[United States Statutes at Large, Volume 120, 109th Congress, 2nd Session]
[From the U.S. Government Printing Office, www.gpo.gov]

120 STAT. 3198

Public Law 109-435
109th Congress

An Act


 
To reform the postal laws of the United States.  NOTE: Dec. 20,
2006 -  [H.R. 6407]

Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,  NOTE: Postal Account-
ability and Enhancement Act.

SECTION 1. SHORT TITLE; TABLE OF CONTENTS.

(a) Short Title.--This  NOTE: 39 USC 101 note.  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.

[[Page 3199]]
120 STAT. 3199

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;
``(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.''.

[[Page 3200]]
120 STAT. 3200

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)  NOTE: Deadline.  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)''.

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,

[[Page 3201]]
120 STAT. 3201

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.--  NOTE: Deadline.  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;

[[Page 3202]]
120 STAT. 3202

``(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)  NOTE: Deadline.  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;

[[Page 3203]]
120 STAT. 3203

``(iii)  NOTE: Notification.  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)  NOTE: Procedures.  establish procedures
whereby the Postal Service may adjust rates not in
excess of the annual limitations under subparagraph (A);
and
``(E)  NOTE: Deadline.  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;

[[Page 3204]]
120 STAT. 3204

``(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)  NOTE: Deadline.  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).  NOTE: Public
comment.  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

[[Page 3205]]
120 STAT. 3205

``(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)  NOTE: Certification.  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.

[[Page 3206]]
120 STAT. 3206

``(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)  NOTE: Federal Register,
publication. Deadline.  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  NOTE: Filing date.  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.--  NOTE: Deadline. Regulations.  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

[[Page 3207]]
120 STAT. 3207

``(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)  NOTE: Deadline.  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.--  NOTE: Deadline. Federal Register,
publication.  At least 30 days before initiating a market test
under this section, the Postal Service shall file

[[Page 3208]]
120 STAT. 3208

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

[[Page 3209]]
120 STAT. 3209

test involved or take such other action as it considers appropriate. A
determination under this subsection shall be made in accordance with
such procedures as the Commission shall by regulation prescribe.
``(g) Adjustment for Inflation.--For purposes of each year following
the year in which occurs the deadline for the Postal Service's first
report to the Postal Regulatory Commission under section 3652(a), each
dollar amount contained in this section shall be adjusted by the change
in the Consumer Price Index for such year (as determined under
regulations of the Commission).
``(h) Definition of a Small Business Concern.--The criteria used in
defining small business concerns or otherwise categorizing business
concerns as small business concerns shall, for purposes of this section,
be established by the Postal Regulatory Commission in conformance with
the requirements of section 3 of the Small Business Act.
``(i) Effective Date.--Market tests under this subchapter may be
conducted in any year beginning with the first year in which occurs the
deadline for the Postal Service's first report to the Postal Regulatory
Commission under section 3652(a).

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

``(a) In General.--Upon request of the Postal Service or users of
the mails, or upon its own initiative, the Postal Regulatory Commission
may change the list of market-dominant products under section 3621 and
the list of competitive products under section 3631 by adding new
products to the lists, removing products from the lists, or transferring
products between the lists.
``(b) Criteria.--All determinations by the Postal Regulatory
Commission under subsection (a) shall be made in accordance with the
following criteria:
``(1) The market-dominant category of products shall consist
of each product in the sale of which the Postal Service
exercises sufficient market power that it can effectively set
the price of such product substantially above costs, raise
prices significantly, decrease quality, or decrease output,
without risk of losing 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

[[Page 3210]]
120 STAT. 3210

``(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)  NOTE: Federal Register, publication.  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.  NOTE: Federal Register,
publication.  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:

[[Page 3211]]
120 STAT. 3211

``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--

[[Page 3212]]
120 STAT. 3212

``(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  NOTE: Audits.  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)  NOTE: Regulations.  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)  NOTE: Regulations.  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)  NOTE: Regulations.  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;

[[Page 3213]]
120 STAT. 3213

``(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).

[[Page 3214]]
120 STAT. 3214

``(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;

[[Page 3215]]
120 STAT. 3215

``(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)  NOTE: Regulations.  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.

[[Page 3216]]
120 STAT. 3216

``(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)  NOTE: Deadline.  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

[[Page 3217]]
120 STAT. 3217

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

NOTE: Deadline.  ``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.

[[Page 3218]]
120 STAT. 3218

``SUBCHAPTER VI--GENERAL

``3681. Reimbursement.
``3682. Size and weight limits.
``3683. Uniform rates for books; films, other materials.
``3684. Limitations.
``3685. Filing of information relating to periodical publications.
``3686. Bonus authority.

``SUBCHAPTER VII--MODERN SERVICE STANDARDS

``3691. Establishment of modern service standards.''.

TITLE III--MODERN SERVICE STANDARDS

SEC. 301. ESTABLISHMENT OF MODERN SERVICE STANDARDS.

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

``SUBCHAPTER VII--MODERN SERVICE STANDARDS

``Sec. 3691. Establishment of modern service standards

``(a)  NOTE: Deadline.  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;

[[Page 3219]]
120 STAT. 3219

``(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.  NOTE: 39 USC 3691 note.  POSTAL SERVICE PLAN.

(a)  NOTE: Deadline.  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.

[[Page 3220]]
120 STAT. 3220

(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.

[[Page 3221]]
120 STAT. 3221

(5)  NOTE: Effective date.  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.

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;

[[Page 3222]]
120 STAT. 3222

``(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;

[[Page 3223]]
120 STAT. 3223

``(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)  NOTE: Recommen- dations.  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--

[[Page 3224]]
120 STAT. 3224

``(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)  NOTE: Submission period.  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)  NOTE: Reports.  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)  NOTE: Deadline.  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)  NOTE: Regulations.  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

[[Page 3225]]
120 STAT. 3225

``(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)  NOTE: Reports.  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)''.

[[Page 3226]]
120 STAT. 3226

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

[[Page 3227]]
120 STAT. 3227

obtainable) from an independent source or is otherwise obtained
(or obtainable).

``(b)  NOTE: Regulations.  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)  NOTE: Applicability.  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.

[[Page 3228]]
120 STAT. 3228

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)  NOTE: Deadline.  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.

[[Page 3229]]
120 STAT. 3229

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

``(6) For purposes of this subsection, the term `State' includes the
District of Columbia, the Commonwealth of Puerto Rico, and a territory
or possession of the United States.
``(g)(1) Notwithstanding any other provision of law, legal
representation may not be furnished by the Department of Justice to the
Postal Service in any action, suit, or proceeding arising, in whole or
in part, under any of the following:
``(A) Subsection (d) or (e) of this section.
``(B) Subsection (f) or (g) of section 504 (relating to
administrative subpoenas by the Postal Regulatory Commission).
``(C) Section 3663 (relating to appellate review).

The Postal Service may, by contract or otherwise, employ attorneys to
obtain any legal representation that it is precluded from obtaining from
the Department of Justice under this paragraph.
``(2) In any circumstance not covered by paragraph (1), the
Department of Justice shall, under section 411, furnish the Postal
Service such legal representation as it may require, except that, with
the prior consent of the Attorney General, the Postal Service may, in
any such circumstance, employ attorneys by contract or otherwise to
conduct litigation brought by or against the Postal Service or its
officers or employees in matters affecting the Postal Service.
``(3)(A) In any action, suit, or proceeding in a court of the United
States arising in whole or in part under any of the provisions of law
referred to in subparagraph (B) or (C) of paragraph (1), and to which
the Commission is not otherwise a party, the Commission shall be
permitted to appear as a party on its own motion and as of right.
``(B) The Department of Justice shall, under such terms and
conditions as the Commission and the Attorney General shall consider
appropriate, furnish the Commission such legal representation as it may
require in connection with any such action, suit, or proceeding, except
that, with the prior consent of the Attorney General, the Commission may
employ attorneys by contract or otherwise for that purpose.
``(h) A judgment against the Government of the United States arising
out of activities of the Postal Service shall be paid by the Postal
Service out of any funds available to the Postal Service, subject to the
restriction specified in section 2011(g).''.
(b) Technical Amendment.--Section 409(a) of title 39, United States
Code, is amended by striking ``Except as provided in section 3628 of
this title,'' and inserting ``Except as otherwise provided in this
title,''.

SEC. 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

[[Page 3230]]
120 STAT. 3230

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

[[Page 3231]]
120 STAT. 3231

with international postal services and international delivery
services.

``(3)  NOTE: Establishment.  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

[[Page 3232]]
120 STAT. 3232

States Trade Representative and the Commissioner of Customs in carrying
out this paragraph.
``(4)  NOTE: Effective date.  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)  NOTE: 39 USC 407 note.  Effective Date.--Notwithstanding any
provision of the amendment made by subsection (a), the authority of the
United States Postal Service to establish the rates of postage or other
charges on mail matter conveyed between the United States and other
countries shall remain available to the Postal Service until--
(1) with respect to market-dominant products, the date as of
which the regulations promulgated under section 3622 of title
39, United States Code (as amended by section 201(a)) take
effect; and
(2) with respect to competitive products, the date as of
which the regulations promulgated under section 3633 of title
39, United States Code (as amended by section 202) take effect.

TITLE V--GENERAL PROVISIONS

SEC. 501. QUALIFICATION AND TERM REQUIREMENTS FOR GOVERNORS.

(a) Qualifications.--
(1) In general.--Section 202(a) of title 39, United States
Code, is amended by striking ``(a)'' and inserting ``(a)(1)''
and by striking the fourth sentence and inserting the following:
``The Governors shall represent the public interest generally,
and shall be chosen solely on the basis of their experience in
the 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)  NOTE: 39 USC 202 note.  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.  NOTE: Effective date.  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,

[[Page 3233]]
120 STAT. 3233

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)  NOTE: 39 USC 202 note.  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 a 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)  NOTE: 39 USC 202 note.  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

[[Page 3234]]
120 STAT. 3234

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
apply.--Subsection (b) of section 2005 of title 39, United
States Code, is amended by striking ``(b)'' and inserting
``(b)(1)'', and by adding at the end the following:

``(2) Notwithstanding any other provision of this section--
``(A) the authority to pledge assets of the Postal Service
under this subsection shall be available only to the extent that
such assets are not related to the provision of competitive
products (as determined under section 2011(h) or, for purposes
of any period before accounting practices and principles under
section 2011(h) have been established and applied, the best
information available from the Postal Service, including the
audited statements required by section 2008(e)); and
``(B) any authority under this subsection relating to the
pledging or other use of revenues or receipts of the Postal
Service shall be available only to the extent that they are not
revenues or receipts of the Competitive Products Fund.''.

SEC. 503. PRIVATE CARRIAGE OF LETTERS.

(a) In General.--Section 601 of title 39, United States Code, is
amended by striking subsection (b) and inserting the following:
``(b) A letter may also be carried out of the mails when--

[[Page 3235]]
120 STAT. 3235

``(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)  NOTE: Regulations.  Any regulations necessary to carry out
this section shall be promulgated by the Postal Regulatory
Commission.''.

(b)  NOTE: 39 USC 601 note.  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  NOTE: Deadlines.  disputes

``(a)  NOTE: Notice.  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.  NOTE: Notification.  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

[[Page 3236]]
120 STAT. 3236

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)  NOTE: 39 USC 1201 note.  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)  NOTE: 39 USC 1217 note.  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.--

[[Page 3237]]
120 STAT. 3237

``(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.  NOTE: Notification. Deadline.  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.''.

[[Page 3238]]
120 STAT. 3238

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)  NOTE: President.  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)  NOTE: 39 USC 3601, 3602.  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;

[[Page 3239]]
120 STAT. 3239

(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)  NOTE: 39 USC 501 note.  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.

[[Page 3240]]
120 STAT. 3240

``(4) For purposes of this subsection, the term `covered person'
means an officer, employee, agent, or contractor of the Postal Service.
``(g)(1)  NOTE: Notification.  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)  NOTE: Confidentiality.  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.  NOTE: Regulations.  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.  NOTE: Budget.  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.)  NOTE: 5 USC app. 8G.  is amended--
(1) by redesignating paragraph (4) as paragraph (5);

[[Page 3241]]
120 STAT. 3241

(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)  NOTE: 5 USC app. 8G note.  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)  NOTE: Applicability.  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  NOTE: 5 USC app.
101.  (5 U.S.C.

[[Page 3242]]
120 STAT. 3242

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)  NOTE: 39 USC 404 note.  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  NOTE: 5 USC app. 8G.  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)  NOTE: 5 USC app. 8G note.  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)  NOTE: Establishment.  the Office of Inspector General
of the Postal Regulatory Commission shall be established.

TITLE VII--EVALUATIONS

SEC. 701.  NOTE: 39 USC 501 note.  ASSESSMENTS OF RATEMAKING,
CLASSIFICATION, AND OTHER PROVISIONS.

(a) In General.--  NOTE: Deadline. Reports.  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.

[[Page 3243]]
120 STAT. 3243

(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.  NOTE: 39 USC 501 note.  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)--

[[Page 3244]]
120 STAT. 3244

(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.  NOTE: 39 USC 3633 note.  STUDY ON EQUAL APPLICATION OF LAWS
TO COMPETITIVE PRODUCTS.

(a) In General.--  NOTE: Deadline. Reports.  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 WORKPLACE-RELATED
INJURIES.

(a) Report by the Inspector General.--

[[Page 3245]]
120 STAT. 3245

(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.--  NOTE: Deadline. Reports.  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.

[[Page 3246]]
120 STAT. 3246

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

(a) In general.--  NOTE: Deadline. Reports.  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)  NOTE: 39 USC 1001 note.  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.

NOTE: Deadline. Reports.  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)  NOTE: Reports.  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.--  NOTE: Deadline. Reports.  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.

[[Page 3247]]
120 STAT. 3247

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

(a) Government Accountability Office  NOTE: Reports.  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;

[[Page 3248]]
120 STAT. 3248

(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.  NOTE: 39 USC 501 note.  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.

[[Page 3249]]
120 STAT. 3249

TITLE VIII--  NOTE: Postal Civil Service Retirement and Health Benefits
Funding Amendments of 2006.  POSTAL SERVICE RETIREMENT AND HEALTH
BENEFITS FUNDING

SEC. 801.  NOTE: 5 USC 101 note.  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)  NOTE: Deadlines.  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)  NOTE: Redetermination period.  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).  NOTE: Effective
date. Deadline.  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.

[[Page 3250]]
120 STAT. 3250

``(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)  NOTE: 5 USC 8348 note.  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.  NOTE: Reports.  The Office shall submit a report
containing the

[[Page 3251]]
120 STAT. 3251

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)  NOTE: Deadlines.  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;

[[Page 3252]]
120 STAT. 3252

``(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)  NOTE: Reports.  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.  NOTE: Reports.  The Office shall submit a report
containing the results of its reconsideration to the Commission, the
Postal Service, and Congress.

``(6)  NOTE: Regulatioins.  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)  NOTE: 5 USC 8909a.  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.

[[Page 3253]]
120 STAT. 3253

(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.  NOTE: Reports.  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  NOTE: 39 USC note prec.
2001.  (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.  NOTE: 5 USC 8334 note.  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.

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.''.

[[Page 3254]]
120 STAT. 3254

(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;''.

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)  NOTE: Penalty.  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,  NOTE: 39 USC 5201 et seq.  is repealed.
(2) Conforming amendments.--(A) Section 5005(a) of title 39,
United States Code, is amended--

[[Page 3255]]
120 STAT. 3255

(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.

[[Page 3256]]
120 STAT. 3256

``(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

[[Page 3257]]
120 STAT. 3257

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).

[[Page 3258]]
120 STAT. 3258

(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)  NOTE: 39 USC 5402 note.  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)  NOTE: 39 USC 404 note.  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)  NOTE: 39 USC 1001 note.  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.

[[Page 3259]]
120 STAT. 3259

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)  NOTE: Regulations.  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.

[[Page 3260]]
120 STAT. 3260

``(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.''.

[[Page 3261]]
120 STAT. 3261

(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.  NOTE: Deadlines.  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

[[Page 3262]]
120 STAT. 3262

and equitable rates of postage and fees for postal services in
accordance with the provisions of chapter 36. Postal rates and fees
shall be reasonable and equitable and sufficient to enable the Postal
Service, under best practices of honest, efficient, and economical
management, to maintain and continue the development of postal services
of the kind and quality adapted to the needs of the United States.
``(c) The Postal Service shall maintain one or more classes of mail
for the transmission of letters sealed against inspection. The rate for
each such class shall be uniform throughout the United States, its
territories, and possessions. One such class shall provide for the most
expeditious handling and transportation afforded mail matter by the
Postal Service. No letter of such a class of domestic origin shall be
opened except under authority of a search warrant authorized by law, or
by an officer or employee of the Postal Service for the sole purpose of
determining an address at which the letter can be delivered, or pursuant
to the authorization of the addressee.''.
(f) Limitations.--Section 3684 of title 39, United States Code, is
amended by striking all that follows ``any provision'' and inserting
``of this title.''.
(g) Miscellaneous.--Title 39, United States Code, is amended--
(1) in section 1005(d)(2)--
(A) by striking ``subsection (g) of section 5532,'';
and
(B) by striking ``8344,'' and inserting ``8344'';
(2) in the analysis for part III, by striking the item
relating to chapter 28 and inserting the following:

``28. Strategic Planning and Performance Management..............2801'';

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

[[Page 3263]]
120 STAT. 3263

(5) by striking the heading for section 3627 and inserting
the following:

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

Approved December 20, 2006.

LEGISLATIVE HISTORY--H.R. 6407 (S. 662):
---------------------------------------------------------------------------

CONGRESSIONAL RECORD, Vol. 152 (2006):
Dec. 8, considered and passed House and Senate.
WEEKLY COMPILATION OF PRESIDENTIAL DOCUMENTS, Vol. 42 (2006):
Dec. 20, Presidential statement.