[Congressional Record Volume 152, Number 15 (Thursday, February 9, 2006)]
[Senate]
[Pages S898-S968]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
POSTAL ACCOUNTABILITY AND ENHANCEMENT ACT
Mr. FRIST. Mr. President, I ask unanimous consent that the Senate
proceed to the immediate consideration of Calendar No. 164, S. 662.
The PRESIDING OFFICER. The clerk will report the bill by title.
The assistant legislative clerk read as follows:
A bill (S. 662) to reform the postal laws of the United
States.
There being no objection, the Senate proceeded to consider the bill,
which had been reported from the Committee on Homeland Security and
Governmental Affairs, with an amendment.
(Strike the part shown in black brackets and insert the part shown in
italic.)
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.
[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.
[[Page S899]]
[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 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--
[``(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
[[Page S900]]
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.--
[``(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)
[[Page S901]]
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 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;
[[Page S902]]
[``(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.''.
[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:
[[Page S903]]
[``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;
[``(2) amounts received from obligations issued by Postal
Service under subsection (e);
[[Page S904]]
[``(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:
[``2011. Provisions relating to competitive products.''.
[[Page S905]]
[(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
[[Page S906]]
sentence, nor shall anything in this subsection require the
Postal Service or any of its contractors to pay for any
action taken by a State or political subdivision to carry out
this subsection (including reviewing plans, carrying out on-
site inspections, issuing building permits, and making
recommendations).
[``(4) Appropriate officials of a State or a political
subdivision of a State may make recommendations to the Postal
Service concerning measures necessary to meet the
requirements of paragraphs (1) and (2). Such officials may
also make recommendations to the Postal Service concerning
measures which should be taken in the construction or
alteration of the building to take into account local
conditions. The Postal Service shall give due consideration
to any such recommendations.
[``(5) In addition to consulting with local and State
officials under paragraph (3), the Postal Service shall
establish procedures for soliciting, assessing, and
incorporating local community input on real property and land
use decisions.
[``(6) For purposes of this subsection, the term `State'
includes the District of Columbia, the Commonwealth of Puerto
Rico, and a territory or possession of the United States.
[``(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 S907]]
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
[[Page S908]]
agreed to another procedure for a binding resolution of 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).
[[Page S909]]
[``(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)--
[``(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
[[Page S910]]
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;
[``(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
[[Page S911]]
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 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)).
[[Page S912]]
[``(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 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.]
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.
[[Page S913]]
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. Authorization of appropriations from the Postal Service Fund.
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.
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. Obsolete provisions.
Sec. 1003. Reduced rates.
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 through
reliably identified causal relationships 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 importance of pricing flexibility to encourage
increased mail volume and operational efficiency;
``(9) 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;
``(10) 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;
``(11) the desirability of special classifications from the
point of view of both the user and of the Postal Service;
``(12) the educational, cultural, scientific, and
informational value to the recipient of mail matter;
``(13) 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
``(14) 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) include an annual limitation on the percentage
changes in rates to be set by the Postal Regulatory
Commission that will be equal to the change in the Consumer
Price Index for All Urban Consumers unadjusted for seasonal
variation over the most recent available 12-month period
preceding the date the Postal Service files notice of its
intention 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--
[[Page S914]]
``(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);
``(D) establish procedures whereby the Postal Service may
adjust rates not in excess of the annual limitations under
subparagraph (A); and
``(E) 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.
``(C) Banking unused pricing authority.--Notwithstanding
paragraph (1), for any class or service that failed to
recover its attributable costs in the previous fiscal year,
or for all classes and services when the Postal Service has
operated at a loss for the last 2 years, rate increases may
exceed Consumer Price Index for All Urban Consumers by the
amount rate increases in the previous year were less than
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--
``(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 through reliably identified causal
relationships.
``(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
[[Page S915]]
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.--
``(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.
[[Page S916]]
``(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 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.
[[Page S917]]
``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.''.
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) postage meter;
(4) stamps by mail;
(5) Postal Service employees on delivery routes;
(6) retail facilities in which overhead costs are shared
with private businesses and other government agencies; or
(7) 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.
[[Page S918]]
``(b) There shall be deposited in the Competitive Products
Fund, subject to withdrawal by the Postal Service--
``(1) revenues from competitive products;
``(2) amounts received from obligations issued by 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:
``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
[[Page S919]]
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 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.
[[Page S920]]
``(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 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
[[Page S921]]
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 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
[[Page S922]]
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)--
``(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.
[[Page S923]]
(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;
``(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
[[Page S924]]
(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 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.
(c) Review.--
(1) In general.--
(A) Request for review.--Notwithstanding any other
provision of this section (including any amendment made by
this section), any determination or redetermination made by
the Office of Personnel Management under this section
(including any amendment made by this section) shall, upon
request of the United States Postal Service, be subject to a
review by the Postal Regulatory Commission under this
subsection.
(B) Report.--Upon receiving a request under subparagraph
(A), the Commission shall promptly procure the services of an
actuary, who shall hold membership in the American Academy of
Actuaries and shall be qualified in the evaluation of pension
obligations, to conduct a review in accordance with generally
accepted actuarial practices and principles and to provide a
report to the Commission containing the results of the
review. The Commission, upon determining that the report
satisfies the requirements of this paragraph, shall approve
the report, with any comments it may choose to make, and
submit it with any such comments to the Postal Service, the
Office of Personnel Management, and Congress.
(2) Reconsideration.--Upon receiving the report from the
Commission under paragraph (1), the Office of Personnel
Management shall reconsider its determination or
redetermination in light of such report, and shall make any
appropriate adjustments. The Office shall submit a report
containing the results of its reconsideration to the
Commission, the Postal Service, and Congress.
SEC. 803. HEALTH INSURANCE.
(a) In General.--
[[Page S925]]
(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)(A)(i) Any computation or other determination of the
Office under this subsection shall, upon request of the
United States Postal Service, be subject to a review by the
Postal Regulatory Commission under this paragraph.
``(ii) Upon receiving a request under clause (i), the
Commission shall promptly procure the services of an actuary,
who shall hold membership in the American Academy of
Actuaries and shall be qualified in the evaluation of
healthcare insurance obligations, to conduct a review in
accordance with generally accepted actuarial practices and
principles and to provide a report to the Commission
containing the results of the review. The Commission, upon
determining that the report satisfies the requirements of
this subparagraph, shall approve the report, with any
comments it may choose to make, and submit it with any such
comments to the Postal Service, the Office of Personnel
Management, and Congress.
``(B) Upon receiving the report under subparagraph (A), the
Office of Personnel Management shall reconsider its
determination or redetermination in light of such report, and
shall make any appropriate adjustments. The Office shall
submit a report containing the results of its reconsideration
to the Commission, the Postal Service, and Congress.
``(6) 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) Review.--
(1) In general.--
(A) Request for review.--Any regulation established under
section 8909a(d)(5) of title 5, United States Code (as added
by subsection (a)), shall, upon request of the United States
Postal Service, be subject to a review by the Postal
Regulatory Commission under this paragraph.
(B) Report.--Upon receiving a request under subparagraph
(A), the Commission shall promptly procure the services of an
actuary, who shall hold membership in the American Academy of
Actuaries and shall be qualified in the evaluation of
healthcare insurance obligations, to conduct a review in
accordance with generally accepted actuarial practices and
principles and to provide a report to the Commission
containing the results of the review. The Commission, upon
determining that the report satisfies the requirements of
this paragraph, shall approve the report, with any comments
it may choose to make, and submit it with any such comments
to the Postal Service, the Office of Personnel Management,
and Congress.
(2) Reconsideration.--Upon receiving the report under
paragraph (1), the Office of Personnel Management shall
reconsider its determination or redetermination in light of
such report, and shall make any appropriate adjustments. The
Office shall submit a report containing the results of its
reconsideration to the Commission, the Postal Service, and
Congress.
(c) 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 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
[[Page S926]]
Security may take under section 1315 of title 40, with
respect to that property.
SEC. 1002. OBSOLETE PROVISIONS.
(a) Repeal.--
(1) In general.--Chapter 52 of title 39, United States
Code, is repealed.
(2) Conforming amendments.--(A) Section 5005(a) of title
39, United States Code, is amended--
(i) by striking paragraph (1), and by redesignating
paragraphs (2) through (4) as paragraphs (1) through (3),
respectively; and
(ii) in paragraph (3) (as so designated by clause (i)), by
striking ``(as defined in section 5201(6) of this title)''.
(B) Section 5005(b) of such title 39 is amended by striking
``(a)(4)'' each place it appears and inserting ``(a)(3)''.
(C) Section 5005(c) of such title 39 is amended by striking
``by carrier or person under subsection (a)(1) of this
section, by contract under subsection (a)(4) of this section,
or'' and inserting ``by contract under subsection (a)(3) of
this section or''.
(b) Eliminating Restriction on Length of Contracts.--(1)
Section 5005(b)(1) of title 39, United States Code, is
amended by striking ``(or where the Postal Service determines
that special conditions or the use of special equipment
warrants, not in excess of 6 years)'' and inserting ``(or
such longer period of time as may be determined by the Postal
Service to be advisable or appropriate)''.
(2) Section 5402(d) of such title 39 is amended by striking
``for a period of not more than 4 years''.
(3) Section 5605 of such title 39 is amended by striking
``for periods of not in excess of 4 years''.
(c) Technical and Conforming Amendment.--The table of
chapters for part V of title 39, United States Code, is
amended by repealing the item relating to chapter 52.
SEC. 1003. REDUCED RATES.
Section 3626 of title 39, United States Code, is amended--
(1) in subsection (a), by striking all before paragraph (4)
and inserting the following:
``(a)(1) Except as otherwise provided in this section,
rates of postage for a class of mail or kind of mailer under
former section 4358, 4452(b), 4452(c), 4554(b), or 4554(c) of
this title shall be established in accordance with section
3622.
``(2) For the purpose of this subsection, the term
`regular-rate category' means any class of mail or kind of
mailer, other than a class or kind referred to in section
2401(c).
``(3) Rates of postage for a class of mail or kind of
mailer under former section 4358(a) through (c) of this title
shall be established so that postage on each mailing of such
mail reflects its preferred status as compared to the postage
for the most closely corresponding regular-rate category
mailing.'';
(2) in subsection (g), by adding at the end the following:
``(3) For purposes of this section and former section
4358(a) through (c) of this title, those copies of an issue
of a publication entered within the county in which it is
published, but distributed outside such county on postal
carrier routes originating in the county of publication,
shall be treated as if they were distributed within the
county of publication.
``(4)(A) In the case of an issue of a publication, any
number of copies of which are mailed at the rates of postage
for a class of mail or kind of mailer under former section
4358(a) through (c) of this title, any copies of such issue
which are distributed outside the county of publication
(excluding any copies subject to paragraph (3)) shall be
subject to rates of postage provided for under this
paragraph.
``(B) The rates of postage applicable to mail under this
paragraph shall be established in accordance with section
3622.
``(C) This paragraph shall not apply with respect to an
issue of a publication unless the total paid circulation of
such issue outside the county of publication (not counting
recipients of copies subject to paragraph (3)) is less than
5,000.''; and
(3) by adding at the end the following:
``(n) In the administration of this section, matter that
satisfies the circulation standards for requester
publications shall not be excluded from being mailed at the
rates for mail under former section 4358 solely because such
matter is designed primarily for free circulation or for
circulation at nominal rates, or fails to meet the
requirements of former section 4354(a)(5).''.
SEC. 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.
Mr. FRIST. Mr. President, I ask unanimous consent that the amendments
at the desk be agreed to, the committee-reported amendment, as amended,
be agreed to, and the bill, as amended, be read a third time.
The PRESIDING OFFICER. Without objection, it is so ordered.
The amendments (Nos. 2750, 2751, 2752, and 2753) were agreed to, as
follows:
AMENDMENT NO. 2750
(Purpose: To modify provisions relating to objectives, unused rate
adjustment authority, transition rules, rate and service complaints,
and for other purposes)
On page 133, line 25, insert before the colon ``, each of
which shall be applied in conjunction with the others''.
On page 134, between lines 21 and 22, insert the following:
``(8) To establish and maintain a just and reasonable
schedule for rates and classifications, however the objective
under this paragraph shall not be construed to prohibit the
Postal Service from making changes of unequal magnitude
within, between, or among classes of mail.
On page 135, strike lines 1 through 3.
On page 135, line 4, strike ``(2)'' and insert ``(1)''.
On page 135, line 9, strike ``(3)'' and insert ``(2)''.
On page 135, line 15, strike ``(4)'' and insert ``(3)''.
On page 135, line 19, strike ``(5)'' and insert ``(4)''.
On page 135, line 22, strike ``(6)'' and insert ``(5)''.
On page 136, line 1, strike ``(7)'' and insert ``(6)''.
On page 136, line 5, strike ``(8)'' and insert ``(7)''.
On page 136, line 8, strike ``(9)'' and insert ``(8)''.
On page 136, line 12, strike ``(10)'' and insert ``(9)''.
On page 136, line 16, strike ``(11)'' and insert ``(10)''.
On page 136, line 19, strike ``(12)'' and insert ``(11)''.
On page 136, line 21, strike ``(13)'' and insert ``(12)''.
On page 137, line 1, strike ``(14)'' and insert ``(13)''.
On page 138, line 19, strike ``The'' and insert ``Except as
provided under subparagraph (C), the''.
On page 139, strike lines 8 through 17, and insert the
following:
``(C) Use of unused rate authority.--
``(i) Definition.--In this subparagraph, the term `unused
rate adjustment authority' means the difference between--
``(I) the maximum amount of a rate adjustment that the
Postal Service is authorized to make in any year subject to
the annual limitation under paragraph (1); and
``(II) the amount of the rate adjustment the Postal Service
actually makes in that year.
``(ii) Authority.--Subject to clause (iii), the Postal
Service may use any unused rate adjustment authority for any
of the 5 years following the year such authority occurred.
``(iii) Limitations.--In exercising the authority under
clause (ii) in any year, the Postal Service--
``(I) may use unused rate adjustment authority from more
than 1 year;
``(II) may use any part of the unused rate adjustment
authority from any year;
``(III) shall use the unused rate adjustment authority from
the earliest year such authority first occurred and then each
following year; and
``(IV) for any class or service, may not exceed the annual
limitation under paragraph (1) by more than 2 percentage
points.
On page 142, strike lines 5 through 10, and insert the
following:
``(f) Transition Rule.--For the 1-year period beginning on
the date of enactment of this section, 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. Proceedings initiated to
consider a request for a recommended decision filed by the
Postal Service during that 1-year period shall be completed
in accordance with subchapter II of chapter 36 of this title
and implementing regulations, as in effect before the date of
enactment of this section.''.
On page 162, line 10, strike all through page 164, line 9,
and insert the following:
``Sec. 3662. Rate and service complaints
``(a) In General.--Any interested party (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 the provisions of chapter 1 (except section 101(c)),
sections 401, 403, 404, 404a, 601, or this chapter (or
regulations promulgated under any of those provisions) 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)--
``(A) either--
``(i) upon a finding that such complaint raises substantial
and material issues of fact or law, begin proceedings on such
complaint; or
``(ii) issue an order dismissing the complaint; and
``(B) with respect to any action taken under subparagraph
(A) (i) or (ii), issue a written statement setting forth the
bases of its determination.
``(2) Treatment of complaints not timely acted on.--For
purposes of section 3663, any complaint under subsection (a)
on which the
[[Page S927]]
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 upon clear and
convincing evidence the complaint to be justified, it shall
order that the Postal Service take such action as is
necessary to achieve compliance with the applicable
requirements and to remedy the effects of any noncompliance.
``(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 from 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.
On page 168, line 11, strike ``Commission'' and insert
``Postal Service''.
AMENDMENT NO. 2751
(Purpose: To provide for procedures by the Postal Service to give
notice on certain actions affecting communities)
On page 171, line 6, strike ``and''.
On page 171, line 10, strike the period and insert ``;
and''.
On page 171, between lines 10 and 11, insert the following:
(D) procedures that the Postal Service will use to--
(i) provide adequate public notice to communities
potentially affected by a proposed rationalization decision;
(ii) make available, upon request, any data, analyses, or
other information considered by the Postal Service in making
the proposed decision;
(iii) afford affected persons ample opportunity to provide
input on the proposed decision; and
(iv) take such comments into account in making a final
decision.
On page 172, between lines 22 and 23, insert the following:
(5) Existing efforts.--Effective on the date of enactment
of this Act, the Postal Service may not close or consolidate
any processing or logistics facilities without using
procedures for public notice and input consistent with those
described under paragraph (3)(D).
AMENDMENT NO. 2752
(Purpose: To modify qualifications and terms of Governors of the United
States Postal Service)
On page 202, lines 10 through 14, strike ``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.'' and insert ``experience
in the fields of public service, law or accounting or on
their demonstrated ability in managing organizations or
corporations (in either the public or private sector) of
substantial size.''
On page 203, line 14, strike ``5'' and insert ``7''.
On page 203, line 17, strike ``5'' and insert ``7''.
On page 205, line 9, strike ``3'' and insert ``2''.
AMENDMENT NO. 2753
(Purpose: To modify contracts for the transportation of mail by air,
and for other purposes)
On page 256, add after line 3, the following:
SEC. 1005. CONTRACTS FOR TRANSPORTATION OF MAIL BY AIR.
(a) Definitions.--Section 5402(a) of title 39, United
States Code, is amended--
(1) in paragraph (4), by striking ``(g)(1)(D)(i)'' and
inserting ``(g)(1)(A)(iv)(I)'';
(2) in paragraph (5), by striking ``(g)(1)(D)(i)'' and
inserting ``(g)(1)(A)(iv)(I)'';
(3) in paragraph (6), by striking ``only'';
(4) in paragraph (8), by striking ``rates paid to a bush
carrier'' and inserting ``linehaul rates and a single
terminal handling payment at a bush terminal handling rate
paid to a bush carrier'';
(5) in paragraph (11), by striking ``(g)(1)(D)(ii)'' and
inserting ``(g)(1)(A)(iv)(II)'';
(6) in paragraph (13)--
(A) in subparagraph (A)--
(i) by striking ``clause (i) or (ii) of subsection
(g)(1)(D)'' and inserting ``subclause (I) or (II) of
subsection (g)(1)(A)(iv)''; and
(ii) by striking ``and'' after the semicolon;
(B) in subparagraph (B), by adding ``and'' after the
semicolon; and
(C) by adding at the end the following:
``(C) is not comprised of previously qualified existing
mainline carriers as a result of merger or sale;'';
(7) in paragraph (18), by striking ``bush routes'' and
inserting ``routes''; and
(8) in paragraph (22), by striking ``bush routes'' and
inserting ``routes''.
(b) Nonpriority Bypass Mail.--Section 5402(g) of title 39,
United States Code, is amended--
(1) in paragraph (2)(C), by inserting ``or a destination
city'' after ``acceptance point and a hub'';
(2) in paragraph (3), by adding at the end the following:
``(C) When a new hub results from a change in a
determination under subparagraph (B), mail tender from that
hub during the 12-month period beginning on the effective
date of that change shall be based on the passenger and
freight shares to the destinations of the affected hub or
hubs resulting in the new hub.''; and
(3) in paragraph (5)(A)(i), by striking ``(g)(1)(D)(ii)''
and inserting ``(g)(1)(A)(iv)(II)''.
(c) Equitable Tender.--Section 5402(h) of title 39, United
States Code, is amended--
(1) in paragraph (1), by inserting ``bush'' after
``providing scheduled'';
(2) by striking paragraph (3) and inserting the following:
``(3)(A) Except as provided under subparagraph (C), a new
or existing 121 bush passenger carrier qualified under
subsection (g)(1) shall be exempt from the requirements under
paragraphs (1)(B) and (2)(A) on a city pair route for a
period which shall extend for--
``(i) 1 year;
``(ii) 1 year in addition to the extension under clause (i)
if, as of the conclusion of the first year, such carrier has
been providing not less than 5 percent of the passenger
service on that route (as calculated under paragraph (5));
and
``(iii) 1 year in addition to the extension under clause
(ii) if, as of the conclusion of the second year, such
carrier has been providing not less than 10 percent of the
passenger service on that route (as calculated under
paragraph (5)).
``(B)(i) The first 3 121 bush passenger carriers entitled
to the exemptions under subparagraph (A) on any city pair
route shall divide no more than an additional 10 percent of
the mail, apportioned equally, comprised of no more than--
``(I) 5 percent of the share of each qualified passenger
carrier servicing that route that is not a 121 bush passenger
carrier; and
``(II) 5 percent of the share of each nonpassenger carrier
servicing that route that transports 25 percent or more of
the total nonmail freight under subsection (i)(1).
``(ii) Additional 121 bush passenger carriers entering
service on that city pair route after the first 3 shall not
receive any additional mail share.
``(iii) If any 121 bush passenger carrier on a city pair
route receiving an additional share of the mail under clause
(ii) discontinues service on that route, the 121 bush
passenger carrier that has been providing the longest period
of service on that route and is otherwise eligible but is not
receiving a share by reason of clause (ii), shall receive the
share of the carrier discontinuing service.
``(C) Notwithstanding the requirements of this subsection,
if only 1 passenger carrier or aircraft is qualified to be
tendered nonpriority bypass mail as a passenger carrier or
aircraft on a city pair route in the State of Alaska, the
Postal Service shall tender 20 percent of the nonpriority
bypass mail described under paragraph (1) to the passenger
carrier or aircraft providing at least 10 percent of the
passenger service on such route.'';
(3) in paragraph (5)(A)--
(A) by striking ``(i)'' after ``(A)''; and
(B) by striking clause (ii).
(d) Percent of Nonmail Freight.--Section 5402(i)(6) of
title 39, United States Code, is amended--
(1) by striking ``(A)'' after ``(6)''; and
(2) by striking subparagraph (B).
(e) Percent of Tender Rate.--Section 5402(j)(3)(B) of title
39, United States Code, is amended by striking ``bush routes
in the State of Alaska'' and inserting ``routes served
exclusively by bush carriers in the State of Alaska''.
(f) Determination of Rates.--Section 5402(k) of title 39,
United States Code, is amended by striking paragraph (5).
(g) Technical and Conforming Amendment.--Section 5402(p)(3)
of title 39, United States Code, is amended by striking
``(g)(1)(D)'' and inserting ``(g)(1)(A)(iv)''.
(h) Effective Date.--
(1) In general.--Except as provided under paragraph (2),
this section shall take effect on the date of enactment of
this Act.
(2) Equitable tender.--Subsection (c) shall take effect on
July 1, 2006.
The committee amendment in the nature of a substitute, as amended,
was agreed to.
The bill was ordered to be engrossed for a third reading and was read
the third time.
Mr. FRIST. Mr. President, I further ask unanimous consent that the
Senate now proceed to Calendar No. 176, H.R. 22.
The PRESIDING OFFICER. The clerk will report the bill by title.
The assistant legislative clerk read as follows:
A bill (H.R. 22) to reform the postal laws of the United
States.
Mr. FRIST. Mr. President, I now ask consent that all after the
enacting clause be stricken, the text of S. 662, as amended, be
inserted in lieu thereof, and the bill, as amended, be read a third
time and passed, and the Senate insist on its amendment, request a
conference with the House, and the Chair
[[Page S928]]
be authorized to appoint conferees with a ratio of 5 to 3.
The PRESIDING OFFICER. Without objection, it is so ordered.
The bill (H.R. 22), as amended, was read the third time and passed,
as follows:
H.R. 22
Resolved, That the bill from the House of Representatives
(H.R. 22) entitled ``An Act to reform the postal laws of the
United States.'', do pass with the following amendment:
Strike out all after the enacting clause and insert:
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. Authorization of appropriations from the Postal Service Fund.
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.
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. Obsolete provisions.
Sec. 1003. Reduced rates.
Sec. 1004. Sense of Congress regarding Postal Service purchasing
reform.
Sec. 1005. Contracts for transportation of mail by air.
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, each of which shall be applied in
conjunction with the others:
``(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.
``(8) To establish and maintain a just and reasonable
schedule for rates and classifications, however the objective
under this paragraph shall not be construed to prohibit the
Postal Service from making changes of unequal magnitude
within, between, or among classes of mail.
``(c) Factors.--In establishing or revising such system,
the Postal Regulatory Commission shall take into account--
``(1) 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;
``(2) 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 through
reliably identified causal relationships plus that portion of
all other costs of the Postal Service reasonably assignable
to such class or type;
``(3) 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;
``(4) the available alternative means of sending and
receiving letters and other mail matter at reasonable costs;
``(5) 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;
``(6) 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;
``(7) the importance of pricing flexibility to encourage
increased mail volume and operational efficiency;
``(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;
[[Page S929]]
``(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) include an annual limitation on the percentage
changes in rates to be set by the Postal Regulatory
Commission that will be equal to the change in the Consumer
Price Index for All Urban Consumers unadjusted for seasonal
variation over the most recent available 12-month period
preceding the date the Postal Service files notice of its
intention 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);
``(D) establish procedures whereby the Postal Service may
adjust rates not in excess of the annual limitations under
subparagraph (A); and
``(E) 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.--Except as provided under
subparagraph (C), 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.
``(C) Use of unused rate authority.--
``(i) Definition.--In this subparagraph, the term `unused
rate adjustment authority' means the difference between--
``(I) the maximum amount of a rate adjustment that the
Postal Service is authorized to make in any year subject to
the annual limitation under paragraph (1); and
``(II) the amount of the rate adjustment the Postal Service
actually makes in that year.
``(ii) Authority.--Subject to clause (iii), the Postal
Service may use any unused rate adjustment authority for any
of the 5 years following the year such authority occurred.
``(iii) Limitations.--In exercising the authority under
clause (ii) in any year, the Postal Service--
``(I) may use unused rate adjustment authority from more
than 1 year;
``(II) may use any part of the unused rate adjustment
authority from any year;
``(III) shall use the unused rate adjustment authority from
the earliest year such authority first occurred and then each
following year; and
``(IV) for any class or service, may not exceed the annual
limitation under paragraph (1) by more than 2 percentage
points.
``(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--
``(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.--For the 1-year period beginning on
the date of enactment of this section, 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. Proceedings initiated to
consider a request for a recommended decision filed by the
Postal Service during that 1-year period shall be completed
in accordance with subchapter II of chapter 36 of this title
and implementing regulations, as 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 through reliably identified causal
relationships.
``(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;
[[Page S930]]
``(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.--
``(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:
[[Page S931]]
``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 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 interested party (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 the provisions of chapter 1 (except section 101(c)),
sections 401, 403, 404, 404a, 601, or this chapter (or
regulations promulgated under any of those provisions) 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)--
``(A) either--
``(i) upon a finding that such complaint raises substantial
and material issues of fact or law, begin proceedings on such
complaint; or
``(ii) issue an order dismissing the complaint; and
``(B) with respect to any action taken under subparagraph
(A) (i) or (ii), issue a written statement setting forth the
bases of its determination.
``(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 upon clear and
convincing evidence the complaint to be justified, it shall
order that the Postal Service take such action as is
necessary to achieve compliance with the applicable
requirements and to remedy the effects of any noncompliance.
``(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 from 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
[[Page S932]]
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.''.
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 Postal Service 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;
(C) an identification of anticipated costs, cost savings,
and other benefits associated with the infrastructure
rationalization alternatives discussed in the plan; and
(D) procedures that the Postal Service will use to--
(i) provide adequate public notice to communities
potentially affected by a proposed rationalization decision;
(ii) make available, upon request, any data, analyses, or
other information considered by the Postal Service in making
the proposed decision;
(iii) afford affected persons ample opportunity to provide
input on the proposed decision; and
(iv) take such comments into account in making a final
decision.
(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.
(5) Existing efforts.--Effective on the date of enactment
of this Act, the Postal Service may not close or consolidate
any processing or logistics facilities without using
procedures for public notice and input consistent with those
described under paragraph (3)(D).
[[Page S933]]
(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) postage meters;
(4) Stamps by Mail;
(5) Postal Service employees on delivery routes;
(6) retail facilities in which overhead costs are shared
with private businesses and other government agencies; or
(7) 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 generalBefore 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;
``(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
[[Page S934]]
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:
``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
[[Page S935]]
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 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
[[Page S936]]
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 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 experience in the fields of public service, law or
accounting or on their demonstrated ability in managing
organizations or corporations (in either the public or
private sector) of substantial size. 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) 7-Year Terms.--
(1) In general.--Section 202(b) of title 39, United States
code, is amended in the first sentence by striking ``9
years'' and inserting ``7 years''.
(2) Applicability.--
(A) Continuation by incumbents.--The amendment made by
paragraph (1) shall not affect the tenure of any person
serving as a Governor of the United States Postal Service on
the date of enactment of this Act and such person may
continue to serve the remainder of the applicable term.
(B) Vacancy by incumbent before 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 2 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
[[Page S937]]
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 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
[[Page S938]]
respect to any information as to which the Commission has
been notified under paragraph (1)--
``(A) use such information for purposes other than the
purposes for which it is supplied; or
``(B) permit anyone who is not an officer or employee of
the Commission to have access to any such information.
``(3)(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. AUTHORIZATION OF APPROPRIATIONS FROM THE POSTAL
SERVICE FUND.
(a) Postal Regulatory Commission.--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) Office of Inspector General of the United States Postal
Service.--Section 8G(f) of the Inspector General Act of 1978
(5 U.S.C. App.) is amended--
(1) by redesignating paragraph (4) as paragraph (5);
(2) by redesignating the second paragraph (3) (relating to
employees and labor organizations) as paragraph (4); and
(3) by adding at the end the following:
``(6) There are authorized to be appropriated, out of the
Postal Service Fund, such sums as may be necessary for the
Office of Inspector General of the United States Postal
Service.''.
(c) 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.''.
(d) Effective Date.--
(1) In general.--The amendments made by this section shall
apply with respect to fiscal years beginning on or after
October 1, 2005.
(2) Savings provision.--The provisions of title 39, United
States Code, and the Inspector General Act of 1978 (5 U.S.C.
App.) 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
[[Page S939]]
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;
``(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 24 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 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
[[Page S940]]
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.
(c) Review.--
(1) In general.--
(A) Request for review.--Notwithstanding any other
provision of this section (including any amendment made by
this section), any determination or redetermination made by
the Office of Personnel Management under this section
(including any amendment made by this section) shall, upon
request of the United States Postal Service, be subject to a
review by the Postal Regulatory Commission under this
subsection.
(B) Report.--Upon receiving a request under subparagraph
(A), the Commission shall promptly procure the services of an
actuary, who shall hold membership in the American Academy of
Actuaries and shall be qualified in the evaluation of pension
obligations, to conduct a review in accordance with generally
accepted actuarial practices and principles and to provide a
report to the Commission containing the results of the
review. The Commission, upon determining that the report
satisfies the requirements of this paragraph, shall approve
the report, with any comments it may choose to make, and
submit it with any such comments to the Postal Service, the
Office of Personnel Management, and Congress.
(2) Reconsideration.--Upon receiving the report from the
Commission under paragraph (1), the Office of Personnel
Management shall reconsider its determination or
redetermination in light of such report, and shall make any
appropriate adjustments. The Office shall submit a report
containing the results of its reconsideration to the
Commission, the Postal Service, and Congress.
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)(A)(i) Any computation or other determination of the
Office under this subsection shall, upon request of the
United States Postal Service, be subject to a review by the
Postal Regulatory Commission under this paragraph.
``(ii) Upon receiving a request under clause (i), the
Commission shall promptly procure the services of an actuary,
who shall hold membership in the American Academy of
Actuaries and shall be qualified in the evaluation of
healthcare insurance obligations, to conduct a review in
accordance with generally accepted actuarial practices and
principles and to provide a report to the Commission
containing the results of the review. The Commission, upon
determining that the report satisfies the requirements of
this subparagraph, shall approve the report, with any
comments it may choose to make, and submit it with any such
comments to the Postal Service, the Office of Personnel
Management, and Congress.
``(B) Upon receiving the report under subparagraph (A), the
Office of Personnel Management shall reconsider its
determination or redetermination in light of such report, and
shall make any appropriate adjustments. The Office shall
submit a report containing the results of its reconsideration
to the Commission, the Postal Service, and Congress.
``(6) 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) Review.--
(1) In general.--
(A) Request for review.--Any regulation established under
section 8909a(d)(5) of title 5, United States Code (as added
by subsection (a)), shall, upon request of the United States
Postal Service, be subject to a review by the Postal
Regulatory Commission under this paragraph.
(B) Report.--Upon receiving a request under subparagraph
(A), the Commission shall promptly procure the services of an
actuary, who shall hold membership in the American Academy of
Actuaries and shall be qualified in the evaluation of
healthcare insurance obligations, to conduct a review in
accordance with generally accepted actuarial practices and
principles and to provide a report to the Commission
containing the results of the review. The Commission, upon
determining that the report satisfies the requirements of
this paragraph, shall approve the report, with any comments
it may choose to make, and submit it with any such comments
to the Postal Service, the Office of Personnel Management,
and Congress.
(2) Reconsideration.--Upon receiving the report under
paragraph (1), the Office of Personnel Management shall
reconsider its determination or redetermination in light of
such report, and shall make any appropriate adjustments. The
Office shall submit a report containing the results of its
reconsideration to the Commission, the Postal Service, and
Congress.
(c) 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.
[[Page S941]]
(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 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. OBSOLETE PROVISIONS.
(a) Repeal.--
(1) In general.--Chapter 52 of title 39, United States
Code, is repealed.
(2) Conforming amendments.--(A) Section 5005(a) of title
39, United States Code, is amended--
(i) by striking paragraph (1), and by redesignating
paragraphs (2) through (4) as paragraphs (1) through (3),
respectively; and
(ii) in paragraph (3) (as so designated by clause (i)), by
striking ``(as defined in section 5201(6) of this title)''.
(B) Section 5005(b) of such title 39 is amended by striking
``(a)(4)'' each place it appears and inserting ``(a)(3)''.
(C) Section 5005(c) of such title 39 is amended by striking
``by carrier or person under subsection (a)(1) of this
section, by contract under subsection (a)(4) of this section,
or'' and inserting ``by contract under subsection (a)(3) of
this section or''.
(b) Eliminating Restriction on Length of Contracts.--(1)
Section 5005(b)(1) of title 39, United States Code, is
amended by striking ``(or where the Postal Service determines
that special conditions or the use of special equipment
warrants, not in excess of 6 years)'' and inserting ``(or
such longer period of time as may be determined by the Postal
Service to be advisable or appropriate)''.
(2) Section 5402(d) of such title 39 is amended by striking
``for a period of not more than 4 years''.
(3) Section 5605 of such title 39 is amended by striking
``for periods of not in excess of 4 years''.
(c) Technical and Conforming Amendment.--The table of
chapters for part V of title 39, United States Code, is
amended by repealing the item relating to chapter 52.
SEC. 1003. REDUCED RATES.
Section 3626 of title 39, United States Code, is amended--
(1) in subsection (a), by striking all before paragraph (4)
and inserting the following:
``(a)(1) Except as otherwise provided in this section,
rates of postage for a class of mail or kind of mailer under
former section 4358, 4452(b), 4452(c), 4554(b), or 4554(c) of
this title shall be established in accordance with section
3622.
``(2) For the purpose of this subsection, the term
`regular-rate category' means any class of mail or kind of
mailer, other than a class or kind referred to in section
2401(c).
``(3) Rates of postage for a class of mail or kind of
mailer under former section 4358(a) through (c) of this title
shall be established so that postage on each mailing of such
mail reflects its preferred status as compared to the postage
for the most closely corresponding regular-rate category
mailing.'';
(2) in subsection (g), by adding at the end the following:
``(3) For purposes of this section and former section
4358(a) through (c) of this title, those copies of an issue
of a publication entered within the county in which it is
published, but distributed outside such county on postal
carrier routes originating in the county of publication,
shall be treated as if they were distributed within the
county of publication.
``(4)(A) In the case of an issue of a publication, any
number of copies of which are mailed at the rates of postage
for a class of mail or kind of mailer under former section
4358(a) through (c) of this title, any copies of such issue
which are distributed outside the county of publication
(excluding any copies subject to paragraph (3)) shall be
subject to rates of postage provided for under this
paragraph.
``(B) The rates of postage applicable to mail under this
paragraph shall be established in accordance with section
3622.
``(C) This paragraph shall not apply with respect to an
issue of a publication unless the total paid circulation of
such issue outside the county of publication (not counting
recipients of copies subject to paragraph (3)) is less than
5,000.''; and
(3) by adding at the end the following:
``(n) In the administration of this section, matter that
satisfies the circulation standards for requester
publications shall not be excluded from being mailed at the
rates for mail under former section 4358 solely because such
matter is designed primarily for free circulation or for
circulation at nominal rates, or fails to meet the
requirements of former section 4354(a)(5).''.
SEC. 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.
SEC. 1005. CONTRACTS FOR TRANSPORTATION OF MAIL BY AIR.
(a) Definitions.--Section 5402(a) of title 39, United
States Code, is amended--
(1) in paragraph (4), by striking ``(g)(1)(D)(i)'' and
inserting ``(g)(1)(A)(iv)(I)'';
(2) in paragraph (5), by striking ``(g)(1)(D)(i)'' and
inserting ``(g)(1)(A)(iv)(I)'';
(3) in paragraph (6), by striking ``only'';
(4) in paragraph (8), by striking ``rates paid to a bush
carrier'' and inserting ``linehaul rates and a single
terminal handling payment at a bush terminal handling rate
paid to a bush carrier'';
(5) in paragraph (11), by striking ``(g)(1)(D)(ii)'' and
inserting ``(g)(1)(A)(iv)(II)'';
(6) in paragraph (13)--
(A) in subparagraph (A)--
(i) by striking ``clause (i) or (ii) of subsection
(g)(1)(D)'' and inserting ``subclause (I) or (II) of
subsection (g)(1)(A)(iv)''; and
(ii) by striking ``and'' after the semicolon;
(B) in subparagraph (B), by adding ``and'' after the
semicolon; and
(C) by adding at the end the following:
``(C) is not comprised of previously qualified existing
mainline carriers as a result of merger or sale;'';
(7) in paragraph (18), by striking ``bush routes'' and
inserting ``routes''; and
(8) in paragraph (22), by striking ``bush routes'' and
inserting ``routes''.
(b) Nonpriority Bypass Mail.--Section 5402(g) of title 39,
United States Code, is amended--
(1) in paragraph (2)(C), by inserting ``or a destination
city'' after ``acceptance point and a hub'';
(2) in paragraph (3), by adding at the end the following:
``(C) When a new hub results from a change in a
determination under subparagraph (B), mail tender from that
hub during the 12-month period beginning on the effective
date of that
[[Page S942]]
change shall be based on the passenger and freight shares to
the destinations of the affected hub or hubs resulting in the
new hub.''; and
(3) in paragraph (5)(A)(i), by striking ``(g)(1)(D)(ii)''
and inserting ``(g)(1)(A)(iv)(II)''.
(c) Equitable Tender.--Section 5402(h) of title 39, United
States Code, is amended--
(1) in paragraph (1), by inserting ``bush'' after
``providing scheduled'';
(2) by striking paragraph (3) and inserting the following:
``(3)(A) Except as provided under subparagraph (C), a new
or existing 121 bush passenger carrier qualified under
subsection (g)(1) shall be exempt from the requirements under
paragraphs (1)(B) and (2)(A) on a city pair route for a
period which shall extend for--
``(i) 1 year;
``(ii) 1 year in addition to the extension under clause (i)
if, as of the conclusion of the first year, such carrier has
been providing not less than 5 percent of the passenger
service on that route (as calculated under paragraph (5));
and
``(iii) 1 year in addition to the extension under clause
(ii) if, as of the conclusion of the second year, such
carrier has been providing not less than 10 percent of the
passenger service on that route (as calculated under
paragraph (5)).
``(B)(i) The first 3 121 bush passenger carriers entitled
to the exemptions under subparagraph (A) on any city pair
route shall divide no more than an additional 10 percent of
the mail, apportioned equally, comprised of no more than--
``(I) 5 percent of the share of each qualified passenger
carrier servicing that route that is not a 121 bush passenger
carrier; and
``(II) 5 percent of the share of each nonpassenger carrier
servicing that route that transports 25 percent or more of
the total nonmail freight under subsection (i)(1).
``(ii) Additional 121 bush passenger carriers entering
service on that city pair route after the first 3 shall not
receive any additional mail share.
``(iii) If any 121 bush passenger carrier on a city pair
route receiving an additional share of the mail under clause
(ii) discontinues service on that route, the 121 bush
passenger carrier that has been providing the longest period
of service on that route and is otherwise eligible but is not
receiving a share by reason of clause (ii), shall receive the
share of the carrier discontinuing service.
``(C) Notwithstanding the requirements of this subsection,
if only 1 passenger carrier or aircraft is qualified to be
tendered nonpriority bypass mail as a passenger carrier or
aircraft on a city pair route in the State of Alaska, the
Postal Service shall tender 20 percent of the nonpriority
bypass mail described under paragraph (1) to the passenger
carrier or aircraft providing at least 10 percent of the
passenger service on such route.'';
(3) in paragraph (5)(A)--
(A) by striking ``(i)'' after ``(A)''; and
(B) by striking clause (ii).
(d) Percent of Nonmail Freight.--Section 5402(i)(6) of
title 39, United States Code, is amended--
(1) by striking ``(A)'' after ``(6)''; and
(2) by striking subparagraph (B).
(e) Percent of Tender Rate.--Section 5402(j)(3)(B) of title
39, United States Code, is amended by striking ``bush routes
in the State of Alaska'' and inserting ``routes served
exclusively by bush carriers in the State of Alaska''.
(f) Determination of Rates.--Section 5402(k) of title 39,
United States Code, is amended by striking paragraph (5).
(g) Technical and Conforming Amendment.--Section 5402(p)(3)
of title 39, United States Code, is amended by striking
``(g)(1)(D)'' and inserting ``(g)(1)(A)(iv)''.
(h) Effective Date.--
(1) In general.--Except as provided under paragraph (2),
this section shall take effect on the date of enactment of
this Act.
(2) Equitable tender.--Subsection (c) shall take effect on
July 1, 2006.
Mr. FRIST. Mr. President, I further ask unanimous consent that S.
662, as amended, be returned to the calendar and that it not be in
order for the Senate to consider any conference report or House
amendments to H.R. 22 if it would cause a net increase in on- or off-
budget direct spending in excess of $5 billion in any of the four 10-
year periods beginning in 2016 to 2055, as estimated by the
Congressional Budget Office.
The PRESIDING OFFICER. Without objection, it is so ordered.
The PRESIDING OFFICER appointed Ms. Collins, Mr. Stevens, Mr.
Voinovich, Mr. Coleman, Mr. Bennett, Mr. Lieberman, Mr. Akaka, and Mr.
Carper conferees on the part of the Senate.
The PRESIDING OFFICER. The majority leader.
Mr. FRIST. President, I would like to take a moment to comment on the
passage of the Postal Accountability and Enhancement Act.
Today's passage of S. 662 is a first step towards meaningful postal
reform. The Postal Service forms a crucial part of the backbone of our
economy, and I am encouraged by today's action toward bringing
meaningful reform to the Postal Service.
I am optimistic that the process of resolving the differences between
the Senate and House bills will result in a product that goes even
further to ensure that America's Postal Service has the resources and
flexibility necessary to remain relevant and competitive in the global
marketplace.
I want to thank the chairman of the Homeland Security and
Governmental Affairs Committee, Senator Susan Collins of Maine, and
Senator Tom Carper of Delaware, for their leadership. They worked
diligently with their colleagues in the Senate, the U.S. Postal
Service, the administration, and kept their focus on the thousands of
postal workers in communities across America, and the businesses which
rely on the mail system to craft the current compromise.
In the past three and a half decades, the needs of the Postal Service
have changed dramatically. Indeed, the way we communicate has been
transformed by technology through e-mail, faxes, and my personal
favorite, Blackberries.
We can now pay our bills on the Internet. And online shopping is more
common than catalog sales.
Nevertheless, the Postal Service remains a critical part of America's
economy. Between paper manufacturing, printing, catalog production,
direct mailing and financial services, the $900 billion mailing
industry employs 11 million workers in America.
And it is fair to say that we rely on the U.S. Postal Service more
than any other governmental service. In Nashville and Knoxville, and
towns all across the country, the local post office still represents
the heart of the community.
In recent years, the Postal Service has undergone some of its most
challenging and difficult times. In 2001 and 2003, it was hit with
deadly anthrax and ricin bioterrorism attacks. It was a frightening
time for our country's postal workers, and shook us all to the core.
The Postal Service has also undergone significant modernization on
the business side. These reforms have made the postal service more
efficient and productive, and I applaud the leadership of Postal Master
Jack Potter who has been a steady, forward-thinking, responsible leader
of the U.S. Postal Service.
I have worked with the Postmaster General on a number of occasions.
The attacks in 2001 and 2003 brought us together to address the public
health risks of mail-born bioterrorism, and to develop better ways of
protecting the Postal Service's employees and America's mail.
And most recently, Jack and I announced the transfer of the historic
post office on the Mississippi River in Memphis, to the University of
Memphis for their new law school. He personally worked with me, the
city and the university to get this done for the Memphis community.
The Postal Service is in good hands, and under Jack Potter's
leadership has significantly improved its financial performance. But in
order for America to have a healthy and stable mail system into the
future, the Postal Service needs a less cumbersome rate-setting process
and better flexibility to respond to an increasingly competitive and
demanding marketplace. S. 662 takes important steps toward that goal.
It grants the Postal Service Board of Governors new authority to set
rates for competitive products like express mail and priority mail, and
replaces the current rate-setting process for products such as first-
class mail, periodicals, and library mail with a more efficient, less
litigious rate cap-based structure.
The Postal Accountability and Enhancement Act also transforms the
existing Postal Rate Commission into the Postal Regulatory Commission
with authority to regulate rates for noncompetitive rates and services,
ensure financial transparency, and establish limits on the accumulation
of retained earnings, among other things.
I look forward to seeing more work done on this issue, but today's
action represents the beginning of real reform to the Postal Service
which will benefit the taxpayers, ratepayers, and the thousands of
dedicated U.S. Postal Service employees.
Every day, we are working to keep America moving forward.
u.s. postal service
Mr. HARKIN. Mr. President, I appreciate the work done by Senator
Collins, Chair of the Homeland Security and Governmental Affairs
Committee, by the ranking member Senator Lieberman, and also by Senator
Carper. It has literally taken years to
[[Page S943]]
move this important postal reform legislation.
As my colleagues are aware, the Postal Service faces multiple
challenges in our changing economy. One of these challenges is how it
should manage its network of processing and logistics facilities. In
order to remain competitive and maintain universal service, the Postal
Service is currently studying how best to streamline its processing and
logistics network and remove excess capacity. The decisions it will
make as part of this process will have a long term impact on many of
the communities and businesses that it serves.
Sadly, the process that the Postal Service has developed to date to
study facility closures and consolidations fails to adequately allow
stakeholders, key customers, postal employees or community leaders
necessary input. The current process also fails to provide an open and
transparent explanation to affected communities for what may be quite
compelling reasons underlying the decisions to close or consolidate a
facility.
I learned how completely lacking in public participation and
transparency this process is from my constituents in Sioux City, IA.
Until I convened a meeting with postal officials in my office last
week, the Sioux City community had been unable to get any information
from the Postal Service about the timing or reasons for the proposed
consolidation of a mail processing and distribution center there with a
similar facility in another state.
Senators Collins, Lieberman, and Carper have agreed to include
language in S. 662 that would ensure that this does not happen. This
language does not stop the Postal Service from studying consolidation
options for its processing operations. What it does do is require that
the Postal Service revise the area mail processing study process by
which it analyzes which of its processing facilities should be closed
or consolidated.
While the language does not prevent the Postal Service from
proceeding with ongoing area mail processing studies on consolidation
of specific facilities, it does provide that no facility closing or
consolidation may actually be implemented until the Postal Service has
met the requirements of public notice, transparency and public input
specified in new section 302(c)(3)(D)(i-iv) .
The new language requires that the Postal Service's decisionmaking
process be transparent, with any analyses made available to the
community upon request. It will also require that the businesses and
communities affected by proposed consolidations of Postal Service
facilities have the opportunity to provide input and guarantees that
their concerns and advice are taken fully into account by the Postal
Service before the Postal Service issues a decision on a closure or
consolidation.
The first section of the amendment provides that the Postal Service
notify an affected community about the potential of a facility being
closed or consolidated in their district; such notification will be
provided at the beginning stage of the matter or as soon as the Postal
Service makes a decision to begin reviewing the matter. The Postal
Service should do their best to ensure that this notification reaches
all of businesses, residents, employees, government entities, and other
organizations that depend on the facility.
The second section will require the Postal Service to make available
to the community, upon request, any data, analyses, or other
information that is being considered by the Postal Service as part of
its decisionmaking process. This will ensure that the Postal Service's
decisionmaking analysis on this matter is transparent.
The third section will allow the affected members of the community
ample opportunity to provide input on the proposed decision. This will
ensure that the community has the chance to provide valuable input into
the decisionmaking process.
The fourth section requires the Postal Service to take community
input into account prior to making a final decision at the district
level. Once the district level decision on consolidation is made, which
includes taking the community input into account, the district level
recommendation can then be forwarded to the next decisionmaking step at
the regional level. It is worth noting that the community served by a
postal facility can be a valuable information resource and that it
should benefit the Postal Service to listen to the community's
suggestions as they seek to arrive at a result that works for them,
their customers and those they serve.
Mr. CARPER. While I fully support efforts by the Postal Service to
rationalize its processing operations, I also believe that the Postal
Service can engage in consolidation decisions that are rational and
justified and can withstand public scrutiny. I believe that this
language will improve the consolidation process, and I was pleased to
work with my colleague from Iowa in drafting it. I believe that the
language strikes the appropriate balance by not stopping the Postal
Service from studying proposed consolidations of particular facilities,
while at the same time requiring the Postal Service to meet some basic
obligations to its customer and affected communities before a
consolidation can be implemented.
Mr. LIEBERMAN. I am pleased to lend my strong support to adding this
provision to S. 622 in order to improve the procedures by which the
Postal Service consolidates its mail processing operations. The
problems local communities are encountering from the Postal Service's
consolidations hit home for me in Waterbury, CT. Connecticut residents
affected by the Postal Service's decision to close its Waterbury mail
processing center have a right to participate in a process that is
transparent and open. This new provision in S. 622 will help ensure
that, when the Postal Service streamlines its mail processing or
logistics network, it gives adequate public notice and takes other
steps to be sure that those who are potentially affected--including
postal customers, postal employees, and other businesses and
individuals in the community--have an opportunity to understand and
provide input into the Postal Service's decision before facilities are
consolidated or closed.
Mr. President, I suggest the absence of a quorum.
The PRESIDING OFFICER. The clerk will call the roll.
The assistant legislative clerk proceeded to call the roll.
Mr. NELSON of Florida. Mr. President, I ask unanimous consent that
the order for the quorum call be dispensed with.
The PRESIDING OFFICER (Mr. Vitter). Without objection, it is so
ordered.
Oil Drilling
Mr. NELSON of Florida. Mr. President, I wanted to call to the
attention of the Senate that over the past couple of days the question
of drilling for oil off the coast of Florida has been joined. Indeed,
the question and the debate has accelerated.
Yesterday, the Department of the Interior offered their proposed new
alignment of the Gulf of Mexico and the central planning area where
drilling for oil will occur and the eastern planning area where oil
drilling will not occur.
As we have speculated for some period of time, when the Department of
the Interior published in the Federal Register that State boundaries
were going to be redrawn so that the boundaries of the State of
Louisiana, indeed, went into the waters off of the State of Florida, we
could well speculate, with some justification, that indeed that was
going to be the plan. That, in fact, was the plan offered yesterday by
the Secretary of the Interior, Gale Norton, for the next 5 years in the
Outer Continental Shelf.
The Secretary's plan increases the drilling in the eastern Gulf of
Mexico off the State of Florida by 2 million acres. That was
simultaneously followed by the filing of a bill by the chairman of the
Energy Committee, the Senator from New Mexico, which would encompass
almost the entirety of an area not included in the moratorium on the
Outer Continental Shelf, known as lease sale 181.
The essence of the proposal by the Senator from New Mexico is to
drill for oil and gas in an area of 4 million acres, in a bulge which
bulges out from the imaginary Florida-Alabama line into the waters off
the State of Florida.
This senior Senator from Florida, joined by my colleague, Senator
Martinez, recognizing this was coming, laid out a plan last week--a
plan that would allow some drilling in a part of
[[Page S944]]
lease sale 181 but far from the Florida coast--indeed, 260 miles west
of Tampa Bay and Clearwater Beach, that from Pensacola, FL, in the
panhandle, would be 150 miles to the south but then would honor the so-
called ``military mission line,'' about which Secretary of Defense Don
Rumsfeld stated in a letter before Christmas that oil and gas drilling
in that area, which has been restricted space because we train and test
our military weapons, would not be compatible; to use his words: It
would be incompatible with military objectives, with military
preparedness through our training and testing in the waters, off the
waters, and around the waters of the Gulf of Mexico off Florida.
Therefore, Senator Martinez and I proposed a line that would honor
the request of the Department of Defense. That request was corroborated
the day before yesterday in front of the Senate Armed Services
Committee, when this Senator put the question to Secretary Rumsfeld,
again in the form of thanking him for his clear statement, and he
acknowledged that statement again.
Where does this leave us? We must continue to have this fight.
We have the prodrilling forces, as evidenced by Senator Domenici and
his proposal wanting additional drilling off the coast of Florida. We
have a more modest proposal by the Secretary of the Interior, who
consulted with a couple of dozen oil companies and their proposal, and
we have the proposal of the two Senators from Florida, recognizing
there is much at stake beyond drilling.
The stakes are very high, not even to speak of Florida's economy,
which is certainly evidenced by a $50 billion a year tourism industry
which depends on pristine beaches, without oilspills the likes of which
occurred last week in Alaska.
When people say: Oh, it is gas that we want to drill, not oil,
ignoring the fact that one of the largest and most costly oil spills
occurred when a gas rig blew off the coast of California in 1968,
causing this massive oilspill, which led to the enactment of a
moratorium of all drilling off the Continental Shelf of the United
States.
Certainly, economic interests of our State are clearly one component.
But there is another component; that is, we have bays and estuaries
where so much of our marine life is spawned where the delicate
environment would be savaged with an oilspill.
People said it would be far from Florida shores, but winds and
currents do not understand mileage. Indeed, there is that current that
comes up into the Gulf of Mexico in a northward arc off of the Yucatan
Peninsula of Mexico and then turns southward and comes around the
Florida Keys, then northward it is the current known as the Gulf
Stream.
The idea that long distances are going to protect the delicate
environment, I hope that can be recognized as a false argument.
Another component of the argument is simply that there is very little
oil out there. They have had several dry holes. The geology shows there
is not very much oil. The oil, in fact, in the Gulf of Mexico, is where
the 4,000-plus oil rigs are, which is the central gulf and the western
gulf off of, primarily, Louisiana and Texas.
But then, of course, there is the fourth component of why we should
not drill in the eastern gulf. That is our military preparedness. If
you fly commercially from Tampa to New Orleans, you do not fly across
the gulf. You hug the coast of Florida. Why? It is restricted space. It
is the largest testing and training area for our U.S. military. It is
what Secretary Rumsfeld memorialized in the letter to the Senate
Committee on Armed Services in December saying: Do not drill east of
that military mission line.
We are testing weapons systems such as the F/A-22. All pilot training
is being done at Tyndall Air Force Base in Panama City. Why? Because
the Gulf of Mexico is restricted space. In a dog fight with the F/A-22,
compared to the F-15, the F/A-22 is engaging in air-to-air combat at a
speed of 1.5 mach, not like the F-15 and the F-16 at .75 mach, three-
quarters of the speed of sound. In other words, the new stealth fighter
is engaging in air-to-air combat at twice the speed of our present
fleet of aircraft. Therefore, the training area has to be so much
larger.
We are testing right now a laser weapon shot from a ship, which goes
several hundred miles. We have to have restricted space. Secretary of
Defense Rumsfeld said oil and gas rigs are incompatible with the
military uses of that space.
That is four components. Senator Martinez and I took all those
components into consideration in suggesting our plan. And we added a
20-mile cushion since that military mission line that Secretary
Rumsfeld referred to was established in 1981, and the weapons have
gotten more sophisticated and, as I stated, require much more space in
which to test and to train our military.
That is the line we have drawn which is in effect from Clearwater
Beach, right there at Tampa Bay, St. Petersburg Beach, 260 miles to the
west from a position further south of Florida, like Fort Myers or
Naples. It is in excess of 300 miles from the coast of Florida.
To my knowledge, as of today every newspaper editorial page in the
State of Florida, save for one newspaper, has editorialized in favor of
Senator Martinez and my proposal from last week. I don't have the exact
count, but that is something upwards of 20 editorial pages.
As we come here for the fights that are going to occur, Senator
Martinez and I are looking for a practical line that will accommodate
the interests of everyone, including our military preparedness. That is
why we cannot have a bill that was offered in the House of
Representatives last fall that says leave it up to the States. We can't
leave it up to a State to set military policy. We cannot leave it up to
an individual State legislature to determine whether the U.S. military
is going to be prepared in this long war on terror. That is why Senator
Martinez and I have said these boundaries ought to be permanent, not in
some 5-year plan that is now being offered but permanent.
We are going to continue the fight. I can tell the Senate there is no
daylight between Senator Martinez, who sits on that side of the aisle,
and this senior Senator of Florida, who sits on this side of the aisle.
We will employ every opportunity we have under the rules of the Senate
to try to get others who disagree to understand the practicality and
the wisdom of the proposal we have laid out to accommodate all of the
interests, including the military interests of this country.
I share that with the Senate. This is not going to be the last time
we will discuss that, but I make this Senator's position unalterably
clear. I thank the Senate for this opportunity to share these thoughts.
I yield the floor.
The PRESIDING OFFICER (Mr. Graham). The Senator from Montana.
Mr. BAUCUS. What is the pending business before the Senate?
The PRESIDING OFFICER. The Senate is on S. 852, the asbestos
legislation.
Mr. BAUCUS. I ask the Presiding Officer, is there an amendment
pending?
The PRESIDING OFFICER. There are several amendments pending.
Mr. BAUCUS. Is one of the amendments the Cornyn substitute?
The PRESIDING OFFICER. There are two Cornyn amendments pending. There
is a perfecting amendment pending and a second degree to that
perfecting amendment.
Mr. BAUCUS. I thank the Chair.
Mr. President, I strongly oppose the Cornyn amendment to the
underlying bill. I want the record to reflect my deep disappointment in
those two amendments. I am deeply concerned we are losing sight of what
is at stake.
What is that? Making sure that people who are sick, who are likely to
become sick from exposure to tremolite asbestos are not denied the
ability to fight for their rights against the persons or companies that
injured them. That is absolutely the bottom line. If these amendments
are agreed to, people in the small county of northwest Montana will not
get justice. These people will not get relief. They will not get
support. They will not be able to pay for needed health care as they
die.
We are talking about hundreds of sick and dying people. This
amendment turns our back on them. It will hurt them while they are
already down. It will hurt the people of Libby. The people in Libby are
proud. They have had more than their share of hard knocks. They just
keep going, getting up and
[[Page S945]]
keep trying. They are good, proud people. But they have been injured.
They have been deceived. They have been wronged. They have been lied
to.
They have tried to put their faith in our Congress and in our
legislative process to make things right. They are survivors. I am
privileged to know them so well and to represent them.
Let me tell you about the first time I went to Libby. It was January
of the year 2000. I traveled to Libby to meet with 25 extremely ill
people for the first time. I had been briefed a number of times on what
I might expect to hear that night. These kind men and women, some of
whom are no longer with us, gathered to share huckleberry pie and
coffee in the home of Gayla Benefield.
They opened their hearts. They poured out unimaginable stories of
suffering and tragedy on a scale that absolutely stunned me. Entire
families--fathers, mothers, uncles, aunts, sons, and daughters--all
sick, hundreds are dead--they are all bound together by their exposure
to the company mine, exposure to tremolite asbestos mined by W.R.
Grace.
This is an isolated community of a few thousand people located as far
away from Washington, DC, as you could possibly get, way up in
northwest Montana.
I will never forget a man I met that night. He has become my dear
friend. His name is Les Skramstad. I mentioned Les yesterday. Let me
tell you about our first introduction.
At that meeting in the home of Gayla Benefield, Les watched me
closely all evening. He was weary and came up to me after his friends
and neighbors finished speaking and said to me:
Senator, a lot of people have come to Libby and told us
they would help, then they leave and we never hear from them
again.
Max, please, as a man like me, as someone's father, too, as
someone's husband, as someone's son, help me. Help us. Help
us make this town safer for Libby's sons and daughters not
even born yet. They should not suffer my fate, too. I was a
miner and I breathed that dust in.
And what happened to me and all the other men and women who
mined wasn't right--but what has happened to the others is a
sin. Every day I carried that deadly dust home on my clothes.
I took it into our house. I contaminated my own wife and each
of our babies with it too. Just like me, they are sick and we
will each die the same way.
I just don't know how to live with the pain of what I have
done to them. If we can make something good come of this
maybe I will stick around to see that, maybe that could help
make this worthwhile.
That is what Les said to me that evening. It riveted me. I told him I
would do all that I could, that I would not back down, and I would not
give up. I said to myself that evening, if I do anything, I am going to
help get justice for the people of Libby, MT.
Les accepted my offer and then pointed his finger at me and said:
I'll be watching, Senator.
Les is my inspiration. He is the face of thousands of sick and
exposed folks in this tiny Montana community. When I get tired, and I
see the difficulties we face to try to get justice for the people of
Libby, I think of Les, and I cannot shake what he asked me to do. In
all my years as an elected official, this issue of doing what is right
for Libby is among the most personally compelling things I have ever
been called on to do.
Doing what is right for the community and making something good come
of it is my mission in Libby. I thank Les Skramstad every day for
handing me my marching orders. My staff and I have worked tirelessly
for Libby--not for thanks, not for recognition but because the tragedy
is that gripping. There is no other choice. It is a no-brainer. We do
all we can. It is such a tragedy for the people of Libby.
The extent of asbestos contamination in Libby, the number of people
who are sick and who have died from asbestos exposure is staggering.
The people of Libby suffer from a deadly asbestos-caused cancer,
mesothelioma, at a rate 100 times greater than the rest of the Nation.
Mr. President, 1 in 1,000 residents of Libby suffers from this disease.
The national average is 1 out of 1 million. Libby residents suffer from
all asbestos-related diseases at a rate of 40 to 60 times the national
average.
So how could this happen? Well, a company named W.R. Grace owned and
operated a vermiculite mining and milling operation in Libby. It just
so happened the vermiculite was contaminated by a deadly form of
asbestos called tremolite asbestos. It is much more pernicious than the
ordinary chrysotile asbestos. Tremolite asbestos is so bad, it gets
into your lungs. It has hooks in it. It stays there and does not ever
get out.
Mr. President, 5,000 pounds of tremolite asbestos was blown over the
town every day. Every day this dust contaminated the air. Dust settled
in the town of Libby, on cars, on homes, in gardens. Think of it. You
get up in the morning to go outside, and there is this tremolite
asbestos dust on your car. It is on your home. It is everywhere, your
garden. It settled on children as they played in the parks. Workers
brought the dust home on their clothes and exposed their families.
Hundreds have died, hundreds more are sick.
The very worst part about this story is that W.R. Grace knew exactly
what it was doing and did not tell anyone. It was making a buck while
it was hurting people. It knew that the vermiculite dust was
contaminated with deadly tremolite asbestos. Yet it had told workers in
the town it was harmless. It was just dust, they said. W.R. Grace not
only said it was harmless, then what did it do? To add insult to
injury, it bagged this stuff. It put all this tremolite asbestos in
bags and then gave bags to residents for their gardens and to the high
school for covering for the high school track and for parks and
playgrounds.
Well, W.R. Grace filed for bankruptcy. Before they did that, what did
they do? They transferred almost all their assets away to other
companies so they could not be sued. So people in Libby could not get
justice. Through all of this, W.R. Grace has yet to step up and do the
right thing for Libby.
So I stepped up. I stood up for the people of Libby. And I am
standing up now for Les and his family to do all I can to help him and
those other people in Libby.
I worked hard with the Judiciary Committee, especially my colleagues,
Senator Specter and Senator Leahy, to tailor a solution that addresses
the unique problems in Libby. I am extremely grateful to Senator
Specter, the chairman of the committee, and Senator Leahy, the ranking
member, for all their work to help protect Libby. I spent a lot of time
explaining to them the problems of Libby, and to their credit, they
listened and put provisions in the bill, the underlying bill, that
address the very unique, special problems of the tragedy in Libby.
The original medical criteria in the bill did not address the
specific needs of Libby because disease resulting from exposure to
tremolite asbestos progresses differently than disease from exposure to
the traditional form of asbestos. Tremolite asbestos, the latency
period is a lot longer. You cannot detect it until much later. It is
also a pernicious kind of asbestos that causes much more injury and
makes it much more difficult to breathe. It is wicked stuff.
So we worked hard, and we included medical criteria that specifically
address the unique needs of Libby. My colleagues, I hope, understand--
they must understand; the right thing to do is to understand--this
whole community was exposed, not just the mine workers but everyone.
W.R. Grace mined the raw vermiculite in the mines of Libby and then
milled that vermiculite to remove up to 96 percent of the tremolite
asbestos contained in the vermiculite. That milling process then shot
5,000 pounds of tremolite asbestos into the air each and every day.
That asbestos blanketed the town. The asbestos did not discriminate
where it fell. It covered the school playground and little league
baseball field. And it is now growing in the bark of trees, if you can
imagine. It is everywhere.
I am offended some of my colleagues think they know best. I am
offended some of my colleagues, who think they know better, have not
taken the time to know the issue, to travel to Libby, to understand
what is going on there, to open up their minds and their hearts, to try
to understand. They have not taken the time to meet the people, to
understand there are different types of asbestos or that the disease
from exposure to tremolite asbestos progresses very differently and is
much more pernicious.
So if you do not support the bill, I ask my colleagues to say so. But
do not
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hold the people and the community of Libby hostage. Whatever we do,
however we deal with the underlying asbestos bill, we cannot hold the
people of Libby hostage. Do not ask the innocent people of Libby to do
your bidding for you.
And if this amendment passes--the Cornyn amendments--I will have to
go back to Libby. I will look into the eyes of that community, and I
will tell them that their Nation turned its back on them.
Let me be very clear. I will keep fighting for Libby until they get
the help that is desperately needed and long overdue. Until they get
the compensation they deserve, I am going to keep fighting. We are
going to find a way, eventually, to give these people the justice they
deserve.
Thank you, Mr. President.
I see the chairman of the committee on the floor. I thank him for his
help and his recognition of the unique differences in Libby, MT. I tell
him, I appreciate that.
The PRESIDING OFFICER. The Senator from Pennsylvania.
Mr. SPECTER. Mr. President, I thank the Senator from Montana for
those comments and for his leadership in structuring the bill now on
the floor, S. 852. He has accurately described the very serious
situation in Libby, MT, where many people have been exposed to asbestos
in a dreadful situation, a situation where the W.R. Grace Company sent
this deadly substance into the atmosphere knowing its dangers.
The bill which has been structured would compensate the people there.
The Senator from Montana accurately and forcefully articulates the
reasons why the pending amendment for medical criteria is totally
insufficient. It simply does not cover people such as those in Libby,
MT. It does not cover the thousands of people who worked for companies
which were bankrupted--77 of them. It does not cover the veterans of
America who are suffering from exposure to asbestos. It does not cover
the real core of the issue and the problem at hand.
I have talked to Senator Cornyn about scheduling a vote. We would
like to have a vote reasonably soon. A vote is always a salutary method
of getting Senators to the floor to move the bill along in other
respects. Senator Cornyn wanted to have some time for discussion and
argument. And a few minutes after 2, I said I would try to accommodate
him on what he wanted to do in that respect. But I hoped we could have
a vote no later than 3 o'clock. That is still my hope, and to get
there, I am going to be brief.
I see Senator Leahy on the floor, and I yield to him.
The PRESIDING OFFICER. The Senator from Vermont.
Mr. LEAHY. Mr. President, did the Senator from Montana wish to say
something?
The PRESIDING OFFICER. The Senator from Montana.
Mr. BAUCUS. Mr. President, I do not care who has the floor, but I
wish to say I appreciate the comments of the chairman of the committee
and, also, how much I appreciate the efforts of the ranking member of
the committee, Senator Leahy from Vermont. He has also, as has the
chairman of the committee, been very receptive in his understanding of
the issue.
I might say, I thank again the Senators. They sent staff to Montana
to get a firsthand understanding of what is going on. I thank the
chairman. I also again thank the Senator from Vermont for his deep
understanding. He has taken the time and effort to learn the problems
that face Libby, MT. I again thank both Senators.
The PRESIDING OFFICER. The Senator from Vermont.
Mr. LEAHY. Mr. President, I thank the distinguished senior Senator
from Montana for his comments. I should note that from the first day
Senator Specter and I started talking about this legislation, the
distinguished Senator from Montana was there visiting with us. He made
it very clear he wanted to make sure that whatever we passed took care
of what is an extraordinary and unique situation in Libby, MT. His help
and his counsel have been extraordinarily important throughout.
We had so much testimony that said the same thing, that said the
current system for compensating asbestos victims is broken. Victims are
dying. Ironically, they are dying while they are waiting for their day
in court--a day that will not come. Even for those who finally receive
their day in court, they often receive only a small percentage of the
costs involved in our tort system. Of course, if the defendant has been
forced to file for bankruptcy, or decided to file for bankruptcy, these
victims receive little or no compensation.
I think, as both Chief Justice Rehnquist and Justice Ruth Bader
Ginsburg have said, this cries out for a solution outside of the court
system that streamlines the claims process for victims, to make sure
they receive timely and fair compensation relative to the severity of
their injuries. That will protect compensation they receive from
subrogation by insurance companies.
Actually, we find from the most recent RAND study asbestos victims
receive an average of only 42 cents for every dollar spent on asbestos
litigation. What may surprise some, 31 cents of every dollar goes to
defense costs. A somewhat smaller amount, 27 cents, goes to plaintiffs'
attorneys and other related costs. All that is eaten up before the
victim, the one suffering, sees anything.
I think the enactment of a medical criteria bill, such as the
amendment the distinguished Senator from Texas, Mr. Cornyn, has
proposed, for asbestos would fail to reduce the high transaction costs
of the asbestos tort system.
Medical criteria bills do nothing to protect businesses from going
bankrupt or victims who were injured by bankrupt companies to receive
fair compensation.
The plain fact--the plain and easy fact--is many of these asbestos
manufacturers are in bankruptcy proceedings and, therefore, are immune
from suit. Victims, such as our Nation's veterans, are unable to
recover for asbestos exposure while serving their country in the
current tort system. Think of that, our veterans.
We received the following testimony from Hershel Gober, the national
legislative director of the Military Order of the Purple Heart. He
said:
We believe the compensation fund approach is the only
solution that will provide veterans suffering from asbestos-
related illnesses with fair [with fair] and certain
compensation.
But he also pointed out:
The avenues open to veterans to seek compensation through
the tort system, however, are very limited. The Federal
government, as the members of this Committee know, has
sovereign immunity, thereby restricting veterans' ability to
recover from the government; and most of the companies that
supplied asbestos to the Federal government have either
disappeared or are bankrupt and, therefore, are only able to
provide a fraction of the compensation that should be paid to
asbestos victims, if anything at all.
This distinguished veteran went on to say:
Even if there is a solvent defendant company for a veteran
or his/her family to pursue, there remains the lengthy,
costly, and uncertain ordeal of filing a civil lawsuit and
going through discovery and trial, where the plaintiff bears
a heavy burden of proof and often has the very difficult to
impossible task of establishing which defendant's product
caused their injuries.
Criteria bills, such as that of the distinguished Senator from Texas,
will do nothing to compensate victims such as our Nation's veterans who
are injured by bankrupt companies during their service to our great
country. Legislation imposing medical criteria on the tort system is
inherently unfair to victims. These measures don't alleviate the delays
victims face when they are confronted with overwhelmed court dockets.
Criteria bills, such as the Cornyn amendment, allow defendants and
insurers to enjoy the delays of litigation and maintain all of their
defenses in the tort system. They are far away from streamlining a
procedure to help people who are sick and dying, and they impose new
hurdles for plaintiffs and continue to require the identification and
proof of the manufacturer or entity responsible for exposing them to
asbestos decades ago.
In contrast, the bill Senator Specter and I have brought to the floor
will not require victims to identify and prove the manufacturer or
entity that exposed them to asbestos. They only have to show the
suffering they have had from asbestos. They will not have to hope that
the entity responsible for their exposure is still in existence or
financially solvent. They will recover
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compensation under the fund in proportion to their impairment or
disease. The current system for compensating victims of asbestos
exposure is inefficient and inequitable.
This medical criteria amendment is not a solution. It actually
operates within that same broken tort system.
I could go further, but I know the distinguished chairman hopes we
will come to a point where we can vote. I would note that this
amendment will preempt the silica claims of thousands of victims. I
understand that the AFL-CIO and other labor unions representing
thousands of workers, like this distinguished veterans association,
oppose the Cornyn amendment.
I suggest the absence of a quorum.
The PRESIDING OFFICER. The clerk will call the roll.
The assistant legislative clerk proceeded to call the roll.
Mr. HATCH. Mr. President, I ask unanimous consent that the order for
the quorum call be rescinded.
The PRESIDING OFFICER (Mr. Coleman). Without objection, it is so
ordered.
Mr. HATCH. Mr. President, I rise in support of S. 852, the bipartisan
Fairness in Asbestos Injury Resolution Act of 2005. Over the last
several days, several of the opponents of this legislation have made
serious, misleading claims, and I would like to take a moment to
respond.
Opponents of this bill have claimed that it amounts to a bailout of
big business generally, and asbestos manufacturers specifically. Guess
what. They are, as usual, almost right. Webster's Dictionary defines
``bailout'' as a rescue from financial distress. It is true that we are
trying to save 90 percent of this country's industry from financial
distress. It is also true that we are trying to rescue literally
hundreds of thousands of asbestos victims from the plague of
uncertainty that advances from the efforts of asbestos attorneys and
the cruelty of asbestos bankruptcies. So using the word ``bailout'' is
not a complete mischaracterization of what this bill does.
This bill saves an overburdened legal system. We have been asked by
no less than the Supreme Court of the United States of America three
times to do something about this mess. If we don't do something about
this mess, we are going to have a severe economic crises in this
country, driven by this approach that is literally bankrupting some
very innocent companies.
This bill saves asbestos victims from unfair and untimely
compensation. This bill saves ordinary Americans from the tremendous
strain on our national economy. And this bill saves veterans who have
nowhere else to turn. I ask my colleagues if they know that once
vibrant companies, now bankrupt due to asbestos liability, employed
over 200,000 workers--200,000. The asbestos crisis affects over 85
percent of the U.S. economy. Over $200 million in lost wages--$200
million--gone. Almost no one has been spared. Mr. President, 75 out of
83 industrial sectors in this country are affected.
Has not this body been working for several years now to save domestic
jobs and help our industries? Not a single Senator questions the fact
that this Nation faces an immediate crisis. Not a single Senator
disputes the fact that our legal system cannot handle the thousands
upon thousands of asbestos claims. And, hopefully, not a single Senator
questions that we must do something, and do it now, and this is the
only vehicle we have.
Too much time has passed, too many people have died, too many people
have lost their jobs, too many people have gone uncompensated, and too
many asbestos lawyers have private jets and luxurious yachts as a
result.
Some colleagues claim this bill lets defendant companies off the
hook. I believe the distinguished senior Senator from Massachusetts
said yesterday that S. 852 would shift more of the financial burden
onto the backs of injured workers. I share my colleague's concern for
injured workers. I disagree with his assessment of how this bill works.
The FAIR Act does not add to the burden on injured workers; it
lessens it. This bill will ensure that asbestos victims are compensated
over a 3- to 4-year period. Individuals with exigent claims will
receive their compensation within 1 year.
Moreover, asbestos victims under this bill will receive the entire
award themselves instead of giving enormous percentages to attorneys in
transaction costs. Of course, claimants may elect to utilize an
attorney, in which case attorney's fees are capped at 5 percent, rather
than 40 percent. That is a far cry from some of the exorbitant
attorney's fees that are being charged today.
I wholeheartedly believe attorneys should be compensated for their
efforts, but I also believe that such compensation should be
reasonable. Under the FAIR Act, defendant companies are not let off the
hook. Defendant companies, along with insurers and reinsurers, do not
get a free ride under S. 852--unless one thinks a combined $136 billion
obligation constitutes a free ride. Defendant companies are responsible
for payments up to $90 billion over the life of the fund. Insurer
participants are responsible for payments up to $46 billion. That is
not pocket change. Indeed, as some of my colleagues have pointed out,
there are companies and insurers who oppose this bill because of this
obligation.
I ask my colleagues: Why would some of these companies oppose this
legislation if it amounted to a free ride? This brings me to my next
subject.
Some of my colleagues have alleged that taxpayers will be footing the
bill for the FAIR Act--$140 billion, they claim. That would be a truly
frightening allegation if it were true. Fortunately for us, if you read
this bill, it is not true. The FAIR Act is entirely funded by private
means. American taxpayers do not pay one dime. Although an argument
could be made that during the war our Government used asbestos in
shipbuilding and so many other ways. And I am just talking about the
war. You can extrapolate way beyond that. But we haven't asked the
Federal Government to pay anything. This bill does not require any
payments by the Federal Government--not one nickel, not one penny.
The truth is, as I mentioned before, private entities provide the
funds for this bill--$140 billion--and none of it comes from the
coffers of the United States of America. Defendant companies pay $90
billion, participant insurers pay $46 billion, and the remaining $4
billion? Bankruptcy trusts: At present, there is somewhere in the range
of $4 billion to $7 billion that sits in bankruptcy trust. This bill
would consolidate those moneys and fold them into the trust it creates.
It is true that some of those trusts do not relish this idea. I don't
blame them. I do not like living in the shadow of this problem either.
But the fact is, Congress can and should consolidate the existing
bankruptcy trusts as part of the comprehensive solution to a critical
national problem.
Let me also say this: If we don't do something about this--and this
is just step 1. We have to get the House to do something. I doubt
seriously they are going to do this bill. If they don't do this bill,
they have to come up with one of their own. When they do, that means we
have to go to conference and hopefully work out any of the problems we
uncover between now and then.
If we don't do this bill, then I personally believe the economy is
going to be very badly damaged and ultimately hurt. I hate to be a
doomsayer, but I really believe that is what is going to happen. I
think virtually everybody in this body knows we need to do something.
This is the vehicle that we have to get through the Senate, and then we
are going to have to, hopefully, get the House to come up with a
similar vehicle, or at least whatever they think is the best way of
doing this. Then we have to go to conference, and people working with
goodwill have to try to solve these problems, hopefully using the best
things in this bill and the best things in a House bill so we can solve
this problem for our country, for our economy, for our workers, and for
companies so that in the future they aren't going to go bankrupt.
When I first started working on this, there were only 30 companies in
bankruptcy. Today there are almost 80. That is just a few years. It is
going to get worse.
As I understand it, the problem is going to get worse because of
superficialities and a tort system run amok, and because we are
unwilling to stand together and do something about it, and because of
special interests. No,
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not special interests down at K Street, special interests that are the
largest hard-money supporters of our friends on the other side today.
As I understand the situation, there are two primary claims against
including the existing bankruptcy trusts in this legislation. The first
argument amounts to a finality claim. Some argue that Congress should
let sleeping dogs lie. Critics in this camp believe we should not undo
what has been done in the bankruptcy court since victims in those
circumstances have been compensated to a degree and the channeling
injunction that accompanies a 524(g) trust effectively terminates
residual liability.
There are problems here. In many instances the sleeping dog here is,
in fact, a very sick puppy. It cannot take care of itself. The Manville
Trust, for example, pays only pennies on the dollar and it does not
address the global problem. In fact, the Supreme Court has, on more
than one occasion as I have said, struck down attempted global
settlements while simultaneously calling upon Congress to act.
The fact is, the Supreme Court is right. The asbestos problem is a
horrific mess and it is time for Congress to intervene. I understand
why companies on the receiving end of a channeling injunction would not
want to upset the balance they have struck. But they will have the
protections of this bill while simultaneously providing much needed
funding that will be used to compensate the true victims of the
asbestos crisis.
One further point on existing asbestos bankruptcy trusts. For reasons
I will explain in a moment, most bankruptcy trusts in this context were
established by the plaintiffs' trial bar. The provisions of 11 United
States Code 524(g) do not permit a channeling injunction unless 75
percent of the claimants approve of the measure. That means that
plaintiffs' attorneys in these cases--and there are about 12 major law
firms, that is what it comes down to--have a very big say in how the
trust is set up and, more troubling, how they, the asbestos lawyers in
these 12 firms, basically are compensated. I can see why the asbestos
plaintiffs' bar would not like to see this change. Can you blame them?
This is a cow they want to milk. It is high quality milk at that.
The second problem is a little more complicated. Certain asbestos
bankruptcy trustees have argued that the inclusion of their assets in
the larger trust established under the FAIR Act constitutes an unlawful
taking in violation of the fifth amendment to the Constitution. I admit
I was surprised when I discovered that my friend Professor Laurence
Tribe and I actually agree on a point of constitutional law. But it is
true. He was correct to say:
It is a well-settled rule that legislatures may act
rationally to modify or abolish causes of action, impose
assessments, and create new compensation programs without
violating due process or triggering the right to just
compensation under the Takings Clause.
I also agree with Professor Tribe's assessment:
The bankruptcy process, and in particular the confirmation
of a plan of organization, does not provide a debtor or a
resulting trust with ongoing immunity from the operation of
federal law as it might evolve over time.
In a nutshell, there is not a final property interest at issue in
this context. I agree with Mr. Carter G. Phillips:
Any property rights arising from the trusts are contractual
in nature and the law is well established that contracts,
however expressed, cannot fetter the constitutional authority
of the Congress.
I do not believe a valid takings claim can exist in a vacuum of
property rights.
In the interest of time, I will not bore my colleagues with a more
detailed legal explanation on the takings issue, but I wish to submit
two letters for the Record, the first dated February 6, 2006, from
Professor Laurence H. Tribe, and the second dated February 7, 2006,
from Mr. Carter G. Phillips. I ask unanimous consent they be printed in
the Record.
There being no objection, the material was ordered to be printed in
the Record, as follows:
Cambridge, MA,
February 6, 2006.
Hon. Arlen Specter,
Chairman, Committee on the Judiciary,
U.S. Senate, Washington, DC.
Dear Senator Specter, I am writing in response to your
request for my current views of the constitutional questions
posed by S. 852, the Fairness in Abestos Injury Resolution
Act (``FAIR.''). The bill was voted out of committee on May
26, 2005, with a bipartisan majority of 13-5, and is
scheduled for floor debate in the near future.
As I testified before the Committee on June 4, 2003 (and as
I reiterated in subsequent responses to questions from
members of the Committee), Congress has ample constitutional
authority to replace the current avalanche of asbestos
litigation with an administrative compensation scheme to
minimize transaction costs and to allocate responsibility
more rationally than the badly broken status quo. Carte G.
Phillips of Sidley Austin Brown & Wood, LLP, and former
Solicitor General Seth P. Waxman, now of Wilmer Cutler &
Pickering, joined in my conclusions at the hearing in 2003.
Nothing since that time has led me to alter my legal views.
I continue to believe that Congress possesses clear
constitutional power to use past histories of payments for
asbestos-related judgments, combined with current revenues,
to substitute predictable fiscal obligations for
unpredictable future liabilities. The aim of S. 852 is to
apportion liability according to likely responsibility,
tempered by some attention to ability to absorb the burden--
not (as in cases like Eastern Enterprises v. Apfel, 524 U.S.
498 (1998)) to saddle one company with liability because it
is the last remaining solvent defendant. Indeed, a principal
aim of S. 852 is precisely to avoid such a scenario, which is
currently being played out in the tort system.
Urging Congress to let the litigation avalanche continue
lest the Supreme Court invalidate the proposed alternative
makes little sense. After all, it was that Court that wrote
in 1997, in a landmark asbestos case I successfully argued,
``a nationwide administrative claims processing regime would
provide the most secure, fair, and efficient means of
compensating victims of asbestos exposure.'' In 1999 and
2003, the Supreme Court repeated this invitation to
congressional action.
In your latest request of me, you have called special
attention to the transfer of assets held by certain
bankruptcy trusts to the FAIR Fund. In particular, former
Senator Don Nickles argued in a February 1, 2006 op-ed on
behalf of a group of existing trusts that ``[m]ore than $7
billion currently set aside to compensate 524(g)
beneficiaries would be taken from the trusts and paid to the
national fund created by S. 852. This represents a `taking'
of property by our government without just compensation,
which is expressly prohibited by the Fifth Amendment.'' With
all respect to Senator Nickles, I believe his objection has
no merit as a constitutional matter.
First, it is not enough to assert that S. 852 changes the
rules applicable to bankruptcy trusts. After all, the bill
changes the rules applicable to other participants as well.
It abrogates insurance contracts, eliminates causes of
action, and overrides numerous existing legal entitlements.
All of these changes could be said to upset expectations
regarding future liabilities and tort recoveries. But none of
the changes states a takings claim, in light of the well
settled rule that legislatures may act rationally to modify
or abolish causes of action, impose assessments, and create
new compensation programs without violating due process or
triggering the right to just compensation under the Takings
Clause. See Logan v. Zimmerman Brush Co., 455 U.S. 422, 432-
33 (1982); Martinez v. California, 444 U.S. 277, 281-83
(1980). State workers' compensation laws, federal pension
regulation, and the Black Lung D1sability Trust Fund, 30
U.S.C. Sec. 901, et seq., all rely on this principle.
``[L]egislation readjusting rights and burdens is not
unlawful solely because it upsets otherwise settled
expectations . . . even though the effect of the legislation
is to impose a new duty or liability based on past acts.''
Usery v. Turner Elkhorn Mining Co., 428 U.S. 1, 16 (1976).
Second, it is well settled that the bankruptcy process, and
in particular the confirmation of a plan of reorganization,
does not provide a debtor or a resulting trust with ongoing
immunity from the operation of federal law as it might evolve
over time. Midlantic Nat'l Bank v. New Jersey Dep't of Envtl.
Protection, 474 U.S. 494, 502 (1986). See NLRB v. Bildisco &
Bildisco, 465 U.S. 513, 534 (1984) (bankrupt debtor not
relieved of labor law obligations); In re Baker & Drake,
Inc., 35 F.3d 1348, 1353-55 (9th Cir. 1994) (reorganization
plan does not immunize debtor from state law on ongoing
basis); see also City & County of San Francisco v. PG & E
Corp., 2006 WL 44315, *9 (9th Cir. Jan. 10. 2006)
(governmental regulatory actions are exempt from bankruptcy
court jurisdiction).
This principle is particularly salient with respect to
bankruptcy trusts, which are themselves the specialized
creatures of the federal Bankruptcy Code. Having responded to
the asbestos litigation crisis by creating such trusts in
1994, Congress is not in any way disabled from taking further
legislative steps toward reform a decade later. Cf. Dames
& Moore v. Regan, 453 U.S. 654, 674 n.6 (1981)
(President's action in nullifying government-created
attachments of Iranian assets pursuant to hostage release
agreement did not effect a taking of property in violation
of Fifth Amendment).
Bankruptcy trusts are subject to the longstanding rule that
``[p]rospective relief under
[[Page S949]]
a continuing decree remains subject to alteration due to
changes in the underlying law.'' Miller v. French, 530 U.S.
327, 344 (2000). ``The provision of prospective relief is
subject to the continuing supervisory jurisdiction of the
court, and therefore may be altered according to subsequent
changes in the law.'' Id. at 347.
Otherise, the bankruptcy system would create a whole
constellation of black holes in the fabric of the U.S. Code.
To avoid such profound disruption of innumerable federal
statutory regimes--from product liability reforms to
telecommunications auctions, from energy conservation
legislation to coal safety laws--courts have routinely
applied statutory changes to debtors in ongoing
reorganization plans, even post-confirmation, and even when
the effect has been to leave the estate without property that
private parties expect to receive. For example, the 1996
amendment to 28 U.S.C. Sec. 1930(a)(6), governing the
imposition of quarterly fees for the United States Trustee in
certain Chapter 11 bankruptcy reorganizations, has been
repeatedly applied even to debtors in confirmed
reorganization plans that had made no provision for the
payment of such fees.
In exactly the same way, S. 82 represents an intervening
change in federal law that is neutral in design and general
in application and accordingly must be accommodated
prospectively by bankruptcy trusts. If bankruptcy trusts won
some special exemption or immunity on a prospective basis
from intervening changes in federal law in relation to
asbestos liability, there would be no field within the broad
reach of Congress' legislative power that would not be
compromised by the unpredictable appearance of a potentially
limitless number of financially crippling gaps.
An order establishing a bankruptcy trust hardly resembles a
final judgment for money damages, of the kind that creates
``vested'' rights. Bankruptcy trusts are ongoing
administrative entities created for the processing and
payment of claims. They typically pay claims at a small
fraction of their face value, and those rates may change
overtime. For example, the Manville Trust is paying out
claims at approximately 5% of their face value. In fact, the
Supreme Court has squarely rejected any analogy between
bankruptcy orders and final judgments for money damages. In
Tennessee Student Assistance Corp. v. Hood, 541 U.S. 440
(2004), the Court held that, precisely because bankruptcy
orders are completely unlike judgments for money damages, a
confirmation order can bind a nonconsenting state under the
Eleventh Amendment, even if the state does not participate in
the bankruptcy process. The Court used much the same
reasoning in Central Virginia Community College v. Katz, 2006
WL 151985 (U.S. Jan. 23, 2006), to hold that states are
subject to in rem bankruptcy proceedings to recover
preferential transfers.
Finally, any ``takings'' claim by bankruptcy trusts would
be ill-founded because any assets they hold are uniquely
dedicated to the payment of asbestos-related claims. Yet S.
852 would eliminate the trusts' liability in that regard. It
is difficult to understand why the trusts would have a
reasonable expectation of retaining property in the situation
where their pertinent liabilities have been eliminated. See
Keystone Bituminous Coal Ass'n v. DeBenedictis. 480 U.S. 470,
488 (1987) (noting that ``reciprocity of advantage'' ``has
been recognized as a justification of various laws'' to
defeat takings claims) (quoting Pennsylvania Coal Co. v.
Mahon, 260 U.S. 393, 415 (1922) (Holmes, J.); Penn Central
Transportation Co. v. New York City, 438 U.S. 104, 140 (1978)
(no compensation due where there is a ``reciprocity of
advantage'').
For all these reasons, I adhere to my conclusion that S.
852 falls well within Congress' constitutional authority to
enact.
Sincerely,
Laurence H. Tribe.
____
Sidley Austin LLP,
Washington, DC, February 7, 2006.
Re S. 852 Fairness in Asbestos Injury Resolution Act.
Hon. Arlen Specter,
Chairman, U.S. Senate, Committee on the Judiciary, Dirksen
Senate Office Building, Washington, DC.
Dear Senator Specter: On April 28, 2005, I submitted a
letter explaining my views that S. 852's requirement that the
assets of asbestos bankruptcy trusts be transferred to the
national compensation fund was fully constitutional. You have
asked whether my views have changed in the interim, and also
how I would respond to the points raised by former Senator
Nickles in his recent editorial, Let Existing Trusts Opt Out
Of Asbestos Plan (Feb. 1, 2006), available at http://
thehill.com/thehill/export/TheHill/Comment/OpEd/
201006_oped.htl (attached as an addendum to this letter
(``Add.'')).
My views have not changed in the interim. As more fully set
forth in my letter of April 28, 2005, which responded to
arguments raised by Theodore B. Olson, there are multiple
reasons why S. 852 presents no constitutional difficulties.
Asbestos trusts created under section 524(g) of the
Bankruptcy Code, 11 U.S.C. Sec. 524(g), even when they assume
the form of state law trusts, are prospective federal
judicial remedies authorized and defined by Congress to
administer the ongoing payment of asbestos-related injury
claims, present and future. They are claims-paying mechanisms
subject to the ongoing superintendence of the federal court
during the pendency of the bankruptcy case, as the terms of
confirmation orders and reorganization plans creating
asbestos trusts generally reflect. See Findley v. Blinken (In
re Joint E. & S. Dists. Asbestos Litig.), 982 F.2d 721, 750
(2d Cir. 1992) (noting that the Johns-MansviUe Trust, after
which section 524(g) trusts were modeled, ``is not an
ordinary private undertaking of a settlor to carry out
private preferences. It is the mechanism established under
the auspices of the Bankruptcy Court to implement a plan of
reorganization. The Bankruptcy Court has continuing
responsibilities to satisfy itself that the Plan is being
properly implemented''). There are no separation of powers
concerns when Congress modifies the law applicable to such
trusts. As the Supreme Court has repeatedly declared,
``[p]rospective relief under a continuing, executory decree
remains subject to alteration due to changes in the
underlying law.'' Miller v. French, 530 U.S. 327, 344 (2000).
A bankruptcy confirmation order itself is not kindred to a
final and unappealable judgment for damages in federal court;
moreover, to the extent other aspects of a confirmation order
may be deemed to create some vested rights, there is
certainly no finality in a prospective claims-paying
mechanism. See United States Tr. v. CF & I Fabricators of
Utah, Inc. (In re CF & I Fabricators of Utah, Inc.),
150F.3d 1233, 1239 (10th Cir. 1998); Hillis Motors, Inc.
v. Hawaii Auto. Dealers' Ass'n, 997 F.2d. 581, 587 n.11
(9th Cir. 1993); Findley v. Trustees of the Manville
Personal Injury Settlement Trust (In re Joint E. & S.
Dists. Asbestos Litig.), 237 F. Supp. 2d 297, 316-17
(B.D.N.Y. 2002). Just like any other prospective remedial
decree, the trust is subject to the continuing
jurisdiction of the federal district court, and thus
subject to the power of Congress to change the governing
law that the court will apply in exercising that
jurisdiction.
Furthermore, any property rights arising from the trusts
are contractual in nature, United States Tr. v. Craige (In re
Salina Speedway, Inc.), 210 B.R. 851, 855 (10th Cir. B.A.P.
1997), and the law is well established that ``[c]ontracts,
however expressed, cannot fetter the constitutional authority
of the Congress.'' Norman v. Baltimore & Ohio R.R., 294, U.S.
240, 307-08 (1935). For all the foregoing reasons, nothing in
the decrees creating asbestos trusts under section 524(g)
create property rights that would be subject to a federal
takings analysis.
Finally, the only ``property right'' that an asbestos
plaintiff can colorably claim is the right to file a claim
with the trust and to prove that his injury meets the
criteria for compensation; no individual beneficiary of the
trust with an unliquidated claim has a property right in the
trust assets themselves. In essence, a bankruptcy court
creating a section 524(g) trust converts the plaintiff's
claim against the debtor under state tort law into a claim
against the trust. While a claim for relief is a species of
property right, it is not a vested right that entitles the
plaintiff to compensation under the Takings Clause if
abrogated. Indeed, if the law were otherwise, Congress could
not pass legislation preempting accrued state or federal law
claims without federal takings liability. That is not the
rule; rather `` `a legal claim affords no definite or
enforceable property right until reduced to final judgment.'
'' Arbour v. Jenkins, 903 F.2d 416, 420 (6th Cir. 1990)
(quoting Sowell v. Am. Cyanamid Co., 888 F.2d 802, 805 (11th
Cir. 1989)); see also, e.g, Hammond v. United States, 786
F.2d 812 (1st Cir. 1986) (no vested right ``until a final,
unreviewable judgment is obtained''). Finally. as more fully
reviewed in my April 28, 2005 letter, even if all these
hurdles could be overcome, asbestos claimants would have no
right of recovery under regulatory takings analysis.
Former Senator Nickles' editorial lacks force because it
does not recognize these legal principles. Senator Nickles
characterizes the bankruptcy court orders as ``final court
judgments approving reorganization plans that resolved
asbestos claims against debtor companies].'' Add. 1. However,
as noted above, bankruptcy reorganization plans (and
especially settlement trusts) are subject to the continuing
jurisdiction of the bankruptcy court and are not final in the
constitutional sense; they do not limit the power of Congress
to change governing law. Nor do the confirmation orders
themselves ``resolve claims'' against the debtor; instead,
they crate a new prospective remedial mechanism and new form
of claim that must be proven in order to secure payment.
Beneficiaries with the right to file a claim against federal
asbestos trusts are not ``entitled to timely compensation
from those trusts,'' and they have no greater property right
(and no more ``certainty and security'' against abrogation by
Congress in the public interest) than any other asbestos
plaintiff. Add. 1, 2. Senator Nickles asserts that the
transfer of trust assets is an unconstitutional ``taking of
trust beneficiaries' property'' without just compensation,
Add. 2, but that claim cannot withstand legal analysis.
Senator Nickles is absolutely right that Congress must be
vigilant against legislation that results in the
unconstitutional taking of vested property rights; however,
those doctrines are not implicated here. In essence, S. 852
requires all asbestos defendants to contribute substantial
assets to a national fund to create a uniform federal
administrative remedy; the requirement that the assets of
asbestos trusts (which were originally the assets of the
debtor) be transferred to the national fund serves the same
end of marshaling defendant assets for the
[[Page S950]]
benefit of injured parties. Not only are no vested property
rights of trust claimants ``taken'' under the Fifth
Amendment, but there is no inequity in having plaintiffs all
treated the same, regardless of whether the defendant who
allegedly injured them happened to have sought bankruptcy
protection. S. 852's requirement that the assets of asbestos
trusts be transferred to the national fund is not only
perfectly legal, but it is also highly just and equitable.
Sincerely,
Carter G. Phillips.
Mr. HATCH. I wish to close by taking a brief moment to address the
budgetary issues. Earlier I spoke to the private versus public funding
issue. Some of my colleagues believe the taxpayer is on the hook for
this bill and I wish to help explain how that is not the case. These
are serious concerns, but the FAIR Act does not use Federal funds. It
is privately funded--lock, stock, and barrel.
Those of you who might be watching at home might be wondering why
some people are worrying about the FAIR Act, if it is privately funded,
and in the spirit that underlies this bill I will try to explain it. To
my knowledge, there is only one way by which the FAIR Act may touch
Federal funds and that is through the borrowing mechanism. The
administrator created by this act may borrow such funds as are
necessary to maintain the liquidity of the fund, but--and this is a big
``but''--the administrator may not borrow amounts which exceed the
fund's ability to repay. So the bottom line is that American taxpayers
do not pay for this fund. The defendant companies and insurer
participants do.
At the end of the day, asbestos victims cannot wait any longer.
Veterans cannot wait any longer. The overburdened legal system cannot
wait any longer. The only group that does not mind waiting consists
mainly of 12 law firms filled with asbestos lawyers who do not mind
exploiting a broken system because of the billions of dollars that are
in it for them. You can hardly blame them. It is a plum tree waiting to
be picked. They are slow walking this bill. I have to implore my
colleagues to resist these efforts.
Before I conclude my remarks, I wish to speak briefly to Senator
Cornyn's medical criteria amendment. I agree with my colleague from
Texas that the FAIR Act is not a perfect bill. I think Senator Specter
has made that clear. Others have made it clear. We have done the best
we can through the Judiciary Committee. This is the first step in a
number of steps that simply have to be taken. I have several concerns
of my own about this bill, and I suppose most everybody does. But I
have to say, as much as I agree in principle with Senator Cornyn, I am
not sure his approach does the trick.
I might add, my colleague from Utah raises the point that there are
some companies that will go bankrupt if we pass this bill. That may be
the case. I will do everything in my power through the whole process
here to make sure that doesn't happen, and I believe Senator Specter is
dedicated to doing everything in his power to make sure that doesn't
happen. I personally believe Senator Leahy will do everything in his
power to make sure that doesn't happen. I believe there are 435 Members
of the House who will do everything in their power to make sure that
doesn't happen. I believe any conference committee that comes up is
going to make sure that doesn't happen. I wouldn't tolerate that, in
the end.
But we have to have a vehicle. We have to have a bill. If we do not
have a bill, we have nothing. And, we have a future prospect of a
number of very fine companies--with the loss of hundreds of thousands
of more jobs--going into bankruptcy at a cost to our economy that may
be overwhelming after a while--all because of a runaway tort system
that basically is out of whack.
In my opinion, the medical criteria approach fails to help too many
sick and injured people. It does nothing for the mesothelioma victims.
These are the ones who deserve compensation. First and foremost, the
reason we basically started this bill, was to help those who are going
to die because they have mesothelioma. They are going to die. Once they
are diagnosed, it is just a matter of months, and their families are
left with nothing. They didn't cause this problem and they are the ones
who deserve compensation. Yet they are the ones who, if we do nothing,
are left out while others--hundreds of thousands--who are not sick at
all are going to get rewards. This is wrong.
In my opinion, as I say, the medical criteria approach fails to help
too many sick and injured people. Let me give another illustration. The
veterans, for example, have very few places to turn under a medical
criteria bill. We just had 10 veterans organizations on Capitol Hill
holding a press conference this week--I was there with them--making it
clear that of all people who deserve to be compensated, they do. This
medical criteria approach does nothing for them. This is the main
reason why we switched to the trust fund approach; so we can take care
of the truly sick--those who really have difficulties.
But, as I do with every amendment, I am going to give the medical
criteria approach a very hard look as we go through this process. In an
ideal world we could run with my colleague's idea. But, unfortunately,
the realities of the asbestos crisis prevent a medical-criteria-only
solution. There may be, down the line, a way of doing a medical
criteria bill that will take care of people who truly deserve to be
taken care of. This amendment is not that. But I am willing to work
with my colleague from Texas and see what we can do to come up with
something that will work as well, if not better, than what we have
here. But right now this is it.
This is a bill that is well thought out in spite of the difficulties
with it. But I submit that any bill this size is going to have some
difficulties.
As I say, this is step No. 1 in what always has been a legislative
process that does not end here. It starts here. If we do not start it,
we don't have a chance of correcting these tremendous ills to our
society that could swamp us. So it is very important that we support
Senator Specter and Senator Leahy and get this bill out of the Senate.
If we don't, I have to say I believe this is probably the last chance
to resolve issues that deserve to be resolved, and to do justice
instead of continue the injustices that are currently resulting from
the current out-of-control asbestos tort system.
I commend my colleagues for their steadfastness in working on this
very difficult, complex set of issues. It is a difficult problem for
us. There are very sincere and good people on both sides of this issue.
There are very sincere and good people on both sides of this aisle. I
have tremendous respect for my colleagues.
On the other hand, for those who are voting against the bill because
the trial lawyers are their largest hard-money supporters, I don't
think that is a good enough reason. I admit it is a powerful reason,
but not if you are interested in the country, not if you are interested
in our economy, not if you are interested in the people who have
suffered from asbestosis and from all of the derivatives of asbestosis,
not if you are interested in helping these mesothelioma victims who
deserve help, helping the veterans who did nothing to cause these
problems but are left high and dry.
This is an effort by the leadership of the Judiciary Committee, led
by Senator Specter and Senator Leahy, to do justice. It is an effort to
comply with at least three requests by the U.S. Supreme Court:
Congress, please do something about this awful issue because we can't.
They can't legislate from the bench to resolve this issue. Some
people think individual States can resolve this issue. That might be
so, if you had absolutely honest judges and absolutely nonpartisan
judges down the line, and if they were willing to work hard, and if
every State would do it. But only a few are going to. Only a few are
going to pass laws that possibly will help in this area. It is up to us
to get this done.
I hope our colleagues who want to do something right here will
realize this is step one. You have to go ahead with it. Good people of
good values, well-intentioned people are going to be able, hopefully,
in the end to get this so it works; so no company is going to be hurt
by it, but the economy as a whole will be helped by it. But above all,
people who deserve compensation will receive compensation with a
minimum of charges that reduce that compensation, compared to the
almost 60 percent attorneys' fees and transaction costs it is costing
us today.
[[Page S951]]
I yield the floor.
The PRESIDING OFFICER. The Senator from Pennsylvania.
Mr. SPECTER. Mr. President, we have been trying to set a vote here on
the amendment offered by Senator Cornyn since about 2, 2:15. I had
hoped to vote at 3, and then I had hoped to vote at 3:30. The Senator
from Illinois advised me a few moments ago that his preference would be
to vote at 4:15. We are willing to accommodate that preference unless
there is some inclination to vote sooner than 4:15.
Therefore, I ask unanimous consent that we set the vote on the Cornyn
amendment for 4:15, with the time equally divided between now and then.
The PRESIDING OFFICER. The Democratic leader.
Mr. REID. Reserving the right to object, is this a vote on the Cornyn
amendment? My understanding was there was going to be a tabling motion.
If it is on the Cornyn amendment, I don't agree, but if it is on the
tabling motion, I am willing to agree to 4:15. But if it is on or in
relation, I am not willing to do that at this time.
The PRESIDING OFFICER. Is there objection?
Mr. SPECTER. I withdraw my request. I suggest the absence of a
quorum.
The PRESIDING OFFICER. The request is withdrawn. The clerk will call
the roll.
The legislative clerk proceeded to call the roll.
Mr. SPECTER. Mr. President, I ask unanimous consent that the order
for the quorum call be dispensed with.
The PRESIDING OFFICER. Without objection, it is so ordered.
Mr. SPECTER. Mr. President, after lots of discussion, as usual around
here, I ask unanimous consent that at 4:45 I be recognized for a motion
to table Cornyn amendment No. 2748, and that the time between now and
then be equally divided between the two managers or their designees.
The PRESIDING OFFICER. Is there objection?
Mr. REID. Mr. President, reserving the right to object, the manager
on this side of the aisle is Senator Durbin. I wonder if the
distinguished Senator from Pennsylvania would change the unanimous
consent request so the time would be divided between Senator Durbin and
Senator Specter.
Mr. SPECTER. I agree.
Mr. REID. Mr. President, I have a very brief statement on an
unrelated matter. Could I be recognized?
The PRESIDING OFFICER. Is there objection to the request as modified?
Mr. CORNYN. Mr. President, reserving the right to object, I want to
make sure I have an opportunity to address the debate, and under the
unanimous consent request there is ample opportunity given to me.
Mr. SPECTER. Mr. President, the way the sides are aligned here, we
need a scorecard to figure out who will give Senator Cornyn time. I
think the manager in favor of Senator Cornyn's amendment would give him
time, and that turns out to be Senator Durbin.
The PRESIDING OFFICER. Is there objection to the request as modified?
Without objection, it is so ordered.
Who yields time?
Mr. DURBIN. Mr. President, I hope to restate the unanimous consent
request which was agreed to accurately. It is my understanding that at
4:45 we will have a vote on the motion to table the pending amendment
by Senator Cornyn of Texas, and that the time be equally divided
between now and then, which would be 60 minutes, 30 minutes to each
side; that I am controlling the 30 minutes in opposition to the motion
to table. I will yield from that amount 15 minutes to Senator Cornyn to
speak during the same period. He can use that time, even if I don't
have to give him the floor at the moment.
We have to understand what we are considering. I am sure people who
are watching this debate wonder why we take so much time going into
quorum calls and talking among ourselves trying to come to some
agreement about what we are going to do. That is the way the Senate
operates. We operate by unanimous consent. Everyone has to agree. Think
about that--100 different Senators coming to an agreement. However, we
have managed, at least to the point of bringing this to a vote.
The vote is important because the bill before the Senate right now is
a bill about asbestos. Everyone knows asbestos is a lethal substance
which, if inhaled, can kill you. It can cause your lungs to stop
functioning, you can start to suffocate, and you can develop something
like lung cancer called mesothelioma and die. People all across
America, since we started using asbestos in products, have been exposed
to it. Some are fortunate and they do not get sick. Others, with very
minor exposure inhaling these asbestos fibers, have set off little
timebombs in their lungs, and they never know when they will detonate.
Victims can go for 10, 20, 30, 40 years after exposure and nothing
happens; then something terrible happens. How do they know it is
asbestos that causes it? Some of these conditions are only related to
asbestos. Mesothelioma is one of them.
People who have been exposed to asbestos over the years have gone to
court and said: The companies that exposed me to products that harmed
me should be held accountable. Some courts and some juries have said,
yes, they should pay; others have said, no, they should not pay. But
what is the nature of our system of justice? You go to a court for your
day in court, you tell them how you were injured, and you let a judge
or jury of your neighbors and peers decide your fate. It happens every
day across America in thousands and thousands of courtrooms.
Now comes this bill, Senate bill 852, which wants to change the way
people across America will be able to recover for their injuries from
asbestos. The first thing it does is to eliminate your option to go to
court. As an American, you could be injured from exposure to some toxic
chemical and go to court, have your day in court, and let the court
decide. But if you have been exposed to this substance, to asbestos, if
this law is passed, you will no longer be able to go to court.
What happens to you? This bill creates a brand new approach--
replacing the courtrooms of America with a trust fund created by this
bill, administered by an agency which does not exist at this moment,
which will handle hundreds of thousands of people who have been exposed
to asbestos.
Some Members come to the floor skeptical that we can change a
judicial system in America and eliminate access to court to hundreds of
thousands of people and get it right. If we do not get it right, the
losers are not going to be embarrassed Senators; the losers are going
to be victims across America, people whose lives have been changed and
in some cases ended because of asbestos.
I don't know of a single person in America who said: Listen, I know
asbestos will kill me; let me take a whiff of it. Not one. Virtually
all the victims and families I have run into were unsuspecting people--
workers on the job; a mechanic putting in an asbestos brake lining;
somebody trying to put in a heating duct in a home and using an
asbestos substance; asbestos shingles on your roof; asbestos tile on
the floor--grinding it, cutting it, powder flying in every direction.
Who knew? Who had any idea what was going on? So these victims,
innocent victims, are the ones who will be affected by this bill.
It is a large bill, a bill of 393 pages. It should be because it is
changing the basic system of justice in America. But this morning, this
bill has become a dead letter. We are no longer considering that bill.
We have a new bill. We were handed this bill this morning. It is 392
pages. It includes some 40 significant changes to the bill we had on
our desks when we came to work this morning. We knew it was coming, we
knew there would be a change, but these changes are significant.
Many Members believe that before we start enacting laws that are
going to impact millions of victims across America, before we close
down the courtrooms of America and say to people, what you used to
assume was your right as an American citizen is no longer your right,
we ought to be careful and we ought to take the time to get it right.
Some of the things that have been filed with this bill reflect the
fact that even those preparing it really do not have it quite clear in
their minds how it is going to work.
One of the amendments filed this morning, amendment 2747 by the
chairman of the Judiciary Committee--I am
[[Page S952]]
certain this was inadvertent--inadvertently included the following on
lines 7 through 9:
(Note: I recognize that this may not be the most adequate
indicator of insurance matching liabilities--however, it is a
political reality that must be addressed.)
Does that sound like a sentence out of a law? I am sure it is not. It
is a sentence from a staffer who, in preparing this language, notified
someone that they were not sure what they were writing would achieve
the goal they want to achieve. That happens all the time. I expect my
staff to be candid with me when they are preparing a law. But it tells
something. By inadvertently including this staff note with this
amendment, it is clear that the people writing this bill are not sure
what is in it. They are not sure what the impact will be.
What is driving this debate? Why are we so hellbent on passing this
legislation at this moment? There are many good reasons, and there are
many real reasons. One of the real reasons is that for many of the
major corporations in America, this bill is a windfall.
This morning, Senator Bennett, a Republican from Utah, brought a
chart to the Chamber and showed 10 of the major corporations in
America, corporations that could be taken to court today because people
were exposed to their products and have asbestos disease. He calculated
how much they would pay into this trust fund under this bill against
what they have said they would have to pay if they went to court. Those
10 corporations will save, with this bill, $20 billion. Do you think
they want to see this bill passed? Why, of course they do. They have an
economic interest in it. But the obvious question is: If they do not
pay the $20 billion to victims, who will? Other companies?
Senator Bennett brought to the Senate another chart of companies that
have never been sued for asbestos, never been held liable. Those
companies will end up paying into this fund even though they never,
ever have been sued successfully.
There is a basic unfairness here. There is a transfer of wealth in
this bill from some of the largest corporations in America and a burden
to smaller companies, not to mention that at the heart of this issue
are hundreds of thousands, perhaps millions, of asbestos victims.
Now comes Senator Cornyn of Texas. He says: Consider another
approach. Consider an approach that will look to what the States are
currently doing to deal with this. Are there ways to change asbestos
lawsuits so that victims get more, so that people are treated fairly,
so that those who are trying to rip off the system on either side are
not advantaged? And he turns to State laws. There have been several
State laws, including Texas, Florida, and Ohio.
He says in his amendment: Let's establish medical criteria so that if
you want to go to court, we know you are truly sick. Perhaps you cannot
go shopping around for the friendliest court in your State or the
Nation. He goes through a variety of different scenarios. All of them
are worthy of debate.
The good thing about Senator Cornyn's amendment is it is based on the
fundamental American right to have your day in court. Senator Cornyn is
trying to achieve a procedural change in the courts of America which
will not extinguish a basic American right to have your day in court.
I believe he filed the amendment early this afternoon, maybe late
this morning. I am not certain. And now the other side is saying: That
is it, we do not want to talk about that amendment anymore, let's get
rid of it. They want to table that amendment.
As it is currently written, I could not support the amendment by the
Senator from Texas, but I will stand with him to keep this amendment on
the floor so we can try to find a bipartisan solution which does not
have such great damage to our judicial system and to the people who
rely on it. There will have to be significant changes in the Cornyn
amendment before I would support it. But he has said to me that he is
willing to sit down on a bipartisan basis in good faith to work out
those differences, and he tells me there is significant support on the
Republican side of the aisle for that effort.
Wouldn't that be the best outcome--an outcome that is bipartisan, one
which tries to work out differences between both sides, keeping in mind
the innocent victims, tries to make this system a little fairer, not
basically abandoning our judicial system, which this new bill, new
version of the bill we have been handed, would do? That is a sensible
approach.
I am going to support the efforts of Senator Cornyn at this moment to
resist a motion to table, with the understanding that before I will
make any commitment to vote on his final amendment, we will have to sit
down and try to work out our differences. It is not too much to ask.
Do you know how long this program is supposed to affect America? For
50 years. Is it worth a few hours, maybe even a day, to get it right? I
believe it is.
I yield the floor.
The PRESIDING OFFICER. The Senator from Texas.
Mr. CORNYN. Mr. President, I believe this is one of those situations
where there is broad bipartisan consensus that we need to find a
solution to this national crisis which not only affects people who are
sick with asbestos-related diseases, including cancers, but also the
companies that are in bankruptcy because they have been put underwater
by the huge volume of claims from people who are not yet sick but who
are worried the statute of limitations will run and bar them from
bringing their claims in the future.
I am proud of the work the Judiciary Committee has done under Senator
Specter's leadership to try to bring us this far. On many of the
differences we have had, he has ably negotiated a resolution. Where we
are today is much better than where we were a year ago.
There was a strategic decision made, as there had to be, whether to
go with the trust fund approach or with a medical criteria approach.
Frankly, the trust fund approach left the station, and everyone put
their hopes and their work and effort into that approach. I am sorry to
say that notwithstanding the hard work and effort which has gone into
the bill, I still believe the trust fund is fundamentally flawed for
reasons I have already talked about.
There are problems with regard to the allocation; that is, the long
arm of Uncle Sam will reach out and send you a bill for a lot of money
to pay into this fund. We have been told by a number of companies that
in order to pay that bill, they will simply have to shut their doors
and go out of business, put their employees on the streets, possibly
causing pension funds to be jeopardized. People who have come to rely
on the solvency of those companies and their ability to pay their
retirees the benefits they have agreed to, we are told they would be
seriously jeopardized by this trust fund as currently written.
Then there is the issue of, how do we know how much money should go
into the trust fund? That has been a subject of a lot of negotiations,
and $140 billion is where we are today. As we have heard before, there
is a wild variation on estimates by very smart people as to how much
the claims for this fund will total, ranging from $120 billion to $695
billion, which is the high number. Just having a predictable bill we
can vote for with some confidence that we believe will actually work as
intended is lacking.
Of course, there is the huge bureaucracy that will be created within
the Department of Labor to administer this fund. We have no idea what
that will look like, but it will be a new addition to the bureaucracy
in Washington, DC. I can tell you, the last thing I want to do, coming
from my State to the Senate, is to grow the size of the bureaucracy in
Washington, DC, unless there is no other option. I do not want to do
that.
Then there is the issue of the medical criteria, where here again the
chairman had to negotiate carefully in order to keep his votes on the
committee. But it is my contention that the medical criteria in the
trust fund are way too loose--authorizing the payment of substantial
funds under the claim to people who are not demonstrably sick from
asbestos-related disease, thus further jeopardizing the solvency of the
fund.
In response to my colleague, Senator Hatch of Utah, who expressed
concern for the veterans who could benefit
[[Page S953]]
under the fund but who would not directly, anyway, benefit under a
medical criteria approach, I think it would be a cruel joke--a cruel
joke--for our veterans, if we built their expectations up, that they
were going to receive benefits under the trust fund, only to have it
explode or go bankrupt in a year or two and dash those hopes to the
ground.
So I am as concerned as anyone is about our veterans. But I certainly
do not want to give anyone unrealistic hope or expectation that this is
going to be a panacea, because of the concerns I have raised.
I would agree with the Democratic whip that we have only today seen a
substitute for the underlying bill filed which totals almost 400 pages.
While a number of us have been working on asbestos legislation for a
long time, neither I nor my staff, I am confident, had a chance to read
each and every one of those 393 pages, I believe it was, to determine
what is in it and to determine whether there are amendments we need to
file in response. Likewise, I would say, as to the 50-page bill we
filed this morning, the amendment that contains the medical criteria
approach, people are only now beginning to understand what their
choices are.
Basically, what this amendment presents is a choice, either for a
trust fund or an alternative medical criteria bill or, third, no bill
at all, a continuation of the current crisis, about which I think we
have a bipartisan consensus that it is a scandal and needs to be
addressed.
So I believe the amendment does present a good alternative. But I
would like to have a chance for my colleagues to look at it further. We
have had a number of good discussions across the aisle. I have talked
to a number of colleagues on the other side of the aisle, and they
said, well, they would like to keep the amendment alive. They want to
vote against the motion to table, but they are not yet ready to vote
for the amendment because they may want to try to negotiate and work
out some minor differences so they can support it. I would like to have
the opportunity to do that with them.
I would, by the way, point out, I guess as further evidence of what I
am talking about--Senators reading the bill, coming to understand now
they are not left with either the trust fund or nothing at all, that
they have a third choice with the medical criteria bill--we have had
two additional Senators come forward and ask to cosponsor it.
Mr. President, I ask unanimous consent that Senator Saxby Chambliss
and Senator Mike Enzi be added as cosponsors to the Cornyn amendment.
The PRESIDING OFFICER (Mr. CHAFEE). Without objection, it is so
ordered.
Mr. CORNYN. Mr. President, I believe, given adequate time, there will
be other Senators who will be interested in this alternative approach.
Here again, I believe we are all committed to trying to find a
solution. I hope we are because we know the status quo is a scandal.
Here again, it is with great respect and admiration for the long and
arduous effort put into this by the chairman that I hesitated even to
offer this alternative. But I do believe that based on the merits,
based on the choice it provides to the Members of the Senate, and based
upon the need to have a little bit more time for Members of the Senate
to understand what is in the amendment and to negotiate perhaps
agreement so we can come back with some modification and an up-or-down
vote on that, that I urge my colleagues to vote against the motion to
table, both on the merits and based on the need for more time for
deliberation and adequate consideration.
I yield the floor and retain the remainder of my time.
The PRESIDING OFFICER. The Senator from Pennsylvania.
Mr. SPECTER. Mr. President, when the Senator from Texas says the
status quo is a scandal, he is right. But the medical criteria bill is
a ``scandal lite.'' It is a light scandal. You hear about Coke and Coke
Lite. Well, this bill is a scandal in its own right, not quite as big a
scandal but a scandal nonetheless.
The only change which this medical criteria bill makes that is an
improvement over the present system is that it does not allow
collection by people who have been exposed but who are not yet sick.
But this medical criteria bill does not go to the heart of the problem;
that is, the thousands of people suffering deadly and serious injuries
who have no one to sue.
This bill is directed to protect the veterans of America who have
been exposed to asbestos in a variety of contexts, sometimes during
work at shipyards, sometimes during work at other governmental
facilities, but they have no one to sue. This bill is directed to
provide compensation to employees of some 77 companies which have gone
bankrupt, where they have no one to sue because the company is in
default and the company is bankrupt.
This bill, similarly, does not answer the grave problem of the
economy of the United States, with companies continuing to go bankrupt
because litigation continues. You still have the costs of going to
court--the costs of filing papers, the costs of depositions, discovery,
interrogatories, taking the case to trial.
And then you continue to have the lawyers taking the lion's share of
the compensation. The fact is that only 42 cents of every dollar spent
on asbestos litigation goes to the victims. The fact is, surprisingly,
more money goes to defense costs--31 cents of every dollar--and 27
cents of every dollar goes to plaintiffs' attorneys. That is a
statistic compiled by the reliable RAND Corporation.
So the medical criteria bill does nothing at all to deal with the
real problems with regard to asbestos litigation but is designed, pure
and simple, to defeat the trust fund concept which is on the floor.
When the Senator from Illinois and the Senator from Nevada argue
strenuously against the trust fund proposal, they do not want this
bill. It is window dressing and a red herring to cite the companies
which are going to save money because the thrust of the bill is to make
an equitable allocation, which we think we do here. There has never
been any real attack on that, except this wild talk about secrecy,
which is unfounded. And you continue to have the problem of companies
going bankrupt and people not being able to collect because there is no
one from whom to collect.
When the Senator from Illinois and the Senator from Texas complain
about the new bill, there again, it is something they know better. They
have the original bill. We had managers' amendments totaling some 47.
And as a tactical matter, the Senator from Illinois and the Senator
from Nevada said they would put us through every one of these
amendments individually. The procedural way to deal with it was to put
them all in another bill called the substitute bill. But they know what
is involved. They know what bill is involved. And the substance is
before them. So you have one charade after another.
And you have a system which is scandalous. Nobody who has addressed
this problem disagrees with the nature of the problem. Scandal is a
good characterization for it. Scandal is an equally good
characterization for the medical criteria bill.
I yield the floor.
The PRESIDING OFFICER. The Senator from Alabama.
Mr. SESSIONS. Mr. President, I respect my colleague from Texas and
those others who believe this amendment will be a preferable way to
deal with the asbestos morass we now have. I, however, based on my best
judgment, cannot agree. It perhaps will make some businesses happy and
some plaintiffs' lawyers happy, but the one group I clearly think will
not be as well treated and will not have the same guarantees and
protections will be the victims.
We are not here to represent any one group. We are here to look at a
litigation problem that has gone wild. It has lost control. It is not
operating properly. I think the trust fund concept is the only way to
make this thing have any sanity about it.
As I understand it, the medical criteria will help a great deal in
making sure that claims by people who are not sick are not maintained
in court, that they can be dismissed short of trial. That would be a
tremendous benefit. I will not dispute that. It would certainly reduce
those kinds of lawsuits.
However, it would have no coherence. It seems to me that two people
could file a lawsuit, and one could draw a favorable judge or favorable
jury and win
[[Page S954]]
$50 million and the other one, I suppose, could win nothing or $1
million. I do not know that it would represent any predictability for
the defendant companies so they could show on their balance sheets
precisely what they are going to be looking at in the future as they go
forward.
It also would maintain the current litigation method of handling the
lawsuits. That, to me, is where we have had the most difficulties
because 60 percent of the money that is being paid out is being eaten
up by lawyers. So if you have lesser numbers of lawsuits but they are
bigger and will be more intensely litigated, the defendant companies
have to hire expensive attorneys to defend themselves, and the
plaintiffs' attorneys, facing top defense attorneys, will charge their
normal high fees, as the case may be, and you end up back where we are,
as the RAND Corporation said, with 60 percent--58 percent--of the money
being paid out in expenses, which is what I would like to see avoided.
The attractiveness of the legislation that is before us is we take
the 60 percent that has been eaten up and we take probably 50 percent
of that and allow it to go to the victims. They get it, with certainty,
in an equal amount. So if you have mesothelioma, a deadly disease,
under this system, you could file your claim, with a doctor's
certificate stating you have mesothelioma--a fairly indisputable
diagnosis--and you get $1.1 million; half of it within 30 days and I
believe the other half within 6 months before you die.
As I noted before, why have we had so many mesothelioma widows here?
It is because these lawsuits take years. I am not just saying that.
This is a fact. These cases take years, and people die of diseases or
become disabled without receiving money.
Under this bill, you will be able to get your money promptly. The
proposal, as I understand it, will not necessarily fix that. Maybe the
cases could be settled.
Again, I say to my distinguished colleague from Texas, we agree on so
much of this. I certainly will say this. His proposal would be far
better than the current system.
There is no doubt about that. The current system is absolutely
indefensible. It is to the point that it is immoral, and the Congress
has no higher responsibility than to make sure our legal system is
working effectively. It is not happening that way.
I believe the medical criteria in the base bill before us is not
tight enough, that it will still allow a large number of people to
maintain lawsuits for diseases they were going to get anyway from other
natural causes or misbehavior such as smoking. They were going to get
those diseases anyway, and they want the asbestos fund to pay for it.
When it is connected to asbestos exposure, and it can be shown
scientifically, this bill allows for that. It actually allows for
people to draw on the fund who probably shouldn't qualify for it.
I am for tightening up those criteria. I am for eliminating the
frivolous, baseless lawsuits where people are not sick, which this
Cornyn bill would do. But I do believe it would undermine one of my
highest goals in this legislation, and that is that we would be in a
position where you make a claim like you would in workers'
compensation. You have so much injury, you get so much money, and you
get it promptly. And the maximum attorney's fee would be 5 percent.
I don't see how you can limit attorney's fees if you are going to
have a long, competitive trial. The victims are going to need top-
flight attorneys, and the defendants are going to need top-flight
attorneys. The juries are going to be calling these cases. Some of them
are going to say big verdicts, and some of them are going to say little
verdicts. We will have more inconsistencies, more jackpot justice than
I would like to see.
I am reluctantly of the opinion that this would not be the best
approach. If this bill gets any worse, I would certainly see that the
suggestions of the Senator from Texas would be preferable. If this bill
were to flounder and isn't successful, I certainly would agree that his
proposal is better than the current law and would support it. Right
now, the Specter legislation is preferable.
I yield the floor.
The PRESIDING OFFICER. The Senator from Texas.
Mr. CORNYN. Mr. President, I find myself in an unusual position of
both agreeing and disagreeing with my colleague from Alabama. That
probably typifies how most of us feel about the proposed solution in
the trust fund. If my colleague from Alabama and I could sit down and
hammer out some meaningful tort reform, we would not have any trouble
doing it, if it were just he and I. I know he is concerned about the
scandal that 58 cents on the dollar for every asbestos recovery there
is goes to transaction costs, attorney's fees for the plaintiff,
attorney's fees for the defendant, court costs, and the like. And that
is not just in asbestos litigation. That is common, unfortunately, in
personal injury litigation generally. If we could get 60 votes to get
cloture on some meaningful tort reform and have an up-or-down vote, we
could be in business and address his concerns, with not only asbestos
but with our civil justice system generally. It is out of sync and
benefits too few people at the expense of the many.
My colleague from Alabama mentioned our effort to try to reduce
attorney's fees because this is, under the trust fund, a system where
an individual does not even need a lawyer to make a claim against the
fund. So we decided in committee to keep it down to 5 percent. But it
is my understanding, and my colleague can check me on this, that in the
managers' amendment, that negotiated provision on attorney's fees was
changed to further expand the recovery of attorney's fees under the
trust fund bill.
My point is that for every time the chairman, Senator Specter, tries
to address one concern, he has to address another concern that loses or
undermines support by someone else. After spending a long time trying
to come to terms with this and understand it and be constructive about
a solution, I came to the reluctant conclusion that it was futile, that
the trust fund was fatally flawed. That is why I have offered my
colleagues a choice. In addition to a choice between the trust fund and
nothing at all, I have offered them another choice, and I would like to
have a chance for more colleagues to think about it, to consider it,
and to work with us to try to make it even better. That is why I urge
my colleagues to vote no on the motion to table.
Finally, one of the other things we have not spent much time on,
there is actually a huge amount of money, hundreds of thousands of
dollars, put in the trust fund to look for new claimants. It pays for
screening of people who have not voluntarily come forward but basically
goes out and looks for more claimants, which further stresses the fund
and increases the likelihood that it will go under because of an
overwhelming number of claims that have not been taken into account in
arriving at the amount of the fund or the medical criteria for which
claims would be paid and which would be excluded.
I hope my colleagues, both on the merits and on the basis of process,
the need for more time to carefully consider our alternatives and come
up with the best possible solution, will vote no on the motion to
table.
I yield the floor and reserve the remainder of my time.
The PRESIDING OFFICER. The Senator from South Dakota.
Mr. THUNE. Mr. President, I rise in support of the Cornyn substitute
amendment to S. 852. I thank the Senator from Texas for his work on
this issue. He is someone who comes to this debate with great knowledge
of the subject matter and has modeled his legislation after what has
been a very successful model in the State of Texas.
As the Senator from Texas has noted, this is a problem that needs to
be addressed. Out-of-control asbestos litigation has become a disease
in our economy. It threatens to drive scores of companies into
bankruptcy. It diverts compensation away from legitimate victims of
asbestos. It discourages investment in companies under suit and drives
stock values down and diverts funds away from expansion and growth and
results in job loss. In short, it has become an obstacle to economic
recovery.
Few of us in this Chamber can disagree with those very basic facts.
However, I am not persuaded that creating
[[Page S955]]
a new Federal program, yet another entitlement program, one more
compensation program, is the right solution. We need to seriously
assess the wisdom of Congress's growing inclination to create more of
what are virtually uncapped entitlement funds. The problem is in the
courts. That is where the solution should be. We cannot continue to
have the Government take every litigation quagmire out of the court
system and put the problem on the back of the Federal Government and
ultimately on the backs of the taxpayers. We cannot continue to do so.
I voted to proceed to debate on this bill because this is a problem.
It needs to be solved. Indeed, Congress must act. But what is the best
solution? Should we create yet another entitlement trust fund or should
we reform the tort system by imposing reasonable medical criteria
standards in the courts?
We need to find a solution that protects both the economy and the
legal rights of those truly injured by asbestos or who will develop
asbestos-related injuries in the future. It is my belief that it would
be a mistake to establish an asbestos trust fund. I know this fund
relies on private financing. Unfortunately, this may turn out to be
only the seed money and unable, over time, to sustain the fund for very
long, creating a high risk that Congress, at some point in the future
may have to step in to keep it operating. The last thing we need is
another uncapped Government entitlement, especially with our existing
deficits.
The major problem with the trust fund is that the private funding is
capped but the potential liability is not. We have to face reality.
This fund will go insolvent. I don't believe it is a question of if; it
is a question of when. The underlying bill supposedly answered that by
putting in a sunset provision that, when the fund goes insolvent, sends
all unpaid claimants back to the tort system, the same broken tort
system that we have today. Does anybody really believe that will
happen? This Senator certainly does not.
With hundreds of thousands, perhaps millions of unpaid claimants,
would those claimants be happy about going back into a court system to
spend 3 or more years litigating a case for an award that probably
would be less than they could have received under this trust fund bill?
I don't think they will do that.
Political pressure on Congress from union and victims groups to bail
out the trust fund and sustain it would be immense. These liability
trust funds typically do not go back to the tort system. Trust funds in
general rarely ever go away, not after creating an entirely new class
of entitled people. So let's not delude ourselves.
President Reagan once said that the closest thing to immortality on
this planet is a government program. Once we create a whole new class
of entitled people, it will be very difficult to go back or in any way
sunset this program. The result would be the taxpayers being left on
the hook. That is why I support the Cornyn substitute amendment.
I ask my colleagues to seriously consider where Congress is going if
it creates such a fund. What kind of precedent is this creating and
where will this end?
There has been a dangerous inclination by Congress to rescue segments
of our economy from out-of-control litigation by simply taking claims
out of the courts and creating a Government-administered liability
trust fund. The solution should be commonsense tort reform, not to have
the Government become some gigantic claims processing and payment
agency.
The best solution, one that has no cost to the Treasury, that does
not require the creation of new Government agencies or battalions of
Government administrators and one that will have immediate positive
effect for both business and victims is a simple solution that, one,
establishes reliable and verifiable medical criteria standards in the
courts; two, tolls the statute of limitations to protect future
victims; and, three, prohibits abusive venue shopping. That is it. It
is simple. It is not loaded up with tort reform that our friends on the
other side of the aisle often object to. And importantly, many trial
lawyers who represent malignant claims of asbestos exposure have in the
past endorsed this approach.
It is time to consider a more modest solution. It may not provide the
grand, comprehensive solution that many have wished for, but it takes a
substantial bite out of the problem and is certainly better than
nothing, which is what all parties will have if we continue to pursue
the impossible.
I ask my colleagues to vote against the motion to table and to
support the Cornyn substitute amendment.
The PRESIDING OFFICER. The Senator from Texas.
Mr. CORNYN. Mr. President, I ask unanimous consent that Senator Hagel
be added as a cosponsor of the amendment.
The PRESIDING OFFICER. Without objection, it is so ordered.
Mr. CORNYN. I yield the floor and retain the remainder of my time, if
any exists.
The PRESIDING OFFICER. The Senator has no time remaining.
Mr. CORNYN. I thank the Chair.
Mr. SESSIONS. Mr. President, how much time is left?
The PRESIDING OFFICER. There is 15 minutes.
Mr. SESSIONS. Mr. President, I will yield the floor when Senator
Specter returns. I will say a couple of things. First, under this
criteria bill--which has good criteria and some very good provisions in
it--veterans are not going to be able to recover. Veterans don't have
anybody to sue, and they would be very much disadvantaged. That is why
they oppose it.
No. 2, we would still have litigation, and the reason litigation now
ceases to be wise is because the defendants are prepared to pay. It is
basically not a question so much of how they are responsible--whether
anybody is responsible for damages; they are prepared to pay, but they
want to know a predictable amount that they are paying, No. 1, and they
want to have it paid fairly.
Under this system, if you meet the illness criteria and you are able
to proceed with your litigation, one person with asbestosis, who
seriously has a disability, maybe is on oxygen--as I have known people
to be as a result of breathing asbestos--they might get $100 million,
literally. Another person may get zero. So I think we have this
aberrational way that a certain limited amount of resources would be
utilized to help people who are sick.
We are at a point now where we have created a circumstance that would
allow a fairly even workmen's compensation type distribution of it.
Secondly, it allows the litigation spasm to continue. Yes, it will take
out the bogus claims from people who are not sick and who don't need to
be in court. Those claims will be able to be removed. But they will
have large numbers of trials of those who actually are injured by
asbestos, and the lawyers on both sides have to be compensated. We know
today that those compensation arrangements turn out to eat up 58
percent of the cost of what the defendant companies pay out. In other
words, many of these companies that are in bankruptcy, and many more on
the verge of bankruptcy and could be pushed into bankruptcy, are paying
out to victims, but only 42 percent of what they are paying out gets to
the victims.
So I was hoping in this legislation--my vision has always been, how
can we not fix this system? How hard is it to take this 60 percent,
allow the business community some predictability and certainty over 30
years, and get more money to the victims quicker and faster? If,
instead of 300,000 pending lawsuits, let's say you have now 150,000
pending lawsuits, that is a lot of lawsuits. That is a lot of lawsuits.
And they are pending by the thousands in certain districts in America.
People are not going to get trials right away. They are not going to be
able to say I want to have my trial today; I have a serious asbestosis;
I am on oxygen; I may die soon, or I have mesothelioma, and this is a
deadly disease, and the doctors say I only have 9 months to live, and I
want to have my case tried. It is not going to happen that way. It is
not happening that way now, and it will not under this bill.
Therefore, people are going to die and suffer in poverty for years
before they get any payment; whereas, in this bill, we can get the
money to the victims promptly and fairly, in an objective way, with
plaintiffs similarly injured, similarly situated, getting similar
amounts of money--generous amounts
[[Page S956]]
of money. As I noted, a mesothelioma case gets $1.1 million. Half would
be paid within 30 days, without any need for an attorney whatsoever.
You go in with a medical claim, and if an attorney is involved, the
maximum he could get is 5 percent.
My colleague from Texas said we modified the attorney fee rule, and I
was at fault for that. Senators Specter and Leahy and others asked we
consider the fact that when cases are appealed, they tend to become
complex and require quite a bit of lawyer time, and we ought to allow
lawyers to have more than that, if the judge approves it. So I thought
that was a reasonable request. We have amended it only to that small
degree. It is not an opening up of attorneys' fees under this bill.
I am concerned that some of the primary advantages of asbestos reform
would not be availed under this amendment. That is why I am reluctantly
not able to support it. I hope we can continue with the bill and that
other people will bring forth thoughtful amendments, as Senator Cornyn
has, and those who joined with him and presented it in a thoughtful
way. But as I have stated, I don't believe it is the proper vote.
I yield the floor.
Mr. SPECTER. Mr. President, how much time remains?
The PRESIDING OFFICER. There is 8\1/2\ minutes.
Mr. SPECTER. For the opponents of the amendment?
The PRESIDING OFFICER. That is correct.
Mr. SPECTER. Mr. President, as we wind down on this debate, I want to
emphasize to my colleagues the importance of this vote because this
amendment, essentially, after looking at it in some detail, is a poison
pill. If this amendment is not defeated, the whole thrust of the
compensation program for victims of asbestos who cannot now collect one
penny will be defeated. The whole thrust of this trust fund was to
compensate victims whose employers had gone bankrupt, compensate
veterans who have served the country, who have no one to sue, and to
stop the rush of bankruptcies, now totaling some 77, resulting in a
loss to the economy estimated at some $300 billion.
This proposal for a medical criteria bill doesn't even rise to the
level of being palliative. It doesn't do anything except defer the
claims of people who have been exposed until they become ill. It
doesn't do anything about the rash of bankruptcies. It doesn't do
anything about the people who suffer from mesothelioma, which is a
deadly ailment, where they have no one to sue. So when the sponsor of
the bill characterizes the current system as scandalous, that
approbation could apply equally well.
This is one of the many votes on the floor of the Senate where the
outcome is uncertain. There is a curious alliance here, with some on
one side of the aisle and some on the other side of the aisle. Trial
lawyers may be for this amendment if it can be modified because they
see the medical criteria bill as a way of continuing to bring cases to
court, and to continue with the current structure. I don't criticize
the trial lawyers. I don't criticize anybody. I don't criticize the
trial lawyers for exercising whatever rights the current system allows.
But it is up to the Congress of the United States to make the
determination as to what is the appropriate public policy. That is a
congressional decision to make.
Mr. LEAHY. Will the Senator yield for a moment?
Mr. SPECTER. I am delighted to.
Mr. LEAHY. Mr. President, the Senator from Pennsylvania is absolutely
right; it will not be a party-line vote. I hope the Senator from
Pennsylvania succeeds. It is interesting, the people who represent
victims and people who don't have legal representation support the
Senator from Pennsylvania. Just about every labor union supports the
Senator from Pennsylvania, as veterans groups do. I will not go through
the list again. Just about every veterans group that has spoken on this
issue supports the Senator from Pennsylvania. There are a lot of others
who support the Senator from Pennsylvania, but I mention veterans and
labor as an interesting coalition. They are speaking for people who
would not have a voice otherwise. They support what the Senator from
Pennsylvania is doing, as do an awful lot of businesses, I might add. I
hope he is successful.
Mr. SPECTER. If the Senator will yield for a question, to pinpoint
what the Senator said about labor's support. The AFL-CIO, which
represents labor, the working men and women of America, has been a
party to the discussion for 2\1/2\ years, at some 36 meetings, which
Judge Becker and I have presided over. When they heard about this
medical criteria bill, they were alarmed at the impact it would have on
the working men and women and the veterans, their constituency, and
they put out an all-points to those people as to what was going on.
I wonder if the Senator from Vermont would care to amplify, as the
senior Democrat and principal cosponsor of the Leahy-Specter bill, as
to what labor is doing in this area.
Mr. LEAHY. It is interesting. We have a lot of labor unions coming
out foursquare for the bill. Some held back and they want a couple of
changes they are looking for. It is interesting that all of them are
against this amendment--those who haven't yet endorsed the bill and
those who have endorsed the bill. It is the same with the veterans
groups. I think they know that this amendment, no matter how well
intentioned it would be, if it went through, basically kills the
chances of people to recover anything. It puts us back into the decades
of litigation where, as people across the spectrum were saying, from
the late Chief Justice William Rehnquist to Ruth Bader Ginsburg, we
need a solution on the floor.
Mr. SPECTER. If the Senator will yield further, as to what happened
in today's maneuvering and negotiations on the floor, where we have had
initially the trial lawyers being against this amendment. If people
were wondering what all the maneuvering and negotiation was about, why
we could not have an up-or-down vote, but a tabling motion, that is
because the trial lawyers think that the amendment offered by Senator
Cornyn may be better for them, but they want to change it around so
that if this motion to table is not defeated, they will have time to
rework it to their satisfaction.
That is the way the system works, and if that happens--this is now
Thursday afternoon at 16 minutes to 5--there will be frantic
negotiations between now and Tuesday, when we come back to work on this
bill--or perhaps Monday afternoon--to come to an alliance. I won't call
it an unholy alliance, but it will be an alliance in very curious ways,
where people who oppose the bill do so out of the mistaken notion that
it is going to cost the Government money. This bill is ironclad not to
cost the Government money. People on my side of the aisle who are
opposed to it don't want to have the Government undertake an
obligation, and I agree with that. This bill accomplishes that, with no
governmental obligations. Now the issue is whether sufficient trial
lawyers on your side of the aisle may come to a majority.
Mr. LEAHY. Well, if the Senator will yield, like him, I was a trial
lawyer. But I know with all trial lawyers, there are times when you
have a superb settlement before you, you take it. The bill the Senator
from Pennsylvania and I put together, after countless hours, months,
and years of work, is a lot better settlement than going to a jury. I
will support the Senator from Pennsylvania.
Mr. SPECTER. Mr. President, I move to table the Cornyn amendment and
ask for the yeas and nays.
The PRESIDING OFFICER. Is there a sufficient second?
There is a sufficient second.
The yeas and nays were ordered.
Mr. ENSIGN. Mr. President, I suggest the absence of a quorum.
The PRESIDING OFFICER. The clerk will call the roll.
The assistant legislative clerk proceeded to call the roll.
Mr. SPECTER. Mr. President, I ask unanimous consent that the order
for the quorum call be rescinded.
Mr. ENSIGN. I object.
The PRESIDING OFFICER. Objection is heard. The clerk will continue
with the call of the roll.
The assistant legislative clerk continued with the call of the roll.
Mr. REID. Mr. President, I ask unanimous consent the order for the
quorum call be rescinded.
The PRESIDING OFFICER. Without objection, it is so ordered.
[[Page S957]]
The question is on agreeing to the motion. The yeas and nays have
previously been ordered.
The clerk will call the roll.
The assistant legislative clerk called the roll.
Mr. McCONNELL. The following Senators were necessarily absent: the
Senator from Kansas (Mr. Brownback) and the Senator from Arizona (Mr.
McCain).
Mr. DURBIN. I announce that the Senator from Colorado (Mr. Salazar)
is absent due to family illness.
The PRESIDING OFFICER (Mr. Cornyn). Are there any other Senators in
the Chamber desiring to vote?
The result was announced--yeas 70, nays 27, as follows:
[Rollcall Vote No. 13 Leg.]
YEAS--70
Akaka
Alexander
Allen
Baucus
Bayh
Biden
Bingaman
Bond
Boxer
Burns
Burr
Byrd
Cantwell
Carper
Chafee
Clinton
Cochran
Coleman
Collins
Dayton
DeWine
Dodd
Domenici
Dorgan
Durbin
Feingold
Feinstein
Frist
Harkin
Hatch
Inouye
Isakson
Jeffords
Johnson
Kennedy
Kerry
Kohl
Landrieu
Lautenberg
Leahy
Levin
Lieberman
Lincoln
Lugar
Menendez
Mikulski
Murkowski
Murray
Nelson (FL)
Nelson (NE)
Obama
Pryor
Reed
Reid
Roberts
Rockefeller
Santorum
Sarbanes
Schumer
Sessions
Shelby
Snowe
Specter
Stabenow
Stevens
Talent
Vitter
Voinovich
Warner
Wyden
NAYS--27
Allard
Bennett
Bunning
Chambliss
Coburn
Conrad
Cornyn
Craig
Crapo
DeMint
Dole
Ensign
Enzi
Graham
Grassley
Gregg
Hagel
Hutchison
Inhofe
Kyl
Lott
Martinez
McConnell
Smith
Sununu
Thomas
Thune
NOT VOTING--3
Brownback
McCain
Salazar
The motion was agreed to.
Mr. REID. Mr. President, I know the distinguished majority leader
filed cloture on Eric S. Edelman to be Under Secretary of Defense for
Policy. Senator Levin has indicated he is agreeable to letting that go
forward on a voice vote. We are ready to do that as soon as necessary
when the majority leader believes it is appropriate.
The PRESIDING OFFICER. The Senator from Pennsylvania.
Mr. SPECTER. Mr. President, I ask unanimous consent that the pending
amendments be set aside so the Senator from Arizona, Mr. Kyl, may be
recognized to lay down an amendment.
Mr. REID. Reserving the right to object.
Mr. DURBIN. Reserving the right to object.
Mr. REID. Mr. President, I know there is no consent order in effect.
We were of the understanding that we were going to go back and forth
with amendments--there would be a Republican amendment, a Democratic
amendment. If that is not the case, I am certainly willing to live by
that, but I thought that was the agreement. I certainly have not spoken
to the managers of the bill, Senator Specter and Senator Leahy, nor did
I, in fact, speak to Senator Durbin, but that was my understanding.
The PRESIDING OFFICER. The Senator from Pennsylvania.
Mr. SPECTER. Mr. President, as the Senator from Nevada has said,
there has been no understanding. It is agreeable with me to have an
understanding as to that effect in the future. I have already talked to
Senator Kyl, who is poised to offer this amendment. I am glad to enter
into such an understanding. There is not one at the present time. I
would like to proceed with Senator Kyl and alternate.
Mr. REID. Mr. President, if I could, we have no problem with Senator
Kyl offering the next amendment. The only problem is we have not seen
it. Could we have some idea of what it is all about?
I suggest the absence of a quorum.
The PRESIDING OFFICER. The Senator from Pennsylvania has the floor.
Mr. SPECTER. I yield the floor for the purposes of letting the
Senator from Nevada be recognized.
Mr. REID. I suggest the absence of a quorum.
The PRESIDING OFFICER. The clerk will call the roll.
The legislative clerk proceeded to call the roll.
Mr. REID. Mr. President, I ask unanimous consent that the order for
the quorum call be rescinded.
The PRESIDING OFFICER. Without objection, it is so ordered.
The Senator from Arizona is recognized.
Amendment No. 2754 to Amendment No. 2746
Mr. KYL. I send an amendment to the desk.
The PRESIDING OFFICER. Is there objection to setting aside the
pending first-degree amendment?
Without objection, it is so ordered.
The clerk will report.
The legislative clerk read as follows:
The Senator from Arizona [Mr. Kyl] proposes an amendment
numbered 2754 to amendment No. 2746.
Mr. KYL. I ask unanimous consent that the reading of the amendment be
dispensed with.
The PRESIDING OFFICER. Without objection, it is so ordered.
The amendment is as follows:
(Purpose: To reduce the impact of the trust fund on smaller companies
and to expand hardship adjustments)
SEC. I. PROPORTIONAL PAYMENTS.
(a) At page 171, after line 5, insert new (c) as follows
(the subsection references assume that the required
renumbering has occurred):
``(c) Limitation.--For any affiliated group, the total
payment in any year, including any guaranteed payment
surcharge under subsection (m) and any bankruptcy trust
guarantee surcharge under section 222(c), shall not exceed
the lesser of $16,702,400 or 1.67024 percent of the revenues
of the affiliated group for the most recent fiscal year
ending on or prior to December 31, 2002, or for the most
recent 12-month fiscal year as of the date the limitation is
applied, whichever is greater. For purposes of this
subsection, the term ``affiliated group'' shall include any
defendant participant that is an ultimate parent. The
limitation in this subsection shall not apply to defendant
participants in Tier I or to any affiliated group whose
revenues for the most recent fiscal year ending on or prior
to December 31, 2002, or for the most recent 12-month fiscal
year as of the date the limitation applied, whichever is
greater, exceeds $1,000,000,000. The revenues of the
affiliated group shall be determined in accordance with
section 203(a)(2), except for the applicable date. An
affiliated group that claims a reduction in its payment in
any year shall file with the Administrator, in accordance
with procedures prescribed by the Administrator, sufficient
information to allow the Administrator to determine the
amount of any such reduction in that year. If as a result of
the application of the limitation provided in this subsection
an affiliated group is exempt from paying all or part of a
guaranteed payment surcharge or bankruptcy trust surcharge,
then the reduction in the affiliated group's payment
obligation due to the limitation in this subsection shall be
redistributed in accordance with subsection (m). Nothing in
this subsection shall be construed as reducing the minimum
aggregate annual payment obligation of defendant participants
as provided in section 204(i)(1).''
(b) Renumber subsections following new subsection (c).
(c) Subsequent to renumbering the subsections following new
subsection 204( c), make the following cross-reference
changes:
At page 142, line 7, replace ``204(g)'' with ``204(h)''
At page 151, line 20, replace ``204(i)(6)'' with
``204(j)(6)''
At page 160, line 21, replace ``204(l)'' with ``204(m)''
At page 167, line 24, replace ``204(d)'' with
``204(e)''
At page 170, lines 21 and 22, replace ``(d) and (m)'' with
``(e) and (n)''
At page 171, line 22, replace ``(i)(10)'' with ``(j)(10)''
At page 172, line 3, replace ``(j)'' with ``(k)''
At page 177, line 12, replace ``(j) with ``(k)''
At page 178, line 25, replace ``(j)(3)'' with ``(k)(3)''
At page 179, line 2, replace ``(k)(1)(A)'' with
``(l)(1)(A)''
At page 182, line 16, replace ``(i) with ``(j)''
At page 183, line 6, replace ``(i)'' with ``(j)''
At page 186, lines 7 and 8, replace ``(d), (f), (g), and
(m)'' with ``(e), (g), (h) and (n)''
At page 186, line 11, replace ``(d) and (m)'' with ``( e)
and ``(n)''
At page 186, line 20, replace ``(d) and (m)'' with ``(e)
and ``(n)''
At page 186, line 23, replace ``(l)'' with ``(m)''
At page 187, line 8, replace ``(f)'' with ``(g)''
At page 196, line 20, replace ``(d)'' with ``(e)''
At page 196, line 22, replace ``(m)'' with ``(n)''
At page 197, line 13, replace ``(h)'' with ``(i)''
At page 198, line 11, replace ``(d)'' with ``(e)''
At page 198, line 16, replace ``(h)'' with ``(i)''
At page 198, line 17, replace ``(j)'' with ``(k)''
At page 198, line 23, replace ``(d)'' with ``(e)''
At page 199, line 10, replace ``(h)'' with ``(i)''
At page 199, line 12, replace ``(d) and (m)'' with ``(e)
and (n)''
[[Page S958]]
At page 199, line 20, replace ``(k)'' with ``(l)''
At page 199, line 22, replace ``(h)'' with ``(i)''
At page 200, line 3, replace ``(h)'' with ``(i)''
At page 200, line 7, replace ``(d), (f), (g), and (m)''
with ``(e), (g), (h) and (n)''
At page 200, line 22, replace ``(d), (f), and (g)'' with
``(e), (g), and (h)''
At page 201, line 5, replace ``(i)(9)'' with ``(j)(9)''
At page 203, line 6, replace ``204(i)'' with ``204(j)''
At page 204, line 23, replace ``204( d)'' with ``204(e)''
At page 205, line 11, replace ``(i)(10)'' with ``(j)(10)''
At page 205, line 16, replace ``204(h)'' with ``204(i)''
At page 248, line 21, replace ``204(f)(3)'' with
``204(g)(3)''
At page 261, line 14, replace ``204(i)(10)'' with
``204(j)(10)''
At page 266, line 14, replace ``204(f)'' with ``204(g)''
At page 289, line 9, replace ``204(i)'' with ``204(j)''
At page 289, line 11, replace ``204(d)'' with ``204(e)''
At page 289, line 12, replace ``204(m)'' with ``204(n)''
At page 289, line 19, replace ``204(i)'' with ``204(j)''
At page 289, line 20, replace ``204(d)'' with ``204(e)''
At page 289, line 21, replace ``204(m)'' with ``204(n)''
At page 289, line 23, replace ``204(i)(10)'' with
``204(j)(10)''
At page 334, line 8, replace ``204(f)'' with ``204(g)''
SEC. 2. HARDSHIP ADJUSTMENTS.
(a) Strike page 172, line 6, through page 173, line 17, and
insert the following:
``(2) Financial Hardship Adjustments.--
(A) In general.--Any defendant participant in any tier may
apply for an adjustment under this paragraph at any time
during the period in which a payment obligation to the Fund
remains outstanding and may qualify for such an adjustment by
demonstrating to the satisfaction of the Administrator that
the amount of its payment obligation would materially and
adversely affect the defendant participant's ability to
continue its business and to pay or satisfy its debts
generally as and when they come due. Such an adjustment shall
be in an amount that in the judgment of the Administrator is
reasonably necessary to prevent such material and adverse
effect on the defendant participant's ability to continue its
business and to pay or satisfy its debts generally as and
when they come due.
(B) Factors to consider.--In determining whether to make an
adjustment under subparagraph (A) and the amount thereof, the
Administrator shall consider--
(1) the financial situation of the defendant participant
and its affiliated group as shown in historical audited
financial statements, including income statement, balance
sheet, and statement of cash flow, for the three fiscal years
ending immediately prior to the application and projected
fmancial statements for the three fiscal years following the
application;
(2) an analysis of capital spending and fixed charge
coverage on a historical basis for the three fiscal years
immediately preceding a defendant participant's application
and for the three fiscal years following the application;
(3) any payments or transfers of property made, or
obligations incurred, within the preceding 6 years by the
defendant participant to or for the benefit of any insider as
defined under section 101(31) of title 11 of the United
States Code or any affiliate as defined under section 101(2)
of title 11 of the United States Code;
(4) any prior extraordinary transactions within the
preceding 6 years involving the defendant participant,
including without limitation payments of extraordinary
salaries, bonuses, or dividends;
(5) the defendant participant's ability to satisfy its
payment obligations to the Fund by borrowing or financing
with equity capital, or through issuance of securities of the
defendant participant or its affiliated group to the Fund;
(6) the defendant participant's ability to delay
discretionary capital spending; and
(7) any other factor that the Administrator considers
relevant.
(B) Term.--A financial hardship adjustment under this
paragraph shall have a term of 5 years unless the
Administrator determines at the time the adjustment is made
that a shorter or longer period is appropriate in the light
of the financial condition of the defendant participant and
its affiliated group and other relevant factors, provided
that a financial hardship adjustment under this paragraph
shall terminate automatically in the event that the defendant
participant holding the adjustment files a petition under
title 11, United States Code.
(C) Renewal.--A defendant participant may renew a hardship
adjustment upon expiration by demonstrating that it remains
justified. Such renewed hardship adjustments shall have a
term of 5 years unless the Administrator determines at the
time of the renewed adjustment that a shorter or longer
period is appropriate in the light of the financial
condition of the defendant participant and its affiliated
group and other relevant factors, provided that a renewed
financial hardship adjustment under this paragraph shall
terminate automatically in the event that the defendant
participant holding the adjustment files a petition under
title 11, United States Code.
(D) Procedure.--
(1) The Administrator shall prescribe the information to be
submitted in applications for adjustments under this
paragraph.
(2) All audited financial information required under this
paragraph shall be as reported by the defendant participant
in its annual report filed with the Securities and Exchange
Commission in accordance with the Securities Exchange Act of
1934 (15 U.S.C. 78a et seq.). Any defendant participant that
does not file reports with the Securities and Exchange
Commission or which does not have audited financial
statements shall submit financial statements prepared
pursuant to generally accepted accounting principles. The
chairman, chief executive officer, and chief financial
officer of the defendant participant shall certify under
penalty of law the completeness and accuracy of the financial
statements provided under this sub-paragraph.
(3) The chairman, chief executive officer, and chief
financial officer of the defendant participant shall certify
that any projected information and analyses submitted to the
Administrator were made in good faith and are reasonable and
attainable.''
(b) Conforming changes.
At page 177, line 10, strike ``hardship and''
At page 178, lines 19-20, strike ``financial hardship
adjustments under paragraph (2) and''
At page 178, lines 22-23, strike ``--(A).''
At page 179, line 2, insert a period after ``(k)(1)(A)''
and delete; ``or''
At pages 179--181, strike line 10 on page 179 through line
2 on page 181.
At page 181, at line 3: Insert ``Rulemaking and'' before
``advisory''
At page 181, line 5: Strike ``shall'' and insert ``may''
At page 181, following line 14, insert: ``The Administrator
may adopt rules consistent with this Act to make the
determination of hardship and inequity adjustments more
efficient and predictable.''
At page 197, line 8, strike ``Hardship and''
At page 197, line 15, strike ``hardship and''
At page 197, line 19, strike ``hardship and''
At page 197, lines 24 and 25, strike ``severe financial
hardship or''
SEC. 3. STEPDOWNS.AND F.UNDING HOLIDAYS
(a) At page 205, line 20, strike ``The'' and insert:
``Except as otherwise provided in this paragraph, the''
(b) At page 205, lines 22 through 24 strike: ``, except
with respect to defendant participants in Tier I, Subtiers 2
and 3, and class action trusts'' and insert the following:
``. The reductions under this subsection shall not apply to
defendant participants in Tier I, subtiers 2 and 3, and class
action trusts. For defendant participants whose payment
obligation has been limited under section 204(c) or who have
received a financial hardship adjustment under section
204(e)(2), aggregate potential reductions under this
subsection shall be calculated on the basis of the defendant
participant's tier and subtier without regard to such
limitation or adjustment. If the aggregate potential
reduction under this subsection exceeds the reduction in the
defendant participant's payment obligation due to the
limitation under section 204(c) and the financial hardship
adjustment under section 204(e)(2), then the defendant
participant's payment obligation shall be further reduced by
the difference between the potential reduction provided under
this subsection and the reductions that the defendant
participant has already received due to the application of
the limitation provided in section 204(c) and the financial
hardship adjustment provided under section 204(e)(2). If the
reduction in the defendant participant's payment obligation
due to the limitation provided in section 204(c) and any the
financial hardship adjustment provided under section
204(e)(2) exceeds the amount of the reduction provided in
this subsection, then the defendant participant's payment
obligation shall not be further reduced under this
paragraph.''
(c) At page 207, line 10 through 12, strike the text
following ``except'' in line 10 and insert ``as otherwise
provided under this paragraph. The reductions or waivers
provided under this subsection shall not apply to defendant
participants in Tier I, subtiers 2 and 3, and class action
trusts. For defendant participants whose payment obligation
has been limited under section 204(c) or who have received a
financial hardship adjustment under section 204(e)(2),
aggregate potential reductions or waivers under this
subsection shall be calculated on the basis of the defendant
participant's tier and subtier without regard to such
limitation or adjustment. If the aggregate potential
reductions or waivers under this subsection exceed the
reduction in the defendant participant's payment obligation
due to the limitation under section 204(c) and the financial
hardship adjustment under section 204(e)(2), then the
defendant participant's payment obligation shall be further
reduced by the difference between the potential reductions or
waivers provided under this subsection and the reductions
that the defendant participant has already received due to
the application of the limitation provided in section 204(c)
and the financial hardship adjustment provided under section
204(e)(2). If the reduction in the defendant participant's
payment obligation due to the limitation provided in section
204(c) and any the financial hardship adjustment provided
under section 204(e)(2) exceeds the
[[Page S959]]
amount of the reductions or waivers provided in this
subsection, then the defendant participant's payment
obligation shall not be further reduced under this
paragraph.''
Mr. KYL. Mr. President, I will be brief.
For those who have been involved in this issue, it has been discussed
actually since last August and deals with the small companies or
businesses that would be paying into the fund that is the subject of
this bill. The amendment is designed to reduce the impact of the trust
fund on the small- and medium-sized companies and to ensure that the
fund does not drive them into bankruptcy.
It does principally two things.
First, it provides across-the-board relief to small- or midsized
companies, those with annual gross revenues of less than $1 billion, by
limiting their trust fund contributions to 1.67 percent of their gross
revenues. This per se relief should resolve most ability-to-pay
problems that are created by the fund with certainty and without
administrative burdens.
For those who do not qualify for this across-the-board relief or for
whom it is not enough, the amendment provides a second form of hardship
relief. It authorizes the administrator to reduce the company's fund
assessments if the company otherwise would go out of business and would
be unable to pay its bills. To be exact, under the amendment, a company
can qualify for an adjustment if it can show that its fund payments
``would materially and adversely affect the defendant participant's
ability to continue its business and to pay or satisfy its debts
generally as and when they come due.'' Under this amendment, access to
this form of relief would be unlimited.
This amendment does not solve all of the problems with the trust fund
allocation of payments. I anticipate there will be other amendments to
address some of those issues, and I support some of those amendments,
as well. I believe this amendment does go a long way toward solving the
problem I identified.
What this amendment does do is shave off some of the roughest edges
of this bill. This amendment makes the hardship adjustment a real and
predictable guarantee. The way that the bill currently is written, some
small- and medium-sized companies will be hit with trust fund payments
that will constitute a major portion of their gross revenues. These
companies obviously will not be able to make these payments. While the
bill currently authorizes an insolvency hardship adjustment, that
hardship adjustment is vaguely stated and includes limitations that
undercut its usefulness for many companies on the margins. Literally,
companies faced with crushing payments under the bill would be forced
to tell potential creditors or capital markets, ``yes, we will be
required to pay 25 percent of our gross revenues into the trust fund
under the FAIR Act, but we might be able to get a hardship
adjustment.'' You can see why these companies might have trouble
getting a loan. Under my amendment, these same small- and medium-sized
companies will be able to tell the banks and potential investors that
they will not be forced to pay more than one and two-thirds of a
percent of their gross revenues into the fund. By providing guaranteed
reasonable limits on assessments, this amendment will make it possible
for these companies to continue to engage in normal business
transactions.
This amendment does not directly affect the availability of inequity
adjustments under the trust fund. The amendment does, however,
indirectly expand the availability of inequity adjustments by making
hardship adjustments into a separate category that is not drawn from
the $300 million that is currently set aside for both kinds of
adjustments. That $300 million will now be set aside solely for equity
adjustments.
Also, the amendment does not in any way affect the fund's guarantee
of producing $3 billion a year for compensating victims. Under the bill
as it is currently written, in the event of any shortfall in reaching
that $3 billion, a guaranteed payment surcharge is imposed on all
defendant participants in order to make up the difference. Thus, to the
extent that relief received by any defendant pursuant to this amendment
prevents the fund from reaching the $3 billion target, that gap will be
filled by the payment surcharge. This amendment, therefore, in no way
adversely affects the FAIR Act's funding guarantee.
Allow me to describe in greater detail exactly how this amendment
works. Under the amendment, no defendant participant, other than a Tier
I participant, with 2002 revenues of less than $1 billion is required
to contribute more than the greater of 1.67 percent of its revenues as
of December 31, 2002, or 1.67 percent of its revenues for the most
recent 12-month fiscal year. The revenue cap employed by this amendment
matches the 1.67 percent of gross revenues that is the measure of Tier
I contributions. Also, only companies that elect to report on a
consolidated basis may take advantage of this revenue cap.
This amendment's revenue cap is only a rough measure of ability to
pay. It is, however, easy to administer, and it is less subject to
manipulation than other measures, such as net income.
As for the amendment's changes to the hardship adjustment, first,
there currently are two hardship provisions in the bill--section
204(d)(2), which provides relief generally for severe financial
hardship and which is subject to the $300 million hardship and inequity
cap, and section 204(d)(5), which allows the cap to be exceeded if
otherwise a company would be forced into insolvency. My amendment would
rewrite (d)(2) to provide clearer standards, eliminate (d)(5), and make
clear that there is no cap on hardship relief. The result is a simpler
proposal more attuned to the needs of potential hardship-adjustment
applicants.
Under the amendment, any defendant participant can apply for hardship
relief, whether it is in Tier I or not, and whether or not it reports
on a consolidated basis. However, in the case of defendant participants
that do not file on a consolidated basis, the administrator must
examine the real financial situation of the defendant participant by
taking into consideration the financial position of the affiliated
group.
Again, under the revised hardship adjustment in this amendment, the
Administrator may grant an adjustment if he concludes that the amount
of a defendant participant's payment obligation would materially and
adversely affect the defendant participant's ability to continue its
business and to pay or satisfy its debts generally as and when they
come due. The amount of relief would be limited to the amount necessary
to avoid the problem.
In determining whether to grant an adjustment under this revised
provision, the administrator will required to consider, among other
things: the historical audited financial statements for the defendant
participant or affiliated group for the three years immediately prior
to the application for relief; projected financial statements for the 3
fiscal years following that application; an analysis of capital
spending and fixed charge coverage on a historical basis for the 3
fiscal years preceding and the 3 fiscal years immediately following the
application; any payments or transfers of property made, or obligations
incurred, by the defendant participant during the 6 fiscal years prior
to the application to or for the benefit of any insider; any
extraordinary transactions of the defendant participant, including
payments of extraordinary salaries, bonuses, or dividends, within the 6
fiscal years prior to the application; the defendant participant's
ability to satisfy its payment obligations to the fund by borrowing or
financing with equity capital, or through issuance of securities to the
fund; and the defendant participant's ability to postpone discretionary
capital spending for a reasonable period.
The term of any adjustment under the amendment shall be 5 years,
unless the administrator determines that a shorter or longer period is
appropriate in light of the financial condition of the defendant
participant. Any adjustment under the amendment may be renewed upon a
showing that it continues to be justified--and it is automatically
terminated if the defendant participant files for bankruptcy
protection.
The amendment also eliminates provisions for recapture of hardship
adjustments, except in cases of fraud. The current bill's provisions
for frequent review of hardship adjustments and potential for giving
adjustments back
[[Page S960]]
have significantly reduced the usefulness of these adjustments in
addressing the concerns of companies on the margins. If these
adjustments aren't reasonably predictable, they are not useful either.
Finally, under the amendment, companies that have received discounts
off their tier/subtier allocation because of the cap or hardship
adjustments would only get the benefit of cumulative step downs to the
extent that the step downs exceeded the amount of the discounts the
company already had. The same rule applies for hardship adjustments.
The PRESIDING OFFICER. The Senator from Pennsylvania.
Mr. SPECTER. Mr. President, I thank the Senator from Arizona for
offering this amendment.
This is a good amendment. There has been a great deal of concern that
smaller businesses--although we are talking about businesses which are
substantial, but they are smaller than many in the field--should not
pay more than they can afford to pay. This amendment achieves that
result.
I add that Senator Kyl has been an outstanding member of the
committee for many years, and in the past year and a half since I have
become chairman, he has been a stalwart and has worked tirelessly on
this bill. I don't know how many meetings he and I and others,
including the presiding Senator, Mr. Cornyn, have had. This has been a
matter very much on the Senator's mind and many others who have
suggested many other provisions. It is a very good amendment. I thank
and compliment the Senator.
The PRESIDING OFFICER. The Senator from Nevada.
Mr. ENSIGN. Mr. President, I make a point of order that the pending
bill violates section 407 of H. Con. Res. 95, the concurrent resolution
on the budget for fiscal year 2006.
Mr. SPECTER. I move to waive the point of order under the applicable
provisions of the rules and statutes.
The PRESIDING OFFICER. The motion to waive is debatable.
Mr. SPECTER. Mr. President, the essence of this issue is that the
point of order should not be sustained because there is no Federal
money involved. All of the money involved comes from private sources.
This is a make-or-break issue for this bill.
The Federal budget is not involved in this bill. To repeat, which I
don't like to do, but for emphasis, the Federal budget is not involved
in this bill. The money comes from private sources. It goes through the
Department of Labor as a conduit. Technically, there is a Federal
expenditure, but it is not the Federal Government's money. Now, the
only issue which has been raised is that at some point in the future,
the Federal Government might seek to bail out this trust fund. The bill
is emphatic in a number of places that the Federal Government has no
obligation to pay out any money. If the trust fund runs short, there
are provisions to meet that situation. It is a complicated provision,
but the administrator makes an analysis, and if he sees the necessity
to make some modifications in the trust fund, he can take it to a
committee and the committee can then make a recommendation to Congress.
The Congress has to act.
The real safety valve is the one provided by the Biden amendment in
July of 2003 that if the fund runs out of money, claimants can go back
to court. So the claimants are no worse off going back to court if the
trust fund runs out of money than they are now. But in the interim,
thousands of people who suffer from deadly diseases--mesothelioma and
exposure to asbestos--will be paid where they cannot be paid now
because their companies are bankrupt or they are veterans and there is
no one to sue.
The consideration that some future Congress, decades down the road,
in the year 2030, might have a different view is up to the Congress in
that year. We cannot bind them as to what they are going to do, nor
should we try to bind them. But what we do here does not implicate or
involve the Federal Treasury. To say that there may be a temptation in
the future for some Congress to spend Federal funds is not something we
should do. It is not within our purview. It is not within our
responsibility. In fact, we ought to keep our hands off the future
Congresses. We should not presume that we know enough in the year 2006
to tell the Congress in the year 2026 what to do. They will be elected.
They may well be a lot smarter than this Congress. Perhaps it is hard
not to be. But it is up to them at that time.
This is a convenient maneuver to defeat the bill by requiring 60
votes. That is like the motion to proceed, the filibuster, to try to
structure a vote for 60 votes, to try to find enough people who do not
like the bill; only takes 41 who do not like the bill to defeat the
bill on this kind of a maneuver, whereas it takes 51 to defeat this
bill otherwise.
The administration is for it. If this bill goes 50-50, the Vice
President votes for it. The President issued a statement of support on
S. 852. There are caveats in it. He said there are concerns. I don't
know of any Member of this Senate who does not have some concerns about
this bill. But that is what the debate is for. That is what we are here
to consider. We will not be able to consider this if this point of
order is sustained.
I yield to the real expert on budgets, a man who was chairman of the
Committee on the Budget for 73 years.
Mr. DOMENICI. I am 73 years old, but I didn't chair it all the time.
Mr. SPECTER. I thought he chaired it his entire life. Senator
Domenici was the chairman of the Committee on the Budget the day I was
sworn in. I have great respect for Senator Gregg, chairman of the
Committee on the Budget today, but I yield to the chairman of the
Committee on the Budget emeritus.
The PRESIDING OFFICER. The Senator from New Mexico is recognized.
Mr. DOMENICI. So that I understand, I am speaking on my own time now;
is that correct?
The PRESIDING OFFICER. The Senator is recognized in his own right.
Mr. DOMENICI. Right. First, let me say the Senator who is raising the
point of order has every right to raise the point of order. The
question is, is this a real point of order? I want to tell the Senate,
I am not the Parliamentarian. I am not the Congressional Budget Office.
But if I were either, I would say this point of order does not even
lie, not that we should defeat it, it just does not lie. It is not a
proper interpretation of the existing budget law to say this point of
order can be raised and can invalidate this bill because the bill
violates the budget.
I want the Senators who are worried about voting to waive this point
of order to understand this is not a budgetary issue. This is a
technical point of order that got to the Senate because the
Congressional Budget Office, I assume, or the Parliamentarian in
consultation with the Congressional Budget Office, ruled that any
expenditure of money exceeding $5 billion over a baseline in the year
2016 cannot be sustained.
You see, Senator Byrd, this was done by our distinguished new
chairman of the Budget Committee because he found that budgets were
being broken in future years by putting in a program that ran at $2 or
$3 billion a year and increased, way out there in future years, up to
$10 or $15 billion.
Now, fellow Senators, what I have described was perfectly valid until
the distinguished chairman, within his rights, decided that this was a
problem he wanted to solve. Now, you see, the goal is to prevent the
bump-up of expenditures in future years that are unexpected by
everybody voting today--unexpected because the increase comes along 10
years later and costs much more than what you thought you were voting
for.
Now, I cannot explain it any better than that. That is about the best
I can do. Somebody must have determined that this budget rule applies
because there is no way to disburse this trust fund money without going
through the Department of Labor. That must be it. Because some
Government agency must take this money--not tax money, not Federal
money--and run it through their books and write the checks, somebody
has decided that this fear of a bump-up in some future year applies.
My good friend from Nevada is absolutely right to bring up this point
of order if what he wants to have happen to this bill is for it to be
proven by 60 votes. That is fine. But I want everybody to know, if the
point of order is not sustained and this bill goes forward, I don't
think the deficit of the United States is going to be affected in 2016
by one dollar if this $5 billion estimate is true because the money is
not
[[Page S961]]
really on the Federal books. The trust fund has no real relationship to
the expenditure of Federal money.
So in considering this budget rule--I have explained it to you--I
ask: how are we going to break the budget when this money is not even
part of the budget? It is not on the budget. The money is going to be
collected and then go through the Department of Labor, but it is not
Federal money.
I say to Senator Byrd, when they send the budget up in 2016, there is
not going to be any of this trust fund money. This money might get a
footnote. The Department of Labor is going to have to run the trust
fund, but it cannot add to or subtract from the deficit because the
Government is not spending its money. And it is not tax money.
So let me say, if you want to kill this bill based upon a point of
order that is--it is almost not a point of order, it is just a little,
tiny technicality--it gets in by the skin of its teeth on an
interpretation--then vote for it. If you are worried about saving
money, and being a tightfisted budgeteer, then understand that this has
nothing to do with being a tightfisted budgeteer because there is no
budgeting involved.
So I thank the good chairman who has worked so hard on this bill. I
have never sat on the committee that produced this bill in my 34 years
here. I never chose to go on the Judiciary Committee, so I am not
intimately knowledgeable about this. But I know we better do something
about asbestos. We run around talking about fiscal responsibility and
helping business and cutting taxes so we will have more business. If we
do not do anything about asbestos, and leave it in the courts, it will
be the biggest abuse of the court system that we have ever known.
If you want to tell these new countries becoming democracies, ``boy,
are we a gifted country, we have this great rule of law, this fantastic
court system,'' please, don't let them ask about asbestos because they
will laugh: Why should they be like America? Why should they have a
legal system that is so messed up that there are hundreds of thousands
of claimants running around this country with scores of lawyers who,
when we were practicing law, would not even have been lawyers? You
could not run around soliciting these cases when I was sworn into the
bar. You could not run around hiring these doctors when I was a member
of the bar. You could not run around saying: Go get your neighbors and
sign them up.
That is American law today. It is business. It is entrepreneurial
law. That is what we have. But it is not very orderly and it is not
very ``due'' in terms of due process. Nor is it very fair because the
claimants do not get very much money. The lawyers get a lot.
I do not know why we would want to kill this bill. Lawyers get less.
There is an orderliness involved. There is a way to adjudicate claims
instead of waiting around for years. So with this point of order, while
I think it is not even a point of order in the sense of what we
intended with the 10-year-out rule--let's call it that; the 10-year-out
rule--I do not know what we are even trying to protect against. It is
not going to affect anything except to possibly kill the bill.
So with that I thank the Senate for yielding me a few minutes. I
regret having to intervene before the proponent got to speak. But I
thank the Senate nonetheless.
The PRESIDING OFFICER. The Senator from North Dakota.
Mr. CONRAD. Mr. President, I have listened with great interest to the
interpretation of my colleague on the Budget Committee. I must say, I
come to a totally different conclusion based on the law and based on
the Congressional Budget Office's own reports.
Here is the report from the Congressional Budget Office itself with
respect to the issue of whether the point of order raised by the
Senator from Nevada has merit or not. The Congressional Budget Office,
which is nonpartisan, has said very clearly that this does involve
Federal direct spending, does involve deficit spending. A point of
order clearly lies.
Mr. ENSIGN. Mr. President, will the Senator yield for a question?
Mr. CONRAD. Yes, I will be happy to yield to the Senator.
Mr. ENSIGN. Is the Senator aware, the ranking member on the Budget
Committee, that the current Republican chairman of the Budget Committee
has indeed ruled that the point of order I raised today is actually
valid?
Mr. CONRAD. Yes. I have talked directly to the chairman of the Budget
Committee, and he has said to me he believes that clearly this budget
point of order does lie. And he is buttressed, I might say to my
colleague, by the Congressional Budget Office itself, which says on
page 2 of their report on this legislation called S. 852, the Fairness
in Asbestos Injury Resolution Act, in the last paragraph:
Pursuant to section 407 of H. Con. Res. 95 (the Concurrent Resolution
on the Budget, Fiscal Year 2006), CBO estimates that enacting S. 852
would cause an increase in direct spending greater than $5 billion in
at least one 10-year period from 2016 to 2055.
That is the point of order raised by the Senator from Nevada. It is
absolutely appropriate, and it clearly lies.
People can come out and be unhappy about the result, but the reality
is we have a problem. And we have a big problem here. Why? Well, we
have done an analysis, my professional staff. Here is what they found.
The claims and administrative expenses will likely exceed the
contributions to the trust fund. No. 2, that upfront claims will far
exceed contributions, so the trust fund will have to borrow substantial
amounts. I have heard over and over it stated on the floor that there
is no Federal money, there is no Federal money. Really? Why is it,
then, that in the legislation they provide for borrowing Federal money?
Why is that? Because everybody knows that point No. 2 is true, that the
upfront claims are going to greatly exceed the revenue, and the result
will be borrowing. And guess who they are going to borrow from. They
are going to borrow from the Federal Treasury.
It is also our conclusion that small adjustments in the amount and
timing of the assumptions quickly bankrupt the trust fund; and,
finally, that it is unrealistic to assume the trust fund will ever
terminate. Because the other thing they are saying is: Well, the
legislation provides, if they run out of money, we will terminate the
trust fund. Let's think about that for a moment. Companies will be on
the hook for tens of billions of dollars that they will have to pay
back that have been borrowed, and then they are thrown back in the
court system too. Can you imagine the outcry that will come from them?
Let me go to the next chart. I had hoped to not be engaged in this
debate, frankly, but we were asked to do a report. And we have done
that report. Professional staff did it. These are the conclusions. They
looked at the CBO estimates, and here is what we found. CBO did not
score many items that are likely to increase the costs, including
dormant claims. Those are claims that are not currently being pursued
but would have a possibility of getting recovery if they went after
this pot of money.
No. 2, exceptional medical claims. There are nine categories that
people can fit into. But if you do not neatly fit into those, there is
an opportunity for the costs to rise.
And third, CBO did not score any claims of family members of workers
who were exposed to asbestos.
We also--the professional staff found that CBO's estimate of the
number of future cancer claims is likely to be too low. The CBO
analysis concluded there would be 78,000 new cancer claims. The
Tillinghast study--which we believe is the most objective study out
there, which was done by the Johns Manville trust--ran 14 different
scenarios. They found, on average, 133,000 new cancer claims is the
likely result, not 78,000. By the way, if they are right, if the
midpoint of their range is correct, the increase in cost will be very
dramatic. Finally, CBO's estimate of the percent of nonmalignant claims
that will receive a cash award is likely too conservative.
In this legislation, there are five tiers for non-malignant claims.
Tier 1 gets medical monitoring. They do not get money. Tier 2 gets cash
awards of $25,000; tier 3, $100,000. CBO has estimated only 15 percent
of claimants will get cash awards.
When our people went out and talked to experts, they said the range
is 10 to
[[Page S962]]
40 percent. Our people took the midpoint of that range, 25 percent. The
Tillinghast study suggests it will be in the range of 23 or 24 percent.
That increases the cost over CBO's analysis.
The conclusion of the Budget Committee staff on the minority side is
that the shortfall over the period of the fund will be $150 billion,
the net present value difference being $50 billion. In other words, the
$150 billion shortfall is over the life of the fund. That turns into a
net present value of $50 billion. But to show you how sensitive this
is, we were very conservative in terms of new cancer claims. CBO said
78,000. Our study said 90,000. Tillinghast, in 14 different scenarios,
on average found 133,000 new cancer claims. If they are right, this
number is not $150 billion, it is $295 billion, with a net present
value of $85 billion.
Let's reality test for one moment. We went out and looked at what has
happened in other cases where funds were set up, what the initial
estimates were and then what actually happened. In the case of the
Manville trust, the original range was that there would be on the low
end 50,000 claims and on the high end, they said 200,000 claims. Here
is how many there have actually been to date--not 50,000, not 200,000--
there have already been 690,000 claims. That is not the end of it. They
now estimate there will be another 1.4 million claims on top of that,
for a total of over 2 million claims. So what is the result? The result
is, people who were promised certain recovery are getting 5 cents on
the dollar. That is what they are getting now, 5 cents on the dollar.
We also looked at the black lung fund. In the black lung fund they
projected at the beginning, the original estimate, it would cost $3
billion. Here is what it has cost so far--$41 billion. That is through
2004.
The assertion has been made that CBO has said this is paid for. That
isn't their conclusion. CBO said this in the letter:
The proposed trust fund might or might not have adequate
resources to pay all valid claims. There is a significant
likelihood that the fund's revenues would fall short of the
amount needed to pay valid claims, debt service, and
administrative costs.
If you look at the numbers behind the numbers, I think it is very
hard to conclude anything other than what my professional staff
concluded. The strong likelihood is that this fund is way under water.
Our conclusion is $150 billion under water. It is entirely possible----
Mr. SPECTER. Will the Senator from North Dakota yield for a question.
Mr. CONRAD. I would be happy to, when I have finished my sentence. It
is entirely possible that it is $295 billion under water. I regret to
conclude it may be more serious than that.
With that, I am happy to yield.
Mr. SPECTER. Mr. President, I have noted the chart. If you could put
the chart back up, please.
Mr. CONRAD. Which one?
Mr. SPECTER. The last one. The one the Senator from North Dakota is
talking about, the one that has the letter going to Senator Arlen
Specter. I received that letter. You may be surprised to know that I
read that letter.
Mr. CONRAD. I am not surprised at all.
Mr. SPECTER. Senators receive lots of letters; relatively few are
read.
My question to the Senator from North Dakota is, isn't it true that
the two sentences which you left off following the chart you have read:
There is some likelihood that the fund's revenue would be
sufficient to meet those needs.
Isn't it true that that is the next sentence in the letter?
Mr. CONRAD. That is the next sentence in the letter. It is also true
that the CBO analysis is very clear. They have not even attempted to
put a cost behind a whole series of things that they have told us are
very likely to cost money and increase the cost in a way that puts this
fund over into insolvency.
I regret being in this situation. I have no desire to be involved in
this debate, but we are here.
Mr. SPECTER. If the Senator will yield for another question.
Mr. CONRAD. I am happy to yield.
Mr. SPECTER. Isn't it true that following the sentence I just read,
which was ``there is some likelihood that the fund's revenues would be
sufficient to meet those needs,'' the next sentence reads:
The final outcome cannot be predicted with great certainty.
Isn't that pretty much standard CBO, where they are making
projections, and the thrust of what CBO has said and the Senator from
North Dakota has cited is that you don't know ``with great certainty''?
And isn't it true that in any projection of this sort you cannot have
``great certainty,'' that you don't even have that on proof for the
death penalty in a first-degree murder case where it is only proof
beyond a reasonable doubt? Isn't it true that CBO in the letter which
they sent to me, dated August 25, made a projection that the cost would
be between $120 and $150 billion, and the final line on page 8 was $132
billion which is well within the $140 billion figure?
Mr. CONRAD. Let me say to my colleague, the problem with that is, it
doesn't include debt service. It doesn't include any additional amount
for dormant claims. It doesn't include any additional amount for
exceptional medical claims. It doesn't include any additional amount
for claims of family members. CBO's estimate of the number of future
cancer cases, we believe, is likely to be far too low. And CBO's
estimate of the percent of nonmalignant claims that will receive a cash
award is likely far too low.
I will go further in answering my colleague and say, when you reality
test all of these things against what has happened in other funds like
this, what we see is a consistent pattern, a very consistent pattern,
that the initial estimates of how many claims there will be have been
vastly understated.
Mr. SPECTER. Will the Senator yield for another question?
Mr. CONRAD. I am happy to.
Mr. SPECTER. As the Senator from North Dakota outlines the situation,
CBO is incompetent, grossly incompetent. When the Senator from North
Dakota shows different conclusions which his staff has reached, why
wouldn't it be sensible to disband the Congressional Budget Office and
just rely on his staff?
Mr. CONRAD. Because first, I say to my colleagues, those are his
words and his conclusions. I have great respect for the Congressional
Budget Office. I think the Senator knows that is the case.
I say this in seriousness. They have been very clear with us. They
have said there are areas that are extremely difficult to predict. I
accept that. It is very difficult to know how many dormant claims will
come out of the woodwork. But to suggest there are not going to be any
is unrealistic. To say that the number of future cancer claims is going
to be 78,000, when the Tillinghast study that was paid for--not by the
trial bar, not by the labor unions, not by any of the companies who are
against this legislation--it was paid for by the Manville trust, they
said they ran 14 different scenarios, and on average there were 133,000
new cancer claims. That one change, if they are right, increases this
fund from being under water by $150 billion to being under water by
almost $300 billion.
Finally, CBO's estimate of the percentage of nonmalignant claims--
again, this is a hard thing to know--the Tillinghast study suggests
that the range will be 10 to 40 percent. The midpoint of that range is
25 percent. If you think about it, people come in and they go to their
doctor and you have a situation in which they might qualify for $25,000
or even $100,000. There is going to be a tremendous tendency to push
them into those categories. It is human nature.
Again, if we reality test and go back to what has happened with these
other funds, there is a very consistent pattern. Black lung, they said
it was going to cost $3 billion. It cost $41 billion, 14 times as much.
I reluctantly come to the conclusion that this is not only under
water by the amount my professional staff came to--they came to the
conclusion it was $150 billion--I think it is entirely possible, even
likely, that it is at least $295 billion under water, and it may be a
multiple of that because the history of these things is so clear. When
you stack up a bunch of money and you say, come and get it, guess what.
People come and get it. All of a sudden there are all kinds of people
coming forward and making a case that they are owed money.
[[Page S963]]
I yield the floor.
The PRESIDING OFFICER (Mr. Sununu). The Senator from Pennsylvania.
Mr. SPECTER. Mr. President, I am somewhat querulous at the
representation of the reluctance of the Senator from North Dakota to
take the position which he has articulated. It is certainly obvious
that he wasn't prepared to take the position, certainly obvious that
this point of order, which was articulated this afternoon, has taken
him by surprise. As I look at his elaborate charts, I think he has been
anticipating this moment for some time, which doesn't necessarily
impugn his comment that this is with reluctance, but it looks to me as
if it is with calculation.
I am not unaware of the obvious facts of life--that colleagues of the
Senator from North Dakota on the Democratic side of the aisle are not
too fond of this bill. I am not unaware of that. I won't go into the
reasons behind it, but it happens to be a fact.
Senator Conrad is experienced and articulate. He has been chairman of
the Budget Committee and ranking member for a long time and a
distinguished Senator, after having been elected in 1986. I have served
with him in this body for 20 years now. But when he talks about the
Tillinghast study and when he projects what his own staff has done, he
is undercutting the Congressional Budget Office which puts this $140
billion well within the ballpark. I put these letters in the Record--I
have already done that today--where there is the comprehensive analysis
of the Congressional Budget Office, in a letter to me, dated August 25,
2005, and a letter dated December 19, 2005. The long and short of the
Congressional Budget Office analysis is that you are dealing in a range
of $120 to $150 billion, and the point they struck on is 132, which is
$8 billion under the 140.
When the Senator from North Dakota talks about dormant claims, he
doesn't know how many dormant claims there are. Nobody does. You can't
sit here in the year 2006 and speculate about how many other claims
there are that he has articulated. We are not going to vote on this
issue tonight. There aren't enough Senators in the Chamber to vote
tonight. We are going to have a battle royal of charts by the time we
revisit this issue a few days from now. We are going to have fancier
charts than the Senator from North Dakota has. This whole bill may turn
on who has the fanciest charts. We have some pretty good chart makers
ourselves.
When the Senator from North Dakota says it will be terrible if, after
companies have paid money into this trust fund, the trust fund becomes
exhausted and they are asked to pay more money going back to court--
well, the companies who committed to pay $140 billion understand that.
Don't feel sorry for them. They know what they are getting into.
The reality is this: As Mr. Thomas Donahue, head of the U.S. Chamber
of Commerce, has estimated, they are dealing with a $500 billion issue
here, which can be accommodated with $140 billion because you cut out
transaction costs, because when claimants only get 42 cents on the
dollar, $140 billion may be enough, when it may cost as much as $500
billion otherwise. The economy has already suffered to the extent of
$300 billion. So don't feel sorry for the companies. If the trust is
terminated because we believe Senator Biden was right when he offered
his amendment, which I supported in committee, that the claimant should
not bear the risk if the fund was insufficient, that claimants ought to
have the right to go back to court, that is the real safety valve if we
are wrong.
But I don't think we are wrong, because we are going to have some
fancy charts in a few days that will show the decline of asbestos
claims. Senator Sessions is usually erudite, but he is especially
erudite on that subject, as to how the claims have gone down and how
the projections show that we will realistically being paying out less,
certainly well within $140 billion.
I know Senator Ensign and Senator Sessions want to speak, so I will
reserve some of my time.
The PRESIDING OFFICER. The Senator from Nevada is recognized.
Mr. ENSIGN. It was with great reluctance that I raised this budget
point of order. I have a great deal of respect for Senator Specter and
believe there is a great need to enact asbestos legal reform. There are
companies that are shutting down. Many of the current tort claims are
fraudulent. There are victims who are not getting the compensation they
need and deserve.
The asbestos crisis is a serious problem that is threatening the
economy of the United States. I recognize that. I voted for the Cornyn
substitute because I believed it was a better answer to help the United
States, our economy, and the victims. The Hippocratic oath, to first do
no harm, has been mentioned on this floor before. Unfortunately, this
Chamber has, on many occasions, done more harm than good. There is so
much unpredictability in this bill that my fear is we are considering
doing far more harm than the current system.
In the December 19 letter written to Senator Specter from the
Congressional Budget Office, that Senator Specter and Senator Conrad
were just talking about, it says:
There is a significant likelihood that the fund's revenues
would fall short of the amount needed to pay valid claims,
debt service, and administrative costs. There is also some
likelihood that the fund's revenues would be sufficient.
So there is a significant likelihood that they won't be enough and
some likelihood that they will. CBO's final conclusion is that they
cannot predict the Budget impact of this bill with any degree of
certainty. We have all seen the Congressional Budget Office or the
Joint Tax Committee's work product. It is put together by hard-working
folks who do their best to estimate. But I have not seen their
estimates turn out to be accurate very often. This is because what they
do is an incredibly inexact science. What they are trying to estimate
in this bill is even less precise, less exact of a science than what
they normally do. Just a given example with respect to JCT, I had a tax
provision about a year and a half ago that had to do with bringing
money from overseas back into this country. The CBO estimated it would
result in $125 billion to $140 billion coming back into this country
for investment. We thought that estimate was very low. It turns out we
were right. To date over $350 billion has been reinvested in the United
States, far in excess of the estimate.
Now if CBO's estimate is off on this particular legislation to the
degree that the estimate was on my legislation, we are in serious
trouble. That is why the CBO says, and the Democratic ranking member
and the Republican Budget Committee chairman say, the point of order is
valid and lies on this bill.
I think there are problems with this bill. One problem has to do with
the medical criteria. It allows all kinds of people to recover without
any degree of certainty as to how many future claimants there will be.
The potential is huge. So despite my strong desire to fix this
legislation, I believe that it cannot be fixed. I wish Senator Cornyn's
substitute would have passed. I thought that was the right place to
start working on solving the asbestos crisis. This body could have
worked with that legislation. We could have made sensible changes to
move that version forward. I don't think that the underlying piece of
legislation can be fixed to provide any certainty. I don't see how we
can ensure that the taxpayers do not end up with a huge mess that
includes a great deal of debt for future generations.
When will the uncertainty occur? Will it be 8, 10, 12, or 15 years
from now? I don't know. When the uncertainty comes, the debt that the
taxpayers will be asked to shoulder could be enormous. And this bill
could come due at exactly the wrong time. When we can least afford it.
It will come due when the baby boomers start affecting Medicare,
Medicaid, and Social Security. I respect the chairman of the Judiciary
Committee a great deal for the work he has done, and I know he has
tried to work in a bipartisan fashion and with many industries. They
say politics makes strange bedfellows. This legislation proves that to
be true. When the positions that we take on this bill or on the point
of order do not break down by party lines and when liberals and
conservatives are likewise divided, you know that this bill has strange
dynamics. Industries that are normally allies are also split on this
[[Page S964]]
bill. Trial lawyers are split on this bill. The reasons for such a
split are a result of the uncertainty about this piece of legislation.
I appreciate the indulgence of my colleagues to allow me to speak for
a few minutes. I look forward to the debate on this point of order. I
am not sure exactly when we will vote on it, but I hope the point of
order is sustained.
I yield the floor.
The PRESIDING OFFICER. The Senator from Alabama is recognized.
Mr. SESSIONS. Mr. President, I serve as a member of the Budget
Committee, and I am very pleased that Chairman Gregg put in language
that allows for this budget point of order. I think it has a potential
in many of our entitlement programs to help rein in abusive spending.
But this is quite a different matter, I say to my distinguished
colleague, Senator Ensign. He is such a terrific asset to this Senate,
a great member of the Budget Committee, and is rightly engaged in
trying to make sure we don't throw away money. I hope I have been an
ally with him in that process.
But this is not Government money. This is money put up by the
defendants who are paying out every day in judgments and lawsuits all
over America. They have said: We are tired of having 58 percent of the
money we pay out not get to the victims. Only 42 percent gets to the
victims. We ought to create a system to allow victims to get more
money, and we can have a little certainty as to what we pay out. So
they agreed to pay into this fund. It is not the Government's money. It
simply would be administered by the Department of Labor and, therefore,
apparently the experts say it qualifies for this objection.
Let me say what happens if there is a shortage. What happens is the
fund fails, the FAIR Act ends, and the plaintiffs get to go back to
court, as they are today, and file their lawsuits. And the Government
is not on the hook for that money, if there is a shortfall, No. 1.
Senator Ensign correctly guesstimated that more money would come back
from foreign company profits into the United States with his tax relief
bill than CBO did. Well, I would say this. I can guesstimate this. At
one point, I represented plaintiffs. I see that the lead plaintiff
lawyer in the history of this litigation has made an estimate on it and
he has concluded there is plenty of money in this trust fund. Why is it
likely, in my opinion, that there is enough money? People say there is
not enough money here and it is going to fail. Why would I conclude
that may not be so, that probably the fund may survive?
First, those who are putting money into it think it is enough. They
would not subject themselves to this if they didn't think it would
work. Second, CBO estimates it, and why would they estimate something
in this nature? The reason is, somewhere in the 1970s--probably early
1970s--people became sensitized to the dangers of asbestos. They
learned about it and crackdowns were undertaken to limit exposure. By
the time 1980 got here, very strict rules were imposed--and that was 26
years ago--on how to handle asbestos, and exposure today is nil
compared to what it was in the 1940s and 1950s, when people were
unknowingly placed in positions where their health was destroyed as a
result of massive exposure to asbestos fibers.
So it is obvious we have very little asbestos in our society today.
If you even see somebody take asbestos out of a building today, they
have masks on. All of this stuff is required by OSHA so that not one
fiber will touch them. I think the likelihood is that we are going to
see a continued decline in the asbestos claims and, as a result, I
think it is possible--although I am certainly not an expert--that CBO,
plaintiff lawyer Dicky Scruggs, and others are correct to conclude
there is enough money in the fund to make it go.
There are a few things we need to do, however. We need to tighten up
several of the medical criteria issues in this legislation so it will
be sure to be successful. If we allow people to come into the fund
because at one time or another they were exposed to some asbestos and
they may contract some cancer or some other disease, and they can then
claim they are, therefore, owed payment from the asbestos fund, we will
never have enough money. The criteria we have today are far better than
exist in the courts of America, but I think there needs to be some
further tightening up, so that people who are sick from asbestos get
paid and paid generously, but people who contract other diseases are
not unjustly enriched by being paid out of a fund that is designated
for people who have contracted disabilities and diseases as a result of
asbestos. That is what is fair and just. That is what the fund should
do. I hope we will be successful in reaching that.
I say again that I respect this point of order and I respect Senator
Ensign for raising it. I point out this is indeed technical in the
sense that the monies in this fund are not Federal Government money,
and that if the fund runs out of money, the Government doesn't put in
extra funds. It goes back into the litigation system and the plaintiffs
continue their lawsuits in that fashion. Therefore, I think it would be
wise under these circumstances to waive the Budget Act.
I thank the Chair and yield the floor.
The PRESIDING OFFICER. The Senator from Pennsylvania.
Mr. SPECTER. Mr. President, I thank the distinguished Senator from
Alabama for his comments, and I thank him for his extensive work on the
committee, especially on this bill and especially for being on the
floor so much this week and making such very strong arguments.
Our general counsel said to me in the corridor a few hours ago: Jeff
Sessions has been around all the time. He is doing the work, and he
used a four-letter word, a blank of a good job. I thank Senator
Sessions for his work.
I wish to make a few comments in closing. We probably lost a few
people who watch C-SPAN2, in any event. We certainly lost the Senators.
When the Senator from Nevada, Mr. Ensign, made a comment about
unpredictability, there is one thing which is not unpredictable, and
that is the suffering of the mesothelioma victims and the other victims
from asbestos exposure. We talk a lot about mesothelioma--abbreviated
to meso but that is a fatal disease which is caused by exposure to
asbestos, and there are many gradations.
When we talk about unpredictability, we also ought to talk about
predictability, about the tens of thousands of asbestos victims who are
not being compensated today because their companies are bankrupt. There
are tens of thousands of veterans who are not being compensated because
they have no one to sue, even though they contracted illnesses from
asbestos in the service of their country. We know of the 77 companies
that have gone bankrupt, and more are on the way. We do know that
predictability.
When the Senator from Nevada, Mr. Ensign, talks about estimates which
are inexact, that is true. You can fault the Congressional Budget
Office, but they do the best they can. We do know of the exact
estimates, exact reality of the people who are suffering.
I believe the conclusion is that we have a duty to do something about
that. When private companies are willing to put up $140 billion to
compensate those victims of asbestos to save future bankruptcies, to
save and eliminate and cure pain and suffering, we ought to take that.
We are not infallible. If we are wrong and we do not have enough
money, they understand the consequence of going back to court. But I
think it all points to the conclusion that we ought to pass this bill.
We ought to consider a number of problems that we have in the floor
debate and improve this bill. Then when we have come to the end of the
rainbow on improving this bill as much as we can, we have to make a
judgment: Is this bill, albeit not perfect, albeit not satisfying
everybody's interests, better than the current chaotic system?
It has to be an enormously terrible bill to be worse than what we
have today. That we know with certainty.
When you don't meet the Congressional Budget Office test of ``great
certainty,'' that is all of life. Again, I analogize the standard for a
death penalty in a criminal first-degree murder case is proof beyond a
reasonable doubt, and in a civil case is more probable than not. And in
our legislative judgment, we have done the most we can do in good faith
to craft legislation
[[Page S965]]
to meet a pressing problem, on which everyone agrees--the Senator who
is advancing this point of order starts off conceding the terrible
problems of asbestos and the pain and suffering to the victims and the
terrible blight on the economy.
We will be debating this some more in the days ahead. I urge my
colleagues to consider this issue very carefully because this is an
issue which will kill the bill if this point of order is not defeated.
I yield the floor.
The PRESIDING OFFICER. The Senator from Illinois.
Mr. DURBIN. Mr. President, I am glad we have finally come to this
portion of the argument because it reinforces a lot of things that have
been said on this Senate floor over the last several days. It really
comes down to a very basic question, the question as to whether this
bill has been carefully crafted, whether it contains enough money in
the trust fund to compensate the hundreds of thousands of asbestos
victims who will have to count on it.
I have raised this issue repeatedly as to the $140 billion figure.
There are reliable estimates of the actual cost over a 50-year period
of time that almost double the amount of this trust fund, some even
higher.
Senator Kent Conrad on our side of the aisle is well respected as the
ranking member of the Senate Budget Committee. His background as the
head of taxes in his State of North Dakota, his own personal education
and experience give him extraordinary credibility when it comes to
issues of cost and issues involving accounting. He has made a
convincing case to our caucus and to those who are listening on both
sides of the aisle that the $140 billion that is part of this trust
fund is not nearly adequate to the task.
Of course, if it isn't, what choices do we have? Senator Specter
suggested on the floor the other day that if $140 billion wasn't enough
to pay the victims, then we will pay the victims less. Today when I
asked him a similar question, he said there are other options. You can
say to these victims, if you have taken away their lawsuit that they
worked on for a year or two, they have to stop their case in court.
Then put them into this new trust fund system, and then the trust fund
system fails them at some later date and doesn't pay them all they are
entitled to, you can say to these victims: You can go back and start
over in court now.
That is cold comfort to a family that is doing its best to take care
of medical bills and lost wages and burial expenses for someone they
love.
They have made a point over and over that under no circumstances will
the Federal Government step in and make up the difference. I guess that
verbal assurance is good, but we know there is always that possibility
at some later date if this program doesn't work, if it fails, that
someone will say we can't go back to the companies and ask them to put
more money in the trust fund; we can't turn the victims loose; the
right, compassionate thing to do is for the Federal taxpayers to step
in.
It is not a farfetched argument, and it is one we have to consider as
a possibility.
Now a Republican Senator steps forward, Senator Ensign of Nevada,
raising a valid point of order, a point which goes to the heart of the
funding of this bill and how it will pay out any benefits that might
accrue in the future.
I would like to note some of the points that have been made during
the course of this debate that I think are worthy of repetition and,
for those following the debate for the first time, worthy of note.
The Congressional Budget Office has warned us of the significant
likelihood that this asbestos trust fund will fail.
In a letter to the chairman, who spoke just before me, they wrote:
The proposed trust fund might or might not have adequate
resources to pay all valid claims. There is a significant
likelihood that the fund's revenues would fall short of the
amount needed to pay valid claims, debt service, and
administrative costs.
So we are saying to hundreds of thousands of victims and their
families: Trust us, we have created a trust fund, and with that trust
fund, we will take care of your needs in the future. There is enough
money, the proponents of this legislation say, but the Congressional
Budget Office, looking at the victims, their injuries, and the
compensation promised in this bill, came to a different conclusion.
They concluded:
There is a significant likelihood that the fund's revenues
would fall short of the amount needed to pay valid claims. .
. .
As Senator Specter said on the floor the other day, one of the
options, then, is to pay the victims less.
One of the reasons we need to take a look at this trust fund
shortfall is when we look at the elements that are behind it, the
claims and administrative expenses are likely to exceed contributions
to the asbestos trust fund. The upfront claims will far exceed
contributions.
Understand, people who are told they have to leave the courthouse and
can no longer pursue a claim in court will have to turn to this trust
fund. There is no place else to go. They will come in large numbers,
but the amount that is being contributed to the fund by businesses is
not going to match the demand. At the outset, claims will far exceed
contributions, so the trust fund will have to borrow substantial
amounts of money.
How much? The trust fund is supposed to be $140 billion. There are
estimates that the interest and administrative costs may reach $52
billion, more than a third.
Small adjustments in amount and timing of assumptions quickly
bankrupt the trust fund. If you guess wrong how many people are sick
and how often they will file their claims and in what numbers, the
estimates of the solvency of the trust fund could fail. It is
unrealistic to assume that the trust fund will ever terminate.
The reasons for likely trust fund shortfalls: The Congressional
Budget Office didn't count dormant claims that may surface once this
trust fund is created, exceptional medical claims, or claims of family
members of workers exposed to asbestos.
CBO's estimate of the number of future cancer claims is likely to be
too low, according to consulting firms that have taken a look at their
formulation.
The CBO's estimate of the percent of nonmalignant claims that will
receive a cash award is likely to be very conservative.
Take a look at this chart. This chart tells the story. The red part
of the graph is trouble. The red part of the graph reflects the
liability, the amount that should be paid out that cannot be covered by
the revenues coming into the trust fund.
So we make a promise to people. We say to them: Give up your claim in
court, come to this trust fund and trust us. Yet when we project the
needs of these victims against the revenues coming into the trust fund,
we see a dramatic shortfall.
The fund stops paying claims in 2009. Claims filed in 2009 and all
later years will not be paid. Too many claims, not enough revenue into
the fund.
Let me indicate what this shortfall can mean. Mr. President, $150
billion--remember, this trust fund is funded at $140 billion--to fall
short $150 billion is a substantial miscalculation. In present value
terms, it means we would have to put $50 billion into the fund today to
cover the $150 billion shortfall over the 30-year life of collections
and 50-year life of disbursements under this trust fund. So this is a
significant shortfall.
Keep in mind that we are saying to people: You cannot continue to go
to court to be compensated; you have to turn to a trust fund with a
hole in the pocket.
Let me tell you how badly others have miscalculated the number of
asbestos cases that can be filed.
I remember Johns Manville, a big company, based in Colorado. They
were one of the first firms hit because they sold a lot of asbestos
products. When they went bankrupt, they tried to create a separate fund
to pay off all the victims of Johns Manville products, their workers,
and others. They set aside money, and in order to set aside a proper
amount they had to speculate and give some calculation about how many
people would be making claims for asbestos injuries.
The original range of claims went from 50,000 to 200,000. That is
what they said they would ultimately have to cover. The claims received
through the summer of last year were almost 700,000. They had estimated
a high of 200,000. Almost 700,000.
[[Page S966]]
The recent estimate of the total number that could be paid is 2.1
million. So how can those who have written this bill say with any
degree of reasonable certainty that we know how many people were
exposed to asbestos at some point in their lives and will later come
and make a claim? Because for many people, they will live a long time
with asbestos fibers in their lungs, ticking timebombs that could go
off 10, 20, 30, 40 or 50 years after exposure. There could be anyone on
the Senate floor today harboring in their lungs asbestos fibers. Those
fibers may or may not cause a problem. We just don't know because for
years no one paid close attention.
Many people were told it is safe. Expose yourself to asbestos, it
can't be a problem. Some were misled. Some operated out of ignorance.
But the fact remains. Johns Manville, in calculating its liability for
its own trust fund, blew it. Instead of 200,000, it was 2.1 million.
(Mr. COBURN assumed the Chair.)
Mr. DURBIN. This is not the only case of miscalculation. For coal
miners, we created a program called black lung. I know it pretty well
because I have met a lot of coal miners suffering from it in my home
State of Illinois. Exposure to coal dust, inhalation of coal dust
causes lung problems, so we tried to set up a separate fund for these
miners to take care of it. We estimated it was going to cost us about
$3 billion to compensate all these coal miners. Our actual black lung
payments through 2004 are $41 billion.
So if some of us come to this floor skeptical of this trust fund,
skeptical of this $140 billion, and wonder if we can say to victims in
good conscience, we are going to stop your going into court and force
you into a trust fund which will pay you, when we know full well how
many times we failed in estimating how much these trust funds need to
have banked away, I think that really goes to the heart of this whole
issue.
Also, a critical element here is why we are on this bill today.
People who are following this Senate debate maybe tune in to watch C-
SPAN, follow the debate in other places, and some will say to them:
What is the Senate talking about today? They may report: Well, it is
about asbestos.
Sure, it is an important issue. But my guess is most families across
America would probably step back and say: I sure wish they would talk
about the cost of health insurance for families, businesses, and
individuals or maybe the cost of this heating bill I have in my hand,
where the cost of heating this home has doubled since last year or
maybe they ought to talk once in a while about this Medicare
prescription Part D Program which has become a mess for seniors across
America. Why aren't they talking about pension security when our
neighbors next door worked a lifetime at that plant, and then the plant
went into bankruptcy and dumped the pension, and now this man and his
wife, who thought they had done everything right in life, don't have
retiree benefits and don't have health benefits? Why aren't they
talking about those things?
No, the Senate is engaged in a debate on the asbestos bill which I
have characterized as a clash of the special interest titans--huge
companies on both sides, for and against asbestos; insurance companies
for and against this bill; trial lawyers opposing the bill; others
supporting the bill; labor unions by and large opposing the bill with
two or three exceptions. Why are we on this bill today? Because what
drives this debate is what is at stake. What is at stake is not just
recovery for hundreds of thousands of asbestos victims but a lot of
money.
Earlier today, a Republican Senator, Mr. Bennett of Utah, came to the
Chamber with two charts which I thought really told the story. I don't
have those charts, but I have summaries here. What Senator Bennett
pointed out is that for about 10 of the largest companies affected by
this bill, this bill is a windfall. It is a windfall in this respect:
They estimated how much each of these companies would have been
required to pay out to asbestos victims if they went through the
regular court process, and then they estimated how much the same
companies would pay into the trust fund we are talking about today. And
the difference is startling. For these 10 companies, the difference is
$20 billion. In other words, if they paid the claims of victims in
court, they would have paid $20 billion more than the amount they paid
into the trust fund.
One of the companies which has been publicized recently is U.S.
Gypsum. The reason people talk about it is they recently did a public
filing, and here is what they said. They said: If we are held liable in
court for all the asbestos claims we think could be filed against us,
we believe we would pay out something in the range of $4 billion. But
if this bill passes, we will be required to pay into the trust fund
$797 million.
What a dramatic difference. So for this company, the passage of this
bill is worth more than $3 billion. That is the reason we are here.
We are here because so many of these corporations know that if this
bill passes, their exposure to liability is reduced dramatically. The
obvious question is, If they don't pay the $20 billion to victims, who
will make up the difference? And that is the point made by Senator
Bennett earlier in the day. He gave the names of eight or nine other
companies, much smaller, some of which have paid small amounts to
asbestos victims in court cases in settlements, some which have paid
none. In each case, these companies had to step up and pay substantial
amounts of money, ranging from $75 million to $578 million.
So here is one of the largest companies, U.S. Gypsum, with the
largest exposure--$4 billion--paying about $800 million into the fund.
And then you take a look at a company named Foster Wheeler, a pretty
well-known company. They will pay out $80 million in their experience
in asbestos over the next 10 years. That is their estimate, I should
say, $80 million. And they are asked to pay $578 million into the fund?
Where is the fairness in that, that these companies with little or no
exposure have to pay so much money while companies with so much
exposure pay dramatically less? That is the fundamental unfairness in
what we are discussing in the Senate here this evening.
I might also add, many of us are struggling to try to absorb this
bill because this morning, as we had expected, the chairman filed a new
version of the bill. We had been debating this for months, maybe years,
and this morning comes a new version which, according to the chairman,
makes 47 significant changes in the first bill we were handed.
Think about that for a moment. When you consider how many lives and
how many families are dependent on our doing the right thing in the
passage of this legislation, we are rushing to pass a trust fund that
will take these families and individuals out of the courthouse into a
trust fund.
The Presiding Officer is a medical doctor from the State of Oklahoma.
We may not see eye to eye on a lot of things, but I listened as he
speculated on what the exposure might be on this trust fund. He has
made some statements as to whether something should be covered or
should not be covered. But what he said, at least in the course of the
Judiciary Committee hearing, is that there is some real uncertainty
about how many people will be filing claims and what those claims will
be worth.
That is what troubles me. I think there is more we can do to make
this system more fair. First don't abandon America's court system.
Don't abandon our system of justice. Don't conclude that 200 years of a
court system in America is not proof positive that it is a valuable
part of our American heritage and a valuable part of America's life.
Start with our court system.
If there are abuses, and I will concede there are abuses, let's deal
with them. I will tell you point blank, based on my legal education of
long ago, if you want to recover for injury in court, you must have
injuries or damages. Simple exposure to asbestos, which could include
all of us, is not enough. You have to show some injuries or damages
before you recover. That is why, in our State of Illinois, we set up
what we call the pleural registry, and that says if you have been
exposed but you are not sick, no symptoms, come in and sign up. If you
don't contract an illness or something that is fatal, then you will
have escaped any problem related to asbestos. If you do, you can come
through the court system and you will
[[Page S967]]
not be held back by any statute of limitations.
Some have argued about where lawsuits should be brought. That is a
valid issue. We should debate it. Some have argued about what
attorney's fees should be. That is a valid issue. But there have been
some misstatements on the floor about attorney's fees, and I wish to
clarify them. Some have said on the floor that 58 percent of all the
money generated in these asbestos verdicts and settlements goes to
lawyers. Technically, that is true, but look more closely: 31 percent
is legal fees claimed by the victims' attorneys; 28 percent or 27
percent is from defense attorneys.
I practiced law for a number of years, and it was not uncommon for a
person of modest means to come in my office and say: I have been
injured, I need to file a lawsuit. And you would say to them: I know
you can't put up thousands of dollars to pay for all the time I have to
put in as a lawyer to get ready to go to court, argue the case, do
everything lawyers do, so I will take it on a contingent fee basis. If
you win, I win. If you lose, I lose.
For many people, that is the only way they can come to a courtroom.
They can't put up $10,000, $20,000, $30,000 to pay for a team of
lawyers to prepare a case. They just don't have it. So contingent fee
cases are all across America.
If you file a case in Workers' Compensation in Illinois, you may pay,
I guess--it has been a few years since I have done it--around 20
percent in attorney's fees. An ordinary case for personal injury might
be a third. That is usually what the lawyer's fees are when it is a
contingent fee basis. To say that asbestos victims are paying 31
percent in attorney's fees doesn't suggest to me that there is a built-
in scandal here; it suggests that is fairly ordinary and routine in the
legal practice.
It is interesting to note that for every dollar paid out, the
defense--companies that are hiring defense attorneys--is receiving 28
cents on the dollar. That is an indication to me, with 30 cents and 28
cents, the victims' attorneys and the defense attorneys are comparable
amounts. But having said that, if there is a discussion about how to
make those attorney's fees more fair, I am willing to sit down and work
on it.
I also believe we ought to look at the States that have already
stepped forward and said: We are not going to abandon our courts, we
are not going to abandon our system of justice, we will make changes so
it works better--States such as Florida, Texas, Ohio. They give us good
guidance. Senator Cornyn of Texas gave us an amendment--and may come
back with another version of it soon--which addresses that particular
approach. I would feel a lot more confident in making certain that our
court system worked a little better than abandoning our court system to
set up a trust fund that is not paid for.
I hope my colleagues in the Senate on both sides of the aisle will
seriously consider the point of order raised today by my Republican
colleague, Senator Ensign of Nevada. It is a valid point of order. It
goes to the issue as to whether $140 billion is adequate, whether the
payout of this money is consistent with the budget rules of the Senate.
I yield the floor.
The PRESIDING OFFICER. The Senator from Alabama is recognized.
Mr. SESSIONS. Mr. President, I think the first time I heard the
figure 31 to 27 was by Senator Durbin. It didn't surprise me, really.
The asbestos defendant companies are hiring some of the best lawyers in
America, and they charge them big fees. It is part of what they cost.
If it is 31 percent for the defendants' attorneys and 27 percent for
the plaintiffs' attorneys, I am not really surprised. I had no idea
precisely how it would come out, but I am not surprised at that.
What I would say to my colleagues here in the Senate, however, is
that it is not disputed that 58 percent of the money paid out by the
defendants is going to lawyers and not to the victims. It goes to the
plaintiff, and the plaintiff has to pay almost half of the judgment to
his lawyer, so he or she doesn't get to keep all the money. He has to
pay this big lawyer fee. Plus the corporation is being sued and has 31
percent of what he is paying out going to his own lawyers. So who is
winning here? This is really indisputable. Who is winning here? The
legal system is grinding up people and companies in an extraordinary
way which just has to be ended. We have to work our way through this.
It is so great to have a Presiding Officer, a medical doctor, try to
help us deal with some of the medical criteria.
There still remains a great weakness in this bill in a number of
things.
My colleagues present the most contradictory arguments. One time they
are in here saying we have to have it in the Department of Labor, or we
have to pay more and more and more, and then they come in and make the
argument that these funds traditionally get out of control.
When Senator Coburn and Senator Cornyn propose an amendment that
tightens the medical criteria a little bit, they object and vote
against them.
This would be sort of amusing if it wasn't such a serious thing.
Some of my colleagues have been saying that the fund is clearly going
to fail because we underestimate the number of claims. Claims are not
the real problem. This bill is going to help with the claims. I don't
know how many claims this bill will reduce--not quite as much as the
Cornyn bill did because it was better criteria, in my view; more
realistic, according to medical data and science.
But under this bill, I would guess that 40 percent to 50 percent of
the current claims are not legitimate.
It prohibits and bars claims when a person is not sick. The latest
estimates are that half the claims being filed today are by people who
are not sick.
If you have asbestos exposure and you can see some scarring in a
person's lungs, the chance of that person getting sick are enhanced.
And under this legislation they don't get paid right then. But if they
are monitored medically, and if they become sick, they will get
compensation.
That is the best way to handle that, for sure.
If you get sick, you simply walk in with your doctor and with a
report that says what the degree of illness is, another doctor will
probably check that, and if it is verified, they will write you a
check. You do not have to give a third, a fourth, or 40 percent to a
plaintiffs' lawyer, and a defendant corporation isn't having to hire
lawyers to defend against the lawsuit.
My colleague, Senator Durbin, is so eloquent and is a skilled lawyer.
He made an argument that I suppose people listening probably took a bit
of an interest in and wondered about. He declared that the 10 companies
with the most exposure would pay substantially less under this trust
fund than under a court process--$20 billion less.
Let me say two things about that.
It is not a question of how much they pay out, it is how much gets to
the victims, people who are sick. That is the most important question.
How do we get more money to people who are sick without having to have
the whole business collapse?
Second, he did not point out the fact about these tier I companies.
These are the companies that are in bankruptcy. They are in bankruptcy
already as a result of this litigation. There is only so much a company
can carry. If you kill off the company, what do you do then? How can
anybody be paid?
You can't destroy the companies totally and take them out of business
if you expect them to continue to pay, for 25 years, people who become
sick.
That is why they already have protections in bankruptcy, and they are
paying through the bankruptcy court less than they would be otherwise.
To keep these companies in the game, keep them alive, we give them a
certain amount they have to pay depending on how big the companies are.
And some are big and can pay a sizable amount--and they will pay a
substantial amount of money, but they won't be going bankrupt.
A lot of people do not understand this. If the company that is
responsible for exposing you to asbestos no longer exists, whom do you
sue? If there are two people who have been exposed to asbestos, both of
them have serious lung damage and it reduces their capacity to
function, let us say both of them are entitled to a $200,000 judgment.
One of them wants to sue a company that is gone, no longer exists, the
company that is responsible, you would say: Well, they will be able to
recover somewhere. No. If the company no longer exists that exposed
him, that
[[Page S968]]
person won't collect $200,000; he won't collect a dime. But the other
one happens to have been exposed by a company that is still in
existence and has money, or insurance, they can collect the full
$200,000.
That is happening today.
To make it crystal clear, I will ask you about an automobile
accident. Have you ever heard of people who have been run into, have an
automobile accident as a result of a drunk driver who is uninsured and
somebody is injured, they say, I am going to sue them and I am going to
get a $1 million verdict. You know what the lawyer says? Does the
defendant have any money? Well, no. Does he have any insurance? No.
What does he have? He has a rental, that is the only car he had, it is
a piece of junk, and it is not worth anything. The lawyer says: If you
get a $50 million verdict, you will not collect one dime. It is not
worth the trouble to go to court over.
This happens in America. It is the way the law is.
But this trust fund says whether the company that exposed them and
injured them is in existence or is not, they will be able to recover
too out of a uniform trust fund. And companies that are bankrupt will
be able to pay at a level that allows them to stay in business and
continue to pay into the trust fund.
Seventy-seven companies are already bankrupt. They say: Well, we are
going to make more companies pay. We are going to make more companies
pay than are supposed to pay--somehow make them pay more than they are
supposed to pay. But let me say this to my colleagues or anyone who may
be listening. Now there are 8,400 companies being sued, being dragged
in, and many of them have the most tenuous exposure.
I remember very vividly a man coming into my office. He bought a
company that at one time sold asbestos and had not sold asbestos for
many years before he bought it. He buys it and makes it a part of his
company. The next thing he knows, all of them are beginning to go at
that little company as a defendant which he bought, and he is liable
for it. Money is being sucked out of his whole, big company and going
into this fund.
These companies realize that. They may not be the main target today,
but the clever and sophisticated and determined plaintiff lawyers have
demonstrated a capacity to add on companies and make them liable more
than they were before. Many companies are willingly prepared to pay
into this fund so they won't be sued for the rest of their existence;
so when they go to a stockholders' meeting and write a prospectus which
shows what their liabilities are, they can say exactly what their
asbestos liability is rather than being required to list 5,000 asbestos
cases filed against them.
Somebody may say: How much is that going to cost? Well, we don't
know. Well, could it be $1 million each? Well, we do not know. We don't
think so. I may not want to invest in your company. I may not want to
buy stock in your company. I have to have some more certainty about how
much you are going to pay.
That is one of reasons we are trying to pass this trust fund, so the
defendant companies can say to their stockholders and would-be
investors and those who would contract with them what their future
financial prospects are.
Isn't that a good public policy thing to try to do?
Veterans, if we don't pass this bill, you are not going to be able to
recover. Most of them have nobody to sue. You can't sue the Federal
Government for this. A lot of other people already have found that the
people they are entitled to sue by law either have no money or no
longer exist.
I will say this: I think the legislation is headed in the right
direction. I believe that Senator Coburn is correct. We need to watch
this criteria. If we get that wrong, it can take this bill down. A
doctor knows that thousands of Americans every day who are not exposed
to asbestos get colorectal cancer or get throat cancer or get prostate
cancer.
If somehow anybody who had any exposure to asbestos is not going to
be able to come into the fund and demand that the fund pay them for
cancer which they may have been genetically predisposed to, whether or
not they have been exposed to asbestos, we have done something that is
dangerous and the fund may not be able to survive.
The Congressional Budget Office says this fund, as rewritten, will
survive. But I believe it could be tightened up to make it better. I
believe that the fund has a chance to be viable throughout its entire
life and fulfill its promise because we have done a better job in
recent years in dealing with exposure to asbestos.
There has been a sea of change in what has happened. In earlier days,
the companies did not warn the people who would be using their product
about how dangerous it was. Even after they knew it was dangerous, they
didn't warn them. Now everybody is warned. For 30 years, maybe 35
years, there has been exceedingly great care utilized when asbestos is
about. You see people with masks on and all of that.
I think it is logical to assume that we will continue to see a
decline in the claims and also this bill will take out the unjustified
claims. Claims of people who have not been given any disability or
sickness, even though they have been exposed and they get sick, they
will be paid. If they don't get sick, they won't be paid.
That will reduce a lot of the claims. It will come down to people
with legitimate illness. If a person comes in with that most grievous
disease, mesothelioma, which is generally a fatal disease, this would
entitle them to claim $1.1 million dollars, be able to have half of it
paid in 30 days and the other half in 6 months.
Today, they do not know what they will get, and most of the claimants
are deceased before money is recovered.
I suggest the absence of a quorum.
The PRESIDING OFFICER. The clerk will call the roll.
The legislative clerk proceeded to call the roll.
Mr. FRIST. Mr. President, I ask unanimous consent the order for the
quorum call be rescinded.
The PRESIDING OFFICER. Without objection, it is so ordered.
Amendment No. 2747, As Modified
Mr. FRIST. Mr. President, I ask unanimous consent that amendment No.
2747 be modified with the change at the desk.
The PRESIDING OFFICER. Without objection, it is so ordered.
The amendment (No. 2747), as modified, is as follows:
On the appropriate page, insert the following and number
accordingly:
Guidelines.--In determining which defendant participants
may receive inequity adjustments the Administrator shall give
preference in the following order:
(A) Defendant participants that have significant insurance
coverage applicable to asbestos claims, such that on the date
of enactment, 80 percent or more of their available primary
insurance limits for asbestos claims remains available.
(B) Defendant participants where, pursuant to the guidance
set forth in section 404(a)(2)(E), 75% of its prior asbestos
expenditures were caused by or arose from premise liability
claims.
(C) Defendant participants who can demonstrate that their
prior asbestos expenditures is inflated due to an unusually
large, anomalous verdict and that such verdict has caused the
defendant to be in a higher tier.
(D) Any other factor deemed reasonable by the Administrator
to have caused a serious inequity.
In determining whether a company has significant insurance
coverage applicable to asbestos claims, such that on the date
of enactment, 80% or more of their available primary
insurance limits for asbestos claims remains available, the
Administrator shall inquire and duly consider:
(1) The defendant participant's expected future liability
in the tort system and accordingly the adequacy of insurance
available measured against future liability.
(2) Whether the insurance coverage is uncontested, or based
on a final judgment or settlement.
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