[Congressional Bills 106th Congress]
[From the U.S. Government Publishing Office]
[H.R. 22 Introduced in House (IH)]







106th CONGRESS
  1st Session
                                 H. R. 22

           To modernize the postal laws of the United States.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                            January 6, 1999

   Mr. McHugh (for himself and Mr. Burton of Indiana) introduced the 
   following bill; which was referred to the Committee on Government 
Reform, and in addition to the Committee on the Judiciary, for a period 
    to be subsequently determined by the Speaker, in each case for 
consideration of such provisions as fall within the jurisdiction of the 
                          committee concerned

_______________________________________________________________________

                                 A BILL


 
           To modernize 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 
Modernization Act of 1999''.
    (b) Table of Contents.--The table of contents for this Act is as 
follows:

Sec. 1. Short title; table of contents.
   TITLE I--REDESIGNATION OF THE BOARD OF GOVERNORS, THE POSTMASTER 
                GENERAL, AND THE POSTAL RATE COMMISSION

Sec. 101. Redesignation of the Board of Governors.
Sec. 102. Redesignation of the Postmaster General.
Sec. 103. Redesignation of the Postal Rate Commission.
Sec. 104. Other references.
  TITLE II--NEW SYSTEM RELATING TO POSTAL RATES, CLASSES, AND SERVICES

                         Subtitle A--In General

Sec. 201. Establishment.
Sec. 202. Amendments to chapter 36.
Sec. 203. Postal Service Competitive Products Fund.
Sec. 204. USPS Corporation.
Sec. 205. Postal and nonpostal products.
                     Subtitle B--Related Provisions

Sec. 211. Authority for Postal Regulatory Commission to issue 
                            subpoenas.
Sec. 212. Qualification requirements for Commissioners and Directors.
Sec. 213. Appropriations for the Commission.
Sec. 214. Change-of-address order involving a commercial mail receiving 
                            agency.
Sec. 215. Rates for mail under former section 4358.
                      TITLE III--GENERAL AUTHORITY

Sec. 301. Rulemaking authority.
Sec. 302. General duties.
Sec. 303. Employment of postal police officers.
Sec. 304. Date of postmark to be treated as date of appeal in 
                            connection with the closing or 
                            consolidation of post offices.
Sec. 305. Unfair competition prohibited.
Sec. 306. International postal arrangements.
Sec. 307. Suits by and against the Postal Service.
     TITLE IV--MISCELLANEOUS PROVISIONS RELATING TO THE BUDGET AND 
                         APPROPRIATIONS PROCESS

Sec. 401. Provisions relating to benefits under chapter 81 of title 5, 
                            United States Code, for officers and 
                            employees of the former Post Office 
                            Department.
Sec. 402. Technical and conforming amendments.
 TITLE V--PROVISIONS RELATING TO TRANSPORTATION, CARRIAGE, OR DELIVERY 
                                OF MAIL

Sec. 501. Obsolete provisions.
Sec. 502. Expanded contracting authority.
Sec. 503. Private carriage of letters.
Sec. 504. Repeal of section 5403.
                           TITLE VI--STUDIES

Sec. 601. Employee-management relations.
Sec. 602. Recommendations on universal postal services.
Sec. 603. Study on equal application of laws to competitive products.
Sec. 604. Greater diversity in Postal Service executive and 
                            administrative schedule management 
                            positions.
Sec. 605. Plan for assisting displaced workers.
Sec. 606. Contracts with women, minorities, and small businesses.
                     TITLE VII--INSPECTORS GENERAL

Sec. 701. Inspector General of the Postal Regulatory Commission.
Sec. 702. Inspector General of the United States Postal Service to be 
                            appointed by the President.
                      TITLE VIII--LAW ENFORCEMENT

         Subtitle A--Amendments to Title 39, United States Code

Sec. 801. Make Federal assault statutes applicable to postal contract 
                            employees.
Sec. 802. Sexually oriented advertising.
Sec. 803. Allow Postal Service to retain asset forfeiture recoveries.
Sec. 804. Hazardous matter.
                      Subtitle B--Other Provisions

Sec. 811. Stalking Federal officers and employees.
Sec. 812. Nonmailability of controlled substances.
Sec. 813. Enhanced penalties.
Sec. 814. Postal burglary provisions.
Sec. 815. Mail, money, or other property of the United States.

   TITLE I--REDESIGNATION OF THE BOARD OF GOVERNORS, THE POSTMASTER 
                GENERAL, AND THE POSTAL RATE COMMISSION

SEC. 101. REDESIGNATION OF THE BOARD OF GOVERNORS.

    (a) Amendments to Title 39, United States Code.--Title 39, United 
States Code, is amended--
            (1) in sections 102, 202, 204, 205, 402, 414, 1005, 3604, 
        3621, 3623, 3624, 3625, 3628, 3641, and 3684, in the analysis 
        for chapter 2 (in the items relating to sections 202 and 205, 
        respectively), and in the analysis for chapter 36 (in the item 
        relating to section 3625) by striking ``Governors'' each place 
        it appears and inserting ``Directors''; and
            (2) in sections 202, 205, and 1002 by striking ``Governor'' 
        each place it appears and inserting ``Director''.
    (b) Amendment to the Federal Salary Act of 1967.--Section 225(f)(E) 
of the Federal Salary Act of 1967 (2 U.S.C. 356(E)) is amended by 
striking ``Governors of the Board of Governors of the United States 
Postal Service'' and inserting ``Directors of the Board of Directors of 
the United States Postal Service''.
    (c) Amendments to Title 5, United States Code.--Title 5, United 
States Code, is amended in sections 8344(e) and 8468(c) by striking 
``Governor of the Board of Governors of the United States Postal 
Service'' and inserting ``Director of the Board of Directors of the 
United States Postal Service''.
    (d) Amendments to the Ethics in Government Act of 1978.--The Ethics 
in Government Act of 1978 (5 U.S.C. App.) is amended--
            (1) in section 101(f)(6) by striking ``Governor of the 
        Board of Governors of the United States Postal Service'' and 
        inserting ``Director of the Board of Directors of the United 
        States Postal Service''; and
            (2) in sections 103(c) and 106(b)(6) by striking 
        ``Governors of the Board of Governors of the United States 
        Postal Service'' and inserting ``Directors of the Board of 
        Directors of the United States Postal Service''.
    (e) Amendments to Title 18, United States Code.--Title 18, United 
States Code, is amended in sections 1735 and 3061 by striking 
``Governors'' each place it appears and inserting ``Directors''.

SEC. 102. REDESIGNATION OF THE POSTMASTER GENERAL.

    (a) Amendments to Title 39, United States Code.--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 ``; and'', and by adding at the end the following:
            ``(5) `Postmaster General' means the Postmaster General and 
        Chief Executive Officer of the United States Postal Service 
        appointed under section 202(a) of this title.''.
    (b) Amendments to the Ethics in Government Act of 1978.--The Ethics 
in Government Act of 1978 (5 U.S.C. App.) is amended in sections 
101(f)(6), 103(c), and 106(b)(6) by striking ``Postmaster General'' and 
inserting ``Postmaster General and Chief Executive Officer of the 
United States Postal Service''.
    (c) Amendments to Title 18, United States Code.--Title 18, United 
States Code, is amended in sections 501, 1703, 1704, and 1709 by 
striking ``Postmaster General'' each place it appears and inserting 
``Postmaster General and Chief Executive Officer of the United States 
Postal Service''.

SEC. 103. REDESIGNATION OF THE POSTAL RATE COMMISSION.

    (a) Amendments to Title 39, United States Code.--Title 39, United 
States Code, is amended in sections 404, 1001, 1002, 2003, 3601, 3602, 
3603, 3604, 3622, 3623, 3624, 3625, 3628, 3641, and 3661, in the 
analysis for chapter 36 (in the item relating to subchapter I), and in 
the heading for subchapter I of chapter 36 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''.

SEC. 104. OTHER REFERENCES.

    (a) Board of Governors, etc.--Whenever 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 Board of Governors of the United States Postal Service 
(or any Governor or Governors thereof), such reference shall be 
considered a reference to the Board of Directors of the United States 
Postal Service (or any Director or Directors thereof, as appropriate).
    (b) Postmaster General.--Whenever 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 Postmaster General, such reference shall be considered a 
reference to the Postmaster General and Chief Executive Officer of the 
United States Postal Service.
    (c) Postal Rate Commission.--Whenever 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.

  TITLE II--NEW SYSTEM RELATING TO POSTAL RATES, CLASSES, AND SERVICES

                         Subtitle A--In General

SEC. 201. ESTABLISHMENT.

    (a) In General.--Title 39, United States Code, is amended by adding 
after chapter 36 the following:

 ``CHAPTER 37--NEW SYSTEM FOR ESTABLISHING POSTAL RATES, CLASSES, AND 
                                SERVICES

                      ``SUBCHAPTER I--DEFINITIONS

``Sec.
``3701. Definitions.
``3702. Free mailing privileges unaffected.
                    ``SUBCHAPTER II--BASELINE RATES

``3721. Determination of baseline rates.
``3722. Provisions relating to reduced-rate categories of mail.
``3723. Automatic termination of any rate case that may be pending.
``SUBCHAPTER III--RATES FOR PRODUCTS IN THE NONCOMPETITIVE CATEGORY OF 
                                  MAIL

``3731. Applicability; definitions.
``3732. Limitations on rates.
``3733. Adjustment factor.
``3734. Action of the Board.
``SUBCHAPTER IV--RATES FOR PRODUCTS IN THE COMPETITIVE CATEGORY OF MAIL

``3741. Applicability; definition.
``3742. Action of the Board.
``3743. Provisions applicable to competitive products individually.
``3744. Provisions applicable to competitive products collectively.
         ``SUBCHAPTER V--MARKET TESTS OF EXPERIMENTAL PRODUCTS

``3751. Market tests of experimental noncompetitive products.
``3752. Market tests of experimental competitive products.
``3753. Large-scale market tests.
``3754. Adjustment for inflation.
``3755. Conversion to permanence.
``3756. Effective date.
     ``SUBCHAPTER VI--PROVISIONS RELATING TO THE INTRODUCTION AND 
                       CATEGORIZATION OF PRODUCTS

``3761. Criteria for the identification of noncompetitive and 
                            competitive products.
``3762. New noncompetitive products.
``3763. New competitive products.
``3764. Transfers of products between categories of mail.
``3765. Transition provisions for new or transferred noncompetitive 
                            products.
    ``SUBCHAPTER VII--REPORTING REQUIREMENTS AND RELATED PROVISIONS

``3771. Annual reports by the Commission.
``3772. Annual reports to the Commission.
``3773. Annual determination of compliance.
``3774. Other reports.

                      ``SUBCHAPTER I--DEFINITIONS

``Sec. 3701. Definitions
    ``For purposes of this chapter:
            ``(1) Product.--The term `product' means a class of mail or 
        type of postal service, including--
                    ``(A) a subclass or other similar subordinate unit 
                thereof; and
                    ``(B) the next level of subordinate units thereof 
                (below the first level of subordinate units, as 
                referred to in subparagraph (A)).
            ``(2) Rate.--The term `rate', as used with respect to any 
        products, includes fees for postal services.
            ``(3) Product in the noncompetitive category of mail.--The 
        term `product in the noncompetitive category of mail' or 
        `noncompetitive product' means a product subject to subchapter 
        III.
            ``(4) Product in the competitive category of mail.--The 
        term `product in the competitive category of mail' or 
        `competitive product' means a product subject to subchapter IV.
            ``(5) Consumer price index.--The term `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.
            ``(6) Year.--The term `year' means a fiscal year.
``Sec. 3702. Free mailing privileges unaffected
    ``Nothing in this chapter shall be considered to affect any free 
mailing privileges accorded under any of sections 3217 or 3403 through 
3406.

                    ``SUBCHAPTER II--BASELINE RATES

``Sec. 3721. Determination of baseline rates
    ``(a) Requirement That a Ratemaking Request Be Made.--The Postal 
Service shall, during the 18-month period beginning on the date of 
enactment of this chapter, submit a request under section 3622 for a 
recommended decision by the Postal Regulatory Commission on rates for 
all products in the noncompetitive category of mail and all products in 
the competitive category of mail.
    ``(b) Policies and Criteria.--The request under subsection (a) 
shall be made in accordance with the same policies and criteria as 
would otherwise apply in the case of a request made under section 3622, 
except that--
            ``(1) in applying section 3621, any determination of total 
        estimated costs of the Postal Service shall be made without 
        including any provision for contingencies; and
            ``(2) to the extent that any class of mail or kind of 
        mailer under section 3626(a) is involved, such request shall be 
        made in conformance with the requirements of section 3722.
    ``(c) Procedures for Consideration.--
            ``(1) In general.--Except as otherwise provided in 
        subsection (b) or any other provision of this subchapter, the 
        request made under subsection (a) shall be considered and acted 
        on in the same way as any other request made under section 
        3622.
            ``(2) Additional authority.--For purposes of the request 
        made under subsection (a), section 3622(b) shall be applied as 
        if it had been amended by inserting after `the policies of this 
        title' the following: `(including the second sentence of 
        section 3621)'.
    ``(d) Effective Date of Any Rates Established Pursuant to 
Request.--All rates established pursuant to the request made under 
subsection (a) shall take effect as of the same date, determined in 
accordance with applicable provisions of chapter 36, but in no event 
later than the last day of the 18-month period beginning on the date on 
which such request is made.
    ``(e) Definition of Baseline Rates.--
            ``(1) In general.--Subject to section 3722(c), for purposes 
        of this title, the baseline rate for each product shall be the 
        rate in effect for such product as of the applicable date under 
        paragraph (2), irrespective of whether--
                    ``(A) any rate change is in fact requested for such 
                product under subsection (a);
                    ``(B) ratemaking proceedings are in fact completed 
                by such date; or
                    ``(C) the rate in effect for such product as of 
                such date is a permanent or temporary one.
            ``(2) Date as of which baseline rates are to be 
        determined.--The applicable date under this paragraph shall 
        be--
                    ``(A) the date as of which any baseline rates, 
                established pursuant to the request made under 
                subsection (a), are to take effect in accordance with 
                subsection (d); or
                    ``(B) if subparagraph (A) does not apply (whether 
                because proceedings under chapter 36 are not completed 
                before the deadline under subsection (d) or otherwise), 
                the last day of the 18-month period referred to in 
                subsection (d).
``Sec. 3722. Provisions relating to reduced-rate categories of mail
    ``(a) Definitions.--For purposes of this section, the terms `costs 
attributable' and `regular-rate category' have the same meanings as are 
given them by section 3626(a).
    ``(b) Requirement.--
            ``(1) In general.--Notwithstanding any other provision of 
        this title (but subject to paragraph (3)), the rate established 
        under this chapter for a product within a reduced-rate category 
        of mail (as referred to in section 3721(b)(2)), including the 
        baseline rate therefor (if applicable), may not exceed--
                    ``(A) in the case of a competitive product, the 
                rate described in paragraph (2); or
                    ``(B) in the case of a noncompetitive product, the 
                lesser of--
                            ``(i) the rate described in paragraph (2); 
                        or
                            ``(ii) the highest rate allowable for such 
                        product under subsection (c) or (d) of section 
                        3732, whichever is less.
            ``(2) Rate described.--The rate described in this paragraph 
        is, with respect to any product, the rate that would then be in 
        effect for such product if established under section 3626(a) in 
        conformance with the requirement that--
                    ``(A) the estimated costs attributable (expressed 
                on a per-unit basis) used in establishing such rate, 
                not exceed
                    ``(B) the estimated costs attributable (similarly 
                expressed) used in establishing the rate that is to be 
                concurrently in effect for the same product within the 
                most closely corresponding regular-rate category.
            ``(3) Noncompetitive product minimum.--Nothing in this 
        subsection shall be considered to waive the limitation set 
        forth in section 3732(b) (relating to the minimum rate required 
        for a noncompetitive product).
    ``(c) Self-Executing Correction Mechanism.--If the baseline rate 
for a product would not otherwise be in compliance with subsection (b), 
such rate shall be reduced by the minimum amount necessary in order to 
achieve compliance.
``Sec. 3723. Automatic termination of any rate case that may be pending
    ``To the extent that any proceedings relating to a request made 
under section 3622 before the date of enactment of this chapter remain 
pending as of such date of enactment, any further action taken in 
connection with such request shall be null and void.

``SUBCHAPTER III--RATES FOR PRODUCTS IN THE NONCOMPETITIVE CATEGORY OF 
                                  MAIL

``Sec. 3731. Applicability; definitions
    ``(a) Applicability.--This subchapter applies with respect to the 
products in the first, second, third, and fourth baskets of products, 
respectively.
    ``(b) Definitions.--For purposes of this subchapter:
            ``(1) First basket of products.--The term `first basket of 
        products' means--
                    ``(A) single-piece first-class letters (both 
                domestic and international);
                    ``(B) single-piece first-class cards (both domestic 
                and international);
                    ``(C) single-piece parcels (both domestic and 
                international); and
                    ``(D) special services.
            ``(2) Second basket of products.--The term `second basket 
        of products' means all first-class mail not in the first basket 
        of products.
            ``(3) Third basket of products.--The term `third basket of 
        products' means periodicals.
            ``(4) Fourth basket of products.--The term `fourth basket 
        of products' means standard mail (except for parcel post).
    ``(c) Rule of Construction.--
            ``(1) In general.--Except as provided in paragraph (2), 
        mail matter referred to in paragraphs (1) through (4) of 
        subsection (b) shall, for purposes of such paragraphs, be 
        considered to have the respective meanings given them under the 
        mail classification schedule (as defined by section 3623) as of 
        the effective date of this chapter.
            ``(2) Updates.--The Postal Regulatory Commission shall, 
        whenever any relevant change occurs (whether pursuant to a 
        product transfer under section 3764, the reclassification of a 
        product under section 3623, or the introduction of a new 
        noncompetitive product under section 3762), prescribe new lists 
        of products within the respective baskets described in 
        subsection (b). The revised lists shall indicate how and when 
        any previous lists (including under subsection (b)) are 
        superseded, and shall be published in the Federal Register.
``Sec. 3732. Limitations on rates
    ``(a) In General.--Except as otherwise provided in this subchapter, 
the rate in effect for a noncompetitive product may not, during any 
year in a ratemaking cycle (as defined in section 3733(a))--
            ``(1) be less than the minimum rate required for such 
        product in such year, as determined under subsection (b);
            ``(2) be greater than the maximum rate allowable for such 
        product in such year, as determined under subsection (c); or
            ``(3) be changed by a percentage that would cause such rate 
        to fall outside of the range allowable for such product in such 
        year, as determined under subsection (d).
Nothing in paragraph (3) shall be considered to authorize the 
establishment of any rate less than the minimum rate required under 
paragraph (1) or greater than the maximum rate allowable under 
paragraph (2).
    ``(b) Minimum Rate Required.--For purposes of this section, the 
minimum rate required for a product in a year is the minimum rate 
which, if kept in effect for such product throughout the year (or, if 
implemented after the start of the year, throughout the remainder of 
the year, but taking into account all revenues from such product that 
are attributable to earlier periods in the same year) will be 
sufficient to ensure that such product will bear the direct and 
indirect postal costs attributable to such product for such year.
    ``(c) Maximum Rate Allowable.--
            ``(1) In general.--For purposes of this section, the 
        maximum rate allowable for a product in a year shall be equal 
        to the rate determined by increasing or decreasing (as 
        applicable)--
                    ``(A) the maximum rate allowable for such product 
                under this subsection in the year preceding the year 
                for which the maximum rate allowable is being 
                determined (disregarding any rounding rules), by
                    ``(B) the percentage adjustment applicable for the 
                year for which the maximum rate allowable is being 
                determined, as determined under paragraph (2).
            ``(2) Percentage adjustment applicable.--For purposes of 
        this section, the percentage adjustment applicable shall, for 
        any year, be equal to--
                    ``(A) the change in the Consumer Price Index for 
                such year, adjusted by
                    ``(B) the adjustment factor for such year.
            ``(3) Definitions.--For purposes of this section:
                    ``(A) Change in the consumer price index.--The 
                change in the Consumer Price Index for a year shall be 
                equal to the percentage (expressed as a positive value, 
                a negative value, or zero, as the case may be) by which 
                the Consumer Price Index for the preceding year differs 
                from the Consumer Price Index for the second preceding 
                year.
                    ``(B) Consumer price index for a year.--The 
                Consumer Price Index for a year is the average of the 
Consumer Price Index for the 12-month period ending on June 30th of 
such year.
                    ``(C) Adjustment factor.--The adjustment factor for 
                any year shall be determined in accordance with section 
                3733.
            ``(4) Special rule.--For purposes of determining the 
        maximum rate allowable for any particular product during the 
        first year of the first ratemaking cycle, paragraph (1)(A) 
        shall be applied by substituting `the baseline rate for such 
        product' for `the maximum rate allowable for such product under 
        this subsection in the year preceding the year for which the 
        maximum rate allowable is being determined (disregarding any 
        rounding rules)'.
            ``(5) Rounding rule.--The maximum rate allowable for a 
        product within the first basket of products shall be equal to 
        the rate determined for such product under this subsection 
        (disregarding this paragraph), rounded to the nearest cent 
        (rounding \1/2\ of a cent to the next higher cent).
    ``(d) Range Allowable.--For purposes of this section, the range 
allowable for a product in any year is the range delimited by--
            ``(1) a maximum rate equal to the rate determined by 
        increasing or decreasing (as applicable)--
                    ``(A) the rate last in effect for such product 
                before the start of such year, by
                    ``(B) the percentage equal to the percentage 
                adjustment applicable with respect to such product for 
                such year, plus 2 percent; and
            ``(2) a minimum rate equal to the rate determined by 
        increasing or decreasing (as applicable)--
                    ``(A) the rate last in effect for such product 
                before the start of such year, by
                    ``(B) the percentage equal to the percentage 
                adjustment applicable with respect to such product for 
                such year, minus 2 percent.
For purposes of applying paragraphs (1)(B) and (2)(B) in any year, the 
Board of Directors may, in a manner consistent with the policies of 
this title and the requirements of this subchapter, establish a single 
percentage which shall be lower than, and which shall be substituted 
for, the percentage adjustment applicable that would otherwise be 
applied under both of those paragraphs in such year. Such single 
percentage shall be the same for every product in the noncompetitive 
category.
``Sec. 3733. Adjustment factor
    ``(a) Definition of Ratemaking Cycle.--
            ``(1) In general.--For purposes of this title, the term 
        `ratemaking cycle' means--
                    ``(A) the 5-year period beginning on the first day 
                of the second year beginning after the date as of which 
                the baseline rates are determined under section 
                3721(e)(2); and
                    ``(B) each 5-year period beginning on the day after 
                the last day of the immediately preceding 5-year period 
                under this subsection.
            ``(2) Earlier commencement date.--The Postal Regulatory 
        Commission may advance the commencement date of the first 
        ratemaking cycle to the date which occurs 1 year earlier than 
        the date that would otherwise apply under subparagraph (1)(A), 
        but only if that earlier date does not precede the date as of 
        which all requirements of this section have been completed with 
        respect to such cycle.
    ``(b) Procedures for Determining Adjustment Factor.--
            ``(1) Commencement of proceedings.--
                    ``(A) In general.--Except as provided in 
                subparagraph (B), the Postal Regulatory Commission 
                shall, beginning in September of the second year before 
                the start of each ratemaking cycle, provide the 
                opportunity for a hearing on the record under sections 
                556 and 557 of title 5 to 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, with respect to the adjustment factor to be 
                established for the upcoming ratemaking cycle.
                    ``(B) Exception.--For purposes of the first hearing 
                under this subsection, proceedings shall be commenced 
                during the second month beginning on or after the date 
                as of which the baseline rates are determined under 
                section 3721(e)(2).
            ``(2) Rules of proceedings.--In order to conduct its 
        proceedings with utmost expedition consistent with procedural 
        fairness to the parties, the Commission may (without 
        limitation) adopt rules which provide for--
                    ``(A) the advance submission of written direct 
                testimony;
                    ``(B) the conduct of prehearing conferences to 
                define issues, and for other purposes to insure orderly 
                and expeditious proceedings;
                    ``(C) discovery both from the Postal Service and 
                the parties to the proceedings;
                    ``(D) limitation of testimony; and
                    ``(E) the conduct of the entire proceedings off the 
                record with the consent of the parties.
            ``(3) Printing and notice requirements.--The Commission's 
        decision and the record of the Commission's hearings shall be 
        made generally available at the time the decision is issued and 
        shall be printed and made available for sale by the Public 
        Printer within 10 days following the day the decision is 
        issued.
            ``(4) Timing.--
                    ``(A) In general.--Except as provided in 
                subparagraph (B), all actions required of the 
                Commission under this section, including those required 
                under paragraph (3), shall be completed by the end of 
                the year preceding the commencement of the ratemaking 
                cycle to which the decision relates.
                    ``(B) Exception.--In any case in which the 
                Commission determines that the Postal Service has 
                unreasonably delayed any proceedings under this section 
                by failing to respond within a reasonable time to any 
                lawful order of the Commission, the Commission may 
                extend the deadline described in subparagraph (A) by 
                one day for each day of such delay.
                    ``(C) Effect of delay on ratemaking authority.--No 
                rate change for any noncompetitive product may take 
                effect during any period of delay. For purposes of the 
                preceding sentence, the term `period of delay' means, 
                in the circumstance described in subparagraph (B), the 
                period beginning on the day following the original 
                deadline (as described in subparagraph (A)) and ending 
                on the date of the new deadline (as determined under 
                subparagraph (B)).
    ``(c) Requirements Relating to the Establishment of Adjustment 
Factor.--
            ``(1) In general.--An adjustment factor shall be 
        established in accordance with--
                    ``(A) the policies of this title; and
                    ``(B) the best evidence of likely Postal Service 
                productivity, and of specific sources of cost savings 
                to the Postal Service, during the ratemaking cycle to 
                which an adjustment factor is to apply.
            ``(2) Requirement that adjustment factor be a negative 
        value or zero.--
                    ``(A) In general.--Except as provided in 
                subparagraph (B), an adjustment factor may be no 
                greater than zero.
                    ``(B) Exceptions.--A positive adjustment factor may 
                be established only upon a written determination by the 
                Postal Regulatory Commission that an exception to 
                subparagraph (A) is necessary--
                            ``(i) because of any new and significant 
                        statutorily imposed funding obligations not 
                        fully funded through appropriations; or
                            ``(ii) because postal revenues during the 
                        upcoming ratemaking cycle would otherwise be 
                        insufficient 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.
                A determination under clause (ii) shall take into 
                account costs anticipated by the Postal Service for the 
                period of time involved, such as wages, benefits, and 
                transportation costs, consistent with the provisions of 
                subsection (g).
    ``(d) Same Adjustment Factor To Be Uniformly Applied to All 
Products.--For purposes of each year in a ratemaking cycle, the same 
adjustment factor shall apply--
            ``(1) to all baskets under section 3731; and
            ``(2) to all products within each such basket.
    ``(e) How an Adjustment Factor Is To Be Expressed and Applied.--
            ``(1) How an adjustment factor is to be expressed.--An 
        adjustment factor established under this section shall be 
        expressed as a percentage.
            ``(2) How an adjustment factor is to be applied.--To adjust 
        a change in the Consumer Price Index by an adjustment factor, 
        the magnitude of the adjustment factor shall--
                    ``(A) if the adjustment factor is a positive value, 
                be added to the change in the Consumer Price Index; or
                    ``(B) if the adjustment factor is a negative value, 
                be subtracted from the change in the Consumer Price 
                Index.
    ``(f) Exigent Circumstances.--
            ``(1) In general.--Notwithstanding subsection (d), upon a 
        majority vote of the members of the Board of Directors then 
holding office, the Postal Service may request the Postal Regulatory 
Commission to render a decision on changing the adjustment factor to be 
applied during the then current ratemaking cycle (after having 
previously been established under this section for such cycle).
            ``(2) Conditions.--A request made under paragraph (1) may 
        be granted only upon a written determination by the Commission 
        that the change requested is justified by one or more of the 
        same reasons as would justify the establishment of a positive 
        adjustment factor (as set forth in subsection (c)(2)(B)).
            ``(3) Effect; duration.--A change granted under this 
        subsection--
                    ``(A) shall supersede the adjustment factor that 
                would otherwise apply under this section (with 
                appropriate changes to the respective limitations under 
                paragraphs (2) and (3) of section 3732(a)); and
                    ``(B) shall remain in effect for the rest of the 
                ratemaking cycle involved, subject to paragraph (5).
            ``(4) Expedited consideration.--A request made under 
        paragraph (1) shall be acted on under this section in the same 
        manner as if initiated under subsection (b)(1), except that a 
        decision on any such request shall be rendered not later than 6 
        months after the date on which the request is made.
            ``(5) Frequency.--Nothing in this section shall be 
        considered to limit the number of times this subsection may be 
        invoked during a ratemaking cycle.
    ``(g) Postal Regulatory Commission Not To Interfere With Collective 
Bargaining.--It is the sense of the Congress that nothing in this 
section should restrict, expand, or otherwise affect any of the rights, 
privileges, or benefits of either employees of the United States Postal 
Service, or labor organizations representing employees of the United 
States Postal Service, under chapter 12 of this title, the National 
Labor Relations Act, any handbook or manual affecting employee labor 
relations within the United States Postal Service, or any collective 
bargaining agreement.
``Sec. 3734. Action of the Board
    ``(a) Authority To Establish Rates.--The Board of Directors, with 
the written concurrence of a majority of all of the members of the 
Board then holding office, shall establish rates for products in the 
noncompetitive category of mail in accordance with the requirements of 
this subchapter and the policies of this title.
    ``(b) Procedures.--
            ``(1) In general.--Rates shall be established in writing, 
        complete with a statement of explanation and justification.
            ``(2) Publication.--The Board shall cause each such 
        decision (complete with the accompanying statement) and the 
        record of the Board's proceedings to be published in the 
        Federal Register at least 45 days before the rate or rates to 
        which they pertain are to take effect.
    ``(c) Limitations on Authority.--
            ``(1) In general.--Except as provided in paragraph (2)--
                    ``(A) Frequency.--Ratemaking authority under this 
                section may not be exercised more than once for 
                purposes of any year.
                    ``(B) Uniform effective date.--All changes in rates 
                pursuant to this section in a year shall take effect on 
                the same date.
            ``(2) Exception for change due to exigent circumstances.--
                    ``(A) In general.--If the maximum rate allowable 
                for a product in a year changes pursuant to a request 
                granted under section 3733(f), then, in the event that 
                ratemaking authority under this section was previously 
                exercised with respect to such product for such year, 
                such rate may be modified, not more than once more in 
                such year, based on the change in the maximum rate 
                allowable (and the corresponding change in the range 
                allowable).
                    ``(B) Uniform effective date.--All changes in rates 
                pursuant to this paragraph shall, to the extent based 
                on the same set of changes (as referred to in 
                subparagraph (A)), take effect beginning on the same 
                date.

``SUBCHAPTER IV--RATES FOR PRODUCTS IN THE COMPETITIVE CATEGORY OF MAIL

``Sec. 3741. Applicability; definition
    ``(a) Applicability.--This subchapter applies with respect to--
            ``(1) priority mail;
            ``(2) expedited mail;
            ``(3) mailgrams;
            ``(4) international mail; and
            ``(5) parcel post;
except that this subchapter does not apply with respect to any product 
then currently in the noncompetitive category of mail.
    ``(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.--
            ``(1) In general.--Except as provided in paragraph (2), 
        mail matter referred to in paragraphs (1) through (5) of 
        subsection (a) shall, for purposes of such paragraphs, be 
        considered to have the respective meanings given them under the 
        mail classification schedule (as defined by section 3623) as of 
        the effective date of this chapter.
            ``(2) Updates.--The Postal Regulatory Commission shall, 
        whenever any relevant change occurs (whether pursuant to a 
        product transfer under section 3764 or an action taken under 
        section 3763), prescribe new lists of the products to which 
        this subchapter applies. The revised lists shall indicate how 
        and when any previous lists (including under subsection (a)) 
        are superseded, and shall be published in the Federal Register.
``Sec. 3742. Action of the Board
    ``(a) Authority To Establish Rates.--The Board of Directors, with 
the written concurrence of a majority of all of the members of the 
Board then holding office, shall establish rates for products in the 
competitive category of mail in accordance with the requirements of 
this subchapter and the policies of this title.
    ``(b) Procedures.--Section 3734(b) shall apply with respect to 
rates and decisions under this section, except that for purposes of 
this section, section 3734(b) shall be applied by substituting `by such 
date before the effective date of any new rates as the Board considers 
appropriate' for `at least 45 days before the rate or rates to which 
they pertain are to take effect'.
    ``(c) Effective Date.--
            ``(1) In general.--Except as provided in paragraph (2), the 
        ratemaking provisions of this subchapter shall be effective 
        beginning with the rates to be established for the first year 
        beginning on or after the date as of which the baseline rates 
        are determined under section 3721(e)(2).
            ``(2) Exception.--The ratemaking provisions of this 
        subchapter shall, with respect to all international mail as to 
        which this subchapter applies, be effective beginning on the 
        date as of which the baseline rates are determined under 
        section 3721(e)(2), subject (until the entirety of this 
        subchapter becomes effective in accordance with paragraph (1)) 
        only to the requirement under section 3743(a).
``Sec. 3743. Provisions applicable to competitive products individually
    ``(a) In General.--Rates for products in the competitive category 
of mail shall be established in a manner such that each such product 
shall bear the costs attributable to such product in such year.
    ``(b) Treatment of Shortfalls.--If revenues derived from a 
competitive product in any year are not sufficient to meet the costs 
attributable to such product for such year, the shortfall shall be made 
up in accordance with section 3744(c)(1).
    ``(c) Mandatory Discontinuance of Loss-Making Products.--
            ``(1) In general.--If a competitive product persistently 
        fails to cover the costs attributable to such product, the 
        Postal Regulatory Commission may, in accordance with procedures 
        which the Commission shall prescribe and after considering all 
        relevant circumstances, order the Postal Service to discontinue 
        such product permanently.
            ``(2) Procedures.--The procedures prescribed to carry out 
        this subsection--
                    ``(A) shall provide the opportunity for a hearing 
                on the record under sections 556 and 557 of title 5 to 
                the Postal Service, users of the mail, and an officer 
                of the Commission who shall be required to represent 
                the interests of the general public;
                    ``(B) may include rules of proceedings that provide 
                for any procedure or other matter listed under section 
                3733(b)(2); and
                    ``(C) shall require that any final decision be 
                accompanied by a statement setting forth the reasons 
                therefor.
``Sec. 3744. Provisions applicable to competitive products collectively
    ``(a) Cost-Coverage Requirement.--
            ``(1) In general.--Rates for competitive products shall be 
        established in a manner such that the cost-coverage ratio for 
        all competitive products (collectively) shall, for each year to 
        which this subchapter applies (as referred to in section 
        3742(c)), be at least equal to the cost-coverage ratio for such 
        year for all competitive and noncompetitive products 
        (collectively).
            ``(2) Cost-coverage ratio.--For purposes of this section, 
        the term `cost-coverage ratio' means, for the products and year 
        involved, the ratio that--
                    ``(A) total revenues from those products in such 
                year, bears to
                    ``(B) total costs attributable to those products in 
                such year.
    ``(b) Adjustment for Special Circumstances.--The Postal Regulatory 
Commission may, by rule, and in order to ensure that ratios under this 
section appropriately compensate for any significant and objective 
differences in the nature and composition of costs attributable to 
competitive and noncompetitive products, respectively, provide for the 
exclusion of such costs attributable as the Commission considers to be 
uniquely or disproportionately associated with either category of 
products.
    ``(c) Special Rules To Make Up for Certain Shortfalls.--
            ``(1) Subtraction to make up for any shortfall described in 
        section 3743(b).--In any year in which a shortfall described in 
        section 3743(b) occurs in the case of any competitive product, 
        an amount equal to the amount of such shortfall shall, for 
        purposes of determining whether the requirement under 
        subsection (a) has been satisfied in such year, be subtracted 
        from total revenues derived from all competitive products 
        (collectively) in such year. Nothing in the preceding sentence 
        shall be considered to permit or require that the same amount 
        be concurrently subtracted from total revenues derived from 
        competitive and noncompetitive products (collectively).
            ``(2) Subtraction to make up for any shortfall in 
        contributions toward institutional costs in a previous year.--
        If, in any year, the requirement under subsection (a) is not 
        met (determined applying the provisions of subsection (b), 
        paragraph (1), and this paragraph based on any failure to 
        satisfy subsection (a) in the previous year), the difference 
        between the total revenues considered to have been derived from 
        competitive products in the year involved (determined applying 
        such provisions), and the minimum amount of total revenues from 
        competitive products which would have been required in order to 
        satisfy subsection (a) (determined applying such provisions), 
        shall, for purposes of determining whether the requirement 
        under subsection (a) is met in the following year, be 
        subtracted from total revenues derived from competitive 
        products (collectively) in such following year. Nothing in the 
        preceding sentence shall be considered to permit or require 
        that the same amount be concurrently subtracted from total 
        revenues derived from competitive and noncompetitive products 
        (collectively).
    ``(d) Phasein Authority.--If necessary in order to afford the 
Postal Service an opportunity to increase efficiency to competitive 
market levels, the Postal Regulatory Commission may, by written 
determination made as part of its first adjustment factor case under 
section 3733, provide for the phasein of subsection (a) over the course 
of the first ratemaking cycle. If the Commission grants relief under 
this subsection, it shall review the continuing need for and the extent 
of such relief annually.

         ``SUBCHAPTER V--MARKET TESTS OF EXPERIMENTAL PRODUCTS

``Sec. 3751. Market tests of experimental noncompetitive products
    ``(a) Authority.--
            ``(1) In general.--The Postal Service may conduct market 
        tests of experimental noncompetitive 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 section 3623 (relating to mail classification), section 3732 
        (relating to limitations on rates), or section 3762 (relating 
        to new noncompetitive products).
    ``(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 mail users, significantly different from 
        all products offered by the Postal Service within the 2-year 
        period preceding the start of the test.
            ``(2) Dollar-amount limitation.--The total revenues that 
        are anticipated, or in fact received, by the Postal Service 
        from such product do not exceed $10,000,000 in any year, 
        subject to section 3754.
            ``(3) Market disruption.--The introduction or continued 
        offering of the product will not cause unreasonable market 
        disruption (either for competitive or noncompetitive products).
            ``(4) Correct categorization.--The testing of the product 
        under this section is consistent with the criteria under 
        section 3761(b)(2).
    ``(c) Notice.--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 
setting out the basis for the Postal Service's determination that the 
market test is covered by this section and describing the nature and 
scope of the market test.
    ``(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) 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 
conditions set forth in subsection (b), it may issue any order that 
would be allowable under section 3662(c)(6). A determination under this 
subsection shall be made in accordance with such procedures as the 
Commission shall by regulation prescribe.
``Sec. 3752. Market tests of experimental competitive products
    ``(a) Authority.--
            ``(1) In general.--The Postal Service may conduct market 
        tests of experimental competitive products in accordance with 
        this section.
            ``(2) Provisions waived.--Any noncompliance with section 
        3743(a) (relating to costs-attributable requirement) on the 
        part of a product shall not, if it occurs while such product is 
        being tested under this section, be taken into account for 
        purposes of any sanction or other action that might otherwise 
        be permitted or required under any of the following:
                    ``(A) Section 3662(c)(3) (relating to ordering the 
                adjustment of rates to lawful levels pursuant to a rate 
                complaint).
                    ``(B) Section 3743(c) (relating to mandatory 
                discontinuance of loss-making products).
                    ``(C) Section 3773(e) (relating to use of profits).
            ``(3) Provisions not waived.--Nothing in this section shall 
        be considered to permit or require the exclusion of any costs 
        or revenues that are attributable to a product that is being 
        tested under this section from any determination under section 
        3744 (relating to provisions applicable to competitive products 
        collectively).
    ``(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 mail users, significantly different from 
        all products offered by the Postal Service within the 2-year 
        period preceding the start of the test.
            ``(2) Dollar-amount limitation.--The total revenues that 
        are anticipated, or in fact received, by the Postal Service 
        from such product do not exceed $10,000,000 in any year, 
        subject to section 3754.
            ``(3) Market disruption.--The introduction or continued 
        offering of the product will not cause unreasonable market 
        disruption (either for competitive or noncompetitive products).
            ``(4) Correct categorization.--The testing of the product 
        under this section is consistent with the criteria under 
        section 3761(b)(2).
    ``(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 setting out the basis for the Postal 
        Service's determination that the market test is covered by this 
        section and describing the nature and scope of the market test.
            ``(2) Safeguards.--The provisions of section 3604(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 
        3604(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 
        3604(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) 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 
conditions set forth in subsection (b), it may issue any order that 
would be allowable under section 3662(c)(6). A determination under this 
subsection shall be made in accordance with such procedures as the 
Commission shall by regulation prescribe.
``Sec. 3753. Large-scale market tests
    ``(a) Authority.--The Postal Service may, in accordance with this 
section, conduct--
            ``(1) market tests involving any experimental 
        noncompetitive product that would be allowable under section 
        3751 but for subsection (b)(2) thereof; and
            ``(2) market tests involving any experimental competitive 
        product that would be allowable under section 3752 but for 
        subsection (b)(2) thereof.
    ``(b) Condition.--Notwithstanding any other provision of this 
section, a product may not be tested under this section unless the 
total revenues that are anticipated, or in fact received, by the Postal 
Service from such product do not exceed $100,000,000 in any year, 
subject to section 3754.
    ``(c) Provisions Waived.--Section 3751(a)(2) shall apply with 
respect to an experimental noncompetitive product being tested under 
this section, and section 3752(a)(2) shall apply with respect to an 
experimental competitive product being tested under this section, as if 
such test were instead being conducted section 3751 or 3752, as the 
case may be.
    ``(d) Regulations.--The Postal Regulatory Commission shall by 
regulation establish rules for the conduct of market tests under this 
section, including rules for the termination of any such test. In 
adopting rules under this subsection, the Commission shall consider 
such matters as--
            ``(1) the Postal Service's interest in the development and 
        testing of new products with a minimum of regulatory 
        impediments; and
            ``(2) the public interest in preventing unfair or 
        disruptive competition.
    ``(e) 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.
``Sec. 3754. Adjustment for inflation
    ``In the case of a year following the first year in which any 
testing under this subchapter is permitted, the dollar amount contained 
in sections 3751(b)(2), 3752(b)(2), and 3753(b), respectively, shall be 
adjusted at the same time and by the same percentage adjustment as the 
maximum rates allowable for noncompetitive products are adjusted 
pursuant to 3732(c) (but deeming the adjustment factor under paragraph 
(2)(B) thereof to be zero for purposes of this section).
``Sec. 3755. Conversion to permanence
    ``A request to have an experimental product under this chapter 
converted to a permanent one--
            ``(1) shall be made and acted on in conformance with 
        applicable provisions of subchapter VI; and
            ``(2) shall be made by the Postal Service.
``Sec. 3756. Effective date
    ``Market tests under this subchapter may be conducted in any year 
beginning with the first year beginning on or after the date as of 
which the baseline rates are determined under section 3721(e)(2).

     ``SUBCHAPTER VI--PROVISIONS RELATING TO THE INTRODUCTION AND 
                       CATEGORIZATION OF PRODUCTS

``Sec. 3761. Criteria for the identification of noncompetitive and 
              competitive products
    ``(a) In General.--Except as provided in subchapter V, no product 
may be offered until such product has been assigned to the 
noncompetitive or competitive category of mail, whichever is 
appropriate (and, if a noncompetitive product, its proper basket).
    ``(b) Criteria.--
            ``(1) In general.--Determinations as to the category of 
        mail to which any particular product should be assigned 
        (whether in connection with a new product under section 3762 or 
        3763, the proposed transfer of a product under section 3764, or 
        the proposed reclassification of an existing product under 
        subchapter II of chapter 36) shall be made in conformance with 
        paragraph (2).
            ``(2) Characteristics by category.--The noncompetitive 
        category of products shall embrace all products 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 or raise prices significantly without risk of 
        losing business to other firms offering similar products, or 
        that it can effectively set the price below competitive costs 
        to forestall entry by new competitors or to eliminate existing 
        competitors. The competitive category of products shall embrace 
        all other products.
    ``(c) Initial and Updated Lists.--The respective products which, as 
of any particular date, are within the noncompetitive or competitive 
category of mail (and any particular basket, if applicable) shall be as 
identified under sections 3731 and 3741.
``Sec. 3762. New noncompetitive products
    ``(a) Request.--The Postal Service--
            ``(1) may from time to time request that the Postal 
        Regulatory Commission submit a recommended decision on the 
        classification for a new noncompetitive product; and
            ``(2) shall, as part of any request made under paragraph 
        (1) (other than in the case of a transferred product), also 
        request a recommended decision on the baseline rate for such 
        product for purposes of section 3765.
    ``(b) Hearings.--In response to any request made by the Postal 
Service under this section, the Postal Regulatory Commission shall 
promptly initiate a proceeding in accordance with the procedures set 
out in section 3624.
    ``(c) Factors and Recommended Decision.--The Postal Regulatory 
Commission shall make a recommended decision on (1) the baseline rate 
for the new product based on the factors set out in section 3622(b), 
and (2) the classification for the new product based on the factors and 
requirements under section 3623(b). Such recommended decision shall be 
submitted to the Directors for action in accordance with section 3625, 
and subject to review in accordance with section 3628(a).
``Sec. 3763. New competitive products
    ``(a) Authority.--The Postal Service may, in accordance with this 
section, offer a new competitive product and, with respect to 
competitive products only, otherwise make changes in the mail 
classification schedule.
    ``(b) Conditions.--An action under this section may not be taken 
unless it satisfies each of the following:
            ``(1) Criteria.--To the extent that the classification of a 
        product is involved, the action would be consistent with the 
        criteria under section 3761(b)(2).
            ``(2) Costs attributable.--To the extent that the 
        establishment of a rate for a competitive product is involved, 
        the requirement under section 3743(a) would be met.
    ``(c) Notice.--
            ``(1) In general.--At least 30 days before it offers a new 
        competitive product or otherwise makes any change in the mail 
        classification schedule under this section, the Postal Service 
        shall file with the Postal Regulatory Commission and publish in 
        the Federal Register a notice setting out the basis for the 
        Postal Service's determination that the product satisfies each 
        of the conditions under subsection (b).
            ``(2) Safeguards.--The provisions of section 3604(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 
        3604(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 
        3604(g)(3)).
    ``(d) Cancellation.--If the Postal Regulatory Commission determines 
that an action proposed to be taken under this section fails to meet 
either of the conditions set forth in subsection (b), the Commission 
shall, before the proposed action is scheduled to be taken or to 
commence (as applicable), order that the proposed action be canceled. A 
determination under this subsection shall be made in accordance with 
such procedures as the Commission shall by regulation prescribe.
``Sec. 3764. Transfers of products between 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, after proceedings conducted in conformity with subsection (d), 
transfer 1 or more products--
            ``(1) from the noncompetitive category of mail to the 
        competitive category of mail; or
            ``(2) from the competitive category of mail to the 
        noncompetitive category of mail.
    ``(b) Criteria.--
            ``(1) In general.--A decision under this section shall be 
        made in accordance with the policies of this title and the 
        criteria set forth in section 3761(b)(2).
            ``(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 noncompetitive 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, under section 1696 of 
        title 18, is reserved to the United States, subject to the same 
        exception as set forth in the last sentence of section 
        409(d)(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; and
                    ``(B) the views of those who use the product 
                involved on the appropriateness of the proposed action.
    ``(c) Transfers of Subclasses and Other Subordinate or Further 
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 or further subordinate units of the 
class of mail or type of postal service involved.
    ``(d) Requirements.--Proceedings required to be conducted in 
accordance with this subsection--
            ``(1) shall provide the opportunity for a hearing on the 
        record under sections 556 and 557 of title 5 to the Postal 
        Service, users of the mail, and an officer of the Postal 
        Regulatory Commission who shall be required to represent the 
        interests of the general public;
            ``(2) may include rules of proceedings that provide for any 
        procedure or other matter listed under section 3733(b)(2); and
            ``(3) shall require that any final decision be accompanied 
        by a statement setting forth the reasons therefor.
Paragraph (3) of section 3733(b) (relating to printing and notice 
requirements) shall apply with respect to each Commission decision and 
related record of Commission hearings under this section.
``Sec. 3765. Transition provisions for new or transferred 
              noncompetitive products
    ``(a) In General.--In the case of a product that becomes assigned 
to the noncompetitive category of mail under section 3762 or that is 
transferred from the competitive to the noncompetitive category of mail 
under section 3764--
            ``(1) the maximum rate initially allowable for such product 
        after that assignment or transfer shall be determined in 
        accordance with subsection (b); and
            ``(2) the initial range allowable for such product after 
        that assignment or transfer shall be determined in accordance 
        with subsection (c).
    ``(b) Maximum Rate Initially Allowable.--The maximum rate allowable 
during the first year in which a product subject to this subsection is 
offered shall be determined in a manner similar to the special rule 
under section 3732(c)(4), subject to the following:
            ``(1) Transferred products.--In the case of any product 
        that becomes a noncompetitive product pursuant to a transfer 
        under section 3764, the rate last in effect for such product 
        (before the effective date of its transfer) shall be treated as 
        its `baseline rate'.
            ``(2) Other products.--In the case of any product assigned 
        to the noncompetitive category of mail pursuant to section 
        3762, the `baseline rate' for such product shall be determined 
        under subchapter II of chapter 36 pursuant to the request made 
under section 3762(a)(2) with respect thereto.
    (c) Range Initially Allowable.--The range allowable during the 
first year in which a product subject to this subsection is offered 
shall be determined in accordance with section 3732(d), deeming the 
rate determined for such product under subsection (b) of this section 
to be the rate specified by paragraphs (1)(A) and (2)(A) of section 
3732(d).

    ``SUBCHAPTER VII--REPORTING REQUIREMENTS AND RELATED PROVISIONS

``Sec. 3771. Annual reports by the Commission
    ``(a) In General.--The Postal Regulatory Commission shall render an 
annual report to the President and the Congress concerning the 
operations of the Commission under this title.
    ``(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. 3772. Annual reports to the Commission
    ``(a) Costs, Revenues, and Rates.--
            ``(1) In general.--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)) analyzing 
        costs, revenues, and rates in sufficient detail to demonstrate 
        that the rates in effect for all products during such year 
        (including, for purposes of section 3744, rates for all 
        competitive products collectively) complied with all applicable 
        requirements of this title.
            ``(2) Auditing requirement.--Before submitting a report 
        (and any annex thereto) under paragraph (1), the Postal Service 
        shall have the information contained in such report (and annex) 
        audited by the Inspector General. The results of any such audit 
        shall be submitted along with the report to which it pertains.
    ``(b) Quality of Services.--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)) which shall, for each noncompetitive 
product provided in such year, provide--
            ``(1) market information, including mail volumes; and
            ``(2) measures of the speed and reliability of postal 
        service, including--
                    ``(A) the service standard applicable to such 
                product;
                    ``(B) the actual level of service (described in 
                terms of speed of delivery and reliability) provided; 
                and
                    ``(C) the degree of customer satisfaction with the 
                service provided.
    ``(c) Market Tests.--In carrying out subsections (a) and (b) with 
respect to experimental products offered through market tests under 
subchapter V in a year--
            ``(1) the Postal Service may, to the extent that a test 
        under section 3751 or 3752 is involved, report summary data on 
        the costs, revenues, and quality of service by market test; and
            ``(2) the Postal Service shall, to the extent that a test 
        under section 3753 is involved, 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 
                postal 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 3604(g) in the same way as if the Commission had 
        received notification with respect to such matter under section 
        3604(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. 3773. Annual determination of compliance
    ``(a) Profits Defined.--For purposes of this section, the term 
`profits', with respect to a year, means the amount by which--
            ``(1) total revenues of the Postal Service attributable to 
        such year, exceeds
            ``(2) total costs of the Postal Service (including 
        institutional costs) attributable to such year,
as determined based on the report under section 3772(a) for such year.
    ``(b) Opportunity for Public Comment.--After receiving the reports 
required under section 3772 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.
    ``(c) Determination of Compliance.--Not later than 90 days after 
receiving the submissions required under section 3772 with respect to a 
year, the Postal Regulatory Commission shall make a written 
determination as to whether--
            ``(1) any rates or fees in effect during such year (for 
        products individually or collectively) were not in compliance 
        with applicable provisions of this title;
            ``(2) any performance goals established under section 2803 
        or 2804 for such year were not met; and
            ``(3) any noncompetitive product failed to meet any service 
        standard during such year.
    ``(d) If No Noncompliance Is Found.--If, for a year, no instance of 
noncompliance is determined under subsection (c) (or no determination 
under subsection (c) is timely made), then, up to 100 percent of the 
profits attributable to such year (if any) may be used by the Postal 
Service for the purposes described in subsection (f).
    ``(e) If Any Noncompliance Is Found.--If, for a year, a timely 
determination of noncompliance is made under subsection (c)--
            ``(1)(A) the Postal Regulatory Commission may order, based 
        on the nature, circumstances, extent, and seriousness of the 
        noncompliance, that a specific percentage (not to exceed 50 
        percent) of the profits attributable to such year (if any) be 
        set aside for the purposes described in subsection (g); and
            ``(B) the remainder (or any portion) of those profits may 
        be used by the Postal Service for the purposes described in 
        subsection (f); and
            ``(2) the Commission may, in the case of any violation as 
        to which a remedy could be ordered by the Commission under 
        section 3662(c), order any such remedy under this section.
    ``(f) Bonuses.--
            ``(1) In general.--The Postal Service shall establish a 
        program under which cash bonuses may be paid to officers and 
        employees of the Postal Service out of any profits which are 
        available for that purpose.
            ``(2) Requirements.--Under the program--
                    ``(A) bonuses may be paid to officers and employees 
                of the Postal Service under criteria which shall be 
                fair and equitable;
                    ``(B) the sole source of funding shall be any 
                profits from any year, subject to the application of 
                subsection (e)(1) with respect to such year; and
                    ``(C) bonuses shall not be precluded (in whole or 
                in part) by the limitation on compensation under the 
                last sentence of section 1003(a) in a year, if--
                            ``(i) total profits attributable to the 
                        preceding year, exceed
                            ``(ii) the amount equal to 1 percent of 
                        total revenues of the Postal Service 
                        attributable to such preceding year.
            ``(3) Discretionary nature of program.--Nothing in this 
        section shall be considered to create any entitlement to 
        receive bonuses or to require that any portion of the profits 
        from any year be used for bonuses in excess of whatever amount 
        the Postal Service, in its sole discretion, considers 
        appropriate.
            ``(4) Considerations relating to the portion of profits to 
        be available for bonuses.--In any decision relating to what 
        portion of the available profits from any year shall be made 
        available or used for bonuses under this subsection, there 
        shall be taken into consideration--
                    ``(A) the obligation on the part of the Postal 
                Service to provide efficient and economical postal 
                services in accordance with this title; and
                    ``(B) the question of what portion of those profits 
                (if any) should be used--
                            ``(i) to retire debts or other obligations 
                        of the Postal Service;
                            ``(ii) to limit future increases in postal 
                        rates or fees for products in the 
                        noncompetitive category of mail; or
                            ``(iii) to carry out any other purpose.
    ``(g) Dedication of Funds Toward Reducing Rates and Fees.--
            ``(1) In general.--Any amounts ordered to be set aside 
        under subsection (e)(1)(A) may not be used for any purpose 
        other than to defray increases in future rates and fees for 
        products in the noncompetitive category of mail or to reduce 
        the rates and fees already in effect for such products.
            ``(2) Compliance.--Whenever an order under paragraph (1)(A) 
        or (2) of subsection (e) is issued, the Postal Service shall 
        include in its next comprehensive statement under section 
        2401(e) (and each subsequent statement thereunder until such 
        order has been fully complied with) a statement as to--
                    ``(A) what measures have been or will be 
                implemented in order to comply with the order, 
                including the schedule in accordance with which any 
                amounts set aside pursuant to an order issued under 
                subsection (e)(1)(A) shall be used or made available 
                for the purposes described in paragraph (1); and
                    ``(B) if (or to the extent that) an order under 
                subsection (e)(1)(A) is involved--
                            ``(i) the amount of savings actually passed 
                        on to mailers during the reporting period 
                        (whether through reduced rates and fees or 
                        otherwise), as compared to the amount of 
                        savings scheduled to have been passed on to 
                        mailers during such period; and
                            ``(ii) to the extent that the amount of 
                        savings actually passed on to mailers is less 
                        than the amount scheduled to have been passed 
                        on to mailers during a reporting period, what 
                        measures (if any) have been or will be 
                        implemented to reconcile the difference.
            ``(3) Nonredundant information.--Nothing in paragraph (2) 
        shall be considered to require that the same information be 
        reported if included in a previous report under this 
        subsection.
    ``(h) Reporting Requirement Relating to Bonuses.--Included in its 
comprehensive statement under section 2401(e) for any period shall be--
            ``(1) the name of each person receiving a bonus during such 
        period which would not have been allowable but for the 
        provisions of subsection (f)(2)(C);
            ``(2) the amount of the bonus; and
            ``(3) the amount by which the limitation referred to in 
        subsection (f)(2)(C) was exceeded as a result of such bonus.
``Sec. 3774. Other reports
    ``The Postal Regulatory Commission shall, at least every 6 years, 
render a report to the President and the Congress concerning--
            ``(1) the operation of the system consisting of chapter 36 
        and this chapter; and
            ``(2) recommendations for any legislation or other measures 
        necessary to improve the effectiveness or efficiency of that 
        system.''.
    (b) Clerical Amendment.--The table of chapters for part IV of title 
39, United States Code, is amended by adding at the end the following:

``37. New System for Establishing Postal Rates, Classes, and    3701''.
                            Services.

SEC. 202. AMENDMENTS TO CHAPTER 36.

    (a) Authority To Fix Rates and Classes.--Section 3621 of title 39, 
United States Code, is amended--
            (1) in the first sentence by striking ``this chapter'' and 
        inserting ``this chapter and chapter 37''; and
            (2) by repealing the last 2 sentences.
    (b) Rates and Fees.--
            (1) In general.--The first sentence of section 3622(a) of 
        title 39, United States Code, is amended to read as follows: 
        ``Whenever necessary in order to provide for the establishment 
        of any baseline rate needed for purposes of section 3762(a) 
        (relating to certain new noncompetitive products), the Postal 
        Service shall request the Postal Regulatory Commission to 
        submit a recommended decision on changes in a rate or rates of 
        postage or in a fee or fees for postal services in accordance 
        with the policies of this title and applicable provisions of 
        chapter 37.''.
            (2) Conforming amendments.--Such section 3622(a) is further 
        amended--
                    (A) by striking ``(a)'' and inserting ``(a)(1)''; 
                and
                    (B) by adding at the end the following:
    ``(2) A request under this subsection may not be submitted except 
in the circumstance described in paragraph (1).''.
    (c) Mail Classification.--
            (1) Repeal.--Section 3623 of title 39, United States Code, 
        is amended by striking subsection (a) and by redesignating 
        subsections (b) through (d) as subsections (a) through (c), 
        respectively.
            (2) Modified authority.--Subsection (a) of section 3623 of 
        title 39, United States Code, as so redesignated by paragraph 
        (1), is amended to read as follows:
    ``(a) The Postal Service may from time to time request that the 
Postal Regulatory Commission submit, or the Commission may submit to 
the Directors on its own initiative, a recommended decision on changes 
in the mail classification schedule for noncompetitive products (within 
the meaning of subchapter III of chapter 37).''.
    (d) Recommended Decisions of Commission.--Subsection (c) of section 
3624 of title 39, United States Code, is amended--
            (1) in paragraph (1) by striking ``a request under section 
        3622 of this title for a recommended decision by the Commission 
        on changes in a rate or rates of postage or in a fee or fees 
        for postal services'' and inserting ``a request under section 
        3623 for a recommended decision by the Commission on changes in 
        the mail classification schedule or a request under section 
        3762 for a recommended decision by the Commission on the 
        baseline rate and classification for a new noncompetitive 
        product,''; and
            (2) in paragraph (2) by striking ``3622'' and inserting 
        ``3623 or 3762 (as applicable)''.
    (e) Appellate Review.--
            (1) Appealability of adjustment factor and product transfer 
        decisions.--The first sentence of section 3628 of title 39, 
        United States Code, is amended--
                    (A) by striking ``A decision'' and inserting ``(a) 
                A decision'';
                    (B) by inserting before ``may be appealed'' the 
                following: ``on a request made under section 3623 or 
                3762, and any final decision by the Commission under 
                section 3733 or 3764,''; and
                    (C) by striking ``3624(a) of this title'' and 
                inserting ``3624(a), 3733(b), 3762(b), or 3764(d) (as 
                the case may be)''.
            (2) Appeals from all other final orders of the 
        Commission.--
                    (A) Title 39 amendment.--Section 3628 of title 39, 
                United States Code, is amended by adding at the end the 
                following:
    ``(b) Any proceeding to enjoin, set aside, annul, or suspend any 
order of the Postal Regulatory Commission (except any order appealable 
under subsection (a)) shall be brought as provided by and in the manner 
prescribed in chapter 158 of title 28.''.
                    (B) Title 28 amendments.--
                            (i) Definitions.--Subparagraph (A) of 
                        section 2341(3) of title 28, United States 
                        Code, is amended by inserting ``the Postal 
                        Regulatory Commission,'' after ``the Federal 
                        Maritime Commission,''.
                            (ii) Orders appealable.--Section 2342 of 
                        title 28, United States Code, is amended by 
                        striking ``and'' at the end of paragraph (6), 
                        by striking the period at the end of paragraph 
(7) and inserting ``; and'', and by adding at the end the following:
            ``(8) all final orders of the Postal Regulatory Commission 
        made reviewable by section 3628(b) of title 39.''.
            (3) Conforming amendments.--Sections 3625 and 3681 of title 
        39, United States Code, are amended by striking ``3628'' each 
        place it appears and inserting ``3628(a)''.
    (f) Temporary Rates and Classes.--
            (1) Negotiated service agreements.--Section 3641 of title 
        39, United States Code, is amended to read as follows:
``Sec. 3641. Negotiated service agreements
    ``(a) The Postal Service may enter into negotiated service 
agreements with users of postal services in accordance with this 
section. A negotiated service agreement under this section shall--
            ``(1) pertain exclusively to products in the noncompetitive 
        category of mail (within the meaning of subchapter III of 
        chapter 37);
            ``(2) require that the contracting mail user perform mail 
        preparation, processing, transportation, administration, or 
        other functions that are in addition to or greater than those 
        required of mailers under provisions of the mail classification 
        schedule established pursuant to section 3623(b);
            ``(3) provide for the payment by the contracting mail user 
        of liquidated damages to the Postal Service for nonperformance 
        or breach of any of the material terms of the agreement, 
        including any minimum volume commitments; the amount of such 
        liquidated damages shall not be less than the difference 
        between postage and fees paid by such mail user pursuant to the 
        agreement and the amounts such user would have paid under the 
        otherwise applicable schedule of rates and fees;
            ``(4) be for a term of not to exceed 3 years; and
            ``(5) provide that such agreement, and any amendment or 
        renewal thereof, shall not become effective until approved by 
        the Postal Regulatory Commission, and is subject to the 
        cancellation authority of the Commission under section 3662(c).
    ``(b) Within 1 year after this subsection takes effect, the Postal 
Regulatory Commission shall adopt rules for the consideration of 
negotiated service agreements between the Postal Service and users of 
postal services, which meet the requirements of subsections (c) and 
(d).
    ``(c) Upon receipt of a proposed negotiated service agreement 
entered into by the Postal Service under subsection (a), or any 
amendment or renewal thereof, the Postal Regulatory Commission shall 
render a decision upon review of the agreement, after notice and 
opportunity for comment by interested parties in accordance with 
section 553 of title 5, pursuant to the regulations adopted by the 
Commission under subsection (b). The Commission shall approve and 
recommend implementation of a proposed negotiated service agreement (or 
any amendment or renewal thereof) unless, on the basis of the written 
data, views, and arguments received, it finds, within 90 days after 
receipt of the proposed agreement, amendment, or renewal (subject to 
the same type of day-for-day extension as set forth in section 
3733(b)(4)(B) for failure by the Postal Service to respond to any 
lawful order of the Commission), that--
            ``(1) the proposed agreement (or amendment or renewal, as 
        applicable)--
                    ``(A) does not satisfy the conditions and 
                requirements of subsection (a);
                    ``(B) precludes or materially hinders similarly 
                situated mail users from entering into agreements with 
                the Postal Service on the same, or substantially the 
                same, terms and conditions; or
                    ``(C) cannot reasonably be expected to result in 
                net benefits to the operation of a nationwide postal 
                system;
            ``(2) the Postal Service is unwilling or unable to enter 
        into such negotiated service agreements with other similarly 
        situated mail users; or
            ``(3) rates and fees payable during the term of the 
        proposed negotiated service agreement are not reasonably 
        calculated to yield to the Postal Service total revenues that 
        equal or exceed the sum of--
                    ``(A) the direct and indirect postal costs 
                attributable to services performed by the Postal 
                Service under the agreement; and
                    ``(B) a portion of all other costs of the Postal 
                Service that are equal, on an average unit basis, to 
                the portion of such costs reasonably assignable to the 
                classification or classifications of mail service most 
                similar to the services performed under the agreement.
    ``(d) Whenever it disapproves a proposed negotiated service 
agreement, the Postal Regulatory Commission shall provide written 
notice to that effect, together with the reasons therefor.
    ``(e) Any decision to approve or disapprove a proposed negotiated 
service agreement (or amendment or renewal, as applicable) shall be 
subject to judicial review in accordance with section 3628(b).
    ``(f) Nothing in subsections (a) through (e) shall be considered to 
limit or otherwise affect any authority available to the Postal Service 
under section 3763.''.
            (2) Conforming amendment.--The table of sections at the 
        beginning of chapter 36 of title 39, United States Code, is 
        amended by striking the item relating to section 3641 and 
        inserting the following:

``3641. Negotiated service agreements.''.
    (g) Rate and Service Complaints.--Section 3662 of title 39, United 
States Code, is amended to read as follows:
``Sec. 3662. Rate and service complaints
    ``(a) Interested parties (including an officer of the Postal 
Regulatory Commission representing the interests of the general public) 
who believe the Postal Service is charging rates which do not conform 
to the policies set out in this title, who believe that the Postal 
Service is not providing postal service in accordance with the policies 
of this title, or who believe that the Postal Service is otherwise not 
acting in conformance with the policies of this title, may lodge a 
complaint with the Postal Regulatory Commission in such form and in 
such manner as it may prescribe.
    ``(b)(1) The Postal Regulatory Commission shall, within 90 days 
after receiving a complaint under subsection (a), either--
            ``(A) begin proceedings on such complaint in conformity 
        with section 3764(d)(1); or
            ``(B) issue an order dismissing the complaint (together 
        with a statement of the reasons therefor).
    ``(2) For purposes of section 3628(b), 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) If the Postal Regulatory Commission finds the complaint to be 
justified, it shall--
            ``(1) in a classification matter covered by section 3623 or 
        3762, after proceedings in conformity with section 3624, issue 
        a recommended decision which shall be acted upon in accordance 
        with the provisions of section 3625;
            ``(2) in a matter involving a violation of any limitation 
        under section 3732 (relating to limitations on rates for 
        noncompetitive products), order the unlawful rates to be 
        adjusted to lawful levels and the taking of such other action 
        as it deems appropriate;
            ``(3) in a matter involving a violation of section 3743(a) 
        (relating to costs-attributable requirement for competitive 
        products) or section 3763(b) (relating to conditions to be met 
        by new competitive products), order the unlawful rates to be 
        adjusted to lawful levels and the taking of such other action 
        as it deems appropriate;
            ``(4) in a matter involving a violation of section 3641, 
        order the payment of liquidated damages in accordance with the 
        provisions included in the agreement involved pursuant to the 
        requirements of section 3641(a)(3) or the cancellation of such 
        agreement;
            ``(5) in a matter involving a violation of section 403(c), 
        order the taking of such action as it deems appropriate;
            ``(6) in a matter involving a violation of any provision of 
        subchapter V of chapter 37 (relating to market tests of 
        experimental products), order the cancellation of the testing 
        involved or the taking of such other action as it deems 
        appropriate;
            ``(7) in a matter involving a violation of section 404a, 
        order the rescission of any regulation involved or the taking 
        of such action as it deems appropriate;
            ``(8) in a matter involving a violation of section 2012(f) 
        (relating to the minimum amount to be charged by the Postal 
        Service for goods or services provided to any corporation 
        established under section 2012), order that the Postal Service 
        increase its prices to at least the minimum levels required;
            ``(9) in a matter involving the Postal Service's providing 
        a nonpostal product that is not permitted under paragraph (6) 
        of section 404(a), order that the Postal Service cease 
        providing such product; and
            ``(10) in a matter not otherwise covered by any of the 
        preceding provisions of this subsection, render a public report 
        thereon.
    ``(d) In addition, in cases of deliberate noncompliance 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 (within the meaning of subchapter IV 
of chapter 37) 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.''.
    (h) Limitations.--Section 3684 of title 39, United States Code, is 
amended--
            (1) by inserting ``and no provision of chapter 37'' after 
        ``no provision of this chapter''; and
            (2) by striking ``any provision of section 3682 or 3683 or 
        chapter 30, 32, or 34 of this title.'' and inserting ``any 
        provision of this title.''.
    (i) Reduced Rates.--Effective as of the date of enactment of this 
Act, subclause (VI) of section 3626(a)(3)(B)(ii) of title 39, United 
States Code, is amended to read as follows:
            ``(VI) one-half (or less, as the Postal Service may 
        prescribe), for any fiscal year after fiscal year 1998.''.
    (j) Regulations of the Commission.--Effective as of the date of 
enactment of this Act, section 3603 of title 39, United States Code, is 
amended by striking ``this chapter.'' and inserting ``this title.''.
    (k) Effective Date.--Except as provided in subsection (i) or (j), 
this section and the amendments made by this section shall become 
effective on the date as of which the baseline rates are determined 
under section 3721(e)(2) of title 39, United States Code (as amended by 
section 201).

SEC. 203. POSTAL SERVICE COMPETITIVE PRODUCTS FUND.

    (a) Establishment.--
            (1) In general.--Chapter 20 of title 39, United States 
        Code, is amended by adding at the end the following:
``Sec. 2011. Postal Service Competitive Products Fund
    ``(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 all attributable costs, institutional 
costs, and other expenses incurred by the Postal Service in providing 
competitive products.
    ``(b) There shall be deposited in the Postal Service 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 this section;
            ``(3) interest which may be earned on investments of the 
        Postal Service Competitive Products Fund; and
            ``(4) any amounts transferred from the Postal Service Fund 
        under subsection (j).
    ``(c) The receipts and disbursements of the Postal Service 
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.
    ``(d)(1) If the Postal Service determines that the moneys of the 
Postal Service Competitive Products Fund are in excess of current 
needs, it may invest such amounts as it deems advisable in any of the 
following:
            ``(A) A corporation established under section 2012.
            ``(B) Such other investments as it considers appropriate.
    ``(2)(A) Nothing in paragraph (1)(B) shall be considered to 
constitute authority for the Postal Service to invest in the 
obligations or securities of, or to make any other investment with 
respect to, 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.
    ``(e) The Postal Service, in its sole discretion, may provide that 
amounts which would otherwise be deposited in the Postal Service 
Competitive Products Fund shall instead be directly deposited in a 
Federal Reserve bank or a depository for public funds selected by the 
Postal Service, and may provide for transfers of amounts under this 
subsection between or among such accounts and the Postal Service 
Competitive Products Fund.
    ``(f) A judgment against the Postal Service or the Government of 
the United States arising out of activities of the Postal Service in 
the provision of competitive products (as determined under regulations 
which the Postal Regulatory Commission shall prescribe, in consultation 
with the Postal Service) shall be paid out of the Postal Service 
Competitive Products Fund.
    ``(g)(1) Subject to the limitations specified in section 2005(a) 
(applied in accordance with paragraph (2)), 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 Postal Service Competitive Products Fund, except 
that the Postal Service may pledge only the assets of the Postal 
Service Competitive Products Fund and pledge and use its revenues and 
receipts 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) For purposes of applying any limitation under section 
2005(a), the aggregate amount of obligations issued by the Postal 
Service which are outstanding at any given 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 all outstanding obligations so issued by the 
Postal Service under section 2005 with all outstanding obligations so 
issued by the Postal Service under this section.
    ``(h) 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 the establishment of reserve, sinking, and other funds, 
application and use of revenues and receipts of the Postal Service 
Competitive Products Fund, stipulations concerning the subsequent 
issuance of obligations or the execution of leases or lease purchases 
relating to properties of the Postal Service and such other matters as 
the Postal Service deems necessary or desirable to enhance the 
marketability of such obligations.
    ``(i) Obligations issued by the Postal Service under this section 
shall--
            ``(1) not be purchased by the Secretary of the Treasury;
            ``(2) not be exempt either as to principal or interest from 
        any taxation now or hereafter imposed by any State or local 
        taxing authority;
            ``(3) 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
            ``(4) notwithstanding the provisions of the Federal 
        Financing Bank Act of 1973 or any other provision of law 
        (except as may be specifically provided by reference to this 
        paragraph in any Act enacted after this paragraph takes 
        effect), not be eligible for purchase by, or commitment to 
        purchase by, or sale or issuance to, the Federal Financing 
        Bank.
    ``(j) The Postal Service shall, on the first day of the first year 
beginning on or after the date as of which the baseline rates are 
determined under section 3721(e)(2), transfer from the Postal Service 
Fund to the Postal Service Competitive Products Fund an amount that, as 
determined by the Postal Regulatory Commission (after notice and 
opportunity for comment by interested parties in accordance with 
section 553 of title 5), fairly reflects the net value of assets and 
liabilities which may be attributed wholly or primarily to competitive 
products.
    ``(k) The Postal Service shall render an annual report to the 
Secretary of the Treasury concerning the operation of the Postal 
Service 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 together with any other submission 
that it is required to make to the Postal Regulatory Commission under 
section 3772(g).
    ``(l) For purposes of this section, the term `competitive product' 
has the meaning given such term by section 3701.''.
            (2) Clerical amendment.--The table of sections at the 
        beginning of chapter 20 of title 39, United States Code, is 
        amended by adding after the item relating to section 2010 the 
        following:

``2011. Postal Service Competitive Products Fund.''.
    (b) Technical and Conforming Amendments.--
            (1) 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 Postal Service 
        Competitive Products Fund,''.
            (2) Postal service fund.--
                    (A) Purposes for which available.--
                            (i) In general.--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 Postal Service Competitive Products 
                        Fund is available).''.
                            (ii) Conforming amendment.--Section 
                        2003(e)(1) of title 39, United States Code, is 
                        amended by inserting after ``as provided by 
                        law'' the following: ``(subject to the same 
                        limitation as set forth in the parenthetical 
                        matter under subsection (a))''.
                    (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''.
            (3) Investments.--Subsection (c) of section 2003 of title 
        39, United States Code, is amended--
                    (A) by striking ``(c) If'' and inserting ``(c)(1) 
                Except as provided in paragraph (2), if''; and
                    (B) by adding at the end the following:
    ``(2) Nothing in this subsection shall be considered to authorize 
any investment in any obligations or securities of a commercial entity 
(as defined by section 2011(d)(2)(B)), including any corporation 
established under section 2012.''.
            (4) Obligations.--
                    (A) Purposes for which issuance is allowed.--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) Special rule for applying limitations.--
                Paragraph (1) of section 2005(a) of title 39, United 
                States Code, is amended by adding at the end the 
                following: ``The limitations under the second and third 
                sentences of this subsection shall be applied in 
                accordance with section 2011(g)(2).''.
            (5) Relationship between the treasury and the postal 
        service.--Section 2006(c) of title 39, United States Code, is 
        amended by inserting ``under section 2005'' before ``shall be 
        obligations''.

SEC. 204. USPS CORPORATION.

    (a) Establishment.--Chapter 20 of title 39, United States Code, is 
amended by adding after section 2011 (as added by section 203) the 
following:
``Sec. 2012. USPS Corporation
    ``(a) The Board of Directors may establish a private for-profit 
corporation under the laws of a State to be known as the USPS 
Corporation or such other corporate name as may be duly adopted by the 
Corporation. The Board of Directors may serve as incorporators of the 
Corporation and take all steps necessary to establish the Corporation, 
including the filing of articles of incorporation consistent with the 
provisions of this section.
    ``(b)(1) The Corporation shall not be an agency, instrumentality, 
or establishment of the United States, a Government corporation, or a 
Government-controlled corporation. Except as provided in this section, 
the Corporation shall not be considered part of the Postal Service. 
Financial obligations of the Corporation shall not be obligations of, 
or guaranteed as to principal or interest by, the Postal Service or the 
United States, and the obligations shall so plainly state. No action 
shall be allowable against the United States based on actions of the 
Corporation.
    ``(2) The receipts and disbursements of the Corporation shall be 
accorded the same budgetary treatment as is accorded to receipts and 
disbursements of the Postal Service Fund under section 2009a.
    ``(c) The Corporation is authorized to issue and have outstanding, 
in such amounts as it shall determine, shares of capital stock, without 
par value, which shall carry voting rights and be eligible for 
dividends. Such shares may be purchased only by the Postal Service 
Competitive Products Fund, in such amounts as the Board of Directors of 
the Postal Service may deem appropriate.
    ``(d) Notwithstanding any provision of State law, the articles of 
incorporation and bylaws of the Corporation shall provide that its 
board of directors shall be named by the Board of Directors of the 
Postal Service. The restrictions on postgovernment employment set out 
in section 207 of title 18 shall not apply to the acts of an individual 
taken in carrying out official duties as a director, officer, or 
employee of the Corporation if the individual was an officer or 
employee of the Postal Service (including a Director) continuously for 
a period of 12 months or longer during the 24 months prior to 
employment with the Corporation.
    ``(e) The Corporation shall have all of the powers conferred upon 
it under the laws of the State or States in which it is incorporated. 
The Corporation is specifically authorized--
            ``(1) to offer any postal or nonpostal product (other than 
        a product covered by the postal monopoly, as defined in section 
        3764(b)(2));
            ``(2) acquire shares of individual private companies; and
            ``(3) participate in joint ventures with individual private 
        companies.
    ``(f) The Corporation may purchase goods and services from the 
Postal Service, except that the Corporation must pay the Postal Service 
the same amount for such goods or services as would be paid by 
similarly situated mailers or, if the goods or services are not offered 
to the public by the Postal Service, amounts which represent fair 
market value.
    ``(g)(1) Insofar as the Corporation offers postal products which 
depend in substantial part on the services of the Postal Service, the 
Postal Service shall, to the extent deemed appropriate by the Postal 
Regulatory Commission (and subject to such requirements as the 
Commission may specify as to form and content), include details of the 
activities of the Corporation (including sufficient information to 
demonstrate that the requirements of subsection (f) are being complied 
with) in the annual reports to the Commission required by section 3772.
    ``(2) In the event that, based on its review of the information 
submitted to it by the Postal Service under paragraph (1), the 
Commission determines that the requirements of subsection (f) are not 
being complied with, the Commission may issue any order allowable under 
subsection (c)(8) or (d) of section 3662.
    ``(h) As used in this section, the term `State' includes the 
District of Columbia.''.
    (b) Clerical Amendment.--The table of sections at the beginning of 
chapter 20 of title 39, United States Code, is amended by adding after 
the item relating to section 2011 (as added by section 203) the 
following:

``2012. USPS Corporation.''.
    (c) Effective Date.--No authority under section 2012 of title 39, 
United States Code (as amended by this section) shall be available 
until the first day of the first year beginning on or after the date as 
of which the baseline rates are determined under section 3721(e)(2).

SEC. 205. POSTAL AND NONPOSTAL PRODUCTS.

    (a) In General.--Section 102 of title 39, United States Code, as 
amended by section 102(a) of this Act, is amended by striking ``and'' 
at the end of paragraph (4), by striking the period at the end of 
paragraph (5) and inserting a semicolon, and by adding at the end the 
following:
            ``(6) `postal product' refers to any service that provides 
        for the physical delivery of letters, printed matter, or 
        packages weighing up to 70 pounds, including physical 
        acceptance, collection, sorting, or transportation services 
        ancillary thereto; and
            ``(7) `nonpostal product' means any product or service 
        offered by the Postal Service (or that could have been offered 
        by the Postal Service under section 404(a)(6), as last in 
        effect before the date of enactment of the Postal Modernization 
        Act of 1999) that is not a postal product.''.
    (b) Specific Powers.--
            (1) In general.--Paragraph (6) of section 404(a) of title 
        39, United States Code, is amended to read as follows:
            ``(6)(A) to continue providing or to abolish any nonpostal 
        product first offered by the Postal Service to the general 
        public before January 1, 1994 (with any nonpostal products not 
        offered by the Postal Service to the general public before 
        January 1, 1994, to be provided by means of a private 
        corporation organized under section 2012, if at all, instead of 
        the Postal Service); and
            ``(B) with respect to any nonpostal products first offered 
        by the Postal Service to the general public during the period 
        beginning on January 1, 1994, and ending on the date of 
        enactment of the Postal Modernization Act of 1999, to continue 
        to offer such products, but only--
                    ``(i) subject to clause (ii), until such products 
                are transferred to the private postal corporation 
                (referred to in subparagraph (A)) in accordance with 
                such schedule and procedures as the Postal Regulatory 
                Commission shall by regulation prescribe; or
                    ``(ii) until the first day of the first year of the 
                first ratemaking cycle (within the meaning of section 
                3733(a)), if the transfer described in clause (i) has 
                not been completed by such date.''.
            (2) Deadline.--The regulations required under section 
        404(a)(6)(B) of title 39, United States Code, as amended by 
        this subsection, shall be prescribed in time to become 
        effective by the commencement of the first proceedings under 
        section 3733 of title 39, United States Code (relating to 
        adjustment factors), as added by section 201.

                     Subtitle B--Related Provisions

SEC. 211. AUTHORITY FOR POSTAL REGULATORY COMMISSION TO ISSUE 
              SUBPOENAS.

    Section 3604 of title 39, United States Code, 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 of any individual, and the production 
        of documentary or other evidence, from any place in the United 
        States, any territory or possession of the United States, the 
        Commonwealth of Puerto Rico, or the District of Columbia; and
            ``(B) order the taking of depositions and responses to 
        written interrogatories.
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.
    ``(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 chapter or chapter 37, 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 chapter or chapter 37 which 
is conducted in accordance with sections 556 and 557 of title 5. 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. 212. QUALIFICATION REQUIREMENTS FOR COMMISSIONERS AND DIRECTORS.

    (a) Commissioners.--Section 3601(a) of title 39, United States 
Code, is amended by striking the third sentence and inserting the 
following: ``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.''.
    (b) Directors.--
            (1) In general.--Section 202(a) of title 39, United States 
        Code, is amended by striking ``(a)'' and inserting ``(a)(1)'' 
        and by striking the fourth sentence and inserting the 
        following: ``The Directors shall represent the public interest 
        generally, and shall be chosen solely on the basis of their 
        demonstrated ability in managing organizations or corporations, 
        in either the public or the private sector, similar in size or 
        scope to the Postal Service. The Directors shall not be 
        representatives of specific interests using the Postal Service, 
        and may be removed only for cause.''.
            (2) Consultation requirement.--Subsection (a) of section 
        202 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 Director, 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.''.
            (3) Restriction.--Subsection (b) of section 202 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 Director the term of which is the first 
one scheduled to expire at least 4 months after the date of 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.''.
    (c) Applicability.--Nothing in this section shall affect the tenure 
of any individual serving as a Commissioner on the Postal Regulatory 
Commission or a Director of the Board of Directors of the United States 
Postal Service pursuant to an appointment made before the date of 
enactment of this Act, or, except as provided in the amendment made by 
subsection (b)(3), any nomination made before such date of enactment.

SEC. 213. APPROPRIATIONS FOR THE COMMISSION.

    (a) Authorization of Appropriations.--Subsection (d) of section 
3604 of title 39, United States Code, 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 8G(f) 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 
        3604(d) of this title.''.
            (2) Conforming amendment.--Section 2003(e)(1) of title 39, 
        United States Code, is amended by striking the matter before 
        the second sentence and inserting the following:
    ``(e)(1) The Fund shall be available for the payment of all 
expenses incurred by the Postal Service in carrying out its functions 
as provided by law and--
            ``(A) subject to the availability of amounts appropriated 
        pursuant to section 3604(d), all of the expenses of the Postal 
        Regulatory Commission; and
            ``(B) subject to the availability of amounts appropriated 
        pursuant to section 8G(f) of the Inspector General Act of 1978, 
        all of the expenses of the Office of Inspector General.''.
    (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, 1999.
            (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. 214. CHANGE-OF-ADDRESS ORDER INVOLVING A COMMERCIAL MAIL RECEIVING 
              AGENCY.

    (a) In General.--Subchapter V of chapter 36 of title 39, United 
States Code, is amended by adding at the end the following:
``Sec. 3686. Change-of-address order involving a commercial mail 
              receiving agency
    ``(a) For the purpose of this section, the term `commercial mail 
receiving agency' or `CMRA' means a private business that acts as the 
mail receiving agent for specific clients.
    ``(b) Upon termination of an agency relationship between an 
addressee and a commercial mail receiving agency--
            ``(1) the addressee or, if authorized to do so, the CMRA 
        may file a change-of-address order with the Postal Service with 
        respect to such addressee;
            ``(2) a change-of-address order so filed shall, to the 
        extent practicable, be given full force and effect; and
            ``(3) any mail for the addressee that is delivered to the 
        CMRA after the filing of an appropriate order under this 
        subsection shall be subject to subsection (c).
    ``(c) Mail described in subsection (b)(3) shall, if marked for 
forwarding and remailed by the CMRA, be forwarded by the Postal Service 
in the same manner as, and subject to the same terms and conditions 
(including limitations on the period of time for which a change-of-
address order shall be given effect) as apply to, mail forwarded 
directly by the Postal Service to the addressee.''.
    (b) Clerical Amendment.--The table of sections at the beginning of 
chapter 36 of title 39, United States Code, is amended by adding after 
the item relating to section 3685 the following:

``3686. Change-of-address order involving a commercial mail receiving 
                            agency.''.

SEC. 215. RATES FOR MAIL UNDER FORMER SECTION 4358.

    Section 3626 of title 39, United States Code, is amended 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).''.

                      TITLE III--GENERAL AUTHORITY

SEC. 301. 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;''.

SEC. 302. GENERAL DUTIES.

    Section 403(c) of title 39, United States Code, is amended--
            (1) by inserting ``domestic or international'' after 
        ``users of the''; and
            (2) by striking ``user.'' and inserting ``user, except that 
        this subsection shall not apply to competitive products (as 
        defined in chapter 37).''.

SEC. 303. EMPLOYMENT OF POSTAL POLICE OFFICERS.

    Section 404 of title 39, United States Code, is amended by adding 
at the end the following:
    ``(c)(1) The Postal Service may employ guards for all buildings and 
areas owned or occupied by the Postal Service or under the charge and 
control of the Postal Service, and such guards shall have, with respect 
to such property, the powers of special policemen provided by the first 
section of the Act cited in paragraph (2), and, as to such property, 
the Postmaster General (or his designee) may take any action that the 
Administrator of General Services (or his designee) may take under 
section 2 or 3 of such Act, attaching thereto penalties under the 
authority and within the limits provided in section 4 of such Act.
    ``(2) The Act cited in this paragraph is the Act of June 1, 1948 
(62 Stat. 281), commonly known as the Protection of Public Property 
Act.''.

SEC. 304. 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 enactment 
of this Act.

SEC. 305. 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) In providing products and services and in establishing 
classifications, rates, and fees under this title, the Postal Service, 
any corporation established under section 2012, and any other entity 
funded, in whole or in part, by the Postal Service, shall not, directly 
or indirectly, except as specifically authorized by law--
            ``(1) provide any postal or nonpostal product or service, 
        with respect to which the Postal Service or any such 
        corporation or entity (as the case may be), precludes 
        competition or otherwise establishes the terms of competition 
        through regulation (including standard-setting), licensing, or 
        policy-setting;
            ``(2)(A) establish any regulation (including any standard) 
        the effect of which is (or would be) to create a monopoly or 
        any competitive advantage for itself, any such corporation or 
        entity, or any other person; or
            ``(B) enter into any agreement, establish any policy, or 
        take any other action (not covered by subparagraph (A)), the 
        effect of which is (or would be) to create a monopoly or any 
        other unlawful competitive advantage for itself, any such 
        corporation or entity, or any other person;
            ``(3) regulate competition or engage in any regulatory or 
        enforcement activity with respect to actions or practices that 
        are subject to the antitrust laws;
            ``(4) obtain information from a person that provides, or 
        seeks to provide, a postal or nonpostal product or service, and 
        subsequently disclose that information, or offer any product or 
        service that uses or is based in whole or in part on that 
        information, without the consent of the person providing that 
        information, unless substantially the same information is 
        obtained from an independent source or is otherwise obtained by 
        the Postal Service, corporation, or other entity (as the case 
        may be) in a manner not inconsistent with this paragraph; or
            ``(5) compel the disclosure, transfer, or licensing of 
        intellectual property (such as patents, copyrights, trademarks, 
        trade secrets, and proprietary information).
    ``(b)(1) For purposes of this section, the term `antitrust laws' 
has the meaning given such term in subsection (a) of the first section 
of the Clayton Act (15 U.S.C. 12(a)), but includes section 5 of the 
Federal Trade Commission Act (15 U.S.C. 45) to the extent that such 
section 5 applies to unfair methods of competition.
    ``(2) Nothing in this section shall be construed as limiting the 
scope or effect of intellectual property rights recognized under the 
laws of the United States.
    ``(c) The Postal Regulatory Commission shall prescribe regulations 
to carry out the purposes of this section.''.
    (b) Clerical Amendment.--The table of sections at the beginning of 
chapter 4 of title 39, United States Code, is amended by adding at the 
end the following:

``404a. Specific limitations.''.

SEC. 306. INTERNATIONAL POSTAL ARRANGEMENTS.

    (a) International Postal Arrangements.--
            (1) 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, except that the Secretary may not negotiate or 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 (as that 
term is defined in chapter 37), 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--
            ``(A) 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 responsibility, the 
        Secretary 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) maintain continuing liaison with other executive 
        branch agencies concerned with postal and delivery services;
            ``(C) maintain continuing liaison with the Committee on 
        Government Reform and Oversight of the House of Representatives 
        and the Committee on Governmental Affairs of the Senate;
            ``(D) maintain appropriate liaison with representatives of 
        the Postal Service to keep informed of its interests and 
        problems, and to provide such assistance as may be needed to 
        ensure that matters of concern to the Postal Service are 
        promptly considered by the Department of State or (if 
        applicable, and to the extent practicable) other executive 
        branch agencies;
            ``(E) maintain appropriate liaison with 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
            ``(F) 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.
    ``(c) 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) must 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.
    ``(d)(1) With respect to shipments of international mail within the 
meaning of section 3741 that are exported or imported by the Postal 
Service--
            ``(A) the Postal Service shall not tender exported 
        shipments to governmental authorities of any other country for 
        clearance and importation except in accordance with procedures 
        and laws which are equally applicable to similar shipments 
        transmitted by private companies; and
            ``(B)(i) subject to clause (ii), the Customs Service 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; and
            ``(ii) the Customs Service and other Federal agencies shall 
        deny shipments imported by the Postal Service from a foreign 
        country access to special customs procedures established in 
        accordance with international postal or customs agreements for 
        shipments by postal authorities of other countries unless that 
        foreign country makes available such special customs procedures 
        both to shipments to such country from the United States by the 
        Postal Service and similar shipments to such country from the 
        United States by private companies.
    ``(2)(A) The provisions of paragraph (1)(B)(i) shall take effect 
beginning on the date of enactment of this subsection.
    ``(B) The provisions of subparagraphs (A) and (B)(ii) of paragraph 
(1) shall take effect beginning 5 years after the date of enactment of 
this subsection.
    ``(C) The Secretary of State shall, to the maximum extent 
practicable, take such measures as are within the control of the 
Secretary--
            ``(i) to complete the renegotiation of any treaties, 
        conventions, or other international agreements (including those 
        regulating international postal services), and
            ``(ii) to encourage the governments of other countries to 
        make any changes in their laws (consistent with the policies 
        carried out by the provisions referred to in subparagraph (B)),
which may be necessary in order to facilitate the timely implementation 
of the provisions that are subject to subparagraph (B). The Secretary 
of State shall consult with the United States Trade Representative and 
the Commissioner of Customs in carrying out this subparagraph.
    ``(3) 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.''.
            (2) Effective date.--Notwithstanding paragraph (1), 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 the date as of which the 
        baseline rates are determined under section 3721(e)(2) of title 
        39, United States Code (as amended by section 201).
    (b) Trade-in-Services program.--The second sentence of paragraph 
(5) of section 306(a) of the Trade and Tariff Act of 1984 (19 U.S.C. 
2114b(5)) is amended by inserting ``postal and delivery services,'' 
after ``transportation,''.

SEC. 307. SUITS BY AND AGAINST THE POSTAL SERVICE.

    (a) In General.--Section 409 of title 39, United States Code, is 
amended by striking subsections (c) through (e) and inserting the 
following:
    ``(c) For purposes of the Act of July 5, 1946 (commonly referred to 
as the `Trademark Act of 1946' (15 U.S.C. 1051 and following)), the 
Postal Service shall be considered to be a `person', as used in that 
Act, and shall not be immune under any other doctrine of sovereign 
immunity from suit in Federal court by any person for any violation of 
that Act by any officer or employee of the Postal Service.
    ``(d)(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 service which is not reserved to 
the United States under section 1696 of title 18, the Postal Service or 
other Federal agency--
            ``(A) shall not be immune under any doctrine of sovereign 
        immunity from suit in Federal court by any person for any 
        violation of law by such agency or any officer or employee 
        thereof;
            ``(B) shall not be considered a `Federal agency' for 
        purposes of section 1346(b) and chapter 171 of title 28, and 
        shall be liable for actions in tort in the same manner as a 
        private company; and
            ``(C) shall be considered to be a person (as defined in 
        subsection (a) of the first section of the Clayton Act (15 
        U.S.C. 12(a)) for purposes of--
                    ``(i) the antitrust laws (as defined in subsection 
                (a) of the first section of the Clayton Act (15 U.S.C. 
                12(a)); and
                    ``(ii) section 5 of the Federal Trade Commission 
                Act (15 U.S.C. 45) to the extent that such section 5 
                applies to unfair methods of competition.
For purposes of the preceding sentence, any private carriage of mail 
allowable by virtue of section 601 shall not be considered a service 
reserved to the United States under section 1696 of title 18.
    ``(2) This subsection shall not apply with respect to conduct 
occurring before the date of enactment of this subsection.
    ``(e)(1) Motor vehicles owned or leased by the Postal Service that 
are primarily and regularly used for the transport or delivery of 
products in the competitive category of mail shall be subject to 
Federal and State laws and regulations associated with the parking and 
operation of such motor vehicles, to the same extent and in the same 
manner as if they were owned or leased by a private company.
    ``(2) Any motor vehicle owned or leased by the Postal Service that 
is primarily and regularly used for the transport or delivery of 
products in the competitive category of mail shall be clearly 
identified as such by appropriate symbol or other marking.
    ``(3) This subsection shall become effective on the first day of 
the first ratemaking cycle.
    ``(4) For purposes of this subsection--
            ``(A) the terms `product in the competitive category of 
        mail' and `ratemaking cycle' have the meanings given them by 
        chapter 37; and
            ``(B) the term `State' includes the District of Columbia, 
        the Commonwealth of Puerto Rico, and a territory or possession 
        of the United States.
    ``(f)(1) The Postal Service shall comply with--
            ``(A) any zoning, planning, and land use regulations 
        applicable to State or local public entities; and
            ``(B) any building codes applicable to State or local 
        public entities.
    ``(2) For purposes of this subsection, the term `State' has the 
meaning given such term by subsection (e).
    ``(g)(1) The Postal Service shall employ attorneys by contract or 
otherwise to conduct litigation on its behalf in any litigation 
arising, in whole or in part, under any of the following:
            ``(A) Subsection (c), (d), or (e) of section 409 (relating 
        to application of certain laws to the Postal Service).
            ``(B) Subsection (f) or (g) of section 3604 (relating to 
        administrative subpoenas by the Postal Regulatory Commission).
            ``(C) Subsection (a) or (b) of section 3628 (relating to 
        appeals from decisions of the Commission and the Directors).
    ``(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.
    ``(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(f).''.
    (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,''.

     TITLE IV--MISCELLANEOUS PROVISIONS RELATING TO THE BUDGET AND 
                         APPROPRIATIONS PROCESS

SEC. 401. 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 take effect on October 1, 1998.

SEC. 402. TECHNICAL AND CONFORMING AMENDMENTS.

    (a) Appropriations.--Subsection (e) of section 2401 of title 39, 
United States Code, is amended--
            (1) by striking ``Committee on Post Office and Civil 
        Service'' each place it appears and inserting ``Committee on 
        Government Reform and Oversight'';
            (2) by striking ``and the Committees on Appropriations of 
        the Senate and the House of Representatives''; and
            (3) by striking ``Not later than March 15 of each year,'' 
        and inserting ``Each year,''.
    (b) Technical Correction.--Sections 2803(a) and 2804(a) of title 
39, United States Code, are amended by striking ``2401(g)'' and 
inserting ``2401(e)''.

 TITLE V--PROVISIONS RELATING TO TRANSPORTATION, CARRIAGE, OR DELIVERY 
                                OF MAIL

SEC. 501. OBSOLETE PROVISIONS.

    (a) Repeal.--Chapter 52 of title 39, United States Code, is 
repealed.
    (b) Conforming Amendments.--Section 5005(a) of title 39, United 
States Code, is amended--
            (1) by repealing paragraph (1); and
            (2) in paragraph (4) by striking ``(as defined in section 
        5201(6) of this title)''.
    (c) 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 length of time as may be determined by the Postal 
Service to be advisable or appropriate)''.
    (2) Section 5402(c) 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''.
    (d) Clerical Amendment.--The table of chapters for part V of title 
39, United States Code, is amended by repealing the item relating to 
chapter 52.

SEC. 502. EXPANDED CONTRACTING AUTHORITY.

    Subsection (d) of section 5402 of title 39, United States Code, is 
amended to read as follows:
    ``(d) Notwithstanding the provisions of subsections (a) through 
(c), the Postal Service may contract for the transportation of mail by 
aircraft, except as provided in subsections (f) and (g).''.

SEC. 503. PRIVATE CARRIAGE OF LETTERS.

    (a) Repeal of Suspension Authority.--Subsection (b) of section 601 
of title 39, United States Code, is repealed.
    (b) Private Carriage.--Section 601 of title 39, United States Code, 
is amended by striking subsection (a) and inserting the following:
    ``(a) A letter may 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;
            ``(3) such carriage is within the scope of services 
        described by regulations of the United States Postal Service 
        (as in effect on July 1, 1998) that purport to permit private 
        carriage by suspension of the operation of this subsection (as 
        then in effect); or
            ``(4) the requirements of subsection (b) are met.
    ``(b) A letter shall be considered to satisfy the requirements of 
this subsection if--
            ``(1) it is enclosed in an envelope;
            ``(2) the amount of postage which would have been charged 
        on the letter if it had been sent by mail is paid by stamps, or 
        postage meter stamps, on the envelope;
            ``(3) the envelope is properly addressed;
            ``(4) the envelope is so sealed that the letter cannot be 
        taken from it without defacing the envelope;
            ``(5) any stamps on the envelope are canceled in ink by the 
        sender; and
            ``(6) the date of the letter, of its transmission or 
        receipt by the carrier is endorsed on the envelope in ink.''.
    (c) Effective Date.--This section shall take effect as of the first 
day of the first year beginning on or after the date as of which the 
baseline rates are determined under section 3721(e)(2).

SEC. 504. REPEAL OF SECTION 5403.

    (a) In General.--Section 5403 of title 39, United States Code, is 
repealed.
    (b) Clerical Amendment.--The table of sections for chapter 54 of 
title 39, United States Code, is amended by repealing the item relating 
to section 5403.

                           TITLE VI--STUDIES

SEC. 601. EMPLOYEE-MANAGEMENT RELATIONS.

    (a) Independent Study Required.--The Board of Directors shall, by 
contract, provide for the National Academy of Public Administration to 
conduct an independent study as to how employee-management relations 
within the United States Postal Service may be improved.
    (b) Specific Requirements.--Under the contract, the Academy shall 
be required--
            (1) to involve the labor, supervisory, and managerial 
        organizations of the Postal Service in developing the design 
        and specific objectives of the study;
            (2) to consult periodically with representatives of the 
        Postal Service, and of those labor, supervisory, and managerial 
        organizations, on the progress of the study; and
            (3) to provide opportunity for those labor, supervisory, 
        and managerial organizations to review and submit written 
        comments on the final report.
    (c) Final Report.--
            (1) In general.--The Academy shall, not later than 12 
        months after the date on which the contract for the study under 
        this section is entered into, submit its final report to the 
        President, the Congress, the Postal Service, and the labor, 
        supervisory, and managerial organizations of the Postal 
        Service.
            (2) Contents.--The report shall contain the findings, 
        conclusions, and recommendations of the Academy on all matters 
        required to be addressed by the study, and shall also include 
        all written comments submitted to the Academy under subsection 
        (b)(3).
    (d) Cooperation.--The Board of Directors shall take appropriate 
measures to ensure that all components of the Postal Service cooperate 
fully with the Academy in the conduct of its study under this section.
    (e) Definition.--For purposes of this section, the term ``Board of 
Directors'' has the meaning given such term by section 102 of title 39, 
United States Code (as amended by section 101 of this Act).

SEC. 602. RECOMMENDATIONS ON UNIVERSAL POSTAL SERVICES.

    (a) In General.--Chapter 28 of title 39, United States Code, is 
amended by adding at the end the following:
``Sec. 2806. Universal postal services
    ``(a)(1) Within 1 month after the date of enactment of this 
section, the Postal Service shall begin conducting a study the purpose 
of which shall be to develop recommendations as to the appropriate 
scope and standards for universal postal services to be assured by the 
Government of the United States consistent with its obligations under 
sections 101 and 403.
    ``(2) The Postal Service shall, within 18 months thereafter, 
complete its study and submit a written report to the President, the 
Congress, and the Postal Regulatory Commission setting forth its 
recommendations under this section and the reasons therefor.
    ``(3) The Postal Service shall solicit and include as part of its 
report the written views and suggestions of any persons who may be 
affected by or interested in any matter as to which the study pertains.
    ``(4) The conduct of the study and the drafting of the report 
required under this section shall, consistent with section 2805 
(relating to inherently Governmental functions), be performed only by 
employees of the Postal Service.
    ``(b)(1) The recommendations submitted by the Postal Service under 
this section shall include recommendations concerning a universal 
service definition for each class of delivery services the continuous 
provision of which must, in the view of the Postal Service, be assured 
in order to fulfill the obligations set out in sections 101 and 403.
    ``(2) In developing its recommendations under this subsection with 
respect to any given class of delivery services, the Postal Service 
shall take into consideration the development of new technologies and 
the evolution of alternative means of meeting the public interest 
objectives set out in this title.
    ``(c) Each universal service definition recommended by the Postal 
Service under this section shall include the specification of minimum 
standards of service to be attained, consistent with the following:
            ``(1) Standards of reliability, speed, frequency, and 
        quality of service shall be established so as to meet the needs 
        of users and consumers of universal services generally.
            ``(2) Universal services should be available at just, 
        reasonable, and affordable rates sufficient to enable universal 
        services to be provided under best practices of honest, 
        efficient, and economical management.
            ``(3) Persons in all regions of the Nation, including low-
        income persons and those located in rural, insular, and high-
        cost areas, should have access to universal postal services 
        that are reasonably comparable to those provided in urban areas 
        and that are available at appropriate rates. As provided in 
        section 101(b), no small post office of the Postal Service 
        shall be closed solely by reason of operating at a deficit.
            ``(4) In providing universal services, the Postal Service 
        shall not, except as specifically authorized in this title, 
        make any undue or unreasonable discrimination among users, 
        including other providers of postal services.
            ``(5) Universal services shall be maintained without 
        interruption and without abrupt and substantial changes in 
        rates or quality of service.
            ``(6) Standards for universal service should avoid 
        distortions in the competition between postal operators and 
        between commercial purchasers of postal services to the extent 
        consistent with fulfilling the obligations set out in sections 
        101 and 403.
            ``(7) Universal service definitions for the State of Alaska 
        shall take into account the special conditions and needs of 
        that State.
            ``(8) Universal services shall be provided consistent with 
        such other principles as the Postal Service determines are 
        necessary and appropriate for the protection of the public 
        interest, convenience, and necessity, and the requirements of 
        this title.
    ``(d) In addition to the principles set out in subsection (c), the 
Postal Service shall take into account special requirements for certain 
classes of postal services under this title, including requirements for 
uniform, reduced, or free rates.''.
    (b) Clerical Amendment.--The table of sections for chapter 28 of 
title 39, United States Code, is amended by adding at the end the 
following:

``2806. Universal postal services.''.

SEC. 603. STUDY ON EQUAL APPLICATION OF LAWS TO COMPETITIVE PRODUCTS.

    (a) In General.--The Department of Justice shall prepare and submit 
to the President and Congress, within 1 year after the date of 
enactment of this Act, a comprehensive report identifying Federal and 
State laws that apply differently to products of the United States 
Postal Service in the competitive category of mail (as that term is 
defined in chapter 37 of title 39, United States Code, as amended by 
this Act) and similar products provided by private companies.
    (b) Recommendations.--The Department of Justice shall include such 
recommendations as it considers appropriate for bringing such legal 
discrimination to an end.
    (c) Consultation.--In preparing its report, the Department of 
Justice 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.

SEC. 604. GREATER DIVERSITY IN POSTAL SERVICE EXECUTIVE AND 
              ADMINISTRATIVE SCHEDULE MANAGEMENT POSITIONS.

    (a) Study.--The Board of Directors shall study and, within 1 year 
after the date of 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.
    (c) Definition.--For purposes of this section, the term ``Board of 
Directors'' has the meaning given such term by section 102 of title 39, 
United States Code (as amended by section 101 of this Act).

SEC. 605. 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 enactment of 
this Act, the United States Postal Service shall submit to its Board of 
Directors (within the meaning of section 102 of title 39, United States 
Code, as amended by section 101 of this Act) and Congress a written 
report describing its plan under this section.

SEC. 606. CONTRACTS WITH WOMEN, MINORITIES, AND SMALL BUSINESSES.

    The Board of Directors of the United States Postal Service shall 
study and, within 1 year after the date of 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.

                     TITLE VII--INSPECTORS GENERAL

SEC. 701. 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 3604 of title 39, United States Code, 
is amended by adding after subsection (g) (as added by section 211) 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 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. 702. 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 ``and'' before ``the chief 
                executive officer of the Resolution Trust 
                Corporation'';
                    (B) by striking ``and'' before ``the Chairperson of 
                the Federal Deposit Insurance Corporation'';
                    (C) by striking ``or'' before ``the Commissioner of 
                Social Security, Social Security Administration''; and
                    (D) by inserting ``or the Postmaster General and 
                Chief Executive Officer of the United States Postal 
                Service;'' after ``Social Security Administration;''; 
                and
            (2) in paragraph (2)--
                    (A) by striking ``or'' before ``the Veterans' 
                Administration'';
                    (B) by striking ``or'' before ``the Social Security 
                Administration''; and
                    (C) by inserting ``or the United States Postal 
                Service;'' after ``Social Security Administration;''.
    (b) Special Provisions Concerning the United States Postal 
Service.--
            (1) In general.--The Inspector General Act of 1978 is 
        amended--
                    (A) by redesignating sections 8G (as amended by 
                section 701(a)) and 8H as sections 8H and 8I, 
                respectively; and
                    (B) by inserting after section 8F the following:

    ``special provisions concerning the united states postal service

    ``Sec. 8G. (a) Notwithstanding the last two sentences of section 
3(a), the Inspector General of the United States Postal Service shall 
report to and be under the general supervision of the Postmaster 
General, but shall not report to, or be subject to supervision by, any 
other officer or employee of the United States Postal Service or its 
Board of Directors. No such officer or employee (including the 
Postmaster General) or member of such Board shall prevent or prohibit 
the Inspector General from initiating, carrying out, or completing any 
audit or investigation, or from issuing any subpoena during the course 
of any audit or investigation.
    ``(b) 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 the significant activities being carried out by the 
Postal Inspection Service to such Inspector General.
    ``(c) Any report required to be transmitted by the Postmaster 
General to the appropriate committees or subcommittees of the Congress 
under section 5(d) shall also be transmitted, within the 7-day period 
specified under such section, to the Committee on Government Reform and 
Oversight of the House of Representatives and the Committee on 
Governmental Affairs of the Senate.
    ``(d) 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.
    ``(e) 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.
    ``(f) 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.
    ``(g) As used in this section, `Postmaster General', `Board of 
Directors', and `Board' each has the meaning given it by section 102 of 
title 39, United States Code.''.
            (2) Related provisions.--

                                For certain related provisions, see 
section 213(b).
    (c) 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 enactment of the Postal Modernization Act 
of 1999, 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, for the most 
        recent fiscal year for which a report under section 2008(e) is 
        available (unless previously transmitted under the following 
        sentence), a copy of such report.''.
            (3) Coordination provisions.--Subsection (d) of section 
        2008 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) Savings provision.--For purposes of any fiscal year 
        preceding the first fiscal year commencing after the date of 
        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.
    (d) Reports.--
            (1) In general.--Section 3013 of title 39, United States 
        Code, is amended--
                    (A) in the first sentence by striking ``Postmaster 
                General'' and inserting ``Chief Postal Inspector'';
                    (B) by striking ``Board'' each place it appears and 
                inserting ``Inspector General'';
                    (C) in the third sentence by striking ``Each such 
                report shall be submitted within sixty days after the 
                close of the reporting period involved'' and inserting 
                ``Each such report shall be submitted within 1 month 
                (or such shorter length of time as the Inspector 
                General may specify) after the close of the reporting 
                period involved''; and
                    (D) by striking the last sentence and inserting the 
                following:
``The information in a report submitted under this section to the 
Inspector General with respect to a reporting period shall be included 
as part of the semiannual report prepared by the Inspector General 
under section 5 of the Inspector General Act of 1978 for the same 
reporting period. Nothing in this section shall be considered to permit 
or require that any report by the Chief Postal Inspector under this 
section include any information relating to activities of the Inspector 
General.''.
            (2) Effective date.--This subsection shall take effect on 
        the first day of the first semiannual reporting period 
        beginning on or after the date of enactment of this Act and 
        shall apply with respect to semiannual reporting periods 
        beginning on or after the effective date of this subsection.
            (3) Savings provision.--For purposes of any semiannual 
        reporting period preceding the first semiannual reporting 
        period referred to in paragraph (2), the provisions of title 
        39, United States Code, shall continue to apply as if the 
        amendments made by this subsection had not been enacted.
    (e) Technical and Conforming Amendments.--
            (1) Relating to the inspector general act of 1978.--(A) 
        Subsection (a) of section 8H of the Inspector General Act of 
        1978 (as amended by section 701 and redesignated by subsection 
        (b) of this section) 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 8H of such Act (as so 
        redesignated) is repealed.
                    (ii) Subsection (c) of section 8H of such Act (as 
                so redesignated) is amended by striking ``Except as 
                provided under subsection (f) of this section, the'' 
                and inserting ``The''.
            (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 sections 102(a) and 205(a) of this Act, 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 section 1003 of this title, or 
        any other provision of law,''.
            (D) Subsection (b) of section 1003 of such title 39 is 
        amended by striking ``respective'' and inserting ``other''.
            (E) Subsection (c) of section 1003 of such title 39 is 
        amended by striking ``included'' and inserting ``includes''.
    (f) Effective Date; Eligibility of Prior Inspector General.--
            (1) Effective date.--
                    (A) In general.--Except as provided in subparagraph 
                (B) or in subsection (c) or (d), this section and the 
                amendments made by this section shall take effect on 
                the date of enactment of this Act.
                    (B) Special rules.--
                            (i) In general.--Except as provided in 
                        clause (ii), if the position of Inspector 
                        General of the United States Postal Service is 
                        occupied on the date of enactment of this Act 
                        (other than by an individual serving due to a 
                        vacancy arising in that position before the 
                        expiration of his or her predecessor's term), 
                        then, until January 5, 2004, or, if earlier, 
                        the date on which such individual ceases to 
                        serve in that position, title 39, United States 
                        Code, shall be applied as if the amendments 
                        made by this section had not been enacted.
                            (ii) Authorization of appropriations.--
                                    (I) In general.--Notwithstanding 
                                any other provision of this paragraph, 
                                subsection (f) of section 8G 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, 1999.
                                    (II) Savings provision.--For 
                                purposes of the fiscal year ending on 
                                September 30, 1999, 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.
            (2) 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 enactment of this Act from being 
        appointed to that position pursuant to the amendments made by 
        this section.

                      TITLE VIII--LAW ENFORCEMENT

                       Subtitle A--Amendments to

                      Title 39, United States Code

SEC. 801. MAKE FEDERAL ASSAULT STATUTES APPLICABLE TO POSTAL CONTRACT 
              EMPLOYEES.

    Section 1008 of title 39, United States Code, is amended--
            (1) in subsection (a) by inserting ``or entrusted with mail 
        under contract with the Postal Service'' after ``mail''; and
            (2) in subsection (b) by inserting ``an employee of the 
        Postal Service for the purposes of sections 111 and 1114 of 
        title 18, and'' after ``deemed''.

SEC. 802. SEXUALLY ORIENTED ADVERTISING.

    (a) Civil Penalty.--Section 3011 of title 39, United States Code, 
is amended--
            (1) by redesignating subsections (b) through (e) as 
        subsections (c) through (f), respectively; and
            (2) by inserting after subsection (a) the following:
    ``(b)(1) Upon a finding by the court that a sexually oriented 
advertisement has been mailed in violation of section 3010(b), the 
court may assess, on whoever made the mailing or caused it to be made, 
a civil penalty of not less than $500 and not more than $1,500 for each 
violation. Each piece of mail sent in violation of section 3010(b) 
shall constitute a separate violation.
    ``(2) For purposes of this subsection--
            ``(A) receipt of a sexually oriented advertisement after 
        the recipient's name and address have been listed (as described 
        in section 3010(b)) for at least 60 days shall create a 
        rebuttable presumption that such advertisement was mailed more 
        than 30 days after that individual's name and address became so 
        listed; and
            ``(B) receipt in the mail of a sexually oriented 
        advertisement addressed to `Occupant' or `Resident' (or any 
        other term permitted by Postal Service standards on simplified 
        addressing) at the recipient's address, or which is 
        specifically addressed to the recipient, but with an 
        inconsequential error or variation in the recipient's name or 
        address, shall, for purposes of applying the mailing 
        prohibition of section 3010(b), create a rebuttable presumption 
        that such advertisement was mailed to such recipient.
    ``(3) Any penalty assessed under paragraph (1) shall be paid to the 
Postal Service for deposit in the Postal Service Fund established by 
section 2003.''.
    (b) Repeal.--
            (1) In general.--Section 3008 of title 39, United States 
        Code, and the item relating to such section in the table of 
        sections at the beginning of chapter 30 of such title, are 
        repealed.
            (2) Conforming amendments.--(A) Subsection (f) of section 
        3011 of such title 39 (as so redesignated by subsection (a)) is 
        amended by striking ``section 3006, 3007, or 3008'' and 
inserting ``section 3006 or 3007''.
            (B) Section 1737 of title 18, United States Code, is 
        amended--
                    (i) in subsection (a) by striking ``3008 or''; and
                    (ii) in subsection (b) by striking ``3008(a) or''.
    (c) Effective Date.--This section and the amendments made by this 
section shall take effect 90 days after the date of the enactment of 
this Act. The amendments made by this section shall be treated as if 
they had never been enacted for purposes of any mailing made or caused 
to be made before this section takes effect.

SEC. 803. ALLOW POSTAL SERVICE TO RETAIN ASSET FORFEITURE RECOVERIES.

    Paragraph (7) of section 2003(b) of title 39, United States Code, 
is amended to read as follows:
            ``(7) amounts (including proceeds from the sale of 
        forfeited items) from any civil forfeiture conducted by the 
        Postal Service and from any forfeiture resulting from an 
        investigation in which the Postal Service has primary 
        responsibility, except that nothing in this paragraph shall 
        preclude the Postal Service, on such terms as it may determine, 
        from sharing such amounts with any Federal, State, or local law 
        enforcement agency which participated in any of the acts which 
        led to the seizure or forfeiture of the property; and''.

SEC. 804. HAZARDOUS MATTER.

    (a) Civil Penalty.--Chapter 30 of title 39, United States Code, is 
amended by adding at the end the following:
``Sec. 3016. Civil penalty for prohibited mailing and deficient 
              packaging of hazardous matter
    ``(a) For the purposes of this section--
            ``(1) the term `parcel' includes any kind of package, 
        envelope, container, or other piece of mail;
            ``(2) the term `manner' includes the preparation and 
        packaging of a piece of mail;
            ``(3) a person shall be considered to have acted knowingly 
        if--
                    ``(A) such person had actual knowledge of the facts 
                giving rise to the violation; or
                    ``(B) a reasonable person acting in the same 
                circumstances and exercising due care would have had 
                such knowledge; and
            ``(4) the term `hazardous matter' has the meaning given 
        such term by section 1716 of title 18.
    ``(b) Any person--
            ``(1) who knowingly mails or causes to be mailed any 
        parcel, the contents of which constitute or include any 
        hazardous matter which has been declared by statute or Postal 
        Service regulation to be nonmailable under any circumstances;
            ``(2) who knowingly mails or causes to be mailed a parcel 
        in violation of any statute or Postal Service regulation 
        restricting the time, place, or manner in which hazardous 
matter may be mailed; or
            ``(3) who knowingly manufactures, distributes, or sells any 
        container, packaging kit, or similar device that--
                    ``(A) is represented, marked, certified, or sold by 
                such person for use in the mailing of any hazardous 
                matter; and
                    ``(B) fails to conform with any statute or Postal 
                Service regulation setting forth standards for 
                containers, packaging kits, or similar devices used for 
                the mailing of hazardous matter;
shall be liable to the Postal Service for a civil penalty in an amount 
not to exceed $25,000 per violation.
    ``(c) The Postal Service may enforce this section by commencing a 
civil action in accordance with section 409(d). The action may be 
brought in the district court of the United States for the district in 
which the defendant resides or any district in which the defendant 
conducts business or in which a violation of this section was 
discovered.
    ``(d) In determining the amount of any civil penalty to be assessed 
under this section, the district court--
            ``(1) shall treat as a separate violation--
                    ``(A) each parcel mailed or caused to be mailed as 
                described in paragraph (1) or (2) of subsection (b); 
                and
                    ``(B) each container, packaging kit, or similar 
                device manufactured, distributed, or sold as described 
                in subsection (b)(3); and
            ``(2) shall take into account--
                    ``(A) the nature, circumstances, extent, and 
                gravity of each violation committed; and
                    ``(B) with respect to the person found to have 
                committed such violation, the degree of culpability, 
                any history of prior offenses, ability to pay, effect 
                on ability to continue to do business, and such other 
                matters as justice may require.
    ``(e) All penalties collected under authority of this section shall 
be paid into the Postal Service Fund established by section 2003.''.
    (b) Clerical Amendment.--The table of sections at the beginning of 
chapter 30 of title 39, United States Code, is amended by adding at the 
end the following:

``3016. Civil penalty for prohibited mailing and deficient packaging of 
                            hazardous matter.''.

                      Subtitle B--Other Provisions

SEC. 811. STALKING FEDERAL OFFICERS AND EMPLOYEES.

    (a) In General.--Chapter 41 of title 18, United States Code, is 
amended by adding at the end the following:
``Sec. 881. Stalking Federal and postal officers and employees
    ``(a) Whoever--
            ``(1) repeatedly engages in conduct (including maintaining 
        a visual or physical proximity or communicating a verbal or 
        written threat) directed at another person who is or was an 
        officer or employee--
                    ``(A) in the executive, legislative, or judicial 
                branch of the Federal Government; or
                    ``(B) in the United States Postal Service;
        while such other person is engaged in official duties or on 
        account of such duties;
            ``(2) knows that such conduct is likely to place that other 
        person in reasonable fear of sexual battery, bodily injury, or 
        death; and
            ``(3) thereby induces such fear in that other person;
shall be punished as provided in subsection (b) of this section.
    ``(b)(1) The punishment for an offense under subsection (a) is--
            ``(A) in the case of a first conviction under such 
        subsection--
                    ``(i) if, during the commission of the offense, the 
                offender uses a deadly or dangerous weapon, a fine 
                under this title or imprisonment for not more than 10 
                years, or both;
                    ``(ii) if the offense violates a protective order, 
                a fine under this title or imprisonment for not more 
                than 5 years, or both; and
                    ``(iii) in any other case, a fine under this title 
                or imprisonment for not more than 3 years, or both; and
            ``(B) in the case of a second or subsequent conviction 
        under such subsection, a fine under this title or imprisonment 
        for not more than 15 years, or both.
    ``(2) If a sentence of probation is imposed for an offense under 
this section, the court shall require the defendant to undergo 
appropriate psychiatric, psychological, or social counselling.
    ``(c)(1) Whoever is aggrieved by a violation of this section may, 
in a civil action, obtain appropriate relief from the person engaging 
in that violation. Such relief may include compensatory and punitive 
damages, and injunctive or declaratory relief, and shall include 
reasonable attorney's fees.
    ``(2) If--
            ``(A) the court issues an injunction under this subsection;
            ``(B) the person against whom the injunction is issued is 
        an officer or employee in the executive branch of the Federal 
        Government or in the United States Postal Service; and
            ``(C) there is a nexus between the enjoined conduct and 
        such person's office or employment;
the court may order that the person be suspended or summarily 
discharged from such office or employment.
    ``(d) As used in this section, the term `protective order' means 
any court order that requires an individual--
            ``(1) to refrain from behavior prohibited by subsection 
        (a); or
            ``(2) to refrain from contact with the person who 
        subsequently is a victim of the offense under such subsection 
        that is committed by that individual.''.
    (b) Clerical Amendment.--The table of sections at the beginning of 
chapter 41 of title 18, United States Code, is amended by adding at the 
end the following:

``881. Stalking Federal and postal officers and employees.''.

SEC. 812. NONMAILABILITY OF CONTROLLED SUBSTANCES.

    Section 1716 of title 18, United States Code, is amended by adding 
at the end the following:
    ``Whoever knowingly deposits for mailing or delivery, or knowingly 
causes to be delivered by mail, according to the direction thereon, or 
at any place at which it is directed to be delivered by the person to 
whom it is addressed, unless in accordance with the rules and 
regulations authorized to be prescribed by the Postal Service, any 
controlled substance, as that term is defined for the purposes of the 
Controlled Substances Act, shall, if the distribution of a like amount 
of such substance is a felony under such Act, be fined under this title 
or imprisoned not more than 5 years, or both.''.

SEC. 813. ENHANCED PENALTIES.

    Pursuant to its authority under section 994 of title 28, United 
States Code, the United States Sentencing Commission shall amend its 
sentencing guidelines to--
            (1) appropriately enhance penalties in cases in which a 
        defendant is convicted of stealing or destroying a quantity of 
        undelivered United States mail, in violation of sections 1702, 
        1703, 1708, 1709, 2114, or 2115 of title 18, United States 
        Code; and
            (2) establish that the intended loss in a theft of an 
        access device as defined in section 1029(e)(1) of title 18, 
        United States Code, shall be based on the credit line of the 
        access device or the actual unauthorized charges, whichever 
        amount is greater.

SEC. 814. POSTAL BURGLARY PROVISIONS.

    (a) Larceny Involving Post Office Boxes and Postal Stamp Vending 
Machines.--Section 2115 of title 18, United States Code, is amended--
            (1) by striking ``or'' before ``any building'';
            (2) by inserting ``or any post office box or postal 
        products vending machine,'' after ``used in whole or in part as 
        a post office,''; and
            (3) by inserting ``or in such box or machine,'' after ``so 
        used''.
    (b) Receipt, Possession, Concealment, or Disposition of Property.--
Section 2115 of title 18, United States Code, is amended--
            (1) by inserting ``(a)'' before ``Whoever''; and
            (2) by adding at the end the following:
    ``(b) Whoever receives, possesses, conceals, or disposes of any 
mail matter, money, or other property of the United States, that has 
been obtained in violation of this section, knowing the same to have 
been unlawfully obtained, shall be fined under this title or imprisoned 
not more than 5 years, or both.''.

SEC. 815. MAIL, MONEY, OR OTHER PROPERTY OF THE UNITED STATES.

    (a) Enhanced Penalty for Robbery.--Subsection (a) of section 2114 
of title 18, United States Code, is amended to read as follows:
    ``(a) Assault.--Whoever assaults any person having lawful charge, 
control, or custody of any mail matter or of any money or other 
property of the United States, with intent to rob, steal, or purloin 
such mail matter, money, or other property of the United States, or 
robs or attempts to rob any such person of mail matter, or of any 
money, or other property of the United States, shall, for the first 
offense, be imprisoned not more than 10 years or fined under this 
title, or both. If, in effecting or attempting to effect such robbery 
the defendant wounds the person having custody of such mail, money, or 
other property of the United States, or puts that person's life in 
jeopardy by the use of a dangerous weapon, or the offense is a 
subsequent offense under this subsection, the defendant shall be 
imprisoned not more than 25 years or fined under this title, or both. 
If the death of any person results from the offense under this 
subsection, the defendant shall be punished by death or life 
imprisonment.''.
    (b) Attempt Offenses.--
            (1) The second paragraph of section 501 of title 18, United 
        States Code, is amended by striking ``uses or sells,'' and 
        inserting ``uses or sells or attempts to use or sell,''.
            (2) Section 1711 of title 18, United States Code, is 
        amended by inserting ``attempts to loan, use, pledge, 
        hypothecate, or convert to this own use,'' after ``converts to 
        his own use,''.
                                 <all>