, section 557, and chapter 7 of title 5 shall not 

apply to any review carried out by the Commission under 

this paragraph. 

(H) DATE OF RECEIPT OF APPEAL.—For purposes of subparagraph (A), any appeal received by the Commission 

shall— 

(i) 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 the appeal is mailed; or 

(ii) 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). 

(g) TREATMENT OF NEW NONPOSTAL SERVICES.—For purposes of 

chapters 20 and 36 of this title, nonpostal services provided under 

subsection (a)(6) shall be treated as competitive products. 

(h) FEDERAL REGULATION OF NEW NONPOSTAL SERVICES.—The 

Postal Service shall ensure that any nonpostal service provided 

under subsection (a)(6) that is otherwise subject to the jurisdiction 

and regulation of a Federal regulatory agency remains subject to the 

jurisdiction and regulation of the Federal regulatory agency notwithstanding the fact that the nonpostal service is provided by the 

Postal Service. 

(i) ALTERNATIVE MEANS OF TRANSPORTATION CONTRACTS.— 


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(1) DEFINITION.—In this subsection, the term ‘‘covered route’’ 

means a route on which first-class mail and periodicals are 

transported under an Alternate Means of Transportation contract. 

(2) REQUIREMENTS BEFORE CHANGING TO OTHER MEANS OF

TRANSPORTATION. The Postal Service, prior to making a determination under subsection (a)(1) to transport first-class mail or 

periodicals on a covered route using a means other than under 

an Alternate Means of Transportation contract, shall consider— 

(A) the effect of the change on— 

(i) each community served by the covered route; 

(ii) businesses, including small businesses, in the 

area served by the covered route; and 

(iii) employees of the Postal Service involved in 

transportation on the covered route; 

(B) whether the change is consistent with the policy of the 

Government, as stated in section 101(b), that the Postal 

Service shall provide a maximum degree of effective and 

regular postal services to rural areas, communities, and 

small towns where post offices are not self-sustaining; 

(C) the extent to which each community served by the covered route lacks access to Internet service; 

(D) the extent to which postal customers served by the 

covered route would continue after the change to receive 

substantially similar access to essential items and time-sensitive communications; 

(E) whether substantial economic savings to the Postal 

Service would result from the change; 

(F) the average daily volume of mail transported on the 

covered route; 

(G) any change in the volume of mail transported on the 

covered route during the preceding 12 months; 

(H) the capacity of available transportation service providers to meet the volume needs of the Postal Service on the 

covered route; 

(I) the ability of the Postal Service to procure and access 

additional transportation capacity to meet the volume 

needs of the Postal Service on the covered route; 

(J) the impact of the change on postal facilities (as that 

term is defined in subsection (f)) that use the covered route; 

(K) the ability of postal facilities described in subparagraph (J) to continue to provide service that complies with 

applicable service standards after the change; and 

(L) any other factors that the Postal Service determines 

are necessary. 

(3) DETERMINATIONS.—Any determination of the Postal Service to transport first-class mail or periodicals on a covered route 

using a means other than under an Alternate Means of Transportation contract shall— 

(A) be in writing; 

(B) include the findings of the Postal Service with respect 

to the considerations required to be made under paragraph 

(2); and 


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91These amendments to 39 U.S.C. § 411 are made by section 302(b) of the bill. 

(C) be made available by public notice to persons served 

by the covered route. 

(4) ADVANCE NOTICE OF DETERMINATIONS.—The Postal Service shall take no action to transport first-class mail or periodicals on a covered route using a means other than under an Alternate Means of Transportation contract until 60 days after the 

date on which the Postal Service makes available to persons 

served by the covered route a written determination under paragraph (3). 

§ 411. Cooperation with other Government agencies 91

øExecutive agencies¿ (a) FEDERAL GOVERNMENT.—Executive 

agencies within the meaning of section 105 of title 5,and the Government Printing Office are authorized to furnish property, both 

real and personal, and personal and nonpersonal services to the 

Postal Service, and the Postal Service is authorized to furnish property and services to them. The furnishing of property and services 

under øthis section¿ this subsection shall be under such terms and 

conditions, including reimbursability, as the Postal Service and the 

head of the agency concerned shall deem appropriate. 

(b) STATE, LOCAL, AND TRIBAL GOVERNMENTS.— 

(1) AUTHORITY OF POSTAL SERVICE.—The Postal Service is authorized to furnish property and services to States, local governments, and tribal governments, under such terms and conditions, including the possibility for reimbursement, as the Postal 

Service and the applicable State, local government, or tribal 

government shall determine appropriate. 

(2) DEFINITIONS.—For purposes of this subsection— 

(A) the term ‘‘local government’’ means— 

(i) a county, municipality, city, town, township, local 

public authority, school district, special district, intrastate district, council of governments, or regional or 

interstate government entity; 

(ii) an agency or instrumentality of an entity described in clause (i); or 

(iii) a rural community, an unincorporated town or 

village, or an instrumentality of a rural community or 

an unincorporated town or village; 

(B) the term ‘‘State’’ includes the District of Columbia, 

the Commonwealth of Puerto Rico, the United States Virgin 

Islands, Guam, American Samoa, the Commonwealth of 

the Northern Mariana Islands, and any other territory or 

possession of the United States; and 

(C) the term ‘‘tribal government’’ means the government 

of an Indian tribe, as that term is defined in section 4(e) 

of the Indian Self-Determination Act (25 U.S.C. 450b(e)). 

(c) REPORT.—The Postal Service shall submit to the Postal Regulatory Commission, together with the report required under section 

3652, a report that details the costs and revenues of the property 

and services furnished by the Postal Service under this section during the period covered by the report required under section 3652. 


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92This new section 39 U.S.C. 417 is added by section 407 of the bill. 93These amendments to 39 U.S.C. chapter 5 are made by section 303(a) of the bill. 

(d) REIMBURSEMENT DETERMINATION.—In determining the possibility for reimbursement under subsections (a) and (b), the Postal 

Service shall ensure that each property or service furnished under 

such subsections covers its costs attributable, as that term is defined 

in section 3631(b). 

* * * * * * * 

§ 417. Postal Service contracts and congressional oversight 

authority 92

The Postal Service may not enter into any contract that restricts 

the ability of Congress to exercise oversight authority. 

* * * * * * * 

CHAPTER 5—POSTAL REGULATORY COMMISSION 93

* * * * * * * 

§ 502. Commissioners 

(a) * * * 

* * * * * * * 

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

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

date upon which his term otherwise would expire under øsubsection (f)¿ subsections (f) and (g). 

* * * * * * * 

(g) The Commissioners may serve for not more than 2 full terms. 

* * * * * * * 

§ 504. Administration 

(a) The Chairman of the Postal Regulatory Commission shall be 

the principal executive officer of the Commission. øThe Chairman¿ 

Subject to the policies adopted under subsection (b), the Chairman 

shall exercise or direct the exercise of øall the executive¿ the dayto-day 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. 

ø(b) In carrying out any of his functions under this section, the 

Chairman shall be governed by the general policies of the Commission.¿ 

(b)(1) The Chairman shall be governed by the policies adopted by 

the Commission under paragraph (2)(A) in carrying out any of the 

functions under this section. 


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94This amendment to 39 U.S.C. § 1001 is made by section 406(b)(2) of the bill. 95These amendment to 39 U.S.C. § 1004 are made by section 108 of the bill. 

(2) The Commission shall adopt, by a vote of the majority of the 

members of the Commission, policies that shall govern all functions 

of the Commission, including the finances, operations, and administration of the Commission. 

(3) The Commission shall review and, if necessary, revise the policies adopted under paragraph (2) not less frequently than every 4 

years. Adoption of revised policies, or re-adoption of existing policies, shall be by a vote of the majority of the members of the Commission. 

(c) øThe Chairman¿ Subject to the policies adopted under subsection (b), the Chairman may obtain such facilities and supplies as 

may be necessary to permit the Commission to carry out its functions. Any officer or employee appointed under this section shall be 

paid at rates of compensation and shall be entitled to programs offering employee benefits established under chapter 10 or chapter 

12 of this title, as appropriate. 

* * * * * * * 

PART II—PERSONNEL 

* * * * * * * 

CHAPTER 10—EMPLOYMENT WITHIN THE POSTAL 

SERVICE 

* * * * * * * 

§ 1001. Appointment and status 94

(a) * * * 

(b) Officers and employees of the Postal Service (other than those 

individuals appointed under sections 202, 204, and 1001(c) of this 

title, and section 3 of the Inspector General Act of 1978 (5 U.S.C. 

App.)) shall be in the postal career service, which shall be a part 

of the civil service. Such appointments and promotions shall be in 

accordance with the procedures established by the Postal Service. 

The Postal Service shall establish procedures, in accordance with 

this title, to assure its officers and employees meaningful opportunities for promotion and career development and to assure its officers and employees full protection of their employment rights by 

guaranteeing them an opportunity for a fair hearing on adverse actions, with representatives of their own choosing. 

* * * * * * * 

§ 1004. Supervisory and other managerial organizations95

(a) It shall be the policy of the Postal Service to provide compensation, working conditions, and career opportunities that will 

assure the attraction and retention of qualified and capable supervisory and other managerial personnel; to provide adequate and 

reasonable differentials in rates of pay and fringe benefits between 

employees in the clerk and carrier grades in the line work force 

and supervisory and other managerial personnel; to establish and 


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96 In 39 U.S.C. 1005, the amendment to subsection (a)(3) is made by section 406(b)(3)) of the 

bill, the amendment to subsection (a)(4) is made by section 107 of the bill, and the amendments 

to subsections (d) and (f) and the addition of new subsection (g) are made by section 102 of the 

bill. 

maintain continuously a program for all such personnel that reflects the essential importance of a well-trained and well-motivated 

force to improve the effectiveness of postal operations; and to promote the leadership status of such personnel with respect to rankand-file employees, recognizing that the role of such personnel in 

primary level management is particularly vital to the process of 

converting general postal policies into successful postal operations. 

b) The Postal Service shall provide a program for consultation 

with recognized organizations of supervisory and other managerial 

personnel who are not subject to collective-bargaining agreements 

under chapter 12 of this title. Upon presentation of evidence satisfactory to the Postal Service that a supervisory organization represents a majority of supervisors, that an organization (other than 

an organization representing supervisors) represents at least 20 

percent of postmasters, or that a managerial organization (other 

than an organization representing supervisors or postmasters) represents a substantial percentage of managerial employees, such organization or organizations shall be entitled to participate directly 

in the planning and development of pay policies and schedules, 

fringe benefit programs, and other programs relating to supervisory 

and other managerial employees as provided under subsection (d) 

and any changes in, or termination of, pay policies and schedules 

and fringe benefit programs for members of the supervisors’ organization as provided under subsection (e). Such pay policies and 

fringe benefit programs shall reflect adequate differentials in rates 

of pay and fringe benefits as provided under subsection (a). 

* * * * * * * 

(e)(1) The Postal Service shall, within 45 days of each date on 

which an agreement is reached on a collective bargaining agreement between the Postal Service and the bargaining representative 

recognized under section 1203 of this title which represents the 

largest number of employees, make a proposal for any changes in, 

or termination of, pay policies and schedules and fringe benefit programs for members of the supervisors’ organization which are to be 

in effect during the same period as covered by such agreement. 

* * * * * * * 

§ 1005. Applicability of laws relating to Federal employees96

(a)(1) * * * 

* * * * * * * 

(3) The provisions of this subsection shall not apply to those individuals appointed under sections 202, 204, and 1001(c) of this title, and section 3 of the Inspector General Act of 1978 (5 U.S.C. App.). (4)(A) Subchapter II of chapter 75 of title 5 shall apply— 

(i) * * * 

(ii) to any other individual who— 

ø(I) is in the position of a supervisor or a management 

employee in the Postal Service, or is an employee of the 


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Postal Service engaged in personnel work in other than a 

purely nonconfidential clerical capacity; and¿ 

(I) is an officer or employee of the Postal Service who— 

(aa) is not represented by a bargaining representative 

recognized under section 1203; and 

(bb) is in a supervisory, professional, technical, clerical, administrative, or managerial position covered by 

the Executive and Administrative Schedule; and 

* * * * * * * 

(d)(1) øOfficers¿ Except as provided in subsection (g), officers and 

employees of the Postal Service (other than the Governors) shall be 

covered by chapters 83 and 84 of title 5. The Postal Service shall 

withhold from pay and shall pay into the Civil Service Retirement 

and Disability Fund the amounts specified in or determined under 

such chapter 83 and subchapter II of such chapter 84, respectively. 

The Postal Service shall pay into the Federal Retirement Thrift 

Savings Fund the amounts specified in or determined under subchapters III and VII of such chapter 84. 

* * * * * * * 

(f) Compensation, benefits, and other terms and conditions of employment in effect immediately prior to the effective date of this 

section, whether provided by statute or by rules and regulations of 

the former Post Office Department or the executive branch of the 

Government of the United States, shall continue to apply to officers 

and employees of the Postal Service, until changed by the Postal 

Service in accordance with this chapter and chapter 12 of this title. 

Subject to the provisions of this chapter and chapter 12 of this title, 

the provisions of subchapter I of chapter 85 and chapters 84, 87, 

89, 89A, and 89B of title 5 shall apply to officers and employees 

of the Postal Service, unless varied, added to, or substituted for, 

under øthis subsection.¿ this subsection or subsection (g). No variation, addition, or substitution with respect to fringe benefits shall 

result in a program of fringe benefits which on the whole is less 

favorable to the officers and employees than fringe benefits in effect on the effective date of this section, and as to officers and employees for whom there is a collective-bargaining representative, no 

such variation, addition, or substitution shall be made except by 

agreement between the collective-bargaining representative and 

the Postal Service. 

(g)(1) In this subsection— 

(A) the term ‘‘collective bargaining agreement’’ means a collective bargaining agreement between the Postal Service and a 

bargaining representative recognized under section 1203 entered 

into after the date of enactment of the Postal Reform Act of 

2014; 

(B) the term ‘‘new employee’’ means an individual who becomes an officer or employee of the Postal Service after the date 

of enactment of the Postal Reform Act of 2014; and 

(C) the term ‘‘not eligible to receive FERS service credit’’, with 

respect to an officer or employee of the Postal Service, means 

that service by the officer or employee of the Postal Service as 

an officer or employee of the Postal Service shall not be creditable service for purposes of chapter 84 of title 5. 


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(2)(A) A collective bargaining agreement may provide, notwithstanding chapter 84 of title 5, that some or all new employees covered under the collective bargaining agreement shall be not eligible 

to receive FERS service credit for service performed during any pay 

period beginning after the effective date of the provision. 

(B) If a new employee is not eligible to receive FERS credit pursuant to a collective bargaining agreement, any subsequent service by 

the new employee as an officer or employee of the Postal Service 

shall not be creditable service for purposes of chapter 84 of title 5. 

(C) Subject to the requirements under this subsection, a collective 

bargaining agreement may include 1 or more additional retirement 

benefit plans for the benefit of some or all new employees covered 

under the collective bargaining agreement. 

(3)(A) A collective bargaining agreement may establish, with respect to some or all new employees covered under the collective bargaining agreement— 

(i) without regard to section 8422 of title 5— 

(I) the amounts to be deducted and withheld from the 

pay of the new employees for deposit in the Treasury of the 

United States to the credit of the Civil Service Retirement 

and Disability Fund; and 

(II) the corresponding adjustment under section 

8423(a)(5)(B)(iii) of title 5 to the amount of the contributions to be made by the Postal Service to the Fund; and 

(ii) for any retirement benefit plan established under the collective bargaining agreement, the amounts to be deducted and 

withheld from the pay of the new employees under the retirement benefit plan for the benefit of the new employees. 

(B) Except as provided in paragraph (2)(B), a collective bargaining agreement may establish the amounts described in subparagraph (A)(i) with respect to some or all new employees who were covered under a previous collective bargaining agreement. 

(4)(A) A collective bargaining agreement among the Postal Service 

and all bargaining representatives recognized under section 1203 

may establish, without regard to section 8432 of title 5, with respect 

to some or all new employees covered under the collective bargaining agreement, whether the Postal Service shall make contributions to the Thrift Savings Fund for the benefit of the new employees, and, if the Postal Service shall make such contributions, the 

amounts that the Postal Service shall contribute. 

(B) A collective bargaining agreement described in subparagraph 

(A) may not establish more than 1 option regarding the contributions by the Postal Service to the Thrift Savings Fund that will 

apply to some or all new employees covered under the agreement. 

(C) If a collective bargaining agreement described in subparagraph (A) is not in effect, and if the Postal Service or a bargaining 

representative requests that the Postal Service and all bargaining 

representatives commence collective bargaining to seek such an 

agreement, the procedures under section 1207(d) shall apply. 

(D) Except as provided in subparagraph (A), nothing in this subsection or in a provision of a collective bargaining agreement entered under this subsection shall affect the coverage of an officer or 


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97These amendment to 39 U.S.C. § 1207 are made by section 105 of the bill. 98These amendment to 39 U.S.C. § 2003 are made by section 302(c)(3) of the bill. 

employee of the Postal Service under subchapter III of chapter 84 

of title 5. 

* * * * * * * 

CHAPTER 12—EMPLOYEE-MANAGEMENT AGREEMENTS 

* * * * * * * 

§ 1207. Labor disputes 97

(a) * * * 

* * * * * * * 

(c)(1) * * * 

* * * * * * * 

(2)(A) The arbitration board shall give the parties a full and fair 

hearing, including an opportunity to present evidence in support of 

their claims, and an opportunity to present their case in person, by 

counsel or by other representative as they may elect. Decisions of 

the arbitration board shall be conclusive and binding upon the parties. øThe arbitration board shall render its decision within 45 days 

after its appointment.¿ The arbitration board shall render a decision not later than 45 days after the date of its appointment. 

(B) In rendering a decision under this paragraph, the arbitration 

board shall consider such relevant factors as the financial condition 

of the Postal Service. 

* * * * * * * 

(4) Nothing in this section may be construed to limit the relevant 

factors that the arbitration board may take into consideration in 

rendering a decision under paragraph (2). 

* * * * * * * 

PART III—MODERNIZATION AND FISCAL 

ADMINISTRATION 

* * * * * * * 

CHAPTER 20—FINANCE 

Sec. 

2001. Definitions. 

* * * * * * * 

2011. Provisions relating to competitive products. 

2012. Provisions relating to workers’ compensation prefunding. 

* * * * * * * 

§ 2003. The Postal Service Fund 98

(a) * * * 

(b) Except as otherwise provided in section 2011, there shall be 

deposited in the Fund, subject to withdrawal by check by the Postal Service— 


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99This new section 39 U.S.C. § 2012 is added by section 106(a) of the bill. 

(1) revenues from øpostal and nonpostal services¿ postal 

services, nonpostal services authorized under section 404(3), 

and property and services authorized under section 411, rendered by the Postal Service; 

* * * * * * * 

2012. Provisions relating to workers’ compensation 

prefunding 99

(a) DEFINITIONS.— (1) IN GENERAL.—In this section— 

(A) the term ‘‘adjusted net income’’, except as provided in 

paragraph (2), means the net income (or loss) reported by 

the Postal Service in the statement of operations included 

in the annual report required under section 3654(a)(1)(B); 

(B) the term ‘‘Fund’’ means the Postal Service Workers’ 

Compensation Accrued Liability Fund established under 

subsection (b); and 

(C) the term ‘‘Postal Service actuarial liability’’ means, as 

of September 30 of a fiscal year, the net present value of 

projected future payments required to be made by the Postal Service under section 8147 of title 5 (including any payments required to be made from the Fund under subsection 

(f) of this section) on account of injuries or deaths that occurred during that fiscal year or any preceding fiscal year. 

(2) CALCULATION OF ADJUSTED NET INCOME.—In calculating 

adjusted net income for a fiscal year— 

(A) any payment made under subsection (e) shall not be 

taken into account; and 

(B) any change in the net present value of projected future payments required to be made by the Postal Service 

under section 8147 of title 5 shall not be taken into account. 

(b) ESTABLISHMENT.—There is established in the Treasury of the 

United States a revolving fund, to be called the Postal Service 

Workers’ Compensation Accrued Liability Fund. 

(c) AVAILABILITY.—The Fund shall be available without fiscal 

year limitation for payments required under subsection (f). 

(d) INVESTMENT.— (1) IN GENERAL.—The Secretary of the Treasury shall immediately invest, in interest-bearing securities of the United States, 

such currently available portions of the Fund as are not immediately required for payments from the Fund. 

(2) MANNER OF INVESTMENTS.—Investments under paragraph 

(1) shall be made in the same manner as investments for the 

Civil Service Retirement and Disability Fund under section 

8348 of title 5. 

(e) PAYMENTS TO FUND.— (1) COST ATTRIBUTABLE TO 1 YEAR OF EMPLOYEES’ SERVICE.— Not later than June 30, 2017, and not later than June 30 of 

each year thereafter, the Postal Service shall compute— 

(A) with respect to each of the 3 preceding fiscal years, 

the net present value, as of September 30 of the fiscal year, 


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of projected future payments required to be paid by the 

Postal Service under section 8147 of title 5 on account of 

injuries or deaths that occurred during the fiscal year; 

(B) for each of the 3 amounts computed under subparagraph (A), the sum of— 

(i) the amount; and 

(ii) accrued interest on the amount through September 30 of the preceding fiscal year; and 

(C) the average of the 3 sums computed under subparagraph (B). 

(2) LIQUIDATION SCHEDULE.— (A) COMPUTATION; RECOMPUTATION.—Not later than 

June 30, 2017, the Postal Service shall compute, and not 

later than June 30 of each year thereafter the Postal Service shall recompute, a schedule including a series of annual 

installments that provide for the liquidation of the amount 

described in subparagraph (B) (regardless of whether the 

amount is a liability or surplus), including interest at the 

rate used in the computations under paragraph (1), by the 

later of— 

(i) September 30, 2057; or 

(ii) September 30 of the fiscal year that is 15 years 

after the fiscal year in which the computation or recomputation is made. 

(B) AMOUNT TO BE LIQUIDATED.—The amount described 

in this subparagraph is the difference between— 

(i) the difference between— 

(I) 80 percent of the Postal Service actuarial liability as of September 30 of the preceding fiscal 

year; and 

(II) 80 percent of the amount computed under 

paragraph (1)(C) as of September 30 of the preceding fiscal year; and 

(ii) the value of the assets of the Fund as of September 30 of the preceding fiscal year. 

(3) LIQUIDATION OF LIABILITY.— (A) IN GENERAL.—Subject to subparagraph (B), not later 

than September 30, 2018, and not later than September 30 

of each year thereafter, the Postal Service shall pay into the 

Fund the lesser of— 

(i) the sum of— 

(I) 80 percent of the amount computed under 

paragraph (1)(C) during the fiscal year; and 

(II) any annual installment computed under 

paragraph (2)(A); and 

‘‘(ii) the amount by which— 

(I) the amount of adjusted net income earned by 

the Postal Service during the fiscal year that ended 

1 year before the date by which a payment is required to be made under this subparagraph; exceeds 

(II) $1,000,000,000. 

(B) EXCEPTION.—If the amount of adjusted net income 

earned by the Postal Service during a fiscal year does not 


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100This amendment to 39 U.S.C. § 3001 is made by section 303(b) of the bill. 

exceed $1,000,000,000, the Postal Service shall not be required to make a payment under this paragraph during the 

subsequent fiscal year. 

(f) PAYMENTS FROM FUND.— (1) IN GENERAL.—Beginning with the fiscal year ending on 

September 30, 2018, for each payment that the Postal Service 

is required to make under section 8147 of title 5 during the fiscal year— 

(A) a fraction of the amount of the payment shall be paid 

from the Fund in accordance with paragraph (2) of this 

subsection; and 

(B) the remaining amount of the payment shall be paid 

by the Postal Service. 

(2) FRACTION.—The fraction to be paid from the Fund, as required under paragraph (1), is, with respect to the fiscal year 

during which the payment is required to be made, the quotient 

of— 

(A) the value of the assets of the Fund as of September 

30 of the preceding fiscal year; and 

(B) the sum of— 

(i) the Postal Service actuarial liability as of the end 

of the fiscal year before the preceding fiscal year, plus 

interest accrued on that amount through the end of the 

preceding fiscal year; and 

(ii) the amount calculated under subsection (e)(1)(C) 

as of the end of the fiscal year before the preceding fiscal year, plus interest accrued on that amount through 

the end of the preceding fiscal year. 

(g) ASSUMPTIONS AND METHODOLOGY.—The assumptions and 

methodology used in the computations under this section shall be 

consistent, insofar as reasonable and appropriate, with the assumptions and methodology used by the Postal Service in making computations of its assets and liabilities for the financial reporting required under section 3654. 

* * * * * * * 

PART IV—MAIL MATTER 

* * * * * * * 

CHAPTER 30—NONMAILABLE MATTER 

* * * * * * * 

§ 3001. Nonmailable Matter 100

(a) * * * 

* * * * * * * 

(p)(1) In this subsection, the terms ‘‘distilled spirits’’, ‘‘wine’’, and 

‘‘malt beverage’’ have the same meanings as in section 117 of the 

Federal Alcohol Administration Act (27 U.S.C. 211). 

(2) Distilled spirits, wine, or malt beverages shall be considered 

mailable if mailed— 


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101This amendment to 39 U.S.C. § 3622 is made by section 301 of the bill. 

(A) in accordance with the laws and regulations of— 

(i) the State, territory, or district of the United States 

where the sender or duly authorized agent initiates the 

mailing; and 

(ii) the State, territory, or district of the United States 

where the addressee or duly authorized agent takes delivery; and 

(B) to an addressee who is at least 21 years of age— 

(i) who provides a signature and presents a valid, government-issued photo identification upon delivery; or 

(ii) the duly authorized agent of whom— 

(I) is at least 21 years of age; and 

(II) provides a signature and presents a valid, government-issued photo identification upon delivery. 

(3) The Postal Service shall prescribe such regulations as may be 

necessary to carry out this subsection. 

* * * * * * * 

CHAPTER 36—POSTAL RATES, CLASSES, AND SERVICES 

* * * * * * * 

Sec. 

3621. Applicability; definitions. 

* * * * * * * 

ø3622. Modern rate regulation.¿ 

3622. Modern rate system. 

* * * * * * * 

ø3661. Postal Services.¿ 

3661. Postal services for market—dominant products. 

* * * * * * * 

3691. Establishment of modern service standards. 

3692. Delivery point modernization. 

* * * * * * * 

Subchapter I—Provisions Relating to Market Dominant 

Products 

* * * * * * * 

ø§ 3622. Modern rate regulation101

ø(a) AUTHORITY GENERALLY.— The Postal Regulatory Commission shall, within 18 months after the date of enactment of this section, by regulation establish (and may from time to time thereafter 

by regulation revise) a modern system for regulating rates and 

classes for market-dominant products. 

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

following objectives, each of which shall be applied in conjunction 

with the others: 

ø(1) To maximize incentives to reduce costs and increase efficiency. 

ø(2) To create predictability and stability in rates. 

ø(3) To maintain high quality service standards established 

under section 3691. 

ø(4) To allow the Postal Service pricing flexibility. 


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ø(5) To assure adequate revenues, including retained earnings, to maintain financial stability. 

ø(6) To reduce the administrative burden and increase the 

transparency of the ratemaking process. 

ø(7) To enhance mail security and deter terrorism. 

ø(8) To establish and maintain a just and reasonable schedule for rates and classifications, however the objective under 

this paragraph shall not be construed to prohibit the Postal 

Service from making changes of unequal magnitude within, between, or among classes of mail. 

ø(9) To allocate the total institutional costs of the Postal 

Service appropriately between market-dominant and competitive products. 

ø(c) FACTORS.— In establishing or revising such system, the Postal Regulatory Commission shall take into account— 

ø(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; 

ø(2) the requirement that each class of mail or type of mail 

service bear the direct and indirect postal costs attributable to 

each class or type of mail service through reliably identified 

causal relationships plus that portion of all other costs of the 

Postal Service reasonably assignable to such class or type; 

ø(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; 

ø(4) the available alternative means of sending and receiving 

letters and other mail matter at reasonable costs; 

ø(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; 

ø(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; 

ø(7) the importance of pricing flexibility to encourage increased mail volume and operational efficiency; 

ø(8) the relative value to the people of the kinds of mail matter entered into the postal system and the desirability and justification for special classifications and services of mail; 

ø(9) the importance of providing classifications with extremely high degrees of reliability and speed of delivery and of 

providing those that do not require high degrees of reliability 

and speed of delivery; 

ø(10) the desirability of special classifications for both postal 

users and the Postal Service in accordance with the policies of 

this title, including agreements between the Postal Service and 

postal users, when available on public and reasonable terms to 

similarly situated mailers, that— 

ø(A) either— 

ø(i) improve the net financial position of the Postal 

Service through reducing Postal Service costs or inVerDate Mar 15 2010 02:45 Aug 09, 2014 Jkt 039010 PO 00000 Frm 00141 Fmt 6604 Sfmt 6602 E:\HR\OC\SR237.XXX SR237

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creasing the overall contribution to the institutional 

costs of the Postal Service; or 

ø(ii) enhance the performance of mail preparation, 

processing, transportation, or other functions; and 

ø(B) do not cause unreasonable harm to the marketplace. 

ø(11) the educational, cultural, scientific, and informational 

value to the recipient of mail matter; 

ø(12) the need for the Postal Service to increase its efficiency 

and reduce its costs, including infrastructure costs, to help 

maintain high quality, affordable postal services; 

ø(13) the value to the Postal Service and postal users of promoting intelligent mail and of secure, sender-identified mail; 

and 

ø(14) the policies of this title as well as such other factors 

as the Commission determines appropriate. 

ø(d) REQUIREMENTS.— 

ø(1) IN GENERAL.— The system for regulating rates and 

classes for market-dominant products shall— 

ø(A) include an annual limitation on the percentage 

changes in rates to be set by the Postal Regulatory Commission that will be equal to the change in the Consumer 

Price Index for All Urban Consumers unadjusted for seasonal variation over the most recent available 12-month 

period preceding the date the Postal Service files notice of 

its intention to increase rates; 

ø(B) establish a schedule whereby rates, when necessary 

and appropriate, would change at regular intervals by predictable amounts; 

ø(C) not later than 45 days before the implementation of 

any adjustment in rates under this section, including adjustments made under subsection (c)(10)— 

ø(i) require the Postal Service to provide public notice of the adjustment; 

ø(ii) provide an opportunity for review by the Postal 

Regulatory Commission; 

ø(iii) provide for the Postal Regulatory Commission 

to notify the Postal Service of any noncompliance of 

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

ø(iv) require the Postal Service to respond to the notice provided under clause (iii) and describe the actions to be taken to comply with the limitation under 

subparagraph (A); 

ø(D) establish procedures whereby the Postal Service 

may adjust rates not in excess of the annual limitations 

under subparagraph (A); and 

ø(E) notwithstanding any limitation set under subparagraphs (A) and (C), and provided there is not sufficient unused rate authority under paragraph (2)(C), establish procedures whereby rates may be adjusted on an expedited 

basis due to either extraordinary or exceptional circumstances, provided that the Commission determines, 

after notice and opportunity for a public hearing and comVerDate Mar 15 2010 02:45 Aug 09, 2014 Jkt 039010 PO 00000 Frm 00142 Fmt 6604 Sfmt 6602 E:\HR\OC\SR237.XXX SR237

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ment, and within 90 days after any request by the Postal 

Service, that such adjustment is reasonable and equitable 

and necessary to enable the Postal Service, under best 

practices of honest, efficient, and economical management, 

to maintain and continue the development of postal services of the kind and quality adapted to the needs of the 

United States. 

ø(2) LIMITATIONS.— ø(A) CLASSES OF MAIL.—Except as provided under subparagraph (C), the annual limitations under paragraph 

(1)(A) shall apply to a class of mail, as defined in the Domestic Mail Classification Schedule as in effect on the date 

of enactment of the Postal Accountability and Enhancement Act. 

ø(B) ROUNDING OF RATES AND FEES.—Nothing in this 

subsection shall preclude the Postal Service from rounding 

rates and fees to the nearest whole integer, if the effect of 

such rounding does not cause the overall rate increase for 

any class to exceed the Consumer Price Index for All 

Urban Consumers. 

ø(C) USE OF UNUSED RATE AUTHORITY.— ø(i) DEFINITION.—In this subparagraph, the term 

‘‘unused rate adjustment authority’’ means the difference between— 

ø(I) the maximum amount of a rate adjustment 

that the Postal Service is authorized to make in 

any year subject to the annual limitation under 

paragraph (1); and 

ø(II) the amount of the rate adjustment the 

Postal Service actually makes in that year. 

ø(ii) AUTHORITY.—Subject to clause (iii), the Postal 

Service may use any unused rate adjustment authority for any of the 5 years following the year such authority occurred. 

ø(iii) LIMITATIONS.—In exercising the authority 

under clause (ii) in any year, the Postal Service— 

ø(I) may use unused rate adjustment authority 

from more than 1 year; 

ø(II) may use any part of the unused rate adjustment authority from any year; 

ø(III) shall use the unused rate adjustment authority from the earliest year such authority first 

occurred and then each following year; and 

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

the annual limitation under paragraph (1) by 

more than 2 percentage points. 

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

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

regulating rates and classes for market-dominant products established under this section to determine if the system is 

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

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

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

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

by regulation, make such modification or adopt such alternative system for regulating rates and classes for market-dominant products as necessary to achieve the objectives. 

ø(e) WORKSHARE DISCOUNTS.— 

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

discount’’ refers to rate discounts provided to mailers for the 

presorting, prebarcoding, handling, or transportation of mail, 

as further defined by the Postal Regulatory Commission under 

subsection (a). 

ø(2) SCOPE.—The Postal Regulatory Commission shall ensure that such discounts do not exceed the cost that the Postal 

Service avoids as a result of workshare activity, unless— 

ø(A) the discount is— 

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

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

initiative related to an existing postal service; and 

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

Service and the portion of the discount in excess of the 

cost that the Postal Service avoids as a result of the 

workshare activity will be phased out over a limited 

period of time; 

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

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

ø(ii) will be phased out over time; 

ø(C) the discount is provided in connection with subclasses of mail consisting exclusively of mail matter of educational, cultural, scientific, or informational value; or 

ø(D) reduction or elimination of the discount would impede the efficient operation of the Postal Service. 

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

that a work share discount be reduced or eliminated if the reduction or elimination of the discount would— 

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

subclass of mail and reduce the aggregate contribution to 

the institutional costs of the Postal Service from the category or subclass subject to the discount below what it otherwise would have been if the discount had not been reduced or eliminated; or 

ø(B) result in a further increase in the rates paid by 

mailers not able to take advantage of the discount. 

ø(4) REPORT.—Whenever the Postal Service establishes a 

workshare discount rate, the Postal Service shall, at the time 

it publishes the workshare discount rate, submit to the Postal 

Regulatory Commission a detailed report that— 

ø(A) explains the Postal Service’s reasons for establishing the rate; 

ø(B) sets forth the data, economic analyses, and other information relied on by the Postal Service to justify the 

rate; and 


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ø(C) certifies that the discount will not adversely affect 

rates or services provided to users of postal services who 

do not take advantage of the discount rate. 

ø(f) TRANSITION RULE.—For the 1-year period beginning on the 

date of enactment of this section, rates and classes for market-dominant products shall remain subject to modification in accordance 

with the provisions of this chapter and section 407, as such provisions were last in effect before the date of enactment of this section. Proceedings initiated to consider a request for a recommended 

decision filed by the Postal Service during that 1-year period shall 

be completed in accordance with subchapter II of chapter 36 of this 

title and implementing regulations, as in effect before the date of 

enactment of this section.¿ 

§ 3622. Modern rate system 

(a) AUTHORITY GENERALLY.— 

(1) BOARD OF GOVERNORS.—The Board may, acting in accordance with this section, establish, and from time to time thereafter revise, a system of rates and classes for market-dominant 

products (referred to in this section as the ‘‘system’’), consistent 

with the requirements under this section. 

(2) NO DELEGATION.—The authority under this section may 

not be delegated to the Postmaster General or to any other individual or entity. 

(b) OBJECTIVES.—The system shall be designed to achieve the following objectives, each of which shall be applied in conjunction with 

the others: 

(1) To maximize incentives for the Postal Service to reduce 

costs and increase efficiency. 

(2) To create predictability and stability in rates. 

(3) To maintain high quality service standards established 

under section 3691. 

(4) To assure adequate revenues and maintain the financial 

stability of the Postal Service. 

(5) To establish and maintain a just and reasonable schedule 

for rates and classifications, however the objective under this 

paragraph shall not be construed to prohibit the Postal Service 

from making changes of unequal magnitude within, between, or 

among classes of mail. 

(6) To allocate the total institutional costs of the Postal Service appropriately between market-dominant and competitive 

products, in accordance with regulations promulgated by the 

Postal Regulatory Commission (referred to in this section as the 

‘‘Commission’’) under section 3633. 

(c) FACTORS.—In establishing or revising the system, the Board 

and the Commission shall take into account— 

(1) the value of the mail service provided through each class 

or type of mail service to both the sender and the recipient, including the educational, cultural, scientific, and informational 

value; 

(2) the direct and indirect postal costs attributable to each 

class or type of mail service; 

(3) the effect of rate increases upon Postal Service customers; 


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(4) the available alternative means of sending and receiving 

letters and other mail matter; 

(5) the 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; and 

(6) the policies of this title as well as such other factors as 

the Board or the Commission determines appropriate. 

(d) ADJUSTMENTS CONSISTENT WITH SYSTEM.— (1) NOTICE.—The Board shall provide notice of any adjustment in rates or classes proposed to be made under this section 

that is consistent with the system then in effect— 

(A) not later than— 

(i) 90 days before the implementation of any rate or 

class adjustment that affects all or substantially all 

market-dominant products; and 

(ii) 45 days before the implementation of any other 

rate or class adjustment; and 

(B) to— 

(i) the public, including by— 

(I) publication in the Federal Register; and 

(II) posting on the website of the Postal Service; 

and 

(ii) the Commission. 

(2) PUBLIC COMMENT.—The Board shall solicit and receive 

public comments on any proposed rate or class adjustment, and 

shall take such comments into account in making its final determination as to a rate or class adjustment. 

(3) FINAL DECISION.—Not later than 10 days before the implementation of a rate or class adjustment, the Board shall issue 

a final decision on the adjustment which shall— 

(A) be published in the Federal Register and posted on 

the website of the Postal Service; and 

(B) include an explanation responding to all relevant 

comments received. 

(4) COMMISSION REVIEW.— (A) IN GENERAL.—Any adjustment made by the Board 

under this section shall be subject to review by the Commission under section 3662. 

(B) APPLICATION OF SECTION 3662.—In a review described 

in subparagraph (A), section 3662 shall be applied by substituting ‘‘Board of Governors’’ for ‘‘Postal Service’’ where 

applicable. 

(e) RATE BASE.—The rates for market-dominant products in effect 

on the date of enactment of the Postal Reform Act of 2014, including 

any rates adjusted under this section on an expedited basis due to 

either extraordinary or exceptional circumstances, shall remain in 

effect unless adjusted in accordance with this section. 

(f) LIMITATIONS ON RATE ADJUSTMENTS.— 

(1) APPLICABILITY OF LIMITATIONS.—The limitations under 

this subsection shall remain in effect unless revised or eliminated under subsection (g). 

(2) ANNUAL LIMITATION.—There shall be an annual limitation 

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centage change in the Consumer Price Index for All Urban Consumers unadjusted for seasonal variation over the most recent 

available 12-month period preceding the date the Board provides notice of its intention to increase rates. 

(3) CONDITIONS.— (A) CLASSES OF MAIL.—The Board shall ensure that the 

annual percentage change in rates under this section for a 

class of mail, as defined in the Domestic Mail Classification Schedule (as in effect on the date of enactment of the 

Postal Accountability and Enhancement Act), does not exceed the annual limitation under paragraph (2) by more 

than 2 percentage points. 

(B) USE OF UNUSED RATE ADJUSTMENT AUTHORITY.— 

(i) DEFINITION.—In this subparagraph, the term ‘‘unused rate adjustment authority’’ means the difference 

between— 

(I) the maximum amount of a rate adjustment 

that the Board is authorized to make in any year 

subject to the annual limitation under paragraph 

(2); and 

(II) the amount of the rate adjustment the Board 

actually makes in that year. 

(ii) AUTHORITY.—Subject to clause (iii), the Board 

may use any unused rate adjustment authority for any 

of the 5 years following the year the authority occurred. 

(iii) LIMITATIONS.—In exercising the authority under 

clause (ii) in any year, the Governors— 

(I) may use unused rate adjustment authority 

from more than 1 year; 

(II) may use any part of the unused rate adjustment authority from any year; and 

(III) may not exceed the annual limitation under 

paragraph (2) by more than 2 percentage points. 

(4) EXCEPTION TO ANNUAL LIMITATION.—Notwithstanding the 

annual limitation under paragraph (2), and provided there is 

not sufficient unused rate adjustment authority under paragraph (3)(B), rates may be adjusted on an expedited basis due 

to either extraordinary or exceptional circumstances, provided 

that the Commission determines, after notice and opportunity 

for public comment, and within 90 days after any request by 

the Board, that such adjustment is reasonable and equitable 

and necessary to enable the Postal Service, under best practices 

of honest, efficient, and economical management, to maintain 

and continue the development of postal services of the kind and 

quality adapted to the needs of the United States. 

(g) ADOPTION OF REVISIONS TO SYSTEM OR NEW SYSTEM.— 

(1) BOARD PROPOSAL.—Not earlier than January 1, 2017, and 

as appropriate thereafter, the Board may, after notice and opportunity for public comment, submit to the Commission a proposal for revisions to the system or a new system, consistent 

with the objectives under subsection (b), taking into account the 

factors under subsection (c), and which may include revision or 

elimination of the limitations established under subsection (f). 

(2) FINAL COMMISSION ACTION.—The Commission— 


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(A) shall consider a proposal submitted by the Board 

under paragraph (1); and 

(B) may— 

(i) adopt the proposal, without modification; or 

(ii) reject the proposal. 

(h) WORKSHARE DISCOUNTS.— 

(1) DEFINITION.—In this subsection, the term ‘‘workshare discount’’ refers to rate discounts provided to mailers for the 

presorting, prebarcoding, handling, or transportation of mail, 

as further defined by the Board in accordance with subsection 

(a). 

(2) SCOPE.—The Board shall ensure that such discounts do 

not exceed the cost that the Postal Service avoids as a result of 

workshare activity, unless— 

(A) the discount is— 

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

an existing postal service, or with a new work share 

initiative related to an existing postal service; and 

(ii) necessary to induce mailer behavior that furthers 

the economically efficient operation of the Postal Service and the portion of the discount in excess of the cost 

that the Postal Service avoids as a result of the 

workshare activity will be phased out over a limited period of time; 

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

(i) is necessary to mitigate rate shock; and 

(ii) will be phased out over time; 

(C) the discount is provided in connection with a category 

of mail consisting exclusively of mail matter of educational, 

cultural, scientific, or informational value; or 

(D) reduction or elimination of the discount would— 

(i) impede the efficient operation of the Postal Service; 

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

of mail and reduce the aggregate contribution to the institutional costs of the Postal Service from the category 

subject to the discount below what it otherwise would 

have been if the discount had not been reduced or 

eliminated; or 

(iii) result in a further increase in the rates paid by 

mailers not able to take advantage of the discount. 

(3) NOTICE.—Whenever a workshare discount is established, 

the Board shall ensure that the notice provided under subsection (d)(1) includes— 

(A) the reasons for establishing the discount; 

(B) the data, economic analyses, and other information 

relied on by the Board to justify the rate; and 

(C) a certification 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. 

(i) NEGOTIATED SERVICE AGREEMENTS.—The Board shall ensure 

that any agreement between the Postal Service and a mailer that 

adjusts rates or classes in a manner that is specific to the mailer— 


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102These amendments to 39 U.S.C. § 3626 are made by section 301(b) of the bill. 

(1) is available on public and reasonable terms to similarly 

situated mailers; 

(2) either— 

(A) improves the net financial position of the Postal Service through reducing Postal Service costs or increasing the 

overall contribution to the institutional costs of the Postal 

Service taking into account changes in volume and revenues from mailers ineligible for the agreement; or 

(B) enhances the performance of mail preparation, processing, transportation, or other functions; and 

(3) does not cause— 

(A) unfair competitive advantage for the Postal Service or 

mailers eligible for the agreement; or 

(B) unreasonable disruption to the volume or revenues of 

other mailers ineligible for the agreement. 

(j) CONSIDERATION OF PRIOR COMMISSION DECISIONS.—In making any determination under this section, including the construction 

and interpretation of the terms used in this section, the Board shall 

give consideration to decisions of the Commission made prior to the 

date of enactment of the Postal Reform Act of 2014, and shall include an explanation of any deviation from such decisions in the notice required under subsection (d)(1). 

* * * * * * * 

§ 3626. Reduced Rates 102

(a) * * * 

* * * * * * * 

ø(e)(1) In the administration of this section, the rates for thirdclass mail matter mailed by a qualified political committee shall be 

the rates currently in effect under former section 4452 of this title 

for third-class mail matter mailed by a qualified nonprofit organization. 

ø(2) For purposes of this subsection— 

ø(A) the term ‘‘qualified political committee’’ means a national or State committee of a political party, the Republican 

and Democratic Senatorial Campaign Committees, the Democratic National Congressional Committee, and the National Republican Congressional Committee; 

ø(B) the term ‘‘national committee’’ means the organization 

which, by virtue of the bylaws of a political party, is responsible for the day-to-day operation of such political party at the 

national level; and 

ø(C) the term ‘‘State committee’’ means the organization 

which, by virtue of the bylaws of a political party, is responsible for the day-to-day operation of such political party at the 

State level.¿ 

ø(f)¿(e) In the administration of this chapter, the rates for mail 

under former section 4358(g) of this title shall be established without regard to either the provisions of such former section 4358(g) 

or the provisions of this section. 


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103These amendment to 39 U.S.C. § 3641 are made by section 302(c)(3) of the bill. 

ø(g)¿(f)(1) In the administration of this section, the rates for mail 

under subsections (a), (b), and (c) of former section 4358 of this title 

shall not apply to an issue of a publication if the number of copies 

of such issue distributed within the county of publication is less 

than the number equal to the sum of 50 percent of the total paid 

circulation of such issue plus one. 

* * * * * * * 

ø(h)¿(g) In the administration of this section, the number of copies of a subscription publication mailed to nonsubscribers during a 

calendar year at rates under subsections (a), (b), and (c) of former 

section 4358 of this title may not exceed 10 percent of the number 

of copies of such publication mailed at such rates to subscribers. 

* * * * * * * 

ø(j)¿(h)(1) In the administration of this section, the rates for mail 

under former section 4452(b) or 4452(c) of this title shall not apply 

to mail which advertises, promotes, offers, or, for a fee or consideration, recommends, describes, or announces the availability of— 

* * * * * * * 

ø(k)¿(i)(1) No person or organization shall mail, or cause to be 

mailed by contractual agreement or otherwise, at the rates for mail 

under former section 4452(b) or 4452(c) of this title, any matter to 

which those rates do not apply. 

* * * * * * * 

ø(l)¿(j) In the administration of this section, the term ‘‘advertising’’, as used in former section 4358(j)(2) of this title, does not 

include the publisher’s own advertising in a publication published 

by the official highway or development agency of a State. 

ø(m)¿(k)(1) In the administration of this section, the rates for 

mail under former section 4452(b) or 4452(c) of this title shall not 

apply to mail consisting of products, unless such products— 

* * * * * * * 

ø(n)¿(l) 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). 

* * * * * * * 

Subchapter III—Provisions Relating to Experimental and 

New Products 

* * * * * * * 

§ 3641. Market Tests of Experimental Products 103

(a) * * * 

(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, 

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104 This amendment to 39 U.S.C. § 3654 is made by section 106 of the bill. 

sumers in the case of nonpostal services), significantly different 

from all products offered by the Postal Service within the 2- 

year period preceding the start of the test. 

(2) * * * 

(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 øsection 3642(b)(1)¿ sections 404(g) and 3642(b)(1). 

Costs and revenues attributable to a product identified as competitive shall be included in any determination under øsection 

3633(3)¿ section 3633(a)(3) (relating to provisions applicable to 

competitive products collectively). Any test that solely affects 

products currently classified as competitive, or which provides 

services ancillary to only competitive products, shall be presumed to be in the competitive product category without regard to whether a similar ancillary product exists for marketdominant products. 

* * * * * * * 

(e) DOLLAR-AMOUNT LIMITATION.— 

(1) IN GENERAL.— A product may only be tested under this 

section if the total revenues that are anticipated, or in fact received, by the Postal Service from such product do not exceed 

ø$10,000,000¿ $50,000,000 in any year, subject to paragraph 

(2) and subsection (g). In carrying out the preceding sentence, 

the Postal Regulatory Commission may limit the amount of 

revenues the Postal Service may obtain from any particular geographic market as necessary to prevent market disruption (as 

defined under subsection (b)(2)). 

(2) EXEMPTION AUTHORITY.— The Postal Regulatory Commission may, upon written application of the Postal Service, exempt the market test from the limit in paragraph (1) if the 

total revenues that are anticipated, or in fact received, by the 

Postal Service from such product do not exceed ø$50,000,000¿ 

$100,000,000 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— 

* * * * * * * 

Subchapter IV—Reporting Requirements and Related 

Provisions 

* * * * * * * 

§ 3654. Additional financial reporting 104

(a) * * * 

(b) Financial reporting. 

(1) * * * 

* * * * * * * 


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105 This amendment to 39 U.S.C. § 3661 is made by section 206 of the bill. 

(4)(A) Each report required by subsection (a)(1)(B) shall include, with respect to the workers’ compensation obligations of 

the Postal Service— 

(i) as of the last day of the fiscal year to which the report 

applies, the amount of the Postal Service actuarial liability; 

(ii) the value of the assets in the Fund, and the difference 

between that amount and the amount of the Postal Service 

actuarial liability; 

(iii) the amounts calculated under paragraphs (1) and (2) 

of section 2012(e); 

(iv) significant methods and assumptions underlying the 

relevant actuarial valuations; 

(v) any payments to the Fund and from the Fund for the 

fiscal year to which the report applies; and 

(vi) the assumed rate of return on balances of the Fund 

and the actual rate of return for the fiscal year to which 

the report applies. 

(B) In this paragraph, the terms ‘‘Fund’’ and ‘‘Postal Service 

actuarial liability’’ have the meaning given those terms in section 2012(a). 

* * * * * * * 

Subchapter V—Postal Services, Complaints, and Judicial 

Review 

ø§ 3661. Postal Services 105

ø(a) The Postal Service shall develop and promote adequate and 

efficient postal services. 

ø(b) When the Postal Service determines that there should be a 

change in the nature of postal services which will generally affect 

service on a nationwide or substantially nationwide basis, it shall 

submit a proposal, within a reasonable time prior to the effective 

date of such proposal, to the Postal Regulatory Commission requesting an advisory opinion on the change. 

ø(c) The Commission shall not issue its opinion on any proposal 

until an opportunity for hearing on the record under sections 556 

and 557 of title 5 has been accorded to the Postal Service, users 

of the mail, and an officer of the Commission who shall be required 

to represent the interests of the general public. The opinion shall 

be in writing and shall include a certification by each Commissioner agreeing with the opinion that in his judgment the opinion 

conforms to the policies established under this title.¿ 

§ 3661. Postal services for market-dominant products 

(a) GENERAL OBLIGATION.—The Postal Service shall develop and 

promote adequate and efficient postal services with respect to its 

market-dominant products. 

(b) PROPOSED CHANGES FOR MARKET-DOMINANT PRODUCTS.— (1) SUBMISSION OF PROPOSAL.—If the Postal Service determines that there should be a change in the nature of postal 

services relating to market-dominant products that will generally affect service on a nationwide or substantially nationwide 


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106This amendment to 39 U.S.C. § 3662 is made by section 302(a)(2) of the bill. 

basis, the Postal Service shall submit a proposal to the Postal 

Regulatory Commission requesting an advisory opinion on the 

change. 

(2) ADVISORY OPINION.—Upon receipt of a proposal under 

paragraph (1), the Postal Regulatory Commission shall— 

(A) provide notice and an opportunity for public comment 

and a public hearing on the proposal; and 

(B) issue an advisory opinion not later than— 

(i) 90 days after the date on which the Postal Regulatory Commission receives the proposal; or 

(ii) a date that the Postal Regulatory Commission 

and the Postal Service may determine jointly. 

(3) RESPONSE TO OPINION.—The Postal Service shall submit 

to the President and to Congress a response to an advisory 

opinion issued under paragraph (2) that includes— 

(A) a statement of whether the Postal Service plans to 

modify the proposal to address any concerns or implement 

any recommendations made by the Commission; and 

(B) for any matter that the Postal Service determines not 

to address and any recommendation that the Postal Service 

determines not to implement, the reasons for the determination. 

(4) ACTION OF PROPOSAL.—The Postal Service may take action regarding a proposal submitted under paragraph (1)— 

(A) on or after the date on which the Postal Service submits the response required under paragraph (3); 

(B) on or after a date that the Postal Regulatory Commission and the Postal Service may determine jointly; or 

(C) after the date described in paragraph (2)(B), if— 

(i) the Postal Regulatory Commission fails to issue 

an advisory opinion on or before the date described in 

paragraph (2)(B); and 

(ii) the action is not otherwise prohibited under Federal law. 

(5) MODIFICATION OF TIMELINE.—At any time, the Postal 

Service and the Postal Regulatory Commission may jointly redetermine a date determined under paragraph (2)(B)(ii) or 

(4)(B). 

(c) Limitation.— 

(1) NO CHANGES FOR COMPETITIVE PRODUCTS.—Nothing in 

this section shall be construed as authorizing the making of 

changes under this section to the nature of service provided for 

competitive products. 

(2) HYBRID CHANGES.—For a change that affects the nature 

of service provided for both market-dominant products and 

competitive products, only the effect on market-dominant products shall be subject to this section. 

§ 3662. Rate and Service Complaints 106

(a) IN GENERAL.—Any interested person (including an officer of 

the Postal Regulatory Commission representing the interests of the 

general public) who believes the Postal Service is not operating in 


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107This new 39 U.S.C. § 3692 is added by section 205 of the bill. 

conformance with the requirements of the provisions of sections 

101(d), 401(2), 403(c), 404(a)(6), 404a, or 601, or this chapter (or 

regulations promulgated under any of those provisions) may lodge 

a complaint with the Postal Regulatory Commission in such form 

and manner as the Commission may prescribe. 

* * * * * * * 

Subchapter VII—Modern Service Standards 

* * * * * * * 

§ 3692. Delivery point modernization107

(a) DEFINITIONS.—In this section, the following definitions shall 

apply: 

(1) CENTRALIZED DELIVERY.—The term ‘‘centralized delivery’’ 

means a primary mode of mail delivery whereby mail is delivered to a group or cluster of mail receptacles at a single location. 

(2) CURBSIDE DELIVERY.—The term ‘‘curbside delivery’’ means 

a primary mode of mail delivery whereby mail is delivered to 

a mail receptacle that is situated at the edge of a public sidewalk abutting a road or curb, at a road, or at a curb. 

(3) DELIVERY POINT.—The term ‘‘delivery point’’ means a 

mailbox or other receptacle to which mail is delivered. 

(4) DISTRICT OFFICE.—The term ‘‘district office’’ means the 

central office of an administrative field unit with responsibility 

for postal operations in a designated geographic area (as defined under regulations, directives, or other guidance of the 

Postal Service). 

(5) DOOR DELIVERY.—The term ‘‘door delivery’’— 

(A) means a primary mode of mail delivery whereby mail 

is— 

(i) delivered to a mail receptacle at or near a postal 

customer’s door; or 

(ii) hand-delivered to a postal customer; and 

(B) does not include curbside or centralized delivery. 

(6) PRIMARY MODE OF MAIL DELIVERY.—The term ‘‘primary 

mode of mail delivery’’ means the typical method by which the 

Postal Service delivers mail to the delivery point of a postal customer. 

(b) POLICY.—Except as otherwise provided in this section, including paragraphs (4) and (5) of subsection (c), it shall be the policy 

of the Postal Service to use the primary mode of mail delivery that 

is most cost effective and is in the best long-term interest of the Postal Service. 

(c) CONVERSION TO OTHER DELIVERY MODES.— (1) NEW ADDRESSES.—Except as provided in paragraphs (4) 

and (5), the Postal Service shall provide centralized delivery to 

new addresses established after the date of enactment of the 

Postal Reform Act of 2014, or if centralized delivery is not practicable shall provide curbside delivery. 

(2) BUSINESS ADDRESS CONVERSION.—The Postal Service 

shall carry out a program to convert business addresses with 


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door delivery on the date of enactment of the Postal Reform Act 

of 2014 to centralized delivery or to curbside delivery. 

(3) RESIDENTIAL ADDRESS CONVERSION.— (A) IDENTIFICATION.—Not later than 9 months after the 

date of enactment of the Postal Reform Act of 2014, the 

head of each district office of the Postal Service shall identify residential addresses within the service area of the district office that are appropriate candidates for conversion 

from door delivery to a more cost-effective primary mode of 

delivery, in accordance with standards established by the 

Postal Service. 

(B) VOLUNTARY CONVERSION.—Not later than 1 year after 

the date of enactment of the Postal Reform Act of 2014, and 

consistent with subsection (b) and paragraph (4), the Postal 

Service shall begin implementation of a program to convert, 

on a voluntary basis, the addresses identified under subparagraph (A) from door delivery to a more cost-effective 

primary mode of delivery. 

(C) PROCEDURES.—In pursuing conversion under subparagraph (B), the Postal Service shall establish procedures 

to— 

(i) solicit and consider input from postal customers, 

State and local governments, local associations, and 

property owners; and 

(ii) place centralized delivery points in locations that 

maximize delivery efficiency, ease of use for postal customers, and respect for private property rights. 

(4) EXCEPTIONS.—In establishing a primary mode of mail delivery for new addresses under paragraph (1) or converting the 

primary mode of mail delivery for an address under paragraph 

(2) or (3), the Postal Service may provide door delivery if— 

(A) a physical barrier precludes the efficient provision of 

centralized delivery or curbside delivery; 

(B) the address is located in a registered historic district, 

as that term is defined in section 47(c)(3)(B) of the Internal 

Revenue Code of 1986; or 

(C) the Postal Service determines that the provision of 

centralized delivery or curbside delivery would be impractical, would not be cost effective, or would not be in the best 

long-term interest of the Postal Service. 

(5) WAIVER FOR PHYSICAL HARDSHIP.— 

(A) IN GENERAL.—The Postal Service shall establish and 

maintain a waiver program under which, upon the application of a postal customer, door delivery may be continued 

or provided to a delivery point if— 

(i) centralized delivery or curbside delivery would, 

but for this paragraph, be the primary mode of mail 

delivery for the delivery point; and 

(ii) a physical hardship prevents the postal customer 

from receiving his or her mail through any other form 

of mail delivery. 

(B) PUBLICITY; SIMPLICITY.—In establishing and maintaining the waiver program under subparagraph (A), the 

Postal Service shall— 


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108These amendments to 40 U.S.C. chapter 5 are made by section 603 of the bill. 

(i) publicize the waiver program; and 

(ii) provide a simple application process for participation in the waiver program. 

(C) POSTAL SERVICE DISCRETION.—Nothing in this paragraph shall be construed to— 

(i) prohibit the Postal Service from requiring evidence of a physical hardship in an appropriate case; or 

(ii) require the Postal Service to require evidence of 

a physical hardship in any case. 

(D) NO FEES FOR APPLICATION OR DOOR DELIVERY.—In 

establishing and maintaining the waiver program under 

subparagraph (A), the Postal Service may not charge a 

postal customer any fee to— 

(i) apply for a waiver; or 

(ii) upon the granting of a waiver by the Postal Service, receive mail through door delivery. 

* * * * * * * 

TITLE 40—PUBLIC BUILDINGS, 

PROPERTY, AND WORKS 

* * * * * * * 

Subtitle I—Federal Property and Administrative Services 

* * * * * * * 

CHAPTER 5—PROPERTY MANAGEMENT 108

* * * * * * * 

Sec. 

501. Services for executive agencies. 

* * * * * * * 

SUBCHAPTER VII—PROPERTY MANAGEMENT AND EXPEDITED DISPOSAL OF REAL

PROPERTY

621. Definitions. 

622. Duties of Federal agencies. 

623. Colocation among United States Postal Service properties. 

624. Establishment of a Federal Real Property Council. 

625. Federal real property inventory and database. 

626. Limitation on certain leasing authorities. 

627. Expedited disposal pilot program. 

628. Homeless assistance grants. 

* * * * * * * 

Subchapter VII—Property Management and Expedited 

Disposal of Real Property 

621. Definitions 

In this subchapter: 

(1) ADMINISTRATOR.—The term ‘‘Administrator’’ means the 

Administrator of General Services. 


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(2) COUNCIL.—The term ‘‘Council’’ means the Federal Real 

Property Council established by section 624(a). 

(3) DIRECTOR.—The term ‘‘Director’’ means the Director of the 

Office of Management and Budget. 

(4) DISPOSAL.—The term ‘‘disposal’’ means any action that 

constitutes the removal of any real property from the Federal inventory, including sale, deed, demolition, or exchange. 

(5) EXCESS PROPERTY.—The term ‘‘excess property’’ means any 

real property under the control of a Federal agency that the 

head of the Federal agency determines is not required to meet 

the needs or responsibilities of the Federal agency. 

(6) FEDERAL AGENCY.—The term ‘‘Federal agency’’ means— 

(A) an executive department or independent establishment in the executive branch of the Government; or 

(B) a wholly owned Government corporation. 

(7) FIELD OFFICE.—The term ‘‘field office’’ means any office of 

a Federal agency that is not the headquarters office location for 

the Federal agency. 

(8) POSTAL PROPERTY.—The term ‘‘postal property’’ means any 

building owned by the United States Postal Service. 

(9) SURPLUS PROPERTY.— (A) IN GENERAL.—The term ‘‘surplus property’’ means excess real property that is not required to meet the needs or 

responsibilities of any Federal agency. 

(B) EXCLUSIONS.—The term ‘‘surplus property’’ does not 

include— 

(i) any military installation (as defined in section 

2910 of the Defense Base Closure and Realignment Act 

of 1990 (10 U.S.C. 2687 note; Public Law 101—510)); 

(ii) any property that is excepted from the definition 

of the term ‘‘property’’ under section 102; 

(iii) Indian and native Eskimo property held in trust 

by the Federal Government as described in section 

3301(a)(5)(C)(iii); 

(iv) real property operated and maintained by the 

Tennessee Valley Authority pursuant to the Tennessee 

Valley Authority Act of 1933 (16 U.S.C. 831 et seq.); 

(v) any real property the Director excludes for reasons of national security; 

(vi) any public lands (as defined in section 203 of the 

Public Lands Corps Act of 1993 (16 U.S.C. 1722)) administered by— 

(I) the Secretary of the Interior, acting through— 

(aa) the Director of the Bureau of Land 

Management; 

(bb) the Director of the National Park Service; 

(cc) the Commissioner of Reclamation; or 

(dd) the Director of the United States Fish 

and Wildlife Service; or 

(II) the Secretary of Agriculture, acting through 

the Chief of the Forest Service; or 

(vii) any property operated and maintained by the 

United States Postal Service. 


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(10) UNDERUTILIZED PROPERTY.—The term ‘‘underutilized 

property’’ means a portion or the entirety of any real property, 

including any improvements, that is used— 

(A) irregularly or intermittently by the accountable Federal agency for program purposes of the Federal agency; or 

(B) for program purposes that can be satisfied with only 

a portion of the property. 

622. Duties of Federal agencies 

Each Federal agency shall— 

(1) maintain adequate inventory controls and accountability 

systems for real property under the control of the Federal agency; 

(2) develop current and future workforce projections so as to 

have the capacity to assess the needs of the Federal workforce 

regarding the use of real property; 

(3) continuously survey real property under the control of the 

Federal agency to identify excess property, underutilized property, and other real property suitable to be used for— 

(A) colocation with other Federal agencies; or 

(B) consolidation with other facilities; 

(4) promptly report excess property and underutilized property to the Administrator; 

(5) establish goals that will lead the Federal agency to reduce 

excess property and underutilized property in the inventory of 

the Federal agency; 

(6) submit to the Council a report on all excess property and 

underutilized property in the inventory of the Federal agency, 

including— 

(A) whether underutilized property can be better utilized; 

and 

(B) the extent to which the Federal agency believes that 

the underutilized property serves the needs of the Federal 

agency to retain underutilized property; 

(7) adopt workplace practices, configurations, and management techniques that can achieve increased levels of productivity and decrease the need for real property assets; 

(8) assess leased space to identify space that is not fully used 

or occupied; 

(9) on an annual basis and subject to the guidance of the 

Council— 

(A) conduct an inventory of real property under control of 

the Federal agency; and 

(B) make an assessment of each real property, which 

shall include— 

(i) the age and condition of the property; 

(ii) the size of the property in square footage and 

acreage; 

(iii) the geographical location of the property, including an address and description; 

(iv) the extent to which the property is being utilized; 

(v) the actual annual operating costs associated with 

the property; 


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(vi) the total cost of capital expenditures associated 

with the property; 

(vii) sustainability metrics associated with the property; 

(viii) the number of Federal employees and functions 

housed at the property; 

(ix) the extent to which the mission of the Federal 

agency is dependent on the property; 

(x) the estimated amount of capital expenditures projected to maintain and operate the property over each 

of the next 5 years after the date of enactment of this 

subchapter; and 

(xi) any additional information required by the Administrator to carry out section 625; and 

(10) provide to the Council and the Administrator the information described in paragraph (9)(B) to be used for the establishment and maintenance of the database described in section 

625. 

623. Colocation among United States Postal Service properties 

(a) IDENTIFICATION OF POSTAL PROPERTY.—Each year, the Postmaster General may— 

(1) identify a list of postal properties with space available for 

use by Federal agencies; and 

(2) submit the list to the Council. 

(b) SUBMISSION OF LIST OF POSTAL PROPERTIES TO FEDERAL

AGENCIES.— (1) IN GENERAL.—Not later than 30 days after the completion 

of a list under subsection (a), the Council shall provide the list 

to each Federal agency. 

(2) REVIEW BY FEDERAL AGENCIES.—Not later than 90 days 

after the receipt of the list submitted under paragraph (1), each 

Federal agency shall— 

(A) review the list; 

(B) identify real property assets under the control of the 

Federal agency; and 

(C) recommend colocations if appropriate. 

(c) TERMS OF COLOCATION.—On approval of the recommendations 

under subsection (b) by the Postmaster General and the applicable 

agency head, the Federal agency or appropriate landholding entity 

may work with the Postmaster General to establish appropriate 

terms of a lease for each postal property. 

624. Establishment of a Federal Real Property Council 

(a) ESTABLISHMENT.—There is established a Federal Real Property Council. 

(b) PURPOSE.—The purpose of the Council shall be to— 

(1) develop guidance and ensure implementation of an efficient and effective real property management strategy; 

(2) identify opportunities for the Federal Government to better 

manage real property assets; and 

(3) reduce the costs of managing real property, including operations, maintenance, and security. 


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(c) COMPOSITION.— 

(1) IN GENERAL.—The Council shall be composed exclusively 

of— 

(A) the senior real property officers of each Federal agency; 

(B) the Deputy Director for Management of the Office of 

Management and Budget; 

(C) the Controller of the Office of Management and Budget; 

(D) the Administrator; and 

(E) any other full-time or permanent part-time Federal 

officials or employees, as the Chairperson determines to be 

necessary. 

(2) CHAIRPERSON.—The Deputy Director for Management of 

the Office of Management and Budget shall serve as Chairperson of the Council. 

(3) EXECUTIVE DIRECTOR.— 

(A) IN GENERAL.—The Chairperson shall designate an 

Executive Director to assist in carrying out the duties of the 

Council. 

(B) QUALIFICATIONS; FULL-TIME.—The Executive Director 

shall— 

(i) be appointed from among individuals who have 

substantial experience in the areas of commercial real 

estate and development, real property management, 

and Federal operations and management; and 

(ii) serve full time. 

(d) MEETINGS.— 

(1) IN GENERAL.—The Council shall meet subject to the call 

of the Chairperson. 

(2) MINIMUM.—The Council shall meet not fewer than 4 times 

each year. 

(e) DUTIES.—The Council, in consultation with the Director and 

the Administrator, shall— 

(1) not later than 1 year after the date of enactment of this 

subchapter, establish a real property management plan template, to be updated annually, which shall include performance 

measures, specific milestones, measurable savings, strategies, 

and Government-wide goals based on the goals established 

under section 622(5) to reduce surplus property or to achieve 

better utilization of underutilized property, and evaluation criteria to determine the effectiveness of real property management 

that are designed to— 

(A) enable Congress and heads of Federal agencies to 

track progress in the achievement of real property management objectives on a Government-wide basis; 

(B) improve the management of real property; and 

(C) allow for comparison of the performance of Federal 

agencies against industry and other public sector agencies 

in terms of performance; 

(2) develop standard use rates consistent throughout each category of space and with nongovernmental space use rates; 


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(3) develop a strategy to reduce the reliance of Federal agencies on leased space for long-term needs if ownership would be 

less costly; 

(4) provide guidance on eliminating inefficiencies in the Federal leasing process; 

(5) compile a list of real property assets that are field offices 

that are suitable for colocation with other real property assets; 

and 

(6) not later than 1 year after the date of enactment of this 

subchapter and annually during the 4-year period beginning on 

the date that is 1 year after the date of enactment of this subchapter and ending on the date that is 5 years after the date 

of enactment of this subchapter, the Council shall submit to the 

Director a report that contains— 

(A) a list of the remaining excess, surplus, and underutilized properties of each Federal agency; 

(B) the progress of the Council toward developing guidance for Federal agencies to ensure that the assessment required under section 622(9)(B) is carried out in a uniform 

manner; and 

(C) the progress of Federal agencies toward achieving the 

goals established under section 622(5). 

(f) CONSULTATION.—In carrying out the duties described in subsection (e), the Council shall also consult with representatives of— 

(1) State, local, tribal authorities, and affected communities; 

and 

(2) appropriate private sector entities and nongovernmental 

organizations that have expertise in areas of— 

(A) commercial real estate and development; 

(B) government management and operations; 

(C) space planning; 

(D) community development, including transportation 

and planning; and 

(E) historic preservation. 

(g) COUNCIL RESOURCES.—The Director and the Administrator 

shall provide staffing, and administrative support for the Council, 

as appropriate. 

625. Federal real property inventory and database 

(a) IN GENERAL.—Not later than 1 year after the date of enactment of this subchapter, the Administrator shall establish and 

maintain a single, comprehensive, and descriptive database of all 

real property under the custody and control of all Federal agencies. 

(b) CONTENTS.—The database shall include— 

(1) information provided to the Administrator under section 

622(10); and 

(2) a list of real property disposals completed, including— 

(A) the date and disposal method used for each real property; 

(B) the proceeds obtained from the disposal of each real 

property; 

(C) the amount of time required to dispose of the real 

property, including the date on which the real property is 

designated as excess property; 


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(D) the date on which the property is designated as surplus property and the date on which the property is disposed; and 

(E) all costs associated with the disposal. 

(c) ACCESSIBILITY.— (1) COMMITTEES.—The database established under subsection 

(a) shall be made available on request to the Committee on 

Homeland Security and Governmental Affairs and the Committee on Environment and Public Works of the Senate and the 

Committee on Oversight and Government Reform and the Committee on Transportation and Infrastructure of the House of 

Representatives. 

(2) GENERAL PUBLIC.—Not later than 3 years after the date 

of enactment of this subchapter and to the extent consistent 

with national security, the Administrator shall make the database established under subsection (a) accessible to the public at 

no cost through the website of the General Services Administration. 

626. Limitation on certain leasing authorities 

(a) IN GENERAL.—Except as provided in subsection (b), not later 

than December 31 of each year following the date of enactment of 

this subchapter, a Federal agency with independent leasing authority shall submit to the Council a list of all leases, including operating leases, in effect on the date of enactment of this subchapter 

that includes— 

(1) the date on which each lease was executed; 

(2) the date on which each lease will expire; 

(3) a description of the size of the space; 

(4) the location of the property; 

(5) the tenant agency; 

(6) the total annual rental rate; and 

(7) the amount of the net present value of the total estimated 

legal obligations of the Federal Government over the life of the 

contract. 

(b) EXCEPTION.—Subsection (a) shall not apply to— 

(1) the United States Postal Service; 

(2) the Department of Veterans Affairs; or 

(3) any other property the President excludes from subsection 

(a) for reasons of national security. 

627. Expedited disposal pilot program 

(a) ESTABLISHMENT.—The Director shall establish a pilot program for disposal of any surplus property by sale, transfer, or other 

means. 

(1) PROPERTIES FOR EXPEDITED DISPOSAL.— 

(A) IN GENERAL.—On an annual basis, the Director may 

authorize the expedited disposal of not more than 200 surplus properties. 

(B) PRIORITY.—In determining which properties to dispose of, the Director shall give priority to surplus properties 

that have the highest fair market value and the greatest potential for disposal. 

(C) COSTS ASSOCIATED WITH DISPOSAL.— 


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(i) IN GENERAL.—The Administrator may obligate an 

amount to pay any direct and indirect costs under section 572 related to identifying and preparing properties 

to be reported as excess property by a Federal agency. 

(ii) REIMBURSEMENT.—An amount obligated under 

clause (i) shall be paid from the proceeds of any sale 

of real property under this subsection. 

(iii) NET PROCEEDS.—Net proceeds shall be distributed under subsection (b). 

(D) MAXIMUM NET PROCEEDS.—Any real property authorized for disposal by sale under subparagraph (A) shall be 

disposed of in a manner that, as determined by the Administrator in consultation with the head of the applicable Federal agency, is structured and marketed to maximize the 

value to the Federal Government. 

(E) MONETARY PROCEEDS REQUIREMENT.—Surplus property may be disposed of under this section only if disposal 

of the property will generate monetary proceeds to the Federal Government that— 

(i) exceed the costs of disposal of the property; and 

(ii) are not less than 90 percent of fair market value. 

(F) LOCAL GOVERNMENT NOTIFICATION.— (i) NOTIFICATION.—Not later than 30 days after the 

date on which the Director makes the authorization 

under subparagraph (A), the Director shall submit in 

writing to the appropriate local government unit in 

which the property is located a notification that includes a list of each applicable property authorized to 

be disposed of under subparagraph (A). 

(ii) REMOVAL FROM PILOT PROGRAM.— 

(I) IN GENERAL.—The Director, at the discretion 

of the Director, may remove a property for which 

notification has been provided under clause (i) 

from the pilot program established under subparagraph (A). 

(II) REPLACEMENT.—For each property removed 

from the pilot program under subclause (I), the Director may authorize the expedited disposal of 1 

property not originally authorized under subparagraph (A). 

(2) APPLICABILITY OF CERTAIN LAW.—Any expedited disposal 

of real property conducted under this section shall not be subject to— 

(A) any section of An Act Authorizing the Transfer of Certain Real Property for Wildlife, or Other Purposes (16 

U.S.C. 667b); 

(B) sections 107 and 317 of title 23; 

(C) sections 545(b)(8), 550, 553, 554, and 1304(b) of this 

title; 

(D) section 501 of the McKinney-Vento Homeless Assistance Act (42 U.S.C. 11411); 

(E) section 47151 of title 49; or 

(F) section 13(d) of the Surplus Property Act of 1944 (50 

U.S.C. App. 1622(d)). 


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(3) EFFECT.—Except as provided in paragraph (2), nothing in 

this subchapter terminates or in any way limits the authority 

of any Federal agency under any other provision of law to dispose of real property. 

(b) USE OF PROCEEDS.— 

(1) IN GENERAL.—Of the proceeds received from the disposal 

of any real property under this subchapter— 

(A) not less than 80 percent shall be returned to the general fund of the Treasury for debt reduction; 

(B) the lesser of 18 percent or the share of proceeds otherwise authorized to be retained under law shall be retained 

by the Federal agency that has custody and is accountable 

for the real property, subject to paragraph (2); 

(C) not greater than 2 percent shall be made available to 

carry out section 628, subject to annual appropriations; 

and 

(D) any remaining share of the proceeds shall be returned 

to the general fund of the Treasury for Federal budget deficit reduction. 

(2) LIMITATION ON USE OF PROCEEDS.—Any proceeds retained 

by Federal agencies under this section shall be— 

(A) deposited into the appropriate real property account 

of the Federal agency that had custody and accountability 

for the real property, with the funds expended only as authorized in annual appropriations Acts; 

(B) used— 

(i) by not later than 2 years after the date of disposal 

of the real property; and 

(ii) only for activities relating to Federal real property asset management and disposal; and 

(C) if not used by the date described in subparagraph 

(B)(i), shall be deposited in the Treasury and used for Federal budget deficit reduction. 

(c) PUBLIC BENEFIT.— 

(1) CONVEYANCE.—Except as provided in paragraph (2), if a 

real property authorized to be disposed of under subsection (a) 

has not been disposed of by the date that is 2 years after the 

date the property is listed for sale, the Director, in consultation 

with the Administrator and the Secretary of Housing and 

Urban Development, may consider a request from the disposing 

Federal agency that the real property be conveyed to State and 

local governments or nonprofit organizations for various public 

purposes or uses as permitted by applicable law. 

(2) PREDOMINANT USE AND SIZE STANDARDS.— 

(A) IN GENERAL.—Any real property authorized to be disposed of under subsection (a) shall not be conveyed under 

paragraph (1) if— 

(i) the predominant use of the property is not for 

housing; and 

(ii)(I) the area of the property is not less than 

25,000 square feet; or 

(II) the appraised fair market value of the property is greater than $1,000,000. 


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(B) APPRAISED FAIR MARKET VALUE.—The appraised fair 

market value described in subparagraph (A)(ii)(II) shall be 

determined by the Federal agency with custody or control 

of the property, in consultation with the Administrator and 

standard appraisal practice. 

(d) ENFORCEMENT.— (1) INCREASE IN SIZE OF INVENTORY.—Except as provided in 

paragraph (2), if a Federal agency fails to make available for 

public sale the real property authorized for disposal under subsection (a) by the date that is 18 months after the date on which 

the authorization is made, that Federal agency, except for specific exceptions promulgated by the Director, shall not increase 

the size of the civilian real property inventory, unless the square 

footage of the increase is offset, within an appropriate time as 

determined by the Director, through consolidation, colocation, 

or disposal of another building space from the inventory of that 

Federal agency. 

(2) EXCEPTION.—Paragraph (1) shall not apply to a Federal 

agency that acquires any real property not under the administrative jurisdiction of the Federal Government, by sale or lease, 

until the Director submits a certification to Congress of the disposal of all of those surplus properties. 

(e) TERMINATION OF AUTHORITY.—The authority provided by this 

section terminates on the date that is 5 years after the date of enactment of this subchapter. 

628. Homeless assistance grants 

(a) DEFINITIONS.—In this section: 

(1) ELIGIBLE NONPROFIT ORGANIZATION.—The term ‘‘eligible 

nonprofit organization’’ means a nonprofit organization that is 

a representative of the homeless. 

(2) HOMELESS.—The term ‘‘homeless’’ has the meaning given 

the term in section 103 of the McKinney-Vento Homeless Assistance Act (42 U.S.C. 11302), except that subsection (c) of that 

section shall not apply. 

(3) PERMANENT HOUSING.—The term ‘‘permanent housing’’ 

has the meaning given the term in section 401 of the McKinneyVento Homeless Assistance Act (42 U.S.C. 11360). 

(4) PRIVATE NONPROFIT ORGANIZATION.—The term ‘‘private 

nonprofit organization’’ has the meaning given the term in section 401 of the McKinney-Vento Homeless Assistance Act (42 

U.S.C. 11360). 

(5) REPRESENTATIVE OF THE HOMELESS.—The term ‘‘representative of the homeless’’ has the meaning given the term in 

section 501(i) of the McKinney-Vento Homeless Assistance Act 

(42 U.S.C. 11411(i)). 

(6) SECRETARY.—The term ‘‘Secretary’’ means the Secretary of 

Housing and Urban Development. 

(7) TRANSITIONAL HOUSING.—The term ‘‘transitional housing’’ 

has the meaning given the term in section 401 of the McKinneyVento Homeless Assistance Act (42 U.S.C. 11360). 

(b) GRANT AUTHORITY.— 

(1) IN GENERAL.—To the extent amounts are made available 

under section 627(b)(1)(C) for use under this section, the SecVerDate Mar 15 2010 02:45 Aug 09, 2014 Jkt 039010 PO 00000 Frm 00165 Fmt 6604 Sfmt 6603 E:\HR\OC\SR237.XXX SR237

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retary shall make grants to eligible private nonprofit organizations through the continuum of care program established under 

subtitle C of title IV of the McKinney-Vento Homeless Assistance Act (42 U.S.C. 11381 et se.), to purchase real property suitable for use to assist the homeless in accordance with subsection 

(c). 

(2) TERMS AND CONDITIONS.—Except as otherwise provided in 

this section, a grant under this section shall be subject to the 

same terms and conditions as a grant under the continuum of 

care program established under subtitle C of title IV of the 

McKinney-Vento Homeless Assistance Act (42 U.S.C. 11381 et 

se.). 

(c) USE OF PROPERTIES FOR HOUSING OR SHELTER FOR THE

HOMELESS.— 

(1) ELIGIBLE USES.—An eligible private nonprofit organization that receives a grant under subsection (b) shall use the 

amounts received only to purchase or rehabilitate real property 

to provide permanent housing, transitional housing, or temporary shelter to the homeless. 

(2) TERM OF USE.—The Secretary may not make a grant 

under subsection (b) to an eligible private nonprofit organization unless the eligible private nonprofit organization provides 

to the Secretary such assurances as the Secretary determines 

necessary to ensure that any real property purchased or rehabilitated using amounts received under the grant is used only 

for the purposes described in paragraph (1) for a period of not 

less than 15 years. 

(d) PREFERENCE.—In awarding grants under subsection (b), the 

Secretary shall give preference to eligible private nonprofit organizations that operate within areas in which Federal real property is 

being sold under the disposal program authorized under section 

627. 

(e) REGULATIONS.—The Secretary may promulgate such regulations as are necessary to carry out this section. 

* * * * * * * 

TITLE 42—THE PUBLIC HEALTH AND WELFARE 

* * * * * * * 

CHAPTER 7—SOCIAL SECURITY 

* * * * * * * 

Subchapter XVIII—Health Insurance for Aged and Disabled 

* * * * * * * 


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109These amendments to the Social Security Act are made by section 104(b) of the bill. 

PART B—SUPPLEMENTARY MEDICAL INSURANCE BENEFITS FOR AGED AND DISABLED 109

* * * * * * * 

§ 1395p. Enrollment periods 

(a) * * * 

* * * * * * * 

(m)(1)(A) In the case of any individual who is subject to the enrollment requirement of section 8903c(e) of title 5, United States 

Code, who has elected not to enroll (or to be deemed enrolled) during the individual’s initial enrollment period, there shall be a special enrollment period described in subparagraph (B). 

(B) The special enrollment period described in this subparagraph 

is the 6-month period, beginning on August 1, 2015 and ending on 

January 31, 2016. 

(2)(A) In the case of any individual who— 

(i) was initially not subject to the enrollment requirement of 

section 8903c(e) of title 5, United States Code; 

(ii) is eligible to enroll in a plan under chapter 89 of title 5, 

United States Code, because of an involuntary loss of health 

care coverage; 

(iii) upon the involuntary loss of health care coverage, becomes subject to the enrollment requirement of section 8903c(e) 

of title 5, United States Code, because of enrollment in a 

PSHBP plan; and 

(iv) has elected not to enroll (or to be deemed enrolled) during 

the individual’s initial enrollment period, there shall be a special enrollment period described in subparagraph (B). 

(B) The special enrollment period described in this subparagraph 

is the period of time equivalent to the period of time in which the 

individual has the ability to enroll in a PSHBP plan due to the involuntary loss of health care coverage, pursuant to chapter 89 of 

title 5, United States Code, and its implementing regulations. 

(C) For purposes of this subsection, the term ‘‘PSHBP plan’’ has 

the meaning under section 8903c(a) of title 5, United States Code. 

(3) In the case of an individual who enrolls during the special enrollment period provided under paragraphs (1) and (2), the coverage 

period under this part shall begin on the first day of the month in 

which the individual enrolls. 

* * * * * * * 

§ 1395r. Amount of premiums for individuals enrolled under 

this part 

(a) * * * 

* * * * * * * 

(b) INCREASE IN MONTHLY PREMIUM— In the case of an individual whose coverage period began pursuant to an enrollment after his initial enrollment period (determined 

pursuant to subsection (c) or (d) of section 1395p of this title) and 


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not pursuant to a special enrollment period under subsection ø(i)(4) 

or (l)¿ (i)(4), (l), or (m) of section 1395p of this title, the monthly 

premium determined under subsection (a) of this section (without 

regard to any adjustment under subsection (i) of this section) shall 

be increased by 10 percent of the monthly premium so determined 

for each full 12 months (in the same continuous period of eligibility) in which he could have been but was not enrolled. For purposes of the preceding sentence, there shall be taken into account 

(1) the months which elapsed between the close of his initial enrollment period and the close of the enrollment period in which he enrolled, plus (in the case of an individual who reenrolls) (2) the 

months which elapsed between the date of termination of a previous coverage period and the close of the enrollment period in 

which he reenrolled, but there shall not be taken into account 

months for which the individual can demonstrate that the individual was enrolled in a group health plan described in section 

1395y(b)(1)(A)(v) of this title by reason of the individual’s (or the 

individual’s spouse’s) current employment status or months during 

which the individual has not attained the age of 65 and for which 

the individual can demonstrate that the individual was enrolled in 

a large group health plan (as that term is defined in section 

1395y(b)(1)(B)(iii) of this title) by reason of the individual’s current 

employment status (or the current employment status of a family 

member of the individual) or months for which the individual can 

demonstrate that the individual was an individual described in section 1395p(k)(3) of this title. Any increase in an individual’s monthly premium under the first sentence of this subsection with respect 

to a particular continuous period of eligibility shall not be applicable with respect to any other continuous period of eligibility which 

such individual may have. No increase in the premium shall be effected for a month in the case of an individual who enrolls under 

this part during 2001, 2002, 2003, or 2004 and who demonstrates 

to the Secretary before December 31, 2004, that the individual is 

a covered beneficiary (as defined in section 1072(5) of title 10). The 

Secretary of Health and Human Services shall consult with the 

Secretary of Defense in identifying individuals described in the previous sentence. 

* * * * * * * 


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