[House Report 114-858]
[From the U.S. Government Publishing Office]
114th Congress } { Rept. 114-858
HOUSE OF REPRESENTATIVES
2d Session } { Part 1
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POSTAL SERVICE REFORM ACT OF 2016
_______
December 5, 2016.--Committed to the Committee of the Whole House on the
State of the Union and ordered to be printed
_______
Mr. Chaffetz, from the Committee on Oversight and Government Reform,
submitted the following
R E P O R T
[To accompany H.R. 5714]
[Including cost estimate of the Congressional Budget Office]
The Committee on Oversight and Government Reform, to whom
was referred the bill (H.R. 5714) to restore the financial
solvency and improve the governance of the United States Postal
Service in order to ensure the efficient and affordable
nationwide delivery of mail, and for other purposes, having
considered the same, report favorably thereon without amendment
and recommend that the bill do pass.
CONTENTS
Page
Committee Statement and Views.................................... 2
Section-by-Section............................................... 17
Explanation of Amendments........................................ 30
Committee Consideration.......................................... 30
Roll Call Votes.................................................. 30
Application of Law to the Legislative Branch..................... 30
Statement of Oversight Findings and Recommendations of the
Committee...................................................... 30
Statement of General Performance Goals and Objectives............ 30
Duplication of Federal Programs.................................. 31
Disclosure of Directed Rule Makings.............................. 31
Federal Advisory Committee Act................................... 31
Unfunded Mandate Statement....................................... 31
Earmark Identification........................................... 31
Committee Estimate............................................... 31
Budget Authority and Congressional Budget Office Cost Estimate... 31
Changes in Existing Law Made by the Bill, as Reported............ 47
Committee Statement and Views
PURPOSE AND SUMMARY
H.R. 5714, the Postal Service Reform Act of 2016 (PSRA),
would restore the solvency of the United States Postal Service
and ensure the efficient and affordable nation-wide delivery of
mail. To accomplish these goals, the legislation would make
significant reforms in retiree health care, delivery
efficiency, governance, innovation, and accounting.
BACKGROUND AND NEED FOR LEGISLATION
Background
The United States Postal Service traces its beginning to
July 26, 1775 when the Second Continental Congress created ``a
line of posts'' under the administration of a Postmaster
General of the ``United Colonies.''\1\ In the more than 200
years since it was founded, the Postal Service's mission has
been largely unchanged: ``to bind the Nation together through
the personal, educational, literary, and business
correspondence of the people.''\2\ To help fulfill this
responsibility, the agency has also been granted two federal
monopolies: one on First-Class Mail and a second on access to
the mailbox.\3\
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\1\U.S. Postal Serv., The History of the United States Postal
Service, available at https://about.usps.com/publications/pub100/
pub100_001.htm.
\2\39 U.S.C. Sec. 101(a).
\3\18 U.S.C. Sec. Sec. 1693-1699, 1725 and 39 U.S.C. Sec. 601-06.
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For almost one hundred years, from 1872 to 1970, the agency
was organized as the cabinet-level Post Office Department
(POD), postage rates were set by federal statute, and the
agency was partially subsidized with federal tax dollars. As a
result, the POD was dependent on both political management and
the appropriations process, even as the challenges of
delivering mail to a growing nation became more and more
complex. By 1970, the nation's postal infrastructure was
crumbling and in March of that year, postal strikes broke out
across the nation.\4\ Eventually, more than 150,000 POD
employees joined these strikes in protesting low wages and
unsafe working conditions. The strikes accelerated work on
legislation already in progress to overhaul the nation's postal
system.\5\
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\4\President's Comm'n. on Postal Organization, Towards Postal
Excellence (June 1968), available at http://hdl.handle.net/2027/
mdp.39015078700625.
\5\U.S. Postal Serv. Office of Inspector Gen., The Postal Strike of
1970, available at https://www.uspsoig.gov/blog/postal-strike-1970.
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On August 12, 1970, President Richard Nixon signed the
Postal Reorganization Act (PRA) into law, just months after the
two-week strike ended.\6\ This law transformed the POD into an
independent establishment of the executive branch called the
United States Postal Service. The PRA eliminated direct
political control of the Postal Service, and required the new
entity to be self-funding by the time taxpayer subsidies phased
out 10 years after the bill's enactment. The PRA granted postal
employees the right to bargain collectively and granted the
Postal Service access to credit through the U.S. Department of
the Treasury so it would have the ability to invest in long-
term infrastructure projects. The PRA also created the Postal
Rate Commission to regulate the Postal Service and approve the
Postal Service's rate proposals.
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\6\Postal Reorganization Act, Pub. L. No. 91-375 (1970).
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Following enactment of the PRA, the Postal Service improved
postal working conditions and upgraded the agency's
infrastructure. However, the PRA included insufficient
incentives for the Postal Service to become more efficient and
cost-effective over the long-term, as Postmasters General could
simply request rate increases if revenue was insufficient.
By the early 2000s, the spread of the Internet threatened
the long-term solvency of the Postal Service as communications
and other transactions were increasingly conducted in
electronic formats. Although mail volume had risen for nearly
200 years, by 2003, long-term projections began to show that
the growth of the Internet could significantly reduce future
mail volume.
Further, the Postal Service did not have the resources to
meet rising retiree health care costs in a time of diminishing
mail volumes. While the Postal Service set aside funds
necessary to pay the full projected costs of employee pensions,
the Postal Service had never set aside the funds necessary to
pay the full costs of retiree health care benefits. Instead,
these costs were paid as they became due and the Postal Service
began to accrue a large unfunded liability for the cost of
retiree health care it was projected to be unable to meet.
After nearly a decade of debate, the Postal Accountability
and Enhancement Act (PAEA) was enacted into law in 2006 to
address these challenges. The legislation required the Postal
Service to begin paying down its largest unfunded liability,
retiree health care, through annual installment payments over
50 years.
PAEA made other changes to postal governance. For example,
in place of the negotiated rate system, PAEA instituted a
postage rate cap intended to force the agency to eliminate
unnecessary costs.
Under PAEA, the Postal Service improved the efficiency of
its operations, including reducing its workforce by 203,000
career employees between 2006 and 2015. However, these
efficiency gains have not been enough to offset steep decreases
in mail volumes. Shortly after PAEA was enacted, the Great
Recession contributed to steep drops in mail volumes. Mail
volume dropped by nearly five percent in 2008, and by another
almost 13 percent in 2009--a virtually unprecedented one-year
decline. Since 2006, the total volume of mail handled by the
Postal Service has declined by more than 28 percent.\7\
Unfunded liabilities have also continued to grow, and these
trends have placed the Postal Service in a precarious financial
position. The agency posted a net loss of $5.1 billion in
fiscal year 2015.\8\ Over these last nine years, the Postal
Service has lost a combined $56.8 billion.\9\ Even without a
statutory requirement to prefund accrued retiree health care
costs, the agency would still have lost $10.8 billion. As of
September 30, 2015, the Postal Service also faced unfunded
liabilities that are projected to cost more than $125 billion--
nearly double the agency's revenue of $69 billion.\10\
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\7\U.S. Postal Serv., A decade of facts and figures, available at
https://about.usps.com/who-we-are/postal-facts/decade-of-facts-and-
figures.htm (last visited Sept. 29, 2016).
\8\U.S. Postal Serv., 2015 Report on Form 10-K, available at http:/
/about.usps.com/who-we-are/financials/10k-reports/fy2015.pdf (last
visited Sept. 29, 2016).
\9\Id. and U.S. Postal Serv., 2011 Report on Form 10-K, available
at http://about.usps.com/who-we-are/financials/10k-reports/fy2011.pdf
(last visited Sept. 29, 2016).
\10\Laying Out the Reality of the United States Postal Service:
Hearing Before the S. Comm. On Homeland Security and Governmental
Affairs, 114th Cong. (Jan. 21, 2016) (statement of Lori Rectanus, Dir.,
Physical Infrastructure, U.S. Gov't. Accountability Office), available
at http://www.gao.gov/assets/680/674728.pdf.
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The Postal Service Reform Act of 2016
H.R. 5714, the Postal Service Reform Act (PSRA), is the
product of more than a year of bipartisan negotiations and is
designed to put the Postal Service on a path to fiscal
stability. The bill includes a wide array of reforms that will
provide measured financial relief to the agency, improve
operations, enable cost-cutting, provide enhanced benefits to
postal customers, and promote enhanced stability in postage
rates in the near-term. While making these reforms, the bill
protects: the agency's vital role as a tool for private
commerce; the agency's utility for rural, low-income, and older
Americans; and the benefits postal workers have earned during
their careers. Critically, it also protects American taxpayers
from being forced to bail out the agency at a potential cost of
$100 billion, or provide a reinstituted annual operating
subsidy.
Even if PSRA legislation is enacted, the Postal Service
will still be faced with $75 billion in unfunded liabilities
and is likely to face continued declines in mail volume.
However, the legislation will make critical adjustments in the
Postal Service's operations and retiree health care benefits
that are essential to ensuring that it continues as a self-
funding agency.
The following sections discuss the rationale behind key
reforms included in the legislation.
Title I--Postal Service Benefits Reform
Health care reform
Like most civilian federal agencies, the Postal Service
currently provides health care benefits to its employees
through the Federal Employees Health Benefits Program (FEHB).
Managed by the Office of Personnel Management (OPM), FEHB
currently offers enrollees the choice of more than 200
individual health insurance plans. Under this program, the
Postal Service pays roughly three-quarters of the premium costs
for plans chosen by postal employees, as well as eligible
postal retirees.\11\
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\11\Postal retirees are eligible to retain FEHB coverage in
retirement if the individual had been an FEHB enrollee for five
consecutive years before retirement and if the retiree is eligible for
an annuity immediately upon retirement. See Office of Personnel Mgmt.,
Frequently Asked Questions: Continuing FEHB Coverage into Retirement,
available at https://www.opm.gov/faqs/topic/insure/?cid=880bfba8-8f8b-
4e64-9a72-fae98408fd0e.
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Through fiscal year 2016, the Postal Service is responsible
for paying both active and retiree health care premiums on a
``pay-as-you-go'' basis and, since 2006, the Postal Service has
also been statutorily required to prefund accrued liabilities
for retiree health care. This mandate was included in PAEA,
which required that by September 30, 2056, the Postal Service
fully prefund its retiree health care liability just as the
agency is required to prefund pension obligations.\12\ Under
PAEA, payments to prefund the retiree health care liability
were to average approximately $5.6 billion per year over the
first ten years after the enactment of PAEA, and these funds
were to be deposited into the Postal Service Retiree Health
Benefits Funds (PSRHBF).
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\12\Postal Accountability and Enhancement Act, Pub. L. No. 109-435
Sec. 803 (2006).
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Under PAEA, beginning in fiscal year 2017, the Postal
Service will no longer be required to make ``pay-as-you-go''
payments for retiree health care premiums and it will no longer
be required to make a specified prefunding payment. Instead,
the premium payments will be drawn from the PSRHBF and the
Postal Service will be responsible for making an annual normal
cost payment to the fund equal to the amount of the new
liability added to the fund in each year. The Postal Service
will also be required to make an amortization payment to
address the remaining existing unfunded liability.
While PAEA sought to address the problem of long-term
retiree health care costs, the legislation did not anticipate
the significant and likely permanent decline in mail volume
that began almost immediately after the enactment of the bill.
As a result of these trends, the Postal Service has been unable
to make most of the statutorily specified payments to prefund
accrued liabilities for retiree health care costs. Currently,
the agency faces $54 billion in unfunded retiree health care
costs--the agency's single largest outstanding liability--and
one worth nearly 80 percent of the agency's annual income.
The PSRA would address this issue by reforming the Postal
Service's health care benefits system for both current and
retired employees. Specifically, the bill would create a new
Postal Service Health Benefits Program (PSHB), which would
operate within the framework of FEHB and be required to provide
actuarially equivalent coverage compared to FEHB. Unlike FEHB,
the PSHB would be open only to postal employees and retirees
and would constitute a separate risk pool within FEHB.
Importantly, postal employees and annuitants would not be
forced to change their carrier or plan type once the PSHB is
set up. Under the bill, if a current enrollee's carrier offers
the same plan type in the PSHB, that enrollee will be required
to sign up for coverage within the PSHB (although not
necessarily for the same plan type or with the same carrier)
and will no longer be eligible for enrollment in the rest of
FEHB. If the current enrollee's carrier does not offer the same
plan type in the PSHB, the enrollee will be allowed to remain
in FEHB. However, if the enrollee elects to change plans, or if
the enrollee's current plan is discontinued, the enrollee will
be able to choose only those plans in the PSHB.
Postal employees who are enrolled in FEHB at the time of
their retirement will be required to enroll in a PSHB plan as
part of the transition to retirement. However, both employees
and annuitants are exempt from the requirement to enroll in the
PSHB if they reside in an area where there is no PSHB plan
available.
Under this bill, employees will be allowed to retain their
current carriers and plan types if they choose to do so, but
they will likely be required to purchase that coverage through
the PSHB instead of the FEHB.
Additionally, the bill would require postal employees and
retirees eligible for Medicare Part A and B enrollment to
enroll in those programs in order to remain eligible for PSHB
(or FEHB) coverage in retirement. Rather than requiring postal
employees and retirees to enroll in individual Part D plans,
the legislation directs PSHB plans to offer Part D benefits
through an Employer Group Waiver Plan.
While approximately three-quarters of eligible postal
employees and retirees enroll in both Medicare Parts A and B
upon reaching eligibility age, the remainder of postal
employees and retirees do not enroll. As a result, this bill
will result in a one-time addition of approximately 83,000
individuals to the Medicare rolls, roughly the number of
individuals who enroll in Medicare every eight days.\13\
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\13\Dan Diamond, 10,000 People Are Now Enrolling in Medicare Every
Day, Forbes, Jul. 13, 2015, http://www.forbes.com/sites/dandiamond/
2015/07/13/aging-in-america-10000-people-enroll-in-medicare-every-day/.
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To minimize the overall impact of the Medicare-related
changes on postal employees and retirees, the legislation makes
a number of accommodations. First, the bill would automatically
deem individuals who would need to enroll in Medicare Part A or
Part B as enrolled in order to minimize the actions necessary
for impacted individuals to retain PSHB coverage. The bill also
waives the late enrollment penalty for those who will be
enrolled in Medicare Parts A and B as a result of the bill.
Finally, for those who would otherwise be subject to a late
enrollment penalty, the legislation creates a three-year phase-
in period for Part B premiums. Under this phase-in period,
during the first year of the PSHB, the Postal Service will pay
for 75 percent of the Part B premiums for those who enroll as a
result of the bill, 50 percent of the premiums in the second
year, and 25 percent of the premiums in the third year. The
Postal Service estimates that paying these premiums will cost
$250 million over the life of the program and supports the
provision.\14\
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\14\E-mail from Ronald A. Stroman, Deputy Postmaster General, U.S.
Postal Serv. to H. Comm. on Oversight & Gov't. Reform Minority Staff
(June. 8, 2016, 12:57 p.m.) (on file with Committee).
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Overall, the Postal Service estimates the creation of the
PSHB and the enrollment of all retirees in Medicare Parts A and
B will save the agency $3 billion annually. The majority of
these savings will come from improved integration with Medicare
and the resulting decrease in the Postal Service's unfunded
liability for retiree health care. An analysis prepared for the
Postal Service and shared with the Committee estimates that the
health care reforms contained in this bill will reduce the
Postal Service's unfunded retiree health care liability to
approximately $400 million from its current level of $54
billion.\15\
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\15\Memorandum from Adam Reese, Tom Rand, and Sanjit Puri to Postal
Management, Retiree Health Benefits (Aug. 14, 2015).
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These changes will also address an inequity the Postal
Service currently faces with Medicare. In 1983, as part of a
wider Medicare reform, the Postal Service and its employees
were required to begin paying the Medicare payroll tax. Over
the last 33 years, the Postal Service and its employees have
paid $29 billion in Medicare taxes into the Medicare Part A
Trust Fund.\16\ Importantly, this figure does not take into
account interest or inflation, making the current dollar total
contribution much higher. Despite these contributions, the
Postal Service is at a relative disadvantage compared to
private sector companies. This is because private sector
companies can require their retirees to fully enroll in
Medicare in order to receive any additional health care
benefits in retirement, but the Postal Service cannot require
its retirees to enroll in Medicare. As a result, the agency is
forced to contribute billions to Medicare for which it receives
no benefit if its employees and retirees do not enroll in
Medicare. By requiring full enrollment in Medicare going
forward, the Postal Service will no longer be forced to provide
a subsidy to Medicare and will be able to address its retiree
health care costs like a private sector business.
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\16\E-mail from Sheila T. Meyers, Manager, Gov't. Liaison, U.S.
Postal Serv. to H. Comm. on Oversight & Gov't. Reform Majority Staff
(Apr. 28, 2016, 9:48 a.m.) (on file with Committee).
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Without the reforms included in this bill, the Postal
Service's retiree health care liability will continue to grow
and the Postal Service will have no options for meeting this
liability. It will continue to face this liability while also
facing urgent unmet infrastructure needs and $70 billion in
other unfunded liabilities. Without the retiree health care
reforms in the PSRA, the Postal Service will almost certainly
be unable to pay out all of the benefits it has promised to
retirees over the next several decades, and if the Postal
Service cannot pay, the result will almost certainly be an
open-ended multi-billion-dollar annual taxpayer bailout of the
Postal Service.
Pension reform
H.R. 5714 would make two technical improvements to ensure
the appropriate funding of the Postal Service's Civil Service
Retirement System (CSRS) and Federal Employees Retirement
System (FERS) pension liabilities. The first change would
require that both CSRS and FERS Postal Service liabilities be
calculated on the basis of factors specific to the Postal
Service, rather than on the basis of the demographic and
economic assumptions used to calculate the liabilities for the
entire federal government.
The second change would create a system to allow the Postal
Service to access surplus funding, should it exist, in either
its CSRS or FERS accounts. Under current law, if the Postal
Service is found to be underfunded in either pension system, it
is required to make annual amortization payments to make up for
the shortfall within a period of 30 years for FERS and a
slightly shorter period for CSRS, as the now-legacy pension
program phases out. To account for possible surpluses, the PSRA
will direct the Office of Personnel Management (OPM) to treat
shortfalls and surpluses in the same manner. The status of
funding will be calculated on an annual basis and if a
shortfall is found, the Postal Service will have to make an
amortization payment to OPM. If a surplus is found, OPM will
make an amortization payment to the Postal Service.
While these pension reforms are important to ensure
accurate and fair accounting of the Postal Service's
liabilities, they will have little short-term impact. As of the
close of fiscal year 2015, the Postal Service had a net pension
deficit of $24.1 billion, and these reforms are not expected to
significantly alter the value of that deficit.\17\
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\17\Supra note 8.
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Title II--Postal Service Operations Reform
Governance reform
The governing body of the Postal Service is the Board of
Governors, which plays a similar role for the Postal Service as
a board of directors does for a publicly held corporation.
Under current law, the Board of Governors is comprised of 11
members, which include nine Governors, the Postmaster General,
and the Deputy Postmaster General. The President, with the
advice and consent of the Senate, appoints the Governors. The
Governors are responsible for appointing the Postmaster General
and the Deputy Postmaster General.
Currently, eight of the nine Governor positions are vacant,
and the only remaining Governor's term is set to expire in
December 2016. While timely confirmation of Governor nominees
has become difficult in recent years, even those confirmed as
Governors in the past often failed to meet the statutory
requirements for Governors set forth in title 39.\18\
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\18\39 U.S.C. Sec. 202(a)(1).
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The PSRA would adjust that structure to make it easier to
have a fully functioning Board. The bill would reduce the
number of Governors to five from nine. The bill would also
amend the duties of the Postmaster General to allow him or her
to carry out the power of the Postal Service, although the
power ultimately remains vested in the Board. As a result, the
Postmaster General would be authorized to carry out day-to-day
operations of the Postal Service while still subject to the
overall supervision of the Board. In addition, these reforms
ensure that vacancies on the Board of Governors do not impair
the powers of the Board, which is permitted to act upon
majority vote of the Board.
The PSRA would also make small alterations in the
eligibility requirements for appointees to the Board of
Governors. The current statutory requirement that at least
three Governors be ``chosen solely on the basis of their
demonstrated ability in managing organizations or corporations
(in either the public or private sector) that employs at least
50,000 employees'' will be altered to an identical requirement,
but will cite organizations of at least 10,000 employees
instead of 50,000. The current provision overly limits the
number of eligible individuals to a very small pool. It is the
hope and intent of the Committee that this change will
encourage future Presidents to nominate more individuals with
experience in managing large organizations.
The PSRA would also change the process for funding the
negotiations of international postage rates for letters and
small parcels. Currently, these rates are governed by a treaty
developed at the Universal Postal Union, a United Nations
organization. While the U.S. Department of State (State) is
responsible for negotiating on behalf of the United States at
the Universal Postal Union, the Postal Service provides full
reimbursement for the costs incurred by State for these
negotiations. However, by statute, the State Department is
required to represent all American interests when negotiating a
treaty, including those of the government, the Postal Service,
and the private sector (including private providers of postal
services). Given this requirement, the Postal Service's
subsidization of State's negotiations at the Universal Postal
Union creates the appearance of a conflict of interest.\19\ To
eliminate this appearance, the PSRA modifies the payment
structure to require the Postal Regulatory Commission (PRC) to
approve the reimbursement sought by the State Department. This
change will help ensure that the Postal Service has the same
level of consultation authority granted to private providers of
international delivery and postal services.
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\19\39 U.S.C. Sec. 407(b)(2).
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In addition, the PSRA also clarifies and confirms the PRC's
authorities to oversee the Postal Service's compliance with its
service standards. Specifically, the bill clarifies the PRC's
authority to levy fines against the Postal Service, payable to
the U.S. Treasury, for deliberate noncompliance with the
provisions of title 39, including noncompliance with the
service standards established by the Postal Service itself.
This provision of the bill helps ensure that the PRC has the
proper disciplinary authorities to enforce compliance by the
Postal Service.
Secure mail delivery
The primary cost savings measure included in the bill is
found in the provisions related to delivery mode conversion.
Specifically, the bill would require mandatory conversion of
eligible business addresses to a more cost effective and secure
centralized mode of delivery. The legislation also authorizes a
program to voluntarily convert residential addresses to
centralized delivery.
According to the most recent U.S. Government Accountability
Office (GAO) report on the topic of delivery mode conversions,
the Postal Service reported that its estimated average annual
costs for Fiscal Year 2012 varied significantly by mode of
delivery.\20\ According to the Postal Service's reported
figures, the average cost to deliver to each type of delivery
point is as follows:
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\20\U.S. Gov't Accountability Office, U.S. Postal Serv.: Delivery
Mode Conversions Could Yield Large Savings, but More Current Data Are
Needed (May 2014) (GAO-14-444).
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Door delivery address: approximately $380
per year;
Curbside delivery address: approximately
$240 per year;
Centralized delivery address: approximately
$170 per year.\21\
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\21\Id.
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The GAO report identified certain limitations in the
underlying data used to formulate these estimates: ``[The
estimates] rely on data from a 1994 USPS study. In lieu of
current data, USPS adjusted the 1994 data according to
increases in the Consumer Price Index--an adjustment that may
not have been the same as changes in USPS delivery costs [. .
.].''\22\ Therefore, the bill requires that the Postal Service
conduct a new study to ensure that accurate data is used to
assess cost savings from delivery point conversions.
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\22\Id.
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Currently, in the United States 41 percent of mail delivery
is made to curbside boxes, 30 percent of mail delivery is made
to centralized delivery locations, and 28 percent of mail
delivery is made to the door.\23\ The number of door delivery
points declined by 308,000 from 2008 to 2013, while curbside
delivery points increased by 1.4 million and centralized
delivery points increased by 4.5 million.\24\ These shifts
primarily reflect the construction of new delivery points over
this period. While the Postal Service has been successful in
providing centralized delivery service to most new addresses in
recent years, there has been little effort to convert existing
addresses.
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\23\Id.
\24\Id.
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The Postal Service can likely realize savings by
transitioning to a more efficient delivery mode. In its report
on delivery methods, GAO noted that the Postal Service has
taken the position that ``since the original [1994] study was
conducted, [the Postal Service] has adopted work rules that
disproportionately increase the cost of door delivery,''
thereby making the difference in cost between delivery modes
even more significant.\25\
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\25\Id.
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The Committee also sees an important advantage for the
consumer in expanding cluster box unit (CBU) delivery. Today,
outside of CBUs, few mailboxes are secured and most mailboxes
can accommodate only small packages. As a result, many packages
are simply left unsecured near a door if the resident is not
home at the time of delivery, putting them at risk of being
stolen. Postal Service-approved CBUs meet stringent security
requirements and contain secure parcel lockers as well as
secure mail receptacles for individual addresses. When a
customer served by a CBU receives a parcel that is too big for
their mail receptacle (which itself is large enough to hold a
side loading Postal Service Medium Flat Rate Box), their letter
carrier will place a key to an attached parcel locker in the
mail receptacle which the customer can use to open a larger
parcel locker attached to the CBU. This ensures that parcels
are kept in secure locations until they are retrieved by their
intended recipients. In fact, the U.S. Postal Inspection
Service, which is responsible for investigating mail theft,
provides guidance on their website for protecting mail from
thieves. The guidance lists a number of ways to protect mail
from thieves, one of which is: ``Consult with your local
Postmaster for the most up-to-date regulations on mailboxes,
including the availability of locked centralized or curbside
boxes.''\26\ A secure clusterbox will give postal customers
greater peace of mind that high-value packages, such as
medication and electronics, will be safely delivered to them
through the mail.
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\26\Protecting Your Mail, U.S. Postal Inspection Service, available
at https://postalinspectors.uspis.gov/investigations/MailFraud/
fraudschemes/mailtheft/TipThieves.aspx (last visited Aug. 18, 2016).
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The Committee recognizes that shifting to secure,
centralized delivery may not be feasible for some addresses,
but it would produce savings and value for some customers. The
PSRA would direct the Postal Service to determine which door
delivery points among both business and residential addresses
are suitable for conversion to centralized delivery. The Postal
Service would be required to convert business addresses deemed
suitable to conversion to a more cost-effective mode of
delivery over a period of five years, with centralized delivery
as the preferred option. The Postal Service would also be
directed to pursue voluntary conversions of residential
addresses based on the number of addresses that opt for
conversion in any given area. Both provisions are included in
order to produce much-needed savings for the Postal Service
while still maintaining its universal service obligation.
The PSRA outlines a process for the Postal Service to
identify and offer conversions to residential addresses, but
ultimately it is the Postal Service's ability to demonstrate
the value to customers that will enable substantial conversions
that will pay for themselves almost immediately. Given the
importance of outreach to induce voluntary conversions, the
Postal Service cannot rely solely on local outreach to achieve
maximum returns. The Postal Service is already engaged in a
national advertising campaign on the value of the mail and can
incorporate this new opportunity into that campaign by focusing
on the benefits of conversion to consumers. For example, in
addition to highlighting the security benefits of conversions
to CBUs, outreach could focus on the reduced environmental
impact of delivery to centralized delivery points, as
conversions allow the Postal Service to shorten delivery routes
and take vehicles off the road.
Centralized delivery also offers a number of advantages to
the Postal Service. Not only does centralized delivery offer
immediate cost savings from reduced work hours for delivery,
conversions to centralized delivery also enable one vehicle
stop for multiple addresses, resulting in savings on fuel and
wear and tear on delivery vehicles. Other cost savings could
result from reductions in workers' compensation claims.
According to a report by GAO, the Post Service's data
``indicate that most injuries that occurred from 2009 through
2012 on mail delivery routes were caused by falls and dog
bites.''\27\ Presumably, the risk of falling lessens as the
amount of walking required for delivery decreases, and the risk
of dog bites lessens by minimizing the requirement to approach
a home.
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\27\Gov't Accountability Office, U.S. Postal Service: Information
on Workforce Injuries Arising During Mail Delivery (Sept. 26, 2013)
(GAO-13-847R), available at http://www.gao.gov/assets/660/658174.pdf.
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Postal rate modernization
The reforms in PAEA reconstituted the Postal Rate
Commission as the current Postal Regulatory Commission (PRC)
and required it to establish a modern system for regulating
rates and classes for the Postal Service's market-dominant
products. This system was required to cap rate increases by the
percentage increase in the Consumer Price Index for All Urban
Consumers (CPI-U). Under this system, the Postal Service has
the authority to set market-dominant rates, but in order for
the rates to go into effect, the PRC must certify that they are
consistent with the rate system requirements. Prior to the
enactment of the PAEA, the ratemaking system was adversarial
and the Postal Rate Commission was the final arbiter of
specific rates.
The regulation of market-dominant rates is essential
because of the Postal Service's mail monopoly. The CPI cap has
been a valuable component of the PAEA rate system. It has
created stability and predictability of postal rates and, more
importantly, the inflation-based price cap has simulated the
effect of competition and forced the Postal Service to minimize
costs while maintaining service. This was a positive step
forward from the former system of cost-based pricing in which
rates were based largely on the costs incurred and there was
little pressure to reduce costs and increase efficiencies.
To help ensure the rate system is flexible over time, the
PAEA required the PRC to conduct a comprehensive review of the
rate setting system in its entirety ten years after it was
enacted. This review will start in December 2016. The review is
statutorily required to evaluate whether the rate system is
achieving a list of nine objectives, while taking into account
a list of 14 factors. The PSRA adds four new factors to the
list:
1. The reliability of delivery timelines and the
extent to which the Postal Service is meeting its
service standard obligations;
2. The need to ensure that the Postal Service has
adequate revenues and has taken appropriate cost-
cutting measures to maintain financial stability and
meet all legal obligations;
3. The extent to which the Postal Service has taken
actions to increase its efficiency and reduce its
costs; and
4. The importance of stability and predictability of
rates to ratepayers.
The PSRA also makes slight adjustments to the objectives
and factors. The adjustments to the objectives language
emphasizes ensuring predictability and stability in rates to
enable business users and the general public to account for
rate adjustments in their budget planning. The language also
increases emphasis on the provision of high-quality service and
delivery standards so that mailers can be certain that their
mail will reach its destination by a specific date. Revised
language also identifies the importance of appropriate levels
of transparency when the Postal Service assigns expenditures to
institutional costs.
The new language also requires that negotiated service
agreements improve the net financial position of the Postal
Service and do not cause unreasonable disruption to the
marketplace.
The legislation also changes access to nonprofit mailing
rates. Currently, national and state political committees
receive the preferential rates available to nonprofit
organizations. Given that the Postal Service must operate
solely from its own revenues, it is not justifiable to ask
ratepayers to subsidize political activity. The PSRA would
repeal subsection (e) of section 3626 of title 39 to render
national and state political committees ineligible for non-
profit rates.
The PSRA also seeks to streamline the Postal Service's
ability to secure Negotiated Service Agreements (NSAs) for its
competitive products. As a result of PAEA, the Postal Service
has been able to negotiate agreements that give individual
companies reduced rates in exchange for guaranteed volume or
better preparation for processing. While NSAs can be valuable
tools, the current statutory framework can result in delays in
the approval of even the most basic agreements. The PSRA would
allow the PRC to conduct after-the-fact review of functionally
equivalent NSAs and allow functionally equivalent NSAs to be
reviewed as a group to ensure they meet the dual requirements
of covering their attributable costs and improving the net
financial position of the Postal Service. This reform will
enable the Postal Service to offer ``on-the-spot'' NSAs for
competitive products if they are similar to existing NSAs.
Nonpostal services
The PSRA would not allow the Postal Service to engage in
any new commercial activities. The bill would allow the Postal
Service to provide some nonpostal services on behalf of state,
local, and tribal entities. Under current law, the Postal
Service is allowed to partner with federal agencies to provide
services on behalf of those agencies. For example, the Postal
Service has an arrangement with the U.S. Department of State
under which it accepts passport applications at post offices.
The Postal Service's revenues exceed the costs of providing
this service, and the Department of State is able to accept
applications at thousands of locations across the country
without having to invest in physical infrastructure or
personnel. The PSRA would authorize the Postal Service to
partner in a similar manner with state, local, or tribal
government entities to provide services to consumers.
Products and services authorized under this section of the
PSRA would be required to be non-commercial in nature, thus
preventing unfair competition with the private sector. Any
products or services offered by the Postal Service under this
new authorization would be required to enhance value to the
public, not interfere with or detract from the value of postal
services, and provide a reasonable contribution to Postal
Service overhead costs by covering at least 100 percent of
their attributable costs. To ensure transparency and an
opportunity for stakeholder input, the Postal Service would be
required to publish its business plans for products and
services it proposes to offer under this new authority and to
allow for public comment. A majority of the presidentially-
appointed Postal Service Governors would be required to approve
any new product and service by a publicly recorded vote before
it could be offered.
The PSRA enhances the Postal Service's ability to generate
revenue by offering nonpostal endeavors that are appropriately
pursued by a federal government entity. It also grandfathers in
those specific products and services approved as a result of
PAEA. Importantly, the Committee's decision not to allow the
Postal Service to offer banking or Internet services recognizes
the Postal Service's unique status as an establishment of the
federal government. As a federal agency, the Postal Service
enjoys a number of benefits the private sector does not. These
benefits include exemptions from income and property tax, the
ability to exercise eminent domain, preferential borrowing
access, and implicit taxpayer backing in the event of a
default. Fair competition issues would arise if the Postal
Service is permitted to leverage its property and assets--
including property received for free from the federal
government when the Postal Service was created in 1971--to
compete in areas served by the private sector.
Exigent rate increase
Title II allows the Postal Service to increase postal rates
for market-dominant products by 2.15 percent, or 1 cent for a
First-Class stamp. The 2.15 percent increase is half of the
temporary rate surcharge, referred to as the ``exigent rate
increase,'' that ended on April 10, 2016. This one-time rate
increase is designed to put the Postal Service in a better
financial position going into the PRC rate review that will
begin in December 2016. The inclusion of a provision
authorizing a rate increase in the PSRA does not indicate that
Congress should set postal rates. Instead, the rate increase is
intended to allow the Postal Service to implement much needed
cost-savings initiatives and capital investments aimed at
realizing cost savings over the long term. The financial
challenges created by mail volume losses should not be met by
raising prices but rather by cutting costs. This is why PSRA
allows only a minimal rate increase and ties that increase to
the Postal Service's implementation of measures that will
increase efficiency and cut costs to support financial
stability in the long term.
Completion of initial PRC rate review
Title II would require the PRC to complete its full review
of the market-dominant rate system by January 1, 2018. The
inclusion of a hard deadline for the completion of the review
will enable affected parties to plan accordingly.
PRC Cost attribution study
The PRC's standard for reviewing the Postal Service's cost
measurement methodology is based on attribution methodologies
stemming from the Postal Reorganization Act of 1970.\28\ The
makeup of the Postal Service's product volumes has changed
significantly since these methodologies were originally put in
place.\29\ Although it is difficult to quantify all of the
effects of changes in product classes from 1970 through today,
the substantial growth in package volume is unmistakable.
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\28\``Section 3633(a)(2) requires that each competitive product
cover its attributable costs, which, in section 3631(b), are defined as
the `direct and indirect postal costs attributable to such product
through reliably identified causal relationships.' This standard
codifies the Commission's long-standing method of attribution under the
Postal Reorganization Act. For purposes of initially implementing
regulations pursuant to section 3633, the Commission intends to employ
this long-established attribution method to determine compliance with
section 3633(a)(2).'' Postal Regulatory Commission, Order No. 26, Order
Proposing Regulations to Establish a System of Ratemaking, Docket No.
2007-1, Aug. 15, 2007, at 67-68, available at http://www.prc.gov/docs/
57/57348/RM2007-1FINAL.pdf.
\29\Id.
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The FY 1972 annual report provides a review of the volumes
of specific product classes, making some comparisons with
current product classes possible.\30\ In FY 1972, the products
that would later be classified as competitive products
(packages and priority mail) made up approximately 12.5 percent
of the Postal Service's total revenue.\31\ The percentage of
total Postal Service revenues comprised by competitive products
remained relatively stagnant for the next three decades. In FY
2006, these products comprised approximately 11.8 percent of
total revenue.\32\ However, since FY 2006, the percentage of
total postal revenue comprised by competitive products has
nearly doubled. In FY 2015, revenue derived from competitive
products made up nearly 22 percent of the Postal Service's
total revenue.\33\
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\30\U.S. Postal Serv., Annual Report of the Postmaster General (FY
1972), at 26 [hereinafter ``FY 1972 Annual Report''].
\31\Includes $653.1 million in revenue for Parcels (zone rate) and
$348.3 million in revenue for Priority Mail. The FY 1972 Total revenue
was $7,996.7 million. Id.
\32\Includes $5,042.5 million in revenue for Priority Mail,
$2,259.0 million in revenue for Package Services, and $918.1 million in
revenue for Express Mail. Total revenue for FY 2006 was $69,144.0
million. U.S. Postal Serv., 2007 Audited Financial Statements (FY
2007), at 45, available at http://about.usps.com/who-we-are/financials/
10k-reports/fy2007.pdf.
\33\Supra note 8.
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The incredible growth in competitive products volume and
revenue in recent years has created a new environment in which
packages are more likely to be a major driver in the Postal
Service's business decisions. In fact, Postmaster General Megan
Brennan testified before the Committee: ``package volume has
grown by more than 1 billion packages in the last three years.
In FY 2015, [the Postal Service] delivered one-third of all
domestic packages in the United States.''\34\ She confirmed
that ``Continued innovation and growth in our package business
is essential to our ability to provide universal postal service
to the American people as First-Class Mail continues to
decline.''\35\
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\34\Id.
\35\Supra note 10.
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Given the growth in the Postal Service's competitive
product sales and the accompanying shift toward competitive
product investments instead of monopoly product investments,
the PSRA requires the PRC to re-examine the methodologies used
to calculate costs and to allocate costs between attributable
costs and institutional costs, as well as between competitive
and monopoly products to ensure they are the most accurate
methodologies available. While the current methodologies may
still be appropriate, they were created at a time when
competitive products and their associated regulations did not
exist and when package delivery and priority mail were
effectively small side operations at the Postal Service rather
than key drivers of operational decision-making. The PRC's
study will re-evaluate these underlying methodologies to ensure
that they are the most effective measure for understanding
costs and whether the appropriate data collection,
calculations, and methodologies are used to determine which
portion of the business or products bear the associated costs.
If the PRC determines that current methodologies are not
the most accurate for determining which portion of the business
and which products and services bear associated costs, the PRC
will specify how the Postal Service should more accurately
measure the costs of competitive and market-dominant products.
However, nothing in this title shall be used to imply that the
current costing attribution or costing allocation guidelines
are incorrect or correct; instead, that determination is left
to the PRC.
Title III--Postal Service Personnel
Postal Service Chief Innovation Officer
Among its provisions, Title III would create in statute the
position of Chief Innovation Officer (CIO) at the Postal
Service. The goal of this provision is to ensure there is a
position within the Postal Service whose sole function is to
spearhead innovation and change in an effort to grow the
agency's revenue. Given increased competition from the Internet
and from other advertising media, the agency must develop
postal product offerings that meet changing customer needs and
increase profits for the agency. Importantly, however, the CIO
does not have the authority to expand the Postal Service's
product offerings in any non-postal lines of business beyond
those currently offered by the Postal Service or authorized in
the PSRA.
Inspector General of the Postal Community
As the third largest office of inspector general (OIG) in
the federal government, the Postal Service OIG has more than
1,100 Full Time Equivalent employees and an annual budget of
almost $250 million.\36\ Unlike other Inspectors General
leading offices of comparable size, the position of Postal
Service Inspector General does not require presidential
appointment or Senate confirmation. In fact, the Postal Service
OIG is currently the largest OIG not headed by a Senate-
confirmed individual. Title III of the bill would make the
Postal Service Inspector General a presidentially appointed,
Senate-confirmed position. In addition, title III would combine
the Postal Service OIG with the OIG of the PRC, forming the new
Office of Inspector General of the Postal Community. The bill
requires that the President nominate an individual to the
Inspector General position within 180 days of enactment of this
bill.
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\36\U.S. Postal Serv. Office of Inspector Gen., Congressional
Budget Justification FY 2017, available at https://www.uspsoig.gov/
sites/default/files/document-library-files/2016/
FY%202017%20Congressional%20Justification.pdf.
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Nothing about this section shall have any impact on the
clear division between the Postal Service as the operator and
the PRC as the regulator. The OIGs for these two entities would
be combined by this bill only to achieve appropriate
efficiencies.
Title IV--Postal Contracting Reform
Title IV of the PSRA includes a number of reforms designed
to improve the Postal Service's contracting process. When the
Postal Service was first constituted as an independent
establishment in 1970, the agency was granted an exemption from
most federal rules and regulations governing the acquisition of
goods and services. Unfortunately, lax internal controls have
led to a number of problems in recent years, such as inadequate
transparency, poor business practices, improper delegations of
authority, and a lack of accountability. To help address many
of these issues, the bill would create a more rigorous code of
ethical standards for contracting officials, improve
transparency for noncompetitive contracts, and clarify and
narrow the framework for delegations of contracting authority.
LEGISLATIVE HISTORY
H.R. 5714, the Postal Service Reform Act of 2016, was
introduced on July 11, 2016 by Chairman Jason Chaffetz (R-UT)
and referred to the Committee on Oversight and Government
Reform, as well as the Committee on Energy and Commerce and the
Committee on Ways and Means. On July 12, 2016, the Committee on
Oversight and Government Reform ordered H.R. 5714 favorably
reported, without amendment. Ranking Member Elijah E. Cummings
(D-MD), Subcommittee on Government Operations Chairman Mark
Meadows (R-NC), Subcommittee on Government Operations Ranking
Member Gerald Connolly (D-VA), and Representative Stephen Lynch
(D-MA) are original cosponsors.
The legislation includes provisions similar to those
included in H.R. 2748 in the 113th Congress, and H.R. 2309 in
the 112th Congress. H.R. 2748, the Postal Reform Act of 2013,
was introduced in the 113th Congress by then-Chairman Darrell
Issa (R-CA) and Representatives Blake Farenthold (R-TX) and
Dennis Ross (R-FL) on July 19, 2013. The legislation was
considered before the Committee on July 24, 2013 and ordered
favorably reported by a record vote of 22 to 17. In the 112th
Congress, H.R. 2309, the Postal Reform Act of 2011, was
introduced by then-Chairman Darrell Issa on June 30, 2011. It
was subsequently ordered reported from the Subcommittee on
Federal Workforce, U.S. Postal Service, and Labor Policy on
September 21, 2011 by a record vote of 8 to 5 and ordered
favorably reported by the Full Committee on October 13, 2011 by
a record vote of 22 to 18. No further action was taken on
either bill in the House.
In addition, the legislation contains some provisions
similar to those contained in S. 1486 introduced in the 113th
Congress. That bill, the Postal Reform Act of 2014, was
introduced by Senator Tom Carper (D-DE), then-Chairman of the
Senate Committee on Homeland Security and Governmental Affairs,
on August 1, 2013. The Committee considered S. 1486 at a
business meeting on February 6, 2014 and ordered the bill
reported by a record vote of 9 to 1. No further action was
taken on the bill in the Senate.
Section-by-Section
Section 1. Short title; table of contents
Designates the short title of the bill as the ``Postal
Service Reform Act of 2016'' and delineates the table of
contents of the bill.
Section 2. Definitions
Defines the term ``Postal Service'' as the United States
Postal Service, and the term ``postal retail facility'' as a
post office, branch, station, or other facility operated by the
Postal Service to provide retail post services for any
references included in the legislation.
TITLE I--POSTAL SERVICE BENEFITS REFORM
Section 101. Postal Service health benefits program
Subsection (a) of section 101 creates section 8903c in
Chapter 89 of title 5, United States Code.
Subsection (a) of section 8903c defines the terms ``covered
Medicare individual,'' ``initial contract year,'' ``initial
participating carrier,'' ``Office'' (as the Office of Personnel
Management, OPM), ``Postal Service annuitant,'' ``Postal
Service employee,'' ``Postal Service Medicare covered
annuitant,'' ``Program,'' and ``Program plan,'' for the
section.
Subsection (b) of section 8903c states that the
requirements of this section apply for the initial contract
year and each year thereafter and that those requirements
supersede any other provisions of the chapter inconsistent with
such requirements.
Subsection (c) of section 8903c establishes the Postal
Service Health Benefits Program (program). Specifically, it
directs OPM to create a program to offer health benefits
consistent with the requirements of section 8902 that includes,
to the greatest extent practicable each carrier that provided
health benefits to at least 1,500 postal employees or
annuitants as of January 2017, as well as any other interested
carriers. It also requires that the program be available to all
postal employees and annuitants, provide for enrollment as
individual, self plus one, and self and family, and not be
available to individuals who are not postal employees or
annuitants or their family members. The subsection further
requires that the program use a separate risk pool for those
enrolled in the program, that the plans offered under the
program are actuarially equivalent to coverage carriers provide
under plans offered under Chapter 89 that are not part of the
program, and that continuation of coverage shall apply in the
same manner as provided under section 8905a.
Subsection (d) of section 8903c specifies election of
coverage under the program. It requires postal employees and
annuitants who elect to receive health benefits under Chapter
89 to meet the requirements of the section and prohibits
enrollment in other health benefit plans offered under other
sections of the Chapter. It also creates an exemption to the
requirements of the section for postal annuitants who are
enrolled in a plan under this chapter that is not offered by an
initial participating carrier under the program unless the
annuitant voluntarily enrolls in a program plan, the plan in
which the annuitant is enrolled ceases to be available, the
plan in which the annuitant is enrolled becomes available under
the plan, or the annuitant resides in a geographic area for
which there is not a program plan in which the annuitant may
enroll. It also requires that if a postal annuitant changes
health plan enrollment, the annuitant may only enroll in a
program plan. Finally, the subsection provides that a postal
employee who is enrolled in a health benefits plan that is not
offered by an initial participating carrier is exempt from this
section unless the employee changes enrollment, the employee's
plan becomes offered within the program, or the employee
becomes an annuitant, unless as an annuitant the employee
resides in a geographic area for which there is not a program
plan that the annuitant may enroll.
Subsection (e) of section 8903c allows postal Medicare-
eligible annuitants to obtain coverage under the section only
if they, and any eligible family member covered through them,
are enrolled in Medicare Part B. It also requires OPM to
establish a process for affected postal annuitants and family
members to ensure that they are informed of the requirement and
automatically enrolled in Medicare Part B.
Subsection (f) of section 8903c directs OPM to require each
program plan to provide benefits for covered Medicare
individuals pursuant to the standard coordination of benefits
method, rather than the exclusion method or the carve-out
method. It further requires each program plan to provide a
Medicare Part D prescription drug benefit to eligible
employees.
Subsection (g) of section 8903c establishes the terms of
the Postal Service contribution for premiums. Specifically, it
directs OPM, by October 1 of each year, to determine the
weighted average of the rates established for program plans for
the following year for each category of enrollment (self, self
plus one, self and family) and for the initial contract year to
take into account the enrollment of postal employees and
annuitants in plans offered by initial participating carriers
as of March 31, 2017.
Subsection (h) of section 8903c, requires OPM to ensure
that each program plan maintains separate reserves with respect
to enrollees in the program plan and that the reserves
maintained by each plan be credited with a proportionate amount
of the funds in the reserves for health benefit plans offered
by the carrier. The subsection also requires, for a plan that
is discontinued, that OPM credit the postal service contingency
reserve established under this subsection only to the separate
reserves of postal plans continuing under this section.
Subsection (i) of section 8903c states that 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.
Subsection (j) of section 8903c requires the Postal Service
to establish a Medicare Education Program not later than 180
days after enactment of this section. Under that program, the
Postal Service shall notify retirees and employees about the
Postal Service Health Benefits Program, provide information
regarding the benefits (including a description of health care
options available under the program, the requirement for
Medicare enrollment and the premium transition fund established
under section 104 of the bill) and respond and provide answers
to inquiries from employees and annuitants about the program or
Medicare enrollment. The subsection also makes technical and
conforming amendments to Chapter 89.
Subsection (b) of section 101 amends provisions of title
42, United States Code, to permit the automatic enrollment of
postal annuitants and family members who are not enrolled in
Medicare and waives any penalty premium increase to which the
individual would otherwise have been subject.
Section 102. Postal Service Retiree Health Care Benefit Funding reform
Subsection (a) amends section 8906(g) of title 5, United
States Code, to require that the portion of the Government
health care premium contributions that is equal to the net
claims cost be paid first from the Postal Service Retiree
Health Benefits Fund and any remaining amount to be paid by the
Postal Service. Additionally, the subsection amends section
8906(g) to define net claims cost as the difference between the
sum of costs incurred by a carrier in providing and
administering health services and the amount withheld from the
annuity of, or paid by, an individual under the section.
Subsection (b) amends section 8909a of title 5, United
States Code, to eliminate the final six statutorily specified
payments for retiree health care prefunding and require the
retiree health premiums to be paid out of the Postal Service
Retiree Health Benefits Fund beginning in fiscal year 2017,
instead of fiscal year 2018. The subsection also requires the
Postal Service to begin making amortization payments in 2017
necessary to satisfy any remaining unfunded liability by
September 30, 2055 and maintains the current law requirement
that the Postal Service make additional annual payments of
normal cost associated with new retiree health benefits earned
by current employees.
Subsection (c) cancels all statutorily specified payments
for prefunding accrued retiree health care expenses that remain
unpaid by the Postal Service on the date of enactment of this
legislation.
Subsection (d) contains a technical correction to add a
missing letter to the section heading of section 8909a of title
5, United States Code.
Section 103. Postal Service pension funding reform
Subsection (a) amends 5 U.S.C. 8348(h) (the Civil Service
Retirement System (CSRS)) to require OPM to determine annually
whether the Postal Service has an actuarial funding surplus or
liability for obligations to CSRS beneficiaries. Beginning in
2017, OPM is directed to establish an amortization schedule for
any surplus or liability, recalculated annually, such that any
surplus or liability is liquidated by September 30, 2043.
Starting by June 30, 2033, OPM shall revise the amortization
period from its otherwise scheduled end of September 30, 2043
to a period of no longer than 15 years, and revised as
necessary, based on generally accepted actuarial practices and
principles. The subsection also requires that when calculating
CSRS liability OPM must use demographic and economic
assumptions regarding wage and salary growth that are specific
to current and former employees, as applicable, of the Postal
Service.
Subsection (b) amends 5 U.S.C. 8423 (the Federal Employees
Retirement System (FERS)) to require that Postal Service
specific assumptions, identical to those in subsection (a) are
applied both to the normal cost payment for current postal
employees and for the Postal Service's total FERS liability. If
the Postal Service is determined to have a FERS projected
funding surplus, the subsection provides for a return of the
surplus on a 30-year amortization schedule, identical to the
amortization period of a FERS liability.
Section 104. Medicare Part B premium transition for newly enrolling
Postal Service annuitants and family members
Subsection (a) amends section 1395r of title 42, United
States Code, to reduce the Medicare Part B premiums for
individuals who have been automatically enrolled in Medicare
under this bill by 75 percent in the first year, 50 percent in
the second year, and 25 percent in the third year.
Subsection (b) amends section 1395w of title 42, United
States Code, to require the Postal Service to pay an amount
equal to the reduced premiums under subsection (a) to place the
Medicare Trust Fund in the same actuarial status as if the
provisions of section 104 had not been enacted.
TITLE II--POSTAL SERVICE OPERATIONS REFORM
Section 201. Governance reform
This section changes the current structure of the Postal
Service's governance system.
Subsection (a) amends section 202 of title 39, United
States Code, to reduce the composition of the Board of
Governors to five Governors, the Postmaster General, and the
Deputy Postmaster General. The Board of Governors is
responsible for appointing, removing, and setting the terms of
service and pay of both the Postmaster General and the Deputy
Postmaster General.
Subsection (b) amends section 203 of title 39, United
States Code, to revise the duties of the Postmaster General to
be the individual who carries out the power of the Postal
Service vested in the Board of Governors, consistent with the
directions of the Governors.
Subsection (c) amends section 205 of title 39, United
States Code to indicate that vacancies in the Board of
Governors do not impair the powers of the Board and that the
Board shall act upon majority vote of the Board.
Subsection (d) allows the Postmaster General and the
Governors to delegate responsibilities as they determine
appropriate to carry out their functions and duties.
Subsection (e) amends section 407 of title 39, United
States Code, to require the Postal Regulatory Commission (PRC)
to review and approve payment by the Postal Service to the
Department of State to cover costs of negotiating international
postal rates. This amendment does not take effect until October
1 of the first fiscal year beginning after enactment of this
Act.
Subsection (f) makes a number of technical and conforming
amendments. This subsection clarifies the PRC's existing
authority to levy fines against the Postal Service, payable to
the U.S. Treasury for deliberate noncompliance with the
provisions of title 39, such as the service standards
established by the Postal Service.
Section 202. Transition to more efficient and secure mail delivery
Subsection (a) creates section 3692 in subchapter VII of
chapter 36 of title 39, United States Code.
Subsection (a) of section 3692 defines a ``delivery point''
as a mailbox or other receptacle to which mail is delivered. A
delivery point's typical method of receiving Postal Service
deliveries is referred to as the ``primary mode of mail
delivery.'' The subsection defines the different kinds of
primary modes of mail delivery: 1) ``Door delivery'' means the
mail is placed into a slot or receptacle at or near the postal
patron's door or hand delivered to the patron; 2) ``Centralized
delivery'' means mail receptacles for a number of delivery
points are grouped or clustered at a single location; 3)
``Curbside delivery'' means the mail receptacle is situated at
the edge of a sidewalk alongside the road or curb and can be
served by a letter carrier from a motorized vehicle; 4)
``Sidewalk delivery'' means the mail receptacle is situated at
the edge of a sidewalk and can be served by the letter carrier
from the sidewalk.
Subsection (b) of section 3692 requires it to be the policy
of the Postal Service to use the most cost-effective primary
mode of mail delivery feasible and to provide access to secure,
convenient mail and package delivery receptacles to the
greatest number of postal patrons feasible.
Subsection (c) of section 3692 requires that new delivery
points established after December 31, 2016, utilize a primary
mode of mail delivery other than door delivery, with a
preference for secure, centralized delivery.
Subsection (d) of section 3692 requires the incremental
conversion to centralized, curbside, or sidewalk delivery of
business addresses identified by the Postal Service. The Postal
Service has one year after enactment of this Act to determine
which door delivery points are appropriate for conversion to a
more cost-effective means of delivery (e.g., centralized
delivery, curbside delivery, or sidewalk delivery). The Postal
Service then has five years to convert--at 20 percent a year--
100 percent of those delivery points that it deemed
appropriate. All eligible delivery points must be converted by
September 30, 2022. The Postal Service is required to notify
postal customers affected by delivery point conversions at
least 60 days prior to the conversion date.
Subsection (e) of section 3692 requires the voluntary
conversion to curbside, centralized, or cluster box delivery of
residential addresses identified by the Postal Service where
40% of the residents consent to conversion. Within one year of
enactment of this bill, each Postal Service district office
must identify delivery points that are appropriate for
conversion to centralized delivery, such as cluster boxes,
curbside delivery, or sidewalk delivery. The Postal Service
will begin a program by October 1, 2017 to convert delivery
points to more cost-effective means of delivery. The Postal
Service has three months after the initial identification of
delivery points appropriate for conversion to divide these
delivery points into groups of no more than 50 delivery points,
referred to here as an address unit. The Postal Service then
has six months to notify in writing the residents of the
appropriate delivery points of their eligibility for
conversion. Notice of eligibility must include the following:
1. Notice that the delivery point has been proposed
for conversion to a more efficient and cost-effective
mode of delivery in order for the Postal Service to
more economically provide universal service;
2. A description of the new primary mode of delivery
proposed by the Postal Service, such as centralized
cluster boxes or curbside delivery, and a visual
example of the mode of delivery;
3. A form that the resident can submit to indicate
consent for conversion to the proposed delivery mode,
as well as notice that the conversion is voluntary;
4. Description of the benefits incentivizing
conversion, including but not limited to secure mail
and package delivery, and the benefits to the Postal
Service, such as a smaller environmental impact for
delivery;
5. Description of how the conversion process would
work and the monetary costs (if any) to the postal
patron; and
6. Any other information the Postal Service considers
necessary or helpful for incentivizing conversion.
No delivery point may be converted unless prior written
consent is provided to the Postal Service by a postal patron
who is at least 18 years old. Prior to the actual conversion,
an eligible postal patron may withdraw the written consent for
conversion. The Postal Service will include on an easily
accessible public Web site an option to request that the
aforementioned consent form or a consent-withdrawal form be
sent to any delivery point identified for conversion.
Once the Postal Service receives a written consent form
from 40 percent of the applicable address unit, the Postal
Service has 90 days to convert the delivery points. At least 30
days prior to conversion, the Postal Service shall provide
written notice to each delivery point in the address unit that
the threshold for conversion has been met and, depending on
prior action by the postal patron served by that delivery
point, the next steps and options for that delivery point.
Any future or new residents moving into the address unit
for which delivery points have been converted shall receive the
converted delivery type.
Subsection (f) of section 3692 requires the Postal Service
to consider: 1) weather conditions, physical barriers, or other
factors that impact the feasibility of the delivery mode and
potential cost savings; 2) historic designation or historic
value of property; and 3) population density and concentration
of poverty when determining whether to convert the primary mode
of mail delivery.
Subsection (g) of section 3692 provides an exemption to
centralized, curbside, or sidewalk delivery for mail recipients
with physical hardships. In cases where door delivery is
necessary to avoid causing significant physical hardship or
physical safety risks to the postal patron, the Postal Service
will grant a waiver to allow for door delivery at no cost to
the postal patron.
Subsection (h) of section 3692 instructs the Postal Service
to establish procedures for: 1) collecting and considering
external input; 2) calculating and making publicly available
cost savings from conversions; and 3) situating centralized
delivery points in locations that maximize efficiency and
convenience.
Subsection (i) of section 3692 establishes a voucher
program whereby the Postal Service provides for the cost of all
or any portion of the converted modes of delivery established
under this section.
Subsection (j) of section 3692 requires the Postal Service
to produce an annual report from fiscal years 2017 through 2023
on the implementation of the delivery conversions established
under this section.
Subsection (k) of section 3692 requires the Inspector
General of the Postal Community (Inspector General) to conduct
an annual audit to be completed 90 days after the Postal
Service releases its annual report under subsection (j).
Subsection (l) of section 3692 exempts the actions taken
under this section from certain reviews required by other
subchapters in chapter 36.
Subsection (b) makes a clerical amendment to the table of
sections.
Subsection (c) requires that the Postal Service collect
data on delivery mode costs and the potential savings of
converting to more cost-effective delivery modes. The Postal
Service shall submit a report on the updated delivery cost
study to specified committees of Congress.
Subsection (d) requires that the Inspector General conduct
a study of the costs and benefits of the delivery mode
conversions required under subsection (a) within two years of
the commencement of the conversions. Within a year of
commencing the study, the Inspector General is required to
submit a report on the results of the study to specified
committees of Congress.
Section 203. Modernizing postal rates
Subsection (a) amends section 3622 of title 39, United
States Code, to strengthen some objectives and factors for
consideration in the Postal Regulatory Commission's (PRC's)
ten-year review of the current postal rate system and to
require that market-dominant negotiated service agreements not
cause unreasonable disruption to the marketplace.
Subsection (b) repeals section 3626 of title 39, United
States Code, to render national and state political committees
ineligible for rate preferences that are received by nonprofit
organizations.
Subsection (c) amends section 3633 of title 39, United
States Code, to streamline review of negotiated service
agreements for competitive products, including after-the-fact
review for new agreements that are functionally equivalent to
existing agreements that have collectively covered costs and
improved the financial condition of the Postal Service.
Section 204. Nonpostal services
This section amends part IV of title 39 to add ``Chapter
37--Nonpostal Services.''
Section 3701 of chapter 37 establishes the purpose of the
chapter.
Section 3702 of chapter 37 defines the terms ``nonpostal
services,'' ``attributable costs,'' and ``year.''
Section 3703 of chapter 37 authorizes the Postal Service to
establish a program to provide property and services on behalf
of an agency of any State government, local government, or
tribal government. Products and services authorized under this
section are subject to safeguards to ensure that they provide
enhanced value to the public, do not interfere with or detract
from the value of postal services, and provide a reasonable
contribution to Postal Service overhead costs by covering at
least 100 percent of costs. Products and services authorized
under this provision must be non-commercial in nature,
preventing unfair competition with the private sector. To
provide transparency and an opportunity for stakeholder input,
the Postal Service is required to publish its business plan for
products and services it plans to offer as authorized under
this section, followed by a public comment period and a
published Postal Service response. A majority of the Postal
Service Governors must approve the Postal Service providing
specific products and services by a publicly recorded vote.
Section 3704 of chapter 37 authorizes the Postal Service to
continue providing property and services for other federal
agencies and the Government Publishing Office, provided it
receives reimbursement covering 100 percent of its costs. This
cost-coverage requirement is intended to ensure that ratepayers
do not subsidize services provided for other federal agencies.
Section 3705 of chapter 37 requires the Postal Service to
annually report financial results, rates, and the quality of
its nonpostal services within 90 days after the end of each
fiscal year, with proprietary data protected from disclosure.
The PRC must annually review compliance that nonpostal services
meet cost-coverage and other requirements; order remedial
action to remedy any noncompliance; and can initiate
proceedings to improve data quality and completeness. The
Inspector General must regularly audit applicable data
collection systems and procedures.
These provisions are modeled after existing provisions for
market-dominant products.
Subsection (b) makes clear that all nonpostal services
continued pursuant to 404(e) of title 39 are considered
expressly authorized by chapter 37 of title 39 as added by this
section and are subject to the same transparency and
accountability requirements as other nonpostal services.
Section 205. Efficient and flexible universal Postal Service
Subsection (a) amends section 404(d)(2)(A) of title 39,
United States Code, to require the Postal Service, when
considering a post office for potential closure, to take into
account: 1) the distance, measured by public roads, to the
nearest postal retail facility; 2) weather and terrain; 3)
commercial mobile service; and 4) broadband internet access
penetration.
Subsection (b) amends section 404(d)(5) of title 39, United
States Code, to reduce the deadline for PRC review of post
office closures from 120 days to 60 days. This subsection
includes an extension that can only be enacted for good cause
and is limited to a period of up to an additional 60 days, or
120 days total.
Subsection (c) amends section 3661 of title 39, United
States Code, to expedite PRC advisory opinions concerning
Postal Service plans to close or consolidate post offices on a
level affecting service on a nationwide basis and on matters
that are identical to matters on which the PRC has issued an
opinion within the preceding 5 years. The subsection includes
an extension for good cause of an additional 30 days, or 120
days total.
Subsection (d) amends section 404(d) of title 39, United
States Code, to require the Postal Service to consult with the
community affected by a post office closure or consolidation on
what type of alternate service they wish to receive. In order
to accomplish this, the Postal Service must provide adequate
notice of intentions to close or consolidate the facility at
least 60 days prior to the proposed date of closing. The Postal
Service shall conduct a nonbinding survey of the postal patrons
served by that post office to determine their preferred
alternative service.
Subsection (e) amends section 404(d) of title 39, United
States Code, to define ``post office'' in in this subsection as
any Postal Service-operated retail facility as defined in this
bill, which includes post offices, branches, and stations. This
change is effective 60 days after enactment.
Subsection (f) amends section 3652(a) of title 39, United
States Code, to require the Postal Service to use a PRC-
recommended formula to determine changes in Postal Service
productivity and the resulting effect on overall costs.
Subsection (g) requires the Inspector General to conduct a
review of the impacts of the Post Office Structure Plan
(POSTPlan) on Postal Service expenses, revenue, and retail
service provision. POSTPlan is a Postal Service initiative that
restructured a number of post offices by reducing hours and
altering the labor structure in an effort to reduce costs and
ultimately produce savings. The Inspector General is required
to evaluate the relative cost savings of POSTPlan initiatives
by looking at both changes in costs and changes in revenue. The
Inspector General will release a report of the results of the
review and resulting recommendations. The Postal Service must
consider these results and recommendations when determining
further action related to POSTPlan initiative impacted post
offices.
Section 206. Fair stamp-evidencing competition
This section further amends section 404a(a) of title 39,
United States Code, to require the Postal Service to follow the
same rules and regulations as apply to private sector postage-
evidencing products and services.
Section 207. Market-dominant rates
Subsection (a) allows the Postal Service to increase postal
rates for market-dominant products by 2.15%, or 1 cent for a
First-Class stamp. The 2.15 percent increase is half of the
temporary rate surcharge, referred to as the ``exigent rate
increase,'' that was in effect on April 9, 2016. The exigent
rate increase was permitted under section 3622(d)(1)(E)
(redesignated by this Act as section 3622(d)(1)(G)) of title
39, United States Code), which allows for a rate adjustment for
extraordinary or exceptional circumstances as long as 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. The subsection further
requires that the 2.15% increase in rates be considered a part
of the rate base for determining future rate increases.
Subsection (b) clarifies that the rate increase permitted
under subsection (a) does not impact any unused rate adjustment
authority maintained by the Postal Service.
Subsection (c) states that the rate increase allowed under
subsection (a) does not affect the PRC's authority to review
the current rate system and make adjustments to that system as
are necessary and allowed for under section 3622 of title 39,
United States Code.
Subsection (d) terminates the Postal Service's current
judicial appeal and removes the right for further judicial
appeal by the Postal Service related to the exigent rate
increase that ended on April 10, 2016.
Section 208. Completion of initial rate regulation review
This section requires the PRC to complete its full review
of the market-dominant rate system by January 1, 2018. Existing
law allows for commencement of the review to begin on December
20, 2016.
Section 209. Review of Postal Service cost attribution guidelines
This section requires that the PRC initiate a review of the
Postal Service's cost attribution and cost allocation
guidelines. The review will determine whether revisions are
necessary to the underlying assumptions for the current costing
methodologies. This includes what costs are associated with
market-dominant products and competitive products. In
conducting this review, the PRC should examine whether the
appropriate data collection, calculations, and methodologies
are used to determine which portion of the business or products
bear the associated costs. The Committee takes no position on
whether the current costing attribution or costing allocation
guidelines are incorrect or correct. That determination is left
to the PRC.
Section 210. Aviation security for parcels
This section creates section 5404 within chapter 54 of
title 39, United States Code. Section 5404 requires that the
Postal Service hold itself to the same standards it requires
from industry regarding the safety and security of parcels
shipped on commercial airplanes.
Section 211. ZIP Codes
This section makes small changes and additions to the ZIP
codes related to three specific communities.
TITLE III--POSTAL SERVICE PERSONNEL
Section 301. Postal Service Chief Innovation Officer
Amends chapter 2 of title 39 to insert a new section,
section 209.
Subsection (a) of section 209 establishes the position of
Chief Innovation Officer (CIO), appointed by the Postmaster
General, and requires the CIO to manage the development of
innovative postal and nonpostal products and services subject
to existing law.
Subsection (b) of section 209 establishes the duties of the
CIO, including: 1) leading the development of postal and
nonpostal products that maximize revenue to the Postal Service;
2) monitoring the performance of innovative products and
services; and 3) taking into consideration, if applicable,
advisory opinions of the PRC.
Subsection (c) of section 209 requires the CIO to be
appointed no later than six months after enactment of this Act
and clarifies that the CIO can be a current Postal Service
employee, but, upon appointment, must leave any other position
within the Postal Service.
Subsection (d) of section 209 requires the Postmaster
General, within 12 months of the CIO's appointment, to submit
to Congress a report outlining a strategy for maximizing
revenue from innovative products.
The strategy must include specific innovative products to
be developed, the nature of the market for each product, the
likely offering date of each product, the cost of developing
each product, the anticipated sales volume of each product, the
anticipated revenue and profit generated by each product, the
likelihood of success of each product, the market trends that
may affect the success of each product, the metrics that will
be utilized to assess the success of the innovation strategy,
and specific ways in which innovative mailpiece design can be
encouraged. The subsection requires an updated strategy on
January 1, 2018 and every 3 years thereafter.
Subsection (e) of section 209 requires the Postmaster
General to submit to Congress an annual report that details the
progress the Postal Service has made in implementing the
innovation strategy described in subsection (d).
Subsection (f) of section 209 requires the Comptroller
General to conduct a study on the implementation of the
innovation strategy not later than 4 years after the date of
enactment of the section. The report is required to include: 1)
an audit of the development costs for each innovative product;
2) the sales volumes of each product; 3) the revenues and
profits of each product; and 4) the likelihood of continued
success of each product.
Section 302. Inspector General of the Postal Community
This section creates a presidentially-appointed, Senate-
confirmed Inspector General of the Postal Community (Inspector
General).
Subsection (a) amends The Inspector General Act of 1978 (5
U.S.C. App.), hereinafter referred to as the ``IG Act,'' to
remove the PRC and the Postal Service from section 8G of the IG
Act, which generally establishes Inspectors General in certain
designated federal entities and requires those Inspectors
General to be appointed by the head of such agency. The effect
of this deletion, and the subsequent additions described below,
is to require the new Inspector General of the Postal Community
to be presidentially-appointed.
Subsection (b) further amends the IG Act to create section
8M, ``Special Provisions Concerning the United States Postal
Service and Postal Regulatory Commission.'' This subsection
creates the Inspector General of the Postal Community and
requires appointment to that position within 180 days of
enactment of this Act.
Subsection (a) of section 8M creates a combined Inspector
General for both the Postal Service and the PRC, which is
called the Inspector General of the Postal Community (Inspector
General).
Subsection (b) of section 8M requires that in carrying out
to the duties under the IG Act, the Inspector General shall
have equal responsibility over both the PRC and the Postal
Service.
Subsection (c) of section 8M clarifies that for matters
dealing with the PRC, the head of the establishment as defined
under the IG Act shall be the Chairman of the PRC. For matters
dealing with the Postal Service, the head of the establishment
as defined under the IG Act shall be the Postmaster General.
Subsection (d) of section 8M requires the Inspector General
to treat the Postal Service and the PRC as separate
establishments in carrying out the duties under section 5 of
the IG Act and to prepare separate semiannual reports to
Congress.
Subsection (e) of section 8M instructs the Postal Service
and the PRC to work jointly with one another in consultation
with the Inspector General to ensure adequate and appropriate
office space and related provision to the Office of the
Inspector General.
Subsection (f) of section 8M establishes procedures for the
Inspector General's budget. For budgetary duties of the head of
the establishment established under section 6(f) of the IG Act,
the Postmaster General shall fulfill the role of the head of
the establishment. Such procedures are for administrative ease
and shall not be construed as granting any authority to the
Postmaster General over the Postal Service.
Subsection (g) of section 8M transfers to the Inspector
General responsibilities regarding the Postal Inspection
Service that were previously held by the Inspector General of
the U.S. Postal Service.
Subsection (h) of section 8M authorizes appropriations for
the Office of Inspector General from the Postal Service Fund.
Subsection (c) transfers the responsibilities, personnel,
and other elements of the Office of the Inspector General of
the PRC to the Inspector General of the Postal Community.
Subsection (d) transfers the responsibilities, personnel,
and other elements of the Office of the Inspector General of
the U.S. Postal Service to the Inspector General of the Postal
Community.
Subsection (e) allows the Inspector General to delegate his
or her functions to officers or employees of the Office of the
Inspector General. This subsection does not relieve the
Inspector General of responsibility for these functions.
Subsection (f) clarifies that the transition of functions
from the two offices of inspectors general to the one Office of
Inspector General of the Postal Community does not terminate or
impact existing legal documents, pending proceedings, or
ongoing suits. This subsection also clarifies that any
reference to the Inspector General of the PRC, the Inspector
General of the U.S. Postal Service, or the respective offices
in any other federal law, executive order, rule, regulation,
delegation of authority, or other document related to the
aforementioned entities shall be deemed to refer to the
Inspector General of the Postal Community or the Office of the
Inspector General of the Postal Community, as applicable.
Subsection (g) transfers existing funds from the two
separate offices of inspectors general to the Inspector General
of the Postal Community.
Subsection (h) amends title 39, United States Code, to
conform with the amendments made under this section.
Subsection (i) delays the effective date of the amendments
made by this section to take affect 30 days after the Inspector
General is confirmed by the Senate.
Section 303. Right of appeal to Merit Systems Protection Board
This section amends section 1005(a)(4)(A)(ii)(I) of title
39, United States Code, to allow certain Postal Service
employees the right to appeal to the Merit Systems Protection
Board.
TITLE IV--POSTAL CONTRACTING REFORM
Section 401. Contracting provisions
This section adds a new chapter, 7--Contracting Provisions,
to title 39:
Sec. 701. Definitions--Defines terms used in the chapter.
``Postal contract'' is defined as any contract for the
procurement of goods or service, including any agreement or
memorandum of understanding entered into by the Postal Service
or the PRC. As applied to the PRC, postal contracts are defined
as those in excess of the Simplified Acquisition Threshold,
currently $150,000.
Sec. 702. Delegation of contracting authority--The Postal
Service and PRC must issue policies on contracting officer
delegations of authority. Any delegation of authority for
postal contracts outside the functional contracting unit must
be made readily available and accessible on its website. A
contracting officer is required to maintain an awareness of and
engagement in the activities being performed on all postal
contracts of which that officer has cognizance, including
contracts involving delegations of authority. The senior
procurement executive is given ultimate responsibility and
accountability for the award and administration of postal
contracts.
Sec. 703. Posting of noncompetitive purchase requests for
noncompetitive contracts--The Postal Service must publicly post
the noncompetitive purchase request for any noncompetitive
award for postal contracts of at least $250,000, with this
amount adjusted annually based on inflation. These postings are
subject to proprietary information exceptions and competitive
disadvantage waivers. The PRC must post noncompetitive purchase
requests of at least $20,000.
Sec. 704. Review of ethical issues--Ethics officials at the
Postal Service and PRC are required to review any ethical
issues relating to a proposed contract before it is awarded and
advise the contracting officer on their appropriate resolution.
Sec. 705. Ethical restrictions on participation in certain
contracting activity--The Postal Service and PRC are required
to establish regulations that limit contracting officers from
entering into a postal contract with any party with whom the
contracting officer has a personal or business relationship, as
defined in the Standards of Ethical Conduct for Employees of
the Executive Branch. The heads of these entities may grant
waivers for contracts in their respective organizations, but
such waivers must be posted on their respective websites. They
also may void any contract and recover amounts expended under
the contract in any cases where there is a final conviction of
bribery or conflict of interest.
Section 402. Technical amendment to definition
Corrects a technical amendment made in the 2006 amendments
to the Contract Disputes Act that inadvertently deleted the
Postal Service and PRC from the definition of executive
agencies covered by this Act. This correction will resolve any
ambiguity and clarify that that Act applies to the Postal
Service and the PRC, as it has since its enactment in 1978.
Explanation of Amendments
No amendments to H.R. 5714 were offered or adopted during
Full Committee consideration of the bill.
Committee Consideration
On July 12, 2016 the Committee met in open session and
ordered reported favorably the bill, H.R. 5714, by voice vote,
a quorum being present.
Roll Call Votes
No roll call votes were requested or conducted during Full
Committee consideration of H.R. 5714.
Application of Law to the Legislative Branch
Section 102(b)(3) of Public Law 104-1 requires a
description of the application of this bill to the legislative
branch where the bill relates to the terms and conditions of
employment or access to public services and accommodations.
This bill restores the financial solvency and improve the
governance of the United States Postal Service in order to
ensure the efficient and affordable nationwide delivery of
mail. As such this bill does not relate to employment or access
to public services and accommodations.
Statement of Oversight Findings And Recommendations of the Committee
In compliance with clause 3(c)(1) of rule XIII and clause
(2)(b)(1) of rule X of the Rules of the House of
Representatives, the Committee's oversight findings and
recommendations are reflected in the descriptive portions of
this report.
Statement of General Performance Goals and Objectives
In accordance with clause 3(c)(4) of rule XIII of the Rules
of the House of Representatives, the Committee's performance
goals and objectives of the bill are to restore the financial
solvency and improve the governance of the United States Postal
Service in order to ensure the efficient and affordable
nationwide delivery of mail.
Duplication of Federal Programs
No provision of this bill establishes or reauthorizes a
program of the Federal Government known to be duplicative of
another Federal program, a program that was included in any
report from the Government Accountability Office to Congress
pursuant to section 21 of Public Law 111-139, or a program
related to a program identified in the most recent Catalog of
Federal Domestic Assistance.
Disclosure of Directed Rule Makings
The Committee estimates that enacting this bill does direct
the completion of specific rule makings within the meaning of 5
U.S.C. 551. Specifically, section 208 of H.R. 5714 directs the
Postal Regulatory Commission's completion of a final rule or
rules regarding maintaining or revising the Postal Service's
authority to increase market dominant rates not later than
January 1, 2018.
Federal Advisory Committee Act
The Committee finds that the legislation does not establish
or authorize the establishment of an advisory committee within
the definition of 5 U.S.C. App., Section 5(b).
Unfunded Mandate Statement
Section 423 of the Congressional Budget and Impoundment
Control Act (as amended by Section 101(a)(2) of the Unfunded
Mandate Reform Act, P.L. 104-4) requires a statement as to
whether the provisions of the reported include unfunded
mandates. In compliance with this requirement the Committee has
received a letter from the Congressional Budget Office included
herein.
Earmark Identification
This bill does not include any congressional earmarks,
limited tax benefits, or limited tariff benefits as defined in
clause 9 of rule XXI.
Committee Estimate
Clause 3(d)(1) of rule XIII of the Rules of the House of
Representatives requires an estimate and a comparison by the
Committee of the costs that would be incurred in carrying out
this bill. However, clause 3(d)(2)(B) of that Rule provides
that this requirement does not apply when the Committee has
included in its report a timely submitted cost estimate of the
bill prepared by the Director of the Congressional Budget
Office under section 402 of the Congressional Budget Act of
1974.
Budget Authority and Congressional Budget Office Cost Estimate
With respect to the requirements of clause 3(c)(2) of rule
XIII of the Rules of the House of Representatives and section
308(a) of the Congressional Budget Act of 1974 and with respect
to requirements of clause (3)(c)(3) of rule XIII of the Rules
of the House of Representatives and section 402 of the
Congressional Budget Act of 1974, the Committee has received
the following cost estimate for this bill from the Director of
Congressional Budget Office:
November 10, 2016.
Hon. Jason Chaffetz,
Chairman, Committee on Oversight and Government Reform,
House of Representatives, Washington, DC.
Dear Mr. Chairman: The Congressional Budget Office has
prepared the enclosed cost estimate for H.R. 5714, the Postal
Service Reform Act of 2016.
If you wish further details on this estimate, we will be
pleased to provide them. The CBO staff contact is Mark
Grabowicz.
Sincerely,
Keith Hall.
Enclosure.
H.R. 5714--Postal Service Reform Act of 2016
Summary: H.R. 5714 would change the laws that govern the
operation of the Postal Service (USPS), restructure how the
federal government pays for health benefits for federal
employees and annuitants, and alter how the federal government
calculates the contributions that agencies make for retirement
benefits. Major provisions of the bill would:
Partially reinstate a postal rate increase
that expired in April 2016 (direct spending savings of
$8.4 billion);
Change the requirements for the security of
parcels sent by air (direct spending costs of $3.2
billion);
Authorize the Postal Service to phase out
delivery of mail directly to business customers' doors
(direct spending savings of $2.0 billion);
Establish a new health benefits program for
Postal Service employees, annuitants, and their
dependents (net direct spending costs of $4.7 billion
and discretionary savings of $1.8 billion);
Change the nature of the payments that the
Postal Service is required to make related to retiree
health benefits (no net effect on direct spending); and
Require the use of demographic data specific
to Postal Service employees for the calculation of
certain retirement benefits, (no net effect on direct
spending, but discretionary costs totaling $5.9
billion).\1\
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\1\CBO estimates that this change would reduce costs to the Postal
Service by $0.4 billion but increase the other federal retirement costs
by the same amount. In addition, CBO estimates the Postal Service would
spend half of the savings it would realize in lower retirement costs.
Thus we estimate this policy would lead to a government-wide cost of
$0.2 billion.
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Effects on the federal budget
CBO estimates that enacting H.R. 5714 would result in $2.2
billion in direct spending savings over the 2017-2026 period;
therefore, pay-as-you-go procedures apply. Enacting H.R. 5714
would not affect revenues.
The total changes in direct spending over the 2017-2026
period are split between net off-budget savings of about $1.9
billion and net on-budget savings of about $0.4 billion. (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 other accounts affected by H.R. 5714 are
classified as on-budget.)
In addition, CBO estimates that implementing H.R. 5714
would have a net discretionary cost of $4.1 billion over the
next 10 years, subject to appropriation actions consistent with
that estimate.
CBO estimates that enacting the legislation would not
increase net direct spending or on-budget deficits in any of
the four consecutive 10-year periods beginning in 2027.
Effects on state, local, and tribal governments, and on the private
sector
By increasing postal rates for public and private mailers,
H.R. 5714 would impose intergovernmental and private-sector
mandates, as defined in the Unfunded Mandates Reform Act
(UMRA), on public and private entities that send certain types
of mail through the USPS. Additionally, the bill would impose a
private-sector mandate on some postal annuitants by requiring
them to enroll in Part B of Medicare, if eligible. CBO
estimates that the annual cost for public entities of
increasing the postal rates would exceed the threshold
established in UMRA for intergovernmental mandates ($77 million
in 2016, adjusted annually for inflation) in four of the first
five years after the rates became effective. CBO also estimates
the aggregate annual cost for private entities of complying
with the mandates would exceed the threshold established in
UMRA private-sector mandates ($154 million in 2016, adjusted
annually for inflation) in each of the first five years the
mandates were effective.
Estimated cost to the federal government: The estimated
budgetary effects of HR. 5714 are shown in Table 1. The costs
of this legislation fall within all budget functions that
include salaries and expense accounts; most budgetary effects
would occur in budget functions 370 (commerce and housing
credit), 550 (health), 570 (Medicare), and 600 (income
security).
TABLE I--SUMMARY OF BUDGETARY EFFECTS OF H.R. 5714, THE POSTAL SERVICE REFORM ACT OF 2016
--------------------------------------------------------------------------------------------------------------------------------------------------------
By fiscal year, in millions of dollars--
-----------------------------------------------------------------------------------------------------------------------
2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2017-2021 2017-2026
--------------------------------------------------------------------------------------------------------------------------------------------------------
OFF-BUDGET INCREASES OR DECREASES (-) IN DIRECT SPENDINGa
Estimated Budget Authority...... 746 -189 -259 -325 -391 -377 -353 -329 -235 -151 -417 -1,859
Estimated Outlays............... 746 -189 -259 -325 -391 -377 -353 -329 -235 -151 -417 -1,859
ON-BUDGET INCREASES OR DECREASES (-) IN DIRECT SPENDING
Estimated Budget Authority...... 28 -13 -102 -10 -19 -13 -35 -83 -61 -79 -116 -361
Estimated Outlays............... 28 -13 -102 -10 -19 -13 -35 -83 -61 -79 -116 -361
INCREASES OR DECREASES (-) IN DIRECT SPENDING (UNIFIED BUDGET)b
Estimated Budget Authority...... 774 -202 -361 -335 -410 -364 -388 -412 -296 -230 -533 -2,220
Estimated Outlays............... 774 -202 -361 -335 -410 -364 -388 -412 -296 -230 -533 -2,220
INCREASES IN SPENDING SUBJECT TO APPROPRIATION
Estimated Authorization Level... 381 497 409 391 393 394 405 417 419 421 2,071 4,127
Estimated Outlays............... 381 497 409 391 393 394 405 417 419 421 2,071 4,127
--------------------------------------------------------------------------------------------------------------------------------------------------------
Note: Components may not add to totals because of rounding.
aCash flows of the Postal Service are classified as off-budget.
bThe federal unified budget is the sum of on-budget and off-budget accounts.
Basis of estimate: For this estimate, CBO assumes that H.R.
5714 will be enacted near the end of calendar year 2016. H.R.
5714 would have effects on off-budget direct spending, on-
budget direct spending, and spending subject to appropriation.
Provisions related to health care and retirement would
simultaneously affect all three types of spending. In the next
section we provide details about the budgetary effects for each
of the three budget categories. The basis for estimates of the
effects on spending for Postal Service operations, health
benefits, and retirement benefits are discussed in separate
sections devoted to those topics.
Budgetary effects
Enacting H.R. 5714 would decrease net direct spending for
the unified budget by $2.2 billion over the 2017-2026 period.
Off-budget spending would decline by about $1.9 billion and on-
budget spending would decline by about $0.4 billion.
Off-Budget Direct Spending (Postal Service Fund). CBO
estimates that enacting H.R. 5714 would reduce net USPS
spending by $1.9 billion over the 2017-2026 period (see Table
2).
Postal Service Operations. Three provisions would directly
affect how the Postal Service operates and would decrease its
net spending by $7.1 billion over the 2017-2026 period.
Health Benefits. Several provisions would affect how the
government pays for the health care expenses of workers and
annuitants (both postal and nonpostal) and would increase
direct spending by $5.5 billion over the 2017-2026 period.
Retirement Benefits. One provision would affect how the
USPS pays for retirement benefits for its annuitants and would,
on net, decrease direct spending by $0.2 billion over the 2017-
2026 period.
On-Budget Direct Spending. CBO estimates that enacting H.R.
5714 would, on net, reduce on-budget direct spending by almost
$0.4 billion over the 2017-2026 period.
Health Benefits. Several provisions would affect how the
government pays for the health care expenses of employees and
annuitants (both postal and nonpostal) and would decrease
direct spending by $0.8 billion over the 2017-2026 period.
Use Postal-Specific Data for Retirement Benefits. One
provision would affect how the government pays for retirement
benefits for its annuitants. CBO estimates that enacting that
provision would increase direct spending by $0.4 billion over
the 2017-2026 period.
Spending Subject to Appropriation. CBO estimates that
implementing H.R. 5714 would increase discretionary spending by
about $4.1 billion, assuming appropriation actions consistent
with those estimates (see Table 3). Over the 2017-2026 period,
implementing the bill would:
Increase agency contributions for retirement
benefits by $5.9 billion; those contributions would be
recorded as offsetting receipts of an equal amount in
the Civil Service Retirement and Disability Fund
(CSRDF) and would have no net effect on spending,
Decrease spending by agencies for the
Federal Employees Health Benefits (FEHB) program by
$1.8 billion, and
Increase spending by the Inspector General
for the Postal Service by less than $0.1 billion.
TABLE 2--OFF-BUDGET AND ON-BUDGET CHANGES IN DIRECT SPENDING UNDER H.R. 5714
--------------------------------------------------------------------------------------------------------------------------------------------------------
By fiscal year, in millions of dollars--
-------------------------------------------------------------------------------------------------------------------------
2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2017-2021 2017-2026
--------------------------------------------------------------------------------------------------------------------------------------------------------
INCREASES OR DECREASES (-) IN OFF-BUDGET DIRECT SPENDING
Postal Service Operations
Rate Increase............. -640 -900 -900 -900 -900 -875 -850 -825 -800 -775 -4,240 -8,365
Enhanced Security......... 1,400 600 150 150 150 150 150 150 150 150 2,450 3,200
Mail Delivery............. 0 -10 -50 -125 -200 -250 -300 -350 -340 -330 -385 -1,955
-------------------------------------------------------------------------------------------------------------------------
Subtotal.............. 760 -310 -800 -875 -950 -975 -1,000 -1,025 -990 -955 -2,175 -7,120
Health Benefits
USPS payments to OPM...... 0 140 580 620 670 720 770 830 890 950 2,010 6,170
PSHB Employees Premiums... 0 -20 -80 -100 -100 -100 -100 -110 -110 -120 -300 -840
Medicare Part B Premiums.. 0 20 60 50 10 0 0 0 0 0 140 140
-------------------------------------------------------------------------------------------------------------------------
Subtotal.............. 0 140 560 570 580 620 670 720 780 830 1,850 5,470
Retirement Benefits
Use Postal-Specific Data -28 -37 -38 -40 -41 -43 -45 -47 -49 -51 -184 -419
for Retirement Benefits..
Capital Improvements...... 14 19 19 20 21 22 23 24 25 26 92 209
-------------------------------------------------------------------------------------------------------------------------
Subtotal.............. -14 -19 -19 -20 -21 -22 -23 -24 -25 -26 -92 -209
Total Changes................. 746 -189 -259 -325 -391 -377 -353 -329 -235 -151 -417 -1,859
INCREASES OR DECREASES (-) IN ON-BUDGET DIRECT SPENDING
Health Benefits
Medicare.................. 0 150 690 870 880 960 980 1,010 1,110 1,180 2,590 7,830
Medicare Part B Premiums.. 0 -20 -60 -50 -10 0 0 0 0 0 -140 -140
PSRHBF Payments Based on 0 -140 -580 -620 -670 -720 -770 -830 -890 -950 -2,010 -6,170
Claims...................
PSHB Annuitant Premiums... 0 -20 -90 -110 -110 -110 -110 -120 -130 -140 -330 -940
FEHB Annuitant Premiums... 0 -20 -100 -140 -150 -160 -180 -190 -200 -220 -410 -1,360
-------------------------------------------------------------------------------------------------------------------------
Subtotal.............. 0 -50 -140 -50 -60 -30 -80 -130 -110 -130 -300 -780
Use Postal-Specific Data for 28 37 38 40 41 43 45 47 49 51 184 419
Retirement Benefits..........
Total Changes................. 28 -13 -102 -10 -19 -13 -35 -83 -61 -79 -116 -361
--------------------------------------------------------------------------------------------------------------------------------------------------------
Notes: Budget authority equals outlays for all estimates; Components may not add to totals because of rounding.
USPS = United States Postal Service; OPM = Office of Personnel Management; PSHB = Postal Service Health Benefits; PSRHBF = Postal Service Retiree Health
Benefits Fund; FEHB = Federal Employee Health Benefits.
TABLE 3--CHANGES IN SPENDING SUBJECT TO APPROPRIATION UNDER H.R. 5714
--------------------------------------------------------------------------------------------------------------------------------------------------------
By fiscal year, in millions of dollars--
-------------------------------------------------------------------------------------------------------------------------
2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2017-2021 2017-2026
--------------------------------------------------------------------------------------------------------------------------------------------------------
INCREASES OR DECREASES (-) IN SPENDING SUBJECT TO APPROPRIATION
Use of Postal-Specific Data
for Retirement Benefitsa
Estimated Authorization 378 522 544 566 588 609 630 652 674 696 2,598 5,858
Level....................
Estimated Outlays......... 378 522 544 566 588 609 630 652 674 696 2,598 5,858
Health Care Premiums for
Nonpostal Employees
Estimated Authorization 0 -30 -140 -180 -200 -220 -230 -240 -260 -280 -550 -1,780
Level....................
Estimated Outlays......... 0 -30 -140 -180 -200 -220 -230 -240 -260 -280 -550 -1,780
USPS Office of Inspector
General
Estimated Authorization 3 5 5 5 5 5 5 5 5 5 23 48
Level....................
Estimated Outlays..... 3 5 5 5 5 5 5 5 5 5 23 48
Total Changes.............
Estimated 381 497 409 391 393 394 405 417 419 421 2,071 4,127
Authorization Level..
Estimated Outlays..... 381 497 409 391 393 394 405 417 419 421 2,071 4,127
Memoranduma
Offsetting Receipts Resulting -378 -522 -544 -566 -588 -609 -630 -652 -674 -696 -2,598 -5,858
From Higher Employer
Contributions................
--------------------------------------------------------------------------------------------------------------------------------------------------------
Notes: Components may not add to totals because of rounding; USPS = United States Postal Service.
aEmployer contributions are intragovernmental transactions that do not affect the deficit; negative numbers indicate an increase in such
intragovemmental 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.
Postal Service operations
Enacting H.R. 5714 would make several change to the
operations of the USPS, including an increase in postage rates.
In total, CBO estimates that enacting the bill would decrease
net off-budget direct spending for those operations by $7.1
billion over the 2017-2026 period (see Table 2).
Rate Increase. In December 2013, the Postal Regulatory
Commission 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 that increase was
temporary and expired in April 2016. H.R. 5714 would authorize
the Postal Service to reinstate up to 50 percent of that
increase.
Based on an analysis of information from the Postal Service
about the effects of rate increases on mail volume and revenue,
CBO estimates that partially reinstating the recent rate hike
would increase net collections of the USPS by $640 million in
2017 and about $8.4 billion over the 2017-2026 period. (Those
collections are recorded as offsetting receipts in the budget.)
We expect that the increase in net receipts would begin to
decline in 2022 and thereafter 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 annual surpluses in the Postal
Service Fund.
Enhanced Security. H.R. 5714 would require the Postal
Service to improve security for parcels and packages that it
transports by air by meeting certain federal standards for
information security (Federal Information Processing Standards
issued by the National Institute of Standards and Technology)
or by requiring mailers to bring those items to post offices or
other USPS retail sites and to verify their identity. In 2015
the Postal Service shipped nearly $5 billion worth of parcels
and packages by air. To meet the bill's requirements and
maintain that revenue stream, the USPS would have to develop
information technology systems and acquire new postage meters
to replace most of the approximately 1 million meters currently
used by the agency, commercial mailers, businesses, and other
shippers. The Postal Service also would incur increased labor
costs to verify the identities of customers who send packages
and parcels from retail sites.
In addition, under the provisions of H.R. 5714, CBO
estimates that because of the additional security measures,
some customers that currently use the Postal Service to deliver
parcels and packages would shift their business to other
delivery providers. Thus, we expect that the USPS would lose
revenue during 2017 and 2018 and possibly in subsequent years.
Based on information from the USPS and the costs of similar
projects, we estimate that the forgone revenue and additional
costs would increase net outlays of the Postal Service by $3.2
billion over the 2017-2026 period. Costs would be higher in the
first two years, mostly because of the need to acquire new
postage meters. Annual spending of $150 million after 2018
would mostly be for system maintenance and increased labor
costs.
Mail Delivery. USPS delivers mail to the doors of
customers, to sidewalk and curbside receptacles, and to
centralized mail receptacles that serve multiple addresses.
H.R. 5714 would require the Postal Service to convert most
business (but not residential) addresses with door delivery to
sidewalk, curbside, or centralized delivery.
In 2015, the Postal Service provided door delivery to about
6 million business addresses. Upon enactment of H.R. 5714, the
USPS expects that it would change the means of delivery for
about 500,000 addresses in 2017 and an additional 1 million
addresses annually over the 2018-2022 period. We anticipate
that nearly all the conversions would be to centralized
delivery for the affected businesses.
Based on an analysis of information from the Postal Service
about the savings per business address from implementing
curbside and centralized delivery as compared to door delivery
(about $80 per address for centralized delivery and $45 per
address for curbside delivery), as well as the costs to install
and maintain curbside and centralized mail receptacles (about
$70 to $100 per business address for installation), CBO
estimates that annual savings under H.R. 5714 would grow to
$350 million by 2024 and would total nearly $2 billion over the
2017-2026 period. Beginning in 2025, we expect that annual
savings would gradually decline as the Postal Service increased
spending or shared savings with its customers in the form of
lower rates.
Other Provisions. Several other provisions of H.R. 5714
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 will be achieved under current law or
under other provisions of the legislation.
H.R. 5714 would authorize the Postal Service to establish a
program to provide services for agencies of state, local, or
tribal governments for a fee. Implementing this program would
require the Postal Service to offer cost-effective alternatives
for services to states or localities. This program might
increase USPS revenues but also would add to its costs. CBO has
no information that would allow us to predict the cost-
effectiveness of such new ventures.
The bill also would reform certain Postal Service
contracting practices. These changes 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 improve procurement
practices.
Health benefits
Many of the changes in H.R. 5714 would affect how health
care is provided to all federal annuitants and employees. As
shown in Table 4, those changes would affect direct spending
(both on- and off-budget) as well as spending subject to
appropriation. CBO estimates that enacting the bill would, on
net, increase direct spending (in the unified budget) by $4.7
billion over the 2017-2026 period to provide health care to
postal and other federal employees and annuitants. In addition,
implementing the bill would reduce discretionary spending by
$1.8 billion over the 2017-2026 period for providing health
care to federal employees, assuming appropriation actions
consistent with that estimate.
TABLE 4--CHANGES IN SPENDING FROM PROVISIONS OF H.R. 5714 THAT AFFECT HEALTH CARE SPENDING
--------------------------------------------------------------------------------------------------------------------------------------------------------
By fiscal year, outlays in millions of dollars--
-------------------------------------------------------------------------------------------------------------------------
2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2017-2021 2017-2026
--------------------------------------------------------------------------------------------------------------------------------------------------------
INCREASES OR DECREASES (-) IN DIRECT SPENDING
Medicare
Require Participation in 0 150 690 870 880 960 980 1,010 1,110 1,180 2,590 7,830
Medicare (on-budget).....
Medicare Part B Premiums 0 20 60 50 10 0 0 0 0 0 140 140
Paid by USPS (off-budget)
Medicare Part B Premiums 0 -20 -60 -50 -10 0 0 0 0 0 -140 -140
Paid by USPS (on-budget).
Postal Service Health Benefits
Premiums for USPS 0 -20 -80 -100 -100 -100 -100 -110 -110 -120 -300 -840
Employees (off-budget)...
Premiums for USPS 0 -20 -90 -110 -110 -110 -110 -120 -130 -140 -330 -940
Annuitants (on-budget)...
Payments Based on Claims 0 -140 -580 -620 -670 -720 -770 -830 -890 -950 -2,010 -6,170
(on-budget)..............
USPS Payments to OPM (off- 0 140 580 620 670 720 770 830 890 950 2,010 6,170
budget)..................
Federal Employee Health
Benefits
Premiums for Nonpostal 0 -20 -100 -140 -150 -160 -180 -190 -200 -220 -410 -1,360
Annuitants (on-budget)...
-------------------------------------------------------------------------------------------------------------------------
Total Changes, Unified 0 90 420 520 520 590 590 590 670 700 1,550 4,690
Budget...............
DECREASES IN SPENDING SUBJECT TO APPROPRIATION
FEHB Premiums for Nonpostal 0 -30 -140 -180 -200 -220 -230 -240 -260 -280 -550 -1,780
Employees....................
--------------------------------------------------------------------------------------------------------------------------------------------------------
Notes: Budget authority equals outlays for all estimates; USPS = United States Postal Service; OPM = Office of Personnel Management; FEHB = Federal
Employee Health Benefits;.
Background. Under current law, USPS employees and
annuitants receive health insurance benefits through the FEHB
program, which also covers nonpostal civilian federal employees
and annuitants. Insurance plans that participate in the FEHB
program charge premiums that are the same for all participants,
regardless of whether the participant is affiliated with the
USPS or not, or is an employee or an annuitant. The Postal
Service is obligated to contribute to the health insurance
premiums of its current and retired employees who participate
in the FEHB program. (Postal Service payments to FEHB are off-
budget direct spending.) In 2016 the agency made direct
payments for retirees' premiums to the FEHB fund totaling
nearly $3.5 billion.
Under current law, the Postal Service also was required to
make a payment in 2016 to the Postal Service Retiree Health
Benefits Fund (PSRHBF) to prefund the health obligations of its
future retirees. (Such payments have no effect on the unified
budget because the off-budget payments are offset exactly by
the on-budget receipt of the payments.) However, because of the
Postal Service's poor financial condition, it has not made
those statutorily specified payments since 2010, including $5.8
billion for 2016.
Starting in 2017, the Postal Service will no longer make
payments directly to the FEHB fund for its annuitants. Rather,
under current law, the Postal Service will be required to make
payments to the PSRHBF to cover the future health care
liabilities accruing to current employees (known as normal
costs) and to eliminate the unfunded liability for retirees'
health benefits (known as amortization payments). CBO estimates
that required payments for normal costs and amortization
payments will sum to nearly $7 billion in fiscal year 2017. The
PSRHBF will then have to make payments to the FEHB program in
2017 and thereafter for the Postal Service's share of premiums.
Because of its poor financial condition, we expect that the
Postal Service will not make any of those normal or
amortization payments over the 2017-2026 period; nevertheless,
CBO estimates that the PSRHBF will pay the required premiums
through 2026. (If the Postal Service does not make those
intragovernmental payments, CBO expects that it will spend that
money on its current operations, including capital
improvements, and thus increase federal outlays over the
period.)
Postal Service Health Benefits Program. H.R. 5714 would
change how the federal government provides health insurance for
USPS employees and annuitants. The legislation would direct OPM
to establish a new Postal Service Health Benefits (PSHB)
program in 2018 (similar to the FEHB program), under which
Postal Service employees and annuitants could enroll to receive
health insurance from qualifying plans. Premiums in the PSHB
program would be set based on the expected health care costs of
only those USPS employees, annuitants, and dependents who
participate in the program. (Premiums in the FEHB program would
be set based on the expected health care costs of the nonpostal
enrollees that remained in that program.) In addition, the bill
would require all eligible postal annuitants who participate in
the PSHB program to enroll in Medicare. Finally, PSHB plans
would be required to participate in Medicare Part D and would
thereby receive subsidies related to prescription drugs.
Postal Service employees and annuitants would be in the
same risk pool, so premiums would be the same for both groups;
however, H.R. 5714 would change the basis for providing funds
to and making payments from the PSRHBF to cover the cost of
health care claims of Postal Service annuitants. CBO expects
that the cost of health care claims would be lower for
annuitants than for USPS employees because the bill would
effectively shift some spending to Medicare Parts B and D.
Thus, that change would reduce both the amount that the USPS
would have to pay into the PSRHBF and the amount that the
PSRHBF would pay to PSHB plans.
Medicare. Because H.R. 5714 would require Medicare-eligible
annuitants who had been employed by the Postal Service to
participate in Medicare Part B, Medicare would become the
primary payer for certain services. The PSHB plans would pay
cost-sharing for those beneficiaries' health care services. In
addition, the bill would require the USPS to contribute towards
the Medicare Part B premiums of annuitants that newly enroll in
Medicare under the legislation. The mechanism by which the
Centers for Medicare and Medicaid Services (CMS) would collect
those premium payments is not specified, but for purposes of
this estimate, CBO assumes that the USPS would make the
required payments for Medicare premiums and that CMS would
collect the remaining premiums from USPS annuitants. Finally,
H.R. 5714 would require PSHB plans to participate in Medicare
Part D. As a result, Medicare Part D would make certain
payments to those PSHB plans.
Based on an analysis of Medicare spending and an estimate
of the number of annuitants who would gain Medicare coverage
under the legislation, CBO estimates that enacting H.R. 5714
would:
Increase on-budget direct spending for
Medicare by about $7.8 billion over the 2017-2026
period, net of Medicare Part B premiums that would be
paid by postal annuitants;
Increase off-budget direct spending by $0.1
billion over the 2017-2026 period for the portion of
Part B premiums that the USPS would pay under the bill;
and
Decrease on-budget direct spending by $0.1
billion, reflecting receipts of Part B premiums paid by
the USPS.
PSHB. CBO anticipates that shifting the primary
responsibility for covering certain health care services from
PSHB plans to the Medicare program would decrease costs to the
Postal Service. As a result, CBO estimates that the PSHB
premiums for postal employees and annuitants would be lower
than the FEHB premiums those people will face under current
law. The legislation is unclear whether PSHB plans would
receive payments related to prescription drugs under the
Retiree Drug Subsidy (RDS) program or the Employer Group Waiver
Plan (EGWP) program. For purposes of this estimate, CBO assumes
that plans would participate under the RDS program. Enacting
H.R. 5714 would:
Decrease net off-budget direct spending for
the Postal Service by $0.8 billion over the 2017-2026
period because of a reduction in premiums for current
postal workers; and
Decrease on-budget direct spending $0.9
billion over the 2017-2026 period for payments from the
PSRHBF because of a reduction in premiums for
annuitants in the Postal Service.
Under the bill, Medicare would pay most of the health care
costs for eligible beneficiaries and PSHB plans would pay for
the cost sharing (for example, copayments and deductibles) when
those beneficiaries receive health care services. Consequently,
the health claims paid by PSHB plans would be less for
annuitants than for postal employees. Because premiums would be
based on the expected claims for all people participating in
PSHB plans (current USPS employees and annuitants), the
premiums would be higher for annuitants and lower for employees
than their expected health claims. As discussed previously,
payments from the PSRHBF would only cover the health claims of
USPS annuitants; therefore, the total payments into the PSHB
fund would not be sufficient to cover the required payments for
premiums for annuitants. Insurance plans probably would not
agree to participate in the PSHB program if premiums were not
paid in full--consequently, CBO expects that the USPS would
have to make additional payments to cover the difference. For
purposes of this estimate, CBO assumes the USPS would make
those payments to OPM, and that OPM would make premium payments
to PSHB plans. Based on an analysis of FEHB premiums and the
health care spending of USPS annuitants, CBO estimates that
enacting the bill would:
Decrease on-budget direct spending by $6.2
billion over the 2017-2026 period, for payments from
the PSRHBF to PSHB plans; and
Increase off-budget direct spending by the
same amount--$6.2 billion over the 2017-2026 period--
for payments from the USPS to OPM.
FEHB. Creating two different groups of federal employees
for the purpose of calculating health insurance premiums (FEHB
and PSHB) would effectively lower the cost of providing
insurance to the nonpostal enrollees who remained in the FEHB
program. Premiums charged to nonpostal enrollees in the FEHB
program would be based on expected health costs of the
employees, annuitants, and dependents remaining in the FEHB
program. Because nonpostal 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.
The estimated reduction in federal costs results from lower
federal payments for the government's share of FEHB premiums.
In 2015, the federal government contributions to the premiums
of the nonpostal enrollees in the FEHB program averaged 71
percent of premiums. In total, CBO estimates that:
Enacting the bill would reduce on-budget
direct spending for the premiums of nonpostal
annuitants by about $1.4 billion over the 2017-2026
period. Premium payments for annuitants are classified
as direct spending; and
Implementing the bill would reduce federal
outlays for health insurance premiums for nonpostal
employees by about $1.8 billion over the 2017-2026
period. The government's contributions for those
premiums for active employees are subject to
appropriation and thus classified as discretionary
spending.
Retirement benefits
Enacting H.R. 5714 would affect the contributions for
retirement benefits made by the Postal Service and other
federal agencies (see Tables 2 and 3). In total, CBO estimates
that enacting the bill would increase net direct spending for
federal retirement benefits (in the unified budget) by $0.2
billion over the 2017-2026 period. Additionally, implementing
the bill would increase discretionary costs related to
retirement benefits by $5.9 billion for increased contributions
by federal agencies to the Civil Service Retirement and
Disability Fund (CSRDF), subject to the availability of
appropriations. (Those increased contributions would be
recorded as offsetting receipts to the fund and would have no
net budgetary impact.)
Background. H.R. 5714 would direct OPM to use economic and
demographic factors specific to Postal Service employees,
rather than government-wide data, to calculate annual
contributions that the USPS is required to make to federal
retirement accounts under the Federal Employees Retirement
System (FERS).
For 2015, the Postal Service made about $3.5 billion in
contributions to the CSRDF for FERS employees and also was
required to make an amortization payment of about $240 million
for those employees. The agency currently makes no
contributions for employees in the Civil Service Retirement
System (CSRS). Beginning in fiscal year 2017, the Postal
Service is required to 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 balance of the CSRDF attributable to Postal
Service contributions.)
Because of the Postal Service's poor financial condition,
CBO expects that the USPS will not make the amortization
payments for FERS or CSRS over the 2017-2026 period. We expect
the Postal Service to continue to contribute to the CSRDF for
FERS employees each year.
CSRDF Payments. Based on an analysis conducted by OPM in
2014, CBO estimates that enacting H.R. 5714 would lower the
Postal Service's annual employer contribution for FERS
employees by between 0.1 percent and 0.2 percent of salary
because Postal Service employees tend to have lower salaries
and higher mortality rates (when retired) compared with the
averages for all federal employees. CBO estimates that enacting
this provision would:
Decrease off-budget direct spending for
Postal Service contributions to the CSRDF by about $420
million over the 2017-2026 period; and
Increase on-budget direct spending by $420
million over the 2017-2026 period because offsetting
receipts in the CSRDF would decline by the same amount
the Postal Service saved.
However, CBO expects that lowering retirement expenses for
the USPS would lead the agency to modify its current efforts to
reduce spending. In recent years, the agency has implemented
severe measures such as curtailing capital spending, closing
mail processing facilities, making major reductions in service
standards, and either deferring or failing to make certain
required payments to certain funds in the Treasury. CBO expects
that enacting legislation to lower retirement expenses for the
USPS would lead the agency to alter its cost-reduction program
by cutting spending somewhat less severely than it would
without the legislation. Thus, CBO estimates that under the
proposal, the Postal Service would decrease off-budget spending
by about half of the savings in retirement contributions--about
$210 million over the 2017-2026 period.
Payments by Federal Agencies. Because H.R. 5714 would
require the use of postal-specific economic and demographic
factors to calculate the employer contribution toward
retirement that the USPS makes on behalf of its employees, the
amount of employer contributions required from most other
federal agencies would be increased. OPM expects that using
economic and demographic factors that exclude postal workers
from the calculation of the contributions required of other
agencies would raise their contribution rates by about 0.3
percent of salary. Based on that assumption, CBO estimates that
such an increase in contributions would increase spending
subject to appropriation by about $5.9 billion over the 2017-
2026 period. (That cost would be offset by additional receipts
to the CSRDF and thus would have no net effect on future
deficits.) However, the basis of such a disparate effect on the
change in contribution rates between the USPS and nonpostal
agencies is unclear to CBO. OPM has noted that their
assumptions could change upon an updated analysis and review of
the USPS and nonpostal experience.
USPS Office of Inspector General
H.R. 5714 would merge the Office of Inspector General (OIG)
of the USPS and the OIG of the Postal Regulatory Commission and
would require the newly formed office to comply with certain
hiring, employment, and contracting practices under Title 5 of
the United States Code. This would increase costs for the
administration of personnel benefits for about 1,200 employees.
Based on an analysis of information from the OIG for the USPS,
we estimate that total costs would be about $3 million in 2017
and about $5 million annually thereafter, assuming
appropriation of the necessary amounts (see Table 3).
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. Only on-budget changes to outlays or revenues are
subject to pay-as-you-go procedures. The net changes in outlays
that are subject to those pay-as-you-go procedures are shown in
the following table.
TABLE 5--CBO ESTIMATE OF PAY-AS-YOU-GO EFFECTS FOR H.R. 5714, THE POSTAL SERVICE REFORM ACT OF 2016, AS ORDERED REPORTED BY THE HOUSE COMMITTEE ON
OVERSIGHT AND GOVERNMENT REFORM ON JULY 12, 2016
--------------------------------------------------------------------------------------------------------------------------------------------------------
By fiscal year, in millions of dollars--
-------------------------------------------------------------------------------------------------------
2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2017-2021 2017-2026
--------------------------------------------------------------------------------------------------------------------------------------------------------
NET INCREASE OR DECREASE (-) IN THE ON-BUDGET DEFICIT
Statutory Pay-As-You-Go Impact.................. 28 -13 -102 -10 -19 13 -35 -83 -61 -79 -116 -361
--------------------------------------------------------------------------------------------------------------------------------------------------------
Increase in long-term direct spending and deficits: CBO
estimates that enacting the legislation would not increase net
direct spending or on-budget deficits in any of the four
consecutive 10-year periods beginning in 2027.
Intergovernmental and private-sector impact: By increasing
postal rates for public and private mailers, H.R. 5714 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 annual costs to public
entities of complying with the mandate that increases postal
rates would exceed the threshold established in UMRA for
intergovernmental mandates ($77 million in 2016, adjusted
annually for inflation) in four of the first five years after
the rate increase becomes effective. CBO estimates the
aggregate annual costs of the mandates on private entities
(including the rate increase) would exceed the threshold
established in UMRA for private-sector mandates ($154 million
in 2016, adjusted annually for inflation) in each of the first
five years the mandates are in effect.
Mandates on public and private mailers
Section 207 of H.R. 5714 would make permanent an increase
in postal rates for certain products, including those for which
the Postal Service has a statutory monopoly, increasing the
postage rate for first-class mail and other market dominant
products by 1 cent. 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
additional cost of mailing those items.
On the basis of projections 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 total about $620
million in 2017, increasing to about $870 million annually
through 2021 and falling thereafter. (Those figures exclude
additional amounts paid for other postal services and amounts
paid by the federal government for postal services.) Taking
into account the size of state and local governments as a
percentage of the economy, CBO estimates that the
intergovernmental mandate would cost about $70 million in 2017
and increase to about $100 million annually over the next four
years. For private mailers, CBO estimates that the increase in
postal rates would total about $550 million in 2017 and
increase to about $770 million annually over the next four
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 the information from political
committees and the USPS, CBO estimates that the cost of the
mandate would average about $5 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 cost for those annuitants would be offset by those
contributions.
Estimate prepared by: Federal costs: Paul Masi--Health care
provisions; Amber Marcellino--Retirement (discretionary
effect); Mark Grabowicz--All other. Impact on state, local, and
tribal governments: Zachary Byrum. Impact on the private
sector: Paige Piper/Bach.
Estimate approved by: H. Samuel Papenfuss, Deputy Assistant
Director for Budget Analysis.
Changes in Existing Law Made by the Bill, as Reported
In compliance with clause 3(e) of rule XIII of the Rules of
the House of Representatives, changes in existing law made by
the bill, as reported, are shown as follows (existing law
proposed to be omitted is enclosed in black brackets, new
matter is printed in italic, and existing law in which no
change is proposed is shown in roman):
TITLE 5, UNITED STATES CODE
* * * * * * *
PART III--EMPLOYEES
* * * * * * *
SUBPART G--INSURANCE AND ANNUITIES
* * * * * * *
CHAPTER 83--RETIREMENT
* * * * * * *
SUBCHAPTER III--CIVIL SERVICE RETIREMENT
* * * * * * *
Sec. 8348. Civil Service Retirement and Disability Fund
(a) There is a Civil Service Retirement and Disability Fund.
The Fund--
(1) is appropriated for the payment of--
(A) benefits as provided by this subchapter
or by the provisions of chapter 84 of this
title which relate to benefits payable out of
the Fund; and
(B) administrative expenses incurred by the
Office of Personnel Management in placing in
effect each annuity adjustment granted under
section 8340 or 8462 of this title, in
administering survivor annuities and elections
providing therefor under sections 8339 and 8341
of this title or subchapters II and IV of
chapter 84 of this title, in administering
alternative forms of annuities under sections
8343a and 8420a (and related provisions of
law), in making an allotment or assignment made
by an individual under section 8345(h) or
8465(b) of this title, and in withholding taxes
pursuant to section 3405 of title 26 or section
8345(k) or 8469 of this title;
(2) is made available, subject to such annual
limitation as the Congress may prescribe, for any
expenses incurred by the Office in connection with the
administration of this chapter, chapter 84 of this
title, and other retirement and annuity statutes; and
(3) is made available, subject to such annual
limitation as the Congress may prescribe, for any
expenses incurred by the Merit Systems Protection Board
in the administration of appeals authorized under
sections 8347(d) and 8461(e) of this title.
(b) The Secretary of the Treasury may accept and credit to
the Fund money received in the form of a donation, gift,
legacy, or bequest, or otherwise contributed for the benefit of
civil-service employees generally.
(c) The Secretary 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. The income derived from these
investments constitutes a part of the Fund.
(d) The purposes for which obligations of the United States
may be issued under chapter 31 of title 31 are extended to
authorize the issuance at par of public-debt obligations for
purchase by the Fund. The obligations issued for purchase by
the Fund shall have maturities fixed with due regard for the
needs of the Fund and bear interest at a rate equal to the
average market yield computed as of the end of the calendar
month next preceding the date of the issue, borne by all
marketable interest-bearing obligations of the United States
then forming a part of the public debt which are not due or
callable until after the expiration of 4 years from the end of
that calendar month. If the average market yield is not a
multiple of 1/8 of 1 percent, the rate of interest on the
obligations shall be the multiple of 1/8 of 1 percent nearest
the average market yield.
(e) The Secretary may purchase other interest-bearing
obligations of the United States, or obligations guaranteed as
to both principal and interest by the United States, on
original issue or at the market price only if he determines
that the purchases are in the public interest.
(f) Any statute which authorizes--
(1) new or liberalized benefits payable from the
Fund, including annuity increases other than under
section 8340 of this title;
(2) extension of the coverage of this subchapter to
new groups of employees; or
(3) increases in pay on which benefits are computed;
is deemed to authorize appropriations to the Fund to finance
the unfunded liability created by that statute, in 30 equal
annual installments with interest computed at the rate used in
the then most recent valuation of the Civil Service Retirement
System and with the first payment thereof due as of the end of
the fiscal year in which each new or liberalized benefit,
extension of coverage, or increase in pay is effective.
(g) At the end of each fiscal year, the Office shall notify
the Secretary of the Treasury of the amount equivalent to (1)
interest on the unfunded liability computed for that year at
the interest rate used in the then most recent valuation of the
System, and (2) that portion of disbursement for annuities for
that year which the Office estimates is attributable to credit
allowed for military service, less an amount determined by the
Office to be appropriate to reflect the value of the deposits
made to the credit of the Fund under section 8334(j) of this
title. Before closing the accounts for each fiscal year, the
Secretary shall credit to the Fund, as a Government
contribution, out of any money in the Treasury of the United
States not otherwise appropriated, the following percentages of
such amounts: 10 percent for 1971; 20 percent for 1972; 30
percent for 1973; 40 percent for 1974; 50 percent for 1975; 60
percent for 1976; 70 percent for 1977; 80 percent for 1978; 90
percent for 1979; and 100 percent for 1980 and for each fiscal
year thereafter.
(h)(1) In this subsection, the term ``Postal surplus or
supplemental liability'' means the estimated difference, as
determined by the Office, between--
(A) the actuarial present value of all future
benefits payable from the Fund under this subchapter to
current or former employees of the United States Postal
Service and attributable to civilian employment with
the United States Postal Service; and
(B) the sum of--
(i) the actuarial present value of deductions
to be withheld from the future basic pay of
employees of the United States Postal Service
currently subject to this subchapter under
section 8334;
(ii) that portion of the Fund balance, as of
the date the Postal surplus or supplemental
liability is determined, attributable to
payments to the Fund by the United States
Postal Service and its employees, minus benefit
payments attributable to civilian employment
with the United States Postal Service, plus the
earnings on such amounts while in the Fund; and
(iii) any other appropriate amount, as
determined by the Office in accordance with
generally accepted actuarial practices and
principles.
(2)(A) Not later than June 15, 2007, the Office shall
determine the Postal surplus or supplemental liability, as of
September 30, 2006. If that result is a surplus, the amount of
the surplus shall be transferred to the Postal Service Retiree
Health Benefits Fund established under section 8909a by June
30, 2007.
[(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.
[(C) As of the close of the fiscal years ending September 30,
2015, 2025, 2035, and 2039, if the result is a surplus, that
amount shall be transferred to the Postal Service Retiree
Health Benefits Fund, and any prior amortization schedule for
payments shall be terminated.]
(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, 2015. Subject to
subparagraph (C), beginning June 15, 2017, if the result is a
surplus or 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 surplus
or liability to the Postal Service or the Fund (as the case may
be) by September 30, 2043.
(C) No later than June 30, 2033, the Office shall determine,
and thereafter redetermine as necessary, but not more
frequently than once per year, the appropriate date to complete
the liquidation of any remaining surplus or liability
determined under this paragraph. The determination under this
subparagraph shall be set in accordance with generally accepted
actuarial practices and principles and shall not be longer than
a period of 15 years from the date on which the determination
is made.
(D) Amortization schedules established under this paragraph
shall be set in accordance with generally accepted actuarial
practices and principles, with interest computed at the rate
used in the most recent valuation of the Civil Service
Retirement System.
(E) The United States Postal Service shall pay the amounts so
determined to the Office, with payments due not later than the
date scheduled by the Office.
(3) Notwithstanding any other provision of law, in computing
the amount of any payment under any other subsection of this
section that is based upon the amount of the unfunded
liability, such payment shall be computed disregarding that
portion of the unfunded liability that the Office determines
will be liquidated by payments under this subsection.
(4) For the purpose of carrying out paragraph (1), for fiscal
year 2013 and each fiscal year thereafter, the Office shall
use--
(A) demographic factors specific to current and
former employees of the United States Postal Service,
unless such data cannot be generated; and
(B) economic assumptions regarding wage and salary
growth that reflect the specific past, and likely
future, pay for current employees of the United States
Postal Service.
(i)(1) Notwithstanding any other provision of law, the Panama
Canal Commission shall be liable for that portion of any
estimated increase in the unfunded liability of the fund which
is attributable to any benefits payable from the Fund to or on
behalf of employees and their survivors to the extent
attributable to the amendments made by sections 1241 and 1242,
and the provisions of sections 1231(b) and 1243(a)(1), of the
Panama Canal Act of 1979, and the amendments made by section
3506 of the Panama Canal Commission Authorization Act for
Fiscal Year 1991.
(2) The estimated increase in the unfunded liability referred
to in paragraph (1) of this subsection shall be determined by
the Office of Personnel Management. The Panama Canal Commission
shall pay to the Fund from funds available to it for that
purpose the amount so determined in annual installments with
interest computed at the rate used in the most recent valuation
of the Civil Service Retirement System.
(j)(1) Notwithstanding subsection (c) of this section, the
Secretary of the Treasury may suspend additional investment of
amounts in the Fund if such additional investment could not be
made without causing the public debt of the United States to
exceed the public debt limit.
(2) Any amounts in the Fund which, solely by reason of the
public debt limit, are not invested shall be invested by the
Secretary of the Treasury as soon as such investments can be
made without exceeding the public debt limit.
(3) Upon expiration of the debt issuance suspension period,
the Secretary of the Treasury shall immediately issue to the
Fund obligations under chapter 31 of title 31 that
(notwithstanding subsection (d) of this section) bear such
interest rates and maturity dates as are necessary to ensure
that, after such obligations are issued, the holdings of the
Fund will replicate to the maximum extent practicable the
obligations that would then be held by the Fund if the
suspension of investment under paragraph (1) of this
subsection, and any redemption or disinvestment under
subsection (k) of this section for the purpose described in
such paragraph, during such period had not occurred.
(4) On the first normal interest payment date after the
expiration of any debt issuance suspension period, the
Secretary of the Treasury shall pay to the Fund, from amounts
in the general fund of the Treasury of the United States not
otherwise appropriated, an amount determined by the Secretary
to be equal to the excess of--
(A) the net amount of interest that would have been
earned by the Fund during such debt issuance suspension
period if--
(i) amounts in the Fund that were not
invested during such debt issuance suspension
period solely by reason of the public debt
limit had been invested, and
(ii) redemptions and disinvestments with
respect to the Fund which occurred during such
debt issuance suspension period solely by
reason of the public debt limit had not
occurred, over (B) the net amount of interest
actually earned by the Fund during such debt
issuance suspension period.
(5) For purposes of this subsection and subsections (k) and
(l) of this section--
(A) the term ``public debt limit'' means the
limitation imposed by section 3101(b) of title 31; and
(B) the term ``debt issuance suspension period''
means any period for which the Secretary of the
Treasury determines for purposes of this subsection
that the issuance of obligations of the United States
may not be made without exceeding the public debt
limit.
(k)(1) Subject to paragraph (2) of this subsection, the
Secretary of the Treasury may sell or redeem securities,
obligations, or other invested assets of the Fund before
maturity in order to prevent the public debt of the United
States from exceeding the public debt limit.
(2) The Secretary may sell or redeem securities, obligations,
or other invested assets of the Fund under paragraph (1) of
this subsection only during a debt issuance suspension period,
and only to the extent necessary to obtain any amount of funds
not exceeding the amount equal to the total amount of the
payments authorized to be made from the Fund under the
provisions of this subchapter or chapter 84 of this title or
related provisions of law during such period. A sale or
redemption may be made under this subsection even if, before
the sale or redemption, there is a sufficient amount in the
Fund to ensure that such payments are made in a timely manner.
(l)(1) The Secretary of the Treasury shall report to Congress
on the operation and status of the Fund during each debt
issuance suspension period for which the Secretary is required
to take action under paragraph (3) or (4) of subsection (j) of
this section. The report shall be submitted as soon as possible
after the expiration of such period, but not later than the
date that is 30 days after the first normal interest payment
date occurring after the expiration of such period.
(2) Whenever the Secretary of the Treasury determines that,
by reason of the public debt limit, the Secretary will be
unable to fully comply with the requirements of subsection (c)
of this section, the Secretary shall immediately notify
Congress of the determination. The notification shall be made
in writing.
* * * * * * *
CHAPTER 84--FEDERAL EMPLOYEES' RETIREMENT SYSTEM
* * * * * * *
SUBCHAPTER II--BASIC ANNUITY
* * * * * * *
Sec. 8423. Government contributions
(a)(1) Each employing agency having any employees or Members
subject to section 8422(a) shall contribute to the Fund an
amount equal to the sum of--
(A) the product of--
(i) the normal-cost percentage, as determined
for employees (other than employees covered by
[subparagraph (B)),] subparagraph (B) or (C)),
multiplied by
(ii) the aggregate amount of basic pay
payable by the agency, for the period involved,
to employees (under clause (i)) who are within
such agency; [and]
(B) the product of--
(i) the normal-cost percentage, as determined
for Members, Congressional employees, law
enforcement officers, members of the Supreme
Court Police, firefighters, nuclear materials
couriers, customs and border protection
officers, air traffic controllers, military
reserve technicians, and employees under
sections 302 and 303 of the Central
Intelligence Agency Retirement Act, multiplied
by
(ii) the aggregate amount of basic pay
payable by the agency, for the period involved,
to employees and Members (under clause (i)) who
are within such agency[.]; and
(C) the product of--
(i) the normal-cost percentage, as determined
for employees (other than employees covered by
subparagraph (B)) of the United States Postal
Service under paragraph (5), 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.
(2)(A) In determining any normal-cost percentage to be
applied under this subsection, amounts provided for under
section 8422 shall be taken into account.
(B)(i) Subject to clauses (ii) and (iii), for purposes of any
period in any year beginning after December 31, 2013, the
normal-cost percentage under this subsection shall be
determined and applied as if section 401(b) of the Bipartisan
Budget Act of 2013 had not been enacted.
(ii) Any contributions under this subsection in excess of the
amounts which (but for clause (i)) would otherwise have been
payable shall be applied toward reducing the unfunded liability
of the Civil Service Retirement System.
(iii) After the unfunded liability of the Civil Service
Retirement System has been eliminated, as determined by the
Office, Government contributions under this subsection shall be
determined and made disregarding this subparagraph.
(iv) The preceding provisions of this subparagraph shall be
disregarded for purposes of determining the contributions
payable by the United States Postal Service and the Postal
Regulatory Commission.
(3) Contributions under this subsection shall be paid--
(A) in the case of law enforcement officers, members
of the Supreme Court Police, firefighters, nuclear
materials couriers, customs and border protection
officers, air traffic controllers, military reserve
technicians, and other employees, from the
appropriation or fund used to pay such law enforcement
officers, members of the Supreme Court Police,
firefighters, nuclear materials couriers, customs and
border protection officers, air traffic controllers,
military reserve technicians, or other employees,
respectively;
(B) in the case of elected officials, from an
appropriation or fund available for payment of other
salaries of the same office or establishment; and
(C) in the case of employees of the legislative
branch paid by the Chief Administrative Officer of the
House of Representatives, from the applicable accounts
of the House of Representatives.
(4) A contribution to the Fund under this subsection shall be
deposited under such procedures as the Comptroller General of
the United States may prescribe.
(5)(A) In determining the normal-cost percentage for
employees of the United States Postal Service for purposes of
paragraph (1)(C), the Office shall use--
(i) demographic factors specific to such employees,
unless such data cannot be generated; and
(ii) economic assumptions regarding wage and salary
growth that reflect the specific past, and likely
future, pay for such employees.
(B) 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 subparagraph (A).
(C) 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 considers
necessary--
(i) upon request of the United States Postal Service,
but not more frequently than once each fiscal year; and
(ii) at such other times as the Office considers
appropriate.
(6) For the purpose of carrying out subsection (b)(1)(B), and
consistent with paragraph (5), for fiscal year 2013, and each
fiscal year thereafter, the Office shall use--
(A) demographic factors specific to current and
former employees of the United States Postal Service,
unless such data cannot be generated; and
(B) economic assumptions regarding wage and salary
growth that reflect the specific past, and likely
future, pay for current employees of the United States
Postal Service.
(b)(1) The Office shall compute--
(A) the amount of the supplemental liability of the
Fund with respect to individuals other than those to
whom subparagraph (B) relates, and
(B) the amount of the supplemental liability of the
Fund with respect to current or former employees of the
United States Postal Service (and the Postal Regulatory
Commission) and their survivors;
as of the close of each fiscal year beginning after September
30, 1987.
(2) The amount of any supplemental liability computed under
paragraph (1)(A) or (1)(B) shall be amortized in 30 equal
annual installments, with interest computed at the rate used in
the most recent valuation of the System.
(3) At the end of each fiscal year, the Office shall notify--
(A) the Secretary of the Treasury of the amount of
the installment computed under this subsection for such
year with respect to individuals under paragraph
(1)(A); and
(B) the Postmaster General of the United States of
the amount of the installment computed under this
subsection for such year with respect to individuals
under paragraph (1)(B).
(4)(A) Before closing the accounts for a fiscal year, the
Secretary of the Treasury shall credit to the Fund, as a
Government contribution, out of any money in the Treasury of
the United States not otherwise appropriated, the amount under
paragraph (3)(A) for such year.
(B) Upon receiving notification under paragraph (3)(B), the
United States Postal Service shall pay the amount specified in
such notification to the Fund.
(5)(A) In this paragraph, the term ``postal funding surplus''
means the amount by which the amount of the supplemental
liability computed under paragraph (1)(B) is less than zero.
(B) If the amount of supplemental liability computed under
paragraph (1)(B) as of the close of any fiscal year after the
date of enactment of the Postal Service Reform Act of 2016 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 30 years, commencing on September 30 of the
subsequent fiscal year; and
(ii) shall be transferred to the United States Postal
Service Fund.
[(5)] (6) For the purpose of carrying out paragraph (1) with
respect to any fiscal year, the Office may--
(A) require the Board of Actuaries of the Civil
Service Retirement System to make actuarial
determinations and valuations, make recommendations,
and maintain records in the same manner as provided in
section 8347(f); and
(B) use the latest actuarial determinations and
valuations made by such Board of Actuaries.
(c) Under regulations prescribed by the Office, the head of
an agency may request reconsideration of any amount determined
to be payable with respect to such agency under subsection (a)
or (b). Any such request shall be referred to the Board of
Actuaries of the Civil Service Retirement System. The Board of
Actuaries shall review the computations of the Office and may
make any adjustment with respect to any such amount which the
Board determines appropriate. A determination by the Board of
Actuaries under this subsection shall be final.
* * * * * * *
CHAPTER 89--HEALTH INSURANCE
Sec.
8901. Definitions.
* * * * * * *
8903c. Postal Service Health Benefits Program.
* * * * * * *
Sec. 8903. Health benefits plans
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.
(2) Indemnity Benefit Plan.--One Government-wide
plan, offering two levels of benefits, under which a
carrier agrees to pay certain sums of money, not in
excess of the actual expenses incurred, for benefits of
the types described by section 8904(2) of this title.
(3) Employee Organization Plans.--Employee
organization plans which offer benefits of the types
referred to by section 8904(3) of this title, which are
sponsored or underwritten, and are administered, in
whole or substantial part, by employee organizations
described in section 8901(8)(A) of this title, which
are available only to individuals, and members of their
families, who at the time of enrollment are members of
the organization.
(4) Comprehensive Medical Plans.--
(A) Group-practice prepayment plans.--Group-
practice prepayment plans which offer health
benefits of the types referred to by section
8904(4) of this title, in whole or in
substantial part on a prepaid basis, with
professional services thereunder provided by
physicians practicing as a group in a common
center or centers. The group shall include at
least 3 physicians who receive all or a
substantial part of their professional income
from the prepaid funds and who represent 1 or
more medical specialties appropriate and
necessary for the population proposed to be
served by the plan.
(B) Individual-practice prepayment plans.--
Individual-practice prepayment plans which
offer health services in whole or substantial
part on a prepaid basis, with professional
services thereunder provided by individual
physicians who agree, under certain conditions
approved by the Office, to accept the payments
provided by the plans as full payment for
covered services given by them including, in
addition to in-hospital services, general care
given in their offices and the patients' homes,
out-of-hospital diagnostic procedures, and
preventive care, and which plans are offered by
organizations which have successfully operated
similar plans before approval by the Office of
the plan in which employees may enroll.
(C) Mixed model prepayment plans.--Mixed
model prepayment plans which are a combination
of the type of plans described in subparagraph
(A) and the type of plans described in
subparagraph (B).
* * * * * * *
SEC. 8903C. POSTAL SERVICE HEALTH BENEFITS PROGRAM.
(a) Definitions.--In this section--
(1) the term ``covered Medicare individual'' means an
individual who is entitled to benefits under part A of
title XVIII of the Social Security Act (42 U.S.C. 1395c
et seq.), but excluding an individual who is eligible
to enroll under such part under section 1818 or 1818A
of the Social Security Act (42 U.S.C. 1395i-2, 1395i-
2a);
(2) the term ``initial contract year'' means the
contract year beginning in January of 2018;
(3) 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 initial contract year;
(4) the term ``Office'' means the Office of Personnel
Management;
(5) the term ``Postal Service'' means the United
States Postal Service;
(6) the term ``Postal Service annuitant'' means an
annuitant enrolled in a health benefits plan under this
chapter whose Government contribution is paid pursuant
to the requirements of section 8906(g)(2);
(7) the term ``Postal Service employee'' means an
employee of the Postal Service enrolled in a health
benefits plan under this chapter;
(8) the term ``Postal Service Medicare covered
annuitant'' means an individual who--
(A) is a Postal Service annuitant; and
(B) is a covered Medicare individual;
(9) the term ``Program'' means the Postal Service
Health Benefits Program established under subsection
(c) within the Federal Employees Health Benefit
Program; and
(10) the term ``Program plan'' means a health
benefits plan offered under the Program.
(b) Application.--The requirements under this section shall--
(1) apply to the initial contract year and each
contract year thereafter; and
(2) supersede any other provision of this chapter
inconsistent with such requirements, 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 under which the
Office contracts with carriers to offer health benefits
plans as described under this section. Except as
otherwise provided under this section, any such
contract shall be consistent with the requirements of
this chapter for contracts under section 8902 with
carriers to offer health benefits plans other than
under this section. The Program shall--
(A) to the greatest extent practicable,
include plans offered by--
(i) each carrier for which the total
enrollment in the plans provided under
this chapter includes, in the contract
year beginning in January 2017, 1,500
or more enrollees who are Postal
Service employees or Postal Service
annuitants; and
(ii) any other carrier determined
appropriate by the Office;
(B) be available for participation by all
Postal Service employees and Postal Service
annuitants, in accordance with subsection (d);
(C) provide for enrollment in a plan as an
individual, for self plus one, or for self and
family; and
(D) 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 or as
provided under paragraph (5)).
(2) Separate postal service risk pool.--The Office
shall ensure that each Program plan includes rates 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
covered family members of such employees and
annuitants), taking into specific account the reduction
in benefits cost for the Program plan due to the
Medicare enrollment requirements under subsection (e)
and any savings or subsidies resulting from subsection
(f)(1).
(3) Actuarially equivalent coverage.--The Office
shall ensure that each carrier participating in the
Postal Service Health Benefits Program provides
coverage under the Program plans offered by the carrier
that is actuarially equivalent, as determined by the
Office, to the coverage that the carrier provides under
the health benefits plans offered by the carrier under
this chapter that are not Program plans.
(4) Applicability of federal employees health
benefits program requirements.--Except as otherwise set
forth in this section, all provisions of this chapter
applicable to health benefits plans offered by the
carrier under section 8903 or 8903a shall also apply to
plans offered under the Program.
(5) Application of continuation coverage.--In
accordance with rules established by the Office,
section 8905a shall apply to health benefits plans
offered under this section in the same manner as such
section applies to other health benefits plans offered
under this chapter.
(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 of
this section; and
(B) may not enroll in any other health
benefits plan offered under any other section
of this chapter.
(2) Annuitants.--
(A) Application.--A Postal Service annuitant
shall not be subject to the requirements of
this section if the Postal Service annuitant--
(i) is enrolled in a health benefits
plan under this chapter for the
contract year immediately preceding the
initial contract year that is not a
health benefits plan offered by an
initial participating carrier, unless--
(I) the Postal Service
annuitant voluntarily enrolls
in a Program plan;
(II) the health benefits plan
in which such annuitant is
enrolled for such contract year
ceases to be available; or
(III) the health benefits
plan in which such annuitant is
enrolled for such contract year
becomes available as a Program
plan; or
(ii) resides in a geographic area for
which there is not a Program plan in
which the Postal Service annuitant may
enroll.
(B) Changed enrollment.--If a Postal Service
annuitant changes enrollment to a health
benefits plan under this chapter provided by a
different carrier than the health benefits plan
in which such annuitant is enrolled during the
previous contract year, the Postal Service
annuitant may only enroll in a Program plan.
(3) Employees.--A Postal Service employee who is
enrolled in a health benefits plan under this chapter
for the contract year immediately preceding the initial
contract year that is not a health benefits plan
offered by an initial participating carrier shall not
be subject to the requirements of this section, except
that--
(A) if the Postal Service employee changes
enrollment to a different health benefits plan
under this chapter during the open season for
the initial contract year, or after the start
of the initial contract year, the Postal
Service employee may only enroll in a Program
plan;
(B) if the health benefits plan in which such
employee is enrolled for such contract year
becomes available as a Program plan, the Postal
Service employee may only enroll in a Program
plan;
(C) 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
Program 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; and
(D) subparagraphs (A), (B), and (C) shall not
apply to an employee who resides in a
geographic area for which there is not a
Program plan in which the employee may enroll.
(e) Requirement of Medicare Enrollment for Annuitants and
Their Family Members.--
(1) Postal service medicare covered annuitants.--A
Postal Service Medicare covered annuitant subject to
the requirements of this section may not obtain
coverage under this chapter unless the annuitant is
enrolled in part B of title XVIII of the Social
Security Act (42 U.S.C. 1395j et seq.).
(2) Medicare covered family members.--If a family
member of a Postal Service annuitant who is subject to
the requirements of this section is a covered Medicare
individual, the family member may not be covered under
the Program as a family member of the Postal Service
annuitant unless the family member is enrolled in part
B of title XVIII of the Social Security Act (42 U.S.C.
1395j et seq.).
(3) Process for coordinated election of enrollment
under medicare part b.--The Office shall establish a
process under which--
(A) Postal Service annuitants and family
members who are subject to the requirements of
paragraph (1) or (2)--
(i) are informed, at the time of
enrollment under this chapter, of such
requirement; and
(ii) as a consequence of such
enrollment are deemed to have elected
to be enrolled under Medicare part B
(under section 1837(m)(1) of the Social
Security Act) in connection with the
enrollment in a Program plan under this
chapter; and
(B) the Office provides the Secretary of
Health and Human Services and the Commissioner
of Social Security in a timely manner with such
information respecting such annuitants and
family members and such election as may be
required to effect their enrollment and
coverage under Medicare part B and this section
in a timely manner.
(f) Medicare Coordination.--
(1) In general.--The Office shall require each
Program plan to provide benefits for covered Medicare
individuals pursuant to the standard coordination of
benefits method used under this chapter, rather than
the exclusion method or the carve-out method.
(2) Medicare part d prescription drug benefits.--The
Office shall require each Program plan to provide
prescription drug benefits for Postal Service
annuitants and family members who are eligible
individuals (as defined in section 1860D-1(a)(3)(A) of
the Social Security Act (42 U.S.C. 1395w-101(a)) in a
form and manner that satisfies the requirements for a
qualified retiree prescription drug plan under
subsection (a)(2) of section 1860D-22 of the Social
Security Act (42 U.S.C. 1395w-132)), for which plan a
waiver or modification of requirements may have been
applied pursuant to subsection (b) of such section. For
purposes of such section, a Program plan shall then be
deemed to be a qualified retiree prescription drug plan
and the Federal Government, through the Office, shall
be deemed the sponsor of such plan.
(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 paragraphs (2) and (3).
(2) Weighted average calculation.--Not later than
October 1 of each year (beginning with 2017), the
Office shall determine the weighted average of the
rates established pursuant to subsection (c)(2) for
Program 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.
(3) Weighting in computing rates for initial contract
year.--In determining such weighted average of the
rates for the initial contract year, the Office shall
take into account (for purposes of section 8906(a)(2))
the enrollment of Postal Service employees and
annuitants in the health benefits plans offered by the
initial participating carriers as of March 31, 2017.
(h) Reserves.--
(1) Separate reserves.--
(A) In general.--The Office shall ensure that
each Program plan maintains separate reserves
(including a separate contingency reserve) with
respect to the enrollees in the Program plan in
accordance with section 8909.
(B) References.--For purposes of the 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 Program plan shall be
credited with a proportionate amount of the
funds in the reserves for health benefits plans
offered by the carrier.
(2) Discontinuation of program plan.--In applying
section 8909(e) relating to a Program 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 Program 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.
(j) Medicare Education Program.--Not later than 180 days
after the date of enactment of this section, the Postal Service
shall establish a Medicare Education Program. Under the
Program, the Postal Service shall--
(1) notify retirees and employees of the Postal
Service about the Postal Service Health Benefits
Program established under subsection (c)(1);
(2) provide information regarding the Postal Service
Health Benefits to such retirees and employees,
including a description of the health care options
available under such Program, the requirement that
retirees be enrolled in Medicare under subsection
(e)(1), and the operation of the premium transition
fund to be created under section 104 of the Postal
Service Reform Act of 2016; and
(3) respond and provide answers to any inquiry from
such employees and retirees about the Postal Service
Health Benefits Program or Medicare enrollment.
* * * * * * *
Sec. 8906. Contributions
(a)(1) Not later than October 1 of each year, the Office of
Personnel Management shall determine the weighted average of
the subscription charges that will be in effect during the
following contract year with respect to--
(A) enrollments under this chapter for self alone;
(B) enrollments under this chapter for self plus one;
and
(C) enrollments under this chapter for self and
family.
(2) In determining each weighted average under paragraph (1),
the weight to be given to a particular subscription charge
shall, with respect to each plan (and option) to which it is to
apply, be commensurate with the number of enrollees enrolled in
such plan (and option) as of March 31 of the year in which the
determination is being made.
(3) For purposes of paragraph (2), the term ``enrollee''
means any individual who, during the contract year for which
the weighted average is to be used under this section, will be
eligible for a Government contribution for health benefits.
(b)(1) Except as provided in paragraphs (2) and (3), the
biweekly Government contribution for health benefits for an
employee or annuitant enrolled in a health benefits plan under
this chapter is adjusted to an amount equal to 72 percent of
the weighted average under subsection (a)(1) (A) or (B), as
applicable. For an employee, the adjustment begins on the first
day of the employee's first pay period of each year. For an
annuitant, the adjustment begins on the first day of the first
period of each year for which an annuity payment is made.
(2) The biweekly Government contribution for an employee or
annuitant enrolled in a plan under this chapter shall not
exceed 75 percent of the subscription charge.
(3) In the case of an employee who is occupying a position on
a part-time career employment basis (as defined in section
3401(2) of this title), the biweekly Government contribution
shall be equal to the percentage which bears the same ratio to
the percentage determined under this subsection (without regard
to this paragraph) as the average number of hours of such
employee's regularly scheduled workweek bears to the average
number of hours in the regularly scheduled workweek of an
employee serving in a comparable position on a full-time career
basis (as determined under regulations prescribed by the
Office).
(4) In the case of persons who are enrolled in a health
benefits plan as part of the demonstration project under
section 1108 of title 10, the Government contribution shall be
subject to the limitation set forth in subsection (i) of that
section.
(c) There shall be withheld from the pay of each enrolled
employee and (except as provided in subsection (i) of this
section) the annuity of each enrolled annuitant and there shall
be contributed by the Government, amounts, in the same ratio as
the contributions of the employee or annuitant and the
Government under subsection (b) of this section, which are
necessary for the administrative costs and the reserves
provided for by section 8909(b) of this title.
(d) The amount necessary to pay the total charge for
enrollment, after the Government contribution is deducted,
shall be withheld from the pay of each enrolled employee and
(except as provided in subsection (i) of this section) from the
annuity of each enrolled annuitant. The withholding for an
annuitant shall be the same as that for an employee enrolled in
the same health benefits plan and level of benefits.
(e)(1)(A) An employee enrolled in a health benefits plan
under this chapter who is placed in a leave without pay status
may have his coverage and the coverage of members of his family
continued under the plan for not to exceed 1 year under
regulations prescribed by the Office.
(B) During each pay period in which an enrollment continues
under subparagraph (A)--
(i) employee and Government contributions required by
this section shall be paid on a current basis; and
(ii) if necessary, the head of the employing agency
shall approve advance payment, recoverable in the same
manner as under section 5524a(c), of a portion of basic
pay sufficient to pay current employee contributions.
(C) Each agency shall establish procedures for accepting
direct payments of employee contributions for the purposes of
this paragraph.
(2) An employee who enters on approved leave without pay to
serve as a full-time officer or employee of an organization
composed primarily of employees as defined by section 8901 of
this title, within 60 days after entering on that leave without
pay, may file with his employing agency an election to continue
his health benefits enrollment and arrange to pay currently
into the Employees Health Benefits Fund, through his employing
agency, both employee and agency contributions from the
beginning of leave without pay. The employing agency shall
forward the enrollment charges so paid to the Fund. If the
employee does not so elect, his enrollment will continue during
nonpay status and end as provided by paragraph (1) of this
subsection and implementing regulations.
(3)(A) An employing agency may pay both the employee and
Government contributions, and any additional administrative
expenses otherwise chargeable to the employee, with respect to
health care coverage for an employee described in subparagraph
(B) and the family of such employee.
(B) An employee referred to in subparagraph (A) is an
employee who--
(i) is enrolled in a health benefits plan under this
chapter;
(ii) is a member of a reserve component of the armed
forces;
(iii) is called or ordered to active duty in support
of a contingency operation (as defined in section
101(a)(13) of title 10);
(iv) is placed on leave without pay or separated from
service to perform active duty; and
(v) serves on active duty for a period of more than
30 consecutive days.
(C) Notwithstanding the one-year limitation on coverage
described in paragraph (1)(A), payment may be made under this
paragraph for a period not to exceed 24 months.
(f) The Government contribution, and any additional payments
under subsection (e)(3)(A), for health benefits for an employee
shall be paid---
(1) in the case of employees generally, from the
appropriation or fund which is used to pay the
employee;
(2) in the case of an elected official, from an
appropriation or fund available for payment of other
salaries of the same office or establishment;
(3) in the case of an employee of the legislative
branch who is paid by the Chief Administrative Officer
of the House of Representatives, from the applicable
accounts of the House of Representatives; and
(4) in the case of an employee in a leave without pay
status, from the appropriation or fund which would be
used to pay the employee if he were in a pay status.
(g)(1) Except as provided in paragraphs (2) and (3), the
Government contributions authorized by this section for health
benefits for an annuitant shall be paid from annual
appropriations which are authorized to be made for that purpose
and which may be made available until expended.
(2)(A)(i) 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 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.] shall be paid as
provided in clause (ii).
(ii) With respect to the Government contributions required to
be paid under clause (i)--
(I) the portion of the contributions that is equal to
the amount of the net claims costs under the enrollment
of the individuals described in clause (i) shall be
paid from the Postal Service Retiree Health Benefits
Fund up to the amount contained in the Fund; and
(II) any remaining amount shall be paid by the United
States Postal Service.
(B) In determining any amount for which the Postal Service is
liable under this paragraph, the amount of the liability shall
be prorated to reflect only that portion of total service which
is attributable to civilian service performed (by the former
postal employee or by the deceased individual referred to in
subparagraph (A), as the case may be) after June 30, 1971, as
estimated by the Office of Personnel Management.
(C) For purposes of this paragraph, the amount of the net
claims costs under the enrollment of an individual described in
subparagraph (A)(i) shall be the amount, as determined by the
Office over any particular period of time, equal to the
difference between--
(i) the sum of--
(I) the costs incurred by a carrier in
providing health services to, paying for health
services provided to, or reimbursing expenses
for health services provided to, the individual
and any other person covered under the
enrollment of the individual; and
(II) an amount of indirect expenses
reasonably allocable to the provision, payment,
or reimbursement described in subclause (I), as
determined by the Office; and
(ii) the amount withheld from the annuity of the
individual or otherwise paid by the individual under
this section.
(3) The Government contribution for persons enrolled in a
health benefits plan as part of the demonstration project under
section 1108 of title 10 shall be paid as provided in
subsection (i) of that section.
(h) The Office shall provide for conversion of biweekly rates
of contribution specified by this section to rates for
employees and annuitants paid on other than a biweekly basis,
and for this purpose may provide for the adjustment of the
converted rate to the nearest cent.
(i) An annuitant whose annuity is insufficient to cover the
withholdings required for enrollment in a particular health
benefits plan may enroll (or remain enrolled) in such plan,
notwithstanding any other provision of this section, if the
annuitant elects, under conditions prescribed by regulations of
the Office, to pay currently into the Employees Health Benefits
Fund, through the retirement system that administers the
annuitant's health benefits enrollment, an amount equal to the
withholdings that would otherwise be required under this
section.
* * * * * * *
Sec. 8909a. Postal Service Retiree Health [Benefit] Benefits Fund
(a) There is in the Treasury of the United States a Postal
Service Retiree Health Benefits Fund which is administered by
the Office of Personnel Management.
(b) The Fund is available without fiscal year limitation for
payments required under section 8906(g)(2)(A).
(c) The Secretary of the Treasury shall immediately invest,
in interest-bearing securities of the United States such
currently available portions of the Fund as are not immediately
required for payments from the Fund. Such investments shall be
made in the same manner as investments for the Civil Service
Retirement and Disability Fund under section 8348.
(d)(1) Not later than June 30, 2007, and by June 30 of each
succeeding year, the Office shall compute the net present value
of the future payments [required under section 8906(g)(2)(A)]
required to be paid from the Postal Service Retiree Health
Benefits Fund under section 8906(g)(2)(A)(ii)(I) and
attributable to the service of Postal Service employees during
the most recently ended fiscal year.
[(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, 2055, 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) 100 percent of the Postal Service actuarial
liability as of September 30 of the preceding fiscal
year; and
(ii) the value of the assets of the Postal Service
Retiree Health Benefits Fund as of September 30 of the
preceding fiscal year.
(3)(A) The United States Postal Service shall pay into such
Fund--
(i) $5,400,000,000, not later than September 30,
2007;
(ii) $5,600,000,000, not later than September 30,
2008;
(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 August 1, 2012;
[(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)] paragraph (1), except to the extent the payment
would cause the value of the assets in the Fund to
exceed the Postal Service actuarial liability; 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.
(5)(A)(i) Any computation or other determination of the
Office under this subsection shall, upon request of the United
States Postal Service, be subject to a review by the Postal
Regulatory Commission under this paragraph.
(ii) Upon receiving a request under clause (i), the
Commission shall promptly procure the services of an actuary,
who shall hold membership in the American Academy of Actuaries
and shall be qualified in the evaluation of healthcare
insurance obligations, to conduct a review in accordance with
generally accepted actuarial practices and principles and to
provide a report to the Commission containing the results of
the review. The Commission, upon determining that the report
satisfies the requirements of this subparagraph, shall approve
the report, with any comments it may choose to make, and submit
it with any such comments to the Postal Service, the Office of
Personnel Management, and Congress.
(B) Upon receiving the report under subparagraph (A), the
Office of Personnel Management shall reconsider its
determination or redetermination in light of such report, and
shall make any appropriate adjustments. The Office shall submit
a report containing the results of its reconsideration to the
Commission, the Postal Service, and Congress.
(6) After consultation with the United States Postal Service,
the Office shall promulgate any regulations the Office
determines necessary under this subsection.
(7) In this subsection, the term ``Postal Service actuarial
liability'' means the difference between--
(A) the net present value of future payments required
to be paid from the Postal Service Retiree Health
Benefits Fund under section 8906(g)(2)(A)(ii)(I) 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.
(8) For purposes of computing an amount under paragraph (1)
or (7)(A), section 8906(g)(2)(A)(ii)(I) shall be applied as
though ``up to the amount contained in the Fund'' were struck.
(e) Subsections (a) through (d) of this section shall be
subject to section 102 of the Postal Service Reform Act of
2016.
* * * * * * *
----------
SOCIAL SECURITY ACT
* * * * * * *
TITLE XVIII--HEALTH INSURANCE FOR THE AGED AND DISABLED
* * * * * * *
Part B--Supplementary Medical Insurance Benefits for the Aged and
Disabled
* * * * * * *
ENROLLMENT PERIODS
Sec. 1837. (a) An individual may enroll in the insurance
program established by this part only in such manner and form
as may be prescribed by regulations, and only during an
enrollment period prescribed in or under this section.
(c) In the case of individuals who first satisfy paragraph
(1) or (2) of section 1836 before March 1, 1966, the initial
general enrollment period shall begin on the first day of the
second month which begins after the date of enactment of this
title and shall end on May 31, 1966. For purposes of this
subsection and subsection (d), an individual who has attained
age 65 and who satisfies paragraph (1) of section 1836 but not
paragraph (2) of such section shall be treated as satisfying
such paragraph (1) on the first day on which he is (or on
filing application would have been) entitled to hospital
insurance benefits under part A.
(d) In the case of an individual who first satisfies
paragraph (1) or (2) of section 1836 on or after March 1, 1966,
his initial enrollment period shall begin on the first day of
the third month before the month in which he first satisfies
such paragraphs and shall end seven months later. Where the
Secretary finds that an individual who has attained age 65
failed to enroll under this part during his initial enrollment
period (based on a determination by the Secretary of the month
in which such individual attained age 65), because such
individual (relying on documentary evidence) was mistaken as to
his correct date of birth, the Secretary shall establish for
such individual an initial enrollment period based on his
attaining age 65 at the time shown in such documentary evidence
(with a coverage period determined under section 1838 as though
he had attained such age at that time).
(e) There shall be a general enrollment period during the
period beginning on January 1 and ending on March 31 of each
year.
(f) Any individual--
(1) who is eligible under section 1836 to enroll in
the medical insurance program by reason of entitlement
to hospital insurance benefits as described in
paragraph (1) of such section, and
(2) whose initial enrollment period under subsection
(d) begins after March 31, 1973, and
(3) who is residing in the United States, exclusive
of Puerto Rico,
shall be deemed to have enrolled in the medical insurance
program established by this part.
(g) All of the provisions of this section shall apply to
individuals satisfying subsection (f), except that--
(1) in the case of an individual who satisfies
subsection (f) by reason of entitlement to disability
insurance benefits described in section 226(b), his
initial enrollment period shall begin on the first day
of the later of (A) April 1973 or (B) the third month
before the 25th month of such entitlement, and shall
reoccur with each continuous period of eligibility (as
defined in section 1839(d)) and upon attainment of age
65;
(2)(A) in the case of an individual who is entitled
to monthly benefits under section 202 or 223 on the
first day of his initial enrollment period or becomes
entitled to monthly benefits under section 202 during
the first 3 months of such period, his enrollment shall
be deemed to have occurred in the third month of his
initial enrollment period, and
(B) in the case of an individual who is not entitled
to benefits under section 202 on the first day of his
initial enrollment period and does not become so
entitled during the first 3 months of such period, his
enrollment shall be deemed to have occurred in the
month in which he files the application establishing
his entitlement to hospital insurance benefits provided
such filing occurs during the last 4 months of his
initial enrollment period; and
(3) in the case of an individual who would otherwise
satisfy subsection (f) but does not establish his
entitlement to hospital insurance benefits until after
the last day of his initial enrollment period (as
defined in subsection (d) of this section), his
enrollment shall be deemed to have occurred on the
first day of the earlier of the then current or
immediately succeeding general enrollment period (as
defined in subsection (e) of this section).
(h) In any case where the Secretary finds that an
individual's enrollment or nonenrollment in the insurance
program established by this part or part A pursuant to section
1818 is unintentional, inadvertent, or erroneous and is the
result of the error, misrepresentation, or inaction of an
officer, employee, or agent of the Federal Government, or its
instrumentalities, the Secretary may take such action
(including the designation for such individual of a special
initial or subsequent enrollment period, with a coverage period
determined on the basis thereof and with appropriate
adjustments of premiums) as may be necessary to correct or
eliminate the effects of such error, misrepresentation, or
inaction.
(i)(1) In the case of an individual who--
(A) at the time the individual first satisfies
paragraph (1) or (2) of section 1836, is enrolled in a
group health plan described in section 1862(b)(1)(A)(v)
by reason of the individual's (or the individual's
spouse's) current employment status, and
(B) has elected not to enroll (or to be deemed
enrolled) under this section during the individual's
initial enrollment period,
there shall be a special enrollment period described in
paragraph (3). In the case of an individual not described in
the previous sentence who has not attained the age of 65, at
the time the individual first satisfies paragraph (1) of
section 1836, is enrolled in a large group health plan (as that
term is defined in section 1862(b)(1)(B)(iii)) by reason of the
individual's current employment status (or the current
employment status of a family member of the individual), and
has elected not to enroll (or to be deemed enrolled) under this
section during the individual's initial enrollment period,
there shall be a special enrollment period described in
paragraph (3)(B).
(2) In the case of an individual who--
(A)(i) has enrolled (or has been deemed to have
enrolled) in the medical insurance program established
under this part during the individual's initial
enrollment period, or (ii) is an individual described
in paragraph (1)(A);
(B) has enrolled in such program during any
subsequent special enrollment period under this
subsection during which the individual was not enrolled
in a group health plan described in section
1862(b)(1)(A)(v) by reason of the individual's (or
individual's spouse's) current employment status; and
(C) has not terminated enrollment under this section
at any time at which the individual is not enrolled in
such a group health plan by reason of the individual's
(or individual's spouse's) current employment status,
there shall be a special enrollment period described in
paragraph (3). In the case of an individual not described in
the previous sentence who has not attained the age of 65, has
enrolled (or has been deemed to have enrolled) in the medical
insurance program established under this part during the
individual's initial enrollment period, or is an individual
described in the second sentence of paragraph (1), has enrolled
in such program during any subsequent special enrollment period
under this subsection during which the individual was not
enrolled in a large group health plan (as that term is defined
in section 1862(b)(1)(B)(iii)) by reason of the individual's
current employment status (or the current employment status of
a family member of the individual), and has not terminated
enrollment under this section at any time at which the
individual is not enrolled in such a large group health plan by
reason of the individual's current employment status (or the
current employment status of a family member of the
individual), there shall be a special enrollment period
described in paragraph (3)(B).
(3)(A) The special enrollment period referred to in the first
sentences of paragraphs (1) and (2) is the period including
each month during any part of which the individual is enrolled
in a group health plan described in section 1862(b)(1)(A)(v) by
reason of current employment status ending with the last day of
the eighth consecutive month in which the individual is at no
time so enrolled.
(B) The special enrollment period referred to in the second
sentences of paragraphs (1) and (2) is the period including
each month during any part of which the individual is enrolled
in a large group health plan (as that term is defined in
section 1862(b)(1)(B)(iii)) by reason of the individual's
current employment status (or the current employment status of
a family member of the individual) ending with the last day of
the eighth consecutive month in which the individual is at no
time so enrolled.
(4)(A) In the case of an individual who is entitled to
benefits under part A pursuant to section 226(b) and--
(i) who at the time the individual first satisfies
paragraph (1) of section 1836--
(I) is enrolled in a group health plan
described in section 1862(b)(1)(A)(v) by reason
of the individual's current or former
employment or by reason of the current or
former employment status of a member of the
individual's family, and
(II) has elected not to enroll (or to be
deemed enrolled) under this section during the
individual's initial enrollment period; and
(ii) whose continuous enrollment under such group
health plan is involuntarily terminated at a time when
the enrollment under the plan is not by reason of the
individual's current employment or by reason of the
current employment of a member of the individual's
family,
there shall be a special enrollment period described in
subparagraph (B).
(B) The special enrollment period referred to in subparagraph
(A) is the 6-month period beginning on the first day of the
month which includes the date of the enrollment termination
described in subparagraph (A)(ii).
(j) In applying this section in the case of an individual who
is entitled to benefits under part A pursuant to the operation
of section 226(h), the following special rules apply:
(1) The initial enrollment period under subsection
(d) shall begin on the first day of the first month in
which the individual satisfies the requirement of
section 1836(1).
(2) In applying subsection (g)(1), the initial
enrollment period shall begin on the first day of the
first month of entitlement to disability insurance
benefits referred to in such subsection.
(k)(1) In the case of an individual who--
(A) at the time the individual first satisfies
paragraph (1) or (2) of section 1836, is described in
paragraph (3), and has elected not to enroll (or to be
deemed enrolled) under this section during the
individual's initial enrollment period; or
(B) has terminated enrollment under this section
during a month in which the individual is described in
paragraph (3),
there shall be a special enrollment period described in
paragraph (2).
(2) The special enrollment period described in this paragraph
is the 6-month period beginning on the first day of the month
which includes the date that the individual is no longer
described in paragraph (3).
(3) For purposes of paragraph (1), an individual described in
this paragraph is an individual who--
(A) is serving as a volunteer outside of the United
States through a program--
(i) that covers at least a 12-month period;
and
(ii) that is sponsored by an organization
described in section 501(c)(3) of the Internal
Revenue Code of 1986 and exempt from taxation
under section 501(a) of such Code; and
(B) demonstrates health insurance coverage while
serving in the program.
(l)(1) In the case of any individual who is a covered
beneficiary (as defined in section 1072(5) of title 10, United
States Code) at the time the individual is entitled to part A
under section 226(b) or section 226A and who is eligible to
enroll but 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
paragraph (2).
(2) The special enrollment period described in this
paragraph, with respect to an individual, is the 12-month
period beginning on the day after the last day of the initial
enrollment period of the individual or, if later, the 12-month
period beginning with the month the individual is notified of
enrollment under this section.
(3) In the case of an individual who enrolls during the
special enrollment period provided under paragraph (1), the
coverage period under this part shall begin on the first day of
the month in which the individual enrolls, or, at the option of
the individual, the first month after the end of the
individual's initial enrollment period.
(4) An individual may only enroll during the special
enrollment period provided under paragraph (1) one time during
the individual's lifetime.
(5) The Secretary shall ensure that the materials relating to
coverage under this part that are provided to an individual
described in paragraph (1) prior to the individual's initial
enrollment period contain information concerning the impact of
not enrolling under this part, including the impact on health
care benefits under the TRICARE program under chapter 55 of
title 10, United States Code.
(6) The Secretary of Defense shall collaborate with the
Secretary of Health and Human Services and the Commissioner of
Social Security to provide for the accurate identification of
individuals described in paragraph (1). The Secretary of
Defense shall provide such individuals with notification with
respect to this subsection. The Secretary of Defense shall
collaborate with the Secretary of Health and Human Services and
the Commissioner of Social Security to ensure appropriate
follow up pursuant to any notification provided under the
preceding sentence.
(m)(1) In the case of an individual who--
(A) is (i) a Postal Service Medicare covered
annuitant, or (ii) an individual who is a family member
of such an annuitant and is a covered Medicare
individual;
(B) enrolls in a Program plan under section 8903c of
title 5, United States Code; and
(C) is not enrolled under this part,
the individual is deemed, in accordance with section
8903c(e)(3) of such title, to have elected to be enrolled under
this part.
(2) In the case of an individual who is deemed to be enrolled
under paragraph (1), the coverage period under this part shall
begin on the date that the individual first has coverage under
the Program plan pursuant to the enrollment described in
paragraph (1)(B).
(3) The definitions in section 8903c(a) of title 5, United
States Code, shall apply for purposes of this subsection.
* * * * * * *
amounts of premiums
Sec. 1839. (a)(1) The Secretary shall, during September of
1983 and of each year thereafter, determine the monthly
actuarial rate for enrollees age 65 and over which shall be
applicable for the succeeding calendar year. Subject to
paragraphs (5) and (6), such actuarial rate shall be the amount
the Secretary estimates to be necessary so that the aggregate
amount for such calendar year with respect to those enrollees
age 65 and older will equal one-half of the total of the
benefits and administrative costs which he estimates will be
payable from the Federal Supplementary Medical Insurance Trust
Fund for services performed and related administrative costs
incurred in such calendar year with respect to such enrollees.
In calculating the monthly actuarial rate, the Secretary shall
include an appropriate amount for a contingency margin. In
applying this paragraph there shall not be taken into account
additional payments under section 1848(o) and section
1853(l)(3) and the Government contribution under section
1844(a)(3).
(2) The monthly premium of each individual enrolled under
this part for each month after December 1983 shall be the
amount determined under paragraph (3), adjusted as required in
accordance with subsections (b), (c), (f), and (i), and to
reflect any credit provided under section
1854(b)(1)(C)(ii)(III).
(3) The Secretary, during September of each year, shall
determine and promulgate a monthly premium rate for the
succeeding calendar year that (except as provided in subsection
(g)) is equal to 50 percent of the monthly actuarial rate for
enrollees age 65 and over, determined according to paragraph
(1), for that succeeding calendar year. Whenever the Secretary
promulgates the dollar amount which shall be applicable as the
monthly premium rate for any period, he shall, at the time such
promulgation is announced, issue a public statement setting
forth the actuarial assumptions and bases employed by him in
arriving at the amount of an adequate actuarial rate for
enrollees age 65 and older as provided in paragraph (1).
(4) The Secretary shall also, during September of 1983 and of
each year thereafter, determine the monthly actuarial rate for
disabled enrollees under age 65 which shall be applicable for
the succeeding calendar year. Such actuarial rate shall be the
amount the Secretary estimates to be necessary so that the
aggregate amount for such calendar year with respect to
disabled enrollees under age 65 will equal one-half of the
total of the benefits and administrative costs which he
estimates will be payable from the Federal Supplementary
Medical Insurance Trust Fund for services performed and related
administrative costs incurred in such calendar year with
respect to such enrollees. In calculating the monthly actuarial
rate under this paragraph, the Secretary shall include an
appropriate amount for a contingency margin.
(5)(A) In applying this part (including subsection (i) and
section 1833(b)), the monthly actuarial rate for enrollees age
65 and over for 2016 shall be determined as if subsection (f)
did not apply.
(B) Subsection (f) shall continue to be applied to paragraph
(6)(A) (during a repayment month, as described in paragraph
(6)(B)) and without regard to the application of subparagraph
(A).
(6)(A) With respect to a repayment month (as described in
subparagraph (B)), the monthly premium otherwise established
under paragraph (3) shall be increased by, subject to
subparagraph (D), $3.
(B) For purposes of this paragraph, a repayment month is a
month during a year, beginning with 2016, for which a balance
due amount is computed under subparagraph (C) as greater than
zero.
(C) For purposes of this paragraph, the balance due amount
computed under this subparagraph, with respect to a month, is
the amount estimated by the Chief Actuary of the Centers for
Medicare & Medicaid Services to be equal to--
(i) the amount transferred under section 1844(d)(1);
plus
(ii) the amount that is equal to the aggregate
reduction, for all individuals enrolled under this
part, in the income related monthly adjustment amount
as a result of the application of paragraph (5); minus
(iii) the amounts payable under this part as a result
of the application of this paragraph for preceding
months.
(D) If the balance due amount computed under subparagraph
(C), without regard to this subparagraph, for December of a
year would be less than zero, the Chief Actuary of the Centers
for Medicare & Medicaid Services shall estimate, and the
Secretary shall apply, a reduction to the dollar amount
increase applied under subparagraph (A) for each month during
such year in a manner such that the balance due amount for
January of the subsequent year is equal to zero.
(b) 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 1837
or pursuant to subsection (m) of such section) and not pursuant
to a special enrollment period under subsection (i)(4) or (l)
of section 1837, the monthly premium determined under
subsection (a) (without regard to any adjustment under
subsection (i)) 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
1862(b)(1)(A)(v) by reason of the individual's (or the
individual's spouse's) current employment 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 an active individual
(as those terms are defined in section 1862(b)(1)(B)(iii)) or
months for which the individual can demonstrate that the
individual was an individual described in section 1837(k)(3).
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, United States Code). The Secretary of
Health and Human Services shall consult with the Secretary of
Defense in identifying individuals described in the previous
sentence.
(c) If any monthly premium determined under the foregoing
provisions of this section is not a multiple of 10 cents, such
premium shall be rounded to the nearest multiple of 10 cents.
(d) For purposes of subsection (b) (and section 1837(g)(1)),
an individual's ``continuous period of eligibility'' is the
period beginning with the first day on which he is eligible to
enroll under section 1836 and ending with his death; except
that any period during all of which an individual satisfied
paragraph (1) of section 1836 and which terminated in or before
the month preceding the month in which he attained age 65 shall
be a separate ``continuous period of eligibility'' with respect
to such individual (and each such period which terminates shall
be deemed not to have existed for purposes of subsequently
applying this section).
(e)(1) Upon the request of a State (or any appropriate State
or local governmental entity specified by the Secretary), the
Secretary may enter into an agreement with the State (or such
entity) under which the State (or such entity) agrees to pay on
a quarterly or other periodic basis to the Secretary (to be
deposited in the Treasury to the credit of the Federal
Supplementary Medical Insurance Trust Fund) an amount equal to
the amount of the part B late enrollment premium increases with
respect to the premiums for eligible individuals (as defined in
paragraph (3)(A)).
(2) No part B late enrollment premium increase shall apply to
an eligible individual for premiums for months for which the
amount of such an increase is payable under an agreement under
paragraph (1).
(3) In this subsection:
(A) The term ``eligible individual'' means an
individual who is enrolled under this part B and who is
within a class of individuals specified in the
agreement under paragraph (1).
(B) The term ``part B late enrollment premium
increase'' means any increase in a premium as a result
of the application of subsection (b).
(f) For any calendar year after 1988, if an individual is
entitled to monthly benefits under section 202 or 223 or to a
monthly annuity under section 3(a), 4(a), or 4(f) of the
Railroad Retirement Act of 1974 for November and December of
the preceding year, if the monthly premium of the individual
under this section for December and for January is deducted
from those benefits under section 1840(a)(1) or section
1840(b)(1), and if the amount of the individual's premium is
not adjusted for such January under subsection (i), the monthly
premium otherwise determined under this section for an
individual for that year shall not be increased, pursuant to
this subsection, to the extent that such increase would reduce
the amount of benefits payable to that individual for that
December below the amount of benefits payable to that
individual for that November (after the deduction of the
premium under this section). For purposes of this subsection,
retroactive adjustments or payments and deductions on account
of work shall not be taken into account in determining the
monthly benefits to which an individual is entitled under
section 202 or 223 or under the Railroad Retirement Act of
1974.
(g) In estimating the benefits and administrative costs which
will be payable from the Federal Supplementary Medical
Insurance Trust Fund for a year for purposes of determining the
monthly premium rate under subsection (a)(3), the Secretary
shall exclude an estimate of any benefits and administrative
costs attributable to--
(1) the application of section 1861(v)(1)(L)(viii) or
to the establishment under section 1861(v)(1)(L)(i)(V)
of a per visit limit at 106 percent of the median
(instead of 105 percent of the median), but only to the
extent payment for home health services under this
title is not being made under section 1895 (relating to
prospective payment for home health services); and
(2) the medicare prescription drug discount card and
transitional assistance program under section 1860D-31.
(h) Potential Application of Comparative Cost Adjustment in
CCA Areas.--
(1) In general.--Certain individuals who are residing
in a CCA area under section 1860C-1 who are not
enrolled in an MA plan under part C may be subject to a
premium adjustment under subsection (f) of such section
for months in which the CCA program under such section
is in effect in such area.
(2) No effect on late enrollment penalty or income-
related adjustment in subsidies.--Nothing in this
subsection or section 1860C-1(f) shall be construed as
affecting the amount of any premium adjustment under
subsection (b) or (i). Subsection (f) shall be applied
without regard to any premium adjustment referred to in
paragraph (1).
(3) Implementation.--In order to carry out a premium
adjustment under this subsection and section 1860C-1(f)
(insofar as it is effected through the manner of
collection of premiums under section 1840(a)), the
Secretary shall transmit to the Commissioner of Social
Security--
(A) at the beginning of each year, the name,
social security account number, and the amount
of the premium adjustment (if any) for each
individual enrolled under this part for each
month during the year; and
(B) periodically throughout the year,
information to update the information
previously transmitted under this paragraph for
the year.
(i) Reduction in Premium Subsidy Based on Income.--
(1) In general.--In the case of an individual whose
modified adjusted gross income exceeds the threshold
amount under paragraph (2), the monthly amount of the
premium subsidy applicable to the premium under this
section for a month after December 2006 shall be
reduced (and the monthly premium shall be increased) by
the monthly adjustment amount specified in paragraph
(3).
(2) Threshold amount.--For purposes of this
subsection, subject to paragraph (6), the threshold
amount is--
(A) except as provided in subparagraph (B),
$80,000 (or, beginning with 2018, $85,000), and
(B) in the case of a joint return, twice the
amount applicable under subparagraph (A) for
the calendar year.
(3) Monthly adjustment amount.--
(A) In general.--Subject to subparagraph (B),
the monthly adjustment amount specified in this
paragraph for an individual for a month in a
year is equal to the product of the following:
(i) Sliding scale percentage.--
Subject to paragraph (6), the
applicable percentage specified in the
applicable table in subparagraph (C)
for the individual minus 25 percentage
points.
(ii) Unsubsidized part b premium
amount.--
(I) 200 percent of the monthly
actuarial rate for enrollees age 65 and
over (as determined under subsection
(a)(1) for the year); plus
(II) 4 times the amount of
the increase in the monthly
premium under subsection (a)(6)
for a month in the year.
(B) 3-year phase in.--The monthly adjustment
amount specified in this paragraph for an
individual for a month in a year before 2009 is
equal to the following percentage of the
monthly adjustment amount specified in
subparagraph (A):
(i) For 2007, 33 percent.
(ii) For 2008, 67 percent.
(C) Applicable percentage.--
(i) In general.--
(I) Subject to paragraphs (5)
and (6), for years before 2018:
If the modified adjusted gross income is: The applicable
percentage is:
More than $80,000 but not more than $100,000.............35 percent
More than $100,000 but not more than $150,000............50 percent
More than $150,000 but not more than $200,000............65 percent
More than $200,000.......................................80 percent.
(II) Subject to paragraph
(5), for years beginning with
2018:
If the modified adjusted gross income is: The applicable
percentage is:
More than $85,000 but not more than $107,000..... 35 percent
More than $107,000 but not more than $133,500.... 50 percent
More than $133,500 but not more than $160,000.... 65 percent
More than $160,000............................... 80 percent.
(ii) Joint returns.--In the case of a
joint return, clause (i) shall be
applied by substituting dollar amounts
which are twice the dollar amounts
otherwise applicable under clause (i)
for the calendar year.
(iii) Married individuals filing
separate returns.--In the case of an
individual who--
(I) is married as of the
close of the taxable year
(within the meaning of section
7703 of the Internal Revenue
Code of 1986) but does not file
a joint return for such year,
and
(II) does not live apart from
such individual's spouse at all
times during the taxable year,
clause (i) shall be applied by reducing
each of the dollar amounts otherwise
applicable under such clause for the
calendar year by the threshold amount
for such year applicable to an
unmarried individual.
(4) Modified adjusted gross income.--
(A) In general.--For purposes of this
subsection, the term ``modified adjusted gross
income'' means adjusted gross income (as
defined in section 62 of the Internal Revenue
Code of 1986)--
(i) determined without regard to
sections 135, 911, 931, and 933 of such
Code; and
(ii) increased by the amount of
interest received or accrued during the
taxable year which is exempt from tax
under such Code.
In the case of an individual filing a joint
return, any reference in this subsection to the
modified adjusted gross income of such
individual shall be to such return's modified
adjusted gross income.
(B) Taxable year to be used in determining
modified adjusted gross income.--
(i) In general.--In applying this
subsection for an individual's premiums
in a month in a year, subject to clause
(ii) and subparagraph (C), the
individual's modified adjusted gross
income shall be such income determined
for the individual's last taxable year
beginning in the second calendar year
preceding the year involved.
(ii) Temporary use of other data.--
If, as of October 15 before a calendar
year, the Secretary of the Treasury
does not have adequate data for an
individual in appropriate electronic
form for the taxable year referred to
in clause (i), the individual's
modified adjusted gross income shall be
determined using the data in such form
from the previous taxable year. Except
as provided in regulations prescribed
by the Commissioner of Social Security
in consultation with the Secretary, the
preceding sentence shall cease to apply
when adequate data in appropriate
electronic form are available for the
individual for the taxable year
referred to in clause (i), and proper
adjustments shall be made to the extent
that the premium adjustments determined
under the preceding sentence were
inconsistent with those determined
using such taxable year.
(iii) Non-filers.--In the case of
individuals with respect to whom the
Secretary of the Treasury does not have
adequate data in appropriate electronic
form for either taxable year referred
to in clause (i) or clause (ii), the
Commissioner of Social Security, in
consultation with the Secretary, shall
prescribe regulations which provide for
the treatment of the premium adjustment
with respect to such individual under
this subsection, including regulations
which provide for--
(I) the application of the
highest applicable percentage
under paragraph (3)(C) to such
individual if the Commissioner
has information which indicates
that such individual's modified
adjusted gross income might
exceed the threshold amount for
the taxable year referred to in
clause (i), and
(II) proper adjustments in
the case of the application of
an applicable percentage under
subclause (I) to such
individual which is
inconsistent with such
individual's modified adjusted
gross income for such taxable
year.
(C) Use of more recent taxable year.--
(i) In general.--The Commissioner of
Social Security in consultation with
the Secretary of the Treasury shall
establish a procedures under which an
individual's modified adjusted gross
income shall, at the request of such
individual, be determined under this
subsection--
(I) for a more recent taxable
year than the taxable year
otherwise used under
subparagraph (B), or
(II) by such methodology as
the Commissioner, in
consultation with such
Secretary, determines to be
appropriate, which may include
a methodology for aggregating
or disaggregating information
from tax returns in the case of
marriage or divorce.
(ii) Standard for granting
requests.--A request under clause
(i)(I) to use a more recent taxable
year may be granted only if--
(I) the individual furnishes
to such Commissioner with
respect to such year such
documentation, such as a copy
of a filed Federal income tax
return or an equivalent
document, as the Commissioner
specifies for purposes of
determining the premium
adjustment (if any) under this
subsection; and
(II) the individual's
modified adjusted gross income
for such year is significantly
less than such income for the
taxable year determined under
subparagraph (B) by reason of
the death of such individual's
spouse, the marriage or divorce
of such individual, or other
major life changing events
specified in regulations
prescribed by the Commissioner
in consultation with the
Secretary.
(5) Inflation adjustment.--
(A) In general.--In the case of any calendar
year beginning after 2007 (other than 2018 and
2019), each dollar amount in paragraph (2) or
(3) shall be increased by an amount equal to--
(i) such dollar amount, multiplied by
(ii) the percentage (if any) by which
the average of the Consumer Price Index
for all urban consumers (United States
city average) for the 12-month period
ending with August of the preceding
calendar year exceeds such average for
the 12-month period ending with August
2006 (or, in the case of a calendar
year beginning with 2020, August 2018).
(B) Rounding.--If any dollar amount after
being increased under subparagraph (A) is not a
multiple of $1,000, such dollar amount shall be
rounded to the nearest multiple of $1,000.
(6) Temporary adjustment to income thresholds.--
Notwithstanding any other provision of this subsection,
during the period beginning on January 1, 2011, and
ending on December 31, 2017--
(A) the threshold amount otherwise applicable
under paragraph (2) shall be equal to such
amount for 2010; and
(B) the dollar amounts otherwise applicable
under paragraph (3)(C)(i) shall be equal to
such dollar amounts for 2010.
(7) Joint return defined.--For purposes of this
subsection, the term ``joint return'' has the meaning
given to such term by section 7701(a)(38) of the
Internal Revenue Code of 1986.
(j) Transition for Newly Enrolling Postal Service Annuitants
and Family Members.--With respect to each individual who is
enrolled under this part pursuant to and during the open
enrollment period established under section 1837(m) and who is
not eligible for Medicare cost-sharing described in section
1905(p)(3)(A)(ii) under a State plan under title XIX, the
premium otherwise established under this part (taking into
account any adjustments, including those under subsections (b)
and (i)) for a month--
(1) in the initial contract year (as defined in
section 8903c(a) of title 5, United States Code), shall
be reduced by 75 percent;
(2) in the succeeding year, shall be reduced by 50
percent; and
(3) in the second succeeding year, shall be reduced
by 25 percent.
* * * * * * *
appropriations to cover government contributions and contingency
reserve
Sec. 1844. (a) There are authorized to be appropriated from
time to time, out of any moneys in the Treasury not otherwise
appropriated, to the Federal Supplementary Medical Insurance
Trust Fund--
(1)(A) a Government contribution equal to the
aggregate premiums payable for a month for enrollees
age 65 and over under this part and deposited in the
Trust Fund, multiplied by the ratio of--
(i) twice the dollar amount of the
actuarially adequate rate per enrollee age 65
and over as determined under section 1839(a)(1)
for such month minus the dollar amount of the
premium per enrollee for such month, as
determined under section 1839(a)(3), to
(ii) the dollar amount of the premium per
enrollee for such month, plus
(B) a Government contribution equal to the aggregate
premiums payable for a month for enrollees under age 65
under this part and deposited in the Trust Fund,
multiplied by the ratio of--
(i) twice the dollar amount of the
actuarially adequate rate per enrollee under
age 65 as determined under section 1839(a)(4)
for such month minus the dollar amount of the
premium per enrollee for such month, as
determined under section 1839(a)(3), to
(ii) the dollar amount of the premium per
enrollee for such month; minus
(C) the aggregate amount of additional premium
payments attributable to the application of section
1839(i); plus
(2) such sums as the Secretary deems necessary to
place the Trust Fund, at the end of any fiscal year
occurring after June 30, 1967, in the same position in
which it would have been at the end of such fiscal year
if (A) a Government contribution representing the
excess of the premiums deposited in the Trust Fund
during the fiscal year ending June 30, 1967, over the
Government contribution actually appropriated to the
Trust Fund during such fiscal year had been
appropriated to it on June 30, 1967, and (B) the
Government contribution for premiums deposited in the
Trust Fund after June 30, 1967, had been appropriated
to it when such premiums were deposited; plus
(3) a Government contribution equal to the amount of
payment incentives payable under sections 1848(o) and
1853(l)(3).
In applying paragraph (1), the amounts transferred [under
subsection (d)(1) with respect to enrollees described in
subparagraphs (A) and (B) of such subsection] under subsections
(d)(1) and (d)(4) with respect to enrollees described in
subparagraphs (A) and (B) of such respective subsection shall
be treated as premiums payable and deposited in the Trust Fund
under subparagraphs (A) and (B), respectively, of paragraph
(1).
(b) In order to assure prompt payment of benefits provided
under this part and the administrative expenses thereunder
during the early months of the program established by this
part, and to provide a contingency reserve, there is also
authorized to be appropriated, out of any moneys in the
Treasury not otherwise appropriated, to remain available
through the calendar year 1969 for repayable advances (without
interest) to the Trust Fund, an amount equal to $18 multiplied
by the number of individuals (as estimated by the Secretary)
who could be covered in July 1966 by the insurance program
established by this part if they had theretofore enrolled under
this part.
(c) The Secretary shall determine the Government contribution
under subparagraphs (A) and (B) of subsection (a)(1) without
regard to any premium reduction resulting from an election
under section 1854(f)(1)(E) or any credits provided under
section 1854(b)(1)(C)(iv) and without regard to any premium
adjustment effected under section 1839(i).
(d)(1) For 2016, there shall be transferred from the General
Fund to the Trust Fund an amount, as estimated by the Chief
Actuary of the Centers for Medicare & Medicaid Services, equal
to the reduction in aggregate premiums payable under this part
for a month in such year (excluding any changes in amounts
collected under section 1839(i)) that is attributable to the
application of section 1839(a)(5)(A) with respect to--
(A) enrollees age 65 and over; and
(B) enrollees under age 65.
Such amounts shall be transferred from time to time as
appropriate.
(2) Premium increases affected under section 1839(a)(6) shall
not be taken into account in applying subsection (a).
(3) There shall be transferred from the Trust Fund to the
General Fund of the Treasury amounts equivalent to the
additional premiums payable as a result of the application of
section 1839(a)(6), excluding the aggregate payments
attributable to the application of section
1839(i)(3)(A)(ii)(II).
(4) For each year, there shall be transferred from the Postal
Service Fund to the Trust Fund an amount, as estimated by the
Chief Actuary of the Centers for Medicare & Medicaid Services,
equal to the reduction in aggregate premiums payable under this
part for a month in such year that is attributable to the
application of section 1839(j) with respect to--
(A) enrollees age 65 and over; and
(B) enrollees under age 65.
Such amounts shall be transferred from time to time as
appropriate but, to the extent practicable, on an annual basis
and in a manner that places the Trust Fund in the same
actuarial status as if this paragraph and section 1839(j) did
not apply.
* * * * * * *
Part E--Miscellaneous Provisions
* * * * * * *
exclusions from coverage and medicare as secondary payer
Sec. 1862. (a) Notwithstanding any other provision of this
title, no payment may be made under part A or part B for any
expenses incurred for items or services--
(1)(A) which, except for items and services described
in a succeeding subparagraph or additional preventive
services (as described in section 1861(ddd)(1)), are
not reasonable and necessary for the diagnosis or
treatment of illness or injury or to improve the
functioning of a malformed body member,
(B) in the case of items and services described in
section 1861(s)(10), which are not reasonable and
necessary for the prevention of illness,
(C) in the case of hospice care, which are not
reasonable and necessary for the palliation or
management of terminal illness,
(D) in the case of clinical care items and services
provided with the concurrence of the Secretary and with
respect to research and experimentation conducted by,
or under contract with, the Medicare Payment Advisory
Commission or the Secretary, which are not reasonable
and necessary to carry out the purposes of section
1886(e)(6),
(E) in the case of research conducted pursuant to
section 1142, which is not reasonable and necessary to
carry out the purposes of that section,
(F) in the case of screening mammography, which is
performed more frequently than is covered under section
1834(c)(2) or which is not conducted by a facility
described in section 1834(c)(1)(B), in the case of
screening pap smear and screening pelvic exam, which is
performed more frequently than is provided under
section 1861(nn), and, in the case of screening for
glaucoma, which is performed more frequently than is
provided under section 1861(uu),
(G) in the case of prostate cancer screening tests
(as defined in section 1861(oo)), which are performed
more frequently than is covered under such section,
(H) in the case of colorectal cancer screening tests,
which are performed more frequently than is covered
under section 1834(d),
(I) the frequency and duration of home health
services which are in excess of normative guidelines
that the Secretary shall establish by regulation,
(J) in the case of a drug or biological specified in
section 1847A(c)(6)(C) for which payment is made under
part B that is furnished in a competitive area under
section 1847B, that is not furnished by an entity under
a contract under such section,
(K) in the case of an initial preventive physical
examination, which is performed more than 1 year after
the date the individual's first coverage period begins
under part B,
(L) in the case of cardiovascular screening blood
tests (as defined in section 1861(xx)(1)), which are
performed more frequently than is covered under section
1861(xx)(2),
(M) in the case of a diabetes screening test (as
defined in section 1861(yy)(1)), which is performed
more frequently than is covered under section
1861(yy)(3),
(N) in the case of ultrasound screening for abdominal
aortic aneurysm which is performed more frequently than
is provided for under section 1861(s)(2)(AA),
(O) in the case of kidney disease education services
(as defined in paragraph (1) of section 1861(ggg)),
which are furnished in excess of the number of sessions
covered under paragraph (4) of such section, and
(P) in the case of personalized prevention plan
services (as defined in section 1861(hhh)(1)), which
are performed more frequently than is covered under
such section;
(2) for which the individual furnished such items or
services has no legal obligation to pay, and which no
other person (by reason of such individual's membership
in a prepayment plan or otherwise) has a legal
obligation to provide or pay for, except in the case of
Federally qualified health center services;
(3) which are paid for directly or indirectly by a
governmental entity (other than under this Act and
other than under a health benefits or insurance plan
established for employees of such an entity), except in
the case of rural health clinic services, as defined in
section 1861(aa)(1), in the case of Federally qualified
health center services, as defined in section
1861(aa)(3), in the case of services for which payment
may be made under section 1880(e), and in such other
cases as the Secretary may specify;
(4) which are not provided within the United States
(except for inpatient hospital services furnished
outside the United States under the conditions
described in section 1814(f) and, subject to such
conditions, limitations, and requirements as are
provided under or pursuant to this title, physicians'
services and ambulance services furnished an individual
in conjunction with such inpatient hospital services
but only for the period during which such inpatient
hospital services were furnished);
(5) which are required as a result of war, or of an
act of war, occurring after the effective date of such
individual's current coverage under such part;
(6) which constitute personal comfort items (except,
in the case of hospice care, as is otherwise permitted
under paragraph (1)(C));
(7) where such expenses are for routine physical
checkups, eyeglasses (other than eyewear described in
section 1861(s)(8)) or eye examinations for the purpose
of prescribing, fitting, or changing eyeglasses,
procedures performed (during the course of any eye
examination) to determine the refractive state of the
eyes, hearing aids or examinations therefor, or
immunizations (except as otherwise allowed under
section 1861(s)(10) and subparagraph (B), (F), (G),
(H), (K), or (P) of paragraph (1));
(8) where such expenses are for orthopedic shoes or
other supportive devices for the feet, other than shoes
furnished pursuant to section 1861(s)(12);
(9) where such expenses are for custodial care
(except, in the case of hospice care, as is otherwise
permitted under paragraph (1)(C));
(10) where such expenses are for cosmetic surgery or
are incurred in connection therewith, except as
required for the prompt repair of accidental injury or
for improvement of the functioning of a malformed body
member;
(11) where such expenses constitute charges imposed
by immediate relatives of such individual or members of
his household;
(12) where such expenses are for services in
connection with the care, treatment, filling, removal,
or replacement of teeth or structures directly
supporting teeth, except that payment may be made under
part A in the case of inpatient hospital services in
connection with the provision of such dental services
if the individual, because of his underlying medical
condition and clinical status or because of the
severity of the dental procedure, requires
hospitalization in connection with the provision of
such services;
(13) where such expenses are for--
(A) the treatment of flat foot conditions and
the prescription of supportive devices
therefor,
(B) the treatment of subluxations of the
foot, or
(C) routine foot care (including the cutting
or removal of corns or calluses, the trimming
of nails, and other routine hygienic care);
(14) which are other than physicians' services (as
defined in regulations promulgated specifically for
purposes of this paragraph), services described by
section 1861(s)(2)(K), certified nurse-midwife
services, qualified psychologist services, and services
of a certified registered nurse anesthetist, and which
are furnished to an individual who is a patient of a
hospital or critical access hospital by an entity other
than the hospital or critical access hospital, unless
the services are furnished under arrangements (as
defined in section 1861(w)(1)) with the entity made by
the hospital or critical access hospital;
(15)(A) which are for services of an assistant at
surgery in a cataract operation (including subsequent
insertion of an intraocular lens) unless, before the
surgery is performed, the appropriate quality
improvement organization (under part B of title XI) or
a carrier under section 1842 has approved of the use of
such an assistant in the surgical procedure based on
the existence of a complicating medical condition, or
(B) which are for services of an assistant at surgery
to which section 1848(i)(2)(B) applies;
(16) in the case in which funds may not be used for
such items and services under the Assisted Suicide
Funding Restriction Act of 1997;
(17) where the expenses are for an item or service
furnished in a competitive acquisition area (as
established by the Secretary under section 1847(a)) by
an entity other than an entity with which the Secretary
has entered into a contract under section 1847(b) for
the furnishing of such an item or service in that area,
unless the Secretary finds that the expenses were
incurred in a case of urgent need, or in other
circumstances specified by the Secretary;
(18) which are covered skilled nursing facility
services described in section 1888(e)(2)(A)(i) and
which are furnished to an individual who is a resident
of a skilled nursing facility during a period in which
the resident is provided covered post-hospital extended
care services (or, for services described in section
1861(s)(2)(D), which are furnished to such an
individual without regard to such period), by an entity
other than the skilled nursing facility, unless the
services are furnished under arrangements (as defined
in section 1861(w)(1)) with the entity made by the
skilled nursing facility;
(19) which are for items or services which are
furnished pursuant to a private contract described in
section 1802(b);
(20) in the case of outpatient physical therapy
services, outpatient speech-language pathology
services, or outpatient occupational therapy services
furnished as an incident to a physician's professional
services (as described in section 1861(s)(2)(A)), that
do not meet the standards and conditions (other than
any licensing requirement specified by the Secretary)
under the second sentence of section 1861(p) (or under
such sentence through the operation of subsection (g)
or (ll)(2) of section 1861) as such standards and
conditions would apply to such therapy services if
furnished by a therapist;
(21) where such expenses are for home health services
(including medical supplies described in section
1861(m)(5), but excluding durable medical equipment to
the extent provided for in such section) furnished to
an individual who is under a plan of care of the home
health agency if the claim for payment for such
services is not submitted by the agency;
(22) subject to subsection (h), for which a claim is
submitted other than in an electronic form specified by
the Secretary;
(23) which are the technical component of advanced
diagnostic imaging services described in section
1834(e)(1)(B) for which payment is made under the fee
schedule established under section 1848(b) and that are
furnished by a supplier (as defined in section
1861(d)), if such supplier is not accredited by an
accreditation organization designated by the Secretary
under section 1834(e)(2)(B);
(24) where such expenses are for renal dialysis
services (as defined in subparagraph (B) of section
1881(b)(14)) for which payment is made under such
section unless such payment is made under such section
to a provider of services or a renal dialysis facility
for such services; or
(25) not later than January 1, 2014, for which the
payment is other than by electronic funds transfer
(EFT) or an electronic remittance in a form as
specified in ASC X12 835 Health Care Payment and
Remittance Advice or subsequent standard.
Paragraph (7) shall not apply to Federally qualified health
center services described in section 1861(aa)(3)(B). In making
a national coverage determination (as defined in paragraph
(1)(B) of section 1869(f)) the Secretary shall ensure
consistent with subsection (l) that the public is afforded
notice and opportunity to comment prior to implementation by
the Secretary of the determination; meetings of advisory
committees with respect to the determination are made on the
record; in making the determination, the Secretary has
considered applicable information (including clinical
experience and medical, technical, and scientific evidence)
with respect to the subject matter of the determination; and in
the determination, provide a clear statement of the basis for
the determination (including responses to comments received
from the public), the assumptions underlying that basis, and
make available to the public the data (other than proprietary
data) considered in making the determination.
(b) Medicare as Secondary Payer.--
(1) Requirements of group health plans.--
(A) Working aged under group health plans.--
(i) In general.--A group health
plan--
(I) may not take into account
that an individual (or the
individual's spouse) who is
covered under the plan by
virtue of the individual's
current employment status with
an employer is entitled to
benefits under this title under
section 226(a), and
(II) shall provide that any
individual age 65 or older (and
the spouse age 65 or older of
any individual) who has current
employment status with an
employer shall be entitled to
the same benefits under the
plan under the same conditions
as any such individual (or
spouse) under age 65.
(ii) Exclusion of group health plan
of a small employer.--Clause (i) shall
not apply to a group health plan unless
the plan is a plan of, or contributed
to by, an employer that has 20 or more
employees for each working day in each
of 20 or more calendar weeks in the
current calendar year or the preceding
calendar year.
(iii) Exception for small employers
in multiemployer or multiple employer
group health plans.--Clause (i) also
shall not apply with respect to
individuals enrolled in a multiemployer
or multiple employer group health plan
if the coverage of the individuals
under the plan is by virtue of current
employment status with an employer that
does not have 20 or more individuals in
current employment status for each
working day in each of 20 or more
calendar weeks in the current calendar
year and the preceding calendar year;
except that the exception provided in
this clause shall only apply if the
plan elects treatment under this
clause.
(iv) Exception for individuals with
end stage renal disease.--Subparagraph
(C) shall apply instead of clause (i)
to an item or service furnished in a
month to an individual if for the month
the individual is, or (without regard
to entitlement under section 226) would
upon application be, entitled to
benefits under section 226A.
(v) Group health plan defined.--In
this subparagraph, and subparagraph
(C), the term ``group health plan'' has
the meaning given such term in section
5000(b)(1) of the Internal Revenue Code
of 1986, without regard to section
5000(d) of such Code
(B) Disabled individuals in large group
health plans.--
(i) In general.--A large group health
plan (as defined in clause (iii)) may
not take into account that an
individual (or a member of the
individual's family) who is covered
under the plan by virtue of the
individual's current employment status
with an employer is entitled to
benefits under this title under section
226(b).
(ii) Exception for individuals with
end stage renal disease.--Subparagraph
(C) shall apply instead of clause (i)
to an item or service furnished in a
month to an individual if for the month
the individual is, or (without regard
to entitlement under section 226) would
upon application be, entitled to
benefits under section 226A.
(iii) Large Group Health Plan
Defined.--In this subparagraph, the
term ``large group health plan'' has
the meaning given such term in section
5000(b)(2) of the Internal Revenue Code
of 1986, without regard to section
5000(d) of such Code.
(C) Individuals with end stage renal
disease.--A group health plan (as defined in
subparagraph (A)(v))--
(i) may not take into account that an
individual is entitled to or eligible
for benefits under this title under
section 226A during the 12-month period
which begins with the first month in
which the individual becomes entitled
to benefits under part A under the
provisions of section 226A, or, if
earlier, the first month in which the
individual would have been entitled to
benefits under such part under the
provisions of section 226A if the
individual had filed an application for
such benefits; and
(ii) may not differentiate in the
benefits it provides between
individuals having end stage renal
disease and other individuals covered
by such plan on the basis of the
existence of end stage renal disease,
the need for renal dialysis, or in any
other manner;
except that clause (ii) shall not prohibit a
plan from paying benefits secondary to this
title when an individual is entitled to or
eligible for benefits under this title under
section 226A after the end of the 12-month
period described in clause (i). Effective for
items and services furnished on or after
February 1, 1991, and before the date of
enactment of the Balanced Budget Act of 1997
(with respect to periods beginning on or after
February 1, 1990), this subparagraph shall be
applied by substituting ``18- month'' for ``12-
month'' each place it appears. Effective for
items and services furnished on or after the
date of enactment of the Balanced Budget Act of
1997, (with respect to periods beginning on or
after the date that is 18 months prior to such
date), clauses (i) and (ii) shall be applied by
substituting ``30-month'' for ``12-month'' each
place it appears.
(D) Treatment of certain members of religious
orders.--In this subsection, an individual
shall not be considered to be employed, or an
employee, with respect to the performance of
services as a member of a religious order which
are considered employment only by virtue of an
election made by the religious order under
section 3121(r) of the Internal Revenue Code of
1986.
(E) General Provisions.--For purposes of this
subsection:
(i) Aggregation Rules.--
(I) All employers treated as
a single employer under
subsection (a) or (b) of
section 52 of the Internal
Revenue Code of 1986 shall be
treated as a single employer.
(II) All employees of the
members of an affiliated
service group (as defined in
section 414(m) of such Code)
shall be treated as employed by
a single employer.
(III) Leased employees (as
defined in section 414(n)(2) of
such Code) shall be treated as
employees of the person for
whom they perform services to
the extent they are so treated
under section 414(n) of such
Code.
In applying sections of the Internal
Revenue Code of 1986 under this clause,
the Secretary shall rely upon
regulations and decisions of the
Secretary of the Treasury respecting
such sections.
(ii) Current employment status
defined.--An individual has ``current
employment status'' with an employer if
the individual is an employee, is the
employer, or is associated with the
employer in a business relationship.
(iii) Treatment of self-employed
persons as employers.--The term
``employer'' includes a self-employed
person.
(F) Limitation on beneficiary liability.--An
individual who is entitled to benefits under
this title and is furnished an item or service
for which such benefits are incorrectly paid is
not liable for repayment of such benefits under
this paragraph unless payment of such benefits
was made to the individual.
(2) Medicare secondary payer.--
(A) In general.--Payment under this title may
not be made, except as provided in subparagraph
(B), with respect to any item or service to the
extent that--
(i) payment has been made, or can
reasonably be expected to be made, with
respect to the item or service as
required under paragraph (1), or
(ii) payment has been made or can
reasonably be expected to be made under
a workmen's compensation law or plan of
the United States or a State or under
an automobile or liability insurance
policy or plan (including a self-
insured plan) or under no fault
insurance.
In the subsection, the term ``primary plan''
means a group health plan or large group health
plan, to the extent that clause (i) applies,
and a workmen's compensation law or plan, an
automobile or liability insurance policy or
plan (including a self-insured plan) or no
fault insurance, to the extent that clause (ii)
applies. An entity that engages in a business,
trade, or profession shall be deemed to have a
self-insured plan if it carries its own risk
(whether by a failure to obtain insurance, or
otherwise) in whole or in part.
(B) Conditional payment.--
(i) Authority to make conditional
payment.--The Secretary may make
payment under this title with respect
to an item or service if a primary plan
described in subparagraph (A)(ii) has
not made or cannot reasonably be
expected to make payment with respect
to such item or service promptly (as
determined in accordance with
regulations). Any such payment by the
Secretary shall be conditioned on
reimbursement to the appropriate Trust
Fund in accordance with the succeeding
provisions of this subsection.
(ii) Repayment required.--Subject to
paragraph (9), a primary plan, and an
entity that receives payment from a
primary plan, shall reimburse the
appropriate Trust Fund for any payment
made by the Secretary under this title
with respect to an item or service if
it is demonstrated that such primary
plan has or had a responsibility to
make payment with respect to such item
or service. A primary plan's
responsibility for such payment may be
demonstrated by a judgment, a payment
conditioned upon the recipient's
compromise, waiver, or release (whether
or not there is a determination or
admission of liability) of payment for
items or services included in a claim
against the primary plan or the primary
plan's insured, or by other means. If
reimbursement is not made to the
appropriate Trust Fund before the
expiration of the 60-day period that
begins on the date notice of, or
information related to, a primary
plan's responsibility for such payment
or other information is received, the
Secretary may charge interest
(beginning with the date on which the
notice or other information is
received) on the amount of the
reimbursement until reimbursement is
made (at a rate determined by the
Secretary in accordance with
regulations of the Secretary of the
Treasury applicable to charges for late
payments).
(iii) Action by united states.--In
order to recover payment made under
this title for an item or service, the
United States may bring an action
against any or all entities that are or
were required or responsible (directly,
as an insurer or self-insurer, as a
third-party administrator, as an
employer that sponsors or contributes
to a group health plan, or large group
health plan, or otherwise) to make
payment with respect to the same item
or service (or any portion thereof)
under a primary plan. The United States
may, in accordance with paragraph
(3)(A) collect double damages against
any such entity. In addition, the
United States may recover under this
clause from any entity that has
received payment from a primary plan or
from the proceeds of a primary plan's
payment to any entity. The United
States may not recover from a third-
party administrator under this clause
in cases where the third-party
administrator would not be able to
recover the amount at issue from the
employer or group health plan and is
not employed by or under contract with
the employer or group health plan at
the time the action for recovery is
initiated by the United States or for
whom it provides administrative
services due to the insolvency or
bankruptcy of the employer or plan. An
action may not be brought by the United
States under this clause with respect
to payment owed unless the complaint is
filed not later than 3 years after the
date of the receipt of notice of a
settlement, judgment, award, or other
payment made pursuant to paragraph (8)
relating to such payment owed.
(iv) Subrogation rights.--The United
States shall be subrogated (to the
extent of payment made under this title
for such an item or service) to any
right under this subsection of an
individual or any other entity to
payment with respect to such item or
service under a primary plan.
(v) Waiver of rights.--The Secretary
may waive (in whole or in part) the
provisions of this subparagraph in the
case of an individual claim if the
Secretary determines that the waiver is
in the best interests of the program
established under this title.
(vi) Claims-filing period.--
Notwithstanding any other time limits
that may exist for filing a claim under
an employer group health plan, the
United States may seek to recover
conditional payments in accordance with
this subparagraph where the request for
payment is submitted to the entity
required or responsible under this
subsection to pay with respect to the
item or service (or any portion
thereof) under a primary plan within
the 3-year period beginning on the date
on which the item or service was
furnished.
(vii) Use of website to determine
final conditional reimbursement
amount.--
(I) Notice to secretary of
expected date of a settlement,
judgment, etc.--In the case of
a payment made by the Secretary
pursuant to clause (i) for
items and services provided to
the claimant, the claimant or
applicable plan (as defined in
paragraph (8)(F)) may at any
time beginning 120 days before
the reasonably expected date of
a settlement, judgment, award,
or other payment, notify the
Secretary that a payment is
reasonably expected and the
expected date of such payment.
(II) Secretarial providing
access to claims information
through a website.--The
Secretary shall maintain and
make available to individuals
to whom items and services are
furnished under this title (and
to authorized family or other
representatives recognized
under regulations and to an
applicable plan which has
obtained the consent of the
individual) access to
information on the claims for
such items and services
(including payment amounts for
such claims), including those
claims that relate to a
potential settlement, judgment,
award, or other payment. Such
access shall be provided to an
individual, representative, or
plan through a website that
requires a password to gain
access to the information. The
Secretary shall update the
information on claims and
payments on such website in as
timely a manner as possible but
not later than 15 days after
the date that payment is made.
Information related to claims
and payments subject to the
notice under subclause (I)
shall be maintained and made
available consistent with the
following:
(aa) The information
shall be as complete as
possible and shall
include provider or
supplier name,
diagnosis codes (if
any), dates of service,
and conditional payment
amounts.
(bb) The information
accurately identifies
those claims and
payments that are
related to a potential
settlement, judgment,
award, or other payment
to which the provisions
of this subsection
apply.
(cc) The website
provides a method for
the receipt of secure
electronic
communications with the
individual,
representative, or plan
involved.
(dd) The website
provides that
information is
transmitted from the
website in a form that
includes an official
time and date that the
information is
transmitted.
(ee) The website
shall permit the
individual,
representative, or plan
to download a statement
of reimbursement
amounts (in this clause
referred to as a
``statement of
reimbursement amount'')
on payments for claims
under this title
relating to a potential
settlement, judgment,
award, or other
payment.
(III) Use of timely web
download as basis for final
conditional amount.--If an
individual (or other claimant
or applicable plan with the
consent of the individual)
obtains a statement of
reimbursement amount from the
website during the protected
period as defined in subclause
(V) and the related settlement,
judgment, award or other
payment is made during such
period, then the last statement
of reimbursement amount that is
downloaded during such period
and within 3 business days
before the date of the
settlement, judgment, award, or
other payment shall constitute
the final conditional amount
subject to recovery under
clause (ii) related to such
settlement, judgment, award, or
other payment.
(IV) Resolution of
discrepancies.--If the
individual (or authorized
representative) believes there
is a discrepancy with the
statement of reimbursement
amount, the Secretary shall
provide a timely process to
resolve the discrepancy. Under
such process the individual (or
representative) must provide
documentation explaining the
discrepancy and a proposal to
resolve such discrepancy.
Within 11 business days after
the date of receipt of such
documentation, the Secretary
shall determine whether there
is a reasonable basis to
include or remove claims on the
statement of reimbursement. If
the Secretary does not make
such determination within the
11 business-day period, then
the proposal to resolve the
discrepancy shall be accepted.
If the Secretary determines
within such period that there
is not a reasonable basis to
include or remove claims on the
statement of reimbursement, the
proposal shall be rejected. If
the Secretary determines within
such period that there is a
reasonable basis to conclude
there is a discrepancy, the
Secretary must respond in a
timely manner by agreeing to
the proposal to resolve the
discrepancy or by providing
documentation showing with good
cause why the Secretary is not
agreeing to such proposal and
establishing an alternate
discrepancy resolution. In no
case shall the process under
this subclause be treated as an
appeals process or as
establishing a right of appeal
for a statement of
reimbursement amount and there
shall be no administrative or
judicial review of the
Secretary's determinations
under this subclause.
(V) Protected period.--In
subclause (III), the term
``protected period'' means,
with respect to a settlement,
judgment, award or other
payment relating to an injury
or incident, the portion (if
any) of the period beginning on
the date of notice under
subclause (I) with respect to
such settlement, judgment,
award, or other payment that is
after the end of a Secretarial
response period beginning on
the date of such notice to the
Secretary. Such Secretarial
response period shall be a
period of 65 days, except that
such period may be extended by
the Secretary for a period of
an additional 30 days if the
Secretary determines that
additional time is required to
address claims for which
payment has been made. Such
Secretarial response period
shall be extended and shall not
include any days for any part
of which the Secretary
determines (in accordance with
regulations) that there was a
failure in the claims and
payment posting system and the
failure was justified due to
exceptional circumstances (as
defined in such regulations).
Such regulations shall define
exceptional circumstances in a
manner so that not more than 1
percent of the repayment
obligations under this
subclause would qualify as
exceptional circumstances.
(VI) Effective date.--The
Secretary shall promulgate
final regulations to carry out
this clause not later than 9
months after the date of the
enactment of this clause.
(VII) Website including
successor technology.--In this
clause, the term ``website''
includes any successor
technology.
(viii) Right of appeal for secondary
payer determinations relating to
liability insurance (including self-
insurance), no fault insurance, and
workers' compensation laws and plans.--
The Secretary shall promulgate
regulations establishing a right of
appeal and appeals process, with
respect to any determination under this
subsection for a payment made under
this title for an item or service for
which the Secretary is seeking to
recover conditional payments from an
applicable plan (as defined in
paragraph (8)(F)) that is a primary
plan under subsection (A)(ii), under
which the applicable plan involved, or
an attorney, agent, or third party
administrator on behalf of such plan,
may appeal such determination. The
individual furnished such an item or
service shall be notified of the plan's
intent to appeal such determination
(C) Treatment of questionnaires.--The
Secretary may not fail to make payment under
subparagraph (A) solely on the ground that an
individual failed to complete a questionnaire
concerning the existence of a primary plan.
(3) Enforcement.--
(A) Private cause of action.--There is
established a private cause of action for
damages (which shall be in an amount double the
amount otherwise provided) in the case of a
primary plan which fails to provide for primary
payment (or appropriate reimbursement) in
accordance with paragraphs (1) and (2)(A).
(B) Reference to excise tax with respect to
nonconforming group health plans.--For
provision imposing an excise tax with respect
to nonconforming group health plans, see
section 5000 of the Internal Revenue Code of
1986.
(C) Prohibition of financial incentives not
to enroll in a group health plan or a large
group health plan.--It is unlawful for an
employer or other entity to offer any financial
or other incentive for an individual entitled
to benefits under this title not to enroll (or
to terminate enrollment) under a group health
plan or a large group health plan which would
(in the case of such enrollment) be a primary
plan (as defined in paragraph (2)(A)). Any
entity that violates the previous sentence is
subject to a civil money penalty of not to
exceed $5,000 for each such violation. The
provisions of section 1128A (other than
subsections (a) and (b)) shall apply to a civil
money penalty under the previous sentence in
the same manner as such provisions apply to a
penalty or proceeding under section 1128A(a).
(4) Coordination of benefits.--Where payment for an
item or service by a primary plan is less than the
amount of the charge for such item or service and is
not payment in full, payment may be made under this
title (without regard to deductibles and coinsurance
under this title) for the remainder of such charge,
but--
(A) payment under this title may not exceed
an amount which would be payable under this
title for such item or service if paragraph
(2)(A) did not apply; and
(B) payment under this title, when combined
with the amount payable under the primary plan,
may not exceed--
(i) in the case of an item or service
payment for which is determined under
this title on the basis of reasonable
cost (or other cost-related basis) or
under section 1886, the amount which
would be payable under this title on
such basis, and
(ii) in the case of an item or
service for which payment is authorized
under this title on another basis--
(I) the amount which would be
payable under the primary plan
(without regard to deductibles
and coinsurance under such
plan), or
(II) the reasonable charge or
other amount which would be
payable under this title
(without regard to deductibles
and coinsurance under this
title),
whichever is greater.
(5) Identification of secondary payer situations.--
(A) Requesting matching information.--
(i) Commissioner of social
security.--The Commissioner of Social
Security shall, not less often that
annually, transmit to the Secretary of
the Treasury a list of the names and
TINs of medicare beneficiaries (as
defined in section 6103(l)(12) of the
Internal Revenue Code of 1986) and
request that the Secretary disclose to
the Commissioner the information
described in subparagraph (A) of such
section.
(ii) Administrator.--The
Administrator of the Centers for
Medicare & Medicaid Services shall
request, not less often than annually,
the Commissioner of the Social Security
Administration to disclose to the
Administrator the information described
in subparagraph (B) of section
6103(l)(12) of the Internal Revenue
Code of 1986.
(B) Disclosure to fiscal intermediaries and
carriers.--In addition to any other information
provided under this title to fiscal
intermediaries and carriers, the Administrator
shall disclose to such intermediaries and
carriers (or to such a single intermediary or
carrier as the Secretary may designate) the
information received under subparagraph (A) for
purposes of carrying out this subsection.
(C) Contacting employers.--
(i) In general.--With respect to each
individual (in this subparagraph
referred to as an ``employee'') who was
furnished a written statement under
section 6051 of the Internal Revenue
Code of 1986 by a qualified employer
(as defined in section
6103(l)(12)(E)(iii) of such Code), as
disclosed under subparagraph (B), the
appropriate fiscal intermediary or
carrier shall contact the employer in
order to determine during what period
the employee or employee's spouse may
be (or have been) covered under a group
health plan of the employer and the
nature of the coverage that is or was
provided under the plan (including the
name, address, and identifying number
of the plan).
(ii) Employer response.--Within 30
days of the date of receipt of the
inquiry, the employer shall notify the
intermediary or carrier making the
inquiry as to the determinations
described in clause (i). An employer
(other than a Federal or other
governmental entity) who willfully or
repeatedly fails to provide timely and
accurate notice in accordance with the
previous sentence shall be subject to a
civil money penalty of not to exceed
$1,000 for each individual with respect
to which such an inquiry is made. The
provision of section 1128A (other than
subsections (a) and (b)) shall apply to
a civil money penalty under the
previous sentence in the same manner as
such provisions apply to a penalty or
proceeding under section 1128A(a).
(D) Obtaining information from
beneficiaries.--Before an individual applies
for benefits under part A or enrolls under part
B, the Administrator shall mail the individual
a questionnaire to obtain information on
whether the individual is covered under a
primary plan and the nature of the coverage
provided under the plan, including the name,
address, and identifying number of the plan.
(E) End date.--The provisions of this
paragraph shall not apply to information
required to be provided on or after July 1,
2016.
(6) Screening requirements for providers and
suppliers.--
(A) In general.--Notwithstanding any other
provision of this title, no payment may be made
for any item or service furnished under part B
unless the entity furnishing such item or
service completes (to the best of its knowledge
and on the basis of information obtained from
the individual to whom the item or service is
furnished) the portion of the claim form
relating to the availability of other health
benefit plans.
(B) Penalties.--An entity that knowingly,
willfully, and repeatedly fails to complete a
claim form in accordance with subparagraph (A)
or provides inaccurate information relating to
the availability of other health benefit plans
on a claim form under such subparagraph shall
be subject to a civil money penalty of not to
exceed $2,000 for each such incident. The
provisions of section 1128A (other than
subsections (a) and (b)) shall apply to a civil
money penalty under the previous sentence in
the same manner as such provisions apply to a
penalty or proceeding under section 1128A(a).
(7) Required submission of information by group
health plans.--
(A) Requirement.--On and after the first day
of the first calendar quarter beginning after
the date that is 1 year after the date of the
enactment of this paragraph, an entity serving
as an insurer or third party administrator for
a group health plan, as defined in paragraph
(1)(A)(v), and, in the case of a group health
plan that is self-insured and self-
administered, a plan administrator or
fiduciary, shall--
(i) secure from the plan sponsor and
plan participants such information as
the Secretary shall specify for the
purpose of identifying situations where
the group health plan is or has been a
primary plan to the program under this
title; and
(ii) submit such information to the
Secretary in a form and manner
(including frequency) specified by the
Secretary.
(B) Enforcement.--
(i) In general.--An entity, a plan
administrator, or a fiduciary described
in subparagraph (A) that fails to
comply with the requirements under such
subparagraph shall be subject to a
civil money penalty of $1,000 for each
day of noncompliance for each
individual for which the information
under such subparagraph should have
been submitted. The provisions of
subsections (e) and (k) of section
1128A shall apply to a civil money
penalty under the previous sentence in
the same manner as such provisions
apply to a penalty or proceeding under
section 1128A(a). A civil money penalty
under this clause shall be in addition
to any other penalties prescribed by
law and in addition to any Medicare
secondary payer claim under this title
with respect to an individual.
(ii) Deposit of amounts collected.--
Any amounts collected pursuant to
clause (i) shall be deposited in the
Federal Hospital Insurance Trust Fund
under section 1817.
(C) Sharing of information.--Notwithstanding
any other provision of law, under terms and
conditions established by the Secretary, the
Secretary--
(i) shall share information on
entitlement under Part A and enrollment
under Part B under this title with
entities, plan administrators, and
fiduciaries described in subparagraph
(A);
(ii) may share the entitlement and
enrollment information described in
clause (i) with entities and persons
not described in such clause; and
(iii) may share information collected
under this paragraph as necessary for
purposes of the proper coordination of
benefits.
(D) Implementation.--Notwithstanding any
other provision of law, the Secretary may
implement this paragraph by program instruction
or otherwise.
(8) Required submission of information by or on
behalf of liability insurance (including self-
insurance), no fault insurance, and workers'
compensation laws and plans.--
(A) Requirement.--On and after the first day
of the first calendar quarter beginning after
the date that is 18 months after the date of
the enactment of this paragraph, an applicable
plan shall--
(i) determine whether a claimant
(including an individual whose claim is
unresolved) is entitled to benefits
under the program under this title on
any basis; and
(ii) if the claimant is determined to
be so entitled, submit the information
described in subparagraph (B) with
respect to the claimant to the
Secretary in a form and manner
(including frequency) specified by the
Secretary.
(B) Required information.--The information
described in this subparagraph is--
(i) the identity of the claimant for
which the determination under
subparagraph (A) was made; and
(ii) such other information as the
Secretary shall specify in order to
enable the Secretary to make an
appropriate determination concerning
coordination of benefits, including any
applicable recovery claim.
Not later than 18 months after the date of
enactment of this sentence, the Secretary shall
modify the reporting requirements under this
paragraph so that an applicable plan in
complying with such requirements is permitted
but not required to access or report to the
Secretary beneficiary social security account
numbers or health identification claim numbers,
except that the deadline for such modification
shall be extended by one or more periods
(specified by the Secretary) of up to 1 year
each if the Secretary notifies the committees
of jurisdiction of the House of Representatives
and of the Senate that the prior deadline for
such modification, without such extension,
threatens patient privacy or the integrity of
the secondary payer program under this
subsection. Any such deadline extension notice
shall include information on the progress being
made in implementing such modification and the
anticipated implementation date for such
modification.
(C) Timing.--Information shall be submitted
under subparagraph (A)(ii) within a time
specified by the Secretary after the claim is
resolved through a settlement, judgment, award,
or other payment (regardless of whether or not
there is a determination or admission of
liability).
(D) Claimant.--For purposes of subparagraph
(A), the term ``claimant'' includes--
(i) an individual filing a claim
directly against the applicable plan;
and
(ii) an individual filing a claim
against an individual or entity insured
or covered by the applicable plan.
(E) Enforcement.--
(i) In general.--An applicable plan
that fails to comply with the
requirements under subparagraph (A)
with respect to any claimant may be
subject to a civil money penalty of up
to $1,000 for each day of noncompliance
with respect to each claimant. The
provisions of subsections (e) and (k)
of section 1128A shall apply to a civil
money penalty under the previous
sentence in the same manner as such
provisions apply to a penalty or
proceeding under section 1128A(a). A
civil money penalty under this clause
shall be in addition to any other
penalties prescribed by law and in
addition to any Medicare secondary
payer claim under this title with
respect to an individual.
(ii) Deposit of amounts collected.--
Any amounts collected pursuant to
clause (i) shall be deposited in the
Federal Hospital Insurance Trust Fund.
(F) Applicable plan.--In this paragraph, the
term ``applicable plan'' means the following
laws, plans, or other arrangements, including
the fiduciary or administrator for such law,
plan, or arrangement:
(i) Liability insurance (including
self-insurance).
(ii) No fault insurance.
(iii) Workers' compensation laws or
plans.
(G) Sharing of information.--The Secretary
may share information collected under this
paragraph as necessary for purposes of the
proper coordination of benefits.
(H) Implementation.--Notwithstanding any
other provision of law, the Secretary may
implement this paragraph by program instruction
or otherwise.
(I) Regulations.--Not later than 60 days
after the date of the enactment of this
subparagraph, the Secretary shall publish a
notice in the Federal Register soliciting
proposals, which will be accepted during a 60-
day period, for the specification of practices
for which sanctions will and will not be
imposed under subparagraph (E), including not
imposing sanctions for good faith efforts to
identify a beneficiary pursuant to this
paragraph under an applicable entity
responsible for reporting information. After
considering the proposals so submitted, the
Secretary, in consultation with the Attorney
General, shall publish in the Federal Register,
including a 60-day period for comment, proposed
specified practices for which such sanctions
will and will not be imposed. After considering
any public comments received during such
period, the Secretary shall issue final rules
specifying such practices.
(9) Exception.--
(A) In general.--Clause (ii) of paragraph
(2)(B) and any reporting required by paragraph
(8) shall not apply with respect to any
settlement, judgment, award, or other payment
by an applicable plan arising from liability
insurance (including self-insurance) and from
alleged physical trauma-based incidents
(excluding alleged ingestion, implantation, or
exposure cases) constituting a total payment
obligation to a claimant of not more than the
single threshold amount calculated by the
Secretary under subparagraph (B) for the year
involved.
(B) Annual computation of threshold.--
(i) In general.--Not later than
November 15 before each year, the
Secretary shall calculate and publish a
single threshold amount for
settlements, judgments, awards, or
other payments for obligations arising
from liability insurance (including
self-insurance) and for alleged
physical trauma-based incidents
(excluding alleged ingestion,
implantation, or exposure cases)
subject to this section for that year.
The annual single threshold amount for
a year shall be set such that the
estimated average amount to be credited
to the Medicare trust funds of
collections of conditional payments
from such settlements, judgments,
awards, or other payments arising from
liability insurance (including self-
insurance) and for such alleged
incidents subject to this section shall
equal the estimated cost of collection
incurred by the United States
(including payments made to
contractors) for a conditional payment
arising from liability insurance
(including self-insurance) and for such
alleged incidents subject to this
section for the year. At the time of
calculating, but before publishing, the
single threshold amount for 2014, the
Secretary shall inform, and seek review
of, the Comptroller General of the
United States with regard to such
amount.
(ii) Publication.--The Secretary
shall include, as part of such
publication for a year--
(I) the estimated cost of
collection incurred by the
United States (including
payments made to contractors)
for a conditional payment
arising from liability
insurance (including self-
insurance) and for such alleged
incidents; and
(II) a summary of the
methodology and data used by
the Secretary in computing such
threshold amount and such cost
of collection.
(C) Exclusion of ongoing expenses.--For
purposes of this paragraph and with respect to
a settlement, judgment, award, or other payment
not otherwise addressed in clause (ii) of
paragraph (2)(B) that includes ongoing
responsibility for medical payments (excluding
settlements, judgments, awards, or other
payments made by a workers' compensation law or
plan or no fault insurance), the amount
utilized for calculation of the threshold
described in subparagraph (A) shall include
only the cumulative value of the medical
payments made under this title.
(D) Report to congress.--Not later than
November 15 before each year, the Secretary
shall submit to the Congress a report on the
single threshold amount for settlements,
judgments, awards, or other payments for
conditional payment obligations arising from
liability insurance (including self-insurance)
and alleged incidents described in subparagraph
(A) for that year and on the establishment and
application of similar thresholds for such
payments for conditional payment obligations
arising from worker compensation cases and from
no fault insurance cases subject to this
section for the year. For each such report, the
Secretary shall--
(i) calculate the threshold amount by
using the methodology applicable to
certain liability claims described in
subparagraph (B); and
(ii) include a summary of the
methodology and data used in
calculating each threshold amount and
the amount of estimated savings under
this title achieved by the Secretary
implementing each such threshold.
(10) Coordination of benefits with postal service
health benefits plans.--The previous provisions of this
subsection are superseded to the extent the Secretary
determines, in consultation with the Office of
Personnel Management, them to be inconsistent with
section 8903c(f) of title 5, United States Code.
(c) No payment may be made under part B for any expenses
incurred for--
(1) a drug product--
(A) which is described in section 107(c)(3)
of the Drug Amendments of 1962,
(B) which may be dispensed only upon
prescription,
(C) for which the Secretary has issued a
notice of an opportunity for a hearing under
subsection (e) of section 505 of the Federal
Food, Drug, and Cosmetic Act on a proposed
order of the Secretary to withdraw approval of
an application for such drug product under such
section because the Secretary has determined
that the drug is less than effective for all
conditions of use prescribed, recommended, or
suggested in its labeling, and
(D) for which the Secretary has not
determined there is a compelling justification
for its medical need; and
(2) any other drug product--
(A) which is identical, related, or similar
(as determined in accordance with section 310.6
of title 21 of the Code of Federal Regulations)
to a drug product described in paragraph (1),
and
(B) for which the Secretary has not
determined there is a compelling justification
for its medical need,
until such time as the Secretary withdraws such proposed order.
(d) For purposes of subsection (a)(1)(A), in the case of any
item or service that is required to be provided pursuant to
section 1867 to an individual who is entitled to benefits under
this title, determinations as to whether the item or service is
reasonable and necessary shall be made on the basis of the
information available to the treating physician or practitioner
(including the patient's presenting symptoms or complaint) at
the time the item or service was ordered or furnished by the
physician or practitioner (and not on the patient's principal
diagnosis). When making such determinations with respect to
such an item or service, the Secretary shall not consider the
frequency with which the item or service was provided to the
patient before or after the time of the admission or visit.
(e)(1) No payment may be made under this title with respect
to any item or service (other than an emergency item or
service, not including items or services furnished in an
emergency room of a hospital) furnished--
(A) by an individual or entity during the period when
such individual or entity is excluded pursuant to
section 1128, 1128A, 1156 or 1842(j)(2) from
participation in the program under this title; or
(B) at the medical direction or on the prescription
of a physician during the period when he is excluded
pursuant to section 1128, 1128A, 1156 or 1842(j)(2)
from participation in the program under this title and
when the person furnishing such item or service knew or
had reason to know of the exclusion (after a reasonable
time period after reasonable notice has been furnished
to the person).
(2) Where an individual eligible for benefits under this
title submits a claim for payment for items or services
furnished by an individual or entity excluded from
participation in the programs under this title, pursuant to
section 1128, 1128A, 1156, 1160 (as in effect on September 2,
1982), 1842(j)(2), 1862(d) (as in effect on the date of the
enactment of the Medicare and Medicaid Patient and Program
Protection Act of 1987), or l866, and such beneficiary did not
know or have reason to know that such individual or entity was
so excluded, then, to the extent permitted by this title, and
notwithstanding such exclusion, payment shall be made for such
items or services. In each such case the Secretary shall notify
the beneficiary of the exclusion of the individual or entity
furnishing the items or services. Payment shall not be made for
items or services furnished by an excluded individual or entity
to a beneficiary after a reasonable time (as determined by the
Secretary in regulations) after the Secretary has notified the
beneficiary of the exclusion of that individual or entity.
(f) The Secretary shall establish utilization guidelines for
the determination of whether or not payment may be made,
consistent with paragraph (1)(A) of subsection (a), under part
A or part B for expenses incurred with respect to the provision
of home health services, and shall provide for the
implementation of such guidelines through a process of
selective postpayment coverage review by intermediaries or
otherwise.
(g) The Secretary shall, in making the determinations under
paragraphs (1) and (9) of subsection (a), and for the purposes
of promoting the effective, efficient, and economical delivery
of health care services, and of promoting the quality of
services of the type for which payment may be made under this
title, enter into contracts with quality improvement
organizations pursuant to part B of title XI of this Act.
(h)(1) The Secretary--
(A) shall waive the application of subsection (a)(22)
in cases in which--
(i) there is no method available for the
submission of claims in an electronic form; or
(ii) the entity submitting the claim is a
small provider of services or supplier; and
(B) may waive the application of such subsection in
such unusual cases as the Secretary finds appropriate.
(2) For purposes of this subsection, the term ``small
provider of services or supplier'' means--
(A) a provider of services with fewer than 25 full-
time equivalent employees; or
(B) a physician, practitioner, facility, or supplier
(other than provider of services) with fewer than 10
full-time equivalent employees.
(i) In order to supplement the activities of the Medicare
Payment Advisory Commission under section 1886(e) in assessing
the safety, efficacy, and cost-effectiveness of new and
existing medical procedures, the Secretary may carry out, or
award grants or contracts for, original research and
experimentation of the type described in clause (ii) of section
1886(e)(6)(E) with respect to such a procedure if the Secretary
finds that--
(1) such procedure is not of sufficient commercial
value to justify research and experimentation by a
commercial organization;
(2) research and experimentation with respect to such
procedure is not of a type that may appropriately be
carried out by an institute, division, or bureau of the
National Institutes of Health; and
(3) such procedure has the potential to be more cost-
effective in the treatment of a condition than
procedures currently in use with respect to such
condition.
(j)(1) Any advisory committee appointed to advise the
Secretary on matters relating to the interpretation,
application, or implementation of subsection (a)(1) shall
assure the full participation of a nonvoting member in the
deliberations of the advisory committee, and shall provide such
nonvoting member access to all information and data made
available to voting members of the advisory committee, other
than information that--
(A) is exempt from disclosure pursuant to subsection
(a) of section 552 of title 5, United States Code, by
reason of subsection (b)(4) of such section (relating
to trade secrets); or
(B) the Secretary determines would present a conflict
of interest relating to such nonvoting member.
(2) If an advisory committee described in paragraph (1)
organizes into panels of experts according to types of items or
services considered by the advisory committee, any such panel
of experts may report any recommendation with respect to such
items or services directly to the Secretary without the prior
approval of the advisory committee or an executive committee
thereof.
(k)(1) Subject to paragraph (2), a group health plan (as
defined in subsection (a)(1)(A)(v)) providing supplemental or
secondary coverage to individuals also entitled to services
under this title shall not require a medicare claims
determination under this title for dental benefits specifically
excluded under subsection (a)(12) as a condition of making a
claims determination for such benefits under the group health
plan.
(2) A group health plan may require a claims determination
under this title in cases involving or appearing to involve
inpatient dental hospital services or dental services expressly
covered under this title pursuant to actions taken by the
Secretary.
(l) National and Local Coverage Determination Process.--
(1) Factors and evidence used in making national
coverage determinations.--The Secretary shall make
available to the public the factors considered in
making national coverage determinations of whether an
item or service is reasonable and necessary. The
Secretary shall develop guidance documents to carry out
this paragraph in a manner similar to the development
of guidance documents under section 701(h) of the
Federal Food, Drug, and Cosmetic Act (21 U.S.C.
371(h)).
(2) Timeframe for decisions on requests for national
coverage determinations.--In the case of a request for
a national coverage determination that--
(A) does not require a technology assessment
from an outside entity or deliberation from the
Medicare Coverage Advisory Committee, the
decision on the request shall be made not later
than 6 months after the date of the request; or
(B) requires such an assessment or
deliberation and in which a clinical trial is
not requested, the decision on the request
shall be made not later than 9 months after the
date of the request.
(3) Process for public comment in national coverage
determinations.--
(A) Period for proposed decision.--Not later
than the end of the 6-month period (or 9-month
period for requests described in paragraph
(2)(B)) that begins on the date a request for a
national coverage determination is made, the
Secretary shall make a draft of proposed
decision on the request available to the public
through the Internet website of the Centers for
Medicare & Medicaid Services or other
appropriate means.
(B) 30-day period for public comment.--
Beginning on the date the Secretary makes a
draft of the proposed decision available under
subparagraph (A), the Secretary shall provide a
30-day period for public comment on such draft.
(C) 60-day period for final decision.--Not
later than 60 days after the conclusion of the
30-day period referred to under subparagraph
(B), the Secretary shall--
(i) make a final decision on the
request;
(ii) include in such final decision
summaries of the public comments
received and responses to such
comments;
(iii) make available to the public
the clinical evidence and other data
used in making such a decision when the
decision differs from the
recommendations of the Medicare
Coverage Advisory Committee; and
(iv) in the case of a final decision
under clause (i) to grant the request
for the national coverage
determination, the Secretary shall
assign a temporary or permanent code
(whether existing or unclassified) and
implement the coding change.
(4) Consultation with outside experts in certain
national coverage determinations.--With respect to a
request for a national coverage determination for which
there is not a review by the Medicare Coverage Advisory
Committee, the Secretary shall consult with appropriate
outside clinical experts.
(5) Local coverage determination process.--
(A) Plan to promote consistency of coverage
determinations.--The Secretary shall develop a
plan to evaluate new local coverage
determinations to determine which
determinations should be adopted nationally and
to what extent greater consistency can be
achieved among local coverage determinations.
(B) Consultation.--The Secretary shall
require the fiscal intermediaries or carriers
providing services within the same area to
consult on all new local coverage
determinations within the area.
(C) Dissemination of information.--The
Secretary should serve as a center to
disseminate information on local coverage
determinations among fiscal intermediaries and
carriers to reduce duplication of effort.
(6) National and local coverage determination
defined.--For purposes of this subsection--
(A) National coverage determination.--The
term ``national coverage determination'' means
a determination by the Secretary with respect
to whether or not a particular item or service
is covered nationally under this title.
(B) Local coverage determination.--The term
``local coverage determination'' has the
meaning given that in section 1869(f)(2)(B).
(m) Coverage of Routine Costs Associated With Certain
Clinical Trials of Category A Devices.--
(1) In general.--In the case of an individual
entitled to benefits under part A, or enrolled under
part B, or both who participates in a category A
clinical trial, the Secretary shall not exclude under
subsection (a)(1) payment for coverage of routine costs
of care (as defined by the Secretary) furnished to such
individual in the trial.
(2) Category a clinical trial.--For purposes of
paragraph (1), a ``category A clinical trial'' means a
trial of a medical device if--
(A) the trial is of an experimental/
investigational (category A) medical device (as
defined in regulations under section 405.201(b)
of title 42, Code of Federal Regulations (as in
effect as of September 1, 2003));
(B) the trial meets criteria established by
the Secretary to ensure that the trial conforms
to appropriate scientific and ethical
standards; and
(C) in the case of a trial initiated before
January 1, 2010, the device involved in the
trial has been determined by the Secretary to
be intended for use in the diagnosis,
monitoring, or treatment of an immediately
life-threatening disease or condition.
(n) Requirement of a Surety Bond for Certain Providers of
Services and Suppliers.--
(1) In general.--The Secretary may require a provider
of services or supplier described in paragraph (2) to
provide the Secretary on a continuing basis with a
surety bond in a form specified by the Secretary in an
amount (not less than $50,000) that the Secretary
determines is commensurate with the volume of the
billing of the provider of services or supplier. The
Secretary may waive the requirement of a bond under the
preceding sentence in the case of a provider of
services or supplier that provides a comparable surety
bond under State law.
(2) Provider of services or supplier described.--A
provider of services or supplier described in this
paragraph is a provider of services or supplier the
Secretary determines appropriate based on the level of
risk involved with respect to the provider of services
or supplier, and consistent with the surety bond
requirements under sections 1834(a)(16)(B) and
1861(o)(7)(C).
(o) Suspension of Payments Pending Investigation of Credible
Allegations of Fraud.--
(1) In general.--The Secretary may suspend payments
to a provider of services or supplier under this title
pending an investigation of a credible allegation of
fraud against the provider of services or supplier,
unless the Secretary determines there is good cause not
to suspend such payments.
(2) Consultation.--The Secretary shall consult with
the Inspector General of the Department of Health and
Human Services in determining whether there is a
credible allegation of fraud against a provider of
services or supplier.
(3) Promulgation of regulations.--The Secretary shall
promulgate regulations to carry out this subsection and
section 1903(i)(2)(C).
* * * * * * *
----------
TITLE 39, UNITED STATES CODE
* * * * * * *
PART I. GENERAL
Chapter Sec.
Postal Policy and Definitions..................................101
Organization...................................................201
General Authority..............................................401
Postal Regulatory Commission...................................501
Private Carriage of Letters....................................601
Contracting Provisions.........................................701
* * * * * * *
PART I--GENERAL
* * * * * * *
CHAPTER 1--POSTAL POLICY AND DEFINITIONS
* * * * * * *
Sec. 102. Definitions
As used in this title--
(1) ``Postal Service'' means the United States Postal
Service established by section 201 of this title;
(2) ``Board of Governors'', and ``Board'', unless the
context otherwise requires, mean the Board of Governors
established under section 202 of this title;
(3) ``Governors'' means the [9 members] 5 members of
the Board of Governors appointed by the President, by
and with the advice and consent of the Senate, under
[section 202(a)] section 202(b)(1) of this title;
(4) ``Inspector General'' means [the Inspector
General appointed under section 202(e) of this title]
the Inspector General of the Postal Community as
described in section 8M of the Inspector General Act of
1978 (5 U.S.C. App.);
(5) ``postal service'' refers to the delivery of
letters, printed matter, or mailable packages,
including acceptance, collection, sorting,
transportation, or other functions ancillary thereto;
(6) ``product'' means a postal service with a
distinct cost or market characteristic for which a rate
or rates are, or may reasonably be, applied;
(7) ``rates'', as used with respect to products,
includes fees for postal services;
(8) ``market-dominant product'' or ``product in the
market-dominant category of mail'' means a product
subject to subchapter I of chapter 36;
(9) ``competitive product'' or ``product in the
competitive category of mail'' means a product subject
to subchapter II of chapter 36; and
(10) ``year'', as used in chapter 36 (other than
subchapters I and VI thereof), means a fiscal year.
* * * * * * *
CHAPTER 2--ORGANIZATION
Sec.
201. United States Postal Service.
* * * * * * *
[203. Postmaster General; Deputy Postmaster General.]
203. Postmaster General.
* * * * * * *
209. Chief Innovation Officer.
* * * * * * *
[Sec. 202. Board of Governors
[(a)(1) The exercise of the power of the Postal Service shall
be directed by a Board of Governors composed of 11 members
appointed in accordance with this section. Nine of the members,
to be known as Governors, shall be appointed by the President,
by and with the advice and consent of the Senate, not more than
5 of whom may be adherents of the same political party. The
Governors shall elect a Chairman from among the members of the
Board. The Governors shall 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. 203. Postmaster General; Deputy Postmaster General
[The chief executive officer of the Postal Service is the
Postmaster General appointed under section 202(c) of this
title. The alternate chief executive officer of the Postal
Service is the Deputy Postmaster General appointed under
section 202(d) of this title.]
Sec. 202. Board of Governors
(a) In General.--There is established in the Postal Service a
Board of Governors composed of 5 Governors, a Postmaster
General, and a Deputy Postmaster General, all of whom shall be
appointed in accordance with this section. The Governors shall
have the power to--
(1) exercise the powers of the Postal Service,
consistent with section 203(c);
(2) appoint, fix the term of service of, and remove
the Postmaster General;
(3) in consultation with the Postmaster General,
appoint, fix the term of service of, and remove the
Deputy Postmaster General;
(4) set the strategic direction of postal operations
and approve the pricing and product strategy for the
Postal Service;
(5) set the compensation of the Postmaster General
and the Deputy Postmaster General in accordance with
private sector best practices, as determined by the
Governors pursuant to section 3686; and
(6) carry out any other duties specifically provided
for in this title.
(b) Appointment; Pay.--
(1) In general.--The Governors shall be appointed by
the President, by and with the advice and consent of
the Senate, not more than 3 of whom may be adherents of
the same political party. The Governors shall elect a
Chair from among their members. The Governors shall
represent the public interest generally, and shall be
chosen solely on the basis of their experience in the
field of public administration, 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 3 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 10,000 employees. The Governors
shall not be representatives of specific interests
using the Postal Service, and may be removed only for
cause.
(2) Compensation.--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.
(3) Consultation.--In selecting the individuals
described in paragraph (1) for nomination for
appointment to the position of Governor, the President
should consult with the Speaker of the House of
Representatives, the minority leader of the House of
Representatives, the majority leader of the Senate, and
the minority leader of the Senate.
(c) Terms of Governors.--
(1) In general.--The terms of the 5 Governors shall
be 7 years, except that the terms of the 5 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, and 1 at the end of 5 years,
following the appointment of the first of them. Any
Governor appointed to fill a vacancy before the
expiration of the term for which the Governor's
predecessor was appointed shall serve for the remainder
of such term. A Governor may continue to serve after
the expiration of the Governor's term until his
successor has qualified, but not to exceed one year.
(2) Limitation.--No individual may serve more than 2
terms as a Governor.
(d) Staff.--The Chair of the Board of Governors shall ensure
that the Board has appropriate independent staff to carry out
the roles and responsibilities of the Board.
Sec. 203. Postmaster General
(a) In General.--The chief executive officer of the Postal
Service is the Postmaster General, appointed pursuant to
section 202(a)(1). The alternate chief executive officer of the
Postal Service is the Deputy Postmaster General, appointed
pursuant to section 202(a)(2) of this title.
(b) Powers.--Consistent with the requirements of this title,
the exercise of the power of the Postal Service shall be vested
in the Governors and carried out by the Postmaster General in a
manner consistent with the strategic direction and pricing and
product strategy approved by the Governors. The Postmaster
General shall consult with the Governors and the Deputy
Postmaster General in carrying out such power.
Sec. 204. General Counsel; Judicial Officer; Chief Postal Inspector
There shall be within the Postal Service a General Counsel,
such number of Assistant Postmasters General as [the Board] the
Postmaster General shall consider appropriate, a Judicial
Officer, and a Chief Postal Inspector. The General Counsel, the
Assistant Postmasters General, the Judicial Officer, and the
Chief Postal Inspector shall be appointed by, and serve at the
pleasure of, the Postmaster General. The Judicial Officer shall
perform such quasi-judicial duties, not inconsistent with
chapter 36 of this title, as the Postmaster General may
designate. The Judicial Officer shall be the agency for the
purposes of the requirements of chapter 5 of title 5, to the
extent that functions are delegated to him by the Postmaster
General. The Chief Postal Inspector shall report to, and be
under the general supervision of, the Postmaster General. The
Postmaster General shall promptly notify [the Governors and]
both Houses of Congress in writing if he or she removes the
Chief Postal Inspector or transfers the Chief Postal Inspector
to another position or location within the Postal Service, and
shall include in any such notification the reasons for the
removal or transfer.
[Sec. 205. Procedures of the Board of Governors
[(a) The Board shall direct and control the expenditures and
review the practices and policies of the Postal Service, and
perform other functions and duties prescribed by this title.
[(b) Vacancies in the Board, as long as there are sufficient
members to form a quorum, shall not impair the powers of the
Board under this title.
[(c) The Board shall act upon majority vote of those members
who are present, and any 6 members present shall constitute a
quorum for the transaction of business by the Board, except--
[(1) that in the appointment or removal of the
Postmaster General, and in setting the compensation of
the Postmaster General and Deputy Postmaster General, a
favorable vote of an absolute majority of the Governors
in office shall be required;
[(2) that in the appointment or removal of the Deputy
Postmaster General, a favorable vote of an absolute
majority of the Governors in office and the member
serving as Postmaster General shall be required; and
[(3) as otherwise provided in this title.
[(d) No officer or employee of the United States may serve
concurrently as a Governor. A Governor may hold any other
office or employment not inconsistent or in conflict with his
duties, responsibilities, and powers as an officer of the
Government of the United States in the Postal Service.]
Sec. 205. Procedures of the Board of Governors
(a) Vacancies.--Vacancies in the Board shall not impair the
powers of the Board under this title.
(b) Vote.--The Board shall act upon majority vote of those
members who are present, subject to such quorum requirements as
the Board may establish.
(c) Limitation.--No officer or employee of the United States
may serve concurrently as a Governor. A Governor may hold any
other office or employment not inconsistent or in conflict with
the Governor's duties, responsibilities, and powers as an
officer of the Government of the United States in the Postal
Service.
* * * * * * *
Sec. 207. Seal
The seal of the Postal Service shall be filed by [the Board]
the Postal Service in the Office of the Secretary of State,
judicially noticed, affixed to all commissions of officers of
the Postal Service, and used to authenticate records of the
Postal Service.
* * * * * * *
Sec. 209. Chief Innovation Officer
(a) In General.--There is established within the Postal
Service the position of Chief Innovation Officer, appointed by
the Postmaster General, who shall manage the Postal Service's
development and implementation of innovative postal and
nonpostal products and services.
(b) Duties.--The primary duties of the Chief Innovation
Officer are as follows:
(1) Leading the development of innovative nonpostal
products and services that will maximize revenue to the
Postal Service.
(2) Developing innovative postal products and
services, specifically those that utilize emerging
information technologies, to maximize revenue to the
Postal Service.
(3) Implementing the innovation strategy described
under subsection (d).
(4) Monitoring the performance of innovative products
and services and revising them as needed to meet
changing market trends.
(5) Taking into consideration comments or advisory
opinions, if applicable, issued by the Postal
Regulatory Commission prior to the initial sale of
innovative postal or nonpostal products and services.
(c) Appointment.--
(1) Deadline.--As soon as practicable after the date
of enactment of the Postal Service Reform Act of 2016,
but no later than 6 months after such date, the
Postmaster General shall appoint a Chief Innovation
Officer.
(2) Requirements.--Any individual appointed to serve
as the Chief Innovation Officer shall have proven
expertise and a record of success in at least 1 of the
following: postal and shipping industry; innovation
product research and development; marketing brand
strategy; emerging communications technology; or
business process management.
(3) Current officer or employee eligible.--An officer
or employee of the Postal Service may be appointed to
the position of Chief Innovation Officer under this
chapter. Upon appointment to such position, such
officer or employee may not concurrently hold any other
position in the Postal Service.
(d) Innovation Strategy.--
(1) In general.--Not later than 12 months after the
date on which the Chief Innovation Officer is appointed
under subsection (c)(1), the Postmaster General shall
submit to the Committee on Oversight and Government
Reform of the House of Representatives, the Committee
on Homeland Security and Governmental Affairs of the
Senate, and the Postal Regulatory Commission a
comprehensive strategy for maximizing revenues through
innovative postal and nonpostal products and services.
(2) Matters to be addressed.--The strategy submitted
under paragraph (1) shall address--
(A) the specific innovative postal and
nonpostal products and services to be developed
and offered by the Postal Service, including
the nature of the market to be filled by each
product and service and the likely date by
which each product and service will be
introduced;
(B) the cost of developing and offering each
product or service;
(C) the anticipated sales volume of each
product and service;
(D) the anticipated revenues and profits
expected to be generated by each product and
service;
(E) the likelihood of success of each product
and service as well as the risks associated
with the development and sale of each product
and service;
(F) the trends anticipated in market
conditions that may affect the success of each
product and service over the 5-year period
beginning on the date such strategy or update
is submitted;
(G) the metrics that will be utilized to
assess the effectiveness of the innovation
strategy; and
(H) the specific methods by which mailpiece
design analysis may be improved to speed the
approval process and promote the increased use
of innovative mailpiece design.
(3) Strategy updates.--On January 1, 2018, and every
3 years thereafter, the Postal Service shall submit an
update to the innovation strategy submitted under
paragraph (1) to the Committee on Oversight and
Government Reform of the House of Representatives, the
Committee on Homeland Security and Governmental Affairs
of the Senate, and the Postal Regulatory Commission.
(e) Report.--
(1) In general.--On the date of submission of the
President's annual budget under section 1105(a) of
title 31, the Postmaster General shall submit to the
Committee on Oversight and Government Reform of the
House of Representatives, the Committee on Homeland
Security and Governmental Affairs of the Senate, and
the Postal Regulatory Commission a report that details
the Postal Service's progress in implementing the
innovation strategy described under subsection (d).
(2) Matters to be addressed.--The report required
under paragraph (1) shall address--
(A) the revenue generated by each product and
service developed through the innovation
strategy and the costs of developing and
offering each such product and service for the
most recent fiscal year;
(B) the total sales volume and revenue
generated by each product and service on a
monthly basis for the preceding year;
(C) trends in the markets filled by each
product and service;
(D) products and services identified in the
innovation strategy that are to be
discontinued, the date on which the
discontinuance will occur, and the reasons for
the discontinuance;
(E) alterations in products and services
identified in the innovation strategy that will
be made to meet changing market conditions, and
an explanation of how these alterations will
ensure the success of the products and
services; and
(F) the performance of the innovation
strategy according to the metrics identified in
subsection (d)(2)(G).
(f) Comptroller General Study.--
(1) In general.--The Comptroller General shall
conduct a study on the implementation of the innovation
strategy described under subsection (d) not later than
4 years after the date of enactment of the Postal
Service Reform Act of 2016.
(2) Contents.--The study required under paragraph (1)
shall assess the effectiveness of the Postal Service in
identifying, developing, and selling innovative postal
and nonpostal products and services. The study shall
also include--
(A) an audit of the costs of developing each
innovative postal and nonpostal product and
service developed or offered by the Postal
Service during the period beginning on the date
of enactment of the Postal Service Reform Act
of 2016 and ending 4 years after such date;
(B) the sales volume of each such product and
service;
(C) the revenues and profits generated by
each such product and service; and
(D) the likelihood of continued success of
each such product and service.
(3) Submission.--The results of the study required
under this subsection shall be submitted to the
Committee on Oversight and Government Reform of the
House of Representatives, the Committee on Homeland
Security and Governmental Affairs of the Senate, and
the Postal Regulatory Commission.
* * * * * * *
CHAPTER 4--GENERAL AUTHORITY
* * * * * * *
[Sec. 402. Delegation of authority
[Except for those powers, duties, or obligations specifically
vested in the Governors, as distinguished from the Board of
Governors, the Board may delegate the authority vested in it to
the Postmaster General under such terms, conditions, and
limitations, including the power of redelegation, as it deems
desirable. The Board may establish such committees of the
Board, and delegate such powers to any committee, as the Board
determines appropriate to carry out its functions and duties.
Delegations to the Postmaster General or committees shall be
consistent with other provisions of this title, shall not
relieve the Board of full responsibility for the carrying out
of its duties and functions, and shall be revocable by the
Governors in their exclusive judgment.]
Sec. 402. Delegation of authority
(a) Postmaster General.--The Postmaster General may delegate
his or her authority under such terms, conditions, and
limitations, including the power of redelegation, as he or she
determines desirable. The Postmaster General may establish such
committees of officers and employees of the Postal Service, and
delegate such powers to any committee, as the Postmaster
General determines appropriate to carry out his or her
functions and duties. Delegations under this section shall be
consistent with other provisions of this title, shall not
relieve the Postmaster General of full responsibility for the
carrying out the Postmaster General's duties and functions, and
shall be revocable by the Postmaster General.
(b) Board of Governors.--The Board may establish such
committees of the Board, and delegate such powers to any
committee, as the Board determines appropriate to carry out its
functions and duties. Delegations to committees shall be
consistent with other provisions of this title, shall not
relieve the Board of full responsibility for the carrying out
of its duties and functions, and shall be revocable by the
Board in its exclusive judgment.
* * * * * * *
Sec. 404. Specific powers
(a) Subject to the provisions of section 404a, but otherwise
without limitation of the generality of its powers, the Postal
Service shall have the following specific powers, among others:
(1) to provide for the collection, handling,
transportation, delivery, forwarding, returning, and
holding of mail, and for the disposition of
undeliverable mail;
(2) to prescribe, in accordance with this title, the
amount of postage and the manner in which it is to be
paid;
(3) to determine the need for post offices, postal
and training facilities and equipment, and to provide
such offices, facilities, and equipment as it
determines are needed;
(4) to provide and sell postage stamps and other
stamped paper, cards, and envelopes and to provide such
other evidences of payment of postage and fees as may
be necessary or desirable;
(5) to provide philatelic services;
(6) to investigate postal offenses and civil matters
relating to the Postal Service;
(7) to offer and pay rewards for information and
services in connection with violation of the postal
laws, and, unless a different disposal is expressly
prescribed, to pay one-half of all penalties and
forfeitures imposed for violations of law affecting the
Postal Service, its revenues, or property, to the
person informing for the same, and to pay the other
one-half into the Postal Service Fund; and
(8) to authorize the issuance of a substitute check
for a lost, stolen, or destroyed check of the Postal
Service.
(b) Except as otherwise provided, the Governors are
authorized to establish reasonable and equitable classes of
mail and reasonable and equitable rates of postage and fees for
postal services in accordance with the provisions of chapter
36. Postal rates and fees shall be reasonable and equitable and
sufficient to enable the Postal Service, under best practices
of honest, efficient, and economical management, to maintain
and continue the development of postal services of the kind and
quality adapted to the needs of the United States.
(c) The Postal Service shall maintain one or more classes of
mail for the transmission of letters sealed against inspection.
The rate for each such class shall be uniform throughout the
United States, its territories, and possessions. One such class
shall provide for the most expeditious handling and
transportation afforded mail matter by the Postal Service. No
letter of such a class of domestic origin shall be opened
except under authority of a search warrant authorized by law,
or by an officer or employee of the Postal Service for the sole
purpose of determining an address at which the letter can be
delivered, or pursuant to the authorization of the addressee.
(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.]
(1) The Postal Service, prior to making a
determination under subsection (a)(3) as to the
necessity for the closing or consolidation of any post
office, shall--
(A) 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 postal patrons
served by such post office;
(B) conduct a nonbinding survey on the
proposed closing or consolidation to allow
postal patrons served by such post office an
opportunity to indicate their preference
between or among--
(i) the closing or consolidation; and
(ii) 1 or more alternative options;
and
(C) ensure that--
(i) should the closure or
consolidation of a postal retail
facility be deemed necessary, it shall
be the policy of the Postal Service to
provide alternative access to postal
services to those served by the postal
retail facility by the option chosen by
the highest number of survey
respondents under subparagraph (B)(ii);
and
(ii) if the Postal Service is unable
to provide alternative access through
the option identified in clause (i), or
if that option is cost prohibitive, the
Postal Service may provide alternative
access through a different means. Upon
selection of an alternative access
method other than the one identified by
clause (i), the Postal Service must
provide written notice to those patrons
served by the postal retail facility
identifying and explaining why the
option identified by clause (i) was not
possible or cost prohibitive.
(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;]
(i) the effect of such closing or
consolidation on the community served by such
post office, including through an analysis of--
(I) the distance (as measured by
public roads) to the closest postal
retail facility not proposed for
closure or consolidation under such
plan;
(II) the characteristics of such
location, including weather and
terrain;
(III) whether commercial mobile
service (as defined in section 332 of
the Communications Act of 1934) and
commercial mobile data service (as
defined in section 6001 of the Middle
Class Tax Relief and Job Creation Act
of 2012) are available in at least 80
percent of the total geographic area of
the ZIP codes served by the postal
retail facility proposed for closure or
consolidation; and
(IV) whether fixed broadband Internet
access service is available to
households in at least 80 percent of
such geographic area at speeds not less
than those sufficient for service to be
considered broadband for purposes of
the most recent report of the Federal
Communications Commission under section
706 of the Telecommunications Act of
1996;
(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.
(5) A determination of the Postal Service to close or
consolidate any post office may be appealed by any person
served by such office to the Postal Regulatory Commission
within 30 days after such determination is made available to
such person under paragraph (3). The Commission shall review
such determination on the basis of the record before the Postal
Service in the making of such determination. The Commission
shall make a determination based upon such review no later than
[120 days] 60 days, or a longer period for good cause shown but
in no event longer than 120 days, after receiving any appeal
under this paragraph. The Commission shall set aside any
determination, findings, and conclusions found to be--
(A) arbitrary, capricious, an abuse of discretion, or
otherwise not in accordance with the law;
(B) without observance of procedure required by law;
or
(C) unsupported by substantial evidence on the
record.
The Commission may affirm the determination of the Postal
Service or order that the entire matter be returned for further
consideration, but the Commission may not modify the
determination of the Postal Service. The Commission may suspend
the effectiveness of the determination of the Postal Service
until the final disposition of the appeal. 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.
(6) For purposes of paragraph (5), any appeal received by the
Commission shall--
(A) if sent to the Commission through the mails, be
considered to have been received on the date of the
Postal Service postmark on the envelope or other cover
in which such appeal is mailed; or
(B) if otherwise lawfully delivered to the
Commission, be considered to have been received on the
date determined based on any appropriate documentation
or other indicia (as determined under regulations of
the Commission).
(7) For purposes of this subsection, the term ``post office''
means a post office and any other facility described in section
2(2) of the Postal Service Reform Act of 2016.
(e)(1) In this subsection, the term ``nonpostal service''
means any service that is not a postal service defined under
section 102(5).
(2) 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, or any nonpostal products or services
authorized by chapter 37.
(3) 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) the public need for the service; and
(B) the ability of the private sector to meet the
public need for the service.
(4) 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.
(6) Licensing which, before the date of enactment of this
paragraph, has been authorized by the Postal Regulatory
Commission for continuation as a nonpostal service may not be
used for any purpose other than--
(A) to continue to provide licensed mailing,
shipping, or stationery supplies offered as of June 23,
2011; or
(B) to license other goods, products, or services,
the primary purpose of which is to promote and enhance
the image or brand of the Postal Service.
(7) Nothing in this section shall be considered to
prevent the Postal Service from establishing nonpostal
products and services that are expressly authorized by
chapter 37.
Sec. 404a. Specific limitations
(a) Except as specifically authorized by law, the Postal
Service may not--
(1) establish any rule or regulation (including any
standard) the effect of which is to preclude
competition or establish the terms of competition
unless the Postal Service demonstrates that the
regulation does not create an unfair competitive
advantage for itself or any entity funded (in whole or
in part) by the Postal Service;
(2) compel the disclosure, transfer, or licensing of
intellectual property to any third party (such as
patents, copyrights, trademarks, trade secrets, and
proprietary information); [or]
(3) obtain information from a person that provides
(or seeks to provide) any product, and then offer any
postal service that uses or is based in whole or in
part on such information, without the consent of the
person providing that information, unless substantially
the same information is obtained (or obtainable) from
an independent source or is otherwise obtained (or
obtainable)[.]; or
(4) offer to the public any postage-evidencing
product or service that does not comply with any rule
or regulation that would be applicable to such product
or service if the product or service were offered by a
private company.
(b) The Postal Regulatory Commission shall prescribe
regulations to carry out this section.
(c) Any party (including an officer of the Commission
representing the interests of the general public) who believes
that the Postal Service has violated this section may bring a
complaint in accordance with section 3662.
* * * * * * *
Sec. 407. International postal arrangements
(a) It is the policy of the United States--
(1) to promote and encourage communications between
peoples by efficient operation of international postal
services and other international delivery services for
cultural, social, and economic purposes;
(2) to promote and encourage unrestricted and
undistorted competition in the provision of
international postal services and other international
delivery services, except where provision of such
services by private companies may be prohibited by law
of the United States;
(3) to promote and encourage a clear distinction
between governmental and operational responsibilities
with respect to the provision of international postal
services and other international delivery services by
the Government of the United States and by
intergovernmental organizations of which the United
States is a member; and
(4) to participate in multilateral and bilateral
agreements with other countries to accomplish these
objectives.
(b)(1) The Secretary of State shall be responsible for
formulation, coordination, and oversight of foreign policy
related to international postal services and other
international delivery services and shall have the power to
conclude postal treaties, conventions, and amendments related
to international postal services and other international
delivery services, except that the Secretary may not conclude
any treaty, convention, or other international agreement
(including those regulating international postal services) if
such treaty, convention, or agreement would, with respect to
any competitive product, grant an undue or unreasonable
preference to the Postal Service, a private provider of
international postal or delivery services, or any other person.
(2) In carrying out the responsibilities specified in
paragraph (1), the Secretary of State shall exercise primary
authority for the conduct of foreign policy with respect to
international postal services and international delivery
services, including the determination of United States
positions and the conduct of United States participation in
negotiations with foreign governments and international bodies.
In exercising this authority, the Secretary--
(A) shall coordinate with other agencies as
appropriate, and in particular, shall give full
consideration to the authority vested by law or
Executive order in the Postal Regulatory Commission,
the Department of Commerce, the Department of
Transportation, and the Office of the United States
Trade Representative in this area;
(B) shall maintain continuing liaison with other
executive branch agencies concerned with postal and
delivery services;
(C) shall maintain continuing liaison with the
Committee on Homeland Security and Governmental Affairs
of the Senate and the Committee on Government Reform of
the House of Representatives;
(D) shall maintain appropriate liaison with both
representatives of the Postal Service and
representatives of users and private providers of
international postal services and other international
delivery services to keep informed of their interests
and problems, and to provide such assistance as may be
needed to ensure that matters of concern are promptly
considered by the Department of State or (if
applicable, and to the extent practicable) other
executive branch agencies; and
(E) shall assist in arranging meetings of such public
sector advisory groups as may be established to advise
the Department of State and other executive branch
agencies in connection with international postal
services and international delivery services.
(3) The Secretary of State shall establish an advisory
committee (within the meaning of the Federal Advisory Committee
Act) to perform such functions as the Secretary considers
appropriate in connection with carrying out subparagraphs (A)
through (D) of paragraph (2).
(c)(1) Before concluding any treaty, convention, or amendment
that establishes a rate or classification for a product subject
to subchapter I of chapter 36, the Secretary of State shall
request the Postal Regulatory Commission to submit its views on
whether such rate or classification is consistent with the
standards and criteria established by the Commission under
section 3622.
(2) The Secretary shall ensure that each treaty, convention,
or amendment concluded under subsection (b) is consistent with
the views submitted by the Commission pursuant to paragraph
(1), except if, or to the extent, the Secretary determines, in
writing, that it is not in the foreign policy or national
security interest of the United States to ensure consistency
with the Commission's views. Such written determination shall
be provided to the Commission together with a full explanation
of the reasons thereof, provided that the Secretary may
designate which portions of the determination or explanation
shall be kept confidential for reasons of foreign policy or
national security.
(d) Nothing in this section shall be considered to prevent
the Postal Service from entering into such commercial or
operational contracts related to providing international postal
services and other international delivery services as it deems
appropriate, except that--
(1) any such contract made with an agency of a
foreign government (whether under authority of this
subsection or otherwise) shall be solely contractual in
nature and may not purport to be international law; and
(2) a copy of each such contract between the Postal
Service and an agency of a foreign government shall be
transmitted to the Secretary of State and the Postal
Regulatory Commission not later than the effective date
of such contract.
(e)(1) In this subsection, the term ``private company'' means
a private company substantially owned or controlled by persons
who are citizens of the United States.
(2) With respect to shipments of international mail that are
competitive products within the meaning of section 3631 that
are exported or imported by the Postal Service, the Customs
Service and other appropriate Federal agencies shall apply the
customs laws of the United States and all other laws relating
to the importation or exportation of such shipments in the same
manner to both shipments by the Postal Service and similar
shipments by private companies.
(3) In exercising the authority under subsection (b) to
conclude new postal treaties and conventions related to
international postal services and to renegotiate such treaties
and conventions, the Secretary of State shall, to the maximum
extent practicable, take such measures as are within the
Secretary's control to encourage the governments of other
countries to make available to the Postal Service and private
companies a range of nondiscriminatory customs procedures that
will fully meet the needs of all types of American shippers.
The Secretary of State shall consult with the United States
Trade Representative and the Commissioner of U.S. Customs and
Border Protection in carrying out this paragraph.
(4) The provisions of this subsection shall take effect 6
months after the date of enactment of this subsection or such
earlier date as the Bureau of Customs and Border Protection of
the Department of Homeland Security may determine in writing.
(f) After submission to the Postal Regulatory Commission by
the Department of State of the budget detailing the estimated
costs of carrying out the activities under this section, and
the Commission's review and approval of such submission, the
Postal Service shall transfer to the Department of State, from
any funds available to the Postal Service, such sums as may be
reasonable, documented, and auditable for the Department of
State to carry out such activities.
* * * * * * *
Sec. 411. Cooperation with other Government agencies
Executive agencies within the meaning of section 105 of title
5 and the Government Publishing 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
shall be under such terms and conditions, [including
reimbursability] including reimbursability within the
limitations of chapter 37, as the Postal Service and the head
of the agency concerned shall deem appropriate.
* * * * * * *
Sec. 414. Special postage stamps
(a) In order to afford the public a convenient way to
contribute to funding for breast cancer research, the Postal
Service shall establish a special rate of postage for first-
class mail under this section.
(b) The rate of postage established under this section--
(1) shall be equal to the regular first-class rate of
postage, plus a differential of not less than 15
percent;
(2) shall be set by [the Governors] the Postal
Service in accordance with such procedures as [the
Governors] the Postal Service shall by regulation
prescribe (in lieu of the procedures under chapter 36);
and
(3) shall be offered as an alternative to the regular
first-class rate of postage.
The use of the special rate of postage established under this
section shall be voluntary on the part of postal patrons. The
special rate of postage of an individual stamp under this
section shall be an amount that is evenly divisible by 5.
(c)(1) Of the amounts becoming available for breast cancer
research pursuant to this section, the Postal Service shall
pay--
(A) 70 percent to the National Institutes of Health;
and
(B) the remainder to the Department of Defense.
Payments under this paragraph to an agency shall be made under
such arrangements as the Postal Service shall by mutual
agreement with such agency establish in order to carry out the
purposes of this section, except that, under those
arrangements, payments to such agency shall be made at least
twice a year. An agency that receives amounts from the Postal
Service under this paragraph shall use the amounts for breast
cancer research.
(2) For purposes of this section, the term ``amounts becoming
available for breast cancer research pursuant to this section''
means--
(A) the total amounts received by the Postal Service
that it would not have received but for the enactment
of this section, reduced by
(B) an amount sufficient to cover reasonable costs
incurred by the Postal Service in carrying out this
section, including those attributable to the printing,
sale, and distribution of stamps under this section, as
determined by the Postal Service under regulations that
it shall prescribe.
(d) It is the sense of the Congress that nothing in this
section should--
(1) directly or indirectly cause a net decrease in
total funds received by the National Institutes of
Health, the Department of Defense, or any other agency
of the Government (or any component or program thereof)
below the level that would otherwise have been received
but for the enactment of this section; or
(2) affect regular first-class rates of postage or
any other regular rates of postage.
(e) Special postage stamps under this section shall be made
available to the public beginning on such date as the Postal
Service shall by regulation prescribe, but in no event later
than 12 months after the date of the enactment of this section.
(f) The Postmaster General shall include in each report
rendered under section 2402 with respect to any period during
any portion of which this section is in effect information
concerning the operation of this section, except that, at a
minimum, each shall include--
(1) the total amount described in subsection
(c)(2)(A) which was received by the Postal Service
during the period covered by such report; and
(2) of the amount under paragraph (1), how much (in
the aggregate and by category) was required for the
purposes described in subsection (c)(2)(B).
(g) For purposes of section 416 (including any regulation
prescribed under subsection (e)(1)(C) of that section), the
special postage stamp issued under this section shall not apply
to any limitation relating to whether more than 1 semipostal
may be offered for sale at the same time.
(h) This section shall cease to be effective after December
31, 2019.
* * * * * * *
Sec. 416. Authority to issue semipostals
(a) Definitions.--For purposes of this section--
(1) the term ``semipostal'' means a postage stamp
which is issued and sold by the Postal Service, at a
premium, in order to help provide funding for a cause
described in subsection (b); and
(2) the term ``agency'' means an Executive agency
within the meaning of section 105 of title 5.
(b) Discretionary Authority.--The Postal Service is hereby
authorized to issue and sell semipostals under this section in
order to advance such causes as the Postal Service considers to
be in the national public interest and appropriate.
(c) Rate of Postage.--The rate of postage on a semipostal
issued under this section shall be established by [the
Governors] the Postal Service, in accordance with such
procedures as [they] the Postal Service shall by regulation
prescribe (in lieu of the procedures under chapter 36), except
that--
(1) the rate established for a semipostal under this
section shall be equal to the rate of postage that
would otherwise regularly apply, plus a differential of
not less than 15 percent; and
(2) no regular rates of postage or fees for postal
services under chapter 36 shall be any different from
what they otherwise would have been if this section had
not been enacted.
The use of any semipostal issued under this section shall be
voluntary on the part of postal patrons. The special rate of
postage of an individual stamp under this section shall be an
amount that is evenly divisible by 5.
(d) Amounts Becoming Available.--
(1) In general.--The amounts becoming available from
the sale of a semipostal under this section shall be
transferred to the appropriate agency or agencies under
such arrangements as the Postal Service shall by mutual
agreement with each such agency establish.
(2) Identification of appropriate causes and
agencies.--Decisions concerning the identification of
appropriate causes and agencies to receive amounts
becoming available from the sale of a semipostal under
this section shall be made in accordance with
applicable regulations under subsection (e).
(3) Determination of amounts.--
(A) In general.--The amounts becoming
available from the sale of a semipostal under
this section shall be determined in a manner
similar to that provided for under section
414(c)(2) (as in effect on July 1, 2000).
(B) Administrative costs.--Regulations under
subsection (e) shall specifically address how
the costs incurred by the Postal Service in
carrying out this section shall be computed,
recovered, and kept to a minimum.
(4) Other funding not to be affected.--Amounts which
have or may become available from the sale of a
semipostal under this section shall not be taken into
account in any decision relating to the level of
appropriations or other Federal funding to be furnished
to an agency in any year.
(5) Recovery of costs.--Before transferring to an
agency in accordance with paragraph (1) any amounts
becoming available from the sale of a semipostal over
any period, the Postal Service shall ensure that it has
recovered the full costs incurred by the Postal Service
in connection with such semipostal through the end of
such period.
(e) Regulations.--
(1) In general.--Except as provided in subsection
(c), the Postal Service shall prescribe any regulations
necessary to carry out this section, including
provisions relating to--
(A) which office or other authority within
the Postal Service shall be responsible for
making the decisions described in subsection
(d)(2);
(B) what criteria and procedures shall be
applied in making those decisions; and
(C) what limitations shall apply, if any,
relating to the issuance of semipostals (such
as whether more than one semipostal may be
offered for sale at the same time).
(2) Notice and comment.--Before any regulation is
issued under this section, a copy of the proposed
regulation shall be published in the Federal Register,
and an opportunity shall be provided for interested
parties to present written and, where practicable, oral
comment. All regulations necessary to carry out this
section shall be issued not later than 30 days before
the date on which semipostals are first made available
to the public under this section.
(f) Annual Reports.--
(1) In general.--The Postmaster General shall include
in each report rendered under section 2402, with
respect to any period during any portion of which this
section is in effect, information concerning the
operation of any program established under this
section.
(2) Specific requirement.--If any semipostal ceases
to be offered during the period covered by such a
report, the information contained in that report shall
also include--
(A) the commencement and termination dates
for the sale of such semipostal;
(B) the total amount that became available
from the sale of such semipostal; and
(C) of that total amount, how much was
applied toward administrative costs.
For each year before the year in which a semipostal
ceases to be offered, any report under this subsection
shall include, with respect to that semipostal (for the
year covered by such report), the information described
in subparagraphs (B) and (C).
(g) Termination.--This section shall cease to be effective at
the end of the 10-year period beginning on the date on which
semipostals are first made available to the public under this
section.
* * * * * * *
CHAPTER 5--POSTAL REGULATORY COMMISSION
* * * * * * *
Sec. 504. Administration
(a) The Chairman of the Postal Regulatory Commission shall be
the principal executive officer of the Commission. The Chairman
shall exercise or direct the exercise of all the executive and
administrative functions of the Commission, including functions
of the Commission with respect to (1) the appointment of
personnel employed under the Commission, except that the
appointment of heads of major administrative units under the
Commission shall require the approval of a majority of the
members of the Commission, (2) the supervision of the personnel
employed under the Commission and the distribution of business
among them and among the Commissioners, and (3) the use and
expenditure of funds.
(b) In carrying out any of his functions under this section,
the Chairman shall be governed by the general policies of the
Commission.
(c) 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.
(d) There are authorized to be appropriated, out of the
Postal Service Fund, such sums as may be necessary for the
Postal Regulatory Commission. In requesting an appropriation
under this subsection for a fiscal year, the Commission shall
prepare and submit to the Congress under section 2009 a budget
of the Commission's expenses, including expenses for
facilities, supplies, compensation, and employee benefits.
(e) The provisions of section 410 and chapter 10 of this
title shall apply to the Commission, as appropriate.
(f)(1) Any Commissioner of the Postal Regulatory Commission,
any administrative law judge appointed by the Commission under
section 3105 of title 5, and any employee of the Commission
designated by the Commission may administer oaths, examine
witnesses, take depositions, and receive evidence.
(2) The Chairman of the Commission, any Commissioner
designated by the Chairman, and any administrative law judge
appointed by the Commission under section 3105 of title 5 may,
with respect to any proceeding conducted by the Commission
under this title or to obtain information to be used to prepare
a report under this title--
(A) issue subpoenas requiring the attendance and
presentation of testimony by, or the production of
documentary or other evidence in the possession of, any
covered person; and
(B) order the taking of depositions and responses to
written interrogatories by a covered person.
The written concurrence of a majority of the Commissioners then
holding office shall, with respect to each subpoena under
subparagraph (A), be required in advance of its issuance.
(3) In the case of contumacy or failure to obey a subpoena
issued under this subsection, upon application by the
Commission, the district court of the United States for the
district in which the person to whom the subpoena is addressed
resides or is served may issue an order requiring such person
to appear at any designated place to testify or produce
documentary or other evidence. Any failure to obey the order of
the court may be punished by the court as a contempt thereof.
(4) For purposes of this subsection, the term ``covered
person'' means an officer, employee, agent, or contractor of
the Postal Service.
(g)(1) If the Postal Service determines that any document or
other matter it provides to the Postal Regulatory Commission
under a subpoena issued under subsection (f), or otherwise at
the request of the Commission in connection with any proceeding
or other purpose under this title, contains information which
is described in section 410(c) of this title, or exempt from
public disclosure under section 552(b) of title 5, the Postal
Service shall, at the time of providing such matter to the
Commission, notify the Commission, in writing, of its
determination (and the reasons therefor).
(2) Except as provided in paragraph (3), no officer or
employee of the Commission may, with respect to any information
as to which the Commission has been notified under paragraph
(1)--
(A) use such information for purposes other than the
purposes for which it is supplied; or
(B) permit anyone who is not an officer or employee
of the Commission to have access to any such
information.
(3)(A) Paragraph (2) shall not prohibit the
Commission from publicly disclosing relevant
information in furtherance of its duties under this
title, provided that the Commission has adopted
regulations under section 553 of title 5, that
establish a procedure for according appropriate
confidentiality to information identified by the Postal
Service under paragraph (1). In determining the
appropriate degree of confidentiality to be accorded
information identified by the Postal Service under
paragraph (1), the Commission shall balance the nature
and extent of the likely commercial injury to the
Postal Service against the public interest in
maintaining the financial transparency of a government
establishment competing in commercial markets.
(B) Paragraph (2) shall not prevent the Commission
from requiring production of information in the course
of any discovery procedure established in connection
with a proceeding under this title. The Commission
shall, by regulations based on rule 26(c) of the
Federal Rules of Civil Procedure, establish procedures
for ensuring appropriate confidentiality for
information furnished to any party.
[(h)(1) Notwithstanding any other provision of this title or
of the Inspector General Act of 1978, the authority to select,
appoint, and employ officers and employees of the Office of
Inspector General of the Postal Regulatory Commission, and to
obtain any temporary or intermittent services of experts or
consultants (or an organization of experts or consultants) for
such Office, shall reside with the Inspector General of the
Postal Regulatory Commission.
[(2) Except as provided in paragraph (1), any exercise of
authority under this subsection shall, to the extent
practicable, be in conformance with the applicable laws and
regulations that govern selections, appointments, and
employment, and the obtaining of any such temporary or
intermittent services, within the Postal Regulatory
Commission.]
* * * * * * *
CHAPTER 7--CONTRACTING PROVISIONS
Sec.
701. Definitions.
702. Delegation of contracting authority.
703. Posting of noncompetitive purchase requests for noncompetitive
contracts.
704. Review of ethical issues.
705. Ethical restrictions on participation in certain contracting
activity.
Sec. 701. Definitions
In this chapter--
(1) the term ``contracting officer'' means an
employee of a covered postal entity who has authority
to enter into a postal contract;
(2) the term ``covered postal entity'' means--
(A) the Postal Service; or
(B) the Postal Regulatory Commission;
(3) the term ``head of a covered postal entity''
means--
(A) in the case of the Postal Service, the
Postmaster General; or
(B) in the case of the Postal Regulatory
Commission, the Chairman of the Postal
Regulatory Commission;
(4) the term ``postal contract'' means--
(A) in the case of the Postal Service, any
contract (including any agreement or memorandum
of understanding) entered into by the Postal
Service for the procurement of goods or
services; or
(B) in the case of the Postal Regulatory
Commission, any contract (including any
agreement or memorandum of understanding) in an
amount exceeding the simplified acquisition
threshold (as defined in section 134 of title
41 and adjusted under section 1908 of such
title) entered into by the Postal Regulatory
Commission for the procurement of goods or
services; and
(5) the term ``senior procurement executive'' means
the senior procurement executive of a covered postal
entity.
Sec. 702. Delegation of contracting authority
(a) In General.--
(1) Policy.--Not later than 60 days after the date of
enactment of this chapter, the head of each covered
postal entity shall issue a policy on contracting
officer delegations of authority for postal contracts
for the covered postal entity.
(2) Contents.--The policy issued under paragraph (1)
shall require that--
(A) notwithstanding any delegation of
authority with respect to postal contracts, the
ultimate responsibility and accountability for
the award and administration of postal
contracts resides with the senior procurement
executive; and
(B) a contracting officer shall maintain an
awareness of and engagement in the activities
being performed on postal contracts of which
that officer has cognizance, notwithstanding
any delegation of authority that may have been
executed.
(b) Posting of Delegations.--
(1) In general.--The head of each covered postal
entity shall make any delegation of authority for
postal contracts outside the functional contracting
unit readily available and accessible on the Web site
of the covered postal entity.
(2) Effective date.--This paragraph shall apply to
any delegation of authority made on or after the date
that is 30 days after the date of enactment of this
chapter.
Sec. 703. Posting of noncompetitive purchase requests for
noncompetitive contracts
(a) Posting Required.--
(1) Postal regulatory commission.--The Postal
Regulatory Commission shall make the noncompetitive
purchase request for any noncompetitive award for any
contract (including any agreement or memorandum of
understanding) entered into by the Postal Regulatory
Commission for the procurement of goods and services,
in an amount of $20,000 or more, including the
rationale supporting the noncompetitive award, publicly
available on the Web site of the Postal Regulatory
Commission--
(A) not later than 14 days after the date of
the award of the noncompetitive contract; or
(B) not later than 30 days after the date of
the award of the noncompetitive contract, if
the basis for the award was a compelling
business interest.
(2) Postal service.--The Postal Service shall make
the noncompetitive purchase request for any
noncompetitive award of a postal contract in an amount
of $250,000 or more, including the rationale supporting
the noncompetitive award, publicly available on the Web
site of the Postal Service--
(A) not later than 14 days after the date of
the award; or
(B) not later than 30 days after the date of
the award, if the basis for the award was a
compelling business interest.
(3) Adjustments to the posting threshold.--
(A) Review and determination.--Not later than
January 31 of each year, the Postal Service and
the Postal Regulatory Commission shall--
(i) review the applicable threshold
established under paragraph (1) or (2);
and
(ii) based on any change in the
Consumer Price Index for All Urban
Consumers of the Department of Labor,
determine whether an adjustment to the
threshold shall be made.
(B) Amount of adjustments.--An adjustment
under subparagraph (A) shall be made in
increments of $5,000. If the covered postal
entity determines that a change in the Consumer
Price Index for a year would require an
adjustment in an amount that is less than
$5,000, the Postal Service may not make an
adjustment to the threshold for the year.
(4) Effective date.--This subsection shall apply to
any noncompetitive contract awarded on or after the
date that is 90 days after the date of enactment of
this chapter.
(b) Public Availability.--
(1) In general.--Subject to paragraph (2), the
information required to be made publicly available by a
covered postal entity under subsection (a) shall be
readily accessible on the Web site of the covered
postal entity.
(2) Protection of proprietary information.--A covered
postal entity shall--
(A) carefully screen any description of the
rationale supporting a noncompetitive award
required to be made publicly available under
subsection (a) to determine whether the
description includes proprietary data
(including any reference or citation to the
proprietary data) or security-related
information; and
(B) remove any proprietary data or security-
related information before making publicly
available a description of the rationale
supporting a noncompetitive award.
(c) Waivers.--
(1) Waiver permitted.--If the Postal Service
determines that making a noncompetitive purchase
request for a postal contract of the Postal Service
publicly available would risk placing the Postal
Service at a competitive disadvantage relative to a
private sector competitor, the senior procurement
executive, in consultation with the advocate for
competition of the Postal Service, may waive the
requirements under subsection (a).
(2) Form and content of waiver.--
(A) Form.--A waiver under paragraph (1) shall
be in the form of a written determination
placed in the file of the contract to which the
noncompetitive purchase request relates.
(B) Content.--A waiver under paragraph (1)
shall include--
(i) a description of the risk
associated with making the
noncompetitive purchase request
publicly available; and
(ii) a statement that redaction of
sensitive information in the
noncompetitive purchase request would
not be sufficient to protect the Postal
Service from being placed at a
competitive disadvantage relative to a
private sector competitor.
(3) Delegation of waiver authority.--The Postal
Service may not delegate the authority to approve a
waiver under paragraph (1) to any employee having less
authority than the senior procurement executive.
Sec. 704. Review of ethical issues
If a contracting officer identifies any ethical issues
relating to a proposed contract and submits those issues and
that proposed contract to the designated ethics official for
the covered postal entity before the awarding of that contract,
that ethics official shall--
(1) review the proposed contract; and
(2) advise the contracting officer on the appropriate
resolution of ethical issues.
Sec. 705. Ethical restrictions on participation in certain contracting
activity
(a) Definitions.--In this section--
(1) the term ``covered employee'' means--
(A) a contracting officer; or
(B) any employee of a covered postal entity
whose decisionmaking affects a postal contract
as determined by regulations prescribed by the
head of a covered postal entity;
(2) the term ``final conviction'' means a conviction,
whether entered on a verdict or plea, including a plea
of nolo contendere, for which a sentence has been
imposed; and
(3) the term ``covered relationship'' means a covered
relationship described in section 2635.502(b)(1) of
title 5, Code of Federal Regulations, or any successor
thereto.
(b) In General.--
(1) Regulations.--The head of each covered postal
entity shall prescribe regulations that--
(A) require a covered employee to include in
the file of any noncompetitive purchase request
for a noncompetitive postal contract a written
certification that--
(i) discloses any covered
relationship of the covered employee;
and
(ii) states that the covered employee
will not take any action with respect
to the noncompetitive purchase request
that affects the financial interests of
a friend, relative, or person with whom
the covered employee is affiliated in a
nongovernmental capacity, or otherwise
gives rise to an appearance of the use
of public office for private gain, as
described in section 2635.702 of title
5, Code of Federal Regulations, or any
successor thereto;
(B) require a contracting officer to consult
with the ethics counsel for the covered postal
entity regarding any disclosure made by a
covered employee under subparagraph (A)(i), to
determine whether participation by the covered
employee in the noncompetitive purchase request
would give rise to a violation of part 2635 of
title 5, Code of Federal Regulations (commonly
referred to as the Standards of Ethical Conduct
for Employees of the Executive Branch), or any
successor thereto;
(C) require the ethics counsel for a covered
postal entity to review any disclosure made by
a contracting officer under subparagraph (A)(i)
to determine whether participation by the
contracting officer in the noncompetitive
purchase request would give rise to a violation
of part 2635 of title 5, Code of Federal
Regulations (commonly referred to as the
Standards of Ethical Conduct for Employees of
the Executive Branch), or any successor
thereto;
(D) under subsections (d) and (e) of section
2635.502 of title 5, Code of Federal
Regulations, or any successor thereto, require
the ethics counsel for a covered postal entity
to--
(i) authorize a covered employee that
makes a disclosure under subparagraph
(A)(i) to participate in the
noncompetitive postal contract; or
(ii) disqualify a covered employee
that makes a disclosure under
subparagraph (A)(i) from participating
in the noncompetitive postal contract;
(E) require a contractor to timely disclose
to the contracting officer in a bid,
solicitation, award, or performance of a postal
contract any conflict of interest with a
covered employee; and
(F) include authority for the head of the
covered postal entity to grant a waiver or
otherwise mitigate any organizational or
personal conflict of interest, if the head of
the covered postal entity determines that the
waiver or mitigation is in the best interests
of the covered postal entity.
(2) Posting of waivers.--Not later than 30 days after
the head of a covered postal entity grants a waiver
described in paragraph (1)(F), the head of the covered
postal entity shall make the waiver publicly available
on the Web site of the covered postal entity.
(c) Contract Voidance and Recovery.--
(1) Unlawful conduct.--In any case in which there is
a final conviction for a violation of any provision of
chapter 11 of title 18 relating to a postal contract,
the head of a covered postal entity may--
(A) void that contract; and
(B) recover the amounts expended and property
transferred by the covered postal entity under
that contract.
(2) Obtaining or disclosing procurement
information.--
(A) In general.--In any case in which a
contractor under a postal contract fails to
timely disclose a conflict of interest to the
appropriate contracting officer as required
under the regulations promulgated under
subsection (b)(1)(E), the head of a covered
postal entity may--
(i) void that contract; and
(ii) recover the amounts expended and
property transferred by the covered
postal entity under that contract.
(B) Conviction or administrative
determination.--A case described under
subparagraph (A) is any case in which--
(i) there is a final conviction for
an offense punishable under section
2105 of title 41; or
(ii) the head of a covered postal
entity determines, based upon a
preponderance of the evidence, that the
contractor or someone acting for the
contractor has engaged in conduct
constituting an offense punishable
under section 2105 of such title.
* * * * * * *
PART II--PERSONNEL
* * * * * * *
CHAPTER 10--EMPLOYMENT WITHIN THE POSTAL SERVICE
* * * * * * *
Sec. 1003. Employment policy
(a) Except as provided under chapters 2 and 12 of this title,
section 8G of the Inspector General Act of 1978, or other
provision of law, the Postal Service shall classify and fix the
compensation and benefits of all officers and employees in the
Postal Service. It shall be the policy of the Postal Service to
maintain compensation and benefits for all officers and
employees on a standard of comparability to the compensation
and benefits paid for comparable levels of work in the private
sector of the economy. No officer or employee shall be paid
compensation at a rate in excess of the rate for level I of the
Executive Schedule under section 5312 of title 5.
(b) Compensation and benefits for all officers and employees
serving in or under [the Office of Inspector General of the
United States Postal Service] the Office of Inspector General
of the Postal Community shall be maintained on a standard of
comparability to the compensation and benefits paid for
comparable levels of work in the respective Offices of
Inspector General of the various establishments named in
section 11(2) of the Inspector General Act of 1978.
(c) Compensation and benefits for all Postal Inspectors shall
be maintained on a standard of comparability to the
compensation and benefits paid for comparable levels of work in
the executive branch of the Government outside of the Postal
Service. As used in this subsection, the term ``Postal
Inspector'' included any agent to whom any investigative powers
are granted under section 3061 of title 18.
(d) The Postal Service shall follow an employment policy
designed, without compromising the policy of section 101(a) of
this title, to extend opportunity to the disadvantaged and the
handicapped.
* * * * * * *
Sec. 1005. Applicability of laws relating to Federal employees
(a)(1) Except as otherwise provided in this subsection, the
provisions of chapter 75 of title 5 shall apply to officers and
employees of the Postal Service except to the extent of any
inconsistency with--
(A) the provisions of any collective-bargaining
agreement negotiated on behalf of and applicable to
them; or
(B) procedures established by the Postal Service and
approved by the Civil Service Commission.
(2) The provisions of title 5 relating to a preference
eligible (as that term is defined under section 2108(3) of such
title) shall apply to an applicant for appointment and any
officer or employee of the Postal Service in the same manner
and under the same conditions as if the applicant, officer, or
employee were subject to the competitive service under such
title. The provisions of this paragraph shall not be modified
by any program developed under section 1004 of this title or
any collective-bargaining agreement entered into under chapter
12 of this title.
(3) The provisions of this subsection shall not apply to
those individuals appointed under sections 202, 204, and
1001(c) of this title.
(4)(A) Subchapter II of chapter 75 of title 5 shall apply--
(i) to any preference eligible in the Postal Service
who is an employee within the meaning of section
7511(a)(1)(B) of such title; and
(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
(II) has completed 1 year of current
continuous service in the same or similar
positions.
(B)(i) The second sentence of paragraph (2) of this
subsection applies with respect to the provisions of
subparagraph (A) of this paragraph, to the extent that such
provisions relate to preference eligibles.
(ii) The provisions of subparagraph (A) of this paragraph
shall not, to the extent that such provisions relate to an
individual under clause (ii) of such subparagraph, be modified
by any program developed under section 1004 of this title.
(b)(1) Except as provided under paragraph (2), section 5941
of title 5 shall apply to the Postal Service. Except as
provided under paragraph (2), for purposes of section 5941 of
that title, the pay of officers and employees of the Postal
Service shall be considered to be fixed by statute, and the
basic pay of an employee shall be the pay (but not any
allowance or benefit) of that officer or employee established
in accordance with the provisions of this title.
(2) On and after the date of enactment of the Non-Foreign
Area Retirement Equity Assurance Act of 2009--
(A) the provisions of that Act and section 5941 of
title 5 shall apply to officers and employees covered
by section 1003 (b) and (c) whose duty station is in a
nonforeign area; and
(B) with respect to officers and employees of the
Postal Service (other than those officers and employees
described under subparagraph (A)) of section 1916(b)(2)
of that Act shall apply.
(c) Officers and employees of the Postal Service shall be
covered by subchapter I of chapter 81 of title 5, relating to
compensation for work injuries.
(d)(1) 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.
(2) The provisions of subsections (i) and (m)(2) of section
8344 and subsections (f) and (j)(2) of section 8468 of title 5
shall apply with respect to the Postal Service. For purposes of
so applying such provisions--
(A) any reference in such provisions to the head of
an Executive agency shall be considered a reference to
the Postmaster General; and
(B) any reference in such provisions to an employee
shall be considered a reference to an officer or
employee of the Postal Service.
(e) Sick and annual leave, and compensatory time of officers
and employees of the Postal Service, whether accrued prior to
or after commencement of operations of the Postal Service,
shall be obligations of the Postal Service under the provisions
of this chapter.
(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 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. 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.
* * * * * * *
Sec. 1011. Oath of office
Before entering upon their duties and before receiving any
salary, all officers and employees of the Postal Service shall
take and subscribe the following oath or affirmation:
``I, -- -- -- -- -- -- -- --, do solemnly swear (or
affirm) that I will support and defend the Constitution
of the United States against all enemies, foreign and
domestic; that I will bear true faith and allegiance to
the same; that I take this obligation freely, without
any mental reservation or purpose of evasion; and that
I will well and faithfully discharge the duties of the
office on which I am about to enter.''
A person authorized to administer oaths by the laws of the
United States, including section 2903 of title 5, or of a State
or territory, or an officer, civil or military, holding a
commission under the United States, or any officer or employee
of the Postal Service designated by [the Board] the Postal
Service may administer and certify the oath or affirmation.
* * * * * * *
PART III--MODERNIZATION AND FISCAL ADMINISTRATION
* * * * * * *
CHAPTER 20--FINANCE
* * * * * * *
Sec. 2003. The Postal Service Fund
(a) There is established in the Treasury of the United States
a revolving fund to be called the Postal Service Fund which
shall be available to the Postal Service without fiscal-year
limitation to carry out the purposes, functions, and powers
authorized by this title (other than any of the purposes,
functions, or powers for which the Competitive Products Fund is
available).
(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
rendered by the Postal Service;
(2) amounts received from obligations issued by the
Postal Service;
(3) amounts appropriated for the use of the Postal
Service;
(4) interest which may be earned on investments of
the Fund;
(5) any other receipts of the Postal Service;
(6) the balance in the Post Office Department Fund
established under former section 2202 of title 39 as of
the commencement of operations of the Postal Service;
(7) amounts (including proceeds from the sale of
forfeited items) from any civil forfeiture conducted by
the Postal Service;
(8) any transfers from the Secretary of the Treasury
from the Department of the Treasury Forfeiture Fund
which shall be available to the Postmaster General only
for Federal law enforcement related purposes; and
(9) any amounts collected under section 3018.
(c) If the Postal Service determines that the moneys of the
Fund are in excess of current needs, it may request the
investment of such amounts as it deems advisable by the
Secretary of the Treasury in obligations of, or obligations
guaranteed by, the Government of the United States, and, with
the approval of the Secretary, in such other obligations or
securities as it deems appropriate.
(d) With the approval of the Secretary of the Treasury, the
Postal Service may deposit moneys of the Fund in any Federal
Reserve bank, any depository for public funds, or in such other
places and in such manner as the Postal Service and the
Secretary may mutually agree.
(e)(1) The Fund shall be available for the payment of (A) all
expenses incurred by the Postal Service in carrying out its
functions as provided by law, subject to the same limitation as
set forth in the parenthetical matter under subsection (a); (B)
all expenses of the Postal Regulatory Commission, subject to
the availability of amounts appropriated under section 504(d);
and (C) all expenses of [the Office of Inspector General,
subject to the availability of amounts appropriated under
section 8G(f) of the Inspector General Act of 1978.] the Office
of Inspector General of the Postal Community The Postmaster
General shall transfer from the Fund to the Secretary of the
Treasury for deposit in the Department of the Treasury
Forfeiture Fund amounts appropriate to reflect the degree of
participation of Department of the Treasury law enforcement
organizations (described in section 9705(o) of title 31) in the
law enforcement effort resulting in the forfeiture pursuant to
laws enforced or administered by the Postal Service. Neither
the Fund nor any of the funds credited to it shall be subject
to apportionment under the provisions of subchapter II of
chapter 15 of title 31.
(2) Funds appropriated to the Postal Service under section
2401 of this title shall be apportioned as provided in this
paragraph. From the total amounts appropriated to the Postal
Service for any fiscal year under the authorizations contained
in section 2401 of this title, the Secretary of the Treasury
shall make available to the Postal Service 25 percent of such
amount at the beginning of each quarter of such fiscal year.
(f) Notwithstanding any other provision of this section, any
amounts appropriated to the Postal Service under subsection (d)
of section 2401 of this title and deposited into the Fund shall
be expended by the Postal Service only for the purposes
provided in such subsection.
(g) Notwithstanding any provision of section 8147 of title 5,
whenever the Secretary of Labor furnishes a statement to the
Postal Service indicating an amount due from the Postal Service
under subsection (b) of that section, the Postal Service shall
make the deposit required pursuant to that statement (and any
additional payment under subsection (c) of that section, to the
extent that it relates to the period covered by such statement)
not later than 30 days after the date on which such statement
is so furnished. Any deposit (and any additional payment) which
is subject to the preceding sentence shall, once made, remain
available without fiscal year limitation.
(h) Liabilities of the former Post Office Department to the
Employees' Compensation Fund (appropriations for which were
authorized by former section 2004, as in effect before the
effective date of this subsection) shall be liabilities of the
Postal Service payable out of the Fund.
* * * * * * *
Sec. 2009. Annual budget
The Postal Service shall cause to be prepared annually a
budget program which shall be submitted to the Office of
Management and Budget, under such rules and regulations as the
President may establish as to the date of submission, the form
and content, the classifications of data, and the manner in
which such budget program shall be prepared and presented. The
budget program shall be a business-type budget, or plan of
operations, with due allowance given to the need for
flexibility, including provision for emergencies and
contingencies, in order that the Postal Service may properly
carry out its activities as authorized by law. The budget
program shall contain estimates of the financial condition and
operations of the Postal Service for the current and ensuing
fiscal years and the actual condition and results of operation
for the last completed fiscal year. Such budget program shall
include a statement of financial condition, a statement of
income and expense, an analysis of surplus or deficit, a
statement of sources and application of funds, and such other
supplementary statements and information as are necessary or
desirable to make known the financial condition and operations
of the Postal Service. Such statements shall include estimates
of operations by major types of activities, together with
estimates of administrative expenses and estimates of
borrowings. The budget program shall also include separate
statements of the amounts which (1) the Postal Service requests
to be appropriated under subsections (b) and (c) of section
2401, (2) [the Office of Inspector General of the United States
Postal Service requests to be appropriated, out of the Postal
Service Fund, under section 8G(f) of the Inspector General Act
of 1978, and] the Office of Inspector General of the Postal
Community requests to be appropriated out of the Postal Service
Fund (3) the Postal Regulatory Commission requests to be
appropriated, out of the Postal Service Fund, under section
504(d) of this title. The President shall include these
amounts, with his recommendations but without revision, in the
budget transmitted to Congress under section 1105 of title 31.
* * * * * * *
Sec. 2011. Provisions relating to competitive products
(a)(1) In this subsection, the term ``costs attributable''
has the meaning given such term by section 3631.
(2) There is established in the Treasury of the United States
a revolving fund, to be called the Postal Service Competitive
Products Fund, which shall be available to the Postal Service
without fiscal year limitation for the payment of--
(A) costs attributable to competitive products; and
(B) all other costs incurred by the Postal Service,
to the extent allocable to competitive products.
(b) There shall be deposited in the Competitive Products
Fund, subject to withdrawal by the Postal Service--
(1) revenues from competitive products;
(2) amounts received from obligations issued by
Postal Service under subsection (e);
(3) interest and dividends earned on investments of
the Competitive Products Fund; and
(4) any other receipts of the Postal Service
(including from the sale of assets), to the extent
allocable to competitive products.
(c) If the Postal Service determines that the moneys of the
Competitive Products Fund are in excess of current needs, the
Postal Service may request the investment of such amounts as
the Postal Service determines advisable by the Secretary of the
Treasury in obligations of, or obligations guaranteed by, the
Government of the United States, and, with the approval of the
Secretary, in such other obligations or securities as the
Postal Service determines appropriate.
(d) With the approval of the Secretary of the Treasury, the
Postal Service may deposit moneys of the Competitive Products
Fund in any Federal Reserve bank, any depository for public
funds, or in such other places and in such manner as the Postal
Service and the Secretary may mutually agree.
(e)(1)(A) Subject to the limitations specified in section
2005(a), the Postal Service is authorized to borrow money and
to issue and sell such obligations as the Postal Service
determines necessary to provide for competitive products and
deposit such amounts in the Competitive Products Fund.
(B) Subject to paragraph (5), any borrowings by the Postal
Service under subparagraph (A) shall be supported and serviced
by--
(i) the revenues and receipts from competitive
products and the assets related to the provision of
competitive products (as determined under subsection
(h)); or
(ii) for purposes of any period before accounting
practices and principles under subsection (h) have been
established and applied, the best information available
from the Postal Service, including the audited
statements required by section 2008(e).
(2) The Postal Service may enter into binding covenants with
the holders of such obligations, and with any trustee under any
agreement entered into in connection with the issuance of such
obligations with respect to--
(A) the establishment of reserve, sinking, and other
funds;
(B) application and use of revenues and receipts of
the Competitive Products Fund;
(C) stipulations concerning the subsequent issuance
of obligations or the execution of leases or lease
purchases relating to properties of the Postal Service;
and
(D) such other matters as the Postal Service
considers necessary or desirable to enhance the
marketability of such obligations.
(3) Obligations issued by the Postal Service under this
subsection--
(A) shall be in such forms and denominations;
(B) shall be sold at such times and in such amounts;
(C) shall mature at such time or times;
(D) shall be sold at such prices;
(E) shall bear such rates of interest;
(F) may be redeemable before maturity in such manner,
at such times, and at such redemption premiums;
(G) may be entitled to such relative priorities of
claim on the assets of the Postal Service with respect
to principal and interest payments; and
(H) shall be subject to such other terms and
conditions, as the Postal Service determines.
(4) Obligations issued by the Postal Service under this
subsection--
(A) shall be negotiable or nonnegotiable and bearer
or registered instruments, as specified therein and in
any indenture or covenant relating thereto;
(B) shall contain a recital that such obligations are
issued under this section, and such recital shall be
conclusive evidence of the regularity of the issuance
and sale of such obligations and of their validity;
(C) shall be lawful investments and may be accepted
as security for all fiduciary, trust, and public funds,
the investment or deposit of which shall be under the
authority or control of any officer or agency of the
Government of the United States, and the Secretary of
the Treasury or any other officer or agency having
authority over or control of any such fiduciary, trust,
or public funds, may at any time sell any of the
obligations of the Postal Service acquired under this
section;
(D) shall not be exempt either as to principal or
interest from any taxation now or hereafter imposed by
any State or local taxing authority; and
(E) except as provided in section 2006(c), shall not
be obligations of, nor shall payment of the principal
thereof or interest thereon be guaranteed by, the
Government of the United States, and the obligations
shall so plainly state.
(5) The Postal Service shall make payments of principal, or
interest, or both on obligations issued under this section out
of revenues and receipts from competitive products and assets
related to the provision of competitive products (as determined
under subsection (h)), or for purposes of any period before
accounting practices and principles under subsection (h) have
been established and applied, the best information available,
including the audited statements required by section 2008(e).
For purposes of this subsection, the total assets of the
Competitive Products Fund shall be the greater of--
(A) the assets related to the provision of
competitive products as calculated under subsection
(h); or
(B) the percentage of total Postal Service revenues
and receipts from competitive products times the total
assets of the Postal Service.
(f) The receipts and disbursements of the Competitive
Products Fund shall be accorded the same budgetary treatment as
is accorded to receipts and disbursements of the Postal Service
Fund under section 2009a.
(g) A judgment (or settlement of a claim) against the Postal
Service or the Government of the United States shall be paid
out of the Competitive Products Fund to the extent that the
judgment or claim arises out of activities of the Postal
Service in the provision of competitive products.
(h)(1)(A) The Secretary of the Treasury, in consultation with
the Postal Service and an independent, certified public
accounting firm and other advisors as the Secretary considers
appropriate, shall develop recommendations regarding--
(i) the accounting practices and principles that
should be followed by the Postal Service with the
objectives of--
(I) identifying and valuing the assets and
liabilities of the Postal Service associated
with providing competitive products, including
the capital and operating costs incurred by the
Postal Service in providing such competitive
products; and
(II) subject to subsection (e)(5), preventing
the subsidization of such products by market-
dominant products; and
(ii) the substantive and procedural rules that should
be followed in determining the assumed Federal income
tax on competitive products income of the Postal
Service for any year (within the meaning of section
3634).
(B) Not earlier than 6 months after the date of enactment of
this section, and not later than 12 months after such date, the
Secretary of the Treasury shall submit the recommendations
under subparagraph (A) to the Postal Regulatory Commission.
(2)(A) Upon receiving the recommendations of the Secretary of
the Treasury under paragraph (1), the Commission shall give
interested parties, including the Postal Service, users of the
mails, and an officer of the Commission who shall be required
to represent the interests of the general public, an
opportunity to present their views on those recommendations
through submission of written data, views, or arguments with or
without opportunity for oral presentation, or in such other
manner as the Commission considers appropriate.
(B)(i) After due consideration of the views and other
information received under subparagraph (A), the Commission
shall by rule--
(I) provide for the establishment and application of
the accounting practices and principles which shall be
followed by the Postal Service;
(II) provide for the establishment and application of
the substantive and procedural rules described under
paragraph (1)(A)(ii); and
(III) provide for the submission by the Postal
Service to the Postal Regulatory Commission of annual
and other periodic reports setting forth such
information as the Commission may require.
(ii) Final rules under this subparagraph shall be issued not
later than 12 months after the date on which recommendations
are submitted under paragraph (1) (or by such later date on
which the Commission and the Postal Service may agree). The
Commission is authorized to promulgate regulations revising
such rules.
(C)(i) Reports described under subparagraph (B)(i)(III) shall
be submitted at such time and in such form, and shall include
such information, as the Commission by rule requires.
(ii) The Commission may, on its own motion or on request of
an interested party, initiate proceedings (to be conducted in
accordance with such rules as the Commission shall prescribe)
to improve the quality, accuracy, or completeness of Postal
Service information under subparagraph (B)(i)(III) whenever it
shall appear that--
(I) the quality of the information furnished in those
reports has become significantly inaccurate or can be
significantly improved; or
(II) such revisions are, in the judgment of the
Commission, otherwise necessitated by the public
interest.
(D) A copy of each report described under subparagraph
(B)(i)(III) shall be submitted by the Postal Service to the
Secretary of the Treasury and [the Inspector General of the
United States Postal Service] the Inspector General of the
Postal Community.
(i)(1) The Postal Service shall submit an annual report to
the Secretary of the Treasury concerning the operation of the
Competitive Products Fund. The report shall address such
matters as risk limitations, reserve balances, allocation or
distribution of moneys, liquidity requirements, and measures to
safeguard against losses.
(2) A copy of the most recent report submitted under
paragraph (1) shall be included in the annual report submitted
by the Postal Regulatory Commission under section 3652(g).
* * * * * * *
CHAPTER 24--APPROPRIATIONS AND ANNUAL REPORT
* * * * * * *
[Sec. 2402. Annual report
[The Postmaster General shall render an annual report to the
Board concerning the operations of the Postal Service under
this title. Upon approval thereof, or after making such changes
as it considers appropriate, the Board shall transmit such
reports to the President and the Congress.]
Sec. 2402. Annual report
The Postmaster General shall render an annual report
concerning the operations of the Postal Service under this
title to the President and Congress.
* * * * * * *
PART IV--MAIL MATTER
Chap. Sec.
Nonmailable Matter............................................3001
* * * * * * *
3701Nonpostal services................................................
* * * * * * *
CHAPTER 36--POSTAL RATES, CLASSES, AND SERVICES
SUBCHAPTER I--PROVISIONS RELATING TO MARKET-DOMINANT PRODUCTS
Sec.
3621. Applicability; definitions.
* * * * * * *
SUBCHAPTER II--PROVISIONS RELATING TO COMPETITIVE PRODUCTS
* * * * * * *
[3632. Action of the Governors.]
3632. Establishment of rates and classes of competitive products.
* * * * * * *
SUBCHAPTER VII--MODERN SERVICE STANDARDS
* * * * * * *
3692. Delivery-point modernization.
SUBCHAPTER I--PROVISIONS RELATING TO MARKET-DOMINANT PRODUCTS
* * * * * * *
Sec. 3622. Modern rate regulation
(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 and ensure predictability and stability
in rates.
(3) To maintain and meet high quality service
standards established under section 3691, with a focus
on achieving predictable and consistent delivery.
(4) To allow the Postal Service pricing flexibility.
(5) To assure adequate revenues, including retained
earnings, to establish and maintain financial
stability.
(6) To reduce the administrative burden and increase
the transparency of the ratemaking [process] and cost
allocation processes.
(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 (and to ensure appropriate
levels of transparency).
[(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.]
(c) Factors.--In establishing or revising such system, the
Postal Regulatory Commission shall take into account the
following factors:
(1) The effect of rate increases upon the general
public and business mail users.
(2) The available alternative means of sending and
receiving written communications, information, and
letters and other mail matter at reasonable costs.
(3) The reliability of delivery timelines and the
extent to which the Postal Service is meeting its
service standard obligations.
(4) The need to ensure that the Postal Service has
adequate revenues and has taken appropriate cost-
cutting measures to maintain financial stability and
meet all legal obligations.
(5) The extent to which the Postal Service has taken
actions to increase its efficiency and reduce its
costs.
(6) The value of the mail service actually provided
by 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.
(7) 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.
(8) The degree of preparation of mail for delivery
into the postal system performed by the mailer and its
effect upon improving efficiency and reducing costs to
the Postal Service.
(9) 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.
(10) The importance of pricing flexibility to
encourage increased mail volume and operational
efficiency.
(11) 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.
(12) 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.
(13) 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) improve the net financial position of the
Postal Service by reducing Postal Service costs
or increasing the overall contribution to the
institutional costs of the Postal Service; and
(B) do not cause--
(i) unfair competitive advantage for
the Postal Service or postal users
eligible for the agreements; or
(ii) unreasonable disruption to the
volume or revenues of other postal
users.
(14) The educational, cultural, scientific, and
informational value to the recipient of mail matter.
(15) 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.
(16) The value to the Postal Service and postal users
of promoting intelligent mail and of secure, sender-
identified mail.
(17) The importance of stability and predictability
of rates to ratepayers.
(18) The policies of this title as well as such other
factors as the Commission determines appropriate.
(d) Requirements.--
(1) In general.--The system for regulating rates and
classes for market-dominant products shall--
(A) include an annual limitation on the
percentage changes in rates to be set by the
Postal Regulatory Commission that will be equal
to the change in the Consumer Price Index for
All Urban Consumers unadjusted for seasonal
variation over the most recent available 12-
month period preceding the date the Postal
Service files notice of its intention to
increase rates;
(B) establish postal rates for each group of
functionally equivalent agreements between the
Postal Service and users of the mail that--
(i) cover attributable cost;
(ii) improve the net financial
position of the Postal Service; and
(iii) do not cause unreasonable
disruption in the marketplace,
consistent with subsection (c)(13)(B);
for purposes of this subparagraph, a group of
functionally equivalent agreements shall
consist of all service agreements that are
functionally equivalent to each other within
the same market-dominant product, but shall not
include agreements within an experimental
product;
[(B)] (C) establish a schedule whereby rates,
when necessary and appropriate, would change at
regular intervals by predictable amounts;
[(C)] (D) not later than 45 days before the
implementation of any adjustment in rates under
this section, including adjustments made under
subsection [(c)(10)] (c)(H)--
(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)] (E) establish procedures whereby the
Postal Service may adjust rates not in excess
of the annual limitations under subparagraph
(A); and
[(E)] (F) notwithstanding any limitation set
under [subparagraphs (A) and (C)] subparagraphs
(A) and (D), 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. 3626. Reduced rates
(a)(1) Except as otherwise provided in this section, rates of
postage for a class of mail or kind of mailer under former
section 4358, 4452(b), 4452(c), 4554(b), or 4554(c) of this
title shall be established in accordance with section 3622.
(2) For the purpose of this subsection, the term ``regular-
rate category'' means any class of mail or kind of mailer,
other than a class or kind referred to in section
(3) Rates of postage for a class of mail or kind of mailer
under former section 4358(a) through (c) of this title shall be
established so that postage on each mailing of such mail
reflects its preferred status as compared to the postage for
the most closely corresponding regular-rate category mailing.
(4)(A) Except as specified in subparagraph (B), rates of
postage for a class of mail or kind of mailer under former
section 4358 (d) or (e) of this title shall be established so
that postage on each mailing of such mail shall be as nearly as
practicable 5 percent lower than the postage for a
corresponding regular-rate category mailing.
(B) With respect to the postage for the advertising pound
portion of any mail matter under former section 4358 (d) or (e)
of this title, the 5-percent discount specified in subparagraph
(A) shall not apply if the advertising portion exceeds 10
percent of the publication involved.
(5) The rates for any advertising under former section
4358(f) of this title shall be equal to 75 percent of the rates
for advertising contained in the most closely corresponding
regular-rate category of mail.
(6) The rates for mail matter under former sections 4452 (b)
and (c) of this title shall be established as follows:
(A) The estimated average revenue per piece to be
received by the Postal Service from each subclass of
mail under former sections 4452 (b) and (c) of this
title shall be equal, as nearly as practicable, to 60
percent of the estimated average revenue per piece to
be received from the most closely corresponding
regular-rate subclass of mail.
(B) For purposes of subparagraph (A), the estimated
average revenue per piece of each regular-rate subclass
shall be calculated on the basis of expected volumes
and mix of mail for such subclass at current rates in
the test year of the proceeding.
(C) Rate differentials within each subclass of mail
matter under former sections 4452 (b) and (c) shall
reflect the policies of this title, including the
factors set forth in section 3622(b) of this title.
(7) The rates for mail matter under former sections 4554 (b)
and (c) of this title shall be established so that postage on
each mailing of such mail shall be as nearly as practicable 5
percent lower than the postage for a corresponding regular-rate
mailing.
(b)(1) For the purposes of this title, the term ``periodical
publications'', as used in former section 4351 of this title,
includes (A) any catalog or other course listing, including
mail announcements of legal texts which are part of post-bar
admission education issued by any institution of higher
education or by a nonprofit organization engaged in continuing
legal education; and (B) any looseleaf page or report
(including any index, instruction for filing, table, or
sectional identifier which is an integral part of such report)
which is designed as part of a looseleaf reporting service
concerning developments in the law or public policy.
(2) Any material described in paragraph (1) of this
subsection shall qualify to be entered and mailed as second
class mail in accordance with the applicable provisions of
former section 4352 through former section 4357 of this title.
(3) For purposes of this subsection, the term ``institution
of higher education'' has the meaning given it by section 101
of the Higher Education Act of 1965, and includes a nonprofit
organization that coordinates a network of college-level
courses that is sponsored primarily by nonprofit educational
institutions for an older adult constituency.
(c) In the administration of this section, one conservation
publication published by an agency of a State which is
responsible for management and conservation of the fish or
wildlife resources of such State shall be considered a
publication of a qualified nonprofit organization which
qualifies for rates of postage under former section 4358(d) of
this title.
(d)(1) For purposes of this title, the term ``agricultural'',
as used in former sections 4358(j)(2), 4452(d), and
4554(b)(1)(B) of this title, includes the art or science of
cultivating land, harvesting crops or marine resources, or
raising of livestock.
(2) In the administration of this section, and for purposes
of former sections 4358(j)(2), 4452(d), and 4554(b)(1)(B) of
this title, agricultural organizations or associations shall
include any organization or association which collects and
disseminates information or materials relating to agricultural
pursuits.
[(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) 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)(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.
(2) Paragraph (1) of this subsection shall not apply to an
issue of a publication if the total paid circulation of such
issue is less than 10,000 copies.
(3) For purposes of this section and former section 4358(a)
through (c) of this title, those copies of an issue of a
publication entered within the county in which it is published,
but distributed outside such county on postal carrier routes
originating in the county of publication, shall be treated as
if they were distributed within the county of publication.
(4)(A) In the case of an issue of a publication, any number
of copies of which are mailed at the rates of postage for a
class of mail or kind of mailer under former section 4358(a)
through (c) of this title, any copies of such issue which are
distributed outside the county of publication (excluding any
copies subject to paragraph (3)) shall be subject to rates of
postage provided for under this paragraph.
(B) The rates of postage applicable to mail under this
paragraph shall be established in accordance with section 3622.
(C) This paragraph shall not apply with respect to an issue
of a publication unless the total paid circulation of such
issue outside the county of publication (not counting
recipients of copies subject to paragraph (3)) is less than
5,000.
(h) 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)(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--
(A) any credit, debit, or charge card, or similar
financial instrument or account, provided by or through
an arrangement with any person or organization not
authorized to mail at the rates for mail under former
section 4452(b) or 4452(c) of this title;
(B) any insurance policy, unless the organization
which promotes the purchase of such policy is
authorized to mail at the rates for mail under former
section 4452(b) or 4452(c) of this title, the policy is
designed for and primarily promoted to the members,
donors, supporters, or beneficiaries of the
organization, and the coverage provided by the policy
is not generally otherwise commercially available;
(C) any travel arrangement, unless the organization
which promotes the arrangement is authorized to mail at
the rates for mail under former section 4452(b) or
4452(c) of this title, the travel contributes
substantially (aside from the cultivation of members,
donors, or supporters, or the acquisition of income or
funds) to one or more of the purposes which constitutes
the basis for the organization's authorization to mail
at such rates, and the arrangement is designed for and
primarily promoted to the members, donors, supporters,
or beneficiaries of the organization; or
(D) any product or service (other than any to which
subparagraph (A), (B), or (C) relates), if--
(i) the sale of such product or the providing
of such service is not substantially related
(aside from the need, on the part of the
organization promoting such product or service,
for income or funds or the use it makes of the
profits derived) to the exercise or performance
by the organization of one or more of the
purposes constituting the basis for the
organization's authorization to mail at such
rates; or
(ii) the mail matter involved is part of a
cooperative mailing (as defined under
regulations of the Postal Service) with any
person or organization not authorized to mail
at the rates for mail under former section
4452(b) or 4452(c) of this title;
except that--
(I) any determination under clause (i) that a
product or service is not substantially related
to a particular purpose shall be made under
regulations which shall be prescribed by the
Postal Service and which shall be consistent
with standards established by the Internal
Revenue Service and the courts with respect to
subsections (a) and (c) of section 513 of the
Internal Revenue Code of 1986; and
(II) clause (i) shall not apply if the
product involved is a periodical publication
described in subsection (m)(2) (including a
subscription to receive any such publication);
and
(III) clause (i) shall not apply to space
advertising in mail matter that otherwise
qualifies for rates under former section
4452(b) or 4452(c) of this title, and satisfies
the content requirements established by the
Postal Service for periodical publications:
Provided, That such changes in law shall take
effect immediately and shall stay in effect
hereafter unless the Congress enacts
legislation on this matter prior to October 1,
1995.
(2) Matter shall not be excluded from being mail at the rates
for mail under former section 4452(b) or 4452(c) of this title,
by an organization authorized to mail at those rates solely
because--
(A) such matter contains, but is not primarily
devoted to, acknowledgements of organizations or
individuals who have made donations to the authorized
organization; or
(B) such matter contains, but is not primarily
devoted to, references to and a response card or other
instructions for making inquiries concerning services
or benefits available as a result of membership in the
authorized organization: Provided, That advertising,
promotional, or application materials specifically
concerning such services or benefits are not included.
(3)(A) Upon request, an organization authorized to mail at
the rates for mail under former section 4452(b) or 4452(c) of
this title shall furnish evidence to the Postal Service
concerning the eligibility of any of its mail matter or
mailings to be sent at those rates.
(B) The Postal Service shall establish procedures to carry
out this paragraph, including procedures for mailer
certification of compliance with the conditions specified in
paragraph (1)(D) or subsection (m), as applicable, and
verification of such compliance.
(k)(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.
(2) The Postal Service may assess a postage deficiency in the
amount of the unpaid postage against any person or organization
which violates paragraph (1) of this subsection. This
assessment shall be deemed the final decision of the Postal
Service, unless the party against whom the deficiency is
assessed appeals it in writing within thirty days to the
postmaster of the office where the mailing was entered. Such an
appeal shall be considered by an official designated by the
Postal Service, other than the postmaster of the office where
the mailing was entered, who shall issue a decision as soon as
practicable. This decision shall be deemed final unless the
party against whom the deficiency was assessed appeals it in
writing within thirty days to a further reviewing official
designated by the Postal Service, who shall issue the final
decision on the matter.
(3) The Postal Service shall maintain procedures for the
prompt collection of postage deficiencies arising from the
violation of paragraph (1) of this subsection, and may in its
discretion, follow the issuance of a final decision regarding a
deficiency under paragraph (2) of this subsection deduct the
amount of that deficiency incurred during the previous 12
months from any postage accounts or other monies of the
violator in its possession.
(l) 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)(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--
(A) were received by the organization as gifts or
contributions; or
(B) are low cost articles (as defined by section
513(h)(2) of the Internal Revenue Code of 1986).
(2) Paragraph (1) shall not apply with respect to a
periodical publication of a qualified nonprofit organization.
(n) In the administration of this section, matter that
satisfies the circulation standards for requester publications
shall not be excluded from being mailed at the rates for mail
under former section 4358 solely because such matter is
designed primarily for free circulation or for circulation at
nominal rates, or fails to meet the requirements of former
section 4354(a)(5).
* * * * * * *
SUBCHAPTER II--PROVISIONS RELATING TO COMPETITIVE PRODUCTS
* * * * * * *
Sec. 3632. [Action of the Governors] Establishment of rates and
classes of competitive products
[(a) Authority To Establish Rates and Classes.--The
Governors, with the concurrence of a majority of all of the
Governors then holding office, shall establish rates and
classes for products in the competitive category of mail in
accordance with the requirements of this subchapter and
regulations promulgated under section 3633.]
[(b)] (a) Procedures.--
(1) In general.--Rates and classes shall be
established in writing, complete with a statement of
explanation and justification, and the date as of which
each such rate or class takes effect.
(2) Rates or classes of general applicability.--In
the case of rates or classes of general applicability
in the Nation as a whole or in any substantial region
of the Nation, [the Governors] the Postal Service shall
cause each rate and class decision under this section
[and the record of the Governors' proceedings in
connection with such decision] to be published in the
Federal Register at least 30 days before the effective
date of any new rates or classes.
(3) Rates or classes not of general applicability.--
In the case of rates or classes not of general
applicability in the Nation as a whole or in any
substantial region of the Nation, [the Governors] the
Postal Service shall cause each rate and class decision
under this section [and the record of the proceedings
in connection with such decision] to be filed with the
Postal Regulatory Commission by such date before the
effective date of any new rates or classes as [the
Governors consider] the Postal Service considers
appropriate, but in no case less than 15 days.
(4) Rates for streamlined review.--In the case of
rates not of general applicability for competitive
products that the Postmaster General considers eligible
for streamlined review under section 3633(c), the
Postmaster General shall cause the agreement to be
filed with the Postal Regulatory Commission by a date
that is on or before the effective date of any new rate
established under the agreement, as the Postmaster
General considers appropriate.
[(4)] (5) Criteria.--As part of the regulations
required under section 3633, the Postal Regulatory
Commission shall establish criteria for determining
when a rate or class established under this subchapter
is or is not of general applicability in the Nation as
a whole or in any substantial region of the Nation.
[(c)] (b) Transition Rule.--Until regulations under section
3633 first take effect, rates and classes for competitive
products shall remain subject to modification in accordance
with the provisions of this chapter and section 407, as such
provisions were as last in effect before the date of enactment
of this section.
Sec. 3633. Provisions applicable to rates for competitive products
(a) In General.--The Postal Regulatory Commission shall,
within 18 months after the date of enactment of this section,
promulgate (and may from time to time thereafter revise)
regulations to--
(1) prohibit the subsidization of competitive
products by market-dominant products;
(2) ensure that each competitive product covers its
costs attributable; and
(3) ensure that all competitive products collectively
cover what the Commission determines to be an
appropriate share of the institutional costs of the
Postal Service.
(b) Review of Minimum Contribution.--Five years after the
date of enactment of this section, and every 5 years
thereafter, the Postal Regulatory Commission shall conduct a
review to determine whether the institutional costs
contribution requirement under subsection (a)(3) should be
retained in its current form, modified, or eliminated. In
making its determination, the Commission shall consider all
relevant circumstances, including the prevailing competitive
conditions in the market, and the degree to which any costs are
uniquely or disproportionately associated with any competitive
products.
(c) Streamlined Review.--Not later than 90 days after the
date of enactment of this subsection, after notice and
opportunity for comment, the Postal Regulatory Commission shall
promulgate (and may from time to time thereafter revise)
regulations for streamlined after-the-fact review of newly
proposed agreements between the Postal Service and users of the
mail that provide rates not of general applicability for
competitive products. Streamlined review shall apply only if
agreements are functionally equivalent to existing agreements
that have collectively covered attributable costs and
collectively improved the net financial position of the Postal
Service. The regulations issued under this subsection shall
provide that streamlined review shall be concluded not later
than 5 business days after the date on which the agreement is
filed with the Commission and shall be limited to approval or
disapproval of the agreement as a whole based on the
Commission's determination of its functional equivalence.
Agreements not approved may be resubmitted without prejudice
under section 3632.
* * * * * * *
SUBCHAPTER IV--REPORTING REQUIREMENTS AND RELATED PROVISIONS
* * * * * * *
Sec. 3652. Annual reports to the Commission
(a) Costs, Revenues, Rates, and Service.--Except as provided
in subsection (c), the Postal Service shall, no later than 90
days after the end of each year, prepare and submit to the
Postal Regulatory Commission a report (together with such
nonpublic annex to the report as the Commission may require
under subsection (e))--
(1) which shall analyze costs, revenues, rates, and
quality of service, using such methodologies as the
Commission shall by regulation prescribe, and in
sufficient detail to demonstrate that all products
during such year complied with all applicable
requirements of this title; [and]
(2) which shall, for each market-dominant product
provided in such year, provide--
(A) product information, including mail
volumes; and
(B) measures of the quality of service
afforded by the Postal Service in connection
with such product, including--
(i) the level of service (described
in terms of speed of delivery and
reliability) provided; and
(ii) the degree of customer
satisfaction with the service
provided[.]; and
(3) which shall provide the overall change in Postal
Service productivity and the resulting effect of such
change on overall Postal Service costs during such
year, using such methodologies as the Commission shall
by regulation prescribe, if necessary.
The Inspector General shall regularly audit the data collection
systems and procedures utilized in collecting information and
preparing such report (including any annex thereto and the
information required under subsection (b)). The results of any
such audit shall be submitted to the Postal Service and the
Postal Regulatory Commission.
(b) Information Relating to Workshare Discounts.--The Postal
Service shall include, in each report under subsection (a), the
following information with respect to each market-dominant
product for which a workshare discount was in effect during the
period covered by such report:
(1) The per-item cost avoided by the Postal Service
by virtue of such discount.
(2) The percentage of such per-item cost avoided that
the per-item workshare discount represents.
(3) The per-item contribution made to institutional
costs.
(c) Market Tests.--In carrying out subsections (a) and (b)
with respect to experimental products offered through market
tests under section 3641 in a year, the Postal Service shall--
(1) report data on the costs, revenues, and quality
of service by market test, which may be reported in
summary form; and
(2) report such data as the Postal Regulatory
Commission requires.
(d) Supporting Matter.--The Postal Regulatory Commission
shall have access, in accordance with such regulations as the
Commission shall prescribe, to the working papers and any other
supporting matter of the Postal Service and the Inspector
General in connection with any information submitted under this
section.
(e) Content and Form of Reports.--
(1) In general.--The Postal Regulatory Commission
shall, by regulation, prescribe the content and form of
the public reports (and any nonpublic annex and
supporting matter relating to the report) to be
provided by the Postal Service under this section. In
carrying out this subsection, the Commission shall give
due consideration to--
(A) providing the public with timely,
adequate information to assess the lawfulness
of rates charged;
(B) avoiding unnecessary or unwarranted
administrative effort and expense on the part
of the Postal Service; and
(C) protecting the confidentiality of
commercially sensitive information.
(2) Revised requirements.--The Commission may, on its
own motion or on request of an interested party,
initiate proceedings (to be conducted in accordance
with regulations that the Commission shall prescribe)
to improve the quality, accuracy, or completeness of
Postal Service data required by the Commission under
this subsection whenever it shall appear that--
(A) the attribution of costs or revenues to
products has become significantly inaccurate or
can be significantly improved;
(B) the quality of service data has become
significantly inaccurate or can be
significantly improved; or
(C) such revisions are, in the judgment of
the Commission, otherwise necessitated by the
public interest.
(f) Confidential Information.--
(1) In general.--If the Postal Service determines
that any document or portion of a document, or other
matter, which it provides to the Postal Regulatory
Commission in a nonpublic annex under this section or
under subsection (d) contains information which is
described in section 410(c) of this title, or exempt
from public disclosure under section 552(b) of title 5,
the Postal Service shall, at the time of providing such
matter to the Commission, notify the Commission of its
determination, in writing, and describe with
particularity the documents (or portions of documents)
or other matter for which confidentiality is sought and
the reasons therefor.
(2) Treatment.--Any information or other matter
described in paragraph (1) to which the Commission
gains access under this section shall be subject to
paragraphs (2) and (3) of section 504(g) in the same
way as if the Commission had received notification with
respect to such matter under section 504(g)(1).
(g) Other Reports.--The Postal Service shall submit to the
Postal Regulatory Commission, together with any other
submission that the Postal Service is required to make under
this section in a year, copies of its then most recent--
(1) comprehensive statement under section 2401(e);
(2) performance plan under section 2803; and
(3) program performance reports under section 2804.
Sec. 3653. Annual determination of compliance
(a) Opportunity for Public Comment.--After receiving the
reports required under section 3652 for any year, the Postal
Regulatory Commission shall promptly provide an opportunity for
comment on such reports by users of the mails, affected
parties, and an officer of the Commission who shall be required
to represent the interests of the general public.
(b) Determination of Compliance or Noncompliance.--Not later
than 90 days after receiving the submissions required under
section 3652 with respect to a year, the Postal Regulatory
Commission shall make a written determination as to--
(1) whether any rates or fees in effect during such
year (for products individually or collectively) were
not in compliance with applicable provisions of this
chapter (or regulations promulgated thereunder); or
(2) whether any service standards in effect during
such year were not met.
If, with respect to a year, no instance of noncompliance is
found under this subsection to have occurred in such year, the
written determination shall be to that effect.
(c) Written Determination.--Each annual written determination
of the Commission under this section shall include the
following:
(1) Requirements.--For each group of functionally
equivalent agreements between the Postal Service and
users of the mail, whether such group fulfilled
requirements to--
(A) cover costs attributable; and
(B) improve the net financial position of the
Postal Service.
(2) Noncompliance.--Any group of functionally
equivalent agreements not meeting subparagraphs (A) and
(B) of paragraph (1) shall be determined to be in
noncompliance under this subsection.
(3) Definition.--For purposes of this subsection, a
group of functionally equivalent agreements shall
consist of 1 or more service agreements that are
functionally equivalent to each other within the same
market-dominant or competitive product, but shall not
include agreements within an experimental product.
[(c)] (d) Noncompliance With Regard to Rates or Services.--
If, for a year, a timely written determination of noncompliance
is made under subsection (b), the Postal Regulatory Commission
shall take appropriate action in accordance with [subsections
(c) and (e)] subsections (c) and (d) of section 3662 (as if a
complaint averring such noncompliance had been duly filed and
found under such section to be justified).
[(d)] (e) Review of Performance Goals.--The Postal Regulatory
Commission shall also evaluate annually whether the Postal
Service has met the goals established under sections 2803 and
2804, and may provide recommendations to the Postal Service
related to the protection or promotion of public policy
objectives set out in this title.
[(e)] (f) Rebuttable Presumption.--A timely written
determination described in the last sentence of subsection (b)
shall, for purposes of any proceeding under section 3662,
create a rebuttable presumption of compliance by the Postal
Service (with regard to the matters described under paragraphs
(1) and (2) of subsection (b)) during the year to which such
determination relates.
* * * * * * *
SUBCHAPTER V--POSTAL SERVICES, COMPLAINTS, AND JUDICIAL REVIEW
Sec. 3661. Postal services
(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.
(d)(1) The Commission shall issue its opinion within 90 days,
or a longer period for good cause shown but in no event longer
than 120 days, after the receipt of any proposal (as referred
to in subsection (b)) concerning an identical or substantially
identical proposal on which the Commission has issued an
opinion within the preceding 5 years.
(2) If necessary in order to comply with the 90-day
requirement under paragraph (1), the Commission may apply
expedited procedures which the Commission shall by regulation
prescribe.
* * * * * * *
SUBCHAPTER VII--MODERN SERVICE STANDARDS
* * * * * * *
Sec. 3692. Delivery-point modernization
(a) Definitions.--For purposes of this section--
(1) the term ``delivery point'' means a mailbox or
other receptacle to which mail is delivered;
(2) the term ``primary mode of mail delivery'' means
the typical method by which the Postal Service delivers
letter mail to the delivery point of a postal patron;
(3) the term ``door delivery'' means a primary mode
of mail delivery whereby mail is placed into a slot or
receptacle at or near the postal patron's door or is
hand delivered to a postal patron, but does not include
centralized delivery, curbside delivery, or sidewalk
delivery;
(4) the term ``centralized delivery'' means a primary
mode of mail delivery whereby mail receptacles of a
number of delivery points are grouped or clustered at a
single location;
(5) the term ``curbside delivery'' means a primary
mode of mail delivery whereby a mail receptacle is
situated at the edge of a sidewalk abutting a road or
curb, at a road, or at a curb, and can be served by a
letter carrier from a motorized vehicle; and
(6) the term ``sidewalk delivery'' means a primary
mode of mail delivery whereby a mail receptacle is
situated at the edge of a sidewalk and can be served by
a letter carrier from the sidewalk.
(b) Policy.--It shall be the policy of the Postal Service--
(1) to provide access to secure, convenient mail and
package delivery receptacles to the greatest number of
postal patrons feasible; and
(2) to use the most cost-effective primary mode of
mail delivery feasible for postal patrons.
(c) Phaseout of Door Delivery for New Addresses.--For any new
delivery point established after December 31, 2016, the Postal
Service shall provide a primary mode of mail delivery other
than door delivery, with a preference for secure, centralized
delivery.
(d) Business Address Conversion.--
(1) Identification.--Not later than 1 year after the
date of the Postal Service Reform Act of 2016, each
Postal Service district office shall identify the
business delivery points within its service area that
are appropriate candidates for conversion from door
delivery to centralized delivery, curbside delivery, or
sidewalk delivery.
(2) Conversion requirement.--Beginning not later than
October 1, 2017, the Postal Service shall implement a
program to convert delivery points identified under
paragraph (1) to centralized delivery, curbside
delivery, or sidewalk delivery at a rate sufficient to
ensure that--
(A) not less than 20 percent of such delivery
points are converted by September 30, 2018;
(B) not less than 40 percent of such delivery
points are converted by September 30, 2019;
(C) not less than 60 percent of such delivery
points are converted by September 30, 2020;
(D) not less than 80 percent of such delivery
points are converted by September 30, 2021; and
(E) all such delivery points are converted by
September 30, 2022.
(3) Notification.--In carrying out conversions under
paragraph (2), the Postal Service shall provide written
notice at least 60 days in advance of the
implementation date of a change in primary mode of mail
delivery to postal customers served by an applicable
delivery point.
(e) Residential Address Conversion.--
(1) Identification.--Not later than 1 year after the
date of the enactment of the Postal Service Reform Act
of 2016, each Postal Service district office shall
identify the residential delivery points within its
service area that are appropriate candidates for
conversion from door delivery to centralized delivery,
curbside delivery, or sidewalk delivery.
(2) Voluntary conversion.--Not later than October 1,
2017, the Postal Service shall commence a program to
convert delivery points identified under paragraph (1)
to centralized delivery, curbside delivery, or sidewalk
delivery. Such program shall operate as follows:
(A) Not later than 3 months after the
identification of the delivery points under
paragraph (1), the Postal Service shall divide
such delivery points into geographically based
address units (such as street blocks or other
similar reasonably segregable units) not to
exceed 50 delivery points per unit.
(B) Not later than 6 months after such
identification, the Postal Service shall
provide written notification to postal patrons
served by each identified delivery point
containing the following:
(i) Notice that the delivery point
has been proposed for conversion to a
more efficient primary mode of mail
delivery to more economically provide
universal postal service and improve
service.
(ii) A description of the new primary
mode of delivery proposed by the Postal
Service and a visual example of such
mode.
(iii) A conversion consent form and
notice that conversion for residential
addresses is on a voluntary basis.
(iv) A description of benefits of
conversion to the postal patron,
including access to secure mail and
package delivery, and benefits of
conversion to the Postal Service,
including a smaller environmental
impact for delivery.
(v) A description of how the
conversion process would work, and the
monetary costs (if any) to the postal
patron.
(vi) Any other information the Postal
Service considers necessary.
(C) No delivery point may be converted under
this subsection unless prior written consent is
provided to the Postal Service by a postal
patron served by such delivery point who is at
least 18 years old. Prior to the conversion of
a delivery point under this section, any
written consent so provided may be withdrawn by
such patron or by any other postal patron
served by such delivery point who is at least
18 years old upon written notification to the
Postal Service. The Postal Service shall place
on the Postal Service's public Web site an
option to request that a consent form or
consent-withdrawal form be delivered to any
delivery point identified for conversion under
this subsection.
(D) Upon the receipt of written consent
applicable to at least 40 percent of the
delivery points within an address unit
described under subparagraph (A), the Postal
Service shall--
(i) not later than 30 days after the
date that the requisite percentage is
reached, provide written notice to each
delivery point within such unit stating
that the conversion threshold has been
reached and that--
(I) with respect to any
delivery point for which a
consent for conversion was
received, that the primary mode
of mail delivery for such
address will be converted; and
(II) with respect to any
delivery point for which a
consent for conversion was not
received, that--
(aa) a postal patron
served by such delivery
point may elect, by
written consent, at any
time to convert the
primary mode of mail
delivery to the same
form of delivery as the
converted delivery
points in such unit;
and
(bb) if such a patron
provides such consent,
the primary mode of
mail delivery shall be
converted not later
than 30 days after the
date of such consent
or, in any case where
the conversion of
delivery points has not
yet occurred, upon
implementation of that
conversion;
(ii) not later than 90 days after the
date that the requisite percentage is
reached, but not less than 30 days
following the written notice under
clause (i), convert the delivery points
for which consent was received to the
applicable new primary mode of mail
delivery; and
(iii) following the conversion of an
address unit, ensure that the primary
mode of mail delivery for any new
residents to the address unit is the
converted primary mode of mail,
regardless of the primary mode of mail
delivery for the previous occupant.
(f) Considerations.--In making a determination to convert the
primary mode of mail delivery under this section, the Postal
Service shall consider--
(1) the impact of weather conditions, physical
barriers, or any other factor that may impact the
feasibility of providing a primary mode of mail
delivery other than door delivery (such as a factor
that may significantly reduce the potential cost
savings associated with providing centralized delivery
or curbside delivery);
(2) whether the address is in a registered historic
district (as that term is defined in section
47(c)(3)(B) of the Internal Revenue Code of 1986), is
listed on the National Register of Historic Places, is
designated as a National Historic Landmark, or is of
historic value; and
(3) population density and the concentration of
poverty.
(g) Waiver for Physical Hardship.--
(1) In general.--The Postal Service shall establish
and maintain a waiver program under which, upon
application, door delivery may be continued, or
provided, for a delivery point identified under
subsection (d)(1) or (e)(1) at no cost to the applicant
in any case in which--
(A) centralized delivery, curbside delivery,
or sidewalk delivery would, but for this
paragraph, otherwise be the primary mode of
mail delivery; and
(B) door delivery is necessary in order to
avoid causing significant physical hardship or
physical safety risks to a postal patron.
(2) Treatment of waiver.--An address receiving door
delivery pursuant to a waiver under this subsection--
(A) shall be counted, for purposes of the
reporting requirement under subsection (j), as
an address that receives the primary mode of
mail delivery which the address would be
subject to if not for the waiver; and
(B) shall, not later than 60 days after
ceasing to meet the requirements of paragraph
(1), be converted to the primary mode of mail
delivery which is otherwise applicable.
(h) Procedures.--In carrying out conversions under this
section, the Postal Service shall establish procedures to--
(1) solicit, consider, and respond to input from the
general public, postal patrons, State and local
governments, local associations, and property owners;
(2) calculate and make publicly accessible the cost
or savings of the conversion to the Postal Service as
well as the average conversion cost or savings to each
postal patron and any cost or savings to the State and
local government; and
(3) place centralized delivery points in locations
that maximize delivery efficiency, ease of use for
postal patrons, and respect for private property
rights.
(i) Voucher Program.--The Postal Service shall provide for a
voucher program under which, upon application, the Postal
Service may defray all or any portion of the costs associated
with conversion from door delivery under this section which
would otherwise be borne by postal patrons.
(j) Annual Report.--Not later than 60 days after the end of
each of fiscal years 2017 through 2023, the Postal Service
shall submit to Congress and the Inspector General a report on
the implementation of this section during the most recently
completed fiscal year. Each such report shall include--
(1) the number of residential and business addresses
that--
(A) receive door delivery as of the end of
the fiscal year preceding the most recently
completed fiscal year;
(B) receive door delivery as of the end of
the most recently completed fiscal year; and
(C) during the most recently completed fiscal
year, were converted from door delivery to--
(i) centralized delivery;
(ii) curbside delivery; and
(iii) any other primary mode of mail
delivery;
(2) the estimated cost savings from the conversions
described in paragraph (1)(C);
(3) a description of the progress made by the Postal
Service toward meeting the requirements of the phaseout
under subsection (c); and
(4) any other information which the Postal Service
considers appropriate.
(k) Inspector General Audit.--The Inspector General shall
issue an annual audit report on the implementation of this
section not later than 90 days after the date on which the
Postal Service releases its annual report under subsection (j).
Such report shall include--
(1) an audit of the data contained in the Postal
Service's report under subsection (j); and
(2) an evaluation of the Postal Service's
implementation of the voucher program under subsection
(i).
(l) Review.--Subchapters IV and V shall not apply with
respect to any action taken by the Postal Service under this
section.
CHAPTER 37--NONPOSTAL SERVICES
Sec.
3701. Purpose.
3702. Definitions.
3703. Postal service program for State governments.
3704. Postal service program for other government agencies.
3705. Transparency and accountability for nonpostal services.
Sec. 3701. Purpose
The purpose of this chapter is to enable the Postal Service
to increase its net revenues through specific nonpostal
products and services that are expressly authorized by this
chapter. Postal Service revenues and expenses under this
chapter shall be funded through the Postal Service Fund.
Sec. 3702. Definitions
In this chapter--
(1) the term ``nonpostal services'' is limited to
services offered by the Postal Service that are
expressly authorized by this chapter and are not postal
products or services;
(2) the term ``attributable costs'' has the meaning
given such term in section 3631; and
(3) the term ``year'' means a fiscal year.
Sec. 3703. Postal service program for State governments
(a) In General.--Notwithstanding any other provision of this
title, the Postal Service may establish a program to enter into
agreements with an agency of any State government, local
government, or tribal government to provide property and
services on behalf of such agencies for non-commercial products
and services at Postal Service facilities within the United
States, but only if such property and services--
(1) provide enhanced value to the public, such as by
lowering the cost or raising the quality of such
services or by making such services more accessible;
(2) do not interfere with or detract from the value
of postal services, including--
(A) the cost and efficiency of postal
services; and
(B) unreasonably restricting access to postal
retail service, such as customer waiting time
and access to parking; and
(3) provide a reasonable contribution to the
institutional costs of the Postal Service, defined as
reimbursement that covers at least 100 percent of
attributable costs of all property and services
provided under each relevant agreement in each year.
(b) Public Notice.--At least 90 days before offering a
service under the program, the Postal Service shall make
available to the public on its Web site--
(1) the agreement with the agency regarding such
service; and
(2) a business plan that describes the specific
service to be provided, the enhanced value to the
public, terms of reimbursement, the estimated annual
reimbursement to the Postal Service, and the estimated
percentage of attributable Postal Service costs that
will be covered by reimbursement (with documentation to
support the estimates).
(c) Public Comment.--Before offering a service under the
program, the Postal Service shall provide for a public comment
period of at least 30 days that allows the public to post
comments relating to the provision of such services on the
Postal Service Web site. The Postal Service shall make
reasonable efforts to provide written responses to the comments
on such Web site at least 30 days before offering such
services.
(d) Approval Required.--The Postal Service may not establish
the program under subsection (a) unless the Governors of the
Postal Service approve such program by a recorded vote that is
publicly disclosed on the Postal Service Web site with a
majority of the total Governors voting for approval.
(e) Application of Reporting Requirements.--For purposes of
the reporting requirements under section 3705, the Postal
Service shall submit a separate report for each agreement with
an agency entered into under subsection (a) analyzing the
costs, revenues, rates, and quality of service for the
provision of all services under such agreement, including
information demonstrating that the agreement satisfies the
requirements of paragraphs (1) through (3) of subsection (a).
(f) Regulations Required.--The Postal Regulatory Commission
shall issue such regulations as are necessary to carry out this
section.
(g) Definitions.--For the purpose of this section--
(1) the term ``local government'' means a county,
municipality, city, town, township, local public
authority, school district, special district,
intrastate district, council of governments, or
regional or interstate government entity;
(2) the term ``State government'' includes the
government of 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;
(3) 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)); and
(4) the term ``United States'', when used in a
geographical sense, means the States, 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.
Sec. 3704. Postal service program for other government agencies
(a) In General.--The Postal Service may establish a program
to provide property and services to other Government agencies
within the meaning of section 411, but only if such program
provides a reasonable contribution to the institutional costs
of the Postal Service, defined as reimbursement by each agency
that covers at least 100 percent of the attributable costs of
all property and service provided by the Postal Service in each
year to such agency.
(b) Application of Reporting Requirements.--For purposes of
the reporting requirements under section 3705, the Postal
Service shall submit a separate report for each agreement with
an agency entered into under subsection (a) analyzing the
costs, revenues, rates, and quality of service for the
provision of all services under such agreement, including
information demonstrating that the agreement satisfies the
requirements of subsection (a).
Sec. 3705. Transparency and accountability for nonpostal services
(a) Annual Report to the Commission.--
(1) In general.--Not later than 90 days after the
last day of each year, the Postal Service shall submit
to the Postal Regulatory Commission a report that
analyzes costs, revenues, rates, and quality of service
for each agreement for the provision of property and
services under this chapter, using such methodologies
as the Commission may prescribe, and in sufficient
detail to demonstrate compliance with the requirements
of this chapter.
(2) Supporting matter.--A report submitted under
paragraph (1) shall include any nonpublic annex, the
working papers, and any other supporting matter of the
Postal Service and the Inspector General related to the
information submitted in such report.
(b) Content and Form of Report.--
(1) In general.--The Postal Regulatory Commission
shall, by regulation, prescribe the content and form of
the report required under subsection (a). In
prescribing such regulations, the Commission shall give
due consideration to--
(A) providing the public with timely,
adequate information to assess compliance;
(B) avoiding unnecessary or unwarranted
administrative effort and expense on the part
of the Postal Service; and
(C) protecting the confidentiality of
information that is commercially sensitive or
is exempt from public disclosure under section
552(b) of title 5.
(2) Revised requirements.--The Commission may, on its
own motion or on request of any interested party,
initiate proceedings to improve the quality, accuracy,
or completeness of Postal Service data required by the
Commission if--
(A) the attribution of costs or revenues to
property or services under this chapter has
become significantly inaccurate or can be
significantly improved;
(B) the quality of service data provided to
the Commission for a report under this chapter
has become significantly inaccurate or can be
significantly improved; or
(C) such revisions are, in the judgment of
the Commission, otherwise necessitated by the
public interest.
(c) Audits.--The Inspector General shall regularly audit the
data collection systems and procedures used in collecting
information and preparing the report required under subsection
(a). The results of any such audit shall be submitted to the
Postal Service and the Postal Regulatory Commission.
(d) Confidential Information.--
(1) In general.--If the Postal Service determines
that any document or portion of a document, or other
matter, which it provides to the Postal Regulatory
Commission in a nonpublic annex under this section
contains information described in section 410(c), or
exempt from public disclosure under section 552(b) of
title 5, the Postal Service shall, at the time of
providing such matter to the Commission, notify the
Commission of its determination, in writing, and
describe with particularity the documents (or portions
of documents) or other matter for which confidentiality
is sought and the reasons therefor.
(2) Treatment.--Any information or other matter
described in paragraph (1) to which the Commission
gains access under this section shall be subject to
paragraphs (2) and (3) of section 504(g) in the same
way as if the Commission had received notification with
respect to such matter under section 504(g)(1).
(e) Annual Compliance Determination.--
(1) Opportunity for public comment.--Upon receiving a
report required under subsection (a), the Postal
Regulatory Commission shall promptly--
(A) provide an opportunity for comment on
such report by any interested party; and
(B) appoint an officer of the Commission to
represent the interests of the general public.
(2) Determination of compliance or noncompliance.--
Not later than 90 days after receiving a report
required under subsection (a), the Postal Regulatory
Commission shall make a written determination as to
whether the nonpostal activities carried out during the
applicable year were or were not in compliance with the
provisions of this chapter. For purposes of this
paragraph, any case in which the requirements for
coverage of attributable costs have not been met shall
be considered to be a case of noncompliance. If, with
respect to a year, no instance of noncompliance is
found to have occurred, the determination shall be to
that effect. Such determination of noncompliance shall
be included with the annual compliance determination
required under section 3653.
(3) Noncompliance.--If a timely written determination
of noncompliance is made under paragraph (2), the
Postal Regulatory Commission shall take the following
appropriate action. If the requirements for coverage of
attributable costs specified by this chapter are not
met, the Commission shall, within 60 days after the
determination, prescribe remedial action to restore
compliance as soon as practicable, including the full
restoration of revenue shortfalls during the following
year. The Commission may order the Postal Service to
discontinue a nonpostal service under section 3703 that
persistently fails to meet cost coverage requirements.
(4) Deliberate noncompliance.--In the case of
deliberate noncompliance by the Postal Service with the
requirements of this chapter, the Postal Regulatory
Commission may order, based on the nature,
circumstances, extent, and seriousness of the
noncompliance, a fine (in the amount specified by the
Commission in its order) for each incidence of such
noncompliance. All receipts from fines imposed under
this subsection shall be deposited in the general fund
of the Treasury.
(f) Regulations Required.--The Postal Regulatory Commission
shall issue such regulations as are necessary to carry out this
section.
* * * * * * *
PART V--TRANSPORTATION OF MAIL
* * * * * * *
CHAPTER 54--TRANSPORTATION OF MAIL BY AIR
Sec.
5401. Authorization.
* * * * * * *
5404. Aviation security for parcels.
Sec. 5401. Authorization
(a) The Postal Service is authorized to provide for the safe
and expeditious transportation of mail by aircraft.
(b) Except as otherwise provided in section 5402 or 5404 of
this title, the Postal Service may make such rules,
regulations, and orders consistent with part A of subtitle VII
of title 49, or any order, rule, or regulation made by the
Secretary of Transportation thereunder, as may be necessary for
such transportation.
* * * * * * *
Sec. 5404. Aviation security for parcels
A parcel carried by an air carrier or foreign air carrier (as
those terms are defined in section 40102(a) of title 49)
shall--
(1) use postage that has been generated by a postage
evidencing system that has been validated under level 4
of the 140 series of the Federal Information Processing
Standards; or
(2) be entered with in person sender verification.
* * * * * * *
----------
SECTION 633 OF THE TREASURY AND GENERAL GOVERNMENT APPROPRIATIONS ACT,
1999
Sec. 633. (a) International Postal Arrangements.--[Omitted--
amends other Act]
(b) Sense of Congress.--I t is the sense of Congress that any
treaty, convention or amendment entered into under the
authority of section 407 of title 39 of the United States Code,
as amended by this section, should not grant any undue or
unreasonable preference to the Postal Service, a private
provider of postal services, or any other person.
(c) Trade-In-Service Programs.--[Omitted--amends other Act]
[(d) Transfer of Funds.--In fiscal year 1999 and each fiscal
year hereafter, the Postal Service shall allocate to the
Department of State from any funds available to the Postal
Service such sums as may be reasonable, documented and
auditable for the Department of State to carry out the
activities of Section 407 of title 39 of the United States
Code.]
----------
INSPECTOR GENERAL ACT OF 1978
* * * * * * *
requirements for federal entities and designated federal entities
Sec. 8G. (a) Notwithstanding section 12 of this Act, as used
in this section--
(1) the term ``Federal entity'' means any Government
corporation (within the meaning of section 103(1) of
title 5, United States Code), any Government controlled
corporation (within the meaning of section 103(2) of
such title), or any other entity in the Executive
branch of the Government, or any independent regulatory
agency, but does not include--
(A) an establishment (as defined under
section 12(2) of this Act) or part of an
establishment;
(B) a designated Federal entity (as defined
under paragraph (2) of this subsection) or part
of a designated Federal entity;
(C) the Executive Office of the President;
(D) the Central Intelligence Agency;
(E) the General Accounting Office; or
(F) any entity in the judicial or legislative
branches of the Government, including the
Administrative Office of the United States
Courts and the Architect of the Capitol and any
activities under the direction of the Architect
of the Capitol;
(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 Committee for Purchase
From People Who Are Blind or Severely Disabled, the
Commodity Futures Trading Commission, the Consumer
Product Safety Commission, the Corporation for Public
Broadcasting, the Defense Intelligence Agency, the
Equal Employment Opportunity Commission, the Farm
Credit Administration, the Federal Communications
Commission, the Federal Deposit Insurance Corporation,
the Federal Election Commission, the Election
Assistance Commission, the Federal Housing Finance
Board, the Federal Labor Relations Authority, the
Federal Maritime Commission, the Federal Trade
Commission, the Legal Services Corporation, the
National Archives and Records Administration, the
National Credit Union Administration, the National
Endowment for the Arts, the National Endowment for the
Humanities, the National Geospatial-Intelligence
Agency, the National Labor Relations Board, the
National Science Foundation, the Panama Canal
Commission, the Peace Corps, the Pension Benefit
Guaranty Corporation, the Securities and Exchange
Commission, the Smithsonian Institution, [the United
States International Trade Commission, the Postal
Regulatory Commission, and the United States Postal
Service] and the United States International Trade
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) with respect to the National Science
Foundation, such term means the National
Science Board;
[(B) with respect to the United States Postal
Service, such term means the Governors (within
the meaning of section 102(3) of title 39,
United States Code);]
[(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 Committee for
Purchase From People Who Are Blind or Severely
Disabled, such term means the Chairman of the
Committee for Purchase From People Who Are
Blind or Severely Disabled;
[(E)] (D) with respect to the National
Archives and Records Administration, such term
means the Archivist of the United States;
[(F)] (E) 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);
[(G)] (F) with respect to the National
Endowment of the Arts, such term means the
National Council on the Arts;
[(H)] (G) with respect to the National
Endowment for the Humanities, such term means
the National Council on the Humanities; and
[(I)] (H) with respect to the Peace Corps,
such term means the Director of the Peace
Corps;
(5) the term ``Office of Inspector General'' means an
Office of Inspector General of a designated Federal
entity; and
(6) the term ``Inspector General'' means an Inspector
General of a designated Federal entity.
(b) No later than 180 days after the date of the enactment of
this section, there shall be established and maintained in each
designated Federal entity an Office of Inspector General. The
head of the designated Federal entity shall transfer to such
office the offices, units, or other components, and the
functions, powers, or duties thereof, that such head determines
are properly related to the functions of the Office of
Inspector General and would, if so transferred, further the
purposes of this section. There shall not be transferred to
such office any program operating responsibilities.
(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.
(d)(1) Each Inspector General shall report to and be under
the general supervision of the head of the designated Federal
entity, but shall not report to, or be subject to supervision
by, any other officer or employee of such designated Federal
entity. Except as provided in paragraph (2), the head of the
designated Federal entity shall not prevent or prohibit the
Inspector General from initiating, carrying out, or completing
any audit or investigation, or from issuing any subpena during
the course of any audit or investigation.
(2)(A) The Secretary of Defense, in consultation with the
Director of National Intelligence, may prohibit the inspector
general of an element of the intelligence community specified
in subparagraph (D) from initiating, carrying out, or
completing any audit or investigation if the Secretary
determines that the prohibition is necessary to protect vital
national security interests of the United States.
(B) If the Secretary exercises the authority under
subparagraph (A), the Secretary shall submit to the committees
of Congress specified in subparagraph (E) an appropriately
classified statement of the reasons for the exercise of such
authority not later than 7 days after the exercise of such
authority.
(C) At the same time the Secretary submits under subparagraph
(B) a statement on the exercise of the authority in
subparagraph (A) to the committees of Congress specified in
subparagraph (E), the Secretary shall notify the inspector
general of such element of the submittal of such statement and,
to the extent consistent with the protection of intelligence
sources and methods, provide such inspector general with a copy
of such statement. Such inspector general may submit to such
committees of Congress any comments on a notice or statement
received by the inspector general under this subparagraph that
the inspector general considers appropriate.
(D) The elements of the intelligence community specified in
this subparagraph are as follows:
(i) The Defense Intelligence Agency.
(ii) The National Geospatial-Intelligence Agency.
(iii) The National Reconnaissance Office.
(iv) The National Security Agency.
(E) The committees of Congress specified in this subparagraph
are--
(i) the Committee on Armed Services and the Select
Committee on Intelligence of the Senate; and
(ii) the Committee on Armed Services and the
Permanent Select Committee on Intelligence of the House
of Representatives.
(e)(1) In the case of a designated Federal entity for which a
board, chairman of a committee, or commission is the head of
the designated Federal entity, a removal under this subsection
may only be made upon the written concurrence of a \2/3\
majority of the board, committee, or commission.''.
(2) If an Inspector General is removed from office or is
transferred to another position or location within a designated
Federal entity, the head of the designated Federal entity shall
communicate in writing the reasons for any such removal or
transfer to both Houses of Congress, not later than 30 days
before the removal or transfer. Nothing in this subsection
shall prohibit a personnel action otherwise authorized by law,
other than transfer or removal.
[(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--
(A) ``designated Federal entity'' for
``establishment''; and
(B) ``head of the designated Federal entity'' for
``head of the establishment''.
(2) In addition to the other authorities specified in this
Act, an Inspector General is authorized to select, appoint, and
employ such officers and employees as may be necessary for
carrying out the functions, powers, and duties of the Office of
Inspector General and to obtain the temporary or intermittent
services of experts or consultants or an organization thereof,
subject to the applicable laws and regulations that govern such
selections, appointments, and employment, and the obtaining of
such services, within the designated Federal entity.
(3) Notwithstanding the last sentence of subsection (d) of
this section, the provisions of subsection (a) of section 8C
(other than the provisions of subparagraphs (A), (B), (C), and
(E) of subsection (a)(1)) shall apply to the Inspector General
of the Board of Governors of the Federal Reserve System and the
Bureau of Consumer Financial Protection and the Chairman of the
Board of Governors of the Federal Reserve System in the same
manner as such provisions apply to the Inspector General of the
Department of the Treasury and the Secretary of the Treasury,
respectively.
(4) Each Inspector General shall--
(A) in accordance with applicable laws and
regulations governing appointments within the
designated Federal entity, appoint a Counsel to the
Inspector General who shall report to the Inspector
General;
(B) obtain the services of a counsel appointed by and
directly reporting to another Inspector General on a
reimbursable basis; or
(C) obtain the services of appropriate staff of the
Council of the Inspectors General on Integrity and
Efficiency on a reimbursable basis.
[(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).
(2) Beginning on October 31, 1989, and on October 31 of each
succeeding calendar year, the head of each Federal entity (as
defined under subsection (a) of this section) shall prepare and
transmit to the Director of the Office of Management and Budget
and to each House of the Congress a report which--
(A) states whether there has been established in the
Federal entity an office that meets the requirements of
this section;
(B) specifies the actions taken by the Federal entity
otherwise to ensure that audits are conducted of its
programs and operations in accordance with the
standards for audit of governmental organizations,
programs, activities, and functions issued by the
Comptroller General of the United States, and includes
a list of each audit report completed by a Federal or
non-Federal auditor during the reporting period and a
summary of any particularly significant findings; and
(C) summarizes any matters relating to the personnel,
programs, and operations of the Federal entity referred
to prosecutive authorities, including a summary
description of any preliminary investigation conducted
by or at the request of the Federal entity concerning
these matters, and the prosecutions and convictions
which have resulted.
* * * * * * *
rule of construction of special provisions
Sec. 8J. [The special provisions under section 8, 8A, 8B, 8C,
8D, 8E or 8F of this Act] The special provisions under section
8, 8A, 8B, 8C, 8D, 8E, 8F, 8H, 8I, or 8M of this Act relate
only to the establishment named in such section and no
inference shall be drawn from the presence or absence of a
provision in any such section with respect to an establishment
not named in such section or with respect to a designated
Federal entity as defined under section 8G(a).
* * * * * * *
SEC. 8M. SPECIAL PROVISIONS CONCERNING THE UNITED STATES POSTAL SERVICE
AND POSTAL REGULATORY COMMISSION.
(a) Office of Inspector General of the Postal Community.--The
Inspector General for the United States Postal Service and the
Postal Regulatory Commission shall be referred to as the
``Inspector General of the Postal Community''.
(b) Responsibilities.--In carrying out the duties and
responsibilities specified in this Act, the Inspector General
of the Postal Community shall have equal responsibility over
the United States Postal Service and the Postal Regulatory
Commission.
(c) Applicable Head of the Establishment.--For purposes of
the applicability of this Act to the Inspector General of the
Postal Community--
(1) the ``head of the establishment'' shall mean the
Postmaster General of the United States for activities
by the Office related to the United States Postal
Service; and
(2) the ``head of the establishment'' shall mean the
Chairman of the Postal Regulatory Commission for
activities by the Office related to the Postal
Regulatory Commission.
(d) Applicability of Establishment for Reports.--In carrying
out the duties and responsibilities under section 5--
(1) the term ``establishment'' shall include as
separate establishments--
(A) the United States Postal Service; and
(B) the Postal Regulatory Commission; and
(2) the Inspector General of the Postal Community
shall prepare separate semiannual reports for the
United States Postal Service and the Postal Regulatory
Commission.
(e) Office Space.--In carrying out the duties and
responsibilities under section 6(c), the heads of the
establishments for the United States Postal Service and the
Postal Regulatory Commission shall work jointly with one
another and in consultation with the Inspector General of the
Postal Community to ensure adequate and appropriate provision
to the Office of the Inspector General of the Postal Community
under section 6(c).
(f) Budget.--In carrying out the duties and responsibilities
under section 6(f)--
(1) the ``head of the establishment'' shall mean the
Postmaster General of the United States; and
(2) designation of the Postmaster General of the
United States as ``head of the establishment'' under
this subsection shall not be construed as granting any
authorities to the Postmaster General of the United
States with regard to the Postal Regulatory Commission.
(g) General Duties and Responsibilities.--In carrying out the
duties and responsibilities specified in this Act--
(1) the Inspector General of the Postal Community
shall have oversight responsibility for all activities
of the Postal Inspection Service, including any
internal investigation performed by the Postal
Inspection Service;
(2) the Inspector General of the Postal Community
shall give particular regard to the activities of the
Postal Inspection Service with a view toward avoiding
duplication and insuring effective coordination and
cooperation; and
(3) the Chief Postal Inspector shall promptly report
the significant activities being carried out by the
Postal Inspection Service to the Inspector General of
the Postal Community.
(h) Authorization of Appropriations.--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
Postal Community.
* * * * * * *
definitions
Sec. 12. As used in this Act--
(1) the term ``head of the establishment'' means the
Secretary of Agriculture, Commerce, Defense, Education,
Energy, Health and Human Services, Housing and Urban
Development, the Interior, Labor, State,
Transportation, Homeland Security, or the Treasury; the
Attorney General; the Administrator of the Agency for
International Development, Environmental Protection,
General Services, National Aeronautics and Space, or
Small Business, or Veterans' Affairs; the Director of
the Federal Emergency Management Agency, or the Office
of Personnel Management; the Chairman of the Nuclear
Regulatory Commission or the Railroad Retirement Board;
the Chairperson of the Thrift Depositor Protection
Oversight Board; the Chief Executive Officer of the
Corporation for National and Community Service; the
Administrator of the Community Development Financial
Institutions Fund; the chief executive officer of the
Resolution Trust Corporation; the Chairperson of the
Federal Deposit Insurance Corporation; the Commissioner
of Social Security, Social Security Administration; the
Director of the Federal Housing Finance Agency; the
Board of Directors of the Tennessee Valley Authority;
the President of the Export-Import Bank; the Postmaster
General of the United States; the Chairman of the
Postal Regulatory Commission; the Federal
Cochairpersons of the Commissions established under
section 15301 of title 40, United States Code; the
Director of the National Security Agency;or the
Director of the National Reconnaissance Office; as the
case may be;
(2) the term ``establishment'' means the Department
of Agriculture, Commerce, Defense, Education, Energy,
Health and Human Services, Housing and Urban
Development, the Interior, Justice, Labor, State,
Transportation, Homeland Security, or the Treasury; the
Agency for International Development, the Community
Development Financial Institutions Fund, the
Environmental Protection Agency, the Federal Emergency
Management Agency, the General Services Administration,
the National Aeronautics and Space Administration, the
Nuclear Regulatory Commission, the Office of Personnel
Management, the Railroad Retirement Board, the
Resolution Trust Corporation, the Federal Deposit
Insurance Corporation, the Small Business
Administration, the Corporation for National and
Community Service, or the Veterans' Administration, the
Social Security Administration, the Federal Housing
Finance Agency, the Tennessee Valley Authority, the
Export-Import Bank, the United States Postal Service,
the Postal Regulatory Commission, the Commissions
established under section 15301 of title 40, United
States Code, the National Security Agency,or the
National Reconnaissance Office, as the case may be;
(3) the term ``Inspector General'' means the
Inspector General of an establishment;
(4) the term ``Office'' means the Office of Inspector
General of an establishment; and
(5) the term ``Federal agency'' means an agency as
defined in section 552(f) of title 5 (including an
establishment as defined in paragraph (2)), United
States Code, but shall not be construed to include the
General Accounting Office.
* * * * * * *
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TITLE 41, UNITED STATES CODE
* * * * * * *
SUBTITLE III--CONTRACT DISPUTES
* * * * * * *
CHAPTER 71--CONTRACT DISPUTES
Sec. 7101. Definitions
In this chapter:
(1) Administrator.--The term ``Administrator'' means
the Administrator for Federal Procurement Policy
appointed pursuant to section 1102 of this title.
(2) Agency board or agency board of contract
appeals.--The term ``agency board'' or ``agency board
of contract appeals'' means--
(A) the Armed Services Board;
(B) the Civilian Board;
(C) the board of contract appeals of the
Tennessee Valley Authority; or
(D) the Postal Service Board established
under section 7105(d)(1) of this title.
(3) Agency head.--The term ``agency head'' means the
head and any assistant head of an executive agency. The
term may include the chief official of a principal
division of an executive agency if the head of the
executive agency so designates that chief official.
(4) Armed Services Board.--The term ``Armed Services
Board'' means the Armed Services Board of Contract
Appeals established under section 7105(a)(1) of this
title.
(5) Civilian Board.--The term ``Civilian Board''
means the Civilian Board of Contract Appeals
established under section 7105(b)(1) of this title.
(6) Contracting officer.--The term ``contracting
officer''--
(A) means an individual who, by appointment
in accordance with applicable regulations, has
the authority to make and administer contracts
and to make determinations and findings with
respect to contracts; and
(B) includes an authorized representative of
the contracting officer, acting within the
limits of the representative's authority.
(7) Contractor.--The term ``contractor'' means a
party to a Federal Government contract other than the
Federal Government.
(8) Executive agency.--The term ``executive agency''
means--
(A) an executive department as defined in
section 101 of title 5;
(B) a military department as defined in
section 102 of title 5;
(C) an independent establishment as defined
in section 104 of title 5, except that the term
does not include the Government Accountability
Office; [and]
(D) a wholly owned Government corporation as
defined in section 9101(3) of title 31[.]; and
(E) the United States Postal Service and the
Postal Regulatory Commission.
(9) Misrepresentation of fact.--The term
``misrepresentation of fact'' means a false statement
of substantive fact, or conduct that leads to a belief
of a substantive fact material to proper understanding
of the matter in hand, made with intent to deceive or
mislead.
* * * * * * *