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H.R. 22 (109th): Postal Accountability and Enhancement Act


The text of the bill below is as of Jan 4, 2005 (Introduced).


HR 22 IH

109th CONGRESS

1st Session

H. R. 22

To reform the postal laws of the United States.

IN THE HOUSE OF REPRESENTATIVES

January 4, 2005

Mr. MCHUGH (for himself, Mr. DAVIS of Illinois, Mr. TOM DAVIS of Virginia, and Mr. WAXMAN) introduced the following bill; which was referred to the Committee on Government Reform


A BILL

To reform the postal laws of the United States.

    Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled,

SECTION 1. SHORT TITLE; TABLE OF CONTENTS.

    (a) SHORT TITLE- This Act may be cited as the `Postal Accountability and Enhancement Act'.

    (b) TABLE OF CONTENTS- The table of contents for this Act is as follows:

      Sec. 1. Short title; table of contents.

TITLE I--DEFINITIONS; POSTAL SERVICES

      Sec. 101. Definitions.

      Sec. 102. Postal services.

      Sec. 103. Financial transparency.

TITLE II--MODERN RATE REGULATION

      Sec. 201. Provisions relating to market-dominant products.

      Sec. 202. Provisions relating to competitive products.

      Sec. 203. Provisions relating to experimental and new products.

      Sec. 204. Reporting requirements and related provisions.

      Sec. 205. Complaints; appellate review and enforcement.

      Sec. 206. Workshare discounts.

      Sec. 207. Clerical amendment.

TITLE III--PROVISIONS RELATING TO FAIR COMPETITION

      Sec. 301. Postal Service Competitive Products Fund.

      Sec. 302. Assumed Federal income tax on competitive products income.

      Sec. 303. Unfair competition prohibited.

      Sec. 304. Suits by and against the Postal Service.

      Sec. 305. International postal arrangements.

      Sec. 306. Redesignation.

      Sec. 307. Clarification.

TITLE IV--GENERAL PROVISIONS

      Sec. 401. Qualification requirements for Governors.

      Sec. 402. Obligations.

      Sec. 403. Private carriage of letters.

      Sec. 404. Rulemaking authority.

      Sec. 405. Noninterference with collective bargaining agreements, etc.

      Sec. 406. Bonus authority.

      Sec. 407. Mediation in collective-bargaining disputes.

TITLE V--ENHANCED REGULATORY COMMISSION

      Sec. 501. Reorganization and modification of certain provisions relating to the Postal Regulatory Commission.

      Sec. 502. Authority for Postal Regulatory Commission to issue subpoenas.

      Sec. 503. Appropriations for the Postal Regulatory Commission.

      Sec. 504. Redesignation of the Postal Rate Commission.

      Sec. 505. Officer of the Postal Regulatory Commission representing the general public.

TITLE VI--INSPECTORS GENERAL

      Sec. 601. Inspector General of the Postal Regulatory Commission.

      Sec. 602. Inspector General of the United States Postal Service to be appointed by the President.

TITLE VII--EVALUATIONS

      Sec. 701. Universal postal service study.

      Sec. 702. Assessments of ratemaking, classification, and other provisions.

      Sec. 703. Study on equal application of laws to competitive products.

      Sec. 704. Greater diversity in Postal Service Executive and administrative schedule management positions.

      Sec. 705. Plan for assisting displaced workers.

      Sec. 706. Contracts with women, minorities, and small businesses.

      Sec. 707. Rates for periodicals.

      Sec. 708. Assessment of certain rate deficiencies.

      Sec. 709. Postal processing and distribution network study.

      Sec. 710. Definition.

TITLE VIII--MISCELLANEOUS; TECHNICAL AND CONFORMING AMENDMENTS

      Sec. 801. Employment of postal police officers.

      Sec. 802. Date of postmark to be treated as date of appeal in connection with the closing or consolidation of post offices.

      Sec. 803. Provisions relating to benefits under chapter 81 of title 5, United States Code, for officers and employees of the former Post Office Department.

      Sec. 804. Obsolete provisions.

      Sec. 805. Expanded contracting authority.

      Sec. 806. Investments.

      Sec. 807. Repeal of section 5403.

      Sec. 808. Reduced rates.

      Sec. 809. Hazardous matter.

      Sec. 810. Provisions relating to cooperative mailings.

      Sec. 811. Technical and conforming amendments.

TITLE IX--POSTAL PENSION FUNDING REFORM AMENDMENTS

      Sec. 901. Civil Service Retirement System.

      Sec. 902. Health insurance.

      Sec. 903. Repealer.

      Sec. 904. Ensuring appropriate use of escrow and military savings.

      Sec. 905. Effective dates.

TITLE I--DEFINITIONS; POSTAL SERVICES

SEC. 101. DEFINITIONS.

    Section 102 of title 39, United States Code, is amended by striking `and' at the end of paragraph (3), by striking the period at the end of paragraph (4) and inserting a semicolon, and by adding at the end the following:

      `(5) `postal service' means the carriage of letters, printed matter, or mailable packages, including acceptance, collection, processing, delivery, or other services supportive or ancillary thereto;

      `(6) `product' means a postal service with a distinct cost or market characteristic for which a rate or rates are, or may reasonably be, applied;

      `(7) `rates', as used with respect to products, includes fees for postal services;

      `(8) `market-dominant product' or `product in the market-dominant category of mail' means a product subject to subchapter I of chapter 36;

      `(9) `competitive product' or `product in the competitive category of mail' means a product subject to subchapter II of chapter 36;

      `(10) `Consumer Price Index' means the Consumer Price Index for All Urban Consumers published monthly by the Bureau of Labor Statistics of the Department of Labor; and

      `(11) `year', as used in chapter 36 (other than subchapters I and VI thereof), means a fiscal year.'.

SEC. 102. POSTAL SERVICES.

    (a) IN GENERAL- Section 404 of title 39, United States Code, is amended--

      (1) in subsection (a), by striking paragraph (6) and by redesignating paragraphs (7) through (9) as paragraphs (6) through (8), respectively; and

      (2) by adding at the end the following:

    `(c) Nothing in this title shall be considered to permit or require that the Postal Service provide any special nonpostal or similar services, except that nothing in this subsection shall prevent the Postal Service from providing any special nonpostal or similar services provided by the Postal Service as of January 4, 2005.'.

    (b) CONFORMING AMENDMENT- Section 1402(b)(1)(B)(ii) of the Victims of Crime Act of 1984 (98 Stat. 2170; 42 U.S.C. 10601(b)(1)(B)(ii)) is amended by striking `404(a)(8)' and inserting `404(a)(7)'.

SEC. 103. FINANCIAL TRANSPARENCY.

    (a) IN GENERAL- Section 101 of title 39, United States Code, is amended by redesignating subsections (d) through (g) as subsections (e) through (h), respectively, and by inserting after subsection (c) the following:

    `(d) As an establishment that provides both market-dominant and competitive products, the Postal Service shall be subject to a high degree of transparency, including in its finances and operations, to ensure fair treatment of customers of the Postal Service's market-dominant products and companies competing with the Postal Service's competitive products.'.

    (b) CONFORMING AMENDMENT- Section 5001 of title 39, United States Code, is amended by striking `101(e) and (f)' and inserting `101(f) and (g)'.

TITLE II--MODERN RATE REGULATION

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

    (a) IN GENERAL- Chapter 36 of title 39, United States Code, is amended by striking sections 3621 and 3622 and inserting the following:

`Sec. 3621. Applicability; definitions

    `(a) APPLICABILITY- This subchapter shall apply with respect to--

      `(1)(A) single piece first-class letters (both domestic and international);

      `(B) single piece first-class cards (both domestic and international); and

      `(C) special services;

      `(2) all first-class mail not included under paragraph (1);

      `(3) periodicals;

      `(4) standard mail;

      `(5) media mail;

      `(6) library mail; and

      `(7) bound printed matter,

    subject to any changes the Postal Regulatory Commission may make under section 3642.

    `(b) RULE OF CONSTRUCTION- Mail matter referred to in subsection (a) shall, for purposes of this subchapter, be considered to have the meaning given to such mail matter under the mail classification schedule.

`Sec. 3622. Modern rate regulation

    `(a) AUTHORITY GENERALLY- The Postal Regulatory Commission shall, within 24 months after the date of the enactment of this section, by regulation establish (and may from time to time thereafter by regulation revise) a modern system for regulating rates and classes for market-dominant products.

    `(b) OBJECTIVES- Such system shall be designed to achieve the following objectives:

      `(1) To maximize incentives to reduce costs and increase efficiency.

      `(2) To create predictability and stability in rates.

      `(3) To maintain high quality service standards.

      `(4) To allow the Postal Service pricing flexibility.

      `(5) To assure adequate revenues, including retained earnings, to maintain financial stability.

      `(6) To reduce the administrative burden of the ratemaking process.

    `(c) FACTORS- In establishing or revising such system, the Postal Regulatory Commission shall take into account--

      `(1) the establishment and maintenance of a fair and equitable schedule for rates and classification system;

      `(2) the value of the mail service actually provided each class or type of mail service to both the sender and the recipient, including but not limited to the collection, mode of transportation, and priority of delivery;

      `(3) the direct and indirect postal costs attributable to each class or type of mail service plus that portion of all other costs of the Postal Service reasonably assignable to such class or type;

      `(4) the effect of rate increases upon the general public, business mail users, and enterprises in the private sector of the economy engaged in the delivery of mail matter other than letters;

      `(5) the available alternative means of sending and receiving letters and other mail matter at reasonable costs;

      `(6) the degree of preparation of mail for delivery into the postal system performed by the mailer and its effect upon reducing costs to the Postal Service;

      `(7) simplicity of structure for the entire schedule and simple, identifiable relationships between the rates or fees charged the various classes of mail for postal services;

      `(8) the relative value to the people of the kinds of mail matter entered into the postal system and the desirability and justification for special classifications and services of mail;

      `(9) the importance of providing classifications with extremely high degrees of reliability and speed of delivery and of providing those that do not require high degrees of reliability and speed of delivery;

      `(10) the desirability of special classifications from the point of view of both the user and of the Postal Service;

      `(11) the educational, cultural, scientific, and informational value to the recipient of mail matter; and

      `(12) the policies of this title as well as such other factors as the Commission deems appropriate.

    `(d) ALLOWABLE PROVISIONS- The system for regulating rates and classes for market-dominant products may include one or more of the following:

      `(1) Price caps, revenue targets, or other form of incentive regulation.

      `(2) Cost-of-service regulation.

      `(3) Such other form of regulation as the Commission considers appropriate to achieve, consistent with subsection (c), the objectives of subsection (b).

    `(e) LIMITATION- In the administration of this section, the Commission shall not permit the average rate in any subclass of mail to increase at an annual rate greater than the comparable increase in the Consumer Price Index, unless it has, after notice and opportunity for a public hearing and comment, determined that such increase is reasonable and equitable and necessary to enable the Postal Service, under best practices of honest, efficient, and economical management, to maintain and continue the development of postal services of the kind and quality adapted to the needs of the United States.

    `(f) TRANSITION RULE- Until regulations under this section first take effect, rates and classes for market-dominant products shall remain subject to modification in accordance with the provisions of this chapter and section 407, as such provisions were last in effect before the date of the enactment of this section.'.

    (b) REPEALED SECTIONS- Sections 3623, 3624, 3625, and 3628 of title 39, United States Code, are repealed.

    (c) REDESIGNATION- Chapter 36 of title 39, United States Code (as in effect after the amendment made by section 501(a)(2), but before the amendment made by section 202) is amended by striking the heading for subchapter II and inserting the following:

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

SEC. 202. PROVISIONS RELATING TO COMPETITIVE PRODUCTS.

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

`SUBCHAPTER II--PROVISIONS RELATING TO COMPETITIVE PRODUCTS

`Sec. 3631. Applicability; definitions and updates

    `(a) APPLICABILITY- This subchapter shall apply with respect to--

      `(1) priority mail;

      `(2) expedited mail;

      `(3) mailgrams;

      `(4) international mail; and

      `(5) parcel post,

    subject to any changes the Postal Regulatory Commission may make under section 3642.

    `(b) DEFINITION- For purposes of this subchapter, the term `costs attributable', as used with respect to a product, means the direct and indirect postal costs attributable to such product.

    `(c) RULE OF CONSTRUCTION- Mail matter referred to in subsection (a) shall, for purposes of this subchapter, be considered to have the meaning given to such mail matter under the mail classification schedule.

`Sec. 3632. Action of the Governors

    `(a) AUTHORITY TO ESTABLISH RATES AND CLASSES- The Governors shall establish rates and classes for products in the competitive category of mail in accordance with the requirements of this subchapter and regulations promulgated under section 3633.

    `(b) PROCEDURES-

      `(1) IN GENERAL- Rates and classes shall be established in writing, complete with a statement of explanation and justification, and the date as of which each such rate or class takes effect.

      `(2) RATES OR CLASSES OF GENERAL APPLICABILITY- In the case of rates or classes of general applicability in the Nation as a whole or in any substantial region of the Nation, the Governors shall cause each rate and class decision under this section and the record of the Governors' proceedings in connection with such decision to be published in the Federal Register at least 30 days before the effective date of any new rates or classes.

      `(3) RATES OR CLASSES NOT OF GENERAL APPLICABILITY- In the case of rates or classes not of general applicability in the Nation as a whole or in any substantial region of the Nation, the Governors shall cause each rate and class decision under this section and the record of the proceedings in connection with such decision to be filed with the Postal Regulatory Commission by such date before the effective date of any new rates or classes as the Governors consider appropriate, but in no case less than 15 days.

      `(4) CRITERIA- As part of the regulations required under section 3633, the Postal Regulatory Commission shall establish criteria for determining when a rate or class established under this subchapter is or is not of general applicability in the Nation as a whole or in any substantial region of the Nation.

    `(c) TRANSITION RULE- Until regulations under section 3633 first take effect, rates and classes for competitive products shall remain subject to modification in accordance with the provisions of this chapter and section 407, as such provisions were as last in effect before the date of the enactment of this section.

`Sec. 3633. Provisions applicable to rates for competitive products

    `The Postal Regulatory Commission shall, within 18 months after the date of the enactment of this section, promulgate (and may from time to time thereafter revise) regulations--

      `(1) to prohibit the subsidization of competitive products by market-dominant products;

      `(2) to ensure that each competitive product covers its costs attributable; and

      `(3) to ensure that all competitive products collectively make a reasonable contribution to the institutional costs of the Postal Service.'.

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

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

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

`Sec. 3641. Market tests of experimental products

    `(a) AUTHORITY-

      `(1) IN GENERAL- The Postal Service may conduct market tests of experimental products in accordance with this section.

      `(2) PROVISIONS WAIVED- A product shall not, while it is being tested under this section, be subject to the requirements of sections 3622, 3633, or 3642, or regulations promulgated under those sections.

    `(b) CONDITIONS- A product may not be tested under this section unless it satisfies each of the following:

      `(1) SIGNIFICANTLY DIFFERENT PRODUCT- The product is, from the viewpoint of the mail users, significantly different from all products offered by the Postal Service within the 2-year period preceding the start of the test.

      `(2) MARKET DISRUPTION- The introduction or continued offering of the product will not create an unfair or otherwise inappropriate competitive advantage for the Postal Service or any mailer, particularly in regard to small business concerns (as defined under subsection (h)).

      `(3) CORRECT CATEGORIZATION- The Postal Service identifies the product, for the purpose of a test under this section, as either market dominant or competitive, consistent with the criteria under section 3642(b)(1). Costs and revenues attributable to a product identified as competitive shall be included in any determination under section 3633(3) (relating to provisions applicable to competitive products collectively).

    `(c) NOTICE-

      `(1) IN GENERAL- At least 30 days before initiating a market test under this section, the Postal Service shall file with the Postal Regulatory Commission and publish in the Federal Register a notice--

        `(A) setting out the basis for the Postal Service's determination that the market test is covered by this section; and

        `(B) describing the nature and scope of the market test.

      `(2) SAFEGUARDS- For a competitive experimental product, the provisions of section 504(g) shall be available with respect to any information required to be filed under paragraph (1) to the same extent and in the same manner as in the case of any matter described in section 504(g)(1). Nothing in paragraph (1) shall be considered to permit or require the publication of any information as to which confidential treatment is accorded under the preceding sentence (subject to the same exception as set forth in section 504(g)(3)).

    `(d) DURATION-

      `(1) IN GENERAL- A market test of a product under this section may be conducted over a period of not to exceed 24 months.

      `(2) EXTENSION AUTHORITY- If necessary in order to determine the feasibility or desirability of a product being tested under this section, the Postal Regulatory Commission may, upon written application of the Postal Service (filed not later than 60 days before the date as of which the testing of such product would otherwise be scheduled to terminate under paragraph (1)), extend the testing of such product for not to exceed an additional 12 months.

    `(e) DOLLAR-AMOUNT LIMITATION-

      `(1) IN GENERAL- A product may be tested under this section only if the total revenues that are anticipated, or in fact received, by the Postal Service from such product do not exceed $10,000,000 nationwide in any year, subject to paragraph (2) and subsection (g). In carrying out the preceding sentence, the Postal Regulatory Commission may limit the amount of revenues the Postal Service may obtain from any particular geographic market as necessary to prevent market disruption (as defined in subsection (b)(2)).

      `(2) EXEMPTION AUTHORITY- The Postal Regulatory Commission may, upon written application of the Postal Service, exempt the market test from the limit in paragraph (1) if the total revenues that are anticipated, or in fact received, by the Postal Service from such product do not exceed $50,000,000 in any year, subject to subsection (g). In reviewing an application under this paragraph, the Postal Regulatory Commission shall approve such application if it determines that--

        `(A) the product is likely to benefit the public and meet an expected demand;

        `(B) the product is likely to contribute to the financial stability of the Postal Service; and

        `(C) the product is not likely to result in unfair or otherwise inappropriate competition.

    `(f) CANCELLATION- If the Postal Regulatory Commission at any time determines that a market test under this section fails, with respect to any particular product, to meet one or more of the requirements of this section, it may order the cancellation of the test involved or take such other action as it considers appropriate. A determination under this subsection shall be made in accordance with such procedures as the Commission shall by regulation prescribe.

    `(g) ADJUSTMENT FOR INFLATION- For purposes of each year following the year in which occurs the deadline for the Postal Service's first report to the Postal Regulatory Commission under section 3652(a), each dollar amount contained in this section shall be adjusted by the change in the Consumer Price Index for such year (as determined under regulations of the Commission).

    `(h) DEFINITION OF A SMALL BUSINESS CONCERN- The criteria used in defining small business concerns or otherwise categorizing business concerns as small business concerns shall, for purposes of this section, be established by the Postal Regulatory Commission in conformance with the requirements of section 3 of the Small Business Act.

    `(i) EFFECTIVE DATE- Market tests under this subchapter may be conducted in any year beginning with

the first year in which occurs the deadline for the Postal Service's first report to the Postal Regulatory Commission under section 3652(a).

`Sec. 3642. New products and transfers of products between the market-dominant and competitive categories of mail

    `(a) IN GENERAL- Upon request of the Postal Service or users of the mails, or upon its own initiative, the Postal Regulatory Commission may change the list of market-dominant products under section 3621 and the list of competitive products under section 3631 by adding new products to the lists, removing products from the lists, or transferring products between the lists.

    `(b) CRITERIA- All determinations by the Postal Regulatory Commission under subsection (a) shall be made in accordance with the following criteria:

      `(1) The market-dominant category of products shall consist of each product in the sale of which the Postal Service exercises sufficient market power that it can effectively set the price of such product substantially above costs, raise prices significantly, decrease quality, or decrease output, without risk of losing business to other firms offering similar products. The competitive category of products shall consist of all other products.

      `(2) EXCLUSION OF PRODUCTS COVERED BY POSTAL MONOPOLY- A product covered by the postal monopoly shall not be subject to transfer under this section from the market-dominant category of mail. For purposes of the preceding sentence, the term `product covered by the postal monopoly' means any product the conveyance or transmission of which is reserved to the United States under section 1696 of title 18, subject to the same exception as set forth in the last sentence of section 409(e)(1).

      `(3) ADDITIONAL CONSIDERATIONS- In making any decision under this section, due regard shall be given to--

        `(A) the availability and nature of enterprises in the private sector engaged in the delivery of the product involved;

        `(B) the views of those who use the product involved on the appropriateness of the proposed action; and

        `(C) the likely impact of the proposed action on small business concerns (within the meaning of section 3641(h)).

    `(c) TRANSFERS OF SUBCLASSES AND OTHER SUBORDINATE UNITS ALLOWABLE- Nothing in this title shall be considered to prevent transfers under this section from being made by reason of the fact that they would involve only some (but not all) of the subclasses or other subordinate units of the class of mail or type of postal service involved (without regard to satisfaction of minimum quantity requirements standing alone).

    `(d) NOTIFICATION AND PUBLICATION REQUIREMENTS-

      `(1) NOTIFICATION REQUIREMENT- The Postal Service shall, whenever it requests to add a product or transfer a product to a different category, file with the Postal Regulatory Commission and publish in the Federal Register a notice setting out the basis for its determination that the product satisfies the criteria under subsection (b) and, in the case of a request to add a product or transfer a product to the competitive category of mail, that the product meets the regulations promulgated by the Postal Regulatory Commission pursuant to section 3633. The provisions of section 504(g) shall be available with respect to any information required to be filed.

      `(2) PUBLICATION REQUIREMENT- The Postal Regulatory Commission shall, whenever it changes the list of products in the market-dominant or competitive category of mail, prescribe new lists of products. The revised lists shall indicate how and when any previous lists (including the lists under sections 3621 and 3631) are superseded, and shall be published in the Federal Register.

    `(e) NOTIFICATION REQUIREMENT- The Postal Regulatory Commission shall, whenever it reaches a conclusion that a product or products should be transferred between the list of market-dominant products under section 3621 and the list of competitive products under section 3631, immediately notify the appropriate committees of the Congress. No such transfer may take effect less than 12 months after such conclusion.

    `(f) PROHIBITION- Except as provided in section 3641, no product that involves the carriage of letters, printed matter, or mailable packages may be offered by the Postal Service unless it has been assigned to the market-dominant or competitive category of mail (as appropriate) either--

      `(1) under this subchapter; or

      `(2) by or under any other provision of law.'.

SEC. 204. REPORTING REQUIREMENTS AND RELATED PROVISIONS.

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

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

    (b) REPORTS AND COMPLIANCE- Chapter 36 of title 39, United States Code, is amended by inserting after subchapter III the following:

`SUBCHAPTER IV--REPORTING REQUIREMENTS AND RELATED PROVISIONS

`Sec. 3651. Annual reports by the Commission

    `(a) IN GENERAL- The Postal Regulatory Commission shall submit an annual report to the President and the Congress concerning the operations of the Commission under this title, including the extent to which regulations are achieving the objectives under sections 3622 and 3633, respectively.

    `(b) ADDITIONAL INFORMATION- In addition to the information required under subsection (a), each report under this section shall also include, with respect to the period covered by such report, an estimate of the costs incurred by the Postal Service in providing--

      `(1) postal services to areas of the Nation where, in the judgment of the Postal Regulatory Commission, the Postal Service either would not provide services at all or would not provide such services in accordance with the requirements of this title if the Postal Service were not required to provide prompt, reliable, and efficient services to patrons in all areas and all communities, including as required under the first sentence of section 101(b);

      `(2) free or reduced rates for postal services as required by this title; and

      `(3) other public services or activities which, in the judgment of the Postal Regulatory Commission, would not otherwise have been provided by the Postal Service but for the requirements of law.

    The Commission shall detail the bases for its estimates and the statutory requirements giving rise to the costs identified in each report under this section.

    `(c) INFORMATION FROM POSTAL SERVICE- The Postal Service shall provide the Postal Regulatory Commission with such information as may, in the judgment of the Commission, be necessary in order for the Commission to prepare its reports under this section.

`Sec. 3652. Annual reports to the Commission

    `(a) COSTS, REVENUES, AND RATES- Except as provided in subsection (c), the Postal Service shall, no later than 90 days after the end of each year, prepare and submit to the Postal Regulatory Commission a report (together with such nonpublic annex thereto as the Commission may require under subsection (e))--

      `(1) which shall analyze costs, revenues, and rates, using such methodologies as the Commission shall by regulation prescribe, and in sufficient detail to demonstrate that the rates in effect for all products during such year complied with all applicable requirements of this title; and

      `(2) which shall, for each market-dominant product provided in such year, provide--

        `(A) market information, including mail volumes; and

        `(B) measures of the quality of service afforded by the Postal Service in connection with such product, including--

          `(i) the service standard applicable to such product;

          `(ii) the level of service (described in terms of speed of delivery and reliability) provided; and

          `(iii) the degree of customer satisfaction with the service provided.

    The Inspector General shall regularly audit the data collection systems and procedures utilized in collecting information and preparing such report (including any annex thereto and the information required under subsection (b)). The results of any such audit shall be submitted to the Postal Service and the Postal Regulatory Commission.

    `(b) INFORMATION RELATING TO WORKSHARE DISCOUNTS-

      `(1) IN GENERAL- The Postal Service shall include, in each report under subsection (a), the following information with respect to each market-dominant product for which a workshare discount was in effect during the period covered by such report:

        `(A) The per-item cost avoided by the Postal Service by virtue of such discount.

        `(B) The percentage of such per-item cost avoided that the per-item workshare discount represents.

        `(C) The per-item contribution made to institutional costs.

      `(2) WORKSHARE DISCOUNT DEFINED- For purposes of this subsection, the term `workshare discount' has the meaning given such term under section 3687.

    `(c) MARKET TESTS- In carrying out subsections (a) and (b) with respect to experimental products offered through market tests under section 3641 in a year, the Postal Service--

      `(1) may report summary data on the costs, revenues, and quality of service by market test; and

      `(2) shall report such data as the Postal Regulatory Commission requires.

    `(d) SUPPORTING MATTER- The Postal Regulatory Commission shall have access, in accordance with such regulations as the Commission shall prescribe, to the working papers and any other supporting matter of the Postal Service and the Inspector General in connection with any information submitted under this section.

    `(e) CONTENT AND FORM OF REPORTS-

      `(1) IN GENERAL- The Postal Regulatory Commission shall, by regulation, prescribe the content and form of the public reports (and any nonpublic annex and supporting matter relating thereto) to be provided by the Postal Service under this section. In carrying out this subsection, the Commission shall give due consideration to--

        `(A) providing the public with adequate information to assess the lawfulness of rates charged;

        `(B) avoiding unnecessary or unwarranted administrative effort and expense on the part of the Postal Service; and

        `(C) protecting the confidentiality of commercially sensitive information.

      `(2) REVISED REQUIREMENTS- The Commission may, on its own motion or on request of an interested party, initiate proceedings (to be conducted in accordance with regulations that the Commission shall prescribe) to improve the quality, accuracy, or completeness of Postal Service data required by the Commission under this subsection whenever it shall appear that--

        `(A) the attribution of costs or revenues to products has become significantly inaccurate or can be significantly improved;

        `(B) the quality of service data has become significantly inaccurate or can be significantly improved; or

        `(C) such revisions are, in the judgment of the Commission, otherwise necessitated by the public interest.

    `(f) CONFIDENTIAL INFORMATION-

      `(1) IN GENERAL- If the Postal Service determines that any document or portion of a document, or other matter, which it provides to the Postal Regulatory Commission in a nonpublic annex under this section or pursuant to subsection (d) contains information which is described in section 410(c) of this title, or exempt from public disclosure under section 552(b) of title 5, the Postal Service shall, at the time of providing such matter to the Commission, notify the Commission of its determination, in writing, and describe with particularity the documents (or portions of documents) or other matter for which confidentiality is sought and the reasons therefor.

      `(2) TREATMENT- Any information or other matter described in paragraph (1) to which the Commission gains access under this section shall be subject to paragraphs (2) and (3) of section 504(g) in the same way as if the Commission had received notification with respect to such matter under section 504(g)(1).

    `(g) OTHER REPORTS- The Postal Service shall submit to the Postal Regulatory Commission, together with any other submission that it is required to make under this section in a year, copies of its then most recent--

      `(1) comprehensive statement under section 2401(e);

      `(2) performance plan under section 2803; and

      `(3) program performance reports under section 2804.

`Sec. 3653. Annual determination of compliance

    `(a) OPPORTUNITY FOR PUBLIC COMMENT- After receiving the reports required under section 3652 for any year, the Postal Regulatory Commission shall promptly provide an opportunity for comment on such reports by users of the mails, affected parties, and an officer of the Commission who shall be required to represent the interests of the general public.

    `(b) DETERMINATION OF COMPLIANCE OR NONCOMPLIANCE- Not later than 90 days after receiving the submissions required under section 3652 with respect to a year, the Postal Regulatory Commission shall make a written determination as to--

      `(1) whether any rates or fees in effect during such year (for products individually or collectively) were not in compliance with applicable provisions of this chapter (or regulations promulgated thereunder);

      `(2) whether any performance goals established under section 2803 or 2804 for such year were not met; and

      `(3) whether any market-dominant product failed to meet any service standard during such year.

    If, with respect to a year, no instance of noncompliance is found under this subsection to have occurred in such year, the written determination shall be to that effect.

    `(c) IF ANY NONCOMPLIANCE IS FOUND- If, for a year, a timely written determination of noncompliance is made under subsection (b), the Postal Regulatory Commission shall take appropriate action in accordance with subsections (c)-(e) of section 3662 (as if a complaint averring such noncompliance had been duly filed and found under such section to be justified).

    `(d) REBUTTABLE PRESUMPTION- A timely written determination described in the last sentence of subsection (b) shall, for purposes of any proceeding under section 3662, create a rebuttable presumption of compliance by the Postal Service (with regard to the matters described in paragraphs (1) through (3) of subsection (b)) during the year to which such determination relates.'.

SEC. 205. COMPLAINTS; APPELLATE REVIEW AND ENFORCEMENT.

    Chapter 36 of title 39, United States Code, is amended by striking sections 3662 and 3663 and inserting the following:

`Sec. 3662. Rate and service complaints

    `(a) IN GENERAL- Interested persons (including an officer of the Postal Regulatory Commission representing the interests of the general public) who believe the Postal Service is not operating in conformance with the requirements of chapter 1, 4, or 6, or this chapter (or regulations promulgated under any of those chapters) may lodge a complaint with the Postal Regulatory Commission in such form and manner as the Commission may prescribe.

    `(b) PROMPT RESPONSE REQUIRED-

      `(1) IN GENERAL- The Postal Regulatory Commission shall, within 90 days after receiving a complaint under subsection (a), either--

        `(A) begin proceedings on such complaint; or

        `(B) issue an order dismissing the complaint (together with a statement of the reasons therefor).

      `(2) TREATMENT OF COMPLAINTS NOT TIMELY ACTED ON- For purposes of section 3663, any complaint under subsection (a) on which the Commission fails to act in the time and manner required by paragraph (1) shall be treated in the same way as if it had been dismissed pursuant to an order issued by the Commission on the last day allowable for the issuance of such order under paragraph (1).

    `(c) ACTION REQUIRED IF COMPLAINT FOUND TO BE JUSTIFIED- If the Postal Regulatory Commission

finds the complaint to be justified, it shall order that the Postal Service take such action as the Commission considers appropriate in order to achieve compliance with the applicable requirements and to remedy the effects of any noncompliance (such as ordering unlawful rates to be adjusted to lawful levels, ordering the cancellation of market tests, ordering the Postal Service to discontinue providing loss-making products, or requiring the Postal Service to make up for revenue shortfalls in competitive products).

    `(d) SUSPENSION AUTHORITY- The Postal Regulatory Commission may suspend implementation of rates or classifications under section 3632(b)(3) for a limited period of time pending expedited proceedings under this section. In evaluating whether circumstances warrant suspension, the Commission shall consider factors such as (1) whether there is a substantial likelihood that such rate or classification will violate the requirements of chapter 1, 4, or 6, or this chapter (or regulations promulgated under any of those chapters), (2) whether any persons would suffer substantial injury, loss, or damage absent a suspension, (3) whether the Postal Service or any other persons would suffer substantial injury, loss, or damage under a suspension, and (4) the public interest.

    `(e) AUTHORITY TO ORDER FINES IN CASES OF DELIBERATE NONCOMPLIANCE- In addition, in cases of deliberate noncompliance by the Postal Service with the requirements of this title, the Postal Regulatory Commission may order, based on the nature, circumstances, extent, and seriousness of the noncompliance, a fine (in the amount specified by the Commission in its order) for each incidence of noncompliance. Fines resulting from the provision of competitive products shall be paid out of the Competitive Products Fund established in section 2011. All receipts from fines imposed under this subsection shall be deposited in the general fund of the Treasury of the United States.

`Sec. 3663. Appellate review

    `A person adversely affected or aggrieved by a final order or decision of the Postal Regulatory Commission may, within 30 days after such order or decision becomes final, institute proceedings for review thereof by filing a petition in the United States Court of Appeals for the District of Columbia. The court shall review the order or decision in accordance with section 706 of title 5, and chapter 158 and section 2112 of title 28, on the basis of the record before the Commission. For purposes of this section, the term `person' includes the Postal Service.

`Sec. 3664. Enforcement of orders

    `The several district courts have jurisdiction specifically to enforce, and to enjoin and restrain the Postal Service from violating, any order issued by the Postal Regulatory Commission.'.

SEC. 206. WORKSHARE DISCOUNTS.

    (a) IN GENERAL- Title 39, United States Code, is amended by adding after section 3686 (as added by section 406) the following:

`Sec. 3687. Workshare discounts

    `(a) IN GENERAL- As part of the regulations established under section 3622(a), the Postal Regulatory Commission shall establish rules for workshare discounts that ensure that workshare discounts do not exceed the cost that the Postal Service avoids as the result of private sector workshare activity, except--

      `(1) where the discount is associated with a new product or service or with a change to an existing product or service and is necessary, over a period of time not to exceed 4 years, to induce mailer behavior that will enable the new or changed product or service in furtherance of the overall economically efficient operation of the Postal Service;

      `(2) to the extent that a reduction in the discount would lead to a loss of volume in the affected category and reduce the aggregate contribution to institutional costs of the Postal Service, from the mail matter subject to the discount, below what it otherwise would have been if the discount had not been reduced to costs avoided; would result in a further increase in the rates paid by mailers not able to take advantage of the discount; or would impede the efficient operation of the Postal Service;

      `(3) where the amount of the discount above costs avoided is necessary to mitigate rate shock and will be phased out over time; or

      `(4) where the workshare discount is provided in connection with subclasses of mail consisting exclusively of mail matter of educational, cultural, scientific, or informational value.

    `(b) REPORTING REQUIREMENT- Whenever the Postal Service establishes or maintains a workshare discount, the Postal Service shall, at the time it publishes the workshare discount rate, file with the Postal Regulatory Commission a detailed report and explanation of its reasons for establishing or maintaining the rate, setting forth the data, economic analyses, and other information relied on by the Postal Service to justify the rate.

    `(c) DEFINITION- For purposes of this section, the term `workshare discount' refers to rate discounts provided to mailers for presorting, prebarcoding, handling, or transportation, as further defined by the Postal Regulatory Commission as part of regulations established under section 3622(a).'.

    (b) CLERICAL AMENDMENT- The analysis for chapter 36 of title 39, United States Code (as amended by section 207) is amended by adding after the item relating to section 3686 the following:

      `3687. Workshare discounts.'.

SEC. 207. CLERICAL AMENDMENT.

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

`CHAPTER 36--POSTAL RATES, CLASSES AND SERVICES

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

      `Sec.

      `3621. Applicability; definitions.

      `3622. Modern rate regulation.

      `3626. Reduced rates.

      `3627. Adjusting free rates.

      `3629. Reduced rates for voter registration purposes.

`SUBCHAPTER II--PROVISIONS RELATING TO COMPETITIVE PRODUCTS

      `3631. Applicability; definitions and updates.

      `3632. Action of the Governors.

      `3633. Provisions applicable to rates for competitive products.

      `3634. Assumed Federal income tax on competitive products.

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

      `3641. Market tests of experimental products.

      `3642. New products and transfers of products between the market-dominant and competitive categories of mail.

`SUBCHAPTER IV--REPORTING REQUIREMENTS AND RELATED PROVISIONS

      `3651. Annual reports by the Commission.

      `3652. Annual reports to the Commission.

      `3653. Annual determination of compliance.

`SUBCHAPTER V--POSTAL SERVICES, COMPLAINTS, AND JUDICIAL REVIEW

      `3661. Postal services.

      `3662. Rate and service complaints.

      `3663. Appellate review.

      `3664. Enforcement of orders.

`SUBCHAPTER VI--GENERAL

      `3681. Reimbursement.

      `3682. Size and weight limits.

      `3683. Uniform rates for books; films, other materials.

      `3684. Limitations.

      `3685. Filing of information relating to periodical publications.

      `3686. Bonus authority.'.

TITLE III--PROVISIONS RELATING TO FAIR COMPETITION

SEC. 301. POSTAL SERVICE COMPETITIVE PRODUCTS FUND.

    (a) PROVISIONS RELATING TO POSTAL SERVICE COMPETITIVE PRODUCTS FUND AND RELATED MATTERS-

      (1) IN GENERAL- Chapter 20 of title 39, United States Code, is amended by adding at the end the following:

`Sec. 2011. Provisions relating to competitive products

    `(a) There is established in the Treasury of the United States a revolving fund, to be called the Postal Service Competitive Products Fund, which shall be available to the Postal Service without fiscal year limitation for the payment of--

      `(1) costs attributable to competitive products; and

      `(2) all other costs incurred by the Postal Service, to the extent allocable to competitive products.

    For purposes of this subsection, the term `costs attributable' has the meaning given such term by section 3631.

    `(b) There shall be deposited in the Competitive Products Fund, subject to withdrawal by the Postal Service--

      `(1) revenues from competitive products;

      `(2) amounts received from obligations issued by the Postal Service under subsection (e);

      `(3) interest and dividends earned on investments of the Competitive Products Fund; and

      `(4) any other receipts of the Postal Service (including from the sale of assets), to the extent allocable to competitive products.

    `(c) If the Postal Service determines that the moneys of the Competitive Products Fund are in excess of current needs, it may invest such amounts as it considers appropriate in--

      `(1) obligations of, or obligations guaranteed by, the Government of the United States; and

      `(2) in accordance with regulations which the Secretary of the Treasury shall prescribe (by not later than 18 months after the date of the enactment of the Postal Accountability and Enhancement Act), such other obligations or securities as it deems appropriate.

    `(d) The Postal Service may, in its sole discretion, provide that moneys of the Competitive Products Fund be deposited in a Federal Reserve bank or a depository for public funds.

    `(e)(1) Subject to the limitations specified in section 2005(a), the Postal Service is authorized to borrow money and to issue and sell such obligations as it determines necessary to provide for competitive products and deposit such amounts in the Competitive Products Fund, except that the Postal Service may pledge only assets related to the provision of competitive products (as determined under subsection (h) or, for purposes of any period before accounting practices and principles under subsection (h) have been established and applied, the best information available from the Postal Service, including the audited statements required by section 2008(e)), and the revenues and receipts from such products, for the payment of the principal of or interest on such obligations, for the purchase or redemption thereof, and for other purposes incidental thereto, including creation of reserve, sinking, and other funds which may be similarly pledged and used, to such extent and in such manner as it deems necessary or desirable.

    `(2) The Postal Service may enter into binding covenants with the holders of such obligations, and with the trustee, if any, under any agreement entered into in connection with the issuance thereof with respect to--

      `(A) the establishment of reserve, sinking, and other funds;

      `(B) application and use of revenues and receipts of the Competitive Products Fund;

      `(C) stipulations concerning the subsequent issuance of obligations or the execution of leases or lease purchases relating to properties of the Postal Service; and

      `(D) such other matters as the Postal Service considers necessary or desirable to enhance the marketability of such obligations.

    `(3) Obligations issued by the Postal Service under this subsection--

      `(A) may not be purchased by the Secretary of the Treasury;

      `(B) shall not be exempt either as to principal or interest from any taxation now or hereafter imposed by any State or local taxing authority;

      `(C) shall not be obligations of, nor shall payment of the principal thereof or interest thereon be guaranteed by, the Government of the United States, and the obligations shall so plainly state; and

      `(D) notwithstanding the provisions of the Federal Financing Bank Act of 1973 or any other provision of law (except as specifically provided by reference to this subparagraph in a law enacted after this subparagraph takes effect), shall not be eligible for purchase by, commitment to purchase by, or sale or issuance to, the Federal Financing Bank.

    `(4)(A) This paragraph applies with respect to the period beginning on the date of the enactment of this paragraph and ending at the close of the 5-year period which begins on the date on which the Secretary of the Treasury makes the submission required under subsection (h)(1).

    `(B) During the period described in subparagraph (A), nothing in subparagraph (A) or (D) of paragraph (3) or the last sentence of section 2006(b) shall, with respect to any obligations sought to be issued by the Postal Service under this subsection, be considered to affect such obligations' eligibility for purchase by, commitment to purchase by, or sale or issuance to, the Federal Financing Bank.

    `(C) The Federal Financing Bank may elect to purchase such obligations under such terms, including rates of interest, as the Bank and the Postal Service may agree, but at a rate of yield no less than the prevailing yield on

outstanding marketable securities of comparable maturity issued by entities with the same credit rating as the rating then most recently obtained by the Postal Service under subparagraph (D), as determined by the Bank.

    `(D) In order to be eligible to borrow under this paragraph, the Postal Service shall first obtain a credit rating from a nationally recognized credit rating organization. Such rating--

      `(i) shall be determined taking into account only those assets and activities of the Postal Service which are described in section 3634(a)(2) (relating to the Postal Service's assumed taxable income from competitive products); and

      `(ii) may, before final rules of the Postal Regulatory Commission under subsection (h) are issued (or deemed to have been issued), be based on the best information available from the Postal Service, including the audited statements required by section 2008(e).

    `(f) The receipts and disbursements of the Competitive Products Fund shall be accorded the same budgetary treatment as is accorded to receipts and disbursements of the Postal Service Fund under section 2009a.

    `(g) A judgment against the Postal Service or the Government of the United States (or settlement of a claim) shall, to the extent that it arises out of activities of the Postal Service in the provision of competitive products, be paid out of the Competitive Products Fund.

    `(h)(1) The Secretary of the Treasury, in consultation with the Postal Service and an independent, certified public accounting firm and such other advisors as the Secretary considers appropriate, shall develop recommendations regarding--

      `(A) the accounting practices and principles that should be followed by the Postal Service with the objectives of (i) identifying and valuing the assets and liabilities of the Postal Service associated with providing, and the capital and operating costs incurred by the Postal Service in providing, competitive products, and (ii) preventing the subsidization of such products by market-dominant products; and

      `(B) the substantive and procedural rules that should be followed in determining the Postal Service's assumed Federal income tax on competitive products income for any year (within the meaning of section 3634).

    Such recommendations shall be submitted to the Postal Regulatory Commission no earlier than 6 months, and no later than 12 months, after the effective date of this section.

    `(2)(A) Upon receiving the recommendations of the Secretary of the Treasury under paragraph (1), the Commission shall give interested parties, including the Postal Service, users of the mails, and an officer of the Commission who shall be required to represent the interests of the general public, an opportunity to present their views on those recommendations through submission of written data, views, or arguments with or without opportunity for oral presentation, or in such other manner as the Commission considers appropriate.

    `(B) After due consideration of the views and other information received under subparagraph (A), the Commission shall by rule--

      `(i) provide for the establishment and application of the accounting practices and principles which shall be followed by the Postal Service;

      `(ii) provide for the establishment and application of the substantive and procedural rules described in paragraph (1)(B); and

      `(iii) provide for the submission by the Postal Service to the Postal Regulatory Commission of annual and other periodic reports setting forth such information as the Commission may require.

    Final rules under this subparagraph shall be issued not later than 12 months after the date on which the Secretary of the Treasury makes his submission to the Commission under paragraph (1) (or by such later date as the Commission and the Postal Service may agree to). The Commission is authorized to promulgate regulations revising such rules.

    `(C) Reports described in subparagraph (B)(iii) shall be submitted at such time and in such form, and shall include such information, as the Commission by rule requires. The Commission may, on its own motion or on request of an interested party, initiate proceedings (to be conducted in accordance with such rules as the Commission shall prescribe) to improve the quality, accuracy, or completeness of Postal Service data under such subparagraph whenever it shall appear that--

      `(i) the quality of the information furnished in those reports has become significantly inaccurate or can be significantly improved; or

      `(ii) such revisions are, in the judgment of the Commission, otherwise necessitated by the public interest.

    `(D) A copy of each report described in subparagraph (B)(iii) shall also be transmitted by the Postal Service to the Secretary of the Treasury and the Inspector General of the United States Postal Service.

    `(i) The Postal Service shall render an annual report to the Secretary of the Treasury concerning the operation of the Competitive Products Fund, in which it shall address such matters as risk limitations, reserve balances, allocation or distribution of moneys, liquidity requirements, and measures to safeguard against losses. A copy of its then most recent report under this subsection shall be included with any other submission that it is required to make to the Postal Regulatory Commission under section 3652(g).'.

      (2) CLERICAL AMENDMENT- The analysis for chapter 20 of title 39, United States Code, is amended by adding after the item relating to section 2010 the following:

      `2011. Provisions relating to competitive products.'.

    (b) TECHNICAL AND CONFORMING AMENDMENTS-

      (1) DEFINITION- Section 2001 of title 39, United States Code, is amended by striking `and' at the end of paragraph (1), by redesignating paragraph (2) as paragraph (3), and by inserting after paragraph (1) the following:

      `(2) `Competitive Products Fund' means the Postal Service Competitive Products Fund established by section 2011; and'.

      (2) CAPITAL OF THE POSTAL SERVICE- Section 2002(b) of title 39, United States Code, is

amended by striking `Fund,' and inserting `Fund and the balance in the Competitive Products Fund,'.

      (3) POSTAL SERVICE FUND-

        (A) PURPOSES FOR WHICH AVAILABLE- Section 2003(a) of title 39, United States Code, is amended by striking `title.' and inserting `title (other than any of the purposes, functions, or powers for which the Competitive Products Fund is available).'.

        (B) DEPOSITS- Section 2003(b) of title 39, United States Code, is amended by striking `There' and inserting `Except as otherwise provided in section 2011, there'.

      (4) RELATIONSHIP BETWEEN THE TREASURY AND THE POSTAL SERVICE- Section 2006 of title 39, United States Code, is amended--

        (A) in subsection (b), by adding at the end the following: `Nothing in this chapter shall be considered to permit or require the Secretary of the Treasury to purchase any obligations of the Postal Service other than those issued under section 2005.'; and

        (B) in subsection (c), by inserting `under section 2005' before `shall be obligations'.

SEC. 302. ASSUMED FEDERAL INCOME TAX ON COMPETITIVE PRODUCTS INCOME.

    Subchapter II of chapter 36 of title 39, United States Code, as amended by section 202, is amended by adding at the end the following:

`Sec. 3634. Assumed Federal income tax on competitive products income

    `(a) DEFINITIONS- For purposes of this section--

      `(1) the term `assumed Federal income tax on competitive products income' means the net income tax that would be imposed by chapter 1 of the Internal Revenue Code of 1986 on the Postal Service's assumed taxable income from competitive products for the year; and

      `(2) the term `assumed taxable income from competitive products', with respect to a year, refers to the amount representing what would be the taxable income of a corporation under the Internal Revenue Code of 1986 for the year, if--

        `(A) the only activities of such corporation were the activities of the Postal Service allocable under section 2011(h) to competitive products; and

        `(B) the only assets held by such corporation were the assets of the Postal Service allocable under section 2011(h) to such activities.

    `(b) COMPUTATION AND TRANSFER REQUIREMENTS- The Postal Service shall, for each year beginning with the year in which occurs the deadline for the Postal Service's first report to the Postal Regulatory Commission under section 3652(a)--

      `(1) compute its assumed Federal income tax on competitive products income for such year; and

      `(2) transfer from the Competitive Products Fund to the Postal Service Fund the amount of that assumed tax.

    `(c) DEADLINE FOR TRANSFERS- Any transfer required to be made under this section for a year shall be due on or before the January 15th next occurring after the close of such year.'.

SEC. 303. UNFAIR COMPETITION PROHIBITED.

    (a) SPECIFIC LIMITATIONS- Chapter 4 of title 39, United States Code, is amended by adding after section 404 the following:

`Sec. 404a. Specific Limitations

    `(a) Except as specifically authorized by law, the Postal Service may not--

      `(1) establish any rule or regulation (including any standard) the effect of which is to preclude competition or establish the terms of competition unless the Postal Service demonstrates that the regulation does not create an unfair competitive advantage for itself or any entity funded (in whole or in part) by the Postal Service;

      `(2) compel the disclosure, transfer, or licensing of intellectual property to any third party (such as patents, copyrights, trademarks, trade secrets, and proprietary information); or

      `(3) obtain information from a person that provides (or seeks to provide) any product, and then offer any product or service that uses or is based in whole or in part on such information, without the consent of the person providing that information, unless substantially the same information is obtained (or obtainable) from an independent source or is otherwise obtained (or obtainable).

    `(b) The Postal Regulatory Commission shall prescribe regulations to carry out this section.

    `(c) Any party (including an officer of the Commission representing the interests of the general public) who believes that the Postal Service has violated this section may bring a complaint in accordance with section 3662.'.

    (b) CONFORMING AMENDMENTS-

      (1) GENERAL POWERS- Section 401 of title 39, United States Code, is amended by striking `The' and inserting `Subject to the provisions of section 404a, the'.

      (2) SPECIFIC POWERS- Section 404(a) of title 39, United States Code, is amended by striking `Without' and inserting `Subject to the provisions of section 404a, but otherwise without'.

    (c) CLERICAL AMENDMENT- The analysis for chapter 4 of title 39, United States Code, is amended by inserting after the item relating to section 404 the following:

      `404a. Specific limitations.'.

SEC. 304. SUITS BY AND AGAINST THE POSTAL SERVICE.

    (a) IN GENERAL- Section 409 of title 39, United States Code, is amended by striking subsections (d) and (e) and inserting the following:

    `(d)(1) For purposes of the provisions of law cited in paragraphs (2)(A) and (2)(B), respectively, the Postal Service--

      `(A) shall be considered to be a `person', as used in the provisions of law involved; and

      `(B) shall not be immune under any other doctrine of sovereign immunity from suit in Federal court by any person for any violation of any of those provisions of law by any officer or employee of the Postal Service.

    `(2) This subsection applies with respect to--

      `(A) the Act of July 5, 1946 (commonly referred to as the `Trademark Act of 1946' (15 U.S.C. 1051 and following)); and

      `(B) the provisions of section 5 of the Federal Trade Commission Act to the extent that such section 5 applies to unfair or deceptive acts or practices.

    `(e)(1) To the extent that the Postal Service, or other Federal agency acting on behalf of or in concert with the Postal Service, engages in conduct with respect to any competitive product, the Postal Service or other Federal agency (as the case may be)--

      `(A) shall not be immune under any doctrine of sovereign immunity from suit in Federal court by any person for any violation of Federal law by such agency or any officer or employee thereof; and

      `(B) shall be considered to be a person (as defined in subsection (a) of the first section of the Clayton Act) for purposes of--

        `(i) the antitrust laws (as defined in such subsection); and

        `(ii) section 5 of the Federal Trade Commission Act to the extent that such section 5 applies to unfair methods of competition.

    `(2) No damages, interest on damages, costs or attorney's fees may be recovered, and no criminal liability may be imposed, under the antitrust laws (as so defined) from any officer or employee of the Postal Service, or other Federal agency acting on behalf of or in concert with the Postal Service, acting in an official capacity.

    `(3) This subsection shall not apply with respect to conduct occurring before the date of the enactment of this subsection.

    `(f)(1) Each building constructed or altered by the Postal Service shall be constructed or altered, to the maximum extent feasible as determined by the Postal Service, in compliance with one of the nationally recognized model building codes and with other applicable nationally recognized 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 applicable environmental laws of a State or subdivision of a State which would apply to the building if it were not a building constructed or altered by an establishment of the Government of the United States.

    `(3) For purposes of meeting the requirements of paragraphs (1) and (2) with respect to a building, the Postal Service shall--

      `(A) in preparing plans for the building, consult with appropriate officials of the State or political subdivision, or both, in which the building will be located;

      `(B) upon request, submit such plans in a timely manner to such officials for review by such officials for a reasonable period of time not exceeding 30 days; and

      `(C) permit inspection by such officials during construction or alteration of the building, in accordance with the customary schedule of inspections for construction or alteration of buildings in the locality, if such officials provide to the Postal Service--

        `(i) a copy of such schedule before construction of the building is begun; and

        `(ii) reasonable notice of their intention to conduct any inspection before conducting such inspection.

    Nothing in this subsection shall impose an obligation on any State or political subdivision to take any action under the preceding sentence, nor shall anything in this subsection require the Postal Service or any of its contractors to pay for any action taken by a State or political subdivision to carry out this subsection (including reviewing plans, carrying out on-site inspections, issuing building permits, and making recommendations).

    `(4) Appropriate officials of a State or a political subdivision of a State may make recommendations to the Postal Service concerning measures necessary to meet the requirements of paragraphs (1) and (2). Such officials may also make recommendations to the Postal Service concerning measures which should be taken in the construction or alteration of the building to take into account local conditions. The Postal Service shall give due consideration to any such recommendations.

    `(5) In addition to consulting with local and State officials under paragraph (3), the Postal Service shall establish procedures for soliciting, assessing, and incorporating local community input on real property and land use decisions.

    `(6) For purposes of this subsection, the term `State' includes the District of Columbia, the Commonwealth of Puerto Rico, and a territory or possession of the United States.

    `(g)(1) Notwithstanding any other provision of law, legal representation may not be furnished by the Department of Justice to the Postal Service in any action, suit, or proceeding arising, in whole or in part, under any of the following:

      `(A) Subsection (d) or (e) of this section.

      `(B) Subsection (f) or (g) of section 504 (relating to administrative subpoenas by the Postal Regulatory Commission).

      `(C) Section 3663 (relating to appellate review).

    The Postal Service may, by contract or otherwise, employ attorneys to obtain any legal representation that it is precluded from obtaining from the Department of Justice under this paragraph.

    `(2) In any circumstance not covered by paragraph (1), the Department of Justice shall, under section 411, furnish the Postal Service such legal representation as it may require, except that, with the prior consent of the Attorney General, the Postal Service may, in any such circumstance, employ attorneys by contract or otherwise to conduct litigation brought by or against the Postal Service or its officers or employees in matters affecting the Postal Service.

    `(3)(A) In any action, suit, or proceeding in a court of the United States arising in whole or in part under any of the provisions of law referred to in subparagraph (B) or (C) of paragraph (1), and to which the Commission

is not otherwise a party, the Commission shall be permitted to appear as a party on its own motion and as of right.

    `(B) The Department of Justice shall, under such terms and conditions as the Commission and the Attorney General shall consider appropriate, furnish the Commission such legal representation as it may require in connection with any such action, suit, or proceeding, except that, with the prior consent of the Attorney General, the Commission may employ attorneys by contract or otherwise for that purpose.

    `(h) A judgment against the Government of the United States arising out of activities of the Postal Service shall be paid by the Postal Service out of any funds available to the Postal Service, subject to the restriction specified in section 2011(g).'.

    (b) TECHNICAL AMENDMENT- Section 409(a) of title 39, United States Code, is amended by striking `Except as provided in section 3628 of this title,' and inserting `Except as otherwise provided in this title,'.

SEC. 305. INTERNATIONAL POSTAL ARRANGEMENTS.

    (a) IN GENERAL- Section 407 of title 39, United States Code, is amended to read as follows:

`Sec. 407. International postal arrangements

    `(a) It is the policy of the United States--

      `(1) to promote and encourage communications between peoples by efficient operation of international postal services and other international delivery services for cultural, social, and economic purposes;

      `(2) to promote and encourage unrestricted and undistorted competition in the provision of international postal services and other international delivery services, except where provision of such services by private companies may be prohibited by law of the United States;

      `(3) to promote and encourage a clear distinction between governmental and operational responsibilities with respect to the provision of international postal services and other international delivery 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 policy related to international postal services and other international delivery services, and shall have the power to conclude treaties, conventions and amendments related to international postal services and other international delivery services, except that the Secretary may not conclude any treaty, convention, or other international agreement (including those regulating international postal services) if such treaty, convention, or agreement would, with 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 primary authority for the conduct of foreign policy with respect to international postal services and international delivery services, including the determination of United States positions and the conduct of United States participation in negotiations with foreign governments and international bodies. In exercising this authority, the Secretary--

      `(A) shall coordinate with other agencies as appropriate, and in particular, shall give full consideration to the authority vested by law or Executive order in the Postal Regulatory Commission, the Department of Commerce, the Department of Transportation, and the Office of the United States Trade Representative in this area;

      `(B) shall maintain continuing liaison with other executive branch agencies concerned with postal and delivery services;

      `(C) shall maintain continuing liaison with the Committee on Government Reform of the House of Representatives and the Committee on Governmental Affairs of the Senate;

      `(D) shall maintain appropriate liaison with both representatives of the Postal Service and representatives of users and private providers of international postal services and other international delivery services to keep informed of their interests and problems, and to provide such assistance as may be needed to ensure that matters of concern are promptly considered by the Department of State or (if applicable, and to the extent practicable) other executive branch agencies; and

      `(E) shall assist in arranging meetings of such public sector advisory groups as may be established to advise the Department of State and other executive branch agencies in connection with international postal services and international delivery services.

    `(3) The Secretary of State shall establish an advisory committee (within the meaning of the Federal Advisory Committee Act) to perform such functions as the Secretary considers appropriate in connection with carrying out subparagraphs (A) through (D) of paragraph (2).

    `(c)(1) Before concluding any treaty, convention, or amendment that establishes a rate or classification for a product subject to subchapter I of chapter 36, the Secretary of State shall request the Postal Regulatory Commission to submit a decision on whether such rate or classification is consistent with the standards and criteria established by the Commission under section 3622.

    `(2) The Secretary shall ensure that each treaty, convention, or amendment concluded under subsection (b) is consistent with a decision of the Commission adopted under paragraph (1), except if, or to the extent, the Secretary determines, by written order, that considerations of foreign policy or national security require modification of the Commission's decision.

    `(d) Nothing in this section shall be considered to prevent the Postal Service from entering into such commercial or operational contracts related to providing international postal services and other international delivery services as it deems appropriate, except that--

      `(1) any such contract made with an agency of a foreign government (whether under authority of this subsection or otherwise) shall be solely contractual in nature and may not purport to be international law; and

      `(2) a copy of each such contract between the Postal Service and an agency of a foreign government shall be transmitted to the Secretary of State and the Postal Regulatory Commission not later than the effective date of such contract.

    `(e)(1) With respect to shipments of international mail that are competitive products within the meaning of section 3631 that are exported or imported by the Postal Service, the Bureau of Customs and Border Protection of the Department of Homeland Security and other appropriate Federal agencies shall apply the customs laws of the United States and all other laws relating to the importation or exportation of such shipments in the same manner to both shipments by the Postal Service and similar shipments by private companies.

    `(2) For purposes of this subsection, the term `private company' means a private company substantially owned or controlled by persons who are citizens of the United States.

    `(3) In exercising the authority pursuant to subsection (b) to conclude new treaties, conventions and amendments related to international postal services and to renegotiate such treaties, conventions and amendments, the Secretary of State shall, to the maximum extent practicable, take such measures as are within the Secretary's control to encourage the governments of other countries to make available to the Postal Service and private companies a range of nondiscriminatory customs procedures that will fully meet the needs of all types of American shippers. The Secretary of State shall consult with the United States Trade Representative and the Commissioner of Customs, Department of Homeland Security in carrying out this paragraph.

    `(4) The provisions of this subsection shall take effect 6 months after the date of the enactment of this subsection or such earlier date as the Bureau of Customs and Border Protection of the Department of Homeland Security may determine in writing.'.

    (b) EFFECTIVE DATE- Notwithstanding any provision of the amendment made by subsection (a), the authority of the United States Postal Service to establish the rates of postage or other charges on mail matter conveyed between the United States and other countries shall remain available to the Postal Service until--

      (1) with respect to market-dominant products, the date as of which the regulations promulgated under section 3622 of title 39, United States Code (as amended by section 201(a)) take effect; and

      (2) with respect to competitive products, the date as of which the regulations promulgated under section 3633 of title 39, United States Code (as amended by section 202) take effect.

SEC. 306. REDESIGNATION.

    Chapter 36 of title 39, United States Code (as in effect before the amendment made by section 204(a)) is amended by striking the heading for subchapter V and inserting the following:

`SUBCHAPTER VI--GENERAL'.

SEC. 307. CLARIFICATION.

    Section 403(c) of title 39, United States Code, is amended by adding after `user.' the following: `The prohibition in this subsection shall not be construed to prevent the establishment of rates that vary with volume if such rates will be made available to similarly situated persons and will increase the aggregate contribution to the institutional costs of the Postal Service.'.

TITLE IV--GENERAL PROVISIONS

SEC. 401. QUALIFICATION REQUIREMENTS FOR GOVERNORS.

    (a) IN GENERAL- Section 202(a) of title 39, United States Code, is amended by striking `(a)' and inserting `(a)(1)' and by striking the fourth sentence and inserting the following: `The Governors shall represent the public interest generally, and at least 4 of the Governors shall be chosen solely on the basis of their demonstrated ability in managing organizations or corporations (in either the public or private sector) of substantial size; for purposes of this sentence, an organization or corporation shall be considered to be of substantial size if it employs at least 50,000 employees. The Governors shall not be representatives of specific interests using the Postal Service, and may be removed only for cause.'.

    (b) CONSULTATION REQUIREMENT- Section 202(a) of title 39, United States Code, is amended by adding at the end the following:

    `(2) In selecting the individuals described in paragraph (1) for nomination for appointment to the position of Governor, the President should consult with the Speaker of the House of Representatives, the minority leader of the House of Representatives, the majority leader of the Senate, and the minority leader of the Senate.'.

    (c) RESTRICTION- Section 202(b) of title 39, United States Code, is amended by striking `(b)' and inserting `(b)(1)', and by adding at the end the following:

    `(2)(A) Notwithstanding any other provision of this section, in the case of the office of the Governor the term of which is the first one scheduled to expire at least 4 months after the date of the enactment of this paragraph--

      `(i) such office may not, in the case of any person commencing service after that expiration date, be filled by any person other than an individual chosen from among persons nominated for such office with the unanimous concurrence of all labor organizations described in section 206(a)(1); and

      `(ii) instead of the term that would otherwise apply under the first sentence of paragraph (1), the term of any person so appointed to such office shall be 3 years.

    `(B) Except as provided in subparagraph (A), an appointment under this paragraph shall be made in conformance with all provisions of this section that would otherwise apply.'.

    (d) APPLICABILITY- The amendment made by subsection (a) shall not affect the appointment or tenure of any person serving as a Governor of the Board of Governors of the United States Postal Service pursuant to an appointment made before the date of the enactment of this Act, or, except as provided in the amendment made by subsection (c), any nomination made before that date; however, when any such office becomes vacant, the appointment of any person to fill that office shall be made in accordance with such amendment. The requirement set forth in the fourth sentence of section 202(a)(1) of title 39, United States Code (as amended by subsection (a)) shall be met beginning not later than 9 years after the date of the enactment of this Act.

SEC. 402. OBLIGATIONS.

    (a) PURPOSES FOR WHICH OBLIGATIONS MAY BE ISSUED- The first sentence of section 2005(a)(1) of title 39, United States Code, is amended by striking `title.' and inserting `title, other than any of the purposes for which the corresponding authority is available to the Postal Service under section 2011.'.

    (b) LIMITATION ON NET ANNUAL INCREASE IN OBLIGATIONS 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 outstanding issued for the purpose of capital improvements and the net increase in the amount of obligations outstanding issued for the purpose of defraying operating expenses of the Postal Service shall not exceed a combined total of $3,000,000,000.' .

    (c) LIMITATIONS ON OBLIGATIONS OUTSTANDING-

      (1) IN GENERAL- Subsection (a) of section 2005 of title 39, United States Code, is amended by adding at the end the following:

    `(3) For purposes of applying the respective limitations under this subsection, the aggregate amount of obligations 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 obligations' and inserting `obligations issued by the Postal Service which may be'.

    (d) AMOUNTS WHICH MAY BE PLEDGED, ETC-

      (1) OBLIGATIONS TO WHICH PROVISIONS APPLY- The first sentence of section 2005(b) of title 39, United States Code, is amended by striking `such obligations,' and inserting `obligations issued by the Postal Service under this section,'.

      (2) ASSETS, REVENUES, AND RECEIPTS TO WHICH PROVISIONS APPLY- Subsection (b) of section 2005 of title 39, United States Code, is amended by striking `(b)' and inserting `(b)(1)', and by adding at the end the following:

    `(2) Notwithstanding any other provision of this section--

      `(A) the authority to pledge assets of the Postal Service under this subsection shall be available only to the extent that such assets are not related to the provision of competitive products (as determined under section 2011(h) or, for purposes of any period before accounting practices and principles under section 2011(h) have been established and applied, the best information available from the Postal Service, including the audited statements required by section 2008(e)); and

      `(B) any authority under this subsection relating to the pledging or other use of revenues or receipts of the Postal Service shall be available only to the extent that they are not revenues or receipts of the Competitive Products Fund.'.

SEC. 403. PRIVATE CARRIAGE OF LETTERS.

    (a) IN GENERAL- Section 601 of title 39, United States Code, is amended by striking subsection (b) and inserting the following:

    `(b) A letter may also be carried out of the mails when--

      `(1) the amount paid for the private carriage of the letter is at least the amount equal to 6 times the rate then currently charged for the 1st ounce of a single-piece first class letter;

      `(2) the letter weighs at least 12 1/2 ounces; or

      `(3) such carriage is within the scope of services described by regulations of the Postal Service (including, in particular, sections 310.1 and 320.2-320.8 of title 39 of the Code of Federal Regulations, as in effect on July 1, 2004) that purport to permit private carriage by suspension of the operation of this section (as then in effect).

    `(c) Any regulations necessary to carry out this section shall be promulgated by the Postal Regulatory Commission.'.

    (b) EFFECTIVE DATE- This section shall take effect on the date as of which the regulations promulgated under section 3633 of title 39, United States Code (as amended by section 202) take effect.

SEC. 404. RULEMAKING AUTHORITY.

    Paragraph (2) of section 401 of title 39, United States Code, is amended to read as follows:

      `(2) to adopt, amend, and repeal such rules and regulations, not inconsistent with this title, as may be necessary in the execution of its functions under this title and such other functions as may be assigned to the Postal Service under any provisions of law outside of this title;'.

SEC. 405. NONINTERFERENCE WITH COLLECTIVE BARGAINING AGREEMENTS, ETC.

    (a) NONINTERFERENCE WITH COLLECTIVE BARGAINING AGREEMENTS- Except as provided in section 407, nothing in this Act or any amendment made by this Act shall restrict, expand, or otherwise affect any of the rights, privileges, or benefits of either employees of or labor organizations representing employees of the United States Postal Service under chapter 12 of title 39, United

States Code, the National Labor Relations Act, any handbook or manual affecting employee labor relations within the United States Postal Service, or any collective bargaining agreement.

    (b) FREE MAILING PRIVILEGES CONTINUE UNCHANGED- Nothing in this Act or any amendment made by this Act shall affect any free mailing privileges accorded under section 3217 or sections 3403 through 3406 of title 39, United States Code.

SEC. 406. BONUS AUTHORITY.

    Subchapter VI of chapter 36 of title 39, United States Code (as so redesignated by section 306) is amended by adding at the end the following:

`Sec. 3686. Bonus authority

    `(a) IN GENERAL- The Postal Service may establish one or more programs to provide bonuses or other rewards to officers and employees of the Postal Service to achieve the objectives of this chapter.

    `(b) WAIVER OF LIMITATION ON COMPENSATION-

      `(1) IN GENERAL- Under any such program, the Postal Service may award a bonus or other reward in excess of the limitation set forth in the last sentence of section 1003(a), if such program has been approved under paragraph (2).

      `(2) APPROVAL PROCESS- If the Postal Service wishes to have the authority, under any program described in subsection (a), to award bonuses or other rewards in excess of the limitation referred to in paragraph (1)--

        `(A) the Postal Service shall make an appropriate request to the Postal Regulatory Commission, in such form and manner as the Commission requires; and

        `(B) the Postal Regulatory Commission shall approve any such request if it finds that the program is likely to achieve the objectives of this chapter.

      `(3) REVOCATION AUTHORITY- If the Postal Regulatory Commission finds that a program previously approved under paragraph (2) is not achieving the objectives of this chapter, the Commission may revoke or suspend the authority of the Postal Service to continue such program until such time as appropriate corrective measures have, in the judgment of the Commission, been taken.

    `(c) REPORTING REQUIREMENT RELATING TO BONUSES OR OTHER REWARDS- Included in its comprehensive statement under section 2401(e) for any period shall be--

      `(1) the name of each person receiving a bonus or other reward during such period which would not have been allowable but for the provisions of subsection (b);

      `(2) the amount of the bonus or other reward; and

      `(3) the amount by which the limitation referred to in subsection (b)(1) was exceeded as a result of such bonus or other reward.'.

SEC. 407. MEDIATION IN COLLECTIVE-BARGAINING DISPUTES.

    (a) IN GENERAL- Section 1207(b) of title 39, United States Code, is amended by striking all that follows `the Director of the Federal Mediation and Conciliation Service shall' and inserting `, within 10 days appoint a mediator of nationwide reputation and professional stature, and who is also a member of the National Academy of Arbitrators. The parties shall cooperate with the mediator in an effort to reach an agreement and shall meet and negotiate in good faith at such times and places that the mediator, in consultation with the parties, shall direct.'.

    (b) PROVISIONS RELATING TO ARBITRATION BOARDS- Section 1207(c) of title 39, United States Code, is amended--

      (1) in paragraph (1)--

        (A) by striking `90' and inserting `60';

        (B) by striking `not members of the factfinding panel,'; and

        (C) by striking all that follows `shall be made' and inserting `from a list of names provided by the Director. This list shall consist of not less than 9 names of arbitrators of nationwide reputation and professional stature, who are also members of the National Academy of Arbitrators, and whom the Director has determined are available and willing to serve.'; and

      (2) in paragraph (3), by striking `factfinding panel' and inserting `mediation'.

    (c) CONFORMING AMENDMENT- Section 1207(d) of title 39, United States Code, is amended by striking `factfinding panel will be established' and inserting `mediator shall be appointed'.

TITLE V--ENHANCED REGULATORY COMMISSION

SEC. 501. REORGANIZATION AND MODIFICATION OF CERTAIN PROVISIONS RELATING TO THE POSTAL REGULATORY COMMISSION.

    (a) TRANSFER AND REDESIGNATION- Title 39, United States Code, is amended--

      (1) by inserting after chapter 4 the following:

`CHAPTER 5--POSTAL REGULATORY COMMISSION

      `Sec.

      `501. Establishment.

      `502. Commissioners.

      `503. Rules; regulations; procedures.

      `504. Administration.

`Sec. 501. Establishment

    `The Postal Regulatory Commission is an independent establishment of the executive branch of the Government of the United States.

`Sec. 502. Commissioners

    `(a) The Postal Regulatory Commission is composed of 5 Commissioners, appointed by the President, by and with the advice and consent of the Senate. The Commissioners shall be chosen solely on the basis of their technical qualifications, professional standing, and demonstrated expertise in economics, accounting, law, or public administration, and may be removed by the President only for cause. Each individual appointed to the Commission shall have the qualifications and expertise necessary to carry out the responsibilities accorded Commissioners under the Postal Accountability and Enhancement Act. Not more than 3 of the Commissioners may be adherents of the same political party.

    `(b) A Commissioner may continue to serve after the expiration of his term until his successor has qualified, except that a Commissioner may not so continue to serve for more than 1 year after the date upon which his term otherwise would expire under subsection (e).

    `(c) One of the Commissioners shall be designated as Chairman by, and shall serve in the position of Chairman at the pleasure of, the President.

    `(d) The Commissioners shall by majority vote designate a Vice Chairman of the Commission. The Vice Chairman shall act as Chairman of the Commission in the absence of the Chairman.

    `(e) The Commissioners shall serve for terms of 6 years.';

      (2) in subchapter I of chapter 36 (as in effect before the amendment made by section 201(c)), by striking the heading for such subchapter I and all that follows through section 3602; and

      (3) by redesignating sections 3603 and 3604 as sections 503 and 504, respectively, and transferring such sections to the end of chapter 5 (as inserted by paragraph (1)).

    (b) DETERMINATIONS- Section 503 of title 39, United States Code, as so redesignated by subsection (a)(3), is amended by adding at the end the following: `Such rules shall include procedures which balance, inter alia, the need for protecting due process rights and ensuring expeditious decision-making.'.

    (c) APPLICABILITY- The amendment made by subsection (a)(1) shall not affect the appointment or tenure of any person serving as a Commissioner on the Postal Regulatory Commission (as so redesignated by section 504) pursuant to an appointment made before the date of the enactment of this Act or any nomination made before that date, but, when any such office becomes vacant, the appointment of any person to fill that office shall be made in accordance with such amendment.

    (d) CLERICAL AMENDMENT- The analysis for part I of title 39, United States Code, is amended by inserting after the item relating to chapter 4 the following:

--501'.

SEC. 502. AUTHORITY FOR POSTAL REGULATORY COMMISSION TO ISSUE SUBPOENAS.

    Section 504 of title 39, United States Code (as so redesignated by section 501) is amended by adding at the end the following:

    `(f)(1) Any Commissioner of the Postal Regulatory Commission, any administrative law judge appointed by the Commission under section 3105 of title 5, and any employee of the Commission designated by the Commission may administer oaths, examine witnesses, take depositions, and receive evidence.

    `(2) The Chairman of the Commission, any Commissioner designated by the Chairman, and any administrative law judge appointed by the Commission under section 3105 of title 5 may, with respect to any proceeding conducted by the Commission under this title--

      `(A) issue subpoenas requiring the attendance and presentation of testimony by, or the production of documentary or other evidence in the possession of, any covered person; and

      `(B) order the taking of depositions and responses to written interrogatories by a covered person.

    The written concurrence of a majority of the Commissioners then holding office shall, with respect to each subpoena under subparagraph (A), be required in advance of its issuance.

    `(3) In the case of contumacy or failure to obey a subpoena issued under this subsection, upon application by the Commission, the district court of the United States for the district in which the person to whom the subpoena is addressed resides or is served may issue an order requiring such person to appear at any designated place to testify or produce documentary or other evidence. Any failure to obey the order of the court may be punished by the court as a contempt thereof.

    `(4) For purposes of this subsection, the term `covered person' means an officer, employee, agent, or contractor of the Postal Service.

    `(g)(1) If the Postal Service determines that any document or other matter it provides to the Postal Regulatory Commission pursuant to a subpoena issued under subsection (f), or otherwise at the request of the Commission in connection with any proceeding or other purpose under this title, contains information which is described in section 410(c) of this title, or exempt from public disclosure under section 552(b) of title 5, the Postal Service shall, at the time of providing such matter to the Commission, notify the Commission, in writing, of its determination (and the reasons therefor).

    `(2) No officer or employee of the Commission may, with respect to any information as to which the Commission has been notified under paragraph (1)--

      `(A) use such information for purposes other than the purposes for which it is supplied; or

      `(B) permit anyone who is not an officer or employee of the Commission to have access to any such information.

    `(3) Paragraph (2) shall not prevent information from being furnished under any process of discovery established under this title in connection with a proceeding under this title. The Commission shall, by regulations based on rule 26(c) of the Federal Rules of Civil Procedure, establish procedures for ensuring appropriate confidentiality for any information furnished under the preceding sentence.'.

SEC. 503. APPROPRIATIONS FOR THE POSTAL REGULATORY COMMISSION.

    (a) AUTHORIZATION OF APPROPRIATIONS- Subsection (d) of section 504 of title 39, United States Code (as so redesignated by section 501) is amended to read as follows:

    `(d) There are authorized to be appropriated, out of the Postal Service Fund, such sums as may be necessary for the Postal Regulatory Commission. In requesting an appropriation under this subsection for a fiscal year, the Commission shall prepare and submit to the Congress under section 2009 a budget of the Commission's expenses, including expenses for facilities, supplies, compensation, and employee benefits.'.

    (b) BUDGET PROGRAM-

      (1) IN GENERAL- The next to last sentence of section 2009 of title 39, United States Code, is

amended to read as follows: `The budget program shall also include separate statements of the amounts which (1) the Postal Service requests to be appropriated under subsections (b) and (c) of section 2401, (2) the Office of Inspector General of the United States Postal Service requests to be appropriated, out of the Postal Service Fund, under section 8J(e) of the Inspector General Act of 1978, and (3) the Postal Regulatory Commission requests to be appropriated, out of the Postal Service Fund, under section 504(d) of this title.'.

      (2) CONFORMING AMENDMENT- Section 2003(e)(1) of title 39, United States Code, is amended by striking the first sentence and inserting the following: `The Fund shall be available for the payment of (A) all expenses incurred by the Postal Service in carrying out its functions as provided by law, subject to the same limitation as set forth in the parenthetical matter under subsection (a); (B) all expenses of the Postal Regulatory Commission, subject to the availability of amounts appropriated pursuant to section 504(d); and (C) all expenses of the Office of Inspector General, subject to the availability of amounts appropriated pursuant to section 8J(e) of the Inspector General Act of 1978.'.

    (c) EFFECTIVE DATE-

      (1) IN GENERAL- The amendments made by this section shall apply with respect to fiscal years beginning on or after October 1, 2005.

      (2) SAVINGS PROVISION- The provisions of title 39, United States Code, that are amended by this section shall, for purposes of any fiscal year before the first fiscal year to which the amendments made by this section apply, continue to apply in the same way as if this section had never been enacted.

SEC. 504. REDESIGNATION OF THE POSTAL RATE COMMISSION.

    (a) AMENDMENTS TO TITLE 39, UNITED STATES CODE- Title 39, United States Code, is amended in sections 404, 503-504 (as so redesignated by section 501), 1001, and 1002 by striking `Postal Rate Commission' each place it appears and inserting `Postal Regulatory Commission'.

    (b) AMENDMENTS TO TITLE 5, UNITED STATES CODE- Title 5, United States Code, is amended in sections 104(1), 306(f), 2104(b), 3371(3), 5314 (in the item relating to Chairman, Postal Rate Commission), 5315 (in the item relating to Members, Postal Rate Commission), 5514(a)(5)(B), 7342(a)(1)(A), 7511(a)(1)(B)(ii), 8402(c)(1), 8423(b)(1)(B), and 8474(c)(4) by striking `Postal Rate Commission' and inserting `Postal Regulatory Commission'.

    (c) AMENDMENT TO THE ETHICS IN GOVERNMENT ACT OF 1978- Section 101(f)(6) of the Ethics in Government Act of 1978 (5 U.S.C. App.) is amended by striking `Postal Rate Commission' and inserting `Postal Regulatory Commission'.

    (d) AMENDMENT TO THE REHABILITATION ACT OF 1973- Section 501(b) of the Rehabilitation Act of 1973 (29 U.S.C. 791(b)) is amended by striking `Postal Rate Office' and inserting `Postal Regulatory Commission'.

    (e) AMENDMENT TO TITLE 44, UNITED STATES CODE- Section 3502(5) of title 44, United States Code, is amended by striking `Postal Rate Commission' and inserting `Postal Regulatory Commission'.

    (f) OTHER REFERENCES- Whenever a reference is made in any provision of law (other than this Act or a provision of law amended by this Act), regulation, rule, document, or other record of the United States to the Postal Rate Commission, such reference shall be considered a reference to the Postal Regulatory Commission.

SEC. 505. OFFICER OF THE POSTAL REGULATORY COMMISSION 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:

`Sec. 505. Officer of the Postal Regulatory Commission representing the general public

    `The Postal Regulatory Commission shall designate an officer of the Postal Regulatory Commission in all public proceedings (such as developing rules, regulations, and procedures) who shall represent the interests of the general public.'.

    (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 public.'.

TITLE VI--INSPECTORS GENERAL

SEC. 601. INSPECTOR GENERAL OF THE POSTAL REGULATORY 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 Commission, and to obtain any temporary or intermittent services of experts or consultants (or an organization of experts or consultants) for such Office, shall reside with the Inspector General of the Postal Regulatory Commission.

    `(2) Except as provided in paragraph (1), any exercise of authority under this subsection shall, to the extent practicable, be in conformance with the applicable laws and regulations that govern selections, appointments and employment, and the obtaining of any such temporary or intermittent services, within the Postal Regulatory 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 Regulatory 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 General Act of 1978 is amended--

      (1) in paragraph (1)--

        (A) by striking `or' before `the President of the Export-Import Bank;' and

        (B) by inserting `or the Governors of the United States Postal Service (within the meaning of section 102(3) of title 39, United States Code);' after `the President of the Export-Import Bank;'; and

      (2) in paragraph (2)--

        (A) by striking `or' before `the Export-Import Bank,'; and

        (B) by inserting `or the United States Postal Service,' after `the Export-Import Bank,'.

    (b) SPECIAL PROVISIONS CONCERNING THE UNITED STATES POSTAL SERVICE-

      (1) IN GENERAL- The Inspector General Act of 1978 is amended--

        (A) by redesignating section 8J as section 8K; and

        (B) by inserting after section 8I the following:

`SPECIAL PROVISIONS CONCERNING THE UNITED STATES POSTAL SERVICE

    `SEC. 8J. (a) In carrying out the duties and responsibilities specified in this Act, the Inspector General of the United States Postal Service shall have oversight responsibility for all activities of the Postal Inspection Service, including 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 Inspector General all allegations of theft, fraud, or misconduct by Postal Service officers or employees, and entities or individuals 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 Government Reform of the House of Representatives, the Committee 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 services of experts or consultants or an organization of experts or consultants, subject to the applicable laws and regulations that govern such selections, appointments, and employment, 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 handbook 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 Postal Service.'.

      (2) RELATED PROVISIONS- For certain related provisions, see section 503(b).

    (c) EXERCISE OF CERTAIN POWERS- Section 6(e)(3) of the Inspector General Act of 1978 is amended--

      (1) by striking `and the' before `Tennessee Valley Authority'; and

      (2) by inserting `, and United States Postal Service' after `Tennessee Valley Authority'.

    (d) PUBLIC CONTRACTS-

      (1) ADDITIONAL PROVISIONS APPLICABLE- Section 410(b)(5) of title 39, United States Code, is amended--

        (A) in subparagraph (A), by striking `and' after the semicolon; and

        (B) by adding after subparagraph (B) the following:

        `(C) the Anti-Kickback Act of 1986 (41 U.S.C. 51 and following), other than 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- Section 410 of title 39, United States Code, is amended by adding at the end the following:

    `(e) The Postal Service shall develop and issue purchasing regulations that prohibit contract costs not allowable under section 5.2.5 of the United States Postal Service Procurement Manual (Publication 41), as in effect on July 12, 1995.'.

    (e) AUDITS OF THE POSTAL SERVICE-

      (1) AUDITS- Subsection (e) of section 2008 of title 39, United States Code, is amended to read as follows:

    `(e)(1) At least once each year beginning with the fiscal year commencing after the date of the enactment of the Postal Accountability and Enhancement Act, the financial statements of the Postal Service (including those used in determining and establishing postal rates) shall be audited by the Inspector General or by an independent external auditor selected by the Inspector General.

    `(2) Audits under this section shall be conducted in accordance with applicable generally accepted government auditing standards.

    `(3) Upon completion of the audit required by this subsection, the person who audits the statement shall submit a report on the audit to the Postmaster General.'.

      (2) RESULTS OF INSPECTOR GENERAL'S AUDIT TO BE INCLUDED IN ANNUAL REPORT- Section 2402 of title 39, United States Code, is amended by inserting after the first sentence the following: `Each report under this section shall include a copy of the report most recently received by the Postmaster General under section 2008(e)(3).'.

      (3) COORDINATION PROVISIONS- Section 2008(d) of title 39, United States Code, is amended--

        (A) by striking `(d) Nothing' and inserting `(d)(1) Except as provided in paragraph (2), nothing'; and

        (B) by adding at the end the following:

    `(2) An audit or report under paragraph (1) may not be obtained without the prior written approval of the Inspector General.'.

      (4) TRANSITION PROVISION- For purposes of any fiscal year preceding the first fiscal year commencing after the date of the enactment of this Act, the provisions of title 39, United States Code, shall be applied as if the amendments made by this subsection had never been enacted.

    (f) REPORTS- Section 3013 of title 39, United States Code, is amended by striking `Postmaster General' each place it appears and inserting `Chief Postal Inspector'.

    (g) TECHNICAL AND CONFORMING AMENDMENTS-

      (1) RELATING TO THE INSPECTOR GENERAL ACT OF 1978- (A) Subsection (a) of section 8G of the Inspector General Act of 1978 (as amended by section 601(a)) is further amended--

        (i) in paragraph (2), by striking `the Postal 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 National 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 subsection (f) of this section, the' and inserting `The'.

      (C) Section 8K of such Act (as so redesignated by subsection (b)(1)(A)) is amended by striking the matter after `8D,' and before `of this Act' and inserting `8E, 8F, 8H, or 8J'.

      (2) RELATING TO TITLE 39, UNITED STATES CODE- (A) Subsection (e) of section 202 of title 39, United States Code, is repealed.

      (B) Paragraph (4) of section 102 of such title 39 (as amended by section 101) is amended to read as follows:

      `(4) `Inspector General' means the Inspector General of the United States Postal Service, appointed under section 3(a) of the Inspector General Act of 1978;'.

      (C) The first sentence of section 1003(a) of such title 39 is amended by striking `chapters 2 and 12 of this title, section 8G of the Inspector General Act of 1978, or other provision of law,' and inserting `chapter 2 or 12 of this title, subsection (b) or (c) of this section, or any other provision of law,'.

      (D) Section 1003(b) of such title 39 is amended by striking `respective' and inserting `other'.

      (E) Section 1003(c) of such title 39 is amended by striking `included' and inserting `includes'.

      (3) RELATING TO THE ENERGY POLICY ACT OF 1992- Section 160(a) of the Energy Policy Act of 1992 (42 U.S.C. 8262f(a)) is amended (in the matter before paragraph (1)) by striking all that follows `(5 U.S.C. App.)' and before `shall--'.

    (h) EFFECTIVE DATE; TRANSITION PROVISIONS-

      (1) EFFECTIVE DATE- Except as provided in paragraph (2) or subsection (c), this section and the amendments made by this section shall take effect on the date of the enactment of this Act.

      (2) TRANSITION PROVISIONS-

        (A) PRESIDENTIAL APPOINTMENT AUTHORITY AVAILABLE IMMEDIATELY- The authority to appoint an Inspector General of the United States Postal Service in accordance with the amendments made by this section shall be available as of the effective date of this section.

        (B) CONTINUATION IN OFFICE- Pending the appointment of an Inspector General of the United States Postal Service in accordance with the amendments made by this section, the individual 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 provisions of the Inspector General Act of 1978 and (except as provided in clause (ii)) of title 39, United States Code, as last in effect before the effective date of this Act; but

          (ii) subject to the provisions of such title 39 as amended by subsections (e) and (f) of this section (deeming any reference to the `Inspector General' in such provisions, as so amended, to refer to the individual continuing to serve under authority of this subparagraph) and subparagraph (C).

        (C) AUTHORIZATION OF APPROPRIATIONS-

          (i) IN GENERAL- Notwithstanding any other provision of this subsection, section 8J(e) of the Inspector General Act of 1978 (as amended by this section) shall be effective for purposes of fiscal years beginning on or after October 1, 2005.

          (ii) SAVINGS PROVISION- For purposes 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 GENERAL- Nothing in this Act shall prevent any individual who has served as Inspector General of the United States Postal Service at any time before the date of the enactment of this Act from being appointed to that position pursuant to the amendments made by this section.

TITLE VII--EVALUATIONS

SEC. 701. UNIVERSAL POSTAL SERVICE STUDY.

    (a) REPORT BY THE POSTAL SERVICE- The United States Postal Service shall, within 12 months after the date of the enactment of this Act, submit to the President, the Congress, and the Postal Regulatory Commission, a written report on universal postal service in the United States (hereinafter in this section referred to as `universal service'). 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, populations, communities, organizations, or other groups or entities not currently covered by universal service or that are covered but that are receiving services deficient in scope or quality or both.

      (4) The scope and standards of universal service likely to be required in the future in order to meet the needs and expectations of the American public, including all types of mail users, based on such assumptions or alternative sets of assumptions as the Postal Service considers plausible.

      (5) Such recommendations as the Postal Service considers appropriate.

    (b) REPORT BY THE POSTAL REGULATORY COMMISSION- 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 following:

      (1) Such comments and observations relating to the matters addressed in the Postal Service's report as the Commission considers appropriate.

      (2) An estimate of the cost attributable to the obligation to provide universal service under prior and current law, respectively.

      (3) An estimate of the likely cost of fulfilling the obligation to provide universal service under--

        (A) the assumptions or respective sets of assumptions of the Postal Service described in subsection (a)(4); and

        (B) such other assumptions or sets of assumptions as the Commission considers plausible.

      (4) Such additional topics and recommendations as the Commission considers appropriate.

    (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 efficiency of the postal laws of the United States.

    (b) POSTAL SERVICE VIEWS- A report under this section shall be submitted only after reasonable opportunity has been afforded to the Postal Service to review 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 subsection (a).

    (c) SPECIFIC INFORMATION REQUIRED- The Postal Regulatory Commission shall include, as part of at least its first report under subsection (a), the following:

      (1) COST-COVERAGE REQUIREMENT RELATING TO COMPETITIVE PRODUCTS COLLECTIVELY- With respect to section 3633 of title 39, United States Code (as amended by this Act)--

        (A) a description of how such section has operated; and

        (B) recommendations as to whether or not such section should remain in effect and, if so, any suggestions as to how it might be improved.

      (2) COMPETITIVE PRODUCTS FUND- With respect to the Postal Service Competitive Products Fund (under section 2011 of title 39, United States Code, as amended by section 301), in consultation with the Secretary of the Treasury--

        (A) a description of how such Fund has operated;

        (B) any suggestions as to how the operation of such Fund might be improved; and

        (C) a description and assessment of alternative accounting or financing mechanisms that

might be used to achieve the objectives of such Fund.

      (3) ASSUMED FEDERAL INCOME TAX ON COMPETITIVE PRODUCTS FUND- With respect to section 3634 of title 39, United States Code (as amended by this Act), in consultation with the Secretary of the Treasury--

        (A) a description of how such section has operated; and

        (B) recommendations as to whether or not such section should remain in effect and, if so, any suggestions as to how it might be improved.

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

    (a) IN GENERAL- The Federal Trade Commission shall prepare and submit to the President, the Congress, and the Postal Regulatory Commission, within 1 year after the date of the enactment of this Act, a comprehensive report identifying Federal and State laws that apply differently to the United States Postal Service with respect to the competitive category of mail (within the meaning of section 102 of title 39, United States Code, as amended by section 101) and 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 Federal Trade Commission shall consult with the United States Postal Service, the Postal Regulatory Commission, other Federal agencies, mailers, private companies that provide delivery services, and the general public, and shall append to such report any written comments received under this subsection.

    (d) COMPETITIVE PRODUCT RATE REGULATION- The Postal Regulatory Commission shall take into account the recommendations of the Federal Trade Commission, and subsequent events that affect the continuing validity of the estimate of the net economic effect, in promulgating or revising the regulations required by section 3633 of title 39, United States Code.

SEC. 704. GREATER DIVERSITY IN POSTAL SERVICE EXECUTIVE AND ADMINISTRATIVE SCHEDULE MANAGEMENT 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 report shall be presented in the aggregate and by pay level.

    (b) PERFORMANCE EVALUATIONS- The United States Postal Service shall, as soon as practicable, take such measures as may be necessary to ensure that, for purposes of conducting performance appraisals of supervisory or managerial employees, appropriate consideration shall be given to meeting affirmative action goals, achieving equal employment 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, before the deadline specified in subsection (b), develop and be prepared to implement, whenever necessary, a comprehensive plan under which reemployment assistance shall be afforded to employees displaced as a result of the automation or privatization of any of its functions.

    (b) REPORT- Not later than 1 year after the date of the enactment of this Act, the United States Postal Service shall submit to its Board of Governors and 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 businesses.

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 determining the direct and indirect postal costs attributable to periodicals; and

      (2) any opportunities that might exist for improving efficiencies in the collection, handling, transportation, or delivery of periodicals by the Postal Service, including any pricing incentives for mailers that might be appropriate.

    (b) RECOMMENDATIONS- The report shall include recommendations 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, including--

      (1) whether the Postal Regulatory Commission or any other body outside the Postal Service should be assigned a role; and

      (2) whether a statute of limitations should be established for the commencement of proceedings by the Postal Service thereunder.

SEC. 709. POSTAL PROCESSING AND DISTRIBUTION NETWORK STUDY.

    The United States Postal Service shall, within 16 months after the date of the enactment of this Act, submit

to the President, the Congress, and the Board of Governors of the United States Postal Service a written report on the postal processing and distribution network. Such report shall include at least the following:

      (1) Recommendations to improve the efficiency and effectiveness of the processing and distribution network while preserving the timely delivery of postal services.

      (2) Identification of excess capacity (if any) within the processing and distribution network and opportunities for savings through realignment or consolidation of facilities.

      (3) Report of the Postal Service's plans for dealing with the recommendations and findings identified in paragraphs (1) and (2).

      (4) Statutory or regulatory obstacles preventing the Postal Service from taking action to realign or consolidate facilities identified in paragraph (2).

      (5) Such additional topics and recommendations as the Postal Service considers appropriate.

SEC. 710. DEFINITION.

    For purposes of this title, the term `Board of Governors' has the meaning given such term by section 102 of title 39, United States Code.

TITLE VIII--MISCELLANEOUS; TECHNICAL AND CONFORMING AMENDMENTS

SEC. 801. EMPLOYMENT OF POSTAL POLICE OFFICERS.

    Section 3061 of title 18, United States Code, is amended 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 property, including duty in areas outside the property to the extent necessary to protect the property and persons on the property.

    `(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 offense 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 arrested 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 regulations 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 property in question, of offenses that may have been committed 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 in subparagraph (B), for violations of the regulations. The regulations shall be posted and remain posted in a conspicuous 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 received 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 Commission, be considered to have been received on the date determined based on any appropriate documentation or other indicia (as determined under regulations of the Commission).'.

    (b) EFFECTIVE DATE- This section and the amendments made by this section shall apply with respect to any determination to close or consolidate a post office which is first made available, in accordance with paragraph (3) of section 404(b) of title 39, United States Code, after the end of the 3-month period beginning on the date of the enactment of this Act.

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 Reorganization 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 officer or employee of the former Post Office Department, have the same authorities and responsibilities as it has with respect to an officer or employee of the Postal Service receiving such benefits.'.

    (b) EFFECTIVE DATE- This section and the amendments made by this section shall be effective as of the first day of the fiscal year in which this Act is enacted.

SEC. 804. OBSOLETE PROVISIONS.

    (a) REPEAL-

      (1) IN GENERAL- Chapter 52 of title 39, United States Code, is repealed.

      (2) CONFORMING AMENDMENTS- (A) Section 5005(a) of title 39, United States Code, is amended--

        (i) by striking paragraph (1), and by redesignating paragraphs (2) through (4) as paragraphs (1) through (3), respectively; and

        (ii) in paragraph (3) (as so designated by clause (i)), by striking `(as defined in section 5201(6) of this title)'.

      (B) Section 5005(b) of such title 39 is amended by striking `(a)(4)' each place it appears and inserting `(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 CONTRACTS- (1) Section 5005(b)(1) of title 39, United States Code, is amended by striking `(or where the Postal Service determines that special conditions or the use of special equipment warrants, not in excess of 6 years)' and inserting `(or such longer period of time as may be 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'.

    (3) Section 5605 of such title 39 is amended by striking `for periods of not in excess of 4 years'.

    (c) CLERICAL AMENDMENT- The analysis for part V of title 39, United States Code, is amended by repealing the item relating to chapter 52.

SEC. 805. EXPANDED CONTRACTING AUTHORITY.

    (a) Amendment to Title 39, United States Code-

      (1) CONTRACTS WITH AIR CARRIERS- Subsection (e)(1) of section 5402 of title 39, United States Code, is amended to read as follows:

    `(e)(1)(A) The Postal Service may contract with any air carrier for the transportation of mail by aircraft in interstate air transportation, including the rates therefor, either through negotiations or competitive bidding.

    `(B) Notwithstanding subsections (a) through (d), the Postal Service may contract with any air carrier or foreign air carrier for the transportation of mail by aircraft in foreign air transportation, including the rates therefor, either through negotiations or competitive bidding, except that--

      `(i) any such contract may be awarded only to (I) an air carrier holding a certificate required by section 41101 of title 49 or an exemption therefrom issued by the Secretary of Transportation, (II) a foreign air carrier holding a permit required by section 41301 of title 49 or an exemption therefrom issued by the Secretary of Transportation, or (III) a combination of such air carriers or foreign air carriers (or both);

      `(ii) mail transported under any such contract shall not be subject to any duty-to-carry requirement imposed by any provision of subtitle VII of title 49 or by any certificate, permit, or corresponding exemption authority issued by the Secretary of Transportation under that subtitle;

      `(iii) every contract that the Postal Service awards to a foreign air carrier under this subparagraph shall be subject to the continuing requirement that air carriers shall be afforded the same opportunity to carry the mail of the country to and from which the mail is transported and the flag country of the foreign air carrier, if different, as the Postal Service has afforded the foreign air carrier; and

      `(iv) the Postmaster General shall consult with the Secretary of Defense concerning actions that affect the carriage of military mail transported in foreign air transportation.

    `(C) Subparagraph (B) shall not be interpreted as suspending or otherwise diminishing the authority of the Secretary of Transportation under section 41310 of title 49.'.

      (2) DEFINITIONS- Paragraph (2) of section 5402(a) of title 39, United States Code, is amended to read as follows:

      `(2) the terms `air carrier', `air transportation', `foreign air carrier', `foreign air transportation', `interstate air transportation', and `mail' shall have the meanings given such terms in section 40102 of title 49;'.

    (b) AMENDMENTS TO TITLE 49, UNITED STATES CODE-

      (1) AUTHORITY OF POSTAL SERVICE TO PROVIDE FOR INTERSTATE AIR TRANSPORTATION OF MAIL- Section 41901(a) of title 49, United States Code, is amended to read as follows:

    `(a) TITLE 39- The United States Postal Service may provide for the transportation of mail by aircraft in air transportation under this chapter and under chapter 54 of title 39.'.

      (2) SCHEDULES FOR CERTAIN TRANSPORTATION OF MAIL- Section 41902(b)(1) of title 49, United States Code, is amended by inserting before the semicolon at the end the following: `(other than foreign air transportation of mail)'.

      (3) PRICES FOR FOREIGN TRANSPORTATION OF MAIL- Section 41907 of title 49, United States Code, is amended--

        (A) by striking `(a) LIMITATIONS- '; and

        (B) by striking subsection (b).

      (4) CONFORMING AMENDMENTS- Sections 41107, 41901(b)(1), 41902(a), 41903(a), and 41903(b) of title 49, United States Code, are amended by striking `in foreign air transportation or'.

SEC. 806. INVESTMENTS.

    Subsection (c) of section 2003 of title 39, United States Code, is amended--

      (1) by striking `(c) If' and inserting `(c)(1) Except 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 `commercial entity' means any corporation, company, association, partnership, joint stock company, firm, society, or other similar entity, as further defined under regulations prescribed by the Postal Regulatory Commission.'.

SEC. 807. REPEAL OF SECTION 5403.

    (a) IN GENERAL- Section 5403 of title 39, United States Code, is repealed.

    (b) CLERICAL AMENDMENT- The analysis for chapter 54 of title 39, United States Code, is amended by repealing the item relating to section 5403.

SEC. 808. REDUCED RATES.

    Section 3626 of title 39, United States Code, is amended--

      (1) in subsection (a), by striking all before paragraph (4) and inserting the following:

    `(a)(1) Except as otherwise provided in this section, rates of postage for a class of mail or kind of mailer under former section 4358, 4452(b), 4452(c), 4554(b), or 4554(c) of this title shall be established in accordance with section 3622.

    `(2) For the purpose of this subsection, the term `regular-rate category' means any class of mail or kind of mailer, other than a class or kind referred to in section 2401(c).

    `(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 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 (excluding 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 designed primarily for free circulation or for circulation at nominal rates, or fails to meet the requirements of former section 4354(a)(5).'.

SEC. 809. HAZARDOUS MATTER.

    (a) NONMAILABILITY GENERALLY- Section 3001 of title 39, United States Code, is amended--

      (1) by redesignating subsection (n) as subsection (o); and

      (2) by inserting after subsection (m) the following:

    `(n)(1) Except as otherwise authorized by law or regulations of the Postal Service, hazardous material is nonmailable.

    `(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:

`Sec. 3018. Hazardous material

    `(a) IN GENERAL- The Postal Service shall prescribe regulations for the safe transportation of hazardous material in the mail.

    `(b) PROHIBITIONS- No person may--

      `(1) mail or cause to be mailed hazardous material that has been declared by statute or Postal Service regulation to be nonmailable;

      `(2) mail or cause to be mailed hazardous material in violation of any statute or Postal Service regulation restricting the time, place, or manner in which hazardous material may be mailed; or

      `(3) manufacture, distribute, or sell any container, 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 DAMAGES-

      `(1) IN GENERAL- A person who knowingly violates this section or a regulation prescribed under this section shall be liable for--

        `(A) a civil penalty of at least $250, but not more than $100,000, for each violation;

        `(B) the costs of any clean-up associated with each violation; and

        `(C) damages.

      `(2) KNOWING ACTION- A person acts knowingly for purposes of paragraph (1) when--

        `(A) the person has actual knowledge of the facts giving rise to the violation; or

        `(B) a reasonable person acting in the circumstances 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 violation 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 prescribed under this section only after notice and an opportunity for a hearing. Proceedings under this section shall be conducted in accordance with section 3001(m).

    `(e) PENALTY CONSIDERATIONS- In determining the amount of a civil penalty for a violation of this section, the Postal Service shall consider--

      `(1) the nature, circumstances, extent, and gravity of the violation;

      `(2) with respect to the person who committed the violation, the degree of culpability, any history of prior violations, the ability to pay, and any effect on the ability to continue in business;

      `(3) the impact on Postal Service operations; and

      `(4) any other matters that justice requires.

    `(f) CIVIL ACTIONS TO COLLECT-

      `(1) IN GENERAL- In accordance with section 409(d), a civil action may be commenced in an appropriate 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) before 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 action in an appropriate district court of the United States to enforce this section or a regulation prescribed under this section.

      `(2) RELIEF- The court in a civil action under paragraph (1) may award appropriate relief, including a temporary or permanent injunction, civil penalties 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 provided 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 subsection (c)(1)(A) and any punitive damages collected under subsection (c)(1)(C) shall be deposited into the Treasury of the United States.'.

    (c) CONFORMING AMENDMENTS- (1) Section 2003(b) of title 39, United States Code, is amended--

      (A) in paragraph (7), by striking `and' after the semicolon;

      (B) in paragraph (8), by striking `purposes.' and inserting `purposes; and'; and

      (C) by adding at the end the following:

      `(9) any amounts collected under section 3018.'.

    (2) The analysis for chapter 30 of title 39, United States Code, is amended by adding at the end the following:

      `3018. Hazardous material.'.

    (d) Injurious Articles as Nonmailable- Section 1716(a) of title 18, United States Code, is amended by inserting after `explosives,' the following: `hazardous materials,'.

SEC. 810. PROVISIONS RELATING TO COOPERATIVE MAILINGS.

    (a) DETERMINATION- The Postal Regulatory Commission 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 nonprofit mail and (2) deception of consumers.

    (b) REGULATIONS- If the Postal Regulatory Commission 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 promulgate 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 enactment of this section.

SEC. 811. TECHNICAL AND CONFORMING AMENDMENTS.

    (a) REIMBURSEMENT- Section 3681 of title 39, United States Code, is amended by striking `section 3628' and inserting `sections 3662 through 3664'.

    (b) SIZE AND WEIGHT LIMITS- Section 3682 of title 39, United States Code, is amended to read as follows:

`Sec. 3682. Size and weight limits

    `The Postal Service may establish size and weight limitations 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 REQUIREMENTS-

      (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 inserting `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 GENERALLY; 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 best practices of honest, efficient, and economical management, to maintain and continue the development of postal services of the kind and quality adapted to the needs of the United States.

    `(c) The Postal Service shall maintain one or more classes of mail for the transmission of letters sealed against inspection. The rate for each such class shall be uniform throughout the United States, its territories, and possessions. One such class shall provide for the most 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 authorization of the addressee.'.

    (f) LIMITATIONS- Section 3684 of title 39, United States Code, is amended by striking all that follows `any provision' and inserting `of this title.'.

    (g) MISCELLANEOUS- Title 39, United States Code, is amended--

      (1) in section 1005(d)(2)--

        (A) by striking `subsection (g) of section 5532,'; and

        (B) by striking `8344,' and inserting `8344';

      (2) in the analysis for part III, by striking the item relating to chapter 28 and inserting the following:

--2801';

      (3) in section 3005(a)--

        (A) in the matter before paragraph (1), by striking all that follows `nonmailable' and precedes `(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:

`Sec. 3627. Adjusting free rates'.

TITLE IX--POSTAL PENSION FUNDING REFORM AMENDMENTS

SEC. 901. CIVIL SERVICE RETIREMENT SYSTEM.

    (a) TERMINATION OF OBLIGATION TO PAY GOVERNMENT CONTRIBUTIONS- Section 8334(a)(1)(B)(ii) of title 5, United States Code, is amended by striking all that follows `be equal to' and inserting `zero.'.

    (b) DETERMINATION AND DISPOSITION OF POSTAL SURPLUS OR SUPPLEMENTAL LIABILITY- Section 8348(h) of title 5, United States Code, is amended to read as follows:

    `(h)(1) For purposes of this subsection, a Postal surplus (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 deductions to be withheld from the future basic pay of employees of the Postal Service currently subject to this subchapter pursuant to section 8334;

        `(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 determined by the Office in accordance with generally accepted actuarial practices and principles.

    `(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 establish an amortization schedule, including a series of equal annual installments commencing September 30, 2006, which provides for the liquidation of such liability by September 30, 2043.

    `(iii) If a surplus is determined under this subparagraph 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 supplemental 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 annual installments commencing on September 30 of the following fiscal year, which provides for the liquidation of such liability by September 30, 2043.

    `(iii)(I) If a surplus of $500,000,000 or more is determined 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 determined under this subparagraph for a fiscal year, the surplus shall remain in the Fund, subject to transfer in a subsequent 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 establish an amortization schedule, including a series of equal annual installments commencing September 30, 2040, which provides for the liquidation of such liability by September 30, 2043.

    `(iii) If a surplus is determined under this subparagraph 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 surplus 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 paragraph--

      `(i) shall be established in accordance with generally accepted actuarial practices and principles, with interest computed at the rate used in the most recent valuation of the Civil Service Retirement System;

      `(ii) shall supersede any amortization schedule previously established under this paragraph; and

      `(iii) shall not be taken into account, for purposes of any determination of Postal surplus or supplemental liability, except to the extent of any amounts under such schedule actually paid.

    `(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 canceled.

    `(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 disregarding that portion of the unfunded liability that the Office determines will be liquidated by payments under this subsection.

    `(4) As used in this subsection, `Postal Service Retiree Health Benefits Fund' refers to the Postal Service Retiree Health Benefits Fund, as established by section 8909a.'.

    (c) PROVISIONS RELATING TO AMOUNTS FOR MILITARY SERVICE- In the application of paragraph (2) of section 8348(g) of title 5, United States Code, for fiscal year 2006, the Office of Personnel Management shall include, in addition to the amount otherwise computed under that paragraph, the amounts that would have been included for fiscal years 2003 through 2005 with respect to credit for military service of former employees of the United States Postal Service if Public Law 108-18 had not been enacted (including earnings thereon) and the Secretary of the Treasury shall make the required transfer to the Civil Service Retirement and Disability Fund based on that amount.

    (d) REVIEW-

      (1) IN GENERAL- Notwithstanding any other provision of this section, any determination or redetermination made by the Office of Personnel Management 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 Personnel Management, and the Congress.

      (2) RESPONSE- Upon receiving the report of the Postal Regulatory Commission, the Office of Personnel 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 reconsideration to the Commission, the Postal Service, and the Congress.

SEC. 902. HEALTH INSURANCE.

    (a) IN GENERAL- Chapter 89 of title 5, United States Code, is amended--

      (1) in section 8906(g)(2)(A), by striking `by the United States Postal Service.' and inserting

`first from the Postal Service Retiree Health Benefits Fund up to the amount contained therein, with any remaining amount paid by the United States Postal Service.';

      (2) by inserting after section 8909 the following:

`Sec. 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 Disability Fund as of the date of transfer. All other investments of amounts in the Fund shall be made in accordance with subsections (c)-(e) of section 8348.

    `(b) The Fund is available without fiscal year limitation 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 Management shall compute the net present value of the excess of future payments required by section 8906(g)(2)(A) for current and future United States Postal Service 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 September 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 described 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).

    `(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 Commission. The Commission shall submit a report containing the results of any such review to the Postal Service, the Office of Personnel Management, and the Congress.

    `(B) Upon receiving the report of the Postal Regulatory Commission, the Office of Personnel Management shall reconsider its computation or other determination in light of such report, and shall make any appropriate adjustments. The Office shall submit a report containing the results of its reconsideration to the Commission, the Postal Service, and the Congress.

    `(4) The Office shall promulgate, after consultation with the United States Postal Service, any regulations it deems necessary under this subsection.'; and

      (3) in the analysis by inserting after the item relating to section 8909 the following:

      `8909a. Postal Service Retiree Health Benefits Fund.'.

    (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 request of the Postal Service, be subject to review by the Postal Regulatory Commission. The Commission shall submit a report containing the results of any such review to the Postal Service, the Office of Personnel Management, and the Congress.

      (2) RESPONSE- Upon receiving the report of the Postal Regulatory Commission, the Office of Personnel Management shall reconsider its regulation in light of such report, and shall take such action as it considers appropriate. The Office shall submit a report 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.

    (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 Personnel 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, exceeds (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 section 8906(g)(2) of such title 5.

    (c) REQUIREMENTS-

      (1) IF THRESHOLD IS MET- If the amount calculated under subsection (b)(2) for a fiscal year is greater than or equal to two-thirds of the total savings in such fiscal year, no further action under this section 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 reduce the postal debt under this subparagraph may not exceed a total of $3,000,000,000.

      (3) AGGREGATION ALLOWED- Notwithstanding paragraph (2), 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, 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 Personnel Management shall submit a report containing the results of its calculations under subsection (b) to the Postal Service, the Postal Regulatory Commission, and the Congress.

    (e) WAIVER AUTHORITY- The requirements of subsection (c)(2)(A) may, upon application of the Postal Service, 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 economical management, to maintain and continue the development of postal services of the kind and quality adapted to the needs of the United States.

SEC. 905. EFFECTIVE DATES.

    (a) IN GENERAL- Except as otherwise provided, this title shall take effect on October 1, 2005.

    (b) GOVERNMENT CONTRIBUTIONS- Section 901(a) shall take effect on the first day of the first pay period beginning on or after October 1, 2005.