[Congressional Record Volume 151, Number 33 (Thursday, March 17, 2005)]
[Senate]
[Pages S3012-S3031]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Ms. COLLINS (for herself, Mr. Carper, and Mr. Voinovich):
  S. 662. A bill to reform the postal laws of the United States; to the 
Committee on Homeland Security and Governmental Affairs.
  Ms. COLLINS. Mr. President, I rise today with my friend and 
colleague, Senator Carper, to introduce the Postal Accountability and 
Enhancement Act of 2005, a bill designed to help the 225-year-old 
Postal Service meet the challenges of the 21st Century. This 
legislation represents the culmination of a process that began in the 
summer of 2002 when I introduced a bill to establish a Presidential 
Commission charged with examining the problems the Postal Service 
faces, and developing specific recommendations and legislative 
proposals that Congress and the Postal Service could implement.
  I originally introduced the Postal Accountability and Enhancement Act 
last

[[Page S3013]]

May. In June of 2004, the bill was unanimously reported out of the the 
Homeland Security and Governmental Affairs Committee. That bill, S. 
2468, had the strong endorsements of the National Rural Letter Carriers 
Association, the National Association of Letter Carriers, the National 
Association of Postmasters of the United States, and the Coalition for 
a 21st Century Postal Service--which represents thousands of the major 
mailers, employee groups, small businesses, and other users of the 
mail. It also had the strong bi-partisan support of twenty-two members 
of the United States Senate. Unfortunately, due to a variety of 
factors, my efforts to have the bill considered before the full Senate 
were stalled.
  Since last Fall, Administration representatives have become actively 
engaged in postal reform efforts, and have given me their commitment to 
working with Congress to ensure passage of a reform bill this year. I 
have every expectation that this will be the year comprehensive postal 
reform legislation is signed into law.
  It has long been acknowledged that the financial and operational 
problems confronting the Postal Service are serious. At present, the 
Postal Service has more than $90 billion in unfunded liabilities and 
obligations, which include $1.8 billion in debt to the U.S. Treasury, 
$7.6 billion for Workers' Compensation claims, $3.5 billion for 
retirement costs, and as much as $47 billion to cover retiree health 
care costs. The Government Accountability Office's Comptroller General, 
David Walker, has pointed to the urgent need for ``fundamental reforms 
to minimize the risk of a significant taxpayer bailout or dramatic 
postal rate increases.'' The Postal Service has been on GAO's ``High-
Risk'' List since April of 2001. The Postal Service is at risk of a 
``death spiral'' of decreasing volume and increasing rates that lead to 
further decreases in volume.
  In December of 2003, President Bush announced the creation of a 
bipartisan commission charged with identifying the operational, 
structural, and financial challenges facing the U.S. Postal Service. 
The President charged this commission with examining all significant 
aspects of the Postal Service with the goal of recommending legislative 
and administrative reforms to ensure its long-term viability.
  The President's Commission conducted seven public hearings across the 
country at which they heard from numerous witnesses. On July 31, 2003, 
the Commission released its final report, making 35 legislative and 
administrative recommendations for the reform of the Postal Service.
  As I read through the Commission's report, I was struck by what I 
considered the Commission's wake up call to Congress: its statement 
that ``an incremental approach to Postal Service reform will yield too 
little, too late given the enterprise's bleak fiscal outlook, the depth 
of current debt and unfunded obligations, the downward trend in First-
Class mail volumes and the limited potential of its legacy postal 
network that was built for a bygone era.'' That is a very strong 
statement, and one that challenged both the Postal Service and Congress 
to embrace far-reaching reforms.
  To the relief of many, including myself, the Commission did not 
recommend privatization of the Postal Service. Instead, the Commission 
sought to find a way for the Postal Service to do, as Co-Chair Jim 
Johnson described to me, ``an overwhelmingly better job under the same 
general structure.''
  The Postal Service plays a vital role in our economy. The Service 
itself employs more than 750,000 career employees. Less well known is 
the fact that it is also the linchpin of a $900-billion mailing 
industry that employs 9 million Americans in fields as diverse as 
direct mailing, printing, catalog production, paper manufacturing, and 
financial services. The health of the Postal Service is essential to 
the vitality of thousands of companies and the millions that they 
employ.
  One of the greatest challenges for the Postal Service is the decrease 
in mail volume as business communications, bills and payments move more 
and more to the Internet. The Postal Service has experienced declining 
volumes of First-Class mail for three straight years. This is highly 
significant, given that First-Class mail accounts for 48 percent of 
total mail volume, and the revenue it generates pays for more than two-
thirds of the Postal Service's institutional costs.
  The Postal Service also faces the difficult task of trying to cut 
costs from its nationwide infrastructure and transportation network. 
These costs are difficult to cut. Even though volumes may be 
decreasing, carriers must still deliver six days a week to more than 
139 million addresses.
  As Chairman of the Committee on Homeland Security and Governmental 
Affairs, I held a series of eight hearings, including a joint hearing 
with the House, during which we reviewed the recommendations of the 
President's Commission. The bill Senator Carper and I introduce today 
reflects what the Committee learned from dozens of witnesses.
  First and foremost, the Collins-Carper bill preserves the basic 
features of universal service--affordable rates, frequent delivery, and 
convenient community access to retail postal services. As a Senator 
representing a large, rural State, I want to ensure that my 
constituents living in the northern woods, or on the islands, or in our 
many rural small towns have the same access to postal services as the 
people of our cities. If the Postal Service were no longer to provide 
universal service and deliver mail to every customer, the affordable 
communication link upon which many Americans rely would be jeopardized. 
Most commercial enterprises would find it uneconomical, if not 
impossible, to deliver mail and packages to rural Americans at rates 
charged by the Postal Service.
  The Collins-Carper bill allows the Postal Service to maintain its 
current mail monopoly, and retain its sole access to customer 
mailboxes. It grants the Postal Service Board of Governors the 
authority to set rates for competitive products like Express Mail and 
Parcel Post, as long as these prices do not result in cross subsidy 
from market-dominant products. As a safeguard, our bill establishes a 
30 day prior review period during which the proposed rate changes shall 
be reviewed by the Postal Regulatory Commission.
  It replaces the current lengthy and litigious rate-setting process 
with a rate cap-based structure for market-dominant products such as 
First-Class Mail, periodicals and library mail. This would allow the 
Postal Service to react more quickly to changes in the mailing 
industry. The rate caps would be linked to the Consumer Price Index. 
The goal would be to make rate increases more predictable and less 
frequent and to provide incentives for the Postal Service to operate 
efficiently. Price changes for market-dominant products would be 
subject to a 45 day prior review period by the Postal Regulatory 
Commission.
  Our bill would introduce new safeguards against unfair competition by 
the Postal Service in competitive markets. Subsidization of competitive 
products by market-dominant products would be expressly forbidden, and 
an equitable allocation of institutional costs to competitive products 
would be required.
  The President's Commission recommended that the regulator be granted 
the authority to make changes to the Postal Service's universal service 
obligation and monopoly. The vast majority of the postal community, 
however, shared my belief that these are important policy 
determinations that should be retained by Congress. The Collins-Carper 
bill keeps those public policy decisions in congressional hands.
  The existing Postal Rate Commission would be transformed into the 
Postal Regulatory Commission with greatly enhanced authority. Under 
current law, the Rate Commission has very narrow authority. We wanted 
to ensure that the Postal Service management has both greater latitude 
and stronger oversight. Among other things, the Postal Regulatory 
Commission will have the authority to regulate rates for non-
competitive products and services; ensure financial transparency; 
establish limits on the accumulation of retained earnings by the Postal 
Service; obtain information from the Postal Service, if need be, 
through the use of new subpoena power; and review and act on complaints 
filed by those who believe the Postal Service has exceeded its 
authority. Members of the Postal

[[Page S3014]]

Regulatory Board will be selected solely on the basis of their 
demonstrated experience and professional standing. Senate confirmation 
of all Board Members will be required.
  To meet the Presidential Commission's call for increased financial 
transparency, the Collins-Carper bill will require the Postal Service 
to file with the Postal Regulatory Commission certain Securities and 
Exchange Commission financial disclosure forms, along with detailed 
annual reports on the status of the Postal Service's pension and 
postretirement health obligations.
  The Governmental Affairs Committee dedicated two hearings to the 
examination of the Commission's workforce-related recommendations. The 
Postal Service is a highly labor intensive organization, using $3 out 
of every $4 to pay the wages and benefits of its employees. Their 
workforce is comprised of more than 700,000 dedicated letter carriers, 
clerks, mail handlers, postmasters, and others, many of whom place 
great value on their right to collectively bargain. Our bill reaffirms 
that right. This bill only makes changes to the bargaining process that 
have been agreed to by both the Postal Service and the four major 
unions. We replace the rarely used fact-finding process with mediation, 
and shorten statutory deadlines for certain phases of the bargaining 
process.
  Additionally, the Collins-Carper bill corrects what I believe to be 
an anomaly in the federal workers' compensation law that results in 
high costs for the Postal Service. Under the Federal Employees 
Compensation Act (FECA), federal employees with dependents are eligible 
for 75 percent of their take-home pay, tax free, plus cost of living 
allowances. In addition, there is no maximum dollar cap on FECA 
payments. As a result, employees often opt not to retire, staying on 
the more generous workers' compensation program permanently.
  According to a March 2003 audit issued by the Postal Service's Office 
of Inspector General, the Postal Service's workers' compensation rolls 
include 81 cases that originated 40 to 50 years ago, with the oldest 
recipient being 102 years old. The IG's office found 778 cases that 
originated 30 to 40 years ago; and 1,189 cases that originated 20 to 29 
years ago.
  The Collins-Carper bill works to protect the financial resources of 
the Postal Service by converting workers' compensation benefits for 
total or partial disability to a retirement annuity when the affected 
employee reaches 65 years of age. This change would reflect the fact 
that disabled postal employees would likely retire at some point were 
they not receiving workers' compensation. I would like to note that the 
average postal employee retires far earlier than age 65, so this is 
still a generous program. It is important to point out that the Postal 
Service has reduced their workplace injury rate by twenty-eight percent 
over the past three years.
  The Collins--Carper bill also puts into place a three-day waiting 
period before an employee is eligible to receive 45 days of 
continuation of pay. This is consistent with every state's workers' 
compensation program that requires a three- to seven-day waiting period 
before benefits are paid.
  To address the President's Commission's recommendation for improved 
executive compensation, this bill will allow the Postal Service to 
raise their overall executive compensation level from Executive Level 1 
to that of the Vice President. This would bring the Postal Service in 
line with authority granted to federal agencies. This new authority 
will be contingent upon the development of a meaningful performance 
appraisal system.
  Our bill has reached an important compromise on the issue of 
workshare discounts. The workshare program was developed by the Postal 
Service and the Postal Rate Commission to enable customers to pay lower 
rates when they perform mail preparation or transportation activities. 
The language in our bill supports the principle that workshare 
discounts should generally not exceed the costs that the Postal Service 
avoids as a result of the worksharing activity. However, the bill 
spells out certain circumstances under which workshare discounts in 
excess of avoided costs are warranted.
  Finally, our bill would repeal a provision of Public Law 108-18 which 
requires that money owed to the Postal Service due to an overpayment 
into the Civil Service Retirement System Fund be held in an escrow 
account. Repealing this provision would essentially ``free up'' $78 
billion over a period of 60 years. These savings would be used to not 
only pay off debt to the U.S. Treasury and to fund health care 
liabilities, but also to mitigate rate increases as well. In fact, 
failure to release these escrow funds could mean, for mailers, a 
double-digit rate increase in 2006--an expense most American businesses 
and many consumers are ill-equipped to afford.
  The bill would also return to the Department of Treasury the 
responsibility for funding CSRS pension benefits relating to the 
military service of postal retirees. No other agency is required to 
make this payment. Ratepayers should not be held responsible for this 
$27 billion obligation.
  The Postal Service has reached a critical juncture. If we are to save 
and strengthen this vital service upon which so many Americans rely for 
communication and their livelihoods, the time to act is now.
  I look forward to working with all of my colleagues in the Senate, 
and House Government Reform and Oversight Committee Chairman Tom Davis, 
who, together with Congressman John McHugh, also recently introduced a 
postal reform bill, H.R. 22.
  I ask unanimous consent that the text of the bill be printed in the 
Record.
  There being no objection, the bill was ordered to be printed in the 
Record, as follows:

                                 S. 662

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

     SECTION 1. SHORT TITLE; TABLE OF CONTENTS.

       (a) Short Title.--This Act may be cited as the ``Postal 
     Accountability and Enhancement Act''.
       (b) Table of Contents.--The table of contents for this Act 
     is as follows:

Sec. 1. Short title; table of contents.

                 TITLE I--DEFINITIONS; POSTAL SERVICES

Sec. 101. Definitions.
Sec. 102. Postal services.

                    TITLE II--MODERN RATE REGULATION

Sec. 201. Provisions relating to market-dominant products.
Sec. 202. Provisions relating to competitive products.
Sec. 203. Provisions relating to experimental and new products.
Sec. 204. Reporting requirements and related provisions.
Sec. 205. Complaints; appellate review and enforcement.
Sec. 206. Clerical amendment.

                  TITLE III--MODERN SERVICE STANDARDS

Sec. 301. Establishment of modern service standards.
Sec. 302. Postal service plan.

           TITLE IV--PROVISIONS RELATING TO FAIR COMPETITION

Sec. 401. Postal Service Competitive Products Fund.
Sec. 402. Assumed Federal income tax on competitive products income.
Sec. 403. Unfair competition prohibited.
Sec. 404. Suits by and against the Postal Service.
Sec. 405. International postal arrangements.

                      TITLE V--GENERAL PROVISIONS

Sec. 501. Qualification and term requirements for Governors.
Sec. 502. Obligations.
Sec. 503. Private carriage of letters.
Sec. 504. Rulemaking authority.
Sec. 505. Noninterference with collective bargaining agreements.
Sec. 506. Bonus authority.

                TITLE VI--ENHANCED REGULATORY COMMISSION

Sec. 601. Reorganization and modification of certain provisions 
              relating to the Postal Regulatory Commission.
Sec. 602. Authority for Postal Regulatory Commission to issue 
              subpoenas.
Sec. 603. Appropriations for the Postal Regulatory Commission.
Sec. 604. Redesignation of the Postal Rate Commission.
Sec. 605. Financial transparency.

                         TITLE VII--EVALUATIONS

Sec. 701. Assessments of ratemaking, classification, and other 
              provisions.
Sec. 702. Report on universal postal service and the postal monopoly.
Sec. 703. Study on equal application of laws to competitive products.
Sec. 704. Report on postal workplace safety and workplace-related 
              injuries.
Sec. 705. Study on recycled paper.

   TITLE VIII--POSTAL SERVICE RETIREMENT AND HEALTH BENEFITS FUNDING

Sec. 801. Short title.
Sec. 802. Civil Service Retirement System.

[[Page S3015]]

Sec. 803. Health insurance.
Sec. 804. Repeal of disposition of savings provision.
Sec. 805. Effective dates.

                TITLE IX--COMPENSATION FOR WORK INJURIES

Sec. 901. Temporary disability; continuation of pay.
Sec. 902. Disability retirement for postal employees.

                         TITLE X--MISCELLANEOUS

Sec. 1001. Employment of postal police officers.
Sec. 1002. Expanded contracting authority.
Sec. 1003. Report on the United States Postal Inspection Service and 
              the Office of the Inspector General of the United States 
              Postal Service.
Sec. 1004. Sense of Congress regarding Postal Service purchasing 
              reform.

                 TITLE I--DEFINITIONS; POSTAL SERVICES

     SEC. 101. DEFINITIONS.

       Section 102 of title 39, United States Code, is amended by 
     striking ``and'' at the end of paragraph (3), by striking the 
     period at the end of paragraph (4) and inserting a semicolon, 
     and by adding at the end the following:
       ``(5) `postal service' refers to the physical delivery of 
     letters, printed matter, or packages weighing up to 70 
     pounds, including physical acceptance, collection, sorting, 
     transportation, or other functions ancillary thereto;
       ``(6) `product' means a postal service with a distinct cost 
     or market characteristic for which a rate or rates are 
     applied;
       ``(7) `rates', as used with respect to products, includes 
     fees for postal services;
       ``(8) `market-dominant product' or `product in the market-
     dominant category of mail' means a product subject to 
     subchapter I of chapter 36; and
       ``(9) `competitive product' or `product in the competitive 
     category of mail' means a product subject to subchapter II of 
     chapter 36; and
       ``(10) `year', as used in chapter 36 (other than 
     subchapters I and VI thereof), means a fiscal year.''.

     SEC. 102. POSTAL SERVICES.

       (a) In General.--Section 404 of title 39, United States 
     Code, is amended--
       (1) in subsection (a), by striking paragraph (6) and by 
     redesignating paragraphs (7) through (9) as paragraphs (6) 
     through (8), respectively; and
       (2) by adding at the end the following:
       ``(c) Except as provided in section 411, nothing in this 
     title shall be considered to permit or require that the 
     Postal Service provide any special nonpostal or similar 
     services.''.
       (b) Conforming Amendments.--(1) Section 1402(b)(1)(B)(ii) 
     of the Victims of Crime Act of 1984 (98 Stat. 2170; 42 U.S.C. 
     10601(b)(1)(B)(ii)) is amended by striking ``404(a)(8)'' and 
     inserting ``404(a)(7)''.
       (2) Section 2003(b)(1) of title 39, United States Code, is 
     amended by striking ``and nonpostal''.

                    TITLE II--MODERN RATE REGULATION

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

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

     ``Sec. 3621. Applicability; definitions

       ``(a) Applicability.--This subchapter shall apply with 
     respect to--
       ``(1) first-class mail letters and sealed parcels;
       ``(2) first-class mail cards;
       ``(3) periodicals;
       ``(4) standard mail;
       ``(5) single-piece parcel post;
       ``(6) media mail;
       ``(7) bound printed matter;
       ``(8) library mail;
       ``(9) special services; and
       ``(10) single-piece international mail,
     subject to any changes the Postal Regulatory Commission may 
     make under section 3642.
       ``(b) Rule of Construction.--Mail matter referred to in 
     subsection (a) shall, for purposes of this subchapter, be 
     considered to have the meaning given to such mail matter 
     under the mail classification schedule.

     ``Sec. 3622. Modern rate regulation

       ``(a) Authority Generally.--The Postal Regulatory 
     Commission shall, within 12 months after the date of 
     enactment of this section, by regulation establish (and may 
     from time to time thereafter by regulation revise) a modern 
     system for regulating rates and classes for market-dominant 
     products.
       ``(b) Objectives.--Such system shall be designed to achieve 
     the following objectives:
       ``(1) To reduce the administrative burden and increase the 
     transparency of the ratemaking process while affording 
     reasonable opportunities for interested parties to 
     participate in that process.
       ``(2) To create predictability and stability in rates.
       ``(3) To maximize incentives to reduce costs and increase 
     efficiency.
       ``(4) To enhance mail security and deter terrorism by 
     promoting secure, sender-identified mail.
       ``(5) To allow the Postal Service pricing flexibility, 
     including the ability to use pricing to promote intelligent 
     mail and encourage increased mail volume during nonpeak 
     periods.
       ``(6) To assure adequate revenues, including retained 
     earnings, to maintain financial stability and meet the 
     service standards established under section 3691.
       ``(7) To allocate the total institutional costs of the 
     Postal Service equitably between market-dominant and 
     competitive products.
       ``(c) Factors.--In establishing or revising such system, 
     the Postal Regulatory Commission shall take into account--
       ``(1) the establishment and maintenance of a fair and 
     equitable schedule for rates and classification system;
       ``(2) the value of the mail service actually provided each 
     class or type of mail service to both the sender and the 
     recipient, including but not limited to the collection, mode 
     of transportation, and priority of delivery;
       ``(3) the requirement that each class of mail or type of 
     mail service bear the direct and indirect postal costs 
     attributable to each class or type of mail service plus that 
     portion of all other costs of the Postal Service reasonably 
     assignable to such class or type;
       ``(4) the effect of rate increases upon the general public, 
     business mail users, and enterprises in the private sector of 
     the economy engaged in the delivery of mail matter other than 
     letters;
       ``(5) the available alternative means of sending and 
     receiving letters and other mail matter at reasonable costs;
       ``(6) the degree of preparation of mail for delivery into 
     the postal system performed by the mailer and its effect upon 
     reducing costs to the Postal Service;
       ``(7) simplicity of structure for the entire schedule and 
     simple, identifiable relationships between the rates or fees 
     charged the various classes of mail for postal services;
       ``(8) the relative value to the people of the kinds of mail 
     matter entered into the postal system and the desirability 
     and justification for special classifications and services of 
     mail;
       ``(9) the importance of providing classifications with 
     extremely high degrees of reliability and speed of delivery 
     and of providing those that do not require high degrees of 
     reliability and speed of delivery;
       ``(10) the desirability of special classifications from the 
     point of view of both the user and of the Postal Service;
       ``(11) the educational, cultural, scientific, and 
     informational value to the recipient of mail matter;
       ``(12) the need for the Postal Service to increase its 
     efficiency and reduce its costs, including infrastructure 
     costs, to help maintain high quality, affordable, universal 
     postal service; and
       ``(13) the policies of this title as well as such other 
     factors as the Commission determines appropriate.
       ``(d) Requirements.--
       ``(1) In general.--The system for regulating rates and 
     classes for market-dominant products shall--
       ``(A) require the Postal Regulatory Commission to set 
     annual limitations on the percentage changes in rates based 
     on inflation using indices, such as the Consumer Price Index 
     for All Urban Consumers unadjusted for seasonal variation 
     over the 12-month period preceding the date the Postal 
     Service proposes to increase rates;
       ``(B) establish a schedule whereby rates, when necessary 
     and appropriate, would change at regular intervals by 
     predictable amounts;
       ``(C) not later than 45 days before the implementation of 
     any adjustment in rates under this section--
       ``(i) require the Postal Service to provide public notice 
     of the adjustment;
       ``(ii) provide an opportunity for review by the Postal 
     Regulatory Commission;
       ``(iii) provide for the Postal Regulatory Commission to 
     notify the Postal Service of any noncompliance of the 
     adjustment with the limitation under subparagraph (A); and
       ``(iv) require the Postal Service to respond to the notice 
     provided under clause (iii) and describe the actions to be 
     taken to comply with the limitation under subparagraph (A); 
     and
       ``(D) notwithstanding any limitation set under 
     subparagraphs (A) and (C), establish procedures whereby rates 
     may be adjusted on an expedited basis due to unexpected and 
     extraordinary circumstances.
       ``(2) Limitations.--
       ``(A) Classes of mail.--The annual limitations under 
     paragraph (1)(A) shall apply to a class of mail, as defined 
     in the Domestic Mail Classification Schedule as in effect on 
     the date of enactment of the Postal Accountability and 
     Enhancement Act.
       ``(B) Rounding of rates and fees.--Nothing in this 
     subsection shall preclude the Postal Service from rounding 
     rates and fees to the nearest whole integer, if the effect of 
     such rounding does not cause the overall rate increase for 
     any class to exceed the Consumer Price Index for All Urban 
     Consumers.
       ``(e) Workshare Discounts.--
       ``(1) Definition.--In this subsection, the term `workshare 
     discount' refers to rate discounts provided to mailers for 
     the presorting, prebarcoding, handling, or transportation of 
     mail, as further defined by the Postal Regulatory Commission 
     under subsection (a).
       ``(2) Regulations.--As part of the regulations established 
     under subsection (a), the Postal Regulatory Commission shall 
     establish rules for workshare discounts that ensure that such 
     discounts do not exceed the cost that the Postal Service 
     avoids as a result of workshare activity, unless--
       ``(A) the discount is--

[[Page S3016]]

       ``(i) associated with a new postal service, a change to an 
     existing postal service, or with a new workshare initiative 
     related to an existing postal service; and
       ``(ii) necessary to induce mailer behavior that furthers 
     the economically efficient operation of the Postal Service 
     and the portion of the discount in excess of the cost that 
     the Postal Service avoids as a result of the workshare 
     activity will be phased out over a limited period of time;
       ``(B) a reduction in the discount would--
       ``(i) lead to a loss of volume in the affected category or 
     subclass of mail and reduce the aggregate contribution to the 
     institutional costs of the Postal Service from the category 
     or subclass subject to the discount below what it otherwise 
     would have been if the discount had not been reduced to costs 
     avoided;
       ``(ii) result in a further increase in the rates paid by 
     mailers not able to take advantage of the discount; or
       ``(iii) impede the efficient operation of the Postal 
     Service;
       ``(C) the amount of the discount above costs avoided--
       ``(i) is necessary to mitigate rate shock; and
       ``(ii) will be phased out over time; or
       ``(D) the discount is provided in connection with 
     subclasses of mail consisting exclusively of mail matter of 
     educational, cultural, scientific, or informational value.
       ``(3) Report.--Whenever the Postal Service establishes or 
     maintains a workshare discount, the Postal Service shall, at 
     the time it publishes the workshare discount rate, submit to 
     the Postal Regulatory Commission a detailed report that--
       ``(A) explains the Postal Service's reasons for 
     establishing or maintaining the rate;
       ``(B) sets forth the data, economic analyses, and other 
     information relied on by the Postal Service to justify the 
     rate; and
       ``(C) certifies that the discount will not adversely affect 
     rates or services provided to users of postal services who do 
     not take advantage of the discount rate.
       ``(f) Transition Rule.--Until regulations under this 
     section first take effect, rates and classes for market-
     dominant products shall remain subject to modification in 
     accordance with the provisions of this chapter and section 
     407, as such provisions were last in effect before the date 
     of enactment of this section.''.
       (b) Repealed Sections.--Sections 3623, 3624, 3625, and 3628 
     of title 39, United States Code, are repealed.
       (c) Redesignation.--Chapter 36 of title 39, United States 
     Code (as in effect after the amendment made by section 601, 
     but before the amendment made by section 202) is amended by 
     striking the heading for subchapter II and inserting the 
     following:

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

     SEC. 202. PROVISIONS RELATING TO COMPETITIVE PRODUCTS.

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

      ``SUBCHAPTER II--PROVISIONS RELATING TO COMPETITIVE PRODUCTS

     ``Sec. 3631. Applicability; definitions and updates

       ``(a) Applicability.--This subchapter shall apply with 
     respect to--
       ``(1) priority mail;
       ``(2) expedited mail;
       ``(3) bulk parcel post;
       ``(4) bulk international mail; and
       ``(5) mailgrams;
     subject to subsection (d) and any changes the Postal 
     Regulatory Commission may make under section 3642.
       ``(b) Definition.--For purposes of this subchapter, the 
     term `costs attributable', as used with respect to a product, 
     means the direct and indirect postal costs attributable to 
     such product.
       ``(c) Rule of Construction.--Mail matter referred to in 
     subsection (a) shall, for purposes of this subchapter, be 
     considered to have the meaning given to such mail matter 
     under the mail classification schedule.
       ``(d) Limitation.--Notwithstanding any other provision of 
     this section, nothing in this subchapter shall be considered 
     to apply with respect to any product then currently in the 
     market-dominant category of mail.

     ``Sec. 3632. Action of the Governors

       ``(a) Authority To Establish Rates and Classes.--The 
     Governors, with the written concurrence of a majority of all 
     of the Governors then holding office, shall establish rates 
     and classes for products in the competitive category of mail 
     in accordance with the requirements of this subchapter and 
     regulations promulgated under section 3633.
       ``(b) Procedures.--
       ``(1) In general.--Rates and classes shall be established 
     in writing, complete with a statement of explanation and 
     justification, and the date as of which each such rate or 
     class takes effect.
       ``(2) Public notice; review; and compliance.--Not later 
     than 30 days before the date of implementation of any 
     adjustment in rates under this section--
       ``(A) the Governors shall provide public notice of the 
     adjustment and an opportunity for review by the Postal 
     Regulatory Commission;
       ``(B) the Postal Regulatory Commission shall notify the 
     Governors of any noncompliance of the adjustment with section 
     3633; and
       ``(C) the Governors shall respond to the notice provided 
     under subparagraph (B) and describe the actions to be taken 
     to comply with section 3633.
       ``(c) Transition Rule.--Until regulations under section 
     3633 first take effect, rates and classes for competitive 
     products shall remain subject to modification in accordance 
     with the provisions of this chapter and section 407, as such 
     provisions were as last in effect before the date of 
     enactment of this section.

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

       ``(a) In General.--The Postal Regulatory Commission shall, 
     within 180 days after the date of enactment of this section, 
     promulgate (and may from time to time thereafter revise) 
     regulations to--
       ``(1) prohibit the subsidization of competitive products by 
     market-dominant products;
       ``(2) ensure that each competitive product covers its costs 
     attributable; and
       ``(3) ensure that all competitive products collectively 
     cover their share of the institutional costs of the Postal 
     Service.
       ``(b) Review of Minimum Contribution.--Five years after the 
     date of enactment of this section, and every 5 years 
     thereafter, the Postal Regulatory Commission shall conduct a 
     review to determine whether the institutional costs 
     contribution requirement under subsection (a)(3) should be 
     retained in its current form, modified, or eliminated. In 
     making its determination, the Commission shall consider all 
     relevant circumstances, including the prevailing competitive 
     conditions in the market, and the degree to which any costs 
     are uniquely or disproportionately associated with any 
     competitive products.''.

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

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

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

     ``Sec. 3641. Market tests of experimental products

       ``(a) Authority.--
       ``(1) In general.--The Postal Service may conduct market 
     tests of experimental products in accordance with this 
     section.
       ``(2) Provisions waived.--A product shall not, while it is 
     being tested under this section, be subject to the 
     requirements of sections 3622, 3633, or 3642, or regulations 
     promulgated under those sections.
       ``(b) Conditions.--A product may not be tested under this 
     section unless it satisfies each of the following:
       ``(1) Significantly different product.--The product is, 
     from the viewpoint of the mail users, significantly different 
     from all products offered by the Postal Service within the 2-
     year period preceding the start of the test.
       ``(2) Market disruption.--The introduction or continued 
     offering of the product will not create an unfair or 
     otherwise inappropriate competitive advantage for the Postal 
     Service or any mailer, particularly in regard to small 
     business concerns (as defined under subsection (h)).
       ``(3) Correct categorization.--The Postal Service 
     identifies the product, for the purpose of a test under this 
     section, as either market-dominant or competitive, consistent 
     with the criteria under section 3642(b)(1). Costs and 
     revenues attributable to a product identified as competitive 
     shall be included in any determination under section 
     3633(3)(relating to provisions applicable to competitive 
     products collectively). Any test that solely affects products 
     currently classified as competitive, or which provides 
     services ancillary to only competitive products, shall be 
     presumed to be in the competitive product category without 
     regard to whether a similar ancillary product exists for 
     market-dominant products.
       ``(c) Notice.--
       ``(1) In general.--At least 30 days before initiating a 
     market test under this section, the Postal Service shall file 
     with the Postal Regulatory Commission and publish in the 
     Federal Register a notice--
       ``(A) setting out the basis for the Postal Service's 
     determination that the market test is covered by this 
     section; and
       ``(B) describing the nature and scope of the market test.
       ``(2) Safeguards.--For a competitive experimental product, 
     the provisions of section 504(g) shall be available with 
     respect to any information required to be filed under 
     paragraph (1) to the same extent and in the same manner as in 
     the case of any matter described in section 504(g)(1). 
     Nothing in paragraph (1) shall be considered to permit or 
     require the publication of any information as to which 
     confidential treatment is accorded under the preceding 
     sentence (subject to the same exception as set forth in 
     section 504(g)(3)).
       ``(d) Duration.--
       ``(1) In general.--A market test of a product under this 
     section may be conducted over a period of not to exceed 24 
     months.
       ``(2) Extension authority.--If necessary in order to 
     determine the feasibility or desirability of a product being 
     tested under this section, the Postal Regulatory 
     Commission may, upon written application of the Postal 
     Service (filed not later than 60 days before the date as 
     of which the testing of such product would otherwise be 
     scheduled to terminate under paragraph (1)), extend the 
     testing of such product for not to exceed an additional 12 
     months.
       ``(e) Dollar-Amount Limitation.--

[[Page S3017]]

       ``(1) In general.--A product may only be tested under this 
     section if 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 paragraph (2) and 
     subsection (g).
       ``(2) Exemption authority.--The Postal Regulatory 
     Commission may, upon written application of the Postal 
     Service, exempt the market test from the limit in paragraph 
     (1) if the total revenues that are anticipated, or in fact 
     received, by the Postal Service from such product do not 
     exceed $50,000,000 in any year, subject to subsection (g). In 
     reviewing an application under this paragraph, the Postal 
     Regulatory Commission shall approve such application if it 
     determines that--
       ``(A) the product is likely to benefit the public and meet 
     an expected demand;
       ``(B) the product is likely to contribute to the financial 
     stability of the Postal Service; and
       ``(C) the product is not likely to result in unfair or 
     otherwise inappropriate competition.
       ``(f) Cancellation.--If the Postal Regulatory Commission at 
     any time determines that a market test under this section 
     fails to meet 1 or more of the requirements of this section, 
     it may order the cancellation of the test involved or take 
     such other action as it considers appropriate. A 
     determination under this subsection shall be made in 
     accordance with such procedures as the Commission shall by 
     regulation prescribe.
       ``(g) Adjustment for Inflation.--For purposes of each year 
     following the year in which occurs the deadline for the 
     Postal Service's first report to the Postal Regulatory 
     Commission under section 3652(a), each dollar amount 
     contained in this section shall be adjusted by the change in 
     the Consumer Price Index for such year (as determined under 
     regulations of the Commission).
       ``(h) Definition of a Small Business Concern.--The criteria 
     used in defining small business concerns or otherwise 
     categorizing business concerns as small business concerns 
     shall, for purposes of this section, be established by the 
     Postal Regulatory Commission in conformance with the 
     requirements of section 3 of the Small Business Act.
       ``(i) Effective Date.--Market tests under this subchapter 
     may be conducted in any year beginning with the first year in 
     which occurs the deadline for the Postal Service's first 
     report to the Postal Regulatory Commission under section 
     3652(a).

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

       ``(a) In General.--Upon request of the Postal Service or 
     users of the mails, or upon its own initiative, the Postal 
     Regulatory Commission may change the list of market-dominant 
     products under section 3621 and the list of competitive 
     products under section 3631 by adding new products to the 
     lists, removing products from the lists, or transferring 
     products between the lists.
       ``(b) Criteria.--All determinations by the Postal 
     Regulatory Commission under subsection (a) shall be made in 
     accordance with the following criteria:
       ``(1) The market-dominant category of products shall 
     consist of each product in the sale of which the Postal 
     Service exercises sufficient market power that it can 
     effectively set the price of such product substantially above 
     costs, raise prices significantly, decrease quality, or 
     decrease output, without risk of losing substantial business 
     to other firms offering similar products. The competitive 
     category of products shall consist of all other products.
       ``(2) Exclusion of products covered by postal monopoly.--A 
     product covered by the postal monopoly shall not be subject 
     to transfer under this section from the market-dominant 
     category of mail. For purposes of the preceding sentence, the 
     term `product covered by the postal monopoly' means any 
     product the conveyance or transmission of which is reserved 
     to the United States under section 1696 of title 18, subject 
     to the same exception as set forth in the last sentence of 
     section 409(e)(1).
       ``(3) Additional considerations.--In making any decision 
     under this section, due regard shall be given to--
       ``(A) the availability and nature of enterprises in the 
     private sector engaged in the delivery of the product 
     involved;
       ``(B) the views of those who use the product involved on 
     the appropriateness of the proposed action; and
       ``(C) the likely impact of the proposed action on small 
     business concerns (within the meaning of section 3641(h)).
       ``(c) Transfers of Subclasses and Other Subordinate Units 
     Allowable.--Nothing in this title shall be considered to 
     prevent transfers under this section from being made by 
     reason of the fact that they would involve only some (but not 
     all) of the subclasses or other subordinate units of the 
     class of mail or type of postal service involved (without 
     regard to satisfaction of minimum quantity requirements 
     standing alone).
       ``(d) Notification and Publication Requirements.--
       ``(1) Notification requirement.--The Postal Service shall, 
     whenever it requests to add a product or transfer a product 
     to a different category, file with the Postal Regulatory 
     Commission and publish in the Federal Register a notice 
     setting out the basis for its determination that the product 
     satisfies the criteria under subsection (b) and, in the case 
     of a request to add a product or transfer a product to the 
     competitive category of mail, that the product meets the 
     regulations promulgated by the Postal Regulatory Commission 
     under section 3633. The provisions of section 504(g) shall be 
     available with respect to any information required to be 
     filed.
       ``(2) Publication requirement.--The Postal Regulatory 
     Commission shall, whenever it changes the list of products in 
     the market-dominant or competitive category of mail, 
     prescribe new lists of products. The revised lists shall 
     indicate how and when any previous lists (including the lists 
     under sections 3621 and 3631) are superseded, and shall be 
     published in the Federal Register.
       ``(e) Prohibition.--Except as provided in section 3641, no 
     product that involves the physical delivery of letters, 
     printed matter, or packages may be offered by the Postal 
     Service unless it has been assigned to the market-dominant or 
     competitive category of mail (as appropriate) either--
       ``(1) under this subchapter; or
       ``(2) by or under any other provision of law.''.

     SEC. 204. REPORTING REQUIREMENTS AND RELATED PROVISIONS.

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

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

       (2) by striking the heading for subchapter V and inserting 
     the following:

                      ``SUBCHAPTER VI--GENERAL''.

       (b) Reports and Compliance.--Chapter 36 of title 39, United 
     States Code, is amended by inserting after subchapter III the 
     following:

     ``SUBCHAPTER IV--REPORTING REQUIREMENTS AND RELATED PROVISIONS

     ``Sec. 3651. Annual reports by the Commission

       ``(a) In General.--The Postal Regulatory Commission shall 
     submit an annual report to the President and the Congress 
     concerning the operations of the Commission under this title, 
     including the extent to which regulations are achieving the 
     objectives under sections 3622, 3633, and 3691.
       ``(b) Information From Postal Service.--The Postal Service 
     shall provide the Postal Regulatory Commission with such 
     information as may, in the judgment of the Commission, be 
     necessary in order for the Commission to prepare its reports 
     under this section.

     ``Sec. 3652. Annual reports to the Commission

       ``(a) Costs, Revenues, Rates, and Service.--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 to the report as the Commission may 
     require under subsection (e))--
       ``(1) which shall analyze costs, revenues, rates, and 
     quality of service in sufficient detail to demonstrate that 
     all products during such year complied with all applicable 
     requirements of this title; and
       ``(2) which shall, for each market-dominant product 
     provided in such year, provide--
       ``(A) product information, including mail volumes; and
       ``(B) measures of the service afforded by the Postal 
     Service in connection with such product, including--
       ``(i) the level of service (described in terms of speed of 
     delivery and reliability) provided; and
       ``(ii) the degree of customer satisfaction with the service 
     provided.
     Before submitting a report under this subsection (including 
     any annex to the report and the information required under 
     subsection (b)), 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) Information Relating to Workshare Discounts.--The 
     Postal Service shall include, in each report under subsection 
     (a), the following information with respect to each market-
     dominant product for which a workshare discount was in effect 
     during the period covered by such report:
       ``(1) The per-item cost avoided by the Postal Service by 
     virtue of such discount.
       ``(2) The percentage of such per-item cost avoided that the 
     per-item workshare discount represents.
       ``(3) The per-item contribution made to institutional 
     costs.
       ``(c) Service Agreements and Market Tests.--In carrying out 
     subsections (a) and (b) with respect to service agreements 
     and experimental products offered through market tests under 
     section 3641 in a year, the Postal Service--
       ``(1) may report summary data on the costs, revenues, and 
     quality of service by service agreement and market test; and
       ``(2) shall report such data as the Postal Regulatory 
     Commission requires.
       ``(d) Supporting Matter.--The Postal Regulatory Commission 
     shall have access, in accordance with such regulations as the 
     Commission shall prescribe, to the working papers and any 
     other supporting matter of the Postal Service and the 
     Inspector General in connection with any information 
     submitted under this section.
       ``(e) Content and Form of Reports.--
       ``(1) In general.--The Postal Regulatory Commission shall, 
     by regulation, prescribe

[[Page S3018]]

     the content and form of the public reports (and any nonpublic 
     annex and supporting matter relating to the report) 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 timely, adequate 
     information to assess the lawfulness of rates charged;
       ``(B) avoiding unnecessary or unwarranted administrative 
     effort and expense on the part of the Postal Service; and
       ``(C) protecting the confidentiality of commercially 
     sensitive information.
       ``(2) Revised requirements.--The Commission may, on its own 
     motion or on request of an interested party, initiate 
     proceedings (to be conducted in accordance with regulations 
     that the Commission shall prescribe) to improve the quality, 
     accuracy, or completeness of Postal Service data required by 
     the Commission under this subsection whenever it shall appear 
     that--
       ``(A) the attribution of costs or revenues to products has 
     become significantly inaccurate or can be significantly 
     improved;
       ``(B) the quality of service data has become significantly 
     inaccurate or can be significantly improved; or
       ``(C) such revisions are, in the judgment of the 
     Commission, otherwise necessitated by the public interest.
       ``(f) Confidential Information.--
       ``(1) In general.--If the Postal Service determines that 
     any document or portion of a document, or other matter, which 
     it provides to the Postal Regulatory Commission in a 
     nonpublic annex under this section or under subsection (d) 
     contains information which is described in section 410(c) of 
     this title, or exempt from public disclosure under section 
     552(b) of title 5, the Postal Service shall, at the time of 
     providing such matter to the Commission, notify the 
     Commission of its determination, in writing, and describe 
     with particularity the documents (or portions of documents) 
     or other matter for which confidentiality is sought and the 
     reasons therefor.
       ``(2) Treatment.--Any information or other matter described 
     in paragraph (1) to which the Commission gains access under 
     this section shall be subject to paragraphs (2) and (3) of 
     section 504(g) in the same way as if the Commission had 
     received notification with respect to such matter under 
     section 504(g)(1).
       ``(g) Other Reports.--The Postal Service shall submit to 
     the Postal Regulatory Commission, together with any other 
     submission that the Postal Service is required to make under 
     this section in a year, copies of its then most recent--
       ``(1) comprehensive statement under section 2401(e);
       ``(2) strategic plan under section 2802;
       ``(3) performance plan under section 2803; and
       ``(4) program performance reports under section 2804.

     ``Sec. 3653. Annual determination of compliance

       ``(a) Opportunity for Public Comment.--After receiving the 
     reports required under section 3652 for any year, the Postal 
     Regulatory Commission shall promptly provide an opportunity 
     for comment on such reports by users of the mails, affected 
     parties, and an officer of the Commission who shall be 
     required to represent the interests of the general public.
       ``(b) Determination of Compliance or Noncompliance.--Not 
     later than 90 days after receiving the submissions required 
     under section 3652 with respect to a year, the Postal 
     Regulatory Commission shall make a written determination as 
     to--
       ``(1) whether any rates or fees in effect during such year 
     (for products individually or collectively) were not in 
     compliance with applicable provisions of this chapter (or 
     regulations promulgated thereunder); or
       ``(2) whether any service standards in effect during such 
     year were not met.
     If, with respect to a year, no instance of noncompliance is 
     found under this subsection to have occurred in such year, 
     the written determination shall be to that effect.
       ``(c) If Any Noncompliance Is Found.--If, for a year, a 
     timely written determination of noncompliance is made under 
     subsection (b), the Postal Regulatory Commission shall take 
     any appropriate remedial action authorized by section 
     3662(c).
       ``(d) Rebuttable Presumption.--A timely written 
     determination described in the last sentence of subsection 
     (b) shall, for purposes of any proceeding under section 3662, 
     create a rebuttable presumption of compliance by the Postal 
     Service (with regard to the matters described under 
     paragraphs (1) and (2) of subsection (b)) during the year to 
     which such determination relates.''.

     SEC. 205. COMPLAINTS; APPELLATE REVIEW AND ENFORCEMENT.

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

     ``Sec. 3662. Rate and service complaints

       ``(a) In General.--Any person (including an officer of the 
     Postal Regulatory Commission representing the interests of 
     the general public) who believes the Postal Service is not 
     operating in conformance with the requirements of chapter 1, 
     4, or 6, or this chapter (or regulations promulgated under 
     any of those chapters) may lodge a complaint with the Postal 
     Regulatory Commission in such form and manner as the 
     Commission may prescribe.
       ``(b) Prompt Response Required.--
       ``(1) In general.--The Postal Regulatory Commission shall, 
     within 90 days after receiving a complaint under subsection 
     (a), either--
       ``(A) begin proceedings on such complaint; or
       ``(B) issue an order dismissing the complaint (together 
     with a statement of the reasons therefor).
       ``(2) Treatment of complaints not timely acted on.--For 
     purposes of section 3663, any complaint under subsection (a) 
     on which the Commission fails to act in the time and manner 
     required by paragraph (1) shall be treated in the same way as 
     if it had been dismissed under an order issued by the 
     Commission on the last day allowable for the issuance of such 
     order under paragraph (1).
       ``(c) Action Required If Complaint Found To Be Justified.--
     If the Postal Regulatory Commission finds the complaint to be 
     justified, it shall order that the Postal Service take such 
     action as the Commission considers appropriate in order to 
     achieve compliance with the applicable requirements and to 
     remedy the effects of any noncompliance including ordering 
     unlawful rates to be adjusted to lawful levels, ordering the 
     cancellation of market tests, ordering the Postal Service to 
     discontinue providing loss-making products, and requiring the 
     Postal Service to make up for revenue shortfalls in 
     competitive products.
       ``(d) Authority To Order Fines in Cases of Deliberate 
     Noncompliance.--In addition, in cases of deliberate 
     noncompliance by the Postal Service with the requirements of 
     this title, the Postal Regulatory Commission may order, based 
     on the nature, circumstances, extent, and seriousness of the 
     noncompliance, a fine (in the amount specified by the 
     Commission in its order) for each incidence of noncompliance. 
     Fines resulting from the provision of competitive products 
     shall be paid out of the Competitive Products Fund 
     established in section 2011. All receipts from fines imposed 
     under this subsection shall be deposited in the general fund 
     of the Treasury of the United States.

     ``Sec. 3663. Appellate review

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

     ``Sec. 3664. Enforcement of orders

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

     SEC. 206. CLERICAL AMENDMENT.

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

           ``CHAPTER 36--POSTAL RATES, CLASSES, AND SERVICES

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

``Sec.
``3621. Applicability; definitions.
``3622. Modern rate regulation.
``[3623. Repealed.]
``[3624. Repealed.]
``[3625. Repealed.]
``3626. Reduced Rates.
``3627. Adjusting free rates.
``[3628. Repealed.]
``3629. Reduced rates for voter registration purposes.

      ``SUBCHAPTER II--PROVISIONS RELATING TO COMPETITIVE PRODUCTS

``3631. Applicability; definitions and updates.
``3632. Action of the Governors.
``3633. Provisions applicable to rates for competitive products.
``3634. Assumed Federal income tax on competitive products.

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

``3641. Market tests of experimental products.
``3642. New products and transfers of products between the market-
              dominant and competitive categories of mail.

     ``SUBCHAPTER IV--REPORTING REQUIREMENTS AND RELATED PROVISIONS

``3651. Annual reports by the Commission.
``3652. Annual reports to the Commission.
``3653. Annual determination of compliance.

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

``3661. Postal Services.
``3662. Rate and service complaints.
``3663. Appellate review.
``3664. Enforcement of orders.

                        ``SUBCHAPTER VI--GENERAL

``3681. Reimbursement.
``3682. Size and weight limits.
``3683. Uniform rates for books; films, other materials.
``3684. Limitations.
``3685. Filing of information relating to periodical publications.
``3686. Bonus authority.

               ``SUBCHAPTER VII--MODERN SERVICE STANDARDS

``3691. Establishment of modern service standards.''.

[[Page S3019]]

                  TITLE III--MODERN SERVICE STANDARDS

     SEC. 301. ESTABLISHMENT OF MODERN SERVICE STANDARDS.

       Chapter 36 of title 39, United States Code, as amended by 
     this Act, is further amended by adding at the end the 
     following:

               ``SUBCHAPTER VII--MODERN SERVICE STANDARDS

     ``Sec. 3691. Establishment of modern service standards

       ``(a) Authority Generally.--Not later than 12 months after 
     the date of enactment of this section, the Postal Service 
     shall, in consultation with the Postal Regulatory Commission, 
     by regulation establish (and may from time to time thereafter 
     by regulation revise) a set of service standards for market-
     dominant products consistent with the Postal Service's 
     universal service obligation as defined in sections 101 (a) 
     and (b) and 403.
       ``(b) Objectives.--Such standards shall be designed to 
     achieve the following objectives:
       ``(1) To enhance the value of postal services to both 
     senders and recipients.
       ``(2) To preserve regular and effective access to postal 
     services in all communities, including those in rural areas 
     or where post offices are not self-sustaining.
       ``(3) To reasonably assure Postal Service customers 
     delivery reliability, speed and frequency consistent with 
     reasonable rates and best business practices.
       ``(4) To provide a system of objective external performance 
     measurements for each market-dominant product as a basis for 
     measurement of Postal Service performance.
       ``(c) Factors.--In establishing or revising such standards, 
     the Postal Service shall take into account--
       ``(1) the actual level of service that Postal Service 
     customers receive under any service guidelines previously 
     established by the Postal Service or service standards 
     established under this section;
       ``(2) the degree of customer satisfaction with Postal 
     Service performance in the acceptance, processing and 
     delivery of mail;
       ``(3) the needs of Postal Service customers, including 
     those with physical impairments;
       ``(4) mail volume and revenues projected for future years;
       ``(5) the projected growth in the number of addresses the 
     Postal Service will be required to serve in future years;
       ``(6) the current and projected future cost of serving 
     Postal Service customers;
       ``(7) the effect of changes in technology, demographics, 
     and population distribution on the efficient and reliable 
     operation of the postal delivery system; and
       ``(8) the policies of this title and such other factors as 
     the Commission determines appropriate.
       ``(d) Review.--The regulations promulgated pursuant to this 
     section (and any revisions thereto) shall be subject to 
     review upon complaint under sections 3662 and 3663.

     SEC. 302. POSTAL SERVICE PLAN.

       (a) In General.--Within 6 months after the establishment of 
     the service standards under section 3691 of title 39, United 
     States Code, as added by this Act, the Postal Service shall, 
     in consultation with the Postal Regulatory Commission, 
     develop and submit to Congress a plan for meeting those 
     standards.
       (b) Contents.--The plan under this section shall--
       (1) establish performance goals;
       (2) describe any changes to the Postal Service's 
     processing, transportation, delivery, and retail networks 
     necessary to allow the Postal Service to meet the performance 
     goals;
       (3) describe any changes to planning and performance 
     management documents previously submitted to Congress to 
     reflect new performance goals; and
       (4) contain the matters relating to postal facilities 
     provided under subsection (c).
       (c) Postal Facilities.--
       (1) Findings.--Congress finds that--
       (A) the Postal Service has more than 400 logistics 
     facilities, separate from its post office network;
       (B) as noted by the President's Commission on the United 
     States Postal Service, the Postal Service has more facilities 
     than it needs and the streamlining of this distribution 
     network can pave the way for the potential consolidation of 
     sorting facilities and the elimination of excess costs;
       (C) the Postal Service has always revised its distribution 
     network to meet changing conditions and is best suited to 
     address its operational needs; and
       (D) Congress strongly encourages the Postal Service to--
       (i) expeditiously move forward in its streamlining efforts; 
     and
       (ii) keep unions, management associations, and local 
     elected officials informed as an essential part of this 
     effort and abide by any procedural requirements contained in 
     the national bargaining agreements.
       (2) In general.--The Postal Service plan shall include a 
     description of--
       (A) the long-term vision of the Postal Service for 
     rationalizing its infrastructure and workforce; and
       (B) how the Postal Service intends to implement that 
     vision.
       (3) Content of facilities plan.--The plan under this 
     subsection shall include--
       (A) a strategy for how the Postal Service intends to 
     rationalize the postal facilities network and remove excess 
     processing capacity and space from the network, including 
     estimated timeframes, criteria, and processes to be used for 
     making changes to the facilities network, and the process for 
     engaging policy makers and the public in related decisions;
       (B) a discussion of what impact any facility changes may 
     have on the postal workforce and whether the Postal Service 
     has sufficient flexibility to make needed workforce changes; 
     and
       (C) an identification of anticipated costs, cost savings, 
     and other benefits associated with the infrastructure 
     rationalization alternatives discussed in the plan.
       (4) Annual reports.--
       (A) In general.--Not later than 90 days after the end of 
     each fiscal year, the Postal Service shall prepare and submit 
     a report to Congress on how postal decisions have impacted or 
     will impact rationalization plans.
       (B) Contents.--Each report under this paragraph shall 
     include--
       (i) an account of actions taken during the preceding fiscal 
     year to improve the efficiency and effectiveness of its 
     processing, transportation, and distribution networks while 
     preserving the timely delivery of postal services, including 
     overall estimated costs and cost savings;
       (ii) an account of actions taken to identify any excess 
     capacity within its processing, transportation, and 
     distribution networks and implement savings through 
     realignment or consolidation of facilities including overall 
     estimated costs and cost savings;
       (iii) an estimate of how postal decisions related to mail 
     changes, security, automation initiatives, worksharing, 
     information technology systems, excess capacity, 
     consolidating and closing facilities, and other areas will 
     impact rationalization plans;
       (iv) identification of any statutory or regulatory 
     obstacles that prevented or will prevent or hinder the Postal 
     Service from taking action to realign or consolidate 
     facilities; and
       (v) such additional topics and recommendations as the 
     Postal Service considers appropriate.
       (d) Alternate Retail Options.--The Postal Service plan 
     shall include plans to expand and market retail access to 
     postal services, in addition to post offices, including--
       (1) vending machines;
       (2) the Internet;
       (3) Postal Service employees on delivery routes;
       (4) retail facilities in which overhead costs are shared 
     with private businesses and other government agencies; or
       (5) any other nonpost office access channel providing 
     market retail access to postal services.
       (e) Reemployment Assistance and Retirement Benefits.--The 
     Postal Service plan shall include--
       (1) a plan under which reemployment assistance shall be 
     afforded to employees displaced as a result of the automation 
     of any of its functions or the closing and consolidation of 
     any of its facilities; and
       (2) a plan, developed in consultation with the Office of 
     Personnel Management, to offer early retirement benefits.
       (f) Inspector General Report.--
       (1) In general.--Before submitting the plan under 
     subsection (a) and each annual report under subsection (c) to 
     Congress, the Postal Service shall submit the plan and each 
     annual report to the Inspector General of the United States 
     Postal Service in a timely manner to carry out this 
     subsection.
       (2) Report.--The Inspector General shall prepare a report 
     describing the extent to which the Postal Service plan and 
     each annual report under subsection (c)--
       (A) are consistent with the continuing obligations of the 
     Postal Service under title 39, United States Code;
       (B) provide for the Postal Service to meet the service 
     standards established under section 3691 of title 39, United 
     States Code; and
       (C) allow progress toward improving overall efficiency and 
     effectiveness consistent with the need to maintain universal 
     postal service at affordable rates.
       (g) Continued Authority.--Nothing in this section shall be 
     construed to prohibit the Postal Service from implementing 
     any change to its processing, transportation, delivery, and 
     retail networks under any authority granted to the Postal 
     Service for those purposes.

           TITLE IV--PROVISIONS RELATING TO FAIR COMPETITION

     SEC. 401. POSTAL SERVICE COMPETITIVE PRODUCTS FUND.

       (a) Provisions Relating to Postal Service Competitive 
     Products Fund and Related Matters.--
       (1) In general.--Chapter 20 of title 39, United States 
     Code, is amended by adding at the end the following:

     ``Sec. 2011. Provisions relating to competitive products

       ``(a)(1) In this subsection, the term `costs attributable' 
     has the meaning given such term by section 3631.
       ``(2) 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--
       ``(A) costs attributable to competitive products; and
       ``(B) all other costs incurred by the Postal Service, to 
     the extent allocable to competitive products.
       ``(b) There shall be deposited in the Competitive Products 
     Fund, subject to withdrawal by the Postal Service--
       ``(1) revenues from competitive products;

[[Page S3020]]

       ``(2) amounts received from obligations issued by Postal 
     Service under subsection (e);
       ``(3) interest and dividends earned on investments of the 
     Competitive Products Fund; and
       ``(4) any other receipts of the Postal Service (including 
     from the sale of assets), to the extent allocable to 
     competitive products.
       ``(c) If the Postal Service determines that the moneys of 
     the Competitive Products Fund are in excess of current needs, 
     the Postal Service may request the investment of such amounts 
     as the Postal Service determines advisable by the Secretary 
     of the Treasury in obligations of, or obligations guaranteed 
     by, the Government of the United States, and, with the 
     approval of the Secretary, in such other obligations or 
     securities as the Postal Service determines appropriate.
       ``(d) With the approval of the Secretary of the Treasury, 
     the Postal Service may deposit moneys of the Competitive 
     Products Fund in any Federal Reserve bank, any depository for 
     public funds, or in such other places and in such manner as 
     the Postal Service and the Secretary may mutually agree.
       ``(e)(1)(A) Subject to the limitations specified in section 
     2005(a), the Postal Service is authorized to borrow money and 
     to issue and sell such obligations as the Postal Service 
     determines necessary to provide for competitive products and 
     deposit such amounts in the Competitive Products Fund.
       ``(B) Subject to paragraph (5), any borrowings by the 
     Postal Service under subparagraph (A) shall be supported and 
     serviced by--
       ``(i) the revenues and receipts from competitive products 
     and the assets related to the provision of competitive 
     products (as determined under subsection (h)); or
       ``(ii) for purposes of any period before accounting 
     practices and principles under subsection (h) have been 
     established and applied, the best information available from 
     the Postal Service, including the audited statements required 
     by section 2008(e).
       ``(2) The Postal Service may enter into binding covenants 
     with the holders of such obligations, and with any trustee 
     under any agreement entered into in connection with the 
     issuance of such obligations with respect to--
       ``(A) the establishment of reserve, sinking, and other 
     funds;
       ``(B) application and use of revenues and receipts of the 
     Competitive Products Fund;
       ``(C) stipulations concerning the subsequent issuance of 
     obligations or the execution of leases or lease purchases 
     relating to properties of the Postal Service; and
       ``(D) such other matters as the Postal Service, considers 
     necessary or desirable to enhance the marketability of such 
     obligations.
       ``(3) Obligations issued by the Postal Service under this 
     subsection--
       ``(A) shall be in such forms and denominations;
       ``(B) shall be sold at such times and in such amounts;
       ``(C) shall mature at such time or times;
       ``(D) shall be sold at such prices;
       ``(E) shall bear such rates of interest;
       ``(F) may be redeemable before maturity in such manner, at 
     such times, and at such redemption premiums;
       ``(G) may be entitled to such relative priorities of claim 
     on the assets of the Postal Service with respect to principal 
     and interest payments; and
       ``(H) shall be subject to such other terms and conditions,
     as the Postal Service determines.
       ``(4) Obligations issued by the Postal Service under this 
     subsection--
       ``(A) shall be negotiable or nonnegotiable and bearer or 
     registered instruments, as specified therein and in any 
     indenture or covenant relating thereto;
       ``(B) shall contain a recital that such obligations are 
     issued under this subsection, and such recital shall be 
     conclusive evidence of the regularity of the issuance and 
     sale of such obligations and of their validity;
       ``(C) shall be lawful investments and may be accepted as 
     security for all fiduciary, trust, and public funds, the 
     investment or deposit of which shall be under the authority 
     or control of any officer or agency of the Government of the 
     United States, and the Secretary of the Treasury or any other 
     officer or agency having authority over or control of any 
     such fiduciary, trust, or public funds, may at any time sell 
     any of the obligations of the Postal Service acquired under 
     this section;
       ``(D) shall not be exempt either as to principal or 
     interest from any taxation now or hereafter imposed by any 
     State or local taxing authority; and
       ``(E) except as provided in section 2006(c), shall not be 
     obligations of, nor shall payment of the principal thereof or 
     interest thereon be guaranteed by, the Government of the 
     United States, and the obligations shall so plainly state.
       ``(5)(A) Subject to subparagraph (B), the Postal Service 
     shall make payments of principal, or interest, or both on 
     obligations issued under this subsection from--
       ``(i) revenues and receipts from competitive products and 
     assets related to the provision of competitive products (as 
     determined under subsection (h)); or
       ``(ii) for purposes of any period before accounting 
     practices and principles under subsection (h) have been 
     established and applied, the best information available, 
     including the audited statements required by section 2008(e).
       ``(B) Based on the audited financial statements for the 
     most recently completed fiscal year, the total assets of the 
     Competitive Products Fund may not be less than the amount 
     determined by multiplying--
       ``(i) the quotient resulting from the total revenue of the 
     Competitive Products Fund divided by the total revenue of the 
     Postal Service; and
       ``(ii) the total assets of the Postal Service.
       ``(f) The receipts and disbursements of the Competitive 
     Products Fund shall be accorded the same budgetary treatment 
     as is accorded to receipts and disbursements of the Postal 
     Service Fund under section 2009a.
       ``(g) A judgment (or settlement of a claim) against the 
     Postal Service or the Government of the United States shall 
     be paid out of the Competitive Products Fund to the extent 
     that the judgment or claim arises out of activities of the 
     Postal Service in the provision of competitive products.
       ``(h)(1)(A) The Secretary of the Treasury, in consultation 
     with the Postal Service and an independent, certified public 
     accounting firm and other advisors as the Secretary considers 
     appropriate, shall develop recommendations regarding--
       ``(i) the accounting practices and principles that should 
     be followed by the Postal Service with the objectives of--
       ``(I) identifying and valuing the assets and liabilities of 
     the Postal Service associated with providing competitive 
     products, including the capital and operating costs incurred 
     by the Postal Service in providing such competitive products; 
     and
       ``(II) subject to subsection (e)(5), preventing the 
     subsidization of such products by market-dominant products; 
     and
       ``(ii) the substantive and procedural rules that should be 
     followed in determining the assumed Federal income tax on 
     competitive products income of the Postal Service for any 
     year (within the meaning of section 3634).
       ``(B) Not earlier than 6 months after the date of enactment 
     of this section, and not later than 12 months after such 
     date, the Secretary of the Treasury shall submit the 
     recommendations under subparagraph (A) to the Postal 
     Regulatory Commission.
       ``(2)(A) Upon receiving the recommendations of the 
     Secretary of the Treasury under paragraph (1), the Commission 
     shall give interested parties, including the Postal Service, 
     users of the mails, and an officer of the Commission who 
     shall be required to represent the interests of the general 
     public, an opportunity to present their views on those 
     recommendations through submission of written data, views, or 
     arguments with or without opportunity for oral presentation, 
     or in such other manner as the Commission considers 
     appropriate.
       ``(B)(i) After due consideration of the views and other 
     information received under subparagraph (A), the Commission 
     shall by rule--
       ``(I) provide for the establishment and application of the 
     accounting practices and principles which shall be followed 
     by the Postal Service;
       ``(II) provide for the establishment and application of the 
     substantive and procedural rules described under paragraph 
     (1)(A)(ii); and
       ``(III) provide for the submission by the Postal Service to 
     the Postal Regulatory Commission of annual and other periodic 
     reports setting forth such information as the Commission may 
     require.
       ``(ii) Final rules under this subparagraph shall be issued 
     not later than 12 months after the date on which 
     recommendations are submitted under paragraph (1) (or by such 
     later date on which the Commission and the Postal Service may 
     agree). The Commission may revise such rules.
       ``(C)(i) Reports described under subparagraph (B)(i)(III) 
     shall be submitted at such time and in such form, and shall 
     include such information, as the Commission by rule requires.
       ``(ii) The Commission may, on its own motion or on request 
     of an interested party, initiate proceedings (to be conducted 
     in accordance with such rules as the Commission shall 
     prescribe) to improve the quality, accuracy, or completeness 
     of Postal Service information under subparagraph (B)(i)(III) 
     whenever it shall appear that--
       ``(I) the quality of the information furnished in those 
     reports has become significantly inaccurate or can be 
     significantly improved; or
       ``(II) such revisions are, in the judgment of the 
     Commission, otherwise necessitated by the public interest.
       ``(D) A copy of each report described under subparagraph 
     (B)(i)(III) shall be submitted by the Postal Service to the 
     Secretary of the Treasury and the Inspector General of the 
     United States Postal Service.
       ``(i)(1) The Postal Service shall submit an annual report 
     to the Secretary of the Treasury concerning the operation of 
     the Competitive Products Fund. The report shall address such 
     matters as risk limitations, reserve balances, allocation or 
     distribution of moneys, liquidity requirements, and measures 
     to safeguard against losses.
       ``(2) A copy of the most recent report submitted under 
     paragraph (1) shall be included in the annual report 
     submitted by the Postal Regulatory Commission under section 
     3652(g).''.
       (2) Clerical amendment.--The table of sections for chapter 
     20 of title 39, United States Code, is amended by adding 
     after the item relating to section 2010 the following:


[[Page S3021]]


``2011. Provisions relating to competitive products.''.

       (b) Technical and Conforming Amendments.--
       (1) Definition.--Section 2001 of title 39, United States 
     Code, is amended by striking ``and'' at the end of paragraph 
     (1), by redesignating paragraph (2) as paragraph (3), and by 
     inserting after paragraph (1) the following:
       ``(2) Competitive products fund.--The term `Competitive 
     Products Fund' means the Postal Service Competitive Products 
     Fund established by section 2011; and''.
       (2) Capital of the postal service.--Section 2002(b) of 
     title 39, United States Code, is amended by striking 
     ``Fund,'' and inserting ``Fund and the balance in the 
     Competitive Products Fund,''.
       (3) Postal service fund.--
       (A) Purposes for which available.--Section 2003(a) of title 
     39, United States Code, is amended by striking ``title.'' and 
     inserting ``title (other than any of the purposes, functions, 
     or powers for which the Competitive Products Fund is 
     available).''.
       (B) Deposits.--Section 2003(b) of title 39, United States 
     Code, is amended by striking ``There'' and inserting ``Except 
     as otherwise provided in section 2011, there''.
       (4) Relationship between the treasury and the postal 
     service.--Section 2006 of title 39, United States Code, is 
     amended--
       (A) in subsection (a), in the first sentence, by inserting 
     ``or 2011'' after ``section 2005'';
       (B) in subsection (b)--
       (i) in the first sentence, by inserting ``under section 
     2005'' before ``in such amounts''; and
       (ii) in the second sentence, by inserting ``under section 
     2005'' before ``in excess of such amount.''; and
       (C) in subsection (c), by inserting ``or 2011(e)(4)(E)'' 
     after ``section 2005(d)(5)''.

     SEC. 402. ASSUMED FEDERAL INCOME TAX ON COMPETITIVE PRODUCTS 
                   INCOME.

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

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

       ``(a) Definitions.--For purposes of this section--
       ``(1) the term `assumed Federal income tax on competitive 
     products income' means the net income tax that would be 
     imposed by chapter 1 of the Internal Revenue Code of 1986 on 
     the Postal Service's assumed taxable income from competitive 
     products for the year; and
       ``(2) the term `assumed taxable income from competitive 
     products', with respect to a year, refers to the amount 
     representing what would be the taxable income of a 
     corporation under the Internal Revenue Code of 1986 for the 
     year, if--
       ``(A) the only activities of such corporation were the 
     activities of the Postal Service allocable under section 
     2011(h) to competitive products; and
       ``(B) the only assets held by such corporation were the 
     assets of the Postal Service allocable under section 2011(h) 
     to such activities.
       ``(b) Computation and Transfer Requirements.--The Postal 
     Service shall, for each year beginning with the year in which 
     occurs the deadline for the Postal Service's first report to 
     the Postal Regulatory Commission under section 3652(a)--
       ``(1) compute its assumed Federal income tax on competitive 
     products income for such year; and
       ``(2) transfer from the Competitive Products Fund to the 
     Postal Service Fund the amount of that assumed tax.
       ``(c) Deadline for Transfers.--Any transfer required to be 
     made under this section for a year shall be due on or before 
     the January 15th next occurring after the close of such 
     year.''.

     SEC. 403. UNFAIR COMPETITION PROHIBITED.

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

     ``Sec. 404a. Specific limitations

       ``(a) Except as specifically authorized by law, the Postal 
     Service may not--
       ``(1) establish any rule or regulation (including any 
     standard) the effect of which is to preclude competition or 
     establish the terms of competition unless the Postal Service 
     demonstrates that the regulation does not create an unfair 
     competitive advantage for itself or any entity funded (in 
     whole or in part) by the Postal Service;
       ``(2) compel the disclosure, transfer, or licensing of 
     intellectual property to any third party (such as patents, 
     copyrights, trademarks, trade secrets, and proprietary 
     information); or
       ``(3) obtain information from a person that provides (or 
     seeks to provide) any product, and then offer any postal 
     service that uses or is based in whole or in part on such 
     information, without the consent of the person providing that 
     information, unless substantially the same information is 
     obtained (or obtainable) from an independent source or is 
     otherwise obtained (or obtainable).
       ``(b) The Postal Regulatory Commission shall prescribe 
     regulations to carry out this section.
       ``(c) Any party (including an officer of the Commission 
     representing the interests of the general public) who 
     believes that the Postal Service has violated this section 
     may bring a complaint in accordance with section 3662.''.
       (b) Conforming Amendments.--
       (1) General powers.--Section 401 of title 39, United States 
     Code, is amended by striking ``The'' and inserting ``Subject 
     to the provisions of section 404a, the''.
       (2) Specific powers.--Section 404(a) of title 39, United 
     States Code, is amended by striking ``Without'' and inserting 
     ``Subject to the provisions of section 404a, but otherwise 
     without''.
       (c) Clerical Amendment.--The analysis for chapter 4 of 
     title 39, United States Code, is amended by inserting after 
     the item relating to section 404 the following:

``404a. Specific limitations.''.

     SEC. 404. SUITS BY AND AGAINST THE POSTAL SERVICE.

       (a) In General.--Section 409 of title 39, United States 
     Code, is amended by striking subsections (d) and (e) and 
     inserting the following:
       ``(d)(1) For purposes of the provisions of law cited in 
     paragraphs (2)(A) and (2)(B), respectively, the Postal 
     Service--
       ``(A) shall be considered to be a `person', as used in the 
     provisions of law involved; and
       ``(B) shall not be immune under any other doctrine of 
     sovereign immunity from suit in Federal court by any person 
     for any violation of any of those provisions of law by any 
     officer or employee of the Postal Service.
       ``(2) This subsection applies with respect to--
       ``(A) the Act of July 5, 1946 (commonly referred to as the 
     `Trademark Act of 1946' (15 U.S.C. 1051 and following)); and
       ``(B) the provisions of section 5 of the Federal Trade 
     Commission Act to the extent that such section 5 applies to 
     unfair or deceptive acts or practices.
       ``(e)(1) To the extent that the Postal Service, or other 
     Federal agency acting on behalf of or in concert with the 
     Postal Service, engages in conduct with respect to any 
     product which is not reserved to the United States under 
     section 1696 of title 18, the Postal Service or other Federal 
     agency (as the case may be)--
       ``(A) shall not be immune under any doctrine of sovereign 
     immunity from suit in Federal court by any person for any 
     violation of Federal law by such agency or any officer or 
     employee thereof; and
       ``(B) shall be considered to be a person (as defined in 
     subsection (a) of the first section of the Clayton Act) for 
     purposes of--
       ``(i) the antitrust laws (as defined in such subsection); 
     and
       ``(ii) section 5 of the Federal Trade Commission Act to the 
     extent that such section 5 applies to unfair methods of 
     competition.
     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) No damages, interest on damages, costs or attorney's 
     fees may be recovered, and no criminal liability may be 
     imposed, under the antitrust laws (as so defined) from any 
     officer or employee of the Postal Service, or other Federal 
     agency acting on behalf of or in concert with the Postal 
     Service, acting in an official capacity.
       ``(3) This subsection shall not apply with respect to 
     conduct occurring before the date of enactment of this 
     subsection.
       ``(f) To the extent that the Postal Service engages in 
     conduct with respect to the provision of competitive 
     products, it shall be considered a person for the purposes of 
     the Federal bankruptcy laws.
       ``(g)(1) Each building constructed or altered by the Postal 
     Service shall be constructed or altered, to the maximum 
     extent feasible as determined by the Postal Service, in 
     compliance with 1 of the nationally recognized model building 
     codes and with other applicable nationally recognized codes. 
     To the extent practicable, model building codes should meet 
     the voluntary consensus criteria established for codes and 
     standards as required in the National Technology Transfer and 
     Advancement Act of 1995 as defined in Office of Management 
     and Budget Circular A1190. For purposes of life safety, the 
     Postal Service shall continue to comply with the most current 
     edition of the Life Safety Code of the National Fire 
     Protection Association (NFPA 101).
       ``(2) Each building constructed or altered by the Postal 
     Service shall be constructed or altered only after 
     consideration of all requirements (other than procedural 
     requirements) of zoning laws, land use laws, and applicable 
     environmental laws of a State or subdivision of a State which 
     would apply to the building if it were not a building 
     constructed or altered by an establishment of the Government 
     of the United States.
       ``(3) For purposes of meeting the requirements of 
     paragraphs (1) and (2) with respect to a building, the Postal 
     Service shall--
       ``(A) in preparing plans for the building, consult with 
     appropriate officials of the State or political subdivision, 
     or both, in which the building will be located;
       ``(B) upon request, submit such plans in a timely manner to 
     such officials for review by such officials for a reasonable 
     period of time not exceeding 30 days; and
       ``(C) permit inspection by such officials during 
     construction or alteration of the building, in accordance 
     with the customary schedule of inspections for construction 
     or alteration of buildings in the locality, if such officials 
     provide to the Postal Service--
       ``(i) a copy of such schedule before construction of the 
     building is begun; and
       ``(ii) reasonable notice of their intention to conduct any 
     inspection before conducting such inspection.
     Nothing in this subsection shall impose an obligation on any 
     State or political subdivision to take any action under the 
     preceding sentence, nor shall anything in this subsection 
     require the Postal Service or any of

[[Page S3022]]

     its contractors to pay for any action taken by a State or 
     political subdivision to carry out this subsection (including 
     reviewing plans, carrying out on-site inspections, issuing 
     building permits, and making recommendations).
       ``(4) Appropriate officials of a State or a political 
     subdivision of a State may make recommendations to the Postal 
     Service concerning measures necessary to meet the 
     requirements of paragraphs (1) and (2). Such officials may 
     also make recommendations to the Postal Service concerning 
     measures which should be taken in the construction or 
     alteration of the building to take into account local 
     conditions. The Postal Service shall give due consideration 
     to any such recommendations.
       ``(5) In addition to consulting with local and State 
     officials under paragraph (3), the Postal Service shall 
     establish procedures for soliciting, assessing, and 
     incorporating local community input on real property and land 
     use decisions.
       ``(6) For purposes of this subsection, the term `State' 
     includes the District of Columbia, the Commonwealth of Puerto 
     Rico, and a territory or possession of the United States.
       ``(h)(1) Notwithstanding any other provision of law, legal 
     representation may not be furnished by the Department of 
     Justice to the Postal Service in any action, suit, or 
     proceeding arising, in whole or in part, under any of the 
     following:
       ``(A) Subsection (d) or (e) of this section.
       ``(B) Subsection (f) or (g) of section 504 (relating to 
     administrative subpoenas by the Postal Regulatory 
     Commission).
       ``(C) Section 3663 (relating to appellate review).
     The Postal Service may, by contract or otherwise, employ 
     attorneys to obtain any legal representation that it is 
     precluded from obtaining from the Department of Justice under 
     this paragraph.
       ``(2) In any circumstance not covered by paragraph (1), the 
     Department of Justice shall, under section 411, furnish the 
     Postal Service such legal representation as it may require, 
     except that, with the prior consent of the Attorney General, 
     the Postal Service may, in any such circumstance, employ 
     attorneys by contract or otherwise to conduct litigation 
     brought by or against the Postal Service or its officers or 
     employees in matters affecting the Postal Service.
       ``(3)(A) In any action, suit, or proceeding in a court of 
     the United States arising in whole or in part under any of 
     the provisions of law referred to in subparagraph (B) or (C) 
     of paragraph (1), and to which the Commission is not 
     otherwise a party, the Commission shall be permitted to 
     appear as a party on its own motion and as of right.
       ``(B) The Department of Justice shall, under such terms and 
     conditions as the Commission and the Attorney General shall 
     consider appropriate, furnish the Commission such legal 
     representation as it may require in connection with any such 
     action, suit, or proceeding, except that, with the prior 
     consent of the Attorney General, the Commission may employ 
     attorneys by contract or otherwise for that purpose.
       ``(i) A judgment against the Government of the United 
     States arising out of activities of the Postal Service shall 
     be paid by the Postal Service out of any funds available to 
     the Postal Service, subject to the restriction specified in 
     section 2011(g).''.
       (b) Technical Amendment.--Section 409(a) of title 39, 
     United States Code, is amended by striking ``Except as 
     provided in section 3628 of this title,'' and inserting 
     ``Except as otherwise provided in this title,''.

     SEC. 405. INTERNATIONAL POSTAL ARRANGEMENTS.

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

     ``Sec. 407. International postal arrangements

       ``(a) It is the policy of the United States--
       ``(1) to promote and encourage communications between 
     peoples by efficient operation of international postal 
     services and other international delivery services for 
     cultural, social, and economic purposes;
       ``(2) to promote and encourage unrestricted and undistorted 
     competition in the provision of international postal services 
     and other international delivery services, except where 
     provision of such services by private companies may be 
     prohibited by law of the United States;
       ``(3) to promote and encourage a clear distinction between 
     governmental and operational responsibilities with respect to 
     the provision of international postal services; and
       ``(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 shall have the 
     power to conclude postal treaties and conventions, except 
     that the Secretary may not conclude any postal treaty or 
     convention if such treaty or convention would, with respect 
     to any competitive product, grant an undue or unreasonable 
     preference to the Postal Service, a private provider of 
     international postal services, or any other person.
       ``(2) In carrying out the responsibilities specified in 
     paragraph (1), the Secretary of State shall exercise primary 
     authority for the conduct of foreign policy with respect to 
     international postal services, including the determination of 
     United States positions and the conduct of United States 
     participation in negotiations with foreign governments and 
     international bodies. In exercising this authority, the 
     Secretary--
       ``(A) shall coordinate with other agencies as appropriate, 
     and in particular, should consider the authority vested by 
     law or Executive order in the Postal Regulatory Commission, 
     the Department of Commerce, the Department of Transportation, 
     and the Office of the United States Trade Representative in 
     this area;
       ``(B) shall maintain continuing liaison with other 
     executive branch agencies concerned with postal and delivery 
     services;
       ``(C) shall maintain continuing liaison with the Committee 
     on Homeland Security and Governmental Affairs of the Senate 
     and the Committee on Government Reform of the House of 
     Representatives;
       ``(D) shall maintain appropriate liaison with both 
     representatives of the Postal Service and representatives of 
     users and private providers of international postal services 
     and other international delivery services to keep informed of 
     their interests and problems, and to provide such assistance 
     as may be needed to ensure that matters of concern are 
     promptly considered by the Department of State or (if 
     applicable, and to the extent practicable) other executive 
     branch agencies; and
       ``(E) shall assist in arranging meetings of such public 
     sector advisory groups as may be established to advise the 
     Department of State and other executive branch agencies in 
     connection with international postal services and 
     international delivery services.
       ``(3) The Secretary of State shall establish an advisory 
     committee (within the meaning of the Federal Advisory 
     Committee Act) to perform such functions as the Secretary 
     considers appropriate in connection with carrying out 
     subparagraphs (A) through (D) of paragraph (2).
       ``(c) Before concluding any postal treaty or convention 
     that establishes a rate or classification for a product 
     subject to subchapter I of chapter 36, the Secretary of State 
     shall request the Postal Regulatory Commission to submit its 
     views on whether such rate or classification is consistent 
     with the standards and criteria established by the Commission 
     under section 3622.
       ``(d) Nothing in this section shall be considered to 
     prevent the Postal Service from entering into such commercial 
     or operational contracts related to providing international 
     postal services as it deems appropriate, except that--
       ``(1) any such contract made with an agency of a foreign 
     government (whether under authority of this subsection or 
     otherwise) shall be solely contractual in nature and may not 
     purport to be binding under international law; and
       ``(2) a copy of each such contract between the Postal 
     Service and an agency of a foreign government shall be 
     transmitted to the Secretary of State and the Postal 
     Regulatory Commission not later than the effective date of 
     such contract.
       ``(e)(1) With respect to shipments of international mail 
     that are competitive products within the meaning of section 
     3631 that are exported or imported by the Postal Service, the 
     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.
       ``(2) In exercising the authority under subsection (b) to 
     conclude new postal treaties and conventions related to 
     international postal services and to renegotiate such 
     treaties and conventions, the Secretary of State shall, to 
     the maximum extent practicable, take such measures as are 
     within the Secretary's control to encourage the governments 
     of other countries to make available to the Postal Service 
     and private companies a range of nondiscriminatory customs 
     procedures that will fully meet the needs of all types of 
     American shippers. The Secretary of State shall consult with 
     the United States Trade Representative and the Commissioner 
     of Customs in carrying out this paragraph.
       ``(3) The provisions of this subsection shall take effect 6 
     months after the date of enactment of this subsection or such 
     earlier date as the Customs Service may determine in 
     writing.''.
       (b) Effective Date.--Notwithstanding any provision of the 
     amendment made by subsection (a), the authority of the United 
     States Postal Service to establish the rates of postage or 
     other charges on mail matter conveyed between the United 
     States and other countries shall remain available to the 
     Postal Service until--
       (1) with respect to market-dominant products, the date as 
     of which the regulations promulgated under section 3622 of 
     title 39, United States Code (as amended by section 201(a)) 
     take effect; and
       (2) with respect to competitive products, the date as of 
     which the regulations promulgated under section 3633 of title 
     39, United States Code (as amended by section 202) take 
     effect.

                      TITLE V--GENERAL PROVISIONS

     SEC. 501. QUALIFICATION AND TERM REQUIREMENTS FOR GOVERNORS.

       (a) Qualifications.--
       (1) In general.--Section 202(a) of title 39, United States 
     Code, is amended by striking ``(a)'' and inserting ``(a)(1)'' 
     and by striking

[[Page S3023]]

     the fourth sentence and inserting the following: ``The 
     Governors 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 private sector) of substantial size. Experience 
     in the fields of law and accounting shall be considered in 
     making appointments of Governors. The Governors shall not be 
     representatives of specific interests using the Postal 
     Service, and may be removed only for cause.''.
       (2) Applicability.--The amendment made by paragraph (1) 
     shall not affect the appointment or tenure of any person 
     serving as a Governor of the United States Postal Service 
     under an appointment made before the date of enactment of 
     this Act however, when any such office becomes vacant, the 
     appointment of any person to fill that office shall be made 
     in accordance with such amendment. The requirement set forth 
     in the fourth sentence of section 202(a)(1) of title 39, 
     United States Code (as amended by subsection (a)) shall be 
     met beginning not later than 9 years after the date of 
     enactment of this Act.
       (b) Consultation Requirement.--Section 202(a) of title 39, 
     United States Code, is amended by adding at the end the 
     following:
       ``(2) In selecting the individuals described in paragraph 
     (1) for nomination for appointment to the position of 
     Governor, the President should consult with the Speaker of 
     the House of Representatives, the minority leader of the 
     House of Representatives, the majority leader of the Senate, 
     and the minority leader of the Senate.''.
       (c) 5-Year Terms.--
       (1) In general.--Section 202(b) of title 39, United States 
     code, is amended in the first sentence by striking ``9 
     years'' and inserting ``5 years''.
       (2) Applicability.--
       (A) Continuation by incumbents.--The amendment made by 
     paragraph (1) shall not affect the tenure of any person 
     serving as a Governor of the United States Postal Service on 
     the date of enactment of this Act and such person may 
     continue to serve the remainder of the applicable term.
       (B) Vacancy by incumbent before 5 years of service.--If a 
     person who is serving as a Governor of the United States 
     Postal Service on the date of enactment of this Act resigns, 
     is removed, or dies before the expiration of the 9-year term 
     of that Governor, and that Governor has served less than 5 
     years of that term, the resulting vacancy in office shall be 
     treated as a vacancy in a 5-year term.
       (C) Vacancy by incumbent after 5 years of service.--If a 
     person who is serving as a Governor of the United States 
     Postal Service on the date of enactment of this Act resigns, 
     is removed, or dies before the expiration of the 9-year term 
     of that Governor, and that Governor has served 5 years or 
     more of that term, that term shall be deemed to have been a 
     5-year term beginning on its commencement date for purposes 
     of determining vacancies in office. Any appointment to the 
     vacant office shall be for a 5-year term beginning at the end 
     of the original 9-year term determined without regard to the 
     deeming under the preceding sentence. Nothing in this 
     subparagraph shall be construed to affect any action or 
     authority of any Governor or the Board of Governors during 
     any portion of a 9-year term deemed to be 5-year term under 
     this subparagraph.
       (d) Term Limitation.--
       (1) In general.--Section 202(b) of title 39, United States 
     Code, is amended--
       (A) by inserting ``(1)'' after ``(b)''; and
       (B) by adding at the end the following:
       ``(2) No person may serve more than 3 terms as a 
     Governor.''.
       (2) Applicability.--The amendments made by paragraph (1) 
     shall not affect the tenure of any person serving as a 
     Governor of the United States Postal Service on the date of 
     enactment of this Act with respect to the term which that 
     person is serving on that date. Such person may continue to 
     serve the remainder of the applicable term, after which the 
     amendments made by paragraph (1) shall apply.

     SEC. 502. OBLIGATIONS.

       (a) Purposes for Which Obligations May Be Issued.--The 
     first sentence of section 2005(a)(1) of title 39, United 
     States Code, is amended by striking ``title.'' and inserting 
     ``title, other than any of the purposes for which the 
     corresponding authority is available to the Postal Service 
     under section 2011.''.
       (b) Increase Relating to Obligations Issued for Capital 
     Improvements.--Section 2005(a)(1) of title 39, United States 
     Code, is amended by striking the third sentence.
       (c) Amounts Which May Be Pledged.--
       (1) Obligations to which provisions apply.--The first 
     sentence of section 2005(b) of title 39, United States Code, 
     is amended by striking ``such obligations,'' and inserting 
     ``obligations issued by the Postal Service under this 
     section,''.
       (2) Assets, revenues, and receipts to which provisions 
     apply.--Subsection (b) of section 2005 of title 39, United 
     States Code, is amended by striking ``(b)'' and inserting 
     ``(b)(1)'', and by adding at the end the following:
       ``(2) Notwithstanding any other provision of this section--
       ``(A) the authority to pledge assets of the Postal Service 
     under this subsection shall be available only to the extent 
     that such assets are not related to the provision of 
     competitive products (as determined under section 2011(h) or, 
     for purposes of any period before accounting practices and 
     principles under section 2011(h) have been established and 
     applied, the best information available from the Postal 
     Service, including the audited statements required by section 
     2008(e)); and
       ``(B) any authority under this subsection relating to the 
     pledging or other use of revenues or receipts of the Postal 
     Service shall be available only to the extent that they are 
     not revenues or receipts of the Competitive Products Fund.''.

     SEC. 503. PRIVATE CARRIAGE OF LETTERS.

       (a) In General.--Section 601 of title 39, United States 
     Code, is amended by striking subsection (b) and inserting the 
     following:
       ``(b) A letter may also be carried out of the mails when--
       ``(1) the amount paid for the private carriage of the 
     letter is at least the amount equal to 6 times the rate then 
     currently charged for the 1st ounce of a single-piece first 
     class letter;
       ``(2) the letter weighs at least 12\1/2\ ounces; or
       ``(3) such carriage is within the scope of services 
     described by regulations of the United States Postal Service 
     (as in effect on July 1, 2001) that permit private carriage 
     by suspension of the operation of this section (as then in 
     effect).
       ``(c) Any regulations necessary to carry out this section 
     shall be promulgated by the Postal Regulatory Commission.''.
       (b) Effective Date.--This section shall take effect on the 
     date as of which the regulations promulgated under section 
     3633 of title 39, United States Code (as amended by section 
     202) take effect.

     SEC. 504. RULEMAKING AUTHORITY.

       Paragraph (2) of section 401 of title 39, United States 
     Code, is amended to read as follows:
       ``(2) to adopt, amend, and repeal such rules and 
     regulations, not inconsistent with this title, as may be 
     necessary in the execution of its functions under this title 
     and such other functions as may be assigned to the Postal 
     Service under any provisions of law outside of this title;''.

     SEC. 505. NONINTERFERENCE WITH COLLECTIVE BARGAINING 
                   AGREEMENTS.

       (a) Labor Disputes.--Section 1207 of title 39, United 
     States Code, is amended to read as follows:

     ``Sec. 1207. Labor disputes

       ``(a) If there is a collective-bargaining agreement in 
     effect, no party to such agreement shall terminate or modify 
     such agreement unless the party desiring such termination or 
     modification serves written notice upon the other party to 
     the agreement of the proposed termination or modification not 
     less than 90 days prior to the expiration date thereof, or 
     not less than 90 days prior to the time it is proposed to 
     make such termination or modification. The party serving such 
     notice shall notify the Federal Mediation and Conciliation 
     Service of the existence of a dispute within 45 days after 
     such notice, if no agreement has been reached by that time.
       ``(b) If the parties fail to reach agreement or to adopt a 
     procedure providing for a binding resolution of a dispute by 
     the expiration date of the agreement in effect, or the date 
     of the proposed termination or modification, the Director of 
     the Federal Mediation and Conciliation Service shall within 
     10 days appoint a mediator of nationwide reputation and 
     professional stature, and who is also a member of the 
     National Academy of Arbitrators. The parties shall cooperate 
     with the mediator in an effort to reach an agreement and 
     shall meet and negotiate in good faith at such times and 
     places that the mediator, in consultation with the parties, 
     shall direct.
       ``(c)(1) If no agreement is reached within 60 days after 
     the expiration or termination of the agreement or the date on 
     which the agreement became subject to modification under 
     subsection (a) of this section, or if the parties decide upon 
     arbitration but do not agree upon the procedures therefore, 
     an arbitration board shall be established consisting of 3 
     members, 1 of whom shall be selected by the Postal Service, 1 
     by the bargaining representative of the employees, and the 
     third by the 2 thus selected. If either of the parties fails 
     to select a member, or if the members chosen by the parties 
     fail to agree on the third person within 5 days after their 
     first meeting, the selection shall be made from a list of 
     names provided by the Director. This list shall consist of 
     not less then 9 names of arbitrators of nationwide reputation 
     and professional nature, who are also members of the National 
     Academy of Arbitrators, and whom the Director has determined 
     are available and willing to serve.
       ``(2) The arbitration board shall give the parties a full 
     and fair hearing, including an opportunity to present 
     evidence in support of their claims, and an opportunity to 
     present their case in person, by counsel or by other 
     representative as they may elect. Decisions of the 
     arbitration board shall be conclusive and binding upon the 
     parties. The arbitration board shall render its decision 
     within 45 days after its appointment.
       ``(3) Costs of the arbitration board and mediation shall be 
     shared equally by the Postal Service and the bargaining 
     representative.
       ``(d) In the case of a bargaining unit whose recognized 
     collective-bargaining representative does not have an 
     agreement with the Postal Service, if the parties fail to 
     reach the agreement within 90 days after the commencement of 
     collective bargaining, a mediator shall be appointed in 
     accordance with the terms in subsection (b) of this section, 
     unless the parties have previously agreed to another 
     procedure for a binding resolution of

[[Page S3024]]

     their differences. If the parties fail to reach agreement 
     within 180 days after the commencement of collective 
     bargaining, and if they have not agreed to another procedure 
     for binding resolution, an arbitration board shall be 
     established to provide conclusive and binding arbitration in 
     accordance with the terms of subsection (c) of this 
     section.''.
       (b) Noninterference With Collective Bargaining 
     Agreements.--Except as otherwise provided by the amendment 
     made by subsection (a), nothing in this Act shall restrict, 
     expand, or otherwise affect any of the rights, privileges, or 
     benefits of either employees of or labor organizations 
     representing employees of the United States Postal Service 
     under chapter 12 of title 39, United States Code, the 
     National Labor Relations Act, any handbook or manual 
     affecting employee labor relations within the United States 
     Postal Service, or any collective bargaining agreement.
       (c) Free Mailing Privileges Continue Unchanged.--Nothing in 
     this Act or any amendment made by this Act shall affect any 
     free mailing privileges accorded under section 3217 or 
     sections 3403 through 3406 of title 39, United States Code.

     SEC. 506. BONUS AUTHORITY.

       Chapter 36 of title 39, United States Code, is amended by 
     inserting after section 3685 the following:

     ``Sec. 3686. Bonus authority

       ``(a) In General.--The Postal Service may establish 1 or 
     more programs to provide bonuses or other rewards to officers 
     and employees of the Postal Service in senior executive or 
     equivalent positions to achieve the objectives of this 
     chapter.
       ``(b) Limitation on Total Compensation.--
       ``(1) In general.--Under any such program, the Postal 
     Service may award a bonus or other reward in excess of the 
     limitation set forth in the last sentence of section 1003(a), 
     if such program has been approved under paragraph (2). Any 
     such award or bonus may not cause the total compensation of 
     such officer or employee to exceed the total annual 
     compensation payable to the Vice President under section 104 
     of title 3 as of the end of the calendar year in which the 
     bonus or award is paid.
       ``(2) Approval process.--If the Postal Service wishes to 
     have the authority, under any program described in subsection 
     (a), to award bonuses or other rewards in excess of the 
     limitation set forth in the last sentence of section 
     1003(a)--
       ``(A) the Postal Service shall make an appropriate request 
     to the Board of Governors of the Postal Service in such form 
     and manner as the Board requires; and
       ``(B) the Board of Governors shall approve any such request 
     if the Board certifies, for the annual appraisal period 
     involved, that the performance appraisal system for affected 
     officers and employees of the Postal Service (as designed and 
     applied) makes meaningful distinctions based on relative 
     performance.
       ``(3) Revocation authority.--If the Board of Governors of 
     the Postal Service finds that a performance appraisal system 
     previously approved under paragraph (2)(B) does not (as 
     designed and applied) make meaningful distinctions based on 
     relative performance, the Board may revoke or suspend the 
     authority of the Postal Service to continue a program 
     approved under paragraph (2) until such time as appropriate 
     corrective measures have, in the judgment of the Board, been 
     taken.
       ``(c) Reporting Requirement Relating to Bonuses or Other 
     Rewards.--Included in its comprehensive statement under 
     section 2401(e) for any period shall be--
       ``(1) the name of each person receiving a bonus or other 
     reward during such period which would not have been allowable 
     but for the provisions of subsection (b);
       ``(2) the amount of the bonus or other reward; and
       ``(3) the amount by which the limitation referred to in 
     subsection (b)(1) was exceeded as a result of such bonus or 
     other reward.''.

                TITLE VI--ENHANCED REGULATORY COMMISSION

     SEC. 601. REORGANIZATION AND MODIFICATION OF CERTAIN 
                   PROVISIONS RELATING TO THE POSTAL REGULATORY 
                   COMMISSION.

       (a) Transfer and Redesignation.--Title 39, United States 
     Code, is amended--
       (1) by inserting after chapter 4 the following:

               ``CHAPTER 5--POSTAL REGULATORY COMMISSION

``Sec.
``501. Establishment.
``502. Commissioners.
``503. Rules; regulations; procedures.
``504. Administration.
``505. Officer of the Postal Regulatory Commission representing the 
              general public.

     ``Sec. 501. Establishment

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

     ``Sec. 502. Commissioners

       ``(a) The Postal Regulatory Commission is composed of 5 
     Commissioners, appointed by the President, by and with the 
     advice and consent of the Senate. The Commissioners shall be 
     chosen solely on the basis of their technical qualifications, 
     professional standing, and demonstrated expertise in 
     economics, accounting, law, or public administration, and may 
     be removed by the President only for cause. Each individual 
     appointed to the Commission shall have the qualifications 
     and expertise necessary to carry out the enhanced 
     responsibilities accorded Commissioners under the Postal 
     Accountability and Enhancement Act. Not more than 3 of the 
     Commissioners may be adherents of the same political 
     party.
       ``(b) No Commissioner shall be financially interested in 
     any enterprise in the private sector of the economy engaged 
     in the delivery of mail matter.
       ``(c) A Commissioner may continue to serve after the 
     expiration of his term until his successor has qualified, 
     except that a Commissioner may not so continue to serve for 
     more than 1 year after the date upon which his term otherwise 
     would expire under subsection (f).
       ``(d) One of the Commissioners shall be designated as 
     Chairman by, and shall serve in the position of Chairman at 
     the pleasure of, the President.
       ``(e) The Commissioners shall by majority vote designate a 
     Vice Chairman of the Commission. The Vice Chairman shall act 
     as Chairman of the Commission in the absence of the Chairman.
       ``(f) The Commissioners shall serve for terms of 6 
     years.'';
       (2) by striking, in subchapter I of chapter 36 (as in 
     effect before the amendment made by section 201(c)), the 
     heading for such subchapter I and all that follows through 
     section 3602;
       (3) by redesignating sections 3603 and 3604 as sections 503 
     and 504, respectively, and transferring such sections to the 
     end of chapter 5 (as inserted by paragraph (1)); and
       (4) by adding after such section 504 the following:

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

       ``The Postal Regulatory Commission shall designate an 
     officer of the Postal Regulatory Commission in all public 
     proceedings who shall represent the interests of the general 
     public.''.
       (b) Applicability.--The amendment made by subsection (a)(1) 
     shall not affect the appointment or tenure of any person 
     serving as a Commissioner on the Postal Regulatory Commission 
     (as so redesignated by section 604) under an appointment made 
     before the date of enactment of this Act or any nomination 
     made before that date, but, when any such office becomes 
     vacant, the appointment of any person to fill that office 
     shall be made in accordance with such amendment.
       (c) Clerical Amendment.--The analysis for part I of title 
     39, United States Code, is amended by inserting after the 
     item relating to chapter 4 the following:

  ``5. Postal Regulatory Commission...........................501''....

     SEC. 602. AUTHORITY FOR POSTAL REGULATORY COMMISSION TO ISSUE 
                   SUBPOENAS.

       Section 504 of title 39, United States Code (as so 
     redesignated by section 601) 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 or to obtain information to be 
     used to prepare a report under this title--
       ``(A) issue subpoenas requiring the attendance and 
     presentation of testimony by, or the production of 
     documentary or other evidence in the possession of, any 
     covered person; and
       ``(B) order the taking of depositions and responses to 
     written interrogatories by a covered person.
     The written concurrence of a majority of the Commissioners 
     then holding office shall, with respect to each subpoena 
     under subparagraph (A), be required in advance of its 
     issuance.
       ``(3) In the case of contumacy or failure to obey a 
     subpoena issued under this subsection, upon application by 
     the Commission, the district court of the United States for 
     the district in which the person to whom the subpoena is 
     addressed resides or is served may issue an order requiring 
     such person to appear at any designated place to testify or 
     produce documentary or other evidence. Any failure to obey 
     the order of the court may be punished by the court as a 
     contempt thereof.
       ``(4) For purposes of this subsection, the term `covered 
     person' means an officer, employee, agent, or contractor of 
     the Postal Service.
       ``(g)(1) If the Postal Service determines that any document 
     or other matter it provides to the Postal Regulatory 
     Commission under a subpoena issued under subsection (f), or 
     otherwise at the request of the Commission in connection with 
     any proceeding or other purpose under this title, contains 
     information which is described in section 410(c) of this 
     title, or exempt from public disclosure under section 552(b) 
     of title 5, the Postal Service shall, at the time of 
     providing such matter to the Commission, notify the 
     Commission, in writing, of its determination (and the reasons 
     therefor).
       ``(2) Except as provided in paragraph (3), no officer or 
     employee of the Commission may, with respect to any 
     information as to which the Commission has been notified 
     under paragraph (1)--

[[Page S3025]]

       ``(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)(A) Paragraph (2) shall not prohibit the Commission 
     from publicly disclosing relevant information in furtherance 
     of its duties under this title, provided that the Commission 
     has adopted regulations under section 553 of title 5, that 
     establish a procedure for according appropriate 
     confidentiality to information identified by the Postal 
     Service under paragraph (1). In determining the appropriate 
     degree of confidentiality to be accorded information 
     identified by the Postal Service under paragraph (1), the 
     Commission shall balance the nature and extent of the likely 
     commercial injury to the Postal Service against the public 
     interest in maintaining the financial transparency of a 
     government establishment competing in commercial markets.
       ``(B) Paragraph (2) shall not prevent the Commission from 
     requiring production of information in the course of any 
     discovery procedure established in connection with a 
     proceeding under this title. The Commission shall, by 
     regulations based on rule 26(c) of the Federal Rules of Civil 
     Procedure, establish procedures for ensuring appropriate 
     confidentiality for information furnished to any party.''.

     SEC. 603. APPROPRIATIONS FOR THE POSTAL REGULATORY 
                   COMMISSION.

       (a) Authorization of Appropriations.--Subsection (d) of 
     section 504 of title 39, United States Code (as so 
     redesignated by section 601) 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 504(d) of this title.''.
       (2) Conforming amendment.--Section 2003(e)(1) of title 39, 
     United States Code, is amended by striking the first sentence 
     and inserting the following: ``The Fund shall be available 
     for the payment of (A) all expenses incurred by the Postal 
     Service in carrying out its functions as provided by law, 
     subject to the same limitation as set forth in the 
     parenthetical matter under subsection (a); (B) all expenses 
     of the Postal Regulatory Commission, subject to the 
     availability of amounts appropriated under section 504(d); 
     and (C) all expenses of the Office of Inspector General, 
     subject to the availability of amounts appropriated under 
     section 8G(f) of the Inspector General Act of 1978.''.
       (c) Effective Date.--
       (1) In general.--The amendments made by this section shall 
     apply with respect to fiscal years beginning on or after 
     October 1, 2002.
       (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. 604. REDESIGNATION OF THE POSTAL RATE COMMISSION.

       (a) Amendments to Title 39, United States Code.--Title 39, 
     United States Code, is amended in sections 404, 503 and 504 
     (as so redesignated by section 601), 1001 and 1002, by 
     striking ``Postal Rate Commission'' each place it appears and 
     inserting ``Postal Regulatory Commission'';
       (b) Amendments to Title 5, United States Code.--Title 5, 
     United States Code, is amended in sections 104(1), 306(f), 
     2104(b), 3371(3), 5314 (in the item relating to Chairman, 
     Postal Rate Commission), 5315 (in the item relating to 
     Members, Postal Rate Commission), 5514(a)(5)(B), 
     7342(a)(1)(A), 7511(a)(1)(B)(ii), 8402(c)(1), 8423(b)(1)(B), 
     and 8474(c)(4) by striking ``Postal Rate Commission'' and 
     inserting ``Postal Regulatory Commission''.
       (c) Amendment to the Ethics in Government Act of 1978.--
     Section 101(f)(6) of the Ethics in Government Act of 1978 (5 
     U.S.C. App.) is amended by striking ``Postal Rate 
     Commission'' and inserting ``Postal Regulatory Commission''.
       (d) Amendment to the Rehabilitation Act of 1973.--Section 
     501(b) of the Rehabilitation Act of 1973 (29 U.S.C. 791(b)) 
     is amended by striking ``Postal Rate Office'' and inserting 
     ``Postal Regulatory Commission''.
       (e) Amendment to Title 44, United States Code.--Section 
     3502(5) of title 44, United States Code, is amended by 
     striking ``Postal Rate Commission'' and inserting ``Postal 
     Regulatory Commission''.
       (f) Other References.--Whenever a reference is made in any 
     provision of law (other than this Act or a provision of law 
     amended by this Act), regulation, rule, document, or other 
     record of the United States to the Postal Rate Commission, 
     such reference shall be considered a reference to the Postal 
     Regulatory Commission.

     SEC. 605. FINANCIAL TRANSPARENCY.

       (a) In General.--Section 101 of title 39, United States 
     Code, is amended--
       (1) by redesignating subsections (d) through (g) as 
     subsections (e) through (h), respectively; and
       (2) by inserting after subsection (c) the following:
       ``(d) As an independent establishment of the executive 
     branch of the Government of the United States, the Postal 
     Service shall be subject to a high degree of transparency to 
     ensure fair treatment of customers of the Postal Service's 
     market-dominant products and companies competing with the 
     Postal Service's competitive products.''.
       (b) Financial Reporting Requirements and Enforcement Powers 
     Applicable to Postal Service.--Section 503 of title 39, 
     United States Code (as so redesignated by section 601 and 
     604) is amended by--
       (1) inserting ``(a)'' before ``The Postal Regulatory 
     Commission shall promulgate''; and
       (2) adding at the end the following:
       ``(b)(1) Beginning with the first full fiscal year 
     following the date of enactment of the Postal Accountability 
     and Enhancement Act, the Postal Service shall file with the 
     Postal Regulatory Commission --
       ``(A) within 35 days after the end of each fiscal quarter, 
     a quarterly report containing the information prescribed in 
     Form 10-Q of the Securities and Exchange Commission under 
     section 13 of the Securities Exchange Act of 1934 (15 U.S.C. 
     78m), or any revised or successor form;
       ``(B) within 60 days after the end of each fiscal year, an 
     annual report containing the information prescribed in Form 
     10-K of the Securities and Exchange Commission under section 
     13 of the Securities Exchange Act of 1934 (15 U.S.C. 78m), or 
     any revised or successor form; and
       ``(C) periodic reports within the time frame and containing 
     the information prescribed in Form 8-K of the Securities and 
     Exchange Commission under section 13 of the Securities 
     Exchange Act of 1934 (15 U.S.C. 78m), or any revised or 
     successor form.
       ``(2) For purposes of preparing the reports required under 
     paragraph (1), the Postal Service shall be deemed to be the 
     registrant described in the Securities and Exchange 
     Commission forms, and references contained in such forms to 
     Securities and Exchange Commission regulations are 
     applicable.
       ``(3) For purposes of preparing the reports required under 
     paragraph (1), the Postal Service shall comply with the rules 
     prescribed by the Securities and Exchange Commission 
     implementing section 404 of the Sarbanes-Oxley Act of 2002 
     (15 U.S.C. 7262; Public Law 107-204) beginning with fiscal 
     year 2007 and in each fiscal year thereafter.
       ``(c)(1) The reports required under subsection (b)(1)(B) 
     shall include, with respect to the financial obligations of 
     the Postal Service under chapters 83, 84, and 89 of title 5 
     for retirees of the Postal Service--
       ``(A) the funded status of such obligations of the Postal 
     Service;
       ``(B) components of the net change in the fund balances and 
     obligations and the nature and cause of any significant 
     changes;
       ``(C) components of net periodic costs;
       ``(D) cost methods and assumptions underlying the relevant 
     actuarial valuations;
       ``(E) the effect of a one-percentage point increase in the 
     assumed health care cost trend rate for each future year on 
     the service and interest costs components of net periodic 
     cost and the accumulated obligation of the Postal Service 
     under chapter 89 of title 5 for retirees of the Postal 
     Service;
       ``(F) actual contributions to and payments from the funds 
     for the years presented and the estimated future 
     contributions and payments for each of the following 5 years;
       ``(G) the composition of plan assets reflected in the fund 
     balances; and
       ``(H) the assumed rate of return on fund balances and the 
     actual rates of return for the years presented.
       ``(2)(A) Beginning with the fiscal year 2007 and in each 
     fiscal year thereafter, for purposes of the reports required 
     under subsection (b)(1) (A) and (B), the Postal Service shall 
     include segment reporting.
       ``(B) The Postal Service shall determine the appropriate 
     segment reporting under subparagraph (A), after consultation 
     with the Postal Regulatory Commission.
       ``(d) For purposes of the annual reports required under 
     subsection (b)(1)(B), the Postal Service shall obtain an 
     opinion from an independent auditor on whether the 
     information listed under subsection (c) is fairly stated in 
     all material respects, either in relation to the basic 
     financial statements as a whole or on a stand-alone basis.
       ``(e) The Postal Regulatory Commission shall have access to 
     the audit documentation and any other supporting matter of 
     the Postal Service and its independent auditor in connection 
     with any information submitted under subsection (b)(1)(B).
       ``(f) The Postal Regulatory 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 section whenever it shall appear 
     that the data--
       ``(1) have become significantly inaccurate;

[[Page S3026]]

       ``(2) can be significantly improved; or
       ``(3) are not cost beneficial.''.

                         TITLE VII--EVALUATIONS

     SEC. 701. ASSESSMENTS OF RATEMAKING, CLASSIFICATION, AND 
                   OTHER PROVISIONS.

       (a) In General.--The Postal Regulatory Commission shall, at 
     least every 3 years, submit a report to the President and 
     Congress concerning--
       (1) the operation of the amendments made by this Act; and
       (2) recommendations for any legislation or other measures 
     necessary to improve the effectiveness or efficiency of the 
     postal laws of the United States.
       (b) Postal Service Views.--A report under this section 
     shall be submitted only after reasonable opportunity has been 
     afforded to the Postal Service to review the report and to 
     submit written comments on the report. Any comments timely 
     received from the Postal Service under the preceding sentence 
     shall be attached to the report submitted under subsection 
     (a).

     SEC. 702. REPORT ON UNIVERSAL POSTAL SERVICE AND THE POSTAL 
                   MONOPOLY.

       (a) Report by the Postal Regulatory Commission.--
       (1) In general.--Not later than 12 months after the date of 
     enactment of this Act, the Postal Regulatory Commission shall 
     submit a report to the President and Congress on universal 
     postal service and the postal monopoly in the United States 
     (in this section referred to as ``universal service and the 
     postal monopoly''), including the monopoly on the delivery of 
     mail and on access to mailboxes.
       (2) Contents.--The report under this subsection shall 
     include--
       (A) a comprehensive review of the history and development 
     of universal service and the postal monopoly, including how 
     the scope and standards of universal service and the postal 
     monopoly have evolved over time for the Nation and its urban 
     and rural areas;
       (B) the scope and standards of universal service and the 
     postal monopoly provided under current law (including 
     sections 101 and 403 of title 39, United States Code), and 
     current rules, regulations, policy statements, and practices 
     of the Postal Service;
       (C) a description of any geographic areas, populations, 
     communities (including both urban and rural communities), 
     organizations, or other groups or entities not currently 
     covered by universal service or that are covered but that are 
     receiving services deficient in scope or quality or both; and
       (D) the scope and standards of universal service and the 
     postal monopoly likely to be required in the future in order 
     to meet the needs and expectations of the United States 
     public, including all types of mail users, based on 
     discussion of such assumptions, alternative sets of 
     assumptions, and analyses as the Postal Service considers 
     plausible.
       (b) Recommended Changes to Universal Service and the 
     Monopoly.--The Postal Regulatory Commission shall include in 
     the report under subsection (a), and in all reports submitted 
     under section 701 of this Act--
       (1) any recommended changes to universal service and the 
     postal monopoly as the Commission considers appropriate, 
     including changes that the Commission may implement under 
     current law and changes that would require changes to current 
     law, with estimated effects of the recommendations on the 
     service, financial condition, rates, and security of mail 
     provided by the Postal Service;
       (2) with respect to each recommended change described under 
     paragraph (1)--
       (A) an estimate of the costs of the Postal Service 
     attributable to the obligation to provide universal service 
     under current law; and
       (B) an analysis of the likely benefit of the current postal 
     monopoly to the ability of the Postal Service to sustain the 
     current scope and standards of universal service, including 
     estimates of the financial benefit of the postal monopoly to 
     the extent practicable, under current law; and
       (3) such additional topics and recommendations as the 
     Commission considers appropriate, with estimated effects of 
     the recommendations on the service, financial condition, 
     rates, and the security of mail provided by the Postal 
     Service.

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

       (a) In General.--The Federal Trade Commission shall prepare 
     and submit to the President and Congress, and to the Postal 
     Regulatory Commission, within 1 year after the date of 
     enactment of this Act, a comprehensive report identifying 
     Federal and State laws that apply differently to the United 
     States Postal Service with respect to the competitive 
     category of mail (within the meaning of section 102 of title 
     39, United States Code, as amended by section 101) and 
     similar products provided by private companies.
       (b) Recommendations.--The Federal Trade Commission shall 
     include such recommendations as it considers appropriate for 
     bringing such legal discrimination to an end, and in the 
     interim, to account under section 3633 of title 39, United 
     States Code (as added by this Act), for the net economic 
     advantages provided by those laws.
       (c) Consultation.--In preparing its report, the Federal 
     Trade Commission shall consult with the United States Postal 
     Service, the Postal Regulatory Commission, other Federal 
     agencies, mailers, private companies that provide delivery 
     services, and the general public, and shall append to such 
     report any written comments received under this subsection.
       (d) Competitive Product Regulation.--The Postal Regulatory 
     Commission shall take into account the recommendations of the 
     Federal Trade Commission in promulgating or revising the 
     regulations required under section 3633 of title 39, United 
     States Code.

     SEC. 704. REPORT ON POSTAL WORKPLACE SAFETY AND WORKPLACE-
                   RELATED INJURIES.

       (a) Report by the Inspector General.--
       (1) In general.--Not later than 6 months after the 
     enactment of this Act, the Inspector General of the United 
     States Postal Service shall submit a report to Congress and 
     the Postal Service that--
       (A) details and assesses any progress the Postal Service 
     has made in improving workplace safety and reducing 
     workplace-related injuries nationwide; and
       (B) identifies opportunities for improvement that remain 
     with respect to such improvements and reductions.
       (2) Contents.--The report under this subsection shall 
     also--
       (A) discuss any injury reduction goals established by the 
     Postal Service;
       (B) describe the actions that the Postal Service has taken 
     to improve workplace safety and reduce workplace-related 
     injuries, and assess how successful the Postal Service has 
     been in meeting its injury reduction goal; and
       (C) identify areas where the Postal Service has failed to 
     meet its injury reduction goals, explain the reasons why 
     these goals were not met, and identify opportunities for 
     making further progress in meeting these goals.
       (b) Report by the Postal Service.--
       (1) Report to congress.--Not later than 6 months after 
     receiving the report under subsection (a), the Postal Service 
     shall submit a report to Congress detailing how it plans to 
     improve workplace safety and reduce workplace-related 
     injuries nationwide, including goals and metrics.
       (2) Problem areas.--The report under this subsection shall 
     also include plans, developed in consultation with the 
     Inspector General and employee representatives, including 
     representatives of each postal labor union and management 
     association, for addressing the problem areas identified by 
     the Inspector General in the report under subsection 
     (a)(2)(C).

     SEC. 705. STUDY ON RECYCLED PAPER.

       (a) In General.--Within 12 months after the date of 
     enactment of this Act, the Government Accountability Office 
     shall study and submit to the Congress, the Board of 
     Governors of the Postal Service, and to the Postal Regulatory 
     Commission a report concerning--
       (1) the economic and environmental efficacy of establishing 
     rate incentives for mailers linked to the use of recycled 
     paper;
       (2) a description of the accomplishments of the Postal 
     Service in each of the preceding 5 years involving recycling 
     activities, including the amount of annual revenue generated 
     and savings achieved by the Postal Service as a result of its 
     use of recycled paper and other recycled products and its 
     efforts to recycle undeliverable and discarded mail and other 
     materials; and
       (3) additional opportunities that may be available for the 
     United States Postal Service to engage in recycling 
     initiatives and the projected costs and revenues of 
     undertaking such opportunities.
       (b) Recommendations.--The report shall include 
     recommendations for any administrative or legislative actions 
     that may be appropriate.

   TITLE VIII--POSTAL SERVICE RETIREMENT AND HEALTH BENEFITS FUNDING

     SEC. 801. SHORT TITLE.

       This title may be cited as the ``Postal Civil Service 
     Retirement and Health Benefits Funding Amendments of 2004''.

     SEC. 802. CIVIL SERVICE RETIREMENT SYSTEM.

       (a) In General.--Chapter 83 of title 5, United States Code, 
     is amended--
       (1) in section 8334(a)(1)(B), by striking clause (ii) and 
     inserting the following:
       ``(ii) In the case of an employee of the United States 
     Postal Service, no amount shall be contributed under this 
     subparagraph.''; and
       (2) by amending section 8348(h) to read as follows:
       ``(h)(1) In this subsection, the term `Postal surplus or 
     supplemental liability' means the estimated difference, as 
     determined by the Office, between--
       ``(A) the actuarial present value of all future benefits 
     payable from the Fund under this subchapter to current or 
     former employees of the United States Postal Service and 
     attributable to civilian employment with the United States 
     Postal Service; and
       ``(B) the sum of--
       ``(i) the actuarial present value of deductions to be 
     withheld from the future basic pay of employees of the United 
     States Postal Service currently subject to this subchapter 
     under section 8334;
       ``(ii) that portion of the Fund balance, as of the date the 
     Postal surplus or supplemental liability is determined, 
     attributable to payments to the Fund by the United States 
     Postal Service and its employees, minus benefit payments 
     attributable to civilian employment with the United States 
     Postal Service, plus the earnings on such amounts while in 
     the Fund; and
       ``(iii) any other appropriate amount, as determined by the 
     Office in accordance with

[[Page S3027]]

     generally accepted actuarial practices and principles.
       ``(2)(A) Not later than June 15, 2006, the Office shall 
     determine the Postal surplus or supplemental liability, as of 
     September 30, 2005. If that result is a surplus, the amount 
     of the surplus shall be transferred to the Postal Service 
     Retiree Health Benefits Fund established under section 8909a 
     by June 30, 2006. If the result is a supplemental liability, 
     the Office shall establish an amortization schedule, 
     including a series of annual installments commencing 
     September 30, 2006, which provides for the liquidation of 
     such liability by September 30, 2043.
       ``(B) The Office shall redetermine the Postal surplus or 
     supplemental liability as of the close of the fiscal year, 
     for each fiscal year beginning after September 30, 2006, 
     through the fiscal year ending September 30, 2038. If the 
     result is a surplus, that amount shall remain in the Fund 
     until distribution is authorized under subparagraph (C), and 
     any prior amortization schedule for payments shall be 
     terminated. If the result is a supplemental liability, the 
     Office shall establish a new amortization schedule, including 
     a series of annual installments commencing on September 30 of 
     the subsequent fiscal year, which provides for the 
     liquidation of such liability by September 30, 2043.
       ``(C) As of the close of the fiscal years ending September 
     30, 2015, 2025, 2035, and 2039, if the result is a surplus, 
     that amount shall be transferred to the Postal Service 
     Retiree Health Benefits Fund, and any prior amortization 
     schedule for payments shall be terminated.
       ``(D) Amortization schedules established under this 
     paragraph shall be set in accordance with generally accepted 
     actuarial practices and principles, with interest computed at 
     the rate used in the most recent valuation of the Civil 
     Service Retirement System.
       ``(E) The United States Postal Service shall pay the 
     amounts so determined to the Office, with payments due not 
     later than the date scheduled by the Office.
       ``(3) Notwithstanding any other provision of law, in 
     computing the amount of any payment under any other 
     subsection of this section that is based upon the amount of 
     the unfunded liability, such payment shall be computed 
     disregarding that portion of the unfunded liability that the 
     Office determines will be liquidated by payments under this 
     subsection.''.
       (b) Credit Allowed for Military Service.--In the 
     application of section 8348(g)(2) of title 5, United States 
     Code, for the fiscal year 2006, the Office of Personnel 
     Management shall include, in addition to the amount otherwise 
     computed under that paragraph, the amounts that would have 
     been included for the fiscal years 2003 through 2005 with 
     respect to credit for military service of former employees of 
     the United States Postal Service as though the Postal Civil 
     Service Retirement System Funding Reform Act of 2003 (Public 
     Law 108-18) had not been enacted, and the Secretary of the 
     Treasury shall make the required transfer to the Civil 
     Service Retirement and Disability Fund based on that amount.

     SEC. 803. HEALTH INSURANCE.

       (a) In General.--
       (1) Funding.--Chapter 89 of title 5, United States Code, is 
     amended--
       (A) in section 8906(g)(2)(A), by striking ``shall be paid 
     by the United States Postal Service.'' and inserting ``shall 
     be paid first from the Postal Service Retiree Health Benefits 
     Fund up to the amount contained in the Fund, with any 
     remaining amount paid by the United States Postal Service.''; 
     and
       (B) by inserting after section 8909 the following:

     ``Sec. 8909a. Postal Service Retiree Health Benefit Fund

       ``(a) There is in the Treasury of the United States a 
     Postal Service Retiree Health Benefits Fund which is 
     administered by the Office of Personnel Management.
       ``(b) The Fund is available without fiscal year limitation 
     for payments required under section 8906(g)(2)(A).
       ``(c) The Secretary of the Treasury shall immediately 
     invest, in interest-bearing securities of the United States 
     such currently available portions of the Fund as are not 
     immediately required for payments from the Fund. Such 
     investments shall be made in the same manner as investments 
     for the Civil Service Retirement and Disability Fund under 
     section 8348.
       ``(d)(1) Not later than June 30, 2006, and by June 30 of 
     each succeeding year, the Office shall compute the net 
     present value of the future payments required under section 
     8906(g)(2)(A) and attributable to the service of Postal 
     Service employees during the most recently ended fiscal year.
       ``(2)(A) Not later than June 30, 2006, the Office shall 
     compute, and by June 30 of each succeeding year, the Office 
     shall recompute the difference between--
       ``(i) the net present value of the excess of future 
     payments required under section 8906(g)(2)(A) for current and 
     future United States Postal Service annuitants as of the end 
     of the fiscal year ending on September 30 of that year; and
       ``(ii)(I) the value of the assets of the Postal Retiree 
     Health Benefits Fund as of the end of the fiscal year ending 
     on September 30 of that year; and
       ``(II) the net present value computed under paragraph (1).
       ``(B) Not later than June 30, 2006, the Office shall 
     compute, and by June 30 of each succeeding year shall 
     recompute, an amortization schedule including a series of 
     annual installments which provide for the liquidation by 
     September 30, 2045, or within 15 years, whichever is later, 
     of the net present value determined under subparagraph (A), 
     including interest at the rate used in that computation.
       ``(3) Not later than September 30, 2006, and by September 
     30 of each succeeding year, the United States Postal Service 
     shall pay into such Fund--
       ``(A) the net present value computed under paragraph (1); 
     and
       ``(B) the annual installment computed under paragraph 
     (2)(B).
       ``(4) Computations under this subsection shall be made 
     consistent with the assumptions and methodology used by the 
     Office for financial reporting under subchapter II of chapter 
     35 of title 31.
       ``(5) After consultation with the United States Postal 
     Service, the Office shall promulgate any regulations the 
     Office determines necessary under this subsection.''.
       (2) Technical and conforming amendment.--The table of 
     sections for chapter 89 of title 5, United States Code, is 
     amended by inserting after the item relating to section 8909 
     the following:

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

       (b) Transitional Adjustment for Fiscal Year 2006.--For 
     fiscal year 2006, the amounts paid by the Postal Service in 
     Government contributions under section 8906(g)(2)(A) of title 
     5, United States Code, for fiscal year 2006 contributions 
     shall be deducted from the initial payment otherwise due from 
     the Postal Service to the Postal Service Retiree Health 
     Benefits Fund under section 8909a(d)(3) of such title as 
     added by this section.

     SEC. 804. REPEAL OF DISPOSITION OF SAVINGS PROVISION.

       Section 3 of the Postal Civil Service Retirement System 
     Funding Reform Act of 2003 (Public Law 108-18) is repealed.

     SEC. 805. EFFECTIVE DATES.

       (a) In General.--Except as provided under subsection (b), 
     this title shall take effect on October 1, 2005.
       (b) Termination of Employer Contribution.--The amendment 
     made by paragraph (1) of section 802(a) shall take effect on 
     the first day of the first pay period beginning on or after 
     October 1, 2005.

                TITLE IX--COMPENSATION FOR WORK INJURIES

     SEC. 901. TEMPORARY DISABILITY; CONTINUATION OF PAY.

       (a) Time of Accrual of Right.--Section 8117 of title 5, 
     United States Code, is amended--
       (1) by striking ``An employee'' and inserting ``(a) An 
     employee other than a Postal Service employee''; and
       (2) by adding at the end the following:
       ``(b) A Postal Service employee is not entitled to 
     compensation or continuation of pay for the first 3 days of 
     temporary disability, except as provided under paragraph (3) 
     of subsection (a). A Postal Service employee may use annual 
     leave, sick leave, or leave without pay during that 3-day 
     period, except that if the disability exceeds 14 days or is 
     followed by permanent disability, the employee may have their 
     sick leave or annual leave reinstated or receive pay for the 
     time spent on leave without pay under this section.''.
       (b) Technical and Conforming Amendment.--Section 8118(b)(1) 
     of title 5, United States Code, is amended to read as 
     follows:
       ``(1) without a break in time, except as provided under 
     section 8117(b), unless controverted under regulations of the 
     Secretary''.

     SEC. 902. DISABILITY RETIREMENT FOR POSTAL EMPLOYEES.

       (a) Total Disability.--Section 8105 of title 5, United 
     States Code, is amended--
       (1) in subsection (a), by adding at the end the following: 
     ``This section applies to a Postal Service employee, except 
     as provided under subsection (c).''; and
       (2) by adding at the end the following:
       ``(c)(1) In this subsection, the term `retirement age' has 
     the meaning given under section 216(l)(1) of the Social 
     Security Act (42 U.S.C. 416(l)(1)).
       ``(2) Notwithstanding any other provision of law, for any 
     injury occurring on or after the date of enactment of the 
     Postal Accountability and Enhancement Act, and for any new 
     claim for a period of disability commencing on or after that 
     date, the compensation entitlement for total disability is 
     converted to 50 percent of the monthly pay of the employee on 
     the later of--
       ``(A) the date on which the injured employee reaches 
     retirement age; or
       ``(B) 1 year after the employee begins receiving 
     compensation.''.
       (b) Partial Disability.--Section 8106 of title 5, United 
     States Code, is amended--
       (1) in subsection (a), by adding at the end the following: 
     ``This section applies to a Postal Service employee, except 
     as provided under subsection (d).''; and
       (2) by adding at the end the following:
       ``(d)(1) In this subsection, the term `retirement age' has 
     the meaning given under section 216(l)(1) of the Social 
     Security Act (42 U.S.C. 416(l)(1)).
       ``(2) Notwithstanding any other provision of law, for any 
     injury occurring on or after the date of enactment of this 
     subsection, and for any new claim for a period of disability 
     commencing on or after that date, the compensation 
     entitlement for partial disability

[[Page S3028]]

     is converted to 50 percent of the difference between the 
     monthly pay of an employee and the monthly wage earning 
     capacity of the employee after the beginning of partial 
     disability on the later of--
       ``(A) the date on which the injured employee reaches 
     retirement age; or
       ``(B) 1 year after the employee begins receiving 
     compensation.''.

                         TITLE X--MISCELLANEOUS

     SEC. 1001. EMPLOYMENT OF POSTAL POLICE OFFICERS.

       Section 404 of title 39, United States Code (as amended by 
     this Act), is further amended by adding at the end the 
     following:
       ``(d) 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 
     may give such guards, with respect to such property, any of 
     the powers of special policemen provided under section 1315 
     of title 40. The Postmaster General, or the designee of the 
     Postmaster General, may take any action that the Secretary of 
     Homeland Security may take under section 1315 of title 40, 
     with respect to that property.

     SEC. 1002. EXPANDED CONTRACTING AUTHORITY.

       (a) Amendment to Title 39, United States Code.--
       (1) Contracts with air carriers.--Subsection (e) of section 
     5402 of title 39, United States Code, is amended--
       (A) by striking the matter preceding paragraph (2) and 
     inserting the following:
       ``(e)(1) The Postal Service may contract with any air 
     carrier for the transportation of mail by aircraft in 
     interstate air transportation, including the rates for that 
     transportation, either through negotiations or competitive 
     bidding.'';
       (B) by redesignating paragraph (2) as paragraph (4); and
       (C) by inserting after paragraph (1) the following:
       ``(2) Notwithstanding subsections (b) through (d), the 
     Postal Service may contract with any air carrier or foreign 
     air carrier for the transportation of mail by aircraft in 
     foreign air transportation, including the rates for that 
     transportation, either through negotiations or competitive 
     bidding, except that--
       ``(A) any such contract may be awarded only to--
       ``(i) an air carrier holding a certificate required by 
     section 41101 of title 49 or an exemption therefrom issued by 
     the Secretary of Transportation;
       ``(ii) a foreign air carrier holding a permit required by 
     section 41301 of title 49 or an exemption therefrom issued by 
     the Secretary of Transportation; or
       ``(iii) a combination of such air carriers or foreign air 
     carriers (or both);
       ``(B) mail transported under any such contract shall not be 
     subject to any duty-to-carry requirement imposed by any 
     provision of subtitle VII of title 49 or by any certificate, 
     permit, or corresponding exemption authority issued by the 
     Secretary of Transportation under that subtitle;
       ``(C) during the 5-year period beginning 1 year after the 
     date of enactment of the Postal Accountability and 
     Enhancement Act, the Postal Service may not under this 
     paragraph--
       ``(i) contract for service between a pair or combination of 
     pairs of points in foreign air transportation with--
       ``(I) a foreign air carrier; or
       ``(II) an air carrier to the extent that service provided 
     would be offered through a code sharing arrangement in which 
     the air carrier's designator code is used to identify a 
     flight operated by a foreign air carrier; or
       ``(ii) tender mail in foreign air transportation under 
     contracts providing for the carriage of mail in foreign air 
     transportation over all (or substantially all, as determined 
     by the Postal Service) of a carrier's routes or all or 
     substantially all of a carrier's routes within a geographic 
     area determined by the Postal Service on the basis of a 
     common unit price per mile and a separate terminal price to--
       ``(I) a foreign air carrier; or
       ``(II) an air carrier to the extent that service provided 
     would be offered through a code sharing arrangement in which 
     the air carrier's designator code is used to identify a 
     flight operated by a foreign air carrier, unless--

       ``(aa) with respect to clause (i) and this clause, fewer 
     than 2 air carriers capable of providing service to the 
     Postal Service adequate for its purposes between the pair or 
     combination of pairs of points in foreign air transportation 
     offer scheduled service between the pair or combination of 
     pairs of points in foreign air transportation which are the 
     subject of the contract or tender;
       ``(bb) with respect to clause (i), after competitive 
     solicitation, the Postal Service has not received at least 2 
     offers from eligible air carriers capable of providing 
     service to the Postal Service adequate for its purposes 
     between the pair of combination of pairs of points in foreign 
     air transportation; or
       ``(cc) with respect to this clause, after competitive 
     solicitation, fewer than 2 air carriers under contract with 
     the Postal Service offer service adequate for the Postal 
     Service's purposes between the pair or combination of pairs 
     of points in foreign air transportation for which tender is 
     being made;

       ``(D) beginning 6 years after the date of enactment of the 
     Postal Accountability and Enhancement Act, every contract 
     that the Postal Service awards to a foreign air carrier under 
     this paragraph shall be subject to the continuing requirement 
     that air carriers shall be afforded the same opportunity to 
     carry the mail of the country to and from which the mail is 
     transported and the flag country of the foreign air carrier, 
     if different, as the Postal Service has afforded the foreign 
     air carrier; and
       ``(E) the Postmaster General shall consult with the 
     Secretary of Defense concerning actions that affect the 
     carriage of military mail transported in foreign air 
     transportation.
       ``(3) Paragraph (2) shall not be interpreted as suspending 
     or otherwise diminishing the authority of the Secretary of 
     Transportation under section 41310 of title 49.''.
       (2) Definitions.--Section 5402(a) of title 39, United 
     States Code, is amended by striking paragraph (2) and 
     inserting the following:
       ``(2) The terms `air carrier', `air transportation', 
     `foreign air carrier', `foreign air transportation', 
     `interstate air transportation', and `mail' have the meanings 
     given such terms in section 40102(a) of title 49.''.
       (b) Amendments to Title 49, United States Code.--
       (1) Authority of postal service to provide for interstate 
     air transportation of mail.--Section 41901(a) of title 49, 
     United States Code, is amended to read as follows:
       ``(a) Title 39.--The United States Postal Service may 
     provide for the transportation of mail by aircraft in air 
     transportation under this chapter and under chapter 54 of 
     title 39.''.
       (2) Schedules for certain transportation of mail.--Section 
     41902 of title 49, United States Code, is amended--
       (A) by striking subsection (b) and inserting the following:
       ``(b) Statements on Places and Schedules.--Every air 
     carrier shall file with the Secretary of Transportation and 
     the United States Postal Service a statement showing--
       ``(1) the places between which the carrier is authorized to 
     transport mail in Alaska;
       ``(2) every schedule of aircraft regularly operated by the 
     carrier between places described under paragraph (1) and 
     every change in each schedule; and
       ``(3) for each schedule, the places served by the carrier 
     and the time of arrival at, and departure from, each 
     place.'';
       (B) in subsection (c), by striking ``(b)(3)'' and inserting 
     ``(b)''; and
       (C) in subsection (d), in the first sentence, by striking 
     ``(b)(3)'' and inserting ``(b)''.
       (3) Prices for foreign transportation of mail.--Section 
     41907 of title 49, United States Code, is amended--
       (A) by striking ``(a) Limitations.--''; and
       (B) by striking subsection (b).
       (4) Technical and conforming amendments.--Sections 41107, 
     41901(b)(1), 41902(a), and 41903 (a) and (b) of title 49, 
     United States Code, are amended by striking ``in foreign air 
     transportation or''.
       (c) Effective Date.--The amendments made by this section 
     shall take effect 1 year after the date of enactment of this 
     Act.

     SEC. 1003. REPORT ON THE UNITED STATES POSTAL INSPECTION 
                   SERVICE AND THE OFFICE OF THE INSPECTOR GENERAL 
                   OF THE UNITED STATES POSTAL SERVICE.

       (a) In General.--Not later than 1 year after the date of 
     enactment of this Act, the Government Accountability Office 
     shall review the functions, responsibilities, and areas of 
     possible duplication of the United States Postal Inspection 
     Service and the Office of the Inspector General of the United 
     States Postal Service and submit a report on the review to 
     the Committee on Homeland Security and Governmental Affairs 
     of the Senate.
       (b) Contents.--The report under this section shall include 
     recommendations for legislative actions necessary to clarify 
     the roles of the United States Postal Inspection Service and 
     the Office of the Inspector General of the United States 
     Postal Service to strengthen oversight of postal operations.

     SEC. 1004. SENSE OF CONGRESS REGARDING POSTAL SERVICE 
                   PURCHASING REFORM.

       It is the sense of Congress that the Postal Service 
     should--
       (1) ensure the fair and consistent treatment of suppliers 
     and contractors in its current purchasing policies and any 
     revision or replacement of such policies, such as through the 
     use of competitive contract award procedures, effective 
     dispute resolution mechanisms, and socioeconomic programs; 
     and
       (2) implement commercial best practices in Postal Service 
     purchasing policies to achieve greater efficiency and cost 
     savings as recommended in July 2003 by the President's 
     Commission on the United States Postal Service, in a manner 
     that is compatible with the fair and consistent treatment of 
     suppliers and contractors, as befitting an establishment in 
     the United States Government.

           postal accountability and enhancement act of 2005

  Mr. CARPER. Mr. President, I rise today to join my friend from Maine, 
Senator Collins, in introducing the Postal Accountability and 
Enhancement Act of 2005, legislation that makes the reforms necessary 
for the Postal Service to thrive in the 21st Century and to better 
serve the American people. This bill is almost identical to S. 2468, 
the version of the Postal Accountability and Enhancement Act that was 
unanimously reported out of the Governmental Affairs Committee last 
June on a 17-0 vote.

[[Page S3029]]

  When I rose with Senator Collins to introduce S. 2468 last year, I 
noted that some of our colleagues may wonder why we need postal reform. 
Most of us probably receive few complaints from our constituents about 
the Postal Service. Most Americans like the Postal Service just the way 
it is and don't want to see it changed. We must keep in mind, however, 
that, despite the fact that the mailing industry, and the economy as a 
whole, have changed radically over the years, the Postal Service has, 
for the most part, remained unchanged for more than three decades now.
  Senator Collins and I are re-introducing this bill today, then, 
because the Postal Service continues to operate under a business model 
created a generation ago.
  In the early 1970s, Senator Stevens led the effort in the Senate to 
create the Postal Service out of the failing Post Office Department. At 
the time, the Post Office Department received about 20 percent of its 
revenue from taxpayer subsidies. Labor-management relations were at 
their worst, service was suffering and there was little hope the 
department would be able to muster the resources necessary to service a 
growing delivery network.
  By all accounts, the product of Senator Stevens' labors, the Postal 
Reorganization Act signed into law by President Nixon in 1971, has been 
a phenomenal success. The Postal Service today receives virtually no 
taxpayer support. The service its hundreds of thousands of employees 
provide to every American, nearly every day is second to none. The 
Postal Service now delivers to 141 million addresses each day and is 
the anchor of a $900 billion mailing industry.
  As we celebrate the success of the Postal Reorganization Act, 
however, we need to be thinking about what needs to be done to help the 
Postal Service continue to thrive in the years to come.
  The Postal Service is clearly in need of modernization once again. 
Back in the early 1970s, none of the Postal Service's customers had 
access to fax machines, cell phones or pagers. Nobody imagined that we 
would ever enjoy conveniences like e-mail and electronic bill pay that 
could replace a First Class letter. That, of course, is no longer the 
case. Most of the mall I receive from my constituents these days 
arrives via fax and e-mail instead of hard copy mail, a marked change 
from my days in the House and even from my more recent days as Governor 
of Delaware.
  This continuing electronic diversion of mail, coupled with a slow 
economy and the threat of terrorism, has made for some rough going at 
the Postal Service of late. In 2001, as Postmaster General Potter came 
onboard, the Postal Service was projecting its third consecutive year 
of deficits. They lost $199 million in 2000 and $1.68 billion in 2001. 
They were projecting losses of up to $4 billion in fiscal year 2002. 
Mail volume was falling, revenues were below projections and the Postal 
Service was estimating that it needed to spend $4 billion on security 
enhancements in order to prevent a repeat of the tragic anthrax attacks 
that took several lives. The Postal Service was also perilously close 
to its $15 billion debt ceiling and had been forced to raise rates 
three times in less than two years in order to pay for its operations.
  A number of positive steps have been taken since 2001. General Potter 
has led a commendable effort to improve productivity and make the 
Postal Service more efficient. Billions of dollars in costs have been 
taken out of the system--some $4.3 billion since 2002--according to the 
Postal Service's most recent annual report. Thousands of positions have 
been eliminated through attrition and successful automation programs 
have yielded great benefits, resulting in the smallest workforce seen 
at the Postal Service since the early 1980s.
  Perhaps most dramatically, the Postal Service learned in 2002 that an 
unfunded pension liability they once believed was as high as $32 
billion was actually significantly lower. Senator Collins and I 
responded with legislation, the Postal Civil Service Retirement System 
Funding Reform Act, which cut the amount the Postal Service must pay 
into the Civil Service Retirement System each year by nearly $3 
billion. This has freed up money for debt reduction and prevented the 
need for further rate increases until at least next year. The Postal 
Service's debt to the Treasury now stands at about $1.8 billion--the 
lowest it's been in more than 20 years--and rates have remained stable 
since the passage of the pension bill.
  Aggressive cost cutting and a lower pension payment, then, have put 
off the postal emergency we thought was right around the corner just a 
few years ago. But cost cutting can only go so far and will not solve 
the Postal Service's long-term challenges. These long-term challenges 
were laid out in stark detail last year when Postmaster General Potter 
and then-Postal Board of Governors Chairman David Fineman testified 
before the House Government Reform Committee's Special Panel on Postal 
Reform. Mr. Fineman pointed out in his testimony that the total volume 
of mail delivered by the Postal Service has declined by more than 5 
billion pieces since 2000. Over the same period, the number of homes 
and businesses the Postal Service delivers to have increased by more 
than 5 million. First Class mail, the largest contributor to the Postal 
Service's bottom line, is leading the decline in volume. Some of those 
disappearing First Class letters are being replaced by advertising 
mail, which earns significantly less. Many First Class letters have 
likely been lost for good to fax machines, e-mail and electronic bill 
pay.
  Despite electronic diversion, the Postal Service continues to add 
between 1.6 million and 1.9 million new delivery points each year, 
creating the need for thousands of new routes and thousands of new 
letter carriers to work them. In addition, faster-growing parts of the 
country will need new or expanded postal facilities in the coming 
years. As more and more customers turn to electronic forms of 
communication, however, letter carriers are bringing fewer pieces of 
mail to each address they serve. The rate increases that will be needed 
to maintain the Postal Service's current infrastructure, finance 
retirement obligations to its current employees, pay for new letter 
carriers and build facilities in growing parts of the country will only 
erode mail volume further.
  The Postal Service has been trying to modernize on its own. General 
Potter and his management team are making progress, but there is only 
so much they can do without legislative change. Even if the Postal 
Service begins to see volume and revenues pick up, we will still need 
to make fundamental changes in the way the Postal Service operates in 
order to make them as successful in the 21st Century as they were in 
the 20th Century.
  This is where the Postal Accountability and Enhancement Act comes in. 
First, our bill begins the process of developing a modern rate system 
for pricing Postal Service products. The new system, to be developed by 
a strengthened Postal Rate Commission, re-named the Postal Regulatory 
Commission, would allow retained earnings, provide the Postal Service 
significantly more flexibility in setting prices and streamline today's 
burdensome rate making process. To provide stability, predictability 
and fairness for the Postal Service's customers, rates would remain 
within a cap to be set each year by the Regulatory Commission.
  The second major provision in the Postal Accountability and 
Enhancement Act requires the Postal Service to set strong service 
standards for its Market Dominant products, a category made up mostly 
of those products, like First Class mail, that are part of the postal 
monopoly. The new standards will improve service and will be used by 
the Postal Service to establish performance goals, rationalize its 
physical infrastructure and streamline its workforce.
  Third, the Postal Accountability and Enhancement Act ensures that the 
Postal Service competes fairly. The bill prohibits the Postal Service 
from issuing anti-competitive regulations. It also subjects the Postal 
Service to state zoning, planning and land use laws, requires them to 
pay an assumed Federal income tax on products like packages and Express 
Mail that private firms also offer and requires that these products as 
a whole pay their share of the Postal Service's institutional costs. 
The Federal Trade Commission will further study any additional legal 
benefits the Postal Service enjoys that

[[Page S3030]]

its private sector competitors do not. The Regulatory Commission will 
then find a way to use the rate system to level the playing field.
  Fourth, the Postal Accountability and Enhancement Act improves Postal 
Service accountability, mostly by strengthening oversight. 
Qualifications for membership on the Regulatory Commission would be 
stronger than those for the Rate Commission so that Commissioners would 
have a background in finance or economics. Commissioners would also 
have the power to demand information from the Postal Service, including 
by subpoena, and have the power to punish the Postal Service for 
violating rate and service regulations. In addition, the Regulatory 
Commission will make an annual determination as to whether the Postal 
Service is in compliance with existing rate regulations and service 
standards and will have the power to punish them for any 
transgressions.
  Fifth, the Postal Accountability and Enhancement Act revises two 
provisions from the ``Postal Civil Service Retirement System Funding 
Reform Act in an effort to shore up the Postal Service's finances in 
the years to come. As our colleagues may be aware, that bill required 
the Postal Service, beginning in 2006, to deposit any savings it enjoys 
by virtue of lower pension payments into an escrow account. In this 
bill, we eliminate that requirement in order to allow the Postal 
Service to spend the money that would have gone into escrow to begin 
pre-funding on a current basis its $50 billion retiree health 
obligation. Leftover savings would be used to continue paying down debt 
to the Treasury and to maintain rate stability.
  The bill Senator Collins and I are introducing today also reverses 
the provision in the Postal Civil Service Retirement System Funding 
Reform Act that made the Postal Service the only Federal agency 
shouldered with the burden of paying the additional pension benefits 
owed to their employees by virtue of past military service.
  Finally, and most importantly, the Postal Accountability and 
Enhancement Act preserves universal service and the postal monopoly and 
forces the Postal Service to concentrate solely on what it does best--
processing and delivering the mail to all Americans. Our bill limits 
the Postal 'Service, for the first time, to providing ``postal 
services,'' meaning they would be prohibited from engaging in other 
lines of business, such as e-commerce, that draw time and resources 
away from letter and package delivery. It also explicitly preserves the 
requirement that the Postal Service ``bind the Nation together through 
the mail'' and serve all parts of the country, urban, suburban and 
rural, in a non-discriminatory fashion. Any service standards 
established by the Postal Service will continue to ensure delivery to 
every address, every day. In addition, the bill maintains the 
prohibition on closing post offices solely because they operate at a 
deficit, ensuring that rural and urban customers continue to enjoy full 
access to retail postal services.
  As I mentioned at the beginning of my remarks, this bill that Senator 
Collins and I are introducing today is almost identical to the version 
of the Postal Accountability and Enhancement Act that was unanimously 
reported out of the Governmental Affairs Committee last June on a 17-0 
vote. A similar bill was unanimously reported out of the House 
Government Reform Committee last year as well. Neither bill was 
considered on the floor of the Senate or the House, however, due--I'm 
told--to objections raised by the administration.
  I was deeply disappointed that we were unable to complete action on 
postal reform last year. However, Senator Collins and I, our staffs and 
our colleagues in the House have had a series of discussions with 
administration officials since the 108th Congress adjourned last year 
and have narrowed our differences with them on these issues 
significantly. I'm pleased to report that this bill contains a handful 
of new provisions drafted to address specific concerns raised by the 
Administration.

  First, we demand even greater financial transparency from the Postal 
Service. The Postal Accountability and Enhancement Act gives the Postal 
Service more room to operate like a private business. For quite some 
time, however, it's been clear that the financial reporting required of 
the Postal Service has been lacking. It's difficult to look at the 
Postal Service's financial reports and learn as much as we'd like to 
learn about its current condition and its future liabilities. For this 
reason, our bill requires the Postal Service to begin filing the very 
same quarterly and annual Securities and Exchange Commission disclosure 
forms that private sector firms must file.
  Second, we add language drafted at the request of the Treasury 
Department that would ensure that the Postal Service does its banking 
and investing with the Federal Financing Bank. Our original bill would 
have given the Postal Service almost total freedom to invest any 
revenue earned by its competitive products in the market as if they 
were a private business. Treasury feared this could have a negative 
impact on the markets and the issuance of federal debt.
  Third, we give the Postal Board of Governors the ability to better 
reward top Postal Service executives for their performance and recruit 
top talent. We accomplish this by raising the cap on executive pay at 
the Postal Service to the level of compensation given to the Vice 
President. This will allow the Board to reward high-performing 
managers. It should also make it easier to recruit and retain qualified 
managers.
  Fourth, we ensure that the rate cap to be developed by the Postal 
Regulatory Commission is truly workable by requiring that the cap be 
based on the Consumer Price Index. A CPI-based cap should guarantee 
that the Postal Service has the room to operate each year without 
breaking the cap or turning to the Treasury for assistance while still 
giving mailers the predictability they need.
  This is significant progress but we still have our work cut out for 
us. I look forward to working in the coming weeks with Chairman 
Collins, my colleagues on the Homeland Security and Governmental 
Affairs Committee, our House counterparts and the administration to 
work out any remaining differences we have. It's vitally important that 
we succeed.
  The Postal Board of Governors voted last month to go forward with a 
rate increase. If approved by the Postal Rate Commission, this increase 
will go into effect sometime next year. Thanks to increased 
productivity, this is expected to be a lower increase than many 
observers feared. Without postal reform, however, especially the 
language freeing the Postal Service from the escrow requirement and the 
military pension obligation, future rate increases will be higher. 
Probably much higher. This will only speed the flight from hard copy 
mail to electronic forms of communication. The impact of this flight 
will be significant, not just at the Postal Service but throughout the 
entire economy.
  A recent study conducted by the Envelope Manufacturers Association 
Foundation's Institute for Postal Studies found that, if mail volume 
were to decline by 10 percent more than 780,000 mail-related jobs will 
be at risk across the country. More than 2,000 of those jobs are in 
Delaware. If mail volume were to decline by 20 percent more than 
1,500,000 mailing industry jobs will be at risk across the country. 
More than 4,000 of those jobs are in Delaware. We need to act soon to 
prevent this from happening.
  In closing, I'd like to point out how amazing it is to me to think 
that the Postal Service, something Senator Stevens was literally able 
to put together at his kitchen table at the very beginning of his 
career, could have lasted so long and had such an enduring impact on 
every American. I'm hopeful that the model Senator Collins and I have 
set out in this bill today can last at least that long and have just as 
positive an impact on our nation and our economy as the Postal Service 
has had over the past 35 years.


              collins and gregg colloquy on postal reform

  Ms. COLLINS. Mr. President, today I introduce the Postal 
Accountability and Enhancement Act of 2005, a bill designed to help the 
225-year-old Postal Service meet the challenges of the 21st century. I 
originally introduced this bill last May. In June of 2004, the bill was 
unanimously reported out of the Homeland Security and Governmental 
Affairs Committee. That bill, S. 2468,

[[Page S3031]]

had the strong endorsements of the National Rural Letter Carriers 
Association, the National Association of Letter Carriers, the National 
Association of Postmasters of the United States, and the Coalition for 
a 21st Century Postal Service--which represents thousands of the major 
mailers, employee groups, small business, and other users of the mail. 
It also had the strong bi-partisan support of twenty-two members of the 
United States Senate. Unfortunately, the 108th Congress expired before 
my bill passed the Senate.
  It has long been acknowledged that the financial and operational 
problems confronting the Postal Service are serious. At present, the 
Postal Service has roughly $70 billion to $80 billion in unfunded 
liabilities and obligations, which include $1.8 billion in debt to the 
U.S. Treasury, $7.6 billion for workers' compensation claims, $3.5 
billion for retirement costs, and as much as $47 billion to cover 
retiree health care costs. The Government Accountability Office's 
Comptroller General, David Walker, has pointed to the urgent need for 
``fundamental reforms to minimize the risk of a significant taxpayer 
bailout or dramatic postal rate increases.'' The Postal Service has 
been on GAO's ``High-Risk'' List since April of 2001. The Postal 
Service is at risk of a ``death spiral'' of decreasing volume and 
increasing rates that lead to further decreases in volume.
  The Postal Service is the linchpin of a $900-billion mailing industry 
that employs 9 million Americans in fields as diverse as direct 
mailing, printing, catalog production, and paper manufacturing. The 
health of the Postal Service is essential to the vitality of thousands 
of companies and the millions that they employ.
  First and foremost, my bill preserves the basic features of universal 
service--affordable rates, frequent delivery, and convenient community 
access to retail postal services. If the Postal Service were no longer 
to provide universal service and deliver mail to every customer, the 
affordable communication link upon which many Americans rely would be 
jeopardized.
  This postal reform legislation grants the Postal Service Board of 
Governors the authority to set rates for competitive products like 
Express Mail and Parcel Post, as long as these prices do not result in 
cross subsidy from market-dominant products. It replaces the current 
lengthy and litigious rate-setting process with a rate cap-based 
structure for market-dominant products such as first-class mail, 
periodicals, and library mail. The bill also introduces new safeguards 
against unfair competition by the Postal Service in competitive 
markets.
  The Postal Accountability and Enhancement Act will greatly improve 
the financial transparency of the Postal Service. The USPS would be 
required to file with the Postal Regulatory Commission certain 
Securities and Exchange Commission financial disclosure forms, along 
with detailed annual reports on the status of the Postal Service's 
pension and postretirement health obligations in order to ensure 
increased financial transparency.
  The legislation repeals a provision of Public Law 108-18 which 
requires that money owed to the Postal Service due to an overpayment 
into the Civil Service Retirement System Fund be held in an escrow 
account, which would essentially ``free up'' $78 billion over a period 
of 60 years. These savings would be used to not only pay off debt to 
the U.S. Treasury and to fund health care liabilities, but also to 
mitigate rate increases. It also returns to the Department of the 
Treasury the responsibility for funding CSRS pension benefits relating 
to the military service of postal retirees--a responsibility that the 
Treasury Department bears for all executive branch departments and 
agencies.
  The bill also converts workers' compensation benefits for total or 
partial disability to a retirement annuity when the affected employee 
reaches 65 years of age, and puts into place a 3-day waiting period 
before an employee is eligible to receive 45 days of continuation of 
pay. These changes will save the Postal Service approximately $50 
million in workers' compensation costs over a 10-year period.
  The Postal Service has reached a critical juncture. If we are to save 
and strengthen this vital service upon which so many Americans rely for 
communication and their livelihoods, the time to act is now.
  I therefore ask the Senior Senator from New Hampshire and chairman of 
the Senate Budget Committee whether I can count on his assistance and 
support to help pass this legislation this Congress.
  Mr. GREGG. I thank the chairman of the Homeland Security and 
Governmental Affairs Committee for her question. I do recognize the 
economic importance of a healthy postal service, and as a Senator from 
the rural State of New Hampshire, I appreciate the role of a healthy 
Postal Service in meeting the universal service needs of rural 
residents. I look forward to reading the bill, reading the CBO cost 
estimate of the bill, and working with the Senator from Maine to ensure 
that a true, fiscally responsible postal reform bill is enacted.
  Ms. COLLINS. I thank my friend from New Hampshire and look forward to 
working with him on this important piece of legislation.
                                 ______