HR 6407 RDS
109th CONGRESS
2d Session
H. R. 6407
IN THE SENATE OF THE UNITED STATES
December 8, 2006
Received

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AN ACT
To reform the postal laws of the United States.

Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled,

SECTION 1. SHORT TITLE; TABLE OF CONTENTS.

(a) SHORT TITLE- This Act may be cited as the ‘Postal Accountability and Enhancement Act‘.

(b) TABLE OF CONTENTS- The table of contents for this Act is as follows:

Sec. 1. Short title; table of contents.

TITLE I--DEFINITIONS; POSTAL SERVICES
Sec. 101. Definitions.
Sec. 102. Postal Services.

TITLE II--MODERN RATE REGULATION
Sec. 201. Provisions relating to market-dominant products.
Sec. 202. Provisions relating to competitive products.
Sec. 203. Provisions relating to experimental and new products.
Sec. 204. Reporting requirements and related provisions.
Sec. 205. Complaints; appellate review and enforcement.
Sec. 206. Clerical amendment.

TITLE III--MODERN SERVICE STANDARDS
Sec. 301. Establishment of modern service standards.
Sec. 302. Postal service plan.

TITLE IV--PROVISIONS RELATING TO FAIR COMPETITION
Sec. 401. Postal Service Competitive Products Fund.
Sec. 402. Assumed Federal income tax on competitive products income.
Sec. 403. Unfair competition prohibited.
Sec. 404. Suits by and against the Postal Service.
Sec. 405. International postal arrangements.

TITLE V--GENERAL PROVISIONS
Sec. 501. Qualification and term requirements for Governors.
Sec. 502. Obligations.
Sec. 503. Private carriage of letters.
Sec. 504. Rulemaking authority.
Sec. 505. Noninterference with collective bargaining agreements.
Sec. 506. Bonus authority.

TITLE VI--ENHANCED REGULATORY COMMISSION
Sec. 601. Reorganization and modification of certain provisions relating to the Postal Regulatory Commission.
Sec. 602. Authority for Postal Regulatory Commission to issue subpoenas.
Sec. 603. Authorization of appropriations from the Postal Service Fund.
Sec. 604. Redesignation of the Postal Rate Commission.
Sec. 605. Inspector General of the Postal Regulatory Commission.

TITLE VII--EVALUATIONS
Sec. 701. Assessments of ratemaking, classification, and other provisions.
Sec. 702. Report on universal postal service and the postal monopoly.
Sec. 703. Study on equal application of laws to competitive products.
Sec. 704. Report on postal workplace safety and workplace-related injuries.
Sec. 705. Study on recycled paper.
Sec. 706. Greater diversity in Postal Service executive and administrative schedule management positions.
Sec. 707. Contracts with women, minorities, and small businesses.
Sec. 708. Rates for periodicals.
Sec. 709. Assessment of certain rate deficiencies.
Sec. 710. Assessment of future business model of the Postal Service.
Sec. 711. Provisions relating to cooperative mailings.
Sec. 712. Definition.

TITLE VIII--POSTAL SERVICE RETIREMENT AND HEALTH BENEFITS FUNDING
Sec. 801. Short title.
Sec. 802. Civil Service Retirement System.
Sec. 803. Health insurance.
Sec. 804. Repeal of disposition of savings provision.
Sec. 805. Effective dates.

TITLE IX--COMPENSATION FOR WORK INJURIES
Sec. 901. Temporary disability; continuation of pay.

TITLE X--MISCELLANEOUS
Sec. 1001. Employment of postal police officers.
Sec. 1002. Obsolete provisions.
Sec. 1003. Reduced rates.
Sec. 1004. Sense of Congress regarding Postal Service purchasing reform.
Sec. 1005. Contracts for transportation of mail by air.
Sec. 1006. Date of postmark to be treated as date of appeal in connection with the closing or consolidation of post offices.
Sec. 1007. Provisions relating to benefits under chapter 81 of title 5, United States Code, for officers and employees of the former Post Office Department.
Sec. 1008. Hazardous matter.
Sec. 1009. ZIP codes and retail hours.
Sec. 1010. Technical and conforming amendments.

TITLE I--DEFINITIONS; POSTAL SERVICES

SEC. 101. DEFINITIONS.
Section 102 of title 39, United States Code, is amended by striking ‘and‘ at the end of paragraph (3), by striking the period at the end of paragraph (4) and inserting a semicolon, and by adding at the end the following:

‘(5) ‘postal service‘ refers to the 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; and

‘(9) ‘competitive product‘ or ‘product in the competitive category of mail‘ means a product subject to subchapter II of chapter 36; and

‘(10) ‘year‘, as used in chapter 36 (other than subchapters I and VI thereof), means a fiscal year.‘.

SEC. 102. POSTAL SERVICES.
(a) IN GENERAL- Section 404 of title 39, United States Code, is amended--

(1) in subsection (a), by striking paragraph (6) and by redesignating paragraphs (7) through (9) as paragraphs (6) through (8), respectively; and

(2) by adding at the end the following:

‘(c)(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.

‘(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.‘.

(b) CONFORMING AMENDMENTS- Section 1402(b)(1)(B)(ii) of the Victims of Crime
Act of 1984 (98 Stat. 2170; 42 U.S.C. 10601(b)(1)(B)(ii)) is amended by striking

‘404(a)(8)‘ and inserting ‘404(a)(7)‘.

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TITLE II--MODERN RATE REGULATION

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

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

‘Sec. 3621. Applicability; definitions

‘(a) APPLICABILITY- This subchapter shall apply with respect to--

‘(1) first-class mail letters and sealed parcels;

‘(2) first-class mail cards;

‘(3) periodicals;

‘(4) standard mail;

‘(5) single-piece parcel post;

‘(6) media mail;

‘(7) bound printed matter;

‘(8) library mail;

‘(9) special services; and

‘(10) single-piece international mail,

subject to any changes the Postal Regulatory Commission may make under section 3642.

‘(b) RULE OF CONSTRUCTION- Mail matter referred to in subsection (a) shall, for
purposes of this subchapter, be considered to have the meaning given to such mail matter
under the mail classification schedule.

‘Sec. 3622. Modern rate regulation

‘(a) AUTHORITY GENERALLY- The Postal Regulatory Commission shall, within 18
months after the date of enactment of this section, by regulation establish (and may from
time to time thereafter by regulation revise) a modern system for regulating rates and
classes for market-dominant products.

‘(b) OBJECTIVES- Such system shall be designed to achieve the following objectives,
each of which shall be applied in conjunction with the others:

‘(1) To maximize incentives to reduce costs and increase efficiency.

‘(2) To create predictability and stability in rates.

‘(3) To maintain high quality service standards established under section 3691.

‘(4) To allow the Postal Service pricing flexibility.

‘(5) To assure adequate revenues, including retained earnings, to maintain financial
stability.

‘(6) To reduce the administrative burden and increase the transparency of the ratemaking
process.

‘(7) To enhance mail security and deter terrorism.

‘(8) To establish and maintain a just and reasonable schedule for rates and classifications,
however the objective under this paragraph shall not be construed to prohibit the Postal
Service from making changes of unequal magnitude within, between, or among classes of
mail.

‘(9) To allocate the total institutional costs of the Postal Service appropriately between
market-dominant and competitive products.

‘(c) FACTORS- In establishing or revising such system, the Postal Regulatory
Commission shall take into account--

‘(1) the value of the mail service actually provided each class or type of mail service to
both the sender and the recipient, including but not limited to the collection, mode of
transportation, and priority of delivery;

‘(2) the requirement that each class of mail or type of mail service bear the direct and
indirect postal costs attributable to each class or type of mail service through reliably
identified causal relationships plus that portion of all other costs of the Postal Service
reasonably assignable to such class or type;

‘(3) the effect of rate increases upon the general public, business mail users, and
enterprises in the private sector of the economy engaged in the delivery of mail matter
other than letters;

‘(4) the available alternative means of sending and receiving letters and other mail matter
at reasonable costs;

‘(5) the degree of preparation of mail for delivery into the postal system performed by the
mailer and its effect upon reducing costs to the Postal Service;

‘(6) simplicity of structure for the entire schedule and simple, identifiable relationships
between the rates or fees charged the various classes of mail for postal services;

‘(7) the importance of pricing flexibility to encourage increased mail volume and
operational efficiency;

‘(8) the relative value to the people of the kinds of mail matter entered into the postal
system and the desirability and justification for special classifications and services of
mail;

‘(9) the importance of providing classifications with extremely high degrees of reliability
and speed of delivery and of providing those that do not require high degrees of
reliability and speed of delivery;

‘(10) the desirability of special classifications for both postal users and the Postal Service
in accordance with the policies of this title, including agreements between the Postal
Service and postal users, when available on public and reasonable terms to similarly
situated mailers, that--

‘(A) either--

‘(i) improve the net financial position of the Postal Service through reducing Postal
Service costs or increasing the overall contribution to the institutional costs of the Postal
Service; or

‘(ii) enhance the performance of mail preparation, processing, transportation, or other
functions; and

‘(B) do not cause unreasonable harm to the marketplace.

‘(11) the educational, cultural, scientific, and informational value to the recipient of mail
matter;

‘(12) the need for the Postal Service to increase its efficiency and reduce its costs,
including infrastructure costs, to help maintain high quality, affordable postal services;
(13) the value to the Postal Service and postal users of promoting intelligent mail and of
secure, sender-identified mail; and

‘(14) the policies of this title as well as such other factors as the Commission determines
appropriate.

‘(d) REQUIREMENTS-

‘(1) IN GENERAL- The system for regulating rates and classes for market-dominant
products shall--

‘(A) include an annual limitation on the percentage changes in rates to be set by the
Postal Regulatory Commission that will be equal to the change in the Consumer Price
Index for All Urban Consumers unadjusted for seasonal variation over the most recent
available 12-month period preceding the date the Postal Service files notice of its
intention to increase rates;

‘(B) establish a schedule whereby rates, when necessary and appropriate, would change
at regular intervals by predictable amounts;

‘(C) not later than 45 days before the implementation of any adjustment in rates under
this section, including adjustments made under subsection (c)(10)--

‘(i) require the Postal Service to provide public notice of the adjustment;

‘(ii) provide an opportunity for review by the Postal Regulatory Commission;

‘(iii) provide for the Postal Regulatory Commission to notify the Postal Service of any
noncompliance of the adjustment with the limitation under subparagraph (A); and

‘(iv) require the Postal Service to respond to the notice provided under clause (iii) and
describe the actions to be taken to comply with the limitation under subparagraph (A);

‘(D) establish procedures whereby the Postal Service may adjust rates not in excess of the
annual limitations under subparagraph (A); and

‘(E) notwithstanding any limitation set under subparagraphs (A) and (C), and provided
there is not sufficient unused rate authority under paragraph (2)(C), establish procedures
whereby rates may be adjusted on an expedited basis due to either extraordinary or
exceptional circumstances, provided that the Commission determines, after notice and
opportunity for a public hearing and comment, and within 90 days after any request by
the Postal Service, that such adjustment is reasonable and equitable and necessary to
enable the Postal Service, under best practices of honest, efficient, and economical
management, to maintain and continue the development of postal services of the kind and
quality adapted to the needs of the United States.

‘(2) LIMITATIONS-

‘(A) CLASSES OF MAIL- Except as provided under subparagraph (C), the annual
limitations under paragraph (1)(A) shall apply to a class of mail, as defined in the
Domestic Mail Classification Schedule as in effect on the date of enactment of the Postal
Accountability and Enhancement Act.

‘(B) ROUNDING OF RATES AND FEES- Nothing in this subsection shall preclude the
Postal Service from rounding rates and fees to the nearest whole integer, if the effect of
such rounding does not cause the overall rate increase for any class to exceed the
Consumer Price Index for All Urban Consumers.

‘(C) USE OF UNUSED RATE AUTHORITY-

‘(i) DEFINITION- In this subparagraph, the term ‘unused rate adjustment authority‘
means the difference between--

‘(I) the maximum amount of a rate adjustment that the Postal Service is authorized to
make in any year subject to the annual limitation under paragraph (1); and

‘(II) the amount of the rate adjustment the Postal Service actually makes in that year.

‘(ii) AUTHORITY- Subject to clause (iii), the Postal Service may use any unused rate
adjustment authority for any of the 5 years following the year such authority occurred.

‘(iii) LIMITATIONS- In exercising the authority under clause (ii) in any year, the Postal
Service--

‘(I) may use unused rate adjustment authority from more than 1 year;

‘(II) may use any part of the unused rate adjustment authority from any year;

‘(III) shall use the unused rate adjustment authority from the earliest year such authority
first occurred and then each following year; and

‘(IV) for any class or service, may not exceed the annual limitation under paragraph (1)
by more than 2 percentage points.

‘(3) REVIEW- Ten years after the date of enactment of the Postal Accountability and
Enhancement Act and as appropriate thereafter, the Commission shall review the system
for regulating rates and classes for market-dominant products established under this
section to determine if the system is achieving the objectives in subsection (b), taking
into account the factors in subsection (c). If the Commission determines, after notice and
opportunity for public comment, that the system is not achieving the objectives in
subsection (b), taking into account the factors in subsection (c), the Commission may, by
regulation, make such modification or adopt such alternative system for regulating rates
and classes for market-dominant products as necessary to achieve the objectives.

‘(e) WORKSHARE DISCOUNTS-

‘(1) DEFINITION- In this subsection, the term ‘workshare discount‘ refers to rate
discounts provided to mailers for the presorting, prebarcoding, handling, or transportation
of mail, as further defined by the Postal Regulatory Commission under subsection (a).

‘(2) SCOPE- The Postal Regulatory Commission shall ensure that such discounts do not
exceed the cost that the Postal Service avoids as a result of workshare activity, unless--

‘(A) the discount is--

‘(i) associated with a new postal service, a change to an existing postal service, or with a
new work share initiative related to an existing postal service; and

‘(ii) necessary to induce mailer behavior that furthers the economically efficient
operation of the Postal Service and the portion of the discount in excess of the cost that
the Postal Service avoids as a result of the workshare activity will be phased out over a
limited period of time;

‘(B) the amount of the discount above costs avoided--

‘(i) is necessary to mitigate rate shock; and

‘(ii) will be phased out over time;

‘(C) the discount is provided in connection with subclasses of mail consisting exclusively
of mail matter of educational, cultural, scientific, or informational value; or

‘(D) reduction or elimination of the discount would impede the efficient operation of the
Postal Service.

‘(3) LIMITATION- Nothing in this subsection shall require that a work share discount be
reduced or eliminated if the reduction or elimination of the discount would--

‘(A) lead to a loss of volume in the affected category or subclass of mail and reduce the
aggregate contribution to the institutional costs of the Postal Service from the category or
subclass subject to the discount below what it otherwise would have been if the discount
had not been reduced or eliminated; or

‘(B) result in a further increase in the rates paid by mailers not able to take advantage of
the discount.

‘(4) REPORT- Whenever the Postal Service establishes a workshare discount rate, the
Postal Service shall, at the time it publishes the workshare discount rate, submit to the
Postal Regulatory Commission a detailed report that--

‘(A) explains the Postal Service‘s reasons for establishing the rate;

‘(B) sets forth the data, economic analyses, and other information relied on by the Postal
Service to justify the rate; and

‘(C) certifies that the discount will not adversely affect rates or services provided to users
of postal services who do not take advantage of the discount rate.

‘(f) Transition Rule- For the 1-year period beginning on the date of enactment of this
section, rates and classes for market-dominant products shall remain subject to
modification in accordance with the provisions of this chapter and section 407, as such
provisions were last in effect before the date of enactment of this section. Proceedings
initiated to consider a request for a recommended decision filed by the Postal Service
during that 1-year period shall be completed in accordance with subchapter II of chapter
36 of this title and implementing regulations, as in effect before the date of enactment of
this section.‘.

(b) REPEALED SECTIONS- Sections 3623, 3624, 3625, and 3628 of title 39, United
States Code, are repealed.

(c) REDESIGNATION- Chapter 36 of title 39, United States Code (as in effect after the
amendment made by section 601, but before the amendment made by section 202) is
amended by striking the heading for subchapter II and inserting the following:

‘SUBCHAPTER I--PROVISIONS RELATING TO MARKET-DOMINANT
PRODUCTS‘.

SEC. 202. PROVISIONS RELATING TO COMPETITIVE PRODUCTS.
Chapter 36 of title 39, United States Code, is amended by inserting after section 3629 the
following:

‘SUBCHAPTER II--PROVISIONS RELATING TO COMPETITIVE PRODUCTS

‘Sec. 3631. Applicability; definitions and updates

‘(a) APPLICABILITY- This subchapter shall apply with respect to--

‘(1) priority mail;

‘(2) expedited mail;

‘(3) bulk parcel post;

‘(4) bulk international mail; and

‘(5) mailgrams;
subject to subsection (d) and any changes the Postal Regulatory Commission may make
under section 3642.

‘(b) DEFINITION- For purposes of this subchapter, the term ‘costs attributable‘, as used
with respect to a product, means the direct and indirect postal costs attributable to such
product through reliably identified causal relationships.

‘(c) RULE OF CONSTRUCTION- Mail matter referred to in subsection (a) shall, for
purposes of this subchapter, be considered to have the meaning given to such mail matter
under the mail classification schedule.

‘Sec. 3632. Action of the Governors

‘(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) PROCEDURES-

‘(1) IN GENERAL- Rates and classes shall be established in writing, complete with a
statement of explanation and justification, and the date as of which each such rate or class
takes effect.

‘(2) RATES OR CLASSES OF GENERAL APPLICABILITY- In the case of rates or
classes of general applicability in the Nation as a whole or in any substantial region of the
Nation, the Governors shall cause each rate and class decision under this section and the
record of the Governors‘ proceedings in connection with such decision to be published in
the Federal Register at least 30 days before the effective date of any new rates or classes.

‘(3) RATES OR CLASSES NOT OF GENERAL APPLICABILITY- In the case of rates
or classes not of general applicability in the Nation as a whole or in any substantial region
of the Nation, the Governors shall cause each rate and class decision under this section
and the record of the proceedings in connection with such decision to be filed with the
Postal Regulatory Commission by such date before the effective date of any new rates or
classes as the Governors consider appropriate, but in no case less than 15 days.

‘(4) CRITERIA- As part of the regulations required under section 3633, the Postal
Regulatory Commission shall establish criteria for determining when a rate or class
established under this subchapter is or is not of general applicability in the Nation as a
whole or in any substantial region of the Nation.

‘(c) TRANSITION RULE- Until regulations under section 3633 first take effect, rates
and classes for competitive products shall remain subject to modification in accordance
with the provisions of this chapter and section 407, as such provisions were as last in
effect before the date of 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.‘.

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

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

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

‘Sec. 3641. Market tests of experimental products

‘(a) AUTHORITY-

‘(1) IN GENERAL- The Postal Service may conduct market tests of experimental
products in accordance with this section.

‘(2) PROVISIONS WAIVED- A product shall not, while it is being tested under this
section, be subject to the requirements of sections 3622, 3633, or 3642, or regulations
promulgated under those sections.

‘(b) CONDITIONS- A product may not be tested under this section unless it satisfies
each of the following:

‘(1) SIGNIFICANTLY DIFFERENT PRODUCT- The product is, from the viewpoint of
the mail users, significantly different from all products offered by the Postal Service
within the 2-year period preceding the start of the test.

‘(2) MARKET DISRUPTION- The introduction or continued offering of the product will
not create an unfair or otherwise inappropriate competitive advantage for the Postal
Service or any mailer, particularly in regard to small business concerns (as defined under
subsection (h)).

‘(3) CORRECT CATEGORIZATION- The Postal Service identifies the product, for the
purpose of a test under this section, as either market-dominant or competitive, consistent
with the criteria under section 3642(b)(1). Costs and revenues attributable to a product
identified as competitive shall be included in any determination under section 3633(3)
(relating to provisions applicable to competitive products collectively). Any test that
solely affects products currently classified as competitive, or which provides services
ancillary to only competitive products, shall be presumed to be in the competitive product
category without regard to whether a similar ancillary product exists for market-dominant
products.

‘(c) NOTICE-

‘(1) IN GENERAL- At least 30 days before initiating a market test under this section, the
Postal Service shall file with the Postal Regulatory Commission and publish in the
Federal Register a notice--

‘(A) setting out the basis for the Postal Service‘s determination that the market test is
covered by this section; and

‘(B) describing the nature and scope of the market test.

‘(2) SAFEGUARDS- For a competitive experimental product, the provisions of section
504(g) shall be available with respect to any information required to be filed under
paragraph (1) to the same extent and in the same manner as in the case of any matter
described in section 504(g)(1). Nothing in paragraph (1) shall be considered to permit or
require the publication of any information as to which confidential treatment is accorded
under the preceding sentence (subject to the same exception as set forth in section
504(g)(3)).

‘(d) DURATION-

‘(1) IN GENERAL- A market test of a product under this section may be conducted over
a period of not to exceed 24 months.

‘(2) EXTENSION AUTHORITY- If necessary in order to determine the feasibility or
desirability of a product being tested under this section, the Postal Regulatory
Commission may, upon written application of the Postal Service (filed not later than 60
days before the date as of which the testing of such product would otherwise be
scheduled to terminate under paragraph (1)), extend the testing of such product for not to
exceed an additional 12 months.

‘(e) DOLLAR-AMOUNT LIMITATION-

‘(1) IN GENERAL- A product may only be tested under this section if the total revenues
that are anticipated, or in fact received, by the Postal Service from such product do not
exceed $10,000,000 in any year, subject to paragraph (2) and subsection (g). In carrying
out the preceding sentence, the Postal Regulatory Commission may limit the amount of
revenues the Postal Service may obtain from any particular geographic market as
necessary to prevent market disruption (as defined under subsection (b)(2)).

‘(2) EXEMPTION AUTHORITY- The Postal Regulatory Commission may, upon written
application of the Postal Service, exempt the market test from the limit in paragraph (1) if
the total revenues that are anticipated, or in fact received, by the Postal Service from such
product do not exceed $50,000,000 in any year, subject to subsection (g). In reviewing an
application under this paragraph, the Postal Regulatory Commission shall approve such
application if it determines that--

‘(A) the product is likely to benefit the public and meet an expected demand;

‘(B) the product is likely to contribute to the financial stability of the Postal Service; and

‘(C) the product is not likely to result in unfair or otherwise inappropriate competition.

‘(f) CANCELLATION- If the Postal Regulatory Commission at any time determines that
a market test under this section fails, with respect to any particular product, to meet 1 or
more of the requirements of this section, it may order the cancellation of the test involved
or take such other action as it considers appropriate. A determination under this
subsection shall be made in accordance with such procedures as the Commission shall by
regulation prescribe.

‘(g) ADJUSTMENT FOR INFLATION- For purposes of each year following the year in
which occurs the deadline for the Postal Service‘s first report to the Postal Regulatory
Commission under section 3652(a), each dollar amount contained in this section shall be
adjusted by the change in the Consumer Price Index for such year (as determined under
regulations of the Commission).

‘(h) DEFINITION OF A SMALL BUSINESS CONCERN- The criteria used in defining
small business concerns or otherwise categorizing business concerns as small business
concerns shall, for purposes of this section, be established by the Postal Regulatory
Commission in conformance with the requirements of section 3 of the Small Business
Act.

‘(i) EFFECTIVE DATE- Market tests under this subchapter may be conducted in any
year beginning with the first year in which occurs the deadline for the Postal Service‘s
first report to the Postal Regulatory Commission under section 3652(a).

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

‘(a) IN GENERAL- Upon request of the Postal Service or users of the mails, or upon its
own initiative, the Postal Regulatory Commission may change the list of marketdominant
products under section 3621 and the list of competitive products under section
3631 by adding new products to the lists, removing products from the lists, or transferring
products between the lists.

‘(b) CRITERIA- All determinations by the Postal Regulatory Commission under
subsection (a) shall be made in accordance with the following criteria:

‘(1) The market-dominant category of products shall consist of each product in the sale of
which the Postal Service exercises sufficient market power that it can effectively set the
price of such product substantially above costs, raise prices significantly, decrease
quality, or decrease output, without risk of losing a significant level of business to other
firms offering similar products. The competitive category of products shall consist of all
other products.

‘(2) EXCLUSION OF PRODUCTS COVERED BY POSTAL MONOPOLY- A product
covered by the postal monopoly shall not be subject to transfer under this section from
the market-dominant category of mail. For purposes of the preceding sentence, the term
‘product covered by the postal monopoly‘ means any product the conveyance or
transmission of which is reserved to the United States under section 1696 of title 18,
subject to the same exception as set forth in the last sentence of section 409(e)(1).

‘(3) ADDITIONAL CONSIDERATIONS- In making any decision under this section,
due regard shall be given to--

‘(A) the availability and nature of enterprises in the private sector engaged in the delivery
of the product involved;

‘(B) the views of those who use the product involved on the appropriateness of the
proposed action; and

‘(C) the likely impact of the proposed action on small business concerns (within the
meaning of section 3641(h)).

‘(c) TRANSFERS OF SUBCLASSES AND OTHER SUBORDINATE UNITS
ALLOWABLE- Nothing in this title shall be considered to prevent transfers under this
section from being made by reason of the fact that they would involve only some (but not
all) of the subclasses or other subordinate units of the class of mail or type of postal
service involved (without regard to satisfaction of minimum quantity requirements
standing alone).

‘(d) NOTIFICATION AND PUBLICATION REQUIREMENTS-

‘(1) NOTIFICATION REQUIREMENT- The Postal Service shall, whenever it requests
to add a product or transfer a product to a different category, file with the Postal
Regulatory Commission and publish in the Federal Register a notice setting out the basis
for its determination that the product satisfies the criteria under subsection (b) and, in the
case of a request to add a product or transfer a product to the competitive category of
mail, that the product meets the regulations promulgated by the Postal Regulatory
Commission under section 3633. The provisions of section 504(g) shall be available with
respect to any information required to be filed.

‘(2) PUBLICATION REQUIREMENT- The Postal Regulatory Commission shall,
whenever it changes the list of products in the market-dominant or competitive category
of mail, prescribe new lists of products. The revised lists shall indicate how and when any
previous lists (including the lists under sections 3621 and 3631) are superseded, and shall
be published in the Federal Register.

‘(e) PROHIBITION- Except as provided in section 3641, no product that involves the
physical delivery of letters, printed matter, or packages may be offered by the Postal
Service unless it has been assigned to the market-dominant or competitive category of
mail (as appropriate) either--

‘(1) under this subchapter; or

‘(2) by or under any other provision of law.‘.

SEC. 204. REPORTING REQUIREMENTS AND RELATED PROVISIONS.

(a) REDESIGNATION- Chapter 36 of title 39, United States Code (as in effect before
the amendment made by subsection (b)) is amended--

(1) by striking the heading for subchapter IV and inserting the following:

‘SUBCHAPTER V--POSTAL SERVICES, COMPLAINTS, AND JUDICIAL
REVIEW‘; and

(2) by striking the heading for subchapter V and inserting the following:

‘SUBCHAPTER VI--GENERAL‘.

(b) REPORTS AND COMPLIANCE- Chapter 36 of title 39, United States Code, is
amended by inserting after subchapter III the following:

‘SUBCHAPTER IV--REPORTING REQUIREMENTS AND RELATED PROVISIONS

‘Sec. 3651. Annual reports by the Commission

‘(a) IN GENERAL- The Postal Regulatory Commission shall submit an annual report to
the President and the Congress concerning the operations of the Commission under this
title, including the extent to which regulations are achieving the objectives under sections
3622 and 3633, respectively.

‘(b) ADDITIONAL INFORMATION-

‘(1) IN GENERAL- In addition to the information required under subsection (a), each
report under this section shall also include, with respect to the period covered by such
report, an estimate of the costs incurred by the Postal Service in providing--

‘(A) postal services to areas of the Nation where, in the judgment of the Postal
Regulatory Commission, the Postal Service either would not provide services at all or
would not provide such services in accordance with the requirements of this title if the
Postal Service were not required to provide prompt, reliable, and efficient services to
patrons in all areas and all communities, including as required under the first sentence of
section 101(b);

‘(B) free or reduced rates for postal services as required by this title; and

‘(C) other public services or activities which, in the judgment of the Postal Regulatory
Commission, would not otherwise have been provided by the Postal Service but for the
requirements of law.

‘(2) BASIS FOR ESTIMATES- The Commission shall detail the basis for its estimates
and the statutory requirements giving rise to the costs identified in each report under this
section.

‘(c) INFORMATION FROM POSTAL SERVICE- The Postal Service shall provide the
Postal Regulatory Commission with such information as may, in the judgment of the
Commission, be necessary in order for the Commission to prepare its reports under this
section.

‘Sec. 3652. Annual reports to the Commission

‘(a) COSTS, REVENUES, 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.
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) 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) of section 3662 (as if a complaint averring such noncompliance had been duly
filed and found under such section to be justified).

‘(d) 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) REBUTTABLE PRESUMPTION- A timely written determination described in the
last sentence of subsection (b) shall, for purposes of any proceeding under section 3662,
create a rebuttable presumption of compliance by the Postal Service (with regard to the
matters described under paragraphs (1) and (2) of subsection (b)) during the year to
which such determination relates.

‘Sec. 3654. Additional financial reporting

‘(a) ADDITIONAL FINANCIAL REPORTING-

‘(1) IN GENERAL- The Postal Service shall file with the Postal Regulatory Commission
beginning with the first full fiscal year following the effective date of this section--

‘(A) within 40 days after the end of each fiscal quarter, a quarterly report containing the
information required by the Securities and Exchange Commission to be included in
quarterly reports under sections 13 and 15(d) of the Securities Exchange Act of 1934 (15
U.S.C. 78m, 78o(d)) on Form 10-Q, as such Form (or any successor form) may be
revised from time to time;

‘(B) within 60 days after the end of each fiscal year, an annual report containing the
information required by the Securities and Exchange Commission to be included in
annual reports under such sections on Form 10-K, as such Form (or any successor form)
may be revised from time to time; and

‘(C) periodic reports within the time frame and containing the information prescribed in
Form 8-K of the Securities and Exchange Commission, as such Form (or any successor
form) may be revised from time to time.

‘(2) REGISTRANT DEFINED- For purposes of defining the reports required by
paragraph (1), the Postal Service shall be deemed to be the ‘registrant‘ described in the
Securities and Exchange Commission Forms, and references contained in such Forms to
Securities and Exchange Commission regulations are incorporated herein by reference, as
amended.

‘(3) INTERNAL CONTROL REPORT- For purposes of defining the reports required by
paragraph (1)(B), the Postal Service shall comply with the rules prescribed by the
Securities and Exchange Commission implementing section 404 of the Sarbanes-Oxley
Act of 2002 (15 U.S.C. 7262), beginning with the annual report for fiscal year 2010.

‘(b) FINANCIAL REPORTING-

‘(1) The reports required by subsection (a)(1)(B) shall include, with respect to the Postal
Service‘s pension and post-retirement health obligations--

‘(A) the funded status of the Postal Service‘s pension and postretirement health
obligations;

‘(B) components of the net change in the fund balances and obligations and the nature
and cause of any significant changes;

‘(C) components of net periodic costs;

‘(D) cost methods and assumptions underlying the relevant actuarial valuations;

‘(E) the effect of a one-percentage point increase in the assumed health care cost trend
rate for each future year on the service and interest costs components of net periodic
postretirement health cost and the accumulated obligation;

‘(F) actual contributions to and payments from the funds for the years presented and the
estimated future contributions and payments for each of the following 5 years;

‘(G) the composition of plan assets reflected in the fund balances; and

‘(H) the assumed rate of return on fund balances and the actual rates of return for the
years presented.

‘(2) The Office of Personnel Management shall provide the data listed under paragraph
(1) to the Postal Service not later than 30 days after the end of each fiscal year.

‘(3)(A) Beginning with reports for the fiscal year 2010, for purposes of the reports
required under subparagraphs (A) and (B) of subsection (a)(1), the Postal Service shall
include segment reporting.

‘(B) The Postal Service shall determine the appropriate segment reporting under
subparagraph (A) after consultation with the Postal Regulatory Commission.

‘(c) TREATMENT- For purposes of the reports required by subsection (a)(1)(B), the
Postal Service shall obtain an opinion from an independent auditor on whether the
information listed in subsection (b) is fairly stated in all material respects, either in
relation to the basic financial statements as a whole or on a stand-alone basis.

‘(d) SUPPORTING MATTER- The Postal Regulatory Commission shall have access to
the audit documentation and any other supporting matter of the Postal Service and its
independent auditor in connection with any information submitted under this section.

‘(e) REVISED REQUIREMENTS- The Postal Regulatory Commission may, on its own
motion or on request of an interested party, initiate proceedings (to be conducted in
accordance with regulations that the Commission shall prescribe) to improve the quality,
accuracy, or completeness of Postal Service data required under this section whenever it
shall appear that--

‘(1) the data have become significantly inaccurate or can be significantly improved; or

‘(2) those revisions are, in the judgment of the Commission, otherwise necessitated by
the public interest.

‘(f) CONFIDENTIAL INFORMATION-

‘(1) IN GENERAL- If the Postal Service determines that any document or portion of a
document, or other matter, which it provides to the Postal Regulatory Commission in a
nonpublic annex under this section or pursuant to subsection (d) contains information
which is described in section 410(c) of this title, or exempt from public disclosure under
section 552(b) of title 5, the Postal Service shall, at the time of providing such matter to
the Commission, notify the Commission of its determination, in writing, and describe
with particularity the documents (or portions of documents) or other matter for which
confidentiality is sought and the reasons therefor.

‘(2) TREATMENT- Any information or other matter described in paragraph (1) to which
the Commission gains access under this section shall be subject to paragraphs (2) and (3)
of section 504(g) in the same way as if the Commission had received notification with
respect to such matter under section 504(g)(1).‘.
SEC. 205. COMPLAINTS; APPELLATE REVIEW AND ENFORCEMENT.
Chapter 36 of title 39, United States Code, is amended by striking sections 3662 and
3663 and inserting the following:

‘Sec. 3662. Rate and service complaints

‘(a) In General- Any interested person (including an officer of the Postal Regulatory
Commission representing the interests of the general public) who believes the Postal
Service is not operating in conformance with the requirements of the provisions of
sections 101(d), 401(2), 403(c), 404a, or 601, or this chapter (or regulations promulgated
under any of those provisions) may lodge a complaint with the Postal Regulatory
Commission in such form and manner as the Commission may prescribe.

‘(b) Prompt Response Required-

‘(1) IN GENERAL- The Postal Regulatory Commission shall, within 90 days after
receiving a complaint under subsection (a)--

‘(A) either--

‘(i) upon a finding that such complaint raises material issues of fact or law, begin
proceedings on such complaint; or

‘(ii) issue an order dismissing the complaint; and

‘(B) with respect to any action taken under subparagraph (A) (i) or (ii), issue a written
statement setting forth the bases of its determination.

‘(2) TREATMENT OF COMPLAINTS NOT TIMELY ACTED ON- For purposes of
section 3663, any complaint under subsection (a) on which the Commission fails to act in
the time and manner required by paragraph (1) shall be treated in the same way as if it
had been dismissed pursuant to an order issued by the Commission on the last day
allowable for the issuance of such order under paragraph (1).

‘(c) Action Required if Complaint Found To Be Justified- If the Postal Regulatory
Commission finds the complaint to be justified, it shall order that the Postal Service take
such action as the Commission considers appropriate in order to achieve compliance with
the applicable requirements and to remedy the effects of any noncompliance (such as
ordering unlawful rates to be adjusted to lawful levels, ordering the cancellation of
market tests, ordering the Postal Service to discontinue providing loss-making products,
or requiring the Postal Service to make up for revenue shortfalls in competitive products).

‘(d) Authority To Order Fines in Cases of Deliberate Noncompliance- In addition, in
cases of deliberate noncompliance by the Postal Service with the requirements of this
title, the Postal Regulatory Commission may order, based on the nature, circumstances,
extent, and seriousness of the noncompliance, a fine (in the amount specified by the
Commission in its order) for each incidence of noncompliance. Fines resulting from the
provision of competitive products shall be paid from the Competitive Products Fund
established in section 2011. All receipts from fines imposed under this subsection shall be
deposited in the general fund of the Treasury of the United States.

‘Sec. 3663. Appellate review

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

‘Sec. 3664. Enforcement of orders

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

SEC. 206. CLERICAL AMENDMENT.

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

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

‘SUBCHAPTER I--PROVISIONS RELATING TO MARKET-DOMINANT
PRODUCTS
‘Sec.

‘3621. Applicability; definitions.

‘3622. Modern rate regulation.

‘[3623. Repealed.]

‘[3624. Repealed.]

‘[3625. Repealed.]

‘3626. Reduced Rates.

‘3627. Adjusting free rates.

‘[3628. Repealed.]

‘3629. Reduced rates for voter registration purposes.

‘SUBCHAPTER II--PROVISIONS RELATING TO COMPETITIVE PRODUCTS

‘3631. Applicability; definitions and updates.

‘3632. Action of the Governors.

‘3633. Provisions applicable to rates for competitive products.

‘3634. Assumed Federal income tax on competitive products.

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

‘3641. Market tests of experimental products.

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

‘SUBCHAPTER IV--REPORTING REQUIREMENTS AND RELATED PROVISIONS

‘3651. Annual reports by the Commission.

‘3652. Annual reports to the Commission.

‘3653. Annual determination of compliance.

‘3654. Additional financial reporting.

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

‘3661. Postal Services.

‘3662. Rate and service complaints.

‘3663. Appellate review.

‘3664. Enforcement of orders.

‘SUBCHAPTER VI--GENERAL

‘3681. Reimbursement.

‘3682. Size and weight limits.

‘3683. Uniform rates for books; films, other materials.

‘3684. Limitations.

‘3685. Filing of information relating to periodical publications.

‘3686. Bonus authority.

‘SUBCHAPTER VII--MODERN SERVICE STANDARDS

‘3691. Establishment of modern service standards.‘.

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TITLE III--MODERN SERVICE STANDARDS

SEC. 301. ESTABLISHMENT OF MODERN SERVICE STANDARDS.

Chapter 36 of title 39, United States Code, as amended by this Act, is further amended by
adding at the end the following:

‘SUBCHAPTER VII--MODERN SERVICE STANDARDS

‘Sec. 3691. Establishment of modern service standards

‘(a) AUTHORITY GENERALLY- Not later than 12 months after the date of enactment
of this section, the Postal Service shall, in consultation with the Postal Regulatory
Commission, by regulation establish (and may from time to time thereafter by regulation
revise) a set of service standards for market-dominant products.

‘(b) OBJECTIVES-

‘(1) IN GENERAL- Such standards shall be designed to achieve the following objectives:

‘(A) To enhance the value of postal services to both senders and recipients.

‘(B) To preserve regular and effective access to postal services in all communities,
including those in rural areas or where post offices are not self-sustaining.

‘(C) To reasonably assure Postal Service customers delivery reliability, speed and
frequency consistent with reasonable rates and best business practices.

‘(D) To provide a system of objective external performance measurements for each
market-dominant product as a basis for measurement of Postal Service performance.

‘(2) IMPLEMENTATION OF PERFORMANCE MEASUREMENTS- With respect to
paragraph (1)(D), with the approval of the Postal Regulatory Commission an internal
measurement system may be implemented instead of an external measurement system.

‘(c) FACTORS- In establishing or revising such standards, the Postal Service shall take
into account--

‘(1) the actual level of service that Postal Service customers receive under any service
guidelines previously established by the Postal Service or service standards established
under this section;

‘(2) the degree of customer satisfaction with Postal Service performance in the
acceptance, processing and delivery of mail;

‘(3) the needs of Postal Service customers, including those with physical impairments;

‘(4) mail volume and revenues projected for future years;

‘(5) the projected growth in the number of addresses the Postal Service will be required
to serve in future years;

‘(6) the current and projected future cost of serving Postal Service customers;

‘(7) the effect of changes in technology, demographics, and population distribution on the
efficient and reliable operation of the postal delivery system; and

‘(8) the policies of this title and such other factors as the Postal Service determines
appropriate.

‘(d) REVIEW- The regulations promulgated pursuant to this section (and any revisions
thereto), and any violations thereof, shall be subject to review upon complaint under
sections 3662 and 3663.‘.

SEC. 302. POSTAL SERVICE PLAN.

(a) IN GENERAL- Within 6 months after the establishment of the service standards
under section 3691 of title 39, United States Code, as added by this Act, the Postal
Service shall, in consultation with the Postal Regulatory Commission, develop and
submit to Congress a plan for meeting those standards.

(b) CONTENTS- The plan under this section shall--

(1) establish performance goals;

(2) describe any changes to the Postal Service‘s processing, transportation, delivery, and
retail networks necessary to allow the Postal Service to meet the performance goals;

(3) describe any changes to planning and performance management documents
previously submitted to Congress to reflect new performance goals; and

(4) describe the long-term vision of the Postal Service for rationalizing its infrastructure
and workforce, and how the Postal Service intends to implement that vision.

(c) POSTAL FACILITIES-

(1) FINDINGS- Congress finds that--

(A) the Postal Service has more than 400 logistics facilities, separate from its post office
network;

(B) as noted by the President‘s Commission on the United States Postal Service, the
Postal Service has more facilities than it needs and the streamlining of this distribution
network can pave the way for the potential consolidation of sorting facilities and the
elimination of excess costs;

(C) the Postal Service has always revised its distribution network to meet changing
conditions and is best suited to address its operational needs; and

(D) Congress strongly encourages the Postal Service to--

(i) expeditiously move forward in its streamlining efforts; and

(ii) keep unions, management associations, and local elected officials informed as an
essential part of this effort and abide by any procedural requirements contained in the
national bargaining agreements.

(2) IN GENERAL- The Postal Service plan shall include a description of--

(A) the long-term vision of the Postal Service for rationalizing its infrastructure and
workforce; and

(B) how the Postal Service intends to implement that vision.

(3) CONTENT OF FACILITIES PLAN- The plan under this subsection shall include--

(A) a strategy for how the Postal Service intends to rationalize the postal facilities
network and remove excess processing capacity and space from the network, including
estimated timeframes, criteria, and processes to be used for making changes to the
facilities network, and the process for engaging policy makers and the public in related
decisions;

(B) a discussion of what impact any facility changes may have on the postal workforce
and whether the Postal Service has sufficient flexibility to make needed workforce
changes;

(C) an identification of anticipated costs, cost savings, and other benefits associated with
the infrastructure rationalization alternatives discussed in the plan; and

(D) procedures that the Postal Service will use to--

(i) provide adequate public notice to communities potentially affected by a proposed
rationalization decision;

(ii) make available information regarding any service changes in the affected
communities, any other effects on customers, any effects on postal employees, and any
cost savings;

(iii) afford affected persons ample opportunity to provide input on the proposed decision;
and

(iv) take such comments into account in making a final decision.

(4) ANNUAL REPORTS-

(A) IN GENERAL- Not later than 90 days after the end of each fiscal year, the Postal
Service shall prepare and submit a report to Congress on how postal decisions have
impacted or will impact rationalization plans.

(B) CONTENTS- Each report under this paragraph shall include--

(i) an account of actions taken during the preceding fiscal year to improve the efficiency
and effectiveness of its processing, transportation, and distribution networks while
preserving the timely delivery of postal services, including overall estimated costs and
cost savings;

(ii) an account of actions taken to identify any excess capacity within its processing,
transportation, and distribution networks and implement savings through realignment or
consolidation of facilities including overall estimated costs and cost savings;

(iii) an estimate of how postal decisions related to mail changes, security, automation
initiatives, worksharing, information technology systems, excess capacity, consolidating
and closing facilities, and other areas will impact rationalization plans;

(iv) identification of any statutory or regulatory obstacles that prevented or will prevent
or hinder the Postal Service from taking action to realign or consolidate facilities; and

(v) such additional topics and recommendations as the Postal Service considers
appropriate.

(5) EXISTING EFFORTS- Effective on the date of enactment of this Act, the Postal
Service may not close or consolidate any processing or logistics facilities without using
procedures for public notice and input consistent with those described under paragraph
(3)(D).
(d) ALTERNATE RETAIL OPTIONS- The Postal Service plan shall include plans to
expand and market retail access to postal services, in addition to post offices, including--

(1) vending machines;

(2) the Internet;

(3) postage meters;

(4) Stamps by Mail;

(5) Postal Service employees on delivery routes;

(6) retail facilities in which overhead costs are shared with private businesses and other
government agencies;

(7) postal kiosks; or

(8) any other nonpost office access channel providing market retail access to postal
services.

(e) REEMPLOYMENT ASSISTANCE AND RETIREMENT BENEFITS- The Postal
Service plan shall include--

(1) a comprehensive plan under which reemployment assistance shall be afforded to
employees displaced as a result of automation of any of its functions, the closing and
consolidation of any of its facilities, or such other reasons as the Postal Service may
determine; and

(2) a plan, developed in consultation with the Office of Personnel Management, to offer
early retirement benefits.

(f) CONTINUED AUTHORITY- Nothing in this section shall be construed to prohibit
the Postal Service from implementing any change to its processing, transportation,
delivery, and retail networks under any authority granted to the Postal Service for those
purposes.

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TITLE IV--PROVISIONS RELATING TO FAIR COMPETITION

SEC. 401. POSTAL SERVICE COMPETITIVE PRODUCTS FUND.

(a) PROVISIONS RELATING TO POSTAL SERVICE COMPETITIVE PRODUCTS
FUND AND RELATED MATTERS-

(1) IN GENERAL- Chapter 20 of title 39, United States Code, is amended by adding at
the end the following:

‘Sec. 2011. Provisions relating to competitive products

‘(a)(1) In this subsection, the term ‘costs attributable‘ has the meaning given such term by
section 3631.

‘(2) There is established in the Treasury of the United States a revolving fund, to be
called the Postal Service Competitive Products Fund, which shall be available to the
Postal Service without fiscal year limitation for the payment of--

‘(A) costs attributable to competitive products; and

‘(B) all other costs incurred by the Postal Service, to the extent allocable to competitive
products.

‘(b) There shall be deposited in the Competitive Products Fund, subject to withdrawal by
the Postal Service--

‘(1) revenues from competitive products;

‘(2) amounts received from obligations issued by Postal Service under subsection (e);

‘(3) interest and dividends earned on investments of the Competitive Products Fund; and

‘(4) any other receipts of the Postal Service (including from the sale of assets), to the
extent allocable to competitive products.

‘(c) If the Postal Service determines that the moneys of the Competitive Products Fund
are in excess of current needs, the Postal Service may request the investment of such
amounts as the Postal Service determines advisable by the Secretary of the Treasury in
obligations of, or obligations guaranteed by, the Government of the United States, and,
with the approval of the Secretary, in such other obligations or securities as the Postal
Service determines appropriate.

‘(d) With the approval of the Secretary of the Treasury, the Postal Service may deposit
moneys of the Competitive Products Fund in any Federal Reserve bank, any depository
for public funds, or in such other places and in such manner as the Postal Service and the
Secretary may mutually agree.

‘(e)(1)(A) Subject to the limitations specified in section 2005(a), the Postal Service is
authorized to borrow money and to issue and sell such obligations as the Postal Service
determines necessary to provide for competitive products and deposit such amounts in the
Competitive Products Fund.

‘(B) Subject to paragraph (5), any borrowings by the Postal Service under subparagraph
(A) shall be supported and serviced by--

‘(i) the revenues and receipts from competitive products and the assets related to the
provision of competitive products (as determined under subsection (h)); or

‘(ii) for purposes of any period before accounting practices and principles under
subsection (h) have been established and applied, the best information available from the
Postal Service, including the audited statements required by section 2008(e).

‘(2) The Postal Service may enter into binding covenants with the holders of such
obligations, and with any trustee under any agreement entered into in connection with the
issuance of such obligations with respect to--

‘(A) the establishment of reserve, sinking, and other funds;

‘(B) application and use of revenues and receipts of the Competitive Products Fund;

‘(C) stipulations concerning the subsequent issuance of obligations or the execution of
leases or lease purchases relating to properties of the Postal Service; and

‘(D) such other matters as the Postal Service, considers necessary or desirable to enhance
the marketability of such obligations.

‘(3) Obligations issued by the Postal Service under this subsection--

‘(A) shall be in such forms and denominations;

‘(B) shall be sold at such times and in such amounts;

‘(C) shall mature at such time or times;

‘(D) shall be sold at such prices;

‘(E) shall bear such rates of interest;

‘(F) may be redeemable before maturity in such manner, at such times, and at such
redemption premiums;

‘(G) may be entitled to such relative priorities of claim on the assets of the Postal Service
with respect to principal and interest payments; and

‘(H) shall be subject to such other terms and conditions,
as the Postal Service determines.

‘(4) Obligations issued by the Postal Service under this subsection--

‘(A) shall be negotiable or nonnegotiable and bearer or registered instruments, as
specified therein and in any indenture or covenant relating thereto;

‘(B) shall contain a recital that such obligations are issued under this 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.

‘(i)(1) The Postal Service shall submit an annual report to the Secretary of the Treasury
concerning the operation of the Competitive Products Fund. The report shall address such
matters as risk limitations, reserve balances, allocation or distribution of moneys,
liquidity requirements, and measures to safeguard against losses.

‘(2) A copy of the most recent report submitted under paragraph (1) shall be included in
the annual report submitted by the Postal Regulatory Commission under section
3652(g).‘.
(2) CLERICAL AMENDMENT- The table of sections for chapter 20 of title 39, United
States Code, is amended by adding after the item relating to section 2010 the following:

‘2011. Provisions relating to competitive products.‘.

(b) TECHNICAL AND CONFORMING AMENDMENTS-

(1) DEFINITION- Section 2001 of title 39, United States Code, is amended by striking ‘and‘ at the end of paragraph (1), by redesignating paragraph (2) as paragraph (3), and by inserting after paragraph (1) the following:

‘(2) COMPETITIVE PRODUCTS FUND- The term ‘Competitive Products Fund‘ means
the Postal Service Competitive Products Fund established by section 2011; and‘.

(2) CAPITAL OF THE POSTAL SERVICE- Section 2002(b) of title 39, United States
Code, is amended by striking ‘Fund,‘ and inserting ‘Fund and the balance in the
Competitive Products Fund,‘.

(3) POSTAL SERVICE FUND-

(A) PURPOSES FOR WHICH AVAILABLE- Section 2003(a) of title 39, United States
Code, is amended by striking ‘title.‘ and inserting ‘title (other than any of the purposes,
functions, or powers for which the Competitive Products Fund is available).‘.

(B) DEPOSITS- Section 2003(b) of title 39, United States Code, is amended by striking ‘There‘ and inserting ‘Except as otherwise provided in section 2011, there‘.

(4) RELATIONSHIP BETWEEN THE TREASURY AND THE POSTAL SERVICE

Section 2006 of title 39, United States Code, is amended--

(A) in subsection (a), in the first sentence, by inserting ‘or 2011‘ after ‘section 2005‘;

(B) in subsection (b)--

(i) in the first sentence, by inserting ‘under section 2005‘ before ‘in such amounts‘; and

(ii) in the second sentence, by inserting ‘under section 2005‘ before ‘in excess of such
amount.‘; and

(C) in subsection (c), by inserting ‘or 2011(e)(4)(E)‘ after ‘section 2005(d)(5)‘.

SEC. 402. ASSUMED FEDERAL INCOME TAX ON COMPETITIVE PRODUCTS
INCOME.

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

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

‘(a) DEFINITIONS- For purposes of this section--

‘(1) the term ‘assumed Federal income tax on competitive products income‘ means the
net income tax that would be imposed by chapter 1 of the Internal Revenue Code of 1986
on the Postal Service‘s assumed taxable income from competitive products for the year;
and

‘(2) the term ‘assumed taxable income from competitive products‘, with respect to a year,
refers to the amount representing what would be the taxable income of a corporation
under the Internal Revenue Code of 1986 for the year, if--

‘(A) the only activities of such corporation were the activities of the Postal Service
allocable under section 2011(h) to competitive products; and

‘(B) the only assets held by such corporation were the assets of the Postal Service
allocable under section 2011(h) to such activities.

‘(b) COMPUTATION AND TRANSFER REQUIREMENTS- The Postal Service shall,
for each year beginning with the year in which occurs the deadline for the Postal
Service‘s first report to the Postal Regulatory Commission under section 3652(a)--

‘(1) compute its assumed Federal income tax on competitive products income for such
year; and

‘(2) transfer from the Competitive Products Fund to the Postal Service Fund the amount
of that assumed tax.

‘(c) DEADLINE FOR TRANSFERS- Any transfer required to be made under this section
for a year shall be due on or before the January 15th next occurring after the close of such
year.‘.

SEC. 403. UNFAIR COMPETITION PROHIBITED.

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

‘Sec. 404a. Specific limitations

‘(a) Except as specifically authorized by law, the Postal Service may not--

‘(1) establish any rule or regulation (including any standard) the effect of which is to
preclude competition or establish the terms of competition unless the Postal Service
demonstrates that the regulation does not create an unfair competitive advantage for itself
or any entity funded (in whole or in part) by the Postal Service;

‘(2) compel the disclosure, transfer, or licensing of intellectual property to any third party
(such as patents, copyrights, trademarks, trade secrets, and proprietary information); or

‘(3) obtain information from a person that provides (or seeks to provide) any product, and
then offer any postal service that uses or is based in whole or in part on such information,
without the consent of the person providing that information, unless substantially the
same information is obtained (or obtainable) from an independent source or is otherwise
obtained (or obtainable).

‘(b) The Postal Regulatory Commission shall prescribe regulations to carry out this
section.

‘(c) Any party (including an officer of the Commission representing the interests of the
general public) who believes that the Postal Service has violated this section may bring a
complaint in accordance with section 3662.‘.

(b) CONFORMING AMENDMENTS-

(1) GENERAL POWERS- Section 401 of title 39, United States Code, is amended by
striking ‘The‘ and inserting ‘Subject to the provisions of section 404a, the‘.

(2) SPECIFIC POWERS- Section 404(a) of title 39, United States Code, is amended by
striking ‘Without‘ and inserting ‘Subject to the provisions of section 404a, but otherwise
without‘.

(c) CLERICAL AMENDMENT- The analysis for chapter 4 of title 39, United States
Code, is amended by inserting after the item relating to section 404 the following:

‘404a. Specific limitations.‘.

SEC. 404. SUITS BY AND AGAINST THE POSTAL SERVICE.

(a) IN GENERAL- Section 409 of title 39, United States Code, is amended by striking
subsections (d) and (e) and inserting the following:

‘(d)(1) For purposes of the provisions of law cited in paragraphs (2)(A) and (2)(B),
respectively, the Postal Service--

‘(A) shall be considered to be a ‘person‘, as used in the provisions of law involved; and

‘(B) shall not be immune under any other doctrine of sovereign immunity from suit in
Federal court by any person for any violation of any of those provisions of law by any
officer or employee of the Postal Service.

‘(2) This subsection applies with respect to--

‘(A) the Act of July 5, 1946 (commonly referred to as the ‘Trademark Act of 1946‘ (15
U.S.C. 1051 and following)); and

‘(B) the provisions of section 5 of the Federal Trade Commission Act to the extent that
such section 5 applies to unfair or deceptive acts or practices.

‘(e)(1) To the extent that the Postal Service, or other Federal agency acting on behalf of
or in concert with the Postal Service, engages in conduct with respect to any product
which is not reserved to the United States under section 1696 of title 18, the Postal
Service or other Federal agency (as the case may be)--

‘(A) shall not be immune under any doctrine of sovereign immunity from suit in Federal
court by any person for any violation of Federal law by such agency or any officer or
employee thereof; and

‘(B) shall be considered to be a person (as defined in subsection (a) of the first section of
the Clayton Act) for purposes of--

‘(i) the antitrust laws (as defined in such subsection); and

‘(ii) section 5 of the Federal Trade Commission Act to the extent that such section 5
applies to unfair methods of competition.
For purposes of the preceding sentence, any private carriage of mail allowable by virtue
of section 601 shall not be considered a service reserved to the United States under
section 1696 of title 18.

‘(2) No damages, interest on damages, costs or attorney‘s fees may be recovered, and no
criminal liability may be imposed, under the antitrust laws (as so defined) from any
officer or employee of the Postal Service, or other Federal agency acting on behalf of or
in concert with the Postal Service, acting in an official capacity.

‘(3) This subsection shall not apply with respect to conduct occurring before the date of
enactment of this subsection.

‘(f)(1) Each building constructed or altered by the Postal Service shall be constructed or
altered, to the maximum extent feasible as determined by the Postal Service, in
compliance with 1 of the nationally recognized model building codes and with other
applicable nationally recognized codes.

‘(2) Each building constructed or altered by the Postal Service shall be constructed or
altered only after consideration of all requirements (other than procedural requirements)
of zoning laws, land use laws, and applicable environmental laws of a State or
subdivision of a State which would apply to the building if it were not a building
constructed or altered by an establishment of the Government of the United States.

‘(3) For purposes of meeting the requirements of paragraphs (1) and (2) with respect to a
building, the Postal Service shall--

‘(A) in preparing plans for the building, consult with appropriate officials of the State or
political subdivision, or both, in which the building will be located;

‘(B) upon request, submit such plans in a timely manner to such officials for review by
such officials for a reasonable period of time not exceeding 30 days; and

‘(C) permit inspection by such officials during construction or alteration of the building,
in accordance with the customary schedule of inspections for construction or alteration of
buildings in the locality, if such officials provide to the Postal Service--

‘(i) a copy of such schedule before construction of the building is begun; and

‘(ii) reasonable notice of their intention to conduct any inspection before conducting such
inspection.
Nothing in this subsection shall impose an obligation on any State or political subdivision
to take any action under the preceding sentence, nor shall anything in this subsection
require the Postal Service or any of its contractors to pay for any action taken by a State
or political subdivision to carry out this subsection (including reviewing plans, carrying
out on-site inspections, issuing building permits, and making recommendations).

‘(4) Appropriate officials of a State or a political subdivision of a State may make
recommendations to the Postal Service concerning measures necessary to meet the
requirements of paragraphs (1) and (2). Such officials may also make recommendations
to the Postal Service concerning measures which should be taken in the construction or
alteration of the building to take into account local conditions. The Postal Service shall
give due consideration to any such recommendations.

‘(5) In addition to consulting with local and State officials under paragraph (3), the Postal
Service shall establish procedures for soliciting, assessing, and incorporating local
community input on real property and land use decisions.

‘(6) For purposes of this subsection, the term ‘State‘ includes the District of Columbia,
the Commonwealth of Puerto Rico, and a territory or possession of the United States.

‘(h)(1) Notwithstanding any other provision of law, legal representation may not be
furnished by the Department of Justice to the Postal Service in any action, suit, or
proceeding arising, in whole or in part, under any of the following:

‘(A) Subsection (d) or (e) of this section.

‘(B) Subsection (f) or (g) of section 504 (relating to administrative subpoenas by the
Postal Regulatory Commission).

‘(C) Section 3663 (relating to appellate review).
The Postal Service may, by contract or otherwise, employ attorneys to obtain any legal
representation that it is precluded from obtaining from the Department of Justice under
this paragraph.

‘(2) In any circumstance not covered by paragraph (1), the Department of Justice shall,
under section 411, furnish the Postal Service such legal representation as it may require,
except that, with the prior consent of the Attorney General, the Postal Service may, in any
such circumstance, employ attorneys by contract or otherwise to conduct litigation
brought by or against the Postal Service or its officers or employees in matters affecting
the Postal Service.

‘(3)(A) In any action, suit, or proceeding in a court of the United States arising in whole
or in part under any of the provisions of law referred to in subparagraph (B) or (C) of
paragraph (1), and to which the Commission is not otherwise a party, the Commission
shall be permitted to appear as a party on its own motion and as of right.

‘(B) The Department of Justice shall, under such terms and conditions as the Commission
and the Attorney General shall consider appropriate, furnish the Commission such legal
representation as it may require in connection with any such action, suit, or proceeding,
except that, with the prior consent of the Attorney General, the Commission may employ
attorneys by contract or otherwise for that purpose.

‘(i) A judgment against the Government of the United States arising out of activities of
the Postal Service shall be paid by the Postal Service out of any funds available to the
Postal Service, subject to the restriction specified in section 2011(g).‘.
(b) TECHNICAL AMENDMENT- Section 409(a) of title 39, United States Code, is
amended by striking ‘Except as provided in section 3628 of this title,‘ and inserting

‘Except as otherwise provided in this title,‘.

SEC. 405. INTERNATIONAL POSTAL ARRANGEMENTS.

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

‘Sec. 407. International postal arrangements

‘(a) It is the policy of the United States--

‘(1) to promote and encourage communications between peoples by efficient operation of
international postal services and other international delivery services for cultural, social,
and economic purposes;

‘(2) to promote and encourage unrestricted and undistorted competition in the provision
of international postal services and other international delivery services, except where
provision of such services by private companies may be prohibited by law of the United
States;

‘(3) to promote and encourage a clear distinction between governmental and operational
responsibilities with respect to the provision of international postal services and 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 Customs 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.‘.

(b) EFFECTIVE DATE- Notwithstanding any provision of the amendment made by
subsection (a), the authority of the United States Postal Service to establish the rates of
postage or other charges on mail matter conveyed between the United States and other
countries shall remain available to the Postal Service until--

(1) with respect to market-dominant products, the date as of which the regulations
promulgated under section 3622 of title 39, United States Code (as amended by section
201(a)) take effect; and

(2) with respect to competitive products, the date as of which the regulations promulgated
under section 3633 of title 39, United States Code (as amended by section 202) take
effect.

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TITLE V--GENERAL PROVISIONS

SEC. 501. QUALIFICATION AND TERM REQUIREMENTS FOR GOVERNORS.
(a) QUALIFICATIONS

(1) IN GENERAL- Section 202(a) of title 39, United States Code, is amended by striking

‘(a)‘ and inserting ‘(a)(1)‘ and by striking the fourth sentence and inserting the following:

‘The Governors shall represent the public interest generally, and shall be chosen solely on
the basis of their experience in the 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.‘.

(2) APPLICABILITY- The amendment made by paragraph (1) shall not affect the
appointment or tenure of any person serving as a Governor of the United States Postal
Service under an appointment made before the date of enactment of this Act however,
when any such office becomes vacant, the appointment of any person to fill that office
shall be made in accordance with such amendment. The requirement set forth in the
fourth sentence of section 202(a)(1) of title 39, United States Code (as amended by
subsection (a)) shall be met beginning not later than 9 years after the date of enactment of
this Act


(b) CONSULTATION REQUIREMENT- Section 202(a) of title 39, United States Code,
is amended by adding at the end the following:

‘(2) In selecting the individuals described in paragraph (1) for nomination for
appointment to the position of Governor, the President should consult with the Speaker of
the House of Representatives, the minority leader of the House of Representatives, the
majority leader of the Senate, and the minority leader of the Senate.‘.

(c) 7-Year Terms-

(1) IN GENERAL- Section 202(b) of title 39, United States code, is amended in the first
sentence by striking ‘9 years‘ and inserting ‘7 years‘.

(2) APPLICABILITY-

(A) CONTINUATION BY INCUMBENTS- The amendment made by paragraph (1)
shall not affect the tenure of any person serving as a Governor of the United States Postal
Service on the date of enactment of this Act and such person may continue to serve the
remainder of the applicable term.

(B) VACANCY BY INCUMBENT BEFORE 7 YEARS OF SERVICE- If a person who
is serving as a Governor of the United States Postal Service on the date of enactment of
this Act resigns, is removed, or dies before the expiration of the 9-year term of that
Governor, and that Governor has served less than 7 years of that term, the resulting
vacancy in office shall be treated as a vacancy in a 7-year term.

(C) VACANCY BY INCUMBENT AFTER 7 YEARS OF SERVICE- If a person who is
serving as a Governor of the United States Postal Service on the date of enactment of this
Act resigns, is removed, or dies before the expiration of the 9-year term of that Governor,
and that Governor has served 7 years or more of that term, that term shall be deemed to
have been a 7-year term beginning on its commencement date for purposes of
determining vacancies in office. Any appointment to the vacant office shall be for a 7-
year term beginning at the end of the original 9-year term determined without regard to
the deeming under the preceding sentence. Nothing in this subparagraph shall be
construed to affect any action or authority of any Governor or the Board of Governors
during any portion of a 9-year term deemed to be 7-year term under this subparagraph.

(d) TERM LIMITATION-

(1) IN GENERAL- Section 202(b) of title 39, United States Code, is amended--

(A) by inserting ‘(1)‘ after ‘(b)‘; and

(B) by adding at the end the following:

‘(2) No person may serve more than 2 terms as a Governor.‘.

(2) APPLICABILITY- The amendments made by paragraph (1) shall not affect the
tenure of any person serving as a Governor of the United States Postal Service on the date
of enactment of this Act with respect to the term which that person is serving on that date.
Such person may continue to serve the remainder of the applicable term, after which the
amendments made by paragraph (1) shall apply.

SEC. 502. OBLIGATIONS.

(a) PURPOSES FOR WHICH OBLIGATIONS MAY BE ISSUED- The first sentence of
section 2005(a)(1) of title 39, United States Code, is amended by striking ‘title.‘ and
inserting ‘title, other than any of the purposes for which the corresponding authority is
available to the Postal Service under section 2011.‘.

(b) LIMITATION ON NET ANNUAL INCREASE IN OBLIGATIONS ISSUED FOR
CERTAIN PURPOSES- The third sentence of section 2005(a)(1) of title 39, United
States Code, is amended to read as follows: ‘In any one fiscal year, the net increase in the
amount of obligations outstanding issued for the purpose of capital improvements and the
net increase in the amount of obligations outstanding issued for the purpose of defraying
operating expenses of the Postal Service shall not exceed a combined total of
$3,000,000,000.‘ .

(c) LIMITATIONS ON OBLIGATIONS OUTSTANDING(
1) IN GENERAL- Subsection (a) of section 2005 of title 39, United States Code, is
amended by adding at the end the following:

‘(3) For purposes of applying the respective limitations under this subsection, the
aggregate amount of obligations issued by the Postal Service which are outstanding as of
any one time, and the net increase in the amount of obligations outstanding issued by the
Postal Service for the purpose of capital improvements or for the purpose of defraying
operating expenses of the Postal Service in any fiscal year, shall be determined by
aggregating the relevant obligations issued by the Postal Service under this section with
the relevant obligations issued by the Postal Service under section 2011.‘.

(2) CONFORMING AMENDMENT- The second sentence of section 2005(a)(1) of title
39, United States Code, is amended by striking ‘any such obligations‘ and inserting ‘obligations issued by the Postal Service which may be‘.

(d) AMOUNTS WHICH MAY BE PLEDGED-

(1) OBLIGATIONS TO WHICH PROVISIONS APPLY- The first sentence of section
2005(b) of title 39, United States Code, is amended by striking ‘such obligations,‘ and
inserting ‘obligations issued by the Postal Service under this section,‘.

(2) ASSETS, REVENUES, AND RECEIPTS TO WHICH PROVISIONS APPLYSubsection
(b) of section 2005 of title 39, United States Code, is amended by striking

‘(b)‘ and inserting ‘(b)(1)‘, and by adding at the end the following:

‘(2) Notwithstanding any other provision of this section--

‘(A) the authority to pledge assets of the Postal Service under this subsection shall be
available only to the extent that such assets are not related to the provision of competitive
products (as determined under section 2011(h) or, for purposes of any period before
accounting practices and principles under section 2011(h) have been established and
applied, the best information available from the Postal Service, including the audited
statements required by section 2008(e)); and

‘(B) any authority under this subsection relating to the pledging or other use of revenues
or receipts of the Postal Service shall be available only to the extent that they are not
revenues or receipts of the Competitive Products Fund.‘.

SEC. 503. PRIVATE CARRIAGE OF LETTERS.

(a) IN GENERAL- Section 601 of title 39, United States Code, is amended by striking
subsection (b) and inserting the following:

‘(b) A letter may also be carried out of the mails when--

‘(1) the amount paid for the private carriage of the letter is at least the amount equal to 6
times the rate then currently charged for the 1st ounce of a single-piece first class letter;

‘(2) the letter weighs at least 12 1/2 ounces; or

‘(3) such carriage is within the scope of services described by regulations of the United
States Postal Service (including, in particular, sections 310.1 and 320.2-320.8 of title 39
of the Code of Federal Regulations, as in effect on July 1, 2005) that purport to permit
private carriage by suspension of the operation of this section (as then in effect).

‘(c) Any regulations necessary to carry out this section shall be promulgated by the Postal
Regulatory Commission.‘.

(b) EFFECTIVE DATE- This section shall take effect on the date as of which the
regulations promulgated under section 3633 of title 39, United States Code (as amended
by section 202) take effect.

SEC. 504. RULEMAKING AUTHORITY.

Paragraph (2) of section 401 of title 39, United States Code, is amended to read as
follows:

‘(2) to adopt, amend, and repeal such rules and regulations, not inconsistent with this
title, as may be necessary in the execution of its functions under this title and such other
functions as may be assigned to the Postal Service under any provisions of law outside of
this title;‘.

SEC. 505. NONINTERFERENCE WITH COLLECTIVE BARGAINING
AGREEMENTS.

(a) LABOR DISPUTES- Section 1207 of title 39, United States Code, is amended to read
as follows:

‘Sec. 1207. Labor disputes

‘(a) If there is a collective-bargaining agreement in effect, no party to such agreement
shall terminate or modify such agreement unless the party desiring such termination or
modification serves written notice upon the other party to the agreement of the proposed
termination or modification not less than 90 days prior to the expiration date thereof, or
not less than 90 days prior to the time it is proposed to make such termination or
modification. The party serving such notice shall notify the Federal Mediation and
Conciliation Service of the existence of a dispute within 45 days after such notice, if no
agreement has been reached by that time.

‘(b) If the parties fail to reach agreement or to adopt a procedure providing for a binding
resolution of a dispute by the expiration date of the agreement in effect, or the date of the
proposed termination or modification, the Director of the Federal Mediation and
Conciliation Service shall within 10 days appoint a mediator of nationwide reputation and
professional stature, and who is also a member of the National Academy of Arbitrators.
The parties shall cooperate with the mediator in an effort to reach an agreement and shall
meet and negotiate in good faith at such times and places that the mediator, in
consultation with the parties, shall direct.

‘(c)(1) If no agreement is reached within 60 days after the expiration or termination of the
agreement or the date on which the agreement became subject to modification under
subsection (a) of this section, or if the parties decide upon arbitration but do not agree
upon the procedures therefore, an arbitration board shall be established consisting of 3
members, 1 of whom shall be selected by the Postal Service, 1 by the bargaining
representative of the employees, and the third by the 2 thus selected. If either of the
parties fails to select a member, or if the members chosen by the parties fail to agree on
the third person within 5 days after their first meeting, the selection shall be made from a
list of names provided by the Director. This list shall consist of not less then 9 names of
arbitrators of nationwide reputation and professional nature, who are also members of the
National Academy of Arbitrators, and whom the Director has determined are available
and willing to serve.

‘(2) The arbitration board shall give the parties a full and fair hearing, including an
opportunity to present evidence in support of their claims, and an opportunity to present
their case in person, by counsel or by other representative as they may elect. Decisions of
the arbitration board shall be conclusive and binding upon the parties. The arbitration
board shall render its decision within 45 days after its appointment.

‘(3) Costs of the arbitration board and mediation shall be shared equally by the Postal
Service and the bargaining representative.

‘(d) In the case of a bargaining unit whose recognized collective-bargaining
representative does not have an agreement with the Postal Service, if the parties fail to
reach the agreement within 90 days after the commencement of collective bargaining, a
mediator shall be appointed in accordance with the terms in subsection (b) of this section,
unless the parties have previously agreed to another procedure for a binding resolution of
their differences. If the parties fail to reach agreement within 180 days after the
commencement of collective bargaining, and if they have not agreed to another procedure
for binding resolution, an arbitration board shall be established to provide conclusive and
binding arbitration in accordance with the terms of subsection (c) of this section.‘.

(b) NONINTERFERENCE WITH COLLECTIVE BARGAINING AGREEMENTS
Except as otherwise provided by the amendment made by subsection (a), nothing in this
Act shall restrict, expand, or otherwise affect any of the rights, privileges, or benefits of
either employees of or labor organizations representing employees of the United States
Postal Service under chapter 12 of title 39, United States Code, the National Labor
Relations Act, any handbook or manual affecting employee labor relations within the
United States Postal Service, or any collective bargaining agreement.

(c) FREE MAILING PRIVILEGES CONTINUE UNCHANGED- Nothing in this Act or
any amendment made by this Act shall affect any free mailing privileges accorded under
section 3217 or sections 3403 through 3406 of title 39, United States Code.

SEC. 506. BONUS AUTHORITY.
Chapter 36 of title 39, United States Code, is amended by inserting after section 3685 the
following:

‘Sec. 3686. Bonus authority

‘(a) IN GENERAL- The Postal Service may establish 1 or more programs to provide
bonuses or other rewards to officers and employees of the Postal Service in senior
executive or equivalent positions to achieve the objectives of this chapter.

‘(b) LIMITATION ON TOTAL COMPENSATION-

‘(1) IN GENERAL- Under any such program, the Postal Service may award a bonus or
other reward in excess of the limitation set forth in the last sentence of section 1003(a), if
such program has been approved under paragraph (2). Any such award or bonus may not
cause the total compensation of such officer or employee to exceed the total annual
compensation payable to the Vice President under section 104 of title 3 as of the end of
the calendar year in which the bonus or award is paid.

‘(2) APPROVAL PROCESS- If the Postal Service wishes to have the authority, under
any program described in subsection (a), to award bonuses or other rewards in excess of
the limitation set forth in the last sentence of section 1003(a)--

‘(A) the Postal Service shall make an appropriate request to the Board of Governors of
the Postal Service in such form and manner as the Board requires; and

‘(B) the Board of Governors shall approve any such request if the Board certifies, for the
annual appraisal period involved, that the performance appraisal system for affected
officers and employees of the Postal Service (as designed and applied) makes meaningful
distinctions based on relative performance.

‘(3) REVOCATION AUTHORITY- If the Board of Governors of the Postal Service
finds that a performance appraisal system previously approved under paragraph (2)(B)
does not (as designed and applied) make meaningful distinctions based on relative
performance, the Board may revoke or suspend the authority of the Postal Service to
continue a program approved under paragraph (2) until such time as appropriate
corrective measures have, in the judgment of the Board, been taken.

‘(c) Exceptions for Critical Positions- Notwithstanding any other provision of law, the
Board of Governors may allow up to 12 officers or employees of the Postal Service in
critical senior executive or equivalent positions to receive total compensation in an
amount not to exceed 120 percent of the total annual compensation payable to the Vice
President under section 104 of title 3 as of the end of the calendar year in which such
payment is received. For each exception made under this subsection, the Board shall
provide written notification to the Director of the Office of Personnel Management and
the Congress within 30 days after the payment is made setting forth the name of the
officer or employee involved, the critical nature of his or her duties and responsibilities,
and the basis for determining that such payment is warranted.

‘(d) Information for Inclusion in Comprehensive Statement- Included in its
comprehensive statement under section 2401(e) for any period shall be--

‘(1) the name of each person receiving a bonus or other payment during such period
which would not have been allowable but for the provisions of subsection (b) or (c);

‘(2) the amount of the bonus or other payment; and

‘(3) the amount by which the limitation set forth in the last sentence of section 1003(a)
was exceeded as a result of such bonus or other payment.

‘(e) Regulations- The Board of Governors may prescribe regulations for the
administration of this section.‘.

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TITLE VI--ENHANCED REGULATORY COMMISSION

SEC. 601. REORGANIZATION AND MODIFICATION OF CERTAIN PROVISIONS
RELATING TO THE POSTAL REGULATORY COMMISSION.

(a) TRANSFER AND REDESIGNATION- Title 39, United States Code, is amended--

(1) by inserting after chapter 4 the following:

‘CHAPTER 5--POSTAL REGULATORY COMMISSION

‘Sec.

‘501. Establishment.

‘502. Commissioners.

‘503. Rules; regulations; procedures.

‘504. Administration.

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

‘Sec. 501. Establishment

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

‘Sec. 502. Commissioners

‘(a) The Postal Regulatory Commission is composed of 5 Commissioners, appointed by
the President, by and with the advice and consent of the Senate. The Commissioners shall
be chosen solely on the basis of their technical qualifications, professional standing, and
demonstrated expertise in economics, accounting, law, or public administration, and may
be removed by the President only for cause. Each individual appointed to the
Commission shall have the qualifications and expertise necessary to carry out the
enhanced responsibilities accorded Commissioners under the Postal Accountability and
Enhancement Act. Not more than 3 of the Commissioners may be adherents of the same
political party.

‘(b) No Commissioner shall be financially interested in any enterprise in the private
sector of the economy engaged in the delivery of mail matter.

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

‘(d) One of the Commissioners shall be designated as Chairman by, and shall serve in the
position of Chairman at the pleasure of, the President.

‘(e) The Commissioners shall by majority vote designate a Vice Chairman of the
Commission. The Vice Chairman shall act as Chairman of the Commission in the
absence of the Chairman.

‘(f) The Commissioners shall serve for terms of 6 years.‘;

(2) by striking, in subchapter I of chapter 36 (as in effect before the amendment made by
section 201(c)), the heading for such subchapter I and all that follows through section
3602;

(3) by redesignating sections 3603 and 3604 as sections 503 and 504, respectively, and
transferring such sections to the end of chapter 5 (as inserted by paragraph (1)); and

(4) by adding after such section 504 the following:

‘Sec. 505. Officer of the Postal Regulatory Commission representing the general public
‘The Postal Regulatory Commission shall designate an officer of the Postal Regulatory
Commission in all public proceedings (such as developing rules, regulations, and
procedures) who shall represent the interests of the general public.‘.

(b) APPLICABILITY- The amendment made by subsection (a)(1) shall not affect the
appointment or tenure of any person serving as a Commissioner on the Postal Regulatory
Commission (as so redesignated by section 604) under an appointment made before the
date of enactment of this Act or any nomination made before that date, but, when any
such office becomes vacant, the appointment of any person to fill that office shall be
made in accordance with such amendment.

(c) CLERICAL AMENDMENT- The analysis for part I of title 39, United States Code, is
amended by inserting after the item relating to chapter 4 the following:

‘5. Postal Regulatory Commission
501‘

SEC. 602. AUTHORITY FOR POSTAL REGULATORY COMMISSION TO ISSUE
SUBPOENAS.

Section 504 of title 39, United States Code (as so redesignated by section 601) is
amended by adding at the end the following:

‘(f)(1) Any Commissioner of the Postal Regulatory Commission, any administrative law
judge appointed by the Commission under section 3105 of title 5, and any employee of
the Commission designated by the Commission may administer oaths, examine
witnesses, take depositions, and receive evidence.

‘(2) The Chairman of the Commission, any Commissioner designated by the Chairman,
and any administrative law judge appointed by the Commission under section 3105 of
title 5 may, with respect to any proceeding conducted by the Commission under this title
or to obtain information to be used to prepare a report under this title--

‘(A) issue subpoenas requiring the attendance and presentation of testimony by, or the
production of documentary or other evidence in the possession of, any covered person;
and

‘(B) order the taking of depositions and responses to written interrogatories by a covered
person.
The written concurrence of a majority of the Commissioners then holding office shall,
with respect to each subpoena under subparagraph (A), be required in advance of its
issuance.

‘(3) In the case of contumacy or failure to obey a subpoena issued under this subsection,
upon application by the Commission, the district court of the United States for the district
in which the person to whom the subpoena is addressed resides or is served may issue an
order requiring such person to appear at any designated place to testify or produce
documentary or other evidence. Any failure to obey the order of the court may be
punished by the court as a contempt thereof.

‘(4) For purposes of this subsection, the term ‘covered person‘ means an officer,
employee, agent, or contractor of the Postal Service.

‘(g)(1) If the Postal Service determines that any document or other matter it provides to
the Postal Regulatory Commission under a subpoena issued under subsection (f), or
otherwise at the request of the Commission in connection with any proceeding or other
purpose under this title, contains information which is described in section 410(c) of this
title, or exempt from public disclosure under section 552(b) of title 5, the Postal Service
shall, at the time of providing such matter to the Commission, notify the Commission, in
writing, of its determination (and the reasons therefor).

‘(2) Except as provided in paragraph (3), no officer or employee of the Commission may,
with respect to any information as to which the Commission has been notified under
paragraph (1)--

‘(A) use such information for purposes other than the purposes for which it is supplied; or

‘(B) permit anyone who is not an officer or employee of the Commission to have access
to any such information.

‘(3)(A) Paragraph (2) shall not prohibit the Commission from publicly disclosing relevant
information in furtherance of its duties under this title, provided that the Commission has
adopted regulations under section 553 of title 5, that establish a procedure for according
appropriate confidentiality to information identified by the Postal Service under
paragraph (1). In determining the appropriate degree of confidentiality to be accorded
information identified by the Postal Service under paragraph (1), the Commission shall
balance the nature and extent of the likely commercial injury to the Postal Service against
the public interest in maintaining the financial transparency of a government
establishment competing in commercial markets.

‘(B) Paragraph (2) shall not prevent the Commission from requiring production of
information in the course of any discovery procedure established in connection with a
proceeding under this title. The Commission shall, by regulations based on rule 26(c) of
the Federal Rules of Civil Procedure, establish procedures for ensuring appropriate
confidentiality for information furnished to any party.‘.

SEC. 603. AUTHORIZATION OF APPROPRIATIONS FROM THE POSTAL
SERVICE FUND.

(a) POSTAL REGULATORY COMMISSION- Subsection (d) of section 504 of title 39,
United States Code (as so redesignated by section 601) is amended to read as follows:

‘(d) There are authorized to be appropriated, out of the Postal Service Fund, such sums as
may be necessary for the Postal Regulatory Commission. In requesting an appropriation
under this subsection for a fiscal year, the Commission shall prepare and submit to the
Congress under section 2009 a budget of the Commission‘s expenses, including expenses
for facilities, supplies, compensation, and employee benefits.‘.

(b) OFFICE OF INSPECTOR GENERAL OF THE UNITED STATES POSTAL
SERVICE- Section 8G(f) of the Inspector General Act of 1978 (5 U.S.C. App.) is
amended--

(1) by redesignating paragraph (4) as paragraph (5);

(2) by redesignating the second paragraph (3) (relating to employees and labor
organizations) as paragraph (4); and

(3) by adding at the end the following:

‘(6) There are authorized to be appropriated, out of the Postal Service Fund, such sums as
may be necessary for the Office of Inspector General of the United States Postal
Service.‘.

(c) BUDGET PROGRAM-

(1) IN GENERAL- The next to last sentence of section 2009 of title 39, United States
Code, is amended to read as follows: ‘The budget program shall also include separate
statements of the amounts which (1) the Postal Service requests to be appropriated under
subsections (b) and (c) of section 2401, (2) the Office of Inspector General of the United
States Postal Service requests to be appropriated, out of the Postal Service Fund, under
section 8G(f) of the Inspector General Act of 1978, and (3) the Postal Regulatory
Commission requests to be appropriated, out of the Postal Service Fund, under section
504(d) of this title.‘.

(2) CONFORMING AMENDMENT- Section 2003(e)(1) of title 39, United States Code,
is amended by striking the first sentence and inserting the following: ‘The Fund shall be
available for the payment of (A) all expenses incurred by the Postal Service in carrying
out its functions as provided by law, subject to the same limitation as set forth in the
parenthetical matter under subsection (a); (B) all expenses of the Postal Regulatory
Commission, subject to the availability of amounts appropriated under section 504(d);
and (C) all expenses of the Office of Inspector General, subject to the availability of
amounts appropriated under section 8G(f) of the Inspector General Act of 1978.‘.

(d) EFFECTIVE DATE

(1) IN GENERAL- The amendments made by this section shall apply with respect to
fiscal years beginning on or after October 1, 2008.

(2) SAVINGS PROVISION- The provisions of title 39, United States Code, and the
Inspector General Act of 1978 (5 U.S.C. App.) that are amended by this section shall, for
purposes of any fiscal year before the first fiscal year to which the amendments made by
this section apply, continue to apply in the same way as if this section had never been
enacted.

SEC. 604. REDESIGNATION OF THE POSTAL RATE COMMISSION.

(a) AMENDMENTS TO TITLE 39, UNITED STATES CODE- Title 39, United States
Code, is amended in sections 404, 503 and 504 (as so redesignated by section 601), 1001
and 1002, by striking ‘Postal Rate Commission‘ each place it appears and inserting ‘Postal Regulatory Commission‘;

(b) AMENDMENTS TO TITLE 5, UNITED STATES CODE- Title 5, United States
Code, is amended in sections 104(1), 306(f), 2104(b), 3371(3), 5314 (in the item relating
to Chairman, Postal Rate Commission), 5315 (in the item relating to Members, Postal
Rate Commission), 5514(a)(5)(B), 7342(a)(1)(A), 7511(a)(1)(B)(ii), 8402(c)(1),
8423(b)(1)(B), and 8474(c)(4) by striking ‘Postal Rate Commission‘ and inserting ‘Postal
Regulatory Commission‘.

(c) AMENDMENT TO THE ETHICS IN GOVERNMENT ACT OF 1978- Section
101(f)(6) of the Ethics in Government Act of 1978 (5 U.S.C. App.) is amended by
striking ‘Postal Rate Commission‘ and inserting ‘Postal Regulatory Commission‘.

(d) AMENDMENT TO THE REHABILITATION ACT OF 1973- Section 501(b) of the
Rehabilitation Act of 1973 (29 U.S.C. 791(b)) is amended by striking ‘Postal Rate Office‘
and inserting ‘Postal Regulatory Commission‘.

(e) AMENDMENT TO TITLE 44, UNITED STATES CODE- Section 3502(5) of title
44, United States Code, is amended by striking ‘Postal Rate Commission‘ and inserting ‘Postal Regulatory Commission‘.

(f) OTHER REFERENCES- Whenever a reference is made in any provision of law (other
than this Act or a provision of law amended by this Act), regulation, rule, document, or
other record of the United States to the Postal Rate Commission, such reference shall be
considered a reference to the Postal Regulatory Commission.

SEC. 605. INSPECTOR GENERAL OF THE POSTAL REGULATORY
COMMISSION.

(a) IN GENERAL- Section 8G(a)(2) of the Inspector General Act of 1978 is amended by
inserting ‘the Postal Regulatory Commission,‘ after ‘the United States International Trade
Commission,‘.

(b) ADMINISTRATION- Section 504 of title 39, United States Code (as so redesignated
by section 601) is amended by adding after subsection (g) (as added by section 602) the
following:

‘(h)(1) Notwithstanding any other provision of this title or of the Inspector General Act of
1978, the authority to select, appoint, and employ officers and employees of the Office of
Inspector General of the Postal Regulatory Commission, and to obtain any temporary or
intermittent services of experts or consultants (or an organization of experts or
consultants) for such Office, shall reside with the Inspector General of the Postal
Regulatory Commission.

‘(2) Except as provided in paragraph (1), any exercise of authority under this subsection
shall, to the extent practicable, be in conformance with the applicable laws and
regulations that govern selections, appointments, and employment, and the obtaining of
any such temporary or intermittent services, within the Postal Regulatory Commission.‘.

(c) DEADLINE- No later than 180 days after the date of the enactment of this Act--

(1) the first Inspector General of the Postal Regulatory Commission shall be appointed;
and

(2) the Office of Inspector General of the Postal Regulatory Commission shall be
established

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TITLE VII--EVALUATIONS

SEC. 701. ASSESSMENTS OF RATEMAKING, CLASSIFICATION, AND OTHER
PROVISIONS.

(a) IN GENERAL- The Postal Regulatory Commission shall, at least every 5 years,
submit a report to the President and Congress concerning--

(1) the operation of the amendments made by this Act; and

(2) recommendations for any legislation or other measures necessary to improve the
effectiveness or efficiency of the postal laws of the United States.

(b) POSTAL SERVICE VIEWS- A report under this section shall be submitted only after
reasonable opportunity has been afforded to the Postal Service to review the report and to
submit written comments on the report. Any comments timely received from the Postal
Service under the preceding sentence shall be attached to the report submitted under
subsection (a).

SEC. 702. REPORT ON UNIVERSAL POSTAL SERVICE AND THE POSTAL
MONOPOLY.

(a) REPORT BY THE POSTAL REGULATORY COMMISSION-

(1) IN GENERAL- Not later than 24 months after the date of enactment of this Act, the
Postal Regulatory Commission shall submit a report to the President and Congress on
universal postal service and the postal monopoly in the United States (in this section
referred to as ‘universal service and the postal monopoly‘), including the monopoly on
the delivery of mail and on access to mailboxes.

(2) CONTENTS- The report under this subsection shall include--

(A) a comprehensive review of the history and development of universal service and the
postal monopoly, including how the scope and standards of universal service and the
postal monopoly have evolved over time for the Nation and its urban and rural areas;

(B) the scope and standards of universal service and the postal monopoly provided under
current law (including sections 101 and 403 of title 39, United States Code), and current
rules, regulations, policy statements, and practices of the Postal Service;

(C) a description of any geographic areas, populations, communities (including both
urban and rural communities), organizations, or other groups or entities not currently
covered by universal service or that are covered but that are receiving services deficient
in scope or quality or both; and

(D) the scope and standards of universal service and the postal monopoly likely to be
required in the future in order to meet the needs and expectations of the United States
public, including all types of mail users, based on discussion of such assumptions,
alternative sets of assumptions, and analyses as the Postal Service considers plausible.

(b) RECOMMENDED CHANGES TO UNIVERSAL SERVICE AND THE
MONOPOLY- The Postal Regulatory Commission shall include in the report under
subsection (a), and in all reports submitted under section 701 of this Act--

(1) any recommended changes to universal service and the postal monopoly as the
Commission considers appropriate, including changes that the Commission may
implement under current law and changes that would require changes to current law, with
estimated effects of the recommendations on the service, financial condition, rates, and
security of mail provided by the Postal Service;

(2) with respect to each recommended change described under paragraph (1)--

(A) an estimate of the costs of the Postal Service attributable to the obligation to provide
universal service under current law; and

(B) an analysis of the likely benefit of the current postal monopoly to the ability of the
Postal Service to sustain the current scope and standards of universal service, including
estimates of the financial benefit of the postal monopoly to the extent practicable, under
current law; and

(3) such additional topics and recommendations as the Commission considers
appropriate, with estimated effects of the recommendations on the service, financial
condition, rates, and the security of mail provided by the Postal Service.

(c) Consultation- In preparing the report required by this section, the Postal Regulatory
Commission--

(1) shall solicit written comments from the Postal Service and consult with the Postal
Service and other Federal agencies, users of the mails, enterprises in the private sector
engaged in the delivery of the mail, and the general public; and

(2) shall address in the report any written comments received under this section.

(d) Clarifying Provision- Nothing in this section shall be considered to relate to any
services that are not postal services within the meaning of section 102 of title 39, United
States Code, as amended by section 101 of this Act.

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

(a) IN GENERAL- The Federal Trade Commission shall prepare and submit to the
President and Congress, and to the Postal Regulatory Commission, within 1 year after the
date of enactment of this Act, a comprehensive report identifying Federal and State laws
that apply differently to the United States Postal Service with respect to the competitive
category of mail (within the meaning of section 102 of title 39, United States Code, as
amended by section 101) and to private companies providing similar products.

(b) RECOMMENDATIONS- The Federal Trade Commission shall include such
recommendations as it considers appropriate for bringing such legal differences to an
end, and in the interim, to account under section 3633 of title 39, United States Code (as
added by this Act), for the net economic effects provided by those laws.

(c) CONSULTATION- In preparing its report, the Federal Trade Commission shall
consult with the United States Postal Service, the Postal Regulatory Commission, other
Federal agencies, mailers, private companies that provide delivery services, and the
general public, and shall append to such report any written comments received under this
subsection.

(d) COMPETITIVE PRODUCT REGULATION- The Postal Regulatory Commission
shall take into account the recommendations of the Federal Trade Commission, and
subsequent events that affect the continuing validity of the estimate of the net economic
effect, in promulgating or revising the regulations required under section 3633 of title 39,
United States Code.

SEC. 704. REPORT ON POSTAL WORKPLACE SAFETY AND WORKPLACERELATED
INJURIES.

(a) REPORT BY THE INSPECTOR GENERAL-

(1) IN GENERAL- Not later than 6 months after the enactment of this Act, the Inspector
General of the United States Postal Service shall submit a report to Congress and the
Postal Service that--

(A) details and assesses any progress the Postal Service has made in improving
workplace safety and reducing workplace-related injuries nationwide; and

(B) identifies opportunities for improvement that remain with respect to such
improvements and reductions.

(2) CONTENTS- The report under this subsection shall also--

(A) discuss any injury reduction goals established by the Postal Service;

(B) describe the actions that the Postal Service has taken to improve workplace safety and
reduce workplace-related injuries, and assess how successful the Postal Service has been
in meeting its injury reduction goal; and

(C) identify areas where the Postal Service has failed to meet its injury reduction goals,
explain the reasons why these goals were not met, and identify opportunities for making
further progress in meeting these goals.

(b) REPORT BY THE POSTAL SERVICE-

(1) REPORT TO CONGRESS- Not later than 6 months after receiving the report under
subsection (a), the Postal Service shall submit a report to Congress detailing how it plans
to improve workplace safety and reduce workplace-related injuries nationwide, including
goals and metrics.

(2) PROBLEM AREAS- The report under this subsection shall also include plans,
developed in consultation with the Inspector General and employee representatives,
including representatives of each postal labor union and management association, for
addressing the problem areas identified by the Inspector General in the report under
subsection (a)(2)(C).

SEC. 705. STUDY ON RECYCLED PAPER.

(a) IN GENERAL- Within 12 months after the date of enactment of this Act, the
Government Accountability Office shall study and submit to the Congress, the Board of
Governors of the Postal Service, and to the Postal Regulatory Commission a report
concerning--

(1) a description and analysis of the accomplishments of the Postal Service in each of the
preceding 5 years involving recycling activities, including efforts by the Postal Service to
recycle undeliverable and discarded mail and other materials and its public affairs efforts
to promote the increased recycling of paper products; and

(2) additional opportunities that may be available for the United States Postal Service to
engage in recycling initiatives, including consultation with the paper recycling industry
and encouraging mailers to increase both the recycling of paper products and the use of
recycled paper, and the projected costs and revenues of undertaking such opportunities.

(b) RECOMMENDATIONS- The report shall include recommendations for any
administrative or legislative actions that may be appropriate.

SEC. 706. GREATER DIVERSITY IN POSTAL SERVICE EXECUTIVE AND
ADMINISTRATIVE SCHEDULE MANAGEMENT POSITIONS.

(a) IN GENERAL- The Board of Governors shall study and, within 1 year after the date
of the enactment of this Act, submit to the President and Congress a report concerning the
extent to which women and minorities are represented in supervisory and management
positions within the United States Postal Service. Any data included in the report shall be
presented in the aggregate and by pay level.

(b) PERFORMANCE EVALUATIONS- The United States Postal Service shall, as soon
as is practicable, take such measures as may be necessary to incorporate the affirmative
action and equal opportunity criteria contained in 4313(5) of title 5, United States Code,
into the performance appraisals of senior supervisory or managerial employees.

SEC. 707. CONTRACTS WITH WOMEN, MINORITIES, AND SMALL
BUSINESSES.

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

SEC. 708. RATES FOR PERIODICALS.

(a) IN GENERAL- The United States Postal Service, acting jointly with the Postal
Regulatory Commission, shall study and submit to the President and Congress a report
concerning--

(1) the quality, accuracy, and completeness of the information used by the Postal Service
in determining the direct and indirect postal costs attributable to periodicals; and

(2) any opportunities that might exist for improving efficiencies in the collection,
handling, transportation, or delivery of periodicals by the Postal Service, including any
pricing incentives for mailers that might be appropriate.

(b) RECOMMENDATIONS- The report shall include recommendations for any
administrative action or legislation that might be appropriate.

SEC. 709. ASSESSMENT OF CERTAIN RATE DEFICIENCIES.

(a) IN GENERAL- Within 12 months after the date of the enactment of this Act, the
Office of Inspector General of the United States Postal Service shall study and submit to
the President, the Congress, and the United States Postal Service, a report concerning the
administration of section 3626(k) of title 39, United States Code.

(b) SPECIFIC REQUIREMENTS- The study and report shall specifically address the
adequacy and fairness of the process by which assessments under section 3626(k) of title
39, United States Code, are determined and appealable, including--

(1) whether the Postal Regulatory Commission or any other body outside the Postal
Service should be assigned a role; and

(2) whether a statute of limitations should be established for the commencement of
proceedings by the Postal Service thereunder.

SEC. 710. ASSESSMENT OF FUTURE BUSINESS MODEL OF THE POSTAL
SERVICE.

(a) GOVERNMENT ACCOUNTABILITY OFFICE MANDATE- The Comptroller
General of the United States shall prepare and submit to the President and Congress a
report that builds upon the work of the 2002 President‘s Commission on the United States
Postal Service by evaluating in-depth various options and strategies for the long-term
structural and operational reforms of the United States Postal Service. The final report
required by this section shall be submitted within 5 years of the date of enactment of this
Act.

(b) PROTECTION OF UNIVERSAL SERVICE- The Government Accountability Office
may include such recommendations as it considers appropriate with respect to how the
Postal Service‘s business model can be maintained or transformed in an orderly manner
that will minimize adverse effects on all interested parties and assure continued
availability of affordable, universal postal service throughout the United States. The
Government Accountability Office shall not consider any strategy or other course of
action that would pose a significant risk to the continued availability of affordable,
universal postal service throughout the United States.

(c) ELEMENTS OF REPORT-

(1) TOPICS TO ADDRESS- The report shall address at least the following:

(A) Specification of nature and bases of one or more sets of reasonable assumptions
about the development of the postal services market, to the extent that such assumptions
may be necessary or appropriate for each strategy identified by the Government
Accountability Office.

(B) Specification of the nature and bases of one or more sets of reasonable assumptions
about the development of the regulatory framework for postal services, to the extent that
such assumptions may be necessary or appropriate for each strategy identified by the
Government Accountability Office.

(C) Qualitative and, to the extent possible, quantitative effects that each strategy
identified by the Government Accountability Office may have on universal service
generally, the Postal Service, mailers, postal employees, private companies that provide
delivery services, and the general public.

(D) Financial effects that each strategy identified by the Government Accountability
Office may have on the Postal Service, postal employees, the Treasury of the United
States, and other affected parties, including the American mailing consumer.

(E) Feasible and appropriate procedural steps and timetables for implementing each
strategy identified by the Government Accountability Office.

(F) Such additional topics as the Comptroller General shall consider necessary and
appropriate.

(2) MATTERS TO CONSIDER- For each strategy identified, the Government
Accountability Office shall assess how each business model might--

(A) address the human-capital challenges facing the Postal Service, including how
employee-management relations within the Postal Service may be improved;

(B) optimize the postal infrastructure, including the best methods for providing retail
services that ensure convenience and access to customers;

(C) ensure the safety and security of the mail and of postal employees;

(D) minimize areas of inefficiency or waste and improve operations involved in the
collection, processing, or delivery of mail; and

(E) impact other matters that the Comptroller General determines are relevant to
evaluating a viable long-term business model for the Postal Service.

(3) EXPERIENCES OF OTHER COUNTRIES- In preparing the report required by
subsection (a), the Government Accountability Office shall comprehensively and
quantitatively investigate the experiences of other industrialized countries that have
transformed the national post office. The Government Accountability Office shall
undertake such original research as it deems necessary. In each case, the Government
Accountability Office shall describe as fully as possible the costs and benefits of
transformation of the national post office on all affected parties and shall identify any
lessons that foreign experience may imply for each strategy identified by the research
organization.

(d) OUTSIDE EXPERTS- In preparing its study, the Government Accountability Office
may retain the services of additional experts and consultants.

(e) CONSULTATION- In preparing its report, the Government Accountability Office
shall consult fully with the Postal Service, the Postal Regulatory Commission, other
Federal agencies, postal employee unions and management associations, mailers, private
companies that provide delivery services, and the general public. The Government
Accountability Office shall include with its final report a copy of all formal written
comments received under this subsection.

(f) AUTHORIZATION OF APPROPRIATIONS- There are authorized to be
appropriated from the Postal Service Fund such sums as may be necessary to carry out
this section.

SEC. 711. PROVISIONS RELATING TO COOPERATIVE MAILINGS.

(a) STUDY-

(1) IN GENERAL- The Postal Regulatory Commission shall examine section E670.5.3
of the Domestic Mail Manual to determine whether it contains adequate safeguards to
protect against--

(A) abuses of rates for nonprofit mail; and

(B) deception of consumers.

(2) REPORT- The Commission shall report the results of its examination to the Postal
Service, along with any recommendations that the Commission determines appropriate.

(b) FAILURE TO ACT- If the Postal Service fails to act on the recommendations of the
Commission, the Commission may take such action as it determines necessary to prevent
abuse of rates or deception of consumers.

SEC. 712. DEFINITION.

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

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TITLE VIII--POSTAL SERVICE RETIREMENT AND HEALTH BENEFITS
FUNDING

SEC. 801. SHORT TITLE.

This title may be cited as the ‘Postal Civil Service Retirement and Health Benefits
Funding Amendments of 2006‘.

SEC. 802. CIVIL SERVICE RETIREMENT SYSTEM.

(a) IN GENERAL- Chapter 83 of title 5, United States Code, is amended--
(1) in section 8334(a)(1)(B), by striking clause (ii) and inserting the following:

‘(ii) In the case of an employee of the United States Postal Service, no amount shall be
contributed under this subparagraph.‘; and

(2) by amending section 8348(h) to read as follows:

‘(h)(1) In this subsection, the term ‘Postal surplus or supplemental liability‘ means the
estimated difference, as determined by the Office, between--

‘(A) the actuarial present value of all future benefits payable from the Fund under this
subchapter to current or former employees of the United States Postal Service and
attributable to civilian employment with the United States Postal Service; and

‘(B) the sum of--

‘(i) the actuarial present value of deductions to be withheld from the future basic pay of
employees of the United States Postal Service currently subject to this subchapter under
section 8334;

‘(ii) that portion of the Fund balance, as of the date the Postal surplus or supplemental
liability is determined, attributable to payments to the Fund by the United States Postal
Service and its employees, minus benefit payments attributable to civilian employment
with the United States Postal Service, plus the earnings on such amounts while in the
Fund; and

‘(iii) any other appropriate amount, as determined by the Office in accordance with
generally accepted actuarial practices and principles.

‘(2)(A) Not later than June 15, 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.

‘(D) Amortization schedules established under this paragraph shall be set in accordance
with generally accepted actuarial practices and principles, with interest computed at the
rate used in the most recent valuation of the Civil Service Retirement System.

‘(E) The United States Postal Service shall pay the amounts so determined to the Office,
with payments due not later than the date scheduled by the Office.

‘(3) Notwithstanding any other provision of law, in computing the amount of any
payment under any other subsection of this section that is based upon the amount of the
unfunded liability, such payment shall be computed disregarding that portion of the
unfunded liability that the Office determines will be liquidated by payments under this
subsection.‘.

(b) CREDIT ALLOWED FOR MILITARY SERVICE- In the application of section
8348(g)(2) of title 5, United States Code, for the fiscal year 2007, the Office of Personnel
Management shall include, in addition to the amount otherwise computed under that
paragraph, the amounts that would have been included for the fiscal years 2003 through
2006 with respect to credit for military service of former employees of the United States
Postal Service as though the Postal Civil Service Retirement System Funding Reform Act
of 2003 (Public Law 108-18) had not been enacted, and the Secretary of the Treasury
shall make the required transfer to the Civil Service Retirement and Disability Fund
based on that amount.

(c) Review-

(1) IN GENERAL-

(A) REQUEST FOR REVIEW- Notwithstanding any other provision of this section
(including any amendment made by this section), any determination or redetermination
made by the Office of Personnel Management under this section (including any
amendment made by this section) shall, upon request of the United States Postal Service,
be subject to a review by the Postal Regulatory Commission under this subsection.

(B) REPORT- Upon receiving a request under subparagraph (A), the Commission shall
promptly procure the services of an actuary, who shall hold membership in the American
Academy of Actuaries and shall be qualified in the evaluation of pension obligations, to
conduct a review in accordance with generally accepted actuarial practices and principles
and to provide a report to the Commission containing the results of the review. The
Commission, upon determining that the report satisfies the requirements of this
paragraph, shall approve the report, with any comments it may choose to make, and
submit it with any such comments to the Postal Service, the Office of Personnel
Management, and Congress.

(2) RECONSIDERATION- Upon receiving the report from the Commission under
paragraph (1), the Office of Personnel Management shall reconsider its determination or
redetermination in light of such report, and shall make any appropriate adjustments. The
Office shall submit a report containing the results of its reconsideration to the
Commission, the Postal Service, and Congress.

SEC. 803. HEALTH INSURANCE.

(a) IN GENERAL-

(1) FUNDING- Chapter 89 of title 5, United States Code, is amended--
(A) in section 8906(g)(2)(A), by striking ‘shall be paid by the United States Postal
Service.‘ and inserting ‘shall 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.‘; and

(B) by inserting after section 8909 the following:

‘Sec. 8909a. Postal Service Retiree Health Benefit Fund

‘(a) There is in the Treasury of the United States a Postal Service Retiree Health Benefits
Fund which is administered by the Office of Personnel Management.

‘(b) The Fund is available without fiscal year limitation for payments required under
section 8906(g)(2)(A).

‘(c) The Secretary of the Treasury shall immediately invest, in interest-bearing securities
of the United States such currently available portions of the Fund as are not immediately
required for payments from the Fund. Such investments shall be made in the same
manner as investments for the Civil Service Retirement and Disability Fund under section
8348.

‘(d)(1) Not later than June 30, 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) 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.

‘(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) $5,400,000,000, not later than September 30, 2009;

‘(iv) $5,500,000,000, not later than September 30, 2010;

‘(v) $5,500,000,000, not later than September 30, 2011;

‘(vi) $5,600,000,000, not later than September 30, 2012;

‘(vii) $5,600,000,000, not later than September 30, 2013;

‘(viii) $5,700,000,000, not later than September 30, 2014;

‘(ix) $5,700,000,000, not later than September 30, 2015; and

‘(x) $5,800,000,000, not later than September 30, 2016.

‘(B) Not later than September 30, 2017, and by September 30 of each succeeding year,
the United States Postal Service shall pay into such Fund the sum of--

‘(i) the net present value computed under paragraph (1); and

‘(ii) any annual installment computed under paragraph (2)(B).

‘(4) Computations under this subsection shall be made consistent with the assumptions
and methodology used by the Office for financial reporting under subchapter II of chapter
35 of title 31.

‘(5)(A)(i) Any computation or other determination of the Office under this subsection
shall, upon request of the United States Postal Service, be subject to a review by the
Postal Regulatory Commission under this paragraph.

‘(ii) Upon receiving a request under clause (i), the Commission shall promptly procure
the services of an actuary, who shall hold membership in the American Academy of
Actuaries and shall be qualified in the evaluation of healthcare insurance obligations, to
conduct a review in accordance with generally accepted actuarial practices and principles
and to provide a report to the Commission containing the results of the review. The
Commission, upon determining that the report satisfies the requirements of this
subparagraph, shall approve the report, with any comments it may choose to make, and
submit it with any such comments to the Postal Service, the Office of Personnel
Management, and Congress.

‘(B) Upon receiving the report under subparagraph (A), the Office of Personnel
Management shall reconsider its determination or redetermination in light of such report,
and shall make any appropriate adjustments. The Office shall submit a report containing
the results of its reconsideration to the Commission, the Postal Service, and Congress.

‘(6) After consultation with the United States Postal Service, the Office shall promulgate
any regulations the Office determines necessary under this subsection.‘.
(2) TECHNICAL AND CONFORMING AMENDMENT- The table of sections for
chapter 89 of title 5, United States Code, is amended by inserting after the item relating to
section 8909 the following:

‘8909a. Postal Service Retiree Health Benefits Fund.‘.

(b) Review-

(1) IN GENERAL

( A) REQUEST FOR REVIEW- Any regulation established under section 8909a(d)(5) of
title 5, United States Code (as added by subsection (a)), shall, upon request of the United
States Postal Service, be subject to a review by the Postal Regulatory Commission under
this paragraph.

(B) REPORT- Upon receiving a request under subparagraph (A), the Commission shall
promptly procure the services of an actuary, who shall hold membership in the American
Academy of Actuaries and shall be qualified in the evaluation of healthcare insurance
obligations, to conduct a review in accordance with generally accepted actuarial practices
and principles and to provide a report to the Commission containing the results of the
review. The Commission, upon determining that the report satisfies the requirements of
this paragraph, shall approve the report, with any comments it may choose to make, and
submit it with any such comments to the Postal Service, the Office of Personnel
Management, and Congress.

(2) RECONSIDERATION- Upon receiving the report under paragraph (1), the Office of
Personnel Management shall reconsider its determination or redetermination in light of
such report, and shall make any appropriate adjustments. The Office shall submit a report
containing the results of its reconsideration to the Commission, the Postal Service, and
Congress.

SEC. 804. REPEAL OF DISPOSITION OF SAVINGS PROVISION.

(a) IN GENERAL- Section 3 of the Postal Civil Service Retirement System Funding
Reform Act of 2003 (Public Law 108-18) is repealed.

(b) SAVINGS- Savings accrued to the Postal Service as a result of enactment of Public
Law 108-18 and attributable to fiscal year 2006 shall be transferred to the Postal Service
Retiree Health Benefits Fund established under section 8909a of title 5, United States
Code, as added by section 803 of this Act.

SEC. 805. EFFECTIVE DATES.

(a) IN GENERAL- Except as provided under subsection (b), this title shall take effect on
October 1, 2006.

(b) TERMINATION OF EMPLOYER CONTRIBUTION- The amendment made by
paragraph (1) of section 802(a) shall take effect on the first day of the first pay period
beginning on or after October 1, 2006.

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TITLE IX--COMPENSATION FOR WORK INJURIES

SEC. 901. TEMPORARY DISABILITY; CONTINUATION OF PAY.

(a) TIME OF ACCRUAL OF RIGHT- Section 8117 of title 5, United States Code, is
amended--

(1) by striking ‘An employee‘ and inserting ‘(a) An employee other than a Postal Service
employee‘; and

(2) by adding at the end the following:

‘(b) A Postal Service employee is not entitled to compensation or continuation of pay for
the first 3 days of temporary disability, except as provided under paragraph (3) of
subsection (a). A Postal Service employee may use annual leave, sick leave, or leave
without pay during that 3-day period, except that if the disability exceeds 14 days or is
followed by permanent disability, the employee may have their sick leave or annual leave
reinstated or receive pay for the time spent on leave without pay under this section.‘.

(b) TECHNICAL AND CONFORMING AMENDMENT- Section 8118(b)(1) of title 5,
United States Code, is amended to read as follows:

‘(1) without a break in time, except as provided under section 8117(b), unless
controverted under regulations of the Secretary;‘.

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TITLE X--MISCELLANEOUS

SEC. 1001. EMPLOYMENT OF POSTAL POLICE OFFICERS.
Section 3061 of title 18, United States Code, is amended by adding at the end the
following:

‘(c)(1) The Postal Service may employ police officers for duty in connection with the
protection of property owned or occupied by the Postal Service or under the charge and
control of the Postal Service, and persons on that property, including duty in areas outside
the property to the extent necessary to protect the property and persons on the property.

‘(2) With respect to such property, such officers shall have the power to--

‘(A) enforce Federal laws and regulations for the protection of persons and property;

‘(B) carry firearms; and

‘(C) make arrests without a warrant for any offense against the Unites States committed
in the presence of the officer or for any felony cognizable under the laws of the United
States if the officer has reasonable grounds to believe that the person to be arrested has
committed or is committing a felony.

‘(3) With respect to such property, such officers may have, to such extent as the Postal
Service may by regulations prescribe, the power to--

‘(A) serve warrants and subpoenas issued under the authority of the United States; and

‘(B) conduct investigations, on and off the property in question, of offenses that may
have been committed against property owned or occupied by the Postal Service or
persons on the property.

‘(4)(A) As to such property, the Postmaster General may prescribe regulations necessary
for the protection and administration of property owned or occupied by the Postal Service
and persons on the property. The regulations may include reasonable penalties, within the
limits prescribed in subparagraph (B), for violations of the regulations. The regulations
shall be posted and remain posted in a conspicuous place on the property.

‘(B) A person violating a regulation prescribed under this subsection shall be fined under
this title, imprisoned for not more than 30 days, or both.‘.

SEC. 1002. OBSOLETE PROVISIONS.

(a) REPEAL-

(1) IN GENERAL- Chapter 52 of title 39, United States Code, is repealed.

(2) CONFORMING AMENDMENTS- (A) Section 5005(a) of title 39, United States
Code, is amended--

(i) by striking paragraph (1), and by redesignating paragraphs (2) through (4) as
paragraphs (1) through (3), respectively; and

(ii) in paragraph (3) (as so designated by clause (i)), by striking ‘(as defined in section
5201(6) of this title)‘.

(B) Section 5005(b) of such title 39 is amended by striking ‘(a)(4)‘ each place it appears
and inserting ‘(a)(3)‘.

(C) Section 5005(c) of such title 39 is amended by striking ‘by carrier or person under
subsection (a)(1) of this section, by contract under subsection (a)(4) of this section, or‘
and inserting ‘by contract under subsection (a)(3) of this section or‘.

(b) ELIMINATING RESTRICTION ON LENGTH OF CONTRACTS- (1) Section
5005(b)(1) of title 39, United States Code, is amended by striking ‘(or where the Postal
Service determines that special conditions or the use of special equipment warrants, not
in excess of 6 years)‘ and inserting ‘(or such longer period of time as may be determined
by the Postal Service to be advisable or appropriate)‘.

(2) Section 5402(d) of such title 39 is amended by striking ‘for a period of not more than
4 years‘.

(3) Section 5605 of such title 39 is amended by striking ‘for periods of not in excess of 4
years‘.

(c) TECHNICAL AND CONFORMING AMENDMENT- The table of chapters for part
V of title 39, United States Code, is amended by repealing the item relating to chapter 52.

SEC. 1003. REDUCED RATES.

Section 3626 of title 39, United States Code, is amended--

(1) in subsection (a), by striking all before paragraph (4) and inserting the following:

‘(a)(1) Except as otherwise provided in this section, rates of postage for a class of mail or
kind of mailer under former section 4358, 4452(b), 4452(c), 4554(b), or 4554(c) of this
title shall be established in accordance with section 3622.

‘(2) For the purpose of this subsection, the term ‘regular-rate category‘ means any class of
mail or kind of mailer, other than a class or kind referred to in section 2401(c).

‘(3) Rates of postage for a class of mail or kind of mailer under former section 4358(a)
through (c) of this title shall be established so that postage on each mailing of such mail
reflects its preferred status as compared to the postage for the most closely corresponding
regular-rate category mailing.‘;

(2) in subsection (g), by adding at the end the following:

‘(3) For purposes of this section and former section 4358(a) through (c) of this title, those
copies of an issue of a publication entered within the county in which it is published, but
distributed outside such county on postal carrier routes originating in the county of
publication, shall be treated as if they were distributed within the county of publication.

‘(4)(A) In the case of an issue of a publication, any number of copies of which are mailed
at the rates of postage for a class of mail or kind of mailer under former section 4358(a)
through (c) of this title, any copies of such issue which are distributed outside the county
of publication (excluding any copies subject to paragraph (3)) shall be subject to rates of
postage provided for under this paragraph.

‘(B) The rates of postage applicable to mail under this paragraph shall be established in
accordance with section 3622.

‘(C) This paragraph shall not apply with respect to an issue of a publication unless the
total paid circulation of such issue outside the county of publication (not counting
recipients of copies subject to paragraph (3)) is less than 5,000.‘; and

(3) by adding at the end the following:

‘(n) In the administration of this section, matter that satisfies the circulation standards for
requester publications shall not be excluded from being mailed at the rates for mail under
former section 4358 solely because such matter is designed primarily for free circulation
or for circulation at nominal rates, or fails to meet the requirements of former section
4354(a)(5).‘.

SEC. 1004. SENSE OF CONGRESS REGARDING POSTAL SERVICE
PURCHASING REFORM.

It is the sense of Congress that the Postal Service should--
(1) ensure the fair and consistent treatment of suppliers and contractors in its current
purchasing policies and any revision or replacement of such policies, such as through the
use of competitive contract award procedures, effective dispute resolution mechanisms,
and socioeconomic programs; and

(2) implement commercial best practices in Postal Service purchasing policies to achieve
greater efficiency and cost savings by taking full advantage of private-sector partnerships
as recommended in July 2003 by the President‘s Commission on the United States Postal
Service.

SEC. 1005. CONTRACTS FOR TRANSPORTATION OF MAIL BY AIR.

(a) Definitions- Section 5402(a) of title 39, United States Code, is amended--

(1) in paragraph (4), by striking ‘(g)(1)(D)(i)‘ and inserting ‘(g)(1)(A)(iv)(I)‘;

(2) in paragraph (5), by striking ‘(g)(1)(D)(i)‘ and inserting ‘(g)(1)(A)(iv)(I)‘;

(3) in paragraph (8), by striking ‘rates paid to a bush carrier‘ and inserting ‘linehaul rates
and a single terminal handling payment at a bush terminal handling rate paid to a bush
carrier‘;

(4) in paragraph (11), by striking ‘(g)(1)(D)(ii)‘ and inserting ‘(g)(1)(A)(iv)(II)‘; and

(5) in paragraph (13)--

(A) in subparagraph (A)--

(i) by striking ‘clause (i) or (ii) of subsection (g)(1)(D)‘ and inserting ‘subclause (I) or (II)
of subsection (g)(1)(A)(iv)‘; and

(ii) by striking ‘and‘ after the semicolon;

(B) in subparagraph (B), by adding ‘and‘ after the semicolon; and

(C) by adding at the end the following:

‘(C) is not comprised of previously qualified existing mainline carriers as a result of
merger or sale;‘.

(b) Nonpriority Bypass Mail- Section 5402(g) of title 39, United States Code, is
amended--

(1) in paragraph (3), by adding at the end the following:

‘(C) When a new hub results from a change in a determination under subparagraph (B),
mail tender from that hub during the 12-month period beginning on the effective date of
that change shall be based on the passenger and freight shares to the destinations of the
affected hub or hubs resulting in the new hub.‘; and

(2) in paragraph (5)(A)(i), by striking ‘(g)(1)(D)(ii)‘ and inserting ‘(g)(1)(A)(iv)(II)‘.

(c) Equitable Tender- Section 5402(h) of title 39, United States Code, is amended--

(1) in paragraph (1), by inserting ‘bush‘ after ‘providing scheduled‘;

(2) by striking paragraph (3) and inserting the following:

‘(3)(A) Except as provided under subparagraph (C), a new or existing 121 bush passenger
carrier qualified under subsection (g)(1) shall be exempt from the requirements under
paragraphs (1)(B) and (2)(A) on a city pair route for a period which shall extend for--

‘(i) 1 year;

‘(ii) 1 year in addition to the extension under clause (i) if, as of the conclusion of the first
year, such carrier has been providing not less than 5 percent of the passenger service on
that route (as calculated under paragraph (5)); and

‘(iii) 1 year in addition to the extension under clause (ii) if, as of the conclusion of the
second year, such carrier has been providing not less than 10 percent of the passenger
service on that route (as calculated under paragraph (5).

‘(B)(i) The first 3 121 bush passenger carriers entitled to the exemptions under
subparagraph (A) on any city pair route shall divide no more than an additional 10
percent of the mail, apportioned equally, comprised of no more than--

‘(I) 5 percent of the share of each qualified passenger carrier servicing that route that is
not a 121 bush passenger carrier; and

‘(II) 5 percent of the share of each nonpassenger carrier servicing that route that
transports 25 percent or more of the total nonmail freight under subsection (i)(1).

‘(ii) Additional 121 bush passenger carriers entering service on that city pair route after
the first 3 shall not receive any additional mail share.

‘(iii) If any 121 bush passenger carrier on a city pair route receiving an additional share
of the mail under clause (ii) discontinues service on that route, the 121 bush passenger
carrier that has been providing the longest period of service on that route and is otherwise
eligible but is not receiving a share by reason of clause (ii), shall receive the share of the
carrier discontinuing service.

‘(C) Notwithstanding the requirements of this subsection, if only 1 passenger carrier or
aircraft is qualified to be tendered nonpriority bypass mail as a passenger carrier or
aircraft on a city pair route in the State of Alaska, the Postal Service shall tender 20
percent of the nonpriority bypass mail described under paragraph (1) to the passenger
carrier or aircraft providing at least 10 percent of the passenger service on such route.‘;

(3) in paragraph (5)(A)--

(A) by striking ‘(i)‘ after ‘(A)‘; and

(B) by striking clause (ii).

(d) Percent of Nonmail Freight- Section 5402(i)(6) of title 39, United States Code, is
amended--

(1) by striking ‘(A)‘ after ‘(6)‘; and

(2) by striking subparagraph (B).

(e) Percent of Tender Rate- Section 5402(j)(3)(B) of title 39, United States Code, is
amended by striking ‘bush routes in the State of Alaska‘ and inserting ‘routes served
exclusively by bush carriers in the State of Alaska‘.

(f) Determination of Rates- Section 5402(k) of title 39, United States Code, is amended
by striking paragraph (5).

(g) Technical and Conforming Amendment- Section 5402(p)(3) of title 39, United States
Code, is amended by striking ‘(g)(1)(D)‘ and inserting ‘(g)(1)(A)(iv)‘.

(h) Effective Date-

(1) IN GENERAL- Except as provided under paragraph (2), this section shall take effect
on the date of enactment of this Act.

(2) EQUITABLE TENDER- Subsection (c) shall take effect on December 1, 2006.

SEC. 1006. DATE OF POSTMARK TO BE TREATED AS DATE OF APPEAL IN
CONNECTION WITH THE CLOSING OR CONSOLIDATION OF POST OFFICES.

(a) IN GENERAL- Section 404(b) of title 39, United States Code, is amended by adding
at the end the following:

‘(6) For purposes of paragraph (5), any appeal received by the Commission shall--

‘(A) if sent to the Commission through the mails, be considered to have been received on
the date of the Postal Service postmark on the envelope or other cover in which such
appeal is mailed; or

‘(B) if otherwise lawfully delivered to the Commission, be considered to have been
received on the date determined based on any appropriate documentation or other indicia
(as determined under regulations of the Commission).‘.

(b) EFFECTIVE DATE- This section and the amendments made by this section shall
apply with respect to any determination to close or consolidate a post office which is first
made available, in accordance with paragraph (3) of section 404(b) of title 39, United
States Code, after the end of the 3-month period beginning on the date of the enactment
of this Act.

SEC. 1007. PROVISIONS RELATING TO BENEFITS UNDER CHAPTER 81 OF
TITLE 5, UNITED STATES CODE, FOR OFFICERS AND EMPLOYEES OF THE
FORMER POST OFFICE DEPARTMENT.

(a) IN GENERAL- Section 8 of the Postal Reorganization Act (39 U.S.C. 1001 note) is
amended by inserting ‘(a)‘ after ‘8.‘ and by adding at the end the following:

‘(b) For purposes of chapter 81 of title 5, United States Code, the Postal Service shall,
with respect to any individual receiving benefits under such chapter as an officer or
employee of the former Post Office Department, have the same authorities and
responsibilities as it has with respect to an officer or employee of the Postal Service
receiving such benefits.‘.

(b) EFFECTIVE DATE- This section and the amendments made by this section shall be
effective as of the first day of the fiscal year in which this Act is enacted.

SEC. 1008. HAZARDOUS MATTER.

(a) NONMAILABILITY GENERALLY- Section 3001 of title 39, United States Code, is
amended--

(1) by redesignating subsection (n) as subsection (o); and

(2) by inserting after subsection (m) the following:

‘(n)(1) Except as otherwise authorized by law or regulations of the Postal Service,
hazardous material is nonmailable.

‘(2) In this subsection, the term ‘hazardous material‘ means a substance or material
designated by the Secretary of Transportation under section 5103(a) of title 49.‘.

(b) MAILABILITY- Chapter 30 of title 39, United States Code, is amended by adding at
the end the following:

‘Sec. 3018. Hazardous material

‘(a) IN GENERAL- The Postal Service shall prescribe regulations for the safe
transportation of hazardous material in the mail.

‘(b) PROHIBITIONS- No person may--

‘(1) mail or cause to be mailed hazardous material that has been declared by statute or
Postal Service regulation to be nonmailable;

‘(2) mail or cause to be mailed hazardous material in violation of any statute or Postal
Service regulation restricting the time, place, or manner in which hazardous material may
be mailed; or

‘(3) manufacture, distribute, or sell any container, packaging kit, or similar device that--

‘(A) is represented, marked, certified, or sold by such person for use in the mailing of
hazardous material; and

‘(B) fails to conform with any statute or Postal Service regulation setting forth standards
for a container, packaging kit, or similar device used for the mailing of hazardous
material.

‘(c) CIVIL PENALTY; CLEAN-UP COSTS AND DAMAGES-

‘(1) IN GENERAL- A person who knowingly violates this section or a regulation
prescribed under this section shall be liable for--

‘(A) a civil penalty of at least $250, but not more than $100,000, for each violation;

‘(B) the costs of any clean-up associated with each violation; and

‘(C) damages.

‘(2) KNOWING ACTION- A person acts knowingly for purposes of paragraph (1) when-
-

‘(A) the person has actual knowledge of the facts giving rise to the violation; or

‘(B) a reasonable person acting in the circumstances and exercising reasonable care
would have had that knowledge.

‘(3) SEPARATE VIOLATIONS-

‘(A) VIOLATIONS OVER TIME- A separate violation under this subsection occurs for
each day hazardous material, mailed or caused to be mailed in noncompliance with this
section, is in the mail.

‘(B) SEPARATE ITEMS- A separate violation under this subsection occurs for each item
containing hazardous material that is mailed or caused to be mailed in noncompliance
with this section.

‘(d) HEARINGS- The Postal Service may determine that a person has violated this
section or a regulation prescribed under this section only after notice and an opportunity
for a hearing. Proceedings under this section shall be conducted in accordance with
section 3001(m).

‘(e) PENALTY CONSIDERATIONS- In determining the amount of a civil penalty for a
violation of this section, the Postal Service shall consider--

‘(1) the nature, circumstances, extent, and gravity of the violation;

‘(2) with respect to the person who committed the violation, the degree of culpability, any
history of prior violations, the ability to pay, and any effect on the ability to continue in
business;

‘(3) the impact on Postal Service operations; and

‘(4) any other matters that justice requires.

‘(f) CIVIL ACTIONS TO COLLECT-

‘(1) IN GENERAL- In accordance with section 409(d), a civil action may be commenced
in an appropriate district court of the United States to collect a civil penalty, clean-up
costs, and damages assessed under subsection (c).

‘(2) COMPROMISE- The Postal Service may compromise the amount of a civil penalty,
clean-up costs, and damages assessed under subsection (c) before commencing a civil
action with respect to such civil penalty, clean-up costs, and damages under paragraph
(1).

‘(g) CIVIL JUDICIAL PENALTIES‘

(1) IN GENERAL- At the request of the Postal Service, the Attorney General may bring
a civil action in an appropriate district court of the United States to enforce this section or
a regulation prescribed under this section.

‘(2) RELIEF- The court in a civil action under paragraph (1) may award appropriate
relief, including a temporary or permanent injunction, civil penalties as determined in
accordance with this section, or punitive damages.

‘(3) CONSTRUCTION- A civil action under this subsection shall be in lieu of civil
penalties for the same violation under subsection (c)(1)(A).

‘(h) DEPOSIT OF AMOUNTS COLLECTED-

‘(1) POSTAL SERVICE FUND- Except as provided under paragraph (2), amounts
collected under subsection (c)(1)(B) and (C) shall be deposited into the Postal Service
Fund under section 2003.

‘(2) TREASURY- Amounts collected under subsection (c)(1)(A) and any punitive
damages collected under subsection (c)(1)(C) shall be deposited into the Treasury of the
United States.‘.

(c) CONFORMING AMENDMENTS- (1) Section 2003(b) of title 39, United States
Code, is amended--

(A) in paragraph (7), by striking ‘and‘ after the semicolon;

(B) in paragraph (8), by striking ‘purposes.‘ and inserting ‘purposes; and‘; and

(C) by adding at the end the following:

‘(9) any amounts collected under section 3018.‘.

(2) The analysis for chapter 30 of title 39, United States Code, is amended by adding at
the end the following:

‘3018. Hazardous material.‘.

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

SEC. 1009. ZIP CODES AND RETAIL HOURS.

(a) ZIP CODES- Not later than September 30, 2007, the United States Postal Service
shall assign a single, unified ZIP code to serve, as nearly as practicable, each of the
following communities:

(1) Auburn Township, Ohio.

(2) Hanahan, South Carolina.

(3) Bradbury, California.

(4) Discovery Bay, California.

(b) RETAIL HOURS- Not later than 60 days after the date of the enactment of this Act,
the United States Postal Service shall provide the same window service hours for the
Fairport Harbor Branch of the United States Post Office in Painesville, Ohio, as were in
effect as of December 1, 2005.

SEC. 1010. TECHNICAL AND CONFORMING AMENDMENTS.

(a) REIMBURSEMENT- Section 3681 of title 39, United States Code, is amended by
striking ‘section 3628‘ and inserting ‘sections 3662 through 3664‘.

(b) SIZE AND WEIGHT LIMITS- Section 3682 of title 39, United States Code, is
amended to read as follows:

‘Sec. 3682. Size and weight limits

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

(c) REVENUE FOREGONE, ETC- Title 39, United States Code, is amended--

(1) in section 503 (as so redesignated by section 601), by striking ‘this chapter.‘ and
inserting ‘this title.‘; and

(2) in section 2401(d), by inserting ‘(as last in effect before enactment of the Postal
Accountability and Enhancement Act)‘ after ‘3626(a)‘ and after ‘3626(a)(3)(B)(ii)‘.

(d) APPROPRIATIONS AND REPORTING REQUIREMENTS-

(1) APPROPRIATIONS- Subsection (e) of section 2401 of title 39, United States Code,
is amended--

(A) by striking ‘Committee on Post Office and Civil Service‘ each place it appears and
inserting ‘Committee on Government Reform‘; and

(B) by striking ‘Not later than March 15 of each year,‘ and inserting ‘Each year,‘.

(2) REPORTING REQUIREMENTS- Sections 2803(a) and 2804(a) of title 39, United
States Code, are amended by striking ‘2401(g)‘ and inserting ‘2401(e)‘.

(e) AUTHORITY TO FIX RATES AND CLASSES GENERALLY; REQUIREMENT

RELATING TO LETTERS SEALED AGAINST INSPECTION- Section 404 of title 39,
United States Code (as amended by section 102) is further amended by redesignating
subsections (b) and (c) as subsections (d) and (e), respectively, and by inserting after
subsection (a) the following:

‘(b) Except as otherwise provided, the Governors are authorized to establish reasonable
and equitable classes of mail and reasonable and equitable rates of postage and fees for
postal services in accordance with the provisions of chapter 36. Postal rates and fees shall
be reasonable and equitable and sufficient to enable the Postal Service, under best
practices of honest, efficient, and economical management, to maintain and continue the
development of postal services of the kind and quality adapted to the needs of the United
States.

‘(c) The Postal Service shall maintain one or more classes of mail for the transmission of
letters sealed against inspection. The rate for each such class shall be uniform throughout
the United States, its territories, and possessions. One such class shall provide for the
most expeditious handling and transportation afforded mail matter by the Postal Service.
No letter of such a class of domestic origin shall be opened except under authority of a
search warrant authorized by law, or by an officer or employee of the Postal Service for
the sole purpose of determining an address at which the letter can be delivered, or
pursuant to the authorization of the addressee.‘.

(f) LIMITATIONS- Section 3684 of title 39, United States Code, is amended by striking
all that follows ‘any provision‘ and inserting ‘of this title.‘.

(g) MISCELLANEOUS- Title 39, United States Code, is amended--

(1) in section 1005(d)(2)--

(A) by striking ‘subsection (g) of section 5532,‘; and

(B) by striking ‘8344,‘ and inserting ‘8344‘;

(2) in the analysis for part III, by striking the item relating to chapter 28 and inserting the
following: --2801‘;

(3) in section 3005(a)--

(A) in the matter before paragraph (1), by striking all that follows ‘nonmailable‘ and
precedes ‘(h),‘ and inserting ‘under section 3001(d),‘; and

(B) in the sentence following paragraph (3), by striking all that follows ‘nonmailable‘ and
precedes ‘(h),‘ and inserting ‘under such section 3001(d),‘;

(4) in section 3210(a)(6)(C), by striking the matter after ‘if such mass mailing‘ and before

‘than 60 days‘ and inserting ‘is postmarked fewer‘; and
(5) by striking the heading for section 3627 and inserting the following:

‘Sec. 3627. Adjusting free rates‘.
Passed the House of Representatives December 8, 2006.

Attest:

KAREN L. HAAS,

Clerk.

END

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