HR 6407 RDS 
‘‘(B) the percentage of total Postal Service rev-
enues and receipts from competitive products times 
the total assets of the Postal Service. 
‘‘(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 (or settlement of a claim) against 
the Postal Service or the Government of the United States 
shall be paid out of the Competitive Products Fund to the 
extent that the judgment or claim arises out of activities 
of the Postal Service in the provision of competitive prod-
ucts. 
‘‘(h)(1)(A) The Secretary of the Treasury, in con-
sultation with the Postal Service and an independent, cer-
tified public accounting firm and other advisors as the 
Secretary considers appropriate, shall develop rec-
ommendations regarding— 
‘‘(i) the accounting practices and principles that 
should be followed by the Postal Service with the ob-
jectives of— 
‘‘(I) identifying and valuing the assets and 
liabilities of the Postal Service associated with 
providing competitive products, including the 
capital and operating costs incurred by the 
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Postal Service in providing such competitive 
products; and 
‘‘(II) subject to subsection (e)(5), pre-
venting the subsidization of such products by 
market-dominant products; and 
‘‘(ii) the substantive and procedural rules that 
should be followed in determining the assumed Fed-
eral income tax on competitive products income of 
the Postal Service for any year (within the meaning 
of section 3634). 
‘‘(B) Not earlier than 6 months after the date of en-
actment of this section, and not later than 12 months 
after such date, the Secretary of the Treasury shall submit 
the recommendations under subparagraph (A) to the Post-
al Regulatory Commission. 
‘‘(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. 
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‘‘(B)(i) 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 under paragraph (1)(A)(ii); 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. 
‘‘(ii) Final rules under this subparagraph shall be 
issued not later than 12 months after the date on which 
recommendations are submitted under paragraph (1) (or 
by such later date on which the Commission and the Post-
al Service may agree). The Commission is authorized to 
promulgate regulations revising such rules. 
‘‘(C)(i) Reports described under subparagraph 
(B)(i)(III) shall be submitted at such time and in such 
form, and shall include such information, as the Commis-
sion by rule requires. 
‘‘(ii) The Commission may, on its own motion or on 
request of an interested party, initiate proceedings (to be 
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conducted in accordance with such rules as the Commis-
sion shall prescribe) to improve the quality, accuracy, or 
completeness of Postal Service information under subpara-
graph (B)(i)(III) whenever it shall appear that— 
‘‘(I) the quality of the information furnished in 
those reports has become significantly inaccurate or 
can be significantly improved; or 
‘‘(II) such revisions are, in the judgment of the 
Commission, otherwise necessitated by the public in-
terest. 
‘‘(D) A copy of each report described under subpara-
graph (B)(i)(III) shall be submitted by the Postal Service 
to the Secretary of the Treasury and the Inspector Gen-
eral of the United States Postal Service. 
‘‘(i)(1) The Postal Service shall submit an annual re-
port to the Secretary of the Treasury concerning the oper-
ation of the Competitive Products Fund. The report shall 
address such matters as risk limitations, reserve balances, 
allocation or distribution of moneys, liquidity require-
ments, and measures to safeguard against losses. 
‘‘(2) A copy of the most recent report submitted 
under paragraph (1) shall be included in the annual report 
submitted by the Postal Regulatory Commission under 
section 3652(g).’’. 
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(2) CLERICAL AMENDMENT.—The table of sec-
tions for chapter 20 of title 39, United States Code, 
is amended by adding after the item relating to sec-
tion 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.—The 
term ‘Competitive Products Fund’ means the Postal 
Service Competitive Products Fund established 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-
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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 (a), in the first sentence, 
by inserting ‘‘or 2011’’ after ‘‘section 2005’’; 
(B) in subsection (b)— 
(i) in the first sentence, by inserting 
‘‘under section 2005’’ before ‘‘in such 
amounts’’; and 
(ii) in the second sentence, by insert-
ing ‘‘under section 2005’’ before ‘‘in excess 
of such amount.’’; and 
(C) in subsection (c), by inserting ‘‘or 
2011(e)(4)(E)’’ after ‘‘section 2005(d)(5)’’. 
SEC. 402. ASSUMED FEDERAL INCOME TAX ON 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: 
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‘‘§ 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)— 
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‘‘(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. 403. 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 
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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 postal service that uses or is based in 
whole or in part on such information, without the 
consent of the person providing that information, 
unless substantially the same information is obtained 
(or obtainable) from an independent source or is 
otherwise obtained (or obtainable). 
‘‘(b) The Postal Regulatory Commission shall 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’’. 
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(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. 404. SUITS BY AND AGAINST THE POSTAL SERVICE. 
(a) IN GENERAL.—Section 409 of title 39, United 
States Code, is amended by striking subsections (d) and 
(e) and inserting the following: 
‘‘(d)(1) For purposes of the provisions of law cited 
in paragraphs (2)(A) and (2)(B), respectively, the Postal 
Service— 
‘‘(A) shall be considered to be a ‘person’, as 
used in the provisions of law involved; and 
‘‘(B) shall not be immune under any other 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. 
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‘‘(e)(1) To the extent that the Postal Service, or other 
Federal agency acting on behalf of or in concert with the 
Postal Service, engages in conduct with respect to any 
product which is not reserved to the United States under 
section 1696 of title 18, the Postal Service or other Fed-
eral 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. 
For purposes of the preceding sentence, any private car-
riage of mail allowable by virtue of section 601 shall not 
be considered a service reserved to the United States 
under section 1696 of title 18. 
‘‘(2) No damages, interest on damages, costs or at-
torney’s fees may be recovered, and no criminal liability 
may be imposed, under the antitrust laws (as so defined) 
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from any officer or employee of the Postal Service, or 
other Federal agency acting on behalf of or in concert with 
the Postal Service, acting in an official capacity. 
‘‘(3) This subsection shall not apply with respect to 
conduct occurring before the date of enactment of this 
subsection. 
‘‘(f)(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 1 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-
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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 ac-
tion under the preceding sentence, nor shall any-
thing in this subsection require the Postal Service or 
any of its contractors to pay for any action taken by 
a State or political subdivision to carry out this sub-
section (including reviewing plans, carrying out on- 
site inspections, issuing building permits, and mak-
ing recommendations). 
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‘‘(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. 
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‘‘(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. 
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‘‘(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. 405. 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-
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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 postal treaties, conventions, and amendments re-
lated to international postal services and other inter-
national delivery services, except that the Secretary may 
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not conclude any treaty, convention, or other international 
agreement (including those regulating international postal 
services) if such treaty, convention, or agreement would, 
with respect to any competitive product, grant an undue 
or unreasonable preference to the Postal Service, a private 
provider of international postal or delivery services, or any 
other person. 
‘‘(2) In carrying out the responsibilities specified in 
paragraph (1), the Secretary of State shall exercise 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; 
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‘‘(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 Homeland Security and Governmental 
Affairs of the Senate and the Committee on Govern-
ment Reform of the House of Representatives; 
‘‘(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-
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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 its views on whether such rate or classi-
fication is consistent with the standards and criteria estab-
lished 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 the views submitted by the Commission 
pursuant to paragraph (1), except if, or to the extent, the 
Secretary determines, in writing, that it is not in the for-
eign policy or national security interest of the United 
States to ensure consistency with the Commission’s views. 
Such written determination shall be provided to the Com-
mission together with a full explanation of the reasons 
thereof, provided that the Secretary may designate which 
portions of the determination or explanation shall be kept 
confidential for reasons of foreign policy or national secu-
rity. 
‘‘(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-
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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) In this subsection, the term ‘private company’ 
means a private company substantially owned or con-
trolled by persons who are citizens of the United States. 
‘‘(2) With respect to shipments of international mail 
that are competitive products within the meaning of sec-
tion 3631 that are exported or imported by the Postal 
Service, the Customs Service and other appropriate Fed-
eral agencies shall apply the customs laws of the United 
States and all other laws relating to the importation or 
exportation of such shipments in the same manner to both 
shipments by the Postal Service and similar shipments by 
private companies. 
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‘‘(3) In exercising the authority under subsection (b) 
to conclude new postal treaties and conventions related to 
international postal services and to renegotiate such trea-
ties and conventions, the Secretary of State shall, to the 
maximum extent practicable, take such measures as are 
within the Secretary’s control to encourage the govern-
ments of other countries to make available to the Postal 
Service and private companies a range of nondiscrim-
inatory customs procedures that will fully meet the needs 
of all types of American shippers. The Secretary of State 
shall consult with the United States Trade Representative 
and the Commissioner of Customs in carrying out this 
paragraph. 
‘‘(4) The provisions of this subsection shall take ef-
fect 6 months after the date of 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— 
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(1) with respect to market-dominant products, 
the date as of which the regulations promulgated 
under section 3622 of title 39, United States Code 
(as amended by section 201(a)) take effect; and 
(2) with respect to competitive products, the 
date as of which the regulations promulgated under 
section 3633 of title 39, United States Code (as 
amended by section 202) take effect. 
TITLE V—GENERAL PROVISIONS 
SEC. 501. QUALIFICATION AND TERM REQUIREMENTS FOR 
GOVERNORS. 
(a) QUALIFICATIONS.— 
(1) IN GENERAL.—Section 202(a) of title 39, 
United States Code, is amended by striking ‘‘(a)’’ 
and inserting ‘‘(a)(1)’’ and by striking the fourth 
sentence and inserting the following: ‘‘The Gov-
ernors shall represent the public interest generally, 
and shall be chosen solely on the basis of their expe-
rience in the field of public service, law or account-
ing or on their demonstrated ability in managing or-
ganizations or corporations (in either the public or 
private sector) of substantial size; except that at 
least 4 of the Governors shall be chosen solely on the 
basis of their demonstrated ability in managing or-
ganizations or corporations (in either the public or 
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private sector) that employ at least 50,000 employ-
ees. The Governors shall not be representatives of 
specific interests using the Postal Service, and may 
be removed only for cause.’’. 
(2) APPLICABILITY.—The amendment made by 
paragraph (1) shall not affect the appointment or 
tenure of any person serving as a Governor of the 
United States Postal Service under an appointment 
made before the date of enactment of this Act how-
ever, 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 re-
quirement set forth in the fourth sentence of section 
202(a)(1) of title 39, United States Code (as amend-
ed by subsection (a)) shall be met beginning not 
later than 9 years after the date of enactment of 
this Act. 
(b) CONSULTATION REQUIREMENT.—Section 202(a) 
of title 39, United States Code, is amended by adding at 
the end the following: 
‘‘(2) In selecting the individuals described in 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 
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of the House of Representatives, the majority leader of 
the Senate, and the minority leader of the Senate.’’. 
(c) 7-YEAR TERMS.— 
(1) IN GENERAL.—Section 202(b) of title 39, 
United States code, is amended in the first sentence 
by striking ‘‘9 years’’ and inserting ‘‘7 years’’. 
(2) APPLICABILITY.— 
(A) CONTINUATION
BY
INCUMBENTS.— 
The amendment made by paragraph (1) shall 
not affect the tenure of any person serving as 
a Governor of the United States Postal Service 
on the date of enactment of this Act and such 
person may continue to serve the remainder of 
the applicable term. 
(B) VACANCY BY INCUMBENT BEFORE 7 
YEARS OF SERVICE.—If a person who is serving 
as a Governor of the United States Postal Serv-
ice on the date of enactment of this Act resigns, 
is removed, or dies before the expiration of the 
9-year term of that Governor, and that Gov-
ernor has served less than 7 years of that term, 
the resulting vacancy in office shall be treated 
as a vacancy in a 7-year term. 
(C) VACANCY
BY
INCUMBENT
AFTER
YEARS OF SERVICE.—If a person who is serving 
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as a Governor of the United States Postal Serv-
ice on the date of enactment of this Act resigns, 
is removed, or dies before the expiration of the 
9-year term of that Governor, and that Gov-
ernor has served 7 years or more of that term, 
that term shall be deemed to have been a 7-year 
term beginning on its commencement date for 
purposes of determining vacancies in office. Any 
appointment to the vacant office shall be for a 
7-year term beginning at the end of the original 
9-year term determined without regard to the 
deeming under the preceding sentence. Nothing 
in this subparagraph shall be construed to af-
fect any action or authority of any Governor or 
the Board of Governors during any portion of 
a 9-year term deemed to be 7-year term under 
this subparagraph. 
(d) TERM LIMITATION.— 
(1) IN GENERAL.—Section 202(b) of title 39, 
United States Code, is amended— 
(A) by inserting ‘‘(1)’’ after ‘‘(b)’’; and 
(B) by adding at the end the following: 
‘‘(2) No person may serve more than 2 terms 
as a Governor.’’. 
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(2) APPLICABILITY.—The amendments made 
by paragraph (1) shall not affect the tenure of any 
person serving as a Governor of the United States 
Postal Service on the date of enactment of this Act 
with respect to the term which that person is serving 
on that date. Such person may continue to serve the 
remainder of the applicable term, after which the 
amendments made by paragraph (1) shall apply. 
SEC. 502. OBLIGATIONS. 
(a) PURPOSES FOR WHICH OBLIGATIONS MAY BE 
ISSUED.—The first sentence of section 2005(a)(1) of title 
39, United States Code, is amended by striking ‘‘title.’’ 
and inserting ‘‘title, other than any of the purposes for 
which the corresponding authority is available to the 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.’’ . 
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(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.— 
(1) 
OBLIGATIONS
TO
WHICH
PROVISIONS 
APPLY.—The first sentence of section 2005(b) of 
title 39, United States Code, is amended by striking 
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‘‘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.’’. 
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SEC. 503. PRIVATE CARRIAGE OF LETTERS. 
(a) IN GENERAL.—Section 601 of title 39, United 
States Code, is amended by striking subsection (b) and 
inserting the following: 
‘‘(b) A letter may also be carried out of the mails 
when— 
‘‘(1) the amount paid for the private carriage of 
the letter is at least the amount equal to 6 times the 
rate then currently charged for the 1st ounce of a 
single-piece first class letter; 
‘‘(2) the letter weighs at least 121⁄2 ounces; or 
‘‘(3) such carriage is within the scope of serv-
ices described by regulations of the United States 
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, 2005) 
that purport to permit private carriage by suspen-
sion of the operation of this section (as then in ef-
fect). 
‘‘(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. 
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SEC. 504. RULEMAKING AUTHORITY. 
Paragraph (2) of section 401 of title 39, United 
States Code, is amended to read as follows: 
‘‘(2) to adopt, amend, and repeal such rules 
and regulations, not inconsistent with this title, as 
may be necessary in the execution of its functions 
under this title and such other functions as may be 
assigned to the Postal Service under any provisions 
of law outside of this title;’’. 
SEC. 505. NONINTERFERENCE WITH COLLECTIVE BAR-
GAINING AGREEMENTS. 
(a) LABOR DISPUTES.—Section 1207 of title 39, 
United States Code, is amended to read as follows: 
‘‘§ 1207. Labor disputes 
‘‘(a) If there is a collective-bargaining agreement in 
effect, no party to such agreement shall terminate or mod-
ify such agreement unless the party desiring such termi-
nation or modification serves written notice upon the other 
party to the agreement of the proposed termination or 
modification not less than 90 days prior to the expiration 
date thereof, or not less than 90 days prior to the time 
it is proposed to make such termination or modification. 
The party serving such notice shall notify the Federal Me-
diation and Conciliation Service of the existence of a dis-
pute within 45 days after such notice, if no agreement has 
been reached by that time. 
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‘‘(b) If the parties fail to reach agreement or to adopt 
a procedure providing for a binding resolution of a dispute 
by the expiration date of the agreement in effect, or the 
date of the proposed termination or modification, the Di-
rector of the Federal Mediation and Conciliation Service 
shall within 10 days appoint a mediator of nationwide rep-
utation and professional stature, and who is also a mem-
ber of the National Academy of Arbitrators. The parties 
shall cooperate with the mediator in an effort to reach an 
agreement and shall meet and negotiate in good faith at 
such times and places that the mediator, in consultation 
with the parties, shall direct. 
‘‘(c)(1) If no agreement is reached within 60 days 
after the expiration or termination of the agreement or 
the date on which the agreement became subject to modi-
fication under subsection (a) of this section, or if the par-
ties decide upon arbitration but do not agree upon the pro-
cedures therefore, an arbitration board shall be established 
consisting of 3 members, 1 of whom shall be selected by 
the Postal Service, 1 by the bargaining representative of 
the employees, and the third by the 2 thus selected. If 
either of the parties fails to select a member, or if the 
members chosen by the parties fail to agree on the third 
person within 5 days after their first meeting, the selection 
shall be made from a list of names provided by the Direc-
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tor. This list shall consist of not less then 9 names of arbi-
trators of nationwide reputation and professional nature, 
who are also members of the National Academy of Arbi-
trators, and whom the Director has determined are avail-
able and willing to serve. 
‘‘(2) The arbitration board shall give the parties a 
full and fair hearing, including an opportunity to present 
evidence in support of their claims, and an opportunity 
to present their case in person, by counsel or by other rep-
resentative as they may elect. Decisions of the arbitration 
board shall be conclusive and binding upon the parties. 
The arbitration board shall render its decision within 45 
days after its appointment. 
‘‘(3) Costs of the arbitration board and mediation 
shall be shared equally by the Postal Service and the bar-
gaining representative. 
‘‘(d) In the case of a bargaining unit whose recog-
nized collective-bargaining representative does not have an 
agreement with the Postal Service, if the parties fail to 
reach the agreement within 90 days after the commence-
ment of collective bargaining, a mediator shall be ap-
pointed in accordance with the terms in subsection (b) of 
this section, unless the parties have previously agreed to 
another procedure for a binding resolution of their dif-
ferences. If the parties fail to reach agreement within 180 
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days after the commencement of collective bargaining, and 
if they have not agreed to another procedure for binding 
resolution, an arbitration board shall be established to pro-
vide conclusive and binding arbitration in accordance with 
the terms of subsection (c) of this section.’’. 
(b) NONINTERFERENCE WITH COLLECTIVE BAR-
GAINING AGREEMENTS.—Except as otherwise provided by 
the amendment made by subsection (a), nothing in this 
Act shall restrict, expand, or otherwise affect any of the 
rights, privileges, or benefits of either employees of or 
labor organizations representing employees of the United 
States Postal Service under chapter 12 of title 39, United 
States Code, the National Labor Relations Act, any hand-
book or manual affecting employee labor relations within 
the United States Postal Service, or any collective bar-
gaining agreement. 
(c) 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. 506. BONUS AUTHORITY. 
Chapter 36 of title 39, United States Code, is amend-
ed by inserting after section 3685 the following: 
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‘‘§ 3686. Bonus authority 
‘‘(a) IN GENERAL.—The Postal Service may establish 
1 or more programs to provide bonuses or other rewards 
to officers and employees of the Postal Service in senior 
executive or equivalent positions to achieve the objectives 
of this chapter. 
‘‘(b) LIMITATION ON TOTAL COMPENSATION.— 
‘‘(1) IN GENERAL.—Under any such program, 
the Postal Service may award a bonus or other 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). Any such award 
or bonus may not cause the total compensation of 
such officer or employee to exceed the total annual 
compensation payable to the Vice President under 
section 104 of title 3 as of the end of the calendar 
year in which the bonus or award is paid. 
‘‘(2) APPROVAL PROCESS.—If the Postal 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 set forth in 
the last sentence of section 1003(a)— 
‘‘(A) the Postal Service shall make an ap-
propriate request to the Board of Governors of 
the Postal Service in such form and manner as 
the Board requires; and 
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‘‘(B) the Board of Governors shall approve 
any such request if the Board certifies, for the 
annual appraisal period involved, that the per-
formance appraisal system for affected officers 
and employees of the Postal Service (as de-
signed and applied) makes meaningful distinc-
tions based on relative performance. 
‘‘(3) REVOCATION AUTHORITY.—If the Board 
of Governors of the Postal Service finds that a per-
formance appraisal system previously approved 
under paragraph (2)(B) does not (as designed and 
applied) make meaningful distinctions based on rel-
ative performance, the Board may revoke or suspend 
the authority of the Postal Service to continue a pro-
gram approved under paragraph (2) until such time 
as appropriate corrective measures have, in the judg-
ment of the Board, been taken. 
‘‘(c) EXCEPTIONS FOR CRITICAL POSITIONS.—Not-
withstanding any other provision of law, the Board of Gov-
ernors may allow up to 12 officers or employees of the 
Postal Service in critical senior executive or equivalent po-
sitions to receive total compensation in an amount not to 
exceed 120 percent of the total annual compensation pay-
able to the Vice President under section 104 of title 3 as 
of the end of the calendar year in which such payment 
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