I 
108TH CONGRESS 
2D SESSION 
H. R. 4341
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 
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 
schedule management positions. 
Sec. 705. Plan for assisting displaced workers. 
Sec. 706. Contracts with women, minorities, and small businesses. 
Sec. 707. Rates for periodicals. 
Sec. 708. Assessment of certain rate deficiencies. 
Sec. 709. Postal processing and distribution network study. 
Sec. 710. Definition. 
TITLE VIII—MISCELLANEOUS; TECHNICAL AND CONFORMING 
AMENDMENTS 
Sec. 801. Employment of postal police officers. 
Sec. 802. Date of postmark to be treated as date of appeal in connection with 
the closing or consolidation of post offices. 
Sec. 803. Provisions relating to benefits under chapter 81 of title 5, United 
States Code, for officers and employees of the former Post Of-
fice Department. 
Sec. 804. Obsolete provisions. 
Sec. 805. Expanded contracting authority. 
Sec. 806. Investments. 
Sec. 807. Repeal of section 5403. 
Sec. 808. Reduced rates. 
Sec. 809. Hazardous matter. 
Sec. 810. Provisions relating to cooperative mailings. 
Sec. 811. Technical and conforming amendments. 
TITLE IX—POSTAL PENSION FUNDING REFORM AMENDMENTS 
Sec. 901. Civil Service Retirement System. 
Sec. 902. Health insurance. 
Sec. 903. Repealer. 
Sec. 904. Ensuring appropriate use of escrow and military savings. 
Sec. 905. Effective dates.
TITLE I—DEFINITIONS; POSTAL 
SERVICES 
SEC. 101. DEFINITIONS. 
Section 102 of title 39, United States Code, is 
amended by striking ‘‘and’’ at the end of paragraph (3), 
by striking the period at the end of paragraph (4) and 
inserting a semicolon, and by adding at the end the fol-
lowing: 
‘‘(5) ‘postal service’ means the carriage of let-
ters, printed matter, or mailable packages, including
acceptance, collection, processing, delivery, or other 
services supportive or ancillary thereto; 
‘‘(6) ‘product’ means a postal service with a 
distinct cost or market characteristic for which a 
rate or rates are, or may reasonably be, applied; 
‘‘(7) ‘rates’, as used with respect to products, 
includes fees for postal services; 
‘‘(8) ‘market-dominant product’ or ‘product in 
the market-dominant category of mail’ means a 
product subject to subchapter I of chapter 36; 
‘‘(9) ‘competitive product’ or ‘product in the 
competitive category of mail’ means a product sub-
ject 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.’’. 
(b) 
CONFORMING
AMENDMENT.—Section 
1402(b)(1)(B)(ii) of the Victims of Crime Act of 1984 (98 
Stat. 2170; 42 U.S.C. 10601(b)(1)(B)(ii)) is amended by 
striking ‘‘404(a)(8)’’ and inserting ‘‘404(a)(7)’’. 
SEC. 103. FINANCIAL TRANSPARENCY. 
(a) IN GENERAL.—Section 101 of title 39, United 
States Code, is amended by redesignating subsections (d) 
through (g) as subsections (e) through (h), respectively, 
and by inserting after subsection (c) the following: 
‘‘(d) As an establishment that provides both market-
dominant and competitive products, the Postal Service 
shall be subject to a high degree of transparency, including 
in its finances and operations, to ensure fair treatment 
of customers of the Postal Service’s market-dominant 
products and companies competing with the Postal Serv-
ice’s competitive products.’’.
(b) CONFORMING AMENDMENT.—Section 5001 of 
title 39, United States Code, is amended by striking 
‘‘101(e) and (f)’’ and inserting ‘‘101(f) and (g)’’. 
TITLE II—MODERN RATE 
REGULATION 
SEC. 201. PROVISIONS RELATING TO MARKET-DOMINANT 
PRODUCTS. 
(a) IN GENERAL.—Chapter 36 of title 39, United 
States Code, is amended by striking sections 3621 and 
3622 and inserting the following: 
‘‘§ 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 domes-
tic and international); and 
‘‘(C) special services; 
‘‘(2) all first-class mail not included under 
paragraph (1); 
‘‘(3) periodicals; 
‘‘(4) standard mail; 
‘‘(5) media mail; 
‘‘(6) library mail; and 
‘‘(7) bound printed matter,
subject to any changes the Postal Regulatory Commission 
may make under section 3642. 
‘‘(b) RULE
OF CONSTRUCTION.—Mail matter re-
ferred to in subsection (a) shall, for purposes of this sub-
chapter, 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 Regu-
latory 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 re-
vise) 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 stand-
ards. 
‘‘(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 classifica-
tion system; 
‘‘(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 rea-
sonably assignable to such class or type; 
‘‘(4) the effect of rate increases upon the gen-
eral public, business mail users, and enterprises in 
the private sector of the economy engaged in the de-
livery of mail matter other than letters; 
‘‘(5) the available alternative means of sending 
and receiving letters and other mail matter at rea-
sonable 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 
Service; 
‘‘(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 clas-
sifications 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 re-
quire high degrees of reliability and speed of deliv-
ery; 
‘‘(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 reg-
ulating 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 in-
crease is reasonable and equitable and necessary to enable 
the Postal Service, under best practices of honest, effi-
cient, and economical management, to maintain and con-
tinue the development of postal services of the kind and 
quality adapted to the needs of the United States. 
‘‘(f) TRANSITION RULE.—Until regulations under 
this section first take effect, rates and classes for market-
dominant products shall remain subject to modification in 
accordance with the provisions of this chapter and section
407, as such provisions were last in effect before the date 
of the enactment of this section.’’. 
(b) REPEALED SECTIONS.—Sections 3623, 3624, 
3625, and 3628 of title 39, United States Code, are re-
pealed. 
(c) REDESIGNATION.—Chapter 36 of title 39, United 
States Code (as in effect after the amendment made by 
section 501(a)(2), but before the amendment made by sec-
tion 202) is amended by striking the heading for sub-
chapter 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 amend-
ed 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 
product, means the direct and indirect postal costs attrib-
utable to such product. 
‘‘(c) RULE
OF CONSTRUCTION.—Mail matter re-
ferred to in subsection (a) shall, for purposes of this sub-
chapter, 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 
established in writing, complete with a statement of 
explanation and justification, and the date as of 
which each such rate or class takes effect. 
‘‘(2) RATES OR CLASSES OF GENERAL APPLICA-
BILITY.—In the case of rates or classes of general 
applicability 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 
Federal 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 ef-
fective date of any new rates or classes as the Gov-
ernors 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 sub-
chapter is or is not of general applicability in the 
Nation as a whole or in any substantial region of the 
Nation.
‘‘(c) TRANSITION RULE.—Until regulations under 
section 3633 first take effect, rates and classes for com-
petitive products shall remain subject to modification in 
accordance with the provisions of this chapter and section 
407, as such provisions were as last in effect before the 
date of the enactment of this section. 
‘‘§ 3633. Provisions applicable to rates for competitive 
products 
‘‘The Postal Regulatory Commission shall, within 18 
months after the date of the enactment of this section, 
promulgate (and may from time to time thereafter revise) 
regulations—
‘‘(1) to prohibit the subsidization of competitive 
products by market-dominant products; 
‘‘(2) to ensure that each competitive product 
covers its costs attributable; and 
‘‘(3) to ensure that all competitive products 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 
conduct market tests of experimental products in ac-
cordance with this section. 
‘‘(2) PROVISIONS
WAIVED.—A product shall 
not, while it is being tested under this section, be 
subject to the requirements of sections 3622, 3633, 
or 3642, or regulations promulgated under those 
sections. 
‘‘(b) CONDITIONS.—A product may not be tested 
under this section unless it satisfies each of the following: 
‘‘(1) SIGNIFICANTLY
DIFFERENT
PRODUCT.—
The product is, from the viewpoint of the mail users, 
significantly different from all products offered by 
the Postal Service within the 2-year period preceding 
the start of the test. 
‘‘(2) MARKET DISRUPTION.—The introduction 
or continued offering of the product will not create 
an unfair or otherwise inappropriate competitive ad-
vantage for the Postal Service or any mailer, par-
ticularly in regard to small business concerns (as de-
fined under subsection (h)).
‘‘(3) CORRECT CATEGORIZATION.—The Postal 
Service identifies the product, for the purpose of a 
test under this section, as either market dominant or 
competitive, consistent with the criteria under sec-
tion 3642(b)(1). Costs and revenues attributable to 
a product identified as competitive shall be included 
in any determination under section 3633(3) (relating 
to provisions applicable to competitive products col-
lectively). 
‘‘(c) NOTICE.—
‘‘(1) IN GENERAL.—At least 30 days before ini-
tiating a market test under this section, the Postal 
Service shall file with the Postal Regulatory Com-
mission and publish in the Federal Register a no-
tice—
‘‘(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 re-
quired 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 re-
quire the publication of any information as to which 
confidential treatment is accorded under the pre-
ceding 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 na-
tionwide in any year, subject to paragraph (2) and
subsection (g). In carrying out the preceding sen-
tence, the Postal Regulatory Commission may limit 
the amount of revenues the Postal Service may ob-
tain from any particular geographic market as nec-
essary to prevent market disruption (as defined in 
subsection (b)(2)). 
‘‘(2) EXEMPTION
AUTHORITY.—The Postal 
Regulatory Commission may, upon written applica-
tion 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 Post-
al Service from such product do not exceed 
$50,000,000 in any year, subject to subsection (g). 
In reviewing an application under this paragraph, 
the Postal Regulatory Commission shall approve 
such application if it determines that—
‘‘(A) the product is likely to benefit the 
public and meet an expected demand; 
‘‘(B) the product is likely to contribute to 
the financial stability of the Postal Service; and 
‘‘(C) the product is not likely to result in 
unfair or otherwise inappropriate competition. 
‘‘(f) CANCELLATION.—If the Postal Regulatory 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 determina-
tion under this subsection shall be made in accordance 
with such procedures as the Commission shall by regula-
tion prescribe. 
‘‘(g) ADJUSTMENT FOR INFLATION.—For purposes 
of each year following the year in which occurs the dead-
line for the Postal Service’s first report to the Postal Reg-
ulatory Commission under section 3652(a), each dollar 
amount contained in this section shall be adjusted by the 
change in the Consumer Price Index for such year (as de-
termined under regulations of the Commission). 
‘‘(h) DEFINITION
OF
A SMALL BUSINESS CON-
CERN.—The criteria used in defining small business con-
cerns or otherwise categorizing business concerns as small 
business concerns shall, for purposes of this section, be 
established by the Postal Regulatory Commission in con-
formance with the requirements of section 3 of the Small 
Business Act. 
‘‘(i) EFFECTIVE DATE.—Market tests under this 
subchapter may be conducted in any year beginning with
the first year in which occurs the deadline for the Postal 
Service’s first report to the Postal Regulatory Commission 
under section 3652(a).
‘‘§ 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 Serv-
ice or users of the mails, or upon its own initiative, the 
Postal Regulatory Commission may change the list of 
market-dominant products under section 3621 and the list 
of competitive products under section 3631 by adding new 
products to the lists, removing products from the lists, or 
transferring products between the lists. 
‘‘(b) CRITERIA.—All determinations by the Postal 
Regulatory Commission under subsection (a) shall be 
made in accordance with the following criteria: 
‘‘(1) The market-dominant category of products 
shall consist of each product in the sale of which the 
Postal Service exercises sufficient market power that 
it can effectively set the price of such product sub-
stantially above costs, raise prices significantly, de-
crease quality, or decrease output, without risk of 
losing business to other firms offering similar prod-
ucts. The competitive category of products shall con-
sist of all other products. 
‘‘(2) EXCLUSION OF PRODUCTS COVERED BY 
POSTAL MONOPOLY.—A product covered by the post-
al 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 sec-
tion 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 mak-
ing 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 prod-
uct involved on the appropriateness of the pro-
posed 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 SUB-
ORDINATE 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 min-
imum quantity requirements standing alone). 
‘‘(d) NOTIFICATION
AND PUBLICATION REQUIRE-
MENTS.—
‘‘(1) NOTIFICATION REQUIREMENT.—The Post-
al Service shall, whenever it requests to add a prod-
uct or transfer a product to a different category, file 
with the Postal Regulatory Commission and publish 
in the Federal Register a notice setting out the basis 
for its determination that the product satisfies the 
criteria under subsection (b) and, in the case of a 
request to add a product or transfer a product to 
the competitive category of mail, that the product 
meets the regulations promulgated by the Postal 
Regulatory Commission pursuant to section 3633. 
The provisions of section 504(g) shall be available 
with respect to any information required to be filed. 
‘‘(2) PUBLICATION REQUIREMENT.—The Postal 
Regulatory Commission shall, whenever it changes 
the list of products in the market-dominant or com-
petitive category of mail, prescribe new lists of prod-
ucts. The revised lists shall indicate how and when 
any previous lists (including the lists under sections 
3621 and 3631) are superseded, and shall be pub-
lished in the Federal Register.
‘‘(e) NOTIFICATION
REQUIREMENT.—The Postal 
Regulatory Commission shall, whenever it reaches a con-
clusion that a product or products should be transferred 
between the list of market-dominant products under sec-
tion 3621 and the list of competitive products under sec-
tion 3631, immediately notify the appropriate committees 
of the Congress. No such transfer may take effect less 
than 12 months after such conclusion. 
‘‘(f) PROHIBITION.—Except as provided in section 
3641, no product that involves the carriage of letters, 
printed matter, or mailable packages may be offered by 
the Postal Service unless it has been assigned to the mar-
ket-dominant or competitive category of mail (as appro-
priate) either—
‘‘(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 
subsection (b)) is amended by striking the heading for 
subchapter IV and inserting the following:
‘‘SUBCHAPTER V—POSTAL SERVICES, 
COMPLAINTS, AND JUDICIAL REVIEW’’. 
(b) REPORTS AND COMPLIANCE.—Chapter 36 of title 
39, United States Code, is amended by inserting after 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 
period covered by such report, an estimate of the costs 
incurred by the Postal Service in providing—
‘‘(1) postal services to areas of the Nation 
where, in the judgment of the Postal Regulatory 
Commission, the Postal Service either would not 
provide services at all or would not provide such 
services in accordance with the requirements of this 
title if the Postal Service were not required to pro-
vide prompt, reliable, and efficient services to pa-
trons in all areas and all communities, including as 
required under the first sentence of section 101(b); 
‘‘(2) free or reduced rates for postal services as 
required by this title; and 
‘‘(3) other public services or activities which, in 
the judgment of the Postal Regulatory Commission, 
would not otherwise have been provided by the Post-
al 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 Com-
mission with such information as may, in the judgment 
of the Commission, be necessary in order for the Commis-
sion to prepare its reports under this section. 
‘‘§ 3652. Annual reports to the Commission 
‘‘(a) COSTS, REVENUES, AND RATES.—Except as 
provided in subsection (c), the Postal Service shall, no 
later than 90 days after the end of each year, prepare and 
submit to the Postal Regulatory Commission a report (to-
gether with such nonpublic annex thereto as the Commis-
sion 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 prod-
ucts during such year complied with all applicable 
requirements of this title; and 
‘‘(2) which shall, for each market-dominant 
product provided in such year, provide—
‘‘(A) market information, including mail 
volumes; and 
‘‘(B) measures of the quality of service 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 (includ-
ing any annex thereto and the information required under 
subsection (b)), the Postal Service shall have the informa-
tion contained in such report (and annex) audited by the
Inspector General. The results of any such audit shall be 
submitted along with the report to which it pertains. 
‘‘(b) INFORMATION RELATING TO WORKSHARE 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-dom-
inant product for which a workshare discount was in 
effect during the period covered by such report: 
‘‘(A) The per-item cost avoided by the 
Postal Service by virtue of such discount. 
‘‘(B) The percentage of such per-item cost 
avoided that the per-item workshare discount 
represents. 
‘‘(C) The per-item contribution made to 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 
Postal Service—
‘‘(1) may report summary data on the costs, 
revenues, and quality of service by market test; and 
‘‘(2) shall report such data as the Postal Regu-
latory Commission requires. 
‘‘(d) SUPPORTING MATTER.—The Postal Regulatory 
Commission shall have access, in accordance with such 
regulations as the Commission shall prescribe, to the 
working papers and any other supporting matter of the 
Postal Service and the Inspector General in connection 
with any information submitted under this section. 
‘‘(e) CONTENT AND FORM OF REPORTS.—
‘‘(1) IN
GENERAL.—The Postal Regulatory 
Commission shall, by regulation, prescribe the con-
tent and form of the public reports (and any non-
public annex and supporting matter relating thereto) 
to be provided by the Postal Service under this sec-
tion. In carrying out this subsection, the Commis-
sion 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 be-
come significantly inaccurate or can be signifi-
cantly 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,
‘‘(2) performance plan under section 2803; and 
‘‘(3) program performance reports under sec-
tion 2804. 
‘‘§ 3653. Annual determination of compliance 
‘‘(a) OPPORTUNITY FOR PUBLIC COMMENT.—After 
receiving the reports required under section 3652 for any 
year, the Postal Regulatory Commission shall promptly 
provide an opportunity for comment on such reports by 
users of the mails, affected parties, and an officer of the 
Commission who shall be required to represent the inter-
ests of the general public. 
‘‘(b) DETERMINATION
OF COMPLIANCE
OR NON-
COMPLIANCE.—Not later than 90 days after receiving the 
submissions required under section 3652 with respect to 
a year, the Postal Regulatory Commission shall make a 
written determination as to—
‘‘(1) whether any rates or fees in effect during 
such year (for products individually or collectively) 
were not in compliance with applicable provisions of 
this chapter (or regulations promulgated there-
under); 
‘‘(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 Com-
mission shall take appropriate action in accordance with 
subsections (c)–(e) of section 3662 (as if a complaint aver-
ring 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 EN-
FORCEMENT. 
Chapter 36 of title 39, United States Code, is amend-
ed by striking sections 3662 and 3663 and inserting the 
following:
‘‘§ 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 
complaint with the Postal Regulatory Commission in such 
form and manner as the Commission may prescribe. 
‘‘(b) PROMPT RESPONSE REQUIRED.—
‘‘(1) IN
GENERAL.—The Postal Regulatory 
Commission shall, within 90 days after receiving a 
complaint under subsection (a), either—
‘‘(A) begin proceedings on such complaint; 
or 
‘‘(B) issue an order dismissing the 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 Commis-
sion fails to act in the time and manner required by 
paragraph (1) shall be treated in the same way as 
if it had been dismissed pursuant to an order issued 
by the Commission on the last day allowable for the 
issuance of such order under paragraph (1).
‘‘(c) ACTION REQUIRED IF COMPLAINT FOUND TO 
BE JUSTIFIED.—If the Postal Regulatory Commission 
finds the complaint to be justified, it shall order that the 
Postal Service take such action as the Commission con-
siders appropriate in order to achieve compliance with the 
applicable requirements and to remedy the effects of any 
noncompliance (such as ordering unlawful rates to be ad-
justed to lawful levels, ordering the cancellation of market 
tests, ordering the Postal Service to discontinue providing 
loss-making products, or requiring the Postal Service to 
make up for revenue shortfalls in competitive products). 
‘‘(d) SUSPENSION AUTHORITY.—The Postal Regu-
latory Commission may suspend implementation of rates 
or classifications under section 3632(b)(3) for a limited 
period of time pending expedited proceedings under this 
section. In evaluating whether circumstances warrant sus-
pension, 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 suf-
fer substantial injury, loss, or damage absent a suspen-
sion, (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 de-
liberate noncompliance by the Postal Service with the re-
quirements of this title, the Postal Regulatory Commission 
may order, based on the nature, circumstances, extent, 
and seriousness of the noncompliance, a fine (in the 
amount specified by the Commission in its order) for each 
incidence of noncompliance. Fines resulting from the pro-
vision of competitive products shall be paid out of the 
Competitive Products Fund established in section 2011. 
All receipts from fines imposed under this subsection shall 
be deposited in the general fund of the Treasury of the 
United States. 
‘‘§ 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 Dis-
trict of Columbia. The court shall review the order or deci-
sion in accordance with section 706 of title 5, and chapter 
158 and section 2112 of title 28, on the basis of the record 
before the Commission. For purposes of this section, the 
term ‘person’ includes the Postal Service.
‘‘§ 3664. Enforcement of orders 
‘‘The several district courts have jurisdiction specifi-
cally to enforce, and to enjoin and restrain the Postal 
Service from violating, any order issued by the Postal Reg-
ulatory Commission.’’.
SEC. 206. WORKSHARE DISCOUNTS. 
(a) IN GENERAL.—Title 39, United States Code, is 
amended by adding after section 3686 (as added by sec-
tion 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 sec-
tor workshare activity, except—
‘‘(1) where the discount is associated with a 
new product or service or with a change to an exist-
ing product or service and is necessary, over a pe-
riod of time not to exceed 4 years, to induce mailer 
behavior that will enable the new or changed product 
or service in furtherance of the overall economically 
efficient operation of the Postal Service; 
‘‘(2) to the extent that a reduction in the dis-
count would lead to a loss of volume in the affected 
category and reduce the aggregate contribution to
institutional costs of the Postal Service, from the 
mail matter subject to the discount, below what it 
otherwise would have been if the discount had not 
been reduced to costs avoided; would result in a fur-
ther increase in the rates paid by mailers not able 
to take advantage of the discount; or would impede 
the efficient operation of the Postal Service; 
‘‘(3) where the amount of the discount above 
costs avoided is necessary to mitigate rate shock and 
will be phased out over time; or 
‘‘(4) where the workshare discount is provided 
in connection with subclasses of mail consisting ex-
clusively of mail matter of educational, cultural, or 
scientific value. 
‘‘(b) REPORTING
REQUIREMENT.—Whenever the 
Postal Service establishes or maintains a workshare dis-
count, the Postal Service shall, at the time it publishes 
the workshare discount rate, file with the Postal Regu-
latory Commission a detailed report and explanation of its 
reasons for establishing or maintaining the rate, setting 
forth the data, economic analyses, and other information 
relied on by the Postal Service to justify the rate. 
‘‘(c) DEFINITION.—For purposes of this section, the 
term ‘workshare discount’ refers to rate discounts pro-
vided to mailers for presorting, prebarcoding, handling, or
transportation, as further defined by the Postal Regu-
latory Commission as part of regulations established 
under section 3622(a).’’. 
(b) CLERICAL AMENDMENT.—The analysis for chap-
ter 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 amend-
ed 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 
COMPETITIVE PRODUCTS FUND
AND RELATED MAT-
TERS.—
(1) IN
GENERAL.—Chapter 20 of title 39, 
United States Code, is amended by adding at the 
end the following: 
‘‘§ 2011. Provisions relating to competitive products 
‘‘(a) There is established in the Treasury of the 
United States a revolving fund, to be called the Postal 
Service Competitive Products Fund, which shall be avail-
able to the Postal Service without fiscal year limitation 
for the payment of—
‘‘(1) costs attributable to competitive products; 
and 
‘‘(2) all other costs incurred by the Postal Serv-
ice, to the extent allocable to competitive products. 
For purposes of this subsection, the term ‘costs attrib-
utable’ has the meaning given such term by section 3631. 
‘‘(b) There shall be deposited in the Competitive 
Products Fund, subject to withdrawal by the Postal Serv-
ice—
‘‘(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 
(including from the sale of assets), to the extent al-
locable 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 enact-
ment of the Postal Accountability and Enhancement 
Act), such other obligations or securities as it deems 
appropriate. 
‘‘(d) The Postal Service may, in its sole discretion, 
provide that moneys of the Competitive Products Fund be 
deposited in a Federal Reserve bank or a depository for 
public funds. 
‘‘(e)(1) Subject to the limitations specified in section 
2005(a), the Postal Service is authorized to borrow money 
and to issue and sell such obligations as it determines 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 provision of competitive products (as determined 
under subsection (h) or, for purposes of any period before 
accounting practices and principles under subsection (h) 
have been established and applied, the best information 
available from the Postal Service, including the audited 
statements required by section 2008(e)), and the revenues 
and receipts from such products, for the payment of the 
principal of or interest on such obligations, for the pur-
chase or redemption thereof, and for other purposes inci-
dental thereto, including creation of reserve, sinking, and 
other funds which may be similarly pledged and used, to
such extent and in such manner as it deems necessary or 
desirable. 
‘‘(2) The Postal Service may enter into binding cov-
enants with the holders of such obligations, and with the 
trustee, if any, under any agreement entered into in con-
nection 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 
period beginning on the date of the enactment of this 
paragraph and ending at the close of the 5-year period 
which begins on the date on which the 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 Serv-
ice under this subsection, be considered to affect such obli-
gations’ eligibility for purchase by, commitment to pur-
chase 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 
outstanding marketable securities of comparable maturity 
issued by entities with the same credit rating as the rating 
then most recently obtained by the Postal Service under 
subparagraph (D), as determined by the Bank. 
‘‘(D) In order to be eligible to borrow under this 
paragraph, the Postal Service shall first obtain a credit 
rating from a nationally recognized credit rating organiza-
tion. Such rating—
‘‘(i) shall be determined taking into account 
only those assets and activities of the Postal Service 
which are described in section 3634(a)(2) (relating 
to the Postal Service’s assumed taxable income from 
competitive products); and 
‘‘(ii) may, before final rules of the Postal Regu-
latory Commission under subsection (h) are issued 
(or deemed to have been issued), be based on the 
best information available from the Postal Service, 
including the audited statements required by section 
2008(e). 
‘‘(f) The receipts and disbursements of the Competi-
tive Products Fund shall be accorded the same budgetary
treatment as is accorded to receipts and disbursements of 
the Postal Service Fund under section 2009a. 
‘‘(g) A judgment against the Postal Service or the 
Government of the United States (or settlement of a 
claim) shall, to the extent that it arises out of activities 
of the Postal Service in the provision of competitive prod-
ucts, be paid out of the Competitive Products Fund.
‘‘(h)(1) The Secretary of the Treasury, in consulta-
tion with the Postal Service and an independent, certified 
public accounting firm and such other advisors as the Sec-
retary considers appropriate, shall develop recommenda-
tions regarding—
‘‘(A) the accounting practices and principles 
that should be followed by the Postal Service with 
the objectives of (i) identifying and valuing the as-
sets and liabilities of the Postal Service associated 
with providing, and the capital and operating costs 
incurred by the Postal Service in providing, competi-
tive products, and (ii) preventing the subsidization 
of such products by market-dominant products; and 
‘‘(B) the substantive and procedural rules that 
should be followed in determining the Postal Serv-
ice’s assumed Federal income tax on competitive 
products income for any year (within the meaning of 
section 3634).
Such recommendations shall be submitted to the Postal 
Regulatory Commission no earlier than 6 months, and no 
later than 12 months, after the effective date of this sec-
tion. 
‘‘(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 Commis-
sion who shall be required to represent the interests of 
the general public, an opportunity to present their views 
on those recommendations through submission of written 
data, views, or arguments with or without opportunity for 
oral presentation, or in such other manner as the Commis-
sion considers appropriate. 
‘‘(B) After due consideration of the views and other 
information received under subparagraph (A), the Com-
mission 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 de-
scribed 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 Sec-
retary of the Treasury makes his submission to the Com-
mission under paragraph (1) (or by such later date as the 
Commission and the Postal Service may agree to). The 
Commission is authorized to promulgate regulations revis-
ing such rules. 
‘‘(C) Reports described in subparagraph (B)(iii) shall 
be submitted at such time and in such form, and shall 
include such information, as the Commission by rule re-
quires. The Commission may, on its own motion or on re-
quest of an interested party, initiate proceedings (to be 
conducted in accordance with such rules as the Commis-
sion shall prescribe) to improve the quality, accuracy, or 
completeness of Postal Service data under such subpara-
graph 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 subpara-
graph (B)(iii) shall also be transmitted by the Postal Serv-
ice 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 ad-
dress such matters as risk limitations, reserve balances, 
allocation or distribution of moneys, liquidity require-
ments, and measures to safeguard against losses. A copy 
of its then most recent report under this subsection shall 
be included with any other submission that it is required 
to make to the Postal Regulatory Commission under sec-
tion 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 para-
graph (2) as paragraph (3), and by inserting after 
paragraph (1) the following:
‘‘(2) ‘Competitive Products Fund’ means the 
Postal Service Competitive Products Fund estab-
lished by section 2011; and’’. 
(2) CAPITAL OF THE POSTAL SERVICE.—Sec-
tion 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, func-
tions, or powers for which the Competitive 
Products Fund is available).’’. 
(B) DEPOSITS.—Section 2003(b) of title 
39, United States Code, is amended by striking 
‘‘There’’ and inserting ‘‘Except as otherwise 
provided in section 2011, there’’. 
(4) RELATIONSHIP BETWEEN THE TREASURY 
AND THE POSTAL SERVICE.—Section 2006 of title 
39, United States Code, is amended—
(A) in subsection (b), by adding at the end 
the following: ‘‘Nothing in this chapter shall be 
considered to permit or require the Secretary of
the Treasury to purchase any obligations of the 
Postal Service other than those issued under 
section 2005.’’; and 
(B) in subsection (c), by inserting ‘‘under 
section 2005’’ before ‘‘shall be obligations’’. 
SEC. 302. ASSUMED FEDERAL INCOME TAX ON 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 
assumed taxable income from competitive products 
for the year; and 
‘‘(2) the term ‘assumed taxable income from 
competitive products’, with respect to a year, refers 
to the amount representing what would be the tax-
able income of a corporation under the Internal Rev-
enue Code of 1986 for the year, if—
‘‘(A) the only activities of such corporation 
were the activities of the Postal Service allo-
cable 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
REQUIRE-
MENTS.—The Postal Service shall, for each year beginning 
with the year in which occurs the deadline for the Postal 
Service’s first report to the Postal Regulatory Commission 
under section 3652(a)—
‘‘(1) compute its assumed Federal income tax 
on competitive products income for such year; and 
‘‘(2) transfer from the Competitive Products 
Fund to the Postal Service Fund the amount of that 
assumed tax. 
‘‘(c) DEADLINE FOR TRANSFERS.—Any transfer 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 
Postal 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 licens-
ing 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 substantially the same information is obtained 
(or obtainable) from an independent source or is 
otherwise obtained (or obtainable). 
‘‘(b) The Postal Regulatory Commission shall pre-
scribe 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 chap-
ter 4 of title 39, United States Code, is amended by insert-
ing after the item relating to section 404 the following:
‘‘404a. Specific limitations.’’.
SEC. 304. SUITS BY AND AGAINST THE POSTAL SERVICE. 
(a) IN GENERAL.—Section 409 of title 39, United 
States Code, is amended by striking subsections (d) and 
(e) and inserting the following: 
‘‘(d)(1) For purposes of the provisions of law cited 
in paragraphs (2)(A) and (2)(B), respectively, the Postal 
Service—
‘‘(A) shall be considered to be a ‘person’, as 
used in the provisions of law involved; and 
‘‘(B) shall not be immune under any other 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 re-
ferred 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 sec-
tion 5 applies to unfair or deceptive acts or prac-
tices. 
‘‘(e)(1) To the extent that the Postal Service, or other 
Federal agency acting on behalf of or in concert with the 
Postal Service, engages in conduct with respect to any 
competitive product, the Postal Service or other Federal 
agency (as the case may be)—
‘‘(A) shall not be immune under any doctrine of 
sovereign immunity from suit in Federal court by 
any person for any violation of Federal law by such 
agency or any officer or employee thereof; and 
‘‘(B) shall be considered to be a person (as de-
fined in subsection (a) of the first section of the 
Clayton Act) for purposes of—
‘‘(i) the antitrust laws (as defined in such 
subsection); and
‘‘(ii) section 5 of the Federal Trade Com-
mission Act to the extent that such section 5 
applies to unfair methods of competition. 
‘‘(2) No damages, interest on damages, costs or at-
torney’s fees may be recovered, and no criminal liability 
may be imposed, under the antitrust laws (as so defined) 
from any officer or employee of the Postal Service, or 
other Federal agency acting on behalf of or in concert with 
the Postal Service, acting in an official capacity. 
‘‘(3) This subsection shall not apply with respect to 
conduct occurring before the date of the enactment of this 
subsection. 
‘‘(f) To the extent that the Postal Service engages 
in conduct with respect to the provision of competitive 
products, it shall be considered a person for the purposes 
of the Federal bankruptcy laws. 
‘‘(g)(1) Each building constructed or altered by the 
Postal Service shall be constructed or altered, to the 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 
consideration of all requirements (other than procedural
requirements) of zoning laws, land use laws, and applica-
ble environmental laws of a State or subdivision of a State 
which would apply to the building if it were not a building 
constructed or altered by an establishment of the Govern-
ment of the United States. 
‘‘(3) For purposes of meeting the requirements of 
paragraphs (1) and (2) with respect to a building, the 
Postal Service shall—
‘‘(A) in preparing plans for the building, con-
sult with appropriate officials of the State or polit-
ical subdivision, or both, in which the building will 
be located; 
‘‘(B) upon request, submit such plans in a 
timely manner to such officials for review by such 
officials for a reasonable period of time not exceed-
ing 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 con-
struction 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 sub-
section require the Postal Service or any of its contractors 
to pay for any action taken by a State or political subdivi-
sion to carry out this subsection (including reviewing 
plans, carrying out on-site inspections, issuing building 
permits, and making recommendations). 
‘‘(4) Appropriate officials of a State or a political 
subdivision of a State may make recommendations to the 
Postal Service concerning measures necessary to meet the 
requirements of paragraphs (1) and (2). Such officials 
may also make recommendations to the Postal Service 
concerning measures which should be taken in the con-
struction or alteration of the building to take into account 
local conditions. The Postal Service shall give due consid-
eration to any such recommendations. 
‘‘(5) In addition to consulting with local and State 
officials under paragraph (3), the Postal Service shall es-
tablish procedures for soliciting, assessing, and incor-
porating local community input on real property and land 
use decisions.
‘‘(6) For purposes of this subsection, the term ‘State’ 
includes the District of Columbia, the Commonwealth of 
Puerto Rico, and a territory or possession of the United 
States. 
‘‘(h)(1) Notwithstanding any other provision of law, 
legal representation may not be furnished by the 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 (relat-
ing to administrative subpoenas by the Postal Regu-
latory Commission). 
‘‘(C) Section 3663 (relating to appellate re-
view). 
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, 
furnish the Postal Service such legal representation as it 
may require, except that, with the prior consent of the 
Attorney General, the Postal Service may, in any such cir-
cumstance, employ attorneys by contract or otherwise to
conduct litigation brought by or against the Postal Service 
or its officers or employees in matters affecting the Postal 
Service. 
‘‘(3)(A) In any action, suit, or proceeding in a court 
of the United States arising in whole or in part under any 
of the provisions of law referred to in subparagraph (B) 
or (C) of paragraph (1), and to which the Commission 
is not otherwise a party, the Commission shall be per-
mitted 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 Commis-
sion such legal representation as it may require in connec-
tion with any such action, suit, or proceeding, except that, 
with the prior consent of the Attorney General, the Com-
mission may employ attorneys by contract or otherwise for 
that purpose. 
‘‘(i) A judgment against the Government of the 
United States arising out of activities of the Postal Service 
shall be paid by the Postal Service out of any funds avail-
able to the Postal Service, subject to the restriction speci-
fied in section 2011(g).’’. 
(b) TECHNICAL AMENDMENT.—Section 409(a) of 
title 39, United States Code, is amended by striking ‘‘Ex-
cept as provided in section 3628 of this title,’’ and insert-
ing ‘‘Except as otherwise provided in this title,’’. 
SEC. 305. INTERNATIONAL POSTAL ARRANGEMENTS. 
(a) IN GENERAL.—Section 407 of title 39, United 
States Code, is amended to read as follows: 
‘‘§ 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 inter-
national postal services and other international deliv-
ery services for cultural, social, and economic pur-
poses; 
‘‘(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 inter-
national postal services and other international deliv-
ery services by the Government of the United States 
and by intergovernmental organizations of which the 
United States is a member; and
‘‘(4) to participate in multilateral and bilateral 
agreements with other countries to accomplish these 
objectives. 
‘‘(b)(1) The Secretary of State shall be responsible 
for formulation, coordination, and oversight of foreign pol-
icy 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 
(including those regulating international postal services) 
if such treaty, convention, or agreement would, with re-
spect to any competitive product, grant an undue or un-
reasonable preference to the Postal Service, a private pro-
vider of international postal or delivery services, or any 
other person. 
‘‘(2) In carrying out the responsibilities specified in 
paragraph (1), the Secretary of State shall exercise pri-
mary authority for the conduct of foreign policy with re-
spect to international postal services and international de-
livery services, including the determination of United 
States positions and the conduct of United States partici-
pation in negotiations with foreign governments and inter-
national bodies. In exercising this authority, the Sec-
retary—
‘‘(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 Trans-
portation, and the Office of the United States Trade 
Representative in this area; 
‘‘(B) shall maintain continuing liaison with 
other executive branch agencies concerned with post-
al and delivery services; 
‘‘(C) shall maintain continuing liaison with the 
Committee on Government Reform of the House of 
Representatives and the Committee on Govern-
mental 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 applicable, and to the extent practicable) other 
executive branch agencies; and 
‘‘(E) shall assist in arranging meetings of such 
public sector advisory groups as may be established 
to advise the Department of State and other execu-
tive branch agencies in connection with international 
postal services and international delivery services. 
‘‘(3) The Secretary of State shall establish an advi-
sory committee (within the meaning of the Federal Advi-
sory Committee Act) to perform such functions as the Sec-
retary considers appropriate in connection with carrying 
out subparagraphs (A) through (D) of paragraph (2). 
‘‘(c)(1) Before concluding any treaty, convention, or 
amendment that establishes a rate or classification for a 
product subject to subchapter I of chapter 36, the Sec-
retary of State shall request the Postal Regulatory Com-
mission to submit a decision on whether such rate or clas-
sification is consistent with the standards and criteria es-
tablished 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 Sec-
retary determines, by written order, that considerations of
foreign policy or national security require modification of 
the Commission’s decision. 
‘‘(d) Nothing in this section shall be considered to 
prevent the Postal Service from entering into such com-
mercial or operational contracts related to providing inter-
national 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 contrac-
tual in nature and may not purport to be inter-
national law; and 
‘‘(2) a copy of each such contract between the 
Postal Service and an agency of a foreign govern-
ment shall be transmitted to the Secretary of State 
and the Postal Regulatory Commission not later 
than the effective date of such contract. 
‘‘(e)(1) With respect to shipments of international 
mail that are competitive products within the meaning of 
section 3631 that are exported or imported by the Postal 
Service, the Bureau of Customs and Border Protection of 
the Department of Homeland Security and other appro-
priate Federal agencies shall apply the customs laws of 
the United States and all other laws relating to the impor-
tation or exportation of such shipments in the same man-
ner to both shipments by the Postal Service and similar 
shipments by private companies. 
‘‘(2) For purposes of this subsection, the term ‘pri-
vate 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 sub-
section (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 prac-
ticable, 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 compa-
nies a range of nondiscriminatory customs procedures that 
will fully meet the needs of all types of American shippers. 
The Secretary of State shall consult with the United 
States Trade Representative and the Commissioner of 
Customs, Department of Homeland Security in carrying 
out this paragraph. 
‘‘(4) The provisions of this subsection shall take ef-
fect 6 months after the date of the enactment of this sub-
section or such earlier date as the Bureau of Customs and 
Border Protection of the Department of Homeland Secu-
rity may determine in writing.’’.
(b) EFFECTIVE DATE.—Notwithstanding any provi-
sion of the amendment made by subsection (a), the au-
thority of the United States Postal Service to establish 
the rates of postage or other charges on mail matter con-
veyed between the United States and other countries shall 
remain available to the Postal Service until—
(1) with respect to market-dominant products, 
the date as of which the regulations promulgated 
under section 3622 of title 39, United States Code 
(as amended by section 201(a)) take effect; and 
(2) with respect to competitive products, the 
date as of which the regulations promulgated under 
section 3633 of title 39, United States Code (as 
amended by section 202) take effect. 
SEC. 306. REDESIGNATION. 
Chapter 36 of title 39, United States Code (as in ef-
fect before the amendment made by section 204(a)) is 
amended by striking the heading for subchapter V and in-
serting 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 pro-
hibition in this subsection shall not be construed to pre-
vent the establishment of rates that vary with volume if
such rates will be made available to similarly situated per-
sons and will increase the aggregate contribution to the 
institutional 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 
interest generally, and at least 4 of the Governors shall 
be chosen solely on the basis of their demonstrated ability 
in managing organizations or corporations (in either the 
public or private sector) of substantial size; for purposes 
of this sentence, an organization or corporation shall be 
considered to be of substantial size if it employs at least 
50,000 employees. The Governors shall not be representa-
tives 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 Speak-
er 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 para-
graph—
‘‘(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 cho-
sen from among persons nominated for such office 
with the unanimous concurrence of all labor organi-
zations 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 other-
wise 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 Gov-
ernors of the United States Postal Service pursuant to an 
appointment made before the date of the enactment of this 
Act, or, except as provided in the amendment made by 
subsection (c), any nomination made before that date; 
however, when any such office becomes vacant, the ap-
pointment of any person to fill that office shall be made 
in accordance with such amendment. The requirement set 
forth in the fourth sentence of section 202(a)(1) of title 
39, United States Code (as amended by subsection (a)) 
shall be met beginning not later than 9 years after the 
date of the enactment of this Act. 
SEC. 402. OBLIGATIONS. 
(a) PURPOSES FOR WHICH OBLIGATIONS MAY BE 
ISSUED.—The first sentence of section 2005(a)(1) of title 
39, United States Code, is amended by striking ‘‘title.’’ 
and inserting ‘‘title, other than any of the purposes for 
which the corresponding authority is available to the Post-
al Service under section 2011.’’. 
(b) LIMITATION ON NET ANNUAL INCREASE IN OB-
LIGATIONS ISSUED FOR CERTAIN PURPOSES.—The third
sentence of section 2005(a)(1) of title 39, United States 
Code, is amended to read as follows: ‘‘In any one fiscal 
year, the net increase in the amount of obligations out-
standing issued for the purpose of capital improvements 
and the net increase in the amount of obligations out-
standing issued for the purpose of defraying operating ex-
penses 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 obli-
gations issued by the Postal Service which are outstanding 
as of any one time, and the net increase in the amount 
of obligations outstanding issued by the Postal Service for 
the purpose of capital improvements or for the purpose 
of defraying operating expenses of the Postal Service in 
any fiscal year, shall be determined by aggregating the 
relevant obligations issued by the Postal Service under this 
section with the relevant obligations issued by the Postal 
Service under section 2011.’’. 
(2) CONFORMING
AMENDMENT.—The second 
sentence of section 2005(a)(1) of title 39, United
States Code, is amended by striking ‘‘any such obli-
gations’’ and inserting ‘‘obligations issued by the 
Postal Service which may be’’. 
(d) AMOUNTS WHICH MAY BE PLEDGED, ETC.—
(1) 
OBLIGATIONS
TO
WHICH
PROVISIONS 
APPLY.—The first sentence of section 2005(b) of 
title 39, United States Code, is amended by striking 
‘‘such obligations,’’ and inserting ‘‘obligations issued 
by the Postal Service under this section,’’. 
(2) ASSETS, REVENUES, AND
RECEIPTS
TO 
WHICH PROVISIONS APPLY.—Subsection (b) of sec-
tion 2005 of title 39, United States Code, is amend-
ed 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 Post-
al Service under this subsection shall be available 
only to the extent that such assets are not related 
to the provision of competitive products (as deter-
mined under section 2011(h) or, for purposes of any 
period before accounting practices and principles 
under section 2011(h) have been established and ap-
plied, 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 re-
ceipts of the Postal Service shall be available only to 
the extent that they are not revenues or receipts of 
the Competitive Products Fund.’’. 
SEC. 403. PRIVATE CARRIAGE OF LETTERS. 
(a) IN GENERAL.—Section 601 of title 39, United 
States Code, is amended by striking subsection (b) and 
inserting the following: 
‘‘(b) A letter may also be carried out of the mails 
when—
‘‘(1) the amount paid for the private carriage of 
the letter is at least the amount equal to 6 times the 
rate then currently charged for the 1st ounce of a 
single-piece first class letter; 
‘‘(2) the letter weighs at least 121⁄2 ounces; or 
‘‘(3) such carriage is within the scope of serv-
ices described by regulations of the Postal Service 
(including, in particular, sections 310.1 and 320.2–
320.8 of title 39 of the Code of Federal Regulations, 
as in effect on July 1, 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 sec-
tion shall be promulgated by the Postal Regulatory Com-
mission.’’. 
(b) EFFECTIVE DATE.—This section shall take effect 
on the date as of which the regulations promulgated under 
section 3633 of title 39, United States Code (as amended 
by section 202) take effect. 
SEC. 404. RULEMAKING AUTHORITY. 
Paragraph (2) of section 401 of title 39, United 
States Code, is amended to read as follows: 
‘‘(2) to adopt, amend, and repeal such rules 
and regulations, not inconsistent with this title, as 
may be necessary in the execution of its functions 
under this title and such other functions as may be 
assigned to the Postal Service under any provisions 
of law outside of this title;’’. 
SEC. 405. NONINTERFERENCE WITH COLLECTIVE 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 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 within 
the United States Postal Service, or any collective bar-
gaining 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 ac-
corded 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 amend-
ed by adding 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 Serv-
ice wishes to have the authority, under any program 
described in subsection (a), to award bonuses or 
other rewards in excess of the limitation referred to 
in paragraph (1)—
‘‘(A) the Postal Service shall make an ap-
propriate request to the Postal Regulatory 
Commission, in such form and manner as the 
Commission requires; and 
‘‘(B) the Postal Regulatory Commission 
shall approve any such request if it finds that 
the program is likely to achieve the objectives of 
this chapter. 
‘‘(3) REVOCATION AUTHORITY.—If the Postal 
Regulatory Commission finds that a program 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 
appropriate corrective measures have, in the judg-
ment 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 re-
ferred to in subsection (b)(1) was exceeded as a re-
sult 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 stat-
ure, and who is also a member of the National Academy 
of Arbitrators. The parties shall cooperate with the medi-
ator in an effort to reach an agreement and shall meet 
and negotiate in good faith at such times and places that 
the mediator, in consultation with the parties, shall di-
rect.’’. 
(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 
Arbitrators, and whom the Director has deter-
mined 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 inde-
pendent establishment of the executive branch of the Gov-
ernment 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 
expertise 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 
Postal Accountability and Enhancement Act. Not more 
than 3 of the Commissioners may be adherents of the 
same political party.
‘‘(b) A Commissioner may continue to serve after the 
expiration of his term until his successor has qualified, 
except that a Commissioner may not so continue to serve 
for more than 1 year after the date upon which his term 
otherwise would expire under subsection (e). 
‘‘(c) One of the Commissioners shall be designated 
as Chairman by, and shall serve in the position of Chair-
man at the pleasure of, the President. 
‘‘(d) The Commissioners shall by majority vote des-
ignate a Vice Chairman of the Commission. The Vice 
Chairman shall act as Chairman of the Commission in the 
absence of the Chairman. 
‘‘(e) The Commissioners shall serve for terms of 6 
years.’’; 
(2) 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 ensur-
ing 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 
Regulatory Commission (as so redesignated by section 
504) pursuant to an appointment made before the date 
of the enactment of this Act or any nomination made be-
fore 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 
redesignated by section 501) is amended by adding at the 
end the following: 
‘‘(f)(1) Any Commissioner of the Postal Regulatory 
Commission, any administrative law judge appointed by 
the Commission under section 3105 of title 5, and any 
employee of the Commission designated by the Commis-
sion may administer oaths, examine witnesses, take depo-
sitions, and receive evidence. 
‘‘(2) The Chairman of the Commission, any Commis-
sioner designated by the Chairman, and any administra-
tive law judge appointed by the Commission under section 
3105 of title 5 may, with respect to any proceeding con-
ducted 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 per-
son. 
The written concurrence of a majority of the Commis-
sioners then holding office shall, with respect to each sub-
poena under subparagraph (A), be required in advance of 
its issuance. 
‘‘(3) In the case of contumacy or failure to obey a 
subpoena issued under this subsection, upon application 
by the Commission, the district court of the United States 
for the district in which the person to whom the subpoena 
is addressed resides or is served may issue an order requir-
ing such person to appear at any designated place to tes-
tify 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 ‘cov-
ered person’ means an officer, employee, agent, or con-
tractor of the Postal Service. 
‘‘(g)(1) If the Postal Service determines that any doc-
ument 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 sec-
tion 410(c) of this title, or exempt from public disclosure 
under section 552(b) of title 5, the Postal Service shall, 
at the time of providing such matter to the Commission, 
notify the Commission, in writing, of its determination 
(and the reasons therefor). 
‘‘(2) No officer or employee of the Commission may, 
with respect to any information as to which the 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 
employee of the Commission to have access to any 
such information.
‘‘(3) Paragraph (2) shall not prevent information 
from being furnished under any process of discovery estab-
lished 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 Proce-
dure, establish procedures for ensuring appropriate con-
fidentiality for any information furnished under the pre-
ceding sentence.’’. 
SEC. 503. APPROPRIATIONS FOR THE POSTAL REGU-
LATORY 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 
appropriation under this subsection for a fiscal year, the 
Commission shall prepare and submit to the Congress 
under section 2009 a budget of the Commission’s ex-
penses, including expenses for facilities, supplies, com-
pensation, and employee benefits.’’. 
(b) BUDGET PROGRAM.—
(1) IN GENERAL.—The next to last sentence of 
section 2009 of title 39, United States Code, is
amended to read as follows: ‘‘The budget program 
shall also include separate statements of the 
amounts which (1) the Postal Service requests to be 
appropriated under subsections (b) and (c) of section 
2401, (2) the Office of Inspector General of the 
United States Postal Service requests to be appro-
priated, out of the Postal Service Fund, under sec-
tion 8J(e) of the Inspector General Act of 1978, and 
(3) the Postal Regulatory Commission requests to be 
appropriated, out of the Postal Service Fund, under 
section 504(d) of this title.’’. 
(2) 
CONFORMING
AMENDMENT.—Section 
2003(e)(1) of title 39, United States Code, is 
amended by striking the first sentence and inserting 
the following: ‘‘The Fund shall be available for the 
payment of (A) all expenses incurred by the Postal 
Service in carrying out its functions as provided by 
law, subject to the same limitation as set forth in 
the parenthetical matter under subsection (a); (B) 
all expenses of the Postal Regulatory Commission, 
subject to the availability of amounts appropriated 
pursuant to section 504(d); and (C) all expenses of 
the Office of Inspector General, subject to the avail-
ability of amounts appropriated pursuant to section 
8J(e) of the Inspector General Act of 1978.’’.
(c) EFFECTIVE DATE.—
(1) IN GENERAL.—The amendments made by 
this section shall apply with respect to fiscal years 
beginning on or after October 1, 2004. 
(2) SAVINGS
PROVISION.—The provisions of 
title 39, United States Code, that are amended by 
this section shall, for purposes of any fiscal year be-
fore 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 
Commission’’. 
(b) AMENDMENTS
TO TITLE 5, UNITED STATES 
CODE.—Title 5, United States Code, is amended in sec-
tions 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 Govern-
ment Act of 1978 (5 U.S.C. App.) is amended by striking 
‘‘Postal Rate Commission’’ and inserting ‘‘Postal Regu-
latory Commission’’. 
(d) AMENDMENT TO THE REHABILITATION ACT OF 
1973.—Section 501(b) of the Rehabilitation Act of 1973 
(29 U.S.C. 791(b)) is amended by striking ‘‘Postal Rate 
Office’’ and inserting ‘‘Postal Regulatory Commission’’. 
(e) AMENDMENT
TO TITLE 44, UNITED STATES 
CODE.—Section 3502(5) of title 44, United States Code, 
is amended by striking ‘‘Postal Rate Commission’’ and in-
serting ‘‘Postal Regulatory Commission’’. 
(f) OTHER REFERENCES.—Whenever a reference is 
made in any provision of law (other than this Act or a 
provision of law amended by this Act), regulation, rule, 
document, or other record of the United States to the 
Postal Rate Commission, such reference shall be consid-
ered a reference 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 pub-
lic proceedings (such as developing rules, regulations, and 
procedures) who shall represent the interests of the gen-
eral public.’’. 
(b) CLERICAL AMENDMENT.—The analysis for chap-
ter 5 of title 39, United States Code (as amended by sec-
tion 501(a)(1)) is amended by adding after the item relat-
ing to section 504 the following:
‘‘505. Officer of the Postal Regulatory Commission representing the general 
public.’’.
TITLE VI—INSPECTORS 
GENERAL 
SEC. 601. INSPECTOR GENERAL OF THE POSTAL REGU-
LATORY COMMISSION. 
(a) IN GENERAL.—Paragraph (2) of section 8G(a) 
of the Inspector General Act of 1978 is amended by insert-
ing ‘‘the Postal Regulatory Commission,’’ after ‘‘the 
United States International Trade Commission,’’.
(b) ADMINISTRATION.—Section 504 of title 39, 
United States Code (as so redesignated by section 501) 
is amended by adding after subsection (g) (as added by 
section 502) the following: 
‘‘(h)(1) Notwithstanding any other provision of this 
title or of the Inspector General Act of 1978, the authority 
to select, appoint, and employ officers and employees of 
the Office of Inspector General of the Postal Regulatory 
Commission, and to obtain any temporary or intermittent 
services of experts or consultants (or an organization of 
experts or consultants) for such Office, shall reside with 
the Inspector General of the Postal Regulatory Commis-
sion. 
‘‘(2) Except as provided in paragraph (1), any exer-
cise of authority under this subsection shall, to the extent 
practicable, be in conformance with the applicable laws 
and regulations that govern selections, appointments and 
employment, and the obtaining of any such temporary or 
intermittent services, within the Postal Regulatory Com-
mission.’’. 
(c) DEADLINE.—No later than 180 days after the 
date of the enactment of this Act—
(1) the first Inspector General of the Postal 
Regulatory Commission shall be appointed; and
(2) the Office of Inspector General of the Post-
al 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 INSPEC-
TOR GENERAL ACT OF 1978.—Section 11 of the Inspector 
General Act of 1978 is amended—
(1) in paragraph (1)—
(A) by striking ‘‘or’’ before ‘‘the President 
of the Export-Import Bank;’’ and 
(B) by inserting ‘‘or the Governors of the 
United States Postal Service (within the 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-
Import Bank,’’; and 
(B) by inserting ‘‘or the United States 
Postal Service,’’ after ‘‘the Export-Import 
Bank,’’. 
(b) SPECIAL PROVISIONS CONCERNING THE UNITED 
STATES POSTAL SERVICE.—
(1) IN GENERAL.—The Inspector General Act 
of 1978 is amended—
(A) by redesignating section 8J as section 
8K; and 
(B) by inserting after section 8I the 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 Gen-
eral. The Postmaster General shall promptly report to 
such Inspector General all allegations of theft, fraud, or 
misconduct by Postal Service officers or employees, and 
entities or individuals doing business with the Postal Serv-
ice. 
‘‘(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 re-
quired 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 Com-
mittee on Government Reform of the House of Represent-
atives, the Committee on Governmental Affairs of the Sen-
ate, and such other committees or subcommittees of Con-
gress 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 car-
rying out the functions, powers, and duties of the Office 
of Inspector General and to obtain the temporary or inter-
mittent services of experts or consultants or an organiza-
tion of experts or consultants, subject to the applicable 
laws and regulations that govern such selections, appoint-
ments, and employment, and the obtaining of such serv-
ices, within the United States Postal Service. 
‘‘(d) Nothing in this Act shall restrict, eliminate, or 
otherwise adversely affect any of the rights, privileges, or 
benefits of employees of the United States Postal Service, 
or labor organizations representing employees of the 
United States Postal Service, under chapter 12 of title 39, 
United States Code, the National Labor Relations Act, 
any handbook or manual affecting employee labor rela-
tions with the United States Postal Service, or any collec-
tive bargaining agreement.
‘‘(e) There are authorized to be appropriated, out of 
the Postal Service Fund, such sums as may be necessary 
for the Office of Inspector General of the United States 
Postal Service.’’. 
(2) RELATED PROVISIONS.—For certain related 
provisions, see section 503(b). 
(c) EXERCISE
OF
CERTAIN
POWERS.—Section 
6(e)(3) of the Inspector General Act of 1978 is amended—
(1) by striking ‘‘and the’’ before ‘‘Tennessee 
Valley Authority’’; and 
(2) by inserting ‘‘, and United States Postal 
Service’’ after ‘‘Tennessee Valley Authority’’. 
(d) PUBLIC CONTRACTS.—
(1) ADDITIONAL
PROVISIONS
APPLICABLE.—
Section 410(b)(5) of title 39, United States Code, is 
amended—
(A) in subparagraph (A), by striking 
‘‘and’’ after the semicolon; and 
(B) by adding after subparagraph (B) the 
following: 
‘‘(C) the Anti-Kickback Act of 1986 (41 
U.S.C. 51 and following), other than sub-
sections (a) and (b) of 7 and section 8 of that 
Act; and
‘‘(D) section 315 of the Federal Property 
and Administrative Services Act of 1949 (41 
U.S.C. 265) (relating to protecting contractor 
employees from reprisal for disclosure of certain 
information);’’. 
(2) REGULATIONS
ON
ALLOWABLE
COSTS.—
Section 410 of title 39, United States Code, is 
amended by adding at the end the following: 
‘‘(e) The Postal Service shall develop and issue pur-
chasing regulations that prohibit contract costs not allow-
able under section 5.2.5 of the United States Postal Serv-
ice Procurement Manual (Publication 41), as in effect on 
July 12, 1995.’’. 
(e) AUDITS OF THE POSTAL SERVICE.—
(1) AUDITS.—Subsection (e) of section 2008 of 
title 39, United States Code, is amended to read as 
follows: 
‘‘(e)(1) At least once each year beginning with the 
fiscal year commencing after the date of the enactment 
of the Postal Accountability and Enhancement Act, the 
financial statements of the Postal Service (including those 
used in determining and establishing postal rates) shall 
be audited by the Inspector General or by an independent 
external auditor selected by the Inspector General.
‘‘(2) Audits under this section shall be conducted in 
accordance with applicable generally accepted government 
auditing standards. 
‘‘(3) Upon completion of the audit required by this 
subsection, the person who audits the statement shall sub-
mit a report on the audit to the Postmaster General.’’. 
(2) RESULTS OF INSPECTOR GENERAL’S AUDIT 
TO
BE
INCLUDED
IN
ANNUAL
REPORT.—Section 
2402 of title 39, United States Code, is amended by 
inserting after the first sentence the following: 
‘‘Each report under this section shall include a copy 
of the report most recently received by the Post-
master General under section 2008(e)(3).’’. 
(3) 
COORDINATION
PROVISIONS.—Section 
2008(d) of title 39, United States Code, is amend-
ed—
(A) by striking ‘‘(d) Nothing’’ and insert-
ing ‘‘(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 sub-
section had never been enacted. 
(f) REPORTS.—Section 3013 of title 39, United 
States Code, is amended by striking ‘‘Postmaster Gen-
eral’’ each place it appears and inserting ‘‘Chief Postal 
Inspector’’. 
(g) TECHNICAL AND CONFORMING AMENDMENTS.—
(1) RELATING
TO
THE
INSPECTOR
GENERAL 
ACT OF 1978.—(A) Subsection (a) of section 8G of 
the Inspector General Act of 1978 (as amended by 
section 601(a)) is further amended—
(i) in paragraph (2), by striking ‘‘the 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 insert-
ing ‘‘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 mat-
ter 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
AU-
THORITY
AVAILABLE
IMMEDIATELY.—The au-
thority to appoint an Inspector General of the 
United States Postal Service in accordance with 
the amendments made by this section shall be 
available as of the effective date of this section. 
(B) CONTINUATION IN OFFICE.—Pending 
the appointment of an Inspector General of the 
United States Postal Service in accordance with 
the amendments made by this section, the 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 provi-
sions, as so amended, to refer to the indi-
vidual 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 Sep-
tember 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 
GENERAL.—Nothing in this Act shall prevent 
any individual who has served as Inspector 
General of the United States Postal Service at 
any time before the date of the enactment of 
this Act from being appointed to that position 
pursuant to the amendments made by this sec-
tion. 
TITLE VII—EVALUATIONS 
SEC. 701. UNIVERSAL POSTAL SERVICE STUDY. 
(a) REPORT BY THE POSTAL SERVICE.—The United 
States Postal Service shall, within 12 months after the 
date of the enactment of this Act, submit to the President, 
the Congress, and the Postal Regulatory Commission, a 
written report on universal postal service in the United 
States (hereinafter in this section referred to as ‘‘universal 
service’’). Such report shall include at least the following:
100
(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 serv-
ice 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, pop-
ulations, 
communities, 
organizations, 
or 
other 
groups or entities not currently covered by universal 
service or that are covered but that are receiving 
services deficient in scope or quality or both. 
(4) The scope and standards of universal serv-
ice likely to be required in the future in order to 
meet the needs and expectations of the American 
public, including all types of mail users, based on 
such assumptions or alternative sets of assumptions 
as the Postal Service considers plausible. 
(5) Such recommendations as the Postal Serv-
ice 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
101
under subsection (a), submit to the President and the 
Congress a written report evaluating the report of the 
Postal Service. The report of the Commission shall include 
at least the following: 
(1) Such comments and observations relating to 
the matters addressed in the Postal Service’s report 
as the Commission considers appropriate. 
(2) An estimate of the cost attributable to the 
obligation to provide universal service under prior 
and current law, respectively. 
(3) An estimate of the likely cost of fulfilling 
the obligation to provide universal service under—
(A) the assumptions or respective sets of 
assumptions of the Postal Service described in 
subsection (a)(4); and 
(B) such other assumptions or sets of as-
sumptions as the Commission considers plau-
sible. 
(4) Such additional topics and recommenda-
tions as the Commission considers appropriate. 
(c) CONSULTATION.—In preparing the reports re-
quired by this section, the Postal Service and the Postal 
Regulatory Commission—
(1) shall consult with each other, other Federal 
agencies, users of the mails, enterprises in the pri-
102
vate sector engaged in the delivery of mail, and the 
general public; and 
(2) shall address in their respective reports any 
written comments received under this section. 
(d) CLARIFYING PROVISION.—Nothing in this section 
shall be considered to relate to any services that are not 
postal services (within the meaning of section 102 of title 
39, United States Code, as amended by section 101). 
SEC. 702. ASSESSMENTS OF RATEMAKING, CLASSIFICA-
TION, AND OTHER PROVISIONS. 
(a) IN GENERAL.—The Postal Regulatory Commis-
sion 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 effective-
ness or efficiency of the postal laws of the United 
States. 
(b) POSTAL SERVICE VIEWS.—A report under this 
section shall be submitted only after reasonable oppor-
tunity 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
103
the preceding sentence shall be attached to the report sub-
mitted under subsection (a). 
(c) SPECIFIC INFORMATION REQUIRED.—The Postal 
Regulatory Commission shall include, as part of at least 
its first report under subsection (a), the following: 
(1) COST-COVERAGE REQUIREMENT RELATING 
TO COMPETITIVE PRODUCTS COLLECTIVELY.—With 
respect to section 3633 of title 39, United States 
Code (as amended by this Act)—
(A) a description of how such section has 
operated; and 
(B) recommendations as to whether or not 
such section should remain in effect and, if so, 
any suggestions as to how it might be improved. 
(2) COMPETITIVE PRODUCTS FUND.—With 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 
operated; 
(B) any suggestions as to how the oper-
ation of such Fund might be improved; and 
(C) a description and assessment of alter-
native accounting or financing mechanisms that
104
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 
this Act), in consultation with the Secretary of the 
Treasury—
(A) a description of how such section has 
operated; and 
(B) recommendations as to whether or not 
such section should remain in effect and, if so, 
any suggestions as to how it might be improved. 
SEC. 703. STUDY ON EQUAL APPLICATION OF LAWS TO 
COMPETITIVE PRODUCTS.
(a) IN GENERAL.—The Federal Trade Commission 
shall prepare and submit to the President, the Congress, 
and the Postal Regulatory Commission, within 1 year 
after the date of the enactment of this Act, a comprehen-
sive report identifying Federal and State laws that apply 
differently to the United States Postal Service with re-
spect to the competitive category of mail (within the mean-
ing of section 102 of title 39, United States Code, as 
amended by section 101) and private companies providing 
similar products.
105
(b) RECOMMENDATIONS; ADJUSTMENTS.—The Fed-
eral Trade Commission shall include such recommenda-
tions as it considers appropriate for bringing such legal 
differences to an end and, in the interim, to account under 
section 3633, for the net economic effects provided by 
those laws. 
(c) CONSULTATION.—In preparing its report, the 
Federal Trade Commission shall consult with the United 
States Postal Service, the Postal Regulatory Commission, 
other Federal agencies, mailers, private companies that 
provide delivery services, and the general public, and shall 
append to such report any written comments received 
under this subsection. 
(d) COMPETITIVE PRODUCT RATE REGULATION.—
The Postal Regulatory Commission shall take into account 
the recommendations of the Federal Trade Commission, 
and subsequent events that affect the continuing validity 
of the estimate of the net economic effect, in promulgating 
or revising the regulations required by section 3633 of title 
39, United States Code. 
SEC. 704. GREATER DIVERSITY IN POSTAL SERVICE 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
106
Act, submit to the President and Congress a report con-
cerning the extent to which women and minorities are rep-
resented in supervisory and management positions within 
the United States Postal Service. Any data included in the 
report shall be presented in the aggregate and by pay level. 
(b) PERFORMANCE
EVALUATIONS.—The United 
States Postal Service shall, as soon as practicable, take 
such measures as may be necessary to ensure that, for 
purposes of conducting performance appraisals of super-
visory or managerial employees, appropriate consideration 
shall be given to meeting affirmative action goals, achiev-
ing equal employment opportunity requirements, and im-
plementation of plans designed to achieve greater diversity 
in the workforce. 
SEC. 705. PLAN FOR ASSISTING DISPLACED WORKERS. 
(a) PLAN.—The United States Postal Service shall, 
before the deadline specified in subsection (b), develop and 
be prepared to implement, whenever necessary, a com-
prehensive plan under which reemployment assistance 
shall be afforded to employees displaced as a result of the 
automation or privatization of any of its functions. 
(b) REPORT.—Not later than 1 year after the date 
of the enactment of this Act, the United States Postal 
Service shall submit to its Board of Governors and Con-
107
gress a written report describing its plan under this sec-
tion. 
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 Post-
al Service has entered into with women, minorities, and 
small businesses. 
SEC. 707. RATES FOR PERIODICALS. 
(a) IN GENERAL.—The United States Postal Service, 
acting jointly with the Postal Regulatory Commission 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.
108
(b) RECOMMENDATIONS.—The report shall include 
recommendations for any administrative action or legisla-
tion 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 Gen-
eral 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 administra-
tion of section 3626(k) of title 39, United States Code. 
(b) SPECIFIC REQUIREMENTS.—The study and re-
port shall specifically address the adequacy and fairness 
of the process by which assessments under section 3626(k) 
of title 39, United States Code, are determined and ap-
pealable, including—
(1) whether the Postal Regulatory Commission 
or any other body outside the Postal Service should 
be assigned a role; and 
(2) whether a statute of limitations should be 
established for the commencement of proceedings by 
the Postal Service thereunder.
SEC. 709. POSTAL PROCESSING AND DISTRIBUTION NET-
WORK STUDY. 
The United States Postal Service shall, within 16 
months after the date of the enactment of this Act, submit
109
to the President, the Congress, and the Board of Gov-
ernors 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 post-
al services. 
(2) Identification of excess capacity (if any) 
within the processing and distribution network and 
opportunities for savings through realignment or 
consolidation of facilities. 
(3) Report of the Postal Service’s plans for 
dealing with the recommendations and findings iden-
tified 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 recommenda-
tions 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.
110
TITLE 
VIII—MISCELLANEOUS; 
TECHNICAL 
AND 
CON-
FORMING AMENDMENTS 
SEC. 801. EMPLOYMENT OF POSTAL POLICE OFFICERS. 
Section 404 of title 39, United States Code, as 
amended by sections 102 and 811(e), is further amended 
by adding at the end the following: 
‘‘(f) The Postal Service may employ police officers for 
duty in connection with the protection of property owned 
or occupied by the Postal Service or under the charge and 
control of the Postal Service, and persons on the property, 
including duty in areas outside the property to the extent 
necessary to protect the property and persons on the prop-
erty. Such officers shall have, with respect to such prop-
erty, the powers available under section 1315 of title 40, 
and, as to such property, the Postal Service may take any 
action that the Secretary of Homeland Security may take 
under such section, attaching thereto penalties under the 
authority and within the limits provided in subsection 
(c)(2) of such section.’’.
111
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 fol-
lowing: 
‘‘(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 first made available, in accordance with paragraph (3) 
of section 404(b) of title 39, United States Code, after 
the end of the 3-month period beginning on the date of 
the enactment of this Act.
112
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 Reorga-
nization Act (39 U.S.C. 1001 note) is amended by insert-
ing ‘‘(a)’’ after ‘‘8.’’ and by adding at the end the fol-
lowing: 
‘‘(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 respect to an officer or employee of the Postal Service 
receiving 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. 
(2) CONFORMING AMENDMENTS.—(A) Section 
5005(a) of title 39, United States Code, is amend-
ed—
113
(i) by striking paragraph (1), and by re-
designating paragraphs (2) through (4) as 
paragraphs (1) through (3), respectively; and 
(ii) in paragraph (3) (as so designated by 
clause (i)), by striking ‘‘(as defined in section 
5201(6) of this title)’’. 
(B) Section 5005(b) of such title 39 is amended 
by striking ‘‘(a)(4)’’ each place it appears and in-
serting ‘‘(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 
inserting ‘‘(or such longer period of time as may be deter-
mined by the Postal Service to be advisable or appro-
priate)’’. 
(2) Section 5402(d) of such title 39 is amended by 
striking ‘‘for a period of not more than 4 years’’.
114
(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, ei-
ther 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 
foreign air transportation, including the rates therefor, ei-
ther 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-
115
eign air carrier holding a permit required by section 
41301 of title 49 or an exemption therefrom issued 
by the Secretary of Transportation, or (iii) a com-
bination 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 ex-
emption authority issued by the Secretary of Trans-
portation 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 
foreign 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 af-
fect the carriage of military mail transported in for-
eign air transportation.
116
‘‘(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.’’. 
(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 PRO-
VIDE
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
TRANSPOR-
TATION OF MAIL.—Section 41902(b)(1) of title 49, 
United States Code, is amended by inserting before
118
other similar entity, as further defined under regulations 
prescribed by the Postal Regulatory Commission.’’. 
SEC. 807. REPEAL OF SECTION 5403. 
(a) IN GENERAL.—Section 5403 of title 39, United 
States Code, is repealed. 
(b) CLERICAL AMENDMENT.—The analysis for chap-
ter 54 of title 39, United States Code, is amended by re-
pealing the item relating to section 5403. 
SEC. 808. REDUCED RATES. 
Section 3626 of title 39, United States Code, is 
amended—
(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 
‘regular-rate category’ means any class of mail or kind of 
mailer, other than a class or kind referred to in section 
2401(c).’’; and
119
(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: 
‘‘(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 post-
age 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 publica-
tion (excluding any copies subject to paragraph (3)) shall 
be subject to rates of postage provided for under this para-
graph. 
‘‘(B) The rates of postage applicable to mail under 
this paragraph shall be established in accordance with sec-
tion 3622. 
‘‘(C) This paragraph shall not apply with respect to 
an issue of a publication unless the total paid circulation
120
of such issue outside the county of publication (not count-
ing 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 publica-
tions shall not be excluded from being mailed at the rates 
for mail under former section 4358 solely because such 
matter is designed primarily for free circulation or for cir-
culation at nominal rates, or fails to meet the require-
ments 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 sub-
section (o); and 
(2) by inserting after subsection (m) the fol-
lowing: 
‘‘(o)(1) Except as otherwise authorized by law or reg-
ulations 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.’’.
121
(b) MAILABILITY.—Chapter 30 of title 39, United 
States Code, is amended by adding at the end the fol-
lowing: 
‘‘§ 3018. Hazardous material 
‘‘(a) IN GENERAL.—The Postal Service shall pre-
scribe regulations for the safe transportation of hazardous 
material in the mail. 
‘‘(b) PROHIBITIONS.—No person may—
‘‘(1) mail or cause to be mailed hazardous ma-
terial that has been declared by statute or Postal 
Service regulation to be nonmailable; 
‘‘(2) mail or cause to be mailed hazardous ma-
terial in violation of any statute or Postal Service 
regulation restricting the time, place, or manner in 
which hazardous material may be mailed; or 
‘‘(3) manufacture, distribute, or sell any 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 stand-
ards for a container, packaging kit, or similar 
device used for the mailing of hazardous mate-
rial.
122
‘‘(c) CIVIL PENALTY; CLEAN-UP COSTS AND DAM-
AGES.—
‘‘(1) IN GENERAL.—A person who knowingly 
violates this section or a regulation prescribed under 
this section shall be liable for—
‘‘(A) a civil penalty of at least $250, but 
not more than $100,000, for each violation; 
‘‘(B) the costs of any clean-up associated 
with each violation; and 
‘‘(C) damages. 
‘‘(2) KNOWING ACTION.—A person acts 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
123
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). 
‘‘(e) PENALTY CONSIDERATIONS.—In determining 
the amount of a civil penalty for a violation of this section, 
the Postal Service shall consider—
‘‘(1) the nature, circumstances, extent, and 
gravity of the violation; 
‘‘(2) with respect to the person who committed 
the violation, the degree of culpability, any history of 
prior violations, the ability to pay, and any effect on 
the ability to continue in business; 
‘‘(3) the impact on Postal Service operations; 
and 
‘‘(4) any other matters that justice requires. 
‘‘(f) CIVIL ACTIONS TO COLLECT.—
‘‘(1) IN GENERAL.—In accordance with section 
409(d), a civil action may be commenced in an ap-
propriate district court of the United States to col-
124
lect a civil penalty, clean-up costs, and damages as-
sessed 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.—
‘‘(1) IN GENERAL.—At the request of the Post-
al Service, the Attorney General may bring a civil 
action in an appropriate district court of the United 
States to enforce this section or a regulation 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
125
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—
(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 fol-
lowing:
‘‘3018. Hazardous material.’’.
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.
126
(b) REGULATIONS.—If the Postal Regulatory Com-
mission determines that section E670.5.3 of the Domestic 
Mail Manual does not contain adequate safeguards as de-
scribed in the preceding subsection, the Commission shall 
promulgate such regulations as may be necessary to en-
sure such safeguards. 
(c) TIMING.—The Postal Regulatory Commission 
shall complete the examination required by subsection (a) 
and the promulgation of any necessary regulations re-
quired by subsection (b) within one year after the date 
of the enactment of this section.
SEC. 811. TECHNICAL AND CONFORMING AMENDMENTS. 
(a) REIMBURSEMENT.—Section 3681 of title 39, 
United States Code, is amended by striking ‘‘section 
3628’’ and inserting ‘‘sections 3662 through 3664’’. 
(b) SIZE AND WEIGHT LIMITS.—Section 3682 of title 
39, United States Code, is amended to read as follows: 
‘‘§ 3682. Size and weight limits 
‘‘The Postal Service may establish size and weight 
limitations for mail matter in the market-dominant cat-
egory of mail consistent with regulations the Postal Regu-
latory Commission may prescribe under section 3622. The 
Postal Service may establish size and weight limitations 
for mail matter in the competitive category of mail con-
sistent with its authority under section 3632.’’.
127
(c) REVENUE FOREGONE, ETC.—Title 39, United 
States Code, is amended—
(1) in section 503 (as so redesignated by sec-
tion 501), by striking ‘‘this chapter.’’ and inserting 
‘‘this title.’’; and 
(2) in section 2401(d), by inserting ‘‘(as last in 
effect before enactment of the Postal Accountability 
and Enhancement Act)’’ after ‘‘3626(a)’’ and after 
‘‘3626(a)(3)(B)(ii)’’. 
(d) APPROPRIATIONS
AND REPORTING REQUIRE-
MENTS.—
(1) APPROPRIATIONS.—Subsection (e) of sec-
tion 2401 of title 39, United States Code, is amend-
ed—
(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 in-
serting ‘‘2401(e)’’.
128
(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, but before the 
amendment made by section 801) is further amended by 
redesignating subsections (b) and (c) as subsections (d) 
and (e), respectively, and by inserting after subsection (a) 
the following: 
‘‘(b) Except as otherwise provided, the Governors are 
authorized to establish reasonable and equitable classes of 
mail and reasonable and equitable rates of postage and 
fees for postal services in accordance with the provisions 
of chapter 36. Postal rates and fees shall be reasonable 
and equitable and sufficient to enable the Postal Service, 
under best practices of honest, efficient, and economical 
management, to maintain and continue the development 
of postal services of the kind and quality adapted to the 
needs of the United States. 
‘‘(c) The Postal Service shall maintain one or more 
classes of mail for the transmission of letters sealed 
against inspection. The rate for each such class shall be 
uniform throughout the United States, its territories, and 
possessions. One such class shall provide for the most ex-
peditious handling and transportation afforded mail mat-
ter by the Postal Service. No letter of such a class of do-
129
mestic 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 de-
termining an address at which the letter can be delivered, 
or pursuant to the authorization of the addressee.’’. 
(f) LIMITATIONS.—Section 3684 of title 39, United 
States Code, is amended by striking all that follows ‘‘any 
provision’’ and inserting ‘‘of this title.’’. 
(g) MISCELLANEOUS.—Title 39, United States Code, 
is amended—
(1) in section 1005(d)(2)—
(A) by striking ‘‘subsection (g) of section 
5532,’’; and 
(B) by striking ‘‘8344,’’ and inserting 
‘‘8344’’; 
(2) in the analysis for part III, by striking the 
item relating to chapter 28 and inserting the 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’’
130
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: 
‘‘§ 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 
follows ‘‘be equal to’’ and inserting ‘‘zero’’. 
(b) DETERMINATION AND DISPOSITION OF POSTAL 
SURPLUS
OR
SUPPLEMENTAL
LIABILITY.—Section 
8348(h) of title 5, United States Code, is amended to read 
as follows: 
‘‘(h)(1) For purposes of this subsection, the ‘Postal 
surplus or supplemental liability’ means the estimated dif-
ference, as determined by the Office, between—
132
‘‘(ii) If a supplemental liability is determined under 
this subparagraph for fiscal year 2005, the Office shall 
establish an amortization schedule, including a series of 
equal annual installments commencing September 30, 
2006, which provides for the liquidation of such liability 
by September 30, 2043. 
‘‘(iii) If a surplus is determined under this subpara-
graph for fiscal year 2005, the amount of the surplus shall 
be transferred to the Postal Service Retiree Health Bene-
fits Fund by June 30, 2006. 
‘‘(B)(i) For each of fiscal years 2006 through 2038, 
the Office shall determine the Postal surplus or supple-
mental liability as of the close of such fiscal year, with 
each such determination to be made by June 15th of the 
following fiscal year. 
‘‘(ii) If a supplemental liability is determined under 
this subparagraph for a fiscal year, the Office shall estab-
lish an amortization schedule, including a series of equal 
annual installments commencing on September 30 of the 
following fiscal year, which provides for the liquidation of 
such liability by September 30, 2043. 
‘‘(iii)(I) If a surplus of $500,000,000 or more is de-
termined under this subparagraph for a fiscal year, the 
amount of the surplus shall be transferred to the Postal
133
Service Retiree Health Benefits Fund by June 30th of the 
following fiscal year. 
‘‘(II) If a surplus of less than $500,000,000 is deter-
mined under this subparagraph for a fiscal year, the sur-
plus shall remain in the Fund, subject to transfer in a 
subsequent fiscal year under subclause (I) or subpara-
graph (C)(iii). 
‘‘(C)(i) Not later than June 15, 2040, the Office shall 
determine the Postal surplus or supplemental liability as 
of September 30, 2039. 
‘‘(ii) If a supplemental liability is determined under 
this subparagraph for fiscal year 2039, the Office shall 
establish an amortization schedule, including a series of 
equal annual installments commencing September 30, 
2040, which provides for the liquidation of such liability 
by September 30, 2043. 
‘‘(iii) If a surplus is determined under this 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.
134
‘‘(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. 
‘‘(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 
disregarding that portion of the unfunded liability that the 
Office determines will be liquidated by payments under 
this subsection. 
‘‘(4) As used in this subsection, ‘Postal Service Re-
tiree Health Benefits Fund’ refers to the Postal Service
135
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 
section 8348(g) of title 5, United States Code, for fiscal 
year 2006, the Office of Personnel Management shall in-
clude, in addition to the amount otherwise computed 
under that paragraph, the amounts that would have been 
included for fiscal years 2003 through 2005 with respect 
to credit for military service of former employees of the 
United States Postal Service if Public Law 108-18 had 
not been enacted (including earnings thereon) and the 
Secretary of the Treasury shall make the required transfer 
to the Civil Service Retirement and Disability Fund based 
on that amount. 
(d) REVIEW.—
(1) IN GENERAL.—Notwithstanding any other 
provision of this section, any determination or rede-
termination made by the Office of Personnel Man-
agement under this section shall, upon request of 
the United States Postal Service, be subject to re-
view by the Postal Regulatory Commission. The 
Commission shall submit a report containing the re-
sults of any such review to the Postal Service, the 
Office of Personnel Management, and the Congress.
136
(2) RESPONSE.—Upon receiving the report of 
the Postal Regulatory Commission, the Office of 
Personnel Management shall reconsider its deter-
mination or redetermination in light of such report, 
and shall make any appropriate adjustments. The 
Office shall submit a report containing the results of 
its reconsideration to the Commission, the Postal 
Service, and the Congress. 
SEC. 902. HEALTH INSURANCE. 
(a) IN GENERAL.—Chapter 89 of title 5, United 
States Code, is amended—
(1) in section 8906(g)(2)(A), by striking ‘‘by 
the United States Postal Service.’’ and inserting 
‘‘first from the Postal Service Retiree Health Bene-
fits Fund up to the amount contained therein, with 
any remaining amount paid by the United States 
Postal Service.’’; 
(2) by inserting after section 8909 the fol-
lowing: 
‘‘§ 8909a. Postal Service Retiree Health Benefits Fund 
‘‘(a) There is in the Treasury of the United States 
a Postal Service Retiree Health Benefits Fund (herein-
after 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
137
8348(h)(2) shall yield interest at a rate equal to the 
weighted average yield of all the investments in the Civil 
Service Retirement and Disability Fund as of the date of 
transfer. All other investments of amounts in the Fund 
shall be made in accordance with subsections (c)–(e) of 
section 8348. 
‘‘(b) The Fund is available without fiscal year 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 Man-
agement shall compute the net present value of the excess 
of future payments required by section 8906(g)(2)(A) for 
current and future United States Postal Service annu-
itants over the value of the assets of the Fund as of the 
end of the fiscal year ending on September 30 of that year. 
The actuarial costing method to be used by the Office and 
all actuarial assumptions shall be established by the Office 
after consultation with the United States Postal Service 
and must be in accordance with generally accepted actu-
arial practices and principles. 
‘‘(2) Not later than September 30, 2006, and by Sep-
tember 30 of each succeeding year, the Office shall com-
pute and the United States Postal Service shall pay into 
such Fund—
138
‘‘(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 Regu-
latory Commission. The Commission shall submit a report 
containing the results of any such review to the Postal 
Service, the Office of Personnel Management, and the 
Congress. 
‘‘(B) Upon receiving the report of the Postal 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 ad-
justments. The Office shall submit a report containing the 
results of its reconsideration to the Commission, the Post-
al Service, and the Congress. 
‘‘(4) The Office shall promulgate, after consultation 
with the United States Postal Service, any regulations it 
deems necessary under this subsection.’’; and 
(3) in the analysis by inserting after the item 
relating to section 8909 the following:
‘‘8909a. Postal Service Retiree Health Benefits Fund.’’.
139
(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 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 
Personnel Management shall reconsider its regula-
tion in light of such report, and shall take such ac-
tion as it considers appropriate. The Office shall 
submit a report containing the results of its recon-
sideration to the Commission, the Postal Service, 
and the Congress. 
SEC. 903. REPEALER. 
Section 3 of Public Law 108–18 is repealed. 
SEC. 904. ENSURING APPROPRIATE USE OF ESCROW AND 
MILITARY SAVINGS. 
(a) DEFINITION.—For purposes of this section, the 
term ‘‘total savings’’ means, for any fiscal year, the 
amount equal to—
140
(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 fis-
cal year. 
(2) On the date of making its determination 
under paragraph (1), the Office shall also determine 
(in consultation with the Postal Service) the amount 
by which—
(A) the amount the Postal Service paid for 
that fiscal year into the Postal Service Retiree 
Health Benefits Fund in accordance with 
8909a(c)(2) of title 5, United States Code, ex-
ceeds (if at all)
141
(B) the amount of payments made by the 
Postal Service for that fiscal year from such 
Fund in order to satisfy the requirements of 
section 8906(g)(2) of such title 5. 
(c) REQUIREMENTS.—
(1) IF THRESHOLD IS MET.—If the amount cal-
culated under subsection (b)(2) for a fiscal year is 
greater than or equal to two-thirds of the total sav-
ings in such fiscal year, no further action under this 
section is necessary with respect to such fiscal year. 
(2) IF THRESHOLD IS NOT MET.—
(A) IN
GENERAL.—If the amount cal-
culated under subsection (b)(2) for a fiscal year 
is less than two-thirds of the total savings in 
such fiscal year, the Postal Service shall pay 
into the Postal Service Retiree Health Benefits 
Fund, by June 30 of the following fiscal year, 
an amount equal to the difference. 
(B) ALLOWABLE ALTERNATIVE.—
(i) IN
GENERAL.—Notwithstanding 
subparagraph (A), and subject to clause 
(ii), the Postal Service may instead use the 
amount that it would otherwise be required 
to pay into the Postal Service Retiree
142
Health Benefits Fund for a year (or any 
portion thereof) to reduce the postal debt. 
(ii) LIMITATION.—Amounts used to 
reduce the postal debt under this 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 in-
volved 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 Post-
al Service, the Postal Regulatory Commission, and the 
Congress. 
(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
143
waiver is reasonable and equitable and necessary to enable 
the Postal Service, under best practices of honest, effi-
cient, and economical management, to maintain and con-
tinue the development of postal services of the kind and 
quality adapted to the needs of the United States. 
SEC. 905. EFFECTIVE DATES. 
(a) IN GENERAL.—Except as otherwise provided, this 
title shall take effect on October 1, 2005. 
(b) 
GOVERNMENT
CONTRIBUTIONS.—Section 
901(a)(1) shall take effect on the first day of the first 
pay period beginning on or after October 1, 2005.
Æ