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[Congressional Bills 109th Congress]
[From the U.S. Government Publishing Office]
[S. 662 Introduced in Senate (IS)]

109th CONGRESS
  1st Session
                                 S. 662

            To reform the postal laws of the United States.

_______________________________________________________________________

                   IN THE SENATE OF THE UNITED STATES

                             March 17, 2005

  Ms. Collins (for herself, Mr. Carper, and Mr. Voinovich) introduced 
the following bill; which was read twice and referred to the Committee 
             on Homeland Security and Governmental Affairs

_______________________________________________________________________

                                 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.
                    TITLE II--MODERN RATE REGULATION

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

Sec. 301. Establishment of modern service standards.
Sec. 302. Postal service plan.
           TITLE IV--PROVISIONS RELATING TO FAIR COMPETITION

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

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

Sec. 601. Reorganization and modification of certain provisions 
                            relating to the Postal Regulatory 
                            Commission.
Sec. 602. Authority for Postal Regulatory Commission to issue 
                            subpoenas.
Sec. 603. Appropriations for the Postal Regulatory Commission.
Sec. 604. Redesignation of the Postal Rate Commission.
Sec. 605. Financial transparency.
                         TITLE VII--EVALUATIONS

Sec. 701. Assessments of ratemaking, classification, and other 
                            provisions.
Sec. 702. Report on universal postal service and the postal monopoly.
Sec. 703. Study on equal application of laws to competitive products.
Sec. 704. Report on postal workplace safety and workplace-related 
                            injuries.
Sec. 705. Study on recycled paper.
   TITLE VIII--POSTAL SERVICE RETIREMENT AND HEALTH BENEFITS FUNDING

Sec. 801. Short title.
Sec. 802. Civil Service Retirement System.
Sec. 803. Health insurance.
Sec. 804. Repeal of disposition of savings provision.
Sec. 805. Effective dates.
                TITLE IX--COMPENSATION FOR WORK INJURIES

Sec. 901. Temporary disability; continuation of pay.
Sec. 902. Disability retirement for postal employees.
                         TITLE X--MISCELLANEOUS

Sec. 1001. Employment of postal police officers.
Sec. 1002. Expanded contracting authority.
Sec. 1003. Report on the United States Postal Inspection Service and 
                            the Office of the Inspector General of the 
                            United States Postal Service.
Sec. 1004. Sense of Congress regarding Postal Service purchasing 
                            reform.

                 TITLE I--DEFINITIONS; POSTAL SERVICES

SEC. 101. DEFINITIONS.

    Section 102 of title 39, United States Code, is amended by striking 
``and'' at the end of paragraph (3), by striking the period at the end 
of paragraph (4) and inserting a semicolon, and by adding at the end 
the following:
            ``(5) `postal service' refers to the physical delivery of 
        letters, printed matter, or packages weighing up to 70 pounds, 
        including physical acceptance, collection, sorting, 
        transportation, or other functions ancillary thereto;
            ``(6) `product' means a postal service with a distinct cost 
        or market characteristic for which a rate or rates are 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; and
            ``(9) `competitive product' or `product in the competitive 
        category of mail' means a product subject to subchapter II of 
        chapter 36; and
            ``(10) `year', as used in chapter 36 (other than 
        subchapters I and VI thereof), means a fiscal year.''.

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) Except as provided in section 411, nothing in this title 
shall be considered to permit or require that the Postal Service 
provide any special nonpostal or similar services.''.
    (b) Conforming Amendments.--(1) 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)''.
    (2) Section 2003(b)(1) of title 39, United States Code, is amended 
by striking ``and nonpostal''.

                    TITLE II--MODERN RATE REGULATION

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

    (a) In General.--Chapter 36 of title 39, United States Code, is 
amended by striking sections 3621 and 3622 and inserting the following:
``Sec. 3621. Applicability; definitions
    ``(a) Applicability.--This subchapter shall apply with respect to--
            ``(1) first-class mail letters and sealed parcels;
            ``(2) first-class mail cards;
            ``(3) periodicals;
            ``(4) standard mail;
            ``(5) single-piece parcel post;
            ``(6) media mail;
            ``(7) bound printed matter;
            ``(8) library mail;
            ``(9) special services; and
            ``(10) single-piece international mail,
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 12 months after the date of enactment of this section, by 
regulation establish (and may from time to time thereafter by 
regulation revise) a modern system for regulating rates and classes for 
market-dominant products.
    ``(b) Objectives.--Such system shall be designed to achieve the 
following objectives:
            ``(1) To reduce the administrative burden and increase the 
        transparency of the ratemaking process while affording 
        reasonable opportunities for interested parties to participate 
        in that process.
            ``(2) To create predictability and stability in rates.
            ``(3) To maximize incentives to reduce costs and increase 
        efficiency.
            ``(4) To enhance mail security and deter terrorism by 
        promoting secure, sender-identified mail.
            ``(5) To allow the Postal Service pricing flexibility, 
        including the ability to use pricing to promote intelligent 
        mail and encourage increased mail volume during nonpeak 
        periods.
            ``(6) To assure adequate revenues, including retained 
        earnings, to maintain financial stability and meet the service 
        standards established under section 3691.
            ``(7) To allocate the total institutional costs of the 
        Postal Service equitably between market-dominant and 
        competitive products.
    ``(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 requirement that each class of mail or type of 
        mail service bear the direct and indirect postal costs 
        attributable to each class or type of mail service 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;
            ``(12) the need for the Postal Service to increase its 
        efficiency and reduce its costs, including infrastructure 
        costs, to help maintain high quality, affordable, universal 
        postal service; and
            ``(13) the policies of this title as well as such other 
        factors as the Commission determines appropriate.
    ``(d) Requirements.--
            ``(1) In general.--The system for regulating rates and 
        classes for market-dominant products shall--
                    ``(A) require the Postal Regulatory Commission to 
                set annual limitations on the percentage changes in 
                rates based on the Consumer Price Index for All Urban 
                Consumers unadjusted for seasonal variation over the 
                12-month period preceding the date the Postal Service 
                proposes to increase rates;
                    ``(B) establish a schedule whereby rates, when 
                necessary and appropriate, would change at regular 
                intervals by predictable amounts;
                    ``(C) not later than 45 days before the 
                implementation of any adjustment in rates under this 
                section--
                            ``(i) require the Postal Service to provide 
                        public notice of the adjustment;
                            ``(ii) provide an opportunity for review by 
                        the Postal Regulatory Commission;
                            ``(iii) provide for the Postal Regulatory 
                        Commission to notify the Postal Service of any 
                        noncompliance of the adjustment with the 
                        limitation under subparagraph (A); and
                            ``(iv) require the Postal Service to 
                        respond to the notice provided under clause 
                        (iii) and describe the actions to be taken to 
                        comply with the limitation under subparagraph 
                        (A); and
                    ``(D) notwithstanding any limitation set under 
                subparagraphs (A) and (C), establish procedures whereby 
                rates may be adjusted on an expedited basis due to 
                unexpected and extraordinary circumstances.
            ``(2) Limitations.--
                    ``(A) Classes of mail.--The annual limitations 
                under paragraph (1)(A) shall apply to a class of mail, 
                as defined in the Domestic Mail Classification Schedule 
                as in effect on the date of enactment of the Postal 
                Accountability and Enhancement Act.
                    ``(B) Rounding of rates and fees.--Nothing in this 
                subsection shall preclude the Postal Service from 
                rounding rates and fees to the nearest whole integer, 
                if the effect of such rounding does not cause the 
                overall rate increase for any class to exceed the 
                Consumer Price Index for All Urban Consumers.
    ``(e) Workshare Discounts.--
            ``(1) Definition.--In this subsection, the term `workshare 
        discount' refers to rate discounts provided to mailers for the 
        presorting, prebarcoding, handling, or transportation of mail, 
        as further defined by the Postal Regulatory Commission under 
        subsection (a).
            ``(2) Regulations.--As part of the regulations established 
        under subsection (a), the Postal Regulatory Commission shall 
        establish rules for workshare discounts that ensure that such 
        discounts do not exceed the cost that the Postal Service avoids 
        as a result of workshare activity, unless--
                    ``(A) the discount is--
                            ``(i) associated with a new postal service, 
                        a change to an existing postal service, or with 
                        a new workshare initiative related to an 
                        existing postal service; and
                            ``(ii) necessary to induce mailer behavior 
                        that furthers the economically efficient 
                        operation of the Postal Service and the portion 
                        of the discount in excess of the cost that the 
                        Postal Service avoids as a result of the 
                        workshare activity will be phased out over a 
                        limited period of time;
                    ``(B) a reduction in the discount would--
                            ``(i) lead to a loss of volume in the 
                        affected category or subclass of mail and 
                        reduce the aggregate contribution to the 
                        institutional costs of the Postal Service from 
                        the category or subclass subject to the 
                        discount below what it otherwise would have 
                        been if the discount had not been reduced to 
                        costs avoided;
                            ``(ii) result in a further increase in the 
                        rates paid by mailers not able to take 
                        advantage of the discount; or
                            ``(iii) impede the efficient operation of 
                        the Postal Service;
                    ``(C) the amount of the discount above costs 
                avoided--
                            ``(i) is necessary to mitigate rate shock; 
                        and
                            ``(ii) will be phased out over time; or
                    ``(D) the discount is provided in connection with 
                subclasses of mail consisting exclusively of mail 
                matter of educational, cultural, scientific, or 
                informational value.
            ``(3) Report.--Whenever the Postal Service establishes or 
        maintains a workshare discount, the Postal Service shall, at 
        the time it publishes the workshare discount rate, submit to 
        the Postal Regulatory Commission a detailed report that--
                    ``(A) explains the Postal Service's reasons for 
                establishing or maintaining the rate;
                    ``(B) sets forth the data, economic analyses, and 
                other information relied on by the Postal Service to 
                justify the rate; and
                    ``(C) certifies that the discount will not 
                adversely affect rates or services provided to users of 
                postal services who do not take advantage of the 
                discount rate.
    ``(f) Transition Rule.--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 enactment of this section.''.
    (b) Repealed Sections.--Sections 3623, 3624, 3625, and 3628 of 
title 39, United States Code, are repealed.
    (c) Redesignation.--Chapter 36 of title 39, United States Code (as 
in effect after the amendment made by section 601, but before the 
amendment made by section 202) is amended by striking the heading for 
subchapter II and inserting the following:

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

SEC. 202. PROVISIONS RELATING TO COMPETITIVE PRODUCTS.

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

      ``SUBCHAPTER II--PROVISIONS RELATING TO COMPETITIVE PRODUCTS

``Sec. 3631. Applicability; definitions and updates
    ``(a) Applicability.--This subchapter shall apply with respect to--
            ``(1) priority mail;
            ``(2) expedited mail;
            ``(3) bulk parcel post;
            ``(4) bulk international mail; and
            ``(5) mailgrams;
subject to subsection (d) and any changes the Postal Regulatory 
Commission may make under section 3642.
    ``(b) Definition.--For purposes of this subchapter, the term `costs 
attributable', as used with respect to a product, means the direct and 
indirect postal costs attributable to such product.
    ``(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.
    ``(d) Limitation.--Notwithstanding any other provision of this 
section, nothing in this subchapter shall be considered to apply with 
respect to any product then currently in the market-dominant category 
of mail.
``Sec. 3632. Action of the Governors
    ``(a) Authority To Establish Rates and Classes.--The Governors, 
with the written concurrence of a majority of all of the Governors then 
holding office, shall establish rates and classes for products in the 
competitive category of mail in accordance with the requirements of 
this subchapter and regulations promulgated under section 3633.
    ``(b) Procedures.--
            ``(1) In general.--Rates and classes shall be established 
        in writing, complete with a statement of explanation and 
        justification, and the date as of which each such rate or class 
        takes effect.
            ``(2) Public notice; review; and compliance.--Not later 
        than 30 days before the date of implementation of any 
        adjustment in rates under this section--
                    ``(A) the Governors shall provide public notice of 
                the adjustment and an opportunity for review by the 
                Postal Regulatory Commission;
                    ``(B) the Postal Regulatory Commission shall notify 
                the Governors of any noncompliance of the adjustment 
                with section 3633; and
                    ``(C) the Governors shall respond to the notice 
                provided under subparagraph (B) and describe the 
                actions to be taken to comply with section 3633.
    ``(c) Transition Rule.--Until regulations under section 3633 first 
take effect, rates and classes for competitive products shall remain 
subject to modification in accordance with the provisions of this 
chapter and section 407, as such provisions were as last in effect 
before the date of enactment of this section.
``Sec. 3633. Provisions applicable to rates for competitive products
    ``(a) In General.--The Postal Regulatory Commission shall, within 
180 days after the date of enactment of this section, promulgate (and 
may from time to time thereafter revise) regulations to--
            ``(1) prohibit the subsidization of competitive products by 
        market-dominant products;
            ``(2) ensure that each competitive product covers its costs 
        attributable; and
            ``(3) ensure that all competitive products collectively 
        cover their share of the institutional costs of the Postal 
        Service.
    ``(b) Review of Minimum Contribution.--Five years after the date of 
enactment of this section, and every 5 years thereafter, the Postal 
Regulatory Commission shall conduct a review to determine whether the 
institutional costs contribution requirement under subsection (a)(3) 
should be retained in its current form, modified, or eliminated. In 
making its determination, the Commission shall consider all relevant 
circumstances, including the prevailing competitive conditions in the 
market, and the degree to which any costs are uniquely or 
disproportionately associated with any competitive products.''.

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

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

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

``Sec. 3641. Market tests of experimental products
    ``(a) Authority.--
            ``(1) In general.--The Postal Service may conduct market 
        tests of experimental products in accordance with this section.
            ``(2) Provisions waived.--A product shall not, while it is 
        being tested under this section, be subject to the requirements 
        of sections 3622, 3633, or 3642, or regulations promulgated 
        under those sections.
    ``(b) Conditions.--A product may not be tested under this section 
unless it satisfies each of the following:
            ``(1) Significantly different product.--The product is, 
        from the viewpoint of the mail users, significantly different 
        from all products offered by the Postal Service within the 2-
        year period preceding the start of the test.
            ``(2) Market disruption.--The introduction or continued 
        offering of the product will not create an unfair or otherwise 
        inappropriate competitive advantage for the Postal Service or 
        any mailer, particularly in regard to small business concerns 
        (as defined under subsection (h)).
            ``(3) Correct categorization.--The Postal Service 
        identifies the product, for the purpose of a test under this 
        section, as either market-dominant or competitive, consistent 
        with the criteria under section 3642(b)(1). Costs and revenues 
        attributable to a product identified as competitive shall be 
        included in any determination under section 3633(3)(relating to 
        provisions applicable to competitive products collectively). 
        Any test that solely affects products currently classified as 
        competitive, or which provides services ancillary to only 
        competitive products, shall be presumed to be in the 
        competitive product category without regard to whether a 
        similar ancillary product exists for market-dominant products.
    ``(c) Notice.--
            ``(1) In general.--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 only be tested under this 
        section if the total revenues that are anticipated, or in fact 
        received, by the Postal Service from such product do not exceed 
        $10,000,000 in any year, subject to paragraph (2) and 
        subsection (g).
            ``(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 to meet 1 
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 substantial 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 under section 
        3633. The provisions of section 504(g) shall be available with 
respect to any information required to be filed.
            ``(2) Publication requirement.--The Postal Regulatory 
        Commission shall, whenever it changes the list of products in 
        the market-dominant or competitive category of mail, prescribe 
        new lists of products. The revised lists shall indicate how and 
        when any previous lists (including the lists under sections 
        3621 and 3631) are superseded, and shall be published in the 
        Federal Register.
    ``(e) Prohibition.--Except as provided in section 3641, no product 
that involves the physical delivery of letters, printed matter, or 
packages may be offered by the Postal Service unless it has been 
assigned to the market-dominant or competitive category of mail (as 
appropriate) either--
            ``(1) under this subchapter; or
            ``(2) by or under any other provision of law.''.

SEC. 204. REPORTING REQUIREMENTS AND RELATED PROVISIONS.

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

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

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

                      ``SUBCHAPTER VI--GENERAL''.

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

     ``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, 
3633, and 3691.
    ``(b) Information From Postal Service.--The Postal Service shall 
provide the Postal Regulatory Commission with such information as may, 
in the judgment of the Commission, be necessary in order for the 
Commission to prepare its reports under this section.
``Sec. 3652. Annual reports to the Commission
    ``(a) Costs, Revenues, Rates, and Service.--Except as provided in 
subsection (c), the Postal Service shall, no later than 90 days after 
the end of each year, prepare and submit to the Postal Regulatory 
Commission a report (together with such nonpublic annex to the report 
as the Commission may require under subsection (e))--
            ``(1) which shall analyze costs, revenues, rates, and 
        quality of service in sufficient detail to demonstrate that all 
        products during such year complied with all applicable 
        requirements of this title; and
            ``(2) which shall, for each market-dominant product 
        provided in such year, provide--
                    ``(A) product information, including mail volumes; 
                and
                    ``(B) measures of the service afforded by the 
                Postal Service in connection with such product, 
                including--
                            ``(i) the level of service (described in 
                        terms of speed of delivery and reliability) 
                        provided; and
                            ``(ii) the degree of customer satisfaction 
                        with the service provided.
        Before submitting a report under this subsection (including any 
        annex to the report and the information required under 
        subsection (b)), the Postal Service shall have the information 
        contained in such report (and annex) audited by the Inspector 
        General. The results of any such audit shall be submitted along 
        with the report to which it pertains.
    ``(b) Information Relating to Workshare Discounts.--The Postal 
Service shall include, in each report under subsection (a), the 
following information with respect to each market-dominant product for 
which a workshare discount was in effect during the period covered by 
such report:
            ``(1) The per-item cost avoided by the Postal Service by 
        virtue of such discount.
            ``(2) The percentage of such per-item cost avoided that the 
        per-item workshare discount represents.
            ``(3) The per-item contribution made to institutional 
        costs.
    ``(c) Service Agreements and Market Tests.--In carrying out 
subsections (a) and (b) with respect to service agreements and 
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 service agreement and 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 
        to the report) to be provided by the Postal Service under this 
        section. In carrying out this subsection, the Commission shall 
        give due consideration to--
                    ``(A) providing the public with timely, adequate 
                information to assess the lawfulness of rates charged;
                    ``(B) avoiding unnecessary or unwarranted 
                administrative effort and expense on the part of the 
                Postal Service; and
                    ``(C) protecting the confidentiality of 
                commercially sensitive information.
            ``(2) Revised requirements.--The Commission may, on its own 
        motion or on request of an interested party, initiate 
        proceedings (to be conducted in accordance with regulations 
        that the Commission shall prescribe) to improve the quality, 
        accuracy, or completeness of Postal Service data required by 
        the Commission under this subsection whenever it shall appear 
        that--
                    ``(A) the attribution of costs or revenues to 
                products has become significantly inaccurate or can be 
                significantly improved;
                    ``(B) the quality of service data has become 
                significantly inaccurate or can be significantly 
                improved; or
                    ``(C) such revisions are, in the judgment of the 
                Commission, otherwise necessitated by the public 
                interest.
    ``(f) Confidential Information.--
            ``(1) In general.--If the Postal Service determines that 
        any document or portion of a document, or other matter, which 
        it provides to the Postal Regulatory Commission in a nonpublic 
        annex under this section or under subsection (d) contains 
        information which is described in section 410(c) of this title, 
        or exempt from public disclosure under section 552(b) of title 
        5, the Postal Service shall, at the time of providing such 
        matter to the Commission, notify the Commission of its 
        determination, in writing, and describe with particularity the 
        documents (or portions of documents) or other matter for which 
        confidentiality is sought and the reasons therefor.
            ``(2) Treatment.--Any information or other matter described 
        in paragraph (1) to which the Commission gains access under 
        this section shall be subject to paragraphs (2) and (3) of 
        section 504(g) in the same way as if the Commission had 
        received notification with respect to such matter under section 
        504(g)(1).
    ``(g) Other Reports.--The Postal Service shall submit to the Postal 
Regulatory Commission, together with any other submission that the 
Postal Service is required to make under this section in a year, copies 
of its then most recent--
            ``(1) comprehensive statement under section 2401(e);
            ``(2) strategic plan under section 2802;
            ``(3) performance plan under section 2803; and
            ``(4) program performance reports under section 2804.
``Sec. 3653. Annual determination of compliance
    ``(a) Opportunity for Public Comment.--After receiving the reports 
required under section 3652 for any year, the Postal Regulatory 
Commission shall promptly provide an opportunity for comment on such 
reports by users of the mails, affected parties, and an officer of the 
Commission who shall be required to represent the interests of the 
general public.
    ``(b) Determination of Compliance or Noncompliance.--Not later than 
90 days after receiving the submissions required under section 3652 
with respect to a year, the Postal Regulatory Commission shall make a 
written determination as to--
            ``(1) whether any rates or fees in effect during such year 
        (for products individually or collectively) were not in 
        compliance with applicable provisions of this chapter (or 
        regulations promulgated thereunder); or
            ``(2) whether any service standards in effect during such 
        year were not met.
If, with respect to a year, no instance of noncompliance is found under 
this subsection to have occurred in such year, the written 
determination shall be to that effect.
    ``(c) 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 any appropriate remedial 
action authorized by section 3662(c).
    ``(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 
under paragraphs (1) and (2) 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.--Any person (including an officer of the Postal 
Regulatory Commission representing the interests of the general public) 
who believes the Postal Service is not operating in conformance with 
the requirements of 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 under 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 
including 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, and requiring the Postal 
Service to make up for revenue shortfalls in competitive products.
    ``(d) Authority To Order Fines in Cases of Deliberate 
Noncompliance.--In addition, in cases of deliberate noncompliance by 
the Postal Service with the requirements of this title, the Postal 
Regulatory Commission may order, based on the nature, circumstances, 
extent, and seriousness of the noncompliance, a fine (in the amount 
specified by the Commission in its order) for each incidence of 
noncompliance. Fines resulting from the provision of competitive 
products shall be paid 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, including the Postal Service, adversely affected or 
aggrieved by a final order or decision of the Postal Regulatory 
Commission may, within 30 days after such order or decision 
becomes final, institute proceedings for review thereof by filing a 
petition in the United States Court of Appeals for the District of 
Columbia. The court shall review the order or decision in accordance 
with section 706 of title 5, and chapter 158 and section 2112 of title 
28, on the basis of the record before the Commission.
``Sec. 3664. Enforcement of orders
    ``The several district courts have jurisdiction specifically to 
enforce, and to enjoin and restrain the Postal Service from violating, 
any order issued by the Postal Regulatory Commission.''.

SEC. 206. CLERICAL AMENDMENT.

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

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

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

``Sec.
``3621. Applicability; definitions.
``3622. Modern rate regulation.
``[3623. Repealed.]
``[3624. Repealed.]
``[3625. Repealed.]
``3626. Reduced Rates.
``3627. Adjusting free rates.
``[3628. Repealed.]
``3629. Reduced rates for voter registration purposes.
      ``SUBCHAPTER II--PROVISIONS RELATING TO COMPETITIVE PRODUCTS

``3631. Applicability; definitions and updates.
``3632. Action of the Governors.
``3633. Provisions applicable to rates for competitive products.
``3634. Assumed Federal income tax on competitive products.
 ``SUBCHAPTER III--PROVISIONS RELATING TO EXPERIMENTAL AND NEW PRODUCTS

``3641. Market tests of experimental products.
``3642. New products and transfers of products between the market-
                            dominant and competitive categories of 
                            mail.
     ``SUBCHAPTER IV--REPORTING REQUIREMENTS AND RELATED PROVISIONS

``3651. Annual reports by the Commission.
``3652. Annual reports to the Commission.
``3653. Annual determination of compliance.
    ``SUBCHAPTER V--POSTAL SERVICES, COMPLAINTS, AND JUDICIAL REVIEW

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

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

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

                  TITLE III--MODERN SERVICE STANDARDS

SEC. 301. ESTABLISHMENT OF MODERN SERVICE STANDARDS.

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

               ``SUBCHAPTER VII--MODERN SERVICE STANDARDS

``Sec. 3691. Establishment of modern service standards
    ``(a) Authority Generally.--Not later than 12 months after the date 
of enactment of this section, the Postal Service shall, in consultation 
with the Postal Regulatory Commission, by regulation establish (and may 
from time to time thereafter by regulation revise) a set of service 
standards for market-dominant products consistent with the Postal 
Service's universal service obligation as defined in sections 101 (a) 
and (b) and 403.
    ``(b) Objectives.--Such standards shall be designed to achieve the 
following objectives:
            ``(1) To enhance the value of postal services to both 
        senders and recipients.
            ``(2) To preserve regular and effective access to postal 
        services in all communities, including those in rural areas or 
        where post offices are not self-sustaining.
            ``(3) To reasonably assure Postal Service customers 
        delivery reliability, speed and frequency consistent with 
        reasonable rates and best business practices.
            ``(4) To provide a system of objective external performance 
        measurements for each market-dominant product as a basis for 
        measurement of Postal Service performance.
    ``(c) Factors.--In establishing or revising such standards, the 
Postal Service shall take into account--
            ``(1) the actual level of service that Postal Service 
        customers receive under any service guidelines previously 
        established by the Postal Service or service standards 
        established under this section;
            ``(2) the degree of customer satisfaction with Postal 
        Service performance in the acceptance, processing and delivery 
        of mail;
            ``(3) the needs of Postal Service customers, including 
        those with physical impairments;
            ``(4) mail volume and revenues projected for future years;
            ``(5) the projected growth in the number of addresses the 
        Postal Service will be required to serve in future years;
            ``(6) the current and projected future cost of serving 
        Postal Service customers;
            ``(7) the effect of changes in technology, demographics, 
        and population distribution on the efficient and reliable 
        operation of the postal delivery system; and
            ``(8) the policies of this title and such other factors as 
        the Commission determines appropriate.
    ``(d) Review.--The regulations promulgated pursuant to this section 
(and any revisions thereto) shall be subject to review upon complaint 
under sections 3662 and 3663.

SEC. 302. POSTAL SERVICE PLAN.

    (a) In General.--Within 6 months after the establishment of the 
service standards under section 3691 of title 39, United States Code, 
as added by this Act, the Postal Service shall, in consultation with 
the Postal Regulatory Commission, develop and submit to Congress a plan 
for meeting those standards.
    (b) Contents.--The plan under this section shall--
            (1) establish performance goals;
            (2) describe any changes to the Postal Service's 
        processing, transportation, delivery, and retail networks 
        necessary to allow the Postal Service to meet the performance 
        goals;
            (3) describe any changes to planning and performance 
        management documents previously submitted to Congress to 
        reflect new performance goals; and
            (4) contain the matters relating to postal facilities 
        provided under subsection (c).
    (c) Postal Facilities.--
            (1) Findings.--Congress finds that--
                    (A) the Postal Service has more than 400 logistics 
                facilities, separate from its post office network;
                    (B) as noted by the President's Commission on the 
                United States Postal Service, the Postal Service has 
                more facilities than it needs and the streamlining of 
                this distribution network can pave the way for the 
                potential consolidation of sorting facilities and the 
                elimination of excess costs;
                    (C) the Postal Service has always revised its 
                distribution network to meet changing conditions and is 
                best suited to address its operational needs; and
                    (D) Congress strongly encourages the Postal Service 
                to--
                            (i) expeditiously move forward in its 
                        streamlining efforts; and
                            (ii) keep unions, management associations, 
                        and local elected officials informed as an 
                        essential part of this effort and abide by any 
                        procedural requirements contained in the 
                        national bargaining agreements.
            (2) In general.--The Postal Service plan shall include a 
        description of--
                    (A) the long-term vision of the Postal Service for 
                rationalizing its infrastructure and workforce; and
                    (B) how the Postal Service intends to implement 
                that vision.
            (3) Content of facilities plan.--The plan under this 
        subsection shall include--
                    (A) a strategy for how the Postal Service intends 
                to rationalize the postal facilities network and remove 
                excess processing capacity and space from the network, 
                including estimated timeframes, criteria, and processes 
                to be used for making changes to the facilities 
                network, and the process for engaging policy makers and 
                the public in related decisions;
                    (B) a discussion of what impact any facility 
                changes may have on the postal workforce and whether 
                the Postal Service has sufficient flexibility to make 
                needed workforce changes; and
                    (C) an identification of anticipated costs, cost 
                savings, and other benefits associated with the 
                infrastructure rationalization alternatives discussed 
                in the plan.
            (4) Annual reports.--
                    (A) In general.--Not later than 90 days after the 
                end of each fiscal year, the Postal Service shall 
                prepare and submit a report to Congress on how postal 
                decisions have impacted or will impact rationalization 
                plans.
                    (B) Contents.--Each report under this paragraph 
                shall include--
                            (i) an account of actions taken during the 
                        preceding fiscal year to improve the efficiency 
                        and effectiveness of its processing, 
                        transportation, and distribution networks while 
                        preserving the timely delivery of postal 
                        services, including overall estimated costs and 
                        cost savings;
                            (ii) an account of actions taken to 
                        identify any excess capacity within its 
                        processing, transportation, and distribution 
                        networks and implement savings through 
                        realignment or consolidation of facilities 
                        including overall estimated costs and cost 
                        savings;
                            (iii) an estimate of how postal decisions 
                        related to mail changes, security, automation 
                        initiatives, worksharing, information 
                        technology systems, excess capacity, 
                        consolidating and closing facilities, and other 
                        areas will impact rationalization plans;
                            (iv) identification of any statutory or 
                        regulatory obstacles that prevented or will 
                        prevent or hinder the Postal Service from 
                        taking action to realign or consolidate 
                        facilities; and
                            (v) such additional topics and 
                        recommendations as the Postal Service considers 
                        appropriate.
    (d) Alternate Retail Options.--The Postal Service plan shall 
include plans to expand and market retail access to postal services, in 
addition to post offices, including--
            (1) vending machines;
            (2) the Internet;
            (3) Postal Service employees on delivery routes;
            (4) retail facilities in which overhead costs are shared 
        with private businesses and other government agencies; or
            (5) any other nonpost office access channel providing 
        market retail access to postal services.
    (e) Reemployment Assistance and Retirement Benefits.--The Postal 
Service plan shall include--
            (1) a plan under which reemployment assistance shall be 
        afforded to employees displaced as a result of the automation 
        of any of its functions or the closing and consolidation of any 
        of its facilities; and
            (2) a plan, developed in consultation with the Office of 
        Personnel Management, to offer early retirement benefits.
    (f) Inspector General Report.--
            (1) In general.--Before submitting the plan under 
        subsection (a) and each annual report under subsection (c) to 
        Congress, the Postal Service shall submit the plan and each 
        annual report to the Inspector General of the United States 
        Postal Service in a timely manner to carry out this subsection.
            (2) Report.--The Inspector General shall prepare a report 
        describing the extent to which the Postal Service plan and each 
        annual report under subsection (c)--
                    (A) are consistent with the continuing obligations 
                of the Postal Service under title 39, United States 
                Code;
                    (B) provide for the Postal Service to meet the 
                service standards established under section 3691 of 
                title 39, United States Code; and
                    (C) allow progress toward improving overall 
                efficiency and effectiveness consistent with the need 
                to maintain universal postal service at affordable 
                rates.
    (g) Continued Authority.--Nothing in this section shall be 
construed to prohibit the Postal Service from implementing any change 
to its processing, transportation, delivery, and retail networks under 
any authority granted to the Postal Service for those purposes.

           TITLE IV--PROVISIONS RELATING TO FAIR COMPETITION

SEC. 401. POSTAL SERVICE COMPETITIVE PRODUCTS FUND.

    (a) Provisions Relating to Postal Service Competitive Products Fund 
and Related Matters.--
            (1) In general.--Chapter 20 of title 39, United States 
        Code, is amended by adding at the end the following:
``Sec. 2011. Provisions relating to competitive products
    ``(a)(1) In this subsection, the term `costs attributable' has the 
meaning given such term by section 3631.
    ``(2) There is established in the Treasury of the United States a 
revolving fund, to be called the Postal Service Competitive Products 
Fund, which shall be available to the Postal Service without fiscal 
year limitation for the payment of--
            ``(A) costs attributable to competitive products; and
            ``(B) all other costs incurred by the Postal Service, to 
        the extent allocable to competitive products.
    ``(b) There shall be deposited in the Competitive Products Fund, 
subject to withdrawal by the Postal Service--
            ``(1) revenues from competitive products;
            ``(2) amounts received from obligations issued by Postal 
        Service under subsection (e);
            ``(3) interest and dividends earned on investments of the 
        Competitive Products Fund; and
            ``(4) any other receipts of the Postal Service (including 
        from the sale of assets), to the extent allocable to 
        competitive products.
    ``(c) If the Postal Service determines that the moneys of the 
Competitive Products Fund are in excess of current needs, the Postal 
Service may request the investment of such amounts as the Postal 
Service determines advisable by the Secretary of the Treasury in 
obligations of, or obligations guaranteed by, the Government of the 
United States, and, with the approval of the Secretary, in such other 
obligations or securities as the Postal Service determines appropriate.
    ``(d) With the approval of the Secretary of the Treasury, the 
Postal Service may deposit moneys of the Competitive Products Fund in 
any Federal Reserve bank, any depository for public funds, or in such 
other places and in such manner as the Postal Service and the Secretary 
may mutually agree.
    ``(e)(1)(A) Subject to the limitations specified in section 
2005(a), the Postal Service is authorized to borrow money and to issue 
and sell such obligations as the Postal Service determines necessary to 
provide for competitive products and deposit such amounts in the 
Competitive Products Fund.
    ``(B) Subject to paragraph (5), any borrowings by the Postal 
Service under subparagraph (A) shall be supported and serviced by--
            ``(i) the revenues and receipts from competitive products 
        and the assets related to the provision of competitive products 
        (as determined under subsection (h)); or
            ``(ii) for purposes of any period before accounting 
        practices and principles under subsection (h) have been 
        established and applied, the best information available from 
        the Postal Service, including the audited statements required 
        by section 2008(e).
    ``(2) The Postal Service may enter into binding covenants with the 
holders of such obligations, and with any trustee under any agreement 
entered into in connection with the issuance of such obligations with 
respect to--
            ``(A) the establishment of reserve, sinking, and other 
        funds;
            ``(B) application and use of revenues and receipts of the 
        Competitive Products Fund;
            ``(C) stipulations concerning the subsequent issuance of 
        obligations or the execution of leases or lease purchases 
        relating to properties of the Postal Service; and
            ``(D) such other matters as the Postal Service, considers 
        necessary or desirable to enhance the marketability of such 
        obligations.
    ``(3) Obligations issued by the Postal Service under this 
subsection--
            ``(A) shall be in such forms and denominations;
            ``(B) shall be sold at such times and in such amounts;
            ``(C) shall mature at such time or times;
            ``(D) shall be sold at such prices;
            ``(E) shall bear such rates of interest;
            ``(F) may be redeemable before maturity in such manner, at 
        such times, and at such redemption premiums;
            ``(G) may be entitled to such relative priorities of claim 
        on the assets of the Postal Service with respect to principal 
        and interest payments; and
            ``(H) shall be subject to such other terms and conditions,
as the Postal Service determines.
    ``(4) Obligations issued by the Postal Service under this 
subsection--
            ``(A) shall be negotiable or nonnegotiable and bearer or 
        registered instruments, as specified therein and in any 
        indenture or covenant relating thereto;
            ``(B) shall contain a recital that such obligations are 
        issued under this subsection, and such recital shall be 
        conclusive evidence of the regularity of the issuance and sale 
        of such obligations and of their validity;
            ``(C) shall be lawful investments and may be accepted as 
        security for all fiduciary, trust, and public funds, the 
        investment or deposit of which shall be under the authority or 
        control of any officer or agency of the Government of the 
        United States, and the Secretary of the Treasury or any other 
        officer or agency having authority over or control of any such 
        fiduciary, trust, or public funds, may at any time sell any of 
        the obligations of the Postal Service acquired under this 
        section;
            ``(D) shall not be exempt either as to principal or 
        interest from any taxation now or hereafter imposed by any 
        State or local taxing authority; and
            ``(E) except as provided in section 2006(c), shall not be 
        obligations of, nor shall payment of the principal thereof or 
        interest thereon be guaranteed by, the Government of the United 
        States, and the obligations shall so plainly state.
    ``(5)(A) Subject to subparagraph (B), the Postal Service shall make 
payments of principal, or interest, or both on obligations issued under 
this subsection from--
            ``(i) revenues and receipts from competitive products and 
        assets related to the provision of competitive products (as 
        determined under subsection (h)); or
            ``(ii) for purposes of any period before accounting 
        practices and principles under subsection (h) have been 
        established and applied, the best information available, 
        including the audited statements required by section 2008(e).
    ``(B) Based on the audited financial statements for the most 
recently completed fiscal year, the total assets of the Competitive 
Products Fund may not be less than the amount determined by 
multiplying--
            ``(i) the quotient resulting from the total revenue of the 
        Competitive Products Fund divided by the total revenue of the 
        Postal Service; and
            ``(ii) the total assets of the Postal Service.
    ``(f) The receipts and disbursements of the Competitive Products 
Fund shall be accorded the same budgetary treatment as is accorded to 
receipts and disbursements of the Postal Service Fund under section 
2009a.
    ``(g) A judgment (or settlement of a claim) against the Postal 
Service or the Government of the United States shall be paid out of the 
Competitive Products Fund to the extent that the judgment or claim 
arises out of activities of the Postal Service in the provision of 
competitive products.
    ``(h)(1)(A) The Secretary of the Treasury, in consultation with the 
Postal Service and an independent, certified public accounting firm and 
other advisors as the Secretary considers appropriate, shall develop 
recommendations regarding--
            ``(i) the accounting practices and principles that should 
        be followed by the Postal Service with the objectives of--
                    ``(I) identifying and valuing the assets and 
                liabilities of the Postal Service associated with 
                providing competitive products, including the capital 
                and operating costs incurred by the Postal Service in 
                providing such competitive products; and
                    ``(II) subject to subsection (e)(5), preventing the 
                subsidization of such products by market-dominant 
                products; and
            ``(ii) the substantive and procedural rules that should be 
        followed in determining the assumed Federal income tax on 
        competitive products income of the Postal Service for any year 
        (within the meaning of section 3634).
    ``(B) Not earlier than 6 months after the date of enactment of this 
section, and not later than 12 months after such date, the Secretary of 
the Treasury shall submit the recommendations under subparagraph (A) to 
the Postal Regulatory Commission.
    ``(2)(A) Upon receiving the recommendations of the Secretary of the 
Treasury under paragraph (1), the Commission shall give interested 
parties, including the Postal Service, users of the mails, and an 
officer of the Commission who shall be required to represent the 
interests of the general public, an opportunity to present their views 
on those recommendations through submission of written data, views, or 
arguments with or without opportunity for oral presentation, or in such 
other manner as the Commission considers appropriate.
    ``(B)(i) After due consideration of the views and other information 
received under subparagraph (A), the Commission shall by rule--
            ``(I) provide for the establishment and application of the 
        accounting practices and principles which shall be followed by 
        the Postal Service;
            ``(II) provide for the establishment and application of the 
        substantive and procedural rules described under paragraph 
        (1)(A)(ii); and
            ``(III) provide for the submission by the Postal Service to 
        the Postal Regulatory Commission of annual and other periodic 
        reports setting forth such information as the Commission may 
        require.
    ``(ii) Final rules under this subparagraph shall be issued not 
later than 12 months after the date on which recommendations are 
submitted under paragraph (1) (or by such later date on which the 
Commission and the Postal Service may agree). The Commission may revise 
such rules.
    ``(C)(i) Reports described under subparagraph (B)(i)(III) shall be 
submitted at such time and in such form, and shall include such 
information, as the Commission by rule requires.
    ``(ii) The Commission may, on its own motion or on request of an 
interested party, initiate proceedings (to be conducted in accordance 
with such rules as the Commission shall prescribe) to improve the 
quality, accuracy, or completeness of Postal Service information under 
subparagraph (B)(i)(III) whenever it shall appear that--
            ``(I) the quality of the information furnished in those 
        reports has become significantly inaccurate or can be 
        significantly improved; or
            ``(II) such revisions are, in the judgment of the 
        Commission, otherwise necessitated by the public interest.
    ``(D) A copy of each report described under subparagraph 
(B)(i)(III) shall be submitted by the Postal Service to the Secretary 
of the Treasury and the Inspector General of the United States Postal 
Service.
    ``(i)(1) The Postal Service shall submit an annual report to the 
Secretary of the Treasury concerning the operation of the Competitive 
Products Fund. The report shall address such matters as risk 
limitations, reserve balances, allocation or distribution of moneys, 
liquidity requirements, and measures to safeguard against losses.
    ``(2) A copy of the most recent report submitted under paragraph 
(1) shall be included in the annual report submitted by the Postal 
Regulatory Commission under section 3652(g).''.
            (2) Clerical amendment.--The table of sections for chapter 
        20 of title 39, United States Code, is amended by adding after 
        the item relating to section 2010 the following:

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

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

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

SEC. 403. UNFAIR COMPETITION PROHIBITED.

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

``404a. Specific limitations.''.

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

    (a) In General.--Section 409 of title 39, United States Code, is 
amended by striking subsections (d) and (e) and inserting the 
following:
    ``(d)(1) For purposes of the provisions of law cited in paragraphs 
(2)(A) and (2)(B), respectively, the Postal Service--
            ``(A) shall be considered to be a `person', as used in the 
        provisions of law involved; and
            ``(B) shall not be immune under any other doctrine of 
        sovereign immunity from suit in Federal court by any person for 
        any violation of any of those provisions of law by any officer 
        or employee of the Postal Service.
    ``(2) This subsection applies with respect to--
            ``(A) the Act of July 5, 1946 (commonly referred to as the 
        `Trademark Act of 1946' (15 U.S.C. 1051 and following)); and
            ``(B) the provisions of section 5 of the Federal Trade 
        Commission Act to the extent that such section 5 applies to 
        unfair or deceptive acts or practices.
    ``(e)(1) To the extent that the Postal Service, or other Federal 
agency acting on behalf of or in concert with the Postal Service, 
engages in conduct with respect to any product which is not reserved to 
the United States under section 1696 of title 18, the Postal Service or 
other Federal agency (as the case may be)--
            ``(A) shall not be immune under any doctrine of sovereign 
        immunity from suit in Federal court by any person for any 
        violation of Federal law by such agency or any officer or 
        employee thereof; and
            ``(B) shall be considered to be a person (as defined in 
        subsection (a) of the first section of the Clayton Act) for 
        purposes of--
                    ``(i) the antitrust laws (as defined in such 
                subsection); and
                    ``(ii) section 5 of the Federal Trade Commission 
                Act to the extent that such section 5 applies to unfair 
                methods of competition.
For purposes of the preceding sentence, any private carriage of mail 
allowable by virtue of section 601 shall not be considered a service 
reserved to the United States under section 1696 of title 18.
    ``(2) No damages, interest on damages, costs or attorney's fees may 
be recovered, and no criminal liability may be imposed, under the 
antitrust laws (as so defined) from any officer or employee of the 
Postal Service, or other Federal agency acting on behalf of or in 
concert with the Postal Service, acting in an official capacity.
    ``(3) This subsection shall not apply with respect to conduct 
occurring before the date of enactment of this subsection.
    ``(f) To the extent that the Postal Service engages in conduct with 
respect to the provision of competitive products, it shall be 
considered a person for the purposes of the Federal bankruptcy laws.
    ``(g)(1) Each building constructed or altered by the Postal Service 
shall be constructed or altered, to the maximum extent feasible as 
determined by the Postal Service, in compliance with 1 of the 
nationally recognized model building codes and with other applicable 
nationally recognized codes. To the extent practicable, model building 
codes should meet the voluntary consensus criteria established for 
codes and standards as required in the National Technology Transfer and 
Advancement Act of 1995 as defined in Office of Management and Budget 
Circular A1190. For purposes of life safety, the Postal Service shall 
continue to comply with the most current edition of the Life Safety 
Code of the National Fire Protection Association (NFPA 101).
    ``(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.
    ``(h)(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.
    ``(i) A judgment against the Government of the United States 
arising out of activities of the Postal Service shall be paid by the 
Postal Service out of any funds available to the Postal Service, 
subject to the restriction specified in section 2011(g).''.
    (b) Technical Amendment.--Section 409(a) of title 39, United States 
Code, is amended by striking ``Except as provided in section 3628 of 
this title,'' and inserting ``Except as otherwise provided in this 
title,''.

SEC. 405. INTERNATIONAL POSTAL ARRANGEMENTS.

    (a) In General.--Section 407 of title 39, United States Code, is 
amended to read as follows:
``Sec. 407. International postal arrangements
    ``(a) It is the policy of the United States--
            ``(1) to promote and encourage communications between 
        peoples by efficient operation of international postal services 
        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
            ``(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 shall have the power to conclude 
postal treaties and conventions, except that the Secretary may not 
conclude any postal treaty or convention if such treaty or convention 
would, with respect to any competitive product, grant an undue or 
unreasonable preference to the Postal Service, a private provider of 
international postal 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, 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, should consider the authority vested by law 
        or Executive order in the Postal Regulatory Commission, the 
        Department of Commerce, the Department of Transportation, and 
        the Office of the United States Trade Representative in this 
        area;
            ``(B) shall maintain continuing liaison with other 
        executive branch agencies concerned with postal and delivery 
        services;
            ``(C) shall maintain continuing liaison with the Committee 
        on Homeland Security and Governmental Affairs of the Senate and 
        the Committee on Government Reform of the House of 
        Representatives;
            ``(D) shall maintain appropriate liaison with both 
        representatives of the Postal Service and representatives of 
        users and private providers of international postal services 
        and other international delivery services to keep informed of 
        their interests and problems, and to provide such assistance as 
        may be needed to ensure that matters of concern are promptly 
        considered by the Department of State or (if applicable, and to 
        the extent practicable) other executive branch agencies; and
            ``(E) shall assist in arranging meetings of such public 
        sector advisory groups as may be established to advise the 
        Department of State and other executive branch agencies in 
        connection 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) Before concluding any postal treaty or convention that 
establishes a rate or classification for a product subject to 
subchapter I of chapter 36, the Secretary of State shall request the 
Postal Regulatory Commission to submit its views on whether such rate 
or classification is consistent with the standards and criteria 
established by the Commission under section 3622.
    ``(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 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 binding under 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 Customs Service and 
other appropriate Federal agencies shall apply the customs laws of the 
United States and all other laws relating to the importation or 
exportation of such shipments in the same manner to both shipments by 
the Postal Service and similar shipments by private companies.
    ``(2) In exercising the authority under subsection (b) to conclude 
new postal treaties and conventions related to international postal 
services and to renegotiate such treaties and conventions, the 
Secretary of State shall, to the maximum extent practicable, take such 
measures as are within the Secretary's control to encourage the 
governments of other countries to make available to the Postal Service 
and private companies a range of nondiscriminatory customs procedures 
that will fully meet the needs of all types of American shippers. The 
Secretary of State shall consult with the United States Trade 
Representative and the Commissioner of Customs in carrying out this 
paragraph.
    ``(3) The provisions of this subsection shall take effect 6 months 
after the date of enactment of this subsection or such earlier date as 
the Customs Service may determine in writing.''.
    (b) Effective Date.--Notwithstanding any provision of the amendment 
made by subsection (a), the authority of the United States Postal 
Service to establish the rates of postage or other charges on mail 
matter conveyed between the United States and other countries shall 
remain available to the Postal Service until--
            (1) with respect to market-dominant products, the date as 
        of which the regulations promulgated under section 3622 of 
        title 39, United States Code (as amended by section 201(a)) 
        take effect; and
            (2) with respect to competitive products, the date as of 
        which the regulations promulgated under section 3633 of title 
        39, United States Code (as amended by section 202) take effect.

                      TITLE V--GENERAL PROVISIONS

SEC. 501. QUALIFICATION AND TERM REQUIREMENTS FOR GOVERNORS.

    (a) Qualifications.--
            (1) In general.--Section 202(a) of title 39, United States 
        Code, is amended by striking ``(a)'' and inserting ``(a)(1)'' 
        and by striking the fourth sentence and inserting the 
        following: ``The Governors shall represent the public interest 
        generally, and shall be chosen solely on the basis of their 
        demonstrated ability in managing organizations or corporations 
        (in either the public or private sector) of substantial size. 
        Experience in the fields of law and accounting shall be 
        considered in making appointments of Governors. The Governors 
        shall not be representatives of specific interests using the 
        Postal Service, and may be removed only for cause.''.
            (2) Applicability.--The amendment made by paragraph (1) 
        shall not affect the appointment or tenure of any person 
        serving as a Governor of the United States Postal Service under 
        an appointment made before the date of enactment of this Act 
        however, when any such office becomes vacant, the appointment 
        of any person to fill that office shall be made in accordance 
        with such amendment. The requirement set forth in the fourth 
        sentence of section 202(a)(1) of title 39, United States Code 
        (as amended by subsection (a)) shall be met beginning not later 
        than 9 years after the date of enactment of this Act.
    (b) Consultation Requirement.--Section 202(a) of title 39, United 
States Code, is amended by adding at the end the following:
    ``(2) In selecting the individuals described in paragraph (1) for 
nomination for appointment to the position of Governor, the President 
should consult with the Speaker of the House of Representatives, the 
minority leader of the House of Representatives, the majority leader of 
the Senate, and the minority leader of the Senate.''.
    (c) 5-Year Terms.--
            (1) In general.--Section 202(b) of title 39, United States 
        code, is amended in the first sentence by striking ``9 years'' 
        and inserting ``5 years''.
            (2) Applicability.--
                    (A) Continuation by incumbents.--The amendment made 
                by paragraph (1) shall not affect the tenure of any 
                person serving as a Governor of the United States 
                Postal Service on the date of enactment of this Act and 
                such person may continue to serve the remainder of the 
                applicable term.
                    (B) Vacancy by incumbent before 5 years of 
                service.--If a person who is serving as a Governor of 
                the United States Postal Service on the date of 
                enactment of this Act resigns, is removed, or dies 
                before the expiration of the 9-year term of that 
                Governor, and that Governor has served less than 5 
                years of that term, the resulting vacancy in office 
                shall be treated as a vacancy in a 5-year term.
                    (C) Vacancy by incumbent after 5 years of 
                service.--If a person who is serving as a Governor of 
                the United States Postal Service on the date of 
                enactment of this Act resigns, is removed, or dies 
                before the expiration of the 9-year term of that 
                Governor, and that Governor has served 5 years or more 
                of that term, that term shall be deemed to have been a 
                5-year term beginning on its commencement date for 
                purposes of determining vacancies in office. Any 
                appointment to the vacant office shall be for a 5-year 
                term beginning at the end of the original 9-year term 
                determined without regard to the deeming under the 
                preceding sentence. Nothing in this subparagraph shall 
                be construed to affect any action or authority of any 
                Governor or the Board of Governors during any portion 
                of a 9-year term deemed to be 5-year term under this 
                subparagraph.
    (d) Term Limitation.--
            (1) In general.--Section 202(b) of title 39, United States 
        Code, is amended--
                    (A) by inserting ``(1)'' after ``(b)''; and
                    (B) by adding at the end the following:
            ``(2) No person may serve more than 3 terms as a 
        Governor.''.
            (2) Applicability.--The amendments made by paragraph (1) 
        shall not affect the tenure of any person serving as a Governor 
        of the United States Postal Service on the date of enactment of 
        this Act with respect to the term which that person is serving 
        on that date. Such person may continue to serve the remainder 
        of the applicable term, after which the amendments made by 
        paragraph (1) shall apply.

SEC. 502. OBLIGATIONS.

    (a) Purposes for Which Obligations May Be Issued.--The first 
sentence of section 2005(a)(1) of title 39, United States Code, is 
amended by striking ``title.'' and inserting ``title, other than any of 
the purposes for which the corresponding authority is available to the 
Postal Service under section 2011.''.
    (b) Increase Relating to Obligations Issued for Capital 
Improvements.--Section 2005(a)(1) of title 39, United States Code, is 
amended by striking the third sentence.
    (c) Amounts Which May Be Pledged.--
            (1) Obligations to which provisions apply.--The first 
        sentence of section 2005(b) of title 39, United States Code, is 
        amended by striking ``such obligations,'' and inserting 
        ``obligations issued by the Postal Service under this 
        section,''.
            (2) Assets, revenues, and receipts to which provisions 
        apply.--Subsection (b) of section 2005 of title 39, United 
        States Code, is amended by striking ``(b)'' and inserting 
        ``(b)(1)'', and by adding at the end the following:
    ``(2) Notwithstanding any other provision of this section--
            ``(A) the authority to pledge assets of the Postal Service 
        under this subsection shall be available only to the extent 
        that such assets are not related to the provision of 
        competitive products (as determined under section 2011(h) or, 
        for purposes of any period before accounting practices and 
        principles under section 2011(h) have been established and 
        applied, the best information available from the Postal 
        Service, including the audited statements required by section 
        2008(e)); and
            ``(B) any authority under this subsection relating to the 
        pledging or other use of revenues or receipts of the Postal 
        Service shall be available only to the extent that they are not 
        revenues or receipts of the Competitive Products Fund.''.

SEC. 503. PRIVATE CARRIAGE OF LETTERS.

    (a) In General.--Section 601 of title 39, United States Code, is 
amended by striking subsection (b) and inserting the following:
    ``(b) A letter may also be carried out of the mails when--
            ``(1) the amount paid for the private carriage of the 
        letter is at least the amount equal to 6 times the rate then 
        currently charged for the 1st ounce of a single-piece first 
        class letter;
            ``(2) the letter weighs at least 12\1/2\ ounces; or
            ``(3) such carriage is within the scope of services 
        described by regulations of the United States Postal Service 
        (as in effect on July 1, 2001) that permit private carriage by 
        suspension of the operation of this section (as then in 
        effect).
    ``(c) Any regulations necessary to carry out this section shall be 
promulgated by the Postal Regulatory Commission.''.
    (b) Effective Date.--This section shall take effect on the date as 
of which the regulations promulgated under section 3633 of title 39, 
United States Code (as amended by section 202) take effect.

SEC. 504. RULEMAKING AUTHORITY.

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

SEC. 505. NONINTERFERENCE WITH COLLECTIVE BARGAINING AGREEMENTS.

    (a) Labor Disputes.--Section 1207 of title 39, United States Code, 
is amended to read as follows:
``Sec. 1207. Labor disputes
    ``(a) If there is a collective-bargaining agreement in effect, no 
party to such agreement shall terminate or modify such agreement unless 
the party desiring such termination or modification serves written 
notice upon the other party to the agreement of the proposed 
termination or modification not less than 90 days prior to the 
expiration date thereof, or not less than 90 days prior to the time it 
is proposed to make such termination or modification. The party serving 
such notice shall notify the Federal Mediation and Conciliation Service 
of the existence of a dispute within 45 days after such notice, if no 
agreement has been reached by that time.
    ``(b) If the parties fail to reach agreement or to adopt a 
procedure providing for a binding resolution of a dispute by the 
expiration date of the agreement in effect, or the date of the proposed 
termination or modification, the Director of the Federal Mediation and 
Conciliation Service shall within 10 days appoint a mediator of 
nationwide reputation and professional stature, and who is also a 
member of the National Academy of Arbitrators. The parties shall 
cooperate with the mediator in an effort to reach an agreement and 
shall meet and negotiate in good faith at such times and places that 
the mediator, in consultation with the parties, shall direct.
    ``(c)(1) If no agreement is reached within 60 days after the 
expiration or termination of the agreement or the date on which the 
agreement became subject to modification under subsection (a) of this 
section, or if the parties decide upon arbitration but do not agree 
upon the procedures therefore, an arbitration board shall be 
established consisting of 3 members, 1 of whom shall be selected by the 
Postal Service, 1 by the bargaining representative of the employees, 
and the third by the 2 thus selected. If either of the parties fails to 
select a member, or if the members chosen by the parties fail to agree 
on the third person within 5 days after their first meeting, the 
selection shall be made from a list of names provided by the Director. 
This list shall consist of not less then 9 names of arbitrators of 
nationwide reputation and professional nature, who are also members of 
the National Academy of Arbitrators, and whom the Director has 
determined are available and willing to serve.
    ``(2) The arbitration board shall give the parties a full and fair 
hearing, including an opportunity to present evidence in support of 
their claims, and an opportunity to present their case in person, by 
counsel or by other representative as they may elect. Decisions of the 
arbitration board shall be conclusive and binding upon the parties. The 
arbitration board shall render its decision within 45 days after its 
appointment.
    ``(3) Costs of the arbitration board and mediation shall be shared 
equally by the Postal Service and the bargaining representative.
    ``(d) In the case of a bargaining unit whose recognized collective-
bargaining representative does not have an agreement with the Postal 
Service, if the parties fail to reach the agreement within 90 days 
after the commencement of collective bargaining, a mediator shall be 
appointed in accordance with the terms in subsection (b) of this 
section, unless the parties have previously agreed to another procedure 
for a binding resolution of their differences. If the parties fail to 
reach agreement within 180 days after the commencement of collective 
bargaining, and if they have not agreed to another procedure for 
binding resolution, an arbitration board shall be established to 
provide conclusive and binding arbitration in accordance with the terms 
of subsection (c) of this section.''.
    (b) Noninterference With Collective Bargaining Agreements.--Except 
as otherwise provided by the amendment made by subsection (a), nothing 
in this Act shall restrict, expand, or otherwise affect any of the 
rights, privileges, or benefits of either employees of or labor 
organizations representing employees of the United States Postal 
Service under chapter 12 of title 39, United States Code, the National 
Labor Relations Act, any handbook or manual affecting employee labor 
relations within the United States Postal Service, or any collective 
bargaining agreement.
    (c) Free Mailing Privileges Continue Unchanged.--Nothing in this 
Act or any amendment made by this Act shall affect any free mailing 
privileges accorded under section 3217 or sections 3403 through 3406 of 
title 39, United States Code.

SEC. 506. BONUS AUTHORITY.

    Chapter 36 of title 39, United States Code, is amended by inserting 
after section 3685 the following:
``Sec. 3686. Bonus authority
    ``(a) In General.--The Postal Service may establish 1 or more 
programs to provide bonuses or other rewards to officers and employees 
of the Postal Service in senior executive or equivalent positions to 
achieve the objectives of this chapter.
    ``(b) Limitation on Total Compensation.--
            ``(1) In general.--Under any such program, the Postal 
        Service may award a bonus or other reward in excess of the 
        limitation set forth in the last sentence of section 1003(a), 
        if such program has been approved under paragraph (2). Any such 
        award or bonus may not cause the total compensation of such 
        officer or employee to exceed the total annual compensation 
        payable to the Vice President under section 104 of title 3 as 
        of the end of the calendar year in which the bonus or award is 
        paid.
            ``(2) Approval process.--If the Postal Service wishes to 
        have the authority, under any program described in subsection 
        (a), to award bonuses or other rewards in excess of the 
        limitation set forth in the last sentence of section 1003(a)--
                    ``(A) the Postal Service shall make an appropriate 
                request to the Board of Governors of the Postal Service 
                in such form and manner as the Board requires; and
                    ``(B) the Board of Governors shall approve any such 
                request if the Board certifies, for the annual 
                appraisal period involved, that the performance 
                appraisal system for affected officers and employees of 
                the Postal Service (as designed and applied) makes 
                meaningful distinctions based on relative performance.
            ``(3) Revocation authority.--If the Board of Governors of 
        the Postal Service finds that a performance appraisal system 
        previously approved under paragraph (2)(B) does not (as 
        designed and applied) make meaningful distinctions based on 
        relative performance, the Board may revoke or suspend the 
        authority of the Postal Service to continue a program approved 
        under paragraph (2) until such time as appropriate corrective 
        measures have, in the judgment of the Board, been taken.
    ``(c) 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.''.

                TITLE VI--ENHANCED REGULATORY COMMISSION

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

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

               ``CHAPTER 5--POSTAL REGULATORY COMMISSION

``Sec.
``501. Establishment.
``502. Commissioners.
``503. Rules; regulations; procedures.
``504. Administration.
``505. Officer of the Postal Regulatory Commission representing the 
                            general public.
``Sec. 501. Establishment
    ``The Postal Regulatory Commission is an independent establishment 
of the executive branch of the Government of the United States.
``Sec. 502. Commissioners
    ``(a) The Postal Regulatory Commission is composed of 5 
Commissioners, appointed by the President, by and with the advice and 
consent of the Senate. The Commissioners shall be chosen solely on the 
basis of their technical qualifications, professional standing, and 
demonstrated expertise in economics, accounting, law, or public 
administration, and may be removed by the President only for cause. 
Each individual appointed to the Commission shall have the 
qualifications and expertise necessary to carry out the enhanced 
responsibilities accorded Commissioners under the Postal Accountability 
and Enhancement Act. Not more than 3 of the Commissioners may be 
adherents of the same political party.
    ``(b) No Commissioner shall be financially interested in any 
enterprise in the private sector of the economy engaged in the delivery 
of mail matter.
    ``(c) A Commissioner may continue to serve after the expiration of 
his term until his successor has qualified, except that a Commissioner 
may not so continue to serve for more than 1 year after the date upon 
which his term otherwise would expire under subsection (f).
    ``(d) One of the Commissioners shall be designated as Chairman by, 
and shall serve in the position of Chairman at the pleasure of, the 
President.
    ``(e) The Commissioners shall by majority vote designate a Vice 
Chairman of the Commission. The Vice Chairman shall act as Chairman of 
the Commission in the absence of the Chairman.
    ``(f) The Commissioners shall serve for terms of 6 years.'';
            (2) by striking, in subchapter I of chapter 36 (as in 
        effect before the amendment made by section 201(c)), the 
        heading for such subchapter I and all that follows through 
        section 3602;
            (3) by redesignating sections 3603 and 3604 as sections 503 
        and 504, respectively, and transferring such sections to the 
        end of chapter 5 (as inserted by paragraph (1)); and
            (4) by adding after such section 504 the following:
``Sec. 505. Officer of the Postal Regulatory Commission representing 
              the general public
    ``The Postal Regulatory Commission shall designate an officer of 
the Postal Regulatory Commission in all public proceedings who shall 
represent the interests of the general public.''.
    (b) Applicability.--The amendment made by subsection (a)(1) shall 
not affect the appointment or tenure of any person serving as a 
Commissioner on the Postal Regulatory Commission (as so redesignated by 
section 604) under an appointment made before the date of enactment of 
this Act or any nomination made before that date, but, when any such 
office becomes vacant, the appointment of any person to fill that 
office shall be made in accordance with such amendment.
    (c) Clerical Amendment.--The analysis for part I of title 39, 
United States Code, is amended by inserting after the item relating to 
chapter 4 the following:

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

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

    Section 504 of title 39, United States Code (as so redesignated by 
section 601) is amended by adding at the end the following:
    ``(f)(1) Any Commissioner of the Postal Regulatory Commission, any 
administrative law judge appointed by the Commission under section 3105 
of title 5, and any employee of the Commission designated by the 
Commission may administer oaths, examine witnesses, take depositions, 
and receive evidence.
    ``(2) The Chairman of the Commission, any Commissioner designated 
by the Chairman, and any administrative law judge appointed by the 
Commission under section 3105 of title 5 may, with respect to any 
proceeding conducted by the Commission under this title or to obtain 
information to be used to prepare a report under this title--
            ``(A) issue subpoenas requiring the attendance and 
        presentation of testimony by, or the production of documentary 
        or other evidence in the possession of, any covered person; and
            ``(B) order the taking of depositions and responses to 
        written interrogatories by a covered person.
The written concurrence of a majority of the Commissioners then holding 
office shall, with respect to each subpoena under subparagraph (A), be 
required in advance of its issuance.
    ``(3) In the case of contumacy or failure to obey a subpoena issued 
under this subsection, upon application by the Commission, the district 
court of the United States for the district in which the person to whom 
the subpoena is addressed resides or is served may issue an order 
requiring such person to appear at any designated place to testify or 
produce documentary or other evidence. Any failure to obey the order of 
the court may be punished by the court as a contempt thereof.
    ``(4) For purposes of this subsection, the term `covered person' 
means an officer, employee, agent, or contractor of the Postal Service.
    ``(g)(1) If the Postal Service determines that any document or 
other matter it provides to the Postal Regulatory Commission under a 
subpoena issued under subsection (f), or otherwise at the request of 
the Commission in connection with any proceeding or other purpose under 
this title, contains information which is described in section 410(c) 
of this title, or exempt from public disclosure under section 552(b) of 
title 5, the Postal Service shall, at the time of providing such matter 
to the Commission, notify the Commission, in writing, of its 
determination (and the reasons therefor).
    ``(2) Except as provided in paragraph (3), no officer or employee 
of the Commission may, with respect to any information as to which the 
Commission has been notified under paragraph (1)--
            ``(A) use such information for purposes other than the 
        purposes for which it is supplied; or
            ``(B) permit anyone who is not an officer or employee of 
        the Commission to have access to any such information.
            ``(3)(A) Paragraph (2) shall not prohibit the Commission 
        from publicly disclosing relevant information in furtherance of 
        its duties under this title, provided that the Commission has 
        adopted regulations under section 553 of title 5, that 
        establish a procedure for according appropriate confidentiality 
        to information identified by the Postal Service under paragraph 
        (1). In determining the appropriate degree of confidentiality 
        to be accorded information identified by the Postal Service 
        under paragraph (1), the Commission shall balance the nature 
        and extent of the likely commercial injury to the Postal 
        Service against the public interest in maintaining the 
        financial transparency of a government establishment competing 
        in commercial markets.
            ``(B) Paragraph (2) shall not prevent the Commission from 
        requiring production of information in the course of any 
        discovery procedure established in connection with a proceeding 
        under this title. The Commission shall, by regulations based on 
        rule 26(c) of the Federal Rules of Civil Procedure, establish 
        procedures for ensuring appropriate confidentiality for 
        information furnished to any party.''.

SEC. 603. 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 601) is 
amended to read as follows:
    ``(d) There are authorized to be appropriated, out of the Postal 
Service Fund, such sums as may be necessary for the Postal Regulatory 
Commission. In requesting an appropriation under this subsection for a 
fiscal year, the Commission shall prepare and submit to the Congress 
under section 2009 a budget of the Commission's expenses, including 
expenses for facilities, supplies, compensation, and employee 
benefits.''.
    (b) Budget Program.--
            (1) In general.--The next to last sentence of section 2009 
        of title 39, United States Code, is amended to read as follows: 
        ``The budget program shall also include separate statements of 
        the amounts which (1) the Postal Service requests to be 
        appropriated under subsections (b) and (c) of section 2401, (2) 
        the Office of Inspector General of the United States Postal 
        Service requests to be appropriated, out of the Postal Service 
        Fund, under section 8G(f) of the Inspector General Act of 1978, 
        and (3) the Postal Regulatory Commission requests to be 
        appropriated, out of the Postal Service Fund, under section 
        504(d) of this title.''.
            (2) Conforming amendment.--Section 2003(e)(1) of title 39, 
        United States Code, is amended by striking the first sentence 
        and inserting the following: ``The Fund shall be available for 
        the payment of (A) all expenses incurred by the Postal Service 
        in carrying out its functions as provided by law, subject to 
        the same limitation as set forth in the parenthetical matter 
        under subsection (a); (B) all expenses of the Postal Regulatory 
        Commission, subject to the availability of amounts appropriated 
        under section 504(d); and (C) all expenses of the Office of 
        Inspector General, subject to the availability of amounts 
        appropriated under section 8G(f) of the Inspector General Act 
        of 1978.''.
    (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, 2002.
            (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. 604. REDESIGNATION OF THE POSTAL RATE COMMISSION.

    (a) Amendments to Title 39, United States Code.--Title 39, United 
States Code, is amended in sections 404, 503 and 504 (as so 
redesignated by section 601), 1001 and 1002, by striking ``Postal Rate 
Commission'' each place it appears and inserting ``Postal Regulatory 
Commission'';
    (b) Amendments to Title 5, United States Code.--Title 5, United 
States Code, is amended in sections 104(1), 306(f), 2104(b), 3371(3), 
5314 (in the item relating to Chairman, Postal Rate Commission), 5315 
(in the item relating to Members, Postal Rate Commission), 
5514(a)(5)(B), 7342(a)(1)(A), 7511(a)(1)(B)(ii), 8402(c)(1), 
8423(b)(1)(B), and 8474(c)(4) by striking ``Postal Rate Commission'' 
and inserting ``Postal Regulatory Commission''.
    (c) Amendment to the Ethics in Government Act of 1978.--Section 
101(f)(6) of the Ethics in Government Act of 1978 (5 U.S.C. App.) is 
amended by striking ``Postal Rate Commission'' and inserting ``Postal 
Regulatory Commission''.
    (d) Amendment to the Rehabilitation Act of 1973.--Section 501(b) of 
the Rehabilitation Act of 1973 (29 U.S.C. 791(b)) is amended by 
striking ``Postal Rate Office'' and inserting ``Postal Regulatory 
Commission''.
    (e) Amendment to Title 44, United States Code.--Section 3502(5) of 
title 44, United States Code, is amended by striking ``Postal Rate 
Commission'' and inserting ``Postal Regulatory Commission''.
    (f) Other References.--Whenever a reference is made in any 
provision of law (other than this Act or a provision of law amended by 
this Act), regulation, rule, document, or other record of the United 
States to the Postal Rate Commission, such reference shall be 
considered a reference to the Postal Regulatory Commission.

SEC. 605. FINANCIAL TRANSPARENCY.

    (a) In General.--Section 101 of title 39, United States Code, is 
amended--
            (1) by redesignating subsections (d) through (g) as 
        subsections (e) through (h), respectively; and
            (2) by inserting after subsection (c) the following:
    ``(d) As an independent establishment of the executive branch of 
the Government of the United States, the Postal Service shall be 
subject to a high degree of transparency 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) Financial Reporting Requirements and Enforcement Powers 
Applicable to Postal Service.--Section 503 of title 39, United States 
Code (as so redesignated by section 601 and 604) is amended by--
            (1) inserting ``(a)'' before ``The Postal Regulatory 
        Commission shall promulgate''; and
            (2) adding at the end the following:
    ``(b)(1) Beginning with the first full fiscal year following the 
date of enactment of the Postal Accountability and Enhancement Act, the 
Postal Service shall file with the Postal Regulatory Commission --
            ``(A) within 35 days after the end of each fiscal quarter, 
        a quarterly report containing the information prescribed in 
        Form 10-Q of the Securities and Exchange Commission under 
        section 13 of the Securities Exchange Act of 1934 (15 U.S.C. 
        78m), or any revised or successor form;
            ``(B) within 60 days after the end of each fiscal year, an 
        annual report containing the information prescribed in Form 10-
        K of the Securities and Exchange Commission under section 13 of 
        the Securities Exchange Act of 1934 (15 U.S.C. 78m), or any 
        revised or successor form; and
            ``(C) periodic reports within the time frame and containing 
        the information prescribed in Form 8-K of the Securities and 
        Exchange Commission under section 13 of the Securities Exchange 
        Act of 1934 (15 U.S.C. 78m), or any revised or successor form.
    ``(2) For purposes of preparing the reports required under 
paragraph (1), the Postal Service shall be deemed to be the registrant 
described in the Securities and Exchange Commission forms, and 
references contained in such forms to Securities and Exchange 
Commission regulations are applicable.
    ``(3) For purposes of preparing the reports required under 
paragraph (1), the Postal Service shall comply with the rules 
prescribed by the Securities and Exchange Commission implementing 
section 404 of the Sarbanes-Oxley Act of 2002 (15 U.S.C. 7262; Public 
Law 107-204) beginning with fiscal year 2007 and in each fiscal year 
thereafter.
    ``(c)(1) The reports required under subsection (b)(1)(B) shall 
include, with respect to the financial obligations of the Postal 
Service under chapters 83, 84, and 89 of title 5 for retirees of the 
Postal Service--
            ``(A) the funded status of such obligations of the Postal 
        Service;
            ``(B) components of the net change in the fund balances and 
        obligations and the nature and cause of any significant 
        changes;
            ``(C) components of net periodic costs;
            ``(D) cost methods and assumptions underlying the relevant 
        actuarial valuations;
            ``(E) the effect of a one-percentage point increase in the 
        assumed health care cost trend rate for each future year on the 
        service and interest costs components of net periodic cost and 
        the accumulated obligation of the Postal Service under chapter 
        89 of title 5 for retirees of the Postal Service;
            ``(F) actual contributions to and payments from the funds 
        for the years presented and the estimated future contributions 
        and payments for each of the following 5 years;
            ``(G) the composition of plan assets reflected in the fund 
        balances; and
            ``(H) the assumed rate of return on fund balances and the 
        actual rates of return for the years presented.
    ``(2)(A) Beginning with the fiscal year 2007 and in each fiscal 
year thereafter, for purposes of the reports required under subsection 
(b)(1) (A) and (B), the Postal Service shall include segment reporting.
    ``(B) The Postal Service shall determine the appropriate segment 
reporting under subparagraph (A), after consultation with the Postal 
Regulatory Commission.
    ``(d) For purposes of the annual reports required under subsection 
(b)(1)(B), the Postal Service shall obtain an opinion from an 
independent auditor on whether the information listed under subsection 
(c) is fairly stated in all material respects, either in relation to 
the basic financial statements as a whole or on a stand-alone basis.
    ``(e) The Postal Regulatory Commission shall have access to the 
audit documentation and any other supporting matter of the Postal 
Service and its independent auditor in connection with any information 
submitted under subsection (b)(1)(B).
    ``(f) The Postal Regulatory Commission may, on its own motion or on 
request of an interested party, initiate proceedings (to be conducted 
in accordance with regulations that the Commission shall prescribe) to 
improve the quality, accuracy, or completeness of Postal Service data 
required by the Commission under this section whenever it shall appear 
that the data--
            ``(1) have become significantly inaccurate;
            ``(2) can be significantly improved; or
            ``(3) are not cost beneficial.''.

                         TITLE VII--EVALUATIONS

SEC. 701. ASSESSMENTS OF RATEMAKING, CLASSIFICATION, AND OTHER 
              PROVISIONS.

    (a) In General.--The Postal Regulatory Commission shall, at least 
every 3 years, submit a report to the President and Congress 
concerning--
            (1) the operation of the amendments made by this Act; and
            (2) recommendations for any legislation or other measures 
        necessary to improve the effectiveness or efficiency of the 
        postal laws of the United States.
    (b) Postal Service Views.--A report under this section shall be 
submitted only after reasonable opportunity has been afforded to the 
Postal Service to review the report and to submit written comments on 
the report. Any comments timely received from the Postal Service under 
the preceding sentence shall be attached to the report submitted under 
subsection (a).

SEC. 702. REPORT ON UNIVERSAL POSTAL SERVICE AND THE POSTAL MONOPOLY.

    (a) Report by the Postal Regulatory Commission.--
            (1) In general.--Not later than 12 months after the date of 
        enactment of this Act, the Postal Regulatory Commission shall 
        submit a report to the President and Congress on universal 
        postal service and the postal monopoly in the United States (in 
        this section referred to as ``universal service and the postal 
        monopoly''), including the monopoly on the delivery of mail and 
        on access to mailboxes.
            (2) Contents.--The report under this subsection shall 
        include--
                    (A) a comprehensive review of the history and 
                development of universal service and the postal 
                monopoly, including how the scope and standards of 
                universal service and the postal monopoly have evolved 
                over time for the Nation and its urban and rural areas;
                    (B) the scope and standards of universal service 
                and the postal monopoly provided under current law 
                (including sections 101 and 403 of title 39, United 
                States Code), and current rules, regulations, policy 
                statements, and practices of the Postal Service;
                    (C) a description of any geographic areas, 
                populations, communities (including both urban and 
                rural communities), organizations, or other groups or 
                entities not currently covered by universal service or 
                that are covered but that are receiving services 
                deficient in scope or quality or both; and
                    (D) the scope and standards of universal service 
                and the postal monopoly likely to be required in the 
                future in order to meet the needs and expectations of 
                the United States public, including all types of mail 
                users, based on discussion of such assumptions, 
                alternative sets of assumptions, and analyses as the 
                Postal Service considers plausible.
    (b) Recommended Changes to Universal Service and the Monopoly.--The 
Postal Regulatory Commission shall include in the report under 
subsection (a), and in all reports submitted under section 701 of this 
Act--
            (1) any recommended changes to universal service and the 
        postal monopoly as the Commission considers appropriate, 
        including changes that the Commission may implement under 
        current law and changes that would require changes to current 
        law, with estimated effects of the recommendations on the 
        service, financial condition, rates, and security of mail 
        provided by the Postal Service;
            (2) with respect to each recommended change described under 
        paragraph (1)--
                    (A) an estimate of the costs of the Postal Service 
                attributable to the obligation to provide universal 
                service under current law; and
                    (B) an analysis of the likely benefit of the 
                current postal monopoly to the ability of the Postal 
                Service to sustain the current scope and standards of 
                universal service, including estimates of the financial 
                benefit of the postal monopoly to the extent 
                practicable, under current law; and
            (3) such additional topics and recommendations as the 
        Commission considers appropriate, with estimated effects of the 
        recommendations on the service, financial condition, rates, and 
        the security of mail provided by the Postal Service.

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

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

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

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

SEC. 705. STUDY ON RECYCLED PAPER.

    (a) In General.--Within 12 months after the date of enactment of 
this Act, the Government Accountability Office shall study and submit 
to the Congress, the Board of Governors of the Postal Service, and to 
the Postal Regulatory Commission a report concerning--
            (1) the economic and environmental efficacy of establishing 
        rate incentives for mailers linked to the use of recycled 
        paper;
            (2) a description of the accomplishments of the Postal 
        Service in each of the preceding 5 years involving recycling 
        activities, including the amount of annual revenue generated 
        and savings achieved by the Postal Service as a result of its 
        use of recycled paper and other recycled products and its 
        efforts to recycle undeliverable and discarded mail and other 
        materials; and
            (3) additional opportunities that may be available for the 
        United States Postal Service to engage in recycling initiatives 
        and the projected costs and revenues of undertaking such 
        opportunities.
    (b) Recommendations.--The report shall include recommendations for 
any administrative or legislative actions that may be appropriate.

   TITLE VIII--POSTAL SERVICE RETIREMENT AND HEALTH BENEFITS FUNDING

SEC. 801. SHORT TITLE.

    This title may be cited as the ``Postal Civil Service Retirement 
and Health Benefits Funding Amendments of 2004''.

SEC. 802. CIVIL SERVICE RETIREMENT SYSTEM.

    (a) In General.--Chapter 83 of title 5, United States Code, is 
amended--
            (1) in section 8334(a)(1)(B), by striking clause (ii) and 
        inserting the following:
    ``(ii) In the case of an employee of the United States Postal 
Service, no amount shall be contributed under this subparagraph.''; and
            (2) by amending section 8348(h) to read as follows:
    ``(h)(1) In this subsection, the term `Postal surplus or 
supplemental liability' means the estimated difference, as determined 
by the Office, between--
            ``(A) the actuarial present value of all future benefits 
        payable from the Fund under this subchapter to current or 
        former employees of the United States Postal Service and 
        attributable to civilian employment with the United States 
        Postal Service; and
            ``(B) the sum of--
                    ``(i) the actuarial present value of deductions to 
                be withheld from the future basic pay of employees of 
                the United States Postal Service currently subject to 
                this subchapter under section 8334;
                    ``(ii) that portion of the Fund balance, as of the 
                date the Postal surplus or supplemental liability is 
                determined, attributable to payments to the Fund by the 
                United States Postal Service and its employees, minus 
                benefit payments attributable to civilian employment 
                with the United States Postal Service, plus the 
                earnings on such amounts while in the Fund; and
                    ``(iii) any other appropriate amount, as determined 
                by the Office in accordance with generally accepted 
                actuarial practices and principles.
    ``(2)(A) Not later than June 15, 2006, the Office shall determine 
the Postal surplus or supplemental liability, as of September 30, 2005. 
If that result is a surplus, the amount of the surplus shall be 
transferred to the Postal Service Retiree Health Benefits Fund 
established under section 8909a by June 30, 2006. If the result is a 
supplemental liability, the Office shall establish an amortization 
schedule, including a series of annual installments commencing 
September 30, 2006, which provides for the liquidation of such 
liability by September 30, 2043.
    ``(B) The Office shall redetermine the Postal surplus or 
supplemental liability as of the close of the fiscal year, for each 
fiscal year beginning after September 30, 2006, through the fiscal year 
ending September 30, 2038. If the result is a surplus, that amount 
shall remain in the Fund until distribution is authorized under 
subparagraph (C), and any prior amortization schedule for payments 
shall be terminated. If the result is a supplemental liability, the 
Office shall establish a new amortization schedule, including a series 
of annual installments commencing on September 30 of the subsequent 
fiscal year, which provides for the liquidation of such liability by 
September 30, 2043.
    ``(C) As of the close of the fiscal years ending September 30, 
2015, 2025, 2035, and 2039, if the result is a surplus, that amount 
shall be transferred to the Postal Service Retiree Health Benefits 
Fund, and any prior amortization schedule for payments shall be 
terminated.
    ``(D) Amortization schedules established under this paragraph shall 
be set in accordance with generally accepted actuarial practices and 
principles, with interest computed at the rate used in the most recent 
valuation of the Civil Service Retirement System.
    ``(E) The United States Postal Service shall pay the amounts so 
determined to the Office, with payments due not later than the date 
scheduled by the Office.
    ``(3) Notwithstanding any other provision of law, in computing the 
amount of any payment under any other subsection of this section that 
is based upon the amount of the unfunded liability, such payment shall 
be computed disregarding that portion of the unfunded liability that 
the Office determines will be liquidated by payments under this 
subsection.''.
    (b) Credit Allowed for Military Service.--In the application of 
section 8348(g)(2) of title 5, United States Code, for the fiscal year 
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 the fiscal years 2003 through 2005 with 
respect to credit for military service of former employees of the 
United States Postal Service as though the Postal Civil Service 
Retirement System Funding Reform Act of 2003 (Public Law 108-18) had 
not been enacted, and the Secretary of the Treasury shall make the 
required transfer to the Civil Service Retirement and Disability Fund 
based on that amount.

SEC. 803. HEALTH INSURANCE.

    (a) In General.--
            (1) Funding.--Chapter 89 of title 5, United States Code, is 
        amended--
                    (A) in section 8906(g)(2)(A), by striking ``shall 
                be paid by the United States Postal Service.'' and 
                inserting ``shall be paid first from the Postal Service 
                Retiree Health Benefits Fund up to the amount contained 
                in the Fund, with any remaining amount paid by the 
                United States Postal Service.''; and
                    (B) by inserting after section 8909 the following:
``Sec. 8909a. Postal Service Retiree Health Benefit Fund
    ``(a) There is in the Treasury of the United States a Postal 
Service Retiree Health Benefits Fund which is administered by the 
Office of Personnel Management.
    ``(b) The Fund is available without fiscal year limitation for 
payments required under section 8906(g)(2)(A).
    ``(c) The Secretary of the Treasury shall immediately invest, in 
interest-bearing securities of the United States such currently 
available portions of the Fund as are not immediately required for 
payments from the Fund. Such investments shall be made in the same 
manner as investments for the Civil Service Retirement and Disability 
Fund under section 8348.
    ``(d)(1) Not later than June 30, 2006, and by June 30 of each 
succeeding year, the Office shall compute the net present value of the 
future payments required under section 8906(g)(2)(A) and attributable 
to the service of Postal Service employees during the most recently 
ended fiscal year.
    ``(2)(A) Not later than June 30, 2006, the Office shall compute, 
and by June 30 of each succeeding year, the Office shall recompute the 
difference between--
            ``(i) the net present value of the excess of future 
        payments required under section 8906(g)(2)(A) for current and 
        future United States Postal Service annuitants as of the end of 
        the fiscal year ending on September 30 of that year; and
            ``(ii)(I) the value of the assets of the Postal Retiree 
        Health Benefits Fund as of the end of the fiscal year ending on 
        September 30 of that year; and
            ``(II) the net present value computed under paragraph (1).
    ``(B) Not later than June 30, 2006, the Office shall compute, and 
by June 30 of each succeeding year shall recompute, an amortization 
schedule including a series of annual installments which provide for 
the liquidation by September 30, 2045, or within 15 years, whichever is 
later, of the net present value determined under subparagraph (A), 
including interest at the rate used in that computation.
    ``(3) Not later than September 30, 2006, and by September 30 of 
each succeeding year, the United States Postal Service shall pay into 
such Fund--
            ``(A) the net present value computed under paragraph (1); 
        and
            ``(B) the annual installment computed under paragraph 
        (2)(B).
    ``(4) Computations under this subsection shall be made consistent 
with the assumptions and methodology used by the Office for financial 
reporting under subchapter II of chapter 35 of title 31.
    ``(5) After consultation with the United States Postal Service, the 
Office shall promulgate any regulations the Office determines necessary 
under this subsection.''.
            (2) Technical and conforming amendment.--The table of 
        sections for chapter 89 of title 5, United States Code, is 
        amended by inserting after the item relating to section 8909 
        the following:

``8909a. Postal Service Retiree Health Benefits Fund.''.
    (b) Transitional Adjustment for Fiscal Year 2006.--For fiscal year 
2006, the amounts paid by the Postal Service in Government 
contributions under section 8906(g)(2)(A) of title 5, United States 
Code, for fiscal year 2006 contributions shall be deducted from the 
initial payment otherwise due from the Postal Service to the Postal 
Service Retiree Health Benefits Fund under section 8909a(d)(3) of such 
title as added by this section.

SEC. 804. REPEAL OF DISPOSITION OF SAVINGS PROVISION.

    Section 3 of the Postal Civil Service Retirement System Funding 
Reform Act of 2003 (Public Law 108-18) is repealed.

SEC. 805. EFFECTIVE DATES.

    (a) In General.--Except as provided under subsection (b), this 
title shall take effect on October 1, 2005.
    (b) Termination of Employer Contribution.--The amendment made by 
paragraph (1) of section 802(a) shall take effect on the first day of 
the first pay period beginning on or after October 1, 2005.

                TITLE IX--COMPENSATION FOR WORK INJURIES

SEC. 901. TEMPORARY DISABILITY; CONTINUATION OF PAY.

    (a) Time of Accrual of Right.--Section 8117 of title 5, United 
States Code, is amended--
            (1) by striking ``An employee'' and inserting ``(a) An 
        employee other than a Postal Service employee''; and
            (2) by adding at the end the following:
    ``(b) A Postal Service employee is not entitled to compensation or 
continuation of pay for the first 3 days of temporary disability, 
except as provided under paragraph (3) of subsection (a). A Postal 
Service employee may use annual leave, sick leave, or leave without pay 
during that 3-day period, except that if the disability exceeds 14 days 
or is followed by permanent disability, the employee may have their 
sick leave or annual leave reinstated or receive pay for the time spent 
on leave without pay under this section.''.
    (b) Technical and Conforming Amendment.--Section 8118(b)(1) of 
title 5, United States Code, is amended to read as follows:
            ``(1) without a break in time, except as provided under 
        section 8117(b), unless controverted under regulations of the 
        Secretary''.

SEC. 902. DISABILITY RETIREMENT FOR POSTAL EMPLOYEES.

    (a) Total Disability.--Section 8105 of title 5, United States Code, 
is amended--
            (1) in subsection (a), by adding at the end the following: 
        ``This section applies to a Postal Service employee, except as 
        provided under subsection (c).''; and
            (2) by adding at the end the following:
    ``(c)(1) In this subsection, the term `retirement age' has the 
meaning given under section 216(l)(1) of the Social Security Act (42 
U.S.C. 416(l)(1)).
    ``(2) Notwithstanding any other provision of law, for any injury 
occurring on or after the date of enactment of the Postal 
Accountability and Enhancement Act, and for any new claim for a period 
of disability commencing on or after that date, the compensation 
entitlement for total disability is converted to 50 percent of the 
monthly pay of the employee on the later of--
            ``(A) the date on which the injured employee reaches 
        retirement age; or
            ``(B) 1 year after the employee begins receiving 
        compensation.''.
    (b) Partial Disability.--Section 8106 of title 5, United States 
Code, is amended--
            (1) in subsection (a), by adding at the end the following: 
        ``This section applies to a Postal Service employee, except as 
        provided under subsection (d).''; and
            (2) by adding at the end the following:
    ``(d)(1) In this subsection, the term `retirement age' has the 
meaning given under section 216(l)(1) of the Social Security Act (42 
U.S.C. 416(l)(1)).
            ``(2) Notwithstanding any other provision of law, for any 
        injury occurring on or after the date of enactment of this 
        subsection, and for any new claim for a period of disability 
        commencing on or after that date, the compensation entitlement 
        for partial disability is converted to 50 percent of the 
        difference between the monthly pay of an employee and the 
        monthly wage earning capacity of the employee after the 
        beginning of partial disability on the later of--
                    ``(A) the date on which the injured employee 
                reaches retirement age; or
                    ``(B) 1 year after the employee begins receiving 
                compensation.''.

                         TITLE X--MISCELLANEOUS

SEC. 1001. EMPLOYMENT OF POSTAL POLICE OFFICERS.

    Section 404 of title 39, United States Code (as amended by this 
Act), is further amended by adding at the end the following:
    ``(d) The Postal Service may employ guards for all buildings and 
areas owned or occupied by the Postal Service or under the charge and 
control of the Postal Service, and may give such guards, with respect 
to such property, any of the powers of special policemen provided under 
section 1315 of title 40. The Postmaster General, or the designee of 
the Postmaster General, may take any action that the Secretary of 
Homeland Security may take under section 1315 of title 40, with respect 
to that property.

SEC. 1002. EXPANDED CONTRACTING AUTHORITY.

    (a) Amendment to Title 39, United States Code.--
            (1) Contracts with air carriers.--Subsection (e) of section 
        5402 of title 39, United States Code, is amended--
                    (A) by striking the matter preceding paragraph (2) 
                and inserting the following:
    ``(e)(1) The Postal Service may contract with any air carrier for 
the transportation of mail by aircraft in interstate air 
transportation, including the rates for that transportation, either 
through negotiations or competitive bidding.'';
                    (B) by redesignating paragraph (2) as paragraph 
                (4); and
                    (C) by inserting after paragraph (1) the following:
    ``(2) Notwithstanding subsections (b) 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 for that transportation, either through 
negotiations or competitive bidding, except that--
            ``(A) 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);
            ``(B) 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;
            ``(C) during the 5-year period beginning 1 year after the 
        date of enactment of the Postal Accountability and Enhancement 
        Act, the Postal Service may not under this paragraph--
                    ``(i) contract for service between a pair or 
                combination of pairs of points in foreign air 
                transportation with--
                            ``(I) a foreign air carrier; or
                            ``(II) an air carrier to the extent that 
                        service provided would be offered through a 
                        code sharing arrangement in which the air 
                        carrier's designator code is used to identify a 
                        flight operated by a foreign air carrier; or
                    ``(ii) tender mail in foreign air transportation 
                under contracts providing for the carriage of mail in 
                foreign air transportation over all (or substantially 
                all, as determined by the Postal Service) of a 
                carrier's routes or all or substantially all of a 
                carrier's routes within a geographic area determined by 
                the Postal Service on the basis of a common unit price 
                per mile and a separate terminal price to--
                            ``(I) a foreign air carrier; or
                            ``(II) an air carrier to the extent that 
                        service provided would be offered through a 
                        code sharing arrangement in which the air 
                        carrier's designator code is used to identify a 
                        flight operated by a foreign air carrier, 
                        unless--
                                    ``(aa) with respect to clause (i) 
                                and this clause, fewer than 2 air 
                                carriers capable of providing service 
                                to the Postal Service adequate for its 
                                purposes between the pair or 
                                combination of pairs of points in 
                                foreign air transportation offer 
                                scheduled service between the pair or 
                                combination of pairs of points in 
                                foreign air transportation which are 
                                the subject of the contract or tender;
                                    ``(bb) with respect to clause (i), 
                                after competitive solicitation, the 
                                Postal Service has not received at 
                                least 2 offers from eligible air 
                                carriers capable of providing service 
                                to the Postal Service adequate for its 
                                purposes between the pair of 
                                combination of pairs of points in 
                                foreign air transportation; or
                                    ``(cc) with respect to this clause, 
                                after competitive solicitation, fewer 
                                than 2 air carriers under contract with 
                                the Postal Service offer service 
                                adequate for the Postal Service's 
                                purposes between the pair or 
                                combination of pairs of points in 
                                foreign air transportation for which 
                                tender is being made;
            ``(D) beginning 6 years after the date of enactment of the 
        Postal Accountability and Enhancement Act, every contract that 
        the Postal Service awards to a foreign air carrier under this 
        paragraph 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
            ``(E) the Postmaster General shall consult with the 
        Secretary of Defense concerning actions that affect the 
        carriage of military mail transported in foreign air 
        transportation.
    ``(3) Paragraph (2) shall not be interpreted as suspending or 
otherwise diminishing the authority of the Secretary of Transportation 
under section 41310 of title 49.''.
            (2) Definitions.--Section 5402(a) of title 39, United 
        States Code, is amended by striking paragraph (2) and inserting 
        the following:
    ``(2) The terms `air carrier', `air transportation', `foreign air 
carrier', `foreign air transportation', `interstate air 
transportation', and `mail' have the meanings given such terms in 
section 40102(a) 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 of title 49, United States Code, is amended--
                    (A) by striking subsection (b) and inserting the 
                following:
    ``(b) Statements on Places and Schedules.--Every air carrier shall 
file with the Secretary of Transportation and the United States Postal 
Service a statement showing--
            ``(1) the places between which the carrier is authorized to 
        transport mail in Alaska;
            ``(2) every schedule of aircraft regularly operated by the 
        carrier between places described under paragraph (1) and every 
        change in each schedule; and
            ``(3) for each schedule, the places served by the carrier 
        and the time of arrival at, and departure from, each place.'';
                    (B) in subsection (c), by striking ``(b)(3)'' and 
                inserting ``(b)''; and
                    (C) in subsection (d), in the first sentence, by 
                striking ``(b)(3)'' and inserting ``(b)''.
            (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) Technical and conforming amendments.--Sections 41107, 
        41901(b)(1), 41902(a), and 41903 (a) and (b) of title 49, 
        United States Code, are amended by striking ``in foreign air 
        transportation or''.
    (c) Effective Date.--The amendments made by this section shall take 
effect 1 year after the date of enactment of this Act.

SEC. 1003. REPORT ON THE UNITED STATES POSTAL INSPECTION SERVICE AND 
              THE OFFICE OF THE INSPECTOR GENERAL OF THE UNITED STATES 
              POSTAL SERVICE.

    (a) In General.--Not later than 1 year after the date of enactment 
of this Act, the Government Accountability Office shall review the 
functions, responsibilities, and areas of possible duplication of the 
United States Postal Inspection Service and the Office of the Inspector 
General of the United States Postal Service and submit a report on the 
review to the Committee on Homeland Security and Governmental Affairs 
of the Senate.
    (b) Contents.--The report under this section shall include 
recommendations for legislative actions necessary to clarify the roles 
of the United States Postal Inspection Service and the Office of the 
Inspector General of the United States Postal Service to strengthen 
oversight of postal operations.

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

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