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[Congressional Bills 109th Congress]
[From the U.S. Government Publishing Office]
[H.R. 22 Introduced in House (IH)]

109th CONGRESS
  1st Session
                                 H. R. 22

            To reform the postal laws of the United States.

_______________________________________________________________________

                    IN THE HOUSE OF REPRESENTATIVES

                            January 4, 2005

   Mr. McHugh (for himself, Mr. Davis of Illinois, Mr. Tom Davis of 
  Virginia, and Mr. Waxman) introduced the following bill; which was 
             referred to the Committee on Government Reform

_______________________________________________________________________

                                 A BILL

 
            To reform the postal laws of the United States.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE; TABLE OF CONTENTS.

    (a) Short Title.--This Act may be cited as the ``Postal 
Accountability and Enhancement Act''.
    (b) Table of Contents.--The table of contents for this Act is as 
follows:

Sec. 1. Short title; table of contents.
                 TITLE I--DEFINITIONS; POSTAL SERVICES

Sec. 101. Definitions.
Sec. 102. Postal services.
Sec. 103. Financial transparency.
                    TITLE II--MODERN RATE REGULATION

Sec. 201. Provisions relating to market-dominant products.
Sec. 202. Provisions relating to competitive products.
Sec. 203. Provisions relating to experimental and new products.
Sec. 204. Reporting requirements and related provisions.
Sec. 205. Complaints; appellate review and enforcement.
Sec. 206. Workshare discounts.
Sec. 207. Clerical amendment.
           TITLE III--PROVISIONS RELATING TO FAIR COMPETITION

Sec. 301. Postal Service Competitive Products Fund.
Sec. 302. Assumed Federal income tax on competitive products income.
Sec. 303. Unfair competition prohibited.
Sec. 304. Suits by and against the Postal Service.
Sec. 305. International postal arrangements.
Sec. 306. Redesignation.
Sec. 307. Clarification.
                      TITLE IV--GENERAL PROVISIONS

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

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

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

Sec. 701. Universal postal service study.
Sec. 702. Assessments of ratemaking, classification, and other 
                            provisions.
Sec. 703. Study on equal application of laws to competitive products.
Sec. 704. Greater diversity in Postal Service Executive and 
                            administrative schedule management 
                            positions.
Sec. 705. Plan for assisting displaced workers.
Sec. 706. Contracts with women, minorities, and small businesses.
Sec. 707. Rates for periodicals.
Sec. 708. Assessment of certain rate deficiencies.
Sec. 709. Postal processing and distribution network study.
Sec. 710. Definition.
     TITLE VIII--MISCELLANEOUS; TECHNICAL AND CONFORMING AMENDMENTS

Sec. 801. Employment of postal police officers.
Sec. 802. Date of postmark to be treated as date of appeal in 
                            connection with the closing or 
                            consolidation of post offices.
Sec. 803. Provisions relating to benefits under chapter 81 of title 5, 
                            United States Code, for officers and 
                            employees of the former Post Office 
                            Department.
Sec. 804. Obsolete provisions.
Sec. 805. Expanded contracting authority.
Sec. 806. Investments.
Sec. 807. Repeal of section 5403.
Sec. 808. Reduced rates.
Sec. 809. Hazardous matter.
Sec. 810. Provisions relating to cooperative mailings.
Sec. 811. Technical and conforming amendments.
           TITLE IX--POSTAL PENSION FUNDING REFORM AMENDMENTS

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

                 TITLE I--DEFINITIONS; POSTAL SERVICES

SEC. 101. DEFINITIONS.

    Section 102 of title 39, United States Code, is amended by striking 
``and'' at the end of paragraph (3), by striking the period at the end 
of paragraph (4) and inserting a semicolon, and by adding at the end 
the following:
            ``(5) `postal service' means the carriage of letters, 
        printed matter, or mailable packages, including acceptance, 
        collection, processing, delivery, or other services supportive 
        or ancillary thereto;
            ``(6) `product' means a postal service with a distinct cost 
        or market characteristic for which a rate or rates are, or may 
        reasonably be, applied;
            ``(7) `rates', as used with respect to products, includes 
        fees for postal services;
            ``(8) `market-dominant product' or `product in the market-
        dominant category of mail' means a product subject to 
        subchapter I of chapter 36;
            ``(9) `competitive product' or `product in the competitive 
        category of mail' means a product subject to subchapter II of 
        chapter 36;
            ``(10) `Consumer Price Index' means the Consumer Price 
        Index for All Urban Consumers published monthly by the Bureau 
        of Labor Statistics of the Department of Labor; and
            ``(11) `year', as used in chapter 36 (other than 
        subchapters I and VI thereof), means a fiscal year.''.

SEC. 102. POSTAL SERVICES.

    (a) In General.--Section 404 of title 39, United States Code, is 
amended--
            (1) in subsection (a), by striking paragraph (6) and by 
        redesignating paragraphs (7) through (9) as paragraphs (6) 
        through (8), respectively; and
            (2) by adding at the end the following:
    ``(c) Nothing in this title shall be considered to permit or 
require that the Postal Service provide any special nonpostal or 
similar services, except that nothing in this subsection shall prevent 
the Postal Service from providing any special nonpostal or similar 
services provided by the Postal Service as of January 4, 2005.''.
    (b) Conforming Amendment.--Section 1402(b)(1)(B)(ii) of the Victims 
of Crime Act of 1984 (98 Stat. 2170; 42 U.S.C. 10601(b)(1)(B)(ii)) is 
amended by striking ``404(a)(8)'' and inserting ``404(a)(7)''.

SEC. 103. FINANCIAL TRANSPARENCY.

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

                    TITLE II--MODERN RATE REGULATION

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

    (a) In General.--Chapter 36 of title 39, United States Code, is 
amended by striking sections 3621 and 3622 and inserting the following:
``Sec. 3621. Applicability; definitions
    ``(a) Applicability.--This subchapter shall apply with respect to--
            ``(1)(A) single piece first-class letters (both domestic 
        and international);
            ``(B) single piece first-class cards (both domestic and 
        international); and
            ``(C) special services;
            ``(2) all first-class mail not included under paragraph 
        (1);
            ``(3) periodicals;
            ``(4) standard mail;
            ``(5) media mail;
            ``(6) library mail; and
            ``(7) bound printed matter,
subject to any changes the Postal Regulatory Commission may make under 
section 3642.
    ``(b) Rule of Construction.--Mail matter referred to in subsection 
(a) shall, for purposes of this subchapter, be considered to have the 
meaning given to such mail matter under the mail classification 
schedule.
``Sec. 3622. Modern rate regulation
    ``(a) Authority Generally.--The Postal Regulatory Commission shall, 
within 24 months after the date of the enactment of this section, by 
regulation establish (and may from time to time thereafter by 
regulation revise) a modern system for regulating rates and classes for 
market-dominant products.
    ``(b) Objectives.--Such system shall be designed to achieve the 
following objectives:
            ``(1) To maximize incentives to reduce costs and increase 
        efficiency.
            ``(2) To create predictability and stability in rates.
            ``(3) To maintain high quality service standards.
            ``(4) To allow the Postal Service pricing flexibility.
            ``(5) To assure adequate revenues, including retained 
        earnings, to maintain financial stability.
            ``(6) To reduce the administrative burden of the ratemaking 
        process.
    ``(c) Factors.--In establishing or revising such system, the Postal 
Regulatory Commission shall take into account--
            ``(1) the establishment and maintenance of a fair and 
        equitable schedule for rates and classification system;
            ``(2) the value of the mail service actually provided each 
        class or type of mail service to both the sender and the 
        recipient, including but not limited to the collection, mode of 
        transportation, and priority of delivery;
            ``(3) the direct and indirect postal costs attributable to 
        each class or type of mail service plus that portion of all 
        other costs of the Postal Service reasonably assignable to such 
        class or type;
            ``(4) the effect of rate increases upon the general public, 
        business mail users, and enterprises in the private sector of 
        the economy engaged in the delivery of mail matter other than 
        letters;
            ``(5) the available alternative means of sending and 
        receiving letters and other mail matter at reasonable costs;
            ``(6) the degree of preparation of mail for delivery into 
        the postal system performed by the mailer and its effect upon 
        reducing costs to the Postal Service;
            ``(7) simplicity of structure for the entire schedule and 
        simple, identifiable relationships between the rates or fees 
        charged the various classes of mail for postal services;
            ``(8) the relative value to the people of the kinds of mail 
        matter entered into the postal system and the desirability and 
        justification for special classifications and services of mail;
            ``(9) the importance of providing classifications with 
        extremely high degrees of reliability and speed of delivery and 
        of providing those that do not require high degrees of 
        reliability and speed of delivery;
            ``(10) the desirability of special classifications from the 
        point of view of both the user and of the Postal Service;
            ``(11) the educational, cultural, scientific, and 
        informational value to the recipient of mail matter; and
            ``(12) the policies of this title as well as such other 
        factors as the Commission deems appropriate.
    ``(d) Allowable Provisions.--The system for regulating rates and 
classes for market-dominant products may include one or more of the 
following:
            ``(1) Price caps, revenue targets, or other form of 
        incentive regulation.
            ``(2) Cost-of-service regulation.
            ``(3) Such other form of regulation as the Commission 
        considers appropriate to achieve, consistent with subsection 
        (c), the objectives of subsection (b).
    ``(e) Limitation.--In the administration of this section, the 
Commission shall not permit the average rate in any subclass of mail to 
increase at an annual rate greater than the comparable increase in the 
Consumer Price Index, unless it has, after notice and opportunity for a 
public hearing and comment, determined that such increase is reasonable 
and equitable and necessary to enable the Postal Service, under best 
practices of honest, efficient, and economical management, to maintain 
and continue the development of postal services of the kind and quality 
adapted to the needs of the United States.
    ``(f) Transition Rule.--Until regulations under this section first 
take effect, rates and classes for market-dominant products shall 
remain subject to modification in accordance with the provisions of 
this chapter and section 407, as such provisions were last in effect 
before the date of the enactment of this section.''.
    (b) Repealed Sections.--Sections 3623, 3624, 3625, and 3628 of 
title 39, United States Code, are repealed.
    (c) Redesignation.--Chapter 36 of title 39, United States Code (as 
in effect after the amendment made by section 501(a)(2), but before the 
amendment made by section 202) is amended by striking the heading for 
subchapter II and inserting the following:

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

SEC. 202. PROVISIONS RELATING TO COMPETITIVE PRODUCTS.

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

      ``SUBCHAPTER II--PROVISIONS RELATING TO COMPETITIVE PRODUCTS

``Sec. 3631. Applicability; definitions and updates
    ``(a) Applicability.--This subchapter shall apply with respect to--
            ``(1) priority mail;
            ``(2) expedited mail;
            ``(3) mailgrams;
            ``(4) international mail; and
            ``(5) parcel post,
subject to any changes the Postal Regulatory Commission may make under 
section 3642.
    ``(b) Definition.--For purposes of this subchapter, the term `costs 
attributable', as used with respect to a product, means the direct and 
indirect postal costs attributable to such product.
    ``(c) Rule of Construction.--Mail matter referred to in subsection 
(a) shall, for purposes of this subchapter, be considered to have the 
meaning given to such mail matter under the mail classification 
schedule.
``Sec. 3632. Action of the Governors
    ``(a) Authority To Establish Rates and Classes.--The Governors 
shall establish rates and classes for products in the competitive 
category of mail in accordance with the requirements of this subchapter 
and regulations promulgated under section 3633.
    ``(b) Procedures.--
            ``(1) In general.--Rates and classes shall be established 
        in writing, complete with a statement of explanation and 
        justification, and the date as of which each such rate or class 
        takes effect.
            ``(2) Rates or classes of general applicability.--In the 
        case of rates or classes of general applicability in the Nation 
        as a whole or in any substantial region of the Nation, the 
        Governors shall cause each rate and class decision under this 
        section and the record of the Governors' proceedings in 
        connection with such decision to be published in the Federal 
        Register at least 30 days before the effective date of any new 
        rates or classes.
            ``(3) Rates or classes not of general applicability.--In 
        the case of rates or classes not of general applicability in 
        the Nation as a whole or in any substantial region of the 
        Nation, the Governors shall cause each rate and class decision 
        under this section and the record of the proceedings in 
        connection with such decision to be filed with the Postal 
        Regulatory Commission by such date before the effective date of 
        any new rates or classes as the Governors consider appropriate, 
        but in no case less than 15 days.
            ``(4) Criteria.--As part of the regulations required under 
        section 3633, the Postal Regulatory Commission shall establish 
        criteria for determining when a rate or class established under 
        this subchapter is or is not of general applicability in the 
        Nation as a whole or in any substantial region of the Nation.
    ``(c) Transition Rule.--Until regulations under section 3633 first 
take effect, rates and classes for competitive products shall remain 
subject to modification in accordance with the provisions of this 
chapter and section 407, as such provisions were as last in effect 
before the date of the enactment of this section.
``Sec. 3633. Provisions applicable to rates for competitive products
    ``The Postal Regulatory Commission shall, within 18 months after 
the date of the enactment of this section, promulgate (and may from 
time to time thereafter revise) regulations--
            ``(1) to prohibit the subsidization of competitive products 
        by market-dominant products;
            ``(2) to ensure that each competitive product covers its 
        costs attributable; and
            ``(3) to ensure that all competitive products collectively 
        make a reasonable contribution to the institutional costs of 
        the Postal Service.''.

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

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

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

``Sec. 3641. Market tests of experimental products
    ``(a) Authority.--
            ``(1) In general.--The Postal Service may conduct market 
        tests of experimental products in accordance with this section.
            ``(2) Provisions waived.--A product shall not, while it is 
        being tested under this section, be subject to the requirements 
        of sections 3622, 3633, or 3642, or regulations promulgated 
        under those sections.
    ``(b) Conditions.--A product may not be tested under this section 
unless it satisfies each of the following:
            ``(1) Significantly different product.--The product is, 
        from the viewpoint of the mail users, significantly different 
        from all products offered by the Postal Service within the 2-
        year period preceding the start of the test.
            ``(2) Market disruption.--The introduction or continued 
        offering of the product will not create an unfair or otherwise 
        inappropriate competitive advantage for the Postal Service or 
        any mailer, particularly in regard to small business concerns 
        (as defined under subsection (h)).
            ``(3) Correct categorization.--The Postal Service 
        identifies the product, for the purpose of a test under this 
        section, as either market dominant or competitive, consistent 
        with the criteria under section 3642(b)(1). Costs and revenues 
        attributable to a product identified as competitive shall be 
        included in any determination under section 3633(3) (relating 
        to provisions applicable to competitive products collectively).
    ``(c) Notice.--
            ``(1) In general.--At least 30 days before initiating a 
        market test under this section, the Postal Service shall file 
        with the Postal Regulatory Commission and publish in the 
        Federal Register a notice--
                    ``(A) setting out the basis for the Postal 
                Service's determination that the market test is covered 
                by this section; and
                    ``(B) describing the nature and scope of the market 
                test.
            ``(2) Safeguards.--For a competitive experimental product, 
        the provisions of section 504(g) shall be available with 
        respect to any information required to be filed under paragraph 
        (1) to the same extent and in the same manner as in the case of 
        any matter described in section 504(g)(1). Nothing in paragraph 
        (1) shall be considered to permit or require the publication of 
        any information as to which confidential treatment is accorded 
        under the preceding sentence (subject to the same exception as 
        set forth in section 504(g)(3)).
    ``(d) Duration.--
            ``(1) In general.--A market test of a product under this 
        section may be conducted over a period of not to exceed 24 
        months.
            ``(2) Extension authority.--If necessary in order to 
        determine the feasibility or desirability of a product being 
        tested under this section, the Postal Regulatory Commission 
        may, upon written application of the Postal Service (filed not 
        later than 60 days before the date as of which the testing of 
        such product would otherwise be scheduled to terminate under 
        paragraph (1)), extend the testing of such product for not to 
        exceed an additional 12 months.
    ``(e) Dollar-Amount Limitation.--
            ``(1) In general.--A product may be tested under this 
        section only if the total revenues that are anticipated, or in 
        fact received, by the Postal Service from such product do not 
        exceed $10,000,000 nationwide in any year, subject to paragraph 
        (2) and subsection (g). In carrying out the preceding sentence, 
        the Postal Regulatory Commission may limit the amount of 
        revenues the Postal Service may obtain from any particular 
        geographic market as necessary to prevent market disruption (as 
        defined in subsection (b)(2)).
            ``(2) Exemption authority.--The Postal Regulatory 
        Commission may, upon written application of the Postal Service, 
        exempt the market test from the limit in paragraph (1) if the 
        total revenues that are anticipated, or in fact received, by 
        the Postal Service from such product do not exceed $50,000,000 
        in any year, subject to subsection (g). In reviewing an 
        application under this paragraph, the Postal Regulatory 
        Commission shall approve such application if it determines 
        that--
                    ``(A) the product is likely to benefit the public 
                and meet an expected demand;
                    ``(B) the product is likely to contribute to the 
                financial stability of the Postal Service; and
                    ``(C) the product is not likely to result in unfair 
                or otherwise inappropriate competition.
    ``(f) Cancellation.--If the Postal Regulatory Commission at any 
time determines that a market test under this section fails, with 
respect to any particular product, to meet one or more of the 
requirements of this section, it may order the cancellation of the test 
involved or take such other action as it considers appropriate. A 
determination under this subsection shall be made in accordance with 
such procedures as the Commission shall by regulation prescribe.
    ``(g) Adjustment for Inflation.--For purposes of each year 
following the year in which occurs the deadline for the Postal 
Service's first report to the Postal Regulatory Commission under 
section 3652(a), each dollar amount contained in this section shall be 
adjusted by the change in the Consumer Price Index for such year (as 
determined under regulations of the Commission).
    ``(h) Definition of a Small Business Concern.--The criteria used in 
defining small business concerns or otherwise categorizing business 
concerns as small business concerns shall, for purposes of this 
section, be established by the Postal Regulatory Commission in 
conformance with the requirements of section 3 of the Small Business 
Act.
    ``(i) Effective Date.--Market tests under this subchapter may be 
conducted in any year beginning with the first year in which occurs the 
deadline for the Postal Service's first report to the Postal Regulatory 
Commission under section 3652(a).
``Sec. 3642. New products and transfers of products between the market-
              dominant and competitive categories of mail
    ``(a) In General.--Upon request of the Postal Service or users of 
the mails, or upon its own initiative, the Postal Regulatory Commission 
may change the list of market-dominant products under section 3621 and 
the list of competitive products under section 3631 by adding new 
products to the lists, removing products from the lists, or 
transferring products between the lists.
    ``(b) Criteria.--All determinations by the Postal Regulatory 
Commission under subsection (a) shall be made in accordance with the 
following criteria:
            ``(1) The market-dominant category of products shall 
        consist of each product in the sale of which the Postal Service 
        exercises sufficient market power that it can effectively set 
        the price of such product substantially above costs, raise 
        prices significantly, decrease quality, or decrease output, 
        without risk of losing business to other firms offering similar 
        products. The competitive category of products shall consist of 
        all other products.
            ``(2) Exclusion of products covered by postal monopoly.--A 
        product covered by the postal monopoly shall not be subject to 
        transfer under this section from the market-dominant category 
        of mail. For purposes of the preceding sentence, the term 
        `product covered by the postal monopoly' means any product the 
        conveyance or transmission of which is reserved to the United 
        States under section 1696 of title 18, subject to the same 
        exception as set forth in the last sentence of section 
        409(e)(1).
            ``(3) Additional considerations.--In making any decision 
        under this section, due regard shall be given to--
                    ``(A) the availability and nature of enterprises in 
                the private sector engaged in the delivery of the 
                product involved;
                    ``(B) the views of those who use the product 
                involved on the appropriateness of the proposed action; 
                and
                    ``(C) the likely impact of the proposed action on 
                small business concerns (within the meaning of section 
                3641(h)).
    ``(c) Transfers of Subclasses and Other Subordinate Units 
Allowable.--Nothing in this title shall be considered to prevent 
transfers under this section from being made by reason of the fact that 
they would involve only some (but not all) of the subclasses or other 
subordinate units of the class of mail or type of postal service 
involved (without regard to satisfaction of minimum quantity 
requirements standing alone).
    ``(d) Notification and Publication Requirements.--
            ``(1) Notification requirement.--The Postal Service shall, 
        whenever it requests to add a product or transfer a product to 
        a different category, file with the Postal Regulatory 
        Commission and publish in the Federal Register a notice setting 
        out the basis for its determination that the product satisfies 
        the criteria under subsection (b) and, in the case of a request 
        to add a product or transfer a product to the competitive 
        category of mail, that the product meets the regulations 
        promulgated by the Postal Regulatory Commission pursuant to 
        section 3633. The provisions of section 504(g) shall be 
        available with respect to any information required to be filed.
            ``(2) Publication requirement.--The Postal Regulatory 
        Commission shall, whenever it changes the list of products in 
        the market-dominant or competitive category of mail, prescribe 
        new lists of products. The revised lists shall indicate how and 
        when any previous lists (including the lists under sections 
        3621 and 3631) are superseded, and shall be published in the 
        Federal Register.
    ``(e) Notification Requirement.--The Postal Regulatory Commission 
shall, whenever it reaches a conclusion that a product or products 
should be transferred between the list of market-dominant products 
under section 3621 and the list of competitive products under section 
3631, immediately notify the appropriate committees of the Congress. No 
such transfer may take effect less than 12 months after such 
conclusion.
    ``(f) Prohibition.--Except as provided in section 3641, no product 
that involves the carriage of letters, printed matter, or mailable 
packages may be offered by the Postal Service unless it has been 
assigned to the market-dominant or competitive category of mail (as 
appropriate) either--
            ``(1) under this subchapter; or
            ``(2) by or under any other provision of law.''.

SEC. 204. REPORTING REQUIREMENTS AND RELATED PROVISIONS.

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

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

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

     ``SUBCHAPTER IV--REPORTING REQUIREMENTS AND RELATED PROVISIONS

``Sec. 3651. Annual reports by the Commission
    ``(a) In General.--The Postal Regulatory Commission shall submit an 
annual report to the President and the Congress concerning the 
operations of the Commission under this title, including the extent to 
which regulations are achieving the objectives under sections 3622 and 
3633, respectively.
    ``(b) Additional Information.--In addition to the information 
required under subsection (a), each report under this section shall 
also include, with respect to the period covered by such report, an 
estimate of the costs incurred by the Postal Service in providing--
            ``(1) postal services to areas of the Nation where, in the 
        judgment of the Postal Regulatory Commission, the Postal 
        Service either would not provide services at all or would not 
        provide such services in accordance with the requirements of 
        this title if the Postal Service were not required to provide 
        prompt, reliable, and efficient services to patrons in all 
        areas and all communities, including as required under the 
        first sentence of section 101(b);
            ``(2) free or reduced rates for postal services as required 
        by this title; and
            ``(3) other public services or activities which, in the 
        judgment of the Postal Regulatory Commission, would not 
        otherwise have been provided by the Postal Service but for the 
        requirements of law.
The Commission shall detail the bases for its estimates and the 
statutory requirements giving rise to the costs identified in each 
report under this section.
    ``(c) Information From Postal Service.--The Postal Service shall 
provide the Postal Regulatory Commission with such information as may, 
in the judgment of the Commission, be necessary in order for the 
Commission to prepare its reports under this section.
``Sec. 3652. Annual reports to the Commission
    ``(a) Costs, Revenues, and Rates.--Except as provided in subsection 
(c), the Postal Service shall, no later than 90 days after the end of 
each year, prepare and submit to the Postal Regulatory Commission a 
report (together with such nonpublic annex thereto as the Commission 
may require under subsection (e))--
            ``(1) which shall analyze costs, revenues, and rates, using 
        such methodologies as the Commission shall by regulation 
        prescribe, and in sufficient detail to demonstrate that the 
        rates in effect for all products during such year complied with 
        all applicable requirements of this title; and
            ``(2) which shall, for each market-dominant product 
        provided in such year, provide--
                    ``(A) market information, including mail volumes; 
                and
                    ``(B) measures of the quality of service afforded 
                by the Postal Service in connection with such product, 
                including--
                            ``(i) the service standard applicable to 
                        such product;
                            ``(ii) the level of service (described in 
                        terms of speed of delivery and reliability) 
                        provided; and
                            ``(iii) the degree of customer satisfaction 
                        with the service provided.
The Inspector General shall regularly audit the data collection systems 
and procedures utilized in collecting information and preparing such 
report (including any annex thereto and the information required under 
subsection (b)). The results of any such audit shall be submitted to 
the Postal Service and the Postal Regulatory Commission.
    ``(b) Information Relating to Workshare Discounts.--
            ``(1) In general.--The Postal Service shall include, in 
        each report under subsection (a), the following information 
        with respect to each market-dominant product for which a 
        workshare discount was in effect during the period covered by 
        such report:
                    ``(A) The per-item cost avoided by the Postal 
                Service by virtue of such discount.
                    ``(B) The percentage of such per-item cost avoided 
                that the per-item workshare discount represents.
                    ``(C) The per-item contribution made to 
                institutional costs.
            ``(2) Workshare discount defined.--For purposes of this 
        subsection, the term `workshare discount' has the meaning given 
        such term under section 3687.
    ``(c) Market Tests.--In carrying out subsections (a) and (b) with 
respect to experimental products offered through market tests under 
section 3641 in a year, the Postal Service--
            ``(1) may report summary data on the costs, revenues, and 
        quality of service by market test; and
            ``(2) shall report such data as the Postal Regulatory 
        Commission requires.
    ``(d) Supporting Matter.--The Postal Regulatory Commission shall 
have access, in accordance with such regulations as the Commission 
shall prescribe, to the working papers and any other supporting matter 
of the Postal Service and the Inspector General in connection with any 
information submitted under this section.
    ``(e) Content and Form of Reports.--
            ``(1) In general.--The Postal Regulatory Commission shall, 
        by regulation, prescribe the content and form of the public 
        reports (and any nonpublic annex and supporting matter relating 
        thereto) to be provided by the Postal Service under this 
        section. In carrying out this subsection, the Commission shall 
        give due consideration to--
                    ``(A) providing the public with adequate 
                information to assess the lawfulness of rates charged;
                    ``(B) avoiding unnecessary or unwarranted 
                administrative effort and expense on the part of the 
                Postal Service; and
                    ``(C) protecting the confidentiality of 
                commercially sensitive information.
            ``(2) Revised requirements.--The Commission may, on its own 
        motion or on request of an interested party, initiate 
        proceedings (to be conducted in accordance with regulations 
        that the Commission shall prescribe) to improve the quality, 
        accuracy, or completeness of Postal Service data required by 
        the Commission under this subsection whenever it shall appear 
        that--
                    ``(A) the attribution of costs or revenues to 
                products has become significantly inaccurate or can be 
                significantly improved;
                    ``(B) the quality of service data has become 
                significantly inaccurate or can be significantly 
                improved; or
                    ``(C) such revisions are, in the judgment of the 
                Commission, otherwise necessitated by the public 
                interest.
    ``(f) Confidential Information.--
            ``(1) In general.--If the Postal Service determines that 
        any document or portion of a document, or other matter, which 
        it provides to the Postal Regulatory Commission in a nonpublic 
        annex under this section or pursuant to subsection (d) contains 
        information which is described in section 410(c) of this title, 
        or exempt from public disclosure under section 552(b) of title 
        5, the Postal Service shall, at the time of providing such 
        matter to the Commission, notify the Commission of its 
        determination, in writing, and describe with particularity the 
        documents (or portions of documents) or other matter for which 
        confidentiality is sought and the reasons therefor.
            ``(2) Treatment.--Any information or other matter described 
        in paragraph (1) to which the Commission gains access under 
        this section shall be subject to paragraphs (2) and (3) of 
        section 504(g) in the same way as if the Commission had 
        received notification with respect to such matter under section 
        504(g)(1).
    ``(g) Other Reports.--The Postal Service shall submit to the Postal 
Regulatory Commission, together with any other submission that it is 
required to make under this section in a year, copies of its then most 
recent--
            ``(1) comprehensive statement under section 2401(e);
            ``(2) performance plan under section 2803; and
            ``(3) program performance reports under section 2804.
``Sec. 3653. Annual determination of compliance
    ``(a) Opportunity for Public Comment.--After receiving the reports 
required under section 3652 for any year, the Postal Regulatory 
Commission shall promptly provide an opportunity for comment on such 
reports by users of the mails, affected parties, and an officer of the 
Commission who shall be required to represent the interests of the 
general public.
    ``(b) Determination of Compliance or Noncompliance.--Not later than 
90 days after receiving the submissions required under section 3652 
with respect to a year, the Postal Regulatory Commission shall make a 
written determination as to--
            ``(1) whether any rates or fees in effect during such year 
        (for products individually or collectively) were not in 
        compliance with applicable provisions of this chapter (or 
        regulations promulgated thereunder);
            ``(2) whether any performance goals established under 
        section 2803 or 2804 for such year were not met; and
            ``(3) whether any market-dominant product failed to meet 
        any service standard during such year.
If, with respect to a year, no instance of noncompliance is found under 
this subsection to have occurred in such year, the written 
determination shall be to that effect.
    ``(c) If Any Noncompliance Is Found.--If, for a year, a timely 
written determination of noncompliance is made under subsection (b), 
the Postal Regulatory Commission shall take appropriate action in 
accordance with subsections (c)-(e) of section 3662 (as if a complaint 
averring such noncompliance had been duly filed and found under such 
section to be justified).
    ``(d) Rebuttable Presumption.--A timely written determination 
described in the last sentence of subsection (b) shall, for purposes of 
any proceeding under section 3662, create a rebuttable presumption of 
compliance by the Postal Service (with regard to the matters described 
in paragraphs (1) through (3) of subsection (b)) during the year to 
which such determination relates.''.

SEC. 205. COMPLAINTS; APPELLATE REVIEW AND ENFORCEMENT.

    Chapter 36 of title 39, United States Code, is amended by striking 
sections 3662 and 3663 and inserting the following:
``Sec. 3662. Rate and service complaints
    ``(a) In General.--Interested persons (including an officer of the 
Postal Regulatory Commission representing the interests of the general 
public) who believe the Postal Service is not operating in conformance 
with the requirements of chapter 1, 4, or 6, or this chapter (or 
regulations promulgated under any of those chapters) may lodge a 
complaint with the Postal Regulatory Commission in such form and manner 
as the Commission may prescribe.
    ``(b) Prompt Response Required.--
            ``(1) In general.--The Postal Regulatory Commission shall, 
        within 90 days after receiving a complaint under subsection 
        (a), either--
                    ``(A) begin proceedings on such complaint; or
                    ``(B) issue an order dismissing the complaint 
                (together with a statement of the reasons therefor).
            ``(2) Treatment of complaints not timely acted on.--For 
        purposes of section 3663, any complaint under subsection (a) on 
        which the Commission fails to act in the time and manner 
        required by paragraph (1) shall be treated in the same way as 
        if it had been dismissed pursuant to an order issued by the 
        Commission on the last day allowable for the issuance of such 
        order under paragraph (1).
    ``(c) Action Required If Complaint Found to Be Justified.--If the 
Postal Regulatory Commission finds the complaint to be justified, it 
shall order that the Postal Service take such action as the Commission 
considers appropriate in order to achieve compliance with the 
applicable requirements and to remedy the effects of any noncompliance 
(such as ordering unlawful rates to be adjusted to lawful levels, 
ordering the cancellation of market tests, ordering the Postal Service 
to discontinue providing loss-making products, or requiring the Postal 
Service to make up for revenue shortfalls in competitive products).
    ``(d) Suspension Authority.--The Postal Regulatory Commission may 
suspend implementation of rates or classifications under section 
3632(b)(3) for a limited period of time pending expedited proceedings 
under this section. In evaluating whether circumstances warrant 
suspension, the Commission shall consider factors such as (1) whether 
there is a substantial likelihood that such rate or classification will 
violate the requirements of chapter 1, 4, or 6, or this chapter (or 
regulations promulgated under any of those chapters), (2) whether any 
persons would suffer substantial injury, loss, or damage absent a 
suspension, (3) whether the Postal Service or any other persons would 
suffer substantial injury, loss, or damage under a suspension, and (4) 
the public interest.
    ``(e) Authority to Order Fines in Cases of Deliberate 
Noncompliance.--In addition, in cases of deliberate noncompliance by 
the Postal Service with the requirements of this title, the Postal 
Regulatory Commission may order, based on the nature, circumstances, 
extent, and seriousness of the noncompliance, a fine (in the amount 
specified by the Commission in its order) for each incidence of 
noncompliance. Fines resulting from the provision of competitive 
products shall be paid out of the Competitive Products Fund established 
in section 2011. All receipts from fines imposed under this subsection 
shall be deposited in the general fund of the Treasury of the United 
States.
``Sec. 3663. Appellate review
    ``A person adversely affected or aggrieved by a final order or 
decision of the Postal Regulatory Commission may, within 30 days after 
such order or decision becomes final, institute proceedings for review 
thereof by filing a petition in the United States Court of Appeals for 
the District of Columbia. The court shall review the order or decision 
in accordance with section 706 of title 5, and chapter 158 and section 
2112 of title 28, on the basis of the record before the Commission. For 
purposes of this section, the term `person' includes the Postal 
Service.
``Sec. 3664. Enforcement of orders
    ``The several district courts have jurisdiction specifically to 
enforce, and to enjoin and restrain the Postal Service from violating, 
any order issued by the Postal Regulatory Commission.''.

SEC. 206. WORKSHARE DISCOUNTS.

    (a) In General.--Title 39, United States Code, is amended by adding 
after section 3686 (as added by section 406) the following:
``Sec. 3687. Workshare discounts
    ``(a) In General.--As part of the regulations established under 
section 3622(a), the Postal Regulatory Commission shall establish rules 
for workshare discounts that ensure that workshare discounts do not 
exceed the cost that the Postal Service avoids as the result of private 
sector workshare activity, except--
            ``(1) where the discount is associated with a new product 
        or service or with a change to an existing product or service 
        and is necessary, over a period of time not to exceed 4 years, 
        to induce mailer behavior that will enable the new or changed 
        product or service in furtherance of the overall economically 
        efficient operation of the Postal Service;
            ``(2) to the extent that a reduction in the discount would 
        lead to a loss of volume in the affected category and reduce 
        the aggregate contribution to institutional costs of the Postal 
        Service, from the mail matter subject to the discount, below 
        what it otherwise would have been if the discount had not been 
        reduced to costs avoided; would result in a further increase in 
        the rates paid by mailers not able to take advantage of the 
        discount; or would impede the efficient operation of the Postal 
        Service;
            ``(3) where the amount of the discount above costs avoided 
        is necessary to mitigate rate shock and will be phased out over 
        time; or
            ``(4) where the workshare discount is provided in 
        connection with subclasses of mail consisting exclusively of 
        mail matter of educational, cultural, scientific, or 
        informational value.
    ``(b) Reporting Requirement.--Whenever the Postal Service 
establishes or maintains a workshare discount, the Postal Service 
shall, at the time it publishes the workshare discount rate, file with 
the Postal Regulatory Commission a detailed report and explanation of 
its reasons for establishing or maintaining the rate, setting forth the 
data, economic analyses, and other information relied on by the Postal 
Service to justify the rate.
    ``(c) Definition.--For purposes of this section, the term 
`workshare discount' refers to rate discounts provided to mailers for 
presorting, prebarcoding, handling, or transportation, as further 
defined by the Postal Regulatory Commission as part of regulations 
established under section 3622(a).''.
    (b) Clerical Amendment.--The analysis for chapter 36 of title 39, 
United States Code (as amended by section 207) is amended by adding 
after the item relating to section 3686 the following:

``3687. Workshare discounts.''.

SEC. 207. CLERICAL AMENDMENT.

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

    ``subchapter i--provisions relating to market-dominant products
``Sec.
``3621. Applicability; definitions.
``3622. Modern rate regulation.
``3626. Reduced rates.
``3627. Adjusting free rates.
``3629``subchapter ii--provisions relating to competitive products
``3631. Applicability; definitions and updates.
``3632. Action of the Governors.
``3633. Provisions applicable to rates for competitive products.
```subchapter iii--provisions relating to experimental and new products
``3641. Market tests of experimental products.
``3642. New products and transfers of products between the market-
                            dominant and competitive categories of 
     ``subchapter iv--reporting requirements and related provisions
``3651. Annual reports by the Commission.
``3652. Annual reports to the Commission.
``36``subchapter v--postal services, complaints, and judicial review
``3661. Postal services.
``3662. Rate and service complaints.
``3663. Appellate review.
``3664. Enforcement of o``subchapter vi--general
``3681. Reimbursement.
``3682. Size and weight limits.
``3683. Uniform rates for books; films, other materials.
``3684. Limitations.
``3685. Filing of information relating to periodical publications.
``3686. Bonus authority.''.

           TITLE III--PROVISIONS RELATING TO FAIR COMPETITION

SEC. 301. POSTAL SERVICE COMPETITIVE PRODUCTS FUND.

    (a) Provisions Relating to Postal Service Competitive Products Fund 
and Related Matters.--
            (1) In general.--Chapter 20 of title 39, United States 
        Code, is amended by adding at the end the following:
``Sec. 2011. Provisions relating to competitive products
    ``(a) There is established in the Treasury of the United States a 
revolving fund, to be called the Postal Service Competitive Products 
Fund, which shall be available to the Postal Service without fiscal 
year limitation for the payment of--
            ``(1) costs attributable to competitive products; and
            ``(2) all other costs incurred by the Postal Service, to 
        the extent allocable to competitive products.
For purposes of this subsection, the term `costs attributable' has the 
meaning given such term by section 3631.
    ``(b) There shall be deposited in the Competitive Products Fund, 
subject to withdrawal by the Postal Service--
            ``(1) revenues from competitive products;
            ``(2) amounts received from obligations issued by the 
        Postal Service under subsection (e);
            ``(3) interest and dividends earned on investments of the 
        Competitive Products Fund; and
            ``(4) any other receipts of the Postal Service (including 
        from the sale of assets), to the extent allocable to 
        competitive products.
    ``(c) If the Postal Service determines that the moneys of the 
Competitive Products Fund are in excess of current needs, it may invest 
such amounts as it considers appropriate in--
            ``(1) obligations of, or obligations guaranteed by, the 
        Government of the United States; and
            ``(2) in accordance with regulations which the Secretary of 
        the Treasury shall prescribe (by not later than 18 months after 
        the date of the enactment of the Postal Accountability and 
        Enhancement Act), such other obligations or securities as it 
        deems appropriate.
    ``(d) The Postal Service may, in its sole discretion, provide that 
moneys of the Competitive Products Fund be deposited in a Federal 
Reserve bank or a depository for public funds.
    ``(e)(1) Subject to the limitations specified in section 2005(a), 
the Postal Service is authorized to borrow money and to issue and sell 
such obligations as it determines necessary to provide for competitive 
products and deposit such amounts in the Competitive Products Fund, 
except that the Postal Service may pledge only assets related to the 
provision of competitive products (as determined under subsection (h) 
or, for purposes of any period before accounting practices and 
principles under subsection (h) have been established and applied, the 
best information available from the Postal Service, including the 
audited statements required by section 2008(e)), and the revenues and 
receipts from such products, for the payment of the principal of or 
interest on such obligations, for the purchase or redemption thereof, 
and for other purposes incidental thereto, including creation of 
reserve, sinking, and other funds which may be similarly pledged and 
used, to such extent and in such manner as it deems necessary or 
desirable.
    ``(2) The Postal Service may enter into binding covenants with the 
holders of such obligations, and with the trustee, if any, under any 
agreement entered into in connection with the issuance thereof with 
respect to--
            ``(A) the establishment of reserve, sinking, and other 
        funds;
            ``(B) application and use of revenues and receipts of the 
        Competitive Products Fund;
            ``(C) stipulations concerning the subsequent issuance of 
        obligations or the execution of leases or lease purchases 
        relating to properties of the Postal Service; and
            ``(D) such other matters as the Postal Service considers 
        necessary or desirable to enhance the marketability of such 
        obligations.
    ``(3) Obligations issued by the Postal Service under this 
subsection--
            ``(A) may not be purchased by the Secretary of the 
        Treasury;
            ``(B) shall not be exempt either as to principal or 
        interest from any taxation now or hereafter imposed by any 
        State or local taxing authority;
            ``(C) shall not be obligations of, nor shall payment of the 
        principal thereof or interest thereon be guaranteed by, the 
        Government of the United States, and the obligations shall so 
        plainly state; and
            ``(D) notwithstanding the provisions of the Federal 
        Financing Bank Act of 1973 or any other provision of law 
        (except as specifically provided by reference to this 
        subparagraph in a law enacted after this subparagraph takes 
        effect), shall not be eligible for purchase by, commitment to 
        purchase by, or sale or issuance to, the Federal Financing 
        Bank.
    ``(4)(A) This paragraph applies with respect to the period 
beginning on the date of the enactment of this paragraph and ending at 
the close of the 5-year period which begins on the date on which the 
Secretary of the Treasury makes the submission required under 
subsection (h)(1).
    ``(B) During the period described in subparagraph (A), nothing in 
subparagraph (A) or (D) of paragraph (3) or the last sentence of 
section 2006(b) shall, with respect to any obligations sought to be 
issued by the Postal Service under this subsection, be considered to 
affect such obligations' eligibility for purchase by, commitment to 
purchase by, or sale or issuance to, the Federal Financing Bank.
    ``(C) The Federal Financing Bank may elect to purchase such 
obligations under such terms, including rates of interest, as the Bank 
and the Postal Service may agree, but at a rate of yield no less than 
the prevailing yield on outstanding marketable securities of comparable 
maturity issued by entities with the same credit rating as the rating 
then most recently obtained by the Postal Service under subparagraph 
(D), as determined by the Bank.
    ``(D) In order to be eligible to borrow under this paragraph, the 
Postal Service shall first obtain a credit rating from a nationally 
recognized credit rating organization. Such rating--
            ``(i) shall be determined taking into account only those 
        assets and activities of the Postal Service which are described 
        in section 3634(a)(2) (relating to the Postal Service's assumed 
        taxable income from competitive products); and
            ``(ii) may, before final rules of the Postal Regulatory 
        Commission under subsection (h) are issued (or deemed to have 
        been issued), be based on the best information available from 
        the Postal Service, including the audited statements required 
        by section 2008(e).
    ``(f) The receipts and disbursements of the Competitive Products 
Fund shall be accorded the same budgetary treatment as is accorded to 
receipts and disbursements of the Postal Service Fund under section 
2009a.
    ``(g) A judgment against the Postal Service or the Government of 
the United States (or settlement of a claim) shall, to the extent that 
it arises out of activities of the Postal Service in the provision of 
competitive products, be paid out of the Competitive Products Fund.
    ``(h)(1) The Secretary of the Treasury, in consultation with the 
Postal Service and an independent, certified public accounting firm and 
such other advisors as the Secretary considers appropriate, shall 
develop recommendations regarding--
            ``(A) the accounting practices and principles that should 
        be followed by the Postal Service with the objectives of (i) 
        identifying and valuing the assets and liabilities of the 
        Postal Service associated with providing, and the capital and 
        operating costs incurred by the Postal Service in providing, 
        competitive products, and (ii) preventing the subsidization of 
        such products by market-dominant products; and
            ``(B) the substantive and procedural rules that should be 
        followed in determining the Postal Service's assumed Federal 
        income tax on competitive products income for any year (within 
        the meaning of section 3634).
Such recommendations shall be submitted to the Postal Regulatory 
Commission no earlier than 6 months, and no later than 12 months, after 
the effective date of this section.
    ``(2)(A) Upon receiving the recommendations of the Secretary of the 
Treasury under paragraph (1), the Commission shall give interested 
parties, including the Postal Service, users of the mails, and an 
officer of the Commission who shall be required to represent the 
interests of the general public, an opportunity to present their views 
on those recommendations through submission of written data, views, or 
arguments with or without opportunity for oral presentation, or in such 
other manner as the Commission considers appropriate.
    ``(B) After due consideration of the views and other information 
received under subparagraph (A), the Commission shall by rule--
            ``(i) provide for the establishment and application of the 
        accounting practices and principles which shall be followed by 
        the Postal Service;
            ``(ii) provide for the establishment and application of the 
        substantive and procedural rules described in paragraph (1)(B); 
        and
            ``(iii) provide for the submission by the Postal Service to 
        the Postal Regulatory Commission of annual and other periodic 
        reports setting forth such information as the Commission may 
        require.
Final rules under this subparagraph shall be issued not later than 12 
months after the date on which the Secretary of the Treasury makes his 
submission to the Commission under paragraph (1) (or by such later date 
as the Commission and the Postal Service may agree to). The Commission 
is authorized to promulgate regulations revising such rules.
    ``(C) Reports described in subparagraph (B)(iii) shall be submitted 
at such time and in such form, and shall include such information, as 
the Commission by rule requires. The Commission may, on its own motion 
or on request of an interested party, initiate proceedings (to be 
conducted in accordance with such rules as the Commission shall 
prescribe) to improve the quality, accuracy, or completeness of Postal 
Service data under such subparagraph whenever it shall appear that--
            ``(i) the quality of the information furnished in those 
        reports has become significantly inaccurate or can be 
        significantly improved; or
            ``(ii) such revisions are, in the judgment of the 
        Commission, otherwise necessitated by the public interest.
    ``(D) A copy of each report described in subparagraph (B)(iii) 
shall also be transmitted by the Postal Service to the Secretary of the 
Treasury and the Inspector General of the United States Postal Service.
    ``(i) The Postal Service shall render an annual report to the 
Secretary of the Treasury concerning the operation of the Competitive 
Products Fund, in which it shall address such matters as risk 
limitations, reserve balances, allocation or distribution of moneys, 
liquidity requirements, and measures to safeguard against losses. A 
copy of its then most recent report under this subsection shall be 
included with any other submission that it is required to make to the 
Postal Regulatory Commission under section 3652(g).''.
            (2) Clerical amendment.--The analysis for chapter 20 of 
        title 39, United States Code, is amended by adding after the 
        item relating to section 2010 the following:

``2011. Provisions relating to competitive products.''.
    (b) Technical and Conforming Amendments.--
            (1) Definition.--Section 2001 of title 39, United States 
        Code, is amended by striking ``and'' at the end of paragraph 
        (1), by redesignating paragraph (2) as paragraph (3), and by 
        inserting after paragraph (1) the following:
            ``(2) `Competitive Products Fund' means the Postal Service 
        Competitive Products Fund established by section 2011; and''.
            (2) Capital of the postal service.--Section 2002(b) of 
        title 39, United States Code, is amended by striking ``Fund,'' 
and inserting ``Fund and the balance in the Competitive Products 
Fund,''.
            (3) Postal service fund.--
                    (A) Purposes for which available.--Section 2003(a) 
                of title 39, United States Code, is amended by striking 
                ``title.'' and inserting ``title (other than any of the 
                purposes, functions, or powers for which the 
                Competitive Products Fund is available).''.
                    (B) Deposits.--Section 2003(b) of title 39, United 
                States Code, is amended by striking ``There'' and 
                inserting ``Except as otherwise provided in section 
                2011, there''.
            (4) Relationship between the treasury and the postal 
        service.--Section 2006 of title 39, United States Code, is 
        amended--
                    (A) in subsection (b), by adding at the end the 
                following: ``Nothing in this chapter shall be 
                considered to permit or require the Secretary of the 
                Treasury to purchase any obligations of the Postal 
                Service other than those issued under section 2005.''; 
                and
                    (B) in subsection (c), by inserting ``under section 
                2005'' before ``shall be obligations''.

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

    Subchapter II of chapter 36 of title 39, United States Code, as 
amended by section 202, is amended by adding at the end the following:
``Sec. 3634. Assumed Federal income tax on competitive products income
    ``(a) Definitions.--For purposes of this section--
            ``(1) the term `assumed Federal income tax on competitive 
        products income' means the net income tax that would be imposed 
        by chapter 1 of the Internal Revenue Code of 1986 on the Postal 
        Service's assumed taxable income from competitive products for 
        the year; and
            ``(2) the term `assumed taxable income from competitive 
        products', with respect to a year, refers to the amount 
        representing what would be the taxable income of a corporation 
        under the Internal Revenue Code of 1986 for the year, if--
                    ``(A) the only activities of such corporation were 
                the activities of the Postal Service allocable under 
                section 2011(h) to competitive products; and
                    ``(B) the only assets held by such corporation were 
                the assets of the Postal Service allocable under 
                section 2011(h) to such activities.
    ``(b) Computation and Transfer Requirements.--The Postal Service 
shall, for each year beginning with the year in which occurs the 
deadline for the Postal Service's first report to the Postal Regulatory 
Commission under section 3652(a)--
            ``(1) compute its assumed Federal income tax on competitive 
        products income for such year; and
            ``(2) transfer from the Competitive Products Fund to the 
        Postal Service Fund the amount of that assumed tax.
    ``(c) Deadline for Transfers.--Any transfer required to be made 
under this section for a year shall be due on or before the January 
15th next occurring after the close of such year.''.

SEC. 303. UNFAIR COMPETITION PROHIBITED.

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

``404a. Specific limitations.''.

SEC. 304. SUITS BY AND AGAINST THE POSTAL SERVICE.

    (a) In General.--Section 409 of title 39, United States Code, is 
amended by striking subsections (d) and (e) and inserting the 
following:
    ``(d)(1) For purposes of the provisions of law cited in paragraphs 
(2)(A) and (2)(B), respectively, the Postal Service--
            ``(A) shall be considered to be a `person', as used in the 
        provisions of law involved; and
            ``(B) shall not be immune under any other doctrine of 
        sovereign immunity from suit in Federal court by any person for 
        any violation of any of those provisions of law by any officer 
        or employee of the Postal Service.
    ``(2) This subsection applies with respect to--
            ``(A) the Act of July 5, 1946 (commonly referred to as the 
        `Trademark Act of 1946' (15 U.S.C. 1051 and following)); and
            ``(B) the provisions of section 5 of the Federal Trade 
        Commission Act to the extent that such section 5 applies to 
        unfair or deceptive acts or practices.
    ``(e)(1) To the extent that the Postal Service, or other Federal 
agency acting on behalf of or in concert with the Postal Service, 
engages in conduct with respect to any competitive product, the Postal 
Service or other Federal agency (as the case may be)--
            ``(A) shall not be immune under any doctrine of sovereign 
        immunity from suit in Federal court by any person for any 
        violation of Federal law by such agency or any officer or 
        employee thereof; and
            ``(B) shall be considered to be a person (as defined in 
        subsection (a) of the first section of the Clayton Act) for 
        purposes of--
                    ``(i) the antitrust laws (as defined in such 
                subsection); and
                    ``(ii) section 5 of the Federal Trade Commission 
                Act to the extent that such section 5 applies to unfair 
                methods of competition.
    ``(2) No damages, interest on damages, costs or attorney's fees may 
be recovered, and no criminal liability may be imposed, under the 
antitrust laws (as so defined) from any officer or employee of the 
Postal Service, or other Federal agency acting on behalf of or in 
concert with the Postal Service, acting in an official capacity.
    ``(3) This subsection shall not apply with respect to conduct 
occurring before the date of the enactment of this subsection.
    ``(f)(1) Each building constructed or altered by the Postal Service 
shall be constructed or altered, to the maximum extent feasible as 
determined by the Postal Service, in compliance with one of the 
nationally recognized model building codes and with other applicable 
nationally recognized codes.
    ``(2) Each building constructed or altered by the Postal Service 
shall be constructed or altered only after consideration of all 
requirements (other than procedural requirements) of zoning laws, land 
use laws, and applicable environmental laws of a State or subdivision 
of a State which would apply to the building if it were not a building 
constructed or altered by an establishment of the Government of the 
United States.
    ``(3) For purposes of meeting the requirements of paragraphs (1) 
and (2) with respect to a building, the Postal Service shall--
            ``(A) in preparing plans for the building, consult with 
        appropriate officials of the State or political subdivision, or 
        both, in which the building will be located;
            ``(B) upon request, submit such plans in a timely manner to 
        such officials for review by such officials for a reasonable 
        period of time not exceeding 30 days; and
            ``(C) permit inspection by such officials during 
        construction or alteration of the building, in accordance with 
        the customary schedule of inspections for construction or 
        alteration of buildings in the locality, if such officials 
        provide to the Postal Service--
                    ``(i) a copy of such schedule before construction 
                of the building is begun; and
                    ``(ii) reasonable notice of their intention to 
                conduct any inspection before conducting such 
                inspection.
Nothing in this subsection shall impose an obligation on any State or 
political subdivision to take any action under the preceding sentence, 
nor shall anything in this subsection require the Postal Service or any 
of its contractors to pay for any action taken by a State or political 
subdivision to carry out this subsection (including reviewing plans, 
carrying out on-site inspections, issuing building permits, and making 
recommendations).
    ``(4) Appropriate officials of a State or a political subdivision 
of a State may make recommendations to the Postal Service concerning 
measures necessary to meet the requirements of paragraphs (1) and (2). 
Such officials may also make recommendations to the Postal Service 
concerning measures which should be taken in the construction or 
alteration of the building to take into account local conditions. The 
Postal Service shall give due consideration to any such 
recommendations.
    ``(5) In addition to consulting with local and State officials 
under paragraph (3), the Postal Service shall establish procedures for 
soliciting, assessing, and incorporating local community input on real 
property and land use decisions.
    ``(6) For purposes of this subsection, the term `State' includes 
the District of Columbia, the Commonwealth of Puerto Rico, and a 
territory or possession of the United States.
    ``(g)(1) Notwithstanding any other provision of law, legal 
representation may not be furnished by the Department of Justice to the 
Postal Service in any action, suit, or proceeding arising, in whole or 
in part, under any of the following:
            ``(A) Subsection (d) or (e) of this section.
            ``(B) Subsection (f) or (g) of section 504 (relating to 
        administrative subpoenas by the Postal Regulatory Commission).
            ``(C) Section 3663 (relating to appellate review).
The Postal Service may, by contract or otherwise, employ attorneys to 
obtain any legal representation that it is precluded from obtaining 
from the Department of Justice under this paragraph.
    ``(2) In any circumstance not covered by paragraph (1), the 
Department of Justice shall, under section 411, furnish the Postal 
Service such legal representation as it may require, except that, with 
the prior consent of the Attorney General, the Postal Service may, in 
any such circumstance, employ attorneys by contract or otherwise to 
conduct litigation brought by or against the Postal Service or its 
officers or employees in matters affecting the Postal Service.
    ``(3)(A) In any action, suit, or proceeding in a court of the 
United States arising in whole or in part under any of the provisions 
of law referred to in subparagraph (B) or (C) of paragraph (1), and to 
which the Commission is not otherwise a party, the Commission shall be 
permitted to appear as a party on its own motion and as of right.
    ``(B) The Department of Justice shall, under such terms and 
conditions as the Commission and the Attorney General shall consider 
appropriate, furnish the Commission such legal representation as it may 
require in connection with any such action, suit, or proceeding, except 
that, with the prior consent of the Attorney General, the Commission 
may employ attorneys by contract or otherwise for that purpose.
    ``(h) A judgment against the Government of the United States 
arising out of activities of the Postal Service shall be paid by the 
Postal Service out of any funds available to the Postal Service, 
subject to the restriction specified in section 2011(g).''.
    (b) Technical Amendment.--Section 409(a) of title 39, United States 
Code, is amended by striking ``Except as provided in section 3628 of 
this title,'' and inserting ``Except as otherwise provided in this 
title,''.

SEC. 305. INTERNATIONAL POSTAL ARRANGEMENTS.

    (a) In General.--Section 407 of title 39, United States Code, is 
amended to read as follows:
``Sec. 407. International postal arrangements
    ``(a) It is the policy of the United States--
            ``(1) to promote and encourage communications between 
        peoples by efficient operation of international postal services 
        and other international delivery services for cultural, social, 
        and economic purposes;
            ``(2) to promote and encourage unrestricted and undistorted 
        competition in the provision of international postal services 
        and other international delivery services, except where 
        provision of such services by private companies may be 
        prohibited by law of the United States;
            ``(3) to promote and encourage a clear distinction between 
        governmental and operational responsibilities with respect to 
        the provision of international postal services and other 
        international delivery services by the Government of the United 
        States and by intergovernmental organizations of which the 
        United States is a member; and
            ``(4) to participate in multilateral and bilateral 
        agreements with other countries to accomplish these objectives.
    ``(b)(1) The Secretary of State shall be responsible for 
formulation, coordination, and oversight of foreign policy related to 
international postal services and other international delivery 
services, and shall have the power to conclude treaties, conventions 
and amendments related to international postal services and other 
international delivery services, except that the Secretary may not 
conclude any treaty, convention, or other international agreement 
(including those regulating international postal services) if such 
treaty, convention, or agreement would, with respect to any competitive 
product, grant an undue or unreasonable preference to the Postal 
Service, a private provider of international postal or delivery 
services, or any other person.
    ``(2) In carrying out the responsibilities specified in paragraph 
(1), the Secretary of State shall exercise primary authority for the 
conduct of foreign policy with respect to international postal services 
and international delivery services, including the determination of 
United States positions and the conduct of United States participation 
in negotiations with foreign governments and international bodies. In 
exercising this authority, the Secretary--
            ``(A) shall coordinate with other agencies as appropriate, 
        and in particular, shall give full consideration to the 
        authority vested by law or Executive order in the Postal 
        Regulatory Commission, the Department of Commerce, the 
        Department of Transportation, and the Office of the United 
        States Trade Representative in this area;
            ``(B) shall maintain continuing liaison with other 
        executive branch agencies concerned with postal and delivery 
        services;
            ``(C) shall maintain continuing liaison with the Committee 
        on Government Reform of the House of Representatives and the 
        Committee on Governmental Affairs of the Senate;
            ``(D) shall maintain appropriate liaison with both 
        representatives of the Postal Service and representatives of 
        users and private providers of international postal services 
        and other international delivery services to keep informed of 
        their interests and problems, and to provide such assistance as 
        may be needed to ensure that matters of concern are promptly 
        considered by the Department of State or (if applicable, and to 
        the extent practicable) other executive branch agencies; and
            ``(E) shall assist in arranging meetings of such public 
        sector advisory groups as may be established to advise the 
        Department of State and other executive branch agencies in 
        connection with international postal services and international 
        delivery services.
    ``(3) The Secretary of State shall establish an advisory committee 
(within the meaning of the Federal Advisory Committee Act) to perform 
such functions as the Secretary considers appropriate in connection 
with carrying out subparagraphs (A) through (D) of paragraph (2).
    ``(c)(1) Before concluding any treaty, convention, or amendment 
that establishes a rate or classification for a product subject to 
subchapter I of chapter 36, the Secretary of State shall request the 
Postal Regulatory Commission to submit a decision on whether such rate 
or classification is consistent with the standards and criteria 
established by the Commission under section 3622.
    ``(2) The Secretary shall ensure that each treaty, convention, or 
amendment concluded under subsection (b) is consistent with a decision 
of the Commission adopted under paragraph (1), except if, or to the 
extent, the Secretary determines, by written order, that considerations 
of foreign policy or national security require modification of the 
Commission's decision.
    ``(d) Nothing in this section shall be considered to prevent the 
Postal Service from entering into such commercial or operational 
contracts related to providing international postal services and other 
international delivery services as it deems appropriate, except that--
            ``(1) any such contract made with an agency of a foreign 
        government (whether under authority of this subsection or 
        otherwise) shall be solely contractual in nature and may not 
        purport to be international law; and
            ``(2) a copy of each such contract between the Postal 
        Service and an agency of a foreign government shall be 
        transmitted to the Secretary of State and the Postal Regulatory 
        Commission not later than the effective date of such contract.
    ``(e)(1) With respect to shipments of international mail that are 
competitive products within the meaning of section 3631 that are 
exported or imported by the Postal Service, the Bureau of Customs and 
Border Protection of the Department of Homeland Security and other 
appropriate Federal agencies shall apply the customs laws of the United 
States and all other laws relating to the importation or exportation of 
such shipments in the same manner to both shipments by the Postal 
Service and similar shipments by private companies.
    ``(2) For purposes of this subsection, the term `private company' 
means a private company substantially owned or controlled by persons 
who are citizens of the United States.
    ``(3) In exercising the authority pursuant to subsection (b) to 
conclude new treaties, conventions and amendments related to 
international postal services and to renegotiate such treaties, 
conventions and amendments, the Secretary of State shall, to the 
maximum extent practicable, take such measures as are within the 
Secretary's control to encourage the governments of other countries to 
make available to the Postal Service and private companies a range of 
nondiscriminatory customs procedures that will fully meet the needs of 
all types of American shippers. The Secretary of State shall consult 
with the United States Trade Representative and the Commissioner of 
Customs, Department of Homeland Security in carrying out this 
paragraph.
    ``(4) The provisions of this subsection shall take effect 6 months 
after the date of the enactment of this subsection or such earlier date 
as the Bureau of Customs and Border Protection of the Department of 
Homeland Security may determine in writing.''.
    (b) Effective Date.--Notwithstanding any provision of the amendment 
made by subsection (a), the authority of the United States Postal 
Service to establish the rates of postage or other charges on mail 
matter conveyed between the United States and other countries shall 
remain available to the Postal Service until--
            (1) with respect to market-dominant products, the date as 
        of which the regulations promulgated under section 3622 of 
        title 39, United States Code (as amended by section 201(a)) 
        take effect; and
            (2) with respect to competitive products, the date as of 
        which the regulations promulgated under section 3633 of title 
        39, United States Code (as amended by section 202) take effect.

SEC. 306. REDESIGNATION.

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

                      ``SUBCHAPTER VI--GENERAL''.

SEC. 307. CLARIFICATION.

    Section 403(c) of title 39, United States Code, is amended by 
adding after ``user.'' the following: ``The prohibition in this 
subsection shall not be construed to prevent the establishment of rates 
that vary with volume if such rates will be made available to similarly 
situated persons and will increase the aggregate contribution to the 
institutional costs of the Postal Service.''.

                      TITLE IV--GENERAL PROVISIONS

SEC. 401. QUALIFICATION REQUIREMENTS FOR GOVERNORS.

    (a) In General.--Section 202(a) of title 39, United States Code, is 
amended by striking ``(a)'' and inserting ``(a)(1)'' and by striking 
the fourth sentence and inserting the following: ``The Governors shall 
represent the public interest generally, and at least 4 of the 
Governors shall be chosen solely on the basis of their demonstrated 
ability in managing organizations or corporations (in either the public 
or private sector) of substantial size; for purposes of this sentence, 
an organization or corporation shall be considered to be of substantial 
size if it employs at least 50,000 employees. The Governors shall not 
be representatives of specific interests using the Postal Service, and 
may be removed only for cause.''.
    (b) Consultation Requirement.--Section 202(a) of title 39, United 
States Code, is amended by adding at the end the following:
    ``(2) In selecting the individuals described in paragraph (1) for 
nomination for appointment to the position of Governor, the President 
should consult with the Speaker of the House of Representatives, the 
minority leader of the House of Representatives, the majority leader of 
the Senate, and the minority leader of the Senate.''.
    (c) Restriction.--Section 202(b) of title 39, United States Code, 
is amended by striking ``(b)'' and inserting ``(b)(1)'', and by adding 
at the end the following:
    ``(2)(A) Notwithstanding any other provision of this section, in 
the case of the office of the Governor the term of which is the first 
one scheduled to expire at least 4 months after the date of the 
enactment of this paragraph--
            ``(i) such office may not, in the case of any person 
        commencing service after that expiration date, be filled by any 
        person other than an individual chosen from among persons 
        nominated for such office with the unanimous concurrence of all 
        labor organizations described in section 206(a)(1); and
            ``(ii) instead of the term that would otherwise apply under 
        the first sentence of paragraph (1), the term of any person so 
        appointed to such office shall be 3 years.
    ``(B) Except as provided in subparagraph (A), an appointment under 
this paragraph shall be made in conformance with all provisions of this 
section that would otherwise apply.''.
    (d) Applicability.--The amendment made by subsection (a) shall not 
affect the appointment or tenure of any person serving as a Governor of 
the Board of Governors of the United States Postal Service pursuant to 
an appointment made before the date of the enactment of this Act, or, 
except as provided in the amendment made by subsection (c), any 
nomination made before that date; however, when any such office becomes 
vacant, the appointment of any person to fill that office shall be made 
in accordance with such amendment. The requirement set forth in the 
fourth sentence of section 202(a)(1) of title 39, United States Code 
(as amended by subsection (a)) shall be met beginning not later than 9 
years after the date of the enactment of this Act.

SEC. 402. OBLIGATIONS.

    (a) Purposes for Which Obligations May Be Issued.--The first 
sentence of section 2005(a)(1) of title 39, United States Code, is 
amended by striking ``title.'' and inserting ``title, other than any of 
the purposes for which the corresponding authority is available to the 
Postal Service under section 2011.''.
    (b) Limitation on Net Annual Increase in Obligations Issued for 
Certain Purposes.--The third sentence of section 2005(a)(1) of title 
39, United States Code, is amended to read as follows: ``In any one 
fiscal year, the net increase in the amount of obligations outstanding 
issued for the purpose of capital improvements and the net increase in 
the amount of obligations outstanding issued for the purpose of 
defraying operating expenses of the Postal Service shall not exceed a 
combined total of $3,000,000,000.'' .
    (c) Limitations on Obligations Outstanding.--
            (1) In general.--Subsection (a) of section 2005 of title 
        39, United States Code, is amended by adding at the end the 
        following:
    ``(3) For purposes of applying the respective limitations under 
this subsection, the aggregate amount of obligations issued by the 
Postal Service which are outstanding as of any one time, and the net 
increase in the amount of obligations outstanding issued by the Postal 
Service for the purpose of capital improvements or for the purpose of 
defraying operating expenses of the Postal Service in any fiscal year, 
shall be determined by aggregating the relevant obligations issued by 
the Postal Service under this section with the relevant obligations 
issued by the Postal Service under section 2011.''.
            (2) Conforming amendment.--The second sentence of section 
        2005(a)(1) of title 39, United States Code, is amended by 
        striking ``any such obligations'' and inserting ``obligations 
        issued by the Postal Service which may be''.
    (d) Amounts Which May Be Pledged, Etc.--
            (1) Obligations to which provisions apply.--The first 
        sentence of section 2005(b) of title 39, United States Code, is 
        amended by striking ``such obligations,'' and inserting 
        ``obligations issued by the Postal Service under this 
        section,''.
            (2) Assets, revenues, and receipts to which provisions 
        apply.--Subsection (b) of section 2005 of title 39, United 
        States Code, is amended by striking ``(b)'' and inserting 
        ``(b)(1)'', and by adding at the end the following:
    ``(2) Notwithstanding any other provision of this section--
            ``(A) the authority to pledge assets of the Postal Service 
        under this subsection shall be available only to the extent 
        that such assets are not related to the provision of 
        competitive products (as determined under section 2011(h) or, 
        for purposes of any period before accounting practices and 
        principles under section 2011(h) have been established and 
        applied, the best information available from the Postal 
        Service, including the audited statements required by section 
        2008(e)); and
            ``(B) any authority under this subsection relating to the 
        pledging or other use of revenues or receipts of the Postal 
        Service shall be available only to the extent that they are not 
        revenues or receipts of the Competitive Products Fund.''.

SEC. 403. PRIVATE CARRIAGE OF LETTERS.

    (a) In General.--Section 601 of title 39, United States Code, is 
amended by striking subsection (b) and inserting the following:
    ``(b) A letter may also be carried out of the mails when--
            ``(1) the amount paid for the private carriage of the 
        letter is at least the amount equal to 6 times the rate then 
        currently charged for the 1st ounce of a single-piece first 
        class letter;
            ``(2) the letter weighs at least 12\1/2\ ounces; or
            ``(3) such carriage is within the scope of services 
        described by regulations of the Postal Service (including, in 
        particular, sections 310.1 and 320.2-320.8 of title 39 of the 
        Code of Federal Regulations, as in effect on July 1, 2004) that 
        purport to permit private carriage by suspension of the 
        operation of this section (as then in effect).
    ``(c) Any regulations necessary to carry out this section shall be 
promulgated by the Postal Regulatory Commission.''.
    (b) Effective Date.--This section shall take effect on the date as 
of which the regulations promulgated under section 3633 of title 39, 
United States Code (as amended by section 202) take effect.

SEC. 404. RULEMAKING AUTHORITY.

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

SEC. 405. NONINTERFERENCE WITH COLLECTIVE BARGAINING AGREEMENTS, ETC.

    (a) Noninterference With Collective Bargaining Agreements.--Except 
as provided in section 407, nothing in this Act or any amendment made 
by this Act shall restrict, expand, or otherwise affect any of the 
rights, privileges, or benefits of either employees of or labor 
organizations representing employees of the United States Postal 
Service under chapter 12 of title 39, United States Code, the National 
Labor Relations Act, any handbook or manual affecting employee labor 
relations within the United States Postal Service, or any collective 
bargaining agreement.
    (b) Free Mailing Privileges Continue Unchanged.--Nothing in this 
Act or any amendment made by this Act shall affect any free mailing 
privileges accorded under section 3217 or sections 3403 through 3406 of 
title 39, United States Code.

SEC. 406. BONUS AUTHORITY.

    Subchapter VI of chapter 36 of title 39, United States Code (as so 
redesignated by section 306) is amended by adding at the end the 
following:
``Sec. 3686. Bonus authority
    ``(a) In General.--The Postal Service may establish one or more 
programs to provide bonuses or other rewards to officers and employees 
of the Postal Service to achieve the objectives of this chapter.
    ``(b) Waiver of Limitation on Compensation.--
            ``(1) In general.--Under any such program, the Postal 
        Service may award a bonus or other reward in excess of the 
        limitation set forth in the last sentence of section 1003(a), 
        if such program has been approved under paragraph (2).
            ``(2) Approval process.--If the Postal Service wishes to 
        have the authority, under any program described in subsection 
        (a), to award bonuses or other rewards in excess of the 
        limitation referred to in paragraph (1)--
                    ``(A) the Postal Service shall make an appropriate 
                request to the Postal Regulatory Commission, in such 
                form and manner as the Commission requires; and
                    ``(B) the Postal Regulatory Commission shall 
                approve any such request if it finds that the program 
                is likely to achieve the objectives of this chapter.
            ``(3) Revocation authority.--If the Postal Regulatory 
        Commission finds that a program previously approved under 
        paragraph (2) is not achieving the objectives of this chapter, 
        the Commission may revoke or suspend the authority of the 
        Postal Service to continue such program until such time as 
        appropriate corrective measures have, in the judgment of the 
        Commission, been taken.
    ``(c) Reporting Requirement Relating to Bonuses or Other Rewards.--
Included in its comprehensive statement under section 2401(e) for any 
period shall be--
            ``(1) the name of each person receiving a bonus or other 
        reward during such period which would not have been allowable 
        but for the provisions of subsection (b);
            ``(2) the amount of the bonus or other reward; and
            ``(3) the amount by which the limitation referred to in 
        subsection (b)(1) was exceeded as a result of such bonus or 
        other reward.''.

SEC. 407. MEDIATION IN COLLECTIVE-BARGAINING DISPUTES.

    (a) In General.--Section 1207(b) of title 39, United States Code, 
is amended by striking all that follows ``the Director of the Federal 
Mediation and Conciliation Service shall'' and inserting ``, within 10 
days appoint a mediator of nationwide reputation and professional 
stature, and who is also a member of the National Academy of 
Arbitrators. The parties shall cooperate with the mediator in an effort 
to reach an agreement and shall meet and negotiate in good faith at 
such times and places that the mediator, in consultation with the 
parties, shall direct.''.
    (b) Provisions Relating to Arbitration Boards.--Section 1207(c) of 
title 39, United States Code, is amended--
            (1) in paragraph (1)--
                    (A) by striking ``90'' and inserting ``60'';
                    (B) by striking ``not members of the factfinding 
                panel,''; and
                    (C) by striking all that follows ``shall be made'' 
                and inserting ``from a list of names provided by the 
                Director. This list shall consist of not less than 9 
                names of arbitrators of nationwide reputation and 
                professional stature, who are also members of the 
                National Academy of Arbitrators, and whom the Director 
                has determined are available and willing to serve.''; 
                and
            (2) in paragraph (3), by striking ``factfinding panel'' and 
        inserting ``mediation''.
    (c) Conforming Amendment.--Section 1207(d) of title 39, United 
States Code, is amended by striking ``factfinding panel will be 
established'' and inserting ``mediator shall be appointed''.

                TITLE V--ENHANCED REGULATORY COMMISSION

SEC. 501. REORGANIZATION AND MODIFICATION OF CERTAIN PROVISIONS 
              RELATING TO THE POSTAL REGULATORY COMMISSION.

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

               ``CHAPTER 5--POSTAL REGULATORY COMMISSION

``Sec.
``501. Establishment.
``502. Commissioners.
``503. Rules; regulations; procedures.
``504. Administration.
``Sec. 501. Establishment
    ``The Postal Regulatory Commission is an independent establishment 
of the executive branch of the Government of the United States.
``Sec. 502. Commissioners
    ``(a) The Postal Regulatory Commission is composed of 5 
Commissioners, appointed by the President, by and with the advice and 
consent of the Senate. The Commissioners shall be chosen solely on the 
basis of their technical qualifications, professional standing, and 
demonstrated expertise in economics, accounting, law, or public 
administration, and may be removed by the President only for cause. 
Each individual appointed to the Commission shall have the 
qualifications and expertise necessary to carry out the 
responsibilities accorded Commissioners under the Postal Accountability 
and Enhancement Act. Not more than 3 of the Commissioners may be 
adherents of the same political party.
    ``(b) A Commissioner may continue to serve after the expiration of 
his term until his successor has qualified, except that a Commissioner 
may not so continue to serve for more than 1 year after the date upon 
which his term otherwise would expire under subsection (e).
    ``(c) One of the Commissioners shall be designated as Chairman by, 
and shall serve in the position of Chairman at the pleasure of, the 
President.
    ``(d) The Commissioners shall by majority vote designate a Vice 
Chairman of the Commission. The Vice Chairman shall act as Chairman of 
the Commission in the absence of the Chairman.
    ``(e) The Commissioners shall serve for terms of 6 years.'';
            (2) in subchapter I of chapter 36 (as in effect before the 
        amendment made by section 201(c)), by striking the heading for 
        such subchapter I and all that follows through section 3602; 
        and
            (3) by redesignating sections 3603 and 3604 as sections 503 
        and 504, respectively, and transferring such sections to the 
        end of chapter 5 (as inserted by paragraph (1)).
    (b) Determinations.--Section 503 of title 39, United States Code, 
as so redesignated by subsection (a)(3), is amended by adding at the 
end the following: ``Such rules shall include procedures which balance, 
inter alia, the need for protecting due process rights and ensuring 
expeditious decision-making.''.
    (c) Applicability.--The amendment made by subsection (a)(1) shall 
not affect the appointment or tenure of any person serving as a 
Commissioner on the Postal Regulatory Commission (as so redesignated by 
section 504) pursuant to an appointment made before the date of the 
enactment of this Act or any nomination made before that date, but, 
when any such office becomes vacant, the appointment of any person to 
fill that office shall be made in accordance with such amendment.
    (d) Clerical Amendment.--The analysis for part I of title 39, 
United States Code, is amended by inserting after the item relating to 
chapter 4 the following:

``5. Postal Regulatory Commission...........................     501''.

SEC. 502. AUTHORITY FOR POSTAL REGULATORY COMMISSION TO ISSUE 
              SUBPOENAS.

    Section 504 of title 39, United States Code (as so redesignated by 
section 501) is amended by adding at the end the following:
    ``(f)(1) Any Commissioner of the Postal Regulatory Commission, any 
administrative law judge appointed by the Commission under section 3105 
of title 5, and any employee of the Commission designated by the 
Commission may administer oaths, examine witnesses, take depositions, 
and receive evidence.
    ``(2) The Chairman of the Commission, any Commissioner designated 
by the Chairman, and any administrative law judge appointed by the 
Commission under section 3105 of title 5 may, with respect to any 
proceeding conducted by the Commission under this title--
            ``(A) issue subpoenas requiring the attendance and 
        presentation of testimony by, or the production of documentary 
        or other evidence in the possession of, any covered person; and
            ``(B) order the taking of depositions and responses to 
        written interrogatories by a covered person.
The written concurrence of a majority of the Commissioners then holding 
office shall, with respect to each subpoena under subparagraph (A), be 
required in advance of its issuance.
    ``(3) In the case of contumacy or failure to obey a subpoena issued 
under this subsection, upon application by the Commission, the district 
court of the United States for the district in which the person to whom 
the subpoena is addressed resides or is served may issue an order 
requiring such person to appear at any designated place to testify or 
produce documentary or other evidence. Any failure to obey the order of 
the court may be punished by the court as a contempt thereof.
    ``(4) For purposes of this subsection, the term `covered person' 
means an officer, employee, agent, or contractor of the Postal Service.
    ``(g)(1) If the Postal Service determines that any document or 
other matter it provides to the Postal Regulatory Commission pursuant 
to a subpoena issued under subsection (f), or otherwise at the request 
of the Commission in connection with any proceeding or other purpose 
under this title, contains information which is described in section 
410(c) of this title, or exempt from public disclosure under section 
552(b) of title 5, the Postal Service shall, at the time of providing 
such matter to the Commission, notify the Commission, in writing, of 
its determination (and the reasons therefor).
    ``(2) No officer or employee of the Commission may, with respect to 
any information as to which the Commission has been notified under 
paragraph (1)--
            ``(A) use such information for purposes other than the 
        purposes for which it is supplied; or
            ``(B) permit anyone who is not an officer or employee of 
        the Commission to have access to any such information.
    ``(3) Paragraph (2) shall not prevent information from being 
furnished under any process of discovery established under this title 
in connection with a proceeding under this title. The Commission shall, 
by regulations based on rule 26(c) of the Federal Rules of Civil 
Procedure, establish procedures for ensuring appropriate 
confidentiality for any information furnished under the preceding 
sentence.''.

SEC. 503. APPROPRIATIONS FOR THE POSTAL REGULATORY COMMISSION.

    (a) Authorization of Appropriations.--Subsection (d) of section 504 
of title 39, United States Code (as so redesignated by section 501) is 
amended to read as follows:
    ``(d) There are authorized to be appropriated, out of the Postal 
Service Fund, such sums as may be necessary for the Postal Regulatory 
Commission. In requesting an appropriation under this subsection for a 
fiscal year, the Commission shall prepare and submit to the Congress 
under section 2009 a budget of the Commission's expenses, including 
expenses for facilities, supplies, compensation, and employee 
benefits.''.
    (b) Budget Program.--
            (1) In general.--The next to last sentence of section 2009 
        of title 39, United States Code, is amended to read as follows: 
``The budget program shall also include separate statements of the 
amounts which (1) the Postal Service requests to be appropriated under 
subsections (b) and (c) of section 2401, (2) the Office of Inspector 
General of the United States Postal Service requests to be 
appropriated, out of the Postal Service Fund, under section 8J(e) of 
the Inspector General Act of 1978, and (3) the Postal Regulatory 
Commission requests to be appropriated, out of the Postal Service Fund, 
under section 504(d) of this title.''.
            (2) Conforming amendment.--Section 2003(e)(1) of title 39, 
        United States Code, is amended by striking the first sentence 
        and inserting the following: ``The Fund shall be available for 
        the payment of (A) all expenses incurred by the Postal Service 
        in carrying out its functions as provided by law, subject to 
        the same limitation as set forth in the parenthetical matter 
        under subsection (a); (B) all expenses of the Postal Regulatory 
        Commission, subject to the availability of amounts appropriated 
        pursuant to section 504(d); and (C) all expenses of the Office 
        of Inspector General, subject to the availability of amounts 
        appropriated pursuant to section 8J(e) of the Inspector General 
        Act of 1978.''.
    (c) Effective Date.--
            (1) In general.--The amendments made by this section shall 
        apply with respect to fiscal years beginning on or after 
        October 1, 2005.
            (2) Savings provision.--The provisions of title 39, United 
        States Code, that are amended by this section shall, for 
        purposes of any fiscal year before the first fiscal year to 
        which the amendments made by this section apply, continue to 
        apply in the same way as if this section had never been 
        enacted.

SEC. 504. REDESIGNATION OF THE POSTAL RATE COMMISSION.

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

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

    (a) In General.--Chapter 5 of title 39, United States Code (as 
added by this Act) is amended by adding after section 504 the 
following:
``Sec. 505. Officer of the Postal Regulatory Commission representing 
              the general public
    ``The Postal Regulatory Commission shall designate an officer of 
the Postal Regulatory Commission in all public proceedings (such as 
developing rules, regulations, and procedures) who shall represent the 
interests of the general public.''.
    (b) Clerical Amendment.--The analysis for chapter 5 of title 39, 
United States Code (as amended by section 501(a)(1)) is amended by 
adding after the item relating to section 504 the following:

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

                      TITLE VI--INSPECTORS GENERAL

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

    (a) In General.--Paragraph (2) of section 8G(a) of the Inspector 
General Act of 1978 is amended by inserting ``the Postal Regulatory 
Commission,'' after ``the United States International Trade 
Commission,''.
    (b) Administration.--Section 504 of title 39, United States Code 
(as so redesignated by section 501) is amended by adding after 
subsection (g) (as added by section 502) the following:
    ``(h)(1) Notwithstanding any other provision of this title or of 
the Inspector General Act of 1978, the authority to select, appoint, 
and employ officers and employees of the Office of Inspector General of 
the Postal Regulatory Commission, and to obtain any temporary or 
intermittent services of experts or consultants (or an organization of 
experts or consultants) for such Office, shall reside with the 
Inspector General of the Postal Regulatory Commission.
    ``(2) Except as provided in paragraph (1), any exercise of 
authority under this subsection shall, to the extent practicable, be in 
conformance with the applicable laws and regulations that govern 
selections, appointments and employment, and the obtaining of any such 
temporary or intermittent services, within the Postal Regulatory 
Commission.''.
    (c) Deadline.--No later than 180 days after the date of the 
enactment of this Act--
            (1) the first Inspector General of the Postal Regulatory 
        Commission shall be appointed; and
            (2) the Office of Inspector General of the Postal 
        Regulatory Commission shall be established.

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

    (a) Definitional Amendments to the Inspector General Act of 1978.--
Section 11 of the Inspector General Act of 1978 is amended--
            (1) in paragraph (1)--
                    (A) by striking ``or'' before ``the President of 
                the Export-Import Bank;'' and
                    (B) by inserting ``or the Governors of the United 
                States Postal Service (within the meaning of section 
                102(3) of title 39, United States Code);'' after ``the 
                President of the Export-Import Bank;''; and
            (2) in paragraph (2)--
                    (A) by striking ``or'' before ``the Export-Import 
                Bank,''; and
                    (B) by inserting ``or the United States Postal 
                Service,'' after ``the Export-Import Bank,''.
    (b) Special Provisions Concerning the United States Postal 
Service.--
            (1) In general.--The Inspector General Act of 1978 is 
        amended--
                    (A) by redesignating section 8J as section 8K; and
                    (B) by inserting after section 8I the following:

    ``special provisions concerning the united states postal service

    ``Sec. 8J.  (a) In carrying out the duties and responsibilities 
specified in this Act, the Inspector General of the United States 
Postal Service shall have oversight responsibility for all activities 
of the Postal Inspection Service, including any internal investigation 
performed by the Postal Inspection Service. The Chief Postal Inspector 
shall promptly report any significant activities being carried out by 
the Postal Inspection Service to such Inspector General. The Postmaster 
General shall promptly report to such Inspector General all allegations 
of theft, fraud, or misconduct by Postal Service officers or employees, 
and entities or individuals doing business with the Postal Service.
    ``(b) In the case of any report that the Governors of the United 
States Postal Service (within the meaning of section 102(3) of title 
39, United States Code) are required to transmit under the second 
sentence of section 5(d), such sentence shall be applied by deeming the 
term `appropriate committees of Congress' to mean the Committee on 
Government Reform of the House of Representatives, the Committee on 
Governmental Affairs of the Senate, and such other committees or 
subcommittees of Congress as may be appropriate.
    ``(c) Notwithstanding any provision of paragraph (7) or (8) of 
section 6(a), the Inspector General of the United States Postal Service 
may select, appoint, and employ such officers and employees as may be 
necessary for carrying out the functions, powers, and duties of the 
Office of Inspector General and to obtain the temporary or intermittent 
services of experts or consultants or an organization of experts or 
consultants, subject to the applicable laws and regulations that govern 
such selections, appointments, and employment, and the obtaining of 
such services, within the United States Postal Service.
    ``(d) Nothing in this Act shall restrict, eliminate, or otherwise 
adversely affect any of the rights, privileges, or benefits of 
employees of the United States Postal Service, or labor organizations 
representing employees of the United States Postal Service, under 
chapter 12 of title 39, United States Code, the National Labor 
Relations Act, any handbook or manual affecting employee labor 
relations with the United States Postal Service, or any collective 
bargaining agreement.
    ``(e) There are authorized to be appropriated, out of the Postal 
Service Fund, such sums as may be necessary for the Office of Inspector 
General of the United States Postal Service.''.
            (2) Related provisions.--For certain related provisions, 
        see section 503(b).
    (c) Exercise of Certain Powers.--Section 6(e)(3) of the Inspector 
General Act of 1978 is amended--
            (1) by striking ``and the'' before ``Tennessee Valley 
        Authority''; and
            (2) by inserting ``, and United States Postal Service'' 
        after ``Tennessee Valley Authority''.
    (d) Public Contracts.--
            (1) Additional provisions applicable.--Section 410(b)(5) of 
        title 39, United States Code, is amended--
                    (A) in subparagraph (A), by striking ``and'' after 
                the semicolon; and
                    (B) by adding after subparagraph (B) the following:
                    ``(C) the Anti-Kickback Act of 1986 (41 U.S.C. 51 
                and following), other than subsections (a) and (b) of 7 
                and section 8 of that Act; and
                    ``(D) section 315 of the Federal Property and 
                Administrative Services Act of 1949 (41 U.S.C. 265) 
                (relating to protecting contractor employees from 
                reprisal for disclosure of certain information);''.
            (2) Regulations on allowable costs.--Section 410 of title 
        39, United States Code, is amended by adding at the end the 
        following:
    ``(e) The Postal Service shall develop and issue purchasing 
regulations that prohibit contract costs not allowable under section 
5.2.5 of the United States Postal Service Procurement Manual 
(Publication 41), as in effect on July 12, 1995.''.
    (e) Audits of the Postal Service.--
            (1) Audits.--Subsection (e) of section 2008 of title 39, 
        United States Code, is amended to read as follows:
    ``(e)(1) At least once each year beginning with the fiscal year 
commencing after the date of the enactment of the Postal Accountability 
and Enhancement Act, the financial statements of the Postal Service 
(including those used in determining and establishing postal rates) 
shall be audited by the Inspector General or by an independent external 
auditor selected by the Inspector General.
    ``(2) Audits under this section shall be conducted in accordance 
with applicable generally accepted government auditing standards.
    ``(3) Upon completion of the audit required by this subsection, the 
person who audits the statement shall submit a report on the audit to 
the Postmaster General.''.
            (2) Results of inspector general's audit to be included in 
        annual report.--Section 2402 of title 39, United States Code, 
        is amended by inserting after the first sentence the following: 
        ``Each report under this section shall include a copy of the 
        report most recently received by the Postmaster General under 
        section 2008(e)(3).''.
            (3) Coordination provisions.--Section 2008(d) of title 39, 
        United States Code, is amended--
                    (A) by striking ``(d) Nothing'' and inserting 
                ``(d)(1) Except as provided in paragraph (2), 
                nothing''; and
                    (B) by adding at the end the following:
    ``(2) An audit or report under paragraph (1) may not be obtained 
without the prior written approval of the Inspector General.''.
            (4) Transition provision.--For purposes of any fiscal year 
        preceding the first fiscal year commencing after the date of 
        the enactment of this Act, the provisions of title 39, United 
        States Code, shall be applied as if the amendments made by this 
        subsection had never been enacted.
    (f) Reports.--Section 3013 of title 39, United States Code, is 
amended by striking ``Postmaster General'' each place it appears and 
inserting ``Chief Postal Inspector''.
    (g) Technical and Conforming Amendments.--
            (1) Relating to the inspector general act of 1978.--(A) 
        Subsection (a) of section 8G of the Inspector General Act of 
        1978 (as amended by section 601(a)) is further amended--
                    (i) in paragraph (2), by striking ``the Postal 
                Regulatory Commission, and the United States Postal 
                Service;'' and inserting ``and the Postal Regulatory 
                Commission;'' and
                    (ii) in paragraph (4), by striking ``except that'' 
                and all that follows through ``Code);'' and inserting 
                ``except that, with respect to the National Science 
                Foundation, such term means the National Science 
                Board;''.
            (B)(i) Subsection (f) of section 8G of such Act is 
        repealed.
            (ii) Subsection (c) of section 8G of such Act is amended by 
        striking ``Except as provided under subsection (f) of this 
        section, the'' and inserting ``The''.
            (C) Section 8K of such Act (as so redesignated by 
        subsection (b)(1)(A)) is amended by striking the matter after 
        ``8D,'' and before ``of this Act'' and inserting ``8E, 8F, 8H, 
        or 8J''.
            (2) Relating to title 39, united states code.--(A) 
        Subsection (e) of section 202 of title 39, United States Code, 
        is repealed.
            (B) Paragraph (4) of section 102 of such title 39 (as 
        amended by section 101) is amended to read as follows:
            ``(4) `Inspector General' means the Inspector General of 
        the United States Postal Service, appointed under section 3(a) 
        of the Inspector General Act of 1978;''.
            (C) The first sentence of section 1003(a) of such title 39 
        is amended by striking ``chapters 2 and 12 of this title, 
        section 8G of the Inspector General Act of 1978, or other 
        provision of law,'' and inserting ``chapter 2 or 12 of this 
        title, subsection (b) or (c) of this section, or any other 
        provision of law,''.
            (D) Section 1003(b) of such title 39 is amended by striking 
        ``respective'' and inserting ``other''.
            (E) Section 1003(c) of such title 39 is amended by striking 
        ``included'' and inserting ``includes''.
            (3) Relating to the energy policy act of 1992.--Section 
        160(a) of the Energy Policy Act of 1992 (42 U.S.C. 8262f(a)) is 
        amended (in the matter before paragraph (1)) by striking all 
        that follows ``(5 U.S.C. App.)'' and before ``shall--''.
    (h) Effective Date; Transition Provisions.--
            (1) Effective date.--Except as provided in paragraph (2) or 
        subsection (c), this section and the amendments made by this 
        section shall take effect on the date of the enactment of this 
        Act.
            (2) Transition provisions.--
                    (A) Presidential appointment authority available 
                immediately.--The authority to appoint an Inspector 
                General of the United States Postal Service in 
                accordance with the amendments made by this section 
                shall be available as of the effective date of this 
                section.
                    (B) Continuation in office.--Pending the 
                appointment of an Inspector General of the United 
                States Postal Service in accordance with the amendments 
                made by this section, the individual serving as the 
                Inspector General of the United States Postal Service 
                on the day before the effective date of this section 
                may continue to serve--
                            (i) in accordance with applicable 
                        provisions of the Inspector General Act of 1978 
                        and (except as provided in clause (ii)) of 
                        title 39, United States Code, as last in effect 
                        before the effective date of this Act; but
                            (ii) subject to the provisions of such 
                        title 39 as amended by subsections (e) and (f) 
                        of this section (deeming any reference to the 
                        ``Inspector General'' in such provisions, as so 
                        amended, to refer to the individual continuing 
                        to serve under authority of this subparagraph) 
                        and subparagraph (C).
                    (C) Authorization of appropriations.--
                            (i) In general.--Notwithstanding any other 
                        provision of this subsection, section 8J(e) of 
                        the Inspector General Act of 1978 (as amended 
                        by this section) shall be effective for 
                        purposes of fiscal years beginning on or after 
                        October 1, 2005.
                            (ii) Savings provision.--For purposes of 
                        the fiscal year ending on September 30, 2005, 
                        funding for the Office of Inspector General of 
                        the United States Postal Service shall be made 
                        available in the same manner as if this Act had 
                        never been enacted.
                    (D) Eligibility of prior inspector general.--
                Nothing in this Act shall prevent any individual who 
                has served as Inspector General of the United States 
                Postal Service at any time before the date of the 
                enactment of this Act from being appointed to that 
                position pursuant to the amendments made by this 
                section.

                         TITLE VII--EVALUATIONS

SEC. 701. UNIVERSAL POSTAL SERVICE STUDY.

    (a) Report by the Postal Service.--The United States Postal Service 
shall, within 12 months after the date of the enactment of this Act, 
submit to the President, the Congress, and the Postal Regulatory 
Commission, a written report on universal postal service in the United 
States (hereinafter in this section referred to as ``universal 
service''). Such report shall include at least the following:
            (1) A comprehensive review of the history and development 
        of universal service, including how the scope and standards of 
        universal service have evolved over time.
            (2) The scope and standards of universal service provided 
        under current law (including sections 101 and 403 of title 39, 
        United States Code) and current rules, regulations, policy 
        statements, and practices of the Postal Service.
            (3) A description of any geographic areas, populations, 
        communities, organizations, or other groups or entities not 
        currently covered by universal service or that are covered but 
        that are receiving services deficient in scope or quality or 
        both.
            (4) The scope and standards of universal service likely to 
        be required in the future in order to meet the needs and 
        expectations of the American public, including all types of 
        mail users, based on such assumptions or alternative sets of 
        assumptions as the Postal Service considers plausible.
            (5) Such recommendations as the Postal Service considers 
        appropriate.
    (b) Report by the Postal Regulatory Commission.--The Postal 
Regulatory Commission shall, within 12 months after receiving the 
report of the Postal Service under subsection (a), submit to the 
President and the Congress a written report evaluating the report of 
the Postal Service. The report of the Commission shall include at least 
the following:
            (1) Such comments and observations relating to the matters 
        addressed in the Postal Service's report as the Commission 
        considers appropriate.
            (2) An estimate of the cost attributable to the obligation 
        to provide universal service under prior and current law, 
        respectively.
            (3) An estimate of the likely cost of fulfilling the 
        obligation to provide universal service under--
                    (A) the assumptions or respective sets of 
                assumptions of the Postal Service described in 
                subsection (a)(4); and
                    (B) such other assumptions or sets of assumptions 
                as the Commission considers plausible.
            (4) Such additional topics and recommendations as the 
        Commission considers appropriate.
    (c) Consultation.--In preparing the reports required by this 
section, the Postal Service and the Postal Regulatory Commission--
            (1) shall consult with each other, other Federal agencies, 
        users of the mails, enterprises in the private sector engaged 
        in the delivery of mail, and the general public; and
            (2) shall address in their respective reports any written 
        comments received under this section.
    (d) Clarifying Provision.--Nothing in this section shall be 
considered to relate to any services that are not postal services 
(within the meaning of section 102 of title 39, United States Code, as 
amended by section 101).

SEC. 702. ASSESSMENTS OF RATEMAKING, CLASSIFICATION, AND OTHER 
              PROVISIONS.

    (a) In General.--The Postal Regulatory Commission shall, at least 
every 5 years, submit a report to the President and the Congress 
concerning--
            (1) the operation of the amendments made by the Postal 
        Accountability and Enhancement Act; and
            (2) recommendations for any legislation or other measures 
        necessary to improve the effectiveness or efficiency of the 
        postal laws of the United States.
    (b) Postal Service Views.--A report under this section shall be 
submitted only after reasonable opportunity has been afforded to the 
Postal Service to review such report and to submit written comments 
thereon. Any comments timely received from the Postal Service under the 
preceding sentence shall be attached to the report submitted under 
subsection (a).
    (c) Specific Information Required.--The Postal Regulatory 
Commission shall include, as part of at least its first report under 
subsection (a), the following:
            (1) Cost-coverage requirement relating to competitive 
        products collectively.--With respect to section 3633 of title 
        39, United States Code (as amended by this Act)--
                    (A) a description of how such section has operated; 
                and
                    (B) recommendations as to whether or not such 
                section should remain in effect and, if so, any 
                suggestions as to how it might be improved.
            (2) Competitive products fund.--With respect to the Postal 
        Service Competitive Products Fund (under section 2011 of title 
        39, United States Code, as amended by section 301), in 
        consultation with the Secretary of the Treasury--
                    (A) a description of how such Fund has operated;
                    (B) any suggestions as to how the operation of such 
                Fund might be improved; and
                    (C) a description and assessment of alternative 
                accounting or financing mechanisms that might be used 
to achieve the objectives of such Fund.
            (3) Assumed federal income tax on competitive products 
        fund.--With respect to section 3634 of title 39, United States 
        Code (as amended by this Act), in consultation with the 
        Secretary of the Treasury--
                    (A) a description of how such section has operated; 
                and
                    (B) recommendations as to whether or not such 
                section should remain in effect and, if so, any 
                suggestions as to how it might be improved.

SEC. 703. STUDY ON EQUAL APPLICATION OF LAWS TO COMPETITIVE PRODUCTS.

    (a) In General.--The Federal Trade Commission shall prepare and 
submit to the President, the Congress, and the Postal Regulatory 
Commission, within 1 year after the date of the enactment of this Act, 
a comprehensive report identifying Federal and State laws that apply 
differently to the United States Postal Service with respect to the 
competitive category of mail (within the meaning of section 102 of 
title 39, United States Code, as amended by section 101) and private 
companies providing similar products.
    (b) Recommendations; Adjustments.--The Federal Trade Commission 
shall include such recommendations as it considers appropriate for 
bringing such legal differences to an end and, in the interim, to 
account under section 3633, for the net economic effects provided by 
those laws.
    (c) Consultation.--In preparing its report, the Federal Trade 
Commission shall consult with the United States Postal Service, the 
Postal Regulatory Commission, other Federal agencies, mailers, private 
companies that provide delivery services, and the general public, and 
shall append to such report any written comments received under this 
subsection.
    (d) Competitive Product Rate Regulation.--The Postal Regulatory 
Commission shall take into account the recommendations of the Federal 
Trade Commission, and subsequent events that affect the continuing 
validity of the estimate of the net economic effect, in promulgating or 
revising the regulations required by section 3633 of title 39, United 
States Code.

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

    (a) Study.--The Board of Governors shall study and, within 1 year 
after the date of the enactment of this Act, submit to the President 
and Congress a report concerning the extent to which women and 
minorities are represented in supervisory and management positions 
within the United States Postal Service. Any data included in the 
report shall be presented in the aggregate and by pay level.
    (b) Performance Evaluations.--The United States Postal Service 
shall, as soon as practicable, take such measures as may be necessary 
to ensure that, for purposes of conducting performance appraisals of 
supervisory or managerial employees, appropriate consideration shall be 
given to meeting affirmative action goals, achieving equal employment 
opportunity requirements, and implementation of plans designed to 
achieve greater diversity in the workforce.

SEC. 705. PLAN FOR ASSISTING DISPLACED WORKERS.

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

SEC. 706. CONTRACTS WITH WOMEN, MINORITIES, AND SMALL BUSINESSES.

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

SEC. 707. RATES FOR PERIODICALS.

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

SEC. 708. ASSESSMENT OF CERTAIN RATE DEFICIENCIES.

    (a) In General.--Within 12 months after the date of the enactment 
of this Act, the Office of Inspector General of the United States 
Postal Service shall study and submit to the President, the Congress, 
and the United States Postal Service, a report concerning the 
administration of section 3626(k) of title 39, United States Code.
    (b) Specific Requirements.--The study and report shall specifically 
address the adequacy and fairness of the process by which assessments 
under section 3626(k) of title 39, United States Code, are determined 
and appealable, including--
            (1) whether the Postal Regulatory Commission or any other 
        body outside the Postal Service should be assigned a role; and
            (2) whether a statute of limitations should be established 
        for the commencement of proceedings by the Postal Service 
        thereunder.

SEC. 709. POSTAL PROCESSING AND DISTRIBUTION NETWORK STUDY.

    The United States Postal Service shall, within 16 months after the 
date of the enactment of this Act, submit to the President, the 
Congress, and the Board of Governors of the United States Postal 
Service a written report on the postal processing and distribution 
network. Such report shall include at least the following:
            (1) Recommendations to improve the efficiency and 
        effectiveness of the processing and distribution network while 
        preserving the timely delivery of postal services.
            (2) Identification of excess capacity (if any) within the 
        processing and distribution network and opportunities for 
        savings through realignment or consolidation of facilities.
            (3) Report of the Postal Service's plans for dealing with 
        the recommendations and findings identified in paragraphs (1) 
        and (2).
            (4) Statutory or regulatory obstacles preventing the Postal 
        Service from taking action to realign or consolidate facilities 
        identified in paragraph (2).
            (5) Such additional topics and recommendations as the 
        Postal Service considers appropriate.

SEC. 710. DEFINITION.

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

     TITLE VIII--MISCELLANEOUS; TECHNICAL AND CONFORMING AMENDMENTS

SEC. 801. EMPLOYMENT OF POSTAL POLICE OFFICERS.

    Section 3061 of title 18, United States Code, is amended by adding 
at the end the following:
    ``(c)(1) The Postal Service may employ police officers for duty in 
connection with the protection of property owned or occupied by the 
Postal Service or under the charge and control of the Postal Service, 
and persons on the property, including duty in areas outside the 
property to the extent necessary to protect the property and persons on 
the property.
    ``(2) With respect to such property, such officers shall have the 
power to--
            ``(A) enforce Federal laws and regulations for the 
        protection of persons and property;
            ``(B) carry firearms; and
            ``(C) make arrests without a warrant for any offense 
        against the United States committed in the presence of the 
        officer or for any felony cognizable under the laws of the 
        United States if the officer has reasonable grounds to believe 
        that the person to be arrested has committed or is committing a 
        felony.
    ``(3) With respect to such property, such officers may have, to 
such extent as the Postal Service may by regulations prescribe, the 
power to--
            ``(A) serve warrants and subpoenas issued under the 
        authority of the United States; and
            ``(B) conduct investigations, on and off the property in 
        question, of offenses that may have been committed against 
        property owned or occupied by the Postal Service or persons on 
        the property.
    ``(4)(A) As to such property, the Postmaster General may prescribe 
regulations necessary for the protection and administration of property 
owned or occupied by the Postal Service and persons on the property. 
The regulations may include reasonable penalties, within the limits 
prescribed in subparagraph (B), for violations of the regulations. The 
regulations shall be posted and remain posted in a conspicuous place on 
the property.
    ``(B) A person violating a regulation prescribed under this 
subsection shall be fined under this title, imprisoned for not more 
than 30 days, or both.''.

SEC. 802. DATE OF POSTMARK TO BE TREATED AS DATE OF APPEAL IN 
              CONNECTION WITH THE CLOSING OR CONSOLIDATION OF POST 
              OFFICES.

    (a) In General.--Section 404(b) of title 39, United States Code, is 
amended by adding at the end the following:
    ``(6) For purposes of paragraph (5), any appeal received by the 
Commission shall--
            ``(A) if sent to the Commission through the mails, be 
        considered to have been received on the date of the Postal 
        Service postmark on the envelope or other cover in which such 
        appeal is mailed; or
            ``(B) if otherwise lawfully delivered to the Commission, be 
        considered to have been received on the date determined based 
        on any appropriate documentation or other indicia (as 
        determined under regulations of the Commission).''.
    (b) Effective Date.--This section and the amendments made by this 
section shall apply with respect to any determination to close or 
consolidate a post office which is first made available, in accordance 
with paragraph (3) of section 404(b) of title 39, United States Code, 
after the end of the 3-month period beginning on the date of the 
enactment of this Act.

SEC. 803. PROVISIONS RELATING TO BENEFITS UNDER CHAPTER 81 OF TITLE 5, 
              UNITED STATES CODE, FOR OFFICERS AND EMPLOYEES OF THE 
              FORMER POST OFFICE DEPARTMENT.

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

SEC. 804. OBSOLETE PROVISIONS.

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

SEC. 805. EXPANDED CONTRACTING AUTHORITY.

    (a) Amendment to Title 39, United States Code.--
            (1) Contracts with air carriers.--Subsection (e)(1) of 
        section 5402 of title 39, United States Code, is amended to 
        read as follows:
    ``(e)(1)(A) The Postal Service may contract with any air carrier 
for the transportation of mail by aircraft in interstate air 
transportation, including the rates therefor, either through 
negotiations or competitive bidding.
    ``(B) Notwithstanding subsections (a) through (d), the Postal 
Service may contract with any air carrier or foreign air carrier for 
the transportation of mail by aircraft in foreign air transportation, 
including the rates therefor, either through negotiations or 
competitive bidding, except that--
            ``(i) any such contract may be awarded only to (I) an air 
        carrier holding a certificate required by section 41101 of 
        title 49 or an exemption therefrom issued by the Secretary of 
        Transportation, (II) a foreign air carrier holding a permit 
        required by section 41301 of title 49 or an exemption therefrom 
        issued by the Secretary of Transportation, or (III) a 
        combination of such air carriers or foreign air carriers (or 
        both);
            ``(ii) mail transported under any such contract shall not 
        be subject to any duty-to-carry requirement imposed by any 
        provision of subtitle VII of title 49 or by any certificate, 
        permit, or corresponding exemption authority issued by the 
        Secretary of Transportation under that subtitle;
            ``(iii) every contract that the Postal Service awards to a 
        foreign air carrier under this subparagraph shall be subject to 
        the continuing requirement that air carriers shall be afforded 
        the same opportunity to carry the mail of the country to and 
        from which the mail is transported and the flag country of the 
        foreign air carrier, if different, as the Postal Service has 
        afforded the foreign air carrier; and
            ``(iv) the Postmaster General shall consult with the 
        Secretary of Defense concerning actions that affect the 
        carriage of military mail transported in foreign air 
        transportation.
    ``(C) Subparagraph (B) shall not be interpreted as suspending or 
otherwise diminishing the authority of the Secretary of Transportation 
under section 41310 of title 49.''.
            (2) Definitions.--Paragraph (2) of section 5402(a) of title 
        39, United States Code, is amended to read as follows:
            ``(2) the terms `air carrier', `air transportation', 
        `foreign air carrier', `foreign air transportation', 
        `interstate air transportation', and `mail' shall have the 
        meanings given such terms in section 40102 of title 49;''.
    (b) Amendments to Title 49, United States Code.--
            (1) Authority of postal service to provide for interstate 
        air transportation of mail.--Section 41901(a) of title 49, 
        United States Code, is amended to read as follows:
    ``(a) Title 39.--The United States Postal Service may provide for 
the transportation of mail by aircraft in air transportation under this 
chapter and under chapter 54 of title 39.''.
            (2) Schedules for certain transportation of mail.--Section 
        41902(b)(1) of title 49, United States Code, is amended by 
        inserting before the semicolon at the end the following: 
        ``(other than foreign air transportation of mail)''.
            (3) Prices for foreign transportation of mail.--Section 
        41907 of title 49, United States Code, is amended--
                    (A) by striking ``(a) Limitations.--''; and
                    (B) by striking subsection (b).
            (4) Conforming amendments.--Sections 41107, 41901(b)(1), 
        41902(a), 41903(a), and 41903(b) of title 49, United States 
        Code, are amended by striking ``in foreign air transportation 
        or''.

SEC. 806. INVESTMENTS.

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

SEC. 807. REPEAL OF SECTION 5403.

    (a) In General.--Section 5403 of title 39, United States Code, is 
repealed.
    (b) Clerical Amendment.--The analysis for chapter 54 of title 39, 
United States Code, is amended by repealing the item relating to 
section 5403.

SEC. 808. REDUCED RATES.

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

SEC. 809. HAZARDOUS MATTER.

    (a) Nonmailability Generally.--Section 3001 of title 39, United 
States Code, is amended--
            (1) by redesignating subsection (n) as subsection (o); and
            (2) by inserting after subsection (m) the following:
    ``(n)(1) Except as otherwise authorized by law or regulations of 
the Postal Service, hazardous material is nonmailable.
    ``(2) In this subsection, the term `hazardous material' means a 
substance or material designated by the Secretary of Transportation 
under section 5103(a) of title 49.''.
    (b) Mailability.--Chapter 30 of title 39, United States Code, is 
amended by adding at the end the following:
``Sec. 3018. Hazardous material
    ``(a) In General.--The Postal Service shall prescribe regulations 
for the safe transportation of hazardous material in the mail.
    ``(b) Prohibitions.--No person may--
            ``(1) mail or cause to be mailed hazardous material that 
        has been declared by statute or Postal Service regulation to be 
        nonmailable;
            ``(2) mail or cause to be mailed hazardous material in 
        violation of any statute or Postal Service regulation 
        restricting the time, place, or manner in which hazardous 
        material may be mailed; or
            ``(3) manufacture, distribute, or sell any container, 
        packaging kit, or similar device that--
                    ``(A) is represented, marked, certified, or sold by 
                such person for use in the mailing of hazardous 
                material; and
                    ``(B) fails to conform with any statute or Postal 
                Service regulation setting forth standards for a 
                container, packaging kit, or similar device used for 
                the mailing of hazardous material.
    ``(c) Civil Penalty; Clean-Up Costs and Damages.--
            ``(1) In general.--A person who knowingly violates this 
        section or a regulation prescribed under this section shall be 
        liable for--
                    ``(A) a civil penalty of at least $250, but not 
                more than $100,000, for each violation;
                    ``(B) the costs of any clean-up associated with 
                each violation; and
                    ``(C) damages.
            ``(2) Knowing action.--A person acts knowingly for purposes 
        of paragraph (1) when--
                    ``(A) the person has actual knowledge of the facts 
                giving rise to the violation; or
                    ``(B) a reasonable person acting in the 
                circumstances and exercising reasonable care would have 
                had that knowledge.
            ``(3) Separate violations.--
                    ``(A) Violations over time.--A separate violation 
                under this subsection occurs for each day hazardous 
                material, mailed or caused to be mailed in 
                noncompliance with this section, is in the mail.
                    ``(B) Separate items.--A separate violation under 
                this subsection occurs for each item containing 
                hazardous material that is mailed or caused to be 
mailed in noncompliance with this section.
    ``(d) Hearings.--The Postal Service may determine that a person has 
violated this section or a regulation prescribed under this section 
only after notice and an opportunity for a hearing. Proceedings under 
this section shall be conducted in accordance with section 3001(m).
    ``(e) Penalty Considerations.--In determining the amount of a civil 
penalty for a violation of this section, the Postal Service shall 
consider--
            ``(1) the nature, circumstances, extent, and gravity of the 
        violation;
            ``(2) with respect to the person who committed the 
        violation, the degree of culpability, any history of prior 
        violations, the ability to pay, and any effect on the ability 
        to continue in business;
            ``(3) the impact on Postal Service operations; and
            ``(4) any other matters that justice requires.
    ``(f) Civil Actions To Collect.--
            ``(1) In general.--In accordance with section 409(d), a 
        civil action may be commenced in an appropriate district court 
        of the United States to collect a civil penalty, clean-up 
        costs, and damages assessed under subsection (c).
            ``(2) Compromise.--The Postal Service may compromise the 
        amount of a civil penalty, clean-up costs, and damages assessed 
        under subsection (c) before commencing a civil action with 
        respect to such civil penalty, clean-up costs, and damages 
        under paragraph (1).
    ``(g) Civil Judicial Penalties.--
            ``(1) In general.--At the request of the Postal Service, 
        the Attorney General may bring a civil action in an appropriate 
        district court of the United States to enforce this section or 
        a regulation prescribed under this section.
            ``(2) Relief.--The court in a civil action under paragraph 
        (1) may award appropriate relief, including a temporary or 
        permanent injunction, civil penalties as determined in 
        accordance with this section, or punitive damages.
            ``(3) Construction.--A civil action under this subsection 
        shall be in lieu of civil penalties for the same violation 
        under subsection (c)(1)(A).
    ``(h) Deposit of Amounts Collected.--
            ``(1) Postal service fund.--Except as provided under 
        paragraph (2), amounts collected under subsection (c)(1)(B) and 
        (C) shall be deposited into the Postal Service Fund under 
        section 2003.
            ``(2) Treasury.--Amounts collected under subsection 
        (c)(1)(A) and any punitive damages collected under subsection 
        (c)(1)(C) shall be deposited into the Treasury of the United 
        States.''.
    (c) Conforming Amendments.--(1) Section 2003(b) of title 39, United 
States Code, is amended--
            (A) in paragraph (7), by striking ``and'' after the 
        semicolon;
            (B) in paragraph (8), by striking ``purposes.'' and 
        inserting ``purposes; and''; and
            (C) by adding at the end the following:
            ``(9) any amounts collected under section 3018.''.
    (2) The analysis for chapter 30 of title 39, United States Code, is 
amended by adding at the end the following:

``3018. Hazardous material.''.
    (d) Injurious Articles as Nonmailable.--Section 1716(a) of title 
18, United States Code, is amended by inserting after ``explosives,'' 
the following: ``hazardous materials,''.

SEC. 810. PROVISIONS RELATING TO COOPERATIVE MAILINGS.

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

SEC. 811. TECHNICAL AND CONFORMING AMENDMENTS.

    (a) Reimbursement.--Section 3681 of title 39, United States Code, 
is amended by striking ``section 3628'' and inserting ``sections 3662 
through 3664''.
    (b) Size and Weight Limits.--Section 3682 of title 39, United 
States Code, is amended to read as follows:
``Sec. 3682. Size and weight limits
    ``The Postal Service may establish size and weight limitations for 
mail matter in the market-dominant category of mail consistent with 
regulations the Postal Regulatory Commission may prescribe under 
section 3622. The Postal Service may establish size and weight 
limitations for mail matter in the competitive category of mail 
consistent with its authority under section 3632.''.
    (c) Revenue Foregone, Etc.--Title 39, United States Code, is 
amended--
            (1) in section 503 (as so redesignated by section 501), by 
        striking ``this chapter.'' and inserting ``this title.''; and
            (2) in section 2401(d), by inserting ``(as last in effect 
        before enactment of the Postal Accountability and Enhancement 
        Act)'' after ``3626(a)'' and after ``3626(a)(3)(B)(ii)''.
    (d) Appropriations and Reporting Requirements.--
            (1) Appropriations.--Subsection (e) of section 2401 of 
        title 39, United States Code, is amended--
                    (A) by striking ``Committee on Post Office and 
                Civil Service'' each place it appears and inserting 
                ``Committee on Government Reform''; and
                    (B) by striking ``Not later than March 15 of each 
                year,'' and inserting ``Each year,''.
            (2) Reporting requirements.--Sections 2803(a) and 2804(a) 
        of title 39, United States Code, are amended by striking 
``2401(g)'' and inserting ``2401(e)''.
    (e) Authority to Fix Rates and Classes Generally; Requirement 
Relating to Letters Sealed Against Inspection.--Section 404 of title 
39, United States Code (as amended by section 102) is further amended 
by redesignating subsections (b) and (c) as subsections (d) and (e), 
respectively, and by inserting after subsection (a) the following:
    ``(b) Except as otherwise provided, the Governors are authorized to 
establish reasonable and equitable classes of mail and reasonable and 
equitable rates of postage and fees for postal services in accordance 
with the provisions of chapter 36. Postal rates and fees shall be 
reasonable and equitable and sufficient to enable the Postal Service, 
under best practices of honest, efficient, and economical management, 
to maintain and continue the development of postal services of the kind 
and quality adapted to the needs of the United States.
    ``(c) The Postal Service shall maintain one or more classes of mail 
for the transmission of letters sealed against inspection. The rate for 
each such class shall be uniform throughout the United States, its 
territories, and possessions. One such class shall provide for the most 
expeditious handling and transportation afforded mail matter by the 
Postal Service. No letter of such a class of domestic origin shall be 
opened except under authority of a search warrant authorized by law, or 
by an officer or employee of the Postal Service for the sole purpose of 
determining an address at which the letter can be delivered, or 
pursuant to the authorization of the addressee.''.
    (f) Limitations.--Section 3684 of title 39, United States Code, is 
amended by striking all that follows ``any provision'' and inserting 
``of this title.''.
    (g) Miscellaneous.--Title 39, United States Code, is amended--
            (1) in section 1005(d)(2)--
                    (A) by striking ``subsection (g) of section 
                5532,''; and
                    (B) by striking ``8344,'' and inserting ``8344'';
            (2) in the analysis for part III, by striking the item 
        relating to chapter 28 and inserting the following:

``28. Strategic Planning and Performance Management.........    2801'';
            (3) in section 3005(a)--
                    (A) in the matter before paragraph (1), by striking 
                all that follows ``nonmailable'' and precedes ``(h),'' 
                and inserting ``under section 3001(d),''; and
                    (B) in the sentence following paragraph (3), by 
                striking all that follows ``nonmailable'' and precedes 
                ``(h),'' and inserting ``under such section 3001(d),'';
            (4) in section 3210(a)(6)(C), by striking the matter after 
        ``if such mass mailing'' and before ``than 60 days'' and 
        inserting ``is postmarked fewer''; and
            (5) by striking the heading for section 3627 and inserting 
        the following:
``Sec. 3627. Adjusting free rates''.

           TITLE IX--POSTAL PENSION FUNDING REFORM AMENDMENTS

SEC. 901. CIVIL SERVICE RETIREMENT SYSTEM.

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

SEC. 902. HEALTH INSURANCE.

    (a) In General.--Chapter 89 of title 5, United States Code, is 
amended--
            (1) in section 8906(g)(2)(A), by striking ``by the United 
        States Postal Service.'' and inserting ``first from the Postal 
Service Retiree Health Benefits Fund up to the amount contained 
therein, with any remaining amount paid by the United States Postal 
Service.'';
            (2) by inserting after section 8909 the following:
``Sec. 8909a. Postal Service Retiree Health Benefits Fund
    ``(a) There is in the Treasury of the United States a Postal 
Service Retiree Health Benefits Fund (hereinafter in this section 
referred to as the `Fund') which is administered by the Office of 
Personnel Management. Any amounts transferred to the Fund under section 
8348(h)(2) shall yield interest at a rate equal to the weighted average 
yield of all the investments in the Civil Service Retirement and 
Disability Fund as of the date of transfer. All other investments of 
amounts in the Fund shall be made in accordance with subsections (c)-
(e) of section 8348.
    ``(b) The Fund is available without fiscal year limitation for 
payments required by section 8906(g)(2).
    ``(c)(1) Not later than June 30, 2006, and by June 30 of each 
succeeding year, the Office of Personnel Management shall compute the 
net present value of the excess of future payments required by section 
8906(g)(2)(A) for current and future United States Postal Service 
annuitants over the value of the assets of the Fund as of the end of 
the fiscal year ending on September 30 of that year. The actuarial 
costing method to be used by the Office and all actuarial assumptions 
shall be established by the Office after consultation with the United 
States Postal Service and must be in accordance with generally accepted 
actuarial practices and principles.
    ``(2) Not later than September 30, 2006, and by September 30 of 
each succeeding year, the Office shall compute and the United States 
Postal Service shall pay into such Fund--
            ``(A) the portion of the net present value described in 
        paragraph (1) attributable to the current year's service of 
        Postal Service employees; and
            ``(B) interest on the net present value described in 
        paragraph (1) for that fiscal year, at the interest rate used 
        in computing that net present value;
except that the amount otherwise payable by the Postal Service under 
the preceding provisions of this paragraph by not later than September 
30, 2006, shall be reduced by the total contributions made by the 
Postal Service under section 8906(g)(2) and attributable to fiscal year 
2006 (as determined by the Office).
    ``(3)(A) Any computation or other determination of the Office under 
this subsection shall, upon request of the Postal Service, be subject 
to review by the Postal Regulatory Commission. The Commission shall 
submit a report containing the results of any such review to the Postal 
Service, the Office of Personnel Management, and the Congress.
    ``(B) Upon receiving the report of the Postal Regulatory 
Commission, the Office of Personnel Management shall reconsider its 
computation or other determination in light of such report, and shall 
make any appropriate adjustments. The Office shall submit a report 
containing the results of its reconsideration to the Commission, the 
Postal Service, and the Congress.
    ``(4) The Office shall promulgate, after consultation with the 
United States Postal Service, any regulations it deems necessary under 
this subsection.''; and
            (3) in the analysis by inserting after the item relating to 
        section 8909 the following:

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

SEC. 903. REPEALER.

     Section 3 of Public Law 108-18 is repealed.

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

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

SEC. 905. EFFECTIVE DATES.

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