IB 
Union Calendar No. 427 
108TH CONGRESS 
2D SESSION 
H. R. 4341 
[Report No. 108–672, Parts I and II] 
To reform the postal laws of the United States. 
IN THE HOUSE OF REPRESENTATIVES 
MAY 12, 2004 
Mr. MCHUGH (for himself, Mr. DAVIS of Illinois, Mr. TOM DAVIS of Virginia, 
Mr. WAXMAN, Mrs. MILLER of Michigan, Mr. BURTON of Indiana, Mr. 
SCHROCK, Mr. SHAYS, Mr. OWENS, Mrs. MALONEY, Mr. MICA, Mr. 
LATOURETTE, Mr. LEWIS of Kentucky, Mr. PLATTS, Mr. CANNON, Mr. 
PUTNAM, Mr. DUNCAN, Mr. DEAL of Georgia, Ms. WATSON, Mr. LYNCH, 
Ms. NORTON, Mr. MURPHY, Mr. TURNER of Ohio, Mr. CARTER, Mrs. 
BLACKBURN, Mr. TIBERI, and Ms. HARRIS) introduced the following bill; 
which was referred to the Committee on Government Reform 
SEPTEMBER 8, 2004 
Reported and referred to the Committee on the Judiciary for a period ending 
not later than September 28, 2004, for consideration of such provisions 
of the bill as fall within the jurisdiction of that committee pursuant to 
clause 1(k), rule X 
SEPTEMBER 23, 2004 
Additional sponsors: Mr. CLAY, Mr. WELDON of Pennsylvania, Mrs. EMER-
SON, Mr. LANTOS, Mr. RUSH, Mr. FORD, Ms. MCCARTHY of Missouri, 
Mr. BOUCHER, Mr. MCINTYRE, Mr. POMEROY, Mrs. CUBIN, Mr. MOORE, 
Mr. EVANS, Mr. ROSS, Mr. BOEHLERT, Mr. FRANK of Massachusetts, 
Ms. SLAUGHTER, Mr. RAHALL, Mr. BAIRD, Mr. LAHOOD, Mr. 
MCDERMOTT, Mr. PAYNE, Mr. WILSON of South Carolina, Mrs. CAPITO, 
Mr. DAVIS of Tennessee, Mr. BRADLEY of New Hampshire, Mr. BILI-
RAKIS, Mr. MORAN of Virginia, Mr. LUCAS of Kentucky, Ms. BERKLEY, 
Mr. MICHAUD, Mr. MEEK of Florida, Mr. TOWNS, Mr. LARSON of Con-
necticut, Mr. PRICE of North Carolina, Mr. LINCOLN DIAZ-BALART of 
Florida, Mr. CONYERS, Mr. SHERMAN, Ms. LINDA T. SA´NCHEZ of Cali-
fornia, Mr. GREEN of Wisconsin, Mr. CHANDLER, Mr. COSTELLO, Mr. 
PALLONE, Mr. SIMMONS, Mr. FERGUSON, Mr. MCNULTY, Mr. VAN 
HOLLEN, Ms. HARMAN, Mr. OXLEY, and Mr. ALLEN 
SEPTEMBER 23, 2004 
Reported by the Committee on the Judiciary with an amendment, committed 
to the Committee of the Whole House on the State of the Union, and 
ordered to be printed 
[Strike out all after the enacting clause and insert the part printed in italic] 
[For text of introduced bill see copy of bill as introduced on May 12, 2004] 
A BILL 
To reform the postal laws of the United States. 
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled, 
SECTION 1. SHORT TITLE; TABLE OF CONTENTS. 
(a) SHORT TITLE.—This Act may be cited as the 
‘‘Postal Accountability and Enhancement Act’’. 
(b) TABLE OF CONTENTS.—The table of contents for 
this Act is as follows: 
Sec. 1. Short title; table of contents. 
TITLE I—DEFINITIONS; POSTAL SERVICES 
Sec. 101. Definitions. 
Sec. 102. Postal services. 
Sec. 103. Financial transparency. 
TITLE II—MODERN RATE REGULATION 
Sec. 201. Provisions relating to market-dominant products. 
Sec. 202. Provisions relating to competitive products. 
Sec. 203. Provisions relating to experimental and new products. 
Sec. 204. Reporting requirements and related provisions. 
Sec. 205. Complaints; appellate review and enforcement. 
Sec. 206. Workshare discounts. 
Sec. 207. Clerical amendment.
TITLE III—PROVISIONS RELATING TO FAIR COMPETITION 
Sec. 301. Postal Service Competitive Products Fund. 
Sec. 302. Assumed Federal income tax on competitive products income. 
Sec. 303. Unfair competition prohibited. 
Sec. 304. Suits by and against the Postal Service. 
Sec. 305. International postal arrangements. 
Sec. 306. Redesignation. 
Sec. 307. Clarification. 
TITLE IV—GENERAL PROVISIONS 
Sec. 401. Qualification requirements for Governors. 
Sec. 402. Obligations. 
Sec. 403. Private carriage of letters. 
Sec. 404. Rulemaking authority. 
Sec. 405. Noninterference with collective bargaining agreements, etc. 
Sec. 406. Bonus authority. 
Sec. 407. Mediation in collective-bargaining disputes. 
TITLE V—ENHANCED REGULATORY COMMISSION 
Sec. 501. Reorganization and modification of certain provisions relating to the 
Postal Regulatory Commission. 
Sec. 502. Authority for Postal Regulatory Commission to issue subpoenas. 
Sec. 503. Appropriations for the Postal Regulatory Commission. 
Sec. 504. Redesignation of the Postal Rate Commission. 
Sec. 505. Officer of the Postal Regulatory Commission representing the general 
public. 
TITLE VI—INSPECTORS GENERAL 
Sec. 601. Inspector General of the Postal Regulatory Commission. 
Sec. 602. Inspector General of the United States Postal Service to be appointed 
by the President. 
TITLE VII—EVALUATIONS 
Sec. 701. Universal postal service study. 
Sec. 702. Assessments of ratemaking, classification, and other provisions. 
Sec. 703. Study on equal application of laws to competitive products. 
Sec. 704. Greater diversity in Postal Service Executive and administrative sched-
ule management positions. 
Sec. 705. Plan for assisting displaced workers. 
Sec. 706. Contracts with women, minorities, and small businesses. 
Sec. 707. Rates for periodicals. 
Sec. 708. Assessment of certain rate deficiencies. 
Sec. 709. Postal processing and distribution network study. 
Sec. 710. Definition. 
TITLE VIII—MISCELLANEOUS; TECHNICAL AND CONFORMING 
AMENDMENTS 
Sec. 801. Employment of postal police officers. 
Sec. 802. Date of postmark to be treated as date of appeal in connection with the 
closing or consolidation of post offices.
Sec. 803. Provisions relating to benefits under chapter 81 of title 5, United States 
Code, for officers and employees of the former Post Office De-
partment. 
Sec. 804. Obsolete provisions. 
Sec. 805. Expanded contracting authority. 
Sec. 806. Investments. 
Sec. 807. Repeal of section 5403. 
Sec. 808. Reduced rates. 
Sec. 809. Hazardous matter. 
Sec. 810. Provisions relating to cooperative mailings. 
Sec. 811. Technical and conforming amendments. 
TITLE IX—POSTAL PENSION FUNDING REFORM AMENDMENTS 
Sec. 901. Civil Service Retirement System. 
Sec. 902. Health insurance. 
Sec. 903. Repealer. 
Sec. 904. Ensuring appropriate use of escrow and military savings. 
Sec. 905. Effective dates. 
TITLE I—DEFINITIONS; POSTAL 
SERVICES 
SEC. 101. DEFINITIONS. 
Section 102 of title 39, United States Code, is amended 
by striking ‘‘and’’ at the end of paragraph (3), by striking 
the period at the end of paragraph (4) and inserting a semi-
colon, and by adding at the end the following: 
‘‘(5) ‘postal service’ means the carriage of letters, 
printed matter, or mailable packages, including ac-
ceptance, collection, processing, delivery, or other serv-
ices supportive or ancillary thereto; 
‘‘(6) ‘product’ means a postal service with a dis-
tinct cost or market characteristic for which a rate or 
rates are, or may reasonably be, applied; 
‘‘(7) ‘rates’, as used with respect to products, in-
cludes fees for postal services;
‘‘(8) ‘market-dominant product’ or ‘product in 
the market-dominant category of mail’ means a prod-
uct subject to subchapter I of chapter 36; 
‘‘(9) ‘competitive product’ or ‘product in the 
competitive category of mail’ means a product subject 
to subchapter II of chapter 36; 
‘‘(10) ‘Consumer Price Index’ means the Con-
sumer Price Index for All Urban Consumers pub-
lished monthly by the Bureau of Labor Statistics of 
the Department of Labor; and 
‘‘(11) ‘year’, as used in chapter 36 (other than 
subchapters I and VI thereof), means a fiscal year.’’. 
SEC. 102. POSTAL SERVICES. 
(a) IN GENERAL.—Section 404 of title 39, United 
States Code, is amended— 
(1) in subsection (a), by striking paragraph (6) 
and by redesignating paragraphs (7) through (9) as 
paragraphs (6) through (8), respectively; and 
(2) by adding at the end the following: 
‘‘(c) Nothing in this title shall be considered to permit 
or require that the Postal Service provide any special non-
postal or similar services, except that nothing in this sub-
section shall prevent the Postal Service from providing any 
special nonpostal or similar services provided by the Postal 
Service as of May 12, 2004.’’.
TITLE II—MODERN RATE 
REGULATION 
SEC. 201. PROVISIONS RELATING TO MARKET-DOMINANT 
PRODUCTS. 
(a) IN GENERAL.—Chapter 36 of title 39, United 
States Code, is amended by striking sections 3621 and 3622 
and inserting the following: 
‘‘§ 3621. Applicability; definitions 
‘‘(a) APPLICABILITY.—This subchapter shall apply 
with respect to— 
‘‘(1)(A) single piece first-class letters (both do-
mestic and international); 
‘‘(B) single piece first-class cards (both domestic 
and international); and 
‘‘(C) special services; 
‘‘(2) all first-class mail not included under para-
graph (1); 
‘‘(3) periodicals; 
‘‘(4) standard mail; 
‘‘(5) media mail; 
‘‘(6) library mail; and 
‘‘(7) bound printed matter, 
subject to any changes the Postal Regulatory Commission 
may make under section 3642.
‘‘(b) RULE OF CONSTRUCTION.—Mail matter referred 
to in subsection (a) shall, for purposes of this subchapter, 
be considered to have the meaning given to such mail matter 
under the mail classification schedule. 
‘‘§ 3622. Modern rate regulation 
‘‘(a) AUTHORITY GENERALLY.—The Postal Regulatory 
Commission shall, within 24 months after the date of the 
enactment of this section, by regulation establish (and may 
from time to time thereafter by regulation revise) a modern 
system for regulating rates and classes for market-dominant 
products. 
‘‘(b) OBJECTIVES.—Such system shall be designed to 
achieve the following objectives: 
‘‘(1) To maximize incentives to reduce costs and 
increase efficiency. 
‘‘(2) To create predictability and stability in 
rates. 
‘‘(3) To maintain high quality service standards. 
‘‘(4) To allow the Postal Service pricing flexi-
bility. 
‘‘(5) To assure adequate revenues, including re-
tained earnings, to maintain financial stability. 
‘‘(6) To reduce the administrative burden of the 
ratemaking process.
‘‘(c) FACTORS.—In establishing or revising such sys-
tem, the Postal Regulatory Commission shall take into ac-
count— 
‘‘(1) the establishment and maintenance of a fair 
and equitable schedule for rates and classification sys-
tem; 
‘‘(2) the value of the mail service actually pro-
vided each class or type of mail service to both the 
sender and the recipient, including but not limited to 
the collection, mode of transportation, and priority of 
delivery; 
‘‘(3) the direct and indirect postal costs attrib-
utable to each class or type of mail service plus that 
portion of all other costs of the Postal Service reason-
ably 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 reason-
able costs; 
‘‘(6) the degree of preparation of mail for deliv-
ery into the postal system performed by the mailer
and its effect upon reducing costs to the Postal Serv-
ice; 
‘‘(7) simplicity of structure for the entire sched-
ule 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 classifica-
tions and services of mail; 
‘‘(9) the importance of providing classifications 
with extremely high degrees of reliability and speed of 
delivery and of providing those that do not require 
high degrees of reliability and speed of delivery; 
‘‘(10) the desirability of special classifications 
from the point of view of both the user and of the 
Postal Service; 
‘‘(11) the educational, cultural, scientific, and 
informational value to the recipient of mail matter; 
and 
‘‘(12) the policies of this title as well as such 
other factors as the Commission deems appropriate. 
‘‘(d) ALLOWABLE PROVISIONS.—The system for regu-
lating rates and classes for market-dominant products may 
include one or more of the following:
‘‘(1) Price caps, revenue targets, or other form of 
incentive regulation. 
‘‘(2) Cost-of-service regulation. 
‘‘(3) Such other form of regulation as the Com-
mission considers appropriate to achieve, consistent 
with subsection (c), the objectives of subsection (b). 
‘‘(e) LIMITATION.—In the administration of this sec-
tion, the Commission shall not permit the average rate in 
any subclass of mail to increase at an annual rate greater 
than the comparable increase in the Consumer Price Index, 
unless it has, after notice and opportunity for a public 
hearing and comment, determined that such increase is rea-
sonable and equitable and necessary to enable the Postal 
Service, under best practices of honest, efficient, and eco-
nomical management, to maintain and continue the devel-
opment of postal services of the kind and quality adapted 
to the needs of the United States. 
‘‘(f) TRANSITION RULE.—Until regulations under this 
section first take effect, rates and classes for market-domi-
nant products shall remain subject to modification in ac-
cordance with the provisions of this chapter and section 
407, as such provisions were last in effect before the date 
of the enactment of this section.’’. 
(b) REPEALED SECTIONS.—Sections 3623, 3624, 3625, 
and 3628 of title 39, United States Code, are repealed.
(c) REDESIGNATION.—Chapter 36 of title 39, United 
States Code (as in effect after the amendment made by sec-
tion 501(a)(2), but before the amendment made by section 
202) is amended by striking the heading for subchapter II 
and inserting the following: 
‘‘SUBCHAPTER I—PROVISIONS RELATING TO 
MARKET-DOMINANT PRODUCTS’’. 
SEC. 202. PROVISIONS RELATING TO COMPETITIVE PROD-
UCTS. 
Chapter 36 of title 39, United States Code, is amended 
by inserting after section 3629 the following: 
‘‘SUBCHAPTER II—PROVISIONS RELATING TO 
COMPETITIVE PRODUCTS 
‘‘§ 3631. Applicability; definitions and updates 
‘‘(a) APPLICABILITY.—This subchapter shall apply 
with respect to— 
‘‘(1) priority mail; 
‘‘(2) expedited mail; 
‘‘(3) mailgrams; 
‘‘(4) international mail; and 
‘‘(5) parcel post, 
subject to any changes the Postal Regulatory Commission 
may make under section 3642. 
‘‘(b) DEFINITION.—For purposes of this subchapter, 
the term ‘costs attributable’, as used with respect to a prod-
uct, 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. 
‘‘§ 3632. Action of the Governors 
‘‘(a) AUTHORITY TO ESTABLISH RATES AND CLASS-
ES.—The Governors shall establish rates and classes for 
products in the competitive category of mail in accordance 
with the requirements of this subchapter and regulations 
promulgated under section 3633. 
‘‘(b) PROCEDURES.— 
‘‘(1) IN GENERAL.—Rates and classes shall be es-
tablished in writing, complete with a statement of ex-
planation and justification, and the date as of which 
each such rate or class takes effect. 
‘‘(2) RATES OR CLASSES OF GENERAL APPLICA-
BILITY.—In the case of rates or classes of general ap-
plicability in the Nation as a whole or in any sub-
stantial region of the Nation, the Governors shall 
cause each rate and class decision under this section 
and the record of the Governors’ proceedings in con-
nection with such decision to be published in the Fed-
eral Register at least 30 days before the effective date 
of any new rates or classes. 
‘‘(3) RATES OR CLASSES NOT OF GENERAL AP-
PLICABILITY.—In the case of rates or classes not of 
general applicability in the Nation as a whole or in 
any substantial region of the Nation, the Governors 
shall cause each rate and class decision under this 
section and the record of the proceedings in connec-
tion with such decision to be filed with the Postal 
Regulatory Commission by such date before the effec-
tive date of any new rates or classes as the Governors 
consider appropriate, but in no case less than 15 
days. 
‘‘(4) CRITERIA.—As part of the regulations re-
quired under section 3633, the Postal Regulatory 
Commission shall establish criteria for determining 
when a rate or class established under this subchapter 
is or is not of general applicability in the Nation as 
a whole or in any substantial region of the Nation. 
‘‘(c) TRANSITION RULE.—Until regulations under sec-
tion 3633 first take effect, rates and classes for competitive 
products shall remain subject to modification in accordance 
with the provisions of this chapter and section 407, as such 
provisions were as last in effect before the date of the enact-
ment of this section.
‘‘§ 3633. Provisions applicable to rates for competitive 
products 
‘‘The Postal Regulatory Commission shall, within 18 
months after the date of the enactment of this section, pro-
mulgate (and may from time to time thereafter revise) regu-
lations— 
‘‘(1) to prohibit the subsidization of competitive 
products by market-dominant products; 
‘‘(2) to ensure that each competitive product cov-
ers its costs attributable; and 
‘‘(3) to ensure that all competitive products col-
lectively make a reasonable contribution to the insti-
tutional costs of the Postal Service.’’. 
SEC. 203. PROVISIONS RELATING TO EXPERIMENTAL AND 
NEW PRODUCTS. 
Subchapter III of chapter 36 of title 39, United States 
Code, is amended to read as follows: 
‘‘SUBCHAPTER III—PROVISIONS RELATING TO 
EXPERIMENTAL AND NEW PRODUCTS 
‘‘§ 3641. Market tests of experimental products 
‘‘(a) AUTHORITY.— 
‘‘(1) IN GENERAL.—The Postal Service may con-
duct market tests of experimental products in accord-
ance 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, sig-
nificantly 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 advan-
tage 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 com-
petitive, consistent with the criteria under section 
3642(b)(1). Costs and revenues attributable to a prod-
uct identified as competitive shall be included in any 
determination under section 3633(3) (relating to pro-
visions applicable to competitive products collec-
tively). 
‘‘(c) NOTICE.—
‘‘(1) IN GENERAL.—At least 30 days before initi-
ating a market test under this section, the Postal 
Service shall file with the Postal Regulatory Commis-
sion 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 experi-
mental 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 publi-
cation 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 applica-
tion of the Postal Service (filed not later than 60 days 
before the date as of which the testing of such product 
would otherwise be scheduled to terminate under 
paragraph (1)), extend the testing of such product for 
not to exceed an additional 12 months. 
‘‘(e) DOLLAR-AMOUNT LIMITATION.— 
‘‘(1) IN
GENERAL.—A product may be tested 
under this section only if the total revenues that are 
anticipated, or in fact received, by the Postal Service 
from such product do not exceed $10,000,000 nation-
wide in any year, subject to paragraph (2) and sub-
section (g). In carrying out the preceding sentence, 
the Postal Regulatory Commission may limit the 
amount of revenues the Postal Service may obtain 
from any particular geographic market as necessary 
to prevent market disruption (as defined in subsection 
(b)(2)). 
‘‘(2) EXEMPTION AUTHORITY.—The Postal Regu-
latory 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 appli-
cation under this paragraph, the Postal Regulatory 
Commission shall approve such application if it de-
termines that— 
‘‘(A) the product is likely to benefit the pub-
lic 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 Com-
mission at any time determines that a market test under 
this section fails, with respect to any particular product, 
to meet one or more of the requirements of this section, it 
may order the cancellation of the test involved or take such 
other action as it considers appropriate. A determination 
under this subsection shall be made in accordance with such 
procedures as the Commission shall by regulation prescribe. 
‘‘(g) ADJUSTMENT FOR INFLATION.—For purposes of 
each year following the year in which occurs the deadline 
for the Postal Service’s first report to the Postal Regulatory 
Commission under section 3652(a), each dollar amount con-
tained 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 oth-
erwise categorizing business concerns as small business con-
cerns 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 sub-
chapter may be conducted in any year beginning with the 
first year in which occurs the deadline for the Postal Serv-
ice’s first report to the Postal Regulatory Commission under 
section 3652(a). 
‘‘§ 3642. New products and transfers of products be-
tween the market-dominant and competi-
tive 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-dom-
inant products under section 3621 and the list of competi-
tive 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 Reg-
ulatory 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 substan-
tially above costs, raise prices significantly, decrease 
quality, or decrease output, without risk of losing 
business to other firms offering similar products. The 
competitive category of products shall consist of all 
other products. 
‘‘(2) EXCLUSION
OF
PRODUCTS
COVERED
BY 
POSTAL MONOPOLY.—A product covered by the postal 
monopoly shall not be subject to transfer under this 
section from the market-dominant category of mail. 
For purposes of the preceding sentence, the term 
‘product covered by the postal monopoly’ means any 
product the conveyance or transmission of which is 
reserved to the United States under section 1696 of 
title 18, subject to the same exception as set forth in 
the last sentence of section 409(e)(1). 
‘‘(3) ADDITIONAL CONSIDERATIONS.—In making 
any decision under this section, due regard shall be 
given to—
‘‘(A) the availability and nature of enter-
prises in the private sector engaged in the deliv-
ery 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 ac-
tion on small business concerns (within the 
meaning of section 3641(h)). 
‘‘(c) TRANSFERS OF SUBCLASSES AND OTHER SUBOR-
DINATE 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 re-
quirements standing alone). 
‘‘(d) NOTIFICATION
AND
PUBLICATION
REQUIRE-
MENTS.— 
‘‘(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 competi-
tive category of mail, that the product meets the regu-
lations promulgated by the Postal Regulatory Com-
mission pursuant to section 3633. The provisions of 
section 504(g) shall be available with respect to any 
information required to be filed. 
‘‘(2) PUBLICATION
REQUIREMENT.—The Postal 
Regulatory Commission shall, whenever it changes the 
list of products in the market-dominant or competi-
tive category of mail, prescribe new lists of products. 
The revised lists shall indicate how and when any 
previous lists (including the lists under sections 3621 
and 3631) are superseded, and shall be published in 
the Federal Register. 
‘‘(e) NOTIFICATION REQUIREMENT.—The Postal Regu-
latory Commission shall, whenever it reaches a conclusion 
that a product or products should be transferred between 
the list of market-dominant products under section 3621 
and the list of competitive products under section 3631, im-
mediately notify the appropriate committees of the Con-
gress. No such transfer may take effect less than 12 months 
after such conclusion. 
‘‘(f) PROHIBITION.—Except as provided in section 
3641, no product that involves the carriage of letters, print-
ed matter, or mailable packages may be offered by the Post-
al Service unless it has been assigned to the market-domi-
nant or competitive category of mail (as appropriate) ei-
ther— 
‘‘(1) under this subchapter; or 
‘‘(2) by or under any other provision of law.’’. 
SEC. 204. REPORTING REQUIREMENTS AND RELATED PRO-
VISIONS. 
(a) REDESIGNATION.—Chapter 36 of title 39, United 
States Code (as in effect before the amendment made by sub-
section (b)) is amended by striking the heading for sub-
chapter IV and inserting the following: 
‘‘SUBCHAPTER V—POSTAL SERVICES, 
COMPLAINTS, AND JUDICIAL REVIEW’’. 
(b) REPORTS AND COMPLIANCE.—Chapter 36 of title 
39, United States Code, is amended by inserting after sub-
chapter III the following: 
‘‘SUBCHAPTER IV—REPORTING REQUIREMENTS 
AND RELATED PROVISIONS 
‘‘§ 3651. Annual reports by the Commission 
‘‘(a) IN GENERAL.—The Postal Regulatory Commis-
sion shall submit an annual report to the President and 
the Congress concerning the operations of the Commission 
under this title, including the extent to which regulations
are achieving the objectives under sections 3622 and 3633, 
respectively. 
‘‘(b) ADDITIONAL INFORMATION.—In addition to the 
information required under subsection (a), each report 
under this section shall also include, with respect to the pe-
riod covered by such report, an estimate of the costs in-
curred by the Postal Service in providing— 
‘‘(1) postal services to areas of the Nation where, 
in the judgment of the Postal Regulatory Commission, 
the Postal Service either would not provide services at 
all or would not provide such services in accordance 
with the requirements of this title if the Postal Service 
were not required to provide prompt, reliable, and ef-
ficient services to patrons in all areas and all com-
munities, including as required under the first sen-
tence of section 101(b); 
‘‘(2) free or reduced rates for postal services as 
required by this title; and 
‘‘(3) other public services or activities which, in 
the judgment of the Postal Regulatory Commission, 
would not otherwise have been provided by the Postal 
Service but for the requirements of law. 
The Commission shall detail the bases for its estimates and 
the statutory requirements giving rise to the costs identified 
in each report under this section.
‘‘(c) INFORMATION
FROM
POSTAL
SERVICE.—The 
Postal Service shall provide the Postal Regulatory Commis-
sion with such information as may, in the judgment of the 
Commission, be necessary in order for the Commission to 
prepare its reports under this section. 
‘‘§ 3652. Annual reports to the Commission 
‘‘(a) COSTS, REVENUES, AND RATES.—Except as pro-
vided in subsection (c), the Postal Service shall, no later 
than 90 days after the end of each year, prepare and submit 
to the Postal Regulatory Commission a report (together 
with such nonpublic annex thereto as the Commission may 
require under subsection (e))— 
‘‘(1) which shall analyze costs, revenues, and 
rates, using such methodologies as the Commission 
shall by regulation prescribe, and in sufficient detail 
to demonstrate that the rates in effect for all products 
during such year complied with all applicable re-
quirements of this title; and 
‘‘(2) which shall, for each market-dominant 
product provided in such year, provide— 
‘‘(A) market information, including mail 
volumes; and 
‘‘(B) measures of the quality of service af-
forded by the Postal Service in connection with 
such product, including—
‘‘(i) the service standard applicable to 
such product; 
‘‘(ii) the level of service (described in 
terms of speed of delivery and reliability) 
provided; and 
‘‘(iii) the degree of customer satisfac-
tion with the service provided. 
Before submitting a report under this subsection (including 
any annex thereto and the information required under sub-
section (b)), the Postal Service shall have the information 
contained in such report (and annex) audited by the Inspec-
tor General. The results of any such audit shall be submitted 
along with the report to which it pertains. 
‘‘(b) INFORMATION RELATING TO WORKSHARE DIS-
COUNTS.— 
‘‘(1) IN GENERAL.—The Postal Service shall in-
clude, in each report under subsection (a), the fol-
lowing information with respect to each market-domi-
nant product for which a workshare discount was in 
effect during the period covered by such report: 
‘‘(A) The per-item cost avoided by the Post-
al Service by virtue of such discount. 
‘‘(B) The percentage of such per-item cost 
avoided that the per-item workshare discount 
represents.
‘‘(C) The per-item contribution made to in-
stitutional costs. 
‘‘(2) WORKSHARE
DISCOUNT
DEFINED.—For 
purposes of this subsection, the term ‘workshare dis-
count’ refers to presorting, barcoding, dropshipping, 
and other similar discounts, as further defined under 
regulations which the Postal Regulatory Commission 
shall prescribe. 
‘‘(c) MARKET TESTS.—In carrying out subsections (a) 
and (b) with respect to experimental products offered 
through market tests under section 3641 in a year, the Post-
al Service— 
‘‘(1) may report summary data on the costs, rev-
enues, and quality of service by market test; and 
‘‘(2) shall report such data as the Postal Regu-
latory Commission requires. 
‘‘(d) SUPPORTING MATTER.—The Postal Regulatory 
Commission shall have access, in accordance with such reg-
ulations as the Commission shall prescribe, to the working 
papers and any other supporting matter of the Postal Serv-
ice and the Inspector General in connection with any infor-
mation submitted under this section. 
‘‘(e) CONTENT AND FORM OF REPORTS.— 
‘‘(1) IN GENERAL.—The Postal Regulatory Com-
mission shall, by regulation, prescribe the content and
form of the public reports (and any nonpublic annex 
and supporting matter relating thereto) to be pro-
vided by the Postal Service under this section. In car-
rying out this subsection, the Commission shall give 
due consideration to— 
‘‘(A) providing the public with adequate in-
formation 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 com-
mercially sensitive information. 
‘‘(2) REVISED
REQUIREMENTS.—The Commis-
sion may, on its own motion or on request of an in-
terested 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 deter-
mines that any document or portion of a document, 
or other matter, which it provides to the Postal Regu-
latory Commission in a nonpublic annex under this 
section or pursuant to subsection (d) contains infor-
mation 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 confiden-
tiality is sought and the reasons therefor. 
‘‘(2) TREATMENT.—Any information or other 
matter described in paragraph (1) to which the Com-
mission gains access under this section shall be sub-
ject to paragraphs (2) and (3) of section 504(g) in the 
same way as if the Commission had received notifica-
tion with respect to such matter under section 
504(g)(1). 
‘‘(g) OTHER REPORTS.—The Postal Service shall sub-
mit to the Postal Regulatory Commission, together with any 
other submission that it is required to make under this sec-
tion in a year, copies of its then most recent— 
‘‘(1) comprehensive statement under section 
2401(e); 
‘‘(2) performance plan under section 2803; and 
‘‘(3) program performance reports under section 
2804. 
‘‘§ 3653. Annual determination of compliance 
‘‘(a) OPPORTUNITY FOR PUBLIC COMMENT.—After re-
ceiving 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 NONCOMPLI-
ANCE.—Not later than 90 days after receiving the submis-
sions required under section 3652 with respect to a year, 
the Postal Regulatory Commission shall make a written de-
termination as to—
‘‘(1) whether any rates or fees in effect during 
such year (for products individually or collectively) 
were not in compliance with applicable provisions of 
this chapter (or regulations promulgated thereunder); 
‘‘(2) whether any performance goals established 
under section 2803 or 2804 for such year were not 
met; and 
‘‘(3) whether any market-dominant product 
failed to meet any service standard during such year. 
If, with respect to a year, no instance of noncompliance 
is found under this subsection to have occurred in such year, 
the written determination shall be to that effect. 
‘‘(c) IF ANY NONCOMPLIANCE IS FOUND.—If, for a 
year, a timely written determination of noncompliance is 
made under subsection (b), the Postal Regulatory Commis-
sion shall take appropriate action in accordance with sub-
sections (c)–(e) of section 3662 (as if a complaint averring 
such noncompliance had been duly filed and found under 
such section to be justified). 
‘‘(d) REBUTTABLE PRESUMPTION.—A timely written 
determination described in the last sentence of subsection 
(b) shall, for purposes of any proceeding under section 3662, 
create a rebuttable presumption of compliance by the Postal 
Service (with regard to the matters described in paragraphs
(1) through (3) of subsection (b)) during the year to which 
such determination relates.’’. 
SEC. 205. COMPLAINTS; APPELLATE REVIEW AND ENFORCE-
MENT. 
Chapter 36 of title 39, United States Code, is amended 
by striking sections 3662 and 3663 and inserting the fol-
lowing: 
‘‘§ 3662. Rate and service complaints 
‘‘(a) IN GENERAL.—Interested persons (including an 
officer of the Postal Regulatory Commission representing 
the interests of the general public) who believe the Postal 
Service is not operating in conformance with the require-
ments of chapter 1, 4, or 6, or this chapter (or regulations 
promulgated under any of those chapters) may lodge a com-
plaint 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 Com-
mission shall, within 90 days after receiving a com-
plaint under subsection (a), either— 
‘‘(A) begin proceedings on such complaint; 
or 
‘‘(B) issue an order dismissing the com-
plaint (together with a statement of the reasons 
therefor).
‘‘(2) TREATMENT OF COMPLAINTS NOT TIMELY 
ACTED ON.—For purposes of section 3663, any com-
plaint under subsection (a) on which the Commission 
fails to act in the time and manner required by para-
graph (1) shall be treated in the same way as if it 
had been dismissed pursuant to an order issued by 
the Commission on the last day allowable for the 
issuance of such order under paragraph (1). 
‘‘(c) ACTION REQUIRED IF COMPLAINT FOUND TO BE 
JUSTIFIED.—If the Postal Regulatory Commission finds the 
complaint to be justified, it shall order that the Postal Serv-
ice take such action as the Commission considers appro-
priate in order to achieve compliance with the applicable 
requirements and to remedy the effects of any noncompli-
ance (such as ordering unlawful rates to be adjusted to law-
ful levels, ordering the cancellation of market tests, ordering 
the Postal Service to discontinue providing loss-making 
products, or requiring the Postal Service to make up for 
revenue shortfalls in competitive products). 
‘‘(d) SUSPENSION AUTHORITY.—The Postal Regu-
latory Commission may suspend implementation of rates 
or classifications under section 3632(b)(3) for a limited pe-
riod of time pending expedited proceedings under this sec-
tion. In evaluating whether circumstances warrant suspen-
sion, the Commission shall consider factors such as (1)
whether there is a substantial likelihood that such rate or 
classification will violate the requirements of chapter 1, 4, 
or 6, or this chapter (or regulations promulgated under any 
of those chapters), (2) whether any persons would suffer sub-
stantial injury, loss, or damage absent a suspension, (3) 
whether the Postal Service or any other persons would suffer 
substantial injury, loss, or damage under a suspension, and 
(4) the public interest. 
‘‘(e) AUTHORITY TO ORDER FINES IN CASES OF DE-
LIBERATE NONCOMPLIANCE.—In addition, in cases of delib-
erate noncompliance by the Postal Service with the require-
ments of this title, the Postal Regulatory Commission may 
order, based on the nature, circumstances, extent, and seri-
ousness of the noncompliance, a fine (in the amount speci-
fied by the Commission in its order) for each incidence of 
noncompliance. Fines resulting from the provision of com-
petitive products shall be paid out of the Competitive Prod-
ucts Fund established in section 2011. All receipts from 
fines imposed under this subsection shall be deposited in 
the general fund of the Treasury of the United States. 
‘‘§ 3663. Appellate review 
‘‘A person adversely affected or aggrieved by a final 
order or decision of the Postal Regulatory Commission may, 
within 30 days after such order or decision becomes final, 
institute proceedings for review thereof by filing a petition
in the United States Court of Appeals for the District of 
Columbia. The court shall review the order or decision in 
accordance with section 706 of title 5, and chapter 158 and 
section 2112 of title 28, on the basis of the record before 
the Commission. For purposes of this section, the term ‘per-
son’ includes the Postal Service. 
‘‘§ 3664. Enforcement of orders 
‘‘The several district courts have jurisdiction specifi-
cally to enforce, and to enjoin and restrain the Postal Serv-
ice from violating, any order issued by the Postal Regu-
latory Commission.’’. 
SEC. 206. WORKSHARE DISCOUNTS. 
(a) IN GENERAL.—Title 39, United States Code, is 
amended by adding after section 3686 (as added by section 
406) the following: 
‘‘§ 3687. Workshare discounts 
‘‘(a) IN GENERAL.—As part of the regulations estab-
lished under section 3622(a), the Postal Regulatory Com-
mission shall establish rules for workshare discounts that 
ensure that workshare discounts do not exceed the cost that 
the Postal Service avoids as the result of private sector 
workshare activity, except— 
‘‘(1) where the discount is associated with a new 
product or service or with a change to an existing 
product or service and is necessary, over a period of
time not to exceed 4 years, to induce mailer behavior 
that will enable the new or changed product or service 
in furtherance of the overall economically efficient op-
eration of the Postal Service; 
‘‘(2) to the extent that a reduction in the dis-
count would lead to a loss of volume in the affected 
category and reduce the aggregate contribution to in-
stitutional costs of the Postal Service, from the mail 
matter subject to the discount, below what it otherwise 
would have been if the discount had not been reduced 
to costs avoided; would result in a further increase in 
the rates paid by mailers not able to take advantage 
of the discount; or would impede the efficient oper-
ation of the Postal Service; 
‘‘(3) where the amount of the discount above 
costs avoided is necessary to mitigate rate shock and 
will be phased out over time; or 
‘‘(4) where the workshare discount is provided in 
connection with subclasses of mail consisting exclu-
sively of mail matter of educational, cultural, or sci-
entific value. 
‘‘(b) REPORTING REQUIREMENT.—Whenever the Post-
al Service establishes or maintains a workshare discount, 
the Postal Service shall, at the time it publishes the 
workshare discount rate, file with the Postal Regulatory
Commission a detailed report and explanation of its rea-
sons for establishing or maintaining the rate, setting forth 
the data, economic analyses, and other information relied 
on by the Postal Service to justify the rate. 
‘‘(c) DEFINITION.—For purposes of this section, the 
term ‘workshare discount’ refers to rate discounts provided 
to mailers for presorting, prebarcoding, handling, or trans-
portation, as further defined by the Postal Regulatory Com-
mission as part of regulations established under section 
3622(a).’’. 
(b) CLERICAL AMENDMENT.—The analysis for chapter 
36 of title 39, United States Code (as amended by section 
207) is amended by adding after the item relating to section 
3686 the following: 
‘‘3687. Workshare discounts.’’. 
SEC. 207. CLERICAL AMENDMENT. 
Chapter 36 of title 39, United States Code, is amended 
by striking the heading and analysis for such chapter and 
inserting the following: 
‘‘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.’’. 
TITLE III—PROVISIONS RELAT-
ING TO FAIR COMPETITION 
SEC. 301. POSTAL SERVICE COMPETITIVE PRODUCTS FUND. 
(a) PROVISIONS RELATING TO POSTAL SERVICE COM-
PETITIVE PRODUCTS FUND AND RELATED MATTERS.— 
(1) IN GENERAL.—Chapter 20 of title 39, United 
States Code, is amended by adding at the end the fol-
lowing:
‘‘§ 2011. Provisions relating to competitive products 
‘‘(a) There is established in the Treasury of the United 
States a revolving fund, to be called the Postal Service Com-
petitive Products Fund, which shall be available to the Post-
al Service without fiscal year limitation for the payment 
of— 
‘‘(1) costs attributable to competitive products; 
and 
‘‘(2) all other costs incurred by the Postal Serv-
ice, to the extent allocable to competitive products. 
For purposes of this subsection, the term ‘costs attributable’ 
has the meaning given such term by section 3631. 
‘‘(b) There shall be deposited in the Competitive Prod-
ucts Fund, subject to withdrawal by the Postal Service— 
‘‘(1) revenues from competitive products; 
‘‘(2) amounts received from obligations issued by 
the Postal Service under subsection (e); 
‘‘(3) interest and dividends earned on invest-
ments of the Competitive Products Fund; and 
‘‘(4) any other receipts of the Postal Service (in-
cluding from the sale of assets), to the extent allocable 
to competitive products. 
‘‘(c) If the Postal Service determines that the moneys 
of the Competitive Products Fund are in excess of current 
needs, it may invest such amounts as it considers appro-
priate in—
‘‘(1) obligations of, or obligations guaranteed by, 
the Government of the United States; and 
‘‘(2) in accordance with regulations which the 
Secretary of the Treasury shall prescribe (by not later 
than 18 months after the date of the enactment of the 
Postal Accountability and Enhancement Act), such 
other obligations or securities as it deems appro-
priate. 
‘‘(d) The Postal Service may, in its sole discretion, 
provide that moneys of the Competitive Products Fund be 
deposited in a Federal Reserve bank or a depository for 
public funds. 
‘‘(e)(1) Subject to the limitations specified in section 
2005(a), the Postal Service is authorized to borrow money 
and to issue and sell such obligations as it determines nec-
essary to provide for competitive products and deposit such 
amounts in the Competitive Products Fund, except that the 
Postal Service may pledge only assets related to the provi-
sion of competitive products (as determined under sub-
section (h) or, for purposes of any period before accounting 
practices and principles under subsection (h) have been es-
tablished and applied, the best information available from 
the Postal Service, including the audited statements re-
quired by section 2008(e)), and the revenues and receipts 
from such products, for the payment of the principal of or
interest on such obligations, for the purchase or redemption 
thereof, and for other purposes incidental thereto, including 
creation of reserve, sinking, and other funds which may be 
similarly pledged and used, to such extent and in such man-
ner as it deems necessary or desirable. 
‘‘(2) The Postal Service may enter into binding cov-
enants with the holders of such obligations, and with the 
trustee, if any, under any agreement entered into in connec-
tion with the issuance thereof with respect to— 
‘‘(A) the establishment of reserve, sinking, and 
other funds; 
‘‘(B) application and use of revenues and re-
ceipts 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 mar-
ketability of such obligations. 
‘‘(3) Obligations issued by the Postal Service under 
this subsection— 
‘‘(A) may not be purchased by the Secretary of 
the Treasury;
‘‘(B) shall not be exempt either as to principal 
or interest from any taxation now or hereafter im-
posed by any State or local taxing authority; 
‘‘(C) shall not be obligations of, nor shall pay-
ment of the principal thereof or interest thereon be 
guaranteed by, the Government of the United States, 
and the obligations shall so plainly state; and 
‘‘(D) notwithstanding the provisions of the Fed-
eral Financing Bank Act of 1973 or any other provi-
sion of law (except as specifically provided by ref-
erence to this subparagraph in a law enacted after 
this subparagraph takes effect), shall not be eligible 
for purchase by, commitment to purchase by, or sale 
or issuance to, the Federal Financing Bank. 
‘‘(4)(A) This paragraph applies with respect to the pe-
riod beginning on the date of the enactment of this para-
graph and ending at the close of the 5-year period which 
begins on the date on which the Postal Service makes its 
submission under subsection (h)(1). 
‘‘(B) During the period described in subparagraph (A), 
nothing in subparagraph (A) or (D) of paragraph (3) or 
the last sentence of section 2006(b) shall, with respect to 
any obligations sought to be issued by the Postal Service 
under this subsection, be considered to affect such obliga-
tions’ eligibility for purchase by, commitment to purchase 
by, or sale or issuance to, the Federal Financing Bank. 
‘‘(C) The Federal Financing Bank may elect to pur-
chase such obligations under such terms, including rates of 
interest, as the Bank and the Postal Service may agree, but 
at a rate of yield no less than the prevailing yield on out-
standing marketable securities of comparable maturity 
issued by entities with the same credit rating as the rating 
then most recently obtained by the Postal Service under sub-
paragraph (D), as determined by the Bank. 
‘‘(D) In order to be eligible to borrow under this para-
graph, the Postal Service shall first obtain a credit rating 
from a nationally recognized credit rating organization. 
Such rating— 
‘‘(i) shall be determined taking into account only 
those assets and activities of the Postal Service which 
are described in section 3634(a)(2) (relating to the 
Postal Service’s assumed taxable income from com-
petitive products); and 
‘‘(ii) may, before final rules of the Postal Regu-
latory Commission under subsection (h) are issued (or 
deemed to have been issued), be based on the best in-
formation available from the Postal Service, includ-
ing the audited statements required by section 
2008(e).
‘‘(f) The receipts and disbursements of the Competitive 
Products Fund shall be accorded the same budgetary treat-
ment as is accorded to receipts and disbursements of the 
Postal Service Fund under section 2009a. 
‘‘(g) A judgment against the Postal Service or the Gov-
ernment of the United States (or settlement of a claim) 
shall, to the extent that it arises out of activities of the Post-
al Service in the provision of competitive products, be paid 
out of the Competitive Products Fund. 
‘‘(h)(1) The Secretary of the Treasury, in consultation 
with the Postal Service and an independent, certified public 
accounting firm and such other advisors as the Secretary 
considers appropriate, shall develop recommendations re-
garding— 
‘‘(A) the accounting practices and principles that 
should be followed by the Postal Service with the ob-
jectives of (i) identifying and valuing the assets and 
liabilities of the Postal Service associated with pro-
viding, and the capital and operating costs incurred 
by the Postal Service in providing, competitive prod-
ucts, and (ii) preventing the subsidization of such 
products by market-dominant products; and 
‘‘(B) the substantive and procedural rules that 
should be followed in determining the Postal Service’s 
assumed Federal income tax on competitive products
income for any year (within the meaning of section 
3634). 
Such recommendations shall be submitted to the Postal Reg-
ulatory Commission no earlier than 6 months, and no later 
than 12 months, after the effective date of this section. 
‘‘(2)(A) Upon receiving the recommendations of the 
Secretary of the Treasury under paragraph (1), the Com-
mission 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 rec-
ommendations through submission of written data, views, 
or arguments with or without opportunity for oral presen-
tation, or in such other manner as the Commission con-
siders appropriate. 
‘‘(B) After due consideration of the views and other 
information received under subparagraph (A), the Commis-
sion shall by rule— 
‘‘(i) provide for the establishment and applica-
tion of the accounting practices and principles which 
shall be followed by the Postal Service; 
‘‘(ii) provide for the establishment and applica-
tion of the substantive and procedural rules described 
in paragraph (1)(B); and
‘‘(iii) provide for the submission by the Postal 
Service to the Postal Regulatory Commission of an-
nual and other periodic reports setting forth such in-
formation as the Commission may require. 
Final rules under this subparagraph shall be issued not 
later than 12 months after the date on which the Secretary 
of the Treasury makes his submission to the Commission 
under paragraph (1) (or by such later date as the Commis-
sion and the Postal Service may agree to). The Commission 
is authorized to promulgate regulations revising such rules. 
‘‘(C) Reports described in subparagraph (B)(iii) shall 
be submitted at such time and in such form, and shall in-
clude such information, as the Commission by rule requires. 
The Commission may, on its own motion or on request of 
an interested party, initiate proceedings (to be conducted 
in accordance with such rules as the Commission shall pre-
scribe) to improve the quality, accuracy, or completeness of 
Postal Service data under such subparagraph whenever it 
shall appear that— 
‘‘(i) the quality of the information furnished in 
those reports has become significantly inaccurate or 
can be significantly improved; or 
‘‘(ii) such revisions are, in the judgment of the 
Commission, otherwise necessitated by the public in-
terest.
‘‘(D) A copy of each report described in subparagraph 
(B)(iii) shall also be transmitted by the Postal Service to 
the Secretary of the Treasury and the Inspector General of 
the United States Postal Service. 
‘‘(i) The Postal Service shall render an annual report 
to the Secretary of the Treasury concerning the operation 
of the Competitive Products Fund, in which it shall address 
such matters as risk limitations, reserve balances, allocation 
or distribution of moneys, liquidity requirements, and 
measures to safeguard against losses. A copy of its then most 
recent report under this subsection shall be included with 
any other submission that it is required to make to the Post-
al Regulatory Commission under section 3652(g).’’. 
(2) CLERICAL
AMENDMENT.—The analysis for 
chapter 20 of title 39, United States Code, is amended 
by adding after the item relating to section 2010 the 
following: 
‘‘2011. Provisions relating to competitive products.’’. 
(b) TECHNICAL AND CONFORMING AMENDMENTS.— 
(1) DEFINITION.—Section 2001 of title 39, 
United States Code, is amended by striking ‘‘and’’ at 
the end of paragraph (1), by redesignating paragraph 
(2) as paragraph (3), and by inserting after para-
graph (1) the following:
‘‘(2) ‘Competitive Products Fund’ means the 
Postal Service Competitive Products Fund established 
by section 2011; and’’. 
(2) CAPITAL OF THE POSTAL SERVICE.—Section 
2002(b) of title 39, United States Code, is amended 
by striking ‘‘Fund,’’ and inserting ‘‘Fund and the 
balance in the Competitive Products Fund,’’. 
(3) POSTAL SERVICE FUND.— 
(A) PURPOSES FOR WHICH AVAILABLE.— 
Section 2003(a) of title 39, United States Code, 
is amended by striking ‘‘title.’’ and inserting 
‘‘title (other than any of the purposes, functions, 
or powers for which the Competitive Products 
Fund is available).’’. 
(B) DEPOSITS.—Section 2003(b) of title 39, 
United States Code, is amended by striking 
‘‘There’’ and inserting ‘‘Except as otherwise pro-
vided in section 2011, there’’. 
(4) RELATIONSHIP
BETWEEN
THE
TREASURY 
AND THE POSTAL SERVICE.—Section 2006 of title 39, 
United States Code, is amended— 
(A) in subsection (b), by adding at the end 
the following: ‘‘Nothing in this chapter shall be 
considered to permit or require the Secretary of 
the Treasury to purchase any obligations of the
Postal Service other than those issued under sec-
tion 2005.’’; and 
(B) in subsection (c), by inserting ‘‘under 
section 2005’’ before ‘‘shall be obligations’’. 
SEC. 302. ASSUMED FEDERAL INCOME TAX ON COMPETI-
TIVE PRODUCTS INCOME. 
Subchapter II of chapter 36 of title 39, United States 
Code, as amended by section 202, is amended by adding 
at the end the following: 
‘‘§ 3634. Assumed Federal income tax on competitive 
products income 
‘‘(a) DEFINITIONS.—For purposes of this section— 
‘‘(1) the term ‘assumed Federal income tax on 
competitive products income’ means the net income 
tax that would be imposed by chapter 1 of the Inter-
nal Revenue Code of 1986 on the Postal Service’s as-
sumed taxable income from competitive products for 
the year; and 
‘‘(2) the term ‘assumed taxable income from com-
petitive products’, with respect to a year, refers to the 
amount representing what would be the taxable in-
come 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 corpora-
tion were the assets of the Postal Service allo-
cable 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 sec-
tion 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 re-
quired to be made under this section for a year shall be 
due on or before the January 15th next occurring after the 
close of such year.’’. 
SEC. 303. UNFAIR COMPETITION PROHIBITED. 
(a) SPECIFIC LIMITATIONS.—Chapter 4 of title 39, 
United States Code, is amended by adding after section 404 
the following:
‘‘§ 404a. Specific Limitations 
‘‘(a) Except as specifically authorized by law, the Post-
al Service may not— 
‘‘(1) establish any rule or regulation (including 
any standard) the effect of which is to preclude com-
petition 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 pro-
vides (or seeks to provide) any product, and then offer 
any product or service that uses or is based in whole 
or in part on such information, without the consent 
of the person providing that information, unless sub-
stantially the same information is obtained (or ob-
tainable) 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 Commis-
sion representing the interests of the general public) who
believes that the Postal Service has violated this section may 
bring a complaint in accordance with section 3662.’’. 
(b) CONFORMING AMENDMENTS.— 
(1) GENERAL POWERS.—Section 401 of title 39, 
United States Code, is amended by striking ‘‘The’’ 
and inserting ‘‘Subject to the provisions of section 
404a, the’’. 
(2) SPECIFIC POWERS.—Section 404(a) of title 
39, United States Code, is amended by striking 
‘‘Without’’ and inserting ‘‘Subject to the provisions of 
section 404a, but otherwise without’’. 
(c) CLERICAL AMENDMENT.—The analysis for chapter 
4 of title 39, United States Code, is amended by inserting 
after the item relating to section 404 the following: 
‘‘404a. Specific limitations.’’. 
SEC. 304. SUITS BY AND AGAINST THE POSTAL SERVICE. 
(a) IN GENERAL.—Section 409 of title 39, United 
States Code, is amended by striking subsections (d) and (e) 
and inserting the following: 
‘‘(d)(1) For purposes of the provisions of law cited in 
paragraphs (2)(A) and (2)(B), respectively, the Postal Serv-
ice— 
‘‘(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 doc-
trine 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 com-
petitive product, the Postal Service or other Federal agency 
(as the case may be)— 
‘‘(A) shall not be immune under any doctrine of 
sovereign immunity from suit in Federal court by 
any person for any violation of Federal law by such 
agency or any officer or employee thereof; and 
‘‘(B) shall be considered to be a person (as de-
fined in subsection (a) of the first section of the Clay-
ton Act) for purposes of— 
‘‘(i) the antitrust laws (as defined in such 
subsection); and
‘‘(ii) section 5 of the Federal Trade Com-
mission Act to the extent that such section 5 ap-
plies to unfair methods of competition. 
‘‘(2) No damages, interest on damages, costs or attor-
ney’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 Fed-
eral agency acting on behalf of or in concert with the Postal 
Service, acting in an official capacity. 
‘‘(3) This subsection shall not apply with respect to 
conduct occurring before the date of the enactment of this 
subsection. 
‘‘(f)(1) Each building constructed or altered by the 
Postal Service shall be constructed or altered, to the max-
imum extent feasible as determined by the Postal Service, 
in compliance with one of the nationally recognized model 
building codes and with other applicable nationally recog-
nized codes. 
‘‘(2) Each building constructed or altered by the Postal 
Service shall be constructed or altered only after consider-
ation of all requirements (other than procedural require-
ments) of zoning laws, land use laws, and applicable envi-
ronmental laws of a State or subdivision of a State which 
would apply to the building if it were not a building con-
structed or altered by an establishment of the Government 
of the United States. 
‘‘(3) For purposes of meeting the requirements of para-
graphs (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 lo-
cated; 
‘‘(B) upon request, submit such plans in a time-
ly 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 accord-
ance 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 construc-
tion 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, car-
rying out on-site inspections, issuing building permits, and 
making recommendations). 
‘‘(4) Appropriate officials of a State or a political sub-
division of a State may make recommendations to the Post-
al Service concerning measures necessary to meet the re-
quirements of paragraphs (1) and (2). Such officials may 
also make recommendations to the Postal Service con-
cerning measures which should be taken in the construction 
or alteration of the building to take into account local con-
ditions. 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 estab-
lish procedures for soliciting, assessing, and incorporating 
local community input on real property and land use deci-
sions. 
‘‘(6) For purposes of this subsection, the term ‘State’ 
includes the District of Columbia, the Commonwealth of 
Puerto Rico, and a territory or possession of the United 
States.
‘‘(g)(1) Notwithstanding any other provision of law, 
legal representation may not be furnished by the Depart-
ment 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 pre-
cluded 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, fur-
nish 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 litiga-
tion 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 pur-
pose. 
‘‘(h) A judgment against the Government of the United 
States arising out of activities of the Postal Service shall 
be paid by the Postal Service out of any funds available 
to the Postal Service, subject to the restriction specified in 
section 2011(g).’’. 
(b) TECHNICAL AMENDMENT.—Section 409(a) of title 
39, United States Code, is amended by striking ‘‘Except as 
provided in section 3628 of this title,’’ and inserting ‘‘Ex-
cept as otherwise provided in this title,’’. 
SEC. 305. INTERNATIONAL POSTAL ARRANGEMENTS. 
(a) IN GENERAL.—Section 407 of title 39, United 
States Code, is amended to read as follows: 
‘‘§ 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 serv-
ices for cultural, social, and economic purposes; 
‘‘(2) to promote and encourage unrestricted and 
undistorted competition in the provision of inter-
national postal services and other international deliv-
ery 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 distinc-
tion between governmental and operational respon-
sibilities with respect to the provision of international 
postal services and other international delivery serv-
ices by the Government of the United States and by 
intergovernmental organizations of which the United 
States is a member; and 
‘‘(4) to participate in multilateral and bilateral 
agreements with other countries to accomplish these 
objectives. 
‘‘(b)(1) The Secretary of State shall be responsible for 
formulation, coordination, and oversight of foreign policy 
related to international postal services and other inter-
national delivery services, and shall have the power to con-
clude treaties, conventions and amendments related to
international postal services and other international deliv-
ery services, except that the Secretary may not conclude any 
treaty, convention, or other international agreement (in-
cluding those regulating international postal services) if 
such treaty, convention, or agreement would, with respect 
to any competitive product, grant an undue or unreason-
able preference to the Postal Service, a private provider of 
international postal or delivery services, or any other per-
son. 
‘‘(2) In carrying out the responsibilities specified in 
paragraph (1), the Secretary of State shall exercise primary 
authority for the conduct of foreign policy with respect to 
international postal services and international delivery 
services, including the determination of United States posi-
tions and the conduct of United States participation in ne-
gotiations with foreign governments and international bod-
ies. In exercising this authority, the Secretary— 
‘‘(A) shall coordinate with other agencies as ap-
propriate, and in particular, shall give full consider-
ation to the authority vested by law or Executive 
order in the Postal Regulatory Commission, the De-
partment of Commerce, the Department of Transpor-
tation, and the Office of the United States Trade Rep-
resentative in this area;
‘‘(B) shall maintain continuing liaison with 
other executive branch agencies concerned with postal 
and delivery services; 
‘‘(C) shall maintain continuing liaison with the 
Committee on Government Reform of the House of 
Representatives and the Committee on Governmental 
Affairs of the Senate; 
‘‘(D) shall maintain appropriate liaison with 
both representatives of the Postal Service and rep-
resentatives of users and private providers of inter-
national postal services and other international deliv-
ery 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 applica-
ble, 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 sub-
paragraphs (A) through (D) of paragraph (2). 
‘‘(c)(1) Before concluding any treaty, convention, or 
amendment that establishes a rate or classification for a 
product subject to subchapter I of chapter 36, the Secretary 
of State shall request the Postal Regulatory Commission to 
submit a decision on whether such rate or classification is 
consistent with the standards and criteria established by the 
Commission under section 3622. 
‘‘(2) The Secretary shall ensure that each treaty, con-
vention, or amendment concluded under subsection (b) is 
consistent with a decision of the Commission adopted under 
paragraph (1), except if, or to the extent, the Secretary de-
termines, by written order, that considerations of foreign 
policy or national security require modification of the Com-
mission’s decision. 
‘‘(d) Nothing in this section shall be considered to pre-
vent the Postal Service from entering into such commercial 
or operational contracts related to providing international 
postal services and other international delivery services as 
it deems appropriate, except that— 
‘‘(1) any such contract made with an agency of 
a foreign government (whether under authority of this 
subsection or otherwise) shall be solely contractual in
nature and may not purport to be international law; 
and 
‘‘(2) a copy of each such contract between the 
Postal Service and an agency of a foreign government 
shall be transmitted to the Secretary of State and the 
Postal Regulatory Commission not later than the ef-
fective date of such contract. 
‘‘(e)(1) With respect to shipments of international mail 
that are competitive products within the meaning of section 
3631 that are exported or imported by the Postal Service, 
the Bureau of Customs and Border Protection of the De-
partment of Homeland Security and other appropriate 
Federal agencies shall apply the customs laws of the United 
States and all other laws relating to the importation or ex-
portation of such shipments in the same manner to both 
shipments by the Postal Service and similar shipments by 
private companies. 
‘‘(2) For purposes of this subsection, the term ‘private 
company’ means a private company substantially owned 
or controlled by persons who are citizens of the United 
States. 
‘‘(3) In exercising the authority pursuant to subsection 
(b) to conclude new treaties, conventions and amendments 
related to international postal services and to renegotiate 
such treaties, conventions and amendments, the Secretary
of State shall, to the maximum extent practicable, take such 
measures as are within the Secretary’s control to encourage 
the governments of other countries to make available to the 
Postal Service and private companies a range of non-
discriminatory 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 Represent-
ative and the Commissioner of Customs, Department of 
Homeland Security in carrying out this paragraph. 
‘‘(4) The provisions of this subsection shall take effect 
6 months after the date of the enactment of this subsection 
or such earlier date as the Bureau of Customs and Border 
Protection of the Department of Homeland Security may 
determine in writing.’’. 
(b) EFFECTIVE DATE.—Notwithstanding any provi-
sion of the amendment made by subsection (a), the author-
ity 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 avail-
able to the Postal Service until— 
(1) with respect to market-dominant products, 
the date as of which the regulations promulgated 
under section 3622 of title 39, United States Code (as 
amended by section 201(a)) take effect; and
(2) with respect to competitive products, the date 
as of which the regulations promulgated under section 
3633 of title 39, United States Code (as amended by 
section 202) take effect. 
SEC. 306. REDESIGNATION. 
Chapter 36 of title 39, United States Code (as in effect 
before the amendment made by section 204(a)) is amended 
by striking the heading for subchapter V and inserting the 
following: 
‘‘SUBCHAPTER VI—GENERAL’’. 
SEC. 307. CLARIFICATION. 
Section 403(c) of title 39, United States Code, is 
amended by adding after ‘‘user.’’ the following: ‘‘The prohi-
bition in this subsection shall not be construed to prevent 
the establishment of rates that vary with volume if such 
rates will be made available to similarly situated persons 
and will increase the aggregate contribution to the institu-
tional costs of the Postal Service.’’. 
TITLE IV—GENERAL PROVISIONS 
SEC. 
401. 
QUALIFICATION 
REQUIREMENTS 
FOR 
GOV-
ERNORS. 
(a) IN GENERAL.—Section 202(a) of title 39, United 
States Code, is amended by striking ‘‘(a)’’ and inserting 
‘‘(a)(1)’’ and by striking the fourth sentence and inserting 
the following: ‘‘The Governors shall represent the public in-
terest generally, and at least 4 of the Governors shall be 
chosen solely on the basis of their demonstrated ability in 
managing organizations or corporations (in either the pub-
lic or private sector) of substantial size; for purposes of this 
sentence, an organization or corporation shall be considered 
to be of substantial size if it employs at least 50,000 employ-
ees. The Governors shall not be representatives of specific 
interests using the Postal Service, and may be removed only 
for cause.’’. 
(b) CONSULTATION REQUIREMENT.—Section 202(a) of 
title 39, United States Code, is amended by adding at the 
end the following: 
‘‘(2) In selecting the individuals described in para-
graph (1) for nomination for appointment to the position 
of Governor, the President should consult with the Speaker 
of the House of Representatives, the minority leader of the 
House of Representatives, the majority leader of the Senate, 
and the minority leader of the Senate.’’. 
(c) RESTRICTION.—Section 202(b) of title 39, United 
States Code, is amended by striking ‘‘(b)’’ and inserting 
‘‘(b)(1)’’, and by adding at the end the following: 
‘‘(2)(A) Notwithstanding any other provision of this 
section, in the case of the office of the Governor the term 
of which is the first one scheduled to expire at least 4 
months after the date of the enactment of this paragraph—
‘‘(i) such office may not, in the case of any per-
son commencing service after that expiration date, be 
filled by any person other than an individual chosen 
from among persons nominated for such office with 
the unanimous concurrence of all labor organizations 
described in section 206(a)(1); and 
‘‘(ii) instead of the term that would otherwise 
apply under the first sentence of paragraph (1), the 
term of any person so appointed to such office shall 
be 3 years. 
‘‘(B) Except as provided in subparagraph (A), an ap-
pointment under this paragraph shall be made in conform-
ance with all provisions of this section that would otherwise 
apply.’’. 
(d) APPLICABILITY.—The amendment made by sub-
section (a) shall not affect the appointment or tenure of any 
person serving as a Governor of the Board of Governors of 
the United States Postal Service pursuant to an appoint-
ment made before the date of the enactment of this Act, or, 
except as provided in the amendment made by subsection 
(c), any nomination made before that date; however, when 
any such office becomes vacant, the appointment of any per-
son to fill that office shall be made in accordance with such 
amendment. The requirement set forth in the fourth sentence 
of section 202(a)(1) of title 39, United States Code (as
amended by subsection (a)) shall be met beginning not later 
than 9 years after the date of the enactment of this Act. 
SEC. 402. OBLIGATIONS. 
(a) PURPOSES FOR WHICH OBLIGATIONS MAY BE 
ISSUED.—The first sentence of section 2005(a)(1) of title 
39, United States Code, is amended by striking ‘‘title.’’ and 
inserting ‘‘title, other than any of the purposes for which 
the corresponding authority is available to the Postal Serv-
ice under section 2011.’’. 
(b) LIMITATION ON NET ANNUAL INCREASE IN OBLI-
GATIONS ISSUED FOR CERTAIN PURPOSES.—The third sen-
tence of section 2005(a)(1) of title 39, United States Code, 
is amended to read as follows: ‘‘In any one fiscal year, the 
net increase in the amount of obligations outstanding issued 
for the purpose of capital improvements and the net in-
crease in the amount of obligations outstanding issued for 
the purpose of defraying operating expenses of the Postal 
Service 
shall 
not 
exceed 
a 
combined 
total 
of 
$3,000,000,000.’’ . 
(c) LIMITATIONS ON OBLIGATIONS OUTSTANDING.— 
(1) IN GENERAL.—Subsection (a) of section 2005 
of title 39, United States Code, is amended by adding 
at the end the following: 
‘‘(3) For purposes of applying the respective limita-
tions under this subsection, the aggregate amount of obliga-
tions issued by the Postal Service which are outstanding 
as of any one time, and the net increase in the amount 
of obligations outstanding issued by the Postal Service for 
the purpose of capital improvements or for the purpose of 
defraying operating expenses of the Postal Service in any 
fiscal year, shall be determined by aggregating the relevant 
obligations issued by the Postal Service under this section 
with the relevant obligations issued by the Postal Service 
under section 2011.’’. 
(2) CONFORMING AMENDMENT.—The second sen-
tence of section 2005(a)(1) of title 39, United States 
Code, is amended by striking ‘‘any such obligations’’ 
and inserting ‘‘obligations issued by the Postal Serv-
ice which may be’’. 
(d) AMOUNTS WHICH MAY BE PLEDGED, ETC.— 
(1) 
OBLIGATIONS
TO
WHICH
PROVISIONS 
APPLY.—The first sentence of section 2005(b) of title 
39, United States Code, is amended by striking ‘‘such 
obligations,’’ and inserting ‘‘obligations issued by the 
Postal Service under this section,’’. 
(2) ASSETS, 
REVENUES, 
AND
RECEIPTS
TO 
WHICH PROVISIONS APPLY.—Subsection (b) of section 
2005 of title 39, United States Code, is amended by 
striking ‘‘(b)’’ and inserting ‘‘(b)(1)’’, and by adding 
at the end the following:
‘‘(2) Notwithstanding any other provision of this sec-
tion— 
‘‘(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 sec-
tion 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 relat-
ing to the pledging or other use of revenues or receipts 
of the Postal Service shall be available only to the ex-
tent that they are not revenues or receipts of the Com-
petitive Products Fund.’’. 
SEC. 403. PRIVATE CARRIAGE OF LETTERS. 
(a) IN GENERAL.—Section 601 of title 39, United 
States Code, is amended by striking subsection (b) and in-
serting 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 sin-
gle-piece first class letter; 
‘‘(2) the letter weighs at least 121⁄2 ounces; or 
‘‘(3) such carriage is within the scope of services 
described by regulations of the Postal Service (includ-
ing, in particular, sections 310.1 and 320.2–320.8 of 
title 39 of the Code of Federal Regulations, as in ef-
fect on July 1, 2003) that purport to permit private 
carriage by suspension of the operation of this section 
(as then in effect). 
‘‘(c) Any regulations necessary to carry out this section 
shall be promulgated by the Postal Regulatory Commis-
sion.’’. 
(b) EFFECTIVE DATE.—This section shall take effect 
on the date as of which the regulations promulgated under 
section 3633 of title 39, United States Code (as amended 
by section 202) take effect. 
SEC. 404. RULEMAKING AUTHORITY. 
Paragraph (2) of section 401 of title 39, United States 
Code, is amended to read as follows: 
‘‘(2) to adopt, amend, and repeal such rules and 
regulations, not inconsistent with this title, as may be 
necessary in the execution of its functions under this 
title and such other functions as may be assigned to
the Postal Service under any provisions of law out-
side of this title;’’. 
SEC. 405. NONINTERFERENCE WITH COLLECTIVE BAR-
GAINING AGREEMENTS, ETC. 
(a) NONINTERFERENCE
WITH
COLLECTIVE
BAR-
GAINING AGREEMENTS.—Except as provided in section 407, 
nothing in this Act or any amendment made by this Act 
shall restrict, expand, or otherwise affect any of the rights, 
privileges, or benefits of either employees of or labor organi-
zations representing employees of the United States Postal 
Service under chapter 12 of title 39, United States Code, 
the National Labor Relations Act, any handbook or manual 
affecting employee labor relations within the United States 
Postal Service, or any collective bargaining agreement. 
(b) FREE
MAILING
PRIVILEGES
CONTINUE
UN-
CHANGED.—Nothing in this Act or any amendment made 
by this Act shall affect any free mailing privileges accorded 
under section 3217 or sections 3403 through 3406 of title 
39, United States Code. 
SEC. 406. BONUS AUTHORITY. 
Subchapter VI of chapter 36 of title 39, United States 
Code (as so redesignated by section 306) is amended by add-
ing at the end the following:
‘‘§ 3686. Bonus authority 
‘‘(a) IN GENERAL.—The Postal Service may establish 
one or more programs to provide bonuses or other rewards 
to officers and employees of the Postal Service to achieve 
the objectives of this chapter. 
‘‘(b) WAIVER OF LIMITATION ON COMPENSATION.— 
‘‘(1) IN GENERAL.—Under any such program, 
the Postal Service may award a bonus or other re-
ward in excess of the limitation set forth in the last 
sentence of section 1003(a), if such program has been 
approved under paragraph (2). 
‘‘(2) APPROVAL PROCESS.—If the Postal Service 
wishes to have the authority, under any program de-
scribed in subsection (a), to award bonuses or other 
rewards in excess of the limitation referred to in 
paragraph (1)— 
‘‘(A) the Postal Service shall make an ap-
propriate request to the Postal Regulatory Com-
mission, in such form and manner as the Com-
mission requires; and 
‘‘(B) the Postal Regulatory Commission 
shall approve any such request if it finds that 
the program is likely to achieve the objectives of 
this chapter. 
‘‘(3) REVOCATION
AUTHORITY.—If the Postal 
Regulatory Commission finds that a program pre-
viously approved under paragraph (2) is not achiev-
ing the objectives of this chapter, the Commission may 
revoke or suspend the authority of the Postal Service 
to continue such program until such time as appro-
priate corrective measures have, in the judgment of 
the Commission, been taken. 
‘‘(c) REPORTING REQUIREMENT RELATING TO BO-
NUSES OR OTHER REWARDS.—Included in its comprehen-
sive 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 sub-
section (b); 
‘‘(2) the amount of the bonus or other reward; 
and 
‘‘(3) the amount by which the limitation referred 
to in subsection (b)(1) was exceeded as a result of 
such bonus or other reward.’’. 
SEC. 407. MEDIATION IN COLLECTIVE-BARGAINING DIS-
PUTES. 
(a) IN GENERAL.—Section 1207(b) of title 39, United 
States Code, is amended by striking all that follows ‘‘the 
Director of the Federal Mediation and Conciliation Service 
shall’’ and inserting ‘‘, within 10 days appoint a mediator
of nationwide reputation and professional stature, and who 
is also a member of the National Academy of Arbitrators. 
The parties shall cooperate with the mediator in an effort 
to reach an agreement and shall meet and negotiate in good 
faith at such times and places that the mediator, in con-
sultation with the parties, shall direct.’’. 
(b) 
PROVISIONS
RELATING
TO
ARBITRATION 
BOARDS.—Section 1207(c) of title 39, United States Code, 
is amended— 
(1) in paragraph (1)— 
(A) by striking ‘‘90’’ and inserting ‘‘60’’; 
(B) by striking ‘‘not members of the fact-
finding panel,’’; and 
(C) by striking all that follows ‘‘shall be 
made’’ and inserting ‘‘from a list of names pro-
vided by the Director. This list shall consist of 
not less than 9 names of arbitrators of nation-
wide reputation and professional stature, who 
are also members of the National Academy of Ar-
bitrators, and whom the Director has determined 
are available and willing to serve.’’; and 
(2) in paragraph (3), by striking ‘‘factfinding 
panel’’ and inserting ‘‘mediation’’. 
(c) CONFORMING AMENDMENT.—Section 1207(d) of 
title 39, United States Code, is amended by striking ‘‘fact-
finding panel will be established’’ and inserting ‘‘mediator 
shall be appointed’’. 
TITLE V—ENHANCED 
REGULATORY COMMISSION 
SEC. 501. REORGANIZATION AND MODIFICATION OF CER-
TAIN 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. 
‘‘§ 501. Establishment 
‘‘The Postal Regulatory Commission is an independent 
establishment of the executive branch of the Government of 
the United States. 
‘‘§ 502. Commissioners 
‘‘(a) The Postal Regulatory Commission is composed 
of 5 Commissioners, appointed by the President, by and 
with the advice and consent of the Senate. The Commis-
sioners shall be chosen solely on the basis of their technical 
qualifications, professional standing, and demonstrated ex-
pertise in economics, accounting, law, or public adminis-
tration, and may be removed by the President only for 
cause. Each individual appointed to the Commission shall 
have the qualifications and expertise necessary to carry out 
the responsibilities accorded Commissioners under the Post-
al Accountability and Enhancement Act. Not more than 3 
of the Commissioners may be adherents of the same political 
party. 
‘‘(b) A Commissioner may continue to serve after the 
expiration of his term until his successor has qualified, ex-
cept that a Commissioner may not so continue to serve for 
more than 1 year after the date upon which his term other-
wise would expire under subsection (e). 
‘‘(c) One of the Commissioners shall be designated as 
Chairman by, and shall serve in the position of Chairman 
at the pleasure of, the President. 
‘‘(d) The Commissioners shall by majority vote des-
ignate a Vice Chairman of the Commission. The Vice Chair-
man shall act as Chairman of the Commission in the ab-
sence of the Chairman. 
‘‘(e) 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; and
(3) by redesignating sections 3603 and 3604 as 
sections 503 and 504, respectively, and transferring 
such sections to the end of chapter 5 (as inserted by 
paragraph (1)). 
(b) DETERMINATIONS.—Section 503 of title 39, United 
States Code, as so redesignated by subsection (a)(3), is 
amended by adding at the end the following: ‘‘Such rules 
shall include procedures which balance, inter alia, the need 
for protecting due process rights and ensuring expeditious 
decision-making.’’. 
(c) APPLICABILITY.—The amendment made by sub-
section (a)(1) shall not affect the appointment or tenure of 
any person serving as a Commissioner on the Postal Regu-
latory Commission (as so redesignated by section 504) pur-
suant to an appointment made before the date of the enact-
ment of this Act or any nomination made before that date, 
but, when any such office becomes vacant, the appointment 
of any person to fill that office shall be made in accordance 
with such amendment. 
(d) CLERICAL AMENDMENT.—The analysis for part I 
of title 39, United States Code, is amended by inserting 
after the item relating to chapter 4 the following: 
‘‘5. Postal Regulatory Commission ..................................................
501’’.
SEC. 502. AUTHORITY FOR POSTAL REGULATORY COMMIS-
SION TO ISSUE SUBPOENAS. 
Section 504 of title 39, United States Code (as so redes-
ignated by section 501) is amended by adding at the end 
the following: 
‘‘(f)(1) Any Commissioner of the Postal Regulatory 
Commission, any administrative law judge appointed by 
the Commission under section 3105 of title 5, and any em-
ployee of the Commission designated by the Commission 
may administer oaths, examine witnesses, take depositions, 
and receive evidence. 
‘‘(2) The Chairman of the Commission, any Commis-
sioner designated by the Chairman, and any administrative 
law judge appointed by the Commission under section 3105 
of title 5 may, with respect to any proceeding conducted 
by the Commission under this title— 
‘‘(A) issue subpoenas requiring the attendance 
and presentation of testimony by, or the production 
of documentary or other evidence in the possession of, 
any covered person; and 
‘‘(B) order the taking of depositions and re-
sponses 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 sub-
poena 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 ad-
dressed 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 docu-
ment or other matter it provides to the Postal Regulatory 
Commission pursuant to a subpoena issued under sub-
section (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 rea-
sons therefor).
‘‘(2) No officer or employee of the Commission may, 
with respect to any information as to which the Commis-
sion 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 em-
ployee of the Commission to have access to any such 
information. 
‘‘(3) Paragraph (2) shall not prevent information from 
being furnished under any process of discovery established 
under this title in connection with a proceeding under this 
title. The Commission shall, by regulations based on rule 
26(c) of the Federal Rules of Civil Procedure, establish pro-
cedures for ensuring appropriate confidentiality for any in-
formation furnished under the preceding sentence.’’. 
SEC. 503. APPROPRIATIONS FOR THE POSTAL REGULATORY 
COMMISSION. 
(a) AUTHORIZATION
OF
APPROPRIATIONS.—Sub-
section (d) of section 504 of title 39, United States Code 
(as so redesignated by section 501) is amended to read as 
follows: 
‘‘(d) There are authorized to be appropriated, out of 
the Postal Service Fund, such sums as may be necessary 
for the Postal Regulatory Commission. In requesting an ap-
propriation under this subsection for a fiscal year, the Com-
mission shall prepare and submit to the Congress under sec-
tion 2009 a budget of the Commission’s expenses, including 
expenses for facilities, supplies, compensation, and em-
ployee 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 appro-
priated under subsections (b) and (c) of section 2401, 
(2) the Office of Inspector General of the United 
States Postal Service requests to be appropriated, out 
of the Postal Service Fund, under section 8J(e) of the 
Inspector General Act of 1978, and (3) the Postal 
Regulatory Commission requests to be appropriated, 
out of the Postal Service Fund, under section 504(d) 
of this title.’’. 
(2) 
CONFORMING
AMENDMENT.—Section 
2003(e)(1) of title 39, United States Code, is amended 
by striking the first sentence and inserting the fol-
lowing: ‘‘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 parenthet-
ical matter under subsection (a); (B) all expenses of 
the Postal Regulatory Commission, subject to the 
availability of amounts appropriated pursuant to sec-
tion 504(d); and (C) all expenses of the Office of In-
spector General, subject to the availability of amounts 
appropriated pursuant to section 8J(e) of the Inspec-
tor General Act of 1978.’’. 
(c) EFFECTIVE DATE.— 
(1) IN
GENERAL.—The amendments made by 
this section shall apply with respect to fiscal years be-
ginning on or after October 1, 2004. 
(2) SAVINGS PROVISION.—The provisions of title 
39, United States Code, that are amended by this sec-
tion shall, for purposes of any fiscal year before the 
first fiscal year to which the amendments made by 
this section apply, continue to apply in the same way 
as if this section had never been enacted. 
SEC. 504. REDESIGNATION OF THE POSTAL RATE COMMIS-
SION. 
(a) AMENDMENTS
TO TITLE 39, UNITED STATES 
CODE.—Title 39, United States Code, is amended in sec-
tions 404, 503–504 (as so redesignated by section 501), 
1001, and 1002 by striking ‘‘Postal Rate Commission’’ each 
place it appears and inserting ‘‘Postal Regulatory Commis-
sion’’.
(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 Regu-
latory 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 Com-
mission’’. 
(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 insert-
ing ‘‘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, doc-
ument, or other record of the United States to the Postal 
Rate Commission, such reference shall be considered a ref-
erence to the Postal Regulatory Commission. 
SEC. 505. OFFICER OF THE POSTAL REGULATORY COMMIS-
SION REPRESENTING THE GENERAL PUBLIC. 
(a) IN GENERAL.—Chapter 5 of title 39, United States 
Code (as added by this Act) is amended by adding after 
section 504 the following: 
‘‘§ 505. Officer of the Postal Regulatory Commission 
representing the general public 
‘‘The Postal Regulatory Commission shall designate an 
officer of the Postal Regulatory Commission in all public 
proceedings (such as developing rules, regulations, and pro-
cedures) who shall represent the interests of the general pub-
lic.’’. 
(b) CLERICAL AMENDMENT.—The analysis for chapter 
5 of title 39, United States Code (as amended by section 
501(a)(1)) is amended by adding after the item relating to 
section 504 the following: 
‘‘505. Officer of the Postal Regulatory Commission representing the general pub-
lic.’’.
TITLE VI—INSPECTORS 
GENERAL 
SEC. 601. INSPECTOR GENERAL OF THE POSTAL REGU-
LATORY COMMISSION. 
(a) IN GENERAL.—Paragraph (2) of section 8G(a) of 
the Inspector General Act of 1978 is amended by inserting 
‘‘the Postal Regulatory Commission,’’ after ‘‘the United 
States International Trade Commission,’’. 
(b) ADMINISTRATION.—Section 504 of title 39, United 
States Code (as so redesignated by section 501) is amended 
by adding after subsection (g) (as added by section 502) 
the following: 
‘‘(h)(1) Notwithstanding any other provision of this 
title or of the Inspector General Act of 1978, the authority 
to select, appoint, and employ officers and employees of the 
Office of Inspector General of the Postal Regulatory Com-
mission, and to obtain any temporary or intermittent serv-
ices of experts or consultants (or an organization of experts 
or consultants) for such Office, shall reside with the Inspec-
tor General of the Postal Regulatory Commission. 
‘‘(2) Except as provided in paragraph (1), any exercise 
of authority under this subsection shall, to the extent prac-
ticable, be in conformance with the applicable laws and reg-
ulations that govern selections, appointments and employ-
ment, and the obtaining of any such temporary or intermit-
tent services, within the Postal Regulatory Commission.’’. 
(c) DEADLINE.—No later than 180 days after the date 
of the enactment of this Act— 
(1) the first Inspector General of the Postal Reg-
ulatory Commission shall be appointed; and 
(2) the Office of Inspector General of the Postal 
Regulatory Commission shall be established. 
SEC. 602. INSPECTOR GENERAL OF THE UNITED STATES 
POSTAL SERVICE TO BE APPOINTED BY THE 
PRESIDENT. 
(a) DEFINITIONAL AMENDMENTS TO THE INSPECTOR 
GENERAL ACT OF 1978.—Section 11 of the Inspector Gen-
eral Act of 1978 is amended— 
(1) in paragraph (1)— 
(A) by striking ‘‘or’’ before ‘‘the President of 
the Export-Import Bank;’’ and 
(B) by inserting ‘‘or the Governors of the 
United States Postal Service (within the mean-
ing of section 102(3) of title 39, United States 
Code);’’ after ‘‘the President of the Export-Im-
port Bank;’’; and 
(2) in paragraph (2)— 
(A) by striking ‘‘or’’ before ‘‘the Export-Im-
port Bank,’’; and
(B) by inserting ‘‘or the United States Post-
al Service,’’ after ‘‘the Export-Import Bank,’’. 
(b) SPECIAL PROVISIONS CONCERNING THE UNITED 
STATES POSTAL SERVICE.— 
(1) IN GENERAL.—The Inspector General Act of 
1978 is amended— 
(A) by redesignating section 8J as section 
8K; and 
(B) by inserting after section 8I the fol-
lowing: 
‘‘SPECIAL PROVISIONS CONCERNING THE UNITED STATES 
POSTAL SERVICE 
‘‘SEC. 8J. (a) In carrying out the duties and respon-
sibilities specified in this Act, the Inspector General of the 
United States Postal Service shall have oversight responsi-
bility for all activities of the Postal Inspection Service, in-
cluding any internal investigation performed by the Postal 
Inspection Service. The Chief Postal Inspector shall 
promptly report any significant activities being carried out 
by the Postal Inspection Service to such Inspector General. 
The Postmaster General shall promptly report to such In-
spector General all allegations of theft, fraud, or misconduct 
by Postal Service officers or employees, and entities or indi-
viduals doing business with the Postal Service. 
‘‘(b) In the case of any report that the Governors of 
the United States Postal Service (within the meaning of
section 102(3) of title 39, United States Code) are required 
to transmit under the second sentence of section 5(d), such 
sentence shall be applied by deeming the term ‘appropriate 
committees of Congress’ to mean the Committee on Govern-
ment Reform of the House of Representatives, the Com-
mittee on Governmental Affairs of the Senate, and such 
other committees or subcommittees of Congress as may be 
appropriate. 
‘‘(c) Notwithstanding any provision of paragraph (7) 
or (8) of section 6(a), the Inspector General of the United 
States Postal Service may select, appoint, and employ such 
officers and employees as may be necessary for carrying out 
the functions, powers, and duties of the Office of Inspector 
General and to obtain the temporary or intermittent serv-
ices of experts or consultants or an organization of experts 
or consultants, subject to the applicable laws and regula-
tions that govern such selections, appointments, and em-
ployment, and the obtaining of such services, within the 
United States Postal Service. 
‘‘(d) Nothing in this Act shall restrict, eliminate, or 
otherwise adversely affect any of the rights, privileges, or 
benefits of employees of the United States Postal Service, 
or labor organizations representing employees of the United 
States Postal Service, under chapter 12 of title 39, United 
States Code, the National Labor Relations Act, any hand-
book or manual affecting employee labor relations with the 
United States Postal Service, or any collective bargaining 
agreement. 
‘‘(e) There are authorized to be appropriated, out of 
the Postal Service Fund, such sums as may be necessary 
for the Office of Inspector General of the United States Post-
al Service.’’. 
(2) RELATED PROVISIONS.—For certain related 
provisions, see section 503(b). 
(c) EXERCISE OF CERTAIN POWERS.—Section 6(e)(3) 
of the Inspector General Act of 1978 is amended— 
(1) by striking ‘‘and the’’ before ‘‘Tennessee Val-
ley Authority’’; and 
(2) by inserting ‘‘, and United States Postal 
Service’’ after ‘‘Tennessee Valley Authority’’. 
(d) PUBLIC CONTRACTS.— 
(1) ADDITIONAL PROVISIONS APPLICABLE.—Sec-
tion 410(b)(5) of title 39, United States Code, is 
amended— 
(A) in subparagraph (A), by striking ‘‘and’’ 
after the semicolon; and 
(B) by adding after subparagraph (B) the 
following:
‘‘(C) the Anti-Kickback Act of 1986 (41 
U.S.C. 51 and following), other than subsections 
(a) and (b) of 7 and section 8 of that Act; and 
‘‘(D) section 315 of the Federal Property 
and Administrative Services Act of 1949 (41 
U.S.C. 265) (relating to protecting contractor 
employees from reprisal for disclosure of certain 
information);’’. 
(2) REGULATIONS ON ALLOWABLE COSTS.—Sec-
tion 410 of title 39, United States Code, is amended 
by adding at the end the following: 
‘‘(e) The Postal Service shall develop and issue pur-
chasing regulations that prohibit contract costs not allow-
able under section 5.2.5 of the United States Postal Service 
Procurement Manual (Publication 41), as in effect on July 
12, 1995.’’. 
(e) AUDITS OF THE POSTAL SERVICE.— 
(1) AUDITS.—Subsection (e) of section 2008 of 
title 39, United States Code, is amended to read as 
follows: 
‘‘(e)(1) At least once each year beginning with the fis-
cal year commencing after the date of the enactment of the 
Postal Accountability and Enhancement Act, the financial 
statements of the Postal Service (including those used in 
determining and establishing postal rates) shall be audited
by the Inspector General or by an independent external 
auditor selected by the Inspector General. 
‘‘(2) Audits under this section shall be conducted in 
accordance with applicable generally accepted government 
auditing standards. 
‘‘(3) Upon completion of the audit required by this 
subsection, the person who audits the statement shall submit 
a report on the audit to the Postmaster General.’’. 
(2) RESULTS OF INSPECTOR GENERAL’S AUDIT 
TO BE INCLUDED IN ANNUAL REPORT.—Section 2402 
of title 39, United States Code, is amended by insert-
ing after the first sentence the following: ‘‘Each report 
under this section shall include a copy of the report 
most recently received by the Postmaster General 
under section 2008(e)(3).’’. 
(3) 
COORDINATION
PROVISIONS.—Section 
2008(d) of title 39, United States Code, is amended— 
(A) by striking ‘‘(d) Nothing’’ and inserting 
‘‘(d)(1) Except as provided in paragraph (2), 
nothing’’; and 
(B) by adding at the end the following: 
‘‘(2) An audit or report under paragraph (1) may not 
be obtained without the prior written approval of the In-
spector General.’’.
(4) TRANSITION
PROVISION.—For purposes of 
any fiscal year preceding the first fiscal year com-
mencing after the date of the enactment of this Act, 
the provisions of title 39, United States Code, shall be 
applied as if the amendments made by this subsection 
had never been enacted. 
(f) REPORTS.—Section 3013 of title 39, United States 
Code, is amended by striking ‘‘Postmaster General’’ each 
place it appears and inserting ‘‘Chief Postal Inspector’’. 
(g) TECHNICAL AND CONFORMING AMENDMENTS.— 
(1) RELATING TO THE INSPECTOR GENERAL ACT 
OF 1978.—(A) Subsection (a) of section 8G of the In-
spector General Act of 1978 (as amended by section 
601(a)) is further amended— 
(i) in paragraph (2), by striking ‘‘the Post-
al Regulatory Commission, and the United 
States Postal Service;’’ and inserting ‘‘and the 
Postal Regulatory Commission;’’ and 
(ii) in paragraph (4), by striking ‘‘except 
that’’ and all that follows through ‘‘Code);’’ and 
inserting ‘‘except that, with respect to the Na-
tional Science Foundation, such term means the 
National Science Board;’’. 
(B)(i) Subsection (f) of section 8G of such Act is 
repealed.
(ii) Subsection (c) of section 8G of such Act is 
amended by striking ‘‘Except as provided under sub-
section (f) of this section, the’’ and inserting ‘‘The’’. 
(C) Section 8K of such Act (as so redesignated 
by subsection (b)(1)(A)) is amended by striking the 
matter after ‘‘8D,’’ and before ‘‘of this Act’’ and in-
serting ‘‘8E, 8F, 8H, or 8J’’. 
(2) RELATING
TO
TITLE
39, UNITED
STATES 
CODE.—(A) Subsection (e) of section 202 of title 39, 
United States Code, is repealed. 
(B) Paragraph (4) of section 102 of such title 39 
(as amended by section 101) is amended to read as 
follows: 
‘‘(4) ‘Inspector General’ means the Inspector 
General of the United States Postal Service, ap-
pointed under section 3(a) of the Inspector General 
Act of 1978;’’. 
(C) The first sentence of section 1003(a) of such 
title 39 is amended by striking ‘‘chapters 2 and 12 
of this title, section 8G of the Inspector General Act 
of 1978, or other provision of law,’’ and inserting 
‘‘chapter 2 or 12 of this title, subsection (b) or (c) of 
this section, or any other provision of law,’’. 
(D) Section 1003(b) of such title 39 is amended 
by striking ‘‘respective’’ and inserting ‘‘other’’.
(E) Section 1003(c) of such title 39 is amended 
by striking ‘‘included’’ and inserting ‘‘includes’’. 
(3) RELATING TO THE ENERGY POLICY ACT OF 
1992.—Section 160(a) of the Energy Policy Act of 
1992 (42 U.S.C. 8262f(a)) is amended (in the matter 
before paragraph (1)) by striking all that follows ‘‘(5 
U.S.C. App.)’’ and before ‘‘shall—’’. 
(h) EFFECTIVE DATE; TRANSITION PROVISIONS.— 
(1) EFFECTIVE DATE.—Except as provided in 
paragraph (2) or subsection (c), this section and the 
amendments made by this section shall take effect on 
the date of the enactment of this Act. 
(2) TRANSITION PROVISIONS.— 
(A) PRESIDENTIAL APPOINTMENT AUTHOR-
ITY AVAILABLE IMMEDIATELY.—The authority to 
appoint an Inspector General of the United 
States Postal Service in accordance with the 
amendments made by this section shall be avail-
able as of the effective date of this section. 
(B) CONTINUATION
IN
OFFICE.—Pending 
the appointment of an Inspector General of the 
United States Postal Service in accordance with 
the amendments made by this section, the indi-
vidual serving as the Inspector General of the 
United States Postal Service on the day before
the effective date of this section may continue to 
serve— 
(i) in accordance with applicable pro-
visions of the Inspector General Act of 1978 
and (except as provided in clause (ii)) of 
title 39, United States Code, as last in effect 
before the effective date of this Act; but 
(ii) subject to the provisions of such 
title 39 as amended by subsections (e) and 
(f) of this section (deeming any reference to 
the ‘‘Inspector General’’ in such provisions, 
as so amended, to refer to the individual 
continuing to serve under authority of this 
subparagraph) and subparagraph (C). 
(C) 
AUTHORIZATION
OF
APPROPRIA-
TIONS.— 
(i) 
IN
GENERAL.—Notwithstanding 
any other provision of this subsection, sec-
tion 8J(e) of the Inspector General Act of 
1978 (as amended by this section) shall be 
effective for purposes of fiscal years begin-
ning on or after October 1, 2004. 
(ii) SAVINGS
PROVISION.—For pur-
poses of the fiscal year ending on September 
30, 2004, funding for the Office of Inspector
General of the United States Postal Service 
shall be made available in the same manner 
as if this Act had never been enacted. 
(D) ELIGIBILITY OF PRIOR INSPECTOR GEN-
ERAL.—Nothing in this Act shall prevent any 
individual who has served as Inspector General 
of the United States Postal Service at any time 
before the date of the enactment of this Act from 
being appointed to that position pursuant to the 
amendments made by this section. 
TITLE VII—EVALUATIONS 
SEC. 701. UNIVERSAL POSTAL SERVICE STUDY. 
(a) REPORT BY THE POSTAL SERVICE.—The United 
States Postal Service shall, within 12 months after the date 
of the enactment of this Act, submit to the President, the 
Congress, and the Postal Regulatory Commission, a written 
report on universal postal service in the United States 
(hereinafter in this section referred to as ‘‘universal serv-
ice’’). Such report shall include at least the following: 
(1) A comprehensive review of the history and 
development of universal service, including how the 
scope and standards of universal service have evolved 
over time. 
(2) The scope and standards of universal service 
provided under current law (including sections 101
and 403 of title 39, United States Code) and current 
rules, regulations, policy statements, and practices of 
the Postal Service. 
(3) A description of any geographic areas, popu-
lations, communities, organizations, or other groups 
or entities not currently covered by universal service 
or that are covered but that are receiving services de-
ficient in scope or quality or both. 
(4) The scope and standards of universal service 
likely to be required in the future in order to meet the 
needs and expectations of the American public, in-
cluding all types of mail users, based on such assump-
tions or alternative sets of assumptions as the Postal 
Service considers plausible. 
(5) Such recommendations as the Postal Service 
considers appropriate. 
(b) REPORT BY THE POSTAL REGULATORY COMMIS-
SION.—The Postal Regulatory Commission shall, within 12 
months after receiving the report of the Postal Service under 
subsection (a), submit to the President and the Congress a 
written report evaluating the report of the Postal Service. 
The report of the Commission shall include at least the fol-
lowing:
101 
(d) CLARIFYING PROVISION.—Nothing in this section 
shall be considered to relate to any services that are not 
postal services (within the meaning of section 102 of title 
39, United States Code, as amended by section 101). 
SEC. 702. ASSESSMENTS OF RATEMAKING, CLASSIFICATION, 
AND OTHER PROVISIONS. 
(a) IN GENERAL.—The Postal Regulatory Commission 
shall, at least every 5 years, submit a report to the President 
and the Congress concerning— 
(1) the operation of the amendments made by the 
Postal Accountability and Enhancement Act; and 
(2) recommendations for any legislation or other 
measures necessary to improve the effectiveness or effi-
ciency of the postal laws of the United States. 
(b) POSTAL SERVICE VIEWS.—A report under this sec-
tion shall be submitted only after reasonable opportunity 
has been afforded to the Postal Service to review such report 
and to submit written comments thereon. Any comments 
timely received from the Postal Service under the preceding 
sentence shall be attached to the report submitted under sub-
section (a). 
(c) SPECIFIC INFORMATION REQUIRED.—The Postal 
Regulatory Commission shall include, as part of at least 
its first report under subsection (a), the following:
102 
(1) COST-COVERAGE REQUIREMENT RELATING TO 
COMPETITIVE
PRODUCTS
COLLECTIVELY.—With re-
spect to section 3633 of title 39, United States Code 
(as amended by this Act)— 
(A) a description of how such section has 
operated; and 
(B) recommendations as to whether or not 
such section should remain in effect and, if so, 
any suggestions as to how it might be improved. 
(2) COMPETITIVE
PRODUCTS
FUND.—With re-
spect to the Postal Service Competitive Products Fund 
(under section 2011 of title 39, United States Code, 
as amended by section 301), in consultation with the 
Secretary of the Treasury— 
(A) a description of how such Fund has op-
erated; 
(B) any suggestions as to how the operation 
of such Fund might be improved; and 
(C) a description and assessment of alter-
native accounting or financing mechanisms that 
might be used to achieve the objectives of such 
Fund. 
(3) ASSUMED FEDERAL INCOME TAX ON COM-
PETITIVE PRODUCTS FUND.—With respect to section 
3634 of title 39, United States Code (as amended by
103 
this Act), in consultation with the Secretary of the 
Treasury— 
(A) a description of how such section has 
operated; and 
(B) recommendations as to whether or not 
such section should remain in effect and, if so, 
any suggestions as to how it might be improved. 
SEC. 703. STUDY ON EQUAL APPLICATION OF LAWS TO COM-
PETITIVE PRODUCTS. 
(a) IN GENERAL.—The Federal Trade Commission 
shall prepare and submit to the President, the Congress, 
and the Postal Regulatory Commission, within 1 year after 
the date of the enactment of this Act, a comprehensive report 
identifying Federal and State laws that apply differently 
to the United States Postal Service with respect to the com-
petitive category of mail (within the meaning of section 102 
of title 39, United States Code, as amended by section 101) 
and private companies providing similar products. 
(b) RECOMMENDATIONS; ADJUSTMENTS.—The Federal 
Trade Commission shall include such recommendations as 
it considers appropriate for bringing such legal differences 
to an end and, in the interim, to account under section 
3633, for the net economic effects provided by those laws. 
(c) CONSULTATION.—In preparing its report, the Fed-
eral Trade Commission shall consult with the United States
104 
Postal Service, the Postal Regulatory Commission, other 
Federal agencies, mailers, private companies that provide 
delivery services, and the general public, and shall append 
to such report any written comments received under this 
subsection. 
(d) COMPETITIVE PRODUCT RATE REGULATION.—The 
Postal Regulatory Commission shall take into account the 
recommendations of the Federal Trade Commission, and 
subsequent events that affect the continuing validity of the 
estimate of the net economic effect, in promulgating or re-
vising the regulations required by section 3633 of title 39, 
United States Code. 
SEC. 704. GREATER DIVERSITY IN POSTAL SERVICE EXECU-
TIVE AND ADMINISTRATIVE SCHEDULE MAN-
AGEMENT POSITIONS. 
(a) STUDY.—The Board of Governors shall study and, 
within 1 year after the date of the enactment of this Act, 
submit to the President and Congress a report concerning 
the extent to which women and minorities are represented 
in supervisory and management positions within the 
United States Postal Service. Any data included in the re-
port shall be presented in the aggregate and by pay level. 
(b) PERFORMANCE EVALUATIONS.—The United States 
Postal Service shall, as soon as practicable, take such meas-
ures as may be necessary to ensure that, for purposes of
105 
conducting performance appraisals of supervisory or mana-
gerial employees, appropriate consideration shall be given 
to meeting affirmative action goals, achieving equal em-
ployment opportunity requirements, and implementation of 
plans designed to achieve greater diversity in the workforce. 
SEC. 705. PLAN FOR ASSISTING DISPLACED WORKERS. 
(a) PLAN.—The United States Postal Service shall, be-
fore the deadline specified in subsection (b), develop and 
be prepared to implement, whenever necessary, a com-
prehensive plan under which reemployment assistance shall 
be afforded to employees displaced as a result of the automa-
tion or privatization of any of its functions. 
(b) REPORT.—Not later than 1 year after the date of 
the enactment of this Act, the United States Postal Service 
shall submit to its Board of Governors and Congress a writ-
ten report describing its plan under this section. 
SEC. 706. CONTRACTS WITH WOMEN, MINORITIES, AND 
SMALL BUSINESSES. 
The Board of Governors shall study and, within 1 year 
after the date of the enactment of this Act, submit to the 
President and the Congress a report concerning the number 
and value of contracts and subcontracts the Postal Service 
has entered into with women, minorities, and small busi-
nesses.
106 
SEC. 707. RATES FOR PERIODICALS. 
(a) IN GENERAL.—The United States Postal Service, 
acting jointly with the Postal Regulatory Commission and 
the General Accounting Office, shall study and submit to 
the President and Congress a report concerning— 
(1) the quality, accuracy, and completeness of the 
information used by the Postal Service in deter-
mining the direct and indirect postal costs attrib-
utable to periodicals; and 
(2) any opportunities that might exist for im-
proving efficiencies in the collection, handling, trans-
portation, or delivery of periodicals by the Postal 
Service, including any pricing incentives for mailers 
that might be appropriate. 
(b) RECOMMENDATIONS.—The report shall include rec-
ommendations for any administrative action or legislation 
that might be appropriate. 
SEC. 708. ASSESSMENT OF CERTAIN RATE DEFICIENCIES. 
(a) IN GENERAL.—Within 12 months after the date 
of the enactment of this Act, the Office of Inspector General 
of the United States Postal Service shall study and submit 
to the President, the Congress, and the United States Postal 
Service, a report concerning the administration of section 
3626(k) of title 39, United States Code. 
(b) SPECIFIC REQUIREMENTS.—The study and report 
shall specifically address the adequacy and fairness of the
107 
process by which assessments under section 3626(k) of title 
39, United States Code, are determined and appealable, in-
cluding— 
(1) whether the Postal Regulatory Commission 
or any other body outside the Postal Service should 
be assigned a role; and 
(2) whether a statute of limitations should be es-
tablished for the commencement of proceedings by the 
Postal Service thereunder. 
SEC. 709. POSTAL PROCESSING AND DISTRIBUTION NET-
WORK STUDY. 
The United States Postal Service shall, within 16 
months after the date of the enactment of this Act, submit 
to the President, the Congress, and the Board of Governors 
of the United States Postal Service a written report on the 
postal processing and distribution network. Such report 
shall include at least the following: 
(1) Recommendations to improve the efficiency 
and effectiveness of the processing and distribution 
network while preserving the timely delivery of postal 
services. 
(2) Identification of excess capacity (if any) 
within the processing and distribution network and 
opportunities for savings through realignment or con-
solidation of facilities.
108 
(3) Report of the Postal Service’s plans for deal-
ing with the recommendations and findings identified 
in paragraphs (1) and (2). 
(4) Statutory or regulatory obstacles preventing 
the Postal Service from taking action to realign or 
consolidate facilities identified in paragraph (2). 
(5) Such additional topics and recommendations 
as the Postal Service considers appropriate. 
SEC. 710. DEFINITION. 
For purposes of this title, the term ‘‘Board of Gov-
ernors’’ has the meaning given such term by section 102 
of title 39, United States Code. 
TITLE 
VIII—MISCELLANEOUS; 
TECHNICAL 
AND 
CON-
FORMING AMENDMENTS 
SEC. 801. EMPLOYMENT OF POSTAL POLICE OFFICERS. 
Section 3061 of title 18, United States Code, is amend-
ed by adding at the end the following: 
‘‘(c)(1) The Postal Service may employ police officers 
for duty in connection with the protection of property 
owned or occupied by the Postal Service or under the charge 
and control of the Postal Service, and persons on the prop-
erty, including duty in areas outside the property to the 
extent necessary to protect the property and persons on the 
property.
109 
‘‘(2) With respect to such property, such officers shall 
have the power to— 
‘‘(A) enforce Federal laws and regulations for the 
protection of persons and property; 
‘‘(B) carry firearms; and 
‘‘(C) make arrests without a warrant for any of-
fense against the United States committed in the 
presence of the officer or for any felony cognizable 
under the laws of the United States if the officer has 
reasonable grounds to believe that the person to be ar-
rested has committed or is committing a felony. 
‘‘(3) With respect to such property, such officers may 
have, to such extent as the Postal Service may by regula-
tions prescribe, the power to— 
‘‘(A) serve warrants and subpoenas issued under 
the authority of the United States; and 
‘‘(B) conduct investigations, on and off the prop-
erty in question, of offenses that may have been com-
mitted against property owned or occupied by the 
Postal Service or persons on the property. 
‘‘(4)(A) As to such property, the Postmaster General 
may prescribe regulations necessary for the protection and 
administration of property owned or occupied by the Postal 
Service and persons on the property. The regulations may 
include reasonable penalties, within the limits prescribed
110 
in subparagraph (B), for violations of the regulations. The 
regulations shall be posted and remain posted in a con-
spicuous place on the property. 
‘‘(B) A person violating a regulation prescribed under 
this subsection shall be fined under this title, imprisoned 
for not more than 30 days, or both.’’. 
SEC. 802. DATE OF POSTMARK TO BE TREATED AS DATE OF 
APPEAL IN CONNECTION WITH THE CLOSING 
OR CONSOLIDATION OF POST OFFICES. 
(a) IN GENERAL.—Section 404(b) of title 39, United 
States Code, is amended by adding at the end the following: 
‘‘(6) For purposes of paragraph (5), any appeal re-
ceived by the Commission shall— 
‘‘(A) if sent to the Commission through the 
mails, be considered to have been received on the date 
of the Postal Service postmark on the envelope or 
other cover in which such appeal is mailed; or 
‘‘(B) if otherwise lawfully delivered to the Com-
mission, be considered to have been received on the 
date determined based on any appropriate docu-
mentation or other indicia (as determined under reg-
ulations of the Commission).’’. 
(b) EFFECTIVE DATE.—This section and the amend-
ments made by this section shall apply with respect to any 
determination to close or consolidate a post office which is
111 
first made available, in accordance with paragraph (3) of 
section 404(b) of title 39, United States Code, after the end 
of the 3-month period beginning on the date of the enact-
ment of this Act. 
SEC. 803. PROVISIONS RELATING TO BENEFITS UNDER 
CHAPTER 81 OF TITLE 5, UNITED STATES 
CODE, FOR OFFICERS AND EMPLOYEES OF 
THE FORMER POST OFFICE DEPARTMENT. 
(a) IN GENERAL.—Section 8 of the Postal Reorganiza-
tion Act (39 U.S.C. 1001 note) is amended by inserting 
‘‘(a)’’ after ‘‘8.’’ and by adding at the end the following: 
‘‘(b) For purposes of chapter 81 of title 5, United 
States Code, the Postal Service shall, with respect to any 
individual receiving benefits under such chapter as an offi-
cer or employee of the former Post Office Department, have 
the same authorities and responsibilities as it has with re-
spect to an officer or employee of the Postal Service receiv-
ing such benefits.’’. 
(b) EFFECTIVE DATE.—This section and the amend-
ments made by this section shall be effective as of the first 
day of the fiscal year in which this Act is enacted. 
SEC. 804. OBSOLETE PROVISIONS. 
(a) REPEAL.— 
(1) IN GENERAL.—Chapter 52 of title 39, United 
States Code, is repealed.
112 
(2) CONFORMING
AMENDMENTS.—(A) Section 
5005(a) of title 39, United States Code, is amended— 
(i) by striking paragraph (1), and by redes-
ignating paragraphs (2) through (4) as para-
graphs (1) through (3), respectively; and 
(ii) in paragraph (3) (as so designated by 
clause (i)), by striking ‘‘(as defined in section 
5201(6) of this title)’’. 
(B) Section 5005(b) of such title 39 is amended 
by striking ‘‘(a)(4)’’ each place it appears and insert-
ing ‘‘(a)(3)’’. 
(C) Section 5005(c) of such title 39 is amended 
by striking ‘‘by carrier or person under subsection 
(a)(1) of this section, by contract under subsection 
(a)(4) of this section, or’’ and inserting ‘‘by contract 
under subsection (a)(3) of this section or’’. 
(b) ELIMINATING RESTRICTION ON LENGTH OF CON-
TRACTS.—(1) Section 5005(b)(1) of title 39, United States 
Code, is amended by striking ‘‘(or where the Postal Service 
determines that special conditions or the use of special 
equipment warrants, not in excess of 6 years)’’ and insert-
ing ‘‘(or such longer period of time as may be determined 
by the Postal Service to be advisable or appropriate)’’. 
(2) Section 5402(d) of such title 39 is amended by 
striking ‘‘for a period of not more than 4 years’’.
113 
(3) Section 5605 of such title 39 is amended by strik-
ing ‘‘for periods of not in excess of 4 years’’. 
(c) CLERICAL AMENDMENT.—The analysis for part V 
of title 39, United States Code, is amended by repealing 
the item relating to chapter 52. 
SEC. 805. EXPANDED CONTRACTING AUTHORITY. 
(a) AMENDMENT
TO TITLE 39, UNITED STATES 
CODE.— 
(1) CONTRACTS
WITH
AIR
CARRIERS.—Sub-
section (d) of section 5402 of title 39, United States 
Code, is amended to read as follows: 
‘‘(d)(1) The Postal Service may contract with any air 
carrier for the transportation of mail by aircraft in inter-
state air transportation, including the rates therefor, either 
through negotiations or competitive bidding. 
‘‘(2) Notwithstanding subsections (a) through (c), the 
Postal Service may contract with any air carrier or foreign 
air carrier for the transportation of mail by aircraft in for-
eign air transportation, including the rates therefor, 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 for-
eign air carrier holding a permit required by section
114 
41301 of title 49 or an exemption therefrom issued by 
the Secretary of Transportation, or (iii) a combina-
tion 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 exemp-
tion authority issued by the Secretary of Transpor-
tation under that subtitle; 
‘‘(C) 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 for-
eign air carrier, if different, as the Postal Service has 
afforded the foreign air carrier; and 
‘‘(D) 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 sus-
pending or otherwise diminishing the authority of the Sec-
retary of Transportation under section 41310 of title 49.’’.
115 
(2) DEFINITIONS.—Subsection (e) of section 5402 
of title 39, United States Code, is amended to read as 
follows: 
‘‘(e) For purposes of this section, the terms ‘air car-
rier’, ‘air transportation’, ‘foreign air carrier’, ‘foreign air 
transportation’, ‘interstate air transportation’, and ‘mail’ 
shall have the meanings given such terms in section 40102 
of title 49.’’. 
(b) AMENDMENTS
TO TITLE 49, UNITED STATES 
CODE.— 
(1) AUTHORITY OF POSTAL SERVICE TO PROVIDE 
FOR INTERSTATE AIR TRANSPORTATION OF MAIL.— 
Section 41901(a) of title 49, United States Code, is 
amended to read as follows: 
‘‘(a) TITLE 39.—The United States Postal Service 
may provide for the transportation of mail by aircraft in 
air transportation under this chapter and under chapter 
54 of title 39.’’. 
(2) SCHEDULES FOR CERTAIN TRANSPORTATION 
OF
MAIL.—Section 41902(b)(1) of title 49, United 
States Code, is amended by inserting before the semi-
colon at the end the following: ‘‘(other than foreign 
air transportation of mail)’’.
116 
(3) PRICES FOR FOREIGN TRANSPORTATION OF 
MAIL.—Section 41907 of title 49, United States Code, 
is amended— 
(A) by striking ‘‘(a) LIMITATIONS.—’’; and 
(B) by striking subsection (b). 
(4) 
CONFORMING
AMENDMENTS.—Sections 
41107, 41901(b)(1), 41902(a), 41903(a), and 41903(b) 
of title 49, United States Code, are amended by strik-
ing ‘‘in foreign air transportation or’’. 
SEC. 806. INVESTMENTS. 
Subsection (c) of section 2003 of title 39, United States 
Code, is amended— 
(1) by striking ‘‘(c) If’’ and inserting ‘‘(c)(1) Ex-
cept as provided in paragraph (2), if’’; and 
(2) by adding at the end the following: 
‘‘(2)(A) Nothing in this section shall be considered to 
authorize any investment in any obligations or securities 
of a commercial entity. 
‘‘(B) For purposes of this paragraph, the term ‘com-
mercial entity’ means any corporation, company, associa-
tion, partnership, joint stock company, firm, society, or 
other similar entity, as further defined under regulations 
prescribed by the Postal Regulatory Commission.’’.
117 
SEC. 807. REPEAL OF SECTION 5403. 
(a) IN GENERAL.—Section 5403 of title 39, United 
States Code, is repealed. 
(b) CLERICAL AMENDMENT.—The analysis for chapter 
54 of title 39, United States Code, is amended by repealing 
the item relating to section 5403. 
SEC. 808. REDUCED RATES. 
Section 3626 of title 39, United States Code, is amend-
ed— 
(1) in subsection (a)— 
(A) by striking all before paragraph (4) and 
inserting the following: 
‘‘(a)(1) Except as otherwise provided in this section, 
rates of postage for a class of mail or kind of mailer under 
former section 4358, 4452(b), 4452(c), 4554(b), or 4554(c) 
of this title shall be established in accordance with section 
3622. 
‘‘(2) For the purpose of this subsection, the term ‘reg-
ular-rate category’ means any class of mail or kind of mail-
er, other than a class or kind referred to in section 
2401(c).’’; and 
(B) 
by 
redesignating 
paragraphs 
(4) 
through (7) as paragraphs (3) through (6), re-
spectively; 
(2) in subsection (g), by adding at the end the 
following:
118 
‘‘(3) For purposes of this section and former section 
4358(a) through (c) of this title, those copies of an issue 
of a publication entered within the county in which it is 
published, but distributed outside such county on postal 
carrier routes originating in the county of publication, shall 
be treated as if they were distributed within the county of 
publication. 
‘‘(4)(A) In the case of an issue of a publication, any 
number of copies of which are mailed at the rates of postage 
for a class of mail or kind of mailer under former section 
4358(a) through (c) of this title, any copies of such issue 
which are distributed outside the county of publication (ex-
cluding any copies subject to paragraph (3)) shall be subject 
to rates of postage provided for under this paragraph. 
‘‘(B) The rates of postage applicable to mail under this 
paragraph shall be established in accordance with section 
3622. 
‘‘(C) This paragraph shall not apply with respect to 
an issue of a publication unless the total paid circulation 
of such issue outside the county of publication (not counting 
recipients of copies subject to paragraph (3)) is less than 
5,000.’’; and 
(3) by adding at the end the following: 
‘‘(n) In the administration of this section, matter that 
satisfies the circulation standards for requester publications
119 
shall not be excluded from being mailed at the rates for mail 
under former section 4358 solely because such matter is de-
signed primarily for free circulation or for circulation at 
nominal rates, or fails to meet the requirements of former 
section 4354(a)(5).’’. 
SEC. 809. HAZARDOUS MATTER. 
(a) NONMAILABILITY GENERALLY.—Section 3001 of 
title 39, United States Code, is amended— 
(1) by redesignating subsection (n) as subsection 
(o); and 
(2) by inserting after subsection (m) the fol-
lowing: 
‘‘(o)(1) Except as otherwise authorized by law or regu-
lations of the Postal Service, hazardous material is non-
mailable. 
‘‘(2) In this subsection, the term ‘hazardous material’ 
means a substance or material designated by the Secretary 
of Transportation under section 5103(a) of title 49.’’. 
(b) MAILABILITY.—Chapter 30 of title 39, United 
States Code, is amended by adding at the end the following: 
‘‘§ 3018. Hazardous material 
‘‘(a) IN GENERAL.—The Postal Service shall prescribe 
regulations for the safe transportation of hazardous mate-
rial in the mail. 
‘‘(b) PROHIBITIONS.—No person may—
120 
‘‘(1) mail or cause to be mailed hazardous mate-
rial that has been declared by statute or Postal Serv-
ice regulation to be nonmailable; 
‘‘(2) mail or cause to be mailed hazardous mate-
rial in violation of any statute or Postal Service reg-
ulation restricting the time, place, or manner in 
which hazardous material may be mailed; or 
‘‘(3) manufacture, distribute, or sell any con-
tainer, packaging kit, or similar device that— 
‘‘(A) is represented, marked, certified, or 
sold by such person for use in the mailing of 
hazardous material; and 
‘‘(B) fails to conform with any statute or 
Postal Service regulation setting forth standards 
for a container, packaging kit, or similar device 
used for the mailing of hazardous material. 
‘‘(c) CIVIL PENALTY; CLEAN-UP COSTS AND DAM-
AGES.— 
‘‘(1) IN GENERAL.—A person who knowingly vio-
lates this section or a regulation prescribed under this 
section shall be liable for— 
‘‘(A) a civil penalty of at least $250, but 
not more than $100,000, for each violation; 
‘‘(B) the costs of any clean-up associated 
with each violation; and
121 
‘‘(C) damages. 
‘‘(2) KNOWING
ACTION.—A person acts know-
ingly for purposes of paragraph (1) when— 
‘‘(A) the person has actual knowledge of the 
facts giving rise to the violation; or 
‘‘(B) a reasonable person acting in the cir-
cumstances and exercising reasonable care would 
have had that knowledge. 
‘‘(3) SEPARATE VIOLATIONS.— 
‘‘(A) VIOLATIONS OVER TIME.—A separate 
violation under this subsection occurs for each 
day hazardous material, mailed or caused to be 
mailed in noncompliance with this section, is in 
the mail. 
‘‘(B) SEPARATE ITEMS.—A separate viola-
tion under this subsection occurs for each item 
containing hazardous material that is mailed or 
caused to be mailed in noncompliance with this 
section. 
‘‘(d) HEARINGS.—The Postal Service may determine 
that a person has violated this section or a regulation pre-
scribed under this section only after notice and an oppor-
tunity for a hearing. Proceedings under this section shall 
be conducted in accordance with section 3001(m).
122 
‘‘(e) PENALTY CONSIDERATIONS.—In determining the 
amount of a civil penalty for a violation of this section, 
the Postal Service shall consider— 
‘‘(1) the nature, circumstances, extent, and grav-
ity of the violation; 
‘‘(2) with respect to the person who committed 
the violation, the degree of culpability, any history of 
prior violations, the ability to pay, and any effect on 
the ability to continue in business; 
‘‘(3) the impact on Postal Service operations; 
and 
‘‘(4) any other matters that justice requires. 
‘‘(f) CIVIL ACTIONS TO COLLECT.— 
‘‘(1) IN GENERAL.—In accordance with section 
409(d), a civil action may be commenced in an ap-
propriate district court of the United States to collect 
a civil penalty, clean-up costs, and damages assessed 
under subsection (c). 
‘‘(2) COMPROMISE.—The Postal Service may 
compromise the amount of a civil penalty, clean-up 
costs, and damages assessed under subsection (c) be-
fore commencing a civil action with respect to such 
civil penalty, clean-up costs, and damages under 
paragraph (1). 
‘‘(g) CIVIL JUDICIAL PENALTIES.—
123 
‘‘(1) IN GENERAL.—At the request of the Postal 
Service, the Attorney General may bring a civil ac-
tion in an appropriate district court of the United 
States to enforce this section or a regulation pre-
scribed under this section. 
‘‘(2) RELIEF.—The court in a civil action under 
paragraph (1) may award appropriate relief, includ-
ing a temporary or permanent injunction, civil pen-
alties as determined in accordance with this section, 
or punitive damages. 
‘‘(3) CONSTRUCTION.—A civil action under this 
subsection shall be in lieu of civil penalties for the 
same violation under subsection (c)(1)(A). 
‘‘(h) DEPOSIT OF AMOUNTS COLLECTED.— 
‘‘(1) POSTAL SERVICE FUND.—Except as pro-
vided under paragraph (2), amounts collected under 
subsection (c)(1)(B) and (C) shall be deposited into 
the Postal Service Fund under section 2003. 
‘‘(2) TREASURY.—Amounts collected under sub-
section (c)(1)(A) and any punitive damages collected 
under subsection (c)(1)(C) shall be deposited into the 
Treasury of the United States.’’. 
(c) CONFORMING AMENDMENTS.—(1) Section 2003(b) 
of title 39, United States Code, is amended—
124 
(A) in paragraph (7), by striking ‘‘and’’ after 
the semicolon; 
(B) in paragraph (8), by striking ‘‘purposes.’’ 
and inserting ‘‘purposes; and’’; and 
(C) by adding at the end the following: 
‘‘(9) any amounts collected under section 3018.’’. 
(2) The analysis for chapter 30 of title 39, United 
States Code, is amended by adding at the end the following: 
‘‘3018. Hazardous material.’’. 
(d) INJURIOUS ARTICLES AS NONMAILABLE.—Section 
1716(a) of title 18, United States Code, is amended by in-
serting after ‘‘explosives,’’ the following: ‘‘hazardous mate-
rials,’’. 
SEC. 810. PROVISIONS RELATING TO COOPERATIVE MAIL-
INGS. 
(a) DETERMINATION.—The Postal Regulatory Com-
mission shall examine section E670.5.3 of the Domestic 
Mail Manual to determine whether it contains adequate 
safeguards to protect against (1) abuses of rates for non-
profit mail and (2) deception of consumers. 
(b) REGULATIONS.—If the Postal Regulatory Commis-
sion determines that section E670.5.3 of the Domestic Mail 
Manual does not contain adequate safeguards as described 
in the preceding subsection, the Commission shall promul-
gate such regulations as may be necessary to ensure such 
safeguards.
125 
(c) TIMING.—The Postal Regulatory Commission shall 
complete the examination required by subsection (a) and 
the promulgation of any necessary regulations required by 
subsection (b) within one year after the date of the enact-
ment of this section. 
SEC. 811. TECHNICAL AND CONFORMING AMENDMENTS. 
(a) REIMBURSEMENT.—Section 3681 of title 39, 
United States Code, is amended by striking ‘‘section 3628’’ 
and inserting ‘‘sections 3662 through 3664’’. 
(b) SIZE AND WEIGHT LIMITS.—Section 3682 of title 
39, United States Code, is amended to read as follows: 
‘‘§ 3682. Size and weight limits 
‘‘The Postal Service may establish size and weight lim-
itations for mail matter in the market-dominant category 
of mail consistent with regulations the Postal Regulatory 
Commission may prescribe under section 3622. The Postal 
Service may establish size and weight limitations for mail 
matter in the competitive category of mail consistent with 
its authority under section 3632.’’. 
(c) REVENUE FOREGONE, ETC.—Title 39, United 
States Code, is amended— 
(1) in section 503 (as so redesignated by section 
501), by striking ‘‘this chapter.’’ and inserting ‘‘this 
title.’’; and
126 
(2) in section 2401(d), by inserting ‘‘(as last in 
effect before enactment of the Postal Accountability 
and Enhancement Act)’’ after ‘‘3626(a)’’ and after 
‘‘3626(a)(3)(B)(ii)’’. 
(d) APPROPRIATIONS
AND
REPORTING
REQUIRE-
MENTS.— 
(1) APPROPRIATIONS.—Subsection (e) of section 
2401 of title 39, United States Code, is amended— 
(A) by striking ‘‘Committee on Post Office 
and Civil Service’’ each place it appears and in-
serting ‘‘Committee on Government Reform’’; 
and 
(B) by striking ‘‘Not later than March 15 of 
each year,’’ and inserting ‘‘Each year,’’. 
(2) 
REPORTING
REQUIREMENTS.—Sections 
2803(a) and 2804(a) of title 39, United States Code, 
are amended by striking ‘‘2401(g)’’ and inserting 
‘‘2401(e)’’. 
(e) AUTHORITY TO FIX RATES AND CLASSES GEN-
ERALLY; REQUIREMENT RELATING TO LETTERS SEALED 
AGAINST INSPECTION.—Section 404 of title 39, United 
States Code (as amended by section 102) is further amended 
by redesignating subsections (b) and (c) as subsections (d) 
and (e), respectively, and by inserting after subsection (a) 
the following:
127 
‘‘(b) Except as otherwise provided, the Governors are 
authorized to establish reasonable and equitable classes of 
mail and reasonable and equitable rates of postage and fees 
for postal services in accordance with the provisions of 
chapter 36. Postal rates and fees shall be reasonable and 
equitable and sufficient to enable the Postal Service, under 
best practices of honest, efficient, and economical manage-
ment, to maintain and continue the development of postal 
services of the kind and quality adapted to the needs of the 
United States. 
‘‘(c) The Postal Service shall maintain one or more 
classes of mail for the transmission of letters sealed against 
inspection. The rate for each such class shall be uniform 
throughout the United States, its territories, and posses-
sions. One such class shall provide for the most expeditious 
handling and transportation afforded mail matter by the 
Postal Service. No letter of such a class of domestic origin 
shall be opened except under authority of a search warrant 
authorized by law, or by an officer or employee of the Postal 
Service for the sole purpose of determining an address at 
which the letter can be delivered, or pursuant to the author-
ization of the addressee.’’. 
(f) LIMITATIONS.—Section 3684 of title 39, United 
States Code, is amended by striking all that follows ‘‘any 
provision’’ and inserting ‘‘of this title.’’.
128 
(g) MISCELLANEOUS.—Title 39, United States Code, 
is amended— 
(1) in section 1005(d)(2)— 
(A) by striking ‘‘subsection (g) of section 
5532,’’; and 
(B) by striking ‘‘8344,’’ and inserting 
‘‘8344’’; 
(2) in the analysis for part III, by striking the 
item relating to chapter 28 and inserting the fol-
lowing: 
‘‘28. Strategic Planning and Performance Management ..............................
2801’’; 
(3) in section 3005(a)— 
(A) in the matter before paragraph (1), by 
striking all that follows ‘‘nonmailable’’ and pre-
cedes ‘‘(h),’’ and inserting ‘‘under section 
3001(d),’’; and 
(B) in the sentence following paragraph (3), 
by striking all that follows ‘‘nonmailable’’ and 
precedes ‘‘(h),’’ and inserting ‘‘under such section 
3001(d),’’; 
(4) in section 3210(a)(6)(C), by striking the 
matter after ‘‘if such mass mailing’’ and before ‘‘than 
60 days’’ and inserting ‘‘is postmarked fewer’’; and 
(5) by striking the heading for section 3627 and 
inserting the following:
129 
‘‘§ 3627. Adjusting free rates’’. 
TITLE 
IX—POSTAL 
PENSION 
FUNDING 
REFORM 
AMEND-
MENTS 
SEC. 901. CIVIL SERVICE RETIREMENT SYSTEM. 
(a) TERMINATION OF OBLIGATION TO PAY GOVERN-
MENT CONTRIBUTIONS.—Section 8334(a)(1)(B)(ii) of title 
5, United States Code, is amended by striking all that fol-
lows ‘‘be equal to’’ and inserting ‘‘zero’’. 
(b) DETERMINATION
AND DISPOSITION
OF POSTAL 
SURPLUS OR SUPPLEMENTAL LIABILITY.—Section 8348(h) 
of title 5, United States Code, is amended to read as follows: 
‘‘(h)(1) For purposes of this subsection, the ‘Postal sur-
plus or supplemental liability’ means the estimated dif-
ference, as determined by the Office, between— 
‘‘(A) the actuarial present value of all future 
benefits which are payable from the Fund under this 
subchapter to current or former employees of the 
United States Postal Service, or their survivors, and 
attributable to civilian employment with the Postal 
Service, and 
‘‘(B) the sum of— 
‘‘(i) the actuarial present value of deduc-
tions to be withheld from the future basic pay of 
employees of the Postal Service currently subject 
to this subchapter pursuant to section 8334;
130 
‘‘(ii) that portion of the Fund balance, as of 
the date the Postal surplus or supplemental li-
ability is determined, attributable to payments 
to the Fund by the Postal Service and its em-
ployees, plus the earnings on such amounts while 
in the Fund; and 
‘‘(iii) any other appropriate amount, as de-
termined by the Office in accordance with gen-
erally accepted actuarial practices and prin-
ciples. 
‘‘(2)(A)(i) Not later than June 15, 2006, the Office 
shall determine the Postal surplus or supplemental liability 
as of September 30, 2005. 
‘‘(ii) If a supplemental liability is determined under 
this subparagraph for fiscal year 2005, the Office shall es-
tablish an amortization schedule, including a series of equal 
annual installments commencing September 30, 2006, 
which provides for the liquidation of such liability by Sep-
tember 30, 2043. 
‘‘(iii) If a surplus is determined under this subpara-
graph for fiscal year 2005, the amount of the surplus shall 
be transferred to the Postal Service Retiree Health Benefits 
Fund by June 30, 2006. 
‘‘(B)(i) For each of fiscal years 2006 through 2038, 
the Office shall determine the Postal surplus or supple-
132 
annual installments commencing September 30, 2040, 
which provides for the liquidation of such liability by Sep-
tember 30, 2043. 
‘‘(iii) If a surplus is determined under this subpara-
graph for fiscal year 2039, the amount of the surplus— 
‘‘(I) shall be applied first toward reducing the 
amount of any supplemental liability described in 
section 8423(b)(1)(B); and 
‘‘(II) to the extent that any portion of such sur-
plus remains after the application of subclause (I), 
shall, not later than June 30, 2040, be transferred to 
the Postal Service Retiree Health Benefits Fund. 
‘‘(D) An amortization schedule under this para-
graph— 
‘‘(i) shall be established in accordance with gen-
erally accepted actuarial practices and principles, 
with interest computed at the rate used in the most 
recent valuation of the Civil Service Retirement Sys-
tem; 
‘‘(ii) shall supersede any amortization schedule 
previously established under this paragraph; and 
‘‘(iii) shall not be taken into account, for pur-
poses of any determination of Postal surplus or sup-
plemental liability, except to the extent of any 
amounts under such schedule actually paid.
133 
‘‘(E) The Postal Service shall pay to the Office the 
amounts due under any amortization schedule established 
under this paragraph that has not been superseded. 
‘‘(3) Notwithstanding any other provision of law, in 
computing the amount of any payment under any other 
subsection of this section that is based on the amount of 
the unfunded liability, such payment shall be computed dis-
regarding that portion of the unfunded liability that the 
Office determines will be liquidated by payments under this 
subsection. 
‘‘(4) As used in this subsection, ‘Postal Service Retiree 
Health Benefits Fund’ refers to the Postal Service Retiree 
Health Benefits Fund, as established by section 8909a.’’. 
(c) PROVISIONS RELATING TO AMOUNTS FOR MILI-
TARY SERVICE.—In the application of paragraph (2) of sec-
tion 8348(g) of title 5, United States Code, for fiscal year 
2006, the Office of Personnel Management shall include, in 
addition to the amount otherwise computed under that 
paragraph, the amounts that would have been included for 
fiscal years 2003 through 2005 with respect to credit for 
military service of former employees of the United States 
Postal Service if Public Law 108–18 had not been enacted 
(including earnings thereon) and the Secretary of the Treas-
ury shall make the required transfer to the Civil Service 
Retirement and Disability Fund based on that amount.
134 
(d) REVIEW.— 
(1) IN
GENERAL.—Notwithstanding any other 
provision of this section, any determination or rede-
termination made by the Office of Personnel Manage-
ment under this section shall, upon request of the 
United States Postal Service, be subject to review by 
the Postal Regulatory Commission. The Commission 
shall submit a report containing the results of any 
such review to the Postal Service, the Office of Per-
sonnel Management, and the Congress. 
(2) RESPONSE.—Upon receiving the report of the 
Postal Regulatory Commission, the Office of Per-
sonnel Management shall reconsider its determination 
or redetermination in light of such report, and shall 
make any appropriate adjustments. The Office shall 
submit a report containing the results of its reconsid-
eration to the Commission, the Postal Service, and the 
Congress. 
SEC. 902. HEALTH INSURANCE. 
(a) IN GENERAL.—Chapter 89 of title 5, United States 
Code, is amended— 
(1) in section 8906(g)(2)(A), by striking ‘‘by the 
United States Postal Service.’’ and inserting ‘‘first 
from the Postal Service Retiree Health Benefits Fund 
up to the amount contained therein, with any re-
135 
maining amount paid by the United States Postal 
Service.’’; 
(2) by inserting after section 8909 the following: 
‘‘§ 8909a. Postal Service Retiree Health Benefits Fund 
‘‘(a) There is in the Treasury of the United States a 
Postal Service Retiree Health Benefits Fund (hereinafter in 
this section referred to as the ‘Fund’) which is administered 
by the Office of Personnel Management. Any amounts 
transferred to the Fund under section 8348(h)(2) shall yield 
interest at a rate equal to the weighted average yield of all 
the investments in the Civil Service Retirement and Dis-
ability Fund as of the date of transfer. All other investments 
of amounts in the Fund shall be made in accordance with 
subsections (c)–(e) of section 8348. 
‘‘(b) The Fund is available without fiscal year limita-
tion for payments required by section 8906(g)(2). 
‘‘(c)(1) Not later than June 30, 2006, and by June 
30 of each succeeding year, the Office of Personnel Manage-
ment shall compute the net present value of the excess of 
future payments required by section 8906(g)(2)(A) for cur-
rent and future United States Postal Service annuitants 
over the value of the assets of the Fund as of the end of 
the fiscal year ending on September 30 of that year. The 
actuarial costing method to be used by the Office and all 
actuarial assumptions shall be established by the Office
136 
after consultation with the United States Postal Service and 
must be in accordance with generally accepted actuarial 
practices and principles. 
‘‘(2) Not later than September 30, 2006, and by Sep-
tember 30 of each succeeding year, the Office shall compute 
and the United States Postal Service shall pay into such 
Fund— 
‘‘(A) the portion of the net present value de-
scribed in paragraph (1) attributable to the current 
year’s service of Postal Service employees; and 
‘‘(B) interest on the net present value described 
in paragraph (1) for that fiscal year, at the interest 
rate used in computing that net present value. 
‘‘(3)(A) Any computation or other determination of the 
Office under this subsection shall, upon request of the Postal 
Service, be subject to review by the Postal Regulatory Com-
mission. The Commission shall submit a report containing 
the results of any such review to the Postal Service, the Of-
fice of Personnel Management, and the Congress. 
‘‘(B) Upon receiving the report of the Postal Regu-
latory Commission, the Office of Personnel Management 
shall reconsider its computation or other determination in 
light of such report, and shall make any appropriate adjust-
ments. The Office shall submit a report containing the re-
137 
sults of its reconsideration to the Commission, the Postal 
Service, and the Congress. 
‘‘(4) The Office shall promulgate, after consultation 
with the United States Postal Service, any regulations it 
deems necessary under this subsection.’’; and 
(3) in the analysis by inserting after the item re-
lating to section 8909 the following: 
‘‘8909a. Postal Service Retiree Health Benefits Fund.’’. 
(b) REVIEW.— 
(1) IN
GENERAL.—Any regulation established 
under section 8909a(c)(4) of title 5, United States 
Code (as amended by subsection (a)) shall, upon re-
quest of the Postal Service, be subject to review by the 
Postal Regulatory Commission. The Commission shall 
submit a report containing the results of any such re-
view to the Postal Service, the Office of Personnel 
Management, and the Congress. 
(2) RESPONSE.—Upon receiving the report of the 
Postal Regulatory Commission, the Office of Per-
sonnel Management shall reconsider its regulation in 
light of such report, and shall take such action as it 
considers appropriate. The Office shall submit a re-
port containing the results of its reconsideration to 
the Commission, the Postal Service, and the Congress. 
SEC. 903. REPEALER. 
Section 3 of Public Law 108–18 is repealed.
138 
SEC. 904. ENSURING APPROPRIATE USE OF ESCROW AND 
MILITARY SAVINGS. 
(a) DEFINITION.—For purposes of this section, the 
term ‘‘total savings’’ means, for any fiscal year, the amount 
equal to— 
(1) the amount of contributions that the Postal 
Service would otherwise have been required to make 
to the Civil Service Retirement and Disability Fund 
under subchapter III of chapter 83 of title 5, United 
States Code, for such fiscal year if Public Law 108– 
18 and this Act had not been enacted, minus 
(2) the amount of amortization payments (if 
any) required under section 8348(h)(2) of title 5, 
United States Code, for such fiscal year. 
(b) CALCULATIONS.—The following calculations shall 
be made for each of fiscal years 2006 through 2015: 
(1) Not later than January 31 of the fiscal year 
following the fiscal year involved, the Office of Per-
sonnel Management (in consultation with the Postal 
Service) shall determine the total savings for the fiscal 
year. 
(2) On the date of making its determination 
under paragraph (1), the Office shall also determine 
(in consultation with the Postal Service) the amount 
by which—
139 
(A) the amount the Postal Service paid for 
that fiscal year into the Postal Service Retiree 
Health Benefits Fund in accordance with 
8909a(c)(2) of title 5, United States Code, ex-
ceeds (if at all) 
(B) the amount of payments made by the 
Postal Service for that fiscal year from such 
Fund in order to satisfy the requirements of sec-
tion 8906(g)(2) of such title 5. 
(c) REQUIREMENTS.— 
(1) IF THRESHOLD IS MET.—If the amount cal-
culated under subsection (b)(2) for a fiscal year is 
greater than or equal to two-thirds of the total savings 
in such fiscal year, no further action under this sec-
tion is necessary with respect to such fiscal year. 
(2) IF THRESHOLD IS NOT MET.— 
(A) IN GENERAL.—If the amount calculated 
under subsection (b)(2) for a fiscal year is less 
than two-thirds of the total savings in such fiscal 
year, the Postal Service shall pay into the Postal 
Service Retiree Health Benefits Fund, by June 
30 of the following fiscal year, an amount equal 
to the difference. 
(B) ALLOWABLE ALTERNATIVE.—
140 
(i) 
IN
GENERAL.—Notwithstanding 
subparagraph (A), and subject to clause (ii), 
the Postal Service may instead use the 
amount that it would otherwise be required 
to pay into the Postal Service Retiree 
Health Benefits Fund for a year (or any 
portion thereof) to reduce the postal debt. 
(ii) LIMITATION.—Amounts used to re-
duce the postal debt under this subpara-
graph 
may 
not 
exceed 
a 
total 
of 
$3,000,000,000. 
(3) AGGREGATION
ALLOWED.—Notwithstanding 
paragraph (2), if the amount calculated under sub-
section (b)(2) for a fiscal year is less than two-thirds 
of the total savings in such fiscal year, but the sum 
of the amounts calculated under subsection (b)(2) for 
all fiscal years from 2006 to the fiscal year involved 
is greater than or equal to two-thirds of the sum of 
the total savings for such years, no further action 
under this section is necessary with respect to such 
fiscal year. 
(d) REPORTING REQUIREMENT.—The Office of Per-
sonnel Management shall submit a report containing the 
results of its calculations under subsection (b) to the Postal
141 
Service, the Postal Regulatory Commission, and the Con-
gress. 
(e) WAIVER AUTHORITY.—The requirements of sub-
section (c)(2)(A) may, upon application of the Postal Serv-
ice, be waived by the Postal Regulatory Commission, to the 
extent that the Commission determines that such waiver is 
reasonable and equitable and necessary to enable the Postal 
Service, under best practices of honest, efficient, and eco-
nomical management, to maintain and continue the devel-
opment of postal services of the kind and quality adapted 
to the needs of the United States. 
SEC. 905. EFFECTIVE DATES. 
(a) IN GENERAL.—Except as otherwise provided, this 
title shall take effect on October 1, 2005. 
(b) GOVERNMENT CONTRIBUTIONS.—Section 901(a)(1) 
shall take effect on the first day of the first pay period be-
ginning on or after October 1, 2005.
Union Calendar No. 427 
108TH CONGRESS 
2D SESSION 
H. R. 4341 
[Report No. 108–672, Parts I and II] 
A BILL 
To reform the postal laws of the United States. 
SEPTEMBER 23, 2004 
Reported by the Committee on the Judiciary with an 
amendment, committed to the Committee of the Whole 
House on the State of the Union, and ordered to be 
printed