[Senate Report 113-237]
[From the U.S. Government Publishing Office]


                                                       Calendar No. 523

113th Congress  }                                         {     Report
                                 SENATE
 2d Session     }                                         {    113-237
_______________________________________________________________________



                       POSTAL REFORM ACT OF 2013

                               __________

                              R E P O R T

                                 of the

                   COMMITTEE ON HOMELAND SECURITY AND

                          GOVERNMENTAL AFFAIRS

                          UNITED STATES SENATE

                         WITH ADDITIONAL VIEWS

                              to accompany

                                S. 1486

  TO IMPROVE, SUSTAIN, AND TRANSFORM THE UNITED STATES POSTAL SERVICE

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]


                 July 31, 2014.--Ordered to be printed

                               __________

                         U.S. GOVERNMENT PRINTING OFFICE 

39-010                         WASHINGTON : 2014 












        COMMITTEE ON HOMELAND SECURITY AND GOVERNMENTAL AFFAIRS

                  THOMAS R. CARPER, Delaware, Chairman
CARL LEVIN, Michigan                 TOM COBURN, Oklahoma
MARK L. PRYOR, Arkansas              JOHN McCAIN, Arizona
MARY L. LANDRIEU, Louisiana          RON JOHNSON, Wisconsin
CLAIRE McCASKILL, Missouri           ROB PORTMAN, Ohio
JON TESTER, Montana                  RAND PAUL, Kentucky
MARK BEGICH, Alaska                  MICHAEL B. ENZI, Wyoming
TAMMY BALDWIN, Wisconsin             KELLY AYOTTE, New Hampshire
HEIDI HEITKAMP, North Dakota

                  Gabrielle A. Batkin, Staff Director
               John P. Kilvington, Deputy Staff Director
                    Beth M. Grossman, Chief Counsel
       Lawrence B. Novey, Chief Counsel for Governmental Affairs
                  Katherine C. Sybenga, Senior Counsel
                Robert H. Bradley, Legislative Assistant
               Keith B. Ashdown, Minority Staff Director
         Christopher J. Barkley, Minority Deputy Staff Director
               Andrew C. Dockham, Minority Chief Counsel
Joseph D. Moeller, Minority U.S. Postal Service Office of the Inspector 
                            General Detailee
                     Laura W. Kilbride, Chief Clerk















                                                       Calendar No. 523
113th Congress   }                                          {    Report
                                 SENATE
 2d Session      }                                          {   113-237

======================================================================
 
                       POSTAL REFORM ACT OF 2013

                                _______
                                

                 July 31, 2014.--Ordered to be printed

                                _______
                                

 Mr. Carper, from the Committee on Homeland Security and Governmental 
                    Affairs, submitted the following

                              R E P O R T

                             together with

                            ADDITIONAL VIEWS

                         [To accompany S. 1486]

    The Committee on Homeland Security and Governmental 
Affairs, to which was referred the bill (S. 1486), to improve, 
sustain and transform the United States Postal Service, having 
considered the same, reports favorably thereon with an 
amendment and recommends that the bill as amended do pass.

                                CONTENTS

                                                                   Page
  I. Purpose and Summary..............................................1
 II. Background and Need for the Legislation..........................2
III. Legislative History.............................................21
 IV. Section-by-Section Analysis.....................................26
  V. Evaluation of Regulatory Impact.................................44
 VI. Congressional Budget Office Estimate............................44
VII. Changes in Existing Law Made by the Bill, as Reported...........70
     Appendix A--Postal Service Financial Projections...............167

                         I. Purpose and Summary

    S. 1486, the Postal Reform Act of 2014, seeks to address 
the United States Postal Service's short-term financial 
challenges while putting into place reforms intended to 
strengthen its long-term financial and commercial viability.

              II. Background and Need for the Legislation


                         A. GENERAL BACKGROUND

    In 2012, the Committee on Homeland Security and 
Governmental Affairs reported out legislation, S. 1789, 
intended to update the Postal Service's business model and take 
steps to address the financial challenges it faced as a result 
of the recent recession and of a decline in the use of hard-
copy mail. The Committee's report on that bill described the 
vital role the Postal Service plays in the U.S. economy, 
summarized the current legal framework of the Postal Service, 
and explained how recent trends have imperiled the long-term 
viability of the Postal Service as it currently exits.\1\ Then 
on April 25, 2012, after several days of debate and the 
adoption of several amendments, the full Senate passed S.1789 
by a vote of 62 to 37.\2\ The House never considered the Senate 
bill or passed any comparable legislation, however, and 
comprehensive postal reform legislation was not enacted during 
the 112th Congress.
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    \1\ ``21st Century Postal Service Act of 2012,'' Report of the 
Senate Committee on Homeland Security and Governmental Affairs to 
accompany S.1789, Senate Report no. 112-143 (Jan. 31, 2012), at pages 
1-4.
    \2\ Congressional Record, S.2695-S2696 (April 25, 2012).
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    The improving economy and the growing package delivery 
market have somewhat improved the Postal Service's short-term 
financial outlook since the Committee last acted on postal 
reform. In recent years, the volume of Standard Mail (a class 
of commercial mail that is lower-priority than First-Class 
Mail) has stabilized,\3\ and the Postal Service has seen a 
dramatic increase in package volume.\4\ In addition, the Postal 
Service has generated significant cost savings through dramatic 
and aggressive cost-cutting efforts. Postmaster General Patrick 
Donahoe described for this Committee the operational and 
workforce initiatives that the Postal Service has implemented 
to better align capacity and cost with reduced mail volumes:
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    \3\ Standard Mail is the largest-volume mail class, consisting of 
nearly 81 billion pieces in 2013. According to figures provided by the 
Postal Service, Standard Mail volume plummeted by nearly 17% in 2009 
compared to the previous year, but, since then, volume has gone through 
only relatively minor fluctuations: up by 0.1 percent in 2010, up an 
additional 2.6% in 2011, back down by 5.3% in 2012, and back up by 1.8% 
in 2013.
    \4\ The Postal Service's shipping and package services declined in 
2009 by 8.0% in volume from the previous year, saw an additional slight 
drop of 0.6% in 2010, and since then has seen steady growth: 6.6% in 
2011, and additional 7.5% in 2012, and a further 6.0% in 2013. See 
United States Postal Service Form 10-K for Fiscal Year 2013 at p. 25, 
available at http://about.usps.com/who-we-are/financials/10k-reports/
fy2013.pdf.

          These initiatives include the accelerated 
        consolidation of mail processing and delivery networks, 
        and the reduction in hours at 13,000 Post Offices, in 
        conjunction with the expansion of alternative retail 
        access. . . . This realignment of mail processing, 
        retail, and delivery operations is expected to generate 
        $6 billion in annual cost reductions by the year 2016.
          The Postal Service also continues to implement 
        efficiency measures by aligning staffing levels with 
        projected mail volume. These staffing level reductions 
        will be achieved primarily through attrition . . . . 
        [The Postal Service is also increasing the use of 
        lower-cost non-career employees], which will facilitate 
        the realignment of staffing and workload levels and the 
        reduction of costs. The Postal Service's current career 
        workforce of 492,000 is the smallest it has been in 
        decades and is down nearly 26 percent in the past five 
        years.\5\
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    \5\ ``Outside the Box: Reforming and Renewing the Postal Service, 
Part I--Maintaining Services, Reducing Costs and Increasing Revenue 
Through Innovation and Modernization,'' hearing before the Senate 
Committee on Homeland Security and Governmental Affairs, 113th Cong. 
(Sept. 19, 2013) (Testimony of Postmaster General Patrick R. Donahoe).

    However, the fundamental structural problems this Committee 
sought to address in 2012 remain unabated. The Postal Service 
continues to face serious financial challenges that threaten 
its short-term and long-term viability. First-Class Mail--the 
class of mail that makes the largest contribution to the Postal 
Service's bottom line--continues to decline. For example, 
Postal Service data show a persistent decline in First-Class 
Mail volume over the past five years: by 8.8 percent in 2009, a 
further 6.2 percent decline 2010, another 6.5 percent in 2011, 
another 5.3 percent decline in 2012, and yet another decline of 
4.2 percent in 2013. The Postal Service's last-published 5-year 
plan projects First-Class Mail volumes continuing to drop by 5 
to 6 percent each year.\6\
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    \6\ See U.S. Postal Service, ``Five-Year Business Plan'', April 
2013, http://about.usps.com/strategic-planning/five-year-business-plan-
2012-2017.pdf.
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    As of the end of the second quarter of Fiscal Year 2014, 
the Postal Service was carrying $3.7 billion in cash-on-
hand\7\--barely enough to cover two of its $1.75-billion bi-
weekly payrolls, not to mention its other obligations during 
the period. Moreover, the Postal Service has borrowed the full 
$15 billion it is permitted under law to borrow from the 
Treasury. In addition, the Postal Service's financial condition 
has made it difficult to invest in needed capital projects. 
Chief Financial Officer Joseph Corbett explained: ``Our 
liabilities exceed our assets by $42 billion and we have a need 
for more than $10 billion to invest in new delivery vehicles, 
package sortation equipment, and other deferred 
investments.''\8\ The Postmaster General has also stated that 
``legislative action is required to give the Postal Service 
authority to generate new revenue and adapt to changing 
business conditions, as the scope of products and services that 
the Postal Service can offer is currently limited by law.''\9\
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    \7\ See United States Postal Service Form 10-Q for Fiscal Year 
2014, Quarter 2 at p. 8, available at http://about.usps.com/who-we-are/
financials/financial-conditions-results-reports/fy2014-q2.pdf.
    \8\ U.S. Postal Service Records Second Quarter Loss of $1.9 
Billion: Urges Congress to Pass Comprehensive Postal Legislation,'' May 
09, 2014, http://about.usps.com/news/national-releases/2014/
pr14_031.htm. U.S. Postal Service Records Second Quarter Loss of $1.9 
Billion.
    \9\ ``Outside the Box: Reforming and Renewing the Postal Service, 
Part I--Maintaining Services, Reducing Costs and Increasing Revenue 
Through Innovation and Modernization,'' hearing before the Senate 
Committee on Homeland Security and Governmental Affairs, 113th Cong. 
(Sept. 19, 2013).
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    The Committee held an initial hearing to discuss these and 
other issues facing the Postal Service on February 13, 
2013.\10\ Senators Carper and Coburn introduced S. 1486 on 
August 1, 2013, and the Committee held further hearings on 
September 19 and September 26, 2013.\11\ Then on February 6, 
2014, after extensive debate and the consideration of nearly 30 
amendments, the Committee ordered the bill reported favorably 
to the full Senate by a vote of 9 to 1.
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    \10\ ``Solutions to the Crisis Facing the U.S. Postal Service,'' 
hearing before the Senate Committee on Homeland Security and 
Governmental Affairs, 113th Cong. (Feb. 13, 2013), 
http://www.gpo.gov/fdsys/pkg/CHRG-113shrg80219/pdf/CHRG-
113shrg80219.pdf. 
    \11\ ``Outside the Box: Reforming and Renewing the Postal Service, 
Part I--Maintaining Services, Reducing Costs and Increasing Revenue 
Through Innovation and Modernization,'' hearing before the Senate 
Committee on Homeland Security and Governmental Affairs, 113th Cong. 
(Sept. 19, 2013); ``Outside the Box: Reforming and Renewing the Postal 
Service, Part II--Promoting a 21st Century Workforce,'' hearing before 
the Senate Committee on Homeland Security and Governmental Affairs, 
113th Cong. (Oct. 19, 2013).
---------------------------------------------------------------------------
    The bill approved by the Committee contains a comprehensive 
package of reforms to protect key postal operations and 
services, shore up the Postal Service's finances, set aside 
enough funding to cover postal retirees' future benefits, and 
increase Postal Service revenues by making ratemaking more 
realistic and by encouraging innovation. Key elements of the 
bill include--
     Protect Saturday mail delivery until at least 
2017. Impose a two-year moratorium on processing plant closures 
and on changes to delivery service standards. Require the 
Postal Service to seek additional local input before closing 
post offices, and place a five-year moratorium on closing rural 
post offices.
     Stop overcharging the Postal Service for the cost 
of its employees' pensions, by requiring calculations of the 
Postal Service's obligations be based on the actual 
characteristics of the postal workforce. Restructure the Postal 
Service's burdensome healthcare pre-funding requirements, 
replacing them with a payment plan that enables the Postal 
Service to honor its commitments to its retirees without 
leaving taxpayers on the hook. Maintain the high-quality 
healthcare coverage for postal workers and retirees under the 
Federal Employee Health Benefits Program (FEHBP), plus better 
utilize the Postal Service's participation in the Medicare 
program to both enhance retiree healthcare coverage and reduce 
the cost to the Postal Service.
     Encourage innovation and generate revenue for the 
Postal Service by allowing it to offer a broader range of 
``non-postal'' products and services, within appropriate 
boundaries. Establish a commission to explore new business 
models for the Postal Service to increase revenues and reduce 
costs. Adjust the rules on postal rates to enable the Postal 
Service to generate more revenue, while preserving both Postal 
Regulatory Commission oversight and the existing Consumer Price 
Index (CPI) rate cap.
    The Postal Service has indicated that the provisions of the 
bill as ordered reported by the Committee would, if enacted 
this year, allow it to pay down its debt to Treasury by Fiscal 
Year 2016, substantially reduce or eliminate its unfunded 
retiree health care obligation and the need to pre-fund it, 
lead to increased revenue over time, allow for needed capital 
expenditures in the coming years, and result in a positive cash 
balance of $7.1 billion after ten years. (See Appendix A of 
this Report, which presents financial projections developed by 
the Postal Service, showing the impact on the Postal Service's 
finances if S.1486 is enacted.)

                  B. DISCUSSION OF LEGISLATIVE ISSUES

1. FERS surplus; Postal-specific assumptions for FERS and CSRS funding

    United States Postal Service (USPS) employees, like federal 
employees, participate in the Federal Employees Retirement 
System (FERS) or, for employees who began federal service 
before the end of 1986, the Civil Service Retirement System 
(CSRS). Thus, the Postal Service is required to make the 
biweekly employer contributions for postal employees 
participating inFERS and CSRS. Also, the Office of Personnel 
Management (OPM) finds that the amounts paid to fund postal workers' 
future annuities under CSRS are insufficient, and the Postal Service 
must make annual payments to liquidate the liability starting in 
2018.\12\
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    \12\See 5.U.S.C. 8348(h). OPM has found that the Postal Service has 
paid more than enough to fund its employees' annuities under FERS, but, 
if OPM ever finds a liability, the Postal Service would be obligated to 
make annual payments to liquidate that liability as well. See 5.U.S.C. 
8423(b).
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    S. 1486 would require that, in calculating the amounts that 
the Postal Service must pay for postal workers' annuities, OPM 
must use the demographic and salary-growth characteristics of 
the Postal Service's actual workforce, rather than the general 
characteristics of both postal and non-postal federal employees 
combined, as OPM does today. This provision responds to 
findings reported by the Postal Service's Office of Inspector 
General (USPS OIG), based on findings by the Hay Group (an 
actuarial consulting firm), that OPM's current approach 
substantially over-estimates the amount that postal retirees' 
annuities will actually cost the FERS and CSRS programs.\13\ 
Both the Postal Service and the President in his budget 
recommendations for Fiscal Year 2015 have also called for 
legislation to require the use of postal-specific assumptions 
for determining the Postal Service's pension obligations.\14\
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    \13\USPS OIG, Using U.S. Postal Service-Specific Assumptions for 
Calculating the Federal Employees Retirement System Liability: 
Management Advisory Report (Report Number FT-MA-13-024) (Sept. 27, 
2013), https://www.uspsoig.gov/sites/default/files/document-library-
files/2013/ft-ma-13-024.pdf.
    \14\``Outside the Box: Reforming and Renewing the Postal Service, 
Part II--Promoting a 21st Century Workforce,'' hearing Before the 
Senate Committee on Homeland Security and Governmental Affairs, 113th 
Cong. (Sept. 26, 2013) (Statement submitted by Postmaster General 
Patrick R. Donahoe); FY 2015 Budget of the U.S. Government, Appendix 
pages 1232 and 1362.
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    Moreover, if OPM finds that the Postal Service has paid 
more into the FERS system than its employees' annuities will 
actually cost, this legislation provides an orderly process by 
which the surplus can be returned for use by the Postal 
Service. If a surplus existed as of September 30, 2013, the 
Postal Service may request not more than $6 billion of the 
amount and use it to retire debt. The bill also establishes 
rules for the Postal Service to gain access to and use of any 
surplus that may remain or develop in subsequent years.
    OPM has estimated that, if demographic factors specific to 
the postal workforce were used, the surplus in the FERS system 
available to fund postal workers' annuities would amount to 
about $ 2.4 billion as of September 30, 2013. S. 1486 would 
provide the Postal Service with the option of having some or 
all of that amount applied to retire the Postal Service's debt.

2. Retiree health pre-funding payments

    The Postal Service is under various statutory mandates 
concerning its funding of the retirement health benefits for 
its current and former employees. While it is critical that the 
Postal Service behave responsibly with respect to these 
retirement obligations, this bill seeks to recalibrate these 
mandates in order to lessen their immediate burden while still 
ensuring that the Postal Service will contribute sufficiently 
to meet realistic estimates of future needs.
    The Postal Accountability and Enhancement Act of 2006\15\ 
required the Postal Service to make a series of ten payments 
beginning in Fiscal Year 2007 to pre-fund its future retiree 
health obligations. The amount of each payment is set in 
statute and ranges from $5.4 billion to $5.8 billion annually, 
although Congress decreased the size of the payment due in 
Fiscal Year 2009 from $5.4 billion to $1.4 billion in an effort 
to ease the financial strain on the Postal Service.\16\ Under 
current law, the Postal Service is scheduled in Fiscal Year 
2017 to begin paying down whatever retiree health obligations 
remain over a period of 40 years.\17\
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    \15\P.L. 109-435.
    \16\P.L. 111-68, Sec. 164.
    \17\5 U.S.C. Sec. 8909a(d)(2)(B).
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    As of the end of Fiscal Year 2013, the Postal Service 
Retiree Health Benefits Fund (the Fund) had a balance of over 
$47 billion and the Postal Service had a remaining liability to 
the Fund of just over $48 billion.\18\ For the past few years, 
the Postal Service has been unable to make its annual pre-
funding payment and defaulted on its last three statutory 
payments, a $5.5 billion payment due on August 1, 2012 that was 
delayed from September 2011, a $5.6 payment due on September 
30, 2012, and a $5.6 billion payment due on September 30, 2013. 
The Postal Service is expected to default on the 2014 payment 
of $5.7 billion on September 30, 2014, and absent comprehensive 
reform, will likely also default on the payments due in 2015 
and 2016.
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    \18\United States Postal Service Form 10-K for Fiscal Year 2013 at 
p. 38, available at 
http://about.usps.com/who-we-are/financials/10k-reports/fy2013.pdf.
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    The Postal Service is also obligated to make premium 
payments each year on behalf of current retirees. According to 
data provided to the Committee by the Postal Service, those 
premium payments totaled $2.85 billion in Fiscal Year 2013 and 
are projected to reach $3.6 billion annually by Fiscal Year 
2016.
    The Committee recognizes that the statutorily mandated 
retiree health prefunding payment schedule has been difficult 
to meet due to the declining revenues of the Postal Service as 
a result of the electronic diversion of the mail and a major 
recession that significantly affected mail volume. At the same 
time, the Committee is aware that easing or eliminating the 
pre-funding obligation could one day either break promises made 
to retirees, or leave taxpayers with a significant financial 
obligation in the event that the Postal Service becomes unable 
to make the payments itself.
    In order to provide the Postal Service with financial 
relief while maintaining its responsibility for the costs 
related to its employees, S. 1486 would make four major reforms 
to the Postal Service's current retiree health payment schedule 
and structure:
          1. It would cancel any outstanding payments owed by 
        the Postal Service.
          2. It would replace the existing payment schedule--
        the statutory annual payments and the 40-year 
        amortization schedule that will start in Fiscal Year 
        2017--with a new 40-year amortization schedule that 
        would start in Fiscal Year 2016.
          3. It would set the pre-funding goal underlying the 
        new amortization schedule at 80 percent of the 
        obligation (rather than the current 100 percent), in 
        recognition of the fact that the Postal Service, if 
        necessary, has additional assets it could draw upon to 
        meet these obligations.
          4. It would allow the Postal Service's contribution 
        towards current retirees' premiums to be paid out of 
        the Fund in the Treasury in which the Postal Service's 
        pre-funding payments have been deposited since Fiscal 
        Year 2007. That Fund currently includes just over $47 
        billion. (Under current statute, the Postal Service's 
        contribution to current retirees' premiums may be paid 
        from the Fund beginning on September 30, 2017.)\19\
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    \19\5 U.S.C. Sec. 8906(g)(2)(A).
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3. Postal service health benefits program

    In order to ensure the future financial viability of the 
Postal Service, the Committee recognizes that the Postal 
Service must be able to address its healthcare costs and future 
healthcare liabilities. The Postal Service has for a number of 
years proposed to provide postal employees and annuitants with 
a separate Postal Service administered health care plan that is 
fully integrated with Medicare, as a way to reduce health care 
costs and reduce their future retiree health care 
liability.\20\ While the Committee did not choose to create an 
entirely separate health plan run by the Postal Service, S. 
1486 does create a new postal-only health program within 
Federal Employees Health Benefits Program (FEHBP) for all 
postal employees and annuitants that is integrated with 
Medicare parts A, B, and D.
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    \20\See, e.g., ``Solutions to the Crisis Facing the U.S. Postal 
Service,'' hearing Before the Senate Committee on Homeland Security and 
Governmental Affairs, 113th Cong. (February 13, 2013) (testimony of 
Patrick R. Donahoe, Postmaster General and CEO, U.S. Postal Service) 
available at http://www.hsgac.senate.gov/hearings/solutions-to-the-
crisis-facing-the-us-postal-service [hereinafter Donahoe Testimony at 
HSGAC Hearing Feb. 13, 2013].
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    S. 1486 would authorize OPM to establish the Postal Service 
Health Benefits Program (PSHBP) within the FEHBP. OPM would be 
required to contract with carriers of current FEHBP plans that 
have over 5,000 postal employees and retirees enrolled in its 
FEHBP plans for the 2015 contract year, but all FEHBP carriers 
would be eligible to bid to participate in the PSHBP. Requiring 
plans with more than 5,000 postal enrollees to participate 
ensures the participation of at least the insurance carriers 
that currently cover over 90 percent of the postal community, 
but participation is not limited to only those plans. The bill 
would authorize OPM to add, after 2016, to the PSHBP only those 
health plans that meet the requirements and criteria to be 
offered through the FEHBP and carriers participating in the 
FEHBP. However, it is the intent of the Committee that carriers 
that are exclusive collective bargaining representatives with 
the Postal Service may terminate their participation in the 
civil service segment of the FEHBP and still continue to 
participate in the PSHBP subject to FEHBP requirements.
    One key difference between the current FEHBP and the new 
PSHBP is that the PSHBP would require Medicare enrollment for 
postal annuitants who are eligible for Medicare parts A, B and 
D and provide postal annuitants with prescription drugs through 
a Medicare Part D Employee Group Waiver plan. Currently, Postal 
Service annuitants, like all other federal annuitants, receive 
full FEHBP coverage in retirement. Like all Americans, they 
have also paid into and are eligible for Medicare. However, 
unlike other businesses that provide health coverage to their 
retirees, the Postal Service is unable to require its Medicare-
eligible annuitants to enroll in Medicare. In fact, 
approximately 8 percent of Medicare-eligible postal annuitants 
do not participate in Medicare part A and approximately 22 
percent do not participate in Medicare part B.\21\ In addition, 
postal annuitants, like all other federal employees and 
annuitants, do not receive prescription drug coverage through 
Medicare part D. This results in higher costs for the FEHBP 
that translate to higher costs for the Postal Service.
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    \21\Government Accountability Office (GAO), U.S. Postal Service: 
Proposed Health Plan Could Improve Financial Condition, but Impact on 
Medicare and Other Issues Should Be Weighed before Approval, GAO-13-
658, at p. 8 (July 2013).
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    S. 1486 would require Medicare-eligible postal annuitants 
to enroll in Medicare parts A, B and D as a condition of their 
enrollment in the PSHBP. Since the PSHBP would be a separate 
risk pool from the rest of the FEHBP, any savings, whether from 
higher Medicare enrollment or otherwise, would be seen by the 
Postal Service, its employees and its annuitants. This new 
program should provide the Postal Service with significant 
savings over time and further decrease its future retiree 
health care liability, reducing its retiree health prefunding 
requirements.
    According to data provided to the Committee by the Postal 
Service, implementation of this new Postal Service Health 
Benefits Program, combined with the restructuring under this 
legislation of the Postal Service's obligation to prefund its 
retirees healthcare, could substantially reduce or eliminate 
the Postal Service's unfunded liability to the Postal Service 
Retiree Health Benefits Fund. (See Appendix A of this Report, 
which presents financial projections developed by the Postal 
Service, showing the impact on the Postal Service's finances if 
S. 1486 is enacted. Also included in Appendix A is a letter 
from the Postal Service to the Chairman of this Committee, 
conveying a memorandum that reconciles the Postal Service's 
estimates and CBO's scoring of S. 1486, and restating the 
Postal Service's belief that the analysis of the cost savings 
associated with the Medicare integration provision of S. 1486 
is accurate and correct.).

4. Postal unions and collective bargaining

    Postal unions date back to the 19th Century and postal 
employees won the right to bargain collectively with the Postal 
Service in 1970. Unlike most federal agencies and their 
employees, which are governed by government-wide civil service 
rules, the Postal Service generally sets compensation and other 
terms and conditions of employment for workers represented by 
unions through a process of collective bargaining between 
postal management and postal unions.\22\ In addition to wages 
and working conditions, the Postal Service also establishes 
leave and holidays through collective bargaining, as well as 
the amounts of the biweekly contribution by the Postal Service 
to the cost of employees' health insurance. Postal workers are 
forbidden to strike, but instead, if the parties are unable to 
reach a timely agreement, the dispute must be resolved by 
binding arbitration.\23\
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    \22\39 U.S.C. Sec. 1005(f), chapter 12.
    \23\39 U.S.C. Sec. 1207.
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    Retirement benefits for new employees. Retirement benefits 
for postal employees are currently excluded from collective 
bargaining and are provided to postal employees under the same 
statutes that grant these benefits to federal employees 
generally.\24\ S. 1486 would modify that approach prospectively 
by allowing unions and management to reconsider the retirement 
package for newly hired postal workers.
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    \24\39 U.S.C. Sec. 1005(f).
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    In testimony before this Committee, Postmaster General 
Donahoe proposed that postal employees be removed from coverage 
under the retirement program that applies to federal employees 
generally, and that instead the Postal Service be authorized to 
establish a new retirement program consisting of a defined 
contribution retirement system for future postal employees.\25\ 
He stated that such a retirement system would be preferable for 
a number of reasons, including that the FERS system is not 
comparable to pension programs in the private sector and is 
more costly, and that the emerging workforce is less likely to 
stay with one employer for a career and therefore wants a more 
flexible and portable program like a defined contribution 
system.
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    \25\``Outside the Box: Reforming and Renewing the Postal Service, 
Part II--Promoting a 21st Century Workforce,'' hearing Before the 
Senate Committee on Homeland Security and Governmental Affairs, 113th 
Cong. (Sept. 26, 2013) (Statement of Postmaster General Patrick R. 
Donahoe).
---------------------------------------------------------------------------
    The Committee did not decide that the FERS annuity for new 
employees should be ended, however, but S. 1486 would, instead, 
allow the Postal Service and the postal unions to bargain over 
the question of whether new employees will earn credit towards 
a FERS annuity, and to bargain over the size of the Postal 
Service's financial contribution towards its new employees' 
retirement. Specifically, the legislation provides that a 
union's collective bargaining agreement may--(1) provide that 
some or all new employees represented by the union will not 
receive a FERS annuity for their service at the Postal Service; 
(2) adjust the amounts that the Postal Service would contribute 
to the FERS plan for the employees; (3) offer alternative 
retirement benefit plans for new employees represented by the 
union; and (4) adjust the amounts that the Postal Service would 
contribute towards the new employees' Thrift Savings Plan (TSP) 
accounts. It is anticipated that bargaining over the retirement 
program would generally take place between the Postal Service 
and each union separately, in connection with the general 
collective bargaining agreement entered into between the Postal 
Service and each union. (With respect to the TSP program, the 
bill allows the amount of the Postal Service's contributions to 
new employees' accounts to be modified only by a collective 
bargaining agreement with all four postal unions.)
    The Committee expects the Postal Service to use these 
flexibilities prudently, to continue recruiting and maintaining 
a high-skill and high-morale workforce.
    Binding arbitration in resolution of labor disputes. If a 
dispute between postal unions and management cannot be resolved 
and is sent to binding arbitration, statute provides that a 
three-member arbitration board be convened to give the parties 
a full and fair hearing, to provide parties an opportunity to 
present evidence in support of their claims, and to render a 
conclusive and binding decision.\26\ Postmaster General Donahoe 
has requested an amendment to this statute requiring 
specifically that the arbitration board must consider the 
Postal Service's financial health, explaining: ``While some 
interest arbitrators [who resolve bargaining disputes between 
the Postal Service and its unions] do consider the Postal 
Service's financial condition, there is no legal requirement to 
do so.''\27\ The Government Accountability Office (GAO) has 
also recommended such a change to statute for similar 
reasons.\28\
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    \26\39 U.S.C. Sec. 1207(c).
    \27\``Outside the Box: Reforming and Renewing the Postal Service, 
Part II--Promoting a 21st Century Workforce,'' hearing Before the 
Senate Committee on Homeland Security and Governmental Affairs, 113th 
Cong. (Sept. 26, 2013) (Statement submitted by Postmaster General 
Patrick R. Donahoe).
    \28\``Finding Solutions to Challenges Facing the U.S. Postal 
Service,'' hearing Before the Subcomm. on Federal Financial Management, 
Government Information, Federal Services and International Security of 
the Senate Committee on Homeland Security and Governmental Affairs, 
111th Cong. (Dec. 2, 2010) (``U.S. Postal Service: Legislation Needed 
to Address Key Challenges,'' statement submitted by Phillip Herr, 
Director for Physical Infrastructure Issues, Government Accountability 
Office, GAO-11-244T, at p.9).
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    The Committee believes that in this period when the Postal 
Service faces such dire financial difficulties, arbitrators 
should consider the financial condition of the Postal Service 
and S. 1486 should say so explicitly. The provision in S. 1486 
is identical to the provision passed by the Senate as part of 
S. 1789 in the 112th Congress.\29\
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    \29\S. 1789, 112th Congress, Sec. 106 of the bill as passed by the 
Senate.
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5. Other workforce issues

    Appeal Rights for Certain Mid-Level Managers. In 1987, 
Congress allowed postal supervisors to appeal firings and other 
adverse personnel actions to the Merit Systems Protection Board 
(MSPB),\30\ which is an independent adjudicatory agency that 
generally reviews cases brought by federal employees who claim 
that personnel actions being taken against them are not lawful 
or that proposed penalties are not appropriate. Meanwhile, 
front-line postal workers retained the right to use the 
grievance procedures established under their union contracts. 
That left approximately 7,500 mid-level postal managers without 
any way to appeal ordinary personnel cases outside of the 
Postal Service. S. 1486 would fill that gap by allowing these 
managers to appeal firings and other adverse personnel actions 
to the MSPB.
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    \30\Public Law 100-90 (Aug. 18, 1987).
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    Managers' Organizations. Current law requires that the 
Postal Service provide reasonable differentials in rates of pay 
between front-line workers and managers, and that managers' 
organizations have an opportunity, on behalf of their members, 
to consult with the Postal Service about pay and benefits. S. 
1486 would clarify and strengthen this process, in several 
ways. Current law requires the Postal Service to provide 
reasonable differentials in pay between front-line employees 
and managers, and the legislation clarifies that the Postal 
Service must take benefits into account as well as salary in 
providing the differential. Moreover, the legislation clarifies 
that changes to pay and/or benefits, including the termination 
of a benefit, for managers cannot occur outside the designated 
time period for pay consultation between the managers' 
organizations and the Postal Service unless mutually agreed 
upon.
    FECA Prefunding. For workers' compensation payments to be 
paid under the Federal Employees' Compensation Act (FECA) for 
on-the-job injuries to postal workers, the Postal Service 
carries on its books an unfunded liability in excess of $17 
billion. S.1486 would establish a process under which the 
Postal Service will begin to pay down this unfunded liability. 
And to make sure that this requirement does not create new 
financial difficulties for the Postal Service, it would only be 
required to make a prefunding payment in any year when the 
Postal Service has net income exceeding $1 billion. The 
amortization schedule is modeled on the schedule now in the 
bill for Retiree Health Benefits: an 80% target and an 
amortization period extending 40 years, or a rolling period of 
15 years, whichever period ends later. Under this plan, the 
Postal Service would keep the first $1 billion of annual net 
income, which the Postal Service could use for capital 
investment or any other appropriate purposes, but would need to 
make any amount above $1 billion available, to the extent 
necessary, for making the amortization payment. Also, to foster 
greater transparency and accountability, the Postal Service 
would be required to report about its unfunded liability for 
workers' compensation payment and about its progress in paying 
down the liability in the USPS's annual audited Form 10-K 
reports.

6. Mail processing facility closures

    On July 1, 2012, in order to reduce its costs and respond 
to the declining volume of First-Class Mail, the Postal Service 
implemented changes to its First-Class Mail delivery standard. 
The change in the delivery standard reduced the areas in which 
the Postal Service provides overnight delivery of First-Class 
Mail and thereby lengthens the delivery window for some First-
Class Mail. At the same time, the Postal Service began the 
process of closing or consolidating mail processing facilities; 
by reducing overnight delivery service, the Postal Service 
reduced its need for processing facilities to support the 
delivery times. This first phase of closures has now been 
completed, during which the Postal Services consolidated 141 
mail processing facilities during 2012 and 2013 and estimates 
that it thereby generated annualized cost savings of $865 
million thus far as a result.\31\ The Postal Service also 
announced on June 30, 2014 that it plans to resume the network 
rationalization in 2015, by closing or consolidating up to 82 
additional facilities beginning in January and concluding 
before the heavy-mailing season in the fall of the year.\32\ 
The Postal Service expects this second phase of closings to 
generate an additional $750 million in annualized savings.\33\
---------------------------------------------------------------------------
    \31\See U.S. Postal Service, News Link, ``Network Rationalization 
Update: USPS to resume efforts early next year.'' June 30, 2014. 
https://liteblue.usps.gov/news/link/2014/07jul/news01s1.htm. 
    \32\Id.
    \33\Id.
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    While the Postal Service maintains that its new delivery 
service standards, together with its greater efficiencies allow 
it to continue providing satisfactory service with a smaller 
processing network, some have raised concerns about whether the 
closure of processing plants has contributed to an excessive 
and unanticipated lengthening in delivery times, particularly 
in rural areas. There have also been related questions raised 
about how the Postal Service calculates delivery time in 
determining whether its revised delivery service standards are 
being met. To help answer these latter questions, the bill 
directs GAO to conduct a study assessing the Postal Service's 
method for calculating delivery times.
    Notwithstanding the concerns that have been raised, the 
Committee recognizes the general need for the Postal Service to 
right-size its network, and has chosen not to curtail or 
eliminate the Postal Service's existing authority to modify 
service standards and, in the process, restructure its 
processing footprint. However, the bill does place a temporary 
moratorium on additional plant closures or changes in delivery 
standards for a period of two years (or until the completion of 
the GAO report on delivery times, whichever is later). This is 
to allow time to understand the full impact of the closures 
that have already occurred, to assess whether additional 
closures can be accomplished without harming service, and to 
see if alternative measures to decrease costs and increase 
revenues may make further closures unnecessary.
    The Committee seeks to ensure, moreover, that employees, 
customers, and representatives of communities that could be 
affected by the closure or consolidation of a mail processing 
facility have an adequate opportunity to provide input before 
the Postal Service makes a final decision about such a closure 
or consolidation. S. 1486 would make the process used for 
facility closures or consolidations more transparent and would 
ensure interested parties a meaningful role in the decision. 
Specifically, section 202 of S. 1486 would mandate that the 
Postal Service provide at least 45 days' advance notice before 
making a final decision to close or consolidate a facility; 
that it provide adequate opportunities for public comment; and 
that it conduct an area mail processing study that includes 
consideration of a plan to reduce the capacity of the postal 
facility rather than close it. Before finalizing a closure, the 
Postal Service would have to publish a written justification 
for the decision that responds to the public comments and 
describes the actions the Postal Service intends to take to 
mitigate any significant negative effects from the closure. The 
Postal Service would also be required to make reasonable 
efforts to provide alternatives for those customers who would 
be affected by the closure of the processing facility. Finally, 
the bill provides for appeals of plant closures to the Postal 
Regulatory Commission (PRC) in the same manner that post office 
closings can be appealed.

7. Post offices

    In July 2011, the Postal Service announced that it would 
conduct studies of approximately 3,700 post offices, retail 
annexes, stations, and branches nationwide for possible 
closure.\34\ The PRC expressed concerns about this plan,\35\ as 
did some Members of Congress. Most importantly, there was 
significant community concern about the proposal, particularly 
the impact of potential post office closings on small and rural 
communities, and questions about whether such impacts were 
worth the relatively modest projected savings. In response, the 
Postal Service in December 2011 announced that it would delay 
the closing or consolidation of post offices and mail 
processing facilities until May 15, 2012.\36\
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    \34\Press Release, U.S. Postal Service, Postal Service Takes Next 
Steps in Optimizing Retail Network (July 26, 2011) available at http://
about.usps.com/news/national-releases/2011/pr11-089.htm.
    \35\The PRC issued an advisory opinion on December 23, 2011 stating 
that the Postal Service's approach failed to provide adequate retail 
access in the event of a post office closure. Postal Regulatory 
Commission, Advisory Opinion on Retail Access Optimization Initiative, 
Docket No. N2011-1, at p.1 (Dec. 23, 2011).
    \36\Press Release, U.S. Postal Service, Statement on Delay of 
Closing or Consolidation of Post Offices and Mail Processing Facilities 
(December 13, 2011), available at http://about.usps.com/news/national-
releases/2011/pr11_1213closings-v2.pdf.
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    In May 2012, the Postal Service announced a new strategy to 
reduce costs associated with post offices while at the same 
time ensuring that postal customers receive adequate access to 
retail services. Under this Post Office Structure (``POSt'') 
Plan, the Postal Service conducts meetings in affected 
communities and gets community input on providing alternate 
means of retail access, such as allowing a private contractor 
to establish a so-called ``Village Post Office'' in a local 
business or providing retail services through a rural letter 
carrier, or keeping the local post office open but operating it 
for a reduced number of hours. The Postal Service estimates 
that, once fully implemented, the POSt Plan will save 
approximately half a billion dollars annually.\37\
---------------------------------------------------------------------------
    \37\Press Release, U.S. Postal Service, New Strategy to Preserve 
the Nation's Smallest Post Offices (May 9, 2012), available at http://
about.usps.com/news/national-releases/2012/pr12_054.htm.
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    Current law requires the Postal Service to consider several 
factors in determining whether to close a post office, such as 
the effect of the closing on the community, the effect on 
postal employees, whether the closing would undermine effective 
service for rural communities, and the amount of the projected 
savings.\38\
---------------------------------------------------------------------------
    \38\39 U.S.C. Sec. 404(d)(2)(A).
---------------------------------------------------------------------------
    The Postal Service must notify the affected public of its 
intent to close or consolidate a particular post office and 
hold a 60-day comment period prior to the proposed date of such 
closure or consolidation.\39\ The public may appeal the Postal 
Service's decision to the PRC within 30 days after USPS has 
made its determination to close such post office. The 
Commission then has 120 days to make a determination about 
whether proper procedures were followed during the closure 
process.
---------------------------------------------------------------------------
    \39\39 U.S.C. Sec. 404(d)(1).
---------------------------------------------------------------------------
    Section 203 of S. 1486 builds on these existing legal 
protections as well as codifying and enhancing the practices 
under the POSt plan, allowing the Postal Service to provide 
retail alternatives to dedicated post offices while also 
putting in place safeguards against premature or inappropriate 
closures. These safeguards are particularly important for 
individuals in small towns and rural areas. Among other things, 
S. 1486 requires the Postal Service to consider several options 
prior to closing a post office, such as consolidating two post 
offices within a reasonable distance, reducing the number of 
operating hours at a particular post office instead of closing 
it, permitting a contractor or rural carrier to provide retail 
services in the community served by the post office, or 
implementing another alternative that may be proposed by the 
community. S. 1486 also requires the Postal Service to consider 
certain factors before making a final decision to close a post 
office or reduce its hours.
    In addition, S. 1486 also includes additional protections 
for small, rural post offices, prohibiting the closure of such 
post offices for a year after enactment and requiring that, 
thereafter, the Postal Service make certain determinations 
about the effect of the closing before going ahead.
    Finally, S. 1486 requires the Postal Service to establish 
minimum standards for retail postal services, to make clear the 
level of retail access that customers can expect, whether that 
retail access is provided through a traditional post office or 
alternative means.

8. Changes to mail delivery schedule

    Mail is currently delivered six days a week to most homes 
and businesses in the United States, and Congress includes 
language in annual appropriation bills intended to preserve 
six-day-per-week delivery service.\40\ However, beginning in 
1976, there have been a series of proposals to reduce mail 
delivery to five days a week as a means of reducing operating 
costs and avoiding rate increases.\41\ President Obama proposed 
allowing the Postal Service to move to five-day delivery as 
part of the Administration's deficit reduction package,\42\ and 
has included it in the FY 2015 budget.\43\
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    \40\U.S. Congressional Research Service, The U.S. Postal Service 
and Six-Day Delivery: History, Issues, and Current Legislation (R40626) 
by Wendy Ginsberg, at pp.6-7 (October 17, 2012); see, e.g., P.L. 112-74 
(Consolidated Appropriations Act, 2012).
    \41\U.S. Congressional Research Service, The U.S. Postal Service 
and Six-Day Delivery: History, Issues, and Current Legislation (R40626) 
by Wendy Ginsberg, at pp.4-7, 14-20 (October 17, 2012).
    \42\Office of Management and Budget, Living Within Our Means and 
Investing in the Future: The President's Plan for Economic Growth and 
Deficit Reduction, at p.23 (Sept. 2011).
    \43\Office of Management and Budget, Budget of the United States 
Government, Fiscal Year 2015, Appendix at page 1362.
---------------------------------------------------------------------------
    Faced with steep declines in mail volume, an increase in 
the number of delivery addresses, and difficult financial 
circumstances, the Postal Service has argued for some time that 
it is essential for it to have the authority to move to a five-
days-per-week delivery schedule for mail.\44\ The Postal 
Service has estimated that it will save about $2 billion 
dollars annually by switching to five-day delivery\45\--and 
notes that this is more than it can save through any other 
single operational change.
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    \44\The Postal Service proposes that mail be delivered to street 
addresses Monday through Friday. Mail addressed to P.O. Boxes would 
continue to be delivered on Saturdays, and Post Offices already open on 
Saturdays would not be affected by this proposal. In addition, packages 
would continue to be delivered six days per week, and Priority Mail 
Express, currently delivered seven days per week, would not be 
affected. See Statement of Postmaster General and Chief Executive 
Officer Patrick R. Donahoe, pages 11-12, at ``Outside the Box: 
Reforming and Renewing the Postal Service, Part II--Promoting a 21st 
Century Workforce,'' hearing Before the Senate Committee on Homeland 
Security and Governmental Affairs, 113th Cong. (Sept. 26, 2013).
    \45\See, id.
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    It is clear that a shift to five-day mail delivery has the 
potential to save the Postal Service a substantial amount of 
money (even if there is some dispute about what the precise 
cost savings are likely to be). However, because reducing the 
days of delivery involves difficult tradeoffs, including the 
potential to reduce mail volume further and to diminish an 
advantage that the Postal Service has over certain of its 
competitors, it is appropriate to be cautious.
    S. 1486 therefore takes a careful and balanced approach to 
the question of delivery frequency. It provides the Postal 
Service with the ultimate authority to establish a nationwide 
delivery schedule of five-days per week if it determines that 
such a delivery schedule would contribute to the achievement of 
the Postal Service's long-term solvency. The bill also, 
however, imposes temporary limitations on this authority, 
allowing a shift to five-day delivery only when mail volume has 
fallen to fewer than 140 billion pieces annually (mail volume 
in FY 2013 was approximately 158 billion pieces), evidencing a 
continuing decline in mail volume that might necessitate such a 
substantial change. And in no event would the Postal Service be 
permitted to move to five-day delivery before October 1, 2017. 
Together, these restrictions provide some room to see if other 
measures the Postal Service is undertaking, on its own or 
pursuant to provisions in this bill, to reduce costs and, at 
least as importantly, to innovate and increase revenues, might 
mitigate the need to reduce delivery frequency.
    In addition, if the Postal Service is seeking to switch to 
five-day delivery, the bill directs the Comptroller General to 
report to Congress on the extent to which a change in delivery 
schedule would improve the financial condition of the Postal 
Service and assist in the efforts of the Postal Service to 
achieve long-term solvency. If the Comptroller General finds 
that the proposed change in delivery schedule would not 
substantially improve the financial condition of the Postal 
Service and assist in the efforts of the Postal Service to 
achieve long-term solvency, the Postal Service may still 
proceed with its plan, but it is first required to submit a 
response to Congress indicating its justification for 
proceeding so in light of the Comptroller General's findings, 
and then wait 60 days, to allow for Congressional review.
    In authorizing five-day mail delivery, the bill does not 
affect the days and times that post offices operate, the 
frequency of delivery to post office boxes, or the delivery 
schedule for competitive (i.e., non-market dominant) products, 
such as Priority Mail Express (overnight delivery, formerly 
called Express Mail). The bill also provides for six-day 
delivery of packages for at least five years after the date of 
enactment. Package delivery--a growth area for the Postal 
Service--is typically a competitive product and therefore would 
be expected to cover its costs.

9. Conversion of door delivery points

    The mode of mail delivery plays an important role in the 
efficiency and cost of delivery operations. The primary modes 
of delivery points for the Postal Service are door, curbside, 
and centralized delivery. Door delivery refers to delivering 
mail to slots or receptacles at a customer's door. The Postal 
Service provides curbside delivery to customers who have 
mailboxes at the curb and that mail carriers can service from 
their vehicles. Centralized delivery includes cluster boxes and 
other mail receptacles in a single location, whether at the 
entrance to an apartment building or grouped together at the 
end of a block. Door delivery is the most time-consuming, and 
therefore the most expensive, form of delivery.\46\
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    \46\The Postal Service has estimated, for Fiscal Year 2012, average 
annual costs of about $380 per delivery point for door delivery, 
compared with about $240 for delivery to the curb, and about $170 for 
delivery to a central location. In a recent report, GAO casts doubt on 
the accuracy of these figures, noting that they are based on 20-year-
old data. Government Accountability Office, Delivery Mode Conversions 
Could Yield Large Savings, but More Current Data Are Needed, GAO-14-
444, (May 12, 2014). Regardless of the specific dollar amounts, 
however, it is generally agreed that door delivery is considerably more 
expensive than other delivery modes.
---------------------------------------------------------------------------
    S. 1486 encourages the Postal Service in its efforts to 
convert more addresses from door delivery to less expensive 
delivery modes. Codifying the Postal Service's existing 
practice, section 205 would require that the Postal Service 
provide centralized delivery (e.g., cluster boxes) for all new 
addresses established after the date of enactment, or, if 
centralized delivery is not practicable, curbside delivery. The 
Postal Service also would be required to carry out a program to 
convert existing business addresses receiving door delivery to 
centralized or curbside delivery. The Postal Service would 
further be required to seek out opportunities to convert 
existing residential addresses, by identifying existing 
residences that receive door delivery and that are appropriate 
candidates for conversion and beginning implementation of a 
program to convert, on a voluntary basis, those addresses to a 
more cost-effective method of delivery. Customer resistance can 
sometimes be a barrier to such voluntary conversions, but the 
Postal Service also reports some success in outreach efforts 
that have emphasized the environmental benefits and the 
additional security (where packages left in a locked box rather 
than on, say, the front steps of a home) that centralized 
delivery can provide.

10. Postal rates

    Since November 9, 2007, when the postal ratemaking system 
required by the Postal Accountability and Enhancement Act 
(PAEA) went into effect,\47\ the Postal Service's ability to 
raise its prices has been constrained by a rate cap applied at 
the class level and based on the Consumer Price Index for All 
Urban Consumers (CPI-U).\48\ (The rate cap applies to mail and 
other ``market dominant products,'' for which the Postal 
Service has significant market power.) For about six years, the 
Postal Regulatory Commission has allowed rate increases only 
within the inflation-based cap. However, the PAEA also 
authorizes the Postal Service to adjust rates in excess of the 
rate cap on an expedited basis if justified due to 
``extraordinary or exceptional circumstances''\49\--known as an 
``exigent'' rate increase. On December 24, 2013, the Commission 
granted rate relief based on a conclusion that the mail-volume 
losses arising from the Great Recession of 2008-2009 were such 
an exigent circumstance.\50\ Specifically, the Commission 
allowed a temporary 4.3 percent exigent rate increase above 
inflation, which the Postal Service implemented on January 26, 
2014, but to be phased out once the revenues lost because of 
the Great Recession are recovered.\51\ The Postal Service's 
projections indicate that the lost revenues are likely to have 
been recovered, and that the exigent rate increase is likely to 
end, sometime during 2015.\52\
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    \47\Postal Regulatory Commission, Final Rule, ``Administrative 
Practice and Procedure, Postal Service,'' 72 Federal Register 217 
(November 9, 2007), at pp. 63662-63704.
    \48\See 39 U.S.C. Sec. 3622(d)(1), enacted by section 201(a) of the 
PEAE, Public Law 109-435 (Dec. 20, 2006). The rate cap went into effect 
under a final rule of the Postal Regulatory Commission, 72 Fed.Reg. 
63662-63704 (Nov. 9, 2007).
    \49\39 U.S.C. Sec. 3622(d)(1)(E).
    \50\See Postal Regulatory Commission Press Release, ``PRC Approves 
Postal Service Request for Exigent rate Increase; Rejects Permanent 
Price Increases'' (December 24, 2013), http://www.prc.gov/prc-docs/
Newsroom/PressReleases/
Exigent%20Rate%20Increase%202%2024%2013%20(2)_3429.pdf; Postal 
Regulatory Commission, Order Granting Exigent Price Increase, (Order 
no. 1926, Docket No. R2013-11, December 24, 2013), http://www.prc.gov/
Docs/88/88645/Order_1926.pdf. 
    \51\Id.
    \52\See id. at page 181.
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    However, given that mail volume has declined over the years 
at the same time that Congress has decided not to dramatically 
curtail the Postal Service's service obligations, the Committee 
is concerned that the rate cap does not and will not provide 
the Postal Service with sufficient revenue to fund its capital 
needs, maintain statutory service levels, and remain 
financially viable.
    To give the Postal Service at least some of the revenue it 
needs to meet its current and future service and financial 
obligations, the Committee considered several options, 
including replacing the CPI-U rate cap with a cap based on 
another inflation measure, or even eliminating the cap 
altogether. However, the Committee ultimately decided, through 
the adoption of a Carper-Coburn amendment, to maintain the 
existing rate cap, but apply it to a baseline consisting of the 
rate now in effect, which includes the 4.3 percent exigent rate 
increase above inflation approved by the Commission.\53\ With 
that rate increase permanently included in the rate base from 
which future inflation-based adjustments will be determined, 
the Postal Service would not be forced to decrease prices, and 
customers would have the assurance that the prices they pay now 
will remain as they are, subject to any increases permitted 
under the CPI-U rate cap in future years. The bill would also 
apply the rate cap to all market-dominant products considered 
together, rather than to each class of mail separately, as is 
done under the current statute.\54\
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    \53\The bill states that the rate base, which would remain in 
effect until adjusted under the rate cap, would be the rates in effect 
on the date of enactment. Since the 4.3 percent exigent rate increase 
is projected to remain in effect until well into 2014, after the end of 
the 113th Congress, enactment of the bill would make the exigent rate 
increase permanent.
    \54\39 U.S.C. Sec. 3662(d)(2).
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    According to data provided by the Postal Service, the 
Postal Service would be in significantly worse financial 
condition if S. 1486 were enacted without the Carper-Coburn 
amendment and the CPI-U rate cap were applied without 
accounting for the 4.3 percent exigent rate increase. Chart 1 
included in the Appendix to this report assumes enactment of S. 
1486 with the Carper-Coburn rates amendment. Chart 2 included 
in the Appendix assumes the bill is enacted without the 
amendment, meaning the exigent rate increase would expire after 
Fiscal Year 2015 and the rate cap would be applied to a lower 
baseline. In the first chart, Total Revenue at the Postal 
Service would remain above $68 billion and grow to $73 billion 
in Fiscal Year 2023, leaving the Postal Service with $7.1 
billion in net cash. In the second chart, the non-rate 
projections in each category are identical to those on the 
first chart but, because rates would go down in Fiscal Year 
2016, Total Revenue would decline significantly that year and 
only reach $71.4 billion in Fiscal Year 2023. With this lower 
level of revenue over time, the Postal Service would have $4.8 
billion in debt at the end of the ten-year projection rather 
than a positive cash balance.
    In addition to establishing the current postal rates 
approved by the Commission as the statutory baseline for 
calculating future adjustment, S. 1486 would also make two key 
changes to the ratemaking process:
          1. It would make the ratemaking process less 
        cumbersome, by not requiring that every Postal Service 
        rate increase within the CPI-U cap be submitted to the 
        Postal Regulatory Commission for formal review. 
        Instead, the Committee believes the Commission should 
        only be required to review and affirmatively approve 
        emergency requests to increase rates above the cap, 
        while maintaining the ability of the Commission to 
        review and render a decision on other rate increases 
        pursuant to complaints filed by interested parties or 
        through the Commission's annual compliance review.\55\
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    \55\See 39 U.S.C. Sec. 3662 (authorizing rate and service 
complaints to be lodged with the Postal Regulatory Commission); 39 
U.S.C. Sec. 3653 (requiring the Commission to make an annual written 
assessment of the Postal Service's rates and service and their 
compliance with applicable requirements.)
---------------------------------------------------------------------------
          2. It would give the Postal Service a role in the 
        review and revision of the ratemaking system. Under 
        current law, the Postal Regulatory Commission would 
        conduct this review in 2017 (and as appropriate 
        thereafter) and may change the ratemaking system by 
        majority vote of its members.\56\ The Committee is 
        concerned that this arrangement gives the members of 
        the Commission too much power over the Postal Service's 
        business decisions regarding the prices of its products 
        in the coming years, and therefore gives the Postal 
        Service too little say. Instead, S. 1486 would 
        authorize the Postal Service, not earlier than January 
        1, 2017, to propose revisions to the ratemaking system, 
        which the Commission would review and could veto and 
        send back to the Postal Service. The Committee believes 
        this process has the potential to force the Postal 
        Service and the Commission to come to consensus on any 
        new or revised ratemaking system that might need to be 
        put into place.
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    \56\39 U.S.C. Sec. 3662(d)(3).
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11. Postal service innovation

    Current law prohibits the Postal Service, with a few narrow 
exceptions, from offering anything other than ``postal'' 
products. This essentially limits it to hard-copy mail and 
packages and prohibits it from experimenting in other areas. 
The Committee is concerned that this restriction is too 
constraining and prevents the Postal Service from better 
capitalizing on its assets.\57\
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    \57\For example, the USPS Office of Inspector General reported in 
July 2012: ``The Postal Service could increase the value of Post Office 
retail facilities and address community needs by evaluating and 
offering non-postal products and services. New non-postal products are 
not currently authorized, but pending legislation could provide 
additional opportunities.'' USPS Office of Inspector General, ``21st 
Century Post Office: Non-Postal Products and Services,'' Management 
Advisory (Report Number DA-MA-12-005, July 16, 2012), https://
www.uspsoig.gov/sites/default/ files/document-library-files/2013/DA-MA-
12-005.pdf. This July 2012 review offered a wide range of non-postal 
products and services that the Postal Service might appropriately 
offer, to the benefit of the public as well as to add to the Postal 
Service's financial viability, and recommended that the Postal Service 
develop a strategy to identify, evaluate, and offer the most promising 
non-postal products and services ``when legislation permits.'' Id.
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    In order to give the Postal Service more authority to make 
the best and most lucrative use of its unique retail, 
processing, and delivery network, S. 1486 would relax the 
restrictions currently placed on the Postal Service while 
setting up a number of safeguards intended to protect the 
private sector from unfair and unnecessary competition from the 
federal government. It would also establish a leadership 
structure at the Postal Service intended to drive innovation 
initiatives through the creation of a ``Chief Innovation 
Officer'' and set up a temporary independent commission that 
would examine areas where the Postal Service could find new 
sources of revenue.

12. Federal Employees' Compensation Act (FECA)

    S. 1486 includes the Worker's Compensation Reform Act of 
2014 to update and reform FECA,\58\ which is the statute 
governing the worker's compensation program for federal 
civilian employees and postal employees. The bill would update 
and reform FECA in several respects--the first time this 96-
year-old law\59\ has been substantially updated since 1974.\60\ 
The provisions of the Worker's Compensation Reform Act that are 
incorporated into S. 1486 are essentially identical to those 
approved by the Senate on April 25, 2012 as part of S. 1789, 
the 21st Century Postal Service Act of 2012, and very similar 
to the provisions that this committee had approved and reported 
on January 1, 2012, as part of that bill.\61\
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    \58\5 U.S.C. Sec. Sec. 8101 et seq.
    \59\See Federal Employee Compensation Act of September 7, 1916
    \60\See P.L. 93-416.
    \61\S.1789, 112th Cong. The only amendment to the Workers' 
Compensation Reform Act made by the Senate in 2012 was to add 
provisions--(1) providing those injured while deployed in armed combat 
additional time to file a claim for FECA benefits; (2) ensuring that 
deployed employees injured in a terrorist attack overseas while off-
duty would receive FECA benefits; and (3) creating an exception from 
benefit-reduction under the legislation for hardship if someone would 
be eligible for food stamps if their benefits are reduced. See 
Congressional Record, 112th Cong., at S2690--S2691 (April 25, 2012).
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    The most significant FECA reform in the legislation would 
make for certain reductions in benefit levels. Under current 
statute, the FECA program pays a basic benefit for a total 
disability equal to 66\2/3\ of an injured worker's pre-
disability wage if the worker has no dependents; for those with 
dependents, the benefit rises to 75 percent (called ``augmented 
compensation''). For a partial disability, the benefit is in 
proportion to the wage-earning capacity that the worker lost. 
These benefits are adjusted for inflation and are tax-free and 
continue for as long as the injury or illness renders the 
individual unable to work. Because those benefits are now 
generally larger than federal retirement benefits, the program 
now creates a financial incentive for insured workers to remain 
on the FECA rule up to and beyond retirement age. Under this 
legislation, injured worker's FECA benefits would be set at 50 
percent of lost wages when workers reach Social Security 
retirement age. In addition, the augmented compensation under 
FECA for workers with dependents is out of line with other 
compensation programs and would be eliminated--under the 
legislation, injured workers before retirement age who have 
dependents would receive the same rate of compensation (i.e., 
66\2/3\ percent of lost wages) as those without dependents.
    Other key provisions in the Workers' Compensation Reform 
Act of 2014 include--
     Strengthened back-to-work programs. In addition to 
removing certain financial disincentives to returning to work, 
this legislation strengthens several existing programs to help 
injured workers get back to work.
     Waiting period. Since minor workplace injuries 
often heal very quickly, the legislation establishes a uniform 
3-day waiting period after injury, before FECA compensation is 
paid; except if the period of disability exceeds 14 days, then 
the injured worker may receive FECA compensation for those 
initial three days. (This 3-day waiting provision currently 
applies to injured postal workers only, and S. 1486 would 
extend the same provision to all FECA beneficiaries.)
     Increased amount of certain statutory benefits. 
The legislation would significantly increase the amount of 
compensation for severe disfigurement and funeral expenses, 
which amounts are fixed in statute and have not been 
significantly changed since 1949.
     Independent medical examinations. The legislation 
would require an independent medical assessment of disability 
and potential for return to work for beneficiaries after six 
months in the program and on a regularly scheduled basis 
thereafter, but no less frequently than every three years. 
(This assessment must be conducted by a medical professional 
other than the beneficiary's own doctor, who would remain 
responsible for treatment and for the initial assessment.)
     Program integrity and compliance. The legislation 
would require beneficiaries to report any outside income that 
they receive, would enable cross-matching of FECA records with 
Social Security data, and contains several additional 
provisions to strengthen integrity and compliance efforts under 
FECA.
    In considering the provisions to include in S. 1486 (as in 
S. 1789 in the 112th Congress), the Committee found that FECA 
reform is necessarily intertwined with the effort to stabilize 
the Postal Service's finances. Employees of the Postal Service 
represent a disproportionate number of FECA beneficiaries, and 
are responsible for a larger share of FECA benefits than are 
the employees of any federal department or agency. 
Specifically, approximately 41 percent of injuries, illnesses, 
and fatalities that resulted in FECA claims during Fiscal Year 
2013 involved Postal Service employees.\62\ According to the 
Department of Labor (DOL), in Fiscal Year 2013, injuries and 
illnesses of USPS employees resulted in 221.5 lost production 
days per 100 employees, compared with the rest of the federal 
government that lost 74.4 days per 100 employees.\63\ Because 
FECA costs are so expensive for the Postal Service, the 
Committee determined that cost-cutting FECA reforms must be 
included in this legislation to place the Postal Service on a 
sound financial footing.
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    \62\Department of Labor, Occupational Safety and Health 
Administration, Federal Injury and Illness Statistics for Fiscal Year 
2013, available at https://www.osha.gov/dep/fap/statistics/
fedprgms_stats13_final.html.
    \63\Department of Labor, Office of Workers' Compensation Programs, 
Protecting Our Workers and Ensuring Reemployment (POWER) Initiative 
statistics, available at http://www.dol.gov/owcp/dfec/power/index.htm.
---------------------------------------------------------------------------
    Moreover, the Committee determined that applying FECA 
reforms only to the Postal Service would cause harmful 
fragmentation and confusion within the FECA program, and also 
that these reforms would be as valuable and appropriate for 
non-postal agencies as they are for the Postal Service. 
Accordingly, the provisions in S. 1486 that reform the federal 
workers' compensation program apply government-wide.
    A more thorough discussion of the need for FECA reform and 
the key provisions included in the Workers' Compensation Reform 
Act of 2014 can be found in this Committee's report on S. 1789 
in the 112th Congress and in Senate debate on that bill.

13. Property management and expedited disposal of real property

    The Committee decided to incorporate into S. 1486 the 
entire text of the Federal Real Property Asset Management 
Reform Act of 2014 (Federal Real Property Act), which the 
Committee earlier approved and reported on November 19, 2013 as 
S. 1398. The purpose of the Federal Real Property Act is to 
improve the efficiency and effectiveness of the federal 
government's management of real property.
    Effectively and efficiently managing the government's 
extensive real property holdings has posed serious and 
longstanding challenges for the federal government. Problems 
related to real property management include ineffective 
management of excess and underutilized property and an 
overreliance on costly leasing. Compounding these management 
problems is the fact that agencies that no longer need 
particular parcels of property face a lengthy and costly 
disposal process, often causing agencies to keep unneeded 
property, and, as a result, the federal government as a whole 
continues to retain more real property than it needs. The 
Federal Real Property Act would strengthen the federal 
government's management of real property by requiring agencies 
to maintain an up-to-date inventory of real property, 
establishing an interagency Federal Real Property Council to 
develop guidance on real property management and ensure its 
implementation, and authorizing a pilot program to expedite the 
disposal of surplus real property.
    The Postal Service, like many other parts of the federal 
government, has a number of underutilized and excess 
properties. The Postal Service Inspector General has estimated 
that the Postal Service possesses 67 million square feet of 
underutilized or excess space that can either be better 
utilized for cost savings or sold for revenue.\64\ The Federal 
Real Property Act provides that the Postmaster General may 
identify a list of postal properties with space available for 
use by federal agencies and submit that list to the Federal 
Real Property Council established in the legislation. Then 
federal agencies must review the list submitted by the 
Postmaster General and recommend colocations as appropriate.
---------------------------------------------------------------------------
    \64\United States Postal Service Office of the Inspector General 
(USPS OIG), Nationwide Facility Optimization Audit Report (Report 
Number DA-AR-11-09) (August 26, 2011), http://www.uspsoig.gov/sites/
default/ files/document-library-files/2013/DA-AR-11-009.pdf
---------------------------------------------------------------------------
    A full explanation of the Federal Real Property Act, 
including the weaknesses in the government's management of real 
property and the ways in which the legislation would improve 
such management, are provided in the Committee's report on S. 
1398.\65\
---------------------------------------------------------------------------
    \65\Federal Real Property Asset Management Reform Act of 2013, 
Report of the Senate Committee on Homeland Security and Governmental 
Affairs, to accompany S.1398, S. Rep. 113-122, 113th Cong., 1st Sess. 
(Nov. 19, 2013), http://www.gpo.gov/fdsys/pkg/CRPT-113srpt122/pdf/CRPT-
113srpt122.pdf
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                        III. Legislative History

    On August 1, 2013, Senators Carper and Coburn introduced S. 
1486, which was referred to the Senate Homeland Security and 
Governmental Affairs Committee.
    Prior to the bill's introduction, the Committee held a 
hearing on February 13, 2013, titled ``Solutions to the Crisis 
Facing the U.S. Postal Service.'' The purpose of the hearing 
was to examine the financial and other challenges facing the 
Postal Service, and solutions that had been put forward to 
address those challenges, both proposals by Postal Service 
management and legislative proposals being considered by 
Congress. Representatives Darrell Issa and Elijah Cummings, the 
Chairman and Ranking Member, respectively, of the Committee on 
Oversight and Government Reform of the House of 
Representatives, both testified, as did Patrick Donahoe, the 
Postmaster General of the United States, and Eugene Dodaro, the 
Comptroller General of the United States. Other witnesses who 
appeared before the Committee included the Presidents of the 
American Postal Workers Union, the National Rural Letter 
Carriers' Association, and the National Association of 
Postmasters of the United States; and representatives from the 
private sector and academia.
    After the bill's introduction, the Committee held two 
additional hearings under the heading ``Outside the Box: 
Reforming and Renewing the Postal Service.'' Part I of this 
series, subtitled ``Maintaining Services, Reducing Costs, and 
Increasing Revenue through Innovation and Modernization,'' was 
held on September 19, 2013, and focused on postal services, 
including delivery schedules, delivery standards, and post 
office services; potential changes in the postal ratemaking 
system; and innovation, including the potential offering of new 
products and services. Postmaster General Donahoe; Ruth 
Goldway, the Chairman of the Postal Regulatory Commission 
(PRC); and David Williams, the Inspector General of the Postal 
Service, appeared as witnesses. The Presidents of the American 
Postal Workers Unions and the National Rural Letter Carriers' 
Association also testified, as did executives of three private 
sector companies and/or associations.
    Part II of the series, subtitled ``Promoting a 21st Century 
Workforce,'' was held on September 26, 2013, and focused on 
issues related to the postal workforce, including matters 
related to health care and pensions for postal workers and the 
manner in which the Postal Service calculates and funds these 
obligations; and the evolving role of postal workers in the 
digital age. Postmaster General Donahoe again testified, as did 
Jonathan Foley, the Director of Planning and Policy Analysis at 
the Office of Personnel Management (OPM), and two 
representatives of the Government Accountability Office (GAO), 
including the Chief Actuary and a director on GAO's health care 
team, the Presidents of the National Association of Letter 
Carriers, the National Mail Handlers Union, and National 
Association of Postmasters of the United States, as well as two 
policy institute leaders.
    The Committee considered S. 1486 at a business meeting that 
was begun on January 29, 2014 and was continued on February 6, 
2014. The legislation was ordered reported favorably by a roll 
call vote with several adopted amendments\66\:
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    \66\A number of additional amendments were offered but not adopted. 
These include a Tester amendment to strike Title V of the bill, dealing 
with the Federal Employees' Compensation Act, which was not adopted by 
a roll call vote of 6-7; a Tester amendment to limit application of the 
bill's changes to the Federal Employees' Compensation Act to Federal 
employees hired after the date of enactment of the Postal Reform Act, 
which was not adopted by a roll call vote of 7-8; a McCain amendment 
that would allow the Postal Service to immediately move to a five-day-
per-week mail delivery schedule, which was not adopted by voice vote; 
and a Paul amendment that would prohibit the Postal Service from 
entering into collective bargaining agreements or agreeing to no-layoff 
clauses in contracts, and allow the Postal Service to file for 
bankruptcy, which was not adopted by a roll call vote of 4-11. In 
addition, Senator Paul withdrew an amendment that would have allowed 
the carrying of firearms into post offices where otherwise permitted by 
state or local law after a Carper second degree amendment that would 
have first required a joint report and recommendations of relevant 
federal agencies was adopted by a roll call vote of 9-6. A subsequent 
agreement, entered into by unanimous consent, provided for a vote on an 
amendment identical to the amendment originally filed by Senator Paul; 
that Paul amendment was not adopted by a roll call vote of 6-9.
---------------------------------------------------------------------------
    A Carper-Coburn substitute amendment makes a number of 
changes to the bill as introduced. These include changes to 
provisions about how the Postal Service's Civil Service 
Retirement System (CSRS) and Federal Employees Retirement 
System (FERS) pension obligations are calculated (to reflect 
postal-specific demographic information); how future FERS 
surpluses would be handled; negotiations over pension benefits 
with respect to TSP; the postal service-only health care 
program and its coordination with Medicare; funding of the 
Postal Service's liability for workers' compensation payments; 
the timing of the moratorium against changes in delivery 
service standards; procedural requirements for closing of 
processing plants; procedural protections before closing or 
reducing the hours for post offices; the circumstances under 
which the Postal Service would be permitted to move from six-
day to five-day delivery of mail; the PRC's review of major 
service changes; and the Postal Service's authority to modify 
the postal rate system. The substitute was adopted by unanimous 
consent. Senators Carper, Levin, Pryor, McCaskill, Tester, 
Baldwin, Coburn, McCain, Johnson, Paul, Enzi, and Ayotte were 
present.
    A Levin amendment prohibits the Postal Service from 
entering into contracts that restrict Congressional oversight. 
The amendment was adopted by voice vote. Senators Carper, 
Levin, Pryor, McCaskill, Tester, Baldwin, Coburn, McCain, 
Johnson, Paul, Enzi, and Ayotte were present for the vote.
    Another Levin amendment, as modified, provides for 
notification and local participation in the expedited disposal 
process for real property in Title VI of the bill. The 
amendment was adopted by voice vote. Senators Carper, Levin, 
McCaskill, Begich, Baldwin, Heitkamp, Coburn, Johnson, Enzi, 
and Ayotte were present.
    A Pryor amendment provides certain postal employees the 
right to appeal significant personnel actions to the Merit 
Systems Protection Board. The amendment was adopted by voice 
vote. Senators Carper, Levin, Pryor, McCaskill, Tester, Begich, 
Heitkamp, Johnson, and Ayotte were present.
    An additional Pryor amendment clarifies that those who 
apply for waivers based on physical hardships in order to 
continue to receive door delivery of mail will not be charged 
for either the waiver application or the actual waiver. The 
amendment was adopted by voice vote. Senators Carper, Levin, 
Pryor, McCaskill, Tester, Begich, Baldwin, Coburn, McCain, 
Johnson, Paul, Enzi, and Ayotte were present.
    A Landrieu amendment requires the Postmaster General to 
submit a report on the feasibility of a pilot program to 
implement the use of natural gas and propane for its heavy-
duty, over-the-road trucks. The amendment was adopted by voice 
vote. Senators Carper, Levin, Pryor, McCaskill, Tester, Begich, 
Baldwin, Coburn, McCain, Johnson, Paul, Enzi, and Ayotte were 
present.
    A McCaskill amendment imposes a one-year moratorium on 
closing rural post offices; amends the additional 
determinations necessary for closing a rural post office and 
makes the requirement for the additional determinations 
permanent; and, for 10 years, requires that the Inspector 
General of the Postal Service report on the projected and 
actual cost savings from closing rural post offices. The 
amendment was adopted by voice vote. Senators Carper, Levin, 
Pryor, McCaskill, Tester, Begich, Baldwin, Heitkamp, Coburn, 
McCain, Johnson, Paul, Enzi, and Ayotte were present.
    A Tester amendment conditions the end of the two-year 
moratorium on changes in delivery standards on GAO's completion 
of the report on delivery times required by section 201(b). The 
amendment was adopted by voice vote en bloc. Senators Carper, 
Levin, Pryor, McCaskill, Begich, Heitkamp, Coburn, Johnson, 
Paul, and Ayotte were present.
    Another Tester amendment, as modified, reinstitutes the 
delivery service standards for First-Class Mail and periodicals 
in effect on June 30, 2012 for routes on which such mail was 
transported under Alternate Means of Transportation contracts, 
and require that such service standards be maintained for two 
years after enactment of this Act. The amendment also puts in 
place additional requirements before service under Alternate 
Means of Transportation contracts can be discontinued. The 
amendment was adopted by a roll call vote of 8-7, with Senators 
Levin, Pryor, Landrieu, McCaskill, Tester, Begich, Baldwin, and 
Heitkamp recorded as a yes vote, and Senators Carper, Coburn, 
McCain, Johnson, Paul, Enzi, and Ayotte recorded as a no vote. 
Senators Carper, Levin, Tester, Begich, Heitkamp, Coburn, 
Johnson, and Paul were present.
    A Begich amendment makes two changes in the rules governing 
pay and benefits for managerial and supervisory employees. 
First, it clarifies that changes to pay and/or benefits, 
including the termination of a benefit, for managers cannot 
occur outside the designated time period for pay consultation 
between the managers' organizations and the Postal Service 
unless mutually agreed upon. Second, it requires that the 
mandated differential in rates of pay between craft employees 
and managers be calculated based on both pay and benefits. The 
amendmentwas adopted by voice vote. Senators Carper, Levin, 
McCaskill, Begich, Heitkamp, Coburn, and Johnson were present.
    A second Begich amendmentclarifies that shipments of 
alcohol, as permitted under section 303, must comply with 
state, local and tribal laws.The amendment was adopted by voice 
vote. Senators Carper, Levin, McCaskill, Begich, Heitkamp, 
Coburn, Johnson and Ayotte were present.
    A third Begich amendment requires the PRC to examine how 
the recent reclassification of Parcel Post to a competitive 
product may affect certain communities that are largely 
inaccessible by road and which rely on the Postal Service for 
delivery of basic goods, and whether the Postal Service still 
exercises monopoly power with respect to these communities. The 
amendment was adopted by voice vote. Senators Carper, Levin, 
McCaskill, Begich, Baldwin, Heitkamp, Coburn, Johnson, Enzi, 
and Ayotte were present.
    A fourth Begich amendment permits the carrying or storing 
of a firearm in a parking lot of a post office in a manner not 
inconsistent with State or local law and not in violation of 
any lease terms. The amendment was adopted by a roll call vote 
of 15-0, with Senators Carper, Levin, Pryor, Landrieu, 
McCaskill, Tester, Begich, Baldwin, Heitkamp, Coburn, McCain, 
Johnson, Paul, Enzi and Ayotte recorded as voting in favor. 
Senators Carper, Levin, Pryor, McCaskill, Tester, Begich, 
Heitkamp, Coburn, Johnson, Paul, and Ayotte were present.
    A Baldwin-McCaskill amendment, as modified, was offered and 
was amended by a Carper-Coburn second degree amendment, which 
fully replaced the text of the underlying amendment.\67\ As 
amended by the second degree amendment, the amendment makes 
permanent the temporary exigent rate increase approved by the 
PRC in December 2013 and permits the Postal Service to raise 
rates beyond that baseline up to the amount of any increase in 
the Consumer Price Index. It also allows the Postal Service to 
propose changes to the postal rate system starting in 2017, but 
only with the review and approval of the PRC. The Carper-Coburn 
second degree amendment was adopted by a roll call vote of 10-
5, with Senators Carper, Levin, McCaskill, Begich, Heitkamp, 
Coburn, McCain, Johnson, Enzi, and Ayotte voting yes, and 
Senators Pryor, Landrieu, Tester, Baldwin, and Paul voting no. 
The Baldwin-McCaskill amendment, as amended by the second 
degree amendment, was adopted by voice vote. Senators Carper, 
Levin, Pryor, Tester, Begich, Baldwin, Heitkamp, Coburn, 
Johnson, and Paul were present for both votes.
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    \67\As modified, the underlying Baldwin-McCaskill amendment would 
have kept the exigent rate increase in effect for one year and then 
permitted rate increases of up to one percentage point above the 
Consumer Price Index until a new rate system was put in place, 
scheduled under existing law for 2017.
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    A Heitkamp amendment adds the efforts by the Postal Service 
to recruit and retain a workforce sufficient to meet the 
strategic needs of the Postal Service to the matters the 
Strategic Advisory Commission is directed to study and develop 
a strategic blueprint to address. The amendment was adopted by 
voice vote en bloc. Senators Carper, Levin, Pryor, McCaskill, 
Begich, Heitkamp, Coburn, Johnson, Paul and Ayotte were 
present.
    Another Heitkamp amendment, as modified and as amended by 
two second degree amendments offered by Senator Levin, provides 
for an appeal process to the PRC in the case of the proposed 
closing of a mail processing plant that is the same as the 
process used for post office closings. It also directs the 
Postal Service to respond to the required GAO report evaluating 
whether any proposed change in delivery schedule from six to 
five days per week would improve the financial condition of the 
Postal Service and assist it in achieving long-term solvency 
and prohibits implementation of a proposed change in schedule 
until after the Postal Service has submitted its response. The 
first Levin second degree amendment prohibits the Postal 
Service from adopting a five-day-per-week delivery schedule 
before October 1, 2017, and was adopted by voice vote. The 
second Levin second degree amendment extends the time during 
which the Postal Service must wait to implement a change in 
delivery schedule until 60 days after the date on which the 
Postal Service responds to the GAO report; it was adopted by 
unanimous consent. The Heitkamp amendment, as amended, was 
adopted by voice vote. Senators Carper, Levin, Tester, Begich, 
Heitkamp, Coburn, Johnson, and Paul were present for all three 
votes.
    A McCain amendment requires a study on the environmental 
impact of moving to five-day-per week mail delivery. The 
amendment was adopted by voice vote en bloc. Senators Carper, 
Levin, Pryor, McCaskill, Begich, Heitkamp, Coburn, Johnson, 
Paul, and Ayotte were present.
    A Paul amendment limits the number of post offices that may 
be located in the U.S. Capitol Complex to one in the Houseof 
Representatives office buildings and one in the Senate office 
buildings. The amendment was adopted by voice vote en bloc. 
Senators Carper, Levin, Pryor, McCaskill, Begich, Heitkamp, 
Coburn, Johnson, Paul, and Ayotte were present.
    An Enzi amendment, as modified, requires the Postal 
Service, when proposing to discontinue a post office, to 
provide affected communities with relevant information on the 
costs of operating the post office; to allow local governments 
to present alternative proposals for providing postal services 
to the community; and to consider whether to implement such an 
alternative proposal. The amendment was adopted by voice vote. 
Senators Carper, Levin, Pryor, McCaskill, Tester, Begich, 
Baldwin, Heitkamp, Coburn, McCain, Johnson, Paul, Enzi, and 
Ayotte were present.
    The Committee ordered the bill, as amended, favorably 
reported by a roll call vote of 9-1. Senators Carper, Levin, 
Pryor, McCaskill, Begich, Heitkamp, Coburn, Johnson and Ayotte 
voted in favor of the bill, while Senator Tester voted against 
the bill. Senators McCain and Enzi asked to be recorded in 
favor of the bill by proxy, while Senators Landrieu, Baldwin, 
Portman, and Paul asked to be recorded against the bill by 
proxy.

                    IV. Section-by-Section Analysis


Section 1 -- Short title

    This section establishes the title of the legislation as 
the--Postal Reform Act of 2014.''

Section 2 -- Table of Contents

    This section sets forth the table of contents for the Act.

Section 3 -- Definitions

    This section provides definitions of terms used in the Act.

                   TITLE I: POSTAL SERVICE WORKFORCE

Section 101--Annual Federal Employee Retirement System and Civil 
        Service Retirement System Assessments

    This section would require that, in annually calculating 
the amounts that the Postal Service must pay to fund postal 
workers' annuities under the Federal Employees Retirement 
System (FERS) and the Civil Service Retirement System (CSRS), 
the Office of Personnel Management (OPM) must use the 
demographic and salary-growth characteristics of the Postal 
Service's actual workforce, rather than the general 
characteristics of both postal and non-postal federal employees 
combined, as OPM does today.
    Moreover, if OPM finds that the Postal Service has paid 
more into the Federal Employees Retirement System (FERS) system 
than its employees' annuities under that system will actually 
cost, this section provides an orderly process by which the 
surplus can be returned for use by the Postal Service. If the 
initial calculation shows a surplus as of the end of the fiscal 
year ending September 30, 2013, the Postal Service may request 
and receive not more than $6 billion of the calculated surplus, 
and must use the refund in 2014 to retire its debt obligations. 
If the second-year calculation shows a surplus, the Postal 
Service could request the return of no more than two-thirds of 
the surplus. Then starting with the third year and for each 
subsequent year, any overfunding of its FERS account would be 
refunded to the Postal Service by a series of annual 
installments through 2047. After the first-year refund, the 
Postal Service would use these annual refund payments to pay 
down unfunded liabilities (for retiree health benefits, CSRS, 
or workers' compensation under the Federal Employees' 
Compensation Act (FECA)) or to pay off Treasury debt. Once all 
of these liabilities and debts are retired, the Postal Service 
could use an annual refund for any appropriate other purpose.
    Finally, this section modifies the schedule under which the 
Postal Service must make up for the amount by which it has paid 
less than its employees' annuities under the CSRS system will 
actually cost. Under current law, the Postal Service would need 
to pay off that CSRS unfunded liability by a series of annual 
payments starting on September 30, 2018 and ending on September 
30, 2043. This section of the bill requires the Postal Service 
to make the series of annual payments starting on September 30, 
2015 and ending on September 30, 2054.

Section 102--Postal service authority to negotiate retirement benefit 
        terms for new employees

    This section would allow the Postal Service and each postal 
labor union to bargain over the retirement package for newly 
hired postal workers represented by the union. Specifically, 
the Postal Service and each union would be able to agree to the 
following kinds of modifications: (1) whether to cease giving 
some or all new employees credit towards an annuity under the 
Federal Employee Retirement System (FERS); (2) whether to offer 
one or more additional retirement benefit plans, for the 
benefit of some or all new employees; (3) whether and how to 
adjust the relative amounts that the Postal Service and an 
employee would contribute to the FERS annuity plan, for those 
new employees who continue to receive credit towards the 
annuity; (4) the amounts that an employee and the Postal 
Service would contribute for a new employee's participation in 
an additional retirement plan established under the agreement; 
and (5) whether and how to adjust the amount that the Postal 
Service would contribute towards new employees' Thrift Savings 
Plan (TSP) accounts. The bargaining would generally take place 
between the Postal Service and each union in connection with 
the general collective bargaining agreement entered into 
between the Postal Service and the union. However, under this 
section of the bill, the Postal Service's contribution to new 
employees' TSP accounts may be modified only by a collective 
bargaining agreement among the Postal Service and all four 
unions, and could result in no more than a single Postal-only 
alternative to the TSP contribution program that applies under 
statute for federal employees generally.

Section 103--restructuring of payments for retiree health benefits

    This section would restructure the Postal Service's retiree 
health pre-funding schedule. The bill would eliminate the 
existing statutory payment schedule, cancel any outstanding 
payments owed by the Postal Service, suspend payments until 
Fiscal Year 2016, and then begin a new payment schedule 
amortized over 40 years. It would also reduce the pre-funding 
goal to 80 percent of projected obligations. The bill also 
recognizes that the amount of these payments should be reduced 
further as a result of the implementation of the Postal Service 
Health Benefits Program in section 104.

Section 104--Postal service health benefits program

    This section would create a new Postal Service Health 
Benefits Program (PSHBP) within the Federal Employees Health 
Benefits Program (FEHBP) in which all postal employees and 
annuitants would participate. The new program would be 
implemented and administered by the Office of Personnel 
Management.
    The program would require Medicare-eligible postal 
annuitants enrolled in the PSHBP to also enroll in Medicare, 
including parts A, B and D. Current annuitants who did not 
enroll in Medicare when they became eligible would be allowed 
to enroll without penalty during a specified period. FEHBP 
insurers with more than 5,000 postal enrollees would be 
required to participate in this new postal only program by 
offering policies that are actuarially equivalent in value to 
those policies that they offer for other federal employees who 
receive FEHBP coverage.
    This section would provide a small number of employees and 
annuitants with the option to opt-out the new PSHBP. These opt-
out provisions would apply only to--(a) postal employees who 
are enrolled in plans that will not be offered in the new 
PSHBP, but at retirement theywould have to switch to a plan in 
the PSHBP and enroll in Medicare parts A, B and D; (b) annuitants who 
are enrolled in plans that will not be offered in the new PSHBP; and 
(c) annuitants for whom plans in the PSHBP are not available due to 
their geographic location.

Section 105--Arbitration; labor disputes

    This section would require that arbitrators deciding a 
contract dispute between the Postal Service and one of its 
recognized unions to take into consideration such relevant 
factors as the financial condition of the Postal Service, and 
would state that nothing in the section may be construed to 
limit the relevant factors that the arbitration board may take 
into consideration in rendering a decision.

Section 106--Prefunding and financial reporting with respect to 
        workers' compensation liability

    This section would establish a process under which the 
Postal Service begins to pay down its unfunded liability for 
workers' compensation payments that will be owed in future 
years. The amortization schedule would be calculated with a 
target of liquidating 80% of the unfunded liability over an 
amortization period of 40 years, or a rolling period of 15 
years, whichever period ends later. Under this plan, the Postal 
Service would not be required to make an amortization payment 
in a year when the annual net income does not exceed $1 
billion, and even then, the amount of an amortization payment 
may not exceed the increment between $1 billion and the total 
net income for the year. Also, to foster greater transparency 
and accountability, the Postal Service would be required to 
report about its unfunded liability for workers' compensation 
payment and about its progress in paying down the liability in 
the United States Postal Service's (USPS) annual audited Form 
10-K reports.

Section 107--Right of appeal to Merit Systems Protection Board

    This section would allow certain mid-level managers at the 
Postal Service to appeal firings and other adverse personnel 
actions to the Merit Systems Protection Board. Supervisors and 
management employees at the Postal Service generally have such 
appeal rights already, but certain mid-level managers do not, 
and this section would fill the gap by extending appeal rights 
to them.

Section 108--Supervisory and other managerial organizations

    This section clarifies that, when the Postal Service 
provides reasonable differentials in compensation between 
front-line employees and managers, the Postal Service takes 
benefits, as well as salary, into account.
    Second, this section clarifies that changes to pay and/or 
benefits for managers cannot occur outside the designated time 
period for pay consultations between the managers' 
organizations and the Postal Service unless mutually agreed 
upon.
    Third, the law is clarified to say that such consultation 
must occur before a benefit program is terminated, just as 
consultation must occur before a benefit program is changed.

                  TITLE II: POSTAL SERVICE OPERATIONS

Section 201--Maintenance of delivery service standards

    Subsection (a) of this section would require the Postal 
Service to maintain the delivery service standards for First-
Class Mail and periodicals in effect as of October 1, 2013 for 
a period of two years from the date of enactment, or until the 
Government Accountability Office (GAO) report required by 
subsection (b) is submitted, whichever is later.
    Subsection (b) would direct GAO to conduct a study about 
the how the Postal Service measures delivery times for the 
purpose of determining whether service standards have been met 
and whether this method of measurement accurately reflects the 
total period of time that it takes for a mailed item to travel 
from the postal customer to its final destination. The 
Comptroller General would be required to submit a report of 
GAO's findings and its recommendations no later than one year 
after the date of enactment.
    Subsection (c) addresses Alternate Means of Transportation 
(AMOT) contracts, through which the Postal Service contracts 
with private air carriers to provide delivery on certain 
routes. After putting into effect revised delivery service 
standards in July 2012, which allowed for longer delivery times 
in certain cases, the Postal Service reduced or eliminated its 
use of AMOT contracts on some routes. This subsection would 
reinstitute the delivery service standards for First-Class Mail 
and periodicals in effect on June 30, 2012 for routes on which 
such mail was transported under AMOT contracts, and require 
that such service standards be maintained for two years after 
enactment of this Act. This subsection would also put in place 
restrictions on discontinuing AMOT contracts, requiring that, 
on routes on which mail is transported under AMOT contracts, 
that the Postal Service consider specific factors before 
deciding to transport mail by other means, including the effect 
on the communities and businesses served by the route. A 
determination by the Postal Service to discontinue service 
under an AMOT contract and transport mail on a previously 
served route by other means is required to be in writing, 
accompanied by findings on the factors required to be 
considered, and made available to the public at least 60 days 
before the Postal Service discontinues AMOT service. Finally, 
this subsection would require the Postal Service, not later 
than 2 years after the date of enactment of this Act to submit 
a report on potential cost savings resulting from any decision 
made in the 2-year period to transport mail using a means other 
than under an AMOT contract.

Section 202--Preserving mail processing capacity

    This section would prohibit the Postal Service from closing 
or consolidating a mail processing facility that was open on 
October 1, 2013 for a period of two years from the date of 
enactment, or until the GAO report required by section 201(b) 
is submitted, whichever is later. In addition, this section 
would specify certain procedural steps the Postal Service must 
take and factors it must consider before closing or 
consolidating a plant, including codifying the current practice 
whereby the Postal Service conducts an Area Mail Processing 
study (with the additional requirement that the study look at 
the possibility of reducing capacity rather than closing a 
plant) and provides notice, a public meeting, and an 
opportunity for public comment. Finally, this section provides 
an opportunity for those served by a postal facility to appeal 
the decision to close or consolidate the facility to the Postal 
Regulatory Commission (PRC) in the same manner that post office 
closings can currently be appealed.

Section 203--Preserving community post offices

    This section establishes procedures that the Postal Service 
would be required to follow before deciding whether to 
discontinue a post office, including soliciting input from 
communities regarding post office operational changes that 
could result in financial savings without closings or 
consolidations. This section builds on the so-called ``POSt'' 
plan adopted by the Postal Service in 2012 and that is 
currently in effect.
    Under these procedures, the Postal Service would be 
required to consider alternatives to discontinuing the post 
office, including--(1) reducing office hours; (2) contracting 
out retail services in the area; (3) co-locating retail 
services with a commercial or governmental entity in the area; 
(4) providing retail services to affected customers through 
letter carriers; or (5) an alternative proposal put forward by 
a local government.
    In addition, in making a determination whether or not to 
discontinue a post office, the Postal Service would be required 
to consider a range of factors, such as the effect of 
discontinuing the post office on the community, on businesses 
in the area, and on postal employees; the proximity and 
accessibility of other post offices; and whether the 
discontinuance would result in substantial economic savings to 
the Postal Service.
    This section also requires that the Postal Service make 
certain additional determinations before discontinuing rural 
post offices. These include that postal customers served by the 
post office would continue to receive substantially similar 
access to essential items, such as prescription drugs; that 
there is unlikely to be undue economic loss to the community as 
a result of the closing; that the area served by the post 
office has adequate access to broadband Internet service; and 
that there is a road with year-round access connecting the 
community to another post office that is within a reasonable 
distance.
    If the Postal Service decides, after making the above 
considerations, to discontinue a post office (rural or 
otherwise), it would be required to provide a written 
determination and findings 60 days before closing the post 
office.
    This section would also require that the Postal Service 
consider certain factors before reducing the number of hours a 
day a post office operates, including the effect on the 
community, the proximity of other post offices, and the ability 
to hire qualified employees, and that it consider which 
alternative schedules would most effectively mitigate potential 
negative impacts. The Postal Service would be required to make 
available a summary of its findings and an explanation of the 
change in hours during which the post office would be open.
    In addition, for a period of 10 years after enactment, any 
time a rural post office is discontinued under this section, 
the Inspector General of the Postal Service would be required 
to examine the actual cost savings resulting from the 
discontinuance and compare that to the cost savings that the 
Postal Service had projected would result from the 
discontinuance. The section directs the Inspector General to 
report on the findings to the PRC, the Postal Board of 
Governors, and Congress not later than two years after the date 
of the discontinuance of the post office.
    Finally, this section requires that the Postal Service 
establish minimum standards for retail postal services.

Section 204--Changes to mail delivery schedule

    This section would allow the Postal Service to establish a 
nationwide delivery schedule of five days per week if the 
Postal Service determines that such a delivery schedule would 
contribute to the achievement of long-term solvency and if 
total mail volume during any period of four consecutive 
quarters drops below 140 billion pieces. In no event, however, 
may the Postal Service establish a five-day delivery schedule 
earlier than October 1, 2017.
    If the Postal Service intends to move to 5-day per week 
delivery, it is required to identify customers and communities 
that might be particularly affected by the scheduled change; to 
develop measures intended to ameliorate any disproportionately 
negative impacts associated with the change; to implement 
measures to increase revenues and reduce costs; and report to 
Congress, the PRC and GAO on these efforts not earlier than two 
years and not later than six months before the effective date 
for the change in delivery service.
    The Comptroller General would be required to report to 
Congress within three months of receiving a report from the 
Postal Service on the extent to which a change in delivery 
schedule would improve the financial condition of the Postal 
Service and assist in the efforts of the Postal Service to 
achieve long-term solvency, as well as on whether the Postal 
Service has complied with the measures required of it under 
this section. If the Comptroller General finds that the 
proposed change in delivery schedule would not substantially 
improve the financial condition of the Postal Service and 
assist in the efforts of the Postal Service to achieve long-
term solvency or that the Postal Service has not complied with 
the relevant statutory requirements, the Postal Service is 
required to submit a response to Congress indicating whether it 
agrees with the Comptroller General's findings; whether it 
intends to reevaluate its decision to establish a change in 
delivery schedule; and, if the Postal Service still intends to 
establish a change in delivery schedule, the justification for 
doing so in light of the Comptroller General's findings. The 
Postal Service would be prohibited from implementing a change 
in delivery schedule until 60 days after it submits its 
response to the GAO report to Congress.
    This section also makes clear that it is not intended to 
affect the delivery frequency on any route for which the Postal 
Service currently delivers less frequently than six days per 
week; does not require the Postal Service to deliver mail on 
Federal holidays; and does not affect the days and times that 
post offices operate, the frequency of delivery to post office 
boxes or the delivery schedule for competitive (i.e., non-
market dominant) products, such as Priority Mail Express 
(overnight delivery).
    In addition, this section would require that, for five 
years after the date of enactment, the Postal Service deliver 
packages six days per week delivery to areas that received six-
day package delivery, as of October 1, 2013 and optionally 
seven days per week where the Postal Service determines it is 
economically beneficial to the Postal Service to do so. It also 
requires that, if the Postal Service adopts a delivery schedule 
of 5 days per week, the Postal Service provide mailers that 
currently have access to customers' mailboxes on Sundays with 
the same access on all days on which the Postal Service chooses 
not to provide mail delivery.
    Finally, this section requires that, not later than 180 
days after enactment, the Chief Sustainability Officer of the 
Postal Service conduct an assessment of the environmental 
impact of moving to a 5-day-per-week delivery schedule and 
publish the results on the Postal Services website.

Section 205--Delivery point modernization

    This section would require that the Postal Service use the 
method of delivery that is most cost-effective and in the best 
long-term interest of the Postal Service. For all new addresses 
established after the date of enactment, the Postal Service 
would be required to provide centralized delivery (e.g., 
cluster boxes) or, if centralized delivery is not practicable, 
curbside delivery. The Postal Service also would be required to 
carry out a program to convert existing business addresses 
receiving door delivery to centralized or curbside delivery. 
With respect to existing residential addresses, the Postal 
Service would be required, within nine months of enactment, to 
identify existing residential addresses that receive door 
delivery and that are appropriate candidates for conversion and 
to begin implementation of a program to convert, on a voluntary 
basis, those addresses to a more cost-effective method of 
delivery.
    In determining the appropriate method of delivery for a new 
or existing address, the Postal Service would be allowed to 
provide door delivery if a physical barrier precludes the 
efficient use of centralized or curbside delivery; if the 
address is in a registered historic district; or the Postal 
Service determines that the provision of centralized or 
curbside delivery would be impractical, not cost effective or 
otherwise not in the best long-term interest of the Postal 
Service. In addition, the Postal Service would be required to 
provide a waiver program for customers for whom door delivery 
is necessary due to a physical hardship. The Postal Service 
would be prohibited from charging a fee to apply for a physical 
hardship waiver or to receive mail through door delivery if a 
waiver has been granted.

Section 206--Postal services for market-dominant products

    When the Postal Service proposes to change the nature of 
postal services relating to market-dominant products, this 
section would establish a default timeline of 90 days for the 
PRC to issue an advisory opinion on the proposal, unless an 
alternative schedule is agreed to between the PRC and the 
Postal Service. Before issuing its opinion, the PRC must 
provide notice and an opportunity for public comment and may 
hold a public hearing on the Postal Service's proposal. The 
Postal Service would be required to formally respond to the 
advisory opinion, and generally it would not be allowed to act 
on its proposed service change until after submitting its 
response.

Section 207--Report on pilot program for use of natural gas and propane 
        for postal trucks

    This section would require the Postmaster General, within 
180 days after enactment of this Act, to submit a report on the 
feasibility of a pilot program to implement the use of natural 
gas and propane as fuels for its heavy-duty, over-the-road 
trucks, in addition to those natural gas-fueled vehicles 
already in the postal fleet, as a fuel cost-saving measure.

Section 208--Capitol complex post offices

    This section would limit the number of post offices that 
may be located in the U.S. Capitol Complex to one in the House 
of Representatives office buildings and one in the Senate 
office buildings.

Section 209--Lawful possession of firearms in post office parking lots

    This section would permit the carrying or storing of a 
firearm in a parking lot of a post office in a manner not 
inconsistent with State or local law and not in violation of 
any lease terms for the use of the parking lot or the postal 
facility that the parking lot serves. It would require the 
Postal Service to amend its regulations accordingly and to post 
signage in each post office parking lot notifying the public of 
this change in law. The section makes clear that it does not 
apply to parking lots that also serve other Federal office 
buildings or courthouses (e.g., when a post office is located 
in a Federal office building) and that it does not limit the 
authority of the Postmaster General to establish workplace 
rules for Postal Service employees or regulations regarding 
nonpublic areas of postal facilities.

                   TITLE III: POSTAL SERVICE REVENUE

Section 301--Postal rates

    Under current law, the Postal Service's pricing authority 
is restricted by a Consumer Price Index (CPI) rate cap on each 
individual class of mail established in 2006 through the Postal 
Accountability and Enhancement Act, or PAEA.\68\ The PAEA also 
laid out a set of objectives and factors intended to guide the 
creation of the current ratemaking system and Postal Service 
pricing decisions. Finally, the PAEA established that, 
beginning in 2017, the PRC must review the ratemaking system 
and may revise it if it determines that doing so is necessary. 
There is no requirement that any revised ratemaking system 
include a rate cap or any other restriction on Postal Service 
pricing authority.
---------------------------------------------------------------------------
    \68\39 U.S.C. Sec. 3622(d)(1), enacted by section 201(a), Public 
Law 109-435 (Dec. 20, 2006).
---------------------------------------------------------------------------
    This section of the bill would adjust the pricing 
limitations by stating that the rates in effect at the time of 
enactment, including any exigent rate increase, would become 
the new base rate for future rate increases. In fact, on 
December 24, 2013, the Postal Regulatory Commission allowed a 
temporary 4.3 percent exigent rate increase to make up for the 
mail-volume losses arising from the Great Recession,\69\ and, 
since the rate increase is projected to end sometime during 
2015, the provision will make the 4.3 percent rate increase a 
permanent part of the base rate.\70\ In addition, the bill 
would apply the rate cap to all market-dominant products 
considered in aggregate, rather than each product class 
separately.
---------------------------------------------------------------------------
    \69\See Postal Regulatory Commission Press Release, ``PRC Approves 
Postal Service Request for Exigent rate Increase; Rejects Permanent 
Price Increases'' (December 24, 2013), http://www.prc.gov/prc-docs/
Newsroom/PressReleases/
Exigent%20Rate%20Increase%202%2024%2013%20(2)_3429.pdf; Postal 
Regulatory Commission, Order Granting Exigent Price Increase, (Order 
no. 1926, Docket No. R2013-11, December 24, 2013), http://www.prc.gov/
Docs/88/88645/Order_1926.pdf.
    \70\3See id. at page 181.
---------------------------------------------------------------------------
    That rate structure would remain in place until at least 
the end of 2016. Beginning in 2017, and as appropriate 
thereafter, the Postal Service would be permitted, by majority 
vote of the Board of Governors, to propose a new or revised 
ratemaking system consistent with the objectives and factors 
laid out in the provision. Any proposal made by the Board would 
be submitted to the PRC, which could either adopt it or reject 
it. No new or revised ratemaking system could be implemented 
without the approval of the PRC.
    Finally, this section would repeal the rate preference that 
currently allows political committees to pay lower rates for 
mail.

Section 302--Nonpostal Services

    Under current law, the Postal Service is generally limited 
to offering ``postal'' products. The definition of ``postal'' 
essentially limits the Postal Service to the processing and 
transportation of hard-copy mail. The only exceptions are 27 
non-postal products that were offered before the enactment of 
the PAEA and its prospective ban on new non-postal products. 
This section would modify that ban, giving the Postal Service 
limited authority to offer non-postal products again. The 
limitations on this new authority would make it clear that any 
non-postal products offered by the Postal Service must make use 
of the Postal Service's mail processing and distribution 
network, must be in the public interest, must demonstrate a 
likely public demand, must not create unfair competition with 
the private sector; and should be reasonably expected to 
improve the Postal Service's net financial condition. Further, 
it would make clear that non-postal products are subject to the 
same Federal and state laws and regulations as the private 
sector. Finally, non-postal products would, like the Postal 
Service's competitive products, be required to cover all of 
their costs.
    This section would also permit the Postal Service to offer 
services on behalf of Federal, state, local, and tribal 
governmental agencies under appropriate terms, and would 
require that the Postal Service report to the Postal Regulatory 
Commission on the costs and revenues of such services.

Section 303--Shipping of wine, beer, and distilled spirits

    Under current law, private shippers are permitted to ship 
alcoholic beverages but the Postal Service is not. This section 
would authorize the Postal Service to ship wine, beer, and 
distilled spirits when they are mailed in accordance with the 
state and local laws that apply to the sender where the product 
is mailed and that apply to the recipient where the delivery is 
made. The provision also specifically requires that the 
recipient be at least 21 years old and present government-
issued proof of identity.

                  TITLE IV: POSTAL SERVICE GOVERNANCE

Section 401--Board of Governors of the Postal Service

    Under current law, the Postal Service is governed by an 
eleven-member Board of Governors made up of nine part-time, 
Senate-confirmed Governors, the Postmaster General, and the 
Deputy Postmaster General. This section would reduce the size 
of the Board to nine members and eliminate the Deputy 
Postmaster General from the Board. It would retain partisan 
balance among the Governors, and would provide for revised 
qualifications for Governors. At least one of the Governors who 
is appointed to fill a position that is vacant on the date of 
enactment would also be required to have a demonstrated ability 
to manage and improve financially troubled organizations. 
Governors would continue to be limited to two terms, and the 
Chairman of the Board would continue to be elected by the 
Governors from among the Board members. Individuals currently 
serving as Governors would be permitted to serve until the 
expiration of their terms.
    In addition, this section would give the Board of Governors 
the authority to establish an Executive Committee made up of 
the elected Chairman of the Board and two additional Governors, 
with no more than two members of the Executive Committee being 
a member of any one political party. If created, the Executive 
Committee would be responsible for developing and overseeing 
the long-term financial solvency of the Postal Service, 
developing and overseeing the financial plan and budget, and 
making recommendations on postal operations.

Section 402--Strategic Advisory Commission on Postal Service solvency 
        and innovation

    This section would establish an independent advisory 
commission that would provide guidance to the President, 
Congress, and the Postal Service on enhancing the long-term 
solvency of the Postal Service and fostering innovative 
thinking there. The commission would be made up of seven 
prominent individuals, three of them appointed by the President 
and one each appointed by each party's leader in the House and 
Senate. Commissioners may not be current elected officials or 
officers or employees of the federal government.
    The Commission would be charged specifically with studying 
the current state of the Postal Service; the Postal Service's 
governance and its organizational and management structures; 
alternative business models for the Postal Service; potential 
postal and non-postal products that the Postal Service could 
offer; innovations that have been implemented by foreign posts; 
and efforts to recruit and retain a workforce capable of 
meeting the strategic needs of the Postal Service, including in 
rural areas. The Commission would be required to issue a 
Strategic Blueprint for Long-Term Solvency. It would also be 
required to conduct a study concerning the advisability of the 
Postal Service entering into interagency agreements with 
Federal, State and local agencies. The Commission would 
terminate 60 days after submission of its StrategicBlueprint 
and the study on interagency agreements, but in no event later than one 
year after enactment.

Section 403--Long term solvency plan; annual financial plan and budget

    This section would require that, within 90 days of 
enactment, the Postal Service prepare and submit a plan to the 
Board of Governors describing the actions the Postal Service 
intends to take to achieve long-term solvency. The Board of 
Governors is to review it, may request changes, and then is to 
submit it within 60 days to Congress. The Postmaster General is 
required to submit updated versions of the long-term solvency 
plan to the Board of Governors at least annually for five years 
after enactment, and the Board is required to review each 
updated version and submit it to Congress.
    This section would further require that, for each of the 
first five fiscal years after enactment, the Postmaster General 
submit to the Board a financial plan and budget for the fiscal 
year that is consistent with the goal of promoting the long-
term solvency of the Postal Service. The Board is required to 
review the plan and budget and either approve the plan and 
budget or direct the Postmaster General to make appropriate 
revisions, before the budget is submitted to Office of 
Management and Budget (OMB) as part of the annual budget 
process.

Section 404--Chief innovation officer; innovation strategy

    This section would require the Postal Service, within 90 
days of enactment, to designate a Chief Innovation Officer. 
This individual must have expertise and a record of 
accomplishment in certain key areas, such as the shipping 
industry, marketing, or new and emerging technology. The Chief 
Innovation Officer would be charged with leading the 
development at the Postal Service of new postal and non-postal 
products and must, within nine months of enactment, publish an 
innovation strategy for the Postal Service detailing new 
products to be tested and launched. The Chief Innovation 
Officer would also be required to submit an annual report on 
implementation of the innovation strategy for the subsequent 10 
years.

Section 405--Area and district office structure

    This section would require the Postal Service to issue a 
plan within one year of enactment for reducing the number of 
area and district offices.

Section 406--Inspector General of the postal service

    This section provides that the Inspector General of the 
Postal Service would be appointed by the President subject to 
confirmation by the Senate. Under present law, the Inspector 
General is appointed by the Postal Board of Governors.

Section 407--Postal regulatory commission

    The section would limit members of the Postal Regulatory 
Commission to two full terms. In addition, this section would 
require that the Commission, by majority vote, adopt policies 
that govern the functions of the Commission, including the 
finances, operations and administration of the Commission, and 
that the Commission is to review and, if necessary, revise 
those policies not less than every four years. The section 
further provides that the Chairman's day-to-day authority to 
direct executive and administrative functions would be subject 
to the policies adopted by the Commission.

              TITLE V: FEDERAL EMPLOYEES COMPENSATION ACT

Sction 501--Short title; references

    This section says that title V of the bill may be cited as 
the ``Workers' Compensation Reform Act of 2014.'' The section 
also provides that, whenever a provision in title V of the bill 
refers to a statutory section being amended, the provision is 
in reference to title 5 of the United States Code unless noted 
otherwise.

Section 502--Federal workers' compensation reforms for retirement-age 
        employees

    This section would reduce Federal Employees' Compensation 
Act (FECA) benefits for totally disabled enrollees to 50 
percent of the pre-disability wage upon the enrollee reaching 
full retirement age, as defined in the Social Security Act. For 
partially disabled enrollees, the benefits would generally be 
reduced to 50 percent of the pre-disability wage, multiplied by 
the percentage of wage-earning capacity lost due to the injury.
    For individuals whose workplace injury occurred before the 
date of enactment, section 502 contains provisions that would 
delay application of the reduced benefit level and provide full 
exemption for those most severely injured and those already 
over retirement age. Specifically--
          (1) Those who are permanently, totally disabled and 
        unable to return to work would be exempt from this 
        section (``grandfathered''), and their benefit rate 
        would not be reduced to 50 percent. This category of 
        grandfathered individuals is defined under the 
        legislation as those who satisfy any one of the 
        following criteria: (a) lost the use of 2 appendages 
        (e.g., arms/legs); (b) receiving custodial home nursing 
        care or full nursing home care for at least 1 year 
        prior to enactment; or (c) receiving ``total 
        disability'' wage-loss compensation for at least 3 
        years prior to enactment or will have done so within 
        the first 3 years after enactment.
          (2) Those who are already at the age of retirement on 
        the date of enactment are also exempt from this 
        section.
          (3) Those who do not qualify as permanently, totally 
        disabled (``grandfathered'') and are not already over 
        the retirement age, the benefit level will be reduced 
        to 50 percent upon reaching retirement age or 3 years 
        after the date of enactment, whichever is later.

Section 503--Augmented compensation for dependents

    This section would eliminate the additional (``augmented'') 
compensation in current law for beneficiaries who have 
dependents.
    Also, for individuals whose workplace injury occurred 
before the date of enactment, section 503 contains provisions 
to delay application of the reduced benefit level and to 
provide full exemption for those most severely injured. 
Specifically--
          (1) Those who are permanently, totally disabled and 
        unable to return to work would be exempt from this 
        section (``grandfathered''), and they would continue to 
        receive the additional level of compensation if they 
        have dependents. This definition of grandfathered 
        individuals is the same as the definition of those 
        grandfathered under section 302.
          (2) Those who are not permanently, totally disabled 
        (``grandfathered'') would become ineligible to receive 
        augmented compensation 3 years after the bill is 
        enacted.

Section 504--Schedule compensation payments

    This section would allow individuals receiving workers' 
compensation benefits for total or partial disability to 
simultaneously receive schedule compensation payments if their 
disability benefits are reduced under sections 502 or 503 of 
this bill. Schedule compensation payments are specific payments 
authorized under existing law for certain injuries, such as 
loss of use of a limb. Under current law, an injured individual 
is not eligible to receive a schedule compensation payment for 
an injury simultaneously with benefits for total or partial 
disability.

Section 505--Vocational rehabilitation

    This section includes several provisions to strengthen 
existing programs that help injured workers get back to work:
          (1) It would extend existing vocational 
        rehabilitation opportunities, which are now available 
        under FECA for workers who are totally disabled, to be 
        available to those who are partially disabled as well.
          (2) It would authorize the Department of Labor (DOL) 
        to pay a federal employer the salary of a beneficiary 
        for up to 3 years as an incentive to hire workers off 
        of the FECA program rolls. Current law permits these 
        payments only to non-federal employers.
          (3) It would make compliance with the Return to Work 
        plan developed between the program and the beneficiary 
        a condition of receiving continued benefits (except 
        this condition would not apply to beneficiaries who are 
        over the age of retirement).

Section 506--Reporting requirements

    This section would mandate that beneficiaries report any 
outside income they receive to DOL. An employee who fails to 
comply will lose the right to receive compensation.

Section 507--Disability management review; independent medical 
        examinations

    This section would require an independent medical 
assessment of disability and potential for return to work for 
beneficiaries after 6 months in the program and on a regularly 
scheduled basis thereafter, but no less frequently than every 3 
years. This would not change existing law allowing a FECA 
beneficiary to choose to see his or her own doctor for 
treatment and initial assessment. In addition, employing 
agencies may request that DOL obtain an independent medical 
examination at any time, and DOL must grant the agency's 
request if DOL has not already conducted such an examination.

Section 508--Waiting period

    Because minor workplace injuries often heal quickly, FECA 
provides a 3-day waiting period before compensation begins. For 
postal employees, FECA's 3-day waiting period comes immediately 
after the injury, but for non-postal workers the waiting period 
does not come until after the end of the 45-day continuation-
of-pay period.
    This section would begin the 3-day waiting period 
immediately after a work-related injury for all injured 
employees. As under current law, injured employees may 
subsequently receive FECA compensation for those 3 days if the 
period of disability exceeds 14 days.

Section 509--Election of benefits

    If an individual is simultaneously eligible for 
compensation benefits both under FECA and under a retirement 
system for federal employees (such as FERS or CSRS), the 
individual must elect which benefits to receive, and the 
election will be irrevocable. This section would prevent an 
injured worker from retroactively claiming workers' 
compensation benefits after having declined such benefits in 
favor of federal retirement benefits. This provision is 
intended to prevent a claimant from electing federal retirement 
benefits as a means of avoiding required participation in 
vocational rehabilitation or acceptance of an offered suitable 
job and then later retroactively electing the potentially more 
generous workers' compensation benefits.

Section 510--Sanctions for non-cooperation with field nurses

    This section would suspend benefits when an injured worker 
fails to cooperate with a field nurse. A ``field nurse'' is 
defined as a registered nurse who assists DOL in the medical 
management of disability claims and assists claimants in 
coordinating medical care, and DOL is authorized to use field 
nurses to coordinate medical services and vocational 
rehabilitation services.

Section 511--Subrogation of continuation of pay

    This section would allow the federal government to recover 
``continuation of pay'' (e.g., salary that's continued to be 
paid to the beneficiary during the 45-day period between the 
injury and the initiation of FECA disability benefits) from 
third parties that are liable for the beneficiary's work-
related injury.

Section 512--Integrity and compliance

    This section includes several provisions to strengthen 
integrity and compliance efforts within the FECA program. It 
would require that, no later than 270 days after enactment, the 
Secretary of Labor must establish an Integrity and Compliance 
Program to prevent, identify, and recover improper payments 
(including those obtained by fraud) for the FECA program. The 
section would also direct the Secretary to cooperate with other 
agencies, including the Postal Service, and the agency 
inspectors general, to prevent, identify, and recover improper 
payments.
    The section would also require the Secretary of Health and 
Human Services to make the National Directory of New Hires 
available to the Secretary of Labor, the Postmaster General, 
the DOL Inspector General, the USPS Inspector General, and GAO, 
so that they can cross-match that data with claimant data under 
the FECA program. The Comptroller General is granted access to 
the National Directory of New Hires under this provision for 
any audit, evaluation, or investigation, including any audit, 
evaluation, or investigation relating to program integrity.

Section 513--Amount of compensation

    This section would increase the amount an injured worker 
receives for a severe disfigurement of the face, head or neck 
from a maximum of $3,500 to a maximum of $50,000. This section 
would also increase the amount allowed to reimburse funeral 
expenses incurred due to a death from a work-related injury 
from $800 to a maximum of $6,000. The limits in the current law 
have not been significantly changed since 1949.

Section 514--Terrorism injuries; zones of armed conflict

    This section would provide that a disability or death as a 
result of ``an attack by a terrorist or terrorist organization, 
either known or unknown,'' is ``deemed to have resulted from 
personal injury sustained while in the performance of duty,'' 
under FECA's ``war-risk hazard'' provision. This would also 
codify the current Office of Workers' Compensation Programs 
(OWCP) practice of covering such disabilities or deaths as 
``war-risk hazards.''
    This section would also provide continuation of pay for 
wage loss due to traumatic injury in performance of duty in a 
designated zone of armed conflict for a period not to exceed 
135 days, so long as the employee files a claim for such 
benefit no longer than 45 days after terminating service in the 
zone of armed conflict or the employee's return to the United 
States, whichever occurs later.

Section 515--Technical and conforming amendments

    This section contains technical and conforming amendments 
to the FECA statute in title 5 of the United States Code.

Section 516--Regulations

    This section would require the DOL to issue regulations to 
carry out this title of the legislation.

Section 517--Effective date

    This section would provide that the provisions of this 
title are to take effect 60 days after the date of enactment, 
except as otherwise provided.

 TITLE VI: PROPERTY MANAGEMENT AND EXPEDITED DISPOSAL OF REAL PROPERTY

Section 601--Short title

    This section gives the legislation in title VI the short 
title of the ``Federal Real Property Asset Management Reform 
Act of 2014.''

Section 602--Purpose

    This section states that the bill's purpose is to increase 
the efficiency and effectiveness of the federal government in 
managing its real property by--(1) requiring agencies to 
maintain an up-to-date inventory of real property; (2) 
establishing a Federal Real Property Council to develop 
guidance and ensure the implementation of strategies for better 
managing federal real property; and (3) authorizing a pilot 
program to expedite the disposal of surplus real property.

Section 603--Property management and expedited disposal of real 
        property

    This section adds a new subchapter VII to Chapter 5 of 
subtitle I of title 40, United States Code.
    Sec. 621. Definitions, added to title 40, United States 
Code, by section 603 of the bill, defines important terms for 
the bill, including--
    ``Council'' means the Federal Real Property Council 
established under this legislation.
    ``Disposal'' means any action that constitutes the removal 
of any real property from the federal inventory, including 
sale, deed, demolition, or exchange.
    ``Excess property'' is defined as property under the 
control of a federal agency that the head of the agency 
determines is not required to meet the agency's needs or 
responsibilities. This term does not include postal property.
    ``Postal property'' means any building owned by the United 
States Postal Service.
    ``Surplus property'' is defined generally to mean excess 
property that is not required to meet the needs or 
responsibilities of any federal agency. However, the term 
surplusproperty does not include--(1) any military 
installation; (2) Indian and Native Eskimo property held in trust by 
the federal government; (3) real property operated and maintained by 
the Tennessee Valley Authority; (4) any real property the Director of 
the Office of Management and Budget excludes for reasons of national 
security; (5) any public lands administered by the Secretary of 
Interior through the Director of the Bureau of Land Management, the 
Director of the National Park Service, the Commissioner of Reclamation, 
or the Director of the United States Fish and Wildlife Service; (6) any 
public lands administered by the Secretary of Agriculture acting 
through the Chief of the Forest Service; and (7) any property operated 
and maintained by the United States Postal Service.
     ``Underutilized property'' means an entire or a 
portion of a property, including any improvements, that is 
used--(1) irregularly or intermittently by the accountable 
federal agency for program purposes of that agency, or (2) for 
program purposes that can be satisfied only with a portion of 
that property.
    Sec. 622. Duties of Federal agencies, added to title 40, 
United States Code, by section 603 of the bill, details actions 
agencies must take in order to improve the management of their 
real property. Under this section each agency must conduct an 
inventory of real property under its control and provide 
detailed information about the inventoried property to the 
Administrator of the General Services Administration (GSA 
Administrator) and the Federal Real Property Council (the 
Council). Additionally, agencies are required to continuously 
survey their real property to identify excess and underutilized 
property, report any excess or underutilized property to the 
GSA Administrator, identify opportunities for colocation with 
other federal agencies where appropriate, and establish goals 
that will lead to a reduction of the agency's excess and 
underutilized real property. Agencies must also provide the 
Council and the GSA Administrator information on their real 
property assets to be used for the establishment and 
maintenance of a government-wide real property database.
    Sec. 623. Colocation among United States Postal Service 
properties, added to title 40, United States Code, by section 
603 of the bill, provides that the Postmaster General may 
identify a list of postal properties with space available for 
use by federal agencies and submit that list to the Federal 
Real Property Council. Under this provision, agencies must 
review this list and recommend colocations if appropriate.
    Sec. 624. Establishment of a Federal Real Property Council, 
added to title 40, United States Code, by section 603 of the 
bill, would establish the Federal Real Property Council, to be 
comprised of senior real property officers from each of 24 
designated federal agencies, the Controller at the Office of 
Management and Budget, and the GSA Administrator. The Deputy 
Director for Management at OMB would chair the Council and 
designate an Executive Director to assist the Council in 
carrying out its duties. This provision would require the 
Council to establish an annual real property asset management 
plan and to include in that plan performance measures that will 
enable Congress to track progress in achieving real property 
goals government-wide and compare the performance of 
landholding agencies against industry and other public sector 
agencies. Additionally, this provision would direct the Council 
to develop a strategy to reduce federal agencies reliance on 
leasing when building ownership would be more cost-effective. 
Finally, the Council would be expected to provide guidance to 
agencies so that property assessments can be uniform across the 
government.
    Sec. 625. Federal real property inventory and database, 
added to title 40, United States Code, by section 603 of the 
bill, would direct the GSA Administrator to establish and 
maintain a single, comprehensive, and descriptive database of 
all real property under the custody and control of federal 
agencies. The database must contain the results of agencies' 
inventory of their real property as described in the first part 
of this section as well as a list of real property disposals 
that have been completed within the past year. The 
Administrator would be required to make the database accessible 
to the public at no cost within three years of the date of 
enactment of this bill.
    Sec. 626. Limitation on certain leasing authorities, added 
to title 40, United States Code, by section 603 of the bill, 
would impose a reporting requirement on agencies with 
independent leasing authority, so that the executive branch and 
Congress can better monitor whether those agencies' leases 
reflect the best use of federal resources. (Although GSA is 
responsible for leasing property on behalf of most federal 
agencies, certain agencies have independent leasing authority, 
under which they may enter into leases on their own.) Agencies 
with independent leasing authority would be required to submit 
a yearly report to the Council providing detailed information 
regarding their leasing activity. This section would not apply 
to the United States Postal Service, the Department of Veterans 
Affairs, or any property that the President excludes for 
reasons of national security.
    Sec. 627. Expedited disposal pilot program, added to title 
40, United States Code, by section 603 of the bill, would 
establish a pilot program to expedite the disposal of surplus 
properties. Under this provision, the Director of OMB could 
authorize the disposal of up to 200 surplus properties each 
year with priority going to those properties that have the 
highest fair market value and the greatest potential for 
disposal. The OMB Director would have to notify the appropriate 
state or local government when a property in its jurisdiction 
has been selected for the pilot program. The OMB Director would 
also be able to remove a property from the pilot and replace it 
with another property at the Director's discretion. Agencies 
would be required to make property available for sale within 18 
months after receiving a determination from the OMB Director 
that the property is surplus and has been selected for the 
pilot program. Failure to do so would prevent the agency from 
acquiring additional property unless the square footage of the 
increase is offset through consolidation, colocation, or 
disposal of another building space from the inventory of that 
agency.
    Under the pilot program, after GSA is reimbursed for the 
costs of identifying and preparing property for disposal, any 
proceeds would be distributed as follows: 80 percent would be 
returned to the Treasury for debt reduction; the lesser of 18 
percent or the share of proceeds otherwise authorized to be 
retained under law would be retained by the agency that owned 
the property; and up to two percent would be used to fund the 
homeless assistance grants under Sec. 628. This section would 
permit the Secretary of the Department of Housing and Urban 
Development to use funds made available through sales proceeds 
for grants to eligible private non-profit organizations through 
the continuum care program established under title IV of the 
McKinney-Vento Homeless Assistance Act (42 U.S.C. Sec. 11381 et 
seq.). If a property that has been selected for disposal under 
the pilot program has not been disposed of after two years in 
the program, it may be conveyed to state and local governments 
or non-profit organizations for certain public purposes, unless 
the predominant use of the property is not for housing, the 
area of the property is not less than 25,000 square feet, or 
the appraised fair market value of the property is greater than 
$1 million.
    Sec. 628. Homeless assistance grants, added to title 40, 
United States Code, by section 603 of the bill, would require 
the Secretary of Housing and Urban Development, using funds 
from the disposal pilot program under Sec. 628, to make grants 
to eligible private nonprofit organizations to purchase real 
property suitable for use to purchase or rehabilitate real 
property to provide housing or temporary shelter to the 
homeless. The Secretary would give preference to areas in which 
Federal real property is sold under the disposal program under 
Sec. 626.

Section 604--Report of the comptroller general

    This section would require the Comptroller General of the 
United States, within five years of enactment, to submit a 
report to Congress on the expedited disposal program 
established in this legislation.

Section 605--Technical and conforming amendment

    This section contains a technical and conforming amendment 
to the table of contents for chapter 5 of subtitle I of Title 
40, United States Code.

                   V. Evaluation of Regulatory Impact

    Pursuant to the requirements of paragraph 11(b) of rule 
XXVI of the Standing Rules of the Senate, the Committee has 
considered the regulatory impact of S. 1789. The Congressional 
Budget Office states that the bill contains no 
intergovernmental or private-sector mandates as defined in the 
Unfunded Mandate Reform Act and would impose no costs on state, 
local, or tribal governments, or private entities. The 
enactment of this legislation will not have significant 
regulatory impact.

             VI. Congressional Budget Office Cost Estimate

                                                     July 14, 2014.
Hon. Tom Carper, Chairman,
Committee on Homeland Security and Governmental Affairs,
U.S. Senate, Washington, DC.
    Dear Mr. Chairman: The Congressional Budget Office has 
prepared the enclosed cost estimate for S. 1486, the Postal 
Reform Act of 2014.
    If you wish further details on this estimate, we will be 
pleased to provide them. The CBO staff contact is Mark 
Grabowicz.
            Sincerely,
                                              Douglas W. Elmendorf.
    Enclosure.

S. 1486--Postal Reform Act of 2014

    Summary: S. 1486 would change the laws that govern the 
operation of the United States Postal Service (USPS). Major 
provisions of the bill would:
         Extend a rate increase that would expire under 
        current law;
         Permit the Postal Service to reduce mail 
        delivery from six days per week to five;
         Authorize the Postal Service to phase out 
        delivery of mail directly to customers' doors (for 
        business addresses only);
         Change the payments that the Postal Service is 
        required to make relating to the Postal Service Retiree 
        Health Benefits Fund (PSRHBF);
         Direct the Postal Service to make payments to 
        liquidate its liability for workers' compensation 
        obligations;
         Transfer $2.4 billion in surplus retirement 
        contributions from the Civil Service Retirement and 
        Disability Fund (CSRDF) to the Postal Service Fund;
         Prohibit the Postal Service from closing mail 
        processing facilities for two years;
         Require the use of demographic data specific 
        to Postal Service employees for the calculation of 
        certain retirement benefits;
         Establish a new health benefits program for 
        Postal Service employees, annuitants, and their 
        dependents; and
         Reduce payments to most federal workers 
        receiving benefits under the Federal Employees' 
        Compensation Act (FECA) and modify the administration 
        of that act.
    In addition, other provisions of S. 1486 would aim to help 
the Postal Service reduce its operating costs and increase its 
revenues.
    Effect on the federal budget: CBO estimates that enacting 
the bill would result in off-budget savings of about $36 
billion over the 2015-2024 period and on-budget costs of about 
$19 billion over the same period. (USPS cash flows are recorded 
in the federal budget in the Postal Service Fund and are 
classified as off-budget, while the cash flows of the PSRHBF 
and the CSRDF are on-budget.)
    Combining those effects, CBO estimates that the net 
budgetary savings from enacting S. 1486 would be about $17 
billion over the 2015-2024 period. All of those effects reflect 
changes in direct spending. Enacting S. 1486 would not affect 
revenues. Pay-as-you-go procedures apply because enacting the 
legislation would increase on-budget direct spending.
    Finally, CBO estimates that implementing S. 1486 would have 
a discretionary cost of $3.3 billion over the next 10 years, 
subject to appropriation of the necessary amounts.
    Effects on state, local, and tribal governments, and on the 
private sector: By making a temporary rate increase for mail 
services permanent and repealing a discount on postal rates for 
political committees, S. 1486 would impose intergovernmental 
and private sector mandates, as defined in the Unfunded 
Mandates Reform Act (UMRA), on entities that send certain mail 
through the USPS. The bill also would impose a private-sector 
mandate by requiring postal annuitants who receive health 
insurance through USPS and are eligible for Medicare to enroll 
in that program. CBO estimates that the aggregate annual costs 
of complying with the mandates would exceed both the 
intergovernmental and private-sector thresholds established in 
UMRA ($76 million and $152 million, respectively, in 2014, 
adjusted annually for inflation).
    Estimated cost to the Federal Government: The estimated 
budgetary impact of S. 1486 is shown in Table 1. The costs of 
this legislation fall within budget functions 370 (commerce and 
housing credit), 550 (health), 570 (Medicare), 600 (income 
security), and 800 (general government).

                                                         TABLE 1--SUMMARY OF BUDGETARY EFFECTS OF S. 1486, THE POSTAL REFORM ACT OF 2014
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                               By fiscal year, in millions of dollars--
                                     -----------------------------------------------------------------------------------------------------------------------------------------------------------
                                          2015         2016         2017         2018         2019         2020         2021         2022         2023         2024      2015-2019    2015-2024
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                             OFF BUDGET CHANGES IN DIRECT SPENDINGa

Estimated Budget Authority..........       -2,972       -2,504       -2,830       -2,966       -4,037       -4,157       -4,174       -4,139       -4,007       -3,877      -15,309      -35,664
Estimated Outlays...................       -2,972       -2,504       -2,830       -2,966       -4,037       -4,157       -4,174       -4,139       -4,007       -3,877      -15,309      -35,664

                                                                              ON BUDGET CHANGES IN DIRECT SPENDING

Estimated Budget Authority..........        4,693        2,601        1,585        1,652        1,259        1,307        1,353        1,473        1,461        1,453       11,789       18,836
Estimated Outlays...................        4,693        2,601        1,585        1,652        1,259        1,307        1,353        1,473        1,461        1,453       11,789       18,836

                                                                                TOTAL CHANGES IN DIRECT SPENDING

Estimated Budget Authority..........        1,720           96       -1,246       -1,313       -2,778       -2,857       -2,820       -2,667       -2,547       -2,424       -3,521      -16,829
Estimated Outlays...................        1,720           96       -1,246       -1,313       -2,778       -2,857       -2,820       -2,667       -2,547       -2,424       -3,521      -16,829

                                                                          CHANGES IN SPENDING SUBJECT TO APPROPRIATION

Estimated Authorization Level.......          505          483          352          296          294          281          279          281          271          266        1,930        3,308
Estimated Outlays...................          502          483          354          300          296          285          281          282          274          268        1,935        3,325
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Note: Components may not add to totals because of rounding. Positive numbers indicate increases in costs; negative numbers indicate reductions in costs.
acash flows of the Postal Service are classified as off-budget.

    Basis of estimate: For this estimate, CBO assumes that S. 
1486 will be enacted near the end of fiscal year 2014. The bill 
would affect outlays of the Postal Service Fund, which is off-
budget, and the on-budget PSRHBF and CSRDF. CBO estimates that 
the net direct spending savings (combining the off-budget and 
on-budget effects) would total $16.8 billion over the 2015-2024 
period.
    Off-Budget changes in direct spending (Postal Service 
Fund): CBO estimates that enacting S. 1486 would reduce net 
USPS spending by $35.7 billion over the 2015-2024 period; as 
noted above, USPS spending is classified as off-budget. Details 
of changes in spending from the Postal Service Fund are 
summarized in Table 2 and discussed in the following 
subsections.

                                         TABLE 2--DETAILS OF OFF-BUDGET CHANGES IN DIRECT SPENDING UNDER S. 1486
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                     By fiscal year, outlays in millions of dollars--
                                ------------------------------------------------------------------------------------------------------------------------
                                    2015       2016       2017       2018       2019       2020       2021       2022       2023       2024    2015-2024
--------------------------------------------------------------------------------------------------------------------------------------------------------
Extend Rate Increase...........          0     -1,900     -1,900     -1,800     -1,800     -1,750     -1,700     -1,650     -1,600     -1,550    -15,650
Reduction in the Frequency of            0          0          0          0     -1,500     -1,500     -1,450     -1,400     -1,350     -1,300     -8,500
 Mail Delivery.................
Other Changes in Mail Delivery.        -30       -150       -300       -500       -550       -700       -800       -850       -800       -750     -5,430
Changes in USPS Payments for        -1,621     -1,720       -252       -254       -255       -256       -258       -260       -261       -263     -5,399
 Retiree Health Benefits (See
 Memorandum for details.)......
Prefunding for Workers                   0          0          0          0        500        500        500        500        500        500      3,000
 Compensation Obligations......
Transfer of Surplus Postal          -2,400          0          0          0          0          0          0          0          0          0     -2,400
 Retirement Contributions......
Prohibition on Closing Mail            600        800          0          0          0          0          0          0          0          0      1,400
 Processing Facilities.........
Use of Postal Specific Data for        478        478       -333       -334       -334       -335       -336       -337       -339       -340     -1,731
 Retirement Benefits...........
Establish PSHB program for USPS          0        -11        -37        -53        -60        -65        -69        -74        -79        -85       -531
Effect of Changes in Workers'            0         -2         -8        -26        -38        -52        -61        -69        -79        -89       -424
 Compensation on USPS..........
                                ------------------------------------------------------------------------------------------------------------------------
    Total Off-Budget Changes...     -2,972     -2,504     -2,830     -2,966     -4,037     -4,157     -4,174     -4,139     -4,007     -3,877    -35,664

                                       MEMORANDUM: DETAILS OF CHANGES IN USPS PAYMENTS FOR RETIREE HEALTH BENEFITS

Under Current Law:
    Estimated Payments to FEHB.      3,241      3,439          0          0          0          0          0          0          0          0      6,680
    Specified Payments to                0          0          0          0          0          0          0          0          0          0          0
     PSRHBF\a\.................
    Estimated Payments for               0          0      2,458      2,574      2,679      2,819      2,991      3,174      3,364      3,566     23,625
     Normal Costs\b\\c\........
    Estimated Amortization               0          0      3,490      3,490      3,490      3,490      3,490      3,490      3,490      3,490     27,920
     Payments\c\...............
                                ------------------------------------------------------------------------------------------------------------------------
        Total, Current Law.....      3,241      3,439      5,948      6,064      6,169      6,309      6,481      6,664      6,854      7,056     58,225
Under S. 1486:
    Estimated Payments to FEHB.          0          0          0          0          0          0          0          0          0          0          0
    Specified Payments to                0          0          0          0          0          0          0          0          0          0          0
     PSRHBFa...................
    Estimated Payment for                0          0      2,409      2,523      2,625      2,763      2,931      3,111      3,297      3,495     23,153
     Normal Costsd.............
    Estimated Amortization               0          0      3,034      3,034      3,034      3,034      3,034      3,034      3,034      3,034     24,275
     Paymentsd.................
                                ------------------------------------------------------------------------------------------------------------------------
        Subtotal...............          0          0      5,443      5,557      5,660      5,797      5,966      6,145      6,331      6,529     47,428
    Changes in Other USPS            1,621      1,720        252        254        255        256        258        260        261        263      5,399
     Spending..................
                                ------------------------------------------------------------------------------------------------------------------------
        Total, S. 1486.........      1,621      1,720      5,696      5,810      5,914      6,053      6,223      6,404      6,593      6,793     52,826
Changes in Payments for Retiree     -1,621     -1,720       -252       -254       -255       -256       -258       -260       -261       -263     -5,399
 Health Benefits...............
--------------------------------------------------------------------------------------------------------------------------------------------------------
Notes: Components may not add to totals because of rounding; USPS = United States Postal Service; PSHB = Postal Service Health Benefits; FEHB = Federal
  Employees Health Benefits; PSRHBF = Postal Service Retiree Health Benefits Fund.
\a\Under current law, the Postal Service is required to pay a total of $11.5 billion to the PSRHBF in 2015 and 2016. However, CBO expects that the
  agency will not make any of those payments.
\b\Those payments are equal to the annual increase in retiree health care liabilities attributable to current employees.
\c\Those costs are based on information provided by the Office of Personnel Management.
\d\S. 1486 would require the Postal Service to make normal and amortization payments in 2016, but CBO expects the Postal Service would not make those
  payments.

    Extend rate increase. In December 2013, the Postal 
Regulatory Commission (PRC) approved a 4.3 percent rate hike 
for first-class mail and other services, including an increase 
in the price of a first-class stamp from $0.47 to $0.49, but 
limited the effect of this change to a period of about two 
years. S. 1486 would make that increase permanent.
    Based on information from the Postal Service, CBO estimates 
that extending the recent rate hike would increase USPS net 
revenues by $1.9 billion in 2016 and by $15.7 billionover the 
2016-2024 period. We expect that annual savings would decline in 2018 
and subsequent years because of falling mail volume and because some of 
the savings would probably be spent by the Postal Service or returned 
to mailers in the form of lower rates rather than accumulated as large 
annual surpluses in the Postal Service Fund.
    Reduction in the frequency of mail delivery. Beginning in 
fiscal year 2018, S. 1486 would permit the Postal Service to 
deliver mail five days a week, but only if the total volume of 
first-class mail and periodicals falls below 140 billion pieces 
over a 12-month period. The aggregate first-class and 
periodicals volume was about 147 billion in 2013 and has been 
declining for many years. The Postal Service anticipates that 
volume will drop below 140 billion pieces sometime in 2018.
    Under the bills provisions, the Postal Service expects that 
beginning in 2019 it would eliminate most mail delivery on 
Saturdays but continue to deliver packages six days a week. The 
Postal Service estimates that this reduction in service would 
yield net savings of $1.9 billion annually, mostly in personnel 
and transportation costs. The agency assumes that most mail 
currently delivered on Saturdays could be delivered on Mondays 
with minimal increased costs.
    The PRC has not prepared an estimate of savings from this 
proposal. However, in 2011 the PRC estimated that reducing both 
mail and package delivery from six to five days per week would 
save $1.7 billion a year--compared to the USPS estimate of $3.1 
billion in annual savings for that proposal--largely because it 
disagreed with the Postal Service's assumption that Saturday 
mail could be delivered on Mondays with minimal increased 
costs. In addition, earlier this year an independent firm 
estimated savings for ending Saturday delivery of mail (but not 
packages) that were roughly 50 percent lower than the USPS 
estimate of that proposal.\1\
---------------------------------------------------------------------------
    \1\http://www.prc.gov/prc-docs/home/whatsnew/
Swiss%20Economics%20Model%20-
%20Saturday%20delivery%20Final%20Report%20V3_3545.pdf.
---------------------------------------------------------------------------
    Based on the current estimates prepared by USPS and 
considering the past disparity in estimates made by USPS and 
other entities, CBO estimates that reducing mail delivery from 
six to five days per week under S. 1486 would save about $1.5 
billion (or roughly 80 percent of the USPS estimate) annually 
beginning in fiscal year 2019. Beginning in 2021, we expect 
that annual savings would gradually decline as some of those 
funds would probably be spent by the Postal Service or returned 
to mailers in the form of lower rates rather than accumulating 
as large annual surpluses in the Postal Service Fund. We 
estimate that net annual savings would fall to $1.3 billion by 
2024.
    Other changes in mail delivery. USPS delivers mail to the 
doors of customers, to curbside receptacles, and to centralized 
mail receptacles that serve multiple addresses. S. 1486 would 
require the Postal Service to convert all business (but not 
residential) addresses with door delivery to curbside or 
centralized delivery.
    In 2013, the Postal Service provided door delivery for 
about 6 million business addresses. Upon enactment of S. 1486, 
the USPS expects that it would change the means of delivery for 
about 500,000 addresses in 2015 and about a million addresses 
annually over the 2016-2020 period. We anticipate that nearly 
all the conversions would be to centralized delivery for the 
affected businesses.
    Based on information from the Postal Service about the 
savings per business address from implementing curbside and 
centralized delivery as compared to door delivery, netted 
against costs to install and maintain curbside and centralized 
mail receptacles, CBO estimates that annual savings under S. 
1486 would grow to about $850 million by 2022 and would total 
$5.4 billion over the 2015-2024 period. Beginning in 2023, we 
expect that annual savings would gradually decline as some of 
those funds would probably be spent by the Postal Service or 
returned to mailers in the form of lower rates. This estimate 
of savings reflects the assumption that mail would be delivered 
five days a week as authorized by the bill.
    Changes in USPS payments for retiree health benefits. CBO 
estimates that the bill's provisions that would change payments 
relating to the PSRHBF would result in off-budget savings of 
$5.4 billion over the 2015-2024 period, as discussed below and 
shown in detail in the memorandum section of Table 2.
    Background on Postal Service Obligations for Retiree Health 
Care. The Postal Service is obligated to contribute toward the 
health insurance premiums of its retired employees who 
participate in the Federal Employees Health Benefits (FEHB) 
program. Under current law, CBO expects that the agency will 
make direct payments for retirees' premiums to the on-budget 
FEHB fund for 2015 and 2016 totaling $6.7 billion. Over the 
same period, the Postal Service also is required to make 
statutorily specified payments to the on-budget PSRHBF to 
prefund future retiree health obligations. Because of the 
Postal Service's poor financial condition, however, it has not 
made those statutorily specified payments since 2010, and CBO 
expects that the agency will not make the remaining specified 
payments for 2015 and 2016.
    Beginning in 2017, the PSRHBF is expected to start making 
payments to the FEHB program for the Postal Service's share of 
those premiums. Under current law, the Postal Service is 
required to make payments to the PSRHBF, starting in 2017, to 
cover the future health care liabilities accruing to current 
employees (``normal costs'') and to liquidate the unfunded 
liability for retirees' health benefits (``amortization 
payments''). CBO estimates that prefunding payments for normal 
costs and amortization will sum to $51.5 billion over the 2017-
2024 period.
    Changes in USPS Payments for Retiree Health Benefits Under 
S. 1486. The bill would make several changes in the timing and 
source of funds for payments for retiree health benefits.
    In particular, S. 1486 would:
         Eliminate the requirement for the USPS to make 
        direct payments to the FEHB fund in 2015 and 2016 and 
        would authorize PSRHBF payments for the agency's share 
        of FEHB retiree premiums in 2015 and 2016 instead;
         Eliminate the requirement for the USPS to make 
        specified payments to the PSRHBF for 2015 and 2016 to 
        prefund retiree health benefits; and
         Require the USPS to begin making annual 
        payments to the PSRHBF for normal and amortization 
        costs in 2016 instead of beginning in 2017 (though the 
        new amortization payments would need to cover just 80 
        percent of the unfunded liability for retirees' health 
        benefits).
    Because of the Postal Service's poor financial condition, 
CBO does not expect that the Postal Service would make the 
normal and amortization payments to the PSRHBF required by the 
bill in 2016 (though we expect that such payments will occur 
under current law and under the bill in subsequent years).
    CBO estimates that eliminating the requirement to make 
direct payments to FEHB would reduce USPS spending on retiree 
health benefits by $6.7 billion over the 2015-092024 period.
    As a result of the PSRHBF payments to the FEHB fund in 2015 
and 2016, the bill is expected to reduce the PSRHBF balance 
relative to current law and to increase the estimated unfunded 
liability for USPS retiree health benefits by the end of 2016. 
However, that effect would be offset by the bill's requirement 
to fund 80 percent rather than 100 percent of the unfunded 
liability and by a relatively small decrease in PSRHBF spending 
resulting from the new Postal Service Health Benefits (PSHB) 
program discussed below. After amortizing the lower unfunded 
liability over a 40-year period, we expect that the Postal 
Service would be charged lower amortization payments over the 
2017 2024 period. In addition, we estimate there would be a 
small decrease in normal payments stemming from the new PSHB 
program. CBO estimates that USPS costs associated with those 
payments would decrease from $51.5 billion to $47.4 billion, or 
$4.1 billion less, over the 2017-2024 period.
    Changes in Other USPS Spending. CBO expects that lowering 
health care expenses for the USPS would lead the agency to 
modify its ongoing efforts under current law to reduce 
spending. In 2009, the Postal Service began cost-cutting 
actions including closing administrative offices, halting 
construction of new facilities, and freezing salaries 
forcertain employees. More recently, the agency has implemented more-
severe measures such as closing mail processing facilities, making 
major reductions in service, and either deferring or failing to make 
certain required payments to the Treasury.
    CBO expects that enacting legislation to lower health care 
expenses for the USPS would lead the agency to alter its cost-
reduction program by cutting spending less aggressively than it 
would without the legislation. We estimate that the net 
increase in such USPS outlays over the 2015-2024 period would 
be about half of the potential gross savings--about $5.4 
billion.
    Prefunding for workers' compensation obligations. The bill 
would require the Postal Service, beginning in fiscal year 
2017, to calculate the actuarial liability of its workers' 
compensation obligations and to make a series of annual 
payments that would liquidate 80 percent of the liability over 
a 40-year period. The agency would start making those annual 
payments in fiscal year 2018 and subsequent years to a new 
fund, known as the Postal Service Workers' Compensation Accrued 
Liability Fund, unless its net income for the previous year 
(computed on an accrual accounting basis) was less than or 
equal to $1 billion. For this estimate, CBO anticipates that 
the fund would be classified as on-budget, consistent with past 
precedents, and thus that payments from USPS to the fund would 
represent off-budget costs and on-budget receipts.
    Based on USPS projections of net accrual income under 
current law, and considering the total savings to the agency 
anticipated from enactment of S. 1486, we expect that the 
Postal Service's net accrual income would exceed $1 billion for 
each year over the 2019-2024 period. Based on information 
provided by the Postal Service on its anticipated liability for 
workers' compensation obligations in 2019 and subsequent years, 
we estimate that the agency would make amortization payments of 
$500 million each year beginning in 2019.
    Transfer of surplus postal retirement contributions. S. 
1486 would authorize the Postal Service Fund to receive a 
transfer of any surplus in the USPS Federal Employees 
Retirement System (FERS) account within the CSRDF as of the end 
of fiscal year 2013. Any funds transferred would have to be 
used to pay off USPS debt to the Treasury. The bill would 
require the Office of Personnel Management (OPM) to use 
economic and demographic factors (such as salary growth and 
retirement rates) specific to Postal Service employees, rather 
than government-wide data, to calculate any such surplus.
    Using data specific to the Postal Service, OPM estimates 
that the USPS surplus for its FERS account in the CSRDF was 
$2.4 billion as of September 30, 2013. Under the bill, CBO 
estimates that $2.4 billion would be transferred from the CSRDF 
to the Postal Service Fund in fiscal year 2015. That 
intragovernmental transfer would be classified as a savings of 
$2.4 billion in off-budget direct spending for the Postal 
Service Fund in 2015. (The transfer also would result in a cost 
of $2.4 billion to the on-budget CSRDF as discussed later.)
    Prohibition on closing mail processing facilities. S. 1486 
would require the Postal Service to maintain the delivery 
service standards for first-class mail and periodicals that 
were in effect on October 1, 2013, for at least two years after 
the bill's enactment. The bill also would block the Postal 
Service from closing or consolidating any postal facility that 
was open on October 1, 2013, for at least two years after the 
bill's enactment. Based on information from the Postal Service, 
we estimate that those new requirements would cost $1.4 billion 
over the 2015-2016 period by delaying the agency's plans to 
close facilities and implement slower mail delivery service.
    Use of postal-specific data for retirement benefits. S. 
1486 would direct OPM to use economic and demographic factors 
specific to Postal Service employees, rather than government-
wide data, to calculate the annual employer contribution that 
USPS is required to make to federal retirement accounts under 
FERS and the Civil Service Retirement System (CSRS). The bill 
also would change the schedule of CSRS amortization payments 
currently required of the Postal Service.
    For 2013, the Postal Service made nearly $2.9 billion in 
contributions to the CSRDF for FERS employees. The agency 
currently makes no contributions for CSRS employees; under 
current law, beginning in fiscal year 2017, the Postal Service 
will make annual payments, amortized over 27 years, to 
liquidate any unfunded liability as estimated by OPM for 
retirees' CSRS pension benefits. (The unfunded liability is the 
total liability accrued to date for retirees' pension benefits 
minus the portion of the CSRDF attributable to Postal Service 
contributions.) S. 1486 would require the Postal Service to 
begin annual payments in 2015, amortized over 40 years, to 
liquidate the unfunded liability.
    Based on information from OPM, CBO estimates that enacting 
S. 1486 would lower the Postal Service's annual employer 
contribution to FERS by about $35 million beginning in 2015 and 
would lower the amortization payment the agency will make to 
the CSRDF beginning in 2017 by $630 million per year (the bill 
would lower the anticipated amortization payment from $1.62 
billion to $990 million). Those reductions would occur because 
Postal Service employees tend to have lower salaries and higher 
mortality rates (when retired) compared to the averages for all 
federal employees and because the CSRS amortization period 
would be longer. In addition, CBO estimates that, under the 
bill's provisions, the Postal Service would make annual CSRS 
amortization payments of about $990 million in 2015 and 2016, 
thus significantly increasing its costs in those years compared 
to current law.
    Over the 2015-2024 period we estimate this provision would 
result in potential savings of $3.4 billion. As with some of 
the bill's other provisions, however, we anticipate that 
lowering retirement costs would lead the Postal Service to cut 
expenses less aggressively than it otherwise would. Thus, we 
estimate net savings to the Postal Service of about $1.7 
billion over the 2015-2024 period, or about half of the 
potential gross savings.
    Establish a Postal Service Health Benefits program. Section 
104 of S. 1486 would make several changes to the health 
insurance program for USPS employees and annuitants. The 
legislation would direct OPM to establish a new PSHB program in 
2016, under which USPS employees and annuitants could enroll to 
receive health insurance from qualifying plans. Premiums in the 
PSHB program would be set based on expected health costs of 
only the USPS employees, annuitants, and dependents 
participating in the program. In addition, the bill would 
require all eligible postal annuitants who participate in the 
PSHB program to enroll in the Medicare program.
    CBO estimates that those changes would reduce USPS spending 
for health insurance premiums by $1.1 billion over the 2015-
2024 period. CBO expects that lowering health care expenses for 
the USPS would lead the agency to reduce other spending less 
aggressively than it would without the legislation. Thus, we 
estimate the net reduction in USPS spending over the same 
period would be about $0.5 billion, or about half of the 
potential gross savings from this policy.
    CBO anticipates that savings to USPS under section 104 of 
the legislation would result, in part, from shifting the 
primary responsibility for certain Medicare-covered services 
from the PSHB plans to the Medicare program. In addition, PSHB 
plans would be required to participate in Medicare Part D (in 
an aspect of the program that other employer sponsored plans 
can participate in) and would thereby receive subsidies and 
discounts related to prescription drugs. As a result of both 
that shift to Medicare and the subsidies and discounts for 
prescription drugs, CBO estimates that PSHB premiums for postal 
employees and annuitants would be lower than the FEHB premiums 
those people would face under current law. (The resulting shift 
of such costs to Medicare is discussed below under On-Budget 
Changes in Direct Spending.)
    Effect of changes in workers' compensation on the USPS. The 
bill would make several changes to the Federal Employees 
Compensation Act, which provides wage replacement and medical 
benefits to federal employees who are injured in the course of 
their work. Under FECA, agencies reimburse the Department of 
Labor (DOL) for expenses incurred on behalf of their employees.
    Based on information from DOL, CBO estimates that the 
changes in S. 1486 (which are discussed below in greater detail 
in the section on On-Budget Changes in Direct Spending) would 
reduce gross outlays under FECA by $1.2 billion over the 2015-
2024 period. Those gross savings would be mostly offset by 
reduced reimbursements from federal agencies of $1.1 billion 
during that period, for net savings to the FECA account over 10 
years of $172 million.
    Based on historical spending patterns under FECA, CBO 
estimates that about 40 percent of the gross FECA savings (and, 
accordingly, the reduced reimbursements) would accrue tothe 
USPS. Thus, CBO estimates that, under provisions of S. 1486, the USPS 
would pay about $0.4 billion less in reimbursements to the FECA account 
over the 10-year period.
    On-budget changes in direct spending: CBO estimates that 
enacting S. 1486 would increase on-budget direct spending by 
$18.8 billion over the 2015-2024 period. Those costs result 
mostly from changes in the cash flows of the CSRDF, which 
reflects expenditures for civil service retirement benefits, 
and the PSRHBF, which reflects expenditures on health care 
benefits for USPS retirees, as shown in Table 3 and discussed 
below.
    Changes in PSRHBF spending. As discussed previously, the 
bill would change payments that the Postal Service makes for 
retiree health benefits, and CBO estimates that those changes 
would increase net on-budget direct spending by about $10.8 
billion over the 2015-2024 period. Those costs result from 
changes in cash flows of the PSRHBF as displayed in the 
memorandum to Table 3.
    Under the bill, CBO estimates that the PSRHBF would pay the 
FEHB fund $3.2 billion in 2015 and $3.4 billion in 2016 toward 
health premiums for postal annuitants enrolled in those years. 
CBO does not expect that the Postal Service will make any of 
the currently specified payments into the PSRHBF in 2015 or 
2016, or that it would begin making payments to cover normal 
and amortization costs before 2017. Thus, we estimate that the 
bill's provisions to eliminate the specified payments and 
require normal and amortization payments in 2016 would have no 
effect on the PSRHBF. Beginning in 2017, however, we estimate 
that amortization payments to the PSRHBF would decrease by 
about $450 million annually--mostly because the bill would 
require liquidation of 80 percent of the unfunded liability for 
retirees health benefits (rather than 100 percent as required 
under current law). Normal payments to the fund also would 
decrease as a result of the new Postal Service Health Benefits 
program.

                                         TABLE 3--DETAILS OF ON BUDGET CHANGES IN DIRECT SPENDING UNDER S. 1486
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                     By fiscal year, outlays in millions of dollars--
                                ------------------------------------------------------------------------------------------------------------------------
                                                                                                                                                 2015-
                                    2015       2016       2017       2018       2019       2020       2021       2022       2023       2024       2024
--------------------------------------------------------------------------------------------------------------------------------------------------------
Changes in PSRHBF Spending (See      3,241      3,439        505        507        509        512        515        519        523        527     10,797
 Memorandum)...................
Postal Service Health Benefits           0        124        429        516        601        642        683        788        781        764      5,328
 Program.......................
Use of Postal-Specific Data for       -957       -956        666        667        669        670        672        675        677        680      3,463
 Retirement Benefits...........
  Prefunding for USPS Workers            0          0          0          0       -500       -500       -500       -500       -500       -500     -3,000
    Compensation Obligations
Effect of Changes in Workers             6         -8        -17        -40        -22        -19        -19        -11        -22        -20       -172
 Compensation on Non-Postal
 Agencies......................
Transfer of Surplus Postal           2,400          0          0          0          0          0          0          0          0          0      2,400
 Retirement Contributions......
Federal Property Asset                   2          2          2          2          2          2          2          2          2          2         20
 Management Reform.............
    Total Changes..............      4,693      2,601      1,585      1,652      1,259      1,307      1,353      1,473      1,461      1,453     18,836

                                                              MEMORANDUM: PSRHBF CASH FLOWS

Under Current Law:
    Specified Payment from USPS          0          0          0          0          0          0          0          0          0          0          0
     a.........................
    Normal Payments............          0          0     -2,458     -2,574     -2,679     -2,819     -2,991     -3,174     -3,364     -3,566    -23,625
    Amortization Payments......          0          0     -3,490     -3,490     -3,490     -3,490     -3,490     -3,490     -3,490     -3,490    -27,920
                                ------------------------------------------------------------------------------------------------------------------------
        Total, Current Law.....          0          0     -5,948     -6,064     -6,169     -6,309     -6,481     -6,664     -6,854     -7,056    -51,545
Under S. 1486:
    FEHB Payment\b\\d\.........      3,241      3,439          0          0          0          0          0          0          0          0      6,680
    Normal Paymentsc...........          0          0     -2,409     -2,523     -2,625     -2,763     -2,931     -3,111     -3,297     -3,495    -23,153
    Amortization Paymentsc.....          0          0     -3,034     -3,034     -3,034     -3,034     -3,034     -3,034     -3,034     -3,034    -24,275
        Total, S. 1486.........      3,241      3,439     -5,443     -5,557     -5,660     -5,797     -5,966     -6,145     -6,331     -6,529    -40,748
Changes in PSRHBF Spending.....      3,241      3,439        505        507        509        512        515        519        523        527     10,797
--------------------------------------------------------------------------------------------------------------------------------------------------------
Notes: Components may not add to totals because of rounding.
USPS = United States Postal Service; PSRHBF = Postal Service Retiree Health Benefits Fund; FEHB = Federal Employees Health Benefits.
aFor fiscal years 2015 and 2016, the Postal Service is required to pay a total of $11.5 billion to the PSRHBF. However, CBO expects that the agency will
  not make any payments.
bUnder current law, the FEHB payment would be made from the PSRHBF beginning in 2017, so S. 1486 would not affect cash flows over the 2017 2024 period.
c 1AS. 1486 would require the Postal Service to make normal and amortization payments in 2016, but CBO expects the agency will not make those payments.
dSection 104 would also reduce payments from the PSRHBF for health premiums for postal annuitants enrolled in the new PSHB program. Those effects are
  included in Table 3 under effects from the Postal Service Health Benefits Program.

    Postal Service Health Benefits program. CBO estimates that 
establishing the new PSHB program, requiring USPS annuitants 
who enroll in the PSHB program to participate in Medicare, and 
requiring PSHB plans to participate in Medicare Part D would, 
on net, increase on-budget direct spending by about $5.3 
billion over the 2015-2024 period.
    The provisions of S. 1486 that require certain USPS 
annuitants to participate in Medicare would increase Medicare 
spending by about $7.9 billion over the 2015-2024 period, CBO 
estimates. Under the legislation, Medicare would become the 
primary payer for Medicare-covered services for USPS annuitants 
who enroll in Medicare Part B (medical insurance). However, the 
PSHB plans would pay cost-sharing for those beneficiaries 
health care services. Additionally, Medicare Part D would make 
certain payments to PSHB plans because those plans would be 
required to participate in the Employer Group Waiver Program 
under Part D.
    The effect of the legislation on federal on-budget payments 
for health insurance premiums in the FEHB program would 
partially offset the increase in Medicare spending. Premiums 
charged to non-postal enrollees in the FEHB program would be 
based on expected health costs of the employees, annuitants, 
and dependents remaining in the FEHB program after the health 
care costs of USPS workers, annuitants, and their dependents 
are shifted to the PSHB program. Because non-postal enrollees 
cost FEHB plans slightly less than postal enrollees, on 
average, CBO estimates that premiums in the FEHB program would 
be lower than under current law. Thus, the amount the federal 
government would contribute toward its share of annuitant 
premiums would be lower.
    CBO estimates that federal payments for health insurance 
premiums for non-postal annuitants enrolled in the FEHB program 
would be reduced by about $1.6 billion over the 2015-2024 
period. (The government's share of FEHB premiums for annuitants 
is classified as direct spending. Federal spending for active 
workers participating in the FEHB program is included in the 
appropriations for federal agencies and, therefore, is 
classified as discretionary.)
    In addition, CBO estimates that the bill would reduce 
payments from the on-budget PSRHBF for USPS annuitants health 
insurance premiums by about $1.0 billion over the 2015-2024 
period. That is because CBO expects premiums for USPS 
annuitants to be lower under the legislation because of the 
requirement that they enroll in Medicare if they enroll in the 
PSHB.
    Use of postal-specific data for retirement benefits. As 
discussed above, S. 1486 would direct OPM to use economic and 
demographic factors specific to Postal Service employees, 
rather than government-wide data, to calculate the annual 
employer contribution that USPS makes to federal retirement 
accounts under FERS and CSRS. The bill also would require the 
Postal Service to begin making amortization payments to 
liquidate any unfunded liability for retirees' CSRS benefits in 
2015 rather than in 2017.
    Based on information from OPM, CBO estimates that the 
Postal Service would make higher payments to the CSRDF in 2015 
and 2016 of about $960 million per year, but the lower payments 
allowed under the bill from 2017 to 2024 would result in net 
costs for the CSRDF of nearly $3.5 billion over the 2015-2024 
period as a whole.
    Prefunding for USPS workers' compensation obligations: As 
discussed above, the bill would require the Postal Service, if 
certain financial conditions are met, to make a series of 
annual payments designed to liquidate 80 percent of the 
estimated liability for its workers compensation obligations 
over a 40-year period. We expect the agency would begin making 
those payments in 2019 to the Postal Service Workers' 
Compensation Accrued Liability Fund. CBO estimates that the new 
fund would receive payments from the Postal Service of $3 
billion over the 2019-2024 period.
    Effect of changes in workers compensation on agencies other 
than USPS: The bill would make several changes to the Federal 
Employees' Compensation Act, which provides wage replacement 
and medical benefits to federal employees who are injured in 
the course of their work. The Department of Labor administers 
the program, and federal agencies reimburse DOL for expenses 
incurred on behalf of their employees.
    Under current law, FECA provides compensation of up to 75 
percent of a worker's pre-injury salary if that person can no 
longer work because of debilitating injuries sustained on the 
job. (Injured workers without dependents receive two-thirds of 
their salary as a wage-replacement benefit; those with 
dependents receive the higher, augmented benefit.) In addition, 
the worker may receive medical benefits and certain death 
benefits. Most of the expenses incurred on behalf of the worker 
are charged back to the employing agency. In 2013, both gross 
FECA benefits and reimbursements from agencies totaled about 
$3.0 billion, resulting in net FECA outlays that year of only 
$20 million.
    Enacting the bill would result in a number of changes to 
the FECA program; most of those changes would reduce benefits, 
though some of the changes would increase them. The changes 
include:
         Reducing benefits to 50 percent of a 
        claimant's pre-injury salary when that claimant reaches 
        full retirement age (as defined by the Social Security 
        Act);
         Eliminating augmented benefits for most 
        claimants who have dependents (so that claimants below 
        the retirement age would receive a benefit equal to 
        two-thirds of their pre-injury salary);
         Increasing benefits under the disfigurement 
        compensation schedule and for funeral expenses;
         Establishing a schedule for managing 
        disability reviews, including requiring periodic 
        medical exams;
         Improving the ability of the government to 
        recapture compensation costs from responsible parties; 
        and
         Enhancing cross-matching of data to identify 
        cases where payments are being made inappropriately.
    Based on information from DOL, CBO estimates that the 
changes in S. 1486 would reduce gross FECA outlays by $1.2 
billion over the 2015-2024 period. Those savings would be 
partially offset by reduced reimbursements from employing 
agencies of about $1.0 billion during that period, resulting in 
net savings to the FECA account of $172 million over the 2015-
2024 period.
    Transfer of surplus postal retirement contributions: S. 
1486 would transfer to the Postal Service Fund any surplus in 
the USPS FERS account within the CSRDF as of September 30, 
2013. Based on information from OPM, CBO estimates that $2.4 
billion would be transferred from the CSRDF to the Postal 
Service Fund in fiscal year 2015. That transfer would increase 
on-budget direct spending from the CSRDF by $2.4 billion in 
2015, but is matched by off-budget savings in the Postal 
Service Fund (as discussed above).
    Federal property asset management reform. S. 1486 would 
amend the Federal Property and Administrative Services Act 
(property act) to facilitate the disposal of federal real 
property. The legislation would expand the duties and 
responsibilities of the Federal Real Property Council, provide 
new authorities to the General Services Administration (GSA), 
and establish a five-year pilot program with the goal of 
expediting the disposal of surplus federal property. CBO 
estimates that enacting the bill would increase direct spending 
by $20 million over the 2015-2024 period because the 
legislation would authorize GSA to spend proceeds from the sale 
of federal property that are expected to be collected but not 
spent under current law.
    Based on information from GAO, the Office of Management and 
Budget, GSA, and other landholding agencies, CBO expects that 
little additional property would be sold under this program. 
That expected result reflects a variety of factors, including: 
(1) many of the largest landholding agencies would opt to 
continue to use their own enhanced-use authorities, (2) the new 
financial incentive provided to non-GSA agencies to sell real 
property would not be significant, and (3) since 2010, the 
President has directed agencies to dispose of unneeded 
property, reduce operating costs, and adopt more efficient real 
estate management practices. It is not clear how the new 
authorities would accelerate disposal of properties beyond what 
would occur under current law.
    Other provisions that could affect direct spending: Several 
other provisions of S. 1486 could help the Postal Service in 
its efforts to lower its net costs; however, CBO has not 
estimated additional savings for those provisions because it is 
not clear that any savings would exceed what we expect would be 
achieved under current law or under other provisions of the 
legislation.
    S. 1486 would authorize the Postal Service to ship 
alcoholic beverages and to establish a program to provide 
services for agencies of state, local, or tribal governments 
for a fee. Implementing these programs would require the Postal 
Service to compete with private businesses that currently ship 
alcoholic beverages and to offer cost-effective alternatives 
for services to states or localities. Those proposed programs 
might increase USPS revenues but also would add to costs. CBO 
has no information to predict the cost-effectiveness of such 
new ventures that may be undertaken by the Postal Service under 
the bill.
    The bill also would direct arbitrators involved in future 
labor negotiations to consider the financial condition of the 
Postal Service when mediating disputes between USPS and its 
labor unions and would reform certain Postal Service 
contracting practices. Those provisions might reduce USPS 
costs, but CBO expects that any net savings probably would be 
indistinguishable from savings that would result from the 
Postal Service's current efforts to negotiate more favorable 
labor contracts and improve procurement practices.
    Spending subject to appropriation: CBO estimates that S. 
1486 also would affect discretionary spending, which is subject 
to future appropriation actions. We estimate that implementing 
the bill would have net discretionary costs of about $3.3 
billion over the 10-year period, assuming the necessary amounts 
are appropriated.

                                                                    TABLE 4--SPENDING SUBJECT TO APPROPRIATION UNDER S. 1486
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                  By fiscal year, outlays in millions of dollars--
                                                  ----------------------------------------------------------------------------------------------------------------------------------------------
                                                       2015         2016         2017         2018         2019         2020         2021         2022         2023         2024      2015-2024
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Use of Postal-Specific Data for Retirement
 Benefits:
    Estimated Authorization Level................          483          502          524          547          571          596          622          649          677          704        5,875
    Estimated Outlays............................          483          502          524          547          571          596          622          649          677          704        5,875
Postal Service Health Benefits Program:
    Estimated Authorization Level................            0          -38         -177         -229         -242         -256         -272         -289         -308         -327       -2,138
    Estimated Outlays............................            0          -38         -177         -229         -242         -256         -272         -289         -308         -327       -2,138
Effects of Changes in Workers' Compensation on
 Non-Postal Agencies:
    Estimated Authorization Level................           19           19            5          -22          -35          -59          -71          -79          -98         -111         -432
    Estimated Outlays............................           16           19            7          -18          -33          -55          -69          -78          -95         -109         -415
New Commission:
    Estimated Authorization Level................            3            0            0            0            0            0            0            0            0            0            3
    Estimated Outlays............................            3            0            0            0            0            0            0            0            0            0            3
Total Change:
    Estimated Authorization Level................          505          485          352          296          294          281          279          281          271          266        3,308
    Estimated Outlays............................          502          483          354          300          296          285          281          282          274          268        3,325
Memorandum:a
Increase in Offsetting Receipts Resulting From            -483         -502         -524         -547         -571         -596         -622         -649         -677         -704      -5,875
 Higher Employer Contributions...................
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
aEmployer contributions are intragovernmental transactions that do not affect the deficit; negative numbers indicate an increase in such intragovernmental receipts. The receipts shown in the
  memorandum result from federal employer contributions financed by future appropriations; such receipts are not considered to be an offset to direct spending because they are contingent on
  future appropriation actions.

    Use of postal-specific data for retirement benefits. Under 
the provisions of S. 1486 that would require the use of postal-
specific economic and demographic factors to calculate the 
employer contribution toward retirement that USPS makes on 
behalf of its employees, the amount of employer contributions 
required from most other federal agencies also would be 
adjusted. OPM estimates that the use of economic and 
demographic factors that exclude postal workers for calculating 
the contributions required of other agencies would raise the 
contribution rate paid by other federal agencies by 0.1 percent 
to 0.2 percent of salary; CBO projects that such an increase in 
contributions would increase spending subject to appropriation 
by about $5.9 billion over the 2015-2024 period. However, that 
cost would be offset by additional receipts to the Civil 
Service Retirement and Disability Trust Fund and thus would 
have no net effect on future deficits.
    Postal service health benefits program. CBO estimates that 
section 104 of the bill would reduce federal outlays for health 
insurance premiums for non-postal employees enrolled in the 
FEHB program by about $2.1 billion over the 2015-2024 period. 
The government's contributions for those premiums for active 
employees are subject to appropriation and thus classified as 
discretionary spending.
    The estimated reduction in costs results from lower federal 
payments for the government's share of health insurance 
premiums for federal employees not employed by USPS. Currently, 
the federal government makes contributions to the premiums of 
employees that participate in the FEHB program, and in 2013 
those contributions averaged 71 percent of premiums. Under the 
bill, as discussed above, premiums charged to non-postal 
employees in the FEHB program would reflect the expected health 
care costs of non-postal employees, non-postal annuitants, and 
their dependents. On a per-enrollee basis, those costs would be 
lower than the expected health care costs including postal 
beneficiaries. CBO estimates that federal spending to cover the 
government's share of premiums would be lower than under 
current law.
    Effect on changes in workers' compensation on agencies 
other than USPS. The changes to FECA in S. 1486 would result in 
agencies paying $1.0 billion less in reimbursements to DOL for 
expenses incurred on behalf of their employees over the 2015-
2024 period. Based on historical spending patterns, CBO 
estimates that about $0.4 billion of the reduction in 
reimbursements would be from the USPS. The balance of those 
payment reductions--about $0.6 billion--would be from federal 
agencies discretionary salaries and expenses accounts.
    Those savings would be partially offset by additional 
discretionary costs of about $0.2 billion over the same period. 
Most of those costs would be incurred by DOL to institute and 
manage the disability review process and other administrative 
provisions required by the bill.
    In addition, provisions in the bill that would extend the 
period of time that injured workers in zones of armed conflict 
would be in ``continuation of pay'' status would result in 
small increases in discretionary costs to agencies that employ 
such workers.
    New commission. S. 1486 would authorize the appropriation 
of $3 million from the Postal Service Fund for fiscal year 2015 
to establish a Strategic Advisory Commission on Postal Service 
Solvency and Innovation. The commission would offer guidance to 
improve USPS finances. CBO estimates that the commission would 
spend $3 million in 2015, assuming appropriation of the 
authorized amounts.
    Pay As-You-Go considerations: The Statutory Pay-As-You-Go 
Act of 2010 establishes budget-reporting and enforcement 
procedures for legislation affecting direct spending or 
revenues. The net changes in outlays that are subject to those 
pay-as-you-go procedures are shown in the following table. Only 
on-budget changes to outlays or revenues are subject to pay-as-
you-go procedures.

 CBO ESTIMATE OF PAY-AS-YOU-GO EFFECTS FOR S. 1486, THE POSTAL REFORM ACT OF 2014, AS ORDERED REPORTED BY THE SENATE COMMITTEE ON HOMELAND SECURITY AND
                                                        GOVERNMENTAL AFFAIRS ON FEBRUARY 6, 2014
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                            By fiscal year, in millions of dollars--
                                       -----------------------------------------------------------------------------------------------------------------
                                         2014    2015    2016    2017    2018    2019    2020    2021    2022    2023    2024    2014-2019    2014-2024
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                          NET INCREASE IN THE ON-BUDGET DEFICIT

Statutory Pay-As-You-Go Impact........       0   4,693   2,601   1,585   1,652   1,259   1,307   1,353   1,473   1,461   1,453       11,789       18,836
--------------------------------------------------------------------------------------------------------------------------------------------------------

    Intergovernmental and private sector impact: By increasing 
postal rates for public and private mailers, S. 1486 would 
impose intergovernmental and private-sector mandates, as 
defined in UMRA. The bill also would impose mandates on some 
postal annuitants by requiring them to enroll in Medicare, if 
eligible. CBO estimates that the aggregate annual costs to 
comply with the mandates in the bill would exceed both the 
intergovernmental and private-sector thresholds established in 
UMRA ($76 million and $152 million, respectively, in 2014, 
adjusted annually for inflation).

Mandates on public and private mailers

    S. 1486 would make permanent an increase in postal rates 
for certain products, including those for which the Postal 
Service has a statutory monopoly. That increase is set to 
expire near the end of 2015. Because the USPS holds a statutory 
monopoly on first class mail, standard mail, and periodicals 
placed in USPS mail boxes, an increase in postal rates would 
constitute a mandate on public and private entities that mail 
those items through the USPS. The cost of the mandate would be 
the incremental cost of mailing those items. Based on 
projections from the USPS of the amount of first class mail, 
standard mail, and periodicals that are expected to be sent at 
the increased rate, CBO estimates that the additional cost to 
public and private entities would amount to about $1.8 billion 
in the first year of the extension of the higher rates. (That 
figure excludes additional amounts paid for other postal 
services and amounts paid by the federal government for postal 
services.) Of the $1.8 billion, CBO estimates that the 
permanent increase in postal rates would cost state andlocal 
governments approximately $200 million in the first year, with slightly 
lower costs in subsequent years. Similarly, CBO estimates that the 
increase in postal rates would cost private mailers about $1.6 billion 
in the first year, with slightly lower costs in later years.
    The bill also would impose a private-sector mandate on 
national and state political committees by repealing their 
current discount on postal rates for third-class letters 
(standard mail). Based on information from a political 
committee and the USPS, CBO estimates that the cost of the 
mandate would average about $4 million annually.
    Mandate on postal annuitants: The bill would require all 
postal annuitants enrolled in Postal Service health plans to 
enroll in Medicare if they are eligible. Those postal 
annuitants would be required to pay new premiums associated 
with mandatory Medicare enrollment and additional amounts for 
health care services. However, Postal Service health plans pay 
a share of the cost of annuitants' health care services, and 
CBO estimates that the aggregate additional costs for those 
annuitants would be offset by those contributions.
    Previous CBO estimate: On June 23, 2014, CBO transmitted a 
cost estimate for H.R. 2748, the Postal Reform Act of 2013, as 
ordered reported by the House Committee on Oversight and 
Government Reform on July 24, 2013. Nearly all the off-budget 
savings of H.R. 2748 would result from two provisions: reducing 
mail delivery to five days per week and phasing out delivery of 
mail to customers' doors. In contrast, the largest contributor 
to off-budget savings for S. 1486 would be the bill's provision 
to permanently extend a 2013 postal rate increase.
    Table 5 compares CBO's estimates of the major budgetary 
effects of the two bills over the next 10 years, showing that 
both bills would have net budgetary savings of about $17 
billion over the 2015-2024 period--although the on-budget and 
off-budget effects for the two bills would be significantly 
different. S. 1486's significantly higher on-budget cost, as 
compared to H.R. 2748, primarily reflects the differences in 
the two bills' provisions related to health care benefits for 
USPS workers and retirees.

    TABLE 5--SUMMARY OF CBO COST ESTIMATES FOR S. 1486 AND H.R. 2748
------------------------------------------------------------------------
                                       By fiscal year, in billions of
                                                 dollars--
                                  --------------------------------------
                                    Off-Budget   On-Budget   Total  2015-
                                    2015-2024    2015-2024       2024
------------------------------------------------------------------------
S. 1486..........................        -35.7         18.8        -16.8
H.R. 2748........................        -23.6          6.6        -17.0
------------------------------------------------------------------------

    Estimate prepared by: Federal costs: Paul Masi--Health care 
provisions; Amber Marcellino--Retirement; Christi Hawley 
Anthony--Federal employees compensation; Mark Grabowicz--All 
other; Impact on state, local, and tribal governments: Michael 
Hirsch; Impact on the private sector: Marin Burnett.
    Estimate approved by: Peter H. Fontaine, Assistant Director 
for Budget Analysis.

                 ADDITIONAL VIEWS OF SENATOR JON TESTER

    While some of the provisions in this legislation would 
meaningfully improve the financial situation of the Postal 
Service, we oppose several sections of the bill that are 
outlined in the Committee report: Retiree Health Pre-Funding 
Payments, Postal Unions and Collective Bargaining, Mail 
Processing Facility Closures, and changes to the Federal 
Employees' Compensation Act (FECA).

                  Retiree Health Pre-Funding Payments

    While S. 1486 would improve the existing retiree health 
pre-funding schedule to make the requirement less onerous on 
the U.S. Postal Service, the legislation fails to restructure 
the investment of those assets. In order to maximize the 
returns on those payments made into the Postal Service Retiree 
Health Benefits Fund (PSRHBF), these investments should be made 
in a more progressive fashion. Currently, retiree health assets 
are invested in Treasury securities that produce low yields. 
Investing these assets into low-cost index funds that contain 
stocks, bonds, and cash equivalents would lead to higher 
returns. These higher returns would lead to greater improvement 
in the PSRHBF's funding status, which would ultimately result 
in further reduction of pre-funding costs.
    Additionally, while this legislation would reduce USPS's 
projected pre-funding obligations from 100 percent to 80 
percent over 40 years, it would still require USPS to make 
annual amortization and normal cost payments into the PSRHBF--
whether or not the 80 percent funding target is met in a given 
year. If the funding level of the PSRHBF is over 80 percent, 
USPS should not be required to make these payments. USPS should 
be obligated to make these payments only when it is necessary 
to achieve the 80 percent funding level. By making this change, 
USPS would have the flexibility to invest the money that is 
saved in new postal vehicles, new post office facilities, and 
new technology.

                Postal Unions and Collective Bargaining

    This legislation would remove the guaranteed right of 
participation in the Federal Employee Retirement System (FERS) 
and matching Thrift Savings Plan (TSP) for newly hired postal 
workers. The Committee recommendation would force new employees 
to bargain for these long-held federal employee rights. Under 
the current law, postal employees' eligibility for FERS and TSP 
contributions is a basic employee benefit, as it is for all 
other federal workers. Postal employees would not only have to 
bargain for a benefit given to every other federal worker under 
this bill, but they would also have to rely on the Postal 
Service to use its new ``flexibilities prudently,'' as the S. 
1486 Committee report states. This legislation could ultimately 
result in new employees being completely excluded from FERS/TSP 
eligibility as a result of these new collective bargaining 
provisions.

                   Mail Processing Facility Closures

    S. 1486 requires the Postal Service to maintain the service 
standards for First Class mail and periodicals that were in 
effect on October 1, 2013. A more appropriate date to use would 
be July 1, 2012--when new service standards first went into 
effect after the original wave of mail processing facility 
closures. The postal network was weakened significantly in the 
14 months between July 2012 and October 2013, with a lower 
volume of mail being delivered overnight. Anecdotally, 
businesses and postal labor organizations have reported that, 
since October 2013, mail delivery regularly occurs at a far 
slower rate than USPS-reported data. By using the October 2013 
date, the Committee accepts a service standard that is simply 
not as strong as the alternative option. If we are to maintain 
our mail processing facilities to the best of our ability, we 
must not slow down mail delivery even further.

                  Federal Employees' Compensation Act

    The legislation makes sweeping changes to the Federal 
Employee Compensation Act (FECA), which affects all federal 
employees, yet it also succeeds in discriminatorily singling 
out the Postal Service. By requiring the USPS to mandate a new 
pre-funding initiative for projected workers' compensation 
liability benefits, the bill creates a burden that is placed on 
no other private company or government agency. Similar to the 
proposed retiree health pre-funding payments, these 
requirements would also force investment in low-yielding 
Treasury securities to finance future FECA benefits. A more 
appropriate investment mechanism would be in an appropriate mix 
of stock and bonds so that sufficient earnings could be created 
to cover future costs. Furthermore, these changes were written 
into S. 1486 without the Committee having held a single hearing 
on the topic in the last five years.

       VII. Changes in Existing Law Made by the Bill, as Reported

    In compliance with paragraph 12 of rule XXVI of the 
Standing Rules of the Senate, changes in existing law made by 
S. 54, as reported, are shown as follows (existing law proposed 
to be omitted is enclosed in black brackets, new matter is 
printed in italic, and existing law in which no change is 
proposed is shown in roman):

                           UNITED STATES CODE

TITLE 5--GOVERNMENT ORGANIZATION AND EMPLOYEES

           *       *       *       *       *       *       *


PART III--EMPLOYEES

           *       *       *       *       *       *       *


                   Subpart G--Insurance and Annuities

             CHAPTER 81--COMPENSATION FOR WORK INJURIES\71\
---------------------------------------------------------------------------

    \71\These amendments to 5 U.S.C. chapter 81 are made by title V of 
the bill.

           *       *       *       *       *       *       *

---------------------------------------------------------------------------
Sec.
8101. Definitions.
     * * * * * * *
8106. Partial disability
8106a. Reporting requirements.
     * * * * * * *
[8117. Time of accrual of right.]
[8118. Election to use annual or sick leave.]
8117. Waiting period.
8118. Continuation of pay.
     * * * * * * *
8152. Annual report.
8153. Integrity and compliance program.
     * * * * * * *

Subchapter I--Generally

           *       *       *       *       *       *       *



Sec. 8101. Definitions

    For the purpose of this subchapter--
          (1) ``employee'' means--
                  (A) * * *

           *       *       *       *       *       *       *

                  (D) an individual employed by the government 
                of the District of Columbia for an injury that 
                occurred before the effective date of section 
                204(e) of the District of Columbia Self-
                Government and Governmental Reorganization Act 
                (Public Law 93--198; 87 Stat. 783; 5 U.S.C. 
                8101 note); and

           *       *       *       *       *       *       *

          (18) ``price index'' means the Consumer Price Index 
        (all items--United States city average) published 
        monthly by the Bureau of Labor Statistics; [and]
          (19) ``organ'' means a part of the body that performs 
        a special function, and for purposes of this subchapter 
        excludes the brain, heart, and back; [and]
          (20) ``United States medical officers and hospitals'' 
        includes medical officers and hospitals of the Army, 
        Navy, Air Forces, Department of Veterans Affairs, and 
        United States Public Health Service, and any other 
        medical officer or hospital designated as a United 
        States medical officer or hospital by the Secretary of 
        Labor;[.]
          (21) ``retirement age'' has the meaning given that 
        term under section 216(l)(1) of the Social Security Act 
        (42 U.S.C. 416(l)(1));
          (22) ``covered claim for total disability'' means a 
        claim for a period of total disability that commenced 
        before the date of enactment of the Workers 
        Compensation Reform Act of 2014;
          (23) ``covered claim for partial disability'' means a 
        claim for a period of partial disability that commenced 
        before the date of enactment of the Workers 
        Compensation Reform Act of 2014; and
          (24) ``individual who has an exempt disability 
        condition'' means an individual--
                  (A) who--
                          (i) is eligible to receive continuous 
                        periodic compensation for total 
                        disability under section 8105 on the 
                        date of enactment of the Workers 
                        Compensation Reform Act of 2014; and
                          (ii) meets the criteria under section 
                        8105(c);
                  (B) who, on the date of enactment of the 
                Workers Compensation Reform Act of 2014--
                          (i) is eligible to receive continuous 
                        periodic compensation for total 
                        disability under section 8105; and
                          (ii) has sustained a currently 
                        irreversible severe mental or physical 
                        disability for which the Secretary of 
                        Labor has authorized, for at least the 
                        1-year period ending on the date of 
                        enactment of the Workers' Compensation 
                        Reform Act of 2014, constant in-home 
                        care or custodial care, such as 
                        placement in a nursing home; or
                  (C) who is eligible to receive continuous 
                periodic compensation for total disability 
                under section 8105--
                          (i) for not less than the 3-year 
                        period ending on the date of enactment 
                        of the Workers' Compensation Reform Act 
                        of 2014; or
                          (ii) if the individual became 
                        eligible to receive continuous periodic 
                        compensation for total disability under 
                        section 8105 during the period 
                        beginning on the date that is 3 years 
                        before the date of enactment of the 
                        Workers' Compensation Reform Act of 
                        2014 and ending on such date of 
                        enactment, for not less than the 3-year 
                        period beginning on the date on which 
                        the individual became eligible.

           *       *       *       *       *       *       *


Sec. 8102. Compensation for disability or death of employee

           *       *       *       *       *       *       *


    (b) Disability or death from a war-risk hazard or during or 
as a result of capture, detention, or other restraint by a 
hostile force or individual, or from an attack by a terrorist 
or terrorist organization, either known or unknown, suffered by 
an employee who is employed outside the continental United 
States or in Alaska or in the areas and installations in the 
Republic of Panama made available to the United States pursuant 
to the Panama Canal Treaty of 1977 and related agreements (as 
described in section 3(a) of the Panama Canal Act of 1979), is 
deemed to have resulted from personal injury sustained while in 
the performance of his duty, whether or not the employee was 
engaged in the course of employment when the disability or 
disability resulting in death occurred or when he was taken by 
the hostile force or individual. This subsection does not apply 
to an individual--

           *       *       *       *       *       *       *


Sec. 8104. Vocational rehabilitation

    (a) [The Secretary of Labor may direct a permanently 
disabled individual whose disability is compensable under this 
subchapter to undergo vocational rehabilitation.] In General._
          (1) Direction.--Except as provided in paragraph (2), 
        not earlier than the date that is 6 months after the 
        date on which an individual eligible for wage-loss 
        compensation under section 8105 or 8106 is injured, or 
        by such other date as the Secretary of Labor determines 
        it would be reasonable under the circumstances for the 
        individual to begin vocational rehabilitation, and if 
        vocational rehabilitation may enable the individual to 
        become capable of more gainful employment, the 
        Secretary of Labor shall direct the individual to 
        participate in developing a comprehensive return to 
        work plan and to undergo vocational rehabilitation at a 
        location a reasonable distance from the residence of 
        the individual. The Secretary shall provide for 
        furnishing the vocational rehabilitation services. In 
        providing for these services, the Secretary, insofar as 
        practicable, shall use the services or facilities of 
        State agencies and corresponding agencies which 
        cooperate with the [Secretary of Health, Education, and 
        Welfare in carrying out the purposes of chapter 4 of 
        title 29] the Secretary of Education in carrying out 
        the purposes of the Rehabilitation Act of 1973 (29 
        U.S.C. 701 et seq.), except to the extent that the 
        Secretary of Labor provides for furnishing these 
        services under section 8103 of this title. The cost of 
        providing these services to individuals undergoing 
        vocational rehabilitation under this section shall be 
        paid from the Employees' Compensation Fund. However, in 
        reimbursing a State or corresponding agency under an 
        arrangement pursuant to this section the cost to the 
        agency reimbursable in full [under section 32(b)(1) of 
        title 29] under section 5 of the Rehabilitation Act of 
        1973 (29 U.S.C. 704) is excluded.
          (2) Exception.--The Secretary of Labor may not direct 
        an individual who has attained retirement age to 
        participate in developing a comprehensive return to 
        work plan or to undergo vocational rehabilitation.
    (b) Contents of Return To Work Plan.--A return to work plan 
developed under subsection (a)--
          (1) shall--
                  (A) set forth specific measures designed to 
                increase the wage-earning capacity of an 
                individual;
                  (B) take into account the prior training and 
                education of the individual and the training, 
                educational, and employment opportunities 
                reasonably available to the individual; and
                  (C) provide that any employment undertaken by 
                the individual under the return to work plan be 
                at a location a reasonable distance from the 
                residence of the individual;
          (2) may provide that the Secretary will pay out of 
        amounts in the Employees' Compensation Fund reasonable 
        expenses of vocational rehabilitation (which may 
        include tuition, books, training fees, supplies, 
        equipment, and child or dependent care) during the 
        course of the plan; and
          (3) may not be for a period of more than 2 years, 
        unless the Secretary finds good cause to grant an 
        extension, which may be for not more than 2 years.
    [(b)](c) Compensation.--Notwithstanding section 8106, 
individuals directed to undergo vocational rehabilitation by 
the Secretary shall, while undergoing such rehabilitation, 
receive compensation at the rate provided in sections 8105 and 
8110 of this title, less the amount of any earnings received 
from remunerative employment [, other than employment 
undertaken pursuant to such rehabilitation].
    (d) Assisted Reemployment Agreements.--
          (1) In general.--The Secretary may enter into an 
        assisted reemployment agreement with an agency or 
        instrumentality of any branch of the Federal Government 
        or a State or local government or a private employer 
        that employs an individual eligible for wage-loss 
        compensation under section 8105 or 8106 to enable the 
        individual to return to productive employment.
          (2) Contents.--An assisted reemployment agreement 
        under paragraph (1)--
                  (A) may provide that the Secretary will use 
                amounts in the Employees' Compensation Fund to 
                reimburse an employer in an amount equal to not 
                more than 100 percent of the compensation the 
                individual would otherwise receive under 
                section 8105 or 8106; and
                  (B) may not be for a period of more than 3 
                years.
    (e) List.--To facilitate the hiring of individuals eligible 
for wage-loss compensation under section 8105 or 8106, the 
Secretary shall provide a list of such individuals to the 
Office of Personnel Management, which the Office of Personnel 
Management shall provide to all agencies and instrumentalities 
of the Federal Government.

           *       *       *       *       *       *       *


Sec. 8105. Total Disability

    (a) [If] In General.--Subject to subsection (b), if the 
disability is total, the United States shall pay the employee 
during the disability monthly monetary compensation equal to 66 
2/3 percent of his monthly pay, which is known as his basic 
compensation for total disability.
    (b) Conversion of Entitlement at Retirement Age.--
          (1) In general.--Except as provided in paragraph (2), 
        the basic compensation for total disability for an 
        employee who has attained retirement age shall be 50 
        percent of the monthly pay of the employee.
          (2) Exceptions.--
                  (A) Covered recipients who are retirement age 
                or have an exempt disability condition.--
                Paragraph (1) shall not apply to a covered 
                claim for total disability by an employee if 
                the employee--
                          (i) on the date of enactment of the 
                        Workers' Compensation Reform Act of 
                        2014, has attained retirement age; or
                          (ii) is an individual who has an 
                        exempt disability condition.
                  (B) Transition period for certain 
                employees.--For a covered claim for total 
                disability by an employee who is not an 
                employee described in subparagraph (A), the 
                employee shall receive the basic compensation 
                for total disability provided under subsection 
                (a) until the later of--
                          (i) the date on which the employee 
                        attains retirement age; and
                          (ii) the date that is 3 years after 
                        the date of enactment of the Workers' 
                        Compensation Reform Act of 2014.
    [(b)](c) The loss of use of both hands, both arms, both 
feet, or both legs, or the loss of sight of both eyes, is prima 
facie permanent total disability.

           *       *       *       *       *       *       *


Sec. 8106. Partial Disability

    (a) [If] In General.--Subject to subsection (b), if the 
disability is partial, the United States shall pay the employee 
during the disability monthly monetary compensation equal to 66 
2/3 percent of the difference between his monthly pay and his 
monthly wage-earning capacity after the beginning of the 
partial disability, which is known as his basic compensation 
for partial disability.
    (b) Conversion of Entitlement at Retirement Age.--
          (1) In general.--Except as provided in paragraph (2), 
        the basic compensation for partial disability for an 
        employee who has attained retirement age shall be 50 
        percent of the difference between the monthly pay of 
        the employee and the monthly wage-earning capacity of 
        the employee after the beginning of the partial 
        disability.
          (2) Exceptions.--
                  (A) Covered recipients who are retirement 
                age.--Paragraph (1) shall not apply to a 
                covered claim for partial disability by an 
                employee if, on the date of enactment of the 
                Workers' Compensation Reform Act of 2014, the 
                employee has attained retirement age.
                  (B) Transition period for certain 
                employees.--For a covered claim for partial 
                disability by an employee who is not an 
                employee described in subparagraph (A), the 
                employee shall receive basic compensation for 
                partial disability in accordance with 
                subsection (a) until the later of--
                          (i) the date on which the employee 
                        attains retirement age; and
                          (ii) the date that is 3 years after 
                        the date of enactment of the Workers' 
                        Compensation Reform Act of 2014.
    [(b)](c) The Secretary of Labor may require a partially 
disabled employee to report his earnings from employment or 
self-employment, by affidavit or otherwise, in the manner and 
at the times the Secretary specifies. The employee shall 
include in the affidavit or report the value of housing, board, 
lodging, and other advantages which are part of his earnings in 
employment or self-employment and which can be estimated in 
money. An employee who--

           *       *       *       *       *       *       *

    [(c)](d) A partially disabled employee who--

           *       *       *       *       *       *       *


Sec. 8106a. Reporting requirements

    (a) Definition.--In this section, the term ``employee 
receiving compensation'' means an employee who--
          (1) is paid compensation under section 8105 or 8106; 
        and
          (2) has not attained retirement age.
    (b) Authority.--The Secretary of Labor shall require an 
employee receiving compensation to report the earnings of the 
employee receiving compensation from employment or self-
employment, by affidavit or otherwise, in the manner and at the 
times the Secretary specifies.
    (c) Contents.--An employee receiving compensation shall 
include in a report required under subsection (a) the value of 
housing, board, lodging, and other advantages which are part of 
the earnings of the employee receiving compensation in 
employment or self-employment and the value of which can be 
estimated.
    (d) Failure To Report and False Reports.--
          (1) In general.--An employee receiving compensation 
        who fails to make an affidavit or other report required 
        under subsection (b) or who knowingly omits or 
        understates any part of the earnings of the employee in 
        such an affidavit or other report shall forfeit the 
        right to compensation with respect to any period for 
        which the report was required.
          (2) Forfeited compensation.--Compensation forfeited 
        under this subsection, if already paid to the employee 
        receiving compensation, shall be recovered by a 
        deduction from the compensation payable to the employee 
        or otherwise recovered under section 8129, unless 
        recovery is waived under that section.

           *       *       *       *       *       *       *


Sec. 8107. Compensation schedule

    (a) If there is permanent disability involving the loss, or 
loss of use, of a member or function of the body or involving 
disfigurement, the employee is entitled to basic compensation 
for the disability, as provided by the schedule in subsection 
(c) of this section, [at the rate of 66 2/3 percent of his 
monthly pay] at the rate specified under subsection (d). The 
basic compensation is--
          (1) * * *
          (2) payable regardless of whether the disability also 
        involves another impairment of the body; and

           *       *       *       *       *       *       *

    (c) The compensation schedule is as follows:
          (1) * * *

           *       *       *       *       *       *       *

          (21) For serious disfigurement of the face, head, or 
        neck of a character likely to handicap an individual in 
        securing or maintaining employment, proper and 
        equitable compensation [not to exceed $3,500] in 
        proportion to the severity of the disfigurement, not to 
        exceed $50,000 shall be awarded in addition to any 
        other compensation payable under this schedule. The 
        maximum amount of compensation under this paragraph 
        shall be increased on March 1 of each year by the 
        amount determined by the Secretary of Labor to 
        represent the percent change in the price index 
        published for December of the preceding year over the 
        price index published for the December of the year 
        prior to the preceding year, adjusted to the nearest 
        one-tenth of 1 percent.

           *       *       *       *       *       *       *

    (d) Rate for Compensation.--
          (1) Annual salary.--
                  (A) In general.--Except as provided in 
                paragraph (2), the rate under subsection (a) 
                shall be the rate of 66 \2/3\ percent of the 
                annual salary level established under 
                subparagraph (B), in a lump sum equal to the 
                present value (as calculated under subparagraph 
                (C)) of the amount of compensation payable 
                under the schedule.
                  (B) Establishment.--
                          (i) In general.--The Secretary of 
                        Labor shall establish an annual salary 
                        for purposes of subparagraph (A) in the 
                        amount the Secretary determines will 
                        result in the aggregate cost of 
                        payments made under this section being 
                        equal to what would have been the 
                        aggregate cost of payments under this 
                        section if the amendments made by 
                        section 304(a) of the Workers' 
                        Compensation Reform Act of 2014 had not 
                        been enacted.
                          (ii) Cost of living adjustment.--The 
                        annual salary established under clause 
                        (i) shall be increased on March 1 of 
                        each year by the amount determined by 
                        the Secretary of Labor to represent the 
                        percent change in the price index 
                        published for December of the preceding 
                        year over the price index published for 
                        the December of the year prior to the 
                        preceding year, adjusted to the nearest 
                        one-tenth of 1 percent.
                  (C) Present value.--The Secretary of Labor 
                shall calculate the present value for purposes 
                of subparagraph (A) using a rate of interest 
                equal to the average market yield for 
                outstanding marketable obligations of the 
                United States with a maturity of 2 years on the 
                first business day of the month in which the 
                compensation is paid or, in the event that such 
                marketable obligations are not being issued on 
                such date, at an equivalent rate selected by 
                the Secretary of Labor, true discount 
                compounded annually.
          (2) Certain injuries.--For an injury that occurred 
        before the date of enactment of the Workers' 
        Compensation Reform Act of 2014, the rate under 
        subsection (a) shall be 66\2/3\ percent of the 
        employee's monthly pay.
    (e) Simultaneous Receipt.--
          (1) Total disability.--An employee who receives 
        compensation for total disability under section 8105 
        may only receive the lump sum of schedule compensation 
        under this section in addition to and simultaneously 
        with the benefits for total disability after the 
        earlier of--
                  (A) the date on which the basic compensation 
                for total disability of the employee becomes 50 
                percent of the monthly pay of the employee 
                under section 8105(b); or
                  (B) the date on which augmented compensation 
                of the employee terminates under section 
                8110(b)(2)(A)(ii), if the employee receives 
                such compensation.
          (2) Partial disability.--An employee who receives 
        benefits for partial disability under section 8106 may 
        only receive the lump sum of schedule compensation 
        under this section in addition to and simultaneously 
        with the benefits for partial disability after the 
        earlier of--
                  (A) the date on which the basic compensation 
                for partial disability of the employee becomes 
                50 percent of the difference between the 
                monthly pay of the employee and the monthly 
                wage-earning capacity of the employee after the 
                beginning of the partial disability under 
                section 8106(b); or
                  (B) the date on which augmented compensation 
                of the employee terminates under section 
                8110(b)(2)(B), if the employee receives such 
                compensation.

           *       *       *       *       *       *       *


Sec. 8110. Augmented compensation for dependents

    (a) * * *
    (b) Termination of Augmented Compensation.--
          (1) In general.--Subject to paragraph (2), augmented 
        compensation for dependants under subsection (c) shall 
        not be provided.
          (2) Exceptions.--
                  (A) Total disability.--For a covered claim 
                for total disability by an employee--
                          (i) the employee shall receive 
                        augmented compensation under subsection 
                        (c) if the employee is an individual 
                        who has an exempt disability condition; 
                        and
                          (ii) the employee shall receive 
                        augmented compensation under subsection 
                        (c) until the date that is 3 years 
                        after the date of enactment of the 
                        Workers' Compensation Reform Act of 
                        2014 if the employee is not an employee 
                        described in clause (i).
                  (B) Partial disability.--For a covered claim 
                for partial disability by an employee, the 
                employee shall receive augmented compensation 
                under subsection (c) until the date that is 3 
                years after the date of enactment of the 
                Workers' Compensation Reform Act of 2014.
                  (C) Permanent disability compensated by a 
                schedule.--For a claim for a permanent 
                disability described in section 8107(a) by an 
                employee that commenced before the date of 
                enactment of the Workers' Compensation Reform 
                Act of 2014, the employee shall receive 
                augmented compensation under subsection (c).
                  [(b)] (c) A disabled employee with one or 
                more dependents is entitled to have his basic 
                compensation for disability augmented--

           *       *       *       *       *       *       *


Sec. 8112. Maximum and minimum monthly payments

    (a) Except as provided by subsections (b) and (c) and 
section 8138 of this title, the monthly rate of compensation 
for disability, [including augmented compensation under section 
8110 of this title but] not including additional compensation 
under section 8111 of this title, may not be more than [75 
percent] 66\2/3\ percent of the monthly pay of the maximum rate 
of basic pay for GS-15, and in case of total disability may not 
be less than [75 percent] 66\2/3\ percent of the monthly pay of 
the minimum rate of basic pay for GS-2 or the amount of the 
monthly pay of the employee, whichever is less.
    (b) Exceptions.--
          (1) Covered disability condition.--For a covered 
        claim for total disability by an employee, if the 
        employee is an individual who has an exempt disability 
        condition--
                  (A) the monthly rate of compensation for 
                disability that is subject to the maximum and 
                minimum monthly amounts under subsection (a) 
                shall include any augmented compensation under 
                section 8110; and
                  (B) subsection (a) shall be applied by 
                substituting ``75 percent'' for ``66\2/3\ 
                percent'' each place it appears.
          (2) Partial disability.--For a covered claim for 
        partial disability by an employee, until the date that 
        is 3 years after the date of enactment of the Workers' 
        Compensation Reform Act of 2014--
                  (A) the monthly rate of compensation for 
                disability that is subject to the maximum and 
                minimum monthly amounts under subsection (a) 
                shall include any augmented compensation under 
                section 8110; and
                  (B) subsection (a) shall be applied by 
                substituting ``75 percent'' for ''66\2/3\ 
                percent'' each place it appears.
      [(b)] (c) The provisions of [subsection (a)] subsections 
(a) and (b) shall not apply to any employee whose disability is 
a result of an assault which occurs during an assassination or 
attempted assassination of a Federal official described under 
section 351(a) or 1751(a) of title 18, and was sustained in the 
performance of duty.

           *       *       *       *       *       *       *


Sec. 8113. Increase or decrease of basic compensation

    (a) * * *
    (b) If an individual without good cause fails to apply for 
and undergo vocational rehabilitation when so directed under 
section 8104 of this title, the Secretary, on review under 
section 8128 of this title and after finding that in the 
absence of the failure the wage-earning capacity of the 
individual would probably have substantially increased, [may 
reduce] shall reduce prospectively the monetary compensation of 
the individual in accordance with what would probably have been 
his wage-earning capacity in the absence of the failure, until 
the individual in good faith complies with the direction of the 
Secretary. An individual who has attained retirement age may 
not be required to undergo vocational rehabilitation.

           *       *       *       *       *       *       *


Sec. 8116. Limitations on right to receive compensation

    (a) * * *

           *       *       *       *       *       *       *

    (e) Retirement Benefits.--
          (1) In general.--An individual entitled to 
        compensation benefits payable under this subchapter and 
        under chapter 83 or 84 or any other retirement system 
        for employees of the Government, for the same period, 
        shall elect which benefits the individual will receive.
          (2) Election.--
                  (A) Deadline.--An individual shall make an 
                election under paragraph (1) in accordance with 
                such deadlines as the Secretary of Labor shall 
                establish, which shall be a reasonable period 
                after the individual has received notice of a 
                final determination that the individual is 
                entitled to compensation benefits payable under 
                this subchapter.
                  (B) Revocability.--An election under 
                paragraph (1) shall be revocable, 
                notwithstanding any other provision of law, 
                except for any period during which an 
                individual--
                          (i) was qualified for benefits 
                        payable under both this subchapter and 
                        under a retirement system described in 
                        paragraph (1); and
                          (ii) was paid benefits under the 
                        retirement system after having been 
                        notified of eligibility for benefits 
                        under this subchapter.
          (3) Informed choice.--The Secretary of Labor shall 
        provide information, and shall ensure that information 
        is provided, to an individual described in paragraph 
        (1) about the benefits available to the individual 
        under this subchapter or under chapter 83 or 84 or any 
        other retirement system referred to in paragraph (1) 
        the individual may elect to receive.

           *       *       *       *       *       *       *


Sec. 8117. [Time of accrual of right] Waiting period

    (a) [An employee other than a Postal Service employee is 
not entitled] In General.--An employee is not entitled to 
continuation of pay within the meaning of section 8118 for the 
first 3 days of temporary disability or, if section 8118 does 
not apply, is not entitled to compensation for the first 3 days 
of temporary disability, except--
          (1) when the disability exceeds 14 days; or
          [(2) when the disability is followed by permanent 
        disability; or]
          [(3)] (2) as provided by sections 8103 and 8104 of 
        this title.
    (b) [A Postal Service employee is not entitled to 
compensation or continuation of pay for the first 3 days of 
temporary disability, except as provided under paragraph (3) of 
subsection (a). A Postal Service] Use of Leave._An employee may 
use annual leave, sick leave, or leave without pay during [that 
3-day period] the first 3 days of temporary disability, except 
that if the disability exceeds 14 days [or is followed by 
permanent disability], the employee may have their sick leave 
or annual leave reinstated or receive pay for the time spent on 
leave without pay under this section.

           *       *       *       *       *       *       *


Sec. 8118. Continuation of pay[; election to use annual or sick leave]

    (a) * * *
    (b) [Continuation] Except as provided under subsection 
(d)(2), continuation of pay under this subchapter shall be 
furnished--
          (1) without a break in time, except as provided under 
        [section 8117(b)] section 8117, unless controverted 
        under regulations of the Secretary;
          (2) * * *
          (3) under accounting procedures and such other 
        regulations as the Secretary may require.
    [(c) An employee may use annual or sick leave to his credit 
at the time the disability begins, but his compensation for 
disability does not begin, and the time periods specified by 
section 8117 of this title do not begin to run, until 
termination of pay as set forth in subsections (a) and (b) or 
the use of annual or sick leave ends.]
    [(d)] (c) If a claim under [subsection (a)] subsection (a) 
or (d) is denied by the Secretary, payments under this section 
shall, at the option of the employee, be charged to sick or 
annual leave or shall be deemed overpayments of pay within the 
meaning of section 5584 of title 5, United States Code.
    (d) Continuation of Pay in a Zone of Armed Conflict.--
          (1) In general.--Notwithstanding subsection (a), the 
        United States shall authorize the continuation of pay 
        of an employee described in subparagraph (A), (C), (D), 
        or (F) of section 8101(1), who--
                  (A) files a claim for a period of wage loss 
                due to an injury in performance of duty in a 
                zone of armed conflict (as determined by the 
                Secretary of Labor under paragraph (3)); and
                  (B) files the claim for such wage loss 
                benefit with the immediate superior of the 
                employee not later than 45 days after the later 
                of--
                          (i) the termination of the assignment 
                        of the employee to the zone of armed 
                        conflict; or
                          (ii) the return of the employee to 
                        the United States.
          (2) Continuation of pay.--Notwithstanding subsection 
        (b), continuation of pay under this subsection shall be 
        furnished for a period not to exceed 135 days without 
        any break in time or waiting period, unless 
        controverted under regulations prescribed by the 
        Secretary of Labor.
          (3) Determination of zones of armed conflict.--For 
        purposes of this subsection, the Secretary of Labor, in 
        consultation with the Secretary of State and the 
        Secretary of Defense, shall determine whether a foreign 
        country or other foreign geographic area outside of the 
        United States (as defined in section 202(a)(7) of the 
        State Department Basic Authorities Act of 1956 (22 
        U.S.C. 4302(a)(7)) is a zone of armed conflict based on 
        whether--
                  (A) the Armed Forces of the United States are 
                involved in hostilities in the country or area;
                  (B) the incidence of civil insurrection, 
                civil war, terrorism, or wartime conditions 
                threatens physical harm or imminent danger to 
                the health or well-being of United States 
                civilian employees in the country or area;
                  (C) the country or area has been designated a 
                combat zone by the President under section 
                112(c) of the Internal Revenue Code of 1986;
                  (D) a contingency operation involving combat 
                operations directly affects civilian employees 
                in the country or area; or
                  (E) there exist other relevant conditions and 
                factors.

           *       *       *       *       *       *       *


Sec. 8123. Physical examinations

    (a) * * *

           *       *       *       *       *       *       *

    (e) Disability Management Review.--
          (1) Definitions.--In this subsection--
                  (A) the term ``covered employee'' means an 
                employee who is in continuous receipt of 
                compensation for total disability under section 
                8105 for a period of not less than 6 months; 
                and
                  (B) the term ``disability management review 
                process'' means the disability management 
                review process established under paragraph 
                (2)(A).
          (2) Establishment.--The Secretary of Labor shall--
                  (A) establish a disability management review 
                process for the purpose of certifying and 
                monitoring the disability status and extent of 
                injury of each covered employee; and
                  (B) promulgate regulations for the 
                administration of the disability management 
                review process.
    (3) Physical examinations required.--Under the disability 
management review process, the Secretary of Labor shall 
periodically require covered employees to submit to physical 
examinations under subsection (a) by physicians selected by the 
Secretary. A physician conducting a physical examination of a 
covered employee shall submit to the Secretary a report 
regarding the nature and extent of the injury to and disability 
of the covered employee.
    (4) Frequency.--
                  (A) In general.--The regulations promulgated 
                under paragraph (2)(B) shall specify the 
                process and criteria for determining when and 
                how frequently a physical examination should be 
                conducted for a covered employee.
                  (B) Minimum frequency.--
                          (i) Initial.--An initial physical 
                        examination shall be conducted not more 
                        than a brief period after the date on 
                        which a covered employee has been in 
                        continuous receipt of compensation for 
                        total disability under section 8015 for 
                        6 months.
                          (ii) Subsequent examinations.--After 
                        the initial physical examination, 
                        physical examinations of a covered 
                        employee shall be conducted not less 
                        than once every 3 years.
    (5) Employing agency or instrumentality requests.--
                  (A) In general.--The agency or 
                instrumentality employing an employee who has 
                made a claim for compensation for total 
                disability under section 8105 may at any time 
                submit a request for the Secretary of Labor to 
                promptly require the employee to submit to a 
                physical examination under this subsection.
                  (B) Requesting officer.--A request under 
                subparagraph (A) shall be made on behalf of an 
                agency or instrumentality by--
                          (i) the head of the agency or 
                        instrumentality;
                          (ii) the Chief Human Capital Officer 
                        of the agency or instrumentality; or
                          (iii) if the agency or 
                        instrumentality does not have a Chief 
                        Human Capital Officer, an officer with 
                        responsibilities similar to those of a 
                        Chief Human Capital Officer designated 
                        by the head of the agency or 
                        instrumentality to make requests under 
                        this paragraph.
                  (C) Information.--A request under 
                subparagraph (A) shall be in writing and 
                accompanied by--
                          (i) a certification by the officer 
                        making the request that the officer has 
                        reviewed the relevant material in the 
                        employee's file;
                          (ii) an explanation of why the 
                        officer has determined, based on the 
                        materials in the file and other 
                        information known to the officer, that 
                        requiring a physical examination of the 
                        employee under this subsection is 
                        necessary; and
                  (iii) copies of the materials relating to the 
                employee that are relevant to the officer's 
                determination and request, unless the agency or 
                instrumentality has a reasonable basis for not 
                providing the materials.
                  (D) Examination.--If the Secretary of Labor 
                receives a request under this paragraph before 
                an employee has undergone an initial physical 
                examination under paragraph (4)(B)(i), the 
                Secretary shall promptly require the physical 
                examination of the employee. A physical 
                examination under this subparagraph shall 
                satisfy the requirement under paragraph 
                (4)(B)(i) that an initial physical examination 
                be conducted.
                  (E) After initial examination.--
                          (i) In general.--If the Secretary of 
                        Labor receives a request under this 
                        paragraph after an employee has 
                        undergone an initial physical 
                        examination under paragraph (4)(B)(i), 
                        the Secretary shall--
                                  (I) review the request and 
                                the information, explanation, 
                                and other materials submitted 
                                with the request; and
                                  (II) determine whether to 
                                require the physical 
                                examination of the employee who 
                                is the subject of the request.
                          (ii) Not granted.--If the Secretary 
                        determines not to grant a request 
                        described in clause (i), the Secretary 
                        shall promptly notify the officer who 
                        made the request and provide an 
                        explanation of the reasons why the 
                        request was denied.
    (f) Field Nurses.--
          (1) Definition.--In this subsection, the term ``field 
        nurse'' means a registered nurse that assists the 
        Secretary in the medical management of disability 
        claims under this subchapter and provides claimants 
        with assistance in coordinating medical care.
          (2) Authorization.--The Secretary may use field 
        nurses to coordinate medical services and vocational 
        rehabilitation programs for injured employees under 
        this subchapter. If an employee refuses to cooperate 
        with a field nurse or obstructs a field nurse in the 
        performance of duties under this subchapter, the right 
        to compensation under this subchapter shall be 
        suspended until the refusal or obstruction stops.

           *       *       *       *       *       *       *


Sec. 8131. Subrogation of the United States

    (a) If an injury or death for which continuation of pay or 
compensation is payable under this subchapter is caused under 
circumstances creating a legal liability on a person other than 
the United States to pay damages, the Secretary of Labor may 
require the beneficiary to--

           *       *       *       *       *       *       *

    (b) A beneficiary who refuses to assign or prosecute an 
action in his own name when required by the Secretary is not 
entitled to continuation of pay or compensation under this 
subchapter.
    (c) The Secretary may prosecute or compromise a cause of 
action assigned to the United States. When the Secretary 
realizes on the cause of action, he shall deduct therefrom and 
place to the credit of the Employees' Compensation Fund the 
amount of continuation of pay or compensation already paid to 
the beneficiary and the expense of realization or collection. 
Any surplus shall be paid to the beneficiary and credited on 
future payments of continuation of pay or compensation payable 
for the same injury. However, the beneficiary is entitled to 
not less than one-fifth of the net amount of a settlement or 
recovery remaining after the expenses thereof have been 
deducted.

           *       *       *       *       *       *       *


Sec. 8132. Adjustment after recovery from a third person

    If an injury or death for which continuation of pay or 
compensation is payable under this subchapter is caused under 
circumstances creating a legal liability in a person other than 
the United States to pay damages, and a beneficiary entitled to 
continuation of pay or compensation from the United States for 
that injury or death receives money or other property in 
satisfaction of that liability as the result of suit or 
settlement [by him or in his behalf] by the beneficiary or on 
behalf of the beneficiary, the beneficiary, after deducting 
therefrom the costs of suit and a reasonable attorney's fee, 
shall refund to the United States the amount of continuation of 
pay and compensation paid by the United States and credit any 
surplus on future payments of [compensation payable to him] 
continuation of pay or compensation payable to the beneficiary 
for the same injury. No court, insurer, attorney, or other 
person shall pay or distribute to the beneficiary or [his 
designee] the designee of the beneficiary the proceeds of such 
suit or settlement without first satisfying or assuring 
satisfaction of the interest of the United States. The amount 
refunded to the United States shall be credited to the 
Employees' Compensation Fund. [If compensation has not been 
paid to the beneficiary, he shall credit the money or property 
on compensation payable to him by the United States] If 
continuation of pay or compensation has not been paid to the 
beneficiary, the money or property shall be credited against 
continuation of pay or compensation payable to the beneficiary 
by the United States for the same injury. However, the 
beneficiary is entitled to retain, as a minimum, at least one-
fifth of the net amount of the money or other property 
remaining after the expenses of a suit or settlement have been 
deducted; and in addition to this minimum and at the time of 
distribution, an amount equivalent to a reasonable attorney's 
fee proportionate to the refund to the United States.

           *       *       *       *       *       *       *


Sec. 8133. Compensation in case of death

    (a) If death results from an injury sustained in the 
performance of duty, the United States shall pay a monthly 
compensation equal to a percentage of the monthly pay of the 
deceased employee in accordance with the following schedule:
          (1) * * *
          (2) To the widow or widower, if there is a child, 45 
        percent and in addition 15 percent for each child not 
        to exceed a total of 66\2/3\ percent (except as 
        provided in subsection (g)) for the widow or widower 
        and children.
          (3) To the children, if there is no widow or widower, 
        40 percent for one child and 15 percent additional for 
        each additional child not to exceed a total of [75 
        percent] 66\2/3\ percent (except as provided in 
        subsection (g)), divided among the children share and 
        share alike.

           *       *       *       *       *       *       *

    If there is a widow, widower, or child, so much of the 
percentages are payable as, when added to the total percentages 
payable to the widow, widower, and children, will not exceed a 
total of [75 percent] 66\2/3\ percent (except as provided in 
subsection (g)).
          (5) To the brothers, sisters, grandparents, and 
        grandchildren, if there is no widow, widower, child, or 
        dependent parent as follows:
                  (A) * * *

           *       *       *       *       *       *       *

                  If there is a widow, widower, or child, or 
                dependent parent, so much of the percentages 
                are payable as, when added to the total 
                percentages payable to the widow, widower, 
                children, and dependent parents, will not 
                exceed a total of [75 percent] 66\2/3\ percent 
                (except as provided in subsection (g)).

           *       *       *       *       *       *       *

    (e) In computing compensation under this section, the 
monthly pay is deemed not less than the minimum rate of basic 
pay for GS 2. However, the total monthly compensation may not 
exceed--
          (1) * * *
          (2) [75 percent] 66\2/3\ percent (except as provided 
        in subsection (g)) of the monthly pay of the maximum 
        rate of basic pay for GS-15.
    (f) * * *
    (g) If the death occurred before the date of enactment of 
the Workers' Compensation Reform Act of 2014, subsections (a) 
and (e) shall be applied by substituting ``75 percent'' for 
``66\2/3\ percent'' each place it appears.

           *       *       *       *       *       *       *


Sec. 8134. Funeral expenses; transportation of body

    (a) If death results from an injury sustained in the 
performance of duty, the United States shall pay, to the 
personal representative of the deceased or otherwise, funeral 
and burial expenses not to exceed [$800] $6,000, in the 
discretion of the Secretary of Labor. The maximum amount of 
compensation under this subsection shall be increased on March 
1 of each year by the amount determined by the Secretary of 
Labor to represent the percent change in the price index 
published for December of the preceding year over the price 
index published for the December of the year prior to the 
preceding year, adjusted to the nearest one-tenth of 1 percent.
    (b) * * *

           *       *       *       *       *       *       *


Sec. 8139. Employees of the District of Columbia

    Compensation awarded under this subchapter to an employee 
of the government of the District of Columbia shall be paid in 
the manner provided by statute for the payment of the general 
expenses of the government of the District of Columbia.

           *       *       *       *       *       *       *


Sec. 8141. Civil Air Patrol volunteers

    (a) * * *
    (b) In administering this subchapter for a member of the 
Civil Air Patrol covered by this section--
          (1) * * *
          (2) the percentages applicable to payments under 
        section 8133 of this title are--
                  (A) * * *
                  (B) 20 percent for section 8133(a)(3) of this 
                title for one child and 10 percent additional 
                for each additional child, but not to exceed a 
                total of [75 percent] 66\2/3\ percent (except 
                as provided in subsection (c)), if the member 
                died fully or currently insured under 
                subchapter II of chapter 7 of title 42; and

           *       *       *       *       *       *       *

    (c) If the death occurred before the date of enactment of 
the Workers' Compensation Reform Act of 2014, subsection 
(b)(2)(B) shall be applied by substituting ``75 percent'' for 
``66\2/3\ percent''.
    [(c)] (d) The Secretary of Labor or his designee may inform 
the Secretary of the Air Force or his designee when a claim is 
filed. The Secretary of the Air Force, on request of the 
Secretary of Labor, shall advise him of the facts concerning 
the injury and whether or not the member was rendering service, 
or engaged in travel to or from service, in performance or 
support of an operational mission of the Civil Air Patrol at 
the time of injury. This subsection does not dispense with the 
report of the immediate superior of the member required by 
section 8120 of this title, or other reports agreed on under 
that section.

           *       *       *       *       *       *       *


Sec. 8147. Employees' Compensation Fund

    (a) * * *

           *       *       *       *       *       *       *

    (d) Notwithstanding subsection (b), any benefits or other 
payments paid to or on behalf of an employee under this 
subchapter or any extension or application thereof for a 
recurrence of injury, consequential injury, aggravation of 
injury, or increase in percentage of impairment to a member for 
which compensation is provided under the schedule under section 
8107 suffered in a permanent position with an agency or 
instrumentality of the United States while the employment with 
the agency or instrumentality is covered under an assisted 
reemployment agreement entered into under section 8104(d) shall 
not be included in total cost of benefits and other payments in 
the statement provided to the agency or instrumentality under 
subsection (b) if the injury was originally incurred in a 
position not covered by an assisted reemployment agreement.

           *       *       *       *       *       *       *


Sec. 8148. Forfeiture of benefits by convicted felons

    (a) Any individual convicted of a violation of section 1920 
of title 18, or any other Federal or State criminal statute 
relating to fraud in the application for or receipt of any 
benefit under this subchapter or subchapter III of this 
chapter, shall forfeit (as of the date of such conviction) any 
entitlement to any benefit such individual would otherwise be 
entitled to under this subchapter or subchapter III (5 USCS 
Sec. Sec. 8101 et seq. or 8191 et seq.) for any injury 
occurring on or before the date of such conviction. Such 
forfeiture shall be in addition to any action the Secretary may 
take under [section 8106] section 8106a or 8129.

           *       *       *       *       *       *       *


Sec. 8153. Integrity and Compliance Program

    (a) Definitions.--In this section--
          (1) the term ``FECA program'' means the Federal 
        Employees Compensation Program administered under this 
        subchapter;
          (2) the term ``Integrity and Compliance Program'' 
        means the Integrity and Compliance Program established 
        under subsection (b);
          (3) the term ``provider'' means a provider of medical 
        or other services under the FECA program; and
          (4) the term ``Secretary'' means the Secretary of 
        Labor.
    (b) Integrity and Compliance Program.--Not later than 270 
days after the date of enactment of this section, the Secretary 
shall establish an Integrity and Compliance Program for the 
purpose of preventing, identifying, and recovering improper 
payments (including improper payments obtained by fraud) for 
the FECA program, which shall include--
          (1) procedures for identifying potentially improper 
        payments (including improper payments obtained by 
        fraud) before payment is made to claimants and 
        providers, including, where appropriate, predictive 
        analytics;
          (2) reviews after payment is made to identify 
        potentially improper payments (including improper 
        payments obtained by fraud) to claimants and providers;
          (3) on-going screening and verification procedures to 
        ensure the continued eligibility of medical providers 
        to provide services under the FECA program, including 
        licensure, Federal disbarment, and the existence of 
        relevant criminal convictions;
          (4) provision of appropriate information, education, 
        and training to claimants and providers on requirements 
        to ensure the integrity of the FECA program, including 
        payments under the FECA program;
          (5) appropriate controls and audits to ensure that 
        providers adopt internal controls and procedures for 
        compliance with requirements under the FECA program;
          (6) procedures to ensure--
                  (A) initial and continuing eligibility of 
                claimants for compensation, benefits, or 
                services under the FECA program; and
                  (B) ongoing verification of databases of 
                information relating to claimants to ensure 
                accuracy and completeness; and
          (7) appropriately sharing and accessing data and 
        information with other agencies and instrumentalities 
        of the United States, including the United States 
        Postal Service.
    (c) Interagency Cooperation on Anti-fraud Efforts.--
          (1) In general.--In administering the FECA program, 
        including the Integrity and Compliance Program, the 
        Secretary shall cooperate with other agencies and 
        instrumentalities of the United States (including the 
        United States Postal Service) and the Inspectors 
        General of such agencies and instrumentalities to 
        prevent, identify, and recover improper payments 
        (including improper payments obtained by fraud) under 
        the FECA program.
          (2) Task force.--
                  (A) In general.--There is established a task 
                force, which shall be known as the FECA 
                Integrity and Compliance Task Force (in this 
                paragraph referred to as the ``Task Force'').
                  (B) Membership.--The members of the Task 
                Force shall be--
                          (i) the Secretary, who shall serve as 
                        the Chairperson of the Task Force;
                          (ii) the Postmaster General, who 
                        shall serve as the Vice Chairperson of 
                        the Task Force;
                          (iii) the Attorney General;
                          (iv) the Director of the Office of 
                        Management and Budget;
                          (v) the Inspector General of the 
                        Department of Labor;
                          (vi) the Inspector General of the 
                        United States Postal Service;
                          (vii) the Inspectors General of other 
                        appropriate agencies and 
                        instrumentalities of the United States 
                        that employ a significant number of 
                        individuals receiving compensation, 
                        benefits, or services under the FECA 
                        program, as determined by the 
                        Chairperson and Vice Chairperson of the 
                        Task Force; and
                          (viii) other appropriate Federal 
                        officials, as determined by the 
                        Chairperson and Vice Chairperson of the 
                        Task Force.
                  (C) Duties.--The Task Force shall--
                          (i) set forth, in writing, a 
                        description of the respective roles and 
                        responsibilities in preventing, 
                        identifying, recovering, and 
                        prosecuting fraud under, and otherwise 
                        ensuring integrity and compliance of, 
                        the FECA program of--
                                  (I) the Secretary (including 
                                subordinate officials such as 
                                the Director of the Office of 
                                Workers' Compensation 
                                Programs);
                                  (II) the Inspector General of 
                                the Department of Labor;
                                  (III) the Inspectors General 
                                of agencies and 
                                instrumentalities of the United 
                                States that employ claimants 
                                under the FECA program;
                                  (IV) the Attorney General; 
                                and
                                  (V) any other relevant 
                                officials;
                          (ii) develop procedures for sharing 
                        information of possible fraud under the 
                        FECA program or other intentional 
                        misstatements by claimants or providers 
                        under the FECA program, including 
                        procedures addressing--
                                  (I) notification of 
                                appropriate officials of the 
                                Department of Labor of 
                                potential fraud or intentional 
                                misstatements, including 
                                provision of supporting 
                                information;
                                  (II ) timely and appropriate 
                                response by officials of the 
                                Department of Labor to 
                                notifications described in 
                                subclause (I);
                                  (III) the inclusion of 
                                information and evidence 
                                relating to fraud and other 
                                intentional misstatements in 
                                criminal, civil, and 
                                administrative proceedings 
                                relating to the provision of 
                                compensation, benefits, or 
                                medical services (including 
                                payments to providers) under 
                                the FECA program;
                                  (IV) the coordination of 
                                criminal investigations with 
                                the administration of the FECA 
                                program; and
                                  (V) the protection of 
                                information relating to an 
                                investigation of possible fraud 
                                under the FECA program from 
                                potential disclosure, including 
                                requirements that enable 
                                investigative files to be 
                                appropriately separated from 
                                case management files;
                          (iii) not later than 1 year after the 
                        date of enactment of this section, 
                        submit to the Committee on Homeland 
                        Security and Governmental Affairs of 
                        the Senate and the Committee on 
                        Oversight and Government Reform and the 
                        Committee on Education and the 
                        Workforce of the House of 
                        Representatives a report that includes 
                        the description and procedures required 
                        under clauses (i) and (ii).
    (d)  Improvements To Access of Federal Databases.--
          (1) In general.--The Secretary, the Postmaster 
        General, the Inspector General of the United States 
        Postal Service, and the Inspector General of the 
        Department of Labor shall have access to and make use 
        of the agency databases described in this subsection in 
        order to improve compliance with the requirements under 
        and the integrity of the FECA program.
          (2) Social security earnings information.--
                  (A)  In general.--Notwithstanding section 
                552a or any other provision of Federal or State 
                law, upon written request, the Commissioner of 
                Social Security shall make available to the 
                Secretary, the Inspector General of the 
                Department of Labor, the Postmaster General, 
                and the Inspector General of the United States 
                Postal Service the Social Security earnings 
                information of a living or deceased employee 
                required by the Secretary to carry out this 
                subchapter.
                   (B) Procedures.--The Secretary shall 
                establish procedures for correlating the 
                identity and status of recipients of 
                compensation, benefits, or services under this 
                subchapter with Social Security earnings 
                information described in subparagraph (A).
          (3) Office of personnel management federal retiree 
        database.--Notwithstanding section 552a or any other 
        provision of Federal or State law, upon written 
        request, the Director of the Office of Personnel 
        Management shall make available to the Secretary, the 
        Inspector General of the Department of Labor, the 
        Postmaster General, and the Inspector General of the 
        United States Postal Service the information in the 
        databases of Federal employees and retirees maintained 
        by the Director.
          (4) Department of veterans affairs beneficiaries 
        database.--Notwithstanding section 552a or any other 
        provision of Federal or State law, upon written 
        request, the Secretary of Veterans Affairs shall make 
        available to the Secretary, the Inspector General of 
        the Department of Labor, the Postmaster General, and 
        the Inspector General of the United States Postal 
        Service the information in the database of disabled 
        individuals maintained by the Secretary of Veterans 
        Affairs.
          (5) National directory of new hires.--Notwithstanding 
        section 552a, section 453(j) of the Social Security Act 
        (42 U.S.C. 653(j)), or any other provision of Federal 
        or State law, upon written request, the Secretary of 
        Health and Human Services shall make available to the 
        Secretary, the Inspector General of the Department of 
        Labor, the Postmaster General, the Inspector General of 
        the United States Postal Service, and the Comptroller 
        General of the United States the information in the 
        National Directory of New Hires. The Comptroller 
        General may obtain information from the National 
        Directory of New Hires under this paragraph for any 
        audit, evaluation, or investigation, including any 
        audit, evaluation, or investigation relating to program 
        integrity.
          (6) Provision.--Information requested under this 
        subsection shall be provided--
                  (A) in a timely manner;
                  (B) at a reasonable cost to the Secretary, 
                the Inspector General of the Department of 
                Labor, the Postmaster General, the Inspector 
                General of the United States Postal Service, or 
                the Comptroller General of the United States; 
                and
                  (C) in the manner, frequency, and form 
                reasonably specified by the officer making the 
                request, which, upon request, shall include 
                electronic form.
          (7) Assessment of data cost-effectiveness.--
                  (A) In general.--The Secretary shall consider 
                and assess procedures for correlating the 
                identity and status of recipients of 
                compensation, benefits, or services under this 
                subchapter with information relating to 
                employees, retirees, and individuals described 
                in paragraphs (3), (4), and (5).
                  (B) Report.--Not later than 1 year after the 
                date of enactment of this section, the 
                Secretary shall submit to the Committee on 
                Homeland Security and Governmental Affairs of 
                the Senate and the Committee on Oversight and 
                Government Reform and the Committee on 
                Education and the Workforce of the House of 
                Representatives a report on the cost-
                effectiveness of the use of the databases 
                described in paragraphs (3), (4), and (5) for 
                program compliance and integrity. The report 
                required under this subparagraph may be 
                included as part of the report required under 
                subsection (f).
          (8) United states postal service feca enrollee 
        database.--Not later than 180 days after the date of 
        enactment of this section, in order to track, verify, 
        and communicate with the Secretary and other relevant 
        entities, the Postmaster General shall establish an 
        electronic database of information relating to 
        employees of the United States Postal Service who have 
        applied for or are receiving compensation, benefits, or 
        services under this subchapter.
    (e) General Protocols and Security.--
          (1) Establishment.--
                  (A) In general.--In order to ensure strong 
                information security and privacy standards, the 
                Secretary, the Postmaster General, the 
                Inspector General of the Department of Labor, 
                and the Inspector General of the United States 
                Postal Service shall establish protocols for 
                the secure transfer and storage of any 
                information provided to an individual or entity 
                under this section.
                  (B) Considerations.--In establishing 
                protocols under subparagraph (A), the 
                Secretary, the Postmaster General, the 
                Inspector General of the Department of Labor, 
                and the Inspector General of the United States 
                Postal Service shall consider any 
                recommendations submitted to the Secretary by 
                the Inspector General of the Department of 
                Health and Human Services with respect to the 
                secure transfer and storage of information, and 
                to comply with privacy laws and best practices.
                  (C) Fraud case protection.--The Secretary, 
                the Postmaster General, the Inspector General 
                of the Department of Labor, and the Inspector 
                General of the United States Postal Service 
                shall establish protocols and procedures to 
                enable information and materials relating to an 
                active investigation of possible fraud relating 
                to the FECA program to be appropriately kept 
                separate from the files for employees relating 
                to the provision of compensation, benefits, or 
                services under the FECA program.
          (2) Compliance.--The Secretary, the Postmaster 
        General, the Inspector General of the Department of 
        Labor, and the Inspector General of the United States 
        Postal Service shall ensure that any information 
        provided to an individual or entity under this section 
        is provided in accordance with protocols established 
        under paragraph (1).
    (f) Report.--Not later than 1 year after the date of 
enactment of this section, and annually thereafter for 5 years, 
the Secretary shall submit a report on the activities of the 
Secretary under this section, including implementation of the 
Integrity and Compliance Program, to--
          (1) the Committee on Homeland Security and 
        Governmental Affairs of the Senate; and
          (2) the Committee on Oversight and Government Reform 
        and the Committee on Education and the Workforce of the 
        House of Representatives.
    (g) GAO Review.--The Comptroller General of the United 
States shall--
          (1) conduct periodic reviews of the Integrity and 
        Compliance Program; and
           (2) submit reports on the results of the reviews 
        under paragraph (1) to the Committee on Homeland 
        Security and Governmental Affairs of the Senate and the 
        Committee on Oversight and Government Reform and the 
        Committee on Education and the Workforce of the House 
        of Representatives not later than--
                  (A) 2 years after the date of enactment of 
                this section; and
                  (B) 3 years after submission of the report 
                under subparagraph (A).

           *       *       *       *       *       *       *


CHAPTER 83--RETIREMENT

           *       *       *       *       *       *       *



Subchapter III--Civil Service Retirement

           *       *       *       *       *       *       *



Sec. 8337. Disability retirement\72\
---------------------------------------------------------------------------

    \72\ This amendment to 5 U.S.C. 8337 is made by section 509(b) of 
the bill.
---------------------------------------------------------------------------
    (a) * * *

           *       *       *       *       *       *       *

    (f)(1) * * *

           *       *       *       *       *       *       *

    (3) [Paragraphs] Except as provided under chapter 81, 
paragraphs (1) and (2) do not bar the right of a claimant to 
the greater benefit conferred by either this subchapter or 
subchapter I of chapter 81.

           *       *       *       *       *       *       *


Sec. 8348. Civil Service Retirement and Disability Fund\73\
---------------------------------------------------------------------------

    \73\ These amendments to 5 U.S.C. 8348 are made by section 
101(b)(2)(B) of the bill.

           *       *       *       *       *       *       *

---------------------------------------------------------------------------
    (h)(1) * * *

           *       *       *       *       *       *       *

    (2)(A) * * *

           *       *       *       *       *       *       *

    [(B) The Office shall redetermine the Postal surplus or 
supplemental liability as of the close of the fiscal year, for 
each fiscal year beginning after September 30, 2007, through 
the fiscal year ending September 30, 2038. If the result is a 
surplus, that amount shall remain in the Fund until 
distribution is authorized under subparagraph (C). Beginning 
June 15, 2017, if the result is a supplemental liability, the 
Office shall establish an amortization schedule, including a 
series of annual installments commencing on September 30 of the 
subsequent fiscal year, which provides for the liquidation of 
such liability by September 30, 2043.]
    (B)(i)(I) Not later than the date on which the Office 
determines the normal-cost percentage under section 101(a)(2) 
of the Postal Reform Act of 2014, the Office shall redetermine 
the Postal surplus or supplemental liability as of the close of 
the fiscal year ending on September 30, 2013, in accordance 
with the requirements under paragraph (4).
    (II) If the result of the redetermination under subclause 
(I) is a surplus, that amount shall remain in the Fund until 
distribution is authorized under subparagraph (C).
    (III) If the result of the redetermination under subclause 
(I) is a supplemental liability, the Office shall establish an 
amortization schedule, including a series of annual 
installments commencing on September 30, 2015, which provides 
for the liquidation of such liability by September 30, 2054.
    (ii)(I) The Office shall redetermine the Postal surplus or 
supplemental liability as of the close of each fiscal year 
beginning after September 30, 2013, in accordance with the 
requirements under paragraph (4).
    (II) If the result of the redetermination under subclause 
(I) is a surplus, that amount shall remain in the Fund until 
distribution is authorized under subparagraph (C).
    (III) On and after June 15, 2015, if the result of the 
redetermination under subclause (I) is a supplemental 
liability, the Office shall establish an amortization schedule, 
including a series of annual installments commencing on 
September 30 of the subsequent fiscal year, which provides for 
the liquidation of such liability by September 30, 2054.

           *       *       *       *       *       *       *

    (3) * * *

           *       *       *       *       *       *       *

    (4)(A) For the purpose of carrying out paragraphs (1) and 
(2), the Office shall, consistent with section 8423(a)(5)(B), 
use--
          (i) demographic factors specific to current and 
        former employees of the United States Postal Service; 
        and
          (ii) appropriate economic assumptions, as determined 
        by the Office, regarding wage and salary trends 
        specific to the employees.
    (B) The United States Postal Service shall provide any data 
or projections the Office requires in order to carry out 
paragraphs (1) and (2) consistent with subparagraph (A) of this 
paragraph.

           *       *       *       *       *       *       *


CHAPTER 84--FEDERAL EMPLOYEES RETIREMENT SYSTEM

           *       *       *       *       *       *       *


Sec.
8401. Definitions

           *       *       *       *       *       *       *

8425. Mandatory separation.
8426. Postal Service retirement

           *       *       *       *       *       *       *


Subchapter II--Basic Annuity

           *       *       *       *       *       *       *



Sec. 8423. Government contributions\74\
---------------------------------------------------------------------------

    \74\These amendments to 5 U.S.C. Sec. 8423 are made by section 101 
of the bill.
---------------------------------------------------------------------------
    (a)(1) Each employing agency other than the United States 
Postal Service having any employees or Members subject to 
section 8422(a) shall contribute to the Fund an amount equal to 
the sum of--

           *       *       *       *       *       *       *

    (5)(A) The United States Postal Service shall contribute to 
the Fund an amount equal to the product of--
          (i) the normal-cost percentage, as determined for 
        employees of the United States Postal Service under 
        subparagraph (B), multiplied by
          (ii) the aggregate amount of basic pay payable by the 
        United States Postal Service, for the period involved, 
        to employees of the United States Postal Service.
    (B)(i) In determining the normal-cost percentage for 
employees of the United States Postal Service, the Office shall 
use--
          (I) demographic factors specific to the employees; 
        and
          (II) appropriate economic assumptions, as determined 
        by the Office, regarding wage and salary trends 
        specific to the employees.
    (ii) The United States Postal Service shall provide any 
data or projections the Office requires in order to determine 
the normal-cost percentage for employees of the United States 
Postal Service consistent with clause (i).
    (iii) Notwithstanding paragraph (2), in determining the 
normal-cost percentage to be applied for employees of the 
United States Postal Service, the Office shall take into 
account amounts provided under section 8422 and amounts 
provided under section 1005(g)(3)(A)(i) of title 39.
    (iv) The Office shall review the determination of the 
normal-cost percentage for employees of the United States 
Postal Service and make such adjustments as the Office 
determines are necessary--
          (I) upon request of the United States Postal Service, 
        but no more frequently than once each fiscal year; and
          (II) at any additional times, as the Office considers 
        appropriate.
    (b)(1) * * *

           *       *       *       *       *       *       *

    (5)(A) In this paragraph, the term ``postal funding 
surplus'' means the amount by which the amount of supplemental 
liability computed under paragraph (1)(B) is less than zero.
    (B) After the date on which the Office determines under 
paragraph (7)(C) the amount of supplemental liability computed 
under paragraph (1)(B) as of the close of the fiscal year 
ending on September 30, 2013, not later than the date on which 
the Postmaster General makes a request under subparagraph (C) 
of this paragraph, and if the amount determined under paragraph 
(7)(C) is less than zero, the Postmaster General may request 
that some or all of the amount of the postal funding surplus, 
not to exceed $6,000,000,000, be returned to the United States 
Postal Service, and not later than 10 days after the request, 
the Director shall transfer to the United States Postal Service 
from the Fund an amount equal to the portion of the postal 
funding surplus requested, for use in accordance with 
subparagraph (E)(i).
    (C)(i) Subject to clause (ii), after the date on which the 
Office computes the amount of supplemental liability under 
paragraph (1)(B) as of the close of the fiscal year ending on 
September 30, 2014, and if such amount is less than zero, the 
Postmaster General may request that some of the amount of the 
postal funding surplus, not to exceed \2/3\ of the amount, be 
returned to the United States Postal Service, and not later 
than 10 days after the request, the Director shall transfer to 
the United States Postal Service from the Fund an amount equal 
to the portion of the postal funding surplus requested, for use 
in accordance with subparagraph (E)(ii).
    (ii) If any amount requested by the Postmaster General 
under subparagraph (B) is not transferred from the Fund as of 
the close of the fiscal year ending on September 30, 2014, for 
purposes of this subparagraph, the Office shall recompute the 
amount of supplemental liability computed under paragraph 
(1)(B) as of the close of that fiscal year by subtracting from 
the balance of the Fund the amount requested under subparagraph 
(B) of this paragraph.
    (D) If the amount of supplemental liability computed under 
paragraph (1)(B) as of the close of any fiscal year commencing 
after September 30, 2014, is less than zero, the Office shall 
establish an amortization schedule, including a series of equal 
annual installments that--
          (i) provide for the liquidation of the postal funding 
        surplus in 40 years, commencing on September 30 of the 
        subsequent fiscal year; and
          (ii) shall be transferred to the United States Postal 
        Service from the Fund for use in accordance with 
        subparagraph (E)(ii).
    (E)(i) The United States Postal Service may use an amount 
transferred under subparagraph (B) only for the purpose of 
repaying any obligation issued under section 2005(a) of title 
39.
    (ii) The United States Postal Service may use an amount 
transferred under subparagraph (C) or (D) only--
          (I) by directing that some or all of the amount be 
        transferred to the Postal Service Retiree Health 
        Benefits Fund for the purpose of reducing any Postal 
        Service actuarial liability referred to under section 
        8909a;
          (II) by directing that some or all of the amount be 
        transferred to the Civil Service Retirement and 
        Disability Fund for the purpose of reducing any 
        supplemental liability under section 8348(h);
          (III) by directing that some or all of the amount be 
        transferred to the Civil Service Retirement and 
        Disability Fund for the purpose of reducing any 
        supplemental liability under section 8423(b)(1)(B);
          (IV) by directing that some or all of the amount be 
        transferred to the Postal Service Workers Compensation 
        Accrued Liability Fund for the purpose of reducing any 
        Postal Service actuarial liability under section 2012 
        of title 39; or
          (V) as described in clause (i), if none of the 
        liabilities referred to in subclause (I), (II), (III), 
        or (IV) remain unpaid.
    [(5)](6) [For the purpose] Subject to paragraph (7), for 
the purpose of carrying out paragraph (1) with respect to any 
fiscal year, the Office may--

           *       *       *       *       *       *       *

    (7)(A) For the purpose of carrying out paragraph (1)(B) 
with respect to the fiscal year ending September 30, 2013, and 
each fiscal year thereafter, the Office shall, consistent with 
subsection (a)(5)(B), use--
          (i) demographic factors specific to current and 
        former employees of the United States Postal Service; 
        and
          (ii) appropriate economic assumptions, as determined 
        by the Office, regarding wage and salary trends 
        specific to current employees of the United States 
        Postal Service.
    (B) The United States Postal Service shall provide any data 
or projections the Office requires in order to carry out 
paragraph (1)(B) consistent with subparagraph (A) of this 
paragraph.
    (C) Not later than 180 days after the later of the date on 
which the Office receives the appropriate data or projections 
from the United States Postal Service under subparagraph (B) or 
the date of enactment of the Postal Reform Act of 2014, the 
Office shall determine or redetermine whether there is a postal 
funding surplus (as defined in paragraph (5)) or a supplemental 
liability described in paragraph (1)(B) (and the amount 
thereof) as of the close of the fiscal year ending on September 
30, 2013, in accordance with the requirements under 
subparagraph (A) of this paragraph.

           *       *       *       *       *       *       *


Sec. 8426. Postal Service retirement\75\
---------------------------------------------------------------------------

    \75\This new 5 U.S.C. Sec. 8426 is added by section 102 of the 
bill.
---------------------------------------------------------------------------
            (1) The application of sections 8422 and 8423 of 
        this title and subchapters III and VII of this chapter 
        with respect to an officer or employee of the Postal 
        Service may be modified as provided under section 
        1005(g) of title 39.

Subchapter III--Thrift Savings Plan

           *       *       *       *       *       *       *



Sec. 8432. Contributions\76\
---------------------------------------------------------------------------

    \76\ This amendment to 5 U.S.C. Sec. 8432 is made by section 102 of 
the bill.
---------------------------------------------------------------------------
    (a) * * *

           *       *       *       *       *       *       *

    (b)(1) * * *

           *       *       *       *       *       *       *

    (2)(A) * * *

           *       *       *       *       *       *       *

    (D)(i) Except as provided in [clause (ii)] clauses (ii) and 
(iii), for purposes of this paragraph, the term ``eligible 
individual'' means any individual who, after any regulations 
under subparagraph (A) first take effect, is appointed, 
transferred, or reappointed to a position in which that 
individual becomes eligible to contribute to the Thrift Savings 
Fund.
    (ii) Members of the uniformed services shall not be 
eligible individuals for purposes of this paragraph.
    (iii) An individual for whom a collective bargaining 
agreement authorized under section 1005(g)(4) of title 39 
establishes whether the Postal Service shall make contributions 
to the Thrift Savings Fund for the benefit of the individual 
and the amount of the contributions shall not be an eligible 
individual for purposes of this paragraph.

           *       *       *       *       *       *       *


Subchapter VI --General and Administration Provisions

           *       *       *       *       *       *       *



Sec. 8464a. Relationship between annuity and workers compensation\77\
---------------------------------------------------------------------------

    \77\This amendment to 5 U.S.C. Sec. 8464a is made by section 509(b) 
of the bill.
---------------------------------------------------------------------------
    (a)(1) * * *

           *       *       *       *       *       *       *

    (3) [Paragraphs] Except as provided under chapter 81, 
paragraphs (1) and (2) do not bar the right of a claimant to 
the greater benefit conferred by either this chapter or 
subchapter I of chapter 81.

           *       *       *       *       *       *       *


                      CHAPTER 89--HEALTH INSURANCE

Sec.
8901. Definitions
     * * * * * * *
8903b. Authority to readmit an employee organization plan.
8903c. Postal Service Health Benefits Program. 
     * * * * * * *

Sec. 8903. Health Benefits Plans\78\
---------------------------------------------------------------------------

    \78\ This amendment to 5 U.S.C. Sec. 8903 is made by section 
104(a)(2)(A) of the bill.
---------------------------------------------------------------------------
    The Office of Personnel Management may contract for or 
approve the following health benefits plans:
          (1) Service Benefit Plan.--One Government-wide plan, 
        which may be underwritten by participating affiliates 
        licensed in any number of States, offering [two levels 
        of benefits] 2 levels of benefits for enrollees under 
        this chapter generally and 2 levels of benefits for 
        enrollees under the Postal Service Health Benefits 
        Program established under section 8903c, under which 
        payment is made by a carrier under contracts with 
        physicians, hospitals, or other providers of health 
        services for benefits of the types described by section 
        8904(1) of this title given to employees, annuitants, 
        members of their families, former spouses, or persons 
        having continued coverage under section 8905a of this 
        title, or, under certain conditions, payment is made by 
        a carrier to the employee, annuitant, family member, 
        former spouse, or person having continued coverage 
        under section 8905a of this title.

           *       *       *       *       *       *       *


Sec. 8903c. Postal Service Health Benefits Program\79\
---------------------------------------------------------------------------

    \79\ This new section 5 U.S.C. Sec. 8903c is added by section 
104(a)(1) of the bill.
---------------------------------------------------------------------------
    (a) Definitions.--In this section--
          (1) the term ``initial participating carrier'' means 
        a carrier that enters into a contract with the Office 
        to participate in the Postal Service Health Benefits 
        Program during the contract year beginning in January 
        2016;
          (2) the term ``Medicare eligible individual'' means 
        an individual who--
                  (A) is entitled to Medicare part A, but 
                excluding an individual who is eligible to 
                enroll under such part under section 1818 of 
                the Social Security Act (42 U.S.C. 1395i-2); 
                and
                  (B) is eligible to enroll in Medicare part B;
          (3) the term ``Medicare part A'' means the Medicare 
        program for hospital insurance benefits under part A of 
        title XVIII of the Social Security Act (42 U.S.C. 1395c 
        et seq.);
          (4) the term ``Medicare part B'' means the Medicare 
        program for supplementary medical insurance benefits 
        under part B of title XVIII of the Social Security Act 
        (42 U.S.C. 1395j et seq.);
          (5) the term ``Medicare part D'' means the Medicare 
        insurance program established under part D of title 
        XVIII of the Social Security Act (42 U.S.C. 1395w-101 
        et seq.);
          (6) the term ``Office'' means the Office of Personnel 
        Management;
          (7) the term ``Postal Service'' means the United 
        States Postal Service;
          (8) the term ``Postal Service annuitant'' means an 
        annuitant enrolled in a health benefits plan under this 
        chapter whose Government contribution is paid by the 
        Postal Service or the Postal Service Retiree Health 
        Benefits Fund under section 8906(g)(2);
          (9) the term ``Postal Service employee'' means an 
        employee of the Postal Service enrolled in a health 
        benefits plan under this chapter;
          (10) the term ``Postal Service Health Benefits 
        Program'' means the program of health benefits plans 
        established under subsection (c);
          (11) the term ``Postal Service Medicare eligible 
        annuitant'' means an individual who--
                  (A) is a Postal Service annuitant; and
                  (B) is a Medicare eligible individual;
          (12) the term ``PSHBP plan'' means a health benefits 
        plan offered under the Postal Service Health Benefits 
        Program; and
          (13) the term ``qualified carrier'' means a carrier 
        for which the total enrollment in the plans provided 
        under this chapter includes, in the contract year 
        beginning in January 2015, 5,000 or more enrollees who 
        are--
                  (A) Postal Service employees; or
                  (B) Postal Service annuitants.
    (b) Application of Section.--The requirements under this 
section shall--
          (1) apply to the contract year beginning in January 
        2016, and each contract year thereafter; and
          (2) supersede other provisions of this chapter to the 
        extent of any specific inconsistency, as determined by 
        the Office.
    (c) Establishment of the Postal Service Health Benefits 
Program.--
          (1) In general.--The Office shall establish the 
        Postal Service Health Benefits Program, which shall--
                  (A) consist of health benefit plans offered 
                under this chapter;
                  (B) include plans offered by--
                          (i) each qualified carrier; and
                          (ii) any other carrier determined 
                        appropriate by the Office;
                  (C) be available for participation by all 
                Postal Service employees, in accordance with 
                subsection (d);
                  (D) be available for participation by all 
                Postal Service annuitants, in accordance with 
                subsection (d);
                  (E) not be available for participation by an 
                individual who is not a Postal Service employee 
                or Postal Service annuitant (except as a family 
                member of such an employee or annuitant); and
                  (F) be implemented and administered by the 
                Office.
          (2) Separate postal service risk pool.--The Office 
        shall ensure that each PSHBP plan includes rates, one 
        for enrollment as an individual, one for enrollment for 
        self plus one, and one for enrollment for self and 
        family within each option in the PSHBP plan, that 
        reasonably and equitably reflect the cost of benefits 
        provided to a risk pool consisting solely of Postal 
        Service employees and Postal Service annuitants (and 
        family members of such employees and annuitants), 
        taking into specific account the reduction in benefits 
        cost for the PSHBP plan due to the Medicare enrollment 
        requirements under subsection (e) and any savings or 
        subsidies resulting from subsection (f).
          (3) Actuarially equivalent coverage.--The Office 
        shall ensure that each carrier participating in the 
        Postal Service Health Benefits Program provides 
        coverage under the PSHBP plans offered by the carrier 
        that is actuarially equivalent, as determined by the 
        Director of the Office, to the coverage that the 
        carrier provides under the health benefits plans 
        offered by the carrier under the Federal Employee 
        Health Benefits Program that are not PSHBP plans.
    (d) Election of Coverage.--
          (1) In general.--Except as provided in paragraphs (2) 
        and (3), each Postal Service employee and Postal 
        Service annuitant who elects to receive health benefits 
        coverage under this chapter--
                  (A) shall be subject to the requirements 
                under this section; and
                  (B) may only enroll in a PSHBP plan.
          (2) Annuitants.--A Postal Service annuitant shall not 
        be subject to this section if the Postal Service 
        annuitant--
                  (A) is enrolled in a health benefits plan 
                under this chapter for the contract year 
                beginning in January 2015 that is not a health 
                benefits plan offered by an initial 
                participating carrier, unless the Postal 
                Service annuitant voluntarily enrolls in a 
                PSHBP plan; or
                  (B) resides in a geographic area for which 
                there is not a PSHBP plan in which the Postal 
                Service annuitant may enroll.
          (3) Employees.--A Postal Service employee who is 
        enrolled in a health benefits plan under this chapter 
        for the contract year beginning in January 2015 that is 
        not a health benefits plan offered by an initial 
        participating carrier shall not be subject to the 
        requirements under this section, except that--
                  (A) if the Postal Service employee changes 
                enrollment to a different health benefits plan 
                under this chapter after the start of the 
                contract year beginning in January 2016, the 
                Postal Service employee may only enroll in a 
                PSHBP plan; and
                  (B) upon becoming a Postal Service annuitant, 
                if the Postal Service employee elects to 
                continue coverage under this chapter, the 
                Postal Service employee shall enroll in a PSHBP 
                plan during the open season that is--
                          (i) being held when the Postal 
                        Service employee becomes a Postal 
                        Service annuitant; or
                          (ii) if the date on which the Postal 
                        Service employee becomes a Postal 
                        Service annuitant falls outside of an 
                        open season, the first open season 
                        following that date.
    (e) Requirement of Medicare Enrollment.--
          (1) Postal service medicare eligible annuitants.--A 
        Postal Service Medicare eligible annuitant subject to 
        this section may not continue coverage under the Postal 
        Service Health Benefits Program unless the Postal 
        Service Medicare eligible annuitant enrolls in Medicare 
        part A, Medicare part B, and Medicare part D (as part 
        of a prescription drug plan described in subsection 
        (f)).
          (2) Medicare eligible family members.--If a family 
        member of a Postal Service annuitant who is subject to 
        this section is a Medicare eligible individual, the 
        family member may not be covered under the Postal 
        Service Health Benefits Program as a family member of 
        the Postal Service annuitant unless the family member 
        enrolls in Medicare part A, Medicare part B, and 
        Medicare part D (as part of a prescription drug plan 
        described in subsection (f)).
          (f) Medicare Part D Prescription Drug Benefits.--The 
        Office shall require each PSHBP plan to provide 
        prescription drug benefits for Postal Service 
        annuitants and family members who are eligible for 
        Medicare part D through a prescription drug plan 
        offered under a waiver under section 1860D--22 of the 
        Social Security Act (42 U.S.C. 1395w--132).
    (g) Postal Service Contribution.--
          (1) In general.--Subject to subsection (i), for 
        purposes of applying section 8906(b) to the Postal 
        Service, the weighted average shall be calculated in 
        accordance with paragraph (2).
          (2) Weighted average calculation.--Not later than 
        October 1 of each year, the Office shall determine the 
        weighted average of the rates established pursuant to 
        subsection (c)(2) for PSHBP plans that will be in 
        effect during the following contract year with respect 
        to--
                  (A) enrollments for self only;
                  (B) enrollments for self plus one; and
                  (C) enrollments for self and family.
    (h) Reserves.--
          (1) Separate reserves.--
                  (A) In general.--The Office shall ensure that 
                each PSHBP plan maintains separate reserves 
                (including a separate contingency reserve) with 
                respect to the enrollees in the PSHBP plan in 
                accordance with section 8909.
                  (B) References.--For purposes of the Postal 
                Service Health Benefits Program, each reference 
                to ''the Government'' in section 8909 shall be 
                deemed to be a reference to the Postal Service.
                  (C) Amounts to be credited.--The reserves 
                (including the separate contingency reserve) 
                maintained by each PSHBP plan shall be credited 
                with a proportionate amount of the funds in the 
                existing reserves for health benefits plans 
                offered by an initial participating carrier.
          (2) Discontinuation of pshbp plan.--In applying 
        section 8909(e) relating to a PSHBP plan that is 
        discontinued, the Office shall credit the separate 
        Postal Service contingency reserve maintained under 
        paragraph (1) for that plan only to the separate Postal 
        Service contingency reserves of the PSHBP plans 
        continuing under this chapter.
    (i) No Effect on Existing Law.--Nothing in this section 
shall be construed as affecting section 1005(f) of title 39 
regarding variations, additions, or substitutions to the 
provisions of this chapter.

           *       *       *       *       *       *       *


Sec. 8906. Contribution\80\
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    \80\ This amendment to 5 U.S.C. Sec. 8906 is made by section 103(a) 
of the bill.
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    (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 [through September 30, 2016, be paid by 
the United States Postal Service, and thereafter shall] after 
the date of enactment of the Postal Reform Act of 2014 be paid 
first from the Postal Service Retiree Health Benefits Fund up 
to the amount contained in the Fund, with any remaining amount 
paid by the United States Postal Service.

           *       *       *       *       *       *       *


Sec. 8909a. Postal Service Retiree Health [Benefit] Benefits 
                    Fund\81\
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    \81\ These amendments to 5 U.S.C. Sec. 8909a are made by section 
103(b) and (d) of the bill. 82 These amendments to the Inspector 
General Act of 1978 are made by section 406 of the bill.
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    (a) * * *

           *       *       *       *       *       *       *

    (d)(1) * * *
    [(2)(A) Not later than June 30, 2007, the Office shall 
compute, and by June 30 of each succeeding year, the Office 
shall recompute the difference between--
          [(i) the net present value of the excess of future 
        payments required under section 8906(g)(2)(A) for 
        current and future United States Postal Service 
        annuitants as of the end of the fiscal year ending on 
        September 30 of that year; and
          [(ii)(I) the value of the assets of the Postal 
        Retiree Health Benefits Fund as of the end of the 
        fiscal year ending on September 30 of that year; and
          [(II) the net present value computed under paragraph 
        (1).
    [(B) Not later than June 30, 2017, the Office shall 
compute, and by June 30 of each succeeding year shall 
recompute, a schedule including a series of annual installments 
which provide for the liquidation of any liability or surplus 
by September 30, 2056, or within 15 years, whichever is later, 
of the net present value determined under subparagraph (A), 
including interest at the rate used in that computation.]
    (2)(A) Not later than June 30, 2016, the Office shall 
compute, and by June 30 of each succeeding year, the Office 
shall recompute, a schedule including a series of annual 
installments which provide for the liquidation of the amount 
described under subparagraph (B) (regardless of whether the 
amount is a liability or surplus) by September 30, 2052, or 
within 15 years, whichever is later, including interest at the 
rate used in the computations under this subsection.
    (B) The amount described in this subparagraph is the 
amount, as of the date on which the applicable computation or 
recomputation under subparagraph (A) is made, that is equal to 
the difference between--
          (i) 80 percent of the Postal Service actuarial 
        liability as of September 30 of the most recently ended 
        fiscal year; and
          (ii) the value of the assets of the Postal Retiree 
        Health Benefits Fund as of September 30 of the most 
        recently ended fiscal year.
    (3)(A) The United States Postal Service shall pay into such 
Fund--
         (i) * * *

           *       *       *       *       *       *       *

          (iii) $1,400,000,000, not later than September 30, 
        2009; and
          (iv) $5,500,000,000, not later than September 30, 
        2010[;].
          [(v) $5,500,000,000, not later than October 4, 2011;
          [(vi) $5,600,000,000, not later than September 30, 
        2012;
          [(vii) $5,600,000,000, not later than September 30, 
        2013;
          [(viii) $5,700,000,000, not later than September 30, 
        2014;
          [(ix) $5,700,000,000, not later than September 30, 
        2015; and
          [(x) $5,800,000,000, not later than September 30, 
        2016.
    (B) Not later than September 30, [2017] 2016, and by 
September 30 of each succeeding year, the United States Postal 
Service shall pay into such Fund the sum of--
          (i) the net present value computed under paragraph 
        (1); and
          (ii) any annual installment computed under [paragraph 
        (2)(B).] paragraph (2).
    [(4) Computations under this subsection shall be made 
consistent with the assumptions and methodology used by the 
Office for financial reporting under subchapter II of chapter 
35 of title 31.]
    (4) Computations under this subsection shall be based on--
          (A) economic and actuarial methods and assumptions 
        consistent with the methods and assumptions used in 
        determining the Postal surplus or supplemental 
        liability under section 8348(h); and
          (B) any other methods and assumptions, including a 
        health care cost trend rate, that the Director of the 
        Office determines to be appropriate.

           *       *       *       *       *       *       *

    (7) In this subsection, the term ``Postal Service actuarial 
liability'' means the difference between--
          (A) the net present value of future payments required 
        under section 8906(g)(2)(A) for current and future 
        United States Postal Service annuitants; and
          (B) the net present value as computed under paragraph 
        (1) attributable to the future service of United States 
        Postal Service employees.
    (e) Subsections (a) through (d) shall be subject to section 
104 of the Postal Reform Act of 2014.

           *       *       *       *       *       *       *

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                   INSPECTOR GENERAL ACT OF 1978\82\

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    \82\These amendments to the Inspector General Act of 1978 are made 
by section 406 of the bill.
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(5 U.S.C. App.)

           *       *       *       *       *       *       *



Sec. 8G. Requirements for Federal entities and designated Federal 
                    entities

    (a) Notwithstanding section 12 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 and the 
        Bureau of Consumer Financial Protection, the Board for 
        International Broadcasting, the CommodityFutures 
Trading Commission, the Consumer Product Safety Commission, the 
Corporation for Public Broadcasting, the Defense Intelligence Agency, 
the Denali Commission, the Equal Employment Opportunity Commission, the 
Farm Credit Administration, the Federal Communications Commission, 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 Geospatial-Intelligence Agency, the National Labor Relations 
Board, the National Reconnaissance Office, the National Security 
Agency, 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, [the Postal Regulatory 
Commission, and the United States Postal Service] and the Postal 
Regulatory Commission;
          (3) the term ``head of the Federal entity'' means any 
        person or persons designated by statute as the head of 
        a Federal entity, and if no such designation exists, 
        the chief policymaking officer or board of a Federal 
        entity as identified in the list published pursuant to 
        [subsection (h)(1)] subsection (g)(1) of this section;
          (4) the term ``head of the designated Federal 
        entity'' means the board or commission of the 
        designated Federal entity, or in the event the 
        designated Federal entity does not have a board or 
        commission, 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)] 
        subsection (g)(1) of this section, except that--
                  (A) * * *
                  [(B) with respect to the United States Postal 
                Service, such term means the Governors (within 
                the meaning ofsection 102(3) of title 39, 
                United States Code);]
                  [(C)](B) with respect to the Federal Labor 
                Relations Authority, such term means the 
                members of the Authority (described under 
                section 7104 of title 5, United States Code);
                  [(D)](C) with respect to the National 
                Archives and Records Administration, such term 
                means the Archivist of the United States;
                  [(E)](D) with respect to the National Credit 
                Union Administration, such term means the 
                National Credit Union Administration Board 
                (described under section 102 of the Federal 
                Credit Union Act (12 U.S.C. 1752a);
                  [(F)](E) with respect to the National 
                Endowment of the Arts, such term means the 
                National Council on the Arts;
                  [(G)](F) with respect to the National 
                Endowment for the Humanities, such term means 
                the National Council on the Humanities; and
                  [(H)](G) with respect to the Peace Corps, 
                such term means the Director of the Peace 
                Corps;

           *       *       *       *       *       *       *

    (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. Each Inspector General shall be 
appointed without regard to political affiliation and solely on 
the basis of integrity and demonstrated ability in accounting, 
auditing, financial analysis, law, management analysis, public 
administration, or investigations. For purposes of implementing 
this section, the Chairman of the Board of Governors of the 
Federal Reserve System shall appoint the Inspector General of 
the Board of Governors of the Federal Reserve System and the 
Bureau of Consumer Financial Protection. The Inspector General 
of the Board of Governors of the Federal Reserve System and the 
Bureau of Consumer Financial Protection shall have all of the 
authorities and responsibilities provided by this Act with 
respect to the Bureau of Consumer Financial Protection, as if 
the Bureau were part of the Board of Governors of the Federal 
Reserve System.

           *       *       *       *       *       *       *

    [(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.
    [(4) 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.
    [(5) As used in this subsection, the term Governors'' has 
the meaning given such term by section 102(3) of title 39, 
United States Code.
    [(6) There are authorized to be appropriated, out of the 
Postal Service Fund, such sums as may be necessary for the 
Office of Inspector General of the United States Postal 
Service.]
    [g](f)(1) Sections 4, 5, 6 (other than subsections (a)(7) 
and (a)(8) thereof), and 7 of this Act shall apply to each 
Inspector General and Office of Inspector General of a 
designated Federal entity and such sections shall be applied to 
each designated Federal entity and head of the designated 
Federal entity (as defined under subsection (a)) by 
substituting--

           *       *       *       *       *       *       *

    [h](g)(1) No later than April 30, 1989, and annually 
thereafter, the Director of the Office of Management and 
Budget, after consultation with the Comptroller General of the 
United States, shall publish in the Federal Register a list of 
the Federal entities and designated Federal entities and if the 
designated Federal entity is not a board or commission, include 
the head of each such entity (as defined under subsection (a) 
of this section).

           *       *       *       *       *       *       *


Sec. 8N. Special Provisions Concerning The Inspector General of the 
                    United States Postal Service

    (a) In this section--
          (1) the term ``Governors'' has the meaning given that 
        term in section 102(3) of title 39, United States Code; 
        and
          (2) the term ``Inspector General'' means the 
        Inspector General of the United States Postal Service.
    (b) In carrying out the duties and responsibilities 
specified in this Act, 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 the 
Inspector General.
    (c)(1)(A) 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.
    (B) With respect to the information described under 
subparagraph (A), the Governors may prohibit the Inspector 
General from carrying out or completing any audit or 
investigation, or from issuing any subpoena, after the 
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 
subparagraph (A) or to prevent the significant impairment to 
the national interests of the United States.
    (C) If the Governors exercise any power under subparagraph 
(A) or (B), the Governors shall notify the Inspector General in 
writing of the reasons for the exercise of such power. Not 
later than 30 days after receipt of any such notice, the 
Inspector General shall transmit a copy of the notice to the 
Committee on Homeland Security and Governmental Affairs of the 
Senate and the Committee on Oversight and Government Reform of 
the House of Representatives, and to other appropriate 
committees or subcommittees of the Congress.
    (2) In carrying out the duties and responsibilities 
specified in this Act, the Inspector General--
          (A) may initiate, conduct, and supervise such audits 
        and investigations of the United States Postal Service 
        as the Inspector General considers appropriate; and
          (B) shall give particular regard to the activities of 
        the Postal Inspection Service with a view toward 
        avoiding duplication and ensuring effective 
        coordination and cooperation.
    (3) 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 7-day 
period specified under that section, to the Committee on 
Homeland Security and Governmental Affairs of the Senate and 
the Committee on Oversight and Government Reform of the House 
of Representatives.
    (d) 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 (29 U.S.C. 
151 et seq.), 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.'';

           *       *       *       *       *       *       *


Sec. 12. Definitions

    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, Small 
        Business, or Veterans' Affairs; the Administrator 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 
        Director of the Federal Housing Finance Agency; the 
        Board of Directors of the Tennessee Valley Authority; 
        the President of the Export-Import Bank; [or the 
        Federal Cochairpersons of the Commissions established 
        under section 15301 of title 40, United States Code] 
        the Federal Cochairpersons of the Commissions 
        established under section 15301 of title 40, United 
        States Code; or the Board of Governors of the United 
        States Postal Service; 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, the Veterans' Administration, the 
        Social Security Administration, the Federal Housing 
        Finance Agency, the Tennessee Valley Authority, the 
        Export-Import Bank, [or the Commissions established 
        under section 15301 of title 40, United States Code] 
        the Commissions established under section 15301 of 
        title 40, United States Code, or the United States 
        Postal Service, as the case may be;

           *       *       *       *       *       *       *

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              TITLE 18--CRIMES AND CRIMINAL PROCEDURE\83\

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    \83\These amendments to title 18, United States Code, are made by 
section 303(a) of the bill.

           *       *       *       *       *       *       *


           *       *       *       *       *       *       *

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PART I--CRIMES

           *       *       *       *       *       *       *



CHAPTER 53--INDIANS

           *       *       *       *       *       *       *



Sec. 1161. Application of Indian liquor laws

    The provisions of sections 1154, 1156, 3113, 3488, and 
3669, of this title, shall not apply within any area that is 
not Indian country, nor to any act or transaction within any 
area of Indian country provided such act or transaction is in 
conformity both with the laws of the State in which such act or 
transaction occurs and with an ordinance duly adopted by the 
tribe having jurisdiction over such area of Indian country, 
certified by the Secretary of the Interior, and published in 
the Federal Register, and, with respect to the mailing of 
distilled spirits, wine, or malt beverages (as those terms are 
defined in section 117 of the Federal Alcohol Administration 
Act (27 U.S.C. 211)), is in conformity with section 3001(p) of 
title 39.

           *       *       *       *       *       *       *


CHAPTER 83--POSTAL SERVICE

           *       *       *       *       *       *       *



Sec. 1716. Injurious articles as nonmailable

    (a) * * *

           *       *       *       *       *       *       *

    (f) All spirituous, vinous, malted, fermented, or other 
intoxicating liquors of any kind are nonmailable and shall not 
be deposited in or carried through the [mails] mails, except to 
the extent that the mailing is allowable under section 3001(p) 
of title 39.

           *       *       *       *       *       *       *

                              ----------                              


TITLE 31--MONEY AND FINANCE

           *       *       *       *       *       *       *



Subtitle II--The Budget Process

           *       *       *       *       *       *       *



CHAPTER 15--APPROPRIATION ACCOUNTING

           *       *       *       *       *       *       *


Sec.
1501. Documentary evidence requirement for Government obligations.
     * * * * * * *
1537. Services between the United States Government and the District of 
          Columbia government.
1538. Authorization for assisted reemployment.

           *       *       *       *       *       *       *


Subchapter III--Transfers and Reimbursements

           *       *       *       *       *       *       *



Sec. 1538. Authorization for assisted reemployment\84\
---------------------------------------------------------------------------

    \84\This new section 31 U.S.C. Sec. 1538 is added by section 505(e) 
of the bill.
---------------------------------------------------------------------------
    Funds may be transferred from the Employees' Compensation 
Fund established under section 8147 of title 5 to the 
applicable appropriations account for an agency or 
instrumentality of any branch of the Federal Government for the 
purposes of reimbursing the agency or instrumentality in 
accordance with an assisted reemployment agreement entered into 
under section 8104 of title 5.

           *       *       *       *       *       *       *

                              ----------                              


TITLE 39--POSTAL SERVICE

           *       *       *       *       *       *       *



PART I--GENERAL

           *       *       *       *       *       *       *



CHAPTER 1--POSTAL POLICY AND DEFINITIONS

           *       *       *       *       *       *       *



Sec. 102. Definitions\85\
---------------------------------------------------------------------------

    \85\In 39 U.S.C. Sec. 102, the amendment to paragraph (3) is made 
by section 401(d) of the bill, and the amendment to paragraph (4) is 
made by section 406(b)(1) of the bill.
---------------------------------------------------------------------------
    As used in this title--
          (1) * * *

           *       *       *       *       *       *       *

          (3) ``Governors'' means the [9] 8 members of the 
        Board of Governors appointed by the President, by and 
        with the advice and consent of the Senate, under 
        section [202(a)] 202(b)(1)(C) of this title.
          (4) ``Inspector General'' means the Inspector General 
        appointed under [section 202(e) of this title] section 
        3 of the Inspector General Act of 1978 (5 U.S.C. App.);

           *       *       *       *       *       *       *


                        CHAPTER 2--ORGANIZATION

Sec.
201. United States Postal Service
     * * * * * * *
208. Reservation of powers.
209. Chief Innovation Officer

           *       *       *       *       *       *       *


[Sec. 202. Board of Governors\86\
---------------------------------------------------------------------------

    \86\This amendment to 39 U.S.C. Sec. 202 is made by section 401(a) 
of the bill.
---------------------------------------------------------------------------
    [(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 represent the public 
interest generally, and shall be chosen solely on the basis of 
their experience in the field of public service, law or 
accounting or on their demonstrated ability in managing 
organizations or corporations (in either the public or private 
sector) of substantial size; except that 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) that employ 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 7 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) No person may serve more than 2 terms as a Governor.
    [(c) The Governors shall appoint and shall have the power 
to remove the Postmaster General, who shall be a voting member 
of the Board. His pay and term of service shall be fixed by the 
Governors.
    [(d) The Governors and the Postmaster General shall appoint 
and shall have the power to remove the Deputy Postmaster 
General, who shall be a voting member of the Board. His term of 
service shall be fixed by the Governors and the Postmaster 
General and his pay by the Governors.
    [(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.]

Sec. 202. Board of Governors

    (a) In General.--The exercise of the power of the Postal 
Service shall be directed by a Board of Governors composed of 9 
members appointed in accordance with this section, each of whom 
shall be a voting member of the Board.
    (b) Membership.--
          (1) Composition.--The Board shall be composed of--
                  (A) the Postmaster General; and
                  (B) 8 members, to be known as Governors, who 
                shall be appointed by the President, by and 
                with the advice and consent of the Senate.
          (2) Affiliation.--Not more than 4 of the Governors 
        may be members of any 1 political party.
          (3) Chairperson.--The Governors shall elect a 
        Chairperson from among the members of the Board.
    (c) Qualifications.--
          (1) In general.--The Governors shall represent the 
        public interest generally, and shall be chosen solely 
        on the basis of experience in public service, law, or 
        accounting, or on a demonstrated ability to manage 
        organizations or corporations (in either the public or 
        private sector) of substantial size.
          (2) No specific interest.--A Governor may not be a 
        representative of a specific interest using the Postal 
        Service.
          (3) Initial appointments.--At least 1 of the 
        Governors who is appointed to fill a position that is 
        vacant on the date of enactment of the Postal Reform 
        Act of 2014 shall, in addition to the qualifications 
        set forth in paragraph (1), be appointed based on the 
        demonstrated ability of that individual to manage and 
        improve financially troubled organizations.
    (d) Removal.--A Governor may be removed only for cause.
    (e) Compensation.--
          (1) Salary.--Each Governor shall receive a salary of 
        $30,000 each year, plus $300 for each day, for not more 
        than 42 days, on which the Governor attends a meeting 
        of the Board. Nothing in this paragraph shall be 
        construed to limit the number of days of meetings each 
        year to 42 days.
          (2) Reimbursement for meetings.--Each Governor shall 
        be reimbursed for travel and reasonable expenses 
        incurred in attending meetings of the Board.
    (f) Terms.--
          (1) In general.--Each Governor shall serve for a term 
        of 7 years.
          (2) Vacancies.--A Governor appointed to fill a 
        vacancy occurring before the expiration of the term to 
        which the predecessor of that Governor was appointed 
        shall serve for the remainder of that term.
          (3) Continuation of service.--A Governor may continue 
        to serve after the expiration of the term of that 
        Governor until a successor has been appointed, except 
        that a Governor may not continue to serve for more than 
        1 year after the date on which the term of that 
        Governor would have otherwise expired.
          (4) Limit.--A Governor may serve for not more than 2 
        terms.
    (g) Postmaster General.--
          (1) Appointment and removal.--The Governors shall 
        appoint and shall have the power to remove the 
        Postmaster General.
          (2) Pay and term of service.--The pay and term of 
        service of the Postmaster General shall be determined 
        by the Governors.
    (h) Deputy Postmaster General.--
          (1) Appointment and removal.--The Governors and the 
        Postmaster General shall appoint and shall have the 
        power to remove the Deputy Postmaster General.
          (2) Pay.--The pay of the Deputy Postmaster General 
        shall be determined by the Governors.
          (3) Term of service.--The term of service of the 
        Deputy Postmaster General shall be determined by the 
        Governors and the Postmaster General.
    (i) Executive Committee.--
          ``(1) Authority to establish.--The Board, by a vote 
        of a majority of its members, may establish an 
        Executive Committee of the Board, consistent with 
        paragraph (2).
          ``(2) Board membership and responsibilities.--If 
        established by the Board, the Executive Committee 
        shall--
                  (A) be composed of the Chairperson of the 
                Board and 2 additional Governors designated by 
                the Board, except that not more than 2 members 
                of the Executive Committee may be members of 
                any 1 political party;
                  (B) develop and oversee implementation of 
                strategies and measures to ensure the long-term 
                financial solvency of the Postal Service;
                  (C) develop and oversee the implementation of 
                the financial plan and budget required under 
                section 403 of the Postal Reform Act of 2014 
                and updates to the financial plan and budget;
                  (D) make recommendations to the Board 
                regarding aspects of postal operations; and
                  (E) assume such other responsibilities as the 
                Board determines appropriate.
          (3) Quorum.--2 members of the Executive Committee 
        shall constitute a quorum for the transaction of 
        business by the Executive Committee.
          (4) Termination.--The Executive Committee may be 
        terminated by a vote of the majority of the members of 
        the Board.

           *       *       *       *       *       *       *


Sec. 203. Postmaster General; Deputy Postmaster General\87\
---------------------------------------------------------------------------

    \87\This amendment to 39 U.S.C. Sec. 203 is made by section 
401(d)(2) of the bill.
---------------------------------------------------------------------------
    The chief executive officer of the Postal Service is the 
Postmaster General appointed under section [202(c)] 202(g) of 
this title. The alternate chief executive officer of the Postal 
Service is the Deputy Postmaster General appointed under 
section [202(d)] 202(h) of this title.

           *       *       *       *       *       *       *


Sec. 205. Procedures of the Board of Governors\88\
---------------------------------------------------------------------------

    \88\This amendment to 39 U.S.C. Sec. 205 is made by section 401(b) 
of the bill.
---------------------------------------------------------------------------
    (a) * * *

           *       *       *       *       *       *       *

    (c) The Board shall act upon majority vote of those members 
who are present, and any [6 members] 5 members present shall 
constitute a quorum for the transaction of business by the 
Board, except--

           *       *       *       *       *       *       *


Sec. 209. Chief innovation officer\89\
---------------------------------------------------------------------------

    \89\This new 39 U.S.C. Sec. 209 is added by section 404(a) of the 
bill.
---------------------------------------------------------------------------
    (a) Establishment.--There shall be in the Postal Service a 
Chief Innovation Officer appointed by the Postmaster General.
    (b) Qualifications.--The Chief Innovation Officer shall 
have proven expertise and a record of accomplishment in areas 
such as--
          (1) the postal and shipping industry;
          (2) innovative product research and development;
          (3) brand marketing strategy;
          (4) new and emerging technology, including 
        communications technology; or
          (5) business process management.
    (c) Duties.--The Chief Innovation Officer shall lead the 
development and implementation of--
          (1) innovative postal products and services, 
        particularly products and services that use new and 
        emerging technology, including communications 
        technology, to improve the net financial position of 
        the Postal Service; and
          (2) nonpostal services authorized under section 
        404(a)(6) that have the potential to improve the net 
        financial position of the Postal Service.
    (d) Deadline.--The Postmaster General shall appoint a Chief 
Innovation Officer not later than 90 days after the date of 
enactment of the Postal Reform Act of 2014.

           *       *       *       *       *       *       *


                      CHAPTER 4--GENERAL AUTHORITY

Sec.
401. General powers of the Postal Service.
     * * * * * * *
416. Authority to issue semipostals.
417. Postal Service contracts and congressional oversight authority.
     * * * * * * *

Sec. 404. Specific powers\90\
---------------------------------------------------------------------------

    \90\In 39 U.S.C. Sec. 404, the amendments to subsection (a) are 
made by section 302(a)(1)(A) of the bill, the amendments to subsection 
(d) are made by section 203 of the bill, the amendments to subsection 
(e) are made by sections 302(a)(1)(B) and (c)(1) of the bill, the new 
subsection (f) is added by section 202(b) of the bill, the new 
subsections (g) and (h) are added by section 302(1)(c) of the bill, and 
the new subsection (i) is added by section 201(c)(2) of the bill.
---------------------------------------------------------------------------
    (a) * * *
          (1) * * *

           *       *       *       *       *       *       *

          (6) on and after the date of enactment of the Postal 
        Reform Act of 2014, except as provided in subsection 
        (e) and subject to subsection (h)--
                  (A) to provide other services that are not 
                postal services, if the provision of such 
                services--
                          (i) uses the processing, 
                        transportation, delivery, retail 
                        network, or technology of the Postal 
                        Service;
                          (ii) is consistent with the public 
                        interest and demonstrated likely public 
                        demand for--
                                  (I) the Postal Service, 
                                rather than another entity, to 
                                provide the services; or
                                  (II) the Postal Service, in 
                                addition to or in partnership 
                                with another entity, to provide 
                                the services;
                          (iii) would not create unfair 
                        competition with the private sector, 
                        taking into consideration the extent to 
                        which the Postal Service will not, 
                        either by legal obligation or 
                        voluntarily, comply with any State or 
                        local laws or requirements generally 
                        applicable to the provision of such 
                        services;
                          (iv) does not unreasonably interfere 
                        with or detract from the value of 
                        postal services, including--
                                  (I) the cost and efficiency 
                                of postal services; and
                                  (II) access to postal retail 
                                service;
                          (v) will be undertaken in accordance 
                        with all Federal laws and regulations 
                        applicable to the provision of such 
                        services; and
                          (vi) is reasonably expected to 
                        improve the net financial position of 
                        the Postal Service, based on a market 
                        analysis conducted by or on behalf of 
                        the Postal Service; and
                  (B) to classify a service provided under 
                subparagraph (A) as an experimental product 
                subject to section 3641;
          [(6)](7) to investigate postal offenses and civil 
        matters relating to the Postal Service;
          [(7)](8) 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
          [(8)](9) to authorize the issuance of a substitute 
        check for a lost, stolen, or destroyed check of the 
        Postal Service.

           *       *       *       *       *       *       *

    [(d)(1) The Postal Service, prior to making a determination 
under subsection (a)(3) of this section as to the necessity for 
the closing or consolidation of any post office, shall provide 
adequate notice of its intention to close or consolidate such 
post office at least 60 days prior to the proposed date of such 
closing or consolidation to persons served by such post office 
to ensure that such persons will have an opportunity to present 
their views.
    [(2) The Postal Service, in making a determination whether 
or not to close or consolidate a post office--
          [(A) shall consider--
                  [(i) the effect of such closing or 
                consolidation on the community served by such 
                post office;
                  [(ii) the effect of such closing or 
                consolidation on employees of the Postal 
                Service employed at such office;
                  [(iii) whether such closing or consolidation 
                is consistent with the policy of the 
                Government, as stated in section 101(b) of this 
                title, that the Postal Service shall provide a 
                maximum degree of effective and regular postal 
                services to rural areas, communities, and small 
                towns where post offices are not self-
                sustaining;
                  [(iv) the economic savings to the Postal 
                Service resulting from such closing or 
                consolidation; and
                  [(v) such other factors as the Postal Service 
                determines are necessary; and
          [(B) may not consider compliance with any provision 
        of the Occupational Safety and Health Act of 1970 (29 
        U.S.C. 651 et seq.).
    [(3) Any determination of the Postal Service to close or 
consolidate a post office shall be in writing and shall include 
the findings of the Postal Service with respect to the 
considerations required to be made under paragraph (2) of this 
subsection. Such determination and findings shall be made 
available to persons served by such post office.
    [(4) The Postal Service shall take no action to close or 
consolidate a post office until 60 days after its written 
determination is made available to persons served by such post 
office.]
    (d) Discontinuance of Post Offices.--
          (1) Definitions.--In this subsection--
                  (A) the term ``discontinuance'' has the 
                meaning given the term in section 241.3 of 
                title 39, Code of Federal Regulations, as in 
                effect on November 1, 2013;
                  (B) the term ``local government'' means--
                          (i) a county, municipality, city, 
                        town, township, local public authority, 
                        special district, intrastate district, 
                        council of government, or regional or 
                        interstate government entity;
                          (ii) an agency or instrumentality of 
                        an entity described in clause (i); or
                          (iii) a rural community, an 
                        unincorporated town or village, or an 
                        instrumentality of a rural community or 
                        an unincorporated town or village;
                  (C) the term ``post office'' means a post 
                office, post office branch, post office 
                classified station, or other facility that is 
                operated by the Postal Service, the primary 
                function of which is to provide retail postal 
                services; and
                  (D) the term ``rural post office'' means a 
                post office that is--
                          (i) in a rural area, as defined by 
                        the Census Bureau; and
                          (ii) within the K or L cost 
                        ascertainment grouping, as classified 
                        by the Postal Service.
          (2) Preliminary considerations.--The Postal Service, 
        prior to making a determination under subsection (a)(3) 
        of this section as to the necessity for the 
        discontinuance of any post office, and, with respect to 
        a determination to discontinue a rural post office, 
        prior to making the determinations required under 
        paragraph (5), shall--
                  (A) consider whether--
                          (i) to discontinue the post office 
                        and combine it with another post office 
                        located within a reasonable distance;
                          (ii) instead of discontinuing the 
                        post office--
                                  (I) to reduce the number of 
                                hours a day that the post 
                                office operates; or
                                  (II) to continue operating 
                                the post office for the same 
                                number of hours a day;
                          (iii) to procure a contract providing 
                        full, or less than full, retail postal 
                        services in the community served by the 
                        post office; or
                          (iv) to provide postal services to 
                        the community served by the post 
                        office--
                                  (I) through a letter carrier 
                                or by Alternate Means of 
                                Transportation delivery 
                                contract;
                                  (II) by colocating postal 
                                services at a commercial or 
                                government entity; or
                                  (III) by implementing an 
                                alternative proposal made by a 
                                local government under 
                                subparagraph (B)(iii);
                  (B) provide--
                          (i) relevant information on financial 
                        costs associated with the operations of 
                        the post office to postal customers and 
                        local governments served by the post 
                        office;
                          (ii) postal customers served by the 
                        post office an opportunity to present 
                        their views, which may be by nonbinding 
                        survey conducted by mail; and
                          (iii) local governments served by the 
                        post office an opportunity to present 
                        alternative proposals for providing 
                        postal services to the community; and
                  (C) if the Postal Service determines to 
                discontinue the post office, provide adequate 
                public notice of its intention to discontinue 
                the post office at least 60 days prior to the 
                proposed date of the discontinuance to persons 
                and local governments served by the post 
                office.
          (3) Considerations.--The Postal Service, in making a 
        determination whether or not to discontinue a post 
        office--
                  (A) shall consider--
                          (i) the effect of the discontinuance 
                        on the community served by the post 
                        office;
                          (ii) the effect of the discontinuance 
                        on businesses, including small 
                        businesses, in the area;
                          (iii) the effect of the 
                        discontinuance on employees of the 
                        Postal Service employed at the post 
                        office;
                          (iv) whether the discontinuance would 
                        have a significant adverse effect on 
                        regular postal services to rural areas, 
                        communities, and small towns where post 
                        offices are not self-sustaining;
                          (v) the extent to which the community 
                        served by the post office lacks access 
                        to Internet, broadband, or cellular 
                        telephone service;
                          (vi) the extent to which postal 
                        customers served by the post office 
                        would continue after the discontinuance 
                        to receive substantially similar access 
                        to essential items, such as 
                        prescription drugs and time-sensitive 
                        communications;
                          (vii) the proximity and accessibility 
                        of other post offices;
                          (viii) whether substantial economic 
                        savings to the Postal Service would 
                        result from the discontinuance; and
                          (ix) any other factors that the 
                        Postal Service determines are 
                        necessary; and
                  (B) may not consider compliance with any 
                provision of the Occupational Safety and Health 
                Act of 1970 (29 U.S.C. 651 et seq.).
          (4) Written determination and findings.--
                  (A) In general.--Any determination of the 
                Postal Service to discontinue a post office 
                shall--
                          (i) be in writing;
                          (ii) include the findings of the 
                        Postal Service with respect to the 
                        considerations required to be made 
                        under paragraph (3); and
                          (iii) with respect to a determination 
                        to discontinue a rural post office, 
                        include a summary of the determinations 
                        required under paragraph (5).
                  (B) Availability of findings.--The Postal 
                Service shall make available, to persons served 
                by a post office that the Postal Service 
                determines to discontinue, any determination 
                and findings under subparagraph (A) with 
                respect to that post office.
                  (C) Notice before discontinuance.--The Postal 
                Service may not take any action to discontinue 
                a post office until 60 days after the date on 
                which the Postal Service makes available, to 
                persons served by the post office, the written 
                determination and findings with respect to the 
                post office as required under subparagraph (B).
          (5) Rural post offices.--
                  (A) Moratorium on discontinuance of rural 
                post offices.--The Postal Service may not 
                discontinue a rural post office during the 1-
                year period beginning on the date of enactment 
                of the Postal Reform Act of 2014.
                  (B) Requirements for discontinuance of rural 
                post offices.--The Postal Service may not make 
                a determination under subsection (a)(3) to 
                discontinue a rural post office unless the 
                Postal Service--
                          (i)(I) determines that postal 
                        customers served by the post office 
                        would continue after the discontinuance 
                        to receive substantially similar access 
                        to essential items, such as 
                        prescription medications and time-
                        sensitive communications, that are sent 
                        through the mails; or
                          (II) takes action to substantially 
                        ameliorate any projected reduction in 
                        access to essential items described in 
                        subclause (I); and
                          (ii) determines that--
                                  (I) there is unlikely to be 
                                substantial economic loss to 
                                the community served by the 
                                post office as a result of the 
                                discontinuance;
                                  (II) the area served by the 
                                post office has adequate access 
                                to broadband Internet service, 
                                as identified on the National 
                                Broadband Map of the National 
                                Telecommunications and 
                                Information Administration; and
                                  (III) there is a road with 
                                year-round access connecting 
                                the community to another post 
                                office that is within 10 miles 
                                from the post office proposed 
                                to be discontinued.
                  (C) Study and report.--
                          (i) Study.--The Inspector General 
                        shall conduct a study after the 
                        discontinuance of a rural post office 
                        under this section, which shall 
                        include--
                                  (I) the actual cost savings 
                                resulting from the 
                                discontinuance; and
                                  (II) a comparison between the 
                                findings described in subclause 
                                (I) and the cost savings that 
                                the Postal Service predicted 
                                would result from the 
                                discontinuance.
                          (ii) Report.--Not later than 2 years 
                        after the date of the discontinuance of 
                        a rural post office under this section, 
                        the Inspector General shall submit a 
                        report on the findings of the study 
                        conducted under clause (i) with respect 
                        to the rural post office to--
                                  ``(I) the Postal Regulatory 
                                Commission;
                                  ``(II) the Board of 
                                Governors;
                                  ``(III) the Committee on 
                                Homeland Security and 
                                Governmental Affairs of the 
                                Senate;
                                  ``(IV) the Committee on 
                                Oversight and Government Reform 
                                of the House of 
                                Representatives;
                                  ``(V) the Member of the House 
                                of Representatives in whose 
                                district the rural post office 
                                was located; and
                                  ``(VI) the Senators in whose 
                                State the rural post office was 
                                located.
                          ``(iii) Sunset.--This subparagraph is 
                        repealed effective 10 years after the 
                        date of enactment of the Postal Reform 
                        Act of 2014.
          (6) Reductions in hours of operation.--
                  (A) Considerations.--The Postal Service, 
                prior to making a determination under paragraph 
                (2)(A)(ii)(I) to reduce the number of hours per 
                day that a post office operates, shall 
                consider--
                          (i) the impact of the proposed 
                        reduction in hours on local businesses;
                          (ii) the effect of the proposed 
                        reduction in hours on the community 
                        served by the post office;
                          (iii) the ability of the Postal 
                        Service to hire qualified employees to 
                        operate the post office during the 
                        reduced hours;
                          (iv) the proximity and accessibility 
                        of other post offices within 15 miles 
                        of the post office, and the hours those 
                        post offices are open;
                          (v) the impact of the proposed 
                        reduction in hours on the elderly and 
                        other vulnerable populations; and
                          (vi) the impact of alternative 
                        schedules on the community served by 
                        the post office, including 
                        consideration of which schedules would 
                        most effectively mitigate any negative 
                        impacts identified under clauses (i) 
                        through (v).
                  (B) Findings.--If the Postal Service 
                determines, after considering the factors under 
                subparagraph (A), to reduce the number of hours 
                per day that a post office operates, the Postal 
                Service shall make available to persons served 
                by the post office--
                          (i) a summary of the findings of the 
                        Postal Service under subparagraph (A);
                          (ii) the hours during which the post 
                        office will be open; and
                          (iii) an explanation of the change in 
                        hours referred to in clause (ii).
          [(5) A determination]
          (7) Appeals._A determination of the Postal Service to 
        [close or consolidate] discontinue any post office may 
        be appealed by any person served by such office to the 
        Postal Regulatory Commission within 30 days after such 
        determination is made available to such person [under 
        paragraph (3)] under paragraph (4). 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) * * *
                  [(B) * * *
                  [(C) * * *]
                  (A) * * *
                  (B) * * *
          (C) * * *
    [The * * *]
    The * * *
          [(6) For purposes of paragraph (5)]
          (8) Date of receipt of appeals._For purposes of 
        paragraph (7), any appeal received by the Commission 
        shall--
                  [(A) * * *
                  [(B) * * *]
                  (A) * * *
                  (B) * * *
          (9) Minimum retail standards._The Postal Service 
        shall establish minimum standards for retail postal 
        services.
    [(e)(1) In this] (e) Previously Offered Nonpostal 
Services.--
          (1) Definition._In this subsection, the term 
        ``nonpostal service'' means any service that is not a 
        postal service defined under section 102(5) and that 
        was offered by the Postal Service on the date of 
        enactment of the Postal Reform Act of 2014.
    [(2) Nothing]
          (2) Eligible nonpostal services._Nothing in this 
        section shall be considered to permit or require that 
        the Postal Service provide any nonpostal service, 
        except that the Postal Service may provide nonpostal 
        services which were offered as of January 1, 2006, as 
        provided under this subsection.
    [(3) Not]
          (3) Review of nonpostal services._Not later than 2 
        years after the date of enactment of the Postal 
        Accountability and Enhancement Act, the Postal 
        Regulatory Commission shall review each nonpostal 
        service offered by the Postal Service on the date of 
        enactment of that Act and determine whether that 
        nonpostal service shall continue, taking into account--
          [(A) * * *
          [(B) * * *]
                  (A) * * *
                  (B) * * *
    [(4) Any]
          (4) Termination._Any nonpostal service not determined 
        to be continued by the Postal Regulatory Commission 
        under paragraph (3) shall terminate.
    [(5) If the Postal Regulatory Commission authorizes the 
Postal Service to continue a nonpostal service under this 
subsection, the Postal Regulatory Commission shall designate 
whether the service shall be regulated under this title as a 
market dominant product, a competitive product, or an 
experimental product.]
          (5) Designation.--Each nonpostal service authorized 
        under this subsection shall be designated as market-
        dominant or competitive based on the designation of the 
        nonpostal service in the Mail Classification Schedule 
        as in effect on the date of enactment of the Postal 
        Reform Act of 2014.
          (6) Rule of construction.--Nothing in this subsection 
        shall be construed to prevent the Postal Service from 
        providing nonpostal services under subsection (a)(6).
    (f) Closing or Consolidation of Certain Postal 
Facilities.--
          (1) Definition.--In this subsection, the term 
        ``postal facility'' means a processing and distribution 
        center, processing and distribution facility, network 
        distribution center, or other facility that is operated 
        by the Postal Service, the primary function of which is 
        to sort and process mail.
          (2) Area mail processing studies.--
                  (A) Applicability.--In this paragraph--
                          (i) the term ``area mail processing 
                        study'' means an area mail processing 
                        feasibility study described in section 
                        2-1 of Handbook PO-408 of the Postal 
                        Service, entitled ``Area Mail 
                        Processing Guidelines'', as in effect 
                        on October 1, 2013;
                          (ii) the term ``closing'', with 
                        respect to a covered postal facility, 
                        means the transfer of all incoming and 
                        outgoing mail sortation and processing 
                        operations of the covered postal 
                        facility to a different covered postal 
                        facility;
                          (iii) the term ``consolidate'', with 
                        respect to a covered postal facility, 
                        means the transfer of either all 
                        incoming or all outgoing mail sortation 
                        and processing operations of the 
                        covered postal facility to a different 
                        covered postal facility; and
                          (iv) the term ``covered postal 
                        facility'' means a postal facility, the 
                        primary function of which is to sort 
                        and process first-class mail 
                        originating or designating within a 
                        defined geographic area.
                  (B) New area mail processing studies.--Before 
                making a determination under subsection (a)(3) 
                as to the necessity for the closing or 
                consolidation of a covered postal facility, the 
                Postal Service shall--
                          (i) conduct an area mail processing 
                        study relating to the covered postal 
                        facility that includes consideration of 
                        a plan to reduce the capacity of the 
                        covered postal facility without closing 
                        the covered postal facility; and
                          (ii) upon completing the study under 
                        clause (i)--
                                  (I) publish the results of 
                                the study on the website of the 
                                Postal Service; and
                                  (II) publish a notice that 
                                the study is complete and the 
                                results of the study are 
                                available to the public, 
                                including on the website of the 
                                Postal Service.
                  (C) Completed or ongoing area mail processing 
                studies.--
                          (i) In general.--In the case of a 
                        covered postal facility described in 
                        clause (ii), the Postal Service shall--
                                  (I) consider a plan to reduce 
                                the capacity of the covered 
                                postal facility without closing 
                                the covered postal facility; 
                                and
                                  (II) publish the results of 
                                the consideration under 
                                subclause (I) with or as an 
                                amendment to the area mail 
                                processing study relating to 
                                the covered postal facility.
                          (ii) Postal facilities.--A covered 
                        postal facility described in this 
                        clause is a covered postal facility--
                                  (I) for which, as of the date 
                                of enactment of this 
                                subsection, an area mail 
                                processing study--
                                          (aa) has been 
                                        completed but does not 
                                        include a plan to 
                                        reduce the capacity of 
                                        the covered postal 
                                        facility without 
                                        closing the covered 
                                        postal facility; or
                                          (bb) is in progress; 
                                        and
                                  (II) which, as of the date of 
                                enactment of this subsection, 
                                has not been closed or 
                                consolidated.
          (3) Notice, public comment, and public hearing.--If 
        the Postal Service makes a determination under 
        subsection (a)(3) to close or consolidate a postal 
        facility, the Postal Service shall--
                  (A) provide notice of the determination to--
                          (i) Congress; and
                          (ii) the Postal Regulatory 
                        Commission;
                  (B) provide adequate public notice of the 
                intention of the Postal Service to close or 
                consolidate the postal facility;
                  (C) ensure that interested persons have an 
                opportunity to submit public comments during a 
                45-day period after the Postal Service provides 
                the notice of intention under subparagraph (B);
                  (D) before the 45-day period described in 
                subparagraph (C), provide public notice of the 
                opportunity under subparagraph (C) to submit 
                public comments during that period by--
                          (i) publication on the website of the 
                        Postal Service;
                          (ii) posting at the affected postal 
                        facility; and
                          (iii) publicizing the date and 
                        location of the public community 
                        meeting under subparagraph (E); and
                  (E) during the 45-day period described in 
                subparagraph (C), conduct a public meeting that 
                provides an opportunity for comments to be 
                submitted verbally or in writing.
          (4) Further considerations.--The Postal Service, in 
        making a determination under subsection (a)(3) to close 
        or consolidate a postal facility, shall consider--
                  (A) the views presented by interested persons 
                under paragraph (3);
                  (B) the effect of the closing or 
                consolidation on the affected community, 
                including the impact the closing or 
                consolidation may have on a State, region, or 
                locality;
                  (C) the effect of the closing or 
                consolidation on the travel times and distances 
                for affected customers to access services under 
                the proposed closing or consolidation;
                  (D) the effect of the closing or 
                consolidation on delivery times for all classes 
                of mail and packages;
                  (E) any characteristics of certain 
                geographical areas, such as remoteness, 
                broadband internet availability with a lower 
                rates of access than the average rate of access 
                in other geographical areas of the United 
                States, and weather-related obstacles, that may 
                result in the closing or consolidation having a 
                unique effect;
                  (F) the effect of the closing or 
                consolidation on small businesses in the area, 
                including shipping and communications with 
                customers and suppliers and the corresponding 
                impact on revenues, operations, and growth;
                  (G) the extent to which significant changes 
                in delivery service resulting from the closure 
                or consolidation of the postal facility would 
                affect the ability of individuals and 
                businesses in the region served by the postal 
                facility to participate in the national 
                economy;
                  (H) the ability of the Postal Service to 
                maintain a safe working environment at each 
                postal facility that, as a result of the 
                closing or consolidation, would process the 
                mail that had been processed by the closed or 
                consolidated postal facility, including by 
                examining--
                          (i) the capacity of each affected 
                        postal facility to process a greater 
                        volume of mail;
                          (ii) the ability of the workforce at 
                        each affected postal facility to handle 
                        a larger workload; and
                          (iii) whether the Postal Service 
                        would need to hire additional employees 
                        at affected postal facilities to 
                        process the increased volume of mail;
                  (I) the extent to which the Postal Service 
                can take action to mitigate significant 
                negative impacts identified through the 
                considerations under this paragraph; and
                  (J) any other factor the Postal Service 
                determines is necessary.
          (5) Notice of final determination; justification 
        statement.--If the Postal Service determines to close 
        or consolidate a postal facility, the Postal Service 
        shall post on the website of the Postal Service--
                  (A) notice of the final determination to 
                close or consolidate the postal facility; and
                  (B) a closing or consolidation justification 
                statement that includes--
                          (i) a response to the public comments 
                        received with respect to the 
                        considerations described under 
                        paragraph (4);
                          (ii) a description of the 
                        considerations made by the Postal 
                        Service under paragraph (4); and
                          (iii) the actions that the Postal 
                        Service will take to mitigate any 
                        significant negative effects identified 
                        under paragraph (4).
          (6) Closing or consolidation of postal facilities.--
                  (A) In general.--Not earlier than 15 days 
                after the date on which the Postal Service 
                posts notice of a final determination and a 
                justification statement under paragraph (5) 
                with respect to a postal facility, the Postal 
                Service may close or consolidate the postal 
                facility.
                  (B) Alternative intake of mail.--If the 
                Postal Service closes or consolidates a postal 
                facility under subparagraph (A), the Postal 
                Service shall make reasonable efforts to ensure 
                continued mail receipt from customers of the 
                closed or consolidated postal facility at the 
                same location or at another appropriate 
                location in close geographic proximity to the 
                closed or consolidated postal facility.
          (7) Protection of certain information.--Nothing in 
        this subsection shall be construed to require the 
        Postal Service to disclose any--
                  (A) proprietary data;
                  (B) information relating to the security of a 
                postal facility; or
                  (C) information that is exempt from 
                disclosure under section 552 of title 5.
          (8) Postal regulatory commission appeals.--
                  (A) Right to appeal.--A determination of the 
                Postal Service to close or consolidate any 
                postal facility may be appealed by any person 
                served by the postal facility to the Postal 
                Regulatory Commission not later than 30 days 
                after the date on which the determination is 
                posted on the Postal Service website under 
                paragraph (5).
                  (B) Review based on record.--The Commission 
                shall review a determination appealed under 
                this paragraph on the basis of the record 
                before the Postal Service in the making of the 
                determination.
                  (C) Deadline for commission determination.--
                The Commission shall make a determination based 
                upon a review conducted under subparagraph (B) 
                not later than 90 days after the date on which 
                the Commission receives the appeal of the 
                determination under subparagraph (A).
                  (D) Bases for setting aside postal service 
                determinations.--In making a determination 
                under subparagraph (C), the Commission shall 
                set aside any determination, finding, or 
                conclusion of the Postal Service that the 
                Commission determines--
                          (i) is arbitrary, capricious, an 
                        abuse of discretion, or otherwise not 
                        in accordance with the law;
                          (ii) is without observance of the 
                        procedures required under this 
                        subsection or any other applicable law; 
                        or
                          (iii) is unsupported by substantial 
                        evidence on the record.
                  (E) Option to affirm or remand.--The 
                Commission--
                          (i) may affirm a determination of the 
                        Postal Service appealed under this 
                        paragraph or order that the entire 
                        matter be returned for further 
                        consideration; and
                          (ii) may not modify the determination 
                        of the Postal Service.
                  (F) Temporary suspension.--The Commission may 
                suspend the effectiveness of a determination of 
                the Postal Service appealed under this 
                paragraph until the final disposition of the 
                appeal.
                  (G) Applicability of other laws.--The 
                provisions of section 556, section 557, and 
                chapter 7 of title 5 shall not apply to any 
                review carried out by the Commission under this 
                paragraph.
                  (H) Date of receipt of appeal.--For purposes 
                of subparagraph (A), any appeal received by the 
                Commission shall--
                          (i) 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 the appeal is 
                        mailed; or
                          (ii) 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).
    (g) Treatment of New Nonpostal Services.--For purposes of 
chapters 20 and 36 of this title, nonpostal services provided 
under subsection (a)(6) shall be treated as competitive 
products.
    (h) Federal Regulation of New Nonpostal Services.--The 
Postal Service shall ensure that any nonpostal service provided 
under subsection (a)(6) that is otherwise subject to the 
jurisdiction and regulation of a Federal regulatory agency 
remains subject to the jurisdiction and regulation of the 
Federal regulatory agency notwithstanding the fact that the 
nonpostal service is provided by the Postal Service.
    (i) Alternative Means of Transportation Contracts.--
          (1) Definition.--In this subsection, the term 
        ``covered route'' means a route on which first-class 
        mail and periodicals are transported under an Alternate 
        Means of Transportation contract.
          (2) Requirements before changing to other means of 
        transportation. The Postal Service, prior to making a 
        determination under subsection (a)(1) to transport 
        first-class mail or periodicals on a covered route 
        using a means other than under an Alternate Means of 
        Transportation contract, shall consider--
                  (A) the effect of the change on--
                          (i) each community served by the 
                        covered route;
                          (ii) businesses, including small 
                        businesses, in the area served by the 
                        covered route; and
                          (iii) employees of the Postal Service 
                        involved in transportation on the 
                        covered route;
                  (B) whether the change is consistent with the 
                policy of the Government, as stated in section 
                101(b), that the Postal Service shall provide a 
                maximum degree of effective and regular postal 
                services to rural areas, communities, and small 
                towns where post offices are not self-
                sustaining;
                  (C) the extent to which each community served 
                by the covered route lacks access to Internet 
                service;
                  (D) the extent to which postal customers 
                served by the covered route would continue 
                after the change to receive substantially 
                similar access to essential items and time-
                sensitive communications;
                  (E) whether substantial economic savings to 
                the Postal Service would result from the 
                change;
                  (F) the average daily volume of mail 
                transported on the covered route;
                  (G) any change in the volume of mail 
                transported on the covered route during the 
                preceding 12 months;
                  (H) the capacity of available transportation 
                service providers to meet the volume needs of 
                the Postal Service on the covered route;
                  (I) the ability of the Postal Service to 
                procure and access additional transportation 
                capacity to meet the volume needs of the Postal 
                Service on the covered route;
                  (J) the impact of the change on postal 
                facilities (as that term is defined in 
                subsection (f)) that use the covered route;
                  (K) the ability of postal facilities 
                described in subparagraph (J) to continue to 
                provide service that complies with applicable 
                service standards after the change; and
                  (L) any other factors that the Postal Service 
                determines are necessary.
          (3) Determinations.--Any determination of the Postal 
        Service to transport first-class mail or periodicals on 
        a covered route using a means other than under an 
        Alternate Means of Transportation contract shall--
                  (A) be in writing;
                  (B) include the findings of the Postal 
                Service with respect to the considerations 
                required to be made under paragraph (2); and
                  (C) be made available by public notice to 
                persons served by the covered route.
          (4) Advance notice of determinations.--The Postal 
        Service shall take no action to transport first-class 
        mail or periodicals on a covered route using a means 
        other than under an Alternate Means of Transportation 
        contract until 60 days after the date on which the 
        Postal Service makes available to persons served by the 
        covered route a written determination under paragraph 
        (3).

Sec. 411. Cooperation with other Government agencies\91\
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    \91\These amendments to 39 U.S.C. Sec. 411 are made by section 
302(b) of the bill.
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    [Executive agencies] (a) Federal Government.--Executive 
agencies within the meaning of section 105 of title 5,and the 
Government Printing Office are authorized to furnish property, 
both real and personal, and personal and nonpersonal services 
to the Postal Service, and the Postal Service is authorized to 
furnish property and services to them. The furnishing of 
property and services under [this section] this subsection 
shall be under such terms and conditions, including 
reimbursability, as the Postal Service and the head of the 
agency concerned shall deem appropriate.
    (b) State, Local, and Tribal Governments.--
          (1) Authority of postal service.--The Postal Service 
        is authorized to furnish property and services to 
        States, local governments, and tribal governments, 
        under such terms and conditions, including the 
        possibility for reimbursement, as the Postal Service 
        and the applicable State, local government, or tribal 
        government shall determine appropriate.
          (2) Definitions.--For purposes of this subsection--
                  (A) the term ``local government'' means--
                          (i) a county, municipality, city, 
                        town, township, local public authority, 
                        school district, special district, 
                        intrastate district, council of 
                        governments, or regional or interstate 
                        government entity;
                          (ii) an agency or instrumentality of 
                        an entity described in clause (i); or
                          (iii) a rural community, an 
                        unincorporated town or village, or an 
                        instrumentality of a rural community or 
                        an unincorporated town or village;
                  (B) the term ``State'' includes the District 
                of Columbia, the Commonwealth of Puerto Rico, 
                the United States Virgin Islands, Guam, 
                American Samoa, the Commonwealth of the 
                Northern Mariana Islands, and any other 
                territory or possession of the United States; 
                and
                  (C) the term ``tribal government'' means the 
                government of an Indian tribe, as that term is 
                defined in section 4(e) of the Indian Self-
                Determination Act (25 U.S.C. 450b(e)).
    (c) Report.--The Postal Service shall submit to the Postal 
Regulatory Commission, together with the report required under 
section 3652, a report that details the costs and revenues of 
the property and services furnished by the Postal Service under 
this section during the period covered by the report required 
under section 3652.
    (d) Reimbursement Determination.--In determining the 
possibility for reimbursement under subsections (a) and (b), 
the Postal Service shall ensure that each property or service 
furnished under such subsections covers its costs attributable, 
as that term is defined in section 3631(b).

           *       *       *       *       *       *       *


Sec. 417. Postal Service contracts and congressional oversight 
                    authority\92\
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    \92\This new section 39 U.S.C. 417 is added by section 407 of the 
bill.
---------------------------------------------------------------------------
    The Postal Service may not enter into any contract that 
restricts the ability of Congress to exercise oversight 
authority.

           *       *       *       *       *       *       *


              CHAPTER 5--POSTAL REGULATORY COMMISSION\93\

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    \93\These amendments to 39 U.S.C. chapter 5 are made by section 
303(a) of the bill.

           *       *       *       *       *       *       *

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Sec. 502. Commissioners

    (a) * * *

           *       *       *       *       *       *       *

    (c) A Commissioner may continue to serve after the 
expiration of his term until his successor has qualified, 
except that a Commissioner may not so continue to serve for 
more than 1 year after the date upon which his term otherwise 
would expire under [subsection (f)] subsections (f) and (g).

           *       *       *       *       *       *       *

    (g) The Commissioners may serve for not more than 2 full 
terms.

           *       *       *       *       *       *       *


Sec. 504. Administration

    (a) The Chairman of the Postal Regulatory Commission shall 
be the principal executive officer of the Commission. [The 
Chairman] Subject to the policies adopted under subsection (b), 
the Chairman shall exercise or direct the exercise of [all the 
executive] the day-to-day 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.
    [(b) In carrying out any of his functions under this 
section, the Chairman shall be governed by the general policies 
of the Commission.]
    (b)(1) The Chairman shall be governed by the policies 
adopted by the Commission under paragraph (2)(A) in carrying 
out any of the functions under this section.
    (2) The Commission shall adopt, by a vote of the majority 
of the members of the Commission, policies that shall govern 
all functions of the Commission, including the finances, 
operations, and administration of the Commission.
    (3) The Commission shall review and, if necessary, revise 
the policies adopted under paragraph (2) not less frequently 
than every 4 years. Adoption of revised policies, or re-
adoption of existing policies, shall be by a vote of the 
majority of the members of the Commission.
    (c) [The Chairman] Subject to the policies adopted under 
subsection (b), the Chairman may obtain such facilities and 
supplies as may be necessary to permit the Commission to carry 
out its functions. Any officer or employee appointed under this 
section shall be paid at rates of compensation and shall be 
entitled to programs offering employee benefits established 
under chapter 10 or chapter 12 of this title, as appropriate.

           *       *       *       *       *       *       *


PART II--PERSONNEL

           *       *       *       *       *       *       *


CHAPTER 10--EMPLOYMENT WITHIN THE POSTAL SERVICE

           *       *       *       *       *       *       *



Sec. 1001. Appointment and status\94\
---------------------------------------------------------------------------

    \94\This amendment to 39 U.S.C. Sec. 1001 is made by section 
406(b)(2) of the bill.
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    (a) * * *
    (b) Officers and employees of the Postal Service (other 
than those individuals appointed under sections 202, 204, and 
1001(c) of this title, and section 3 of the Inspector General 
Act of 1978 (5 U.S.C. App.)) shall be in the postal career 
service, which shall be a part of the civil service. Such 
appointments and promotions shall be in accordance with the 
procedures established by the Postal Service. The Postal 
Service shall establish procedures, in accordance with this 
title, to assure its officers and employees meaningful 
opportunities for promotion and career development and to 
assure its officers and employees full protection of their 
employment rights by guaranteeing them an opportunity for a 
fair hearing on adverse actions, with representatives of their 
own choosing.

           *       *       *       *       *       *       *


Sec. 1004. Supervisory and other managerial 
                    organizations\95\
---------------------------------------------------------------------------

    \95\These amendment to 39 U.S.C. Sec. 1004 are made by section 108 
of the bill.
---------------------------------------------------------------------------
    (a) It shall be the policy of the Postal Service to provide 
compensation, working conditions, and career opportunities that 
will assure the attraction and retention of qualified and 
capable supervisory and other managerial personnel; to provide 
adequate and reasonable differentials in rates of pay and 
fringe benefits between employees in the clerk and carrier 
grades in the line work force and supervisory and other 
managerial personnel; to establish and maintain continuously a 
program for all such personnel that reflects the essential 
importance of a well-trained and well-motivated force to 
improve the effectiveness of postal operations; and to promote 
the leadership status of such personnel with respect to rank-
and-file employees, recognizing that the role of such personnel 
in primary level management is particularly vital to the 
process of converting general postal policies into successful 
postal operations.
    b) The Postal Service shall provide a program for 
consultation with recognized organizations of supervisory and 
other managerial personnel who are not subject to collective-
bargaining agreements under chapter 12 of this title. Upon 
presentation of evidence satisfactory to the Postal Service 
that a supervisory organization represents a majority of 
supervisors, that an organization (other than an organization 
representing supervisors) represents at least 20 percent of 
postmasters, or that a managerial organization (other than an 
organization representing supervisors or postmasters) 
represents a substantial percentage of managerial employees, 
such organization or organizations shall be entitled to 
participate directly in the planning and development of pay 
policies and schedules, fringe benefit programs, and other 
programs relating to supervisory and other managerial employees 
as provided under subsection (d) and any changes in, or 
termination of, pay policies and schedules and fringe benefit 
programs for members of the supervisors' organization as 
provided under subsection (e). Such pay policies and fringe 
benefit programs shall reflect adequate differentials in rates 
of pay and fringe benefits as provided under subsection (a).

           *       *       *       *       *       *       *

    (e)(1) The Postal Service shall, within 45 days of each 
date on which an agreement is reached on a collective 
bargaining agreement between the Postal Service and the 
bargaining representative recognized under section 1203 of this 
title which represents the largest number of employees, make a 
proposal for any changes in, or termination of, pay policies 
and schedules and fringe benefit programs for members of the 
supervisors' organization which are to be in effect during the 
same period as covered by such agreement.

           *       *       *       *       *       *       *


Sec. 1005. Applicability of laws relating to Federal 
                    employees\96\
---------------------------------------------------------------------------

    \96\In 39 U.S.C. 1005, the amendment to subsection (a)(3) is made 
by section 406(b)(3)) of the bill, the amendment to subsection (a)(4) 
is made by section 107 of the bill, and the amendments to subsections 
(d) and (f) and the addition of new subsection (g) are made by section 
102 of the bill.
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    (a)(1) * * *

           *       *       *       *       *       *       *

    (3) The provisions of this subsection shall not apply to 
those individuals appointed under sections 202, 204, and 
1001(c) of this title, and section 3 of the Inspector General 
Act of 1978 (5 U.S.C. App.).
    (4)(A) Subchapter II of chapter 75 of title 5 shall apply--
          (i) * * *
          (ii) to any other individual who--
                  [(I) is in the position of a supervisor or a 
                management employee in the Postal Service, or 
                is an employee of the Postal Service engaged in 
                personnel work in other than a purely 
                nonconfidential clerical capacity; and]
                  (I) is an officer or employee of the Postal 
                Service who--
                          (aa) is not represented by a 
                        bargaining representative recognized 
                        under section 1203; and
                          (bb) is in a supervisory, 
                        professional, technical, clerical, 
                        administrative, or managerial position 
                        covered by the Executive and 
                        Administrative Schedule; and

           *       *       *       *       *       *       *

    (d)(1) [Officers] Except as provided in subsection (g), 
officers and employees of the Postal Service (other than the 
Governors) shall be covered by chapters 83 and 84 of title 5. 
The Postal Service shall withhold from pay and shall pay into 
the Civil Service Retirement and Disability Fund the amounts 
specified in or determined under such chapter 83 and subchapter 
II of such chapter 84, respectively. The Postal Service shall 
pay into the Federal Retirement Thrift Savings Fund the amounts 
specified in or determined under subchapters III and VII of 
such chapter 84.

           *       *       *       *       *       *       *

    (f) Compensation, benefits, and other terms and conditions 
of employment in effect immediately prior to the effective date 
of this section, whether provided by statute or by rules and 
regulations of the former Post Office Department or the 
executive branch of the Government of the United States, shall 
continue to apply to officers and employees of the Postal 
Service, until changed by the Postal Service in accordance with 
this chapter and chapter 12 of this title. Subject to the 
provisions of this chapter and chapter 12 of this title, the 
provisions of subchapter I of chapter 85 and chapters 84, 87, 
89, 89A, and 89B of title 5 shall apply to officers and 
employees of the Postal Service, unless varied, added to, or 
substituted for, under [this subsection.] this subsection or 
subsection (g). No variation, addition, or substitution with 
respect to fringe benefits shall result in a program of fringe 
benefits which on the whole is less favorable to the officers 
and employees than fringe benefits in effect on the effective 
date of this section, and as to officers and employees for whom 
there is a collective-bargaining representative, no such 
variation, addition, or substitution shall be made except by 
agreement between the collective-bargaining representative and 
the Postal Service.
    (g)(1) In this subsection--
          (A) the term ``collective bargaining agreement'' 
        means a collective bargaining agreement between the 
        Postal Service and a bargaining representative 
        recognized under section 1203 entered into after the 
        date of enactment of the Postal Reform Act of 2014;
          (B) the term ``new employee'' means an individual who 
        becomes an officer or employee of the Postal Service 
        after the date of enactment of the Postal Reform Act of 
        2014; and
          (C) the term ``not eligible to receive FERS service 
        credit'', with respect to an officer or employee of the 
        Postal Service, means that service by the officer or 
        employee of the Postal Service as an officer or 
        employee of the Postal Service shall not be creditable 
        service for purposes of chapter 84 of title 5.
    (2)(A) A collective bargaining agreement may provide, 
notwithstanding chapter 84 of title 5, that some or all new 
employees covered under the collective bargaining agreement 
shall be not eligible to receive FERS service credit for 
service performed during any pay period beginning after the 
effective date of the provision.
    (B) If a new employee is not eligible to receive FERS 
credit pursuant to a collective bargaining agreement, any 
subsequent service by the new employee as an officer or 
employee of the Postal Service shall not be creditable service 
for purposes of chapter 84 of title 5.
    (C) Subject to the requirements under this subsection, a 
collective bargaining agreement may include 1 or more 
additional retirement benefit plans for the benefit of some or 
all new employees covered under the collective bargaining 
agreement.
    (3)(A) A collective bargaining agreement may establish, 
with respect to some or all new employees covered under the 
collective bargaining agreement--
          (i) without regard to section 8422 of title 5--
                  (I) the amounts to be deducted and withheld 
                from the pay of the new employees for deposit 
                in the Treasury of the United States to the 
                credit of the Civil Service Retirement and 
                Disability Fund; and
                  (II) the corresponding adjustment under 
                section 8423(a)(5)(B)(iii) of title 5 to the 
                amount of the contributions to be made by the 
                Postal Service to the Fund; and
          (ii) for any retirement benefit plan established 
        under the collective bargaining agreement, the amounts 
        to be deducted and withheld from the pay of the new 
        employees under the retirement benefit plan for the 
        benefit of the new employees.
    (B) Except as provided in paragraph (2)(B), a collective 
bargaining agreement may establish the amounts described in 
subparagraph (A)(i) with respect to some or all new employees 
who were covered under a previous collective bargaining 
agreement.
    (4)(A) A collective bargaining agreement among the Postal 
Service and all bargaining representatives recognized under 
section 1203 may establish, without regard to section 8432 of 
title 5, with respect to some or all new employees covered 
under the collective bargaining agreement, whether the Postal 
Service shall make contributions to the Thrift Savings Fund for 
the benefit of the new employees, and, if the Postal Service 
shall make such contributions, the amounts that the Postal 
Service shall contribute.
    (B) A collective bargaining agreement described in 
subparagraph (A) may not establish more than 1 option regarding 
the contributions by the Postal Service to the Thrift Savings 
Fund that will apply to some or all new employees covered under 
the agreement.
    (C) If a collective bargaining agreement described in 
subparagraph (A) is not in effect, and if the Postal Service or 
a bargaining representative requests that the Postal Service 
and all bargaining representatives commence collective 
bargaining to seek such an agreement, the procedures under 
section 1207(d) shall apply.
    (D) Except as provided in subparagraph (A), nothing in this 
subsection or in a provision of a collective bargaining 
agreement entered under this subsection shall affect the 
coverage of an officer or employee of the Postal Service under 
subchapter III of chapter 84 of title 5.

           *       *       *       *       *       *       *


CHAPTER 12--EMPLOYEE-MANAGEMENT AGREEMENTS

           *       *       *       *       *       *       *



Sec. 1207. Labor disputes\97\
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    \97\These amendment to 39 U.S.C. Sec. 1207 are made by section 105 
of the bill.
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    (a) * * *

           *       *       *       *       *       *       *

    (c)(1) * * *

           *       *       *       *       *       *       *

    (2)(A) The arbitration board shall give the parties a full 
and fair hearing, including an opportunity to present evidence 
in support of their claims, and an opportunity to present their 
case in person, by counsel or by other representative as they 
may elect. Decisions of the arbitration board shall be 
conclusive and binding upon the parties. [The arbitration board 
shall render its decision within 45 days after its 
appointment.] The arbitration board shall render a decision not 
later than 45 days after the date of its appointment.
    (B) In rendering a decision under this paragraph, the 
arbitration board shall consider such relevant factors as the 
financial condition of the Postal Service.

           *       *       *       *       *       *       *

    (4) Nothing in this section may be construed to limit the 
relevant factors that the arbitration board may take into 
consideration in rendering a decision under paragraph (2).

           *       *       *       *       *       *       *


PART III--MODERNIZATION AND FISCAL ADMINISTRATION

           *       *       *       *       *       *       *


                          CHAPTER 20--FINANCE

Sec.
2001. Definitions.
2011. Provisions relating to competitive products.
2012. Provisions relating to workers' compensation prefunding.

           *       *       *       *       *       *       *


Sec. 2003. The Postal Service Fund\98\
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    \98\These amendment to 39 U.S.C. Sec. 2003 are made by section 
302(c)(3) of the bill.
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    (a) * * *
    (b) Except as otherwise provided in section 2011, there 
shall be deposited in the Fund, subject to withdrawal by check 
by the Postal Service--
          (1) revenues from [postal and nonpostal services] 
        postal services, nonpostal services authorized under 
        section 404(3), and property and services authorized 
        under section 411, rendered by the Postal Service;

           *       *       *       *       *       *       *


2012. Provisions relating to workers' compensation prefunding\99\
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    \99\This new section 39 U.S.C. Sec. 2012 is added by section 106(a) 
of the bill.
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    (a) Definitions.--
          (1) In general.--In this section--
                  (A) the term ``adjusted net income'', except 
                as provided in paragraph (2), means the net 
                income (or loss) reported by the Postal Service 
                in the statement of operations included in the 
                annual report required under section 
                3654(a)(1)(B);
                  (B) the term ``Fund'' means the Postal 
                Service Workers' Compensation Accrued Liability 
                Fund established under subsection (b); and
                  (C) the term ``Postal Service actuarial 
                liability'' means, as of September 30 of a 
                fiscal year, the net present value of projected 
                future payments required to be made by the 
                Postal Service under section 8147 of title 5 
                (including any payments required to be made 
                from the Fund under subsection (f) of this 
                section) on account of injuries or deaths that 
                occurred during that fiscal year or any 
                preceding fiscal year.
          (2) Calculation of adjusted net income.--In 
        calculating adjusted net income for a fiscal year--
                  (A) any payment made under subsection (e) 
                shall not be taken into account; and
                  (B) any change in the net present value of 
                projected future payments required to be made 
                by the Postal Service under section 8147 of 
                title 5 shall not be taken into account.
    (b) Establishment.--There is established in the Treasury of 
the United States a revolving fund, to be called the Postal 
Service Workers' Compensation Accrued Liability Fund.
    (c) Availability.--The Fund shall be available without 
fiscal year limitation for payments required under subsection 
(f).
    (d) Investment.--
          (1) In general.--The Secretary of the Treasury shall 
        immediately invest, in interest-bearing securities of 
        the United States, such currently available portions of 
        the Fund as are not immediately required for payments 
        from the Fund.
          (2) Manner of investments.--Investments under 
        paragraph (1) shall be made in the same manner as 
        investments for the Civil Service Retirement and 
        Disability Fund under section 8348 of title 5.
    (e) Payments to Fund.--
          (1) Cost attributable to 1 year of employees' 
        service.--Not later than June 30, 2017, and not later 
        than June 30 of each year thereafter, the Postal 
        Service shall compute--
                  (A) with respect to each of the 3 preceding 
                fiscal years, the net present value, as of 
                September 30 of the fiscal year, of projected 
                future payments required to be paid by the 
                Postal Service under section 8147 of title 5 on 
                account of injuries or deaths that occurred 
                during the fiscal year;
                  (B) for each of the 3 amounts computed under 
                subparagraph (A), the sum of--
                          (i) the amount; and
                          (ii) accrued interest on the amount 
                        through September 30 of the preceding 
                        fiscal year; and
                  (C) the average of the 3 sums computed under 
                subparagraph (B).
          (2) Liquidation schedule.--
                  (A) Computation; recomputation.--Not later 
                than June 30, 2017, the Postal Service shall 
                compute, and not later than June 30 of each 
                year thereafter the Postal Service shall 
                recompute, a schedule including a series of 
                annual installments that provide for the 
                liquidation of the amount described in 
                subparagraph (B) (regardless of whether the 
                amount is a liability or surplus), including 
                interest at the rate used in the computations 
                under paragraph (1), by the later of--
                          (i) September 30, 2057; or
                          (ii) September 30 of the fiscal year 
                        that is 15 years after the fiscal year 
                        in which the computation or 
                        recomputation is made.
                  (B) Amount to be liquidated.--The amount 
                described in this subparagraph is the 
                difference between--
                          (i) the difference between--
                                  (I) 80 percent of the Postal 
                                Service actuarial liability as 
                                of September 30 of the 
                                preceding fiscal year; and
                                  (II) 80 percent of the amount 
                                computed under paragraph (1)(C) 
                                as of September 30 of the 
                                preceding fiscal year; and
                          (ii) the value of the assets of the 
                        Fund as of September 30 of the 
                        preceding fiscal year.
          (3) Liquidation of liability.--
                  (A) In general.--Subject to subparagraph (B), 
                not later than September 30, 2018, and not 
                later than September 30 of each year 
                thereafter, the Postal Service shall pay into 
                the Fund the lesser of--
                          (i) the sum of--
                                  (I) 80 percent of the amount 
                                computed under paragraph (1)(C) 
                                during the fiscal year; and
                                  (II) any annual installment 
                                computed under paragraph 
                                (2)(A); and
                          ``(ii) the amount by which--
                                  (I) the amount of adjusted 
                                net income earned by the Postal 
                                Service during the fiscal year 
                                that ended 1 year before the 
                                date by which a payment is 
                                required to be made under this 
                                subparagraph; exceeds
                                  (II) $1,000,000,000.
                  (B) Exception.--If the amount of adjusted net 
                income earned by the Postal Service during a 
                fiscal year does not exceed $1,000,000,000, the 
                Postal Service shall not be required to make a 
                payment under this paragraph during the 
                subsequent fiscal year.
    (f) Payments From Fund.--
          (1) In general.--Beginning with the fiscal year 
        ending on September 30, 2018, for each payment that the 
        Postal Service is required to make under section 8147 
        of title 5 during the fiscal year--
                  (A) a fraction of the amount of the payment 
                shall be paid from the Fund in accordance with 
                paragraph (2) of this subsection; and
                  (B) the remaining amount of the payment shall 
                be paid by the Postal Service.
          (2) Fraction.--The fraction to be paid from the Fund, 
        as required under paragraph (1), is, with respect to 
        the fiscal year during which the payment is required to 
        be made, the quotient of--
                  (A) the value of the assets of the Fund as of 
                September 30 of the preceding fiscal year; and
                  (B) the sum of--
                          (i) the Postal Service actuarial 
                        liability as of the end of the fiscal 
                        year before the preceding fiscal year, 
                        plus interest accrued on that amount 
                        through the end of the preceding fiscal 
                        year; and
                          (ii) the amount calculated under 
                        subsection (e)(1)(C) as of the end of 
                        the fiscal year before the preceding 
                        fiscal year, plus interest accrued on 
                        that amount through the end of the 
                        preceding fiscal year.
    (g) Assumptions and Methodology.--The assumptions and 
methodology used in the computations under this section shall 
be consistent, insofar as reasonable and appropriate, with the 
assumptions and methodology used by the Postal Service in 
making computations of its assets and liabilities for the 
financial reporting required under section 3654.

           *       *       *       *       *       *       *


PART IV--MAIL MATTER

           *       *       *       *       *       *       *


CHAPTER 30--NONMAILABLE MATTER

           *       *       *       *       *       *       *



Sec. 3001. Nonmailable Matter\100\
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    \100\This amendment to 39 U.S.C. Sec. 3001 is made by section 
303(b) of the bill.
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    (a) * * *

           *       *       *       *       *       *       *

    (p)(1) In this subsection, the terms ``distilled spirits'', 
``wine'', and ``malt beverage'' have the same meanings as in 
section 117 of the Federal Alcohol Administration Act (27 
U.S.C. 211).
    (2) Distilled spirits, wine, or malt beverages shall be 
considered mailable if mailed--
          (A) in accordance with the laws and regulations of--
                  (i) the State, territory, or district of the 
                United States where the sender or duly 
                authorized agent initiates the mailing; and
                  (ii) the State, territory, or district of the 
                United States where the addressee or duly 
                authorized agent takes delivery; and
          (B) to an addressee who is at least 21 years of age--
                  (i) who provides a signature and presents a 
                valid, government-issued photo identification 
                upon delivery; or
                  (ii) the duly authorized agent of whom--
                          (I) is at least 21 years of age; and
                          (II) provides a signature and 
                        presents a valid, government-issued 
                        photo identification upon delivery.
    (3) The Postal Service shall prescribe such regulations as 
may be necessary to carry out this subsection.

           *       *       *       *       *       *       *


CHAPTER 36--POSTAL RATES, CLASSES, AND SERVICES

           *       *       *       *       *       *       *


Sec.
3621. Applicability; definitions.
     * * * * * * *
[3622. Modern rate regulation.]
3622. Modern rate system.
     * * * * * * *
[3661. Postal Services.]
3661. Postal services for market--dominant products.
     * * * * * * *
3691. Establishment of modern service standards.
3692. Delivery point modernization.
     * * * * * * *

Subchapter I--Provisions Relating to Market Dominant Products

           *       *       *       *       *       *       *



[Sec. 3622. Modern rate regulation\101\
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    \101\This amendment to 39 U.S.C. Sec. 3622 is made by section 301 
of the bill.
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    [(a) Authority Generally.-- The Postal Regulatory 
Commission shall, within 18 months after the date of enactment 
of this section, by regulation establish (and may from time to 
time thereafter by regulation revise) a modern system for 
regulating rates and classes for market-dominant products.
    [(b) Objectives.-- Such system shall be designed to achieve 
the following objectives, each of which shall be applied in 
conjunction with the others:
          [(1) To maximize incentives to reduce costs and 
        increase efficiency.
          [(2) To create predictability and stability in rates.
          [(3) To maintain high quality service standards 
        established under section 3691.
          [(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 and increase 
        the transparency of the ratemaking process.
          [(7) To enhance mail security and deter terrorism.
          [(8) To establish and maintain a just and reasonable 
        schedule for rates and classifications, however the 
        objective under this paragraph shall not be construed 
        to prohibit the Postal Service from making changes of 
        unequal magnitude within, between, or among classes of 
        mail.
          [(9) To allocate the total institutional costs of the 
        Postal Service appropriately between market-dominant 
        and competitive products.
    [(c) Factors.-- In establishing or revising such system, 
the Postal Regulatory Commission shall take into account--
          [(1) the value of the mail service actually provided 
        each class or type of mail service to both the sender 
        and the recipient, including but not limited to the 
        collection, mode of transportation, and priority of 
        delivery;
          [(2) the requirement that each class of mail or type 
        of mail service bear the direct and indirect postal 
        costs attributable to each class or type of mail 
        service through reliably identified causal 
        relationships plus that portion of all other costs of 
        the Postal Service reasonably assignable to such class 
        or type;
          [(3) the effect of rate increases upon the general 
        public, business mail users, and enterprises in the 
        private sector of the economy engaged in the delivery 
        of mail matter other than letters;
          [(4) the available alternative means of sending and 
        receiving letters and other mail matter at reasonable 
        costs;
          [(5) the degree of preparation of mail for delivery 
        into the postal system performed by the mailer and its 
        effect upon reducing costs to the Postal Service;
          [(6) simplicity of structure for the entire schedule 
        and simple, identifiable relationships between the 
        rates or fees charged the various classes of mail for 
        postal services;
          [(7) the importance of pricing flexibility to 
        encourage increased mail volume and operational 
        efficiency;
          [(8) the relative value to the people of the kinds of 
        mail matter entered into the postal system and the 
        desirability and justification for special 
        classifications and services of mail;
          [(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 for 
        both postal users and the Postal Service in accordance 
        with the policies of this title, including agreements 
        between the Postal Service and postal users, when 
        available on public and reasonable terms to similarly 
        situated mailers, that--
                  [(A) either--
                          [(i) improve the net financial 
                        position of the Postal Service through 
                        reducing Postal Service costs or 
                        increasing the overall contribution to 
                        the institutional costs of the Postal 
                        Service; or
                          [(ii) enhance the performance of mail 
                        preparation, processing, 
                        transportation, or other functions; and
                  [(B) do not cause unreasonable harm to the 
                marketplace.
          [(11) the educational, cultural, scientific, and 
        informational value to the recipient of mail matter;
          [(12) the need for the Postal Service to increase its 
        efficiency and reduce its costs, including 
        infrastructure costs, to help maintain high quality, 
        affordable postal services;
          [(13) the value to the Postal Service and postal 
        users of promoting intelligent mail and of secure, 
        sender-identified mail; and
          [(14) the policies of this title as well as such 
        other factors as the Commission determines appropriate.
    [(d) Requirements.--
          [(1) In general.-- The system for regulating rates 
        and classes for market-dominant products shall--
                  [(A) include an annual limitation on the 
                percentage changes in rates to be set by the 
                Postal Regulatory Commission that will be equal 
                to the change in the Consumer Price Index for 
                All Urban Consumers unadjusted for seasonal 
                variation over the most recent available 12-
                month period preceding the date the Postal 
                Service files notice of itsintention to 
increase rates;
                  [(B) establish a schedule whereby rates, when 
                necessary and appropriate, would change at 
                regular intervals by predictable amounts;
                  [(C) not later than 45 days before the 
                implementation of any adjustment in rates under 
                this section, including adjustments made under 
                subsection (c)(10)--
                          [(i) require the Postal Service to 
                        provide public notice of the 
                        adjustment;
                          [(ii) provide an opportunity for 
                        review by the Postal Regulatory 
                        Commission;
                          [(iii) provide for the Postal 
                        Regulatory Commission to notify the 
                        Postal Service of any noncompliance of 
                        the adjustment with the limitation 
                        under subparagraph (A); and
                          [(iv) require the Postal Service to 
                        respond to the notice provided under 
                        clause (iii) and describe the actions 
                        to be taken to comply with the 
                        limitation under subparagraph (A);
                  [(D) establish procedures whereby the Postal 
                Service may adjust rates not in excess of the 
                annual limitations under subparagraph (A); and
                  [(E) notwithstanding any limitation set under 
                subparagraphs (A) and (C), and provided there 
                is not sufficient unused rate authority under 
                paragraph (2)(C), establish procedures whereby 
                rates may be adjusted on an expedited basis due 
                to either extraordinary or exceptional 
                circumstances, provided that the Commission 
                determines, after notice and opportunity for a 
                public hearing and comment, and within 90 days 
                after any request by the Postal Service, that 
                such adjustment 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.
          [(2) Limitations.--
                  [(A) Classes of mail.--Except as provided 
                under subparagraph (C), the annual limitations 
                under paragraph (1)(A) shall apply to a class 
                of mail, as defined in the Domestic Mail 
                Classification Schedule as in effect on the 
                date of enactment of the Postal Accountability 
                and Enhancement Act.
                  [(B) Rounding of rates and fees.--Nothing in 
                this subsection shall preclude the Postal 
                Service from rounding rates and fees to the 
                nearest whole integer, if the effect of such 
                rounding does not cause the overall rate 
                increase for any class to exceed the Consumer 
                Price Index for All Urban Consumers.
                  [(C) Use of unused rate authority.--
                          [(i) Definition.--In this 
                        subparagraph, the term ``unused rate 
                        adjustment authority'' means the 
                        difference between--
                                  [(I) the maximum amount of a 
                                rate adjustment that the Postal 
                                Service is authorized to make 
                                in any year subject to the 
                                annual limitation under 
                                paragraph (1); and
                                  [(II) the amount of the rate 
                                adjustment the Postal Service 
                                actually makes in that year.
                          [(ii) Authority.--Subject to clause 
                        (iii), the Postal Service may use any 
                        unused rate adjustment authority for 
                        any of the 5 years following the year 
                        such authority occurred.
                          [(iii) Limitations.--In exercising 
                        the authority under clause (ii) in any 
                        year, the Postal Service--
                                  [(I) may use unused rate 
                                adjustment authority from more 
                                than 1 year;
                                  [(II) may use any part of the 
                                unused rate adjustment 
                                authority from any year;
                                  [(III) shall use the unused 
                                rate adjustment authority from 
                                the earliest year such 
                                authority first occurred and 
                                then each following year; and
                                  [(IV) for any class or 
                                service, may not exceed the 
                                annual limitation under 
                                paragraph (1) by more than 2 
                                percentage points.
          [(3) Review.--Ten years after the date of enactment 
        of the Postal Accountability and Enhancement Act and as 
        appropriate thereafter, the Commission shall review the 
        system for regulating rates and classes for market-
        dominant products established under this section to 
        determine if the system is achieving the objectives in 
        subsection (b), taking into account the factors in 
        subsection (c). If the Commission determines, after 
        notice and opportunity for public comment, that the 
        system is not achieving the objectives in subsection 
        (b), taking into account the factors in subsection (c), 
        the Commission may, by regulation, make such 
        modification or adopt such alternative system for 
        regulating rates and classes for market-dominant 
        products as necessary to achieve the objectives.
    [(e) Workshare Discounts.--
          [(1) Definition.--In this subsection, the term 
        ``workshare discount'' refers to rate discounts 
        provided to mailers for the presorting, prebarcoding, 
        handling, or transportation of mail, as further defined 
        by the Postal Regulatory Commission under subsection 
        (a).
          [(2) Scope.--The Postal Regulatory Commission shall 
        ensure that such discounts do not exceed the cost that 
        the Postal Service avoids as a result of workshare 
        activity, unless--
                  [(A) the discount is--
                          [(i) associated with a new postal 
                        service, a change to an existing postal 
                        service, or with a new work share 
                        initiative related to an existing 
                        postal service; and
                          [(ii) necessary to induce mailer 
                        behavior that furthers the economically 
                        efficient operation of the Postal 
                        Service and the portion of the discount 
                        in excess of the cost that the Postal 
                        Service avoids as a result of the 
                        workshare activity will be phased out 
                        over a limited period of time;
                  [(B) the amount of the discount above costs 
                avoided--
                          [(i) is necessary to mitigate rate 
                        shock; and
                          [(ii) will be phased out over time;
                  [(C) the discount is provided in connection 
                with subclasses of mail consisting exclusively 
                of mail matter of educational, cultural, 
                scientific, or informational value; or
                  [(D) reduction or elimination of the discount 
                would impede the efficient operation of the 
                Postal Service.
          [(3) Limitation.--Nothing in this subsection shall 
        require that a work share discount be reduced or 
        eliminated if the reduction or elimination of the 
        discount would--
                  [(A) lead to a loss of volume in the affected 
                category or subclass of mail and reduce the 
                aggregate contribution to the institutional 
                costs of the Postal Service from the category 
                or subclass subject to the discount below what 
                it otherwise would have been if the discount 
                had not been reduced or eliminated; or
                  [(B) result in a further increase in the 
                rates paid by mailers not able to take 
                advantage of the discount.
          [(4) Report.--Whenever the Postal Service establishes 
        a workshare discount rate, the Postal Service shall, at 
        the time it publishes the workshare discount rate, 
        submit to the Postal Regulatory Commission a detailed 
        report that--
                  [(A) explains the Postal Service's reasons 
                for establishing the rate;
                  [(B) sets forth the data, economic analyses, 
                and other information relied on by the Postal 
                Service to justify the rate; and
                  [(C) certifies that the discount will not 
                adversely affect rates or services provided to 
                users of postal services who do not take 
                advantage of the discount rate.
    [(f) Transition Rule.--For the 1-year period beginning on 
the date of enactment of this section, rates and classes for 
market-dominant products shall remain subject to modification 
in accordance with the provisions of this chapter and section 
407, as such provisions were last in effect before the date of 
enactment of this section. Proceedings initiated to consider a 
request for a recommended decision filed by the Postal Service 
during that 1-year period shall be completed in accordance with 
subchapter II of chapter 36 of this title and implementing 
regulations, as in effect before the date of enactment of this 
section.]

Sec. 3622. Modern rate system

      (a) Authority Generally.--
          (1) Board of governors.--The Board may, acting in 
        accordance with this section, establish, and from time 
        to time thereafter revise, a system of rates and 
        classes for market-dominant products (referred to in 
        this section as the ``system''), consistent with the 
        requirements under this section.
          (2) No delegation.--The authority under this section 
        may not be delegated to the Postmaster General or to 
        any other individual or entity.
    (b) Objectives.--The system shall be designed to achieve 
the following objectives, each of which shall be applied in 
conjunction with the others:
          (1) To maximize incentives for the Postal Service to 
        reduce costs and increase efficiency.
          (2) To create predictability and stability in rates.
          (3) To maintain high quality service standards 
        established under section 3691.
          (4) To assure adequate revenues and maintain the 
        financial stability of the Postal Service.
          (5) To establish and maintain a just and reasonable 
        schedule for rates and classifications, however the 
        objective under this paragraph shall not be construed 
        to prohibit the Postal Service from making changes of 
        unequal magnitude within, between, or among classes of 
        mail.
          (6) To allocate the total institutional costs of the 
        Postal Service appropriately between market-dominant 
        and competitive products, in accordance with 
        regulations promulgated by the Postal Regulatory 
        Commission (referred to in this section as the 
        ``Commission'') under section 3633.
    (c) Factors.--In establishing or revising the system, the 
Board and the Commission shall take into account--
          (1) the value of the mail service provided through 
        each class or type of mail service to both the sender 
        and the recipient, including the educational, cultural, 
        scientific, and informational value;
          (2) the direct and indirect postal costs attributable 
        to each class or type of mail service;
          (3) the effect of rate increases upon Postal Service 
        customers;
          (4) the available alternative means of sending and 
        receiving letters and other mail matter;
          (5) the 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; and
          (6) the policies of this title as well as such other 
        factors as the Board or the Commission determines 
        appropriate.
    (d) Adjustments Consistent With System.--
          (1) Notice.--The Board shall provide notice of any 
        adjustment in rates or classes proposed to be made 
        under this section that is consistent with the system 
        then in effect--
                  (A) not later than--
                          (i) 90 days before the implementation 
                        of any rate or class adjustment that 
                        affects all or substantially all 
                        market-dominant products; and
                          (ii) 45 days before the 
                        implementation of any other rate or 
                        class adjustment; and
                  (B) to--
                          (i) the public, including by--
                                  (I) publication in the 
                                Federal Register; and
                                  (II) posting on the website 
                                of the Postal Service; and
                          (ii) the Commission.
          (2) Public comment.--The Board shall solicit and 
        receive public comments on any proposed rate or class 
        adjustment, and shall take such comments into account 
        in making its final determination as to a rate or class 
        adjustment.
          (3) Final decision.--Not later than 10 days before 
        the implementation of a rate or class adjustment, the 
        Board shall issue a final decision on the adjustment 
        which shall--
                  (A) be published in the Federal Register and 
                posted on the website of the Postal Service; 
                and
                  (B) include an explanation responding to all 
                relevant comments received.
          (4) Commission review.--
                  (A) In general.--Any adjustment made by the 
                Board under this section shall be subject to 
                review by the Commission under section 3662.
                  (B) Application of section 3662.--In a review 
                described in subparagraph (A), section 3662 
                shall be applied by substituting ``Board of 
                Governors'' for ``Postal Service'' where 
                applicable.
    (e) Rate Base.--The rates for market-dominant products in 
effect on the date of enactment of the Postal Reform Act of 
2014, including any rates adjusted under this section on an 
expedited basis due to either extraordinary or exceptional 
circumstances, shall remain in effect unless adjusted in 
accordance with this section.
    (f) Limitations on Rate Adjustments.--
          (1) Applicability of limitations.--The limitations 
        under this subsection shall remain in effect unless 
        revised or eliminated under subsection (g).
          (2) Annual limitation.--There shall be an annual 
        limitation on the percentage changes in rates for 
        market-dominant products as a whole under this section 
        that shall be equal to the percentage change in the 
        Consumer Price Index for All Urban Consumers unadjusted 
        for seasonal variation over the most recent available 
        12-month period preceding the date the Board provides 
        notice of its intention to increase rates.
          (3) Conditions.--
                  (A) Classes of mail.--The Board shall ensure 
                that the annual percentage change in rates 
                under this section for a class of mail, as 
                defined in the Domestic Mail Classification 
                Schedule (as in effect on the date of enactment 
                of the Postal Accountability and Enhancement 
                Act), does not exceed the annual limitation 
                under paragraph (2) by more than 2 percentage 
                points.
                  (B) Use of unused rate adjustment 
                authority.--
                          (i) Definition.--In this 
                        subparagraph, the term ``unused rate 
                        adjustment authority'' means the 
                        difference between--
                                  (I) the maximum amount of a 
                                rate adjustment that the Board 
                                is authorized to make in any 
                                year subject to the annual 
                                limitation under paragraph (2); 
                                and
                                  (II) the amount of the rate 
                                adjustment the Board actually 
                                makes in that year.
                          (ii) Authority.--Subject to clause 
                        (iii), the Board may use any unused 
                        rate adjustment authority for any of 
                        the 5 years following the year the 
                        authority occurred.
                          (iii) Limitations.--In exercising the 
                        authority under clause (ii) in any 
                        year, the Governors--
                                  (I) may use unused rate 
                                adjustment authority from more 
                                than 1 year;
                                  (II) may use any part of the 
                                unused rate adjustment 
                                authority from any year; and
                                  (III) may not exceed the 
                                annual limitation under 
                                paragraph (2) by more than 2 
                                percentage points.
          (4) Exception to annual limitation.--Notwithstanding 
        the annual limitation under paragraph (2), and provided 
        there is not sufficient unused rate adjustment 
        authority under paragraph (3)(B), rates may be adjusted 
        on an expedited basis due to either extraordinary or 
        exceptional circumstances, provided that the Commission 
        determines, after notice and opportunity for public 
        comment, and within 90 days after any request by the 
        Board, that such adjustment 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.
    (g) Adoption of Revisions to System or New System.--
          (1) Board proposal.--Not earlier than January 1, 
        2017, and as appropriate thereafter, the Board may, 
        after notice and opportunity for public comment, submit 
        to the Commission a proposal for revisions to the 
        system or a new system, consistent with the objectives 
        under subsection (b), taking into account the factors 
        under subsection (c), and which may include revision or 
        elimination of the limitations established under 
        subsection (f).
          (2) Final commission action.--The Commission--
                  (A) shall consider a proposal submitted by 
                the Board under paragraph (1); and
                  (B) may--
                          (i) adopt the proposal, without 
                        modification; or
                          (ii) reject the proposal.
    (h) Workshare Discounts.--
          (1) Definition.--In this subsection, the term 
        ``workshare discount'' refers to rate discounts 
        provided to mailers for the presorting, prebarcoding, 
        handling, or transportation of mail, as further defined 
        by the Board in accordance with subsection (a).
          (2) Scope.--The Board shall ensure that such 
        discounts do not exceed the cost that the Postal 
        Service avoids as a result of workshare activity, 
        unless--
                  (A) the discount is--
                          (i) associated with a new postal 
                        service, a change to an existing postal 
                        service, or with a new work share 
                        initiative related to an existing 
                        postal service; and
                          (ii) necessary to induce mailer 
                        behavior that furthers the economically 
                        efficient operation of the Postal 
                        Service and the portion of the discount 
                        in excess of the cost that the Postal 
                        Service avoids as a result of the 
                        workshare activity will be phased out 
                        over a limited period of time;
                  (B) the amount of the discount above costs 
                avoided--
                          (i) is necessary to mitigate rate 
                        shock; and
                          (ii) will be phased out over time;
                  (C) the discount is provided in connection 
                with a category of mail consisting exclusively 
                of mail matter of educational, cultural, 
                scientific, or informational value; or
                  (D) reduction or elimination of the discount 
                would--
                          (i) impede the efficient operation of 
                        the Postal Service;
                          (ii) lead to a loss of volume in the 
                        affected category of mail and reduce 
                        the aggregate contribution to the 
                        institutional costs of the Postal 
                        Service from the category subject to 
                        the discount below what it otherwise 
                        would have been if the discount had not 
                        been reduced or eliminated; or
                          (iii) result in a further increase in 
                        the rates paid by mailers not able to 
                        take advantage of the discount.
          (3) Notice.--Whenever a workshare discount is 
        established, the Board shall ensure that the notice 
        provided under subsection (d)(1) includes--
                  (A) the reasons for establishing the 
                discount;
                  (B) the data, economic analyses, and other 
                information relied on by the Board to justify 
                the rate; and
                  (C) a certification that the discount will 
                not adversely affect rates or services provided 
                to users of postal services who do not take 
                advantage of the discount rate.
    (i) Negotiated Service Agreements.--The Board shall ensure 
that any agreement between the Postal Service and a mailer that 
adjusts rates or classes in a manner that is specific to the 
mailer--
          (1) is available on public and reasonable terms to 
        similarly situated mailers;
          (2) either--
                  (A) improves the net financial position of 
                the Postal Service through reducing Postal 
                Service costs or increasing the overall 
                contribution to the institutional costs of the 
                Postal Service taking into account changes in 
                volume and revenues from mailers ineligible for 
                the agreement; or
                  (B) enhances the performance of mail 
                preparation, processing, transportation, or 
                other functions; and
          (3) does not cause--
                  (A) unfair competitive advantage for the 
                Postal Service or mailers eligible for the 
                agreement; or
                  (B) unreasonable disruption to the volume or 
                revenues of other mailers ineligible for the 
                agreement.
    (j) Consideration of Prior Commission Decisions.--In making 
any determination under this section, including the 
construction and interpretation of the terms used in this 
section, the Board shall give consideration to decisions of the 
Commission made prior to the date of enactment of the Postal 
Reform Act of 2014, and shall include an explanation of any 
deviation from such decisions in the notice required under 
subsection (d)(1).

           *       *       *       *       *       *       *


Sec. 3626. Reduced Rates\102\
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    \102\These amendments to 39 U.S.C. Sec. 3626 are made by section 
301(b) of the bill.
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    (a) * * *

           *       *       *       *       *       *       *

    [(e)(1) In the administration of this section, the rates 
for third-class mail matter mailed by a qualified political 
committee shall be the rates currently in effect under former 
section 4452 of this title for third-class mail matter mailed 
by a qualified nonprofit organization.
    [(2) For purposes of this subsection--
          [(A) the term ``qualified political committee'' means 
        a national or State committee of a political party, the 
        Republican and Democratic Senatorial Campaign 
        Committees, the Democratic National Congressional 
        Committee, and the National Republican Congressional 
        Committee;
          [(B) the term ``national committee'' means the 
        organization which, by virtue of the bylaws of a 
        political party, is responsible for the day-to-day 
        operation of such political party at the national 
        level; and
          [(C) the term ``State committee'' means the 
        organization which, by virtue of the bylaws of a 
        political party, is responsible for the day-to-day 
        operation of such political party at the State level.]
    [(f)](e) In the administration of this chapter, the rates 
for mail under former section 4358(g) of this title shall be 
established without regard to either the provisions of such 
former section 4358(g) or the provisions of this section.
    [(g)](f)(1) In the administration of this section, the 
rates for mail under subsections (a), (b), and (c) of former 
section 4358 of this title shall not apply to an issue of a 
publication if the number of copies of such issue distributed 
within the county of publication is less than the number equal 
to the sum of 50 percent of the total paid circulation of such 
issue plus one.

           *       *       *       *       *       *       *

    [(h)](g) In the administration of this section, the number 
of copies of a subscription publication mailed to 
nonsubscribers during a calendar year at rates under 
subsections (a), (b), and (c) of former section 4358 of this 
title may not exceed 10 percent of the number of copies of such 
publication mailed at such rates to subscribers.

           *       *       *       *       *       *       *

    [(j)](h)(1) In the administration of this section, the 
rates for mail under former section 4452(b) or 4452(c) of this 
title shall not apply to mail which advertises, promotes, 
offers, or, for a fee or consideration, recommends, describes, 
or announces the availability of--

           *       *       *       *       *       *       *

    [(k)](i)(1) No person or organization shall mail, or cause 
to be mailed by contractual agreement or otherwise, at the 
rates for mail under former section 4452(b) or 4452(c) of this 
title, any matter to which those rates do not apply.

           *       *       *       *       *       *       *

    [(l)](j) In the administration of this section, the term 
``advertising'', as used in former section 4358(j)(2) of this 
title, does not include the publisher's own advertising in a 
publication published by the official highway or development 
agency of a State.
    [(m)](k)(1) In the administration of this section, the 
rates for mail under former section 4452(b) or 4452(c) of this 
title shall not apply to mail consisting of products, unless 
such products--

           *       *       *       *       *       *       *

    [(n)](l) 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).

           *       *       *       *       *       *       *


Subchapter III--Provisions Relating to Experimental and New Products

           *       *       *       *       *       *       *



Sec. 3641. Market Tests of Experimental Products\103\
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    \103\These amendment to 39 U.S.C. Sec. 3641 are made by section 
302(c)(3) of the bill.
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    (a) * * *
    (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 (or the 
        appropriate consumers in the case of nonpostal 
        services), significantly different from all products 
        offered by the Postal Service within the 2-year period 
        preceding the start of the test.
          (2) * * *
          (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)] 
        sections 404(g) and 3642(b)(1). Costs and revenues 
        attributable to a product identified as competitive 
        shall be included in any determinationunder [section 
3633(3)] section 3633(a)(3) (relating to provisions applicable to 
competitive products collectively). Any test that solely affects 
products currently classified as competitive, or which provides 
services ancillary to only competitive products, shall be presumed to 
be in the competitive product category without regard to whether a 
similar ancillary product exists for market-dominant products.

           *       *       *       *       *       *       *

    (e) Dollar-Amount Limitation.--
          (1) In general.-- A product may only be tested under 
        this section if the total revenues that are 
        anticipated, or in fact received, by the Postal Service 
        from such product do not exceed [$10,000,000] 
        $50,000,000 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 under 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] 
        $100,000,000 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--

           *       *       *       *       *       *       *


Subchapter IV--Reporting Requirements and Related Provisions

           *       *       *       *       *       *       *



Sec. 3654. Additional financial reporting\104\
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    \104\ This amendment to 39 U.S.C. Sec. 3654 is made by section 106 
of the bill.
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    (a) * * *
    (b) Financial reporting.
          (1) * * *

           *       *       *       *       *       *       *

          (4)(A) Each report required by subsection (a)(1)(B) 
        shall include, with respect to the workers' 
        compensation obligations of the Postal Service--
                  (i) as of the last day of the fiscal year to 
                which the report applies, the amount of the 
                Postal Service actuarial liability;
                  (ii) the value of the assets in the Fund, and 
                the difference between that amount and the 
                amount of the Postal Service actuarial 
                liability;
                  (iii) the amounts calculated under paragraphs 
                (1) and (2) of section 2012(e);
                  (iv) significant methods and assumptions 
                underlying the relevant actuarial valuations;
                  (v) any payments to the Fund and from the 
                Fund for the fiscal year to which the report 
                applies; and
                  (vi) the assumed rate of return on balances 
                of the Fund and the actual rate of return for 
                the fiscal year to which the report applies.
          (B) In this paragraph, the terms ``Fund'' and 
        ``Postal Service actuarial liability'' have the meaning 
        given those terms in section 2012(a).

           *       *       *       *       *       *       *


     Subchapter V--Postal Services, Complaints, and Judicial Review


[Sec.  3661. Postal Services\105\
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    \105\ This amendment to 39 U.S.C. Sec. 3661 is made by section 206 
of the bill.
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    [(a) The Postal Service shall develop and promote adequate 
and efficient postal services.
    [(b) When the Postal Service determines that there should 
be a change in the nature of postal services which will 
generally affect service on a nationwide or substantially 
nationwide basis, it shall submit a proposal, within a 
reasonable time prior to the effective date of such proposal, 
to the Postal Regulatory Commission requesting an advisory 
opinion on the change.
    [(c) The Commission shall not issue its opinion on any 
proposal until an opportunity for hearing on the record under 
sections 556 and 557 of title 5 has been accorded to the Postal 
Service, users of the mail, and an officer of the Commission 
who shall be required to represent the interests of the general 
public. The opinion shall be in writing and shall include a 
certification by each Commissioner agreeing with the opinion 
that in his judgment the opinion conforms to the policies 
established under this title.]

Sec. 3661. Postal services for market-dominant products

    (a) General Obligation.--The Postal Service shall develop 
and promote adequate and efficient postal services with respect 
to its market-dominant products.
    (b) Proposed Changes for Market-dominant Products.--
          (1) Submission of proposal.--If the Postal Service 
        determines that there should be a change in the nature 
        of postal services relating to market-dominant products 
        that will generally affect service on a nationwide or 
        substantially nationwide basis, the Postal Service 
        shall submit a proposal to the Postal Regulatory 
        Commission requesting an advisory opinion on the 
        change.
          (2) Advisory opinion.--Upon receipt of a proposal 
        under paragraph (1), the Postal Regulatory Commission 
        shall--
                  (A) provide notice and an opportunity for 
                public comment and a public hearing on the 
                proposal; and
                  (B) issue an advisory opinion not later 
                than--
                          (i) 90 days after the date on which 
                        the Postal Regulatory Commission 
                        receives the proposal; or
                          (ii) a date that the Postal 
                        Regulatory Commission and the Postal 
                        Service may determine jointly.
          (3) Response to opinion.--The Postal Service shall 
        submit to the President and to Congress a response to 
        an advisory opinion issued under paragraph (2) that 
        includes--
                  (A) a statement of whether the Postal Service 
                plans to modify the proposal to address any 
                concerns or implement any recommendations made 
                by the Commission; and
                  (B) for any matter that the Postal Service 
                determines not to address and any 
                recommendation that the Postal Service 
                determines not to implement, the reasons for 
                the determination.
          (4) Action of proposal.--The Postal Service may take 
        action regarding a proposal submitted under paragraph 
        (1)--
                  (A) on or after the date on which the Postal 
                Service submits the response required under 
                paragraph (3);
                  (B) on or after a date that the Postal 
                Regulatory Commission and the Postal Service 
                may determine jointly; or
                  (C) after the date described in paragraph 
                (2)(B), if--
                          (i) the Postal Regulatory Commission 
                        fails to issue an advisory opinion on 
                        or before the date described in 
                        paragraph (2)(B); and
                          (ii) the action is not otherwise 
                        prohibited under Federal law.
          (5) Modification of timeline.--At any time, the 
        Postal Service and the Postal Regulatory Commission may 
        jointly redetermine a date determined under paragraph 
        (2)(B)(ii) or (4)(B).
    (c) Limitation.--
          (1) No changes for competitive products.--Nothing in 
        this section shall be construed as authorizing the 
        making of changes under this section to the nature of 
        service provided for competitive products.
          (2) Hybrid changes.--For a change that affects the 
        nature of service provided for both market-dominant 
        products and competitive products, only the effect on 
        market-dominant products shall be subject to this 
        section.

Sec. 3662. Rate and Service Complaints\106\
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    \106\This amendment to 39 U.S.C. Sec. 3662 is made by section 
302(a)(2) of the bill.
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    (a) In General.--Any interested person (including an 
officer of the Postal Regulatory Commission representing the 
interests of the general public) who believes the Postal 
Service is not operating in conformance with the requirements 
of the provisions of sections 101(d), 401(2), 403(c), 
404(a)(6), 404a, or 601, or this chapter (or regulations 
promulgated under any of those provisions) may lodge a 
complaint with the Postal Regulatory Commission in such form 
and manner as the Commission may prescribe.

           *       *       *       *       *       *       *


Subchapter VII--Modern Service Standards

           *       *       *       *       *       *       *



Sec. 3692. Delivery point modernization\107\
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    \107\This new 39 U.S.C. Sec. 3692 is added by section 205 of the 
bill.
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    (a) Definitions.--In this section, the following 
definitions shall apply:
          (1) Centralized delivery.--The term ``centralized 
        delivery'' means a primary mode of mail delivery 
        whereby mail is delivered to a group or cluster of mail 
        receptacles at a single location.
          (2) Curbside delivery.--The term ``curbside 
        delivery'' means a primary mode of mail delivery 
        whereby mail is delivered to a mail receptacle that is 
        situated at the edge of a public sidewalk abutting a 
        road or curb, at a road, or at a curb.
          (3) Delivery point.--The term ``delivery point'' 
        means a mailbox or other receptacle to which mail is 
        delivered.
          (4) District office.--The term ``district office'' 
        means the central office of an administrative field 
        unit with responsibility for postal operations in a 
        designated geographic area (as defined under 
        regulations, directives, or other guidance of the 
        Postal Service).
          (5) Door delivery.--The term ``door delivery''--
                  (A) means a primary mode of mail delivery 
                whereby mail is--
                          (i) delivered to a mail receptacle at 
                        or near a postal customer's door; or
                          (ii) hand-delivered to a postal 
                        customer; and
                  (B) does not include curbside or centralized 
                delivery.
          (6) Primary mode of mail delivery.--The term 
        ``primary mode of mail delivery'' means the typical 
        method by which the Postal Service delivers mail to the 
        delivery point of a postal customer.
    (b) Policy.--Except as otherwise provided in this section, 
including paragraphs (4) and (5) of subsection (c), it shall be 
the policy of the Postal Service to use the primary mode of 
mail delivery that is most cost effective and is in the best 
long-term interest of the Postal Service.
    (c) Conversion to Other Delivery Modes.--
          (1) New addresses.--Except as provided in paragraphs 
        (4) and (5), the Postal Service shall provide 
        centralized delivery to new addresses established after 
        the date of enactment of the Postal Reform Act of 2014, 
        or if centralized delivery is not practicable shall 
        provide curbside delivery.
          (2) Business address conversion.--The Postal Service 
        shall carry out a program to convert business addresses 
        with door delivery on the date of enactment of the 
        Postal Reform Act of 2014 to centralized delivery or to 
        curbside delivery.
          (3) Residential address conversion.--
                (A) Identification.--Not later than 9 months 
                after the date of enactment of the Postal 
                Reform Act of 2014, the head of each district 
                office of the Postal Service shall identify 
                residential addresses within the service area 
                of the district office that are appropriate 
                candidates for conversion from door delivery to 
                a more cost-effective primary mode of delivery, 
                in accordance with standards established by the 
                Postal Service.
                  (B) Voluntary conversion.--Not later than 1 
                year after the date of enactment of the Postal 
                Reform Act of 2014, and consistent with 
                subsection (b) and paragraph (4), the Postal 
                Service shall begin implementation of a program 
                to convert, on a voluntary basis, the addresses 
                identified under subparagraph (A) from door 
                delivery to a more cost-effective primary mode 
                of delivery.
                  (C) Procedures.--In pursuing conversion under 
                subparagraph (B), the Postal Service shall 
                establish procedures to--
                          (i) solicit and consider input from 
                        postal customers, State and local 
                        governments, local associations, and 
                        property owners; and
                          (ii) place centralized delivery 
                        points in locations that maximize 
                        delivery efficiency, ease of use for 
                        postal customers, and respect for 
                        private property rights.
          (4) Exceptions.--In establishing a primary mode of 
        mail delivery for new addresses under paragraph (1) or 
        converting the primary mode of mail delivery for an 
        address under paragraph (2) or (3), the Postal Service 
        may provide door delivery if--
                  (A) a physical barrier precludes the 
                efficient provision of centralized delivery or 
                curbside delivery;
                  (B) the address is located in a registered 
                historic district, as that term is defined in 
                section 47(c)(3)(B) of the Internal Revenue 
                Code of 1986; or
                  (C) the Postal Service determines that the 
                provision of centralized delivery or curbside 
                delivery would be impractical, would not be 
                cost effective, or would not be in the best 
                long-term interest of the Postal Service.
          (5) Waiver for physical hardship.--
                  (A) In general.--The Postal Service shall 
                establish and maintain a waiver program under 
                which, upon the application of a postal 
                customer, door delivery may be continued or 
                provided to a delivery point if--
                          (i) centralized delivery or curbside 
                        delivery would, but for this paragraph, 
                        be the primary mode of mail delivery 
                        for the delivery point; and
                          (ii) a physical hardship prevents the 
                        postal customer from receiving his or 
                        her mail through any other form of mail 
                        delivery.
                  (B) Publicity; simplicity.--In establishing 
                and maintaining the waiver program under 
                subparagraph (A), the Postal Service shall--
                          (i) publicize the waiver program; and
                          (ii) provide a simple application 
                        process for participation in the waiver 
                        program.
                  (C) Postal service discretion.--Nothing in 
                this paragraph shall be construed to--
                          (i) prohibit the Postal Service from 
                        requiring evidence of a physical 
                        hardship in an appropriate case; or
                          (ii) require the Postal Service to 
                        require evidence of a physical hardship 
                        in any case.
                  (D) No fees for application or door 
                delivery.--In establishing and maintaining the 
                waiver program under subparagraph (A), the 
                Postal Service may not charge a postal customer 
                any fee to--
                          (i) apply for a waiver; or
                          (ii) upon the granting of a waiver by 
                        the Postal Service, receive mail 
                        through door delivery.

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TITLE 40--PUBLIC BUILDINGS, PROPERTY, AND WORKS

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Subtitle I--Federal Property and Administrative Services

           *       *       *       *       *       *       *



                  CHAPTER 5--PROPERTY MANAGEMENT\108\

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    \108\These amendments to 40 U.S.C. chapter 5 are made by section 
603 of the bill.

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Sec.
501. Services for executive agencies.

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    SUBCHAPTER VII--PROPERTY MANAGEMENT AND EXPEDITED DISPOSAL OF REAL 
                                PROPERTY

621. Definitions.
622. Duties of Federal agencies.
623. Colocation among United States Postal Service properties.
624. Establishment of a Federal Real Property Council.
625. Federal real property inventory and database.
626. Limitation on certain leasing authorities.
627. Expedited disposal pilot program.
628. Homeless assistance grants.

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  Subchapter VII--Property Management and Expedited Disposal of Real 
                                Property

621. DEFINITIONS

    In this subchapter:
          (1) Administrator.--The term ``Administrator'' means 
        the Administrator of General Services.
          (2) Council.--The term ``Council'' means the Federal 
        Real Property Council established by section 624(a).
          (3) Director.--The term ``Director'' means the 
        Director of the Office of Management and Budget.
          (4) Disposal.--The term ``disposal'' means any action 
        that constitutes the removal of any real property from 
        the Federal inventory, including sale, deed, 
        demolition, or exchange.
          (5) Excess property.--The term ``excess property'' 
        means any real property under the control of a Federal 
        agency that the head of the Federal agency determines 
        is not required to meet the needs or responsibilities 
        of the Federal agency.
          (6) Federal agency.--The term ``Federal agency'' 
        means--
                  (A) an executive department or independent 
                establishment in the executive branch of the 
                Government; or
                  (B) a wholly owned Government corporation.
          (7) Field office.--The term ``field office'' means 
        any office of a Federal agency that is not the 
        headquarters office location for the Federal agency.
          (8) Postal property.--The term ``postal property'' 
        means any building owned by the United States Postal 
        Service.
          (9) Surplus property.--
                  (A) In general.--The term ``surplus 
                property'' means excess real property that is 
                not required to meet the needs or 
                responsibilities of any Federal agency.
                  (B) Exclusions.--The term ``surplus 
                property'' does not include--
                          (i) any military installation (as 
                        defined in section 2910 of the Defense 
                        Base Closure and Realignment Act of 
                        1990 (10 U.S.C. 2687 note; Public Law 
                        101--510));
                          (ii) any property that is excepted 
                        from the definition of the term 
                        ``property'' under section 102;
                          (iii) Indian and native Eskimo 
                        property held in trust by the Federal 
                        Government as described in section 
                        3301(a)(5)(C)(iii);
                          (iv) real property operated and 
                        maintained by the Tennessee Valley 
                        Authority pursuant to the Tennessee 
                        Valley Authority Act of 1933 (16 U.S.C. 
                        831 et seq.);
                          (v) any real property the Director 
                        excludes for reasons of national 
                        security;
                          (vi) any public lands (as defined in 
                        section 203 of the Public Lands Corps 
                        Act of 1993 (16 U.S.C. 1722)) 
                        administered by--
                                  (I) the Secretary of the 
                                Interior, acting through--
                                          (aa) the Director of 
                                        the Bureau of Land 
                                        Management;
                                          (bb) the Director of 
                                        the National Park 
                                        Service;
                                          (cc) the Commissioner 
                                        of Reclamation; or
                                          (dd) the Director of 
                                        the United States Fish 
                                        and Wildlife Service; 
                                        or
                                  (II) the Secretary of 
                                Agriculture, acting through the 
                                Chief of the Forest Service; or
                          (vii) any property operated and 
                        maintained by the United States Postal 
                        Service.
          (10) Underutilized property.--The term 
        ``underutilized property'' means a portion or the 
        entirety of any real property, including any 
        improvements, that is used--
                  (A) irregularly or intermittently by the 
                accountable Federal agency for program purposes 
                of the Federal agency; or
                  (B) for program purposes that can be 
                satisfied with only a portion of the property.

622. Duties of Federal agencies

    Each Federal agency shall--
          (1) maintain adequate inventory controls and 
        accountability systems for real property under the 
        control of the Federal agency;
          (2) develop current and future workforce projections 
        so as to have the capacity to assess the needs of the 
        Federal workforce regarding the use of real property;
          (3) continuously survey real property under the 
        control of the Federal agency to identify excess 
        property, underutilized property, and other real 
        property suitable to be used for--
                  (A) colocation with other Federal agencies; 
                or
                  (B) consolidation with other facilities;
          (4) promptly report excess property and underutilized 
        property to the Administrator;
          (5) establish goals that will lead the Federal agency 
        to reduce excess property and underutilized property in 
        the inventory of the Federal agency;
          (6) submit to the Council a report on all excess 
        property and underutilized property in the inventory of 
        the Federal agency, including--
                  (A) whether underutilized property can be 
                better utilized; and
                  (B) the extent to which the Federal agency 
                believes that the underutilized property serves 
                the needs of the Federal agency to retain 
                underutilized property;
          (7) adopt workplace practices, configurations, and 
        management techniques that can achieve increased levels 
        of productivity and decrease the need for real property 
        assets;
          (8) assess leased space to identify space that is not 
        fully used or occupied;
          (9) on an annual basis and subject to the guidance of 
        the Council--
                  (A) conduct an inventory of real property 
                under control of the Federal agency; and
                  (B) make an assessment of each real property, 
                which shall include--
                          (i) the age and condition of the 
                        property;
                          (ii) the size of the property in 
                        square footage and acreage;
                          (iii) the geographical location of 
                        the property, including an address and 
                        description;
                          (iv) the extent to which the property 
                        is being utilized;
                          (v) the actual annual operating costs 
                        associated with the property;
                          (vi) the total cost of capital 
                        expenditures associated with the 
                        property;
                          (vii) sustainability metrics 
                        associated with the property;
                          (viii) the number of Federal 
                        employees and functions housed at the 
                        property;
                          (ix) the extent to which the mission 
                        of the Federal agency is dependent on 
                        the property;
                          (x) the estimated amount of capital 
                        expenditures projected to maintain and 
                        operate the property over each of the 
                        next 5 years after the date of 
                        enactment of this subchapter; and
                          (xi) any additional information 
                        required by the Administrator to carry 
                        out section 625; and
          (10) provide to the Council and the Administrator the 
        information described in paragraph (9)(B) to be used 
        for the establishment and maintenance of the database 
        described in section 625.

623. Colocation among United States Postal Service properties

    (a) Identification of Postal Property.--Each year, the 
Postmaster General may--
          (1) identify a list of postal properties with space 
        available for use by Federal agencies; and
          (2) submit the list to the Council.
    (b) Submission of List of Postal Properties to Federal 
Agencies.--
          (1) In general.--Not later than 30 days after the 
        completion of a list under subsection (a), the Council 
        shall provide the list to each Federal agency.
          (2) Review by federal agencies.--Not later than 90 
        days after the receipt of the list submitted under 
        paragraph (1), each Federal agency shall--
                  (A) review the list;
                  (B) identify real property assets under the 
                control of the Federal agency; and
                  (C) recommend colocations if appropriate.
    (c) Terms of Colocation.--On approval of the 
recommendations under subsection (b) by the Postmaster General 
and the applicable agency head, the Federal agency or 
appropriate landholding entity may work with the Postmaster 
General to establish appropriate terms of a lease for each 
postal property.

624. Establishment of a Federal Real Property Council

    (a) Establishment.--There is established a Federal Real 
Property Council.
    (b) Purpose.--The purpose of the Council shall be to--
          (1) develop guidance and ensure implementation of an 
        efficient and effective real property management 
        strategy;
          (2) identify opportunities for the Federal Government 
        to better manage real property assets; and
          (3) reduce the costs of managing real property, 
        including operations, maintenance, and security.
    (c) Composition.--
          (1) In general.--The Council shall be composed 
        exclusively of--
                  (A) the senior real property officers of each 
                Federal agency;
                  (B) the Deputy Director for Management of the 
                Office of Management and Budget;
                  (C) the Controller of the Office of 
                Management and Budget;
                  (D) the Administrator; and
                  (E) any other full-time or permanent part-
                time Federal officials or employees, as the 
                Chairperson determines to be necessary.
          (2) Chairperson.--The Deputy Director for Management 
        of the Office of Management and Budget shall serve as 
        Chairperson of the Council.
          (3) Executive director.--
                  (A) In general.--The Chairperson shall 
                designate an Executive Director to assist in 
                carrying out the duties of the Council.
                  (B) Qualifications; full-time.--The Executive 
                Director shall--
                          (i) be appointed from among 
                        individuals who have substantial 
                        experience in the areas of commercial 
                        real estate and development, real 
                        property management, and Federal 
                        operations and management; and
                          (ii) serve full time.
    (d) Meetings.--
          (1) In general.--The Council shall meet subject to 
        the call of the Chairperson.
          (2) Minimum.--The Council shall meet not fewer than 4 
        times each year.
    (e) Duties.--The Council, in consultation with the Director 
and the Administrator, shall--
          (1) not later than 1 year after the date of enactment 
        of this subchapter, establish a real property 
        management plan template, to be updated annually, which 
        shall include performance measures, specific 
        milestones, measurable savings, strategies, and 
        Government-wide goals based on the goals established 
        under section 622(5) to reduce surplus property or to 
        achieve better utilization of underutilized property, 
        and evaluationcriteria to determine the effectiveness 
of real property management that are designed to--
                  (A) enable Congress and heads of Federal 
                agencies to track progress in the achievement 
                of real property management objectives on a 
                Government-wide basis;
                  (B) improve the management of real property; 
                and
                  (C) allow for comparison of the performance 
                of Federal agencies against industry and other 
                public sector agencies in terms of performance;
          (2) develop standard use rates consistent throughout 
        each category of space and with nongovernmental space 
        use rates;
          (3) develop a strategy to reduce the reliance of 
        Federal agencies on leased space for long-term needs if 
        ownership would be less costly;
          (4) provide guidance on eliminating inefficiencies in 
        the Federal leasing process;
          (5) compile a list of real property assets that are 
        field offices that are suitable for colocation with 
        other real property assets; and
          (6) not later than 1 year after the date of enactment 
        of this subchapter and annually during the 4-year 
        period beginning on the date that is 1 year after the 
        date of enactment of this subchapter and ending on the 
        date that is 5 years after the date of enactment of 
        this subchapter, the Council shall submit to the 
        Director a report that contains--
                  (A) a list of the remaining excess, surplus, 
                and underutilized properties of each Federal 
                agency;
                  (B) the progress of the Council toward 
                developing guidance for Federal agencies to 
                ensure that the assessment required under 
                section 622(9)(B) is carried out in a uniform 
                manner; and
                  (C) the progress of Federal agencies toward 
                achieving the goals established under section 
                622(5).
    (f) Consultation.--In carrying out the duties described in 
subsection (e), the Council shall also consult with 
representatives of--
          (1) State, local, tribal authorities, and affected 
        communities; and
          (2) appropriate private sector entities and 
        nongovernmental organizations that have expertise in 
        areas of--
                  (A) commercial real estate and development;
                  (B) government management and operations;
                  (C) space planning;
                  (D) community development, including 
                transportation and planning; and
                  (E) historic preservation.
    (g) Council Resources.--The Director and the Administrator 
shall provide staffing, and administrative support for the 
Council, as appropriate.

625. Federal real property inventory and database

    (a) In General.--Not later than 1 year after the date of 
enactment of this subchapter, the Administrator shall establish 
and maintain a single, comprehensive, and descriptive database 
of all real property under the custody and control of all 
Federal agencies.
    (b) Contents.--The database shall include--
          (1) information provided to the Administrator under 
        section 622(10); and
          (2) a list of real property disposals completed, 
        including--
                  (A) the date and disposal method used for 
                each real property;
                  (B) the proceeds obtained from the disposal 
                of each real property;
                  (C) the amount of time required to dispose of 
                the real property, including the date on which 
                the real property is designated as excess 
                property;
                  (D) the date on which the property is 
                designated as surplus property and the date on 
                which the property is disposed; and
                  (E) all costs associated with the disposal.
    (c) Accessibility.--
          (1) Committees.--The database established under 
        subsection (a) shall be made available on request to 
        the Committee on Homeland Security and Governmental 
        Affairs and the Committee on Environment and Public 
        Works of the Senate and the Committee on Oversight and 
        Government Reform and the Committee on Transportation 
        and Infrastructure of the House of Representatives.
          (2) General public.--Not later than 3 years after the 
        date of enactment of this subchapter and to the extent 
        consistent with national security, the Administrator 
        shall make the database established under subsection 
        (a) accessible to the public at no cost through the 
        website of the General Services Administration.

626. Limitation on certain leasing authorities

    (a) In General.--Except as provided in subsection (b), not 
later than December 31 of each year following the date of 
enactment of this subchapter, a Federal agency with independent 
leasing authority shall submit to the Council a list of all 
leases, including operating leases, in effect on the date of 
enactment of this subchapter that includes--
          (1) the date on which each lease was executed;
          (2) the date on which each lease will expire;
          (3) a description of the size of the space;
          (4) the location of the property;
          (5) the tenant agency;
          (6) the total annual rental rate; and
          (7) the amount of the net present value of the total 
        estimated legal obligations of the Federal Government 
        over the life of the contract.
    (b) Exception.--Subsection (a) shall not apply to--
          (1) the United States Postal Service;
          (2) the Department of Veterans Affairs; or
          (3) any other property the President excludes from 
        subsection (a) for reasons of national security.

627. Expedited disposal pilot program

    (a) Establishment.--The Director shall establish a pilot 
program for disposal of any surplus property by sale, transfer, 
or other means.
          (1) Properties for expedited disposal.--
                  (A) In general.--On an annual basis, the 
                Director may authorize the expedited disposal 
                of not more than 200 surplus properties.
                  (B) Priority.--In determining which 
                properties to dispose of, the Director shall 
                give priority to surplus properties that have 
                the highest fair market value and the greatest 
                potential for disposal.
                  (C) Costs associated with disposal.--
                          (i) In general.--The Administrator 
                        may obligate an amount to pay any 
                        direct and indirect costs under section 
                        572 related to identifying and 
                        preparing properties to be reported as 
                        excess property by a Federal agency.
                          (ii) Reimbursement.--An amount 
                        obligated under clause (i) shall be 
                        paid from the proceeds of any sale of 
                        real property under this subsection.
                          (iii) Net proceeds.--Net proceeds 
                        shall be distributed under subsection 
                        (b).
                  (D) Maximum net proceeds.--Any real property 
                authorized for disposal by sale under 
                subparagraph (A) shall be disposed of in a 
                manner that, as determined by the Administrator 
                in consultation with the head of the applicable 
                Federal agency, is structured and marketed to 
                maximize the value to the Federal Government.
                  (E) Monetary proceeds requirement.--Surplus 
                property may be disposed of under this section 
                only if disposal of the property will generate 
                monetary proceeds to the Federal Government 
                that--
                          (i) exceed the costs of disposal of 
                        the property; and
                          (ii) are not less than 90 percent of 
                        fair market value.
                  (F) Local government notification.--
                          (i) Notification.--Not later than 30 
                        days after the date on which the 
                        Director makes the authorization under 
                        subparagraph (A), the Director shall 
                        submit in writing to the appropriate 
                        local government unit in which the 
                        property is located a notification that 
                        includes a list of each applicable 
                        property authorized to be disposed of 
                        under subparagraph (A).
                          (ii) Removal from pilot program.--
                                  (I) In general.--The 
                                Director, at the discretion of 
                                the Director, may remove a 
                                property for which notification 
                                has been provided under clause 
                                (i) from the pilot program 
                                established under subparagraph 
                                (A).
                                  (II) Replacement.--For each 
                                property removed from the pilot 
                                program under subclause (I), 
                                the Director may authorize the 
                                expedited disposal of 1 
                                property not originally 
                                authorized under subparagraph 
                                (A).
          (2) Applicability of certain law.--Any expedited 
        disposal of real property conducted under this section 
        shall not be subject to--
                  (A) any section of An Act Authorizing the 
                Transfer of Certain Real Property for Wildlife, 
                or Other Purposes (16 
                U.S.C. 667b);
                  (B) sections 107 and 317 of title 23;
                  (C) sections 545(b)(8), 550, 553, 554, and 
                1304(b) of this title;
                  (D) section 501 of the McKinney-Vento 
                Homeless Assistance Act (42 U.S.C. 11411);
                  (E) section 47151 of title 49; or
                  (F) section 13(d) of the Surplus Property Act 
                of 1944 (50 U.S.C. App. 1622(d)).
          (3) Effect.--Except as provided in paragraph (2), 
        nothing in this subchapter terminates or in any way 
        limits the authority of any Federal agency under any 
        other provision of law to dispose of real property.
    (b) Use of Proceeds.--
          (1) In general.--Of the proceeds received from the 
        disposal of any real property under this subchapter--
                  (A) not less than 80 percent shall be 
                returned to the general fund of the Treasury 
                for debt reduction;
                  (B) the lesser of 18 percent or the share of 
                proceeds otherwise authorized to be retained 
                under law shall be retained by the Federal 
                agency that has custody and is accountable for 
                the real property, subject to paragraph (2);
                  (C) not greater than 2 percent shall be made 
                available to carry out section 628, subject to 
                annual appropriations; and
                  (D) any remaining share of the proceeds shall 
                be returned to the general fund of the Treasury 
                for Federal budget deficit reduction.
          (2) Limitation on use of proceeds.--Any proceeds 
        retained by Federal agencies under this section shall 
        be--
                  (A) deposited into the appropriate real 
                property account of the Federal agency that had 
                custody and accountability for the real 
                property, with the funds expended only as 
                authorized in annual appropriations Acts;
                  (B) used--
                          (i) by not later than 2 years after 
                        the date of disposal of the real 
                        property; and
                          (ii) only for activities relating to 
                        Federal real property asset management 
                        and disposal; and
                  (C) if not used by the date described in 
                subparagraph (B)(i), shall be deposited in the 
                Treasury and used for Federal budget deficit 
                reduction.
    (c) Public Benefit.--
          (1) Conveyance.--Except as provided in paragraph (2), 
        if a real property authorized to be disposed of under 
        subsection (a) has not been disposed of by the date 
        that is 2 years after the date the property is listed 
        for sale, the Director, in consultation with the 
        Administrator and the Secretary of Housing and Urban 
        Development, may consider a request from the disposing 
        Federal agency that the real property be conveyed to 
        State and local governments or nonprofit organizations 
        for various public purposes or uses as permitted by 
        applicable law.
          (2) Predominant use and size standards.--
                  (A) In general.--Any real property authorized 
                to be disposed of under subsection (a) shall 
                not be conveyed under paragraph (1) if--
                                  (i) the predominant use of 
                                the property is not for 
                                housing; and
                                  (ii)(I) the area of the 
                                property is not less than 
                                25,000 square feet; or
                                  (II) the appraised fair 
                                market value of the property is 
                                greater than $1,000,000.
                  (B) Appraised fair market value.--The 
                appraised fair market value described in 
                subparagraph (A)(ii)(II) shall be determined by 
                the Federal agency with custody or control of 
                the property, in consultation with the 
                Administrator and standard appraisal practice.
    (d) Enforcement.--
          (1) Increase in size of inventory.--Except as 
        provided in paragraph (2), if a Federal agency fails to 
        make available for public sale the real property 
        authorized for disposal under subsection (a) by the 
        date that is 18 months after the date on which the 
        authorization is made, that Federal agency, except for 
        specific exceptions promulgated by the Director, shall 
        not increase the size of the civilian real property 
        inventory, unless the square footage of the increase is 
        offset, within an appropriate time as determined by the 
        Director, through consolidation, colocation, or 
        disposal of another building space from the inventory 
        of that Federal agency.
          (2) Exception.--Paragraph (1) shall not apply to a 
        Federal agency that acquires any real property not 
        under the administrative jurisdiction of the Federal 
        Government, by sale or lease, until the Director 
        submits a certification to Congress of the disposal of 
        all of those surplus properties.
    (e) Termination of Authority.--The authority provided by 
this section terminates on the date that is 5 years after the 
date of enactment of this subchapter.

628. Homeless assistance grants

    (a) Definitions.--In this section:
          (1) Eligible nonprofit organization.--The term 
        ``eligible nonprofit organization'' means a nonprofit 
        organization that is a representative of the homeless.
          (2) Homeless.--The term ``homeless'' has the meaning 
        given the term in section 103 of the McKinney-Vento 
        Homeless Assistance Act (42 U.S.C. 11302), except that 
        subsection (c) of that section shall not apply.
          (3) Permanent housing.--The term ``permanent 
        housing'' has the meaning given the term in section 401 
        of the McKinney-Vento Homeless Assistance Act (42 
        U.S.C. 11360).
          (4) Private nonprofit organization.--The term 
        ``private nonprofit organization'' has the meaning 
        given the term in section 401 of the McKinney-Vento 
        Homeless Assistance Act (42 U.S.C. 11360).
          (5) Representative of the homeless.--The term 
        ``representative of the homeless'' has the meaning 
        given the term in section 501(i) of the McKinney-Vento 
        Homeless Assistance Act (42 U.S.C. 11411(i)).
          (6) Secretary.--The term ``Secretary'' means the 
        Secretary of Housing and Urban Development.
          (7) Transitional housing.--The term ``transitional 
        housing'' has the meaning given the term in section 401 
        of the McKinney-Vento Homeless Assistance Act (42 
        U.S.C. 11360).
    (b) Grant Authority.--
          (1) In general.--To the extent amounts are made 
        available under section 627(b)(1)(C) for use under this 
        section, the Secretary shall make grants to eligible 
        private nonprofit organizations through the continuum 
        of care program established under subtitle C of title 
        IV of the McKinney-Vento Homeless Assistance Act (42 
        U.S.C. 11381 et se.), to purchase real property 
        suitable for use to assist the homeless in accordance 
        with subsection (c).
          (2) Terms and conditions.--Except as otherwise 
        provided in this section, a grant under this section 
        shall be subject to the same terms and conditions as a 
        grant under the continuum of care program established 
        under subtitle C of title IV of the McKinney-Vento 
        Homeless Assistance Act (42 U.S.C. 11381 et se.).
    (c) Use of Properties for Housing or Shelter for the 
Homeless.--
          (1) Eligible uses.--An eligible private nonprofit 
        organization that receives a grant under subsection (b) 
        shall use the amounts received only to purchase or 
        rehabilitate real property to provide permanent 
        housing, transitional housing, or temporary shelter to 
        the homeless.
          (2) Term of use.--The Secretary may not make a grant 
        under subsection (b) to an eligible private nonprofit 
        organization unless the eligible private nonprofit 
        organization provides to the Secretary such assurances 
        as the Secretary determines necessary to ensure that 
        any real property purchased or rehabilitated using 
        amounts received under the grant is used only for the 
        purposes described in paragraph (1) for a period of not 
        less than 15 years.
    (d) Preference.--In awarding grants under subsection (b), 
the Secretary shall give preference to eligible private 
nonprofit organizations that operate within areas in which 
Federal real property is being sold under the disposal program 
authorized under section 627.
    (e) Regulations.--The Secretary may promulgate such 
regulations as are necessary to carry out this section.

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TITLE 42--THE PUBLIC HEALTH AND WELFARE

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CHAPTER 7--SOCIAL SECURITY

           *       *       *       *       *       *       *



Subchapter XVIII--Health Insurance for Aged and Disabled

           *       *       *       *       *       *       *



     PART B--SUPPLEMENTARY MEDICAL INSURANCE BENEFITS FOR AGED AND 
                        DISABLED\109\
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    \109\These amendments to the Social Security Act are made by 
section 104(b) of the bill.

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Sec. 1395p. Enrollment periods

    (a) * * *

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    (m)(1)(A) In the case of any individual who is subject to 
the enrollment requirement of section 8903c(e) of title 5, 
United States Code, who has elected not to enroll (or to be 
deemed enrolled) during the individual's initial enrollment 
period, there shall be a special enrollment period described in 
subparagraph (B).
    (B) The special enrollment period described in this 
subparagraph is the 6-month period, beginning on August 1, 2015 
and ending on January 31, 2016.
    (2)(A) In the case of any individual who--
          (i) was initially not subject to the enrollment 
        requirement of section 8903c(e) of title 5, United 
        States Code;
          (ii) is eligible to enroll in a plan under chapter 89 
        of title 5, United States Code, because of an 
        involuntary loss of health care coverage;
          (iii) upon the involuntary loss of health care 
        coverage, becomes subject to the enrollment requirement 
        of section 8903c(e) of title 5, United States Code, 
        because of enrollment in a PSHBP plan; and
          (iv) has elected not to enroll (or to be deemed 
        enrolled) during the individual's initial enrollment 
        period, there shall be a special enrollment period 
        described in subparagraph (B).
    (B) The special enrollment period described in this 
subparagraph is the period of time equivalent to the period of 
time in which the individual has the ability to enroll in a 
PSHBP plan due to the involuntary loss of health care coverage, 
pursuant to chapter 89 of title 5, United States Code, and its 
implementing regulations.
    (C) For purposes of this subsection, the term ``PSHBP 
plan'' has the meaning under section 8903c(a) of title 5, 
United States Code.
    (3) In the case of an individual who enrolls during the 
special enrollment period provided under paragraphs (1) and 
(2), the coverage period under this part shall begin on the 
first day of the month in which the individual enrolls.

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Sec. 1395r. Amount of premiums for individuals enrolled under this part

    (a) * * *

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    (b) Increase in Monthly Premium--
    In the case of an individual whose coverage period began 
pursuant to an enrollment after his initial enrollment period 
(determined pursuant to subsection (c) or (d) of section 1395p 
of this title) and not pursuant to a special enrollment period 
under subsection [(i)(4) or (l)] (i)(4), (l), or (m) of section 
1395p of this title, the monthly premium determined under 
subsection (a) of this section (without regard to any 
adjustment under subsection (i) of this section) shall be 
increased by 10 percent of the monthly premium so determined 
for each full 12 months (in the same continuous period of 
eligibility) in which he could have been but was not enrolled. 
For purposes of the preceding sentence, there shall be taken 
into account (1) the months which elapsed between the close of 
his initial enrollment period and the close of the enrollment 
period in which he enrolled, plus (in the case of an individual 
who reenrolls) (2) the months which elapsed between the date of 
termination of a previous coverage period and the close of the 
enrollment period in which he reenrolled, but there shall not 
be taken into account months for which the individual can 
demonstrate that the individual was enrolled in a group health 
plan described in section 1395y(b)(1)(A)(v) of this title by 
reason of the individual's (or the individual's spouse's) 
current employment status or months during which the individual 
has not attained the age of 65 and for which the individual can 
demonstrate that the individual was enrolled in a large group 
health plan (as that term is defined in section 
1395y(b)(1)(B)(iii) of this title) by reason of the 
individual's current employment status (or the current 
employment status of a family member of the individual) or 
months for which the individual can demonstrate that the 
individual was an individual described in section 1395p(k)(3) 
of this title. Any increase in an individual's monthly premium 
under the first sentence of this subsection with respect to a 
particular continuous period of eligibility shall not be 
applicable with respect to any other continuous period of 
eligibility which such individual may have. No increase in the 
premium shall be effected for a month in the case of an 
individual who enrolls under this part during 2001, 2002, 2003, 
or 2004 and who demonstrates to the Secretary before December 
31, 2004, that the individual is a covered beneficiary (as 
defined in section 1072(5) of title 10). The Secretary of 
Health and Human Services shall consult with the Secretary of 
Defense in identifying individuals described in the previous 
sentence.

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[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

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