[House Report 108-672]
[From the U.S. Government Publishing Office]



108th Congress                                            Rept. 108-672
                        HOUSE OF REPRESENTATIVES
 2d Session                                                      Part 2

======================================================================



 
               POSTAL ACCOUNTABILITY AND ENHANCEMENT ACT

                                _______
                                

 September 23, 2004.--Committed to the Committee of the Whole House on 
            the State of the Union and ordered to be printed

                                _______
                                

 Mr. Sensenbrenner, from the Committee on the Judiciary, submitted the 
                               following

                              R E P O R T

                        [To accompany H.R. 4341]

      [Including cost estimate of the Congressional Budget Office]

  The Committee on the Judiciary, to whom was referred the bill 
(H.R. 4341) to reform the postal laws of the United States, 
having considered the same, reports favorably thereon with an 
amendment and recommends that the bill as amended do pass.

                                CONTENTS

                                                                   Page
The Amendment....................................................     1
Purpose and Summary..............................................    40
Background and Need for the Legislation..........................    40
Hearings.........................................................    42
Committee Consideration..........................................    42
Vote of the Committee............................................    42
Committee Oversight Findings.....................................    42
New Budget Authority and Tax Expenditures........................    42
Congressional Budget Office Cost Estimate........................    42
Performance Goals and Objectives.................................    53
Constitutional Authority Statement...............................    53
Section-by-Section Analysis and Discussion.......................    53
Changes in Existing Law Made by the Bill, as Reported............    58
Committee Jurisdiction Letter....................................   144
Markup Transcript................................................   147

                             The Amendment

    The amendment is as follows:
    Strike all after the enacting clause and insert the 
following:

SECTION 1. SHORT TITLE; TABLE OF CONTENTS.

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

Sec. 1. Short title; table of contents.

                 TITLE I--DEFINITIONS; POSTAL SERVICES

Sec. 101. Definitions.
Sec. 102. Postal services.
Sec. 103. Financial transparency.

                    TITLE II--MODERN RATE REGULATION

Sec. 201. Provisions relating to market-dominant products.
Sec. 202. Provisions relating to competitive products.
Sec. 203. Provisions relating to experimental and new products.
Sec. 204. Reporting requirements and related provisions.
Sec. 205. Complaints; appellate review and enforcement.
Sec. 206. Workshare discounts.
Sec. 207. Clerical amendment.

           TITLE III--PROVISIONS RELATING TO FAIR COMPETITION

Sec. 301. Postal Service Competitive Products Fund.
Sec. 302. Assumed Federal income tax on competitive products income.
Sec. 303. Unfair competition prohibited.
Sec. 304. Suits by and against the Postal Service.
Sec. 305. International postal arrangements.
Sec. 306. Redesignation.
Sec. 307. Clarification.

                      TITLE IV--GENERAL PROVISIONS

Sec. 401. Qualification requirements for Governors.
Sec. 402. Obligations.
Sec. 403. Private carriage of letters.
Sec. 404. Rulemaking authority.
Sec. 405. Noninterference with collective bargaining agreements, etc.
Sec. 406. Bonus authority.
Sec. 407. Mediation in collective-bargaining disputes.

                TITLE V--ENHANCED REGULATORY COMMISSION

Sec. 501. Reorganization and modification of certain provisions 
relating to the Postal Regulatory Commission.
Sec. 502. Authority for Postal Regulatory Commission to issue 
subpoenas.
Sec. 503. Appropriations for the Postal Regulatory Commission.
Sec. 504. Redesignation of the Postal Rate Commission.
Sec. 505. Officer of the Postal Regulatory Commission representing the 
general public.

                      TITLE VI--INSPECTORS GENERAL

Sec. 601. Inspector General of the Postal Regulatory Commission.
Sec. 602. Inspector General of the United States Postal Service to be 
appointed by the President.

                         TITLE VII--EVALUATIONS

Sec. 701. Universal postal service study.
Sec. 702. Assessments of ratemaking, classification, and other 
provisions.
Sec. 703. Study on equal application of laws to competitive products.
Sec. 704. Greater diversity in Postal Service Executive and 
administrative schedule management positions.
Sec. 705. Plan for assisting displaced workers.
Sec. 706. Contracts with women, minorities, and small businesses.
Sec. 707. Rates for periodicals.
Sec. 708. Assessment of certain rate deficiencies.
Sec. 709. Postal processing and distribution network study.
Sec. 710. Definition.

     TITLE VIII--MISCELLANEOUS; TECHNICAL AND CONFORMING AMENDMENTS

Sec. 801. Employment of postal police officers.
Sec. 802. Date of postmark to be treated as date of appeal in 
connection with the closing or consolidation of post offices.
Sec. 803. Provisions relating to benefits under chapter 81 of title 5, 
United States Code, for officers and employees of the former Post 
Office Department.
Sec. 804. Obsolete provisions.
Sec. 805. Expanded contracting authority.
Sec. 806. Investments.
Sec. 807. Repeal of section 5403.
Sec. 808. Reduced rates.
Sec. 809. Hazardous matter.
Sec. 810. Provisions relating to cooperative mailings.
Sec. 811. Technical and conforming amendments.

           TITLE IX--POSTAL PENSION FUNDING REFORM AMENDMENTS

Sec. 901. Civil Service Retirement System.
Sec. 902. Health insurance.
Sec. 903. Repealer.
Sec. 904. Ensuring appropriate use of escrow and military savings.
Sec. 905. Effective dates.

                 TITLE I--DEFINITIONS; POSTAL SERVICES

SEC. 101. DEFINITIONS.

    Section 102 of title 39, United States Code, is amended by striking 
``and'' at the end of paragraph (3), by striking the period at the end 
of paragraph (4) and inserting a semicolon, and by adding at the end 
the following:
            ``(5) `postal service' means the carriage of letters, 
        printed matter, or mailable packages, including acceptance, 
        collection, processing, delivery, or other services supportive 
        or ancillary thereto;
            ``(6) `product' means a postal service with a distinct cost 
        or market characteristic for which a rate or rates are, or may 
        reasonably be, applied;
            ``(7) `rates', as used with respect to products, includes 
        fees for postal services;
            ``(8) `market-dominant product' or `product in the market-
        dominant category of mail' means a product subject to 
        subchapter I of chapter 36;
            ``(9) `competitive product' or `product in the competitive 
        category of mail' means a product subject to subchapter II of 
        chapter 36;
            ``(10) `Consumer Price Index' means the Consumer Price 
        Index for All Urban Consumers published monthly by the Bureau 
        of Labor Statistics of the Department of Labor; and
            ``(11) `year', as used in chapter 36 (other than 
        subchapters I and VI thereof), means a fiscal year.''.

SEC. 102. POSTAL SERVICES.

    (a) In General.--Section 404 of title 39, United States Code, is 
amended--
            (1) in subsection (a), by striking paragraph (6) and by 
        redesignating paragraphs (7) through (9) as paragraphs (6) 
        through (8), respectively; and
            (2) by adding at the end the following:
    ``(c) Nothing in this title shall be considered to permit or 
require that the Postal Service provide any special nonpostal or 
similar services, except that nothing in this subsection shall prevent 
the Postal Service from providing any special nonpostal or similar 
services provided by the Postal Service as of May 12, 2004.''.
    (b) Conforming Amendment.--Section 1402(b)(1)(B)(ii) of the Victims 
of Crime Act of 1984 (98 Stat. 2170; 42 U.S.C. 10601(b)(1)(B)(ii)) is 
amended by striking ``404(a)(8)'' and inserting ``404(a)(7)''.

SEC. 103. FINANCIAL TRANSPARENCY.

    (a) In General.--Section 101 of title 39, United States Code, is 
amended by redesignating subsections (d) through (g) as subsections (e) 
through (h), respectively, and by inserting after subsection (c) the 
following:
    ``(d) As an establishment that provides both market-dominant and 
competitive products, the Postal Service shall be subject to a high 
degree of transparency, including in its finances and operations, to 
ensure fair treatment of customers of the Postal Service's market-
dominant products and companies competing with the Postal Service's 
competitive products.''.
    (b) Conforming Amendment.--Section 5001 of title 39, United States 
Code, is amended by striking ``101(e) and (f)'' and inserting ``101(f) 
and (g)''.

                    TITLE II--MODERN RATE REGULATION

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

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

``Sec. 3621. Applicability; definitions

    ``(a) Applicability.--This subchapter shall apply with respect to--
            ``(1)(A) single piece first-class letters (both domestic 
        and international);
            ``(B) single piece first-class cards (both domestic and 
        international); and
            ``(C) special services;
            ``(2) all first-class mail not included under paragraph 
        (1);
            ``(3) periodicals;
            ``(4) standard mail;
            ``(5) media mail;
            ``(6) library mail; and
            ``(7) bound printed matter,
subject to any changes the Postal Regulatory Commission may make under 
section 3642.
    ``(b) Rule of Construction.--Mail matter referred to in subsection 
(a) shall, for purposes of this subchapter, be considered to have the 
meaning given to such mail matter under the mail classification 
schedule.

``Sec. 3622. Modern rate regulation

    ``(a) Authority Generally.--The Postal Regulatory Commission shall, 
within 24 months after the date of the enactment of this section, by 
regulation establish (and may from time to time thereafter by 
regulation revise) a modern system for regulating rates and classes for 
market-dominant products.
    ``(b) Objectives.--Such system shall be designed to achieve the 
following objectives:
            ``(1) To maximize incentives to reduce costs and increase 
        efficiency.
            ``(2) To create predictability and stability in rates.
            ``(3) To maintain high quality service standards.
            ``(4) To allow the Postal Service pricing flexibility.
            ``(5) To assure adequate revenues, including retained 
        earnings, to maintain financial stability.
            ``(6) To reduce the administrative burden of the ratemaking 
        process.
    ``(c) Factors.--In establishing or revising such system, the Postal 
Regulatory Commission shall take into account--
            ``(1) the establishment and maintenance of a fair and 
        equitable schedule for rates and classification system;
            ``(2) the value of the mail service actually provided each 
        class or type of mail service to both the sender and the 
        recipient, including but not limited to the collection, mode of 
        transportation, and priority of delivery;
            ``(3) the direct and indirect postal costs attributable to 
        each class or type of mail service plus that portion of all 
        other costs of the Postal Service reasonably assignable to such 
        class or type;
            ``(4) the effect of rate increases upon the general public, 
        business mail users, and enterprises in the private sector of 
        the economy engaged in the delivery of mail matter other than 
        letters;
            ``(5) the available alternative means of sending and 
        receiving letters and other mail matter at reasonable costs;
            ``(6) the degree of preparation of mail for delivery into 
        the postal system performed by the mailer and its effect upon 
        reducing costs to the Postal Service;
            ``(7) simplicity of structure for the entire schedule and 
        simple, identifiable relationships between the rates or fees 
        charged the various classes of mail for postal services;
            ``(8) the relative value to the people of the kinds of mail 
        matter entered into the postal system and the desirability and 
        justification for special classifications and services of mail;
            ``(9) the importance of providing classifications with 
        extremely high degrees of reliability and speed of delivery and 
        of providing those that do not require high degrees of 
        reliability and speed of delivery;
            ``(10) the desirability of special classifications from the 
        point of view of both the user and of the Postal Service;
            ``(11) the educational, cultural, scientific, and 
        informational value to the recipient of mail matter; and
            ``(12) the policies of this title as well as such other 
        factors as the Commission deems appropriate.
    ``(d) Allowable Provisions.--The system for regulating rates and 
classes for market-dominant products may include one or more of the 
following:
            ``(1) Price caps, revenue targets, or other form of 
        incentive regulation.
            ``(2) Cost-of-service regulation.
            ``(3) Such other form of regulation as the Commission 
        considers appropriate to achieve, consistent with subsection 
        (c), the objectives of subsection (b).
    ``(e) Limitation.--In the administration of this section, the 
Commission shall not permit the average rate in any subclass of mail to 
increase at an annual rate greater than the comparable increase in the 
Consumer Price Index, unless it has, after notice and opportunity for a 
public hearing and comment, determined that such increase is reasonable 
and equitable and necessary to enable the Postal Service, under best 
practices of honest, efficient, and economical management, to maintain 
and continue the development of postal services of the kind and quality 
adapted to the needs of the United States.
    ``(f) Transition Rule.--Until regulations under this section first 
take effect, rates and classes for market-dominant products shall 
remain subject to modification in accordance with the provisions of 
this chapter and section 407, as such provisions were last in effect 
before the date of the enactment of this section.''.
    (b) Repealed Sections.--Sections 3623, 3624, 3625, and 3628 of 
title 39, United States Code, are repealed.
    (c) Redesignation.--Chapter 36 of title 39, United States Code (as 
in effect after the amendment made by section 501(a)(2), but before the 
amendment made by section 202) is amended by striking the heading for 
subchapter II and inserting the following:

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

SEC. 202. PROVISIONS RELATING TO COMPETITIVE PRODUCTS.

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

      ``SUBCHAPTER II--PROVISIONS RELATING TO COMPETITIVE PRODUCTS

``Sec. 3631. Applicability; definitions and updates

    ``(a) Applicability.--This subchapter shall apply with respect to--
            ``(1) priority mail;
            ``(2) expedited mail;
            ``(3) mailgrams;
            ``(4) international mail; and
            ``(5) parcel post,
subject to any changes the Postal Regulatory Commission may make under 
section 3642.
    ``(b) Definition.--For purposes of this subchapter, the term `costs 
attributable', as used with respect to a product, means the direct and 
indirect postal costs attributable to such product.
    ``(c) Rule of Construction.--Mail matter referred to in subsection 
(a) shall, for purposes of this subchapter, be considered to have the 
meaning given to such mail matter under the mail classification 
schedule.

``Sec. 3632. Action of the Governors

    ``(a) Authority to Establish Rates and Classes.--The Governors 
shall establish rates and classes for products in the competitive 
category of mail in accordance with the requirements of this subchapter 
and regulations promulgated under section 3633.
    ``(b) Procedures.--
            ``(1) In general.--Rates and classes shall be established 
        in writing, complete with a statement of explanation and 
        justification, and the date as of which each such rate or class 
        takes effect.
            ``(2) Rates or classes of general applicability.--In the 
        case of rates or classes of general applicability in the Nation 
        as a whole or in any substantial region of the Nation, the 
        Governors shall cause each rate and class decision under this 
        section and the record of the Governors' proceedings in 
        connection with such decision to be published in the Federal 
        Register at least 30 days before the effective date of any new 
        rates or classes.
            ``(3) Rates or classes not of general applicability.--In 
        the case of rates or classes not of general applicability in 
        the Nation as a whole or in any substantial region of the 
        Nation, the Governors shall cause each rate and class decision 
        under this section and the record of the proceedings in 
        connection with such decision to be filed with the Postal 
        Regulatory Commission by such date before the effective date of 
        any new rates or classes as the Governors consider appropriate, 
        but in no case less than 15 days.
            ``(4) Criteria.--As part of the regulations required under 
        section 3633, the Postal Regulatory Commission shall establish 
        criteria for determining when a rate or class established under 
        this subchapter is or is not of general applicability in the 
        Nation as a whole or in any substantial region of the Nation.
    ``(c) Transition Rule.--Until regulations under section 3633 first 
take effect, rates and classes for competitive products shall remain 
subject to modification in accordance with the provisions of this 
chapter and section 407, as such provisions were as last in effect 
before the date of the enactment of this section.

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

    ``The Postal Regulatory Commission shall, within 18 months after 
the date of the enactment of this section, promulgate (and may from 
time to time thereafter revise) regulations--
            ``(1) to prohibit the subsidization of competitive products 
        by market-dominant products;
            ``(2) to ensure that each competitive product covers its 
        costs attributable; and
            ``(3) to ensure that all competitive products collectively 
        make a reasonable contribution to the institutional costs of 
        the Postal Service.''.

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

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

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

``Sec. 3641. Market tests of experimental products

    ``(a) Authority.--
            ``(1) In general.--The Postal Service may conduct market 
        tests of experimental products in accordance with this section.
            ``(2) Provisions waived.--A product shall not, while it is 
        being tested under this section, be subject to the requirements 
        of sections 3622, 3633, or 3642, or regulations promulgated 
        under those sections.
    ``(b) Conditions.--A product may not be tested under this section 
unless it satisfies each of the following:
            ``(1) Significantly different product.--The product is, 
        from the viewpoint of the mail users, significantly different 
        from all products offered by the Postal Service within the 2-
        year period preceding the start of the test.
            ``(2) Market disruption.--The introduction or continued 
        offering of the product will not create an unfair or otherwise 
        inappropriate competitive advantage for the Postal Service or 
        any mailer, particularly in regard to small business concerns 
        (as defined under subsection (h)).
            ``(3) Correct categorization.--The Postal Service 
        identifies the product, for the purpose of a test under this 
        section, as either market dominant or competitive, consistent 
        with the criteria under section 3642(b)(1). Costs and revenues 
        attributable to a product identified as competitive shall be 
        included in any determination under section 3633(3) (relating 
        to provisions applicable to competitive products collectively).
    ``(c) Notice.--
            ``(1) In general.--At least 30 days before initiating a 
        market test under this section, the Postal Service shall file 
        with the Postal Regulatory Commission and publish in the 
        Federal Register a notice--
                    ``(A) setting out the basis for the Postal 
                Service's determination that the market test is covered 
                by this section; and
                    ``(B) describing the nature and scope of the market 
                test.
            ``(2) Safeguards.--For a competitive experimental product, 
        the provisions of section 504(g) shall be available with 
        respect to any information required to be filed under paragraph 
        (1) to the same extent and in the same manner as in the case of 
        any matter described in section 504(g)(1). Nothing in paragraph 
        (1) shall be considered to permit or require the publication of 
        any information as to which confidential treatment is accorded 
        under the preceding sentence (subject to the same exception as 
        set forth in section 504(g)(3)).
    ``(d) Duration.--
            ``(1) In general.--A market test of a product under this 
        section may be conducted over a period of not to exceed 24 
        months.
            ``(2) Extension authority.--If necessary in order to 
        determine the feasibility or desirability of a product being 
        tested under this section, the Postal Regulatory Commission 
        may, upon written application of the Postal Service (filed not 
        later than 60 days before the date as of which the testing of 
        such product would otherwise be scheduled to terminate under 
        paragraph (1)), extend the testing of such product for not to 
        exceed an additional 12 months.
    ``(e) Dollar-Amount Limitation.--
            ``(1) In general.--A product may be tested under this 
        section only if the total revenues that are anticipated, or in 
        fact received, by the Postal Service from such product do not 
        exceed $10,000,000 nationwide in any year, subject to paragraph 
        (2) and subsection (g). In carrying out the preceding sentence, 
        the Postal Regulatory Commission may limit the amount of 
        revenues the Postal Service may obtain from any particular 
        geographic market as necessary to prevent market disruption (as 
        defined in subsection (b)(2)).
            ``(2) Exemption authority.--The Postal Regulatory 
        Commission may, upon written application of the Postal Service, 
        exempt the market test from the limit in paragraph (1) if the 
        total revenues that are anticipated, or in fact received, by 
        the Postal Service from such product do not exceed $50,000,000 
        in any year, subject to subsection (g). In reviewing an 
        application under this paragraph, the Postal Regulatory 
        Commission shall approve such application if it determines 
        that--
                    ``(A) the product is likely to benefit the public 
                and meet an expected demand;
                    ``(B) the product is likely to contribute to the 
                financial stability of the Postal Service; and
                    ``(C) the product is not likely to result in unfair 
                or otherwise inappropriate competition.
    ``(f) Cancellation.--If the Postal Regulatory Commission at any 
time determines that a market test under this section fails, with 
respect to any particular product, to meet one or more of the 
requirements of this section, it may order the cancellation of the test 
involved or take such other action as it considers appropriate. A 
determination under this subsection shall be made in accordance with 
such procedures as the Commission shall by regulation prescribe.
    ``(g) Adjustment for Inflation.--For purposes of each year 
following the year in which occurs the deadline for the Postal 
Service's first report to the Postal Regulatory Commission under 
section 3652(a), each dollar amount contained in this section shall be 
adjusted by the change in the Consumer Price Index for such year (as 
determined under regulations of the Commission).
    ``(h) Definition of a Small Business Concern.--The criteria used in 
defining small business concerns or otherwise categorizing business 
concerns as small business concerns shall, for purposes of this 
section, be established by the Postal Regulatory Commission in 
conformance with the requirements of section 3 of the Small Business 
Act.
    ``(i) Effective Date.--Market tests under this subchapter may be 
conducted in any year beginning withthe first year in which occurs the 
deadline for the Postal Service's first report to the Postal Regulatory 
Commission under section 3652(a).

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

    ``(a) In General.--Upon request of the Postal Service or users of 
the mails, or upon its own initiative, the Postal Regulatory Commission 
may change the list of market-dominant products under section 3621 and 
the list of competitive products under section 3631 by adding new 
products to the lists, removing products from the lists, or 
transferring products between the lists.
    ``(b) Criteria.--All determinations by the Postal Regulatory 
Commission under subsection (a) shall be made in accordance with the 
following criteria:
            ``(1) The market-dominant category of products shall 
        consist of each product in the sale of which the Postal Service 
        exercises sufficient market power that it can effectively set 
        the price of such product substantially above costs, raise 
        prices significantly, decrease quality, or decrease output, 
        without risk of losing business to other firms offering similar 
        products. The competitive category of products shall consist of 
        all other products.
            ``(2) Exclusion of products covered by postal monopoly.--A 
        product covered by the postal monopoly shall not be subject to 
        transfer under this section from the market-dominant category 
        of mail. For purposes of the preceding sentence, the term 
        `product covered by the postal monopoly' means any product the 
        conveyance or transmission of which is reserved to the United 
        States under section 1696 of title 18, subject to the same 
        exception as set forth in the last sentence of section 
        409(e)(1).
            ``(3) Additional considerations.--In making any decision 
        under this section, due regard shall be given to--
                    ``(A) the availability and nature of enterprises in 
                the private sector engaged in the delivery of the 
                product involved;
                    ``(B) the views of those who use the product 
                involved on the appropriateness of the proposed action; 
                and
                    ``(C) the likely impact of the proposed action on 
                small business concerns (within the meaning of section 
                3641(h)).
    ``(c) Transfers of Subclasses and Other Subordinate Units 
Allowable.--Nothing in this title shall be considered to prevent 
transfers under this section from being made by reason of the fact that 
they would involve only some (but not all) of the subclasses or other 
subordinate units of the class of mail or type of postal service 
involved (without regard to satisfaction of minimum quantity 
requirements standing alone).
    ``(d) Notification and Publication Requirements.--
            ``(1) Notification requirement.--The Postal Service shall, 
        whenever it requests to add a product or transfer a product to 
        a different category, file with the Postal Regulatory 
        Commission and publish in the Federal Register a notice setting 
        out the basis for its determination that the product satisfies 
        the criteria under subsection (b) and, in the case of a request 
        to add a product or transfer a product to the competitive 
        category of mail, that the product meets the regulations 
        promulgated by the Postal Regulatory Commission pursuant to 
        section 3633. The provisions of section 504(g) shall be 
        available with respect to any information required to be filed.
            ``(2) Publication requirement.--The Postal Regulatory 
        Commission shall, whenever it changes the list of products in 
        the market-dominant or competitive category of mail, prescribe 
        new lists of products. The revised lists shall indicate how and 
        when any previous lists (including the lists under sections 
        3621 and 3631) are superseded, and shall be published in the 
        Federal Register.
    ``(e) Notification Requirement.--The Postal Regulatory Commission 
shall, whenever it reaches a conclusion that a product or products 
should be transferred between the list of market-dominant products 
under section 3621 and the list of competitive products under section 
3631, immediately notify the appropriate committees of the Congress. No 
such transfer may take effect less than 12 months after such 
conclusion.
    ``(f) Prohibition.--Except as provided in section 3641, no product 
that involves the carriage of letters, printed matter, or mailable 
packages may be offered by the Postal Service unless it has been 
assigned to the market-dominant or competitive category of mail (as 
appropriate) either--
            ``(1) under this subchapter; or
            ``(2) by or under any other provision of law.''.

SEC. 204. REPORTING REQUIREMENTS AND RELATED PROVISIONS.

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

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

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

     ``SUBCHAPTER IV--REPORTING REQUIREMENTS AND RELATED PROVISIONS

``Sec. 3651. Annual reports by the Commission

    ``(a) In General.--The Postal Regulatory Commission shall submit an 
annual report to the President and the Congress concerning the 
operations of the Commission under this title, including the extent to 
which regulations are achieving the objectives under sections 3622 and 
3633, respectively.
    ``(b) Additional Information.--In addition to the information 
required under subsection (a), each report under this section shall 
also include, with respect to the period covered by such report, an 
estimate of the costs incurred by the Postal Service in providing--
            ``(1) postal services to areas of the Nation where, in the 
        judgment of the Postal Regulatory Commission, the Postal 
        Service either would not provide services at all or would not 
        provide such services in accordance with the requirements of 
        this title if the Postal Service were not required to provide 
        prompt, reliable, and efficient services to patrons in all 
        areas and all communities, including as required under the 
        first sentence of section 101(b);
            ``(2) free or reduced rates for postal services as required 
        by this title; and
            ``(3) other public services or activities which, in the 
        judgment of the Postal Regulatory Commission, would not 
        otherwise have been provided by the Postal Service but for the 
        requirements of law.
The Commission shall detail the bases for its estimates and the 
statutory requirements giving rise to the costs identified in each 
report under this section.
    ``(c) Information From Postal Service.--The Postal Service shall 
provide the Postal Regulatory Commission with such information as may, 
in the judgment of the Commission, be necessary in order for the 
Commission to prepare its reports under this section.

``Sec. 3652. Annual reports to the Commission

    ``(a) Costs, Revenues, and Rates.--Except as provided in subsection 
(c), the Postal Service shall, no later than 90 days after the end of 
each year, prepare and submit to the Postal Regulatory Commission a 
report (together with such nonpublic annex thereto as the Commission 
may require under subsection (e))--
            ``(1) which shall analyze costs, revenues, and rates, using 
        such methodologies as the Commission shall by regulation 
        prescribe, and in sufficient detail to demonstrate that the 
        rates in effect for all products during such year complied with 
        all applicable requirements of this title; and
            ``(2) which shall, for each market-dominant product 
        provided in such year, provide--
                    ``(A) market information, including mail volumes; 
                and
                    ``(B) measures of the quality of service afforded 
                by the Postal Service in connection with such product, 
                including--
                            ``(i) the service standard applicable to 
                        such product;
                            ``(ii) the level of service (described in 
                        terms of speed of delivery and reliability) 
                        provided; and
                            ``(iii) the degree of customer satisfaction 
                        with the service provided.
Before submitting a report under this subsection (including any annex 
thereto 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.--
            ``(1) In general.--The Postal Service shall include, in 
        each report under subsection (a), the following information 
        with respect to each market-dominant product for which a 
        workshare discount was in effect during the period covered by 
        such report:
                    ``(A) The per-item cost avoided by the Postal 
                Service by virtue of such discount.
                    ``(B) The percentage of such per-item cost avoided 
                that the per-item workshare discount represents.
                    ``(C) The per-item contribution made to 
                institutional costs.
            ``(2) Workshare discount defined.--For purposes of this 
        subsection, the term `workshare discount' refers to presorting, 
        barcoding, dropshipping, and other similar discounts, as 
        further defined under regulations which the Postal Regulatory 
        Commission shall prescribe.
    ``(c) Market Tests.--In carrying out subsections (a) and (b) with 
respect to experimental products offered through market tests under 
section 3641 in a year, the Postal Service--
            ``(1) may report summary data on the costs, revenues, and 
        quality of service by market test; and
            ``(2) shall report such data as the Postal Regulatory 
        Commission requires.
    ``(d) Supporting Matter.--The Postal Regulatory Commission shall 
have access, in accordance with such regulations as the Commission 
shall prescribe, to the working papers and any other supporting matter 
of the Postal Service and the Inspector General in connection with any 
information submitted under this section.
    ``(e) Content and Form of Reports.--
            ``(1) In general.--The Postal Regulatory Commission shall, 
        by regulation, prescribe the content and form of the public 
        reports (and any nonpublic annex and supporting matter relating 
        thereto) to be provided by the Postal Service under this 
        section. In carrying out this subsection, the Commission shall 
        give due consideration to--
                    ``(A) providing the public with adequate 
                information to assess the lawfulness of rates charged;
                    ``(B) avoiding unnecessary or unwarranted 
                administrative effort and expense on the part of the 
                Postal Service; and
                    ``(C) protecting the confidentiality of 
                commercially sensitive information.
            ``(2) Revised requirements.--The Commission may, on its own 
        motion or on request of an interested party, initiate 
        proceedings (to be conducted in accordance with regulations 
        that the Commission shall prescribe) to improve the quality, 
        accuracy, or completeness of Postal Service data required by 
        the Commission under this subsection whenever it shall appear 
        that--
                    ``(A) the attribution of costs or revenues to 
                products has become significantly inaccurate or can be 
                significantly improved;
                    ``(B) the quality of service data has become 
                significantly inaccurate or can be significantly 
                improved; or
                    ``(C) such revisions are, in the judgment of the 
                Commission, otherwise necessitated by the public 
                interest.
    ``(f) Confidential Information.--
            ``(1) In general.--If the Postal Service determines that 
        any document or portion of a document, or other matter, which 
        it provides to the Postal Regulatory Commission in a nonpublic 
        annex under this section or pursuant to subsection (d) contains 
        information which is described in section 410(c) of this title, 
        or exempt from public disclosure under section 552(b) of title 
        5, the Postal Service shall, at the time of providing such 
        matter to the Commission, notify the Commission of its 
        determination, in writing, and describe with particularity the 
        documents (or portions of documents) or other matter for which 
        confidentiality is sought and the reasons therefor.
            ``(2) Treatment.--Any information or other matter described 
        in paragraph (1) to which the Commission gains access under 
        this section shall be subject to paragraphs (2) and (3) of 
        section 504(g) in the same way as if the Commission had 
        received notification with respect to such matter under section 
        504(g)(1).
    ``(g) Other Reports.--The Postal Service shall submit to the Postal 
Regulatory Commission, together with any other submission that it is 
required to make under this section in a year, copies of its then most 
recent--
            ``(1) comprehensive statement under section 2401(e);
            ``(2) performance plan under section 2803; and
            ``(3) program performance reports under section 2804.

``Sec. 3653. Annual determination of compliance

    ``(a) Opportunity for Public Comment.--After receiving the reports 
required under section 3652 for any year, the Postal Regulatory 
Commission shall promptly provide an opportunity for comment on such 
reports by users of the mails, affected parties, and an officer of the 
Commission who shall be required to represent the interests of the 
general public.
    ``(b) Determination of Compliance or Noncompliance.--Not later than 
90 days after receiving the submissions required under section 3652 
with respect to a year, the Postal Regulatory Commission shall make a 
written determination as to--
            ``(1) whether any rates or fees in effect during such year 
        (for products individually or collectively) were not in 
        compliance with applicable provisions of this chapter (or 
        regulations promulgated thereunder);
            ``(2) whether any performance goals established under 
        section 2803 or 2804 for such year were not met; and
            ``(3) whether any market-dominant product failed to meet 
        any service standard during such year.
If, with respect to a year, no instance of noncompliance is found under 
this subsection to have occurred in such year, the written 
determination shall be to that effect.
    ``(c) If Any Noncompliance Is Found.--If, for a year, a timely 
written determination of noncompliance is made under subsection (b), 
the Postal Regulatory Commission shall take appropriate action in 
accordance with subsections (c)-(e) of section 3662 (as if a complaint 
averring such noncompliance had been duly filed and found under such 
section to be justified).
    ``(d) Rebuttable Presumption.--A timely written determination 
described in the last sentence of subsection (b) shall, for purposes of 
any proceeding under section 3662, create a rebuttable presumption of 
compliance by the Postal Service (with regard to the matters described 
in paragraphs (1) through (3) of subsection (b)) during the year to 
which such determination relates.''.

SEC. 205. COMPLAINTS; APPELLATE REVIEW AND ENFORCEMENT.

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

``Sec. 3662. Rate and service complaints

    ``(a) In General.--Interested persons (including an officer of the 
Postal Regulatory Commission representing the interests of the general 
public) who believe the Postal Service is not operating in conformance 
with the requirements of chapter 1, 4, or 6, or this chapter (or 
regulations promulgated under any of those chapters) may lodge a 
complaint with the Postal Regulatory Commission in such form and manner 
as the Commission may prescribe.
    ``(b) Prompt Response Required.--
            ``(1) In general.--The Postal Regulatory Commission shall, 
        within 90 days after receiving a complaint under subsection 
        (a), either--
                    ``(A) begin proceedings on such complaint; or
                    ``(B) issue an order dismissing the complaint 
                (together with a statement of the reasons therefor).
            ``(2) Treatment of complaints not timely acted on.--For 
        purposes of section 3663, any complaint under subsection (a) on 
        which the Commission fails to act in the time and manner 
        required by paragraph (1) shall be treated in the same way as 
        if it had been dismissed pursuant to an order issued by the 
        Commission on the last day allowable for the issuance of such 
        order under paragraph (1).
    ``(c) Action Required If Complaint Found to Be Justified.--If the 
Postal Regulatory Commission finds the complaint to be justified, it 
shall order that the Postal Service take such action as the Commission 
considers appropriate in order to achieve compliance with the 
applicable requirements and to remedy the effects of any noncompliance 
(such as ordering unlawful rates to be adjusted to lawful levels, 
ordering the cancellation of market tests, ordering the Postal Service 
to discontinue providing loss-making products, or requiring the Postal 
Service to make up for revenue shortfalls in competitive products).
    ``(d) Suspension Authority.--The Postal Regulatory Commission may 
suspend implementation of rates or classifications under section 
3632(b)(3) for a limited period of time pending expedited proceedings 
under this section. In evaluating whether circumstances warrant 
suspension, the Commission shall consider factors such as (1) whether 
there is a substantial likelihood that such rate or classification will 
violate the requirements of chapter 1, 4, or 6, or this chapter (or 
regulations promulgated under any of those chapters), (2) whether any 
persons would suffer substantial injury, loss, or damage absent a 
suspension, (3) whether the Postal Service or any other persons would 
suffer substantial injury, loss, or damage under a suspension, and (4) 
the public interest.
    ``(e) Authority to Order Fines in Cases of Deliberate 
Noncompliance.--In addition, in cases of deliberate noncompliance by 
the Postal Service with the requirements of this title, the Postal 
Regulatory Commission may order, based on the nature, circumstances, 
extent, and seriousness of the noncompliance, a fine (in the amount 
specified by the Commission in its order) for each incidence of 
noncompliance. Fines resulting from the provision of competitive 
products shall be paid out of the Competitive Products Fund established 
in section 2011. All receipts from fines imposed under this subsection 
shall be deposited in the general fund of the Treasury of the United 
States.

``Sec. 3663. Appellate review

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

``Sec. 3664. Enforcement of orders

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

SEC. 206. WORKSHARE DISCOUNTS.

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

``Sec. 3687. Workshare discounts

    ``(a) In General.--As part of the regulations established under 
section 3622(a), the Postal Regulatory Commission shall establish rules 
for workshare discounts that ensure that workshare discounts do not 
exceed the cost that the Postal Service avoids as the result of private 
sector workshare activity, except--
            ``(1) where the discount is associated with a new product 
        or service or with a change to an existing product or service 
        and is necessary, over a period of time not to exceed 4 years, 
        to induce mailer behavior that will enable the new or changed 
        product or service in furtherance of the overall economically 
        efficient operation of the Postal Service;
            ``(2) to the extent that a reduction in the discount would 
        lead to a loss of volume in the affected category and reduce 
        the aggregate contribution to institutional costs of the Postal 
        Service, from the mail matter subject to the discount, below 
        what it otherwise would have been if the discount had not been 
        reduced to costs avoided; would result in a further increase in 
        the rates paid by mailers not able to take advantage of the 
        discount; or would impede the efficient operation of the Postal 
        Service;
            ``(3) where the amount of the discount above costs avoided 
        is necessary to mitigate rate shock and will be phased out over 
        time; or
            ``(4) where the workshare discount is provided in 
        connection with subclasses of mail consisting exclusively of 
        mail matter of educational, cultural, or scientific value.
    ``(b) Reporting Requirement.--Whenever the Postal Service 
establishes or maintains a workshare discount, the Postal Service 
shall, at the time it publishes the workshare discount rate, file with 
the Postal Regulatory Commission a detailed report and explanation of 
its reasons for establishing or maintaining the rate, setting forth the 
data, economic analyses, and other information relied on by the Postal 
Service to justify the rate.
    ``(c) Definition.--For purposes of this section, the term 
`workshare discount' refers to rate discounts provided to mailers for 
presorting, prebarcoding, handling, or transportation, as further 
defined by the Postal Regulatory Commission as part of regulations 
established under section 3622(a).''.
    (b) Clerical Amendment.--The analysis for chapter 36 of title 39, 
United States Code (as amended by section 207) is amended by adding 
after the item relating to section 3686 the following:

``3687. Workshare discounts.''.

SEC. 207. CLERICAL AMENDMENT.

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

            ``Chapter 36--Postal rates, classes and services

      ``Subchapter I--Provisions relating to market-dominant products

``Sec.
``3621. Applicability; definitions.
``3622. Modern rate regulation.
``[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.''.

           TITLE III--PROVISIONS RELATING TO FAIR COMPETITION

SEC. 301. POSTAL SERVICE COMPETITIVE PRODUCTS FUND.

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

``Sec. 2011. Provisions relating to competitive products

    ``(a) There is established in the Treasury of the United States a 
revolving fund, to be called the Postal Service Competitive Products 
Fund, which shall be available to the Postal Service without fiscal 
year limitation for the payment of--
            ``(1) costs attributable to competitive products; and
            ``(2) all other costs incurred by the Postal Service, to 
        the extent allocable to competitive products.
For purposes of this subsection, the term `costs attributable' has the 
meaning given such term by section 3631.
    ``(b) There shall be deposited in the Competitive Products Fund, 
subject to withdrawal by the Postal Service--
            ``(1) revenues from competitive products;
            ``(2) amounts received from obligations issued by the 
        Postal Service under subsection (e);
            ``(3) interest and dividends earned on investments of the 
        Competitive Products Fund; and
            ``(4) any other receipts of the Postal Service (including 
        from the sale of assets), to the extent allocable to 
        competitive products.
    ``(c) If the Postal Service determines that the moneys of the 
Competitive Products Fund are in excess of current needs, it may invest 
such amounts as it considers appropriate in--
            ``(1) obligations of, or obligations guaranteed by, the 
        Government of the United States; and
            ``(2) in accordance with regulations which the Secretary of 
        the Treasury shall prescribe (by not later than 18 months after 
        the date of the enactment of the Postal Accountability and 
        Enhancement Act), such other obligations or securities as it 
        deems appropriate.
    ``(d) The Postal Service may, in its sole discretion, provide that 
moneys of the Competitive Products Fund be deposited in a Federal 
Reserve bank or a depository for public funds.
    ``(e)(1) Subject to the limitations specified in section 2005(a), 
the Postal Service is authorized to borrow money and to issue and sell 
such obligations as it determines necessary to provide for competitive 
products and deposit such amounts in the Competitive Products Fund, 
except that the Postal Service may pledge only assets related to the 
provision of competitive products (as determined under subsection (h) 
or, for purposes of any period before accounting practices and 
principles under subsection (h) have been established and applied, the 
best information available from the Postal Service, including the 
audited statements required by section 2008(e)), and the revenues and 
receipts from such products, for the payment of the principal of or 
interest on such obligations, for the purchase or redemption thereof, 
and for other purposes incidental thereto, including creation of 
reserve, sinking, and other funds which may be similarly pledged and 
used, to such extent and in such manner as it deems necessary or 
desirable.
    ``(2) The Postal Service may enter into binding covenants with the 
holders of such obligations, and with the trustee, if any, under any 
agreement entered into in connection with the issuance thereof with 
respect to--
            ``(A) the establishment of reserve, sinking, and other 
        funds;
            ``(B) application and use of revenues and receipts of the 
        Competitive Products Fund;
            ``(C) stipulations concerning the subsequent issuance of 
        obligations or the execution of leases or lease purchases 
        relating to properties of the Postal Service; and
            ``(D) such other matters as the Postal Service considers 
        necessary or desirable to enhance the marketability of such 
        obligations.
    ``(3) Obligations issued by the Postal Service under this 
subsection--
            ``(A) may not be purchased by the Secretary of the 
        Treasury;
            ``(B) shall not be exempt either as to principal or 
        interest from any taxation now or hereafter imposed by any 
        State or local taxing authority;
            ``(C) shall not be obligations of, nor shall payment of the 
        principal thereof or interest thereon be guaranteed by, the 
        Government of the United States, and the obligations shall so 
        plainly state; and
            ``(D) notwithstanding the provisions of the Federal 
        Financing Bank Act of 1973 or any other provision of law 
        (except as specifically provided by reference to this 
        subparagraph in a law enacted after this subparagraph takes 
        effect), shall not be eligible for purchase by, commitment to 
        purchase by, or sale or issuance to, the Federal Financing 
        Bank.
    ``(4)(A) This paragraph applies with respect to the period 
beginning on the date of the enactment of this paragraph and ending at 
the close of the 5-year period which begins on the date on which the 
Postal Service makes its submission under subsection (h)(1).
    ``(B) During the period described in subparagraph (A), nothing in 
subparagraph (A) or (D) of paragraph (3) or the last sentence of 
section 2006(b) shall, with respect to any obligations sought to be 
issued by the Postal Service under this subsection, be considered to 
affect such obligations' eligibility for purchase by, commitment to 
purchase by, or sale or issuance to, the Federal Financing Bank.
    ``(C) The Federal Financing Bank may elect to purchase such 
obligations under such terms, including rates of interest, as the Bank 
and the Postal Service may agree, but at a rate of yield no less than 
the prevailing yield on outstanding marketable securities of comparable 
maturity issued by entities with the same credit rating as the rating 
then most recently obtained by the Postal Service under subparagraph 
(D), as determined by the Bank.
    ``(D) In order to be eligible to borrow under this paragraph, the 
Postal Service shall first obtain a credit rating from a nationally 
recognized credit rating organization. Such rating--
            ``(i) shall be determined taking into account only those 
        assets and activities of the Postal Service which are described 
        in section 3634(a)(2) (relating to the Postal Service's assumed 
        taxable income from competitive products); and
            ``(ii) may, before final rules of the Postal Regulatory 
        Commission under subsection (h) are issued (or deemed to have 
        been issued), be based on the best information available from 
        the Postal Service, including the audited statements required 
        by section 2008(e).
    ``(f) The receipts and disbursements of the Competitive Products 
Fund shall be accorded the same budgetary treatment as is accorded to 
receipts and disbursements of the Postal Service Fund under section 
2009a.
    ``(g) A judgment against the Postal Service or the Government of 
the United States (or settlement of a claim) shall, to the extent that 
it arises out of activities of the Postal Service in the provision of 
competitive products, be paid out of the Competitive Products Fund.
    ``(h)(1) The Secretary of the Treasury, in consultation with the 
Postal Service and an independent, certified public accounting firm and 
such other advisors as the Secretary considers appropriate, shall 
develop recommendations regarding--
            ``(A) the accounting practices and principles that should 
        be followed by the Postal Service with the objectives of (i) 
        identifying and valuing the assets and liabilities of the 
        Postal Service associated with providing, and the capital and 
        operating costs incurred by the Postal Service in providing, 
        competitive products, and (ii) preventing the subsidization of 
        such products by market-dominant products; and
            ``(B) the substantive and procedural rules that should be 
        followed in determining the Postal Service's assumed Federal 
        income tax on competitive products income for any year (within 
        the meaning of section 3634).
Such recommendations shall be submitted to the Postal Regulatory 
Commission no earlier than 6 months, and no later than 12 months, after 
the effective date of this section.
    ``(2)(A) Upon receiving the recommendations of the Secretary of the 
Treasury under paragraph (1), the Commission shall give interested 
parties, including the Postal Service, users of the mails, and an 
officer of the Commission who shall be required to represent the 
interests of the general public, an opportunity to present their views 
on those recommendations through submission of written data, views, or 
arguments with or without opportunity for oral presentation, or in such 
other manner as the Commission considers appropriate.
    ``(B) After due consideration of the views and other information 
received under subparagraph (A), the Commission shall by rule--
            ``(i) provide for the establishment and application of the 
        accounting practices and principles which shall be followed by 
        the Postal Service;
            ``(ii) provide for the establishment and application of the 
        substantive and procedural rules described in paragraph (1)(B); 
        and
            ``(iii) provide for the submission by the Postal Service to 
        the Postal Regulatory Commission of annual and other periodic 
        reports setting forth such information as the Commission may 
        require.
Final rules under this subparagraph shall be issued not later than 12 
months after the date on which the Secretary of the Treasury makes his 
submission to the Commission under paragraph (1) (or by such later date 
as the Commission and the Postal Service may agree to). The Commission 
is authorized to promulgate regulations revising such rules.
    ``(C) Reports described in subparagraph (B)(iii) shall be submitted 
at such time and in such form, and shall include such information, as 
the Commission by rule requires. The Commission may, on its own motion 
or on request of an interested party, initiate proceedings (to be 
conducted in accordance with such rules as the Commission shall 
prescribe) to improve the quality, accuracy, or completeness of Postal 
Service data under such subparagraph whenever it shall appear that--
            ``(i) the quality of the information furnished in those 
        reports has become significantly inaccurate or can be 
        significantly improved; or
            ``(ii) such revisions are, in the judgment of the 
        Commission, otherwise necessitated by the public interest.
    ``(D) A copy of each report described in subparagraph (B)(iii) 
shall also be transmitted by the Postal Service to the Secretary of the 
Treasury and the Inspector General of the United States Postal Service.
    ``(i) The Postal Service shall render an annual report to the 
Secretary of the Treasury concerning the operation of the Competitive 
Products Fund, in which it shall address such matters as risk 
limitations, reserve balances, allocation or distribution of moneys, 
liquidity requirements, and measures to safeguard against losses. A 
copy of its then most recent report under this subsection shall be 
included with any other submission that it is required to make to the 
Postal Regulatory Commission under section 3652(g).''.
            (2) Clerical amendment.--The analysis for chapter 20 of 
        title 39, United States Code, is amended by adding after the 
        item relating to section 2010 the following:

``2011. Provisions relating to competitive products.''.
    (b) Technical and Conforming Amendments.--
            (1) Definition.--Section 2001 of title 39, United States 
        Code, is amended by striking ``and'' at the end of paragraph 
        (1), by redesignating paragraph (2) as paragraph (3), and by 
        inserting after paragraph (1) the following:
            ``(2) `Competitive Products Fund' means the Postal Service 
        Competitive Products Fund established by section 2011; and''.
            (2) Capital of the postal service.--Section 2002(b) of 
        title 39, United States Code, is amended by striking ``Fund,'' 
        and inserting ``Fund and the balance in the Competitive 
        Products Fund,''.
            (3) Postal service fund.--
                    (A) Purposes for which available.--Section 2003(a) 
                of title 39, United States Code, is amended by striking 
                ``title.'' and inserting ``title (other than any of the 
                purposes, functions, or powers for which the 
                Competitive Products Fund is available).''.
                    (B) Deposits.--Section 2003(b) of title 39, United 
                States Code, is amended by striking ``There'' and 
                inserting ``Except as otherwise provided in section 
                2011, there''.
            (4) Relationship between the treasury and the postal 
        service.--Section 2006 of title 39, United States Code, is 
        amended--
                    (A) in subsection (b), by adding at the end the 
                following: ``Nothing in this chapter shall be 
                considered to permit or require the Secretary of the 
                Treasury to purchase any obligations of the Postal 
                Service other than those issued under section 2005.''; 
                and
                    (B) in subsection (c), by inserting ``under section 
                2005'' before ``shall be obligations''.

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

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

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

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

SEC. 303. UNFAIR COMPETITION PROHIBITED.

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

``Sec. 404a. Specific Limitations

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

``404a. Specific limitations.''.

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

    (a) In General.--Section 409 of title 39, United States Code, is 
amended by striking subsections (d) and (e) and inserting the 
following:
    ``(d)(1) For purposes of the provisions of law cited in paragraphs 
(2)(A) and (2)(B), respectively, the Postal Service--
            ``(A) shall be considered to be a `person', as used in the 
        provisions of law involved; and
            ``(B) shall not be immune under any other doctrine of 
        sovereign immunity from suit in Federalcourt by any person for 
any violation of any of those provisions of law by any officer or 
employee of the Postal Service.
    ``(2) This subsection applies with respect to--
            ``(A) the Act of July 5, 1946 (commonly referred to as the 
        `Trademark Act of 1946' (15 U.S.C. 1051 and following)); and
            ``(B) the provisions of section 5 of the Federal Trade 
        Commission Act to the extent that such section 5 applies to 
        unfair or deceptive acts or practices.
    ``(e)(1) To the extent that the Postal Service, or other Federal 
agency acting on behalf of or in concert with the Postal Service, 
engages in conduct with respect to any competitive product, the Postal 
Service or other Federal agency (as the case may be)--
            ``(A) shall not be immune under any doctrine of sovereign 
        immunity from suit in Federal court by any person for any 
        violation of Federal law by such agency or any officer or 
        employee thereof; and
            ``(B) shall be considered to be a person (as defined in 
        subsection (a) of the first section of the Clayton Act) for 
        purposes of--
                    ``(i) the antitrust laws (as defined in such 
                subsection); and
                    ``(ii) section 5 of the Federal Trade Commission 
                Act to the extent that such section 5 applies to unfair 
                methods of competition.
    ``(2) No damages, interest on damages, costs or attorney's fees may 
be recovered, and no criminal liability may be imposed, under the 
antitrust laws (as so defined) from any officer or employee of the 
Postal Service, or other Federal agency acting on behalf of or in 
concert with the Postal Service, acting in an official capacity.
    ``(3) This subsection shall not apply with respect to conduct 
occurring before the date of the enactment of this subsection.
    ``(f)(1) Each building constructed or altered by the Postal Service 
shall be constructed or altered, to the maximum extent feasible as 
determined by the Postal Service, in compliance with one of the 
nationally recognized model building codes and with other applicable 
nationally recognized codes.
    ``(2) Each building constructed or altered by the Postal Service 
shall be constructed or altered only after consideration of all 
requirements (other than procedural requirements) of zoning laws, land 
use laws, and applicable environmental laws of a State or subdivision 
of a State which would apply to the building if it were not a building 
constructed or altered by an establishment of the Government of the 
United States.
    ``(3) For purposes of meeting the requirements of paragraphs (1) 
and (2) with respect to a building, the Postal Service shall--
            ``(A) in preparing plans for the building, consult with 
        appropriate officials of the State or political subdivision, or 
        both, in which the building will be located;
            ``(B) upon request, submit such plans in a timely manner to 
        such officials for review by such officials for a reasonable 
        period of time not exceeding 30 days; and
            ``(C) permit inspection by such officials during 
        construction or alteration of the building, in accordance with 
        the customary schedule of inspections for construction or 
        alteration of buildings in the locality, if such officials 
        provide to the Postal Service--
                    ``(i) a copy of such schedule before construction 
                of the building is begun; and
                    ``(ii) reasonable notice of their intention to 
                conduct any inspection before conducting such 
                inspection.
Nothing in this subsection shall impose an obligation on any State or 
political subdivision to take any action under the preceding sentence, 
nor shall anything in this subsection require the Postal Service or any 
of its contractors to pay for any action taken by a State or political 
subdivision to carry out this subsection (including reviewing plans, 
carrying out on-site inspections, issuing building permits, and making 
recommendations).
    ``(4) Appropriate officials of a State or a political subdivision 
of a State may make recommendations to the Postal Service concerning 
measures necessary to meet the requirements of paragraphs (1) and (2). 
Such officials may also make recommendations to the Postal Service 
concerning measures which should be taken in the construction or 
alteration of the building to take into account local conditions. The 
Postal Service shall give due consideration to any such 
recommendations.
    ``(5) In addition to consulting with local and State officials 
under paragraph (3), the Postal Service shall establish procedures for 
soliciting, assessing, and incorporating local community input on real 
property and land use decisions.
    ``(6) For purposes of this subsection, the term `State' includes 
the District of Columbia, the Commonwealth of Puerto Rico, and a 
territory or possession of the United States.
    ``(g)(1) Notwithstanding any other provision of law, legal 
representation may not be furnished by the Department of Justice to the 
Postal Service in any action, suit, or proceeding arising, in whole or 
in part, under any of the following:
            ``(A) Subsection (d) or (e) of this section.
            ``(B) Subsection (f) or (g) of section 504 (relating to 
        administrative subpoenas by the Postal Regulatory Commission).
            ``(C) Section 3663 (relating to appellate review).
The Postal Service may, by contract or otherwise, employ attorneys to 
obtain any legal representation that it is precluded from obtaining 
from the Department of Justice under this paragraph.
    ``(2) In any circumstance not covered by paragraph (1), the 
Department of Justice shall, under section 411, furnish the Postal 
Service such legal representation as it may require, except that, with 
the prior consent of the Attorney General, the Postal Service may, in 
any such circumstance, employ attorneys by contract or otherwise to 
conduct litigation brought by or against the Postal Service or its 
officers or employees in matters affecting the Postal Service.
    ``(3)(A) In any action, suit, or proceeding in a court of the 
United States arising in whole or in part under any of the provisions 
of law referred to in subparagraph (B) or (C) of paragraph (1), and to 
which the Commission is not otherwise a party, the Commission shall be 
permitted to appear as a party on its own motion and as of right.
    ``(B) The Department of Justice shall, under such terms and 
conditions as the Commission and the Attorney General shall consider 
appropriate, furnish the Commission such legal representation as it may 
require in connection with any such action, suit, or proceeding, except 
that, with the prior consent of the Attorney General, the Commission 
may employ attorneys by contract or otherwise for that purpose.
    ``(h) A judgment against the Government of the United States 
arising out of activities of the Postal Service shall be paid by the 
Postal Service out of any funds available to the Postal Service, 
subject to the restriction specified in section 2011(g).''.
    (b) Technical Amendment.--Section 409(a) of title 39, United States 
Code, is amended by striking ``Except as provided in section 3628 of 
this title,'' and inserting ``Except as otherwise provided in this 
title,''.

SEC. 305. INTERNATIONAL POSTAL ARRANGEMENTS.

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

``Sec. 407. International postal arrangements

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

SEC. 306. REDESIGNATION.

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

                      ``SUBCHAPTER VI--GENERAL''.

SEC. 307. CLARIFICATION.

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

                      TITLE IV--GENERAL PROVISIONS

SEC. 401. QUALIFICATION REQUIREMENTS FOR GOVERNORS.

    (a) In General.--Section 202(a) of title 39, United States Code, is 
amended by striking ``(a)'' and inserting ``(a)(1)'' and by striking 
the fourth sentence and inserting the following: ``The Governors shall 
represent the public interest generally, and at least 4 of the 
Governors shall be chosen solely on the basis of their demonstrated 
ability in managing organizations or corporations (in either the public 
or private sector) of substantial size; for purposes of this sentence, 
an organization or corporation shall be considered to be of substantial 
size if it employs at least 50,000 employees. The Governors shall not 
be representatives of specific interests using the Postal Service, and 
may be removed only for cause.''.
    (b) Consultation Requirement.--Section 202(a) of title 39, United 
States Code, is amended by adding at the end the following:
    ``(2) In selecting the individuals described in paragraph (1) for 
nomination for appointment to the positionof Governor, the President 
should consult with the Speaker of the House of Representatives, the 
minority leader of the House of Representatives, the majority leader of 
the Senate, and the minority leader of the Senate.''.
    (c) Restriction.--Section 202(b) of title 39, United States Code, 
is amended by striking ``(b)'' and inserting ``(b)(1)'', and by adding 
at the end the following:
    ``(2)(A) Notwithstanding any other provision of this section, in 
the case of the office of the Governor the term of which is the first 
one scheduled to expire at least 4 months after the date of the 
enactment of this paragraph--
            ``(i) such office may not, in the case of any person 
        commencing service after that expiration date, be filled by any 
        person other than an individual chosen from among persons 
        nominated for such office with the unanimous concurrence of all 
        labor organizations described in section 206(a)(1); and
            ``(ii) instead of the term that would otherwise apply under 
        the first sentence of paragraph (1), the term of any person so 
        appointed to such office shall be 3 years.
    ``(B) Except as provided in subparagraph (A), an appointment under 
this paragraph shall be made in conformance with all provisions of this 
section that would otherwise apply.''.
    (d) Applicability.--The amendment made by subsection (a) shall not 
affect the appointment or tenure of any person serving as a Governor of 
the Board of Governors of the United States Postal Service pursuant to 
an appointment made before the date of the enactment of this Act, or, 
except as provided in the amendment made by subsection (c), any 
nomination made before that date; however, when any such office becomes 
vacant, the appointment of any person to fill that office shall be made 
in accordance with such amendment. The requirement set forth in the 
fourth sentence of section 202(a)(1) of title 39, United States Code 
(as amended by subsection (a)) shall be met beginning not later than 9 
years after the date of the enactment of this Act.

SEC. 402. OBLIGATIONS.

    (a) Purposes for Which Obligations May Be Issued.--The first 
sentence of section 2005(a)(1) of title 39, United States Code, is 
amended by striking ``title.'' and inserting ``title, other than any of 
the purposes for which the corresponding authority is available to the 
Postal Service under section 2011.''.
    (b) Limitation on Net Annual Increase in Obligations Issued for 
Certain Purposes.--The third sentence of section 2005(a)(1) of title 
39, United States Code, is amended to read as follows: ``In any one 
fiscal year, the net increase in the amount of obligations outstanding 
issued for the purpose of capital improvements and the net increase in 
the amount of obligations outstanding issued for the purpose of 
defraying operating expenses of the Postal Service shall not exceed a 
combined total of $3,000,000,000.'' .
    (c) Limitations on Obligations Outstanding.--
            (1) In general.--Subsection (a) of section 2005 of title 
        39, United States Code, is amended by adding at the end the 
        following:
    ``(3) For purposes of applying the respective limitations under 
this subsection, the aggregate amount of obligations issued by the 
Postal Service which are outstanding as of any one time, and the net 
increase in the amount of obligations outstanding issued by the Postal 
Service for the purpose of capital improvements or for the purpose of 
defraying operating expenses of the Postal Service in any fiscal year, 
shall be determined by aggregating the relevant obligations issued by 
the Postal Service under this section with the relevant obligations 
issued by the Postal Service under section 2011.''.
            (2) Conforming amendment.--The second sentence of section 
        2005(a)(1) of title 39, United States Code, is amended by 
        striking ``any such obligations'' and inserting ``obligations 
        issued by the Postal Service which may be''.
    (d) Amounts Which May Be Pledged, Etc.--
            (1) Obligations to which provisions apply.--The first 
        sentence of section 2005(b) of title 39, United States Code, is 
        amended by striking ``such obligations,'' and inserting 
        ``obligations issued by the Postal Service under this 
        section,''.
            (2) Assets, revenues, and receipts to which provisions 
        apply.--Subsection (b) of section 2005 of title 39, United 
        States Code, is amended by striking ``(b)'' and inserting 
        ``(b)(1)'', and by adding at the end the following:
    ``(2) Notwithstanding any other provision of this section--
            ``(A) the authority to pledge assets of the Postal Service 
        under this subsection shall be available only to the extent 
        that such assets are not related to the provision of 
        competitive products (as determined under section 2011(h) or, 
        for purposes of any period before accounting practices and 
        principles under section 2011(h) have been established and 
        applied, the best information available from the Postal 
        Service, including the audited statements required by section 
        2008(e)); and
            ``(B) any authority under this subsection relating to the 
        pledging or other use of revenues or receipts of the Postal 
        Service shall be available only to the extent that they are not 
        revenues or receipts of the Competitive Products Fund.''.

SEC. 403. PRIVATE CARRIAGE OF LETTERS.

    (a) In General.--Section 601 of title 39, United States Code, is 
amended by striking subsection (b) and inserting the following:
    ``(b) A letter may also be carried out of the mails when--
            ``(1) the amount paid for the private carriage of the 
        letter is at least the amount equal to 6 times the rate then 
        currently charged for the 1st ounce of a single-piece first 
        class letter;
            ``(2) the letter weighs at least 12\1/2\ ounces; or
            ``(3) such carriage is within the scope of services 
        described by regulations of the Postal Service (including, in 
        particular, sections 310.1 and 320.2-320.8 of title 39 of the 
        Code of Federal Regulations, as in effect on July 1, 2003) that 
        purport to permit private carriage by suspension of the 
        operation of this section (as then in effect).
    ``(c) Any regulations necessary to carry out this section shall be 
promulgated by the Postal Regulatory Commission.''.
    (b) Effective Date.--This section shall take effect on the date as 
of which the regulations promulgated under section 3633 of title 39, 
United States Code (as amended by section 202) take effect.

SEC. 404. RULEMAKING AUTHORITY.

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

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

    (a) Noninterference With Collective Bargaining Agreements.--Except 
as provided in section 407, nothing in this Act or any amendment made 
by this Act shall restrict, expand, or otherwise affect any of the 
rights, privileges, or benefits of either employees of or labor 
organizations representing employees of the United States Postal 
Service under chapter 12 of title 39, United States Code, the National 
Labor Relations Act, any handbook or manual affecting employee labor 
relations within the United States Postal Service, or any collective 
bargaining agreement.
    (b) Free Mailing Privileges Continue Unchanged.--Nothing in this 
Act or any amendment made by this Act shall affect any free mailing 
privileges accorded under section 3217 or sections 3403 through 3406 of 
title 39, United States Code.

SEC. 406. BONUS AUTHORITY.

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

``Sec. 3686. Bonus authority

    ``(a) In General.--The Postal Service may establish one or more 
programs to provide bonuses or other rewards to officers and employees 
of the Postal Service to achieve the objectives of this chapter.
    ``(b) Waiver of Limitation on Compensation.--
            ``(1) In general.--Under any such program, the Postal 
        Service may award a bonus or other reward in excess of the 
        limitation set forth in the last sentence of section 1003(a), 
        if such program has been approved under paragraph (2).
            ``(2) Approval process.--If the Postal Service wishes to 
        have the authority, under any program described in subsection 
        (a), to award bonuses or other rewards in excess of the 
        limitation referred to in paragraph (1)--
                    ``(A) the Postal Service shall make an appropriate 
                request to the Postal Regulatory Commission, in such 
                form and manner as the Commission requires; and
                    ``(B) the Postal Regulatory Commission shall 
                approve any such request if it finds that the program 
                is likely to achieve the objectives of this chapter.
            ``(3) Revocation authority.--If the Postal Regulatory 
        Commission finds that a program previously approved under 
        paragraph (2) is not achieving the objectives of this chapter, 
        the Commission may revoke or suspend the authority of the 
        Postal Service to continue such program until such time as 
        appropriate corrective measures have, in the judgment of the 
        Commission, been taken.
    ``(c) Reporting Requirement Relating to Bonuses or Other Rewards.--
Included in its comprehensive statement under section 2401(e) for any 
period shall be--
            ``(1) the name of each person receiving a bonus or other 
        reward during such period which would not have been allowable 
        but for the provisions of subsection (b);
            ``(2) the amount of the bonus or other reward; and
            ``(3) the amount by which the limitation referred to in 
        subsection (b)(1) was exceeded as a result of such bonus or 
        other reward.''.

SEC. 407. MEDIATION IN COLLECTIVE-BARGAINING DISPUTES.

    (a) In General.--Section 1207(b) of title 39, United States Code, 
is amended by striking all that follows ``the Director of the Federal 
Mediation and Conciliation Service shall'' and inserting ``, within 10 
days appoint a mediator of nationwide reputation and professional 
stature, and who is also a member of the National Academy of 
Arbitrators. The parties shall cooperate with the mediator in an effort 
to reach an agreement and shall meet and negotiate in good faith at 
such times and places that the mediator, in consultation with the 
parties, shall direct.''.
    (b) Provisions Relating to Arbitration Boards.--Section 1207(c) of 
title 39, United States Code, is amended--
            (1) in paragraph (1)--
                    (A) by striking ``90'' and inserting ``60'';
                    (B) by striking ``not members of the factfinding 
                panel,''; and
                    (C) by striking all that follows ``shall be made'' 
                and inserting ``from a list of names provided by the 
                Director. This list shall consist of not less than 9 
                names of arbitrators of nationwide reputation and 
                professional stature, who are also members of the 
                National Academy of Arbitrators, and whom the Director 
                has determined are available and willing to serve.''; 
                and
            (2) in paragraph (3), by striking ``factfinding panel'' and 
        inserting ``mediation''.
    (c) Conforming Amendment.--Section 1207(d) of title 39, United 
States Code, is amended by striking ``factfinding panel will be 
established'' and inserting ``mediator shall be appointed''.

                TITLE V--ENHANCED REGULATORY COMMISSION

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

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

               ``CHAPTER 5--POSTAL REGULATORY COMMISSION

``Sec.
``501. Establishment.
``502. Commissioners.
``503. Rules; regulations; procedures.
``504. Administration.

``Sec. 501. Establishment

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

``Sec. 502. Commissioners

    ``(a) The Postal Regulatory Commission is composed of 5 
Commissioners, appointed by the President, by and with the advice and 
consent of the Senate. The Commissioners shall be chosen solely on the 
basis of their technical qualifications, professional standing, and 
demonstrated expertise in economics, accounting, law, or public 
administration, and may be removed by the President only for cause. 
Each individual appointed to the Commission shall have the 
qualifications and expertise necessary to carry out the 
responsibilities accorded Commissioners under the Postal Accountability 
and Enhancement Act. Not more than 3 of the Commissioners may be 
adherents of the same political party.
    ``(b) A Commissioner may continue to serve after the expiration of 
his term until his successor has qualified, except that a Commissioner 
may not so continue to serve for more than 1 year after the date upon 
which his term otherwise would expire under subsection (e).
    ``(c) One of the Commissioners shall be designated as Chairman by, 
and shall serve in the position of Chairman at the pleasure of, the 
President.
    ``(d) The Commissioners shall by majority vote designate a Vice 
Chairman of the Commission. The Vice Chairman shall act as Chairman of 
the Commission in the absence of the Chairman.
    ``(e) The Commissioners shall serve for terms of 6 years.'';
            (2) 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; and
            (3) by redesignating sections 3603 and 3604 as sections 503 
        and 504, respectively, and transferring such sections to the 
        end of chapter 5 (as inserted by paragraph (1)).
    (b) Determinations.--Section 503 of title 39, United States Code, 
as so redesignated by subsection (a)(3), is amended by adding at the 
end the following: ``Such rules shall include procedures which balance, 
inter alia, the need for protecting due process rights and ensuring 
expeditious decision-making.''.
    (c) Applicability.--The amendment made by subsection (a)(1) shall 
not affect the appointment or tenure of any person serving as a 
Commissioner on the Postal Regulatory Commission (as so redesignated by 
section 504) pursuant to an appointment made before the date of the 
enactment of this Act or any nomination made before that date, but, 
when any such office becomes vacant, the appointment of any person to 
fill that office shall be made in accordance with such amendment.
    (d) Clerical Amendment.--The analysis for part I of title 39, 
United States Code, is amended by inserting after the item relating to 
chapter 4 the following:

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

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

    Section 504 of title 39, United States Code (as so redesignated by 
section 501) is amended by adding at the end the following:
    ``(f)(1) Any Commissioner of the Postal Regulatory Commission, any 
administrative law judge appointed by the Commission under section 3105 
of title 5, and any employee of the Commission designated by the 
Commission may administer oaths, examine witnesses, take depositions, 
and receive evidence.
    ``(2) The Chairman of the Commission, any Commissioner designated 
by the Chairman, and any administrative law judge appointed by the 
Commission under section 3105 of title 5 may, with respect to any 
proceeding conducted by the Commission under this title--
            ``(A) issue subpoenas requiring the attendance and 
        presentation of testimony by, or the production of documentary 
        or other evidence in the possession of, any covered person; and
            ``(B) order the taking of depositions and responses to 
        written interrogatories by a covered person.
The written concurrence of a majority of the Commissioners then holding 
office shall, with respect to each subpoena under subparagraph (A), be 
required in advance of its issuance.
    ``(3) In the case of contumacy or failure to obey a subpoena issued 
under this subsection, upon application by the Commission, the district 
court of the United States for the district in which the person to whom 
the subpoena is addressed resides or is served may issue an order 
requiring such person to appear at any designated place to testify or 
produce documentary or other evidence. Any failure to obey the order of 
the court may be punished by the court as a contempt thereof.
    ``(4) For purposes of this subsection, the term `covered person' 
means an officer, employee, agent, or contractor of the Postal Service.
    ``(g)(1) If the Postal Service determines that any document or 
other matter it provides to the Postal Regulatory Commission pursuant 
to a subpoena issued under subsection (f), or otherwise at the request 
of the Commission in connection with any proceeding or other purpose 
under this title, contains information which is described in section 
410(c) of this title, or exempt from public disclosure under section 
552(b) of title 5, the Postal Service shall, at the time of providing 
such matter to the Commission, notify the Commission, in writing, of 
its determination (and the reasons therefor).
    ``(2) No officer or employee of the Commission may, with respect to 
any information as to which the Commission has been notified under 
paragraph (1)--
            ``(A) use such information for purposes other than the 
        purposes for which it is supplied; or
            ``(B) permit anyone who is not an officer or employee of 
        the Commission to have access to any such information.
    ``(3) Paragraph (2) shall not prevent information from being 
furnished under any process of discovery established under this title 
in connection with a proceeding under this title. The Commission shall, 
by regulations based on rule 26(c) of the Federal Rules of Civil 
Procedure, establish procedures for ensuring appropriate 
confidentiality for any information furnished under the preceding 
sentence.''.

SEC. 503. APPROPRIATIONS FOR THE POSTAL REGULATORY COMMISSION.

    (a) Authorization of Appropriations.--Subsection (d) of section 504 
of title 39, United States Code (as so redesignated by section 501) is 
amended to read as follows:
    ``(d) There are authorized to be appropriated, out of the Postal 
Service Fund, such sums as may be necessary for the Postal Regulatory 
Commission. In requesting an appropriation under this subsection for a 
fiscal year, the Commission shall prepare and submit to the Congress 
under section 2009 a budget of the Commission's expenses, including 
expenses for facilities, supplies, compensation, and employee 
benefits.''.
    (b) Budget Program.--
            (1) In general.--The next to last sentence of section 2009 
        of title 39, United States Code, is amended to read as follows: 
        ``The budget program shall also include separate statements of 
        the amounts which (1) the Postal Service requests to be 
        appropriated under subsections (b) and (c) of section 2401, (2) 
        the Office of Inspector General of the United States Postal 
        Service requests to be appropriated, out of the Postal Service 
        Fund, under section 8J(e) of the Inspector General Act of 1978, 
        and (3) the Postal Regulatory Commission requests to be 
        appropriated, out of the Postal Service Fund, under section 
        504(d) of this title.''.
            (2) Conforming amendment.--Section 2003(e)(1) of title 39, 
        United States Code, is amended by striking the first sentence 
        and inserting the following: ``The Fund shall be available for 
        the payment of (A) all expenses incurred by the Postal Service 
        in carrying out its functions as provided by law, subject to 
        the same limitation as set forth in the parenthetical matter 
        under subsection (a); (B) all expenses of the Postal Regulatory 
        Commission, subject to the availability of amounts appropriated 
        pursuant to section 504(d); and (C) all expenses of the Office 
        of Inspector General, subject to the availability of amounts 
        appropriated pursuant to section 8J(e) of the Inspector General 
        Act of 1978.''.
    (c) Effective Date.--
            (1) In general.--The amendments made by this section shall 
        apply with respect to fiscal years beginning on or after 
        October 1, 2004.
            (2) Savings provision.--The provisions of title 39, United 
        States Code, that are amended by this section shall, for 
        purposes of any fiscal year before the first fiscal year to 
        which the amendments made by this section apply, continue to 
        apply in the same way as if this section had never been 
        enacted.

SEC. 504. REDESIGNATION OF THE POSTAL RATE COMMISSION.

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

SEC. 505. OFFICER OF THE POSTAL REGULATORY COMMISSION REPRESENTING THE 
                    GENERAL PUBLIC.

    (a) In General.--Chapter 5 of title 39, United States Code (as 
added by this Act) is amended by adding after section 504 the 
following:

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

    ``The Postal Regulatory Commission shall designate an officer of 
the Postal Regulatory Commission in all public proceedings (such as 
developing rules, regulations, and procedures) who shall represent the 
interests of the general public.''.
    (b) Clerical Amendment.--The analysis for chapter 5 of title 39, 
United States Code (as amended by section 501(a)(1)) is amended by 
adding after the item relating to section 504 the following:

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

                      TITLE VI--INSPECTORS GENERAL

SEC. 601. INSPECTOR GENERAL OF THE POSTAL REGULATORY COMMISSION.

    (a) In General.--Paragraph (2) of section 8G(a) of the Inspector 
General Act of 1978 is amended by inserting ``the Postal Regulatory 
Commission,'' after ``the United States International Trade 
Commission,''.
    (b) Administration.--Section 504 of title 39, United States Code 
(as so redesignated by section 501) is amended by adding after 
subsection (g) (as added by section 502) the following:
    ``(h)(1) Notwithstanding any other provision of this title or of 
the Inspector General Act of 1978, the authority to select, appoint, 
and employ officers and employees of the Office of Inspector General of 
the Postal Regulatory Commission, and to obtain any temporary or 
intermittent services of experts or consultants (or an organization of 
experts or consultants) for such Office, shall reside with the 
Inspector General of the Postal Regulatory Commission.
    ``(2) Except as provided in paragraph (1), any exercise of 
authority under this subsection shall, to the extent practicable, be in 
conformance with the applicable laws and regulations that govern 
selections, appointments and employment, and the obtaining of any such 
temporary or intermittent services, within the Postal Regulatory 
Commission.''.
    (c) Deadline.--No later than 180 days after the date of the 
enactment of this Act--
            (1) the first Inspector General of the Postal Regulatory 
        Commission shall be appointed; and
            (2) the Office of Inspector General of the Postal 
        Regulatory Commission shall be established.

SEC. 602. INSPECTOR GENERAL OF THE UNITED STATES POSTAL SERVICE TO BE 
                    APPOINTED BY THE PRESIDENT.

    (a) Definitional Amendments to the Inspector General Act of 1978.--
Section 11 of the Inspector General Act of 1978 is amended--
            (1) in paragraph (1)--
                    (A) by striking ``or'' before ``the President of 
                the Export-Import Bank;'' and
                    (B) by inserting ``or the Governors of the United 
                States Postal Service (within the meaning of section 
                102(3) of title 39, United States Code);'' after ``the 
                President of the Export-Import Bank;''; and
            (2) in paragraph (2)--
                    (A) by striking ``or'' before ``the Export-Import 
                Bank,''; and
                    (B) by inserting ``or the United States Postal 
                Service,'' after ``the Export-Import Bank,''.
    (b) Special Provisions Concerning the United States Postal 
Service.--
            (1) In general.--The Inspector General Act of 1978 is 
        amended--
                    (A) by redesignating section 8J as section 8K; and
                    (B) by inserting after section 8I the following:
    ``special provisions concerning the united states postal service
    ``Sec. 8J.  (a) In carrying out the duties and responsibilities 
specified in this Act, the Inspector General of the United States 
Postal Service shall have oversight responsibility for all activities 
of the Postal Inspection Service, including any internal investigation 
performed by the Postal Inspection Service. The Chief Postal Inspector 
shall promptly report any significant activities being carried out by 
the Postal Inspection Service to such Inspector General. The Postmaster 
General shall promptly report to such Inspector General all allegations 
of theft, fraud, or misconduct by Postal Service officers or employees, 
and entities or individuals doing business with the Postal Service.
    ``(b) In the case of any report that the Governors of the United 
States Postal Service (within the meaning of section 102(3) of title 
39, United States Code) are required to transmit under the second 
sentence of section 5(d), such sentence shall be applied by deeming the 
term `appropriate committees of Congress' to mean the Committee on 
Government Reform of the House of Representatives, the Committee on 
Governmental Affairs of the Senate, and such other committees or 
subcommittees of Congress as may be appropriate.
    ``(c) Notwithstanding any provision of paragraph (7) or (8) of 
section 6(a), the Inspector General of the United States Postal Service 
may select, appoint, and employ such officers and employees as may be 
necessary for carrying out the functions, powers, and duties of the 
Office of Inspector General and to obtain the temporary or intermittent 
services of experts or consultants or an organization of experts or 
consultants, subject to the applicable laws and regulations that govern 
such selections, appointments, and employment, and the obtaining of 
such services, within the United States Postal Service.
    ``(d) Nothing in this Act shall restrict, eliminate, or otherwise 
adversely affect any of the rights, privileges, or benefits of 
employees of the United States Postal Service, or labor organizations 
representing employees of the United States Postal Service, under 
chapter 12 of title 39, United States Code, the National Labor 
Relations Act, any handbook or manual affecting employee labor 
relations with the United States Postal Service, or any collective 
bargaining agreement.
    ``(e) There are authorized to be appropriated, out of the Postal 
Service Fund, such sums as may be necessary for the Office of Inspector 
General of the United States Postal Service.''.
            (2) Related provisions.--For certain related provisions, 
        see section 503(b).
    (c) Exercise of Certain Powers.--Section 6(e)(3) of the Inspector 
General Act of 1978 is amended--
            (1) by striking ``and the'' before ``Tennessee Valley 
        Authority''; and
            (2) by inserting ``, and United States Postal Service'' 
        after ``Tennessee Valley Authority''.
    (d) Public Contracts.--
            (1) Additional provisions applicable.--Section 410(b)(5) of 
        title 39, United States Code, is amended--
                    (A) in subparagraph (A), by striking ``and'' after 
                the semicolon; and
                    (B) by adding after subparagraph (B) the following:
                    ``(C) the Anti-Kickback Act of 1986 (41 U.S.C. 51 
                and following), other than subsections (a) and (b) of 7 
                and section 8 of that Act; and
                    ``(D) section 315 of the Federal Property and 
                Administrative Services Act of 1949 (41 U.S.C. 265) 
                (relating to protecting contractor employees from 
                reprisal for disclosure of certain information);''.
            (2) Regulations on allowable costs.--Section 410 of title 
        39, United States Code, is amended by adding at the end the 
        following:
    ``(e) The Postal Service shall develop and issue purchasing 
regulations that prohibit contract costs not allowable under section 
5.2.5 of the United States Postal Service Procurement Manual 
(Publication 41), as in effect on July 12, 1995.''.
    (e) Audits of the Postal Service.--
            (1) Audits.--Subsection (e) of section 2008 of title 39, 
        United States Code, is amended to read as follows:
    ``(e)(1) At least once each year beginning with the fiscal year 
commencing after the date of the enactment of the Postal Accountability 
and Enhancement Act, the financial statements of the Postal Service 
(including those used in determining and establishing postal rates) 
shall be audited by the Inspector General or by an independent external 
auditor selected by the Inspector General.
    ``(2) Audits under this section shall be conducted in accordance 
with applicable generally accepted government auditing standards.
    ``(3) Upon completion of the audit required by this subsection, the 
person who audits the statement shall submit a report on the audit to 
the Postmaster General.''.
            (2) Results of inspector general's audit to be included in 
        annual report.--Section 2402 of title 39, United States Code, 
        is amended by inserting after the first sentence the following: 
        ``Each report under this section shall include a copy of the 
        report most recently received by the Postmaster General under 
        section 2008(e)(3).''.
            (3) Coordination provisions.--Section 2008(d) of title 39, 
        United States Code, is amended--
                    (A) by striking ``(d) Nothing'' and inserting 
                ``(d)(1) Except as provided in paragraph (2), 
                nothing''; and
                    (B) by adding at the end the following:
    ``(2) An audit or report under paragraph (1) may not be obtained 
without the prior written approval of the Inspector General.''.
            (4) Transition provision.--For purposes of any fiscal year 
        preceding the first fiscal year commencing after the date of 
        the enactment of this Act, the provisions of title 39, United 
        States Code, shall be applied as if the amendments made by this 
        subsection had never been enacted.
    (f) Reports.--Section 3013 of title 39, United States Code, is 
amended by striking ``Postmaster General'' each place it appears and 
inserting ``Chief Postal Inspector''.
    (g) Technical and Conforming Amendments.--
            (1) Relating to the inspector general act of 1978.--(A) 
        Subsection (a) of section 8G of the Inspector General Act of 
        1978 (as amended by section 601(a)) is further amended--
                    (i) in paragraph (2), by striking ``the Postal 
                Regulatory Commission, and the United States Postal 
                Service;'' and inserting ``and the Postal Regulatory 
                Commission;'' and
                    (ii) in paragraph (4), by striking ``except that'' 
                and all that follows through ``Code);'' and inserting 
                ``except that, with respect to the National Science 
                Foundation, such term means the National Science 
                Board;''.
            (B)(i) Subsection (f) of section 8G of such Act is 
        repealed.
            (ii) Subsection (c) of section 8G of such Act is amended by 
        striking ``Except as provided under subsection (f) of this 
        section, the'' and inserting ``The''.
            (C) Section 8K of such Act (as so redesignated by 
        subsection (b)(1)(A)) is amended by striking the matter after 
        ``8D,'' and before ``of this Act'' and inserting ``8E, 8F, 8H, 
        or 8J''.
            (2) Relating to title 39, united states code.--(A) 
        Subsection (e) of section 202 of title 39, United States Code, 
        is repealed.
            (B) Paragraph (4) of section 102 of such title 39 (as 
        amended by section 101) is amended to read as follows:
            ``(4) `Inspector General' means the Inspector General of 
        the United States Postal Service, appointed under section 3(a) 
        of the Inspector General Act of 1978;''.
            (C) The first sentence of section 1003(a) of such title 39 
        is amended by striking ``chapters 2 and 12 of this title, 
        section 8G of the Inspector General Act of 1978, or other 
        provision of law,'' and inserting ``chapter 2 or 12 of this 
        title, subsection (b) or (c) of this section, or any other 
        provision of law,''.
            (D) Section 1003(b) of such title 39 is amended by striking 
        ``respective'' and inserting ``other''.
            (E) Section 1003(c) of such title 39 is amended by striking 
        ``included'' and inserting ``includes''.
            (3) Relating to the energy policy act of 1992.--Section 
        160(a) of the Energy Policy Act of 1992 (42 U.S.C. 8262f(a)) is 
        amended (in the matter before paragraph (1)) by striking all 
        that follows ``(5 U.S.C. App.)'' and before ``shall--''.
    (h) Effective Date; Transition Provisions.--
            (1) Effective date.--Except as provided in paragraph (2) or 
        subsection (c), this section and the amendments made by this 
        section shall take effect on the date of the enactment of this 
        Act.
            (2) Transition provisions.--
                    (A) Presidential appointment authority available 
                immediately.--The authority to appoint an Inspector 
                General of the United States Postal Service in 
                accordance with the amendments made by this section 
                shall be available as of the effective date of this 
                section.
                    (B) Continuation in office.--Pending the 
                appointment of an Inspector General of the United 
                States Postal Service in accordance with the amendments 
                made by this section, the individual serving as the 
                Inspector General of the United States Postal Service 
                on the day beforethe effective date of this section may 
continue to serve--
                            (i) in accordance with applicable 
                        provisions of the Inspector General Act of 1978 
                        and (except as provided in clause (ii)) of 
                        title 39, United States Code, as last in effect 
                        before the effective date of this Act; but
                            (ii) subject to the provisions of such 
                        title 39 as amended by subsections (e) and (f) 
                        of this section (deeming any reference to the 
                        ``Inspector General'' in such provisions, as so 
                        amended, to refer to the individual continuing 
                        to serve under authority of this subparagraph) 
                        and subparagraph (C).
                    (C) Authorization of appropriations.--
                            (i) In general.--Notwithstanding any other 
                        provision of this subsection, section 8J(e) of 
                        the Inspector General Act of 1978 (as amended 
                        by this section) shall be effective for 
                        purposes of fiscal years beginning on or after 
                        October 1, 2004.
                            (ii) Savings provision.--For purposes of 
                        the fiscal year ending on September 30, 2004, 
                        funding for the Office of Inspector General of 
                        the United States Postal Service shall be made 
                        available in the same manner as if this Act had 
                        never been enacted.
                    (D) Eligibility of prior inspector general.--
                Nothing in this Act shall prevent any individual who 
                has served as Inspector General of the United States 
                Postal Service at any time before the date of the 
                enactment of this Act from being appointed to that 
                position pursuant to the amendments made by this 
                section.

                         TITLE VII--EVALUATIONS

SEC. 701. UNIVERSAL POSTAL SERVICE STUDY.

    (a) Report by the Postal Service.--The United States Postal Service 
shall, within 12 months after the date of the enactment of this Act, 
submit to the President, the Congress, and the Postal Regulatory 
Commission, a written report on universal postal service in the United 
States (hereinafter in this section referred to as ``universal 
service''). Such report shall include at least the following:
            (1) A comprehensive review of the history and development 
        of universal service, including how the scope and standards of 
        universal service have evolved over time.
            (2) The scope and standards of universal service provided 
        under current law (including sections 101 and 403 of title 39, 
        United States Code) and current rules, regulations, policy 
        statements, and practices of the Postal Service.
            (3) A description of any geographic areas, populations, 
        communities, organizations, or other groups or entities not 
        currently covered by universal service or that are covered but 
        that are receiving services deficient in scope or quality or 
        both.
            (4) The scope and standards of universal service likely to 
        be required in the future in order to meet the needs and 
        expectations of the American public, including all types of 
        mail users, based on such assumptions or alternative sets of 
        assumptions as the Postal Service considers plausible.
            (5) Such recommendations as the Postal Service considers 
        appropriate.
    (b) Report by the Postal Regulatory Commission.--The Postal 
Regulatory Commission shall, within 12 months after receiving the 
report of the Postal Service under subsection (a), submit to the 
President and the Congress a written report evaluating the report of 
the Postal Service. The report of the Commission shall include at least 
the following:
            (1) Such comments and observations relating to the matters 
        addressed in the Postal Service's report as the Commission 
        considers appropriate.
            (2) An estimate of the cost attributable to the obligation 
        to provide universal service under prior and current law, 
        respectively.
            (3) An estimate of the likely cost of fulfilling the 
        obligation to provide universal service under--
                    (A) the assumptions or respective sets of 
                assumptions of the Postal Service described in 
                subsection (a)(4); and
                    (B) such other assumptions or sets of assumptions 
                as the Commission considers plausible.
            (4) Such additional topics and recommendations as the 
        Commission considers appropriate.
    (c) Consultation.--In preparing the reports required by this 
section, the Postal Service and the Postal Regulatory Commission--
            (1) shall consult with each other, other Federal agencies, 
        users of the mails, enterprises in the private sector engaged 
        in the delivery of mail, and the general public; and
            (2) shall address in their respective reports any written 
        comments received under this section.
    (d) Clarifying Provision.--Nothing in this section shall be 
considered to relate to any services that are not postal services 
(within the meaning of section 102 of title 39, United States Code, as 
amended by section 101).

SEC. 702. ASSESSMENTS OF RATEMAKING, CLASSIFICATION, AND OTHER 
                    PROVISIONS.

    (a) In General.--The Postal Regulatory Commission shall, at least 
every 5 years, submit a report to the President and the Congress 
concerning--
            (1) the operation of the amendments made by the Postal 
        Accountability and Enhancement Act; and
            (2) recommendations for any legislation or other measures 
        necessary to improve the effectiveness or efficiency of the 
        postal laws of the United States.
    (b) Postal Service Views.--A report under this section shall be 
submitted only after reasonable opportunity has been afforded to the 
Postal Service to review such report and to submit written comments 
thereon. Any comments timely received from the Postal Service underthe 
preceding sentence shall be attached to the report submitted under 
subsection (a).
    (c) Specific Information Required.--The Postal Regulatory 
Commission shall include, as part of at least its first report under 
subsection (a), the following:
            (1) Cost-coverage requirement relating to competitive 
        products collectively.--With respect to section 3633 of title 
        39, United States Code (as amended by this Act)--
                    (A) a description of how such section has operated; 
                and
                    (B) recommendations as to whether or not such 
                section should remain in effect and, if so, any 
                suggestions as to how it might be improved.
            (2) Competitive products fund.--With respect to the Postal 
        Service Competitive Products Fund (under section 2011 of title 
        39, United States Code, as amended by section 301), in 
        consultation with the Secretary of the Treasury--
                    (A) a description of how such Fund has operated;
                    (B) any suggestions as to how the operation of such 
                Fund might be improved; and
                    (C) a description and assessment of alternative 
                accounting or financing mechanisms that might be used 
                to achieve the objectives of such Fund.
            (3) Assumed federal income tax on competitive products 
        fund.--With respect to section 3634 of title 39, United States 
        Code (as amended by this Act), in consultation with the 
        Secretary of the Treasury--
                    (A) a description of how such section has operated; 
                and
                    (B) recommendations as to whether or not such 
                section should remain in effect and, if so, any 
                suggestions as to how it might be improved.

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

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

SEC. 704. GREATER DIVERSITY IN POSTAL SERVICE EXECUTIVE AND 
                    ADMINISTRATIVE SCHEDULE MANAGEMENT POSITIONS.

    (a) Study.--The Board of Governors shall study and, within 1 year 
after the date of the enactment of this Act, submit to the President 
and Congress a report concerning the extent to which women and 
minorities are represented in supervisory and management positions 
within the United States Postal Service. Any data included in the 
report shall be presented in the aggregate and by pay level.
    (b) Performance Evaluations.--The United States Postal Service 
shall, as soon as practicable, take such measures as may be necessary 
to ensure that, for purposes of conducting performance appraisals of 
supervisory or managerial employees, appropriate consideration shall be 
given to meeting affirmative action goals, achieving equal employment 
opportunity requirements, and implementation of plans designed to 
achieve greater diversity in the workforce.

SEC. 705. PLAN FOR ASSISTING DISPLACED WORKERS.

    (a) Plan.--The United States Postal Service shall, before the 
deadline specified in subsection (b), develop and be prepared to 
implement, whenever necessary, a comprehensive plan under which 
reemployment assistance shall be afforded to employees displaced as a 
result of the automation or privatization of any of its functions.
    (b) Report.--Not later than 1 year after the date of the enactment 
of this Act, the United States Postal Service shall submit to its Board 
of Governors and Congress a written report describing its plan under 
this section.

SEC. 706. CONTRACTS WITH WOMEN, MINORITIES, AND SMALL BUSINESSES.

    The Board of Governors shall study and, within 1 year after the 
date of the enactment of this Act, submit to the President and the 
Congress a report concerning the number and value of contracts and 
subcontracts the Postal Service has entered into with women, 
minorities, and small businesses.

SEC. 707. RATES FOR PERIODICALS.

    (a) In General.--The United States Postal Service, acting jointly 
with the Postal Regulatory Commission and the General Accounting 
Office, shall study and submit to the President and Congress a report 
concerning--
            (1) the quality, accuracy, and completeness of the 
        information used by the Postal Service in determining the 
        direct and indirect postal costs attributable to periodicals; 
        and
            (2) any opportunities that might exist for improving 
        efficiencies in the collection, handling, transportation, or 
        delivery of periodicals by the Postal Service, including any 
        pricing incentives for mailers that might be appropriate.
    (b) Recommendations.--The report shall include recommendations for 
any administrative action or legislation that might be appropriate.

SEC. 708. ASSESSMENT OF CERTAIN RATE DEFICIENCIES.

    (a) In General.--Within 12 months after the date of the enactment 
of this Act, the Office of Inspector General of the United States 
Postal Service shall study and submit to the President, the Congress, 
and the United States Postal Service, a report concerning the 
administration of section 3626(k) of title 39, United States Code.
    (b) Specific Requirements.--The study and report shall specifically 
address the adequacy and fairness of the process by which assessments 
under section 3626(k) of title 39, United States Code, are determined 
and appealable, including--
            (1) whether the Postal Regulatory Commission or any other 
        body outside the Postal Service should be assigned a role; and
            (2) whether a statute of limitations should be established 
        for the commencement of proceedings by the Postal Service 
        thereunder.

SEC. 709. POSTAL PROCESSING AND DISTRIBUTION NETWORK STUDY.

    The United States Postal Service shall, within 16 months after the 
date of the enactment of this Act, submit to the President, the 
Congress, and the Board of Governors of the United States Postal 
Service a written report on the postal processing and distribution 
network. Such report shall include at least the following:
            (1) Recommendations to improve the efficiency and 
        effectiveness of the processing and distribution network while 
        preserving the timely delivery of postal services.
            (2) Identification of excess capacity (if any) within the 
        processing and distribution network and opportunities for 
        savings through realignment or consolidation of facilities.
            (3) Report of the Postal Service's plans for dealing with 
        the recommendations and findings identified in paragraphs (1) 
        and (2).
            (4) Statutory or regulatory obstacles preventing the Postal 
        Service from taking action to realign or consolidate facilities 
        identified in paragraph (2).
            (5) Such additional topics and recommendations as the 
        Postal Service considers appropriate.

SEC. 710. DEFINITION.

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

     TITLE VIII--MISCELLANEOUS; TECHNICAL AND CONFORMING AMENDMENTS

SEC. 801. EMPLOYMENT OF POSTAL POLICE OFFICERS.

    Section 3061 of title 18, United States Code, is amended by adding 
at the end the following:
    ``(c)(1) The Postal Service may employ police officers for duty in 
connection with the protection of property owned or occupied by the 
Postal Service or under the charge and control of the Postal Service, 
and persons on the property, including duty in areas outside the 
property to the extent necessary to protect the property and persons on 
the property.
    ``(2) With respect to such property, such officers shall have the 
power to--
            ``(A) enforce Federal laws and regulations for the 
        protection of persons and property;
            ``(B) carry firearms; and
            ``(C) make arrests without a warrant for any offense 
        against the United States committed in the presence of the 
        officer or for any felony cognizable under the laws of the 
        United States if the officer has reasonable grounds to believe 
        that the person to be arrested has committed or is committing a 
        felony.
    ``(3) With respect to such property, such officers may have, to 
such extent as the Postal Service may by regulations prescribe, the 
power to--
            ``(A) serve warrants and subpoenas issued under the 
        authority of the United States; and
            ``(B) conduct investigations, on and off the property in 
        question, of offenses that may have been committed against 
        property owned or occupied by the Postal Service or persons on 
        the property.
    ``(4)(A) As to such property, the Postmaster General may prescribe 
regulations necessary for the protection and administration of property 
owned or occupied by the Postal Service and persons on the property. 
The regulations may include reasonable penalties, within the limits 
prescribed in subparagraph (B), for violations of the regulations. The 
regulations shall be posted and remain posted in a conspicuous place on 
the property.
    ``(B) A person violating a regulation prescribed under this 
subsection shall be fined under this title, imprisoned for not more 
than 30 days, or both.''.

SEC. 802. DATE OF POSTMARK TO BE TREATED AS DATE OF APPEAL IN 
                    CONNECTION WITH THE CLOSING OR CONSOLIDATION OF 
                    POST OFFICES.

    (a) In General.--Section 404(b) of title 39, United States Code, is 
amended by adding at the end the following:
    ``(6) For purposes of paragraph (5), any appeal received by the 
Commission shall--
            ``(A) if sent to the Commission through the mails, be 
        considered to have been received on the date of the Postal 
        Service postmark on the envelope or other cover in which such 
        appeal is mailed; or
            ``(B) if otherwise lawfully delivered to the Commission, be 
        considered to have been received on the date determined based 
        on any appropriate documentation or other indicia (as 
        determined under regulations of the Commission).''.
    (b) Effective Date.--This section and the amendments made by this 
section shall apply with respect to any determination to close or 
consolidate a post office which is first made available, in accordance 
with paragraph (3) of section 404(b) of title 39, United States Code, 
after the end of the 3-month period beginning on the date of the 
enactment of this Act.

SEC. 803. PROVISIONS RELATING TO BENEFITS UNDER CHAPTER 81 OF TITLE 5, 
                    UNITED STATES CODE, FOR OFFICERS AND EMPLOYEES OF 
                    THE FORMER POST OFFICE DEPARTMENT.

    (a) In General.--Section 8 of the Postal Reorganization Act (39 
U.S.C. 1001 note) is amended by inserting ``(a)'' after ``8.'' and by 
adding at the end the following:
    ``(b) For purposes of chapter 81 of title 5, United States Code, 
the Postal Service shall, with respect to any individual receiving 
benefits under such chapter as an officer or employee of the former 
Post Office Department, have the same authorities and responsibilities 
as it has with respect to an officer or employee of the Postal Service 
receiving such benefits.''.
    (b) Effective Date.--This section and the amendments made by this 
section shall be effective as of the first day of the fiscal year in 
which this Act is enacted.

SEC. 804. OBSOLETE PROVISIONS.

    (a) Repeal.--
            (1) In general.--Chapter 52 of title 39, United States 
        Code, is repealed.
            (2) Conforming amendments.--(A) Section 5005(a) of title 
        39, United States Code, is amended--
                    (i) by striking paragraph (1), and by redesignating 
                paragraphs (2) through (4) as paragraphs (1) through 
                (3), respectively; and
                    (ii) in paragraph (3) (as so designated by clause 
                (i)), by striking ``(as defined in section 5201(6) of 
                this title)''.
            (B) Section 5005(b) of such title 39 is amended by striking 
        ``(a)(4)'' each place it appears and inserting ``(a)(3)''.
            (C) Section 5005(c) of such title 39 is amended by striking 
        ``by carrier or person under subsection (a)(1) of this section, 
        by contract under subsection (a)(4) of this section, or'' and 
        inserting ``by contract under subsection (a)(3) of this section 
        or''.
    (b) Eliminating Restriction on Length of Contracts.--(1) Section 
5005(b)(1) of title 39, United States Code, is amended by striking 
``(or where the Postal Service determines that special conditions or 
the use of special equipment warrants, not in excess of 6 years)'' and 
inserting ``(or such longer period of time as may be determined by the 
Postal Service to be advisable or appropriate)''.
    (2) Section 5402(d) of such title 39 is amended by striking ``for a 
period of not more than 4 years''.
    (3) Section 5605 of such title 39 is amended by striking ``for 
periods of not in excess of 4 years''.
    (c) Clerical Amendment.--The analysis for part V of title 39, 
United States Code, is amended by repealing the item relating to 
chapter 52.

SEC. 805. EXPANDED CONTRACTING AUTHORITY.

    (a) Amendment to Title 39, United States Code.--
            (1) Contracts with air carriers.--Subsection (d) of section 
        5402 of title 39, United States Code, is amended to read as 
        follows:
    ``(d)(1) The Postal Service may contract with any air carrier for 
the transportation of mail by aircraft in interstate air 
transportation, including the rates therefor, either through 
negotiations or competitive bidding.
    ``(2) Notwithstanding subsections (a) through (c), the Postal 
Service may contract with any air carrier or foreign air carrier for 
the transportation of mail by aircraft in foreign air transportation, 
including the rates therefor, either through negotiations or 
competitive bidding, except that--
            ``(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) 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
            ``(D) 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.--Subsection (e) of section 5402 of title 
        39, United States Code, is amended to read as follows:
    ``(e) For purposes of this section, the terms `air carrier', `air 
transportation', `foreign air carrier', `foreign air transportation', 
`interstate air transportation', and `mail' shall have the meanings 
given such terms in section 40102 of title 49.''.
    (b) Amendments to Title 49, United States Code.--
            (1) Authority of postal service to provide for interstate 
        air transportation of mail.--Section 41901(a) of title 49, 
        United States Code, is amended to read as follows:
    ``(a) Title 39.--The United States Postal Service may provide for 
the transportation of mail by aircraft in air transportation under this 
chapter and under chapter 54 of title 39.''.
            (2) Schedules for certain transportation of mail.--Section 
        41902(b)(1) of title 49, United States Code, is amended by 
        inserting before the semicolon at the end the following: 
        ``(other than foreign air transportation of mail)''.
            (3) Prices for foreign transportation of mail.--Section 
        41907 of title 49, United States Code, is amended--
                    (A) by striking ``(a) Limitations.--''; and
                    (B) by striking subsection (b).
            (4) Conforming amendments.--Sections 41107, 41901(b)(1), 
        41902(a), 41903(a), and 41903(b) of title 49, United States 
        Code, are amended by striking ``in foreign air transportation 
        or''.

SEC. 806. INVESTMENTS.

    Subsection (c) of section 2003 of title 39, United States Code, is 
amended--
            (1) by striking ``(c) If'' and inserting ``(c)(1) Except as 
        provided in paragraph (2), if''; and
            (2) by adding at the end the following:
    ``(2)(A) Nothing in this section shall be considered to authorize 
any investment in any obligations or securities of a commercial entity.
    ``(B) For purposes of this paragraph, the term `commercial entity' 
means any corporation, company, association, partnership, joint stock 
company, firm, society, orother similar entity, as further defined 
under regulations prescribed by the Postal Regulatory Commission.''.

SEC. 807. REPEAL OF SECTION 5403.

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

SEC. 808. REDUCED RATES.

    Section 3626 of title 39, United States Code, is amended--
            (1) in subsection (a)--
                    (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).''; and
                    (B) by redesignating paragraphs (4) through (7) as 
                paragraphs (3) through (6), respectively;
            (2) in subsection (g), by adding at the end the following:
    ``(3) For purposes of this section and former section 4358(a) 
through (c) of this title, those copies of an issue of a publication 
entered within the county in which it is published, but distributed 
outside such county on postal carrier routes originating in the county 
of publication, shall be treated as if they were distributed within the 
county of publication.
    ``(4)(A) In the case of an issue of a publication, any number of 
copies of which are mailed at the rates of postage for a class of mail 
or kind of mailer under former section 4358(a) through (c) of this 
title, any copies of such issue which are distributed outside the 
county of publication (excluding any copies subject to paragraph (3)) 
shall be subject to rates of postage provided for under this paragraph.
    ``(B) The rates of postage applicable to mail under this paragraph 
shall be established in accordance with section 3622.
    ``(C) This paragraph shall not apply with respect to an issue of a 
publication unless the total paid circulation of such issue outside the 
county of publication (not counting recipients of copies subject to 
paragraph (3)) is less than 5,000.''; and
            (3) by adding at the end the following:
    ``(n) In the administration of this section, matter that satisfies 
the circulation standards for requester publications shall not be 
excluded from being mailed at the rates for mail under former section 
4358 solely because such matter is designed primarily for free 
circulation or for circulation at nominal rates, or fails to meet the 
requirements of former section 4354(a)(5).''.

SEC. 809. HAZARDOUS MATTER.

    (a) Nonmailability Generally.--Section 3001 of title 39, United 
States Code, is amended--
            (1) by redesignating subsection (n) as subsection (o); and
            (2) by inserting after subsection (m) the following:
    ``(o)(1) Except as otherwise authorized by law or regulations of 
the Postal Service, hazardous material is nonmailable.
    ``(2) In this subsection, the term `hazardous material' means a 
substance or material designated by the Secretary of Transportation 
under section 5103(a) of title 49.''.
    (b) Mailability.--Chapter 30 of title 39, United States Code, is 
amended by adding at the end the following:

``Sec. 3018. Hazardous material

    ``(a) In General.--The Postal Service shall prescribe regulations 
for the safe transportation of hazardous material in the mail.
    ``(b) Prohibitions.--No person may--
            ``(1) mail or cause to be mailed hazardous material that 
        has been declared by statute or Postal Service regulation to be 
        nonmailable;
            ``(2) mail or cause to be mailed hazardous material in 
        violation of any statute or Postal Service regulation 
        restricting the time, place, or manner in which hazardous 
        material may be mailed; or
            ``(3) manufacture, distribute, or sell any container, 
        packaging kit, or similar device that--
                    ``(A) is represented, marked, certified, or sold by 
                such person for use in the mailing of hazardous 
                material; and
                    ``(B) fails to conform with any statute or Postal 
                Service regulation setting forth standards for a 
                container, packaging kit, or similar device used for 
                the mailing of hazardous material.
    ``(c) Civil Penalty; Clean-Up Costs and Damages.--
            ``(1) In general.--A person who knowingly violates this 
        section or a regulation prescribed under this section shall be 
        liable for--
                    ``(A) a civil penalty of at least $250, but not 
                more than $100,000, for each violation;
                    ``(B) the costs of any clean-up associated with 
                each violation; and
                    ``(C) damages.
            ``(2) Knowing action.--A person acts knowingly for purposes 
        of paragraph (1) when--
                    ``(A) the person has actual knowledge of the facts 
                giving rise to the violation; or
                    ``(B) a reasonable person acting in the 
                circumstances and exercising reasonable care would have 
                had that knowledge.
            ``(3) Separate violations.--
                    ``(A) Violations over time.--A separate violation 
                under this subsection occurs for each day hazardous 
                material, mailed or caused to be mailed in 
                noncompliance with this section, is in the mail.
                    ``(B) Separate items.--A separate violation under 
                this subsection occurs for each itemcontaining 
hazardous material that is mailed or caused to be mailed in 
noncompliance with this section.
    ``(d) Hearings.--The Postal Service may determine that a person has 
violated this section or a regulation prescribed under this section 
only after notice and an opportunity for a hearing. Proceedings under 
this section shall be conducted in accordance with section 3001(m).
    ``(e) Penalty Considerations.--In determining the amount of a civil 
penalty for a violation of this section, the Postal Service shall 
consider--
            ``(1) the nature, circumstances, extent, and gravity of the 
        violation;
            ``(2) with respect to the person who committed the 
        violation, the degree of culpability, any history of prior 
        violations, the ability to pay, and any effect on the ability 
        to continue in business;
            ``(3) the impact on Postal Service operations; and
            ``(4) any other matters that justice requires.
    ``(f) Civil Actions To Collect.--
            ``(1) In general.--In accordance with section 409(d), a 
        civil action may be commenced in an appropriate district court 
        of the United States to collect a civil penalty, clean-up 
        costs, and damages assessed under subsection (c).
            ``(2) Compromise.--The Postal Service may compromise the 
        amount of a civil penalty, clean-up costs, and damages assessed 
        under subsection (c) before commencing a civil action with 
        respect to such civil penalty, clean-up costs, and damages 
        under paragraph (1).
    ``(g) Civil Judicial Penalties.--
            ``(1) In general.--At the request of the Postal Service, 
        the Attorney General may bring a civil action in an appropriate 
        district court of the United States to enforce this section or 
        a regulation prescribed under this section.
            ``(2) Relief.--The court in a civil action under paragraph 
        (1) may award appropriate relief, including a temporary or 
        permanent injunction, civil penalties as determined in 
        accordance with this section, or punitive damages.
            ``(3) Construction.--A civil action under this subsection 
        shall be in lieu of civil penalties for the same violation 
        under subsection (c)(1)(A).
    ``(h) Deposit of Amounts Collected.--
            ``(1) Postal Service Fund.--Except as provided under 
        paragraph (2), amounts collected under subsection (c)(1)(B) and 
        (C) shall be deposited into the Postal Service Fund under 
        section 2003.
            ``(2) Treasury.--Amounts collected under subsection 
        (c)(1)(A) and any punitive damages collected under subsection 
        (c)(1)(C) shall be deposited into the Treasury of the United 
        States.''.
    (c) Conforming Amendments.--(1) Section 2003(b) of title 39, United 
States Code, is amended--
            (A) in paragraph (7), by striking ``and'' after the 
        semicolon;
            (B) in paragraph (8), by striking ``purposes.'' and 
        inserting ``purposes; and''; and
            (C) by adding at the end the following:
            ``(9) any amounts collected under section 3018.''.
    (2) The analysis for chapter 30 of title 39, United States Code, is 
amended by adding at the end the following:

``3018. Hazardous material.''.
    (d) Injurious Articles as Nonmailable.--Section 1716(a) of title 
18, United States Code, is amended by inserting after ``explosives,'' 
the following: ``hazardous materials,''.

SEC. 810. PROVISIONS RELATING TO COOPERATIVE MAILINGS.

    (a) Determination.--The Postal Regulatory Commission shall examine 
section E670.5.3 of the Domestic Mail Manual to determine whether it 
contains adequate safeguards to protect against (1) abuses of rates for 
nonprofit mail and (2) deception of consumers.
    (b) Regulations.--If the Postal Regulatory Commission determines 
that section E670.5.3 of the Domestic Mail Manual does not contain 
adequate safeguards as described in the preceding subsection, the 
Commission shall promulgate such regulations as may be necessary to 
ensure such safeguards.
    (c) Timing.--The Postal Regulatory Commission shall complete the 
examination required by subsection (a) and the promulgation of any 
necessary regulations required by subsection (b) within one year after 
the date of the enactment of this section.

SEC. 811. TECHNICAL AND CONFORMING AMENDMENTS.

    (a) Reimbursement.--Section 3681 of title 39, United States Code, 
is amended by striking ``section 3628'' and inserting ``sections 3662 
through 3664''.
    (b) Size and Weight Limits.--Section 3682 of title 39, United 
States Code, is amended to read as follows:

``Sec. 3682. Size and weight limits

    ``The Postal Service may establish size and weight limitations for 
mail matter in the market-dominant category of mail consistent with 
regulations the Postal Regulatory Commission may prescribe under 
section 3622. The Postal Service may establish size and weight 
limitations for mail matter in the competitive category of mail 
consistent with its authority under section 3632.''.
    (c) Revenue Foregone, Etc.--Title 39, United States Code, is 
amended--
            (1) in section 503 (as so redesignated by section 501), by 
        striking ``this chapter.'' and inserting ``this title.''; and
            (2) in section 2401(d), by inserting ``(as last in effect 
        before enactment of the Postal Accountability and Enhancement 
        Act)'' after ``3626(a)'' and after ``3626(a)(3)(B)(ii)''.
    (d) Appropriations and Reporting Requirements.--
            (1) Appropriations.--Subsection (e) of section 2401 of 
        title 39, United States Code, is amended--
                    (A) by striking ``Committee on Post Office and 
                Civil Service'' each place it appears and inserting 
                ``Committee on Government Reform''; and
                    (B) by striking ``Not later than March 15 of each 
                year,'' and inserting ``Each year,''.
            (2) Reporting requirements.--Sections 2803(a) and 2804(a) 
        of title 39, United States Code, are amended by striking 
        ``2401(g)'' and inserting ``2401(e)''.
    (e) Authority to Fix Rates and Classes Generally; Requirement 
Relating to Letters Sealed Against Inspection.--Section 404 of title 
39, United States Code (as amended by section 102) is further amended 
by redesignating subsections (b) and (c) as subsections (d) and (e), 
respectively, and by inserting after subsection (a) the following:
    ``(b) Except as otherwise provided, the Governors are authorized to 
establish reasonable and equitable classes of mail and reasonable and 
equitable rates of postage and fees for postal services in accordance 
with the provisions of chapter 36. Postal rates and fees shall be 
reasonable and equitable and sufficient to enable the Postal Service, 
under best practices of honest, efficient, and economical management, 
to maintain and continue the development of postal services of the kind 
and quality adapted to the needs of the United States.
    ``(c) The Postal Service shall maintain one or more classes of mail 
for the transmission of letters sealed against inspection. The rate for 
each such class shall be uniform throughout the United States, its 
territories, and possessions. One such class shall provide for the most 
expeditious handling and transportation afforded mail matter by the 
Postal Service. No letter of such a class of domestic origin shall be 
opened except under authority of a search warrant authorized by law, or 
by an officer or employee of the Postal Service for the sole purpose of 
determining an address at which the letter can be delivered, or 
pursuant to the authorization of the addressee.''.
    (f) Limitations.--Section 3684 of title 39, United States Code, is 
amended by striking all that follows ``any provision'' and inserting 
``of this title.''.
    (g) Miscellaneous.--Title 39, United States Code, is amended--
            (1) in section 1005(d)(2)--
                    (A) by striking ``subsection (g) of section 
                5532,''; and
                    (B) by striking ``8344,'' and inserting ``8344'';
            (2) in the analysis for part III, by striking the item 
        relating to chapter 28 and inserting the following:

``28. Strategic Planning and Performance Management.........    2801'';
            (3) in section 3005(a)--
                    (A) in the matter before paragraph (1), by striking 
                all that follows ``nonmailable'' and precedes ``(h),'' 
                and inserting ``under section 3001(d),''; and
                    (B) in the sentence following paragraph (3), by 
                striking all that follows ``nonmailable'' and precedes 
                ``(h),'' and inserting ``under such section 3001(d),'';
            (4) in section 3210(a)(6)(C), by striking the matter after 
        ``if such mass mailing'' and before ``than 60 days'' and 
        inserting ``is postmarked fewer''; and
            (5) by striking the heading for section 3627 and inserting 
        the following:

``Sec. 3627. Adjusting free rates''.

           TITLE IX--POSTAL PENSION FUNDING REFORM AMENDMENTS

SEC. 901. CIVIL SERVICE RETIREMENT SYSTEM.

    (a) Termination of Obligation to Pay Government Contributions.--
Section 8334(a)(1)(B)(ii) of title 5, United States Code, is amended by 
striking all that follows ``be equal to'' and inserting ``zero''.
    (b) Determination and Disposition of Postal Surplus or Supplemental 
Liability.--Section 8348(h) of title 5, United States Code, is amended 
to read as follows:
    ``(h)(1) For purposes of this subsection, the `Postal surplus or 
supplemental liability' means the estimated difference, as determined 
by the Office, between--
            ``(A) the actuarial present value of all future benefits 
        which are payable from the Fund under this subchapter to 
        current or former employees of the United States Postal 
        Service, or their survivors, and attributable to civilian 
        employment with the Postal Service, and
            ``(B) the sum of--
                    ``(i) the actuarial present value of deductions to 
                be withheld from the future basic pay of employees of 
                the Postal Service currently subject to this subchapter 
                pursuant to section 8334;
                    ``(ii) that portion of the Fund balance, as of the 
                date the Postal surplus or supplemental liability is 
                determined, attributable to payments to the Fund by the 
                Postal Service and its employees, plus the earnings on 
                such amounts while in the Fund; and
                    ``(iii) any other appropriate amount, as determined 
                by the Office in accordance with generally accepted 
                actuarial practices and principles.
    ``(2)(A)(i) Not later than June 15, 2006, the Office shall 
determine the Postal surplus or supplemental liability as of September 
30, 2005.
    ``(ii) If a supplemental liability is determined under this 
subparagraph for fiscal year 2005, the Office shall establish an 
amortization schedule, including a series of equal annual installments 
commencing September 30, 2006, which provides for the liquidation of 
such liability by September 30, 2043.
    ``(iii) If a surplus is determined under this subparagraph for 
fiscal year 2005, the amount of the surplus shall be transferred to the 
PostalService Retiree Health Benefits Fund by June 30, 2006.
    ``(B)(i) For each of fiscal years 2006 through 2038, the Office 
shall determine the Postal surplus or supplemental liability as of the 
close of such fiscal year, with each such determination to be made by 
June 15th of the following fiscal year.
    ``(ii) If a supplemental liability is determined under this 
subparagraph for a fiscal year, the Office shall establish an 
amortization schedule, including a series of equal annual installments 
commencing on September 30 of the following fiscal year, which provides 
for the liquidation of such liability by September 30, 2043.
    ``(iii)(I) If a surplus of $500,000,000 or more is determined under 
this subparagraph for a fiscal year, the amount of the surplus shall be 
transferred to the Postal Service Retiree Health Benefits Fund by June 
30th of the following fiscal year.
    ``(II) If a surplus of less than $500,000,000 is determined under 
this subparagraph for a fiscal year, the surplus shall remain in the 
Fund, subject to transfer in a subsequent fiscal year under subclause 
(I) or subparagraph (C)(iii).
    ``(C)(i) Not later than June 15, 2040, the Office shall determine 
the Postal surplus or supplemental liability as of September 30, 2039.
    ``(ii) If a supplemental liability is determined under this 
subparagraph for fiscal year 2039, the Office shall establish an 
amortization schedule, including a series of equal annual installments 
commencing September 30, 2040, which provides for the liquidation of 
such liability by September 30, 2043.
    ``(iii) If a surplus is determined under this subparagraph for 
fiscal year 2039, the amount of the surplus--
            ``(I) shall be applied first toward reducing the amount of 
        any supplemental liability described in section 8423(b)(1)(B); 
        and
            ``(II) to the extent that any portion of such surplus 
        remains after the application of subclause (I), shall, not 
        later than June 30, 2040, be transferred to the Postal Service 
        Retiree Health Benefits Fund.
    ``(D) An amortization schedule under this paragraph--
            ``(i) shall be established in accordance with generally 
        accepted actuarial practices and principles, with interest 
        computed at the rate used in the most recent valuation of the 
        Civil Service Retirement System;
            ``(ii) shall supersede any amortization schedule previously 
        established under this paragraph; and
            ``(iii) shall not be taken into account, for purposes of 
        any determination of Postal surplus or supplemental liability, 
        except to the extent of any amounts under such schedule 
        actually paid.
    ``(E) The Postal Service shall pay to the Office the amounts due 
under any amortization schedule established under this paragraph that 
has not been superseded.
    ``(3) Notwithstanding any other provision of law, in computing the 
amount of any payment under any other subsection of this section that 
is based on the amount of the unfunded liability, such payment shall be 
computed disregarding that portion of the unfunded liability that the 
Office determines will be liquidated by payments under this subsection.
    ``(4) As used in this subsection, `Postal Service Retiree Health 
Benefits Fund' refers to the Postal Service Retiree Health Benefits 
Fund, as established by section 8909a.''.
    (c) Provisions Relating to Amounts for Military Service.--In the 
application of paragraph (2) of section 8348(g) of title 5, United 
States Code, for fiscal year 2006, the Office of Personnel Management 
shall include, in addition to the amount otherwise computed under that 
paragraph, the amounts that would have been included for fiscal years 
2003 through 2005 with respect to credit for military service of former 
employees of the United States Postal Service if Public Law 108-18 had 
not been enacted (including earnings thereon) and the Secretary of the 
Treasury shall make the required transfer to the Civil Service 
Retirement and Disability Fund based on that amount.
    (d) Review.--
            (1) In general.--Notwithstanding any other provision of 
        this section, any determination or redetermination made by the 
        Office of Personnel Management under this section shall, upon 
        request of the United States Postal Service, be subject to 
        review by the Postal Regulatory Commission. The Commission 
        shall submit a report containing the results of any such review 
        to the Postal Service, the Office of Personnel Management, and 
        the Congress.
            (2) Response.--Upon receiving the report of the Postal 
        Regulatory Commission, the Office of Personnel Management shall 
        reconsider its determination or redetermination in light of 
        such report, and shall make any appropriate adjustments. The 
        Office shall submit a report containing the results of its 
        reconsideration to the Commission, the Postal Service, and the 
        Congress.

SEC. 902. HEALTH INSURANCE.

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

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

    ``(a) There is in the Treasury of the United States a Postal 
Service Retiree Health Benefits Fund (hereinafter in this section 
referred to as the `Fund') which is administered by the Office of 
Personnel Management. Any amounts transferred to the Fund under section 
8348(h)(2) shall yield interest at a rate equal to the weighted average 
yield of all the investments in the Civil Service Retirement and 
Disability Fund as of the date of transfer. All other investments of 
amounts in the Fund shall be made in accordance with subsections (c)-
(e) of section 8348.
    ``(b) The Fund is available without fiscal year limitation for 
payments required by section 8906(g)(2).
    ``(c)(1) Not later than June 30, 2006, and by June 30 of each 
succeeding year, the Office of Personnel Management shall compute the 
net present value of the excess of future payments required by section 
8906(g)(2)(A) for current and future United States Postal Service 
annuitants over the value of the assets of the Fund as of the end of 
the fiscal year ending on September 30 of that year. The actuarial 
costing method to be used by the Office and all actuarial assumptions 
shall be established by the Office after consultation with the United 
States Postal Service and must be in accordance with generally accepted 
actuarial practices and principles.
    ``(2) Not later than September 30, 2006, and by September 30 of 
each succeeding year, the Office shall compute and the United States 
Postal Service shall pay into such Fund--
            ``(A) the portion of the net present value described in 
        paragraph (1) attributable to the current year's service of 
        Postal Service employees; and
            ``(B) interest on the net present value described in 
        paragraph (1) for that fiscal year, at the interest rate used 
        in computing that net present value.
    ``(3)(A) Any computation or other determination of the Office under 
this subsection shall, upon request of the Postal Service, be subject 
to review by the Postal Regulatory Commission. The Commission shall 
submit a report containing the results of any such review to the Postal 
Service, the Office of Personnel Management, and the Congress.
    ``(B) Upon receiving the report of the Postal Regulatory 
Commission, the Office of Personnel Management shall reconsider its 
computation or other determination in light of such report, and shall 
make any appropriate adjustments. The Office shall submit a report 
containing the results of its reconsideration to the Commission, the 
Postal Service, and the Congress.
    ``(4) The Office shall promulgate, after consultation with the 
United States Postal Service, any regulations it deems necessary under 
this subsection.''; and
            (3) in the analysis by inserting after the item relating to 
        section 8909 the following:

``8909a. Postal Service Retiree Health Benefits Fund.''.
    (b) Review.--
            (1) In general.--Any regulation established under section 
        8909a(c)(4) of title 5, United States Code (as amended by 
        subsection (a)) shall, upon request of the Postal Service, be 
        subject to review by the Postal Regulatory Commission. The 
        Commission shall submit a report containing the results of any 
        such review to the Postal Service, the Office of Personnel 
        Management, and the Congress.
            (2) Response.--Upon receiving the report of the Postal 
        Regulatory Commission, the Office of Personnel Management shall 
        reconsider its regulation in light of such report, and shall 
        take such action as it considers appropriate. The Office shall 
        submit a report containing the results of its reconsideration 
        to the Commission, the Postal Service, and the Congress.

SEC. 903. REPEALER.

     Section 3 of Public Law 108-18 is repealed.

SEC. 904. ENSURING APPROPRIATE USE OF ESCROW AND MILITARY SAVINGS.

    (a) Definition.--For purposes of this section, the term ``total 
savings'' means, for any fiscal year, the amount equal to--
            (1) the amount of contributions that the Postal Service 
        would otherwise have been required to make to the Civil Service 
        Retirement and Disability Fund under subchapter III of chapter 
        83 of title 5, United States Code, for such fiscal year if 
        Public Law 108-18 and this Act had not been enacted, minus
            (2) the amount of amortization payments (if any) required 
        under section 8348(h)(2) of title 5, United States Code, for 
        such fiscal year.
    (b) Calculations.--The following calculations shall be made for 
each of fiscal years 2006 through 2015:
            (1) Not later than January 31 of the fiscal year following 
        the fiscal year involved, the Office of Personnel Management 
        (in consultation with the Postal Service) shall determine the 
        total savings for the fiscal year.
            (2) On the date of making its determination under paragraph 
        (1), the Office shall also determine (in consultation with the 
        Postal Service) the amount by which--
                    (A) the amount the Postal Service paid for that 
                fiscal year into the Postal Service Retiree Health 
                Benefits Fund in accordance with 8909a(c)(2) of title 
                5, United States Code, exceeds (if at all)
                    (B) the amount of payments made by the Postal 
                Service for that fiscal year from such Fund in order to 
                satisfy the requirements of section 8906(g)(2) of such 
                title 5.
    (c) Requirements.--
            (1) If threshold is met.--If the amount calculated under 
        subsection (b)(2) for a fiscal year is greater than or equal to 
        two-thirds of the total savings in such fiscal year, no further 
        action under this section is necessary with respect to such 
        fiscal year.
            (2) If threshold is not met.--
                    (A) In general.--If the amount calculated under 
                subsection (b)(2) for a fiscal year is less than two-
                thirds of the total savings in such fiscal year, the 
                Postal Service shall pay into the Postal Service 
                Retiree Health Benefits Fund, by June 30 of the 
                following fiscal year, an amount equal to the 
                difference.
                    (B) Allowable alternative.--
                            (i) In general.--Notwithstanding 
                        subparagraph (A), and subject to clause (ii), 
                        the Postal Service may instead use the amount 
                        that it would otherwise be required to pay into 
                        the Postal Service Retiree Health Benefits Fund 
                        for a year (or any portion thereof) to reduce 
                        the postal debt.
                            (ii) Limitation.--Amounts used to reduce 
                        the postal debt under this subparagraph may not 
                        exceed a total of $3,000,000,000.
            (3) Aggregation allowed.--Notwithstanding paragraph (2), if 
        the amount calculated under subsection (b)(2) for a fiscal year 
        is less than two-thirds of the total savings in such fiscal 
        year, but the sum of the amounts calculated under subsection 
        (b)(2) for all fiscal years from 2006 to the fiscal year 
        involved is greater than or equal to two-thirds of the sum of 
        the total savings for such years, no further action under this 
        section is necessary with respect to such fiscal year.
    (d) Reporting Requirement.--The Office of Personnel Management 
shall submit a report containing the results of its calculations under 
subsection (b) to the Postal Service, the Postal Regulatory Commission, 
and the Congress.
    (e) Waiver Authority.--The requirements of subsection (c)(2)(A) 
may, upon application of the Postal Service, be waived by the Postal 
Regulatory Commission, to the extent that the Commission determines 
that such waiver is reasonable and equitable and necessary to enable 
the Postal Service, under best practices of honest, efficient, and 
economical management, to maintain and continue the development of 
postal services of the kind and quality adapted to the needs of the 
United States.

SEC. 905. EFFECTIVE DATES.

    (a) In General.--Except as otherwise provided, this title shall 
take effect on October 1, 2005.
    (b) Government Contributions.--Section 901(a)(1) shall take effect 
on the first day of the first pay period beginning on or after October 
1, 2005.

                          Purpose and Summary

    H.R. 4341, the ``Postal Accountability and Enhancement 
Act'' represents the most sweeping structural reform of the 
United States Postal Service (``Postal Service'') in over three 
decades. A central objective of this legislation is to ensure 
that the Postal Service operates in a more business-like 
manner. The legislation creates a modern system of rate 
regulation, expands the purview of ``competitive activities'' 
in which the Postal Service may operate, addresses the Postal 
Service's universal service obligation and the scope of the 
mail monopoly, and protects private firms from unfair 
competition.

                Background and Need for the Legislation

        POSTAL SERVICE--SCOPE OF ACTIVITIES AND NEED FOR REFORM

    The United States Postal Service processes and delivers 208 
billion pieces of mail to more than 130 million households and 
businesses in the United States each year. The Postal Service 
is the center of a $900 billion industry employing nine million 
workers in the United States. The Postal Service has lost over 
$2 billion over the last three years, mail volume has shown a 
consistent decline over the same period, and the Postal Service 
will be required to file a rate increase of 5.4% this year.
    The mission of the Postal Service, outlined in the Postal 
Reorganization Act of 1970, is to provide postal access in all 
communities, and to offer prompt, reliable postal services at 
uniform prices. The law was designed to transform the Postal 
Service from a bureaucracy subsidized by tax revenue to a self-
supporting, businesslike entity supported by the fees (e.g., 
stamp revenue) paid by its users. The ability of the Postal 
Service to advance these objectives is being challenged by a 
variety of factors including decreasing mail volume, 
insufficient revenue, mounting debt, and electronic 
communications alternatives such as Internet advertising, 
electronic bill payments, e-mails, and faxes.

                         PRESIDENT'S COMMISSION

    On July 31, 2003, the President's Commission on the Postal 
Service (hereinafter ``Commission'') released its 
recommendations for maintaining the viability of the Postal 
Service. Roughly half of the recommendations require 
legislative change. Most of these concerns have been addressed 
in earlier postal reform proposals, although some specific 
recommendations differ. New issues raised by the Commission 
include reform of the collective bargaining process and 
legislative changes making it easier to close post offices and 
processing centers.

             ADMINISTRATION'S PRINCIPLES FOR POSTAL REFORM

    On December 8, 2003, the Department of the Treasury 
released a set of five principles, based on the recommendations 
of the President's Commission, that should guide Congress's 
effort to reform the Postal Service. The principles are: 
ensuring that the Postal Service's governing body is equipped 
to meet the responsibilities and objectives of an enterprise of 
its size and scope; ensuring that important factual information 
on the Postal Service's product costs and performance is 
accurately measured and made available to the public in a 
timely manner; ensuring that the Postal Service's governing 
body and management have the authority to reduce costs, set 
rates, and adjust key aspects of its business in order to meet 
its obligations to customers in a dynamic marketplace; 
promoting accountability by ensuring that the Postal Service 
has appropriate independent oversight to protect consumer 
welfare and universal mail service; and ensuring that the 
Postal Service operates with greater flexibility and is 
financially self-sufficient, covering all of its obligations.

      H.R. 4341, THE ``POSTAL ACCOUNTABILITY AND ENHANCEMENT ACT''

    The ``Postal Accountability and Enhancement Act'' reflects 
the Administration's principles for postal reform, and 
incorporates nearly all of the seventeen legislative 
recommendations made by the Commission. The legislation 
mandates transparency in the Postal Service's finances, costs, 
and operations. The legislation creates a modern system of rate 
regulation, establishes fair competition rules and a powerful 
new regulator, addresses the Postal Service's universal service 
obligation and the scope of the mail monopoly, and improves the 
collective bargaining process. However, unlike the unlimited 
and unfettered pricing flexibility recommended for the Postal 
Service by the Commission for competitive product offerings, 
the bill imposes important controls to protect the public 
interest from unfair competition.

                 PROVISIONS WITHIN THE JURISDICTION OF 
                     THE COMMITTEE ON THE JUDICIARY

    The Committee on Government Reform and Oversight reported 
H.R. 4341 by unanimous consent on May 12, 2004.\1\ The 
Committee on the Judiciary received a sequential referral to 
consider provisions within the Committee's subject matter 
jurisdiction.
---------------------------------------------------------------------------
    \1\ H.R. Rep. No. 108-672.
---------------------------------------------------------------------------
    First, Section 205 revises the complaint and appellate 
review process of the Postal Regulatory Commission--which is 
charged with setting postage rates and helping define 
activities in which the Postal Service may compete with private 
industry. Section 301 establishes an off-budget fund within the 
Treasury Department for revenues and expenditures associated 
with services offered by the Postal Service on a competitive 
basis. Section 303 prohibits the Postal Service from issuing 
regulations that preclude competition or compel the disclosure 
of protected intellectual property. Section 304 ensures that 
laws regulating the conduct of private commercial activities 
also apply to competitive activities undertaken by the Postal 
Service, including the antitrust laws, bankruptcy laws, the 
Federal Trade Commission Act, and laws pertaining to sovereign 
immunity. The Committee reported an amendment offered by 
Chairman Sensenbrenner and Ranking Member Conyers to strike 
language that would have defined the Postal Service, to the 
extent that it engages in competitive activity, as a ``person'' 
for purposes of the bankruptcy laws.
    Section 502 provides authority for the Postal Regulatory 
Commission to issue subpoenas to compel disclosure of evidence 
in its proceedings and to refer failures to adhere to 
Commission directives to Federal district court. Section 703 
requires the Federal Trade Commission to prepare a report 
detailing how Federal and state laws apply differently to 
competitive activities of the Postal Service and private 
companies.
    Section 801 provides permanent authority for the Postal 
Service to employ postal police to protect property and persons 
on Postal Service property and gives the Attorney General 
authority to collect penalties and clean up costs associated 
with the unlawful mailing of hazardous materials. Finally, 
section 809 prohibits the mailing of hazardous materials and 
clarifies penalties for their shipment. The Committee reported 
an amendment offered by Crime, Terrorism, and Homeland Security 
Subcommittee Chairman Coble to place these changes to existing 
law in Title 18 of the United States Code and to add 
``hazardous materials'' to the list of nonmailable offenses for 
which criminal penalties may be imposed thereby establishing a 
criminal offense for mailing hazardous materials.

                                Hearings

    The Committee on the Judiciary held no hearings on H.R. 
4341.

                        Committee Consideration

    On September 15, 2004, the Committee met in open session 
and ordered favorably reported the bill H.R. 4341, with an 
amendment, by voice vote, a quorum being present.

                         Vote of the Committee

    In compliance with clause 3(b) of rule XIII of the Rules of 
the House of Representatives, the Committee notes that there 
were no recorded votes during the committee consideration of 
H.R. 4341.

                      Committee Oversight Findings

    In compliance with clause 3(c)(1) of rule XIII of the Rules 
of the House of Representatives, the Committee reports that the 
findings and recommendations of the Committee, based on 
oversight activities under clause 2(b)(1) of rule X of the 
Rules of the House of Representatives, are incorporated in the 
descriptive portions of this report.

               New Budget Authority and Tax Expenditures

    Clause 3(c)(2) of rule XIII of the Rules of the House of 
Representatives is inapplicable because this legislation does 
not provide new budgetary authority or increased tax 
expenditures.

               Congressional Budget Office Cost Estimate

    In compliance with clause 3(c)(3) of rule XIII of the Rules 
of the House of Representatives, the Committee sets forth, with 
respect to the bill, H.R. 4341, the following estimate and 
comparison prepared by the Director of the Congressional Budget 
Office under section 402 of the Congressional Budget Act of 
1974:

                                     U.S. Congress,
                               Congressional Budget Office,
                                Washington, DC, September 23, 2004.
Hon. F. James Sensenbrenner, Jr., Chairman,
Committee on the Judiciary,
House of Representatives, Washington, DC.
    Dear Mr. Chairman: The Congressional Budget Office has 
prepared the enclosed cost estimate for H.R. 4341, the Postal 
Accountability and Enhancement Act.
    If you wish further details on this estimate, we will be 
pleased to provide them. The CBO staff contacts are Mark 
Grabowicz (for Postal Service costs), who can be reached at 
226-2860, Geoffrey Gerhardt (for retirement costs), who can be 
reached at 226-2820, and Julia Christensen (for health care 
costs), who can be reached at 226-9010.
            Sincerely,
                                       Douglas Holtz-Eakin.

Enclosure

cc:
        Honorable John Conyers, Jr.
        Ranking Member
H.R. 4341--Postal Accountability and Enhancement Act.

                                SUMMARY

    H.R. 4341 would change the laws that govern the operation 
of the United States Postal Service (USPS), particularly those 
regarding the cost of pensions and health care benefits of 
retired workers and the requirement to hold certain funds in 
escrow. CBO estimates that enacting this legislation would 
result in on-budget savings of $24.1 billion and off-budget 
costs of $34.5 billion over the 2005-2014 period. (The net 
expenditures of the USPS are classified as ``off-budget.'') 
Thus, CBO estimates the net cost to the unified budget would be 
$10.4 billion over the 2005-2014 period. In addition, we 
estimate that implementing H.R. 4341 would cost about $1.5 
billion over the 2005-2014 period, assuming appropriation of 
the necessary amounts.
    Enacting H.R. 4341 would not affect how much the federal 
government spends on pension or health care benefits for USPS 
retirees. By increasing how much the Postal Service pays to 
finance those benefits and by eliminating the current-law 
escrow account requirements, however, the bill would increase 
future budget deficits as measured by the unified federal 
budget. Eliminating the escrow account requirement for the USPS 
would allow that agency to increase spending for capital 
improvements or other projects, pay down its outstanding debt, 
postpone or diminish future rate increases, or some combination 
of these options. Enacting the bill also would reduce direct 
spending by making the costs of the Postal Rate Commission and 
the USPS Office of the Inspector General subject to 
appropriation.
    H.R. 4341 contains no intergovernmental or private-sector 
mandates as defined in the Unfunded Mandates Reform Act (UMRA) 
and would impose no costs on State, local, or tribal 
governments.
    Major provisions of H.R. 4341 would:

         LEliminate a requirement in Public Law 108-18 
        (P.L. 108-18), the Postal Civil Service Retirement 
        Funding Reform Act of 2003, that the Postal Service 
        place savings from reduced pension contributions in 
        escrow.

         LTransfer from the Postal Service to the 
        Department of the Treasury responsibility for paying 
        pension costs associated with military service credits.

         LReplace direct payments the Postal Service is 
        making for retiree health care costs with payments 
        designed to prefund some of the health care costs of 
        current employees when they retire.

         LRevise the procedure for raising postal 
        rates.

         LStrengthen the USPS Board of Governors and 
        the Postal Rate Commission, which would be redesignated 
        the Postal Regulatory Commission (PRC).

         LMake other changes designed to increase the 
        Postal Service's competitiveness with private industry.

                ESTIMATED COST TO THE FEDERAL GOVERNMENT

    The estimated budgetary impact of H.R. 4341 is shown in 
Table 1. The costs of this legislation fall within budget 
functions 370 (commerce and housing credit), 550 (health), 900 
(net interest), and 950 (undistributed offsetting receipts).


                           BASIS OF ESTIMATE

    For this estimate, CBO assumes that H.R. 4341 will be 
enacted near the start of fiscal year 2005. CBO estimates that 
enacting the bill would result in on-budget savings of $24.1 
billion and off-budget costs of $34.5 billion over the 2005-
2014 period, for a net cost to the unified budget of $10.4 
billion over the 10-year period. In addition, we estimate that 
implementing H.R. 4341 would cost about $1.5 billion over the 
2005-2014 period, assuming appropriation of the necessary 
amounts, mostly to fund the USPS Office of the Inspector 
General.
Background
    The following paragraphs present background information 
relating to the major provisions of H.R. 4341, mostly for 
postal finances affected by the bill.
    Budgetary Treatment of USPS. Although the Postal Service is 
a federal agency, its financial operations are classified as 
off-budget. Despite this treatment, federal budget documents 
present the net income (gross income minus expenses) of the 
agency in the unified budgetary totals for the federal 
government. The Postal Service is required by law to set 
postage rates to cover its full costs, although from year to 
year its net income may be positive or negative. In fiscal year 
2003, the Postal Service generated $69.5 billion in 
collections, mostly from postage and user fees, and had $64.2 
billion in expenses, for a net cash surplus of $5.3 billion in 
that year.
    USPS and Federal Retirement Plans. Postal Service employees 
participate in the federal government's two main defined 
benefit pension programs. Those workers initially hired prior 
to 1984 are covered by the Civil Service Retirement System 
(CSRS) while those initially hired after 1983, as well as 
former CSRS workers who elected to change federal retirement 
plans in 1987 or 1998, participate in the Federal Employees' 
Retirement System (FERS). In 2003, about 30 percent of the USPS 
workforce was covered by CSRS, and the rest were under FERS.
    The Postal Service and its employees each make payroll 
contributions toward the civilian retirement system (CSRS and 
FERS). Unlike other agencies, the agency contribution rate for 
most CSRS employees is 17.4 percent of basic pay (most other 
agencies contribute 7 percent), while the employee contribution 
rate is 7 percent.\1\ For FERS employees, the agency 
contribution rate for most employees is 10.7 percent, while the 
employee rate is 0.8 percent, plus Social Security payroll 
taxes on both employers and employees. Workers in CSRS receive 
generally higher benefits than those in FERS, but unlike FERS, 
those in CSRS do not participate in Social Security and do not 
receive agency contributions toward the Thrift Savings Plan. In 
addition to its payroll contributions, the Postal Service also 
makes annual amortization payments toward an unfunded liability 
within CSRS. In 2003, that payment was about $300 million.
---------------------------------------------------------------------------
    \1\ P.L. 108-18 increased the contribution rate the Postal Service 
pays for its CSRS employees from 7 percent to 17.4 percent. That 
legislation also eliminated a series of amortization payments the 
Postal Service was required to make for unfunded CSRS liabilities. For 
more details, see CBO's cost estimates of the Postal Civil Service 
Retirement System Funding Reform Act of 2003 (S. 380 and H.R. 735 from 
the 108th Congress). These estimates are posted on www.cbo.gov.
---------------------------------------------------------------------------
    USPS and Federal Health Benefits. The Postal Service also 
pays a portion of health care premiums for currently retired 
USPS employees who are eligible to participate in the Federal 
Employees Health Benefits (FEHB) program. Currently, there are 
over 400,000 Postal Service retirees who participate in the 
FEHB program. On average, the Postal Service currently pays 
about 45 percent of the health care premiums for its retirees. 
Retirees pay about 30 percent of their FEHB premiums with 
general revenues accounting for the remaining amount, roughly 
25 percent. In 2003, the Postal Service paid $1.1 billion to 
FEHB for premiums for current retirees.
    USPS Escrow Fund. Starting in October 2006, the Postal 
Service will be required under current law to begin holding 
funds in an escrow account equal to the difference between what 
the Postal Service currently pays toward CSRS and what it would 
have paid for CSRS benefits prior to the enactment P.L. 108-18. 
Under current law, CBO estimates the Postal Service will need 
to hold in escrow nearly $3 billion in 2006 and $36 billion 
over the 2006-2014 period. H.R. 4341 would eliminate the 
requirement that USPS collect and hold these funds in escrow.
Effects on the Unified Budget
    H.R. 4341 would not affect how much the federal government 
spends on pension or health benefits for USPS retirees. 
However, by increasing how much the Postal Service pays to 
finance those benefits and by eliminating the current-law 
escrow requirements, the bill would increase future budget 
deficits as measured by the unified federal budget.
    Off-budget payments made by the Postal Service for CSRS and 
FEHB are transfers to on-budget federal accounts, and are 
counted as offsetting receipts (a credit against direct 
spending). Eliminating the USPS transfer to CSRS would reduce 
on-budget offsetting receipts by $13.5 billion over the 2006-
2014 period. Under the bill, that reduction would be offset by 
a $37.6 billion net increase in on-budget offsetting receipts 
paid by the Postal Service for the new health benefits fund. 
Thus, the bill would increase on-budget offsetting receipts by 
$24.1 billion over the 2006-2014 period.
    The collection of funds to be held in escrow by the Postal 
Service is recorded as an off-budget offsetting receipt. 
Eliminating the requirement to fund the escrow account would 
allow the USPS to pay down debt, increase spending for capital 
improvements or other projects, postpone or diminish future 
rate increases, or some combination of these activities. CBO 
estimates that this provision would increase net off-budget 
spending by $36 billion over the 2006-2014 period. (Much of 
that spending would be to fund the new health benefits payments 
mentioned above as on-budget offsetting receipts.) Making the 
costs of the PRC and the USPS Office of the Inspector General 
subject to appropriation would reduce direct spending by the 
Postal Service by $1.5 billion over the next 10 years.
    The combined effect of the $24.1 billion increase in on-
budget receipts, the $36 billion reduction in off-budget 
offsetting receipts, and a $1.5 billion reduction in USPS 
direct spending would produce a $10.4 billion cost to the 
unified budget deficit over the 2006-2014 period. Those effects 
are presented in Table 2 and explained in more detail below.


On-Budget Effects (Direct Spending)
    CBO estimates the total on-budget effect of the pension and 
health care provisions in H.R. 4341 would be an increase in 
offsetting receipts of $3.1 billion in 2006, $9.7 billion over 
the 2006-2009 period, and $24.1 billion over the 2006-2014 
period. That increase in on-budget collections would come from 
increased transfers (off-budget outlays) coming from the USPS. 
(The off-budget effects are discussed in the following 
section.)
    Civil Service Retirement Contributions. H.R. 4341 would 
change the way the Postal Service finances retirement benefits 
for current and retired employees. Starting in October 2005, 
the bill would transfer financial responsibility for military 
service credits earned by Postal Service employees and retirees 
participating in CSRS from the Postal Service to the Department 
of the Treasury. Military service credits represent time served 
in the U.S. military that is credited toward benefits under the 
civilian retirement system. Most federal agencies are not 
responsible for the cost to the pension system of the military 
service credits incurred by their CSRS employees, but P.L. 108-
18 transferred responsibility for military service credits from 
the Treasury to the Postal Service beginning in June 2004.
    The Office of Personnel Management (OPM) estimates that 
transferring responsibility for military service credits from 
the Postal Service back to the Treasury would cause the Postal 
Service to have overfunded its obligation to CSRS by about 
$19.4 billion through September 2005.\2\ Consequently, under 
H.R. 4341 the Postal Service would no longer be obligated to 
make either agency contributions or any further annual 
amortization payments for CSRS. (Employee contributions would 
continue at 7 percent of basic pay and retirement benefits 
under CSRS would not change.)
---------------------------------------------------------------------------
    \2\ This overfunding, which is calculated on a net-present-value 
basis, represents an estimate of the total amount of money the Postal 
Service will have contributed toward CSRS from 1971 through September 
30, 2005, minus the agency's CSRS liabilities if USPS bears no 
financial responsibility for the pension costs associated with military 
service credits. The projected overfunding is due primarily to larger-
than-expected returns on assets held in the CSRDF.
---------------------------------------------------------------------------
    Spending by the Postal Service--including amounts paid into 
other federal accounts--is considered off-budget spending. 
However, the Civil Service Retirement and Disability Fund 
(CSRDF) is an on-budget account, so the amounts the CSRDF 
collects from the Postal Service are on-budget offsetting 
receipts. Reducing payments the Postal Service makes to the 
CSRDF would result in a reduction in off-budget spending and a 
reduction in on-budget offsetting receipts. CBO estimates 
transferring responsibility for military service credits, and 
the attendant reduction in CSRS contributions such a change 
would bring, would reduce on-budget receipts by $2 billion in 
2006 and $13.5 billion over the 2006-2014 period. Although the 
Treasury Department would then be responsible for the costs 
associated with those pension liabilities under the bill, the 
Treasury payment and receipt by CSRDF are both on-budget 
intragovernmental transactions. That is, the bill would replace 
one intragovernmental transfer with another. Instead of a 
transfer from the off-budget Postal Service to the on-budget 
CSRDF, there would be a transfer from the Treasury to the 
CSRDF.
    Postal Service Retiree Health Benefits Fund. H.R. 4341 also 
would change the way the Postal Service finances its share of 
the cost of providing health care to retirees. Instead of 
directly paying a portion of the health premiums incurred by 
current retirees each year, the USPS would begin paying for 
estimated costs of retiree health care as such costs are 
accrued by current workers. Starting in 2006, H.R. 4341 would 
require the USPS to make payments equal to the annual increase 
in retiree health care liabilities accrued by current 
employees. These payments would be deposited into a new on-
budget account, the Postal Service Retiree Health Benefits Fund 
(PSRHBF), which would earn interest at the same rate as the 
CSRDF. The Postal Service's share of health care premiums for 
current retirees would be paid out of the PSRHBF as soon as 
adequate funds are available in the account to do so.
    Under H.R. 4341, any overfunding toward CSRS liabilities 
(after financial responsibility for military service credits 
reverts to the Treasury) would be transferred from the CSRDF to 
the PSRHBF by June 30, 2006. Based on information provided by 
OPM, CBO anticipates that the transfer to the new fund would 
total $20.2 billion and would occur in June 2006. This amount 
reflects the $19.4 billion in estimated CSRS overfunding plus 
interest that would accrue between the end of the valuation 
period in September 2005 and when CBO assumes the asset 
transfer would take place in June 2006.
    Under the bill, the Postal Service also would pay annual 
interest costs on the unfunded liabilities for health care 
costs of both current and future retirees. The unfunded 
liability would be the difference between the assets held in 
the PSRHBF and the net present value of accrued liabilities 
projected for retiree health care. The bill would direct OPM to 
compute the required prefunding and interest payments after 
consultation with the Postal Service, subject to review by the 
PRC. The bill specifies that payments would be made at the end 
of each fiscal year. Based on information provided by OPM, CBO 
anticipates the net present value of the unfunded liability for 
the health care costs of retirees would amount to $37.7 billion 
at the end of 2006 and would shrink to $35.8 billion by the end 
of 2014. CBO estimates that payments by the Postal Service for 
prefunding health care costs of retirees and interest on the 
remaining unfunded liability would be $5.5 billion in 2006, 
$23.3 billion over the 2006-2009 period, and $58.1 billion over 
the 2006-2014 period.
    CBO expects that the transfer of $20.2 billion from the 
CSRDF to the PSRHBF resulting from the shift in responsibility 
for military service credits would occur in June 2006. 
Therefore, the Postal Service would cease making payments under 
current law for its share of FEHB premiums for annuitants 
beginning in July 2006; with those premium payments instead 
being drawn from the PSRHBF. CBO estimates that change in the 
funding mechanism for retiree health benefits would reduce off-
budget payments by the Postal Service for FEHB premiums by $0.4 
billion in 2006 (which reflects premium payments, under current 
law, for the last three months of 2006), $6.3 billion over the 
2006-2009 period, and $20.5 billion over the 2006-2014 period. 
On-budget payments for those amounts would then be transferred 
from the PSRHBF to the FEHB program to pay the Postal Service's 
share of health care costs for retirees.
    The bill would require a minimum level of prefunding by the 
Postal Service through 2015, after accounting for disbursements 
for health premiums from the PSRHBF. To achieve the annual or 
cumulative prefunding target, payments from the Postal Service 
to the PSRHBF--net of premiums paid by the PSRHBF--must total 
at least two-thirds of the amount the Postal Service would have 
paid toward CSRS prior to the enactment of
    P.L. 108-18. If the threshold is not met, additional 
prefunding payments would be required to make up the shortfall. 
Those payments also could be used to reduce postal debt (up to 
$3 billion) in lieu of contributions to the fund. The 
requirement could be waived completely by the PRC under certain 
conditions. CBO anticipates that the threshold established 
under the bill would be met and no additional payments would be 
required through 2014.
    Health premiums paid by the Postal Service for FEHB and any 
payments that would be made into the new PSRHBF would be 
considered on-budget offsetting receipts. CBO estimates the 
increase in on-budget receipts as a result of changes in how 
the Postal Service finances its health care obligations would 
be $5.1 billion in 2006, $17.0 billion over the 2006-2009 
period, and $37.6 billion over the 2006-2014 period.
Off-Budget Effects (Direct Spending)
    CBO estimates that enacting H.R. 4341 would result in net 
off-budget costs of $2.8 billion in fiscal year 2006, $12.7 
billion over the 2005-2009 period, and $34.5 billion over the 
2005-2014 period because it would eliminate the requirement to 
fund the escrow account, allowing the Postal Service to 
increase other spending, reduce postal rates, or some 
combination of these actions. The bill also would make the 
costs of the PRC and the USPS Office of the Inspector General 
subject to appropriation, thus reducing direct spending by $1.6 
billion over the next 10 years. The bill contains many other 
provisions that could affect USPS cash flows in each year, but 
we estimate they would not have a significant net effect on the 
USPS over the long term.
    Elimination of Escrow Fund. P.L. 108-18 permanently reduced 
payments by the USPS to the CSRDF. As a result of that act, 
USPS payments to the CSRDF declined by $2.5 billion to $5 
billion annually, beginning in 2003. For fiscal years starting 
in 2006, P.L. 108-18 requires that savings resulting from 
reduced payments to the CSRDF be considered an operating 
expense of the Postal Service and held in escrow, remaining 
unavailable for obligation unless authorized by subsequent 
legislation.
    H.R. 4341 would amend P.L. 108-18 to eliminate the escrow 
fund requirement. As a result of this provision, the Postal 
Service could lower rates and thus reduce its revenues, or 
maintain rates and increase spending, or some combination of 
these actions. The net outlays of the Postal Service would 
increase because collections would not be deposited in escrow. 
CBO estimates that eliminating the escrow requirement would 
increase net spending by about $2.9 billion in 2006, $13.3 
billion over the 2006-2009 period, and $36 billion over the 
2006-2014 period. Much of the spending would go toward making 
new payments to the on-budget account for health care costs.
    Make Cost of PRC and USPS IG Subject to Appropriation. 
Under current law, the PRC and the Inspector General of the 
Postal Service are funded from the Postal Service Fund without 
annual Congressional appropriation. In total, these offices 
spent about $140 million in 2003. H.R. 4341 would authorize the 
appropriation of such sums as may be necessary from the Postal 
Service Fund for these offices. Thus, enacting this legislation 
would reduce direct spending--and therefore, increase spending 
subject to appropriation--by about $140 million annually 
beginning in fiscal year 2005.
    Changes to USPS Rate-Setting Procedures. Under the bill the 
Postal Service would be directed to define the cost basis for 
the different products and services it supplies. These products 
and services would broadly be categorized as market-dominant 
products and competitive products. Different rate-setting 
procedures would apply to these different categories of 
products and services.
    Market-Dominant Products. Under H.R. 4341, market-dominant 
products would include: first-class mail, special services, 
periodicals, standard mail, media mail, library mail, and bound 
printed matter.
    H.R. 4341 would require the PRC to establish, within two 
years of enactment, a new system for regulating postage rates 
for market-dominant products. The bill would permit the new 
system to involve price caps, revenue targets, or other forms 
of incentive or cost-of-service regulation. However, the 
legislation would mandate that the average rate for any market-
dominant product could not rise more than the annual increase 
in the Consumer Price Index (CPI), unless a larger increase 
would be necessary to ensure the viability of the Postal 
Service.
    Later this year we expect the Postal Service to begin 
preparations for a rate case in 2006. Assuming the PRC would 
need the two years that the bill would provide to establish the 
new system for regulating rates for market dominant products, 
we assume that the new rate setting system would not be 
effective until after 2006.
    Since 1970, increases in postage rates have largely tracked 
the rate of inflation. Over the past 10 years, rates were 
increased in 1995, 1999, 2001, and 2002 as a result of rate 
cases. After 2006, we expect that the Postal Service would 
increase rates for market-dominant mail services more 
frequently than under current law, but by smaller increments 
(as limited by the CPI). Over the long term, CBO does not 
expect that enacting H.R. 4341 would significantly change the 
revenues from market-dominant products that the Postal Service 
would be expected to receive under current law.
    Competitive Products. Under H.R. 4341, competitive products 
would include the following: priority mail, express mail, 
mailgrams, international mail, and parcel post. Currently, the 
competitive products contribute less than 15 percent of total 
postal revenues.
    H.R. 4341 would direct the PRC to prohibit subsidizing 
competitive products by market-dominant products, ensure that 
each competitive product covers its attributable costs, and 
ensure that all competitive products collectively make a 
reasonable contribution to the institutional costs of the 
Postal Service. After these requirements have been implemented, 
the USPS could change rates for competitive products without 
consulting the PRC, as long as the cost coverage requirements 
are met. The Postal Service, however, would have to provide 
public notice and justification of changes in rates.
    In addition, H.R. 4341 would require the Postal Service to 
establish a new off-budget fund, the Competitive Products Fund, 
solely for revenues and expenditures associated with 
competitive products. We expect that it could be difficult to 
differentiate postal expenses related only to competitive 
products, as USPS uses the same employees and facilities to 
handle both market dominant and competitive products.
    CBO cannot predict the bill's effect on Postal Service 
revenues from competitive products because the agency could set 
and change prices with few restrictions, although we would 
expect that yearly cash flows under the bill would differ from 
those estimated under current law. CBO also cannot predict how 
successfully the Postal Service might compete in the open 
market. However, the highly competitive nature of the mailing 
industry would tend to keep prices and revenues down, while the 
labor-intensive cost structure of the USPS would maintain 
upward pressure on expenses. Thus, over the long term under 
this legislation, CBO expects the Postal Service to attempt to 
recover its costs and break even as it did before the enactment 
of P.L 108-18.
    Other Off-Budget Effects. H.R. 4341 would make many other 
changes to the laws governing the Postal Service, the PRC, and 
the delivery of mail and other postal products. Some of these 
provisions, such as the expansion of USPS contracting authority 
for the interstate air transportation of mail, would yield 
savings. Other provisions, including the requirement for 
additional USPS reports and the establishment of an inspector 
general for the PRC, would increase costs. In total, CBO does 
not expect the net effects of these provisions to be 
significant.
Spending Subject to Appropriation
    H.R. 4341 would authorize the appropriation of such sums as 
may be necessary, out of the Postal Service Fund, for the PRC 
and the Inspector General of the Postal Service. (Currently, 
these offices are funded out the Postal Service Fund without 
Congressional action.) Beginning in 2005, this provision would 
entail about $140 million a year in spending, subject to 
appropriation of the necessary amounts. Enacting the bill would 
reduce direct spending by the same amount. Spending on these 
activities would likely still be considered off-budget, since 
funds would come from the Postal Service Fund.
    In addition, H.R. 4341 would require OPM to make actuarial 
computations related to the CSRS and PSRHBF trust funds and 
would increase OPM's administrative workload to comply with the 
requirements under the bill. CBO estimates that such activities 
would cost less than $500,000 annually, assuming the 
availability of appropriated funds.

              INTERGOVERNMENTAL AND PRIVATE-SECTOR IMPACT

    H.R. 4341 contains no intergovernmental or private-sector 
mandates as defined in UMRA and would impose no costs on State, 
local, or tribal governments.

                         PREVIOUS CBO ESTIMATES

    On July 13, 2004, CBO transmitted a cost estimate for H.R. 
4341, the Postal Accountability and Enhancement Act, as ordered 
reported by the House Committee on Government Reform on May 12, 
2004. The two Committees' versions of this bill are very 
similar, and the CBO cost estimates are identical.
    On June 24, 2004, CBO transmitted a cost estimate for S. 
2468, the Postal Accountability and Enhancement Act, as ordered 
reported by the Senate Committee on Governmental Affairs on 
June 2, 2004. S. 2468 also would make changes to the operation 
of the Postal Service. However, the bills present different 
approaches to some of the changes--especially with regard to 
financing the cost of health care benefits of USPS retirees. 
Our estimates reflect those differences. CBO estimates that 
enacting S. 2468 would result in on-budget savings of $20.2 
billion and off-budget costs of $35.8 billion over the 2005-
2014 period, for a net cost to the unified budget of $15.7 
billion over that period.

                         ESTIMATE PREPARED BY:

Federal Costs: Mark Grabowicz for USPS costs (226-2860)
Geoffrey Gerhardt for retirement costs (226-2820)
Julia Christensen for health care costs (226-9010)
Impact on State, Local, and Tribal Governments: Sarah Puro 
    (225-3220)
Impact on the Private Sector: Paige Piper/Bach (226-2960)

                         ESTIMATE APPROVED BY:

Peter H. Fontaine
Deputy Assistant Director for Budget Analysis

                    Performance Goals and Objectives

    The Committee states that pursuant to clause 3(c)(4) of 
rule XIII of the Rules of the House of Representatives, H.R. 
4341, the ``Postal Accountability and Enhancement Act'' 
represents the most sweeping structural reform of the United 
States Postal Service (``Postal Service'') in over three 
decades. A central objective of this legislation is to ensure 
that the Postal Service operates in a more business-like 
manner. The legislation creates a modern system of rate 
regulation, expands the purview of ``competitive activities'' 
in which the Postal Service may operate, addresses the Postal 
Service's universal service obligation and the scope of the 
mail monopoly, and protects private firms from unfair 
competition.

                   Constitutional Authority Statement

    Pursuant to clause 3(d)(1) of rule XIII of the Rules of the 
House of Representatives, the Committee finds the authority for 
this legislation in article I, Sec. 8 of the Constitution.

               Section-by-Section Analysis and Discussion

    The following is a discussion of sections under 
jurisdiction of the Committee on the Judiciary. The other 
sections are described in the report of the Committee on 
Government Reform and Oversight H.R. Rep. No. 108-672.
Sec. 205. Complaints; appellate review and enforcement.
    Section 205 of the bill revises the complaint and appellate 
review provisions set out in subchapter V of chapter 36, Title 
39 (as re-designated by the bill). In general, the bill 
strengthens the authority of the Postal Regulatory Commission 
to act on complaints. The Postal Regulatory Commission has 
authority over rate-making and other activities of the Postal 
Service. Section 205 repeals current Sec. Sec. 3662 (rate and 
service complaints) and 3663 (annual report on international 
services) and adds three sections in Title 39 as follows.
    First, Sec. 3662 provides the Postal Regulatory Commission 
with enhanced authority to respond to complaints of pricing, 
service, or other actions by the Postal Service in violation of 
law. As revised, this section would require the Commission to 
begin proceedings on or dismiss complaints within 90 days and 
if not acted on, the complaint shall be treated in the same way 
as if it had been dismissed pursuant to an order issued by the 
Commission on the last day allowable for the issuance of such 
order under paragraph (1). In subsection 3662(c), the amendment 
gives the Commission broad authority to correct violations by 
ordering the Postal Service to take whatever steps the 
Commission considers appropriate. For instance, the Commission 
may order the Postal Service to adjust the rates of competitive 
products to lawful levels if they are set below attributable 
costs (the Commission has no such authority under current law). 
The Commission is authorized to suspend rates or 
classifications that are not of general applicability in the 
Nation as a whole or in any substantial region of the Nation. 
The suspension is permitted for only a limited period of time 
pending expedited proceedings under Sec. 3662, and four key 
factors are outlined in subsection (d) that the Commission must 
consider in evaluating whether this authority may be exercised. 
In cases of deliberate noncompliance with law, the Commission 
is authorized to levy fines based on the seriousness, nature, 
circumstances, and extent of the noncompliance. Fines resulting 
from provision of Competitive products must be paid out of the 
Competitive Products Fund, and all fines are paid into the 
general Treasury fund.
    Second, Sec. 3663 provides for appeals of any order or 
decision of the Postal Regulatory Commission to the United 
States Court of Appeals for the District of Columbia Circuit in 
accordance with chapter 706 of Title 5 and chapter 158 of Title 
28. Third, Sec. 3664 gives any United States District Court 
jurisdiction to enforce orders of the Postal Regulatory 
Commission and issue injunctions or restraining orders.
Sec. 301. Postal Service Competitive Products Fund.
    Section 301 of the bill adds a new Sec. 2011 to title 39. 
Section 2011 establishes an off-budget fund within the Treasury 
for revenues and expenditures associated with competitive 
products. The ``Competitive Products Fund'' is in addition to 
the current Postal Service Fund. The intent of this section is 
to level the playing field for the Postal Service and its 
competitors in the competitive product market by requiring the 
Postal Service to keep separate financial accounts for market 
dominant and competitive products. Separation of accounts also 
protects the interests of postal consumers in the market 
dominant category and taxpayers. Subsection 2011 essentially 
permits the Postal Service to manage the Competitive Products 
Fund in its discretion but prohibits the Postal Service from 
borrowing funds from Treasury or borrowing from private capital 
markets by pledging the full faith and credit of the United 
States. The new fund can borrow money to support competitive 
products by pledging the assets of the fund and its revenues 
and receipts. The Postal Service may invest money from the new 
fund in accordance with rules which the Secretary of Treasury 
shall prescribe (by not later than 18 months after the date of 
enactment)--in such other obligations or securities as the 
Postal Service deems appropriate.
    Subsection 2011(g) provides that claims against the Postal 
Service arising out of its competitive activities shall be paid 
out of the Competitive Products Fund.
    Subsection 2011(h) requires that the Secretary of the 
Treasury, in consultation with the Postal Service, an 
independent accountant, and other appropriate advisors, develop 
recommendations for rules such as accounting practices and 
principles that will identify and value the assets, 
liabilities, capital, and operating costs, associated with 
competitive products. Treasury's recommendations must be 
submitted to the Postal Regulatory Commission, which must then 
provide an opportunity for all other interested parties to 
present their views.
    The Postal Service, among others, will therefore be able to 
present its own recommendations and counterarguments. While 
Treasury will have the first opportunity to make 
recommendations, the Committee expects the Commission to give 
consideration to all input from interested parties, without a 
presumption that the Treasury recommendations are correct. 
After taking into account all views and information presented, 
the Commission must issue rules providing for the establishment 
and application of accounting practices and principles, certain 
substantive and procedural rules, and submission by the Postal 
Service of annual and periodic reports. The Commission is 
authorized to update the rules as necessary. The Postal Service 
must report to the Postal Regulatory Commission on the 
Competitive Products Fund periodically, as may be required by 
the Commission. In addition, the Postal Service must prepare an 
annual report for the Secretary of the Treasury concerning the 
operation of this Fund. This report shall address such matters 
as risk limitations, reserve balances, allocation or 
distribution of moneys, liquidity requirements, and measures to 
safeguard against losses. A copy of the report must also be 
provided to the Commission as part of the required annual 
reports.
Sec. 303. Unfair competition prohibited.
    Section 303 of the bill adds a new Sec. 404a to Title 39. 
Section 404a prohibits the Postal Service from: (1) 
establishing rules or regulations which preclude competition or 
give the Postal Service an unfair competitive advantage; (2) 
compelling disclosure, transfer, or licensing of intellectual 
property to any third party; or (3) offering any product or 
service that makes use of information obtained from a person 
that provides or seeks to provide a product to the Postal 
Service (unless the person has consented to such use or 
substantially the same information is otherwise obtainable). 
The Postal Regulatory Commission is required to prescribe 
regulations to carry out the purposes of this section, and the 
prohibitions are enforced through the Commission's strengthened 
complaint process and remedies, which include ordering 
rescission of any regulation.
Sec. 304. Suits by and against the Postal Service.
    Section 304 of the bill amends Sec. 409 of Title 39, to 
make the Postal Service more amenable to other laws regulating 
the conduct of commercial activities. First, the amendment 
subjects all Postal Service activities to Federal laws 
prohibiting the conduct of business in a fraudulent manner (the 
Lanham Act and certain parts of the Federal Trade Commission 
Act). Second, the amendment subjects Postal Service conduct 
with respect to competitive products to Federal antitrust laws 
and unfair competition prohibitions and eliminates sovereign 
immunity protection from suits in Federal court for violations 
of Federal law. The amended Sec. 409 allows injunctive relief 
against officers and employees of the Postal Service in case of 
violation of the antitrust laws, while the Postal Service 
itself would be subject to all available remedies. To the 
extent that private entities contract with the Postal Service 
for services in which the Postal Service is market dominant, 
the Committee does not believe these private entities should be 
subject to antitrust liability for the provision of these 
particular services.
    In addition, the bill as introduced would have made the 
Postal Service, to the extent it engages in conduct with 
respect to the provision of competitive products, a ``person'' 
for purposes of the Federal bankruptcy laws. Under current 
bankruptcy law, a governmental unit such as the Postal Service, 
is not eligible to be a bankruptcy debtor.\2\ The intent of 
this provision was to ensure that the Postal Service--to the 
extent it engages in competitive enterprises--has the same 
options and remedies available to its private sector 
counterparts.
---------------------------------------------------------------------------
    \2\ Section 109 of the Bankruptcy Code provides, in relevant part, 
that only a person may be a debtor. 11 U.S.C. Sec. 109 (2002). The 
Code, in turn, specifically excludes a governmental unit from its 
definition of a ``person.'' 11 U.S.C. Sec. 101(41) (2002).
---------------------------------------------------------------------------
    This bankruptcy provision had several practical 
difficulties associated with its implementation. First, the 
provision might have been impossible to implement under the 
Bankruptcy Code as it would only permit ``that portion of the 
Postal Service'' that engages in certain activities to be 
eligible for bankruptcy relief. The bankruptcy law lacks any 
means to bifurcate a debtor based on eligibility, i.e., the 
entire entity must be eligible for relief. Second, the 
provision may give the Postal Service an anti-competitive 
advantage with respect to its private sector counterparts by 
allowing it to use various protections and equitable remedies 
available to bankruptcy debtors. These bankruptcy-specific 
protections include the ability to avoid certain contracts and 
leases,\3\ avoid certain payments made to creditors prior to 
the bankruptcy filing,\4\ and set aside collective bargaining 
agreements and modify retiree benefits, under certain 
conditions.\5\ Third, the parameters of what assets and 
liabilities would comprise the bankruptcy estate \6\ may be 
ill-defined as only part of the Post Service would be 
authorized to be a bankruptcy debtor. For these reasons, an 
amendment offered by Chairman Sensenbrenner and Ranking Member 
Conyers to strike this provision was adopted the Committee by 
voice vote.
---------------------------------------------------------------------------
    \3\ See 11 U.S.C. Sec. 365 (2002).
    \4\ See 11 U.S.C. Sec. Sec. 547, 548 (2002).
    \5\ See 11 U.S.C. Sec. Sec. 1113-14 (2002).
    \6\ Bankruptcy Code Sec. 541, which specifies what assets comprise 
a bankruptcy estate, has been broadly construed. Section 541 provides 
that the bankruptcy estate is comprised of property, wherever located 
and by whomever held, including all legal and equitable interests in 
such property. 11 U.S.C. Sec. 541 (2002).
---------------------------------------------------------------------------
    Section 304 would also require the Postal Service to 
consider local zoning, planning, or land use regulations and 
building codes when constructing or altering buildings. This 
section further requires the Postal Service to represent itself 
in most legal proceedings permitted by the amendment as well as 
in cases involving administrative subpoenas issued by the 
Postal Regulatory Commission and appeals of decisions by the 
Commission or the Governors. The amendment requires that 
judgments arising out of activities of the Postal Service must 
be paid by the Postal Service, and judgments arising out of 
violations of law involving competitive products must be paid 
from revenues from competitive products.
Sec. 502. Authority for Postal Regulatory Commission to issue 
        subpoenas.
    Section 502 of the bill amends Sec. 504 of Title 39 (i.e., 
Sec. 3604 of current law as redesignated by Sec. 501 of the 
bill). As amended, Sec. 504 provides that Commissioners, any 
administrative law judge appointed by the Commission, and any 
designated employee of the Commission may administer oaths, 
examine witnesses, take depositions, and receive evidence. In 
addition, the Chairman of the Commission, any Commissioner 
designated by the Chairman, and any administrative law judge 
appointed by the Commission may issue subpoenas requiring the 
attendance and presentation of testimony by, or production of, 
documentary or other evidence in the possession of, officers, 
employees, agents, or contractors of the Postal Service, and to 
order the taking of depositions of, and responses to, written 
interrogatories by such persons. Such subpoena or order is 
allowed with respect to any proceeding conducted by the 
Commission under this title. Any subpoena requires the written 
concurrence of a majority of Commissioners then holding office 
in advance of its issuance. A failure to obey a subpoena may be 
referred to the appropriate United States district court and a 
failure to obey a court order is punishable as a contempt of 
court.
    The amendment also provides for the handling of information 
the Postal Service views as proprietary that is requested from 
the Postal Service by the Commission. Section 504 provides 
that, if the Postal Service determines requested information is 
proprietary and so notifies the Commission in writing, the 
Commission may use the information only for the purpose 
supplied and must restrict access to the information to 
Commission officers and employees. It further provides for the 
possibility of discovery of such information by interested 
parties and requires the Commission to adopt rules to protect 
the confidentiality of such information similar to the rules 
that govern protective orders issued by the Federal courts 
under the Federal Rules of Civil Procedure. This section 
creates new subsections (f) and (g) of Sec. 504 of Title 39. 
These new subsections provide administrative subpoena power to 
the Postal Regulatory Commission and provide for the 
enforcement of such subpoenas in district court.
Sec. 703. Study on equal application of laws to competitive products.
    Section 703 of the bill requires the Federal Trade 
Commission to prepare a report detailing how Federal and state 
laws apply differently to the Postal Service with respect to 
competitive products and private companies providing similar 
products. The Commission is directed to report within one year 
after enactment and to include recommendations for resolving 
any identified disparities in legal treatment. The Federal 
Trade Commission is to consult in preparing its report with the 
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. This section provides for 
a Federal Trade Commission study of laws that apply differently 
to the Postal Service and its private sector competitors. Such 
a study may include sovereign immunity, antitrust, and 
intellectual property laws. When preparing this Report, the 
Committee expects the Federal Trade Commission to closely 
consult with the United States Patent and Trademark Office, the 
Copyright Office, and the Department of Justice's Antitrust 
Division.
Sec. 801. Employment of Postal Police Officers.
    The Postal Service currently employs more than one thousand 
uniformed Postal Police officers who are assigned to critical 
postal facilities throughout the country. These officers 
provide vital protective and security functions, escort high-
value mail functions, and provide other essential functions. 
Each year the authority for these officers has been provided in 
appropriations bills. As introduced, H.R. 4341 sought to make 
this authority permanent in Title 40 of the United States Code. 
An amendment offered by Crime, Terrorism, and Homeland Security 
Subcommittee Chairman Coble to establish this authority in 
Title 18 of the United States Code, consistent with other 
police authorities of the Postal Service and Federal Government 
agencies, was reported from the Committee by voice vote.
Sec. 809. Hazardous Matter.
    Section 809 provides for penalties regarding illegal use of 
mail to transport hazardous matter. As introduced, H.R. 4341 
would have added a new Sec. 3018 to Title 39 of the United 
States Code to prohibit the mailing of hazardous material, the 
causing of hazardous material to be mailed, and the 
manufacture, distribution, or sale of containers, packaging 
kits or other devices (for use in mailing hazardous materials) 
that fail to conform with relevant standards.
    An amendment offered by Crime, Terrorism, and Homeland 
Security Subcommittee Chairman Coble to add ``hazardous 
materials'' to the list of nonmailable materials for which 
criminal penalties may be applied was reported from the 
Committee by voice vote. Under Title 18, the Postal Service may 
continue to permit the transmission of these items under such 
rules and regulations as they may prescribe. This amendment 
makes the civil and criminal penalties consistent for all 
nonmailable items and continues to allow the Postal Service to 
make any exceptions they deem necessary.

         Changes in Existing Law Made by the Bill, as Reported

    In compliance with clause 3(e) of rule XIII of the Rules of 
the House of Representatives, changes in existing law made by 
the bill, as reported, are shown as follows (existing law 
proposed to be omitted is enclosed in black brackets, new 
matter is printed in italics, existing law in which no change 
is proposed is shown in roman):

                      TITLE 39, UNITED STATES CODE



           *       *       *       *       *       *       *
                             PART I--GENERAL


Chap.                                                               Sec.
1. Postal Policy and Definitions..................................   101
     * * * * * * *
5. Postal Regulatory Commission...................................   501

CHAPTER 1--POSTAL POLICY AND DEFINITIONS

           *       *       *       *       *       *       *


Sec. 101. Postal policy

    (a) * * *

           *       *       *       *       *       *       *

    (d) As an establishment that provides both market-dominant 
and competitive products, the Postal Service shall be subject 
to a high degree of transparency, including in its finances and 
operations, to ensure fair treatment of customers of the Postal 
Service's market-dominant products and companies competing with 
the Postal Service's competitive products.
    [(d)] (e) Postal rates shall be established to apportion 
the costs of all postal operations to all users of the mail on 
a fair and equitable basis.
    [(e)] (f) In determining all policies for postal services, 
the Postal Service shall give the highest consideration to the 
requirement for the most expeditious collection, 
transportation, and delivery of important letter mail.
    [(f)] (g) In selecting modes of transportation, the Postal 
Service shall give highest consideration to the prompt and 
economical delivery of all mail and shall make a fair and 
equitable distribution of mail business to carriers providing 
similar modes of transportation services to the Postal Service. 
Modern methods of transporting mail by containerization and 
programs designed to achieve overnight transportation to the 
destination of important letter mail to all parts of the Nation 
shall be a primary goal of postal operations.
    [(g)] (h) In planning and building new postal facilities, 
the Postal Service shall emphasize the need for facilities and 
equipment designed to create desirable working conditions for 
its officers and employees, a maximum degree of convenience for 
efficient postal services, proper access to existing and future 
air and surface transportation facilities, and control of costs 
to the Postal Service.

Sec. 102. Definitions

    As used in this title--
            (1) * * *

           *       *       *       *       *       *       *

            (3) ``Governors'' means the 9 members of the Board 
        of Governors appointed by the President, by and with 
        the advice and consent of the Senate, under section 
        202(a) of this title; [and]
            [(4) ``Inspector General'' means the Inspector 
        General appointed under section 202(e) of this title;]
            (4) ``Inspector General'' means the Inspector 
        General of the United States Postal Service, appointed 
        under section 3(a) of the Inspector General Act of 
        1978;
            (5) ``postal service'' means the carriage of 
        letters, printed matter, or mailable packages, 
        including acceptance, collection, processing, delivery, 
        or other services supportive or ancillary thereto;
            (6) ``product'' means a postal service with a 
        distinct cost or market characteristic for which a rate 
        or rates are, or may reasonably be, applied;
            (7) ``rates'', as used with respect to products, 
        includes fees for postal services;
            (8) ``market-dominant product'' or ``product in the 
        market-dominant category of mail'' means a product 
        subject to subchapter I of chapter 36;
            (9) ``competitive product'' or ``product in the 
        competitive category of mail'' means a product subject 
        to subchapter II of chapter 36;
            (10) ``Consumer Price Index'' means the Consumer 
        Price Index for All Urban Consumers published monthly 
        by the Bureau of Labor Statistics of the Department of 
        Labor; and
            (11) ``year'', as used in chapter 36 (other than 
        subchapters I and VI thereof), means a fiscal year.

CHAPTER 2--ORGANIZATION

           *       *       *       *       *       *       *


Sec. 202. Board of Governors

    (a)(1) The exercise of the power of the Postal Service 
shall be directed by a Board of Governors composed of 11 
members appointed in accordance with this section. Nine of the 
members, to be known as Governors, shall be appointed by the 
President, by and with the advice and consent of the Senate, 
not more than 5 of whom may be adherents of the same political 
party. The Governors shall elect a Chairman from among the 
members of the Board. [The Governors shall be chosen to 
represent the public interest generally, and shall not be 
representatives of specific interests using the Postal Service, 
and may be removed only for cause.] The Governors shall 
represent the public interest generally, and at least 4 of the 
Governors shall be chosen solely on the basis of their 
demonstrated ability in managing organizations or corporations 
(in either the public or private sector) of substantial size; 
for purposes of this sentence, an organization or corporation 
shall be considered to be of substantial size if it employs at 
least 50,000 employees. The Governors shall not be 
representatives of specific interests using the Postal Service, 
and may be removed only for cause. Each Governor shall receive 
a salary of $30,000 a year plus $300 a day for not more than 42 
days of meetings each year and shall be reimbursed for travel 
and reasonable expenses incurred in attending meetings of the 
Board. Nothing in the preceding sentence shall be construed to 
limit the number of days of meetings each year to 42 days.
    (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.
    (b)(1) The terms of the 9 Governors shall be 9 years, 
except that the terms of the 9 Governors first taking office 
shall expire as designated by the President at the time of 
appointment, 1 at the end of 1 year, 1 at the end of 2 years, 1 
at the end of 3 years, 1 at the end of 4 years, 1 at the end of 
5 years, 1 at the end of 6 years, 1 at the end of 7 years, 1 at 
the end of 8 years, and 1 at the end of 9 years, following the 
appointment of the first of them. Any Governor appointed to 
fill a vacancy before the expiration of the term for which his 
predecessor was appointed shall serve for the remainder of such 
term. A Governor may continue to serve after the expiration of 
his term until his successor has qualified, but not to exceed 
one year.
    (2)(A) Notwithstanding any other provision of this section, 
in the case of the office of the Governor the term of which is 
the first one scheduled to expire at least 4 months after the 
date of the enactment of this paragraph--
            (i) such office may not, in the case of any person 
        commencing service after that expiration date, be 
        filled by any person other than an individual chosen 
        from among persons nominated for such office with the 
        unanimous concurrence of all labor organizations 
        described in section 206(a)(1); and
            (ii) instead of the term that would otherwise apply 
        under the first sentence of paragraph (1), the term of 
        any person so appointed to such office shall be 3 
        years.
    (B) Except as provided in subparagraph (A), an appointment 
under this paragraph shall be made in conformance with all 
provisions of this section that would otherwise apply.

           *       *       *       *       *       *       *

    [(e)(1) The Governors shall appoint and shall have the 
power to remove the Inspector General.
    [(2) The Inspector General shall be appointed--
            [(A) for a term of 7 years;
            [(B) without regard to political affiliation; and
            [(C) solely on the basis of integrity and 
        demonstrated ability in accounting, auditing, financial 
        analysis, law, management analysis, public 
        administration, or investigations.
    [(3) The Inspector General may at any time be removed upon 
the written concurrence of at least 7 Governors, but only for 
cause. Nothing in this subsection shall be considered to exempt 
the Governors from the requirements of section 8G(e) of the 
Inspector General Act of 1978.]

           *       *       *       *       *       *       *


                      CHAPTER 4--GENERAL AUTHORITY

Sec.
401. General powers of the Postal Service.
     * * * * * * *
404a. Specific limitations.
     * * * * * * *

Sec. 401. General powers of the Postal Service

    [The] Subject to the provisions of section 404a, the Postal 
Service shall have the following general powers:
            (1) * * *
            [(2) to adopt, amend, and repeal such rules and 
        regulations as it deems necessary to accomplish the 
        objectives of this title;]
            (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. 403. General duties

    (a) * * *

           *       *       *       *       *       *       *

    (c) In providing services and in establishing 
classifications, rates, and fees under this title, the Postal 
Service shall not, except as specifically authorized in this 
title, make any undue or unreasonable discrimination among 
users of the mails, nor shall it grant any undue or 
unreasonable preferences to any such user. The prohibition in 
this subsection shall not be construed to prevent the 
establishment of rates that vary with volume if such rates will 
be made available to similarly situated persons and will 
increase the aggregate contribution to the institutional costs 
of the Postal Service.

Sec. 404. Specific powers

    (a) [Without] Subject to the provisions of section 404a, 
but otherwise without limitation of the generality of its 
powers, the Postal Service shall have the following specific 
powers, among others:
            (1) to provide for the collection, handling, 
        transportation, delivery, forwarding, returning, and 
        holding of mail, and for the disposition of 
        undeliverable mail;
            (2) to prescribe, in accordance with this title, 
        the amount of postage and the manner in which it is to 
        be paid;
            (3) to determine the need for post offices, postal 
        and training facilities and equipment, and to provide 
        such offices, facilities, and equipment as it 
        determines are needed;
            (4) to provide and sell postage stamps and other 
        stamped paper, cards, and envelopes and to provide such 
        other evidences of payment of postage and fees as may 
        be necessary or desirable;
            (5) to provide philatelic services;
            [(6) to provide, establish, change, or abolish 
        special nonpostal or similar services;]
            [(7)] (6) to investigate postal offenses and civil 
        matters relating to the Postal Service;
            [(8)] (7) to offer and pay rewards for information 
        and services in connection with violation of the postal 
        laws, and, unless a different disposal is expressly 
        prescribed, to pay one-half of all penalties and 
        forfeitures imposed for violations of law affecting the 
        Postal Service, its revenues, or property, to the 
        person informing for the same, and to pay the other 
        one-half into the Postal Service Fund; and
            [(9)] (8) to authorize the issuance of a substitute 
        check for a lost, stolen, or destroyed check of the 
        Postal Service.
    (b) Except as otherwise provided, the Governors are 
authorized to establish reasonable and equitable classes of 
mail and reasonable and equitable rates of postage and fees for 
postal services in accordance with the provisions of chapter 
36. Postal rates and fees shall be reasonable and equitable and 
sufficient to enable the Postal Service, under best practices 
of honest, efficient, and economical management, to maintain 
and continue the development of postal services of the kind and 
quality adapted to the needs of the United States.
    (c) The Postal Service shall maintain one or more classes 
of mail for the transmission of letters sealed against 
inspection. The rate for each such class shall be uniform 
throughout the United States, its territories, and possessions. 
One such class shall provide for the most expeditious handling 
and transportation afforded mail matter by the Postal Service. 
No letter of such a class of domestic origin shall be opened 
except under authority of a search warrant authorized by law, 
or by an officer or employee of the Postal Service for the sole 
purpose of determining an address at which the letter can be 
delivered, or pursuant to the authorization of the addressee.
    [(b)] (d)(1) * * *

           *       *       *       *       *       *       *

    (5) A determination of the Postal Service to close or 
consolidate any post office may be appealed by any person 
served by such office to the [Postal Rate] Postal Regulatory 
Commission within 30 days after such determination is made 
available to such person under paragraph (3). The Commission 
shall review such determination on the basis of the record 
before the Postal Service in the making of such determination. 
The Commission shall make a determination based upon such 
review no later than 120 days after receiving any appeal under 
this paragraph. The Commission shall set aside any 
determination, findings, and conclusions found to be--
            (A) * * *

           *       *       *       *       *       *       *

    (6) For purposes of paragraph (5), any appeal received by 
the Commission shall--
            (A) if sent to the Commission through the mails, be 
        considered to have been received on the date of the 
        Postal Service postmark on the envelope or other cover 
        in which such appeal is mailed; or
            (B) if otherwise lawfully delivered to the 
        Commission, be considered to have been received on the 
        date determined based on any appropriate documentation 
        or other indicia (as determined under regulations of 
        the Commission).
    (e) Nothing in this title shall be considered to permit or 
require that the Postal Service provide any special nonpostal 
or similar services, except that nothing in this subsection 
shall prevent the Postal Service from providing any special 
nonpostal or similar services provided by the Postal Service as 
of May 12, 2004.

Sec. 404a. Specific Limitations

    (a) Except as specifically authorized by law, the Postal 
Service may not--
            (1) establish any rule or regulation (including any 
        standard) the effect of which is to preclude 
        competition or establish the terms of competition 
        unless the Postal Service demonstrates that the 
        regulation does not create an unfair competitive 
        advantage for itself or any entity funded (in whole or 
        in part) by the Postal Service;
            (2) compel the disclosure, transfer, or licensing 
        of intellectual property to any third party (such as 
        patents, copyrights, trademarks, trade secrets, and 
        proprietary information); or
            (3) obtain information from a person that provides 
        (or seeks to provide) any product, and then offer any 
        product or service that uses or is based in whole or in 
        part on such information, without the consent of the 
        person providing that information, unless substantially 
        the same information is obtained (or obtainable) from 
        an independent source or is otherwise obtained (or 
        obtainable).
    (b) The Postal Regulatory Commission shall prescribe 
regulations to carry out this section.
    (c) Any party (including an officer of the Commission 
representing the interests of the general public) who believes 
that the Postal Service has violated this section may bring a 
complaint in accordance with section 3662.

           *       *       *       *       *       *       *


[Sec. 407. International Postal Arrangements.

    [(a)(1) The Secretary of State shall have primary 
responsibility for formulation, coordination and oversight of 
policy with respect to United States participation in the 
Universal Postal Union, including the Universal Postal 
Convention and other Acts of the Universal Postal Union, 
amendments thereto, and all postal treaties and conventions 
concluded within the framework of the Convention and such Acts.
    [(2) Subject to subsection (d), the Secretary may, with the 
consent of the President, negotiate and conclude treaties, 
conventions and amendments referred to in paragraph (1).
    [(b)(1) Subject to subsections (a), (c), and (d), the 
Postal Service may, with the consent of the President, 
negotiate and conclude postal treaties and conventions.
    [(2) The Postal Service may, with the consent of the 
President, establish rates of postage or other charges on mail 
matter conveyed between the United States and other countries.
    [(3) The Postal Service shall transmit a copy of each 
postal treaty or convention concluded with other governments 
under the authority of this subsection to the Secretary of 
State, who shall furnish a copy to the Public Printer for 
publication.
    [(c) The Postal Service shall not conclude any treaty or 
convention under the authority of this section or any other 
arrangement related to the delivery of international postal 
services that is inconsistent with any policy developed 
pursuant to subsection (a).
    [(d) In carrying out their responsibilities under this 
section, the Secretary and the Postal Service shall consult 
with such federal agencies as the Secretary or the Postal 
Service considers appropriate, private providers of 
international postal services, users of international postal 
services, the general public, and such other persons as the 
Secretary or the Postal Service considers appropriate.]

Sec. 407. International postal arrangements

    (a) It is the policy of the United States--
            (1) to promote and encourage communications between 
        peoples by efficient operation of international postal 
        services and other international delivery services for 
        cultural, social, and economic purposes;
            (2) to promote and encourage unrestricted and 
        undistorted competition in the provision of 
        international postal services and other international 
        delivery services, except where provision of such 
        services by private companies may be prohibited by law 
        of the United States;
            (3) to promote and encourage a clear distinction 
        between governmental and operational responsibilities 
        with respect to the provision of international postal 
        services and other international delivery services by 
        the Government of the United States and by 
        intergovernmental organizations of which the United 
        States is a member; and
            (4) to participate in multilateral and bilateral 
        agreements with other countries to accomplish these 
        objectives.
    (b)(1) The Secretary of State shall be responsible for 
formulation, coordination, and oversight of foreign policy 
related to international postal services and other 
international delivery services, and shall have the power to 
conclude treaties, conventions and amendments related to 
international postal services and other international delivery 
services, except that the Secretary may not conclude any 
treaty, convention, or other international agreement (including 
those regulating international postal services) if such treaty, 
convention, or agreement would, with respect to any competitive 
product, grant an undue or unreasonable preference to the 
Postal Service, a private provider of international postal or 
delivery services, or any other person.
    (2) In carrying out the responsibilities specified in 
paragraph (1), the Secretary of State shall exercise primary 
authority for the conduct of foreign policy with respect to 
international postal services and international delivery 
services, including the determination of United States 
positions and the conduct of United States participation in 
negotiations with foreign governments and international bodies. 
In exercising this authority, the Secretary--
            (A) shall coordinate with other agencies as 
        appropriate, and in particular, shall give full 
        consideration to the authority vested by law or 
        Executive order in the Postal Regulatory Commission, 
        the Department of Commerce, the Department of 
        Transportation, and the Office of the United States 
        Trade Representative in this area;
            (B) shall maintain continuing liaison with other 
        executive branch agencies concerned with postal and 
        delivery services;
            (C) shall maintain continuing liaison with the 
        Committee on Government Reform of the House of 
        Representatives and the Committee on Governmental 
        Affairs of the Senate;
            (D) shall maintain appropriate liaison with both 
        representatives of the Postal Service and 
        representatives of users and private providers of 
        international postal services and other international 
        delivery services to keep informed of their interests 
        and problems, and to provide such assistance as may be 
        needed to ensure that matters of concern are promptly 
        considered by the Department of State or (if 
        applicable, and to the extent practicable) other 
        executive branch agencies; and
            (E) shall assist in arranging meetings of such 
        public sector advisory groups as may be established to 
        advise the Department of State and other executive 
        branch agencies in connection with international postal 
        services and international delivery services.
    (3) The Secretary of State shall establish an advisory 
committee (within the meaning of the Federal Advisory Committee 
Act) to perform such functions as the Secretary considers 
appropriate in connection with carrying out subparagraphs (A) 
through (D) of paragraph (2).
    (c)(1) Before concluding any treaty, convention, or 
amendment that establishes a rate or classification for a 
product subject to subchapter I of chapter 36, the Secretary of 
State shall request the Postal Regulatory Commission to submit 
a decision on whether such rate or classification is consistent 
with the standards and criteria established by the Commission 
under section 3622.
    (2) The Secretary shall ensure that each treaty, 
convention, or amendment concluded under subsection (b) is 
consistent with a decision of the Commission adopted under 
paragraph (1), except if, or to the extent, the Secretary 
determines, by written order, that considerations of foreign 
policy or national security require modification of the 
Commission's decision.
    (d) Nothing in this section shall be considered to prevent 
the Postal Service from entering into such commercial or 
operational contracts related to providing international postal 
services and other international delivery services as it deems 
appropriate, except that--
            (1) any such contract made with an agency of a 
        foreign government (whether under authority of this 
        subsection or otherwise) shall be solely contractual in 
        nature and may not purport to be international law; and
            (2) a copy of each such contract between the Postal 
        Service and an agency of a foreign government shall be 
        transmitted to the Secretary of State and the Postal 
        Regulatory Commission not later than the effective date 
        of such contract.
    (e)(1) With respect to shipments of international mail that 
are competitive products within the meaning of section 3631 
that are exported or imported by the Postal Service, the Bureau 
of Customs and Border Protection of the Department of Homeland 
Security and other appropriate Federal agencies shall apply the 
customs laws of the United States and all other laws relating 
to the importation or exportation of such shipments in the same 
manner to both shipments by the Postal Service and similar 
shipments by private companies.
    (2) For purposes of this subsection, the term ``private 
company'' means a private company substantially owned or 
controlled by persons who are citizens of the United States.
    (3) In exercising the authority pursuant to subsection (b) 
to conclude new treaties, conventions and amendments related to 
international postal services and to renegotiate such treaties, 
conventions and amendments, the Secretary of State shall, to 
the maximum extent practicable, take such measures as are 
within the Secretary's control to encourage the governments of 
other countries to make available to the Postal Service and 
private companies a range of nondiscriminatory customs 
procedures that will fully meet the needs of all types of 
American shippers. The Secretary of State shall consult with 
the United States Trade Representative and the Commissioner of 
Customs, Department of Homeland Security in carrying out this 
paragraph.
    (4) The provisions of this subsection shall take effect 6 
months after the date of the enactment of this subsection or 
such earlier date as the Bureau of Customs and Border 
Protection of the Department of Homeland Security may determine 
in writing.

           *       *       *       *       *       *       *


Sec. 409. Suits by and against the Postal Service

    (a) [Except as provided in section 3628 of this title,] 
Except as otherwise provided in this title, the United States 
district courts shall have original but not exclusive 
jurisdiction over all actions brought by or against the Postal 
Service. Any action brought in a State court to which the 
Postal Service is a party may be removed to the appropriate 
United States district court under the provisions of chapter 89 
of title 28.

           *       *       *       *       *       *       *

    [(d) The Department of Justice shall furnish, under section 
411 of this title, the Postal Service such legal representation 
as it may require, but with the prior consent of the Attorney 
General the Postal Service may 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.
    [(e) 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.]
    (d)(1) For purposes of the provisions of law cited in 
paragraphs (2)(A) and (2)(B), respectively, the Postal 
Service--
            (A) shall be considered to be a ``person'', as used 
        in the provisions of law involved; and
            (B) shall not be immune under any other doctrine of 
        sovereign immunity from suit in Federal court by any 
        person for any violation of any of those provisions of 
        law by any officer or employee of the Postal Service.
    (2) This subsection applies with respect to--
            (A) the Act of July 5, 1946 (commonly referred to 
        as the ``Trademark Act of 1946'' (15 U.S.C. 1051 and 
        following)); and
            (B) the provisions of section 5 of the Federal 
        Trade Commission Act to the extent that such section 5 
        applies to unfair or deceptive acts or practices.
    (e)(1) To the extent that the Postal Service, or other 
Federal agency acting on behalf of or in concert with the 
Postal Service, engages in conduct with respect to any 
competitive product, the Postal Service or other Federal agency 
(as the case may be)--
            (A) shall not be immune under any doctrine of 
        sovereign immunity from suit in Federal court by any 
        person for any violation of Federal law by such agency 
        or any officer or employee thereof; and
            (B) shall be considered to be a person (as defined 
        in subsection (a) of the first section of the Clayton 
        Act) for purposes of--
                    (i) the antitrust laws (as defined in such 
                subsection); and
                    (ii) section 5 of the Federal Trade 
                Commission Act to the extent that such section 
                5 applies to unfair methods of competition.
    (2) No damages, interest on damages, costs or attorney's 
fees may be recovered, and no criminal liability may be 
imposed, under the antitrust laws (as so defined) from any 
officer or employee of the Postal Service, or other Federal 
agency acting on behalf of or in concert with the Postal 
Service, acting in an official capacity.
    (3) This subsection shall not apply with respect to conduct 
occurring before the date of the enactment of this subsection.
    (f)(1) Each building constructed or altered by the Postal 
Service shall be constructed or altered, to the maximum extent 
feasible as determined by the Postal Service, in compliance 
with one of the nationally recognized model building codes and 
with other applicable nationally recognized codes.
    (2) Each building constructed or altered by the Postal 
Service shall be constructed or altered only after 
consideration of all requirements (other than procedural 
requirements) of zoning laws, land use laws, and applicable 
environmental laws of a State or subdivision of a State which 
would apply to the building if it were not a building 
constructed or altered by an establishment of the Government of 
the United States.
    (3) For purposes of meeting the requirements of paragraphs 
(1) and (2) with respect to a building, the Postal Service 
shall--
            (A) in preparing plans for the building, consult 
        with appropriate officials of the State or political 
        subdivision, or both, in which the building will be 
        located;
            (B) upon request, submit such plans in a timely 
        manner to such officials for review by such officials 
        for a reasonable period of time not exceeding 30 days; 
        and
            (C) permit inspection by such officials during 
        construction or alteration of the building, in 
        accordance with the customary schedule of inspections 
        for construction or alteration of buildings in the 
        locality, if such officials provide to the Postal 
        Service--
                    (i) a copy of such schedule before 
                construction of the building is begun; and
                    (ii) reasonable notice of their intention 
                to conduct any inspection before conducting 
                such inspection.
Nothing in this subsection shall impose an obligation on any 
State or political subdivision to take any action under the 
preceding sentence, nor shall anything in this subsection 
require the Postal Service or any of its contractors to pay for 
any action taken by a State or political subdivision to carry 
out this subsection (including reviewing plans, carrying out 
on-site inspections, issuing building permits, and making 
recommendations).
    (4) Appropriate officials of a State or a political 
subdivision of a State may make recommendations to the Postal 
Service concerning measures necessary to meet the requirements 
of paragraphs (1) and (2). Such officials may also make 
recommendations to the Postal Service concerning measures which 
should be taken in the construction or alteration of the 
building to take into account local conditions. The Postal 
Service shall give due consideration to any such 
recommendations.
    (5) In addition to consulting with local and State 
officials under paragraph (3), the Postal Service shall 
establish procedures for soliciting, assessing, and 
incorporating local community input on real property and land 
use decisions.
    (6) For purposes of this subsection, the term ``State'' 
includes the District of Columbia, the Commonwealth of Puerto 
Rico, and a territory or possession of the United States.
    (g)(1) Notwithstanding any other provision of law, legal 
representation may not be furnished by the Department of 
Justice to the Postal Service in any action, suit, or 
proceeding arising, in whole or in part, under any of the 
following:
            (A) Subsection (d) or (e) of this section.
            (B) Subsection (f) or (g) of section 504 (relating 
        to administrative subpoenas by the Postal Regulatory 
        Commission).
            (C) Section 3663 (relating to appellate review).
The Postal Service may, by contract or otherwise, employ 
attorneys to obtain any legal representation that it is 
precluded from obtaining from the Department of Justice under 
this paragraph.
    (2) In any circumstance not covered by paragraph (1), the 
Department of Justice shall, under section 411, furnish the 
Postal Service such legal representation as it may require, 
except that, with the prior consent of the Attorney General, 
the Postal Service may, in any such circumstance, employ 
attorneys by contract or otherwise to conduct litigation 
brought by or against the Postal Service or its officers or 
employees in matters affecting the Postal Service.
    (3)(A) In any action, suit, or proceeding in a court of the 
United States arising in whole or in part under any of the 
provisions of law referred to in subparagraph (B) or (C) of 
paragraph (1), and to which the Commission is not otherwise a 
party, the Commission shall be permitted to appear as a party 
on its own motion and as of right.
    (B) The Department of Justice shall, under such terms and 
conditions as the Commission and the Attorney General shall 
consider appropriate, furnish the Commission such legal 
representation as it may require in connection with any such 
action, suit, or proceeding, except that, with the prior 
consent of the Attorney General, the Commission may employ 
attorneys by contract or otherwise for that purpose.
    (h) A judgment against the Government of the United States 
arising out of activities of the Postal Service shall be paid 
by the Postal Service out of any funds available to the Postal 
Service, subject to the restriction specified in section 
2011(g).

           *       *       *       *       *       *       *


Sec. 410. Application of other laws

    (a) * * *
    (b) The following provisions shall apply to the Postal 
Service:
            (1) * * *

           *       *       *       *       *       *       *

            (5) the following provisions of title 41:
                    (A) sections 35-45 (known as the Walsh-
                Healey Act, relating to wages and hours); [and]
                    (B) chapter 6 (the Service Contract Act of 
                1965);
                    (C) the Anti-Kickback Act of 1986 (41 
                U.S.C. 51 and following), other than 
                subsections (a) and (b) of 7 and section 8 of 
                that Act; and
                    (D) section 315 of the Federal Property and 
                Administrative Services Act of 1949 (41 U.S.C. 
                265) (relating to protecting contractor 
                employees from reprisal for disclosure of 
                certain information);

           *       *       *       *       *       *       *

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

           *       *       *       *       *       *       *


                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 responsibilities accorded 
Commissioners under the Postal Accountability and Enhancement 
Act. Not more than 3 of the Commissioners may be adherents of 
the same political party.
    (b) A Commissioner may continue to serve after the 
expiration of his term until his successor has qualified, 
except that a Commissioner may not so continue to serve for 
more than 1 year after the date upon which his term otherwise 
would expire under subsection (e).
    (c) One of the Commissioners shall be designated as 
Chairman by, and shall serve in the position of Chairman at the 
pleasure of, the President.
    (d) The Commissioners shall by majority vote designate a 
Vice Chairman of the Commission. The Vice Chairman shall act as 
Chairman of the Commission in the absence of the Chairman.
    (e) The Commissioners shall serve for terms of 6 years.

[Sec. 3603.] Sec. 503. Rules; regulations; procedures

    The [Postal Rate] Postal Regulatory Commission shall 
promulgate rules and regulations and establish procedures, 
subject to chapters 5 and 7 of title 5, and take any other 
action they deem necessary and proper to carry out their 
functions and obligations to the Government of the United 
States and the people as prescribed under this [chapter] title. 
Such rules, regulations, procedures, and actions shall not be 
subject to any change or supervision by the Postal Service. 
Such rules shall include procedures which balance, inter alia, 
the need for protecting due process rights and ensuring 
expeditious decision-making.

[Sec. 3604.] Sec. 504. Administration

    (a) The Chairman of the [Postal Rate] Postal Regulatory 
Commission shall be the principal executive officer of the 
Commission. The Chairman shall exercise or direct the exercise 
of all the executive and administrative functions of the 
Commission, including functions of the Commission with respect 
to (1) the appointment of personnel employed under the 
Commission, except that the appointment of heads of major 
administrative units under the Commission shall require the 
approval of a majority of the members of the Commission, (2) 
the supervision of the personnel employed under the Commission 
and the distribution of business among them and among the 
Commissioners, and (3) the use and expenditure of funds.

           *       *       *       *       *       *       *

    [(d)(1) The Commission shall periodically prepare and 
submit to the Postal Service a budget of the Commission's 
expenses, including, but not limited to, expenses for 
facilities, supplies, compensation, and employee benefits. The 
budget shall be considered approved--
            [(A) as submitted if the Governors fail to act in 
        accordance with subparagraph (B) of this paragraph; or
            [(B) as adjusted if the Governors holding office, 
        by unanimous written decision, adjust the total amount 
        of money requested in the budget.
Subparagraph (B) shall not be construed to authorize the 
Governors to adjust any item included within the budget.
    [(2) Expenses incurred under any budget approved under 
paragraph (1) of this subsection shall be paid out of the 
Postal Service fund established under section 2003 of this 
title.]
    (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.

           *       *       *       *       *       *       *

    (f)(1) Any Commissioner of the Postal Regulatory 
Commission, any administrative law judge appointed by the 
Commission under section 3105 of title 5, and any employee of 
the Commission designated by the Commission may administer 
oaths, examine witnesses, take depositions, and receive 
evidence.
    (2) The Chairman of the Commission, any Commissioner 
designated by the Chairman, and any administrative law judge 
appointed by the Commission under section 3105 of title 5 may, 
with respect to any proceeding conducted by the Commission 
under this title--
            (A) issue subpoenas requiring the attendance and 
        presentation of testimony by, or the production of 
        documentary or other evidence in the possession of, any 
        covered person; and
            (B) order the taking of depositions and responses 
        to written interrogatories by a covered person.
The written concurrence of a majority of the Commissioners then 
holding office shall, with respect to each subpoena under 
subparagraph (A), be required in advance of its issuance.
    (3) In the case of contumacy or failure to obey a subpoena 
issued under this subsection, upon application by the 
Commission, the district court of the United States for the 
district in which the person to whom the subpoena is addressed 
resides or is served may issue an order requiring such person 
to appear at any designated place to testify or produce 
documentary or other evidence. Any failure to obey the order of 
the court may be punished by the court as a contempt thereof.
    (4) For purposes of this subsection, the term ``covered 
person'' means an officer, employee, agent, or contractor of 
the Postal Service.
    (g)(1) If the Postal Service determines that any document 
or other matter it provides to the Postal Regulatory Commission 
pursuant to a subpoena issued under subsection (f), or 
otherwise at the request of the Commission in connection with 
any proceeding or other purpose under this title, contains 
information which is described in section 410(c) of this title, 
or exempt from public disclosure under section 552(b) of title 
5, the Postal Service shall, at the time of providing such 
matter to the Commission, notify the Commission, in writing, of 
its determination (and the reasons therefor).
    (2) No officer or employee of the Commission may, with 
respect to any information as to which the Commission has been 
notified under paragraph (1)--
            (A) use such information for purposes other than 
        the purposes for which it is supplied; or
            (B) permit anyone who is not an officer or employee 
        of the Commission to have access to any such 
        information.
    (3) Paragraph (2) shall not prevent information from being 
furnished under any process of discovery established under this 
title in connection with a proceeding under this title. The 
Commission shall, by regulations based on rule 26(c) of the 
Federal Rules of Civil Procedure, establish procedures for 
ensuring appropriate confidentiality for any information 
furnished under the preceding sentence.
    (h)(1) Notwithstanding any other provision of this title or 
of the Inspector General Act of 1978, the authority to select, 
appoint, and employ officers and employees of the Office of 
Inspector General of the Postal Regulatory Commission, and to 
obtain any temporary or intermittent services of experts or 
consultants (or an organization of experts or consultants) for 
such Office, shall reside with the Inspector General of the 
Postal Regulatory Commission.
    (2) Except as provided in paragraph (1), any exercise of 
authority under this subsection shall, to the extent 
practicable, be in conformance with the applicable laws and 
regulations that govern selections, appointments and 
employment, and the obtaining of any such temporary or 
intermittent services, within the Postal Regulatory Commission.

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

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

CHAPTER 6--PRIVATE CARRIAGE OF LETTERS

           *       *       *       *       *       *       *


Sec. 601. Letters carried out of the mail

    (a) * * *
    [(b) The Postal Service may suspend the operation of any 
part of this section upon any mail route where the public 
interest requires the suspension.]
    (b) A letter may also be carried out of the mails when--
            (1) the amount paid for the private carriage of the 
        letter is at least the amount equal to 6 times the rate 
        then currently charged for the 1st ounce of a single-
        piece first class letter;
            (2) the letter weighs at least 12\1/2\ ounces; or
            (3) such carriage is within the scope of services 
        described by regulations of the Postal Service 
        (including, in particular, sections 310.1 and 320.2-
        320.8 of title 39 of the Code of Federal Regulations, 
        as in effect on July 1, 2003) that purport to permit 
        private carriage by suspension of the operation of this 
        section (as then in effect).
    (c) Any regulations necessary to carry out this section 
shall be promulgated by the Postal Regulatory Commission.

           *       *       *       *       *       *       *


PART II--PERSONNEL

           *       *       *       *       *       *       *


CHAPTER 10--EMPLOYMENT WITHIN THE POSTAL SERVICE

           *       *       *       *       *       *       *


Sec. 1001. Appointment and status

    (a) * * *

           *       *       *       *       *       *       *

    (d) Notwithstanding section 5533, 5535, or 5536 of title 5, 
or any other provision of law, any officer or employee of the 
Government of the United States is eligible to serve and 
receive pay concurrently as an officer or employee of the 
Postal Service (other than as a member of the Board or of the 
[Postal Rate] Postal Regulatory Commission) and as an officer 
or employee of any other department, agency, or establishment 
of the Government of the United States.

           *       *       *       *       *       *       *


Sec. 1002. Political recommendations

    (a) Except as provided in subsection (e) of this section, 
each appointment, promotion, assignment, transfer, or 
designation, interim or otherwise, of an officer or employee in 
the Postal Service (except a Governor or member of the [Postal 
Rate] Postal Regulatory Commission) shall be made without 
regard to any recommendation or statement, oral or written, 
with respect to any person who requests or is under 
consideration for such appointment, promotion, assignment, 
transfer, or designation, made by--
            (1) * * *

           *       *       *       *       *       *       *


Sec. 1003. Employment policy

    (a) Except as provided under [chapters 2 and 12 of this 
title, section 8G of the Inspector General Act of 1978, or 
other provision of law,] chapter 2 or 12 of this title, 
subsection (b) or (c) of this section, or any other provision 
of law, the Postal Service shall classify and fix the 
compensation and benefits of all officers and employees in the 
Postal Service. It shall be the policy of the Postal Service to 
maintain compensation and benefits for all officers and 
employees on a standard of comparability to the compensation 
and benefits paid for comparable levels of work in the private 
sector of the economy. No officer or employee shall be paid 
compensation at a rate in excess of the rate for level I of the 
Executive Schedule under section 5312 of title 5.
        (b) Compensation and benefits for all officers and 
employees serving in or under the Office of Inspector General 
of the United States Postal Service shall be maintained on a 
standard of comparability to the compensation and benefits paid 
for comparable levels of work in the [respective] other Offices 
of Inspector General of the various establishments named in 
section 11(2) of the Inspector General Act of 1978.
        (c) Compensation and benefits for all Postal Inspectors 
shall be maintained on a standard of comparability to the 
compensation and benefits paid for comparable levels of work in 
the executive branch of the Government outside of the Postal 
Service. As used in this subsection, the term ``Postal 
Inspector'' [included] includes any agent to whom any 
investigative powers are granted under section 3061 of title 
18.

           *       *       *       *       *       *       *


Sec. 1005. Applicability of laws relating to Federal employees

    (a) * * *

           *       *       *       *       *       *       *

    (d)(1) * * *
    (2) The provisions of [subsection (g) of section 5532,] 
subsections (i) and (l)(2) of section 8344[,] and subsections 
(f) and (i)(2) of section 8468 of title 5 shall apply with 
respect to the Postal Service. For purposes of so applying such 
provisions--
            (A) * * *

           *       *       *       *       *       *       *


CHAPTER 12--EMPLOYEE-MANAGEMENT AGREEMENTS

           *       *       *       *       *       *       *


Sec. 1207. Labor disputes

    (a) * * *
    (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 [direct the 
establishment of a factfinding panel consisting of 3 persons. 
For this purpose, he shall submit to the parties a list of not 
less than 15 names, from which list each party, within 10 days, 
shall select 1 person. The 2 so selected shall then choose from 
the list a third person who shall serve as chairman of the 
factfinding panel. If either of the parties fails to select a 
person or if the 2 members are unable to agree on the third 
person within 3 days, the selection shall be made by the 
Director. The factfinding panel shall issue after due 
investigation a report of its findings, with or without 
recommendations, to the parties no later than 45 days from the 
date the list of names is submitted.], 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 [90] 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 therefor, an 
arbitration board shall be established consisting of 3 members, 
[not members of the factfinding panel,] 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 [by the Director. If the parties do not agree on 
the framing of the issues to be submitted, the factfinding 
panel shall frame the issues and submit them to the arbitration 
board.] from a list of names provided by the Director. This 
list shall consist of not less than 9 names of arbitrators of 
nationwide reputation and professional stature, who are also 
members of the National Academy of Arbitrators, and whom the 
Director has determined are available and willing to serve.

           *       *       *       *       *       *       *

    (3) Costs of the arbitration board and [factfinding panel] 
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 agreement 
within 90 days of the commencement of collective bargaining, a 
[factfinding panel will be established] mediator shall be 
appointed in accordance with the terms of 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 of 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.

           *       *       *       *       *       *       *


           PART III--MODERNIZATION AND FISCAL ADMINISTRATION

Chap.                                                               Sec.
20. Finance.......................................................  2001
     * * * * * * *
[28. Strategic planning and performance management................ 2801]
2801rategic Planning and Performance Management.................

           *       *       *       *       *       *       *


                          CHAPTER 20--FINANCE

Sec.
2001. Definitions.
     * * * * * * *
2011. Provisions relating to competitive products.

Sec. 2001. Definitions

    As used in this chapter--
            (1) ``Fund'' means the Postal Service Fund 
        established by section 2003 of this chapter; [and]
            (2) ``Competitive Products Fund'' means the Postal 
        Service Competitive Products Fund established by 
        section 2011; and
            [(2)] (3) ``obligations'', when referring to debt 
        instruments issued by the Postal Service, means notes, 
        bonds, debentures, mortgages, and any other evidence of 
        indebtedness.

Sec. 2002. Capital of the Postal Service

    (a) * * *
    (b) The capital of the Postal Service at any time shall 
consist of its assets, including the balance in the [Fund,] 
Fund and the balance in the Competitive Products Fund, less its 
liabilities.

           *       *       *       *       *       *       *


Sec. 2003. The Postal Service Fund

    (a) There is established in the Treasury of the United 
States a revolving fund to be called the Postal Service Fund 
which shall be available to the Postal Service without fiscal-
year limitation to carry out the purposes, functions, and 
powers authorized by this [title.] title (other than any of the 
purposes, functions, or powers for which the Competitive 
Products Fund is available).
    (b) [There] Except as otherwise provided in section 2011, 
there shall be deposited in the Fund, subject to withdrawal by 
check by the Postal Service--
            (1) * * *

           *       *       *       *       *       *       *

            (7) amounts (including proceeds from the sale of 
        forfeited items) from any civil forfeiture conducted by 
        the Postal Service; [and]
            (8) any transfers from the Secretary of the 
        Treasury from the Department of the Treasury Forfeiture 
        Fund which shall be available to the Postmaster General 
        only for Federal law enforcement related purposes[.]; 
        and
            (9) any amounts collected under section 3018.
    [(c) If] (c)(1) Except as provided in paragraph (2), if the 
Postal Service determines that the moneys of the Fund are in 
excess of current needs, it may request the investment of such 
amounts as it deems 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 it deems 
appropriate.
    (2)(A) Nothing in this section shall be considered to 
authorize any investment in any obligations or securities of a 
commercial entity.
    (B) For purposes of this paragraph, the term ``commercial 
entity'' means any corporation, company, association, 
partnership, joint stock company, firm, society, or other 
similar entity, as further defined under regulations prescribed 
by the Postal Regulatory Commission.

           *       *       *       *       *       *       *

    (e)(1) [The Fund shall be available for the payment of all 
expenses incurred by the Postal Service in carrying out its 
functions as provided by law and, subject to the provisions of 
section 3604 of this title, all of the expenses of the Postal 
Rate Commission.] The Fund shall be available for the payment 
of (A) all expenses incurred by the Postal Service in carrying 
out its functions as provided by law, subject to the same 
limitation as set forth in the parenthetical matter under 
subsection (a); (B) all expenses of the Postal Regulatory 
Commission, subject to the availability of amounts appropriated 
pursuant to section 504(d); and (C) all expenses of the Office 
of Inspector General, subject to the availability of amounts 
appropriated pursuant to section 8J(e) of the Inspector General 
Act of 1978. The Postmaster General shall transfer from the 
Fund to the Secretary of the Treasury for deposit in the 
Department of the Treasury Forfeiture Fund amounts appropriate 
to reflect the degree of participation of Department of the 
Treasury law enforcement organizations (described in section 
9703(p) of title 31) in the law enforcement effort resulting in 
the forfeiture pursuant to laws enforced or administered by the 
Postal Service. Neither the Fund nor any of the funds credited 
to it shall be subject to apportionment under the provisions of 
subchapter II of chapter 15 of title 31.

           *       *       *       *       *       *       *


Sec. 2005. Obligations

    (a)(1) The Postal Service is authorized to borrow money and 
to issue and sell such obligations as it determines necessary 
to carry out the purposes of this [title.] title, other than 
any of the purposes for which the corresponding authority is 
available to the Postal Service under section 2011. The 
aggregate amount of [any such obligations] obligations issued 
by the Postal Service which may be outstanding at any one time 
shall not exceed the maximum amount then allowable under 
paragraph (2) of this subsection. [In any one fiscal year the 
net increase in the amount of obligations outstanding issued 
for the purpose of capital improvements shall not exceed 
$2,000,000,000, and the net increase in the amount of 
obligations outstanding issued for the purpose of defraying 
operating expenses of the Postal Service shall not exceed 
$1,000,000,000.] In any one fiscal year, the net increase in 
the amount of obligations outstanding issued for the purpose of 
capital improvements and the net increase in the amount of 
obligations outstanding issued for the purpose of defraying 
operating expenses of the Postal Service shall not exceed a 
combined total of $3,000,000,000.

           *       *       *       *       *       *       *

    (3) For purposes of applying the respective limitations 
under this subsection, the aggregate amount of obligations 
issued by the Postal Service which are outstanding as of any 
one time, and the net increase in the amount of obligations 
outstanding issued by the Postal Service for the purpose of 
capital improvements or for the purpose of defraying operating 
expenses of the Postal Service in any fiscal year, shall be 
determined by aggregating the relevant obligations issued by 
the Postal Service under this section with the relevant 
obligations issued by the Postal Service under section 2011.
    (b)(1) The Postal Service may pledge the assets of the 
Postal Service and pledge and use its revenues and receipts for 
the payment of the principal of or interest on [such 
obligations,] obligations issued by the Postal Service under 
this section, for the purchase or redemption thereof, and for 
other purposes incidental thereto, including creation of 
reserve, sinking, and other funds which may be similarly 
pledged and used, to such extent and in such manner as it deems 
necessary or desirable. The Postal Service is authorized to 
enter into binding covenants with the holders of such 
obligations, and with the trustee, if any, under any agreement 
entered into in connection with the issuance thereof with 
respect to the establishment of reserve, sinking, and other 
funds, application and use of revenues and receipts of the 
Postal Service, stipulations concerning the subsequent issuance 
of obligations or the execution of leases or lease purchases 
relating to properties of the Postal Service and such other 
matters as the Postal Service deems necessary or desirable to 
enhance the marketability of such obligations.
    (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. 2006. Relationship between the Treasury and the Postal Service

    (a) * * *
    (b) Subject to the conditions of subsection (a) of this 
section, the Postal Service may require the Secretary of the 
Treasury to purchase obligations of the Postal Service in such 
amounts as will not cause the holding by the Secretary of the 
Treasury resulting from such required purchases to exceed 
$2,000,000,000 at any one time. This subsection shall not be 
construed as limiting the authority of the Secretary to 
purchase obligations of the Postal Service in excess of such 
amount. Nothing in this chapter shall be considered to permit 
or require the Secretary of the Treasury to purchase any 
obligations of the Postal Service other than those issued under 
section 2005.
    (c) Notwithstanding section 2005(d)(5) of this title, 
obligations issued by the Postal Service under section 2005 
shall be obligations of the Government of the United States, 
and payment of principal and interest thereon shall be fully 
guaranteed by the Government of the United States, such 
guaranty being expressed on the face thereof, if and to the 
extent that--
            (1) * * *

           *       *       *       *       *       *       *


Sec. 2008. Audit and expenditures

    (a) * * *

           *       *       *       *       *       *       *

    [(d) Nothing] (d)(1) Except as provided in paragraph (2), 
nothing in this section shall be construed as denying to the 
Postal Service the power to obtain audits of the accounts of 
the Postal Service and reports concerning its financial 
condition and operations by certified public accounting firms. 
Such audits and reports shall be in addition to those required 
by this section.
    (2) An audit or report under paragraph (1) may not be 
obtained without the prior written approval of the Inspector 
General.
    [(e) At least once each year beginning with the fiscal year 
commencing after June 30, 1971, the Postal Service shall obtain 
a certification from an independent, certified public 
accounting firm of the accuracy of any financial statements of 
the Postal Service used in determining and establishing postal 
rates.]
    (e)(1) At least once each year beginning with the fiscal 
year commencing after the date of the enactment of the Postal 
Accountability and Enhancement Act, the financial statements of 
the Postal Service (including those used in determining and 
establishing postal rates) shall be audited by the Inspector 
General or by an independent external auditor selected by the 
Inspector General.
    (2) Audits under this section shall be conducted in 
accordance with applicable generally accepted government 
auditing standards.
    (3) Upon completion of the audit required by this 
subsection, the person who audits the statement shall submit a 
report on the audit to the Postmaster General.

Sec. 2009. Annual budget

    The Postal Service shall cause to be prepared annually a 
budget program which shall be submitted to the Office of 
Management and Budget, under such rules and regulations as the 
President may establish as to the date of submission, the form 
and content, the classifications of data, and the manner in 
which such budget program shall be prepared and presented. The 
budget program shall be a business-type budget, or plan of 
operations, with due allowance given to the need for 
flexibility, including provision for emergencies and 
contingencies, in order that the Postal Service may properly 
carry out its activities as authorized by law. The budget 
program shall contain estimates of the financial condition and 
operations of the Postal Service for the current and ensuing 
fiscal years and the actual condition and results of operation 
for the last completed fiscal year. Such budget program shall 
include a statement of financial condition, a statement of 
income and expense, an analysis of surplus or deficit, a 
statement of sources and application of funds, and such other 
supplementary statements and information as are necessary or 
desirable to make known the financial condition and operations 
of the Postal Service. Such statements shall include estimates 
of operations by major types of activities, together with 
estimates of administrative expenses and estimates of 
borrowings. [The budget program shall also include separate 
statements of the amounts which the Postal Service requests to 
be appropriated under subsections (b) and (c) of section 2401 
of this title.] The budget program shall also include separate 
statements of the amounts which (1) the Postal Service requests 
to be appropriated under subsections (b) and (c) of section 
2401, (2) the Office of Inspector General of the United States 
Postal Service requests to be appropriated, out of the Postal 
Service Fund, under section 8J(e) of the Inspector General Act 
of 1978, and (3) the Postal Regulatory Commission requests to 
be appropriated, out of the Postal Service Fund, under section 
504(d) of this title. The President shall include these 
amounts, with his recommendations but without revision, in the 
budget transmitted to Congress under section 1105 of title 31.

           *       *       *       *       *       *       *


Sec. 2011. Provisions relating to competitive products

    (a) There is established in the Treasury of the United 
States a revolving fund, to be called the Postal Service 
Competitive Products Fund, which shall be available to the 
Postal Service without fiscal year limitation for the payment 
of--
            (1) costs attributable to competitive products; and
            (2) all other costs incurred by the Postal Service, 
        to the extent allocable to competitive products.
For purposes of this subsection, the term ``costs 
attributable'' has the meaning given such term by section 3631.
    (b) There shall be deposited in the Competitive Products 
Fund, subject to withdrawal by the Postal Service--
            (1) revenues from competitive products;
            (2) amounts received from obligations issued by the 
        Postal Service under subsection (e);
            (3) interest and dividends earned on investments of 
        the Competitive Products Fund; and
            (4) any other receipts of the Postal Service 
        (including from the sale of assets), to the extent 
        allocable to competitive products.
    (c) If the Postal Service determines that the moneys of the 
Competitive Products Fund are in excess of current needs, it 
may invest such amounts as it considers appropriate in--
            (1) obligations of, or obligations guaranteed by, 
        the Government of the United States; and
            (2) in accordance with regulations which the 
        Secretary of the Treasury shall prescribe (by not later 
        than 18 months after the date of the enactment of the 
        Postal Accountability and Enhancement Act), such other 
        obligations or securities as it deems appropriate.
    (d) The Postal Service may, in its sole discretion, provide 
that moneys of the Competitive Products Fund be deposited in a 
Federal Reserve bank or a depository for public funds.
    (e)(1) Subject to the limitations specified in section 
2005(a), the Postal Service is authorized to borrow money and 
to issue and sell such obligations as it determines necessary 
to provide for competitive products and deposit such amounts in 
the Competitive Products Fund, except that the Postal Service 
may pledge only assets related to the provision of competitive 
products (as determined under subsection (h) or, for purposes 
of any period before accounting practices and principles under 
subsection (h) have been established and applied, the best 
information available from the Postal Service, including the 
audited statements required by section 2008(e)), and the 
revenues and receipts from such products, for the payment of 
the principal of or interest on such obligations, for the 
purchase or redemption thereof, and for other purposes 
incidental thereto, including creation of reserve, sinking, and 
other funds which may be similarly pledged and used, to such 
extent and in such manner as it deems necessary or desirable.
    (2) The Postal Service may enter into binding covenants 
with the holders of such obligations, and with the trustee, if 
any, under any agreement entered into in connection with the 
issuance thereof with respect to--
            (A) the establishment of reserve, sinking, and 
        other funds;
            (B) application and use of revenues and receipts of 
        the Competitive Products Fund;
            (C) stipulations concerning the subsequent issuance 
        of obligations or the execution of leases or lease 
        purchases relating to properties of the Postal Service; 
        and
            (D) such other matters as the Postal Service 
        considers necessary or desirable to enhance the 
        marketability of such obligations.
    (3) Obligations issued by the Postal Service under this 
subsection--
            (A) may not be purchased by the Secretary of the 
        Treasury;
            (B) shall not be exempt either as to principal or 
        interest from any taxation now or hereafter imposed by 
        any State or local taxing authority;
            (C) shall not be obligations of, nor shall payment 
        of the principal thereof or interest thereon be 
        guaranteed by, the Government of the United States, and 
        the obligations shall so plainly state; and
            (D) notwithstanding the provisions of the Federal 
        Financing Bank Act of 1973 or any other provision of 
        law (except as specifically provided by reference to 
        this subparagraph in a law enacted after this 
        subparagraph takes effect), shall not be eligible for 
        purchase by, commitment to purchase by, or sale or 
        issuance to, the Federal Financing Bank.
    (4)(A) This paragraph applies with respect to the period 
beginning on the date of the enactment of this paragraph and 
ending at the close of the 5-year period which begins on the 
date on which the Postal Service makes its submission under 
subsection (h)(1).
    (B) During the period described in subparagraph (A), 
nothing in subparagraph (A) or (D) of paragraph (3) or the last 
sentence of section 2006(b) shall, with respect to any 
obligations sought to be issued by the Postal Service under 
this subsection, be considered to affect such obligations' 
eligibility for purchase by, commitment to purchase by, or sale 
or issuance to, the Federal Financing Bank.
    (C) The Federal Financing Bank may elect to purchase such 
obligations under such terms, including rates of interest, as 
the Bank and the Postal Service may agree, but at a rate of 
yield no less than the prevailing yield on outstanding 
marketable securities of comparable maturity issued by entities 
with the same credit rating as the rating then most recently 
obtained by the Postal Service under subparagraph (D), as 
determined by the Bank.
    (D) In order to be eligible to borrow under this paragraph, 
the Postal Service shall first obtain a credit rating from a 
nationally recognized credit rating organization. Such rating--
            (i) shall be determined taking into account only 
        those assets and activities of the Postal Service which 
        are described in section 3634(a)(2) (relating to the 
        Postal Service's assumed taxable income from 
        competitive products); and
            (ii) may, before final rules of the Postal 
        Regulatory Commission under subsection (h) are issued 
        (or deemed to have been issued), be based on the best 
        information available from the Postal Service, 
        including the audited statements required by section 
        2008(e).
    (f) The receipts and disbursements of the Competitive 
Products Fund shall be accorded the same budgetary treatment as 
is accorded to receipts and disbursements of the Postal Service 
Fund under section 2009a.
    (g) A judgment against the Postal Service or the Government 
of the United States (or settlement of a claim) shall, to the 
extent that it arises out of activities of the Postal Service 
in the provision of competitive products, be paid out of the 
Competitive Products Fund.
    (h)(1) The Secretary of the Treasury, in consultation with 
the Postal Service and an independent, certified public 
accounting firm and such other advisors as the Secretary 
considers appropriate, shall develop recommendations 
regarding--
            (A) the accounting practices and principles that 
        should be followed by the Postal Service with the 
        objectives of (i) identifying and valuing the assets 
        and liabilities of the Postal Service associated with 
        providing, and the capital and operating costs incurred 
        by the Postal Service in providing, competitive 
        products, and (ii) preventing the subsidization of such 
        products by market-dominant products; and
            (B) the substantive and procedural rules that 
        should be followed in determining the Postal Service's 
        assumed Federal income tax on competitive products 
        income for any year (within the meaning of section 
        3634).
Such recommendations shall be submitted to the Postal 
Regulatory Commission no earlier than 6 months, and no later 
than 12 months, after the effective date of this section.
    (2)(A) Upon receiving the recommendations of the Secretary 
of the Treasury under paragraph (1), the Commission shall give 
interested parties, including the Postal Service, users of the 
mails, and an officer of the Commission who shall be required 
to represent the interests of the general public, an 
opportunity to present their views on those recommendations 
through submission of written data, views, or arguments with or 
without opportunity for oral presentation, or in such other 
manner as the Commission considers appropriate.
    (B) After due consideration of the views and other 
information received under subparagraph (A), the Commission 
shall by rule--
            (i) provide for the establishment and application 
        of the accounting practices and principles which shall 
        be followed by the Postal Service;
            (ii) provide for the establishment and application 
        of the substantive and procedural rules described in 
        paragraph (1)(B); and
            (iii) provide for the submission by the Postal 
        Service to the Postal Regulatory Commission of annual 
        and other periodic reports setting forth such 
        information as the Commission may require.
Final rules under this subparagraph shall be issued not later 
than 12 months after the date on which the Secretary of the 
Treasury makes his submission to the Commission under paragraph 
(1) (or by such later date as the Commission and the Postal 
Service may agree to). The Commission is authorized to 
promulgate regulations revising such rules.
    (C) Reports described in subparagraph (B)(iii) shall be 
submitted at such time and in such form, and shall include such 
information, as the Commission by rule requires. The Commission 
may, on its own motion or on request of an interested party, 
initiate proceedings (to be conducted in accordance with such 
rules as the Commission shall prescribe) to improve the 
quality, accuracy, or completeness of Postal Service data under 
such subparagraph whenever it shall appear that--
            (i) the quality of the information furnished in 
        those reports has become significantly inaccurate or 
        can be significantly improved; or
            (ii) such revisions are, in the judgment of the 
        Commission, otherwise necessitated by the public 
        interest.
    (D) A copy of each report described in subparagraph 
(B)(iii) shall also be transmitted by the Postal Service to the 
Secretary of the Treasury and the Inspector General of the 
United States Postal Service.
    (i) The Postal Service shall render an annual report to the 
Secretary of the Treasury concerning the operation of the 
Competitive Products Fund, in which it shall address such 
matters as risk limitations, reserve balances, allocation or 
distribution of moneys, liquidity requirements, and measures to 
safeguard against losses. A copy of its then most recent report 
under this subsection shall be included with any other 
submission that it is required to make to the Postal Regulatory 
Commission under section 3652(g).

           *       *       *       *       *       *       *


CHAPTER 24--APPROPRIATIONS AND ANNUAL REPORT

           *       *       *       *       *       *       *


Sec. 2401. Appropriations

    (a) * * *

           *       *       *       *       *       *       *

    (d) As reimbursement to the Postal Service for losses which 
it incurred as a result of insufficient amounts appropriated 
under section 2401(c) for fiscal years 1991 through 1993, and 
to compensate for the additional revenues it is estimated the 
Postal Service would have received under the provisions of 
section 3626(a) (as last in effect before enactment of the 
Postal Accountability and Enhancement Act), for the period 
beginning on October 1, 1993, and ending on September 30, 1998, 
if the fraction specified in subclause (VI) of section 
3626(a)(3)(B)(ii) (as last in effect before enactment of the 
Postal Accountability and Enhancement Act) were applied with 
respect to such period (instead of the respective fractions 
specified in subclauses (I) through (V) thereof), there are 
authorized to be appropriated to the Postal Service $29,000,000 
for each of fiscal years 1994 through 2035.
    (e) The Postal Service shall present to the Committee on 
Governmental Affairs of the Senate and the [Committee on Post 
Office and Civil Service] Committee on Government Reform of the 
House of Representatives and the Committees on Appropriations 
of the Senate and the House of Representatives, at the same 
time it submits its annual budget under section 2009 of this 
title, sufficient copies of the budget of the Postal Service 
for the fiscal year for which funds are requested to be 
appropriated, and a comprehensive statement relating to the 
following matters:
            (1) * * *

           *       *       *       *       *       *       *

[Not later than March 15 of each year,] Each year, the Postal 
Service shall appear before the Committee on Governmental 
Affairs of the Senate and the [Committee on Post Office and 
Civil Service] Committee on Government Reform of the House of 
Representatives to submit information which any such committee 
considers necessary to determine the amount of funds to be 
appropriated for the operation of the Postal Service, and to 
present testimony and respond to questions with respect to such 
budget and statement. Each such committee shall take such 
action as it considers appropriate and shall advise the Postal 
Service of such action.

           *       *       *       *       *       *       *


Sec. 2402. Annual report

    The Postmaster General shall render an annual report to the 
Board concerning the operations of the Postal Service under 
this title. Each report under this section shall include a copy 
of the report most recently received by the Postmaster General 
under section 2008(e)(3). Upon approval thereof, or after 
making such changes as it considers appropriate, the Board 
shall transmit such reports to the President and the Congress.

           *       *       *       *       *       *       *


CHAPTER 28--STRATEGIC PLANNING AND PERFORMANCE MANAGEMENT

           *       *       *       *       *       *       *


Sec. 2803. Performance plans

    (a) The Postal Service shall prepare an annual performance 
plan covering each program activity set forth in the Postal 
Service budget, which shall be included in the comprehensive 
statement presented under section [2401(g)] 2401(e) of this 
title. Such plan shall--
            (1) * * *

           *       *       *       *       *       *       *


Sec. 2804. Program performance reports

    (a) The Postal Service shall prepare a report on program 
performance for each fiscal year, which shall be included in 
the annual comprehensive statement presented under section 
[2401(g)] 2401(e) of this title.

           *       *       *       *       *       *       *


PART IV--MAIL MATTER

           *       *       *       *       *       *       *


                     CHAPTER 30--NONMAILABLE MATTER

Sec.
3001. Nonmailable matter.
     * * * * * * *
3018. Hazardous material.

Sec. 3001. Nonmailable matter

    (a) * * *

           *       *       *       *       *       *       *

    (o)(1) Except as otherwise authorized by law or regulations 
of the Postal Service, hazardous material is nonmailable.
    (2) In this subsection, the term ``hazardous material'' 
means a substance or material designated by the Secretary of 
Transportation under section 5103(a) of title 49.
    [(n)] (o) The district courts, together with the District 
Court of the Virgin Islands and the District Court of Guam, 
shall have jurisdiction, upon cause shown, to enjoin violations 
of section 1716 of title 18.

           *       *       *       *       *       *       *


Sec. 3005. False representations; lotteries

    (a) Upon evidence satisfactory to the Postal Service that 
any person is engaged in conducting a scheme or device for 
obtaining money or property through the mail by means of false 
representations, including the mailing of matter which is 
nonmailable [under 3001(d),] under section 3001(d), (h), (i), 
(j), or (k) of this title, or is engaged in conducting a 
lottery, gift enterprise, or scheme for the distribution of 
money or of real or personal property, by lottery, chance, or 
drawing of any kind, the Postal Service may issue an order 
which--
            (1) * * *

           *       *       *       *       *       *       *

            (3) requires the person or his representative to 
        cease and desist from engaging in any such scheme, 
        device, lottery, or gift enterprise.
For purposes of the preceding sentence, the mailing of matter 
which is nonmailable [under such 3001(d),] under such section 
3001(d), (h), (i), (j), or (k) by any person shall constitute 
prima facie evidence that such person is engaged in conducting 
a scheme or device for obtaining money or property through the 
mail by false representations.

           *       *       *       *       *       *       *


Sec. 3013. Semiannual reports on investigative activities of the Postal 
                    Service

    The [Postmaster General] Chief Postal Inspector shall 
submit semiannual reports to the Inspector General summarizing 
the investigative activities of the Postal Service. One 
semiannual report shall be submitted for the reporting period 
beginning on October 1 and ending on March 31, and the other 
semiannual report shall be submitted for the reporting period 
beginning on April 1 and ending on September 30. Each such 
report shall be submitted within 1 month (or such shorter 
length of time as the Inspector General may specify) after the 
close of the reporting period involved and shall include with 
respect to such reporting period--
            (1) * * *

           *       *       *       *       *       *       *

The information in a report submitted under this section to the 
Inspector General with respect to a reporting period shall be 
included as part of the semiannual report prepared by the 
Inspector General under section 5 of the Inspector General Act 
of 1978 for the same reporting period. Nothing in this section 
shall be considered to permit or require that any report by the 
[Postmaster General] Chief Postal Inspector under this section 
include any information relating to activities of the Inspector 
General.

           *       *       *       *       *       *       *


Sec. 3018. Hazardous material

    (a) In General.--The Postal Service shall prescribe 
regulations for the safe transportation of hazardous material 
in the mail.
    (b) Prohibitions.--No person may--
            (1) mail or cause to be mailed hazardous material 
        that has been declared by statute or Postal Service 
        regulation to be nonmailable;
            (2) mail or cause to be mailed hazardous material 
        in violation of any statute or Postal Service 
        regulation restricting the time, place, or manner in 
        which hazardous material may be mailed; or
            (3) manufacture, distribute, or sell any container, 
        packaging kit, or similar device that--
                    (A) is represented, marked, certified, or 
                sold by such person for use in the mailing of 
                hazardous material; and
                    (B) fails to conform with any statute or 
                Postal Service regulation setting forth 
                standards for a container, packaging kit, or 
                similar device used for the mailing of 
                hazardous material.
    (c) Civil Penalty; Clean-Up Costs and Damages.--
            (1) In general.--A person who knowingly violates 
        this section or a regulation prescribed under this 
        section shall be liable for--
                    (A) a civil penalty of at least $250, but 
                not more than $100,000, for each violation;
                    (B) the costs of any clean-up associated 
                with each violation; and
                    (C) damages.
            (2) Knowing action.--A person acts knowingly for 
        purposes of paragraph (1) when--
                    (A) the person has actual knowledge of the 
                facts giving rise to the violation; or
                    (B) a reasonable person acting in the 
                circumstances and exercising reasonable care 
                would have had that knowledge.
            (3) Separate violations.--
                    (A) Violations over time.--A separate 
                violation under this subsection occurs for each 
                day hazardous material, mailed or caused to be 
                mailed in noncompliance with this section, is 
                in the mail.
                    (B) Separate items.--A separate violation 
                under this subsection occurs for each item 
                containing hazardous material that is mailed or 
                caused to be mailed in noncompliance with this 
                section.
    (d) Hearings.--The Postal Service may determine that a 
person has violated this section or a regulation prescribed 
under this section only after notice and an opportunity for a 
hearing. Proceedings under this section shall be conducted in 
accordance with section 3001(m).
    (e) Penalty Considerations.--In determining the amount of a 
civil penalty for a violation of this section, the Postal 
Service shall consider--
            (1) the nature, circumstances, extent, and gravity 
        of the violation;
            (2) with respect to the person who committed the 
        violation, the degree of culpability, any history of 
        prior violations, the ability to pay, and any effect on 
        the ability to continue in business;
            (3) the impact on Postal Service operations; and
            (4) any other matters that justice requires.
    (f) Civil Actions To Collect.--
            (1) In general.--In accordance with section 409(d), 
        a civil action may be commenced in an appropriate 
        district court of the United States to collect a civil 
        penalty, clean-up costs, and damages assessed under 
        subsection (c).
            (2) Compromise.--The Postal Service may compromise 
        the amount of a civil penalty, clean-up costs, and 
        damages assessed under subsection (c) before commencing 
        a civil action with respect to such civil penalty, 
        clean-up costs, and damages under paragraph (1).
    (g) Civil Judicial Penalties.--
            (1) In general.--At the request of the Postal 
        Service, the Attorney General may bring a civil action 
        in an appropriate district court of the United States 
        to enforce this section or a regulation prescribed 
        under this section.
            (2) Relief.--The court in a civil action under 
        paragraph (1) may award appropriate relief, including a 
        temporary or permanent injunction, civil penalties as 
        determined in accordance with this section, or punitive 
        damages.
            (3) Construction.--A civil action under this 
        subsection shall be in lieu of civil penalties for the 
        same violation under subsection (c)(1)(A).
    (h) Deposit of Amounts Collected.--
            (1) Postal Service Fund.--Except as provided under 
        paragraph (2), amounts collected under subsection 
        (c)(1)(B) and (C) shall be deposited into the Postal 
        Service Fund under section 2003.
            (2) Treasury.--Amounts collected under subsection 
        (c)(1)(A) and any punitive damages collected under 
        subsection (c)(1)(C) shall be deposited into the 
        Treasury of the United States.

CHAPTER 32--PENALTY AND FRANKED MAIL

           *       *       *       *       *       *       *


Sec. 3210. Franked mail transmitted by the Vice President, Members of 
                    Congress, and congressional officials

    (a)(1) * * *

           *       *       *       *       *       *       *

    (6)(A) * * *

           *       *       *       *       *       *       *

    (C) No Member of the Senate may mail any mass mailing as 
franked mail if such mass mailing [is mailed fewer] is 
postmarked fewer than 60 days immediately before the date of 
any primary election or general election (whether regular, 
special, or runoff) for any national, State or local office in 
which such Member is a candidate for election.

           *       *       *       *       *       *       *


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

                  [SUBCHAPTER I--POSTAL RATE COMMISSION

[Sec.
[3601. Establishment.
[3602. Terms of office.
[3603. Rules; regulations; procedures.
[3604. Administration.

           [SUBCHAPTER II--PERMANENT RATES AND CLASSES OF MAIL

[3621. Authority to fix rates and classes.
[3622. Rates and fees.
[3623. Mail classification.
[3624. Recommended decisions of Commission.
[3625. Action of the Governors.
[3626. Reduced rates.
[3627. Adjusting free rates.
[3628. Appellate review.
[3629. Reduced rates for voter registration purposes.

              [SUBCHAPTER III--TEMPORARY RATES AND CLASSES

[3641. Temporary changes in rates and classes.
[3642. Special authority relating to reduced-rate categories of mail.

             [SUBCHAPTER IV--POSTAL SERVICES AND COMPLAINTS

[3661. Postal services.
[3662. Rate and service complaints.
[3663. Annual report on international services.

                         [SUBCHAPTER V--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.

                 [SUBCHAPTER I--POSTAL RATE COMMISSION

[Sec. 3601. Establishment

    [(a) The Postal Rate Commission is an independent 
establishment of the executive branch of the Government of the 
United States. The 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 on the basis 
of their professional qualifications and may be removed by the 
President only for cause. Not more than 3 of the Commissioners 
may be adherents of the same political party.
    [(b) A Commissioner may continue to serve after the 
expiration of his term until his successor has qualified, 
except that a Commissioner may not so continue to serve for 
more than 1 year after the date upon which his term otherwise 
would expire under section 3602 of this title.
    [(c) One of the Commissioners shall be designated as 
Chairman by, and shall serve in the position of Chairman at the 
pleasure of, the President.
    [(d) The Commissioners shall by majority vote designate a 
Vice Chairman of the Commission. The Vice Chairman shall act as 
Chairman of the Commission in the absence of the Chairman.

[Sec. 3602. Terms of office

    [The Commissioners of the Postal Rate Commission shall 
serve for terms of 6 years except that--
            [(1) the terms of the Commissioners first taking 
        office shall expire as designated by the President at 
        the time of appointment, 1 at the end of 2 years, 2 at 
        the end of 4 years, and 2 at the end of 6 years, 
        following the appointment of the first of them; and
            [(2) any Commissioner appointed to fill a vacancy 
        occurring before the expiration of the term for which 
        his predecessor was appointed shall serve for the 
        remainder of such term.

          [SUBCHAPTER II--PERMANENT RATES AND CLASSES OF MAIL

[Sec. 3621. Authority to fix rates and classes

    [Except as otherwise provided, the Governors are authorized 
to establish reasonable and equitable classes of mail and 
reasonable and equitable rates of postage and fees for postal 
services in accordance with the provisions of this chapter. 
Postal rates and fees shall be reasonable and equitable and 
sufficient to enable the Postal Service under honest, 
efficient, and economical management to maintain and continue 
the development of postal services of the kind and quality 
adapted to the needs of the United States. Postal rates and 
fees shall provide sufficient revenues so that the total 
estimated income and appropriations to the Postal Service will 
equal as nearly as practicable total estimated costs of the 
Postal Service. For purposes of this section, ``total estimated 
costs'' shall include (without limitation) operating expenses, 
depreciation on capital facilities and equipment, debt service 
(including interest, amortization of debt discount and expense, 
and provision for sinking funds or other retirements of 
obligations to the extent that such provision exceeds 
applicable depreciation charges), and a reasonable provision 
for contingencies.

[Sec. 3622. Rates and fees

    [(a) From time to time the Postal Service shall request the 
Postal Rate Commission to submit a recommended decision on 
changes in a rate or rates of postage or in a fee or fees for 
postal services if the Postal Service determines that such 
changes would be in the public interest and in accordance with 
the policies of this title. The Postal Service may submit such 
suggestions for rate adjustments as it deems suitable.
    [(b) Upon receiving a request, the Commission shall make a 
recommended decision on the request for changes in rates or 
fees in each class of mail or type of service in accordance 
with the policies of this title and the following factors:
            [(1) the establishment and maintenance of a fair 
        and equitable schedule;
            [(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 that class or type 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 educational, cultural, scientific, and 
        informational value to the recipient of mail matter; 
        and
            [(9) such other factors as the Commission deems 
        appropriate.
    [(c) Regular rates for each class or subclass of mail that 
includes 1 or more special rate categories for mail under 
former section 4358 (d) or (e), 4452 (b) or (c), or 4554 (b) or 
(c) of this title shall be established by applying the policies 
of this title, including the factors of section 3622(b) of this 
title, to the costs attributable to the regular rate mail in 
each class or subclass combined with the mail in the 
corresponding special rate categories authorized by former 
section 4358 (d) or (e), 4452 (b) or (c), or 4554 (b) or (c) of 
this title.
    [(d) Compliance with any provision of the Occupational 
Safety and Health Act of 1970 (29 U.S.C. 651 et seq.) shall not 
be considered by the Commission in determining whether to 
increase rates and shall not otherwise affect the service of 
the Postal Service.

[Sec. 3623. Mail classification

    [(a) Within 2 years after the effective date of this 
subchapter, the Postal Service shall request the Postal Rate 
Commission to make a recommended decision on establishing a 
mail classification schedule in accordance with the provisions 
of this section.
    [(b) Following the establishment of the mail classification 
schedule requested under subsection (a) of this section, the 
Postal Service may from time to time request that the 
Commission submit, or the Commission may submit to the 
Governors on its own initiative, a recommended decision on 
changes in the mail classification schedule.
    [(c) The Commission shall make a recommended decision on 
establishing or changing the schedule in accordance with the 
policies of this title and the following factors:
            [(1) the establishment and maintenance of a fair 
        and equitable classification system for all mail;
            [(2) 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;
            [(3) the importance of providing classifications 
        with extremely high degrees of reliability and speed of 
        delivery;
            [(4) the importance of providing classifications 
        which do not require an extremely high degree of 
        reliability and speed of delivery;
            [(5) the desirability of special classifications 
        from the point of view of both the user and of the 
        Postal Service; and
            [(6) such other factors as the Commission may deem 
        appropriate.
    [(d) The Postal Service shall maintain one or more classes 
of mail for the transmission of letters sealed against 
inspection. The rate for each such class shall be uniform 
throughout the United States, its territories, and possessions. 
One such class shall provide for the most expeditious handling 
and transportation afforded mail matter by the Postal Service. 
No letter of such a class of domestic origin shall be opened 
except under authority of a search warrant authorized by law, 
or by an officer or employee of the Postal Service for the sole 
purpose of determining an address at which the letter can be 
delivered, or pursuant to the authorization of the addressee.

[Sec. 3624. Recommended decisions of Commission

    [(a) The Postal Rate Commission shall promptly consider a 
request made under section 3622 or 3623 of this title, except 
that the Commission shall not recommend a decision until the 
opportunity for a hearing on the record under sections 556 and 
557 of title 5 has been accorded to the Postal Service, users 
of the mails, and an officer of the Commission who shall be 
required to represent the interests of the general public.
    [(b) In order to conduct its proceedings with utmost 
expedition consistent with procedural fairness to the parties, 
the Commission may (without limitation) adopt rules which 
provide for--
            [(1) the advance submission of written direct 
        testimony;
            [(2) the conduct of prehearing conferences to 
        define issues, and for other purposes to insure orderly 
        and expeditious proceedings;
            [(3) discovery both from the Postal Service and the 
        parties to the proceedings;
            [(4) limitation of testimony; and
            [(5) the conduct of the entire proceedings off the 
        record with the consent of the parties.
    [(c)(1) Except as provided by paragraph (2) of this 
subsection, in any case in which the Postal Service makes a 
request under section 3622 of this title for a recommended 
decision by the Commission on changes in a rate or rates of 
postage or in a fee or fees for postal services the Commission 
shall transmit its recommended decision to the Governors under 
subsection (d) of this section no later than 10 months after 
receiving any such request from the Postal Service.
    [(2) In any case in which the Commission determines that 
the Postal Service has unreasonably delayed consideration of a 
request made by the Postal Service under section 3622 by 
failing to respond within a reasonable time to any lawful order 
of the Commission, the Commission may extend the 10-month 
period described in paragraph (1) of this subsection by one day 
for each day of such delay.
    [(d) The Commission shall transmit its recommended decision 
in a rate, fee, or classification matter to the Governors. The 
recommended decision shall include a statement specifically 
responsive to the criteria established under section 3622 or 
3623, as the case may be.

[Sec. 3625. Action of the Governors

    [(a) Upon receiving a recommended decision from the Postal 
Rate Commission, the Governors may approve, allow under 
protest, reject, or modify that decision in accordance with the 
provisions of this section.
    [(b) The Governors may approve the recommended decision and 
order the decision placed in effect.
    [(c) The Governors may, under protest, allow a recommended 
decision of the Commission to take effect and (1) seek judicial 
review thereof under section 3628 of this title, or (2) return 
the recommended decision to the Commission for reconsideration 
and a further recommended decision, which shall be acted upon 
under this section and subject to review in accordance with 
section 3628 of this title.
    [(d) The Governors may reject the recommended decision of 
the Commission and the Postal Service may resubmit its request 
to the Commission for reconsideration. Upon resubmission, the 
request shall be reconsidered, and a further recommended 
decision of the Commission shall be acted upon under this 
section and subject to review in accordance with section 3628 
of this title. However, with the unanimous written concurrence 
of all of the Governors then holding office, the Governors may 
modify any such further recommended decision of the Commission 
under this subsection if the Governors expressly find that (1) 
such modification is in accord with the record and the policies 
of this chapter, and (2) the rates recommended by the 
Commission are not adequate to provide sufficient total 
revenues so that total estimated income and appropriations will 
equal as nearly as practicable estimated total costs.
    [(e) The decision of the Governors to approve, allow under 
protest, reject, or modify a recommended decision of the 
Commission shall be in writing and shall include an estimate of 
anticipated revenue and a statement of explanation and 
justification. The decision, the record of the Commission's 
hearings, and the Commission's recommended decision shall be 
made generally available at the time the decision is issued and 
shall be printed and made available for sale by the Public 
Printer within 10 days following the day the decision is 
issued.
    [(f) The Board shall determine the date on which the new 
rates, fees, the mail classification schedule, and changes in 
such schedule under this subchapter shall become effective.]

             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.
3687. Workshare discounts.

     SUBCHAPTER I--PROVISIONS RELATING TO MARKET-DOMINANT PRODUCTS

Sec. 3621. Applicability; definitions

    (a) Applicability.--This subchapter shall apply with 
respect to--
            (1)(A) single piece first-class letters (both 
        domestic and international);
            (B) single piece first-class cards (both domestic 
        and international); and
            (C) special services;
            (2) all first-class mail not included under 
        paragraph (1);
            (3) periodicals;
            (4) standard mail;
            (5) media mail;
            (6) library mail; and
            (7) bound printed matter,
subject to any changes the Postal Regulatory Commission may 
make under section 3642.
    (b) Rule of Construction.--Mail matter referred to in 
subsection (a) shall, for purposes of this subchapter, be 
considered to have the meaning given to such mail matter under 
the mail classification schedule.

Sec. 3622. Modern rate regulation

    (a) Authority Generally.--The Postal Regulatory Commission 
shall, within 24 months after the date of the enactment of this 
section, by regulation establish (and may from time to time 
thereafter by regulation revise) a modern system for regulating 
rates and classes for market-dominant products.
    (b) Objectives.--Such system shall be designed to achieve 
the following objectives:
            (1) To maximize incentives to reduce costs and 
        increase efficiency.
            (2) To create predictability and stability in 
        rates.
            (3) To maintain high quality service standards.
            (4) To allow the Postal Service pricing 
        flexibility.
            (5) To assure adequate revenues, including retained 
        earnings, to maintain financial stability.
            (6) To reduce the administrative burden of the 
        ratemaking process.
    (c) Factors.--In establishing or revising such system, the 
Postal Regulatory Commission shall take into account--
            (1) the establishment and maintenance of a fair and 
        equitable schedule for rates and classification system;
            (2) the value of the mail service actually provided 
        each class or type of mail service to both the sender 
        and the recipient, including but not limited to the 
        collection, mode of transportation, and priority of 
        delivery;
            (3) the direct and indirect postal costs 
        attributable to each class or type of mail service plus 
        that portion of all other costs of the Postal Service 
        reasonably assignable to such class or type;
            (4) the effect of rate increases upon the general 
        public, business mail users, and enterprises in the 
        private sector of the economy engaged in the delivery 
        of mail matter other than letters;
            (5) the available alternative means of sending and 
        receiving letters and other mail matter at reasonable 
        costs;
            (6) the degree of preparation of mail for delivery 
        into the postal system performed by the mailer and its 
        effect upon reducing costs to the Postal Service;
            (7) simplicity of structure for the entire schedule 
        and simple, identifiable relationships between the 
        rates or fees charged the various classes of mail for 
        postal services;
            (8) the relative value to the people of the kinds 
        of mail matter entered into the postal system and the 
        desirability and justification for special 
        classifications and services of mail;
            (9) the importance of providing classifications 
        with extremely high degrees of reliability and speed of 
        delivery and of providing those that do not require 
        high degrees of reliability and speed of delivery;
            (10) the desirability of special classifications 
        from the point of view of both the user and of the 
        Postal Service;
            (11) the educational, cultural, scientific, and 
        informational value to the recipient of mail matter; 
        and
            (12) the policies of this title as well as such 
        other factors as the Commission deems appropriate.
    (d) Allowable Provisions.--The system for regulating rates 
and classes for market-dominant products may include one or 
more of the following:
            (1) Price caps, revenue targets, or other form of 
        incentive regulation.
            (2) Cost-of-service regulation.
            (3) Such other form of regulation as the Commission 
        considers appropriate to achieve, consistent with 
        subsection (c), the objectives of subsection (b).
    (e) Limitation.--In the administration of this section, the 
Commission shall not permit the average rate in any subclass of 
mail to increase at an annual rate greater than the comparable 
increase in the Consumer Price Index, unless it has, after 
notice and opportunity for a public hearing and comment, 
determined that such increase is reasonable and equitable and 
necessary to enable the Postal Service, under best practices of 
honest, efficient, and economical management, to maintain and 
continue the development of postal services of the kind and 
quality adapted to the needs of the United States.
    (f) Transition Rule.--Until regulations under this section 
first take effect, rates and classes for market-dominant 
products shall remain subject to modification in accordance 
with the provisions of this chapter and section 407, as such 
provisions were last in effect before the date of the enactment 
of this section.

Sec. 3626. Reduced rates

    [(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 the applicable 
provisions of this chapter.
    [(2) For the purpose of this subsection--
            [(A) the term ``costs attributable'', as used with 
        respect to a class of mail or kind of mailer, means the 
        direct and indirect postal costs attributable to such 
        class of mail or kind of mailer (excluding any other 
        costs of the Postal Service);
            [(B) the term ``regular-rate category'' means any 
        class of mail or kind of mailer, other than a class or 
        kind referred to in paragraph (3)(A) or section 
        2401(c); and
            [(C) the term ``institutional-costs contribution'', 
        as used with respect to a class of mail or kind of 
        mailer, means that portion of the estimated revenues to 
        the Postal Service from such class of mail or kind of 
        mailer which remains after subtracting an amount equal 
        to the estimated costs attributable to such class of 
        mail or kind of mailer.
            [(3)(A) Except as provided in paragraph (4) or (5), 
        rates of postage for a class of mail or kind of mailer 
        under former section 4358 of this title shall be 
        established in a manner such that the estimated 
        revenues to be received by the Postal Service from such 
        class of mail or kind of mailer shall be equal to the 
        sum of--
                    [(i) the estimated costs attributable to 
                such class of mail or kind of mailer; and
                    [(ii) the product derived by multiplying 
                the estimated costs referred to in clause (i) 
                by the applicable percentage under subparagraph 
                (B).
    [(B) The applicable percentage for any class of mail or 
kind of mailer referred to in subparagraph (A) shall be the 
product derived by multiplying--
            [(i) the percentage which, for the most closely 
        corresponding regular-rate category, the institutional-
        costs contribution for such category represents 
        relative to the estimated costs attributable to such 
        category of mail, times
            [(ii)(I) one-twelfth, for fiscal year 1994;
            [(II) one-sixth, for fiscal year 1995;
            [(III) one-fourth, for fiscal year 1996;
            [(IV) one-third, for fiscal year 1997;
            [(V) five-twelfths, for fiscal year 1998; and
            [(VI) one-half, for any fiscal year after fiscal 
        year 1998.
    [(C) Temporary special authority to permit the timely 
implementation of the preceding provisions of this paragraph is 
provided under section 3642.
    [(D) For purposes of establishing rates of postage under 
this subchapter for any of the classes of mail or kinds of 
mailers referred to in subparagraph (A), subclauses (I) through 
(V) of subparagraph (B)(ii) shall be deemed amended by striking 
the fraction specified in each such subclause and inserting 
``one-half''.]
    (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).
            [(4)(A)] (3)(A) Except as specified in subparagraph 
        (B), rates of postage for a class of mail or kind of 
        mailer under former section 4358 (d) or (e) of this 
        title shall be established so that postage on each 
        mailing of such mail shall be as nearly as practicable 
        5 percent lower than the postage for a corresponding 
        regular-rate category mailing.

           *       *       *       *       *       *       *

    [(5)] (4) The rates for any advertising under former 
section 4358(f) of this title shall be equal to 75 percent of 
the rates for advertising contained in the most closely 
corresponding regular-rate category of mail.
            [(6)] (5) The rates for mail matter under former 
        sections 4452 (b) and (c) of this title shall be 
        established as follows:
                    (A) * * *

           *       *       *       *       *       *       *

            [(7)] (6) The rates for mail matter under former 
        sections 4554 (b) and (c) of this title shall be 
        established so that postage on each mailing of such 
        mail shall be as nearly as practicable 5 percent lower 
        than the postage for a corresponding regular-rate 
        mailing.

           *       *       *       *       *       *       *

    (g)(1) * * *

           *       *       *       *       *       *       *

    (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.

           *       *       *       *       *       *       *

    (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. 3627. Adjusting free and reduced rates]

Sec. 3627. Adjusting free rates

    If Congress fails to appropriate an amount authorized under 
section 2401(c) of this title for any class of mail sent free 
of postage under section 3217 or 3403-3406 the rate for that 
class may be adjusted in accordance with the provisions of this 
subchapter so that the increased revenues received from the 
users of such class will equal the amount for that class that 
the Congress was to appropriate.

[Sec. 3628. Appellate review

    [A decision of the Governors to approve, allow under 
protest, or modify the recommended decision of the Postal Rate 
Commission may be appealed to any court of appeals of the 
United States, within 15 days after its publication by the 
Public Printer, by an aggrieved party who appeared in the 
proceedings under section 3624(a) of this title. The court 
shall review the decision, in accordance with section 706 of 
title 5, and chapter 158 and section 2112 of title 28, except 
as otherwise provided in this section, on the basis of the 
record before the Commission and the Governors. The court may 
affirm the decision or order that the entire matter be returned 
for further consideration, but the court may not modify the 
decision. The court may not suspend the effectiveness of the 
changes, or otherwise prevent them from taking effect until 
final disposition of the suit by the court. No court shall have 
jurisdiction to review a decision made by the Commission or 
Governors under this chapter except as provided in this 
section.]

           *       *       *       *       *       *       *


       SUBCHAPTER II--PROVISIONS RELATING TO COMPETITIVE PRODUCTS

Sec. 3631. Applicability; definitions and updates

    (a) Applicability.--This subchapter shall apply with 
respect to--
            (1) priority mail;
            (2) expedited mail;
            (3) mailgrams;
            (4) international mail; and
            (5) parcel post,
subject to any changes the Postal Regulatory Commission may 
make under section 3642.
    (b) Definition.--For purposes of this subchapter, the term 
``costs attributable'', as used with respect to a product, 
means the direct and indirect postal costs attributable to such 
product.
    (c) Rule of Construction.--Mail matter referred to in 
subsection (a) shall, for purposes of this subchapter, be 
considered to have the meaning given to such mail matter under 
the mail classification schedule.

Sec. 3632. Action of the Governors

    (a) Authority to Establish Rates and Classes.--The 
Governors shall establish rates and classes for products in the 
competitive category of mail in accordance with the 
requirements of this subchapter and regulations promulgated 
under section 3633.
    (b) Procedures.--
            (1) In general.--Rates and classes shall be 
        established in writing, complete with a statement of 
        explanation and justification, and the date as of which 
        each such rate or class takes effect.
            (2) Rates or classes of general applicability.--In 
        the case of rates or classes of general applicability 
        in the Nation as a whole or in any substantial region 
        of the Nation, the Governors shall cause each rate and 
        class decision under this section and the record of the 
        Governors' proceedings in connection with such decision 
        to be published in the Federal Register at least 30 
        days before the effective date of any new rates or 
        classes.
            (3) Rates or classes not of general 
        applicability.--In the case of rates or classes not of 
        general applicability in the Nation as a whole or in 
        any substantial region of the Nation, the Governors 
        shall cause each rate and class decision under this 
        section and the record of the proceedings in connection 
        with such decision to be filed with the Postal 
        Regulatory Commission by such date before the effective 
        date of any new rates or classes as the Governors 
        consider appropriate, but in no case less than 15 days.
            (4) Criteria.--As part of the regulations required 
        under section 3633, the Postal Regulatory Commission 
        shall establish criteria for determining when a rate or 
        class established under this subchapter is or is not of 
        general applicability in the Nation as a whole or in 
        any substantial region of the Nation.
    (c) Transition Rule.--Until regulations under section 3633 
first take effect, rates and classes for competitive products 
shall remain subject to modification in accordance with the 
provisions of this chapter and section 407, as such provisions 
were as last in effect before the date of the enactment of this 
section.

Sec. 3633. Provisions applicable to rates for competitive products

    The Postal Regulatory Commission shall, within 18 months 
after the date of the enactment of this section, promulgate 
(and may from time to time thereafter revise) regulations--
            (1) to prohibit the subsidization of competitive 
        products by market-dominant products;
            (2) to ensure that each competitive product covers 
        its costs attributable; and
            (3) to ensure that all competitive products 
        collectively make a reasonable contribution to the 
        institutional costs of the Postal Service.

Sec. 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.

              [SUBCHAPTER III--TEMPORARY RATES AND CLASSES

[Sec. 3641. Temporary changes in rates and classes

    [(a) In any case in which the Postal Rate Commission fails 
to transmit a recommended decision on a change in rates of 
postage or in fees for postal services to the Governors in 
accordance with section 3624(c) of this title, the Postal 
Service may establish temporary changes in rates of postage and 
in fees for postal services in accordance with the proposed 
changes under consideration by the Commission. Such temporary 
changes may take effect upon such date as the Postal Service 
may determine, except that such temporary changes may take 
effect only after 10 days' notice in the Federal Register.
    [(b) Any temporary rate or fee established by the Postal 
Service under subsection (a) of this section shall be in 
accordance with the policies of this title and shall not exceed 
such amount as may be necessary for sufficient revenues to 
assure that the total estimated income, including 
appropriations, of the Postal Service shall, to the extent 
practicable, be equal to the total estimated costs of the 
Postal Service.
    [(c) Notwithstanding the provisions of subsection (b) of 
this section, the Postal Service may not establish any 
temporary rate for a class of mail or any temporary fee for a 
postal service which is more than the permanent rate or fee 
requested for such class or postal service by the Postal 
Service under section 3622 of this title.
    [(d) Any temporary change in rates of postage or in fees 
for postal services made by the Postal Service under this 
section shall remain in effect no longer than 150 days after 
the date on which the Commission transmits its recommended 
decision to the Governors under section 3624(d) of this title, 
unless such temporary change is terminated by the Governors 
before the expiration of such period.
    [(e) If the Postal Rate Commission does not transmit to the 
Governors within 90 days after the Postal Service has 
submitted, or within 30 days after the Postal Service has 
resubmitted, to the Commission a request for a recommended 
decision on a change in the mail classification schedule (after 
such schedule is established under section 3623 of this title), 
the Postal Service, upon 10 days' notice in the Federal 
Register, may place into effect temporary changes in the mail 
classification schedule in accordance with proposed changes 
under consideration by the Commission. Any temporary change 
shall be effective for a period ending not later than 30 days 
after the Commission has transmitted its recommended decision 
to the Governors.
    [(f) If, under section 3628 of this title, a court orders a 
matter returned to the Commission for further consideration, 
the Postal Service, with the consent of the Commission, may 
place into effect temporary changes in rates of postage, and 
fees for postal services, or in the mail classification 
schedule.

[Sec. 3642. Special authority relating to reduced-rate categories of 
                    mail

    [(a) In order to permit the timely implementation of 
section 3626(a)(3), the Postal Service may establish temporary 
rates of postage for any class of mail or kind of mailer 
referred to in section 3626(a)(3)(A).
    [(b) Any exercise of authority under this section shall be 
in conformance with the requirements of section 3626(a), 
subject to the following:
            [(1) All attributable costs and institutional-costs 
        contributions assumed shall be the same as those which 
        were assumed for purposes of the then most recent 
        proceedings under subchapter II pursuant to which rates 
        of postage for the class of mail or kind of mailer 
        involved were last adjusted.
            [(2) Any temporary rate established under this 
        section shall take effect upon such date as the Postal 
        Service may determine, except that--
                    [(A) such a rate may take effect only after 
                10 days' notice in the Federal Register; and
                    [(B) no such rate may take effect after 
                September 30, 1998.
            [(3) A temporary rate under this section may remain 
        in effect no longer than the last day of the fiscal 
        year in which it first takes effect.
            [(4) Authority under this section may not be 
        exercised in a manner that would result in more than 1 
        change taking effect under this section, during the 
        same fiscal year, in the rates of postage for a 
        particular class of mail or kind of mailer, except as 
        provided in paragraph (5).
            [(5) Nothing in paragraph (4) shall prevent an 
        adjustment under this section in rates for a class of 
        mail or kind of mailer with respect to which any rates 
        took effect under this section earlier in the same 
        fiscal year if--
                    [(A) the rates established for such class 
                of mail or kind of mailer by the earlier 
                adjustment are superseded by new rates 
                established under subchapter II; and
                    [(B) authority under this paragraph has not 
                previously been exercised with respect to such 
                class of mail or kind of mailer based on the 
                new rates referred to in subparagraph (A).
    [(c) The Postal Service may prescribe any regulations which 
may be necessary to carry out this section, including 
provisions governing the coordination of adjustments under this 
section with any other adjustments under this title.
    [(d) Notwithstanding any provision of section 3626(a)(3)(B) 
or subsection (a) of this section, any temporary rates 
established under this section for non-letter-shaped mail under 
former section 4452(b) or 4452(c) of this title shall not be 
lower than the rates in effect for such mail on September 30, 
1993.]

  SUBCHAPTER III--PROVISIONS RELATING TO EXPERIMENTAL AND NEW PRODUCTS

Sec. 3641. Market tests of experimental products

    (a) Authority.--
            (1) In general.--The Postal Service may conduct 
        market tests of experimental products in accordance 
        with this section.
            (2) Provisions waived.--A product shall not, while 
        it is being tested under this section, be subject to 
        the requirements of sections 3622, 3633, or 3642, or 
        regulations promulgated under those sections.
    (b) Conditions.--A product may not be tested under this 
section unless it satisfies each of the following:
            (1) Significantly different product.--The product 
        is, from the viewpoint of the mail users, significantly 
        different from all products offered by the Postal 
        Service within the 2-year period preceding the start of 
        the test.
            (2) Market disruption.--The introduction or 
        continued offering of the product will not create an 
        unfair or otherwise inappropriate competitive advantage 
        for the Postal Service or any mailer, particularly in 
        regard to small business concerns (as defined under 
        subsection (h)).
            (3) Correct categorization.--The Postal Service 
        identifies the product, for the purpose of a test under 
        this section, as either market dominant or competitive, 
        consistent with the criteria under section 3642(b)(1). 
        Costs and revenues attributable to a product identified 
        as competitive shall be included in any determination 
        under section 3633(3) (relating to provisions 
        applicable to competitive products collectively).
    (c) Notice.--
            (1) In general.--At least 30 days before initiating 
        a market test under this section, the Postal Service 
        shall file with the Postal Regulatory Commission and 
        publish in the Federal Register a notice--
                    (A) setting out the basis for the Postal 
                Service's determination that the market test is 
                covered by this section; and
                    (B) describing the nature and scope of the 
                market test.
            (2) Safeguards.--For a competitive experimental 
        product, the provisions of section 504(g) shall be 
        available with respect to any information required to 
        be filed under paragraph (1) to the same extent and in 
        the same manner as in the case of any matter described 
        in section 504(g)(1). Nothing in paragraph (1) shall be 
        considered to permit or require the publication of any 
        information as to which confidential treatment is 
        accorded under the preceding sentence (subject to the 
        same exception as set forth in section 504(g)(3)).
    (d) Duration.--
            (1) In general.--A market test of a product under 
        this section may be conducted over a period of not to 
        exceed 24 months.
            (2) Extension authority.--If necessary in order to 
        determine the feasibility or desirability of a product 
        being tested under this section, the Postal Regulatory 
        Commission may, upon written application of the Postal 
        Service (filed not later than 60 days before the date 
        as of which the testing of such product would otherwise 
        be scheduled to terminate under paragraph (1)), extend 
        the testing of such product for not to exceed an 
        additional 12 months.
    (e) Dollar-Amount Limitation.--
            (1) In general.--A product may be tested under this 
        section only if the total revenues that are 
        anticipated, or in fact received, by the Postal Service 
        from such product do not exceed $10,000,000 nationwide 
        in any year, subject to paragraph (2) and subsection 
        (g). In carrying out the preceding sentence, the Postal 
        Regulatory Commission may limit the amount of revenues 
        the Postal Service may obtain from any particular 
        geographic market as necessary to prevent market 
        disruption (as defined in subsection (b)(2)).
            (2) Exemption authority.--The Postal Regulatory 
        Commission may, upon written application of the Postal 
        Service, exempt the market test from the limit in 
        paragraph (1) if the total revenues that are 
        anticipated, or in fact received, by the Postal Service 
        from such product do not exceed $50,000,000 in any 
        year, subject to subsection (g). In reviewing an 
        application under this paragraph, the Postal Regulatory 
        Commission shall approve such application if it 
        determines that--
                    (A) the product is likely to benefit the 
                public and meet an expected demand;
                    (B) the product is likely to contribute to 
                the financial stability of the Postal Service; 
                and
                    (C) the product is not likely to result in 
                unfair or otherwise inappropriate competition.
    (f) Cancellation.--If the Postal Regulatory Commission at 
any time determines that a market test under this section 
fails, with respect to any particular product, to meet one or 
more of the requirements of this section, it may order the 
cancellation of the test involved or take such other action as 
it considers appropriate. A determination under this subsection 
shall be made in accordance with such procedures as the 
Commission shall by regulation prescribe.
    (g) Adjustment for Inflation.--For purposes of each year 
following the year in which occurs the deadline for the Postal 
Service's first report to the Postal Regulatory Commission 
under section 3652(a), each dollar amount contained in this 
section shall be adjusted by the change in the Consumer Price 
Index for such year (as determined under regulations of the 
Commission).
    (h) Definition of a Small Business Concern.--The criteria 
used in defining small business concerns or otherwise 
categorizing business concerns as small business concerns 
shall, for purposes of this section, be established by the 
Postal Regulatory Commission in conformance with the 
requirements of section 3 of the Small Business Act.
    (i) Effective Date.--Market tests under this subchapter may 
be conducted in any year beginning with the first year in which 
occurs the deadline for the Postal Service's first report to 
the Postal Regulatory Commission under section 3652(a).

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

    (a) In General.--Upon request of the Postal Service or 
users of the mails, or upon its own initiative, the Postal 
Regulatory Commission may change the list of market-dominant 
products under section 3621 and the list of competitive 
products under section 3631 by adding new products to the 
lists, removing products from the lists, or transferring 
products between the lists.
    (b) Criteria.--All determinations by the Postal Regulatory 
Commission under subsection (a) shall be made in accordance 
with the following criteria:
            (1) The market-dominant category of products shall 
        consist of each product in the sale of which the Postal 
        Service exercises sufficient market power that it can 
        effectively set the price of such product substantially 
        above costs, raise prices significantly, decrease 
        quality, or decrease output, without risk of losing 
        business to other firms offering similar products. The 
        competitive category of products shall consist of all 
        other products.
            (2) Exclusion of products covered by postal 
        monopoly.--A product covered by the postal monopoly 
        shall not be subject to transfer under this section 
        from the market-dominant category of mail. For purposes 
        of the preceding sentence, the term ``product covered 
        by the postal monopoly'' means any product the 
        conveyance or transmission of which is reserved to the 
        United States under section 1696 of title 18, subject 
        to the same exception as set forth in the last sentence 
        of section 409(e)(1).
            (3) Additional considerations.--In making any 
        decision under this section, due regard shall be given 
        to--
                    (A) the availability and nature of 
                enterprises in the private sector engaged in 
                the delivery of the product involved;
                    (B) the views of those who use the product 
                involved on the appropriateness of the proposed 
                action; and
                    (C) the likely impact of the proposed 
                action on small business concerns (within the 
                meaning of section 3641(h)).
    (c) Transfers of Subclasses and Other Subordinate Units 
Allowable.--Nothing in this title shall be considered to 
prevent transfers under this section from being made by reason 
of the fact that they would involve only some (but not all) of 
the subclasses or other subordinate units of the class of mail 
or type of postal service involved (without regard to 
satisfaction of minimum quantity requirements standing alone).
    (d) Notification and Publication Requirements.--
            (1) Notification requirement.--The Postal Service 
        shall, whenever it requests to add a product or 
        transfer a product to a different category, file with 
        the Postal Regulatory Commission and publish in the 
        Federal Register a notice setting out the basis for its 
        determination that the product satisfies the criteria 
        under subsection (b) and, in the case of a request to 
        add a product or transfer a product to the competitive 
        category of mail, that the product meets the 
        regulations promulgated by the Postal Regulatory 
        Commission pursuant to section 3633. The provisions of 
        section 504(g) shall be available with respect to any 
        information required to be filed.
            (2) Publication requirement.--The Postal Regulatory 
        Commission shall, whenever it changes the list of 
        products in the market-dominant or competitive category 
        of mail, prescribe new lists of products. The revised 
        lists shall indicate how and when any previous lists 
        (including the lists under sections 3621 and 3631) are 
        superseded, and shall be published in the Federal 
        Register.
    (e) Notification Requirement.--The Postal Regulatory 
Commission shall, whenever it reaches a conclusion that a 
product or products should be transferred between the list of 
market-dominant products under section 3621 and the list of 
competitive products under section 3631, immediately notify the 
appropriate committees of the Congress. No such transfer may 
take effect less than 12 months after such conclusion.
    (f) Prohibition.--Except as provided in section 3641, no 
product that involves the carriage of letters, printed matter, 
or mailable packages may be offered by the Postal Service 
unless it has been assigned to the market-dominant or 
competitive category of mail (as appropriate) either--
            (1) under this subchapter; or
            (2) by or under any other provision of law.

      SUBCHAPTER IV--REPORTING REQUIREMENTS AND RELATED PROVISIONS

Sec. 3651. Annual reports by the Commission

    (a) In General.--The Postal Regulatory Commission shall 
submit an annual report to the President and the Congress 
concerning the operations of the Commission under this title, 
including the extent to which regulations are achieving the 
objectives under sections 3622 and 3633, respectively.
    (b) Additional Information.--In addition to the information 
required under subsection (a), each report under this section 
shall also include, with respect to the period covered by such 
report, an estimate of the costs incurred by the Postal Service 
in providing--
            (1) postal services to areas of the Nation where, 
        in the judgment of the Postal Regulatory Commission, 
        the Postal Service either would not provide services at 
        all or would not provide such services in accordance 
        with the requirements of this title if the Postal 
        Service were not required to provide prompt, reliable, 
        and efficient services to patrons in all areas and all 
        communities, including as required under the first 
        sentence of section 101(b);
            (2) free or reduced rates for postal services as 
        required by this title; and
            (3) other public services or activities which, in 
        the judgment of the Postal Regulatory Commission, would 
        not otherwise have been provided by the Postal Service 
        but for the requirements of law.
The Commission shall detail the bases for its estimates and the 
statutory requirements giving rise to the costs identified in 
each report under this section.
    (c) Information From Postal Service.--The Postal Service 
shall provide the Postal Regulatory Commission with such 
information as may, in the judgment of the Commission, be 
necessary in order for the Commission to prepare its reports 
under this section.

Sec. 3652. Annual reports to the Commission

    (a) Costs, Revenues, and Rates.--Except as provided in 
subsection (c), the Postal Service shall, no later than 90 days 
after the end of each year, prepare and submit to the Postal 
Regulatory Commission a report (together with such nonpublic 
annex thereto as the Commission may require under subsection 
(e))--
            (1) which shall analyze costs, revenues, and rates, 
        using such methodologies as the Commission shall by 
        regulation prescribe, and in sufficient detail to 
        demonstrate that the rates in effect for all products 
        during such year complied with all applicable 
        requirements of this title; and
            (2) which shall, for each market-dominant product 
        provided in such year, provide--
                    (A) market information, including mail 
                volumes; and
                    (B) measures of the quality of service 
                afforded by the Postal Service in connection 
                with such product, including--
                            (i) the service standard applicable 
                        to such product;
                            (ii) the level of service 
                        (described in terms of speed of 
                        delivery and reliability) provided; and
                            (iii) the degree of customer 
                        satisfaction with the service provided.
Before submitting a report under this subsection (including any 
annex thereto 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.--
            (1) In general.--The Postal Service shall include, 
        in each report under subsection (a), the following 
        information with respect to each market-dominant 
        product for which a workshare discount was in effect 
        during the period covered by such report:
                    (A) The per-item cost avoided by the Postal 
                Service by virtue of such discount.
                    (B) The percentage of such per-item cost 
                avoided that the per-item workshare discount 
                represents.
                    (C) The per-item contribution made to 
                institutional costs.
            (2) Workshare discount defined.--For purposes of 
        this subsection, the term ``workshare discount'' refers 
        to presorting, barcoding, dropshipping, and other 
        similar discounts, as further defined under regulations 
        which the Postal Regulatory Commission shall prescribe.
    (c) Market Tests.--In carrying out subsections (a) and (b) 
with respect to experimental products offered through market 
tests under section 3641 in a year, the Postal Service--
            (1) may report summary data on the costs, revenues, 
        and quality of service by market test; and
            (2) shall report such data as the Postal Regulatory 
        Commission requires.
    (d) Supporting Matter.--The Postal Regulatory Commission 
shall have access, in accordance with such regulations as the 
Commission shall prescribe, to the working papers and any other 
supporting matter of the Postal Service and the Inspector 
General in connection with any information submitted under this 
section.
    (e) Content and Form of Reports.--
            (1) In general.--The Postal Regulatory Commission 
        shall, by regulation, prescribe the content and form of 
        the public reports (and any nonpublic annex and 
        supporting matter relating thereto) to be provided by 
        the Postal Service under this section. In carrying out 
        this subsection, the Commission shall give due 
        consideration to--
                    (A) providing the public with adequate 
                information to assess the lawfulness of rates 
                charged;
                    (B) avoiding unnecessary or unwarranted 
                administrative effort and expense on the part 
                of the Postal Service; and
                    (C) protecting the confidentiality of 
                commercially sensitive information.
            (2) Revised requirements.--The Commission may, on 
        its own motion or on request of an interested party, 
        initiate proceedings (to be conducted in accordance 
        with regulations that the Commission shall prescribe) 
        to improve the quality, accuracy, or completeness of 
        Postal Service data required by the Commission under 
        this subsection whenever it shall appear that--
                    (A) the attribution of costs or revenues to 
                products has become significantly inaccurate or 
                can be significantly improved;
                    (B) the quality of service data has become 
                significantly inaccurate or can be 
                significantly improved; or
                    (C) such revisions are, in the judgment of 
                the Commission, otherwise necessitated by the 
                public interest.
    (f) Confidential Information.--
            (1) In general.--If the Postal Service determines 
        that any document or portion of a document, or other 
        matter, which it provides to the Postal Regulatory 
        Commission in a nonpublic annex under this section or 
        pursuant to subsection (d) contains information which 
        is described in section 410(c) of this title, or exempt 
        from public disclosure under section 552(b) of title 5, 
        the Postal Service shall, at the time of providing such 
        matter to the Commission, notify the Commission of its 
        determination, in writing, and describe with 
        particularity the documents (or portions of documents) 
        or other matter for which confidentiality is sought and 
        the reasons therefor.
            (2) Treatment.--Any information or other matter 
        described in paragraph (1) to which the Commission 
        gains access under this section shall be subject to 
        paragraphs (2) and (3) of section 504(g) in the same 
        way as if the Commission had received notification with 
        respect to such matter under section 504(g)(1).
    (g) Other Reports.--The Postal Service shall submit to the 
Postal Regulatory Commission, together with any other 
submission that it is required to make under this section in a 
year, copies of its then most recent--
            (1) comprehensive statement under section 2401(e);
            (2) performance plan under section 2803; and
            (3) program performance reports under section 2804.

Sec. 3653. Annual determination of compliance

    (a) Opportunity for Public Comment.--After receiving the 
reports required under section 3652 for any year, the Postal 
Regulatory Commission shall promptly provide an opportunity for 
comment on such reports by users of the mails, affected 
parties, and an officer of the Commission who shall be required 
to represent the interests of the general public.
    (b) Determination of Compliance or Noncompliance.--Not 
later than 90 days after receiving the submissions required 
under section 3652 with respect to a year, the Postal 
Regulatory Commission shall make a written determination as 
to--
            (1) whether any rates or fees in effect during such 
        year (for products individually or collectively) were 
        not in compliance with applicable provisions of this 
        chapter (or regulations promulgated thereunder);
            (2) whether any performance goals established under 
        section 2803 or 2804 for such year were not met; and
            (3) whether any market-dominant product failed to 
        meet any service standard during such year.
If, with respect to a year, no instance of noncompliance is 
found under this subsection to have occurred in such year, the 
written determination shall be to that effect.
    (c) If Any Noncompliance Is Found.--If, for a year, a 
timely written determination of noncompliance is made under 
subsection (b), the Postal Regulatory Commission shall take 
appropriate action in accordance with subsections (c)-(e) of 
section 3662 (as if a complaint averring such noncompliance had 
been duly filed and found under such section to be justified).
    (d) Rebuttable Presumption.--A timely written determination 
described in the last sentence of subsection (b) shall, for 
purposes of any proceeding under section 3662, create a 
rebuttable presumption of compliance by the Postal Service 
(with regard to the matters described in paragraphs (1) through 
(3) of subsection (b)) during the year to which such 
determination relates.

            [SUBCHAPTER IV--POSTAL SERVICES AND COMPLAINTS]

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

           *       *       *       *       *       *       *


[Sec. 3662. Rate and service complaints

    [Interested parties who believe the Postal Service is 
charging rates which do not conform to the policies set out in 
this title or who believe that they are not receiving postal 
service in accordance with the policies of this title may lodge 
a complaint with the Postal Rate Commission in such form and in 
such manner as it may prescribe. The Commission may in its 
discretion hold hearings on such complaint. If the Commission, 
in a matter covered by subchapter II of this chapter, 
determines the complaint to be justified, it shall, after 
proceedings in conformity with section 3624 of this title, 
issue a recommended decision which shall be acted upon in 
accordance with the provisions of section 3625 of this title 
and subject to review in accordance with the provisions of 
section 3628 of this title. If a matter not covered by 
subchapter II of this chapter is involved, and the Commission 
after hearing finds the complaint to be justified, it shall 
render a public report thereon to the Postal Service which 
shall take such action as it deems appropriate.

[Sec. 3663. Annual report on international services

    [(a) Not later than July 1 of each year, the Postal Rate 
Commission shall transmit to each House of Congress a 
comprehensive report of the costs, revenues, and volumes 
accrued by the Postal Service in connection with mail matter 
conveyed between the United States and other countries for the 
previous fiscal year.
    [(b) Not later than March 15 of each year, the Postal 
Service shall provide to the Postal Rate Commission such data 
as the Commission may require to prepare the report required 
under subsection (a) of this section. Data shall be provided in 
sufficient detail to enable the Commission to analyze the 
costs, revenues, and volumes for each international mail 
product or service, under the methods determined appropriate by 
the Commission for the analysis of rates for domestic mail.]

Sec. 3662. Rate and service complaints

    (a) In General.--Interested persons (including an officer 
of the Postal Regulatory Commission representing the interests 
of the general public) who believe the Postal Service is not 
operating in conformance with the requirements of chapter 1, 4, 
or 6, or this chapter (or regulations promulgated under any of 
those chapters) may lodge a complaint with the Postal 
Regulatory Commission in such form and manner as the Commission 
may prescribe.
    (b) Prompt Response Required.--
            (1) In general.--The Postal Regulatory Commission 
        shall, within 90 days after receiving a complaint under 
        subsection (a), either--
                    (A) begin proceedings on such complaint; or
                    (B) issue an order dismissing the complaint 
                (together with a statement of the reasons 
                therefor).
            (2) Treatment of complaints not timely acted on.--
        For purposes of section 3663, any complaint under 
        subsection (a) on which the Commission fails to act in 
        the time and manner required by paragraph (1) shall be 
        treated in the same way as if it had been dismissed 
        pursuant to an order issued by the Commission on the 
        last day allowable for the issuance of such order under 
        paragraph (1).
    (c) Action Required If Complaint Found to Be Justified.--If 
the Postal Regulatory Commission finds the complaint to be 
justified, it shall order that the Postal Service take such 
action as the Commission considers appropriate in order to 
achieve compliance with the applicable requirements and to 
remedy the effects of any noncompliance (such as ordering 
unlawful rates to be adjusted to lawful levels, ordering the 
cancellation of market tests, ordering the Postal Service to 
discontinue providing loss-making products, or requiring the 
Postal Service to make up for revenue shortfalls in competitive 
products).
    (d) Suspension Authority.--The Postal Regulatory Commission 
may suspend implementation of rates or classifications under 
section 3632(b)(3) for a limited period of time pending 
expedited proceedings under this section. In evaluating whether 
circumstances warrant suspension, the Commission shall consider 
factors such as (1) whether there is a substantial likelihood 
that such rate or classification will violate the requirements 
of chapter 1, 4, or 6, or this chapter (or regulations 
promulgated under any of those chapters), (2) whether any 
persons would suffer substantial injury, loss, or damage absent 
a suspension, (3) whether the Postal Service or any other 
persons would suffer substantial injury, loss, or damage under 
a suspension, and (4) the public interest.
    (e) Authority to Order Fines in Cases of Deliberate 
Noncompliance.--In addition, in cases of deliberate 
noncompliance by the Postal Service with the requirements of 
this title, the Postal Regulatory Commission may order, based 
on the nature, circumstances, extent, and seriousness of the 
noncompliance, a fine (in the amount specified by the 
Commission in its order) for each incidence of noncompliance. 
Fines resulting from the provision of competitive products 
shall be paid out of the Competitive Products Fund established 
in section 2011. All receipts from fines imposed under this 
subsection shall be deposited in the general fund of the 
Treasury of the United States.

Sec. 3663. Appellate review

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

Sec. 3664. Enforcement of orders

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

                        [SUBCHAPTER V--GENERAL]

                         SUBCHAPTER VI--GENERAL

Sec. 3681. Reimbursement

    No mailer may be reimbursed for any amount paid under any 
rate or fee which, after such payment, is determined to have 
been unlawful after proceedings in accordance with the 
provisions of [section 3628] sections 3662 through 3664 of this 
title, or is superseded by a lower rate or fee established 
under subchapter II of this chapter.

[Sec. 3682. Size and weight limits

    [The Postal Service may establish size and weight 
limitations for mail matter in the same manner as prescribed 
for changes in mail classification under subchapter II of this 
chapter.]

Sec. 3682. Size and weight limits

    The Postal Service may establish size and weight 
limitations for mail matter in the market-dominant category of 
mail consistent with regulations the Postal Regulatory 
Commission may prescribe under section 3622. The Postal Service 
may establish size and weight limitations for mail matter in 
the competitive category of mail consistent with its authority 
under section 3632.

           *       *       *       *       *       *       *


Sec. 3684. Limitations

    Except as provided in section 3627 of this title, no 
provision of this chapter shall be construed to give authority 
to the Governors to make any change in any provision [of 
section 3682 or 3683 or chapter 30, 32, or 34 of this title.] 
of this title.

           *       *       *       *       *       *       *


Sec. 3686. Bonus authority

    (a) In General.--The Postal Service may establish one or 
more programs to provide bonuses or other rewards to officers 
and employees of the Postal Service to achieve the objectives 
of this chapter.
    (b) Waiver of Limitation on Compensation.--
            (1) In general.--Under any such program, the Postal 
        Service may award a bonus or other reward in excess of 
        the limitation set forth in the last sentence of 
        section 1003(a), if such program has been approved 
        under paragraph (2).
            (2) Approval process.--If the Postal Service wishes 
        to have the authority, under any program described in 
        subsection (a), to award bonuses or other rewards in 
        excess of the limitation referred to in paragraph (1)--
                    (A) the Postal Service shall make an 
                appropriate request to the Postal Regulatory 
                Commission, in such form and manner as the 
                Commission requires; and
                    (B) the Postal Regulatory Commission shall 
                approve any such request if it finds that the 
                program is likely to achieve the objectives of 
                this chapter.
            (3) Revocation authority.--If the Postal Regulatory 
        Commission finds that a program previously approved 
        under paragraph (2) is not achieving the objectives of 
        this chapter, the Commission may revoke or suspend the 
        authority of the Postal Service to continue such 
        program until such time as appropriate corrective 
        measures have, in the judgment of the Commission, been 
        taken.
    (c) Reporting Requirement Relating to Bonuses or Other 
Rewards.--Included in its comprehensive statement under section 
2401(e) for any period shall be--
            (1) the name of each person receiving a bonus or 
        other reward during such period which would not have 
        been allowable but for the provisions of subsection 
        (b);
            (2) the amount of the bonus or other reward; and
            (3) the amount by which the limitation referred to 
        in subsection (b)(1) was exceeded as a result of such 
        bonus or other reward.

Sec. 3687. Workshare discounts

    (a) In General.--As part of the regulations established 
under section 3622(a), the Postal Regulatory Commission shall 
establish rules for workshare discounts that ensure that 
workshare discounts do not exceed the cost that the Postal 
Service avoids as the result of private sector workshare 
activity, except--
            (1) where the discount is associated with a new 
        product or service or with a change to an existing 
        product or service and is necessary, over a period of 
        time not to exceed 4 years, to induce mailer behavior 
        that will enable the new or changed product or service 
        in furtherance of the overall economically efficient 
        operation of the Postal Service;
            (2) to the extent that a reduction in the discount 
        would lead to a loss of volume in the affected category 
        and reduce the aggregate contribution to institutional 
        costs of the Postal Service, from the mail matter 
        subject to the discount, below what it otherwise would 
        have been if the discount had not been reduced to costs 
        avoided; would result in a further increase in the 
        rates paid by mailers not able to take advantage of the 
        discount; or would impede the efficient operation of 
        the Postal Service;
            (3) where the amount of the discount above costs 
        avoided is necessary to mitigate rate shock and will be 
        phased out over time; or
            (4) where the workshare discount is provided in 
        connection with subclasses of mail consisting 
        exclusively of mail matter of educational, cultural, or 
        scientific value.
    (b) Reporting Requirement.--Whenever the Postal Service 
establishes or maintains a workshare discount, the Postal 
Service shall, at the time it publishes the workshare discount 
rate, file with the Postal Regulatory Commission a detailed 
report and explanation of its reasons for establishing or 
maintaining the rate, setting forth the data, economic 
analyses, and other information relied on by the Postal Service 
to justify the rate.
    (c) Definition.--For purposes of this section, the term 
``workshare discount'' refers to rate discounts provided to 
mailers for presorting, prebarcoding, handling, or 
transportation, as further defined by the Postal Regulatory 
Commission as part of regulations established under section 
3622(a).

                     PART V--TRANSPORTATION OF MAIL

Chap.                                                               Sec.
50. General.......................................................  5001
[52. Transportation of Mail by Surface Carrier.................... 5201]
     * * * * * * *

CHAPTER 50--GENERAL

           *       *       *       *       *       *       *


Sec. 5001. Provisions for carrying mail

    The Postal Service shall provide for the transportation of 
mail in accordance with the policies established under section 
[101(e) and (f)] 101(f) and (g) of this title and the 
provisions of this chapter. Notwithstanding any other provision 
of this title, the Postal Service may make arrangements on a 
temporary basis for the transportation of mail when, as 
determined by the Postal Service, an emergency arises. Such 
arrangements shall terminate when the emergency ceases and the 
Postal Service is promptly able to secure transportation 
services under other provisions of this title.

           *       *       *       *       *       *       *


Sec. 5005. Mail transportation

    (a) The Postal Service may obtain mail transportation 
service--
            [(1) from common carriers by rail and motor vehicle 
        or persons as provided in chapter 52 of this title;]
            [(2)] (1) from air carriers as provided in chapter 
        54 of this title;
            [(3)] (2) from water carriers as provided in 
        chapter 56 of this title; and
            [(4)] (3) by contract from any person [(as defined 
        in section 5201(6) of this title)] or carrier for 
        surface and water transportation under such terms and 
        conditions as it deems appropriate, subject to the 
        provisions of this section.
    (b)(1) Contracts for the transportation of mail procured 
under subsection [(a)(4)] (a)(3) of this section shall be for 
periods not in excess of 4 years [(or where the Postal Service 
determines that special conditions or the use of special 
equipment warrants, not in excess of 6 years)] (or such longer 
period of time as may be determined by the Postal Service to be 
advisable or appropriate) and shall be entered into only after 
advertising a sufficient time previously for proposals. The 
Postal Service, with the consent of the holder of any such 
contract, may adjust the compensation allowed under that 
contract for increased or decreased costs resulting from 
changed conditions occurring during the term of the contract.
    (2) A contract under subsection [(a)(4)] (a)(3) of this 
section may be renewed at the existing rate by mutual agreement 
between the contractor or subcontractor and the Postal Service.

           *       *       *       *       *       *       *

    (c) The Postal Service, in determining whether to obtain 
transportation of mail [by carrier or person under subsection 
(a)(1) of this section, by contract under subsection (a)(4) of 
this section, or] by contract under subsection (a)(3) of this 
section or by Government motor vehicle, shall use the mode of 
transportation which best serves the public interest, due 
consideration being given to the cost of the transportation 
service under each mode.

           *       *       *       *       *       *       *


         [CHAPTER 52--TRANSPORTATION OF MAIL BY SURFACE CARRIER

[Sec.
[5201. Definitions.
[5202. Applicability.
[5203. Authorization of service by carrier.
[5204. Changes in service; placement of equipment.
[5205. Evidence of service.
[5206. Fines and deductions.
[5207. Surface Transportation Board to fix rates.
[5208. Procedures.
[5209. Special rates.
[5210. Intermodal transportation.
[5211. Statistical studies.
[5212. Special contracts.
[5213. Carrier operations; receipts; expenditures.
[5214. Agreements with passenger common carriers by motor vehicle.
[5215. Star route certification.

[Sec. 5201. Definitions

    [For purposes of this chapter--
            [(1) ``Board'' means the Surface Transportation 
        Board;
            [(2) ``carrier'' and ``regulated surface carrier'' 
        mean a railroad, a freight forwarder, or a motor 
        carrier;
            [(3) ``railroad'' means a railway common carrier, 
        including an electric urban and interurban railway 
        common carrier;
            [(4) ``freight forwarder'' means any regulated 
        freight forwarder which holds itself out to the general 
        public as a carrier to transport or provide 
        transportation of property as authorized by a 
        registration issued by the Board;
            [(5) ``motor carrier'' means a motor carrier, 
        except a passenger-carrying motor vehicle of such a 
        carrier, within the meaning of section 13102(12) of 
        title 49, that holds a registration issued by the 
        Board;
            [(6) ``person'' includes any person other than a 
        carrier holding a certificate or registration issued by 
        the Board; and
            [(7) ``mail'' includes equipment and supplies of 
        the Postal Service.

[Sec. 5202. Applicability

    [This chapter applies to mail transportation performed by 
any person or carrier or carrier combination regardless of the 
mode of transportation actually used to provide the service.

[Sec. 5203. Authorization of service by carrier

    [(a) The Postal Service may establish mail routes and 
authorize mail transportation service thereon.
    [(b) A carrier shall transport mail offered for 
transportation by the Postal Service in the manner, under the 
conditions, and with the service prescribed by the Postal 
Service. A carrier is entitled to receive fair and reasonable 
compensation for the transportation and service connected 
therewith.
    [(c) The Postal Service shall determine the trains or motor 
vehicles upon which mail shall be transported, except that no 
carrier shall be compelled to transport mail on any train or 
vehicle which is operated exclusively for the transportation of 
passengers and their baggage.
    [(d) A carrier shall transport with due speed such mail as 
the Postal Service directs under this section.
    [(e) No carrier shall be required to serve territory it is 
not otherwise authorized to serve, to provide service for the 
Postal Service at a rate which is less than compensatory cost, 
or to provide service at a detriment to the carrier or its 
other customers.
    [(f) Any order or determination of the Postal Service 
providing for the transportation of mail by a motor carrier 
shall be filed with the Board. If the Board finds, within 90 
days after the filing, that the order or determination will be 
detrimental to the motor carrier or its other customers, or 
that such carrier does not operate equipment suitable for the 
transportation of mail, the order or determination shall be 
terminated.
    [(g) An order or determination of the Postal Service under 
this section shall be consistent with the orders of the Board 
under sections 5207 and 5208 of this title.

[Sec. 5204. Changes in service; placement of equipment

    [(a) The Postal Service may authorize, according to the 
need therefor, new or additional mail transportation service by 
carriers at the rate or compensation fixed under this chapter. 
It may reduce or discontinue service with pro rata reductions 
in compensation and indemnity for the loss of reasonable 
investment in equipment used exclusively for mail.
    [(b) A railroad shall place cars used for full or apartment 
post office service in position at such times before departure 
as the Postal Service directs.

[Sec. 5205. Evidence of service

    [A carrier shall submit evidence of its performance of mail 
transportation service, signed by an authorized official, in 
such form and at such times as the Postal Service requires. 
Mail transportation service is considered that of the carrier 
performing it regardless of the ownership of the property used 
by the carrier.

[Sec. 5206. Fines and deductions

    [(a) The Postal Service may fine any carrier an amount not 
to exceed $500 for each day the carrier refuses to perform mail 
transportation services required by it at rates or compensation 
established under this chapter.
    [(b) The Postal Service shall fine a carrier an amount it 
deems reasonable for failure or refusal by that carrier to 
transport mail as required by the Postal Service under section 
5203 of this title.
    [(c) The Board may make deductions from the compensation of 
a carrier for failure to perform mail transportation service as 
required under section 5203 of this title. If the failure to 
perform is due to the fault of the carrier, it may deduct a sum 
not exceeding twice the compensation applying to such service. 
Such deductions shall not be made prior to the expiration of 60 
days following service upon the carrier by the Board of notice 
of intention to assess a fine or make a deduction and of the 
basis therefor.

[Sec. 5207. Surface Transportation Board to fix rates

    [(a) The Board shall determine and fix the fair and 
reasonable rates or compensation for the transportation of mail 
by carrier and the service connected therewith, and shall 
prescribe the method of computing such rates or compensation. 
The Board shall publish its orders stating its determination 
under this section which shall remain in force until changed by 
it after notice and hearing.
    [(b) For the purpose of determining and fixing rates or 
compensation under this section, the Board may make just and 
reasonable classifications of carriers and, where just and 
equitable, fix general rates applicable to carriers in the same 
classification.
    [(c) In determining and fixing fair and reasonable rates or 
compensation under this section, the Board shall consider the 
relation between the Government and carriers as public service 
corporations, and the nature of public service as 
distinguished, if there is a distinction, from the ordinary 
transportation business of the carriers.
    [(d) Initial rates or compensation for mail transportation 
service by any carrier or carriers shall be those agreed to by 
the Postal Service and the carrier or carriers, and such rates 
or compensation shall continue in effect until such time as the 
Board fixes the rates or compensation under subsection (a) of 
this section.

[Sec. 5208. Procedures

    [(a) At any time after 6 months from the entry of an order 
stating the Board's determination under section 5207 of this 
title, the Postal Service or an interested carrier may apply 
for a reexamination and substantially similar proceedings as 
have theretofore been had shall be followed with respect to the 
rates of compensation for services covered by the application. 
At the conclusion of the hearing the Board shall enter an order 
stating its determination.
    [(b) Except as authorized by sections 5207(d), 5209, 5210, 
and 5212 of this title, the Postal Service shall pay a carrier 
the rates or compensation so determined and fixed for 
application at such stated times as named in the order.
    [(c) The Postal Service may file with the Board a 
comprehensive plan stating--
            [(1) its requirements for the transportation of 
        mail by carrier;
            [(2) the character and speed of the trains or motor 
        vehicles which are to carry the various kinds of mail;
            [(3) the service, both terminal and en route, which 
        carriers are to render;
            [(4) what it believes to be the fair and reasonable 
        rates or compensation for the services required; and
            [(5) all other information which may be material to 
        the inquiry, but such other information may be filed at 
        any time in the discretion of the Board.
    [(d) When a comprehensive plan is filed, the Board shall 
give notice of not less than 30 days to each carrier required 
by the Postal Service to transport mail pursuant to such plan. 
A carrier may file its answer at the time fixed by the Board, 
but not later than 30 days after the expiration date fixed by 
the Board in the notice, and the Board shall proceed with the 
hearing.

[Sec. 5209. Special rates

    [Upon petition by the Postal Service, the Board shall 
determine and fix carload or truckload, or less than carload or 
truckload, rates for the transportation of mail not entitled to 
high priority in transportation. A carrier shall perform the 
service at the rates so determined when requested to do so and 
under the conditions prescribed by the Postal Service.

[Sec. 5210. Intermodal transportation

    [The Postal Service may permit a carrier to perform mail 
transportation by any form of transportation it deems 
appropriate at rates or compensation not exceeding those 
allowable for similar service by the designated form of 
transportation.

[Sec. 5211. Statistical studies

    [The Postal Service may arrange for weighing and measuring 
mail transported on carrier mail routes and make other 
computations for statistical and administrative purposes to 
carry out the purposes of this chapter.

[Sec. 5212. Special contracts

    [The Postal Service may enter into special contracts with 
any carrier or person, without advertising, for bids and for 
periods not in excess of 4 years. It may contract to pay lower 
rates or compensation or, where in its judgment conditions 
warrant, higher rates or compensation than those determined or 
fixed by the Board. The fact that the Board has not prescribed 
rates or compensation for the carrier involved, under section 
5207 of this title, shall not preclude execution of a contract 
under this section. Such contracts may be negotiated only after 
reasonable notice has been posted in advance in post offices on 
the post roads to be served, and other carriers or persons have 
been given an opportunity to offer to negotiate for the 
transportation of mail.

[Sec. 5213. Carrier operations; receipts; expenditures

    [The Postal Service shall request any carrier transporting 
the mails to furnish, under seal, such data relating to the 
operations, receipts, and expenditures of such carrier as may, 
in its judgment, be deemed necessary to enable it to ascertain 
the cost of mail transportation and the proper compensation to 
be paid for such service.

[Sec. 5214. Agreements with passenger common carriers by motor vehicle

    [The Postal Service may enter into contracts under such 
terms and conditions as it shall prescribe and without 
advertising for bids for the transportation of mail, in 
passenger-carrying motor vehicles, by passenger common 
carriers, or by motor vehicles over the regular routes on which 
the carrier is permitted by law to transport passengers.

[Sec. 5215. Star route certification

    [(a) Any person who was a contractor under a star route, 
mail messenger, or contract motor vehicle service contract on 
the effective date of this section (or successor in interest to 
any such person), shall, upon application to the Board for the 
territory within which such contractor operated on or before 
the effective date of this section be issued a certificate of 
public convenience and necessity as a motor carrier for the 
transportation of mail by the Board without the Board's 
requiring further proof that the public convenience and 
necessity will be served by such operation and without further 
proceedings.
    [(b) Applications of persons who were not contractors on 
the effective date of this section shall be decided in 
accordance with applicable Board procedure.
    [(c) For purposes of this section, the term ``person'' has 
the same meaning given that term under section 1 of title 1.]

               CHAPTER 54--TRANSPORTATION OF MAIL BY AIR

Sec.
5401. Authorization.
     * * * * * * *
[5403. Fines.]

           *       *       *       *       *       *       *


Sec. 5402. Contracts for transportation of mail by air

    (a) * * *

           *       *       *       *       *       *       *

    [(d) If the Postal Service determines that service by 
certificated air carriers or combination of air carriers 
between any pair or pairs of points in foreign air 
transportation is not adequate for its purposes, it may 
contract for a period of not more than 4 years, without 
advertising for bids, in such manner and under such terms and 
conditions as it may deem appropriate, with any air taxi 
operator or combination thereof for such air transportation 
service. Contracts made under this subsection may be renewed at 
the existing rate by mutual agreement between the holder and 
the Postal Service. The Postal Service, with the consent of the 
air taxi operator, may adjust the compensation under such 
contracts for increased or decreased costs occasioned by 
changed conditions occurring during the contract term. The 
Postal Service shall cancel such a contract when the Secretary 
authorizes an additional certificated carrier or carriers to 
provide service between any pair or pairs of points covered by 
the contract, and such carrier or carriers inaugurate schedules 
adequate for its purposes.
    [(e)(1) The Postal Service may determine rates and contract 
with any air carrier for the transportation of mail by aircraft 
in interstate air transportation either through negotiations or 
competitive bidding.
    [(2)(A) In the exercise of its authority under paragraph 
(1), the Postal Service may require any air carrier to accept 
as mail shipments of day-old poultry, honeybees, and such other 
live animals as postal regulations allow to be transmitted as 
mail matter. The authority of the Postal Service under this 
subparagraph shall not apply in the case of any air carrier who 
commonly and regularly refuses to accept any live animals as 
cargo.
    [(B) Notwithstanding any other provision of law, the Postal 
Service is authorized to assess, as postage to be paid by the 
mailers of any shipments covered by subparagraph (A), a 
reasonable surcharge that the Postal Service determines in its 
discretion to be adequate to compensate air carriers for any 
necessary additional expense incurred in handling such 
shipments.]
    (d)(1) The Postal Service may contract with any air carrier 
for the transportation of mail by aircraft in interstate air 
transportation, including the rates therefor, either through 
negotiations or competitive bidding.
    (2) Notwithstanding subsections (a) through (c), the Postal 
Service may contract with any air carrier or foreign air 
carrier for the transportation of mail by aircraft in foreign 
air transportation, including the rates therefor, either 
through negotiations or competitive bidding, except that--
            (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) 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
            (D) 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.
    (e) For purposes of this section, the terms ``air 
carrier'', ``air transportation'', ``foreign air carrier'', 
``foreign air transportation'', ``interstate air 
transportation'', and ``mail'' shall have the meanings given 
such terms in section 40102 of title 49.

           *       *       *       *       *       *       *


[Sec. 5403. Fines

    [The Postal Service may impose or remit fines on carriers 
transporting mail by air on routes extending beyond the borders 
of the United States for--
            [(1) unreasonable or unnecessary delay to mail; and
            [(2) other delinquencies in the transportation of 
        the mail.]

           *       *       *       *       *       *       *


CHAPTER 56--TRANSPORTATION OF MAIL BY VESSEL

           *       *       *       *       *       *       *


Sec. 5605. Contracts for transportation of mail by vessel

    The Postal Service may contract for the transportation of 
mail by vessel without advertising for bids [for periods of not 
in excess of 4 years].
                              ----------                              


            SECTION 1402 OF THE VICTIMS OF CRIME ACT OF 1984

                           CRIME VICTIMS FUND

    Sec. 1402. (a) * * *
    (b) Except as limited by subsection (c), there shall be 
deposited in the Fund--
            (1) all fines that are collected from persons 
        convicted of offenses against the United States 
        except--
                    (A) * * *
                    (B) fines to be paid into--
                            (i) the railroad unemployment 
                        insurance account pursuant to the 
                        Railroad Unemployment Insurance Act (45 
                        U.S.C. 351 et seq.);
                            (ii) the Postal Service Fund 
                        pursuant to sections 2601(a)(2) and 
                        2003 of title 39 of the United States 
                        Code and for the purposes set forth in 
                        section [404(a)(8)] 404(a)(7) of such 
                        title 39;

           *       *       *       *       *       *       *

                              ----------                              


                      TITLE 5, UNITED STATES CODE



           *       *       *       *       *       *       *
PART I--THE AGENCIES GENERALLY

           *       *       *       *       *       *       *


CHAPTER 1--ORGANIZATION

           *       *       *       *       *       *       *


Sec. 104. Independent establishment

    For the purpose of this title, ``independent 
establishment'' means--
            (1) an establishment in the executive branch (other 
        than the United States Postal Service or the [Postal 
        Rate] Postal Regulatory Commission) which is not an 
        Executive department, military department, Government 
        corporation, or part thereof, or part of an independent 
        establishment; and

           *       *       *       *       *       *       *


CHAPTER 3--POWERS

           *       *       *       *       *       *       *


Sec. 306. Strategic plans

    (a) * * *

           *       *       *       *       *       *       *

    (f) For purposes of this section the term ``agency'' means 
an Executive agency defined under section 105, but does not 
include the Central Intelligence Agency, the General Accounting 
Office, the Panama Canal Commission, the United States Postal 
Service, and the [Postal Rate] Postal Regulatory Commission.

           *       *       *       *       *       *       *


                          PART III--EMPLOYEES

Subpart A--General Provisions

           *       *       *       *       *       *       *


CHAPTER 21--DEFINITIONS

           *       *       *       *       *       *       *


Sec. 2104. Officer

    (a) * * *
    (b) Except as otherwise provided by law, an officer of the 
United States Postal Service or of the [Postal Rate] Postal 
Regulatory Commission is deemed not an officer for purposes of 
this title.

           *       *       *       *       *       *       *


Subpart B--Employment and Retention

           *       *       *       *       *       *       *


CHAPTER 33--EXAMINATION, SELECTION, AND PLACEMENT

           *       *       *       *       *       *       *


             SUBCHAPTER VI--ASSIGNMENTS TO AND FROM STATES

Sec. 3371. Definitions

    For the purpose of this subchapter--
            (1) * * *

           *       *       *       *       *       *       *

            (3) ``Federal agency'' means an Executive agency, 
        military department, a court of the United States, the 
        Administrative Office of the United States Courts, the 
        Library of Congress, the Botanic Garden, the Government 
        Printing Office, the Congressional Budget Office, the 
        United States Postal Service, the [Postal Rate] Postal 
        Regulatory Commission, the Office of the Architect of 
        the Capitol, the Office of Technology Assessment, and 
        such other similar agencies of the legislative and 
        judicial branches as determined appropriate by the 
        Office of Personnel Management; and

           *       *       *       *       *       *       *


Subpart D--Pay and Allowances

           *       *       *       *       *       *       *


CHAPTER 53--PAY RATES AND SYSTEMS

           *       *       *       *       *       *       *


SUBCHAPTER II--EXECUTIVE SCHEDULE PAY RATES

           *       *       *       *       *       *       *


Sec. 5314. Positions at level III

    Level III of the Executive Schedule applies to the 
following positions, for which the annual rate of basic pay 
shall be the rate determined with respect to such level under 
chapter 11 of title 2, as adjusted by section 5318 of this 
title:
            Solicitor General of the United States.

           *       *       *       *       *       *       *

            Chairman, [Postal Rate] Postal Regulatory 
        Commission.

           *       *       *       *       *       *       *


Sec. 5315. Positions at level IV

    Level IV of the Executive Schedule applies to the following 
positions, for which the annual rate of basic pay shall be the 
rate determined with respect to such level under chapter 11 of 
title 2, as adjusted by section 5318 of this title:
            Deputy Administrator of General Services.

           *       *       *       *       *       *       *

            Members, [Postal Rate] Postal Regulatory Commission 
        (4).

           *       *       *       *       *       *       *


CHAPTER 55--PAY ADMINISTRATION

           *       *       *       *       *       *       *


SUBCHAPTER II--WITHHOLDING PAY

           *       *       *       *       *       *       *


Sec. 5514. Installment deduction for indebtedness to the United States

    (a)(1) * * *

           *       *       *       *       *       *       *

    (5) For purposes of this subsection--
            (A) * * *margin for subpar. (B) so in 
        law deg.
                    (B) ``agency'' includes executive 
                departments and agencies, the United States 
                Postal Service, the [Postal Rate] Postal 
                Regulatory Commission, the United States 
                Senate, the United States House of 
                Representatives, and any court, court 
                administrative office, or instrumentality in 
                the judicial or legislative branches of the 
                Government, and government corporations.

           *       *       *       *       *       *       *


Subpart F--Labor-Management and Employee Relations

           *       *       *       *       *       *       *


CHAPTER 73--SUITABILITY, SECURITY, AND CONDUCT

           *       *       *       *       *       *       *


              SUBCHAPTER IV--FOREIGN GIFTS AND DECORATIONS

Sec. 7342. Receipt and disposition of foreign gifts and decorations

    (a) For the purpose of this section--
            (1) ``employee'' means--
                    (A) an employee as defined by section 2105 
                of this title and an officer or employee of the 
                United States Postal Service or of the [Postal 
                Rate] Postal Regulatory Commission;

           *       *       *       *       *       *       *


CHAPTER 75--ADVERSE ACTIONS

           *       *       *       *       *       *       *


SUBCHAPTER II--REMOVAL, SUSPENSION FOR MORE THAN 14 DAYS, REDUCTION IN 
             GRADE OR PAY, OR FURLOUGH FOR 30 DAYS OR LESS

Sec. 7511. Definitions; application

    (a) For the purpose of this subchapter--
            (1) ``employee'' means--
                    (A) * * *
                    (B) a preference eligible in the excepted 
                service who has completed 1 year of current 
                continuous service in the same or similar 
                positions--
                            (i) in an Executive agency; or
                            (ii) in the United States Postal 
                        Service or [Postal Rate] Postal 
                        Regulatory Commission; and

           *       *       *       *       *       *       *


Subpart G--Insurance and Annuities

           *       *       *       *       *       *       *


CHAPTER 83--RETIREMENT

           *       *       *       *       *       *       *


SUBCHAPTER III--CIVIL SERVICE RETIREMENT

           *       *       *       *       *       *       *


Sec. 8334. Deductions, contributions, and deposits

    (a)(1)(A) * * *
    (B)(i) * * *
    (ii) In the case of an employee of the United States Postal 
Service, the amount to be contributed under this subparagraph 
shall (instead of the amount described in clause (i)) be equal 
to [the product derived by multiplying the employee's basic pay 
by the percentage equal to--
            [(I) the normal-cost percentage for the applicable 
        employee category listed in subparagraph (A), minus
            [(II) the percentage deduction rate that applies 
        with respect to such employee under subparagraph (A).] 
        zero

           *       *       *       *       *       *       *


Sec. 8348. Civil Service Retirement and Disability Fund

    (a) * * *

           *       *       *       *       *       *       *

    [(h)(1)(A) For purposes of this subsection, ``Postal 
supplemental liability'' means the estimated excess, as 
determined by the Office, of--
            [(i) the actuarial present value of all future 
        benefits payable from the Fund under this subchapter 
        attributable to the service of current or former 
        employees of the United States Postal Service, over
            [(ii) 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 
                pursuant to section 8334;
                    [(II) the actuarial present value of the 
                future contributions to be made pursuant to 
                section 8334 with respect to employees of the 
                United States Postal Service currently subject 
                to this subchapter;
                    [(III) that portion of the Fund balance, as 
                of the date the Postal supplemental liability 
                is determined, attributable to payments to the 
                Fund by the United States Postal Service and 
                its employees, including earnings on those 
                payments; and
                    [(IV) any other appropriate amount, as 
                determined by the Office in accordance with 
                generally accepted actuarial practices and 
                principles.
    [(B)(i) In computing the actuarial present value of future 
benefits, the Office shall include the full value of benefits 
attributable to military and volunteer service for United 
States Postal Service employees first employed after June 30, 
1971, and a prorated share of the value of benefits 
attributable to military and volunteer service for United 
States Postal Service employees first employed before July 1, 
1971.
    [(ii) Military service so included shall not be included in 
the computation of any amount under subsection (g)(2).
    [(2)(A) Not later than June 30, 2004, the Office shall 
determine the Postal supplemental liability as of September 30, 
2003. The Office shall establish an amortization schedule, 
including a series of equal annual installments commencing 
September 30, 2004, which provides for the liquidation of such 
liability by September 30, 2043.
    [(B) The Office shall redetermine the Postal supplemental 
liability as of the close of the fiscal year, for each fiscal 
year beginning after September 30, 2003, through the fiscal 
year ending September 30, 2038, and shall establish a new 
amortization schedule, including a series of equal annual 
installments commencing on September 30 of the subsequent 
fiscal year, which provides for the liquidation of such 
liability by September 30, 2043.
    [(C) The Office shall redetermine the Postal supplemental 
liability as of the close of the fiscal year for each fiscal 
year beginning after September 30, 2038, and shall establish a 
new amortization schedule, including a series of equal annual 
installments commencing on September 30 of the subsequent 
fiscal year, which provides for the liquidation of such 
liability over 5 years.
    [(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 dynamic actuarial 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.
    [(F) An amortization schedule established under 
subparagraph (B) or (C) shall supersede any amortization 
schedule previously established under this paragraph.
    [(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.
    [(4) Notwithstanding any other provision of this 
subsection, any determination or redetermination made by the 
Office under this subsection shall, upon request of the Postal 
Service, be subject to reconsideration and review (including 
adjustment by the Board of Actuaries of the Civil Service 
Retirement System) to the same extent and in the same manner as 
provided under section 8423(c).]
    (h)(1) For purposes of this subsection, the ``Postal 
surplus or supplemental liability'' means the estimated 
difference, as determined by the Office, between--
            (A) the actuarial present value of all future 
        benefits which are payable from the Fund under this 
        subchapter to current or former employees of the United 
        States Postal Service, or their survivors, and 
        attributable to civilian employment with the Postal 
        Service, and
            (B) the sum of--
                    (i) the actuarial present value of 
                deductions to be withheld from the future basic 
                pay of employees of the Postal Service 
                currently subject to this subchapter pursuant 
                to section 8334;
                    (ii) that portion of the Fund balance, as 
                of the date the Postal surplus or supplemental 
                liability is determined, attributable to 
                payments to the Fund by the Postal Service and 
                its employees, plus the earnings on such 
                amounts while in the Fund; and
                    (iii) any other appropriate amount, as 
                determined by the Office in accordance with 
                generally accepted actuarial practices and 
                principles.
    (2)(A)(i) Not later than June 15, 2006, the Office shall 
determine the Postal surplus or supplemental liability as of 
September 30, 2005.
    (ii) If a supplemental liability is determined under this 
subparagraph for fiscal year 2005, the Office shall establish 
an amortization schedule, including a series of equal annual 
installments commencing September 30, 2006, which provides for 
the liquidation of such liability by September 30, 2043.
    (iii) If a surplus is determined under this subparagraph 
for fiscal year 2005, the amount of the surplus shall be 
transferred to the Postal Service Retiree Health Benefits Fund 
by June 30, 2006.
    (B)(i) For each of fiscal years 2006 through 2038, the 
Office shall determine the Postal surplus or supplemental 
liability as of the close of such fiscal year, with each such 
determination to be made by June 15th of the following fiscal 
year.
    (ii) If a supplemental liability is determined under this 
subparagraph for a fiscal year, the Office shall establish an 
amortization schedule, including a series of equal annual 
installments commencing on September 30 of the following fiscal 
year, which provides for the liquidation of such liability by 
September 30, 2043.
    (iii)(I) If a surplus of $500,000,000 or more is determined 
under this subparagraph for a fiscal year, the amount of the 
surplus shall be transferred to the Postal Service Retiree 
Health Benefits Fund by June 30th of the following fiscal year.
    (II) If a surplus of less than $500,000,000 is determined 
under this subparagraph for a fiscal year, the surplus shall 
remain in the Fund, subject to transfer in a subsequent fiscal 
year under subclause (I) or subparagraph (C)(iii).
    (C)(i) Not later than June 15, 2040, the Office shall 
determine the Postal surplus or supplemental liability as of 
September 30, 2039.
    (ii) If a supplemental liability is determined under this 
subparagraph for fiscal year 2039, the Office shall establish 
an amortization schedule, including a series of equal annual 
installments commencing September 30, 2040, which provides for 
the liquidation of such liability by September 30, 2043.
    (iii) If a surplus is determined under this subparagraph 
for fiscal year 2039, the amount of the surplus--
            (I) shall be applied first toward reducing the 
        amount of any supplemental liability described in 
        section 8423(b)(1)(B); and
            (II) to the extent that any portion of such surplus 
        remains after the application of subclause (I), shall, 
        not later than June 30, 2040, be transferred to the 
        Postal Service Retiree Health Benefits Fund.
    (D) An amortization schedule under this paragraph--
            (i) shall be established in accordance with 
        generally accepted actuarial practices and principles, 
        with interest computed at the rate used in the most 
        recent valuation of the Civil Service Retirement 
        System;
            (ii) shall supersede any amortization schedule 
        previously established under this paragraph; and
            (iii) shall not be taken into account, for purposes 
        of any determination of Postal surplus or supplemental 
        liability, except to the extent of any amounts under 
        such schedule actually paid.
    (E) The Postal Service shall pay to the Office the amounts 
due under any amortization schedule established under this 
paragraph that has not been superseded.
    (3) Notwithstanding any other provision of law, in 
computing the amount of any payment under any other subsection 
of this section that is based on the amount of the unfunded 
liability, such payment shall be computed disregarding that 
portion of the unfunded liability that the Office determines 
will be liquidated by payments under this subsection.
    (4) As used in this subsection, ``Postal Service Retiree 
Health Benefits Fund'' refers to the Postal Service Retiree 
Health Benefits Fund, as established by section 8909a.

           *       *       *       *       *       *       *


CHAPTER 84--FEDERAL EMPLOYEES' RETIREMENT SYSTEM

           *       *       *       *       *       *       *


SUBCHAPTER I--GENERAL PROVISIONS

           *       *       *       *       *       *       *


Sec. 8402. Federal Employees' Retirement System; exclusions

    (a) * * *

           *       *       *       *       *       *       *

    (c)(1) The Office may exclude from the operation of this 
chapter an employee or group of employees in or under an 
Executive agency, the United States Postal Service, or the 
[Postal Rate] Postal Regulatory Commission, whose employment is 
temporary or intermittent, except an employee whose employment 
is part-time career employment (as defined in section 3401(2)).

           *       *       *       *       *       *       *


SUBCHAPTER II--BASIC ANNUITY

           *       *       *       *       *       *       *


Sec. 8423. Government contributions

    (a) * * *
    (b)(1) The Office shall compute--
            (A) the amount of the supplemental liability of the 
        Fund with respect to individuals other than those to 
        whom subparagraph (B) relates, and
            (B) the amount of the supplemental liability of the 
        Fund with respect to current or former employees of the 
        United States Postal Service (and the [Postal Rate] 
        Postal Regulatory Commission) and their survivors;
as of the close of each fiscal year beginning after September 
30, 1987.

           *       *       *       *       *       *       *


SUBCHAPTER VII--FEDERAL RETIREMENT THRIFT INVESTMENT MANAGEMENT SYSTEM

           *       *       *       *       *       *       *


Sec. 8474. Executive Director

    (a) * * *

           *       *       *       *       *       *       *

    (c) The Executive Director may--
            (1) * * *

           *       *       *       *       *       *       *

            (4) secure directly from an Executive agency, the 
        United States Postal Service, or the [Postal Rate] 
        Postal Regulatory Commission any information necessary 
        to carry out the provisions of this subchapter or 
        subchapter III of this chapter and policies of the 
        Board;

           *       *       *       *       *       *       *


                      CHAPTER 89--HEALTH INSURANCE

Sec.
8901.    Definitions.
     * * * * * * *
8909a. Postal Service Retiree Health Benefits Fund.

           *       *       *       *       *       *       *


Sec. 8906. Contributions

    (a) * * *

           *       *       *       *       *       *       *

    (g)(1) * * *
    (2)(A) The Government contributions authorized by this 
section for health benefits for an individual who first becomes 
an annuitant by reason of retirement from employment with the 
United States Postal Service on or after July 1, 1971, or for a 
survivor of such an individual or of an individual who died on 
or after July 1, 1971, while employed by the United States 
Postal Service, shall be paid [by the United States Postal 
Service.] first from the Postal Service Retiree Health Benefits 
Fund up to the amount contained therein, with any remaining 
amount paid by the United States Postal Service.

           *       *       *       *       *       *       *


Sec. 8909a. Postal Service Retiree Health Benefits Fund

    (a) There is in the Treasury of the United States a Postal 
Service Retiree Health Benefits Fund (hereinafter in this 
section referred to as the ``Fund'') which is administered by 
the Office of Personnel Management. Any amounts transferred to 
the Fund under section 8348(h)(2) shall yield interest at a 
rate equal to the weighted average yield of all the investments 
in the Civil Service Retirement and Disability Fund as of the 
date of transfer. All other investments of amounts in the Fund 
shall be made in accordance with subsections (c)-(e) of section 
8348.
    (b) The Fund is available without fiscal year limitation 
for payments required by section 8906(g)(2).
    (c)(1) Not later than June 30, 2006, and by June 30 of each 
succeeding year, the Office of Personnel Management shall 
compute the net present value of the excess of future payments 
required by section 8906(g)(2)(A) for current and future United 
States Postal Service annuitants over the value of the assets 
of the Fund as of the end of the fiscal year ending on 
September 30 of that year. The actuarial costing method to be 
used by the Office and all actuarial assumptions shall be 
established by the Office after consultation with the United 
States Postal Service and must be in accordance with generally 
accepted actuarial practices and principles.
    (2) Not later than September 30, 2006, and by September 30 
of each succeeding year, the Office shall compute and the 
United States Postal Service shall pay into such Fund--
            (A) the portion of the net present value described 
        in paragraph (1) attributable to the current year's 
        service of Postal Service employees; and
            (B) interest on the net present value described in 
        paragraph (1) for that fiscal year, at the interest 
        rate used in computing that net present value.
    (3)(A) Any computation or other determination of the Office 
under this subsection shall, upon request of the Postal 
Service, be subject to review by the Postal Regulatory 
Commission. The Commission shall submit a report containing the 
results of any such review to the Postal Service, the Office of 
Personnel Management, and the Congress.
    (B) Upon receiving the report of the Postal Regulatory 
Commission, the Office of Personnel Management shall reconsider 
its computation or other determination in light of such report, 
and shall make any appropriate adjustments. The Office shall 
submit a report containing the results of its reconsideration 
to the Commission, the Postal Service, and the Congress.
    (4) The Office shall promulgate, after consultation with 
the United States Postal Service, any regulations it deems 
necessary under this subsection.

           *       *       *       *       *       *       *

                              ----------                              


          SECTION 101 OF THE ETHICS IN GOVERNMENT ACT OF 1978

                        PERSONS REQUIRED TO FILE

    Sec. 101. (a) * * *

           *       *       *       *       *       *       *

    (f) The officers and employees referred to in subsections 
(a), (d), and (e) are--
            (1) * * *

           *       *       *       *       *       *       *

            (6) the Postmaster General, the Deputy Postmaster 
        General, each Governor of the Board of Governors of the 
        United States Postal Service and each officer or 
        employee of the United States Postal Service or [Postal 
        Rate] Postal Regulatory Commission who occupies a 
        position for which the rate of basic pay is equal to or 
        greater than 120 percent of the minimum rate of basic 
        pay payable for GS-15 of the General Schedule;

           *       *       *       *       *       *       *

                              ----------                              


             SECTION 501 OF THE REHABILITATION ACT OF 1973

              EMPLOYMENT OF INDIVIDUALS WITH DISABILITIES

    Sec. 501. (a) * * *
    (b) Each department, agency, and instrumentality (including 
the United States Postal Service and the [Postal Rate Office] 
Postal Regulatory Commission) in the executive branch and the 
Smithsonian Institution shall, within one hundred and eighty 
days after the date of enactment of this Act, submit to the 
Commission and to the Committee an affirmative action program 
plan for the hiring, placement, and advancement of individuals 
with disabilities in such department, agency, instrumentality, 
or Institution. Such plan shall include a description of the 
extent to which and methods whereby the special needs of 
employees who are individuals with disabilities are being met. 
Such plan shall be updated annually, and shall be reviewed 
annually and approved by the Commission, if the Commission 
determines, after consultation with the Committee, that such 
plan provides sufficient assurances, procedures, and 
commitments to provide adequate hiring, placement, and 
advancement opportunities for individuals with disabilities.

           *       *       *       *       *       *       *

                              ----------                              


              SECTION 3502 OF TITLE 44, UNITED STATES CODE

Sec. 3502. Definitions

    As used in this subchapter--
            (1) * * *

           *       *       *       *       *       *       *

            (5) the term ``independent regulatory agency'' 
        means the Board of Governors of the Federal Reserve 
        System, the Commodity Futures Trading Commission, the 
        Consumer Product Safety Commission, the Federal 
        Communications Commission, the Federal Deposit 
        Insurance Corporation, the Federal Energy Regulatory 
        Commission, the Federal Housing Finance Board, the 
        Federal Maritime Commission, the Federal Trade 
        Commission, the Interstate Commerce Commission, the 
        Mine Enforcement Safety and Health Review Commission, 
        the National Labor Relations Board, the Nuclear 
        Regulatory Commission, the Occupational Safety and 
        Health Review Commission, the [Postal Rate] Postal 
        Regulatory Commission, the Securities and Exchange 
        Commission, and any other similar agency designated by 
        statute as a Federal independent regulatory agency or 
        commission;

           *       *       *       *       *       *       *

                              ----------                              


                     INSPECTOR GENERAL ACT OF 1978



           *       *       *       *       *       *       *
                  AUTHORITY; ADMINISTRATION PROVISIONS

    Sec. 6. (a) * * *

           *       *       *       *       *       *       *

    (e)(1) * * *

           *       *       *       *       *       *       *

    (3) The Inspector General offices of the Department of 
Commerce, Department of Education, Department of Energy, 
Department of Health and Human Services, Department of Homeland 
Security, Department of Housing and Urban Development, 
Department of the Interior, Department of Justice, Department 
of Labor, Department of State, Department of Transportation, 
Department of the Treasury, Department of Veterans Affairs, 
Agency for International Development, Environmental Protection 
Agency, Federal Deposit Insurance Corporation, Federal 
Emergency Management Agency, General Services Administration, 
National Aeronautics and Space Administration, Nuclear 
Regulatory Commission, Office of Personnel Management, Railroad 
Retirement Board, Small Business Administration, Social 
Security Administration, [and the] Tennessee Valley Authority, 
and United States Postal Service are exempt from the 
requirement of paragraph (2) of an initial determination of 
eligibility by the Attorney General.

           *       *       *       *       *       *       *


   REQUIREMENTS FOR FEDERAL ENTITIES AND DESIGNATED FEDERAL ENTITIES

    Sec. 8G. (a) Notwithstanding section 11 of this Act, as 
used in this section--
            (1) * * *
            (2) the term ``designated Federal entity'' means 
        Amtrak, the Appalachian Regional Commission, the Board 
        of Governors of the Federal Reserve System, the Board 
        for International Broadcasting, the Commodity Futures 
        Trading Commission, the Consumer Product Safety 
        Commission, the Corporation for Public Broadcasting, 
        the Equal Employment Opportunity Commission, the Farm 
        Credit Administration, the Federal Communications 
        Commission, the Federal Deposit Insurance Corporation, 
        the Federal Election Commission, the Election 
        Assistance Commission, the Federal Housing Finance 
        Board, the Federal Labor Relations Authority, the 
        Federal Maritime Commission, the Federal Trade 
        Commission, the Legal Services Corporation, the 
        National Archives and Records Administration, the 
        National Credit Union Administration, the National 
        Endowment for the Arts, the National Endowment for the 
        Humanities, the National Labor Relations Board, the 
        National Science Foundation, the Panama Canal 
        Commission, the Peace Corps, the Pension Benefit 
        Guaranty Corporation, the Securities and Exchange 
        Commission, the Smithsonian Institution, the United 
        States International Trade Commission[, and the United 
        States Postal Service;] and the Postal Regulatory 
        Commission;

           *       *       *       *       *       *       *

            (4) the term ``head of the designated Federal 
        entity'' means any person or persons designated by 
        statute as the head of a designated Federal entity and 
        if no such designation exists, the chief policymaking 
        officer or board of a designated Federal entity as 
        identified in the list published pursuant to subsection 
        (h)(1) of this section, [except that--
                    [(A) with respect to the National Science 
                Foundation, such term means the National 
                Science Board; and
                    [(B) with respect to the United States 
                Postal Service, such term means the Governors 
                (within the meaning of section 102(3) of title 
                39, United States Code);] except that, with 
                respect to the National Science Foundation, 
                such term means the National Science Board;

           *       *       *       *       *       *       *

    (c) [Except as provided under subsection (f) of this 
section, the] The Inspector General shall be appointed by the 
head of the designated Federal entity in accordance with the 
applicable laws and regulations governing appointments within 
the designated Federal entity.

           *       *       *       *       *       *       *

      [(f)(1) For purposes of carrying out subsection (c) with 
respect to the United States Postal Service, the appointment 
provisions of section 202(e) of title 39, United States Code, 
shall be applied.
      [(2) In carrying out the duties and responsibilities 
specified in this Act, the Inspector General of the United 
States Postal Service (hereinafter in this subsection referred 
to as the ``Inspector General'') shall have oversight 
responsibility for all activities of the Postal Inspection 
Service, including any internal investigation performed by the 
Postal Inspection Service. The Chief Postal Inspector shall 
promptly report the significant activities being carried out by 
the Postal Inspection Service to such Inspector General.
      [(3)(A)(i) Notwithstanding subsection (d), the Inspector 
General shall be under the authority, direction, and control of 
the Governors with respect to audits or investigations, or the 
issuance of subpoenas, which require access to sensitive 
information concerning--
            [(I) ongoing civil or criminal investigations or 
        proceedings;
            [(II) undercover operations;
            [(III) the identity of confidential sources, 
        including protected witnesses;
            [(IV) intelligence or counterintelligence matters; 
        or
            [(V) other matters the disclosure of which would 
        constitute a serious threat to national security.
        [(ii) With respect to the information described under 
clause (i), the Governors may prohibit the Inspector General 
from carrying out or completing any audit or investigation, or 
from issuing any subpoena, after such Inspector General has 
decided to initiate, carry out, or complete such audit or 
investigation or to issue such subpoena, if the Governors 
determine that such prohibition is necessary to prevent the 
disclosure of any information described under clause (i) or to 
prevent the significant impairment to the national interests of 
the United States.
        [(iii) If the Governors exercise any power under clause 
(i) or (ii), the Governors shall notify the Inspector General 
in writing stating the reasons for such exercise. Within 30 
days after receipt of any such notice, the Inspector General 
shall transmit a copy of such notice to the Committee on 
Governmental Affairs of the Senate and the Committee on 
Government Reform and Oversight of the House of 
Representatives, and to other appropriate committees or 
subcommittees of the Congress.
        [(B) In carrying out the duties and responsibilities 
specified in this Act, the Inspector General--
            [(i) may initiate, conduct and supervise such 
        audits and investigations in the United States Postal 
        Service as the Inspector General considers appropriate; 
        and
            [(ii) shall give particular regard to the 
        activities of the Postal Inspection Service with a view 
        toward avoiding duplication and insuring effective 
        coordination and cooperation.
        [(C) Any report required to be transmitted by the 
Governors to the appropriate committees or subcommittees of the 
Congress under section 5(d) shall also be transmitted, within 
the seven-day period specified under such section, to the 
Committee on Governmental Affairs of the Senate and the 
Committee on Government Reform and Oversight of the House of 
Representatives.
        [(3) Nothing in this Act shall restrict, eliminate, or 
otherwise adversely affect any of the rights, privileges, or 
benefits of either employees of the United States Postal 
Service, or labor organizations representing employees of the 
United States Postal Service, under chapter 12 of title 39, 
United States Code, the National Labor Relations Act, any 
handbook or manual affecting employee labor relations with the 
United States Postal Service, or any collective bargaining 
agreement.
        [(4) As used in this subsection, the term ``Governors'' 
has the meaning given such term by section 102(3) of title 39, 
United States Code.]

           *       *       *       *       *       *       *


     SPECIAL PROVISIONS CONCERNING THE UNITED STATES POSTAL SERVICE

    Sec. 8J.  (a) In carrying out the duties and 
responsibilities specified in this Act, the Inspector General 
of the United States Postal Service shall have oversight 
responsibility for all activities of the Postal Inspection 
Service, including any internal investigation performed by the 
Postal Inspection Service. The Chief Postal Inspector shall 
promptly report any significant activities being carried out by 
the Postal Inspection Service to such Inspector General. The 
Postmaster General shall promptly report to such Inspector 
General all allegations of theft, fraud, or misconduct by 
Postal Service officers or employees, and entities or 
individuals doing business with the Postal Service.
    (b) In the case of any report that the Governors of the 
United States Postal Service (within the meaning of section 
102(3) of title 39, United States Code) are required to 
transmit under the second sentence of section 5(d), such 
sentence shall be applied by deeming the term ``appropriate 
committees of Congress'' to mean the Committee on Government 
Reform of the House of Representatives, the Committee on 
Governmental Affairs of the Senate, and such other committees 
or subcommittees of Congress as may be appropriate.
    (c) Notwithstanding any provision of paragraph (7) or (8) 
of section 6(a), the Inspector General of the United States 
Postal Service may select, appoint, and employ such officers 
and employees as may be necessary for carrying out the 
functions, powers, and duties of the Office of Inspector 
General and to obtain the temporary or intermittent services of 
experts or consultants or an organization of experts or 
consultants, subject to the applicable laws and regulations 
that govern such selections, appointments, and employment, and 
the obtaining of such services, within the United States Postal 
Service.
    (d) Nothing in this Act shall restrict, eliminate, or 
otherwise adversely affect any of the rights, privileges, or 
benefits of employees of the United States Postal Service, or 
labor organizations representing employees of the United States 
Postal Service, under chapter 12 of title 39, United States 
Code, the National Labor Relations Act, any handbook or manual 
affecting employee labor relations with the United States 
Postal Service, or any collective bargaining agreement.
    (e) There are authorized to be appropriated, out of the 
Postal Service Fund, such sums as may be necessary for the 
Office of Inspector General of the United States Postal 
Service.

               RULE OF CONSTRUCTION OF SPECIAL PROVISIONS

    Sec. [8J.] 8K. The special provisions under section 8, 8A, 
8B, 8C, 8D, [8E or 8F] 8E, 8F, 8H, or 8J of this Act relate 
only to the establishment named in such section and no 
inference shall be drawn from the presence or absence of a 
provision in any such section with respect to an establishment 
not named in such section or with respect to a designated 
Federal entity as defined under section 8G(a).

           *       *       *       *       *       *       *


                              DEFINITIONS

    Sec. 11. As used in this Act--
            (1) the term ``head of the establishment'' means 
        the Secretary of Agriculture, Commerce, Defense, 
        Education, Energy, Health and Human Services, Housing 
        and Urban Development, the Interior, Labor, State, 
        Transportation, Homeland Security, or the Treasury; the 
        Attorney General; the Administrator of the Agency for 
        International Development, Environmental Protection, 
        General Services, National Aeronautics and Space, or 
        Small Business, or Veterans' Affairs; the Director of 
        the Federal Emergency Management Agency, or the Office 
        of Personnel Management; the Chairman of the Nuclear 
        Regulatory Commission or the Railroad Retirement Board; 
        the Chairperson of the Thrift Depositor Protection 
        Oversight Board; the Chief Executive Officer of the 
        Corporation for National and Community Service; the 
        Administrator of the Community Development Financial 
        Institutions Fund; the chief executive officer of the 
        Resolution Trust Corporation; the Chairperson of the 
        Federal Deposit Insurance Corporation; the Commissioner 
        of Social Security, Social Security Administration; the 
        Board of Directors of the Tennessee Valley Authority; 
        [or] the President of the Export-Import Bank; or the 
        Governors of the United States Postal Service (within 
        the meaning of section 102(3) of title 39, United 
        States Code); as the case may be;
            (2) the term ``establishment'' means the Department 
        of Agriculture, Commerce, Defense, Education, Energy, 
        Health and Human Services, Housing and Urban 
        Development, the Interior, Justice, Labor, State, 
        Transportation, Homeland Security, or the Treasury; the 
        Agency for International Development, the Community 
        Development Financial Institutions Fund, the 
        Environmental Protection Agency, the Federal Emergency 
        Management Agency, the General Services Administration, 
        the National Aeronautics and Space Administration, the 
        Nuclear Regulatory Commission, the Office of Personnel 
        Management, the Railroad Retirement Board, the 
        Resolution Trust Corporation, the Federal Deposit 
        Insurance Corporation, the Small Business 
        Administration, the Corporation for National and 
        Community Service, or the Veterans' Administration, the 
        Social Security Administration, the Tennessee Valley 
        Authority, [or] the Export-Import Bank, or the United 
        States Postal Service, as the case may be;
          * * * * * * *
                              ----------                              


              SECTION 160 OF THE ENERGY POLICY ACT OF 1992

SEC. 160. INSPECTOR GENERAL REVIEW AND AGENCY ACCOUNTABILITY.

    (a) Audit Survey.--Not later than 120 days after the date 
of the enactment of this Act, each Inspector General created to 
conduct and supervise audits and investigations relating to the 
programs and operations of the establishments listed in section 
11(2) of the Inspector General Act of 1978 (5 U.S.C. App.)[, 
and the Chief Postal Inspector of the United States Postal 
Service, in accordance with section 8E(f)(1) as established by 
section 8E(a)(2) of the Inspector General Act Amendments of 
1988 (Public Law 100-504)] shall--
            (1) * * *
          * * * * * * *
                              ----------                              


               SECTION 8 OF THE POSTAL REORGANIZATION ACT

              transfer of post office department personnel
    Sec. 8. (a) Officers and employees of the Post Office 
Department shall become officers and employees of the United 
States Postal Service on the effective date of this section. 
The provisions of this section shall not apply to persons 
occupying the positions of Postmaster General, Deputy 
Postmaster General, Assistant Postmasters General, General 
Counsel, or Judicial Officer. This section shall not be 
construed, however, to prohibit the appointment of such persons 
to positions in the Postal Service.
    (b) For purposes of chapter 81 of title 5, United States 
Code, the Postal Service shall, with respect to any individual 
receiving benefits under such chapter as an officer or employee 
of the former Post Office Department, have the same authorities 
and responsibilities as it has with respect to an officer or 
employee of the Postal Service receiving such benefits.
                              ----------                              


                      TITLE 49, UNITED STATES CODE

          * * * * * * *

                    SUBTITLE VII--AVIATION PROGRAMS

          * * * * * * *

                    SUBPART II--ECONOMIC REGULATION

          * * * * * * *

                 CHAPTER 411--AIR CARRIER CERTIFICATES

          * * * * * * *

Sec. 41107. Transportation of mail

    When the United States Postal Service finds that the needs 
of the Postal Service require the transportation of mail by 
aircraft [in foreign air transportation or] between places in 
Alaska, in addition to the transportation of mail authorized 
under certificates in effect, the Postal Service shall certify 
that finding to the Secretary of Transportation with a 
statement about the additional transportation and facilities 
necessary to provide the additional transportation. A copy of 
each certification and statement shall be posted for at least 
20 days in the office of the Secretary. After notice and an 
opportunity for a hearing, the Secretary shall issue a new 
certificate under section 41102 of this title, or amend or 
modify an existing certificate under section 41110(a)(2)(A) of 
this title, to provide the additional transportation and 
facilities if the Secretary finds the additional transportation 
is required by the public convenience and necessity.
          * * * * * * *

                  CHAPTER 419--TRANSPORTATION OF MAIL

          * * * * * * *

Sec. 41901. General authority

    [(a) Title 39.--The United States Postal Service may 
provide for the transportation of mail by aircraft in 
interstate air transportation under section 5402(e) and (f) of 
title 39.]
    (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.
    (b) Authority To Prescribe Prices.--Except as provided in 
section 5402 of title 39, on the initiative of the Secretary of 
Transportation or on petition by the Postal Service or an air 
carrier, the Secretary shall prescribe and publish--
            (1) after notice and an opportunity for a hearing 
        on the record, reasonable prices to be paid by the 
        Postal Service for the transportation of mail by 
        aircraft [in foreign air transportation or] between 
        places in Alaska, the facilities used in and useful for 
        the transportation of mail, and the services related to 
        the transportation of mail for each carrier holding a 
        certificate that authorizes that transportation;

           *       *       *       *       *       *       *


Sec. 41902. Schedules for certain transportation of mail

    (a) Requirement.--Except as provided in section 41906 of 
this title and section 5402 of title 39, an air carrier may 
transport mail by aircraft [in foreign air transportation or] 
between places in Alaska only under a schedule designated or 
required to be established under subsection (c) of this section 
for the transportation of mail.
    (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 provide foreign air transportation (other 
        than foreign air transportation of mail);

           *       *       *       *       *       *       *


Sec. 41903. Duty to provide certain transportation of mail

    (a) Air Carriers.--Subject to subsection (b) of this 
section, an air carrier authorized by its certificate to 
transport mail by aircraft [in foreign air transportation or] 
between places in Alaska shall--
            (1) * * *
          * * * * * * *
    (b) Maximum Mail Load.--The Secretary of Transportation may 
prescribe the maximum mail load for a schedule or for an 
aircraft or type of aircraft for the transportation of mail by 
aircraft [in foreign air transportation or] between places in 
Alaska. If the Postal Service tenders to an air carrier mail 
exceeding the maximum load for transportation by the carrier 
under a schedule designated or required to be established for 
the transportation of mail under section 41902(c) of this 
title, the carrier, as nearly in accordance with the schedule 
as the Secretary decides is possible, shall--
            (1) * * *
          * * * * * * *

Sec. 41907. Prices for foreign transportation of mail

    [(a) Limitations.--]When air transportation is provided 
between the United States and a foreign country both by 
aircraft owned or operated by an air carrier holding a 
certificate under chapter 411 of this title and by aircraft 
owned or operated by a foreign air carrier, the United States 
Postal Service may not pay to or for the account of the foreign 
air carrier a price for transporting mail by aircraft between 
the United States and the foreign country that the Postal 
Service believes will result (over a reasonable period 
determined by the Postal Service considering exchange 
fluctuations and other factors) in the foreign air carrier 
receiving a price for transporting the mail that is higher than 
the price--
            (1) the government of a foreign country or foreign 
        postal administration pays to air carriers for 
        transporting mail of the foreign country by aircraft 
        between the foreign country and the United States; or
            (2) determined by the Postal Service to be 
        comparable to the price the government of a foreign 
        country or foreign postal administration pays to air 
        carriers for transporting mail of the foreign country 
        by aircraft between the foreign country and an 
        intermediate country on the route of the air carrier 
        between the foreign country and the United States.
    [(b) Changes.--The Secretary of Transportation shall act 
expeditiously on proposed changes in prices for transporting 
mail by aircraft in foreign air transportation. When 
prescribing those prices, the Secretary shall consider--
            [(1) the prices paid for transportation of mail 
        under the Universal Postal Union Convention as ratified 
        by the United States Government;
            [(2) the price-making elements used by the 
        Universal Postal Union in prescribing its airmail 
        prices; and
            [(3) the competitive disadvantage to United States 
        flag air carriers resulting from foreign air carriers 
        receiving Universal Postal Union prices for 
        transporting United States mail and national origin 
        mail of their own countries.]
          * * * * * * *
                              ----------                              


                      TITLE 18, UNITED STATES CODE

          * * * * * * *

                             PART I--CRIMES

          * * * * * * *

                       CHAPTER 83--POSTAL SERVICE

          * * * * * * *

Sec. 1716. Injurious articles as nonmailable

    (a) All kinds of poison, and all articles and compositions 
containing poison, and all poisonous animals, insects, 
reptiles, and all explosives, hazardous materials, inflammable 
materials, infernal machines, and mechanical, chemical, or 
other devices or compositions which may ignite or explode, and 
all disease germs or scabs, and all other natural or artificial 
articles, compositions, or material which may kill or injure 
another, or injure the mails or other property, whether or not 
sealed as first-class matter, are nonmailable matter and shall 
not be conveyed in the mails or delivered from any post office 
or station thereof, nor by any officer or employee of the 
Postal Service.
          * * * * * * *

                      PART II--CRIMINAL PROCEDURE

          * * * * * * *

                   CHAPTER 203--ARREST AND COMMITMENT

          * * * * * * *

Sec. 3061. Investigative powers of Postal Service personnel

    (a) * * *
          * * * * * * *
    (c)(1) The Postal Service may employ police officers for 
duty in connection with the protection of property owned or 
occupied by the Postal Service or under the charge and control 
of the Postal Service, and persons on the property, including 
duty in areas outside the property to the extent necessary to 
protect the property and persons on the property.
    (2) With respect to such property, such officers shall have 
the power to--
            (A) enforce Federal laws and regulations for the 
        protection of persons and property;
            (B) carry firearms; and
            (C) make arrests without a warrant for any offense 
        against the United States committed in the presence of 
        the officer or for any felony cognizable under the laws 
        of the United States if the officer has reasonable 
        grounds to believe that the person to be arrested has 
        committed or is committing a felony.
    (3) With respect to such property, such officers may have, 
to such extent as the Postal Service may by regulations 
prescribe, the power to--
            (A) serve warrants and subpoenas issued under the 
        authority of the United States; and
            (B) conduct investigations, on and off the property 
        in question, of offenses that may have been committed 
        against property owned or occupied by the Postal 
        Service or persons on the property.
    (4)(A) As to such property, the Postmaster General may 
prescribe regulations necessary for the protection and 
administration of property owned or occupied by the Postal 
Service and persons on the property. The regulations may 
include reasonable penalties, within the limits prescribed in 
subparagraph (B), for violations of the regulations. The 
regulations shall be posted and remain posted in a conspicuous 
place on the property.
    (B) A person violating a regulation prescribed under this 
subsection shall be fined under this title, imprisoned for not 
more than 30 days, or both.

           *       *       *       *       *       *       *

                              ----------                              


SECTION 3 OF THE POSTAL CIVIL SERVICE RETIREMENT SYSTEM FUNDING REFORM 
                              ACT OF 2003

                          (Public Law 108-18)



           *       *       *       *       *       *       *
[SEC. 3. DISPOSITION OF SAVINGS ACCRUING TO THE UNITED STATES POSTAL 
                    SERVICE.

    [(a) In General.--Savings accruing to the United States 
Postal Service as a result of the enactment of this Act--
            [(1) shall, to the extent that such savings are 
        attributable to fiscal year 2003 or 2004, be used to 
        reduce the postal debt (in consultation with the 
        Secretary of the Treasury), and the Postal Service 
        shall not incur additional debt to offset the use of 
        the savings to reduce the postal debt in fiscal years 
        2003 and 2004;
            [(2) shall, to the extent that such savings are 
        attributable to fiscal year 2005, be used to continue 
        holding postage rates unchanged and to reduce the 
        postal debt, to such extent and in such manner as the 
        Postal Service shall specify (in consultation with the 
        Secretary of the Treasury); and
            [(3) to the extent that such savings are 
        attributable to any fiscal year after fiscal year 2005, 
        shall be considered to be operating expenses of the 
        Postal Service and, until otherwise provided for by 
        law, shall be held in escrow and may not be obligated 
        or expended.
    [(b) Amounts Saved.--
            [(1) In general.--The amounts representing any 
        savings accruing to the Postal Service in any fiscal 
        year as a result of the enactment of this Act shall be 
        computed by the Office of Personnel Management for each 
        such fiscal year in accordance with paragraph (2).
            [(2) Methodology.--Not later than July 31, 2003, 
        the Office of Personnel Management shall--
                    [(A) formulate a plan specifically 
                enumerating the actuarial methods and 
                assumptions by which the Office shall make its 
                computations under paragraph (1); and
                    [(B) submit such plan to the Committee on 
                Government Reform of the House of 
                Representatives and the Committee on 
                Governmental Affairs of the Senate.
            [(3) Requirements.--The plan shall be formulated in 
        consultation with the Postal Service and shall include 
        the opportunity for the Postal Service to request 
        reconsideration of computations under this subsection, 
        and for the Board of Actuaries of the Civil Service 
        Retirement System to review and make adjustments to 
        such computations, to the same extent and in the same 
        manner as provided under section 8423(c) of title 5, 
        United States Code.
    [(c) Reporting Requirement.--The Postal Service shall 
include in each report rendered under section 2402 of title 39, 
United States Code, the amount applied toward reducing the 
postal debt, and the size of the postal debt before and after 
the application of subsection (a), during the period covered by 
such report.
    [(d) Sense of Congress.--It is the sense of the Congress 
that--
            [(1) the savings accruing to the Postal Service as 
        a result of the enactment of this Act will be 
        sufficient to allow the Postal Service to fulfill its 
        commitment to hold postage rates unchanged until at 
        least 2006;
            [(2) because the Postal Service still faces 
        substantial obligations related to postretirement 
        health benefits for its current and former employees, 
        some portion of the savings referred to in paragraph 
        (1) should be used to address those unfunded 
        obligations; and
            [(3) none of the savings referred to in paragraph 
        (1) should be used in the computation of any bonuses 
        for Postal Service executives.
    [(e) Postal Service Proposal.--
            [(1) In general.--The United States Postal Service 
        shall, by September 30, 2003, prepare and submit to the 
        President, the Congress, and the General Accounting 
        Office its proposal detailing how any savings accruing 
        to the Postal Service as a result of the enactment of 
        this Act, which are attributable to any fiscal year 
        after fiscal year 2005, should be expended.
            [(2) Matters to consider.--In preparing its 
        proposal under this subsection, the Postal Service 
        shall consider--
                    [(A) whether, and to what extent, those 
                future savings should be used to address--
                            [(i) debt repayment;
                            [(ii) prefunding of postretirement 
                        healthcare benefits for current and 
                        former postal employees;
                            [(iii) productivity and cost saving 
                        capital investments;
                            [(iv) delaying or moderating 
                        increases in postal rates; and
                            [(v) any other matter; and
                    [(B) the work of the President's Commission 
                on the United States Postal Service under 
                section 5 of Executive Order 13278 (67 Fed. 
                Reg. 76672).
            [(3) GAO review and report.--Not later than 60 days 
        after the Postal Service submits its proposal pursuant 
        to paragraph (1), the General Accounting Office shall 
        prepare and submit a written evaluation of such 
        proposal to the Committee on Government Reform of the 
        House of Representatives and the Committee on 
        Governmental Affairs of the Senate.
            [(4) Legislative action.--Not later than 180 days 
        after it has received both the proposal of the Postal 
        Service and the evaluation of such proposal by the 
        General Accounting Office under this subsection, 
        Congress shall revisit the question of how the savings 
        accruing to the Postal Service as a result of the 
        enactment of this Act should be used.
    [(f) Determination and Disposition of Surplus.--
            [(1) In general.--If, as of the date under 
        paragraph (2), the Office of Personnel Management 
        determines (after consultation with the Postmaster 
        General) that the computation under section 
        8348(h)(1)(A) of title 5, United States Code, yields a 
        negative amount (hereinafter referred to as a 
        ``surplus'')--
                    [(A) the Office shall inform the Postmaster 
                General of its determination, including the 
                size of the surplus so determined; and
                    [(B) the Postmaster General shall submit to 
                the Congress a report describing how the Postal 
                Service proposes that such surplus be used, 
                including a draft of any legislation that might 
                be necessary.
            [(2) Determination date.--The date to be used for 
        purposes of paragraph (1) shall be September 30, 2025, 
        or such earlier date as, in the judgment of the Office, 
        is the date by which all postal employees under the 
        Civil Service Retirement System will have retired.
    [(g) Definitions.--For purposes of this section--
            [(1) the savings accruing to the Postal Service as 
        a result of the enactment of this Act shall, for any 
        fiscal year, be equal to the amount (if any) by which--
                    [(A) the contributions that the Postal 
                Service would otherwise have been required to 
                make to the Civil Service Retirement and 
                Disability Fund for such fiscal year if this 
                Act had not been enacted, exceed
                    [(B) the contributions made by the Postal 
                Service to such Fund for such fiscal year; and
            [(2) the term ``postal debt'' means the outstanding 
        obligations of the Postal Service, as determined under 
        chapter 20 of title 39, United States Code.]

                      Commitee Jurisdiction Letter



                           Markup Transcript



                            BUSINESS MEETING

                     WEDNESDAY, SEPTEMBER 15, 2004

                  House of Representatives,
                                Committee on the Judiciary,
                                                    Washington, DC.
    The Committee met, pursuant to notice, at 10:10 a.m., in 
Room 2141, Rayburn House Office Building, Hon. F. James 
Sensenbrenner, Jr. [Chairman of the Committee] presiding.
    Chairman Sensenbrenner. The Committee will be in order. A 
working quorum is present.
    Pursuant to notice I call up the bill, H.R. 4341, the 
``Postal Accountability and Enhancement Act,'' for purposes of 
markup, and move its favorable recommendation to the House.
    Without objection, the bill will be considered as read and 
open for amendment at any point, and the Chair recognizes 
himself for 5 minutes to explain the bill.
    [The bill, H.R. 4341, follows:]




    Chairman Sensenbrenner. The U.S. Postal Service is the hub 
of a $900 billion industry employing 9 million American 
workers. Over the last several years, alternative technologies 
have led to a decrease in mail shipped by the Postal Service. 
Unfortunately, changing industry conditions have not been 
accompanied by structural reform of the Postal Service. This 
has produced a series of rate increases that serve as a direct 
tax on businesses and consumers.
    The Postal Accountability and Enhancement Act seeks to 
streamline the Postal Service by permitting it to engage in 
competing activities in a manner similar to private firms while 
protecting private industry from unfair competition. This 
legislation reflects the product of considerable consultation 
and deliberation, and was reported by the Committee on 
Government Reform and Oversight by unanimous consent on May 12.
    The Judiciary Committee received a sequential referral on 
several sections of this legislation. First, section 205 
revises the complaint and appellate review procedures of the 
Postal Regulatory Commission, which is charged with setting 
postage rates and defining activities in which the Postal 
Service may compete with private industry.
    Section 301 establishes an off-budget fund within the 
Treasury Department for revenues and expenditures associated 
with services offered by the Postal Service on a competitive 
basis.
    Section 303 prohibits the Postal Service from issuing 
regulations that preclude competition or compel the disclosure 
of protected intellectual property.
    Section 304 ensures that laws regulating the conduct of 
private commercial activities also apply to the competitive 
activities undertaken by the Postal Service, including the 
antitrust laws, the Federal Trade Commission Act, and laws 
pertaining to sovereign immunity. This section also provides 
that the Postal Service, to the extent it engages in 
competitive activities, be considered a person for purposes of 
the bankruptcy laws. There are several problems associated with 
this bankruptcy provision, and Ranking Member Conyers and I 
will offer an amendment to strike it.
    Section 502 provides authority for the Postal Regulatory 
Commission to issue subpoenas to compel disclosure of evidence 
in its proceedings and to refer failures to adhere to 
Commission directives to Federal district court.
    Section 703 requires the FTC to prepare a report detailing 
how Federal and State laws apply differently to competitive 
activities of the Postal Service and private companies.
    Section 801 provides permanent authority for the Postal 
Service to employ postal police to protect property and persons 
on Postal Service property, and gives the Attorney General 
authority to collect penalties and cleanup costs associated 
with the unlawful mailing of hazardous materials.
    Finally, section 809 prohibits the mailing of hazardous 
materials and clarifies penalties for their shipment. While I 
fully support these provisions, Crime, Terrorism, and Homeland 
Security Subcommittee Chairman Coble will offer an amendment to 
place these changes to existing law in Title 18 of the United 
States Code, where they belong.
    I would also note that Members should limit their 
amendments to those portions of the sections which the 
Committee has jurisdiction over.
    H.R. 4341 was the product of careful consideration and 
deliberation, and I urge my colleagues to support the 
provisions within the Committee's jurisdiction.
    I yield back the balance of my time.
    Does anybody wish to give an opening statement on the 
Democratic side?
    The gentleman from Virginia.
    Mr. Scott. Mr. Chairman, I ask unanimous consent that 
Members be given an opportunity to present their statements for 
the record.
    Chairman Sensenbrenner. Without objection.
    Are there amendments?
    The Chair has an amendment at the desk.
    The Clerk. Amendment to H.R. 4341 offered by Mr. 
Sensenbrenner and Mr. Conyers. Page 55, strike lines 13 through 
16 and make such technical and conforming changes as may be 
appropriate.
    [The amendment follows:]

    
    
    Chairman Sensenbrenner. The Chair recognizes himself for 5 
minutes.
    A provision in section 304 would in effect make the Postal 
Service, to the extent that it engages in conduct with respect 
to the provision of competitive products, eligible for 
bankruptcy relief either on a voluntary or involuntary basis. 
What this amendment does is strike that.
    I ask unanimous consent that my full statement appear in 
the record, and yield back the balance of my time.
    [The prepared statement of Mr. Sensenbrenner follows:]
  Prepared Statement of the Honorable F. James Sensenbrenner, Jr., a 
 Representative in Congress From the State of Wisconsin, and Chairman, 
                       Committee on the Judiciary
    A provision in Section 304 of H.R. 4341 would in effect make the 
Postal Service--to the extent it engages in conduct with respect to the 
provision of competitive products--eligible for bankruptcy relief, 
either on a voluntary or involuntary basis. Under current bankruptcy 
law, a governmental unit like the Postal Service, is not eligible to be 
a bankruptcy debtor. While this provision in Section 304 may be 
conceptually appealing, it unfortunately presents significant 
implementation issues.
    The biggest problem presented by this provision is that it would be 
virtually impossible to implement under the Bankruptcy Code as it only 
allows some ill-defined portion of the Postal Service, that is--the 
part that engages in competitive activities--to be eligible for 
bankruptcy relief.
    Although H.R. 4341 will create a much needed financial firewall 
between the Postal Service's market dominant services (such as First 
Class Mail) and its competitive services, this firewall will not result 
in a legal bifurcation of the Postal Service into separate entities. 
Bankruptcy law simply lacks any means to accord partial eligibility to 
a debtor. The entire entity must be eligible for bankruptcy relief.
    In addition, this provision may actually have the unintended result 
of giving the Postal Service an unfair, anti-competitive advantage with 
respect to its private sector counterparts. This provision would allow 
the Postal Service to avail itself of various extraordinary protections 
and equitable remedies unique to bankruptcy--such as the power to avoid 
certain contractual obligations and leases as well as the power to 
modify collective bargaining agreements and retiree benefits--that are 
not available to the Service's private sector counterparts outside of 
bankruptcy.
    In a somewhat rare bipartisan meeting of the minds on the subject 
of bankruptcy in this Committee, I am pleased to offer an amendment 
together with my colleague, the Ranking Member of this Committee, that 
simply strikes this provision from Section 304 of H.R. 4341. 
Accordingly, I urge my colleagues--on both sides of the aisle--to 
support our amendment.

    Chairman Sensenbrenner. The question is on agreeing to the 
Sensenbrenner-Conyers amendment. Those in favor will say aye.
    Those opposed, no.
    The ayes appear to have it. The ayes have it. The amendment 
is agreed to.
    Are there further amendments?
    The gentleman from North Carolina Mr. Coble.
    Mr. Coble. I have an amendment at the desk.
    Chairman Sensenbrenner. The Clerk will report the 
amendment.
    The Clerk. Amendment to H.R. 4341, offered by Mr. Coble----
    Mr. Coble. I ask unanimous consent that it be considered as 
read.
    Chairman Sensenbrenner. Without objection, the amendment is 
considered as read.
    [The amendment follows:]
      


    Chairman Sensenbrenner. The gentleman from North Carolina 
is recognized for 5 minutes.
    Mr. Coble. Mr. Chairman, this amendment is simple. We have 
run this by the Majority and Minority. There appear to be no 
objections to it.
    The amendment creates two provisions in Title 18. First, 
the Postal Service currently employs more than 1,000 uniformed 
postal police officers who are assigned to critical postal 
facilities throughout the country. These officers are providing 
vital protective and security functions. Each year the 
authority for these officers has been provided in appropriation 
bills. The original legislation sought to make this authority 
permanent, which I do not oppose. However, I believe that if 
this authority is to be provided, it should be included in 
Title 18 along with the other police authorities of the Postal 
Service and other Federal Government agencies. The amendment 
establishes the authority of the Postal Service to employ these 
officers in Title 18.
    The second part of the amendment amends section 80 of H.R. 
4341. The original bill modifies current law, which has civil 
penalties for mailing certain nonmailable materials to include 
penalties for mailing hazardous materials.
    Currently Title 18 includes criminal penalties which mirror 
these civil penalties for mailing prohibited materials. The 
amendment adds hazardous materials to the list of nonmailable 
materials for which penalties may be imposed.
    Under Title 18, the Postal Service may continue to permit 
the transmission of these items under such rules and 
regulations as they provide or prescribe. The amendment makes 
these civil and criminal penalties consistent for all 
nonmailable items and continues to allow the Postal Service to 
make any exceptions it deems necessary. However, it does 
communicate the dangerous consequences of mailing these items.
    I urge my colleagues to support the amendment.
    Chairman Sensenbrenner. Does the gentleman yield back?
    Mr. Coble. I yield back.
    Chairman Sensenbrenner. The question is on agreeing to the 
amendment offered by the gentleman from North Carolina Mr. 
Coble. Those in favor will say aye.
    Those opposed, no.
    The ayes appear to have it. The ayes have it. The amendment 
is agreed to.
    Are there further amendments?
    Ms. Jackson Lee. Mr. Chairman, I am listening to see 
whether there are further amendments. I would like to strike 
the last word.
    Chairman Sensenbrenner. The gentlewoman is recognized for 5 
minutes.
    Ms. Jackson Lee. Thank you very much, Mr. Chairman.
    To my colleagues, I do have an amendment at the desk that 
at this time I will not offer, but I do want to raise this 
point, because I believe it is a sufficiently important point 
that I hope that I would have bipartisan support as we go to 
the floor of the House.
    The Chairman knows of his leadership on the No Fear Act, 
which some would call one of the first civil rights acts of the 
21st century, and it deals with Federal employees. I want to 
have an amendment that sort of tracks the No Fear Act as 
relates to the Postal Service, but specifically focusing on the 
question of civil rights within that system and Service. The 
amendment I would have offered would have discussed that or 
presented those issues to my colleagues.
    We are going to continue to work on this legislation. I 
would like to be able to work with the Chairman and others just 
to ensure that it works for this system and the reform that is 
in place. I know a lot of this work deals with the Government 
Reform Committee, the Committee that deals with that 
restructuring, but I do believe these are important issues, 
particularly in our Federal agencies where employees' rights 
are of particular importance, and we have the responsibility to 
address that question.
    Again, I would have offered this amendment. I will look 
forward to offering this amendment as this legislation goes to 
the floor and working with my colleagues on what I think is an 
important addition to the reform of the U.S. Postal Service.
    With that, I yield back my time.
    Chairman Sensenbrenner. Are there further amendments?
    If there are no further amendments, a reporting quorum is 
present.
    The question occurs on the motion to report the bill, H.R. 
4341, favorably as amended. All in favor will say aye.
    Opposed, no.
    The ayes appear to have it. The ayes have it. The motion to 
report favorably is agreed to.
    Without objection, the bill will be reported favorably to 
the House in the form of a single amendment in the nature of a 
substitute incorporating the amendments made today here.
    Without objection, the Chairman is authorized to move to go 
to conference pursuant to House rules.
    Without objection, the staff is directed to make any 
technical and conforming changes, and all Members will be given 
2 days as provided by the House rules to present additional 
supplemental or dissenting Minority views.

                                 
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