(2) 
CONFORMING
AMENDMENT.—Section 
2003(e)(1) of title 39, United States Code, is amended 
by striking the first sentence and inserting the fol-
lowing: ‘‘The Fund shall be available for the payment 
of (A) all expenses incurred by the Postal Service in 
carrying out its functions as provided by law, subject 
to the same limitation as set forth in the parenthet-
ical matter under subsection (a); (B) all expenses of 
the Postal Regulatory Commission, subject to the 
availability of amounts appropriated pursuant to sec-
tion 504(d); and (C) all expenses of the Office of In-
spector General, subject to the availability of amounts 
appropriated pursuant to section 8L(e) of the Inspec-
tor General Act of 1978.’’. 
(c) EFFECTIVE DATE.— 
(1) IN
GENERAL.—The amendments made by 
this section shall apply with respect to fiscal years be-
ginning on or after October 1, 2005. 
(2) SAVINGS PROVISION.—The provisions of title 
39, United States Code, that are amended by this sec-
tion shall, for purposes of any fiscal year before the 
first fiscal year to which the amendments made by 
this section apply, continue to apply in the same way 
as if this section had never been enacted.
SEC. 504. REDESIGNATION OF THE POSTAL RATE COMMIS-
SION. 
(a) AMENDMENTS
TO TITLE 39, UNITED STATES 
CODE.—Title 39, United States Code, is amended in sec-
tions 404, 503–504 (as so redesignated by section 501), 
1001, and 1002 by striking ‘‘Postal Rate Commission’’ each 
place it appears and inserting ‘‘Postal Regulatory Commis-
sion’’. 
(b) AMENDMENTS
TO TITLE 5, UNITED STATES 
CODE.—Title 5, United States Code, is amended in sections 
104(1), 306(f), 2104(b), 3371(3), 5314 (in the item relating 
to Chairman, Postal Rate Commission), 5315 (in the item 
relating 
to 
Members, 
Postal 
Rate 
Commission), 
5514(a)(5)(B), 
7342(a)(1)(A), 
7511(a)(1)(B)(ii), 
8402(c)(1), 8423(b)(1)(B), and 8474(c)(4) by striking 
‘‘Postal Rate Commission’’ and inserting ‘‘Postal Regu-
latory Commission’’. 
(c) AMENDMENT TO THE ETHICS IN GOVERNMENT ACT 
OF 1978.—Section 101(f)(6) of the Ethics in Government 
Act of 1978 (5 U.S.C. App.) is amended by striking ‘‘Postal 
Rate Commission’’ and inserting ‘‘Postal Regulatory Com-
mission’’. 
(d) AMENDMENT TO THE REHABILITATION ACT OF 
1973.—Section 501(b) of the Rehabilitation Act of 1973 (29 
U.S.C. 791(b)) is amended by striking ‘‘Postal Rate Office’’ 
and inserting ‘‘Postal Regulatory Commission’’.
(e) AMENDMENT
TO
TITLE
44, UNITED
STATES 
CODE.—Section 3502(5) of title 44, United States Code, is 
amended by striking ‘‘Postal Rate Commission’’ and insert-
ing ‘‘Postal Regulatory Commission’’. 
(f) OTHER REFERENCES.—Whenever a reference is 
made in any provision of law (other than this Act or a 
provision of law amended by this Act), regulation, rule, doc-
ument, or other record of the United States to the Postal 
Rate Commission, such reference shall be considered a ref-
erence to the Postal Regulatory Commission. 
SEC. 505. OFFICER OF THE POSTAL REGULATORY COMMIS-
SION REPRESENTING THE GENERAL PUBLIC. 
(a) IN GENERAL.—Chapter 5 of title 39, United States 
Code (as added by this Act) is amended by adding after 
section 504 the following: 
‘‘§ 505. Officer of the Postal Regulatory Commission 
representing the general public 
‘‘The Postal Regulatory Commission shall designate an 
officer of the Postal Regulatory Commission in all public 
proceedings (such as developing rules, regulations, and pro-
cedures) who shall represent the interests of the general pub-
lic.’’. 
(b) CLERICAL AMENDMENT.—The analysis for chapter 
5 of title 39, United States Code (as amended by section
501(a)(1)) is amended by adding after the item relating to 
section 504 the following: 
‘‘505. Officer of the Postal Regulatory Commission representing the general pub-
lic.’’. 
TITLE VI—INSPECTORS 
GENERAL 
SEC. 601. INSPECTOR GENERAL OF THE POSTAL REGU-
LATORY COMMISSION. 
(a) IN GENERAL.—Paragraph (2) of section 8G(a) of 
the Inspector General Act of 1978 is amended by inserting 
‘‘the Postal Regulatory Commission,’’ after ‘‘the United 
States International Trade Commission,’’. 
(b) ADMINISTRATION.—Section 504 of title 39, United 
States Code (as so redesignated by section 501) is amended 
by adding after subsection (g) (as added by section 502) 
the following: 
‘‘(h)(1) Notwithstanding any other provision of this 
title or of the Inspector General Act of 1978, the authority 
to select, appoint, and employ officers and employees of the 
Office of Inspector General of the Postal Regulatory Com-
mission, and to obtain any temporary or intermittent serv-
ices of experts or consultants (or an organization of experts 
or consultants) for such Office, shall reside with the Inspec-
tor General of the Postal Regulatory Commission. 
‘‘(2) Except as provided in paragraph (1), any exercise 
of authority under this subsection shall, to the extent prac-
ticable, be in conformance with the applicable laws and reg-
ulations that govern selections, appointments and employ-
ment, and the obtaining of any such temporary or intermit-
tent services, within the Postal Regulatory Commission.’’. 
(c) DEADLINE.—No later than 180 days after the date 
of the enactment of this Act— 
(1) the first Inspector General of the Postal Reg-
ulatory Commission shall be appointed; and 
(2) the Office of Inspector General of the Postal 
Regulatory Commission shall be established. 
SEC. 602. INSPECTOR GENERAL OF THE UNITED STATES 
POSTAL SERVICE TO BE APPOINTED BY THE 
PRESIDENT. 
(a) DEFINITIONAL AMENDMENTS TO THE INSPECTOR 
GENERAL ACT OF 1978.—Section 11 of the Inspector Gen-
eral Act of 1978 is amended— 
(1) in paragraph (1)— 
(A) by striking ‘‘or’’ before ‘‘the President of 
the Export-Import Bank;’’ and 
(B) by inserting ‘‘or the Governors of the 
United States Postal Service (within the mean-
ing of section 102(3) of title 39, United States 
Code);’’ after ‘‘the President of the Export-Im-
port Bank;’’; and 
(2) in paragraph (2)—
(A) by striking ‘‘or’’ before ‘‘the Export-Im-
port Bank,’’; and 
(B) by inserting ‘‘or the United States Post-
al Service,’’ after ‘‘the Export-Import Bank,’’. 
(b) SPECIAL PROVISIONS CONCERNING THE UNITED 
STATES POSTAL SERVICE.— 
(1) IN GENERAL.—The Inspector General Act of 
1978 is amended by inserting after section 8K the fol-
lowing: 
‘‘SPECIAL PROVISIONS CONCERNING THE UNITED STATES 
POSTAL SERVICE 
‘‘SEC. 8L. (a) In carrying out the duties and respon-
sibilities specified in this Act, the Inspector General of the 
United States Postal Service shall have oversight responsi-
bility for all activities of the Postal Inspection Service, in-
cluding any internal investigation performed by the Postal 
Inspection Service. The Chief Postal Inspector shall 
promptly report any significant activities being carried out 
by the Postal Inspection Service to such Inspector General. 
The Postmaster General shall promptly report to such In-
spector General all allegations of theft, fraud, or misconduct 
by Postal Service officers or employees, and entities or indi-
viduals doing business with the Postal Service. 
‘‘(b) In the case of any report that the Governors of 
the United States Postal Service (within the meaning of
section 102(3) of title 39, United States Code) are required 
to transmit under the second sentence of section 5(d), such 
sentence shall be applied by deeming the term ‘appropriate 
committees of Congress’ to mean the Committee on Govern-
ment Reform of the House of Representatives, the Com-
mittee on Governmental Affairs of the Senate, and such 
other committees or subcommittees of Congress as may be 
appropriate. 
‘‘(c) Notwithstanding any provision of paragraph (7) 
or (8) of section 6(a), the Inspector General of the United 
States Postal Service may select, appoint, and employ such 
officers and employees as may be necessary for carrying out 
the functions, powers, and duties of the Office of Inspector 
General and to obtain the temporary or intermittent serv-
ices of experts or consultants or an organization of experts 
or consultants, subject to the applicable laws and regula-
tions that govern such selections, appointments, and em-
ployment, and the obtaining of such services, within the 
United States Postal Service. 
‘‘(d) Nothing in this Act shall restrict, eliminate, or 
otherwise adversely affect any of the rights, privileges, or 
benefits of employees of the United States Postal Service, 
or labor organizations representing employees of the United 
States Postal Service, under chapter 12 of title 39, United 
States Code, the National Labor Relations Act, any hand-
book or manual affecting employee labor relations with the 
United States Postal Service, or any collective bargaining 
agreement. 
‘‘(e) There are authorized to be appropriated, out of 
the Postal Service Fund, such sums as may be necessary 
for the Office of Inspector General of the United States Post-
al Service.’’. 
(2) RELATED PROVISIONS.—For certain related 
provisions, see section 503(b). 
(c) EXERCISE OF CERTAIN POWERS.—Section 6(e)(3) 
of the Inspector General Act of 1978 is amended— 
(1) by striking ‘‘and the’’ before ‘‘Tennessee Val-
ley Authority’’; and 
(2) by inserting ‘‘, and United States Postal 
Service’’ after ‘‘Tennessee Valley Authority’’. 
(d) PUBLIC CONTRACTS.— 
(1) ADDITIONAL PROVISIONS APPLICABLE.—Sec-
tion 410(b)(5) of title 39, United States Code, is 
amended— 
(A) in subparagraph (A), by striking ‘‘and’’ 
after the semicolon; and 
(B) by adding after subparagraph (B) the 
following:
‘‘(C) the Anti-Kickback Act of 1986 (41 
U.S.C. 51 and following), other than subsections 
(a) and (b) of 7 and section 8 of that Act; and 
‘‘(D) section 315 of the Federal Property 
and Administrative Services Act of 1949 (41 
U.S.C. 265) (relating to protecting contractor 
employees from reprisal for disclosure of certain 
information);’’. 
(2) REGULATIONS ON ALLOWABLE COSTS.—Sec-
tion 410 of title 39, United States Code, is amended 
by adding at the end the following: 
‘‘(e) The Postal Service shall develop and issue pur-
chasing regulations that prohibit contract costs not allow-
able under section 5.2.5 of the United States Postal Service 
Procurement Manual (Publication 41), as in effect on July 
12, 1995.’’. 
(e) REPORTS.—Section 3013 of title 39, United States 
Code, is amended by striking ‘‘Postmaster General’’ each 
place it appears and inserting ‘‘Chief Postal Inspector’’. 
(f) TECHNICAL AND CONFORMING AMENDMENTS.— 
(1) RELATING TO THE INSPECTOR GENERAL ACT 
OF 1978.—(A) Subsection (a) of section 8G of the In-
spector General Act of 1978 (as amended by section 
601(a)) is further amended—
100 
(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 8J of such Act is amended by strik-
ing the matter after ‘‘8D,’’ and before ‘‘of this Act’’ 
and inserting ‘‘8E, 8F, 8H, or 8L’’. 
(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-
101 
pointed under section 3(a) of the Inspector General 
Act of 1978;’’. 
(C) The first sentence of section 1003(a) of such 
title 39 is amended by striking ‘‘chapters 2 and 12 
of this title, section 8G of the Inspector General Act 
of 1978, or other provision of law,’’ and inserting 
‘‘chapter 2 or 12 of this title, subsection (b) or (c) of 
this section, or any other provision of law,’’. 
(D) Section 1003(b) of such title 39 is amended 
by striking ‘‘respective’’ and inserting ‘‘other’’. 
(E) Section 1003(c) of such title 39 is amended 
by striking ‘‘included’’ and inserting ‘‘includes’’. 
(3) RELATING TO THE ENERGY POLICY ACT OF 
1992.—Section 160(a) of the Energy Policy Act of 
1992 (42 U.S.C. 8262f(a)) is amended (in the matter 
before paragraph (1)) by striking all that follows ‘‘(5 
U.S.C. App.)’’ and before ‘‘shall—’’. 
(g) EFFECTIVE DATE; TRANSITION PROVISIONS.— 
(1) EFFECTIVE DATE.—Except as provided in 
paragraph (2) or subsection (c), this section and the 
amendments made by this section shall take effect on 
the date of the enactment of this Act. 
(2) TRANSITION PROVISIONS.— 
(A) PRESIDENTIAL APPOINTMENT AUTHOR-
ITY AVAILABLE IMMEDIATELY.—The authority to
102 
appoint an Inspector General of the United 
States Postal Service in accordance with the 
amendments made by this section shall be avail-
able as of the effective date of this section. 
(B) CONTINUATION
IN
OFFICE.—Pending 
the appointment of an Inspector General of the 
United States Postal Service in accordance with 
the amendments made by this section, the indi-
vidual serving as the Inspector General of the 
United States Postal Service on the day before 
the effective date of this section may continue to 
serve— 
(i) in accordance with applicable pro-
visions of the Inspector General Act of 1978 
and (except as provided in clause (ii)) of 
title 39, United States Code, as last in effect 
before the effective date of this Act; but 
(ii) subject to the provisions of such 
title 39 as amended by subsection (e) of this 
section (deeming any reference to the ‘‘In-
spector General’’ in such provisions, as so 
amended, to refer to the individual con-
tinuing to serve under authority of this sub-
paragraph) and subparagraph (C).
103 
(C) 
AUTHORIZATION
OF
APPROPRIA-
TIONS.— 
(i) 
IN
GENERAL.—Notwithstanding 
any other provision of this subsection, sec-
tion 8L(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, 2005. 
(ii) SAVINGS
PROVISION.—For pur-
poses of the fiscal year ending on September 
30, 2005, funding for the Office of Inspector 
General of the United States Postal Service 
shall be made available in the same manner 
as if this Act had never been enacted. 
(D) ELIGIBILITY OF PRIOR INSPECTOR GEN-
ERAL.—Nothing in this Act shall prevent any 
individual who has served as Inspector General 
of the United States Postal Service at any time 
before the date of the enactment of this Act from 
being appointed to that position pursuant to the 
amendments made by this section. 
TITLE VII—EVALUATIONS 
SEC. 701. UNIVERSAL POSTAL SERVICE STUDY. 
(a) REPORT BY THE POSTAL SERVICE.—The United 
States Postal Service shall, within 12 months after the date
104 
of the enactment of this Act, submit to the President, the 
Congress, and the Postal Regulatory Commission, a written 
report on universal postal service in the United States 
(hereinafter in this section referred to as ‘‘universal serv-
ice’’). Such report shall include at least the following: 
(1) A comprehensive review of the history and 
development of universal service, including how the 
scope and standards of universal service have evolved 
over time. 
(2) The scope and standards of universal service 
provided under current law (including sections 101 
and 403 of title 39, United States Code) and current 
rules, regulations, policy statements, and practices of 
the Postal Service. 
(3) A description of any geographic areas, popu-
lations, communities, organizations, or other groups 
or entities not currently covered by universal service 
or that are covered but that are receiving services de-
ficient in scope or quality or both. 
(4) The scope and standards of universal service 
likely to be required in the future in order to meet the 
needs and expectations of the American public, in-
cluding all types of mail users, based on such assump-
tions or alternative sets of assumptions as the Postal 
Service considers plausible.
105 
(5) Such recommendations as the Postal Service 
considers appropriate. 
(b) REPORT BY THE POSTAL REGULATORY COMMIS-
SION.—The Postal Regulatory Commission shall, within 12 
months after receiving the report of the Postal Service under 
subsection (a), submit to the President and the Congress a 
written report evaluating the report of the Postal Service. 
The report of the Commission shall include at least the fol-
lowing: 
(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 ob-
ligation 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 as-
sumptions of the Postal Service described in sub-
section (a)(4); and 
(B) such other assumptions or sets of as-
sumptions as the Commission considers plau-
sible. 
(4) Such additional topics and recommendations 
as the Commission considers appropriate.
106 
(c) CONSULTATION.—In preparing the reports required 
by this section, the Postal Service and the Postal Regulatory 
Commission— 
(1) shall consult with each other, other Federal 
agencies, users of the mails, enterprises in the private 
sector engaged in the delivery of mail, and the general 
public; and 
(2) shall address in their respective reports any 
written comments received under this section. 
(d) CLARIFYING PROVISION.—Nothing in this section 
shall be considered to relate to any services that are not 
postal services (within the meaning of section 102 of title 
39, United States Code, as amended by section 101). 
SEC. 702. ASSESSMENTS OF RATEMAKING, CLASSIFICATION, 
AND OTHER PROVISIONS. 
(a) IN GENERAL.—The Postal Regulatory Commission 
shall, at least every 5 years, submit a report to the President 
and the Congress concerning— 
(1) the operation of the amendments made by the 
Postal Accountability and Enhancement Act; and 
(2) recommendations for any legislation or other 
measures necessary to improve the effectiveness or effi-
ciency of the postal laws of the United States. 
(b) POSTAL SERVICE VIEWS.—A report under this sec-
tion shall be submitted only after reasonable opportunity
107 
has been afforded to the Postal Service to review such report 
and to submit written comments thereon. Any comments 
timely received from the Postal Service under the preceding 
sentence shall be attached to the report submitted under sub-
section (a). 
(c) SPECIFIC INFORMATION REQUIRED.—The Postal 
Regulatory Commission shall include, as part of at least 
its first report under subsection (a), the following: 
(1) COST-COVERAGE REQUIREMENT RELATING TO 
COMPETITIVE
PRODUCTS
COLLECTIVELY.—With re-
spect to section 3633 of title 39, United States Code 
(as amended by this Act)— 
(A) a description of how such section has 
operated; and 
(B) recommendations as to whether or not 
such section should remain in effect and, if so, 
any suggestions as to how it might be improved. 
(2) COMPETITIVE
PRODUCTS
FUND.—With re-
spect to the Postal Service Competitive Products Fund 
(under section 2011 of title 39, United States Code, 
as amended by section 301), in consultation with the 
Secretary of the Treasury— 
(A) a description of how such Fund has op-
erated;
108 
(B) any suggestions as to how the operation 
of such Fund might be improved; and 
(C) a description and assessment of alter-
native accounting or financing mechanisms that 
might be used to achieve the objectives of such 
Fund. 
(3) ASSUMED FEDERAL INCOME TAX ON COM-
PETITIVE PRODUCTS FUND.—With respect to section 
3634 of title 39, United States Code (as amended by 
this Act), in consultation with the Secretary of the 
Treasury— 
(A) a description of how such section has 
operated; and 
(B) recommendations as to whether or not 
such section should remain in effect and, if so, 
any suggestions as to how it might be improved. 
SEC. 703. STUDY ON EQUAL APPLICATION OF LAWS TO COM-
PETITIVE PRODUCTS. 
(a) IN GENERAL.—The Federal Trade Commission 
shall prepare and submit to the President, the Congress, 
and the Postal Regulatory Commission, within 1 year after 
the date of the enactment of this Act, a comprehensive report 
identifying Federal and State laws that apply differently 
to the United States Postal Service with respect to the com-
petitive category of mail (within the meaning of section 102
109 
of title 39, United States Code, as amended by section 101) 
and private companies providing similar products. 
(b) RECOMMENDATIONS; ADJUSTMENTS.—The Federal 
Trade Commission shall include such recommendations as 
it considers appropriate for bringing such legal differences 
to an end and, in the interim, to account under section 
3633, for the net economic effects provided by those laws. 
(c) CONSULTATION.—In preparing its report, the Fed-
eral Trade Commission shall consult with the United States 
Postal Service, the Postal Regulatory Commission, other 
Federal agencies, mailers, private companies that provide 
delivery services, and the general public, and shall append 
to such report any written comments received under this 
subsection. 
(d) COMPETITIVE PRODUCT RATE REGULATION.—The 
Postal Regulatory Commission shall take into account the 
recommendations of the Federal Trade Commission, and 
subsequent events that affect the continuing validity of the 
estimate of the net economic effect, in promulgating or re-
vising the regulations required by section 3633 of title 39, 
United States Code.
110 
SEC. 704. GREATER DIVERSITY IN POSTAL SERVICE EXECU-
TIVE AND ADMINISTRATIVE SCHEDULE MAN-
AGEMENT POSITIONS. 
(a) STUDY.—The Board of Governors shall study and, 
within 1 year after the date of the enactment of this Act, 
submit to the President and Congress a report concerning 
the extent to which women and minorities are represented 
in supervisory and management positions within the 
United States Postal Service. Any data included in the re-
port shall be presented in the aggregate and by pay level. 
(b) PERFORMANCE EVALUATIONS.—The United States 
Postal Service shall, as soon as practicable, take such meas-
ures as may be necessary to ensure that, for purposes of 
conducting performance appraisals of supervisory or mana-
gerial employees, appropriate consideration shall be given 
to meeting affirmative action goals, achieving equal em-
ployment opportunity requirements, and implementation of 
plans designed to achieve greater diversity in the workforce. 
SEC. 705. PLAN FOR ASSISTING DISPLACED WORKERS. 
(a) PLAN.—The United States Postal Service shall, be-
fore the deadline specified in subsection (b), develop and 
be prepared to implement, whenever necessary, a com-
prehensive plan under which reemployment assistance shall 
be afforded to employees displaced as a result of the automa-
tion or privatization of any of its functions.
111 
(b) REPORT.—Not later than 1 year after the date of 
the enactment of this Act, the United States Postal Service 
shall submit to the Board of Governors and to Congress a 
written report describing its plan under this section. 
SEC. 706. CONTRACTS WITH WOMEN, MINORITIES, AND 
SMALL BUSINESSES. 
The Board of Governors shall study and, within 1 year 
after the date of the enactment of this Act, submit to the 
President and the Congress a report concerning the number 
and value of contracts and subcontracts the Postal Service 
has entered into with women, minorities, and small busi-
nesses. 
SEC. 707. RATES FOR PERIODICALS. 
(a) IN GENERAL.—The United States Postal Service, 
acting jointly with the Postal Regulatory Commission, shall 
study and submit to the President and Congress a report 
concerning— 
(1) the quality, accuracy, and completeness of the 
information used by the Postal Service in 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
112 
Service, including any pricing incentives for mailers 
that might be appropriate. 
(b) RECOMMENDATIONS.—The report shall include rec-
ommendations for any administrative action or legislation 
that might be appropriate. 
SEC. 708. ASSESSMENT OF CERTAIN RATE DEFICIENCIES. 
(a) IN GENERAL.—Within 12 months after the date 
of the enactment of this Act, the Office of Inspector General 
of the United States Postal Service shall study and submit 
to the President, the Congress, and the United States Postal 
Service, a report concerning the administration of section 
3626(k) of title 39, United States Code. 
(b) SPECIFIC REQUIREMENTS.—The study and report 
shall specifically address the adequacy and fairness of the 
process by which assessments under section 3626(k) of title 
39, United States Code, are determined and appealable, in-
cluding— 
(1) whether the Postal Regulatory Commission 
or any other body outside the Postal Service should 
be assigned a role; and 
(2) whether a statute of limitations should be es-
tablished for the commencement of proceedings by the 
Postal Service thereunder.
113 
SEC. 709. NETWORK OPTIMIZATION. 
(a) IN GENERAL.—The Postal Service shall, within 90 
days after the end of each fiscal year, prepare and submit 
to the Postal Regulatory Commission, the Congress, and the 
Board of Governors a written report on the postal proc-
essing, transportation, and distribution networks. Such re-
port shall include at least the following: 
(1) An account of actions taken during the pre-
ceding fiscal year to improve the efficiency and effec-
tiveness of the processing, transportation, and dis-
tribution networks, while preserving the timely deliv-
ery of postal services. 
(2) An account of— 
(A) actions taken to identify any excess ca-
pacity within the processing, transportation, and 
distribution networks; and 
(B) actions taken to implement savings 
through realignment or consolidation of facili-
ties. 
(3) Identification of statutory or regulatory ob-
stacles that prevented or will prevent the Postal Serv-
ice from taking action to realign or consolidate facili-
ties. 
(4) Such additional topics and recommendations 
as the Postal Service considers appropriate.
114 
(b) TREATMENT AS PERFORMANCE GOALS.—The Post-
al Service shall establish and report the matters set forth 
in subsection (a) as performance goals in the reports re-
quired by sections 2803 and 2804. 
(c) ACTIONS TO BE TAKEN.—The Postal Service shall 
take such actions it considers, in its sole discretion, nec-
essary and appropriate to provide the Nation with a mod-
ern and efficient network for the processing, transportation, 
and distribution of mail. Nothing in this section shall pre-
vent the Postal Service from making such improvements in 
the efficiency and effectiveness of the network as it deems 
appropriate. 
SEC. 710. ASSESSMENT OF FUTURE BUSINESS MODEL OF 
THE POSTAL SERVICE. 
(a) APPOINTMENT OF RESEARCH ORGANIZATION.— 
Not later than 90 days after the date of the enactment of 
this Act, the Comptroller General of the United States shall 
appoint, in such manner and under such terms as he in 
his sole discretion determines appropriate, an independent, 
impartial, and expert research organization (hereinafter in 
this section referred to as the ‘‘research organization’’) to 
prepare and submit to the President and to Congress a com-
prehensive report that evaluates what business model would 
best promote an efficient, reliable, innovative, and viable 
Postal Service that can meet the needs of the Nation and
115 
its citizens in the 21st century. The final report required 
by this section shall be submitted within 27 months of the 
date of the enactment of this Act. The final report shall 
identify costs, benefits, and feasible options, if any, associ-
ated with one or more strategies for— 
(1) maintaining the Postal Service in its current 
form as an independent establishment in the executive 
branch of the Government; and 
(2) transforming the Postal Service into an ordi-
nary corporation, owned wholly by the Government, 
wholly by private shareholders, or partly by the Gov-
ernment and partly by private shareholders. 
(b) PROTECTION OF UNIVERSAL SERVICE.—The re-
search organization may include such recommendations as 
it considers appropriate with respect to how the Postal 
Service’s business model can be maintained or transformed 
in an orderly manner that will minimize adverse effects on 
all interested parties and assure continued availability of 
affordable, universal postal service throughout the United 
States (based on the reports required by section 701). The 
research organization shall not consider any strategy or 
other course of action that would pose a significant risk 
to the continued availability of affordable, universal postal 
service throughout the United States. 
(c) ELEMENTS OF REPORT.—
116 
(1) TOPICS TO ADDRESS.—The report shall ad-
dress at least the following: 
(A) Specification of nature and bases of one 
or more sets of reasonable assumptions about the 
development of the postal services market, to the 
extent that such assumptions may be necessary 
or appropriate for each strategy identified by the 
research organization. 
(B) Specification of the nature and bases of 
one or more sets of reasonable assumptions about 
the development of the regulatory framework for 
postal services, to the extent that such assump-
tions may be necessary or appropriate for each 
strategy identified by the research organization. 
(C) Qualitative and, to the extent possible, 
quantitative effects that each strategy identified 
by the research organization may have on uni-
versal service generally, the Postal Service, mail-
ers, postal employees, private companies that 
provide delivery services, and the general public. 
(D) Financial effects that each strategy 
identified by the research organization may have 
on the Postal Service, postal employees, the 
Treasury of the United States, and other affected
117 
parties, including the American mailing con-
sumer. 
(E) Feasible and appropriate procedural 
steps and timetables for implementing each 
strategy identified by the research organization. 
(F) Such additional topics as the Comp-
troller General or the research organization shall 
consider necessary and appropriate. 
(2) MATTERS TO CONSIDER.—For each strategy 
identified, the research organization shall assess how 
each business model might— 
(A) address the human-capital challenges 
facing the Postal Service, including how em-
ployee-management relations within the Postal 
Service may be improved; 
(B) optimize the postal infrastructure, in-
cluding the best methods for providing retail 
services that ensure convenience and access to 
customers; 
(C) ensure the safety and security of the 
mail and of postal employees; 
(D) minimize areas of inefficiency or waste 
and improve operations involved in the collec-
tion, processing, or delivery of mail; and
118 
(E) impact other matters that the Comp-
troller General or the research organization de-
termines are relevant to evaluating a viable long- 
term business model for the Postal Service. 
(3) EXPERIENCES
OF
OTHER
COUNTRIES.—In 
preparing the report required by subsection (a), the 
research organization shall comprehensively and 
quantitatively investigate the experiences of other in-
dustrialized countries that have transformed the na-
tional post office. The research organization shall un-
dertake such original research as it deems necessary. 
In each case, the research organization shall describe 
as fully as possible the costs and benefits of trans-
formation of the national post office on all affected 
parties and shall identify any lessons that foreign ex-
perience may imply for each strategy identified by 
the research organization. 
(d) OUTSIDE EXPERTS.—In preparing its study, the 
research organization may retain the services of additional 
experts and consultants. 
(e) CONSULTATION.—In preparing its report, the re-
search organization shall consult fully with the Postal Serv-
ice, the Postal Regulatory Commission, other Federal agen-
cies, postal employee unions and management associations, 
mailers, private companies that provide delivery services,
119 
and the general public. The research organization shall in-
clude with its final report a copy of all formal written com-
ments received under this subsection. 
(f) AUTHORIZATION OF APPROPRIATIONS.—There are 
authorized to be appropriated from the Postal Service Fund 
such sums as may be necessary to carry out this section. 
SEC. 711. STUDY ON CERTAIN PROPOSED AMENDMENTS. 
The Government Accountability Office shall study and, 
within 12 months after the date of the enactment of this 
Act, submit to the Congress a report on sections 805 and 
807 of H.R. 22 (109th Congress), as introduced. Such report 
shall include the following: 
(1) A description of the efficiencies of the current 
system under section 5402 of title 39, United States 
Code. 
(2) The potential for cost savings to the United 
States Postal Service if the Postal Service, rather 
than the Department of Transportation, were to ad-
minister international mail carriage. 
(3) The potential for harm to domestic air car-
riers and American workers currently employed by 
domestic air carriers. 
(4) The potential loss of revenue to domestic air 
carriers and American workers currently employed by 
domestic air carriers.
120 
(5) The process by which the United States Post-
al Service would administer any changes in current 
law. 
(6) The process by which the Department of 
Transportation administers current law. 
(7) The potential for change in protection of na-
tional security by carriage by foreign carriers of 
international mail to and from the United States. 
SEC. 712. DEFINITION. 
For purposes of this title, the term ‘‘Board of Gov-
ernors’’ has the meaning given such term by section 102 
of title 39, United States Code. 
TITLE 
VIII—MISCELLANEOUS; 
TECHNICAL 
AND 
CON-
FORMING AMENDMENTS 
SEC. 801. EMPLOYMENT OF POSTAL POLICE OFFICERS. 
Section 3061 of title 18, United States Code, is amend-
ed by adding at the end the following: 
‘‘(c)(1) The Postal Service may employ police officers 
for duty in connection with the protection of property 
owned or occupied by the Postal Service or under the charge 
and control of the Postal Service, and persons on the prop-
erty, including duty in areas outside the property to the 
extent necessary to protect the property and persons on the 
property.
121 
‘‘(2) With respect to such property, such officers shall 
have the power to— 
‘‘(A) enforce Federal laws and regulations for the 
protection of persons and property; 
‘‘(B) carry firearms; and 
‘‘(C) make arrests without a warrant for any of-
fense against the United States committed in the 
presence of the officer or for any felony cognizable 
under the laws of the United States if the officer has 
reasonable grounds to believe that the person to be ar-
rested has committed or is committing a felony. 
‘‘(3) With respect to such property, such officers may 
have, to such extent as the Postal Service may by regula-
tions prescribe, the power to— 
‘‘(A) serve warrants and subpoenas issued under 
the authority of the United States; and 
‘‘(B) conduct investigations, on and off the prop-
erty in question, of offenses that may have been com-
mitted against property owned or occupied by the 
Postal Service or persons on the property. 
‘‘(4)(A) As to such property, the Postmaster General 
may prescribe regulations necessary for the protection and 
administration of property owned or occupied by the Postal 
Service and persons on the property. The regulations may 
include reasonable penalties, within the limits prescribed
122 
in subparagraph (B), for violations of the regulations. The 
regulations shall be posted and remain posted in a con-
spicuous place on the property. 
‘‘(B) A person violating a regulation prescribed under 
this subsection shall be fined under this title, imprisoned 
for not more than 30 days, or both.’’. 
SEC. 802. DATE OF POSTMARK TO BE TREATED AS DATE OF 
APPEAL IN CONNECTION WITH THE CLOSING 
OR CONSOLIDATION OF POST OFFICES. 
(a) IN GENERAL.—Section 404(b) of title 39, United 
States Code, is amended by adding at the end the following: 
‘‘(6) For purposes of paragraph (5), any appeal re-
ceived by the Commission shall— 
‘‘(A) if sent to the Commission through the 
mails, be considered to have been received on the date 
of the Postal Service postmark on the envelope or 
other cover in which such appeal is mailed; or 
‘‘(B) if otherwise lawfully delivered to the Com-
mission, be considered to have been received on the 
date determined based on any appropriate docu-
mentation or other indicia (as determined under reg-
ulations of the Commission).’’. 
(b) EFFECTIVE DATE.—This section and the amend-
ments made by this section shall apply with respect to any 
determination to close or consolidate a post office which is
123 
first made available, in accordance with paragraph (3) of 
section 404(b) of title 39, United States Code, after the end 
of the 3-month period beginning on the date of the enact-
ment of this Act. 
SEC. 803. PROVISIONS RELATING TO BENEFITS UNDER 
CHAPTER 81 OF TITLE 5, UNITED STATES 
CODE, FOR OFFICERS AND EMPLOYEES OF 
THE FORMER POST OFFICE DEPARTMENT. 
(a) IN GENERAL.—Section 8 of the Postal Reorganiza-
tion Act (39 U.S.C. 1001 note) is amended by inserting 
‘‘(a)’’ after ‘‘8.’’ and by adding at the end the following: 
‘‘(b) For purposes of chapter 81 of title 5, United 
States Code, the Postal Service shall, with respect to any 
individual receiving benefits under such chapter as an offi-
cer or employee of the former Post Office Department, have 
the same authorities and responsibilities as it has with re-
spect to an officer or employee of the Postal Service receiv-
ing such benefits.’’. 
(b) EFFECTIVE DATE.—This section and the amend-
ments made by this section shall be effective as of the first 
day of the fiscal year in which this Act is enacted. 
SEC. 804. OBSOLETE PROVISIONS. 
(a) REPEAL.— 
(1) IN GENERAL.—Chapter 52 of title 39, United 
States Code, is repealed.
124 
(2) CONFORMING
AMENDMENTS.—(A) Section 
5005(a) of title 39, United States Code, is amended— 
(i) by striking paragraph (1), and by redes-
ignating paragraphs (2) through (4) as para-
graphs (1) through (3), respectively; and 
(ii) in paragraph (3) (as so designated by 
clause (i)), by striking ‘‘(as defined in section 
5201(6) of this title)’’. 
(B) Section 5005(b) of such title 39 is amended 
by striking ‘‘(a)(4)’’ each place it appears and insert-
ing ‘‘(a)(3)’’. 
(C) Section 5005(c) of such title 39 is amended 
by striking ‘‘by carrier or person under subsection 
(a)(1) of this section, by contract under subsection 
(a)(4) of this section, or’’ and inserting ‘‘by contract 
under subsection (a)(3) of this section or’’. 
(b) ELIMINATING RESTRICTION ON LENGTH OF CON-
TRACTS.—(1) Section 5005(b)(1) of title 39, United States 
Code, is amended by striking ‘‘(or where the Postal Service 
determines that special conditions or the use of special 
equipment warrants, not in excess of 6 years)’’ and insert-
ing ‘‘(or such longer period of time as may be determined 
by the Postal Service to be advisable or appropriate)’’. 
(2) Section 5402(d) of such title 39 is amended by 
striking ‘‘for a period of not more than 4 years’’.
125 
(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. INVESTMENTS. 
Subsection (c) of section 2003 of title 39, United States 
Code, is amended— 
(1) by striking ‘‘(c) If’’ and inserting ‘‘(c)(1) Ex-
cept as provided in paragraph (2), if’’; and 
(2) by adding at the end the following: 
‘‘(2)(A) Nothing in this section shall be considered to 
authorize any investment in any obligations or securities 
of a commercial entity. 
‘‘(B) For purposes of this paragraph, the term ‘com-
mercial entity’ means any corporation, company, associa-
tion, partnership, joint stock company, firm, society, or 
other similar entity, as further defined under regulations 
prescribed by the Postal Regulatory Commission.’’. 
SEC. 806. REDUCED RATES. 
Section 3626 of title 39, United States Code, is amend-
ed— 
(1) in subsection (a), by striking all before para-
graph (4) and inserting the following:
126 
‘‘(a)(1) Except as otherwise provided in this section, 
rates of postage for a class of mail or kind of mailer under 
former section 4358, 4452(b), 4452(c), 4554(b), or 4554(c) 
of this title shall be established in accordance with section 
3622. 
‘‘(2) For the purpose of this subsection, the term ‘reg-
ular-rate category’ means any class of mail or kind of mail-
er, other than a class or kind referred to in section 2401(c). 
‘‘(3) Rates of postage for a class of mail or kind of 
mailer under former section 4358(a) through (c) of this title 
shall be established so that postage on each mailing of such 
mail reflects its preferred status as compared to the postage 
for the most closely corresponding regular-rate category 
mailing.’’; 
(2) in subsection (g), by adding at the end the 
following: 
‘‘(3) For purposes of this section and former section 
4358(a) through (c) of this title, those copies of an issue 
of a publication entered within the county in which it is 
published, but distributed outside such county on postal 
carrier routes originating in the county of publication, shall 
be treated as if they were distributed within the county of 
publication. 
‘‘(4)(A) In the case of an issue of a publication, any 
number of copies of which are mailed at the rates of postage
127 
for a class of mail or kind of mailer under former section 
4358(a) through (c) of this title, any copies of such issue 
which are distributed outside the county of publication (ex-
cluding any copies subject to paragraph (3)) shall be subject 
to rates of postage provided for under this paragraph. 
‘‘(B) The rates of postage applicable to mail under this 
paragraph shall be established in accordance with section 
3622. 
‘‘(C) This paragraph shall not apply with respect to 
an issue of a publication unless the total paid circulation 
of such issue outside the county of publication (not counting 
recipients of copies subject to paragraph (3)) is less than 
5,000.’’; and 
(3) by adding at the end the following: 
‘‘(n) In the administration of this section, matter that 
satisfies the circulation standards for requester publications 
shall not be excluded from being mailed at the rates for mail 
under former section 4358 solely because such matter is de-
signed primarily for free circulation or for circulation at 
nominal rates, or fails to meet the requirements of former 
section 4354(a)(5).’’. 
SEC. 807. HAZARDOUS MATTER. 
(a) NONMAILABILITY GENERALLY.—Section 3001 of 
title 39, United States Code, is amended—
128 
(1) by redesignating subsection (n) as subsection 
(o); and 
(2) by inserting after subsection (m) the fol-
lowing: 
‘‘(n)(1) Except as otherwise authorized by law or regu-
lations of the Postal Service, hazardous material is non-
mailable. 
‘‘(2) In this subsection, the term ‘hazardous material’ 
means a substance or material designated by the Secretary 
of Transportation under section 5103(a) of title 49.’’. 
(b) MAILABILITY.—Chapter 30 of title 39, United 
States Code, is amended by adding at the end the following: 
‘‘§ 3018. Hazardous material 
‘‘(a) IN GENERAL.—The Postal Service shall prescribe 
regulations for the safe transportation of hazardous mate-
rial in the mail. 
‘‘(b) PROHIBITIONS.—No person may— 
‘‘(1) mail or cause to be mailed hazardous mate-
rial that has been declared by statute or Postal Serv-
ice regulation to be nonmailable; 
‘‘(2) mail or cause to be mailed hazardous mate-
rial in violation of any statute or Postal Service reg-
ulation restricting the time, place, or manner in 
which hazardous material may be mailed; or
129 
‘‘(3) manufacture, distribute, or sell any con-
tainer, packaging kit, or similar device that— 
‘‘(A) is represented, marked, certified, or 
sold by such person for use in the mailing of 
hazardous material; and 
‘‘(B) fails to conform with any statute or 
Postal Service regulation setting forth standards 
for a container, packaging kit, or similar device 
used for the mailing of hazardous material. 
‘‘(c) CIVIL PENALTY; CLEAN-UP COSTS AND DAM-
AGES.— 
‘‘(1) IN GENERAL.—A person who knowingly vio-
lates this section or a regulation prescribed under this 
section shall be liable for— 
‘‘(A) a civil penalty of at least $250, but 
not more than $100,000, for each violation; 
‘‘(B) the costs of any clean-up associated 
with each violation; and 
‘‘(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
130 
‘‘(B) a reasonable person acting in the cir-
cumstances and exercising reasonable care would 
have had that knowledge. 
‘‘(3) SEPARATE VIOLATIONS.— 
‘‘(A) VIOLATIONS OVER TIME.—A separate 
violation under this subsection occurs for each 
day hazardous material, mailed or caused to be 
mailed in noncompliance with this section, is in 
the mail. 
‘‘(B) SEPARATE ITEMS.—A separate viola-
tion under this subsection occurs for each item 
containing hazardous material that is mailed or 
caused to be mailed in noncompliance with this 
section. 
‘‘(d) HEARINGS.—The Postal Service may determine 
that a person has violated this section or a regulation pre-
scribed under this section only after notice and an oppor-
tunity for a hearing. Proceedings under this section shall 
be conducted in accordance with section 3001(m). 
‘‘(e) PENALTY CONSIDERATIONS.—In determining the 
amount of a civil penalty for a violation of this section, 
the Postal Service shall consider— 
‘‘(1) the nature, circumstances, extent, and grav-
ity of the violation;
131 
‘‘(2) with respect to the person who committed 
the violation, the degree of culpability, any history of 
prior violations, the ability to pay, and any effect on 
the ability to continue in business; 
‘‘(3) the impact on Postal Service operations; 
and 
‘‘(4) any other matters that justice requires. 
‘‘(f) CIVIL ACTIONS TO COLLECT.— 
‘‘(1) IN GENERAL.—In accordance with section 
409(d), a civil action may be commenced in an ap-
propriate district court of the United States to collect 
a civil penalty, clean-up costs, and damages assessed 
under subsection (c). 
‘‘(2) COMPROMISE.—The Postal Service may 
compromise the amount of a civil penalty, clean-up 
costs, and damages assessed under subsection (c) be-
fore commencing a civil action with respect to such 
civil penalty, clean-up costs, and damages under 
paragraph (1). 
‘‘(g) CIVIL JUDICIAL PENALTIES.— 
‘‘(1) IN GENERAL.—At the request of the Postal 
Service, the Attorney General may bring a civil ac-
tion in an appropriate district court of the United 
States to enforce this section or a regulation pre-
scribed under this section.
132 
‘‘(2) RELIEF.—The court in a civil action under 
paragraph (1) may award appropriate relief, includ-
ing a temporary or permanent injunction, civil pen-
alties as determined in accordance with this section, 
or punitive damages. 
‘‘(3) CONSTRUCTION.—A civil action under this 
subsection shall be in lieu of civil penalties for the 
same violation under subsection (c)(1)(A). 
‘‘(h) DEPOSIT OF AMOUNTS COLLECTED.— 
‘‘(1) POSTAL
SERVICE
FUND.—Except as pro-
vided under paragraph (2), amounts collected under 
subsection (c)(1)(B) and (C) shall be deposited into 
the Postal Service Fund under section 2003. 
‘‘(2) TREASURY.—Amounts collected under sub-
section (c)(1)(A) and any punitive damages collected 
under subsection (c)(1)(C) shall be deposited into the 
Treasury of the United States.’’. 
(c) CONFORMING AMENDMENTS.—(1) Section 2003(b) 
of title 39, United States Code, is amended— 
(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.’’.
133 
(2) The analysis for chapter 30 of title 39, United 
States Code, is amended by adding at the end the following: 
‘‘3018. Hazardous material.’’. 
(d) INJURIOUS ARTICLES AS NONMAILABLE.—Section 
1716(a) of title 18, United States Code, is amended by in-
serting after ‘‘explosives,’’ the following: ‘‘hazardous mate-
rials,’’. 
SEC. 808. PROVISIONS RELATING TO COOPERATIVE MAIL-
INGS. 
(a) DETERMINATION.—The Postal Regulatory Com-
mission shall examine section E670.5.3 of the Domestic 
Mail Manual to determine whether it contains adequate 
safeguards to protect against (1) abuses of rates for non-
profit mail and (2) deception of consumers. 
(b) REGULATIONS.—If the Postal Regulatory Commis-
sion determines that section E670.5.3 of the Domestic Mail 
Manual does not contain adequate safeguards as described 
in the preceding subsection, the Commission shall promul-
gate such regulations as may be necessary to ensure such 
safeguards. 
(c) TIMING.—The Postal Regulatory Commission shall 
complete the examination required by subsection (a) and 
the promulgation of any necessary regulations required by 
subsection (b) within one year after the date of the enact-
ment of this section.
134 
SEC. 809. TECHNICAL AND CONFORMING AMENDMENTS. 
(a) REIMBURSEMENT.—Section 3681 of title 39, 
United States Code, is amended by striking ‘‘section 3628’’ 
and inserting ‘‘sections 3662 through 3664’’. 
(b) SIZE AND WEIGHT LIMITS.—Section 3682 of title 
39, United States Code, is amended to read as follows: 
‘‘§ 3682. Size and weight limits 
‘‘The Postal Service may establish size and weight lim-
itations for mail matter in the market-dominant category 
of mail consistent with regulations the Postal Regulatory 
Commission may prescribe under section 3622. The Postal 
Service may establish size and weight limitations for mail 
matter in the competitive category of mail consistent with 
its authority under section 3632.’’. 
(c) REVENUE FOREGONE, ETC.—Title 39, United 
States Code, is amended— 
(1) in section 503 (as so redesignated by section 
501), by striking ‘‘this chapter.’’ and inserting ‘‘this 
title.’’; and 
(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.—
135 
(1) APPROPRIATIONS.—Subsection (e) of section 
2401 of title 39, United States Code, is amended— 
(A) by striking ‘‘Committee on Post Office 
and Civil Service’’ each place it appears and in-
serting ‘‘Committee on Government Reform’’; 
and 
(B) by striking ‘‘Not later than March 15 of 
each year,’’ and inserting ‘‘Each year,’’. 
(2) 
REPORTING
REQUIREMENTS.—Sections 
2803(a) and 2804(a) of title 39, United States Code, 
are amended by striking ‘‘2401(g)’’ and inserting 
‘‘2401(e)’’. 
(e) AUTHORITY TO FIX RATES AND CLASSES GEN-
ERALLY; REQUIREMENT RELATING TO LETTERS SEALED 
AGAINST INSPECTION.—Section 404 of title 39, United 
States Code (as amended by section 102) is further amended 
by redesignating subsections (b) and (c) as subsections (d) 
and (e), respectively, and by inserting after subsection (a) 
the following: 
‘‘(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
136 
best practices of honest, efficient, and economical manage-
ment, to maintain and continue the development of postal 
services of the kind and quality adapted to the needs of the 
United States. 
‘‘(c) The Postal Service shall maintain one or more 
classes of mail for the transmission of letters sealed against 
inspection. The rate for each such class shall be uniform 
throughout the United States, its territories, and posses-
sions. One such class shall provide for the most expeditious 
handling and transportation afforded mail matter by the 
Postal Service. No letter of such a class of domestic origin 
shall be opened except under authority of a search warrant 
authorized by law, or by an officer or employee of the Postal 
Service for the sole purpose of determining an address at 
which the letter can be delivered, or pursuant to the author-
ization of the addressee.’’. 
(f) LIMITATIONS.—Section 3684 of title 39, United 
States Code, is amended by striking all that follows ‘‘any 
provision’’ and inserting ‘‘of this title.’’. 
(g) MISCELLANEOUS.—Title 39, United States Code, 
is amended— 
(1) in section 1005(d)(2)— 
(A) by striking ‘‘subsection (g) of section 
5532,’’; and
137 
(B) by striking ‘‘8344,’’ and inserting 
‘‘8344’’; 
(2) in the analysis for part III, by striking the 
item relating to chapter 28 and inserting the fol-
lowing: 
‘‘28. Strategic Planning and Performance Management .... 2801’’; 
(3) in section 3005(a)— 
(A) in the matter before paragraph (1), by 
striking all that follows ‘‘nonmailable’’ and pre-
cedes ‘‘(h),’’ and inserting ‘‘under section 
3001(d),’’; and 
(B) in the sentence following paragraph (3), 
by striking all that follows ‘‘nonmailable’’ and 
precedes ‘‘(h),’’ and inserting ‘‘under such section 
3001(d),’’; 
(4) in section 3210(a)(6)(C), by striking the 
matter after ‘‘if such mass mailing’’ and before ‘‘than 
60 days’’ and inserting ‘‘is postmarked fewer’’; and 
(5) by striking the heading for section 3627 and 
inserting the following:
138 
‘‘§ 3627. Adjusting free rates’’. 
TITLE 
IX—POSTAL 
PENSION 
FUNDING 
REFORM 
AMEND-
MENTS 
SEC. 901. CIVIL SERVICE RETIREMENT SYSTEM. 
(a) TERMINATION OF OBLIGATION TO PAY GOVERN-
MENT CONTRIBUTIONS.—Section 8334(a)(1)(B)(ii) of title 
5, United States Code, is amended by striking all that fol-
lows ‘‘be equal to’’ and inserting ‘‘zero.’’. 
(b) DETERMINATION
AND DISPOSITION
OF POSTAL 
SURPLUS OR SUPPLEMENTAL LIABILITY.—Section 8348(h) 
of title 5, United States Code, is amended to read as follows: 
‘‘(h)(1) For purposes of this subsection, a Postal sur-
plus (or supplemental liability) is the amount, as estimated 
by the Office, by which— 
‘‘(A) the actuarial present value of all future 
benefits which are payable from the Fund under this 
subchapter to current or former employees of the 
United States Postal Service, or their survivors, and 
attributable to civilian employment with the Postal 
Service, is less than (or greater than) 
‘‘(B) the sum of— 
‘‘(i) the actuarial present value of deduc-
tions to be withheld from the future basic pay of 
employees of the Postal Service currently subject 
to this subchapter pursuant to section 8334;
139 
‘‘(ii) that portion of the Fund balance, as of 
the date such surplus or supplemental liability is 
determined, attributable to payments to the 
Fund by the Postal Service and its employees, 
plus the earnings on such amounts while in the 
Fund; and 
‘‘(iii) any other appropriate amount, as de-
termined by the Office in accordance with gen-
erally accepted actuarial practices and prin-
ciples. 
‘‘(2)(A)(i) Not later than June 15, 2006, the Office 
shall determine the Postal surplus or supplemental liability 
as of September 30, 2005. 
‘‘(ii) If a supplemental liability is determined under 
this subparagraph for fiscal year 2005, the Office shall es-
tablish an amortization schedule, including a series of equal 
annual installments commencing September 30, 2006, 
which provides for the liquidation of such liability by Sep-
tember 30, 2043. 
‘‘(iii) If a surplus is determined under this subpara-
graph for fiscal year 2005, the amount of the surplus shall 
be transferred to the Postal Service Retiree Health Benefits 
Fund by June 30, 2006. 
‘‘(B)(i) For each of fiscal years 2006 through 2038, 
the Office shall determine the Postal surplus or supple-
140 
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 establish 
an amortization schedule, including a series of equal an-
nual installments commencing on September 30 of the fol-
lowing 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 deter-
mined under this subparagraph for a fiscal year, the 
amount of the surplus shall be transferred to the Postal 
Service Retiree Health Benefits Fund by June 30th of the 
following fiscal year. 
‘‘(II) If a surplus of less than $500,000,000 is deter-
mined under this subparagraph for a fiscal year, the sur-
plus shall remain in the Fund, subject to transfer in a sub-
sequent fiscal year under subclause (I) or subparagraph 
(C)(iii). 
‘‘(C)(i) Not later than June 15, 2040, the Office shall 
determine the Postal surplus or supplemental liability as 
of September 30, 2039. 
‘‘(ii) If a supplemental liability is determined under 
this subparagraph for fiscal year 2039, the Office shall es-
tablish an amortization schedule, including a series of equal
141 
annual installments commencing September 30, 2040, 
which provides for the liquidation of such liability by Sep-
tember 30, 2043. 
‘‘(iii) If a surplus is determined under this subpara-
graph for fiscal year 2039, the amount of the surplus— 
‘‘(I) shall be applied first toward reducing the 
amount of any supplemental liability described in 
section 8423(b)(1)(B); and 
‘‘(II) to the extent that any portion of such sur-
plus remains after the application of subclause (I), 
shall, not later than June 30, 2040, be transferred to 
the Postal Service Retiree Health Benefits Fund. 
‘‘(D) An amortization schedule under this para-
graph— 
‘‘(i) shall be established in accordance with gen-
erally accepted actuarial practices and principles, 
with interest computed at the rate used in the most 
recent valuation of the Civil Service Retirement Sys-
tem; 
‘‘(ii) shall supersede any amortization schedule 
previously established under this paragraph; and 
‘‘(iii) shall not be taken into account, for pur-
poses of any determination of Postal surplus or sup-
plemental liability, except to the extent of any 
amounts under such schedule actually paid.
142 
‘‘(E)(i) The Postal Service shall pay to the Office the 
amounts due under any amortization schedule established 
under this paragraph, to the extent not superseded or can-
celed. 
‘‘(ii) A determination under subparagraph (B)(i) or 
(C)(i) that no supplemental liability exists shall cancel any 
amortization schedule previously established under this 
paragraph, to the extent of any amounts first coming due 
after the close of the fiscal year to which such determination 
relates. 
‘‘(3) Notwithstanding any other provision of law, in 
computing the amount of any payment under any other 
subsection of this section that is based on the amount of 
the unfunded liability, such payment shall be computed dis-
regarding that portion of the unfunded liability that the 
Office determines will be liquidated by payments under this 
subsection. 
‘‘(4) As used in this subsection, ‘Postal Service Retiree 
Health Benefits Fund’ refers to the Postal Service Retiree 
Health Benefits Fund, as established by section 8909a.’’. 
(c) PROVISIONS RELATING TO AMOUNTS FOR MILI-
TARY SERVICE.—In the application of paragraph (2) of sec-
tion 8348(g) of title 5, United States Code, for fiscal year 
2006, the Office of Personnel Management shall include, in 
addition to the amount otherwise computed under that
143 
paragraph, the amounts that would have been included for 
fiscal years 2003 through 2005 with respect to credit for 
military service of former employees of the United States 
Postal Service if Public Law 108-18 had not been enacted 
(including earnings thereon) and the Secretary of the Treas-
ury shall make the required transfer to the Civil Service 
Retirement and Disability Fund based on that amount. 
(d) REVIEW.— 
(1) IN
GENERAL.—Notwithstanding any other 
provision of this section, any determination or rede-
termination made by the Office of Personnel Manage-
ment under this section shall, upon request of the 
United States Postal Service, be subject to review by 
the Postal Regulatory Commission. The Commission 
shall submit a report containing the results of any 
such review to the Postal Service, the Office of Per-
sonnel Management, and the Congress. 
(2) RESPONSE.—Upon receiving the report of the 
Postal Regulatory Commission, the Office of Per-
sonnel Management shall reconsider its determination 
or redetermination in light of such report, and shall 
make any appropriate adjustments. The Office shall 
submit a report containing the results of its reconsid-
eration to the Commission, the Postal Service, and the 
Congress.
144 
SEC. 902. HEALTH INSURANCE. 
(a) IN GENERAL.—Chapter 89 of title 5, United States 
Code, is amended— 
(1) in section 8906(g)(2)(A), by striking ‘‘by the 
United States Postal Service.’’ and inserting ‘‘first 
from the Postal Service Retiree Health Benefits Fund 
up to the amount contained therein, with any re-
maining amount paid by the United States Postal 
Service.’’; 
(2) by inserting after section 8909 the following: 
‘‘§ 8909a. Postal Service Retiree Health Benefits Fund 
‘‘(a) There is in the Treasury of the United States a 
Postal Service Retiree Health Benefits Fund (hereinafter in 
this section referred to as the ‘Fund’) which is administered 
by the Office of Personnel Management. Any amounts 
transferred to the Fund under section 8348(h)(2) shall yield 
interest at a rate equal to the weighted average yield of all 
the investments in the Civil Service Retirement and Dis-
ability Fund as of the date of transfer. All other investments 
of amounts in the Fund shall be made in accordance with 
subsections (c)–(e) of section 8348. 
‘‘(b) The Fund is available without fiscal year limita-
tion for payments required by section 8906(g)(2). 
‘‘(c)(1) Not later than June 30, 2006, and by June 
30 of each succeeding year, the Office of Personnel Manage-
ment shall compute the net present value of the excess of
145 
future payments required by section 8906(g)(2)(A) for cur-
rent and future United States Postal Service annuitants 
over the value of the assets of the Fund as of the end of 
the fiscal year ending on September 30 of that year. The 
actuarial costing method to be used by the Office and all 
actuarial assumptions shall be established by the Office 
after consultation with the United States Postal Service and 
must be in accordance with generally accepted actuarial 
practices and principles. 
‘‘(2) Not later than September 30, 2006, and by Sep-
tember 30 of each succeeding year, the Office shall compute 
and the United States Postal Service shall pay into such 
Fund— 
‘‘(A) the portion of the net present value de-
scribed in paragraph (1) attributable to the current 
year’s service of Postal Service employees; and 
‘‘(B) interest on the net present value described 
in paragraph (1) for that fiscal year, at the interest 
rate used in computing that net present value; 
except that the amount otherwise payable by the Postal 
Service under the preceding provisions of this paragraph 
by not later than September 30, 2006, shall be reduced by 
the total contributions made by the Postal Service under 
section 8906(g)(2) and attributable to fiscal year 2006 (as 
determined by the Office).
146 
‘‘(3)(A) Any computation or other determination of the 
Office under this subsection shall, upon request of the Postal 
Service, be subject to review by the Postal Regulatory Com-
mission. The Commission shall submit a report containing 
the results of any such review to the Postal Service, the Of-
fice of Personnel Management, and the Congress. 
‘‘(B) Upon receiving the report of the Postal Regu-
latory Commission, the Office of Personnel Management 
shall reconsider its computation or other determination in 
light of such report, and shall make any appropriate adjust-
ments. The Office shall submit a report containing the re-
sults of its reconsideration to the Commission, the Postal 
Service, and the Congress. 
‘‘(4) The Office shall promulgate, after consultation 
with the United States Postal Service, any regulations it 
deems necessary under this subsection.’’; and 
(3) in the analysis by inserting after the item re-
lating to section 8909 the following: 
‘‘8909a. Postal Service Retiree Health Benefits Fund.’’. 
(b) REVIEW.— 
(1) IN
GENERAL.—Any regulation established 
under section 8909a(c)(4) of title 5, United States 
Code (as amended by subsection (a)) shall, upon re-
quest of the Postal Service, be subject to review by the 
Postal Regulatory Commission. The Commission shall 
submit a report containing the results of any such re-
147 
view to the Postal Service, the Office of Personnel 
Management, and the Congress. 
(2) RESPONSE.—Upon receiving the report of the 
Postal Regulatory Commission, the Office of Per-
sonnel Management shall reconsider its regulation in 
light of such report, and shall take such action as it 
considers appropriate. The Office shall submit a re-
port containing the results of its reconsideration to 
the Commission, the Postal Service, and the Congress. 
SEC. 903. REPEALER. 
Section 3 of Public Law 108–18 is repealed. 
SEC. 904. ENSURING APPROPRIATE USE OF ESCROW AND 
MILITARY SAVINGS. 
(a) DEFINITION.—For purposes of this section, the 
term ‘‘total savings’’ means, for any fiscal year, the amount 
equal to— 
(1) the amount of contributions that the Postal 
Service would otherwise have been required to make 
to the Civil Service Retirement and Disability Fund 
under subchapter III of chapter 83 of title 5, United 
States Code, for such fiscal year if Public Law 108- 
18 and this Act had not been enacted, minus 
(2) the amount of amortization payments (if 
any) required under section 8348(h)(2) of title 5, 
United States Code, for such fiscal year.
148 
(b) CALCULATIONS.—The following calculations shall 
be made for each of fiscal years 2006 through 2015: 
(1) Not later than January 31 of the fiscal year 
following the fiscal year involved, the Office of Per-
sonnel Management (in consultation with the Postal 
Service) shall determine the total savings for the fiscal 
year. 
(2) On the date of making its determination 
under paragraph (1), the Office shall also determine 
(in consultation with the Postal Service) the amount 
by which— 
(A) the amount the Postal Service paid for 
that fiscal year into the Postal Service Retiree 
Health Benefits Fund in accordance with 
8909a(c)(2) of title 5, United States Code, ex-
ceeds (if at all) 
(B) the amount of payments made by the 
Postal Service for that fiscal year from such 
Fund in order to satisfy the requirements of sec-
tion 8906(g)(2) of such title 5. 
(c) REQUIREMENTS.— 
(1) IF THRESHOLD IS MET.—If the amount cal-
culated under subsection (b)(2) for a fiscal year is 
greater than or equal to two-thirds of the total savings
149 
in such fiscal year, no further action under this sec-
tion is necessary with respect to such fiscal year. 
(2) IF THRESHOLD IS NOT MET.— 
(A) IN GENERAL.—If the amount calculated 
under subsection (b)(2) for a fiscal year is less 
than two-thirds of the total savings in such fiscal 
year, the Postal Service shall pay into the Postal 
Service Retiree Health Benefits Fund, by June 
30 of the following fiscal year, an amount equal 
to the difference. 
(B) ALLOWABLE ALTERNATIVE.— 
(i) 
IN
GENERAL.—Notwithstanding 
subparagraph (A), and subject to clause (ii), 
the Postal Service may instead use the 
amount that it would otherwise be required 
to pay into the Postal Service Retiree 
Health Benefits Fund for a year (or any 
portion thereof) to reduce the postal debt. 
(ii) LIMITATION.—Amounts used to re-
duce the postal debt under this subpara-
graph 
may 
not 
exceed 
a 
total 
of 
$3,000,000,000. 
(3) AGGREGATION
ALLOWED.—Notwithstanding 
paragraph (2), if the amount calculated under sub-
section (b)(2) for a fiscal year is less than two-thirds
150 
of the total savings in such fiscal year, but the sum 
of the amounts calculated under subsection (b)(2) for 
all fiscal years from 2006 to the fiscal year involved 
is greater than or equal to two-thirds of the sum of 
the total savings for such years, no further action 
under this section is necessary with respect to such 
fiscal year. 
(d) REPORTING REQUIREMENT.—The Office of Per-
sonnel Management shall submit a report containing the 
results of its calculations under subsection (b) to the Postal 
Service, the Postal Regulatory Commission, and the Con-
gress. 
(e) WAIVER AUTHORITY.—The requirements of sub-
section (c)(2)(A) may, upon application of the Postal Serv-
ice, be waived by the Postal Regulatory Commission, to the 
extent that the Commission determines that such waiver is 
reasonable and equitable and necessary to enable the Postal 
Service, under best practices of honest, efficient, and eco-
nomical management, to maintain and continue the devel-
opment of postal services of the kind and quality adapted 
to the needs of the United States. 
SEC. 905. EFFECTIVE DATES. 
(a) IN GENERAL.—Except as otherwise provided, this 
title shall take effect on October 1, 2005.
151 
(b) GOVERNMENT CONTRIBUTIONS.—Section 901(a) 
shall take effect on the first day of the first pay period be-
ginning on or after October 1, 2005.
Union Calendar No. 55 
109TH CONGRESS 
1ST SESSION 
H. R. 22 
[Report No. 109–66, Part I] 
A BILL 
To reform the postal laws of the United States. 
MAY 27, 2005 
The Committee on the Judiciary discharged; committed 
to the Committee of the Whole House on the State of 
the Union and ordered to be printed