[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

[[Page S946]]

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

[[Page S947]]

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,

[[Page S948]]

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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