[Senate Report 113-237]
[From the U.S. Government Publishing Office]
Calendar No. 523
113th Congress } { Report
SENATE
2d Session } { 113-237
_______________________________________________________________________
POSTAL REFORM ACT OF 2013
__________
R E P O R T
of the
COMMITTEE ON HOMELAND SECURITY AND
GOVERNMENTAL AFFAIRS
UNITED STATES SENATE
WITH ADDITIONAL VIEWS
to accompany
S. 1486
TO IMPROVE, SUSTAIN, AND TRANSFORM THE UNITED STATES POSTAL SERVICE
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
July 31, 2014.--Ordered to be printed
__________
U.S. GOVERNMENT PRINTING OFFICE
39-010 WASHINGTON : 2014
COMMITTEE ON HOMELAND SECURITY AND GOVERNMENTAL AFFAIRS
THOMAS R. CARPER, Delaware, Chairman
CARL LEVIN, Michigan TOM COBURN, Oklahoma
MARK L. PRYOR, Arkansas JOHN McCAIN, Arizona
MARY L. LANDRIEU, Louisiana RON JOHNSON, Wisconsin
CLAIRE McCASKILL, Missouri ROB PORTMAN, Ohio
JON TESTER, Montana RAND PAUL, Kentucky
MARK BEGICH, Alaska MICHAEL B. ENZI, Wyoming
TAMMY BALDWIN, Wisconsin KELLY AYOTTE, New Hampshire
HEIDI HEITKAMP, North Dakota
Gabrielle A. Batkin, Staff Director
John P. Kilvington, Deputy Staff Director
Beth M. Grossman, Chief Counsel
Lawrence B. Novey, Chief Counsel for Governmental Affairs
Katherine C. Sybenga, Senior Counsel
Robert H. Bradley, Legislative Assistant
Keith B. Ashdown, Minority Staff Director
Christopher J. Barkley, Minority Deputy Staff Director
Andrew C. Dockham, Minority Chief Counsel
Joseph D. Moeller, Minority U.S. Postal Service Office of the Inspector
General Detailee
Laura W. Kilbride, Chief Clerk
Calendar No. 523
113th Congress } { Report
SENATE
2d Session } { 113-237
======================================================================
POSTAL REFORM ACT OF 2013
_______
July 31, 2014.--Ordered to be printed
_______
Mr. Carper, from the Committee on Homeland Security and Governmental
Affairs, submitted the following
R E P O R T
together with
ADDITIONAL VIEWS
[To accompany S. 1486]
The Committee on Homeland Security and Governmental
Affairs, to which was referred the bill (S. 1486), to improve,
sustain and transform the United States Postal Service, having
considered the same, reports favorably thereon with an
amendment and recommends that the bill as amended do pass.
CONTENTS
Page
I. Purpose and Summary..............................................1
II. Background and Need for the Legislation..........................2
III. Legislative History.............................................21
IV. Section-by-Section Analysis.....................................26
V. Evaluation of Regulatory Impact.................................44
VI. Congressional Budget Office Estimate............................44
VII. Changes in Existing Law Made by the Bill, as Reported...........70
Appendix A--Postal Service Financial Projections...............167
I. Purpose and Summary
S. 1486, the Postal Reform Act of 2014, seeks to address
the United States Postal Service's short-term financial
challenges while putting into place reforms intended to
strengthen its long-term financial and commercial viability.
II. Background and Need for the Legislation
A. GENERAL BACKGROUND
In 2012, the Committee on Homeland Security and
Governmental Affairs reported out legislation, S. 1789,
intended to update the Postal Service's business model and take
steps to address the financial challenges it faced as a result
of the recent recession and of a decline in the use of hard-
copy mail. The Committee's report on that bill described the
vital role the Postal Service plays in the U.S. economy,
summarized the current legal framework of the Postal Service,
and explained how recent trends have imperiled the long-term
viability of the Postal Service as it currently exits.\1\ Then
on April 25, 2012, after several days of debate and the
adoption of several amendments, the full Senate passed S.1789
by a vote of 62 to 37.\2\ The House never considered the Senate
bill or passed any comparable legislation, however, and
comprehensive postal reform legislation was not enacted during
the 112th Congress.
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\1\ ``21st Century Postal Service Act of 2012,'' Report of the
Senate Committee on Homeland Security and Governmental Affairs to
accompany S.1789, Senate Report no. 112-143 (Jan. 31, 2012), at pages
1-4.
\2\ Congressional Record, S.2695-S2696 (April 25, 2012).
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The improving economy and the growing package delivery
market have somewhat improved the Postal Service's short-term
financial outlook since the Committee last acted on postal
reform. In recent years, the volume of Standard Mail (a class
of commercial mail that is lower-priority than First-Class
Mail) has stabilized,\3\ and the Postal Service has seen a
dramatic increase in package volume.\4\ In addition, the Postal
Service has generated significant cost savings through dramatic
and aggressive cost-cutting efforts. Postmaster General Patrick
Donahoe described for this Committee the operational and
workforce initiatives that the Postal Service has implemented
to better align capacity and cost with reduced mail volumes:
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\3\ Standard Mail is the largest-volume mail class, consisting of
nearly 81 billion pieces in 2013. According to figures provided by the
Postal Service, Standard Mail volume plummeted by nearly 17% in 2009
compared to the previous year, but, since then, volume has gone through
only relatively minor fluctuations: up by 0.1 percent in 2010, up an
additional 2.6% in 2011, back down by 5.3% in 2012, and back up by 1.8%
in 2013.
\4\ The Postal Service's shipping and package services declined in
2009 by 8.0% in volume from the previous year, saw an additional slight
drop of 0.6% in 2010, and since then has seen steady growth: 6.6% in
2011, and additional 7.5% in 2012, and a further 6.0% in 2013. See
United States Postal Service Form 10-K for Fiscal Year 2013 at p. 25,
available at http://about.usps.com/who-we-are/financials/10k-reports/
fy2013.pdf.
These initiatives include the accelerated
consolidation of mail processing and delivery networks,
and the reduction in hours at 13,000 Post Offices, in
conjunction with the expansion of alternative retail
access. . . . This realignment of mail processing,
retail, and delivery operations is expected to generate
$6 billion in annual cost reductions by the year 2016.
The Postal Service also continues to implement
efficiency measures by aligning staffing levels with
projected mail volume. These staffing level reductions
will be achieved primarily through attrition . . . .
[The Postal Service is also increasing the use of
lower-cost non-career employees], which will facilitate
the realignment of staffing and workload levels and the
reduction of costs. The Postal Service's current career
workforce of 492,000 is the smallest it has been in
decades and is down nearly 26 percent in the past five
years.\5\
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\5\ ``Outside the Box: Reforming and Renewing the Postal Service,
Part I--Maintaining Services, Reducing Costs and Increasing Revenue
Through Innovation and Modernization,'' hearing before the Senate
Committee on Homeland Security and Governmental Affairs, 113th Cong.
(Sept. 19, 2013) (Testimony of Postmaster General Patrick R. Donahoe).
However, the fundamental structural problems this Committee
sought to address in 2012 remain unabated. The Postal Service
continues to face serious financial challenges that threaten
its short-term and long-term viability. First-Class Mail--the
class of mail that makes the largest contribution to the Postal
Service's bottom line--continues to decline. For example,
Postal Service data show a persistent decline in First-Class
Mail volume over the past five years: by 8.8 percent in 2009, a
further 6.2 percent decline 2010, another 6.5 percent in 2011,
another 5.3 percent decline in 2012, and yet another decline of
4.2 percent in 2013. The Postal Service's last-published 5-year
plan projects First-Class Mail volumes continuing to drop by 5
to 6 percent each year.\6\
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\6\ See U.S. Postal Service, ``Five-Year Business Plan'', April
2013, http://about.usps.com/strategic-planning/five-year-business-plan-
2012-2017.pdf.
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As of the end of the second quarter of Fiscal Year 2014,
the Postal Service was carrying $3.7 billion in cash-on-
hand\7\--barely enough to cover two of its $1.75-billion bi-
weekly payrolls, not to mention its other obligations during
the period. Moreover, the Postal Service has borrowed the full
$15 billion it is permitted under law to borrow from the
Treasury. In addition, the Postal Service's financial condition
has made it difficult to invest in needed capital projects.
Chief Financial Officer Joseph Corbett explained: ``Our
liabilities exceed our assets by $42 billion and we have a need
for more than $10 billion to invest in new delivery vehicles,
package sortation equipment, and other deferred
investments.''\8\ The Postmaster General has also stated that
``legislative action is required to give the Postal Service
authority to generate new revenue and adapt to changing
business conditions, as the scope of products and services that
the Postal Service can offer is currently limited by law.''\9\
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\7\ See United States Postal Service Form 10-Q for Fiscal Year
2014, Quarter 2 at p. 8, available at http://about.usps.com/who-we-are/
financials/financial-conditions-results-reports/fy2014-q2.pdf.
\8\ U.S. Postal Service Records Second Quarter Loss of $1.9
Billion: Urges Congress to Pass Comprehensive Postal Legislation,'' May
09, 2014, http://about.usps.com/news/national-releases/2014/
pr14_031.htm. U.S. Postal Service Records Second Quarter Loss of $1.9
Billion.
\9\ ``Outside the Box: Reforming and Renewing the Postal Service,
Part I--Maintaining Services, Reducing Costs and Increasing Revenue
Through Innovation and Modernization,'' hearing before the Senate
Committee on Homeland Security and Governmental Affairs, 113th Cong.
(Sept. 19, 2013).
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The Committee held an initial hearing to discuss these and
other issues facing the Postal Service on February 13,
2013.\10\ Senators Carper and Coburn introduced S. 1486 on
August 1, 2013, and the Committee held further hearings on
September 19 and September 26, 2013.\11\ Then on February 6,
2014, after extensive debate and the consideration of nearly 30
amendments, the Committee ordered the bill reported favorably
to the full Senate by a vote of 9 to 1.
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\10\ ``Solutions to the Crisis Facing the U.S. Postal Service,''
hearing before the Senate Committee on Homeland Security and
Governmental Affairs, 113th Cong. (Feb. 13, 2013),
http://www.gpo.gov/fdsys/pkg/CHRG-113shrg80219/pdf/CHRG-
113shrg80219.pdf.
\11\ ``Outside the Box: Reforming and Renewing the Postal Service,
Part I--Maintaining Services, Reducing Costs and Increasing Revenue
Through Innovation and Modernization,'' hearing before the Senate
Committee on Homeland Security and Governmental Affairs, 113th Cong.
(Sept. 19, 2013); ``Outside the Box: Reforming and Renewing the Postal
Service, Part II--Promoting a 21st Century Workforce,'' hearing before
the Senate Committee on Homeland Security and Governmental Affairs,
113th Cong. (Oct. 19, 2013).
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The bill approved by the Committee contains a comprehensive
package of reforms to protect key postal operations and
services, shore up the Postal Service's finances, set aside
enough funding to cover postal retirees' future benefits, and
increase Postal Service revenues by making ratemaking more
realistic and by encouraging innovation. Key elements of the
bill include--
Protect Saturday mail delivery until at least
2017. Impose a two-year moratorium on processing plant closures
and on changes to delivery service standards. Require the
Postal Service to seek additional local input before closing
post offices, and place a five-year moratorium on closing rural
post offices.
Stop overcharging the Postal Service for the cost
of its employees' pensions, by requiring calculations of the
Postal Service's obligations be based on the actual
characteristics of the postal workforce. Restructure the Postal
Service's burdensome healthcare pre-funding requirements,
replacing them with a payment plan that enables the Postal
Service to honor its commitments to its retirees without
leaving taxpayers on the hook. Maintain the high-quality
healthcare coverage for postal workers and retirees under the
Federal Employee Health Benefits Program (FEHBP), plus better
utilize the Postal Service's participation in the Medicare
program to both enhance retiree healthcare coverage and reduce
the cost to the Postal Service.
Encourage innovation and generate revenue for the
Postal Service by allowing it to offer a broader range of
``non-postal'' products and services, within appropriate
boundaries. Establish a commission to explore new business
models for the Postal Service to increase revenues and reduce
costs. Adjust the rules on postal rates to enable the Postal
Service to generate more revenue, while preserving both Postal
Regulatory Commission oversight and the existing Consumer Price
Index (CPI) rate cap.
The Postal Service has indicated that the provisions of the
bill as ordered reported by the Committee would, if enacted
this year, allow it to pay down its debt to Treasury by Fiscal
Year 2016, substantially reduce or eliminate its unfunded
retiree health care obligation and the need to pre-fund it,
lead to increased revenue over time, allow for needed capital
expenditures in the coming years, and result in a positive cash
balance of $7.1 billion after ten years. (See Appendix A of
this Report, which presents financial projections developed by
the Postal Service, showing the impact on the Postal Service's
finances if S.1486 is enacted.)
B. DISCUSSION OF LEGISLATIVE ISSUES
1. FERS surplus; Postal-specific assumptions for FERS and CSRS funding
United States Postal Service (USPS) employees, like federal
employees, participate in the Federal Employees Retirement
System (FERS) or, for employees who began federal service
before the end of 1986, the Civil Service Retirement System
(CSRS). Thus, the Postal Service is required to make the
biweekly employer contributions for postal employees
participating inFERS and CSRS. Also, the Office of Personnel
Management (OPM) finds that the amounts paid to fund postal workers'
future annuities under CSRS are insufficient, and the Postal Service
must make annual payments to liquidate the liability starting in
2018.\12\
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\12\See 5.U.S.C. 8348(h). OPM has found that the Postal Service has
paid more than enough to fund its employees' annuities under FERS, but,
if OPM ever finds a liability, the Postal Service would be obligated to
make annual payments to liquidate that liability as well. See 5.U.S.C.
8423(b).
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S. 1486 would require that, in calculating the amounts that
the Postal Service must pay for postal workers' annuities, OPM
must use the demographic and salary-growth characteristics of
the Postal Service's actual workforce, rather than the general
characteristics of both postal and non-postal federal employees
combined, as OPM does today. This provision responds to
findings reported by the Postal Service's Office of Inspector
General (USPS OIG), based on findings by the Hay Group (an
actuarial consulting firm), that OPM's current approach
substantially over-estimates the amount that postal retirees'
annuities will actually cost the FERS and CSRS programs.\13\
Both the Postal Service and the President in his budget
recommendations for Fiscal Year 2015 have also called for
legislation to require the use of postal-specific assumptions
for determining the Postal Service's pension obligations.\14\
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\13\USPS OIG, Using U.S. Postal Service-Specific Assumptions for
Calculating the Federal Employees Retirement System Liability:
Management Advisory Report (Report Number FT-MA-13-024) (Sept. 27,
2013), https://www.uspsoig.gov/sites/default/files/document-library-
files/2013/ft-ma-13-024.pdf.
\14\``Outside the Box: Reforming and Renewing the Postal Service,
Part II--Promoting a 21st Century Workforce,'' hearing Before the
Senate Committee on Homeland Security and Governmental Affairs, 113th
Cong. (Sept. 26, 2013) (Statement submitted by Postmaster General
Patrick R. Donahoe); FY 2015 Budget of the U.S. Government, Appendix
pages 1232 and 1362.
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Moreover, if OPM finds that the Postal Service has paid
more into the FERS system than its employees' annuities will
actually cost, this legislation provides an orderly process by
which the surplus can be returned for use by the Postal
Service. If a surplus existed as of September 30, 2013, the
Postal Service may request not more than $6 billion of the
amount and use it to retire debt. The bill also establishes
rules for the Postal Service to gain access to and use of any
surplus that may remain or develop in subsequent years.
OPM has estimated that, if demographic factors specific to
the postal workforce were used, the surplus in the FERS system
available to fund postal workers' annuities would amount to
about $ 2.4 billion as of September 30, 2013. S. 1486 would
provide the Postal Service with the option of having some or
all of that amount applied to retire the Postal Service's debt.
2. Retiree health pre-funding payments
The Postal Service is under various statutory mandates
concerning its funding of the retirement health benefits for
its current and former employees. While it is critical that the
Postal Service behave responsibly with respect to these
retirement obligations, this bill seeks to recalibrate these
mandates in order to lessen their immediate burden while still
ensuring that the Postal Service will contribute sufficiently
to meet realistic estimates of future needs.
The Postal Accountability and Enhancement Act of 2006\15\
required the Postal Service to make a series of ten payments
beginning in Fiscal Year 2007 to pre-fund its future retiree
health obligations. The amount of each payment is set in
statute and ranges from $5.4 billion to $5.8 billion annually,
although Congress decreased the size of the payment due in
Fiscal Year 2009 from $5.4 billion to $1.4 billion in an effort
to ease the financial strain on the Postal Service.\16\ Under
current law, the Postal Service is scheduled in Fiscal Year
2017 to begin paying down whatever retiree health obligations
remain over a period of 40 years.\17\
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\15\P.L. 109-435.
\16\P.L. 111-68, Sec. 164.
\17\5 U.S.C. Sec. 8909a(d)(2)(B).
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As of the end of Fiscal Year 2013, the Postal Service
Retiree Health Benefits Fund (the Fund) had a balance of over
$47 billion and the Postal Service had a remaining liability to
the Fund of just over $48 billion.\18\ For the past few years,
the Postal Service has been unable to make its annual pre-
funding payment and defaulted on its last three statutory
payments, a $5.5 billion payment due on August 1, 2012 that was
delayed from September 2011, a $5.6 payment due on September
30, 2012, and a $5.6 billion payment due on September 30, 2013.
The Postal Service is expected to default on the 2014 payment
of $5.7 billion on September 30, 2014, and absent comprehensive
reform, will likely also default on the payments due in 2015
and 2016.
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\18\United States Postal Service Form 10-K for Fiscal Year 2013 at
p. 38, available at
http://about.usps.com/who-we-are/financials/10k-reports/fy2013.pdf.
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The Postal Service is also obligated to make premium
payments each year on behalf of current retirees. According to
data provided to the Committee by the Postal Service, those
premium payments totaled $2.85 billion in Fiscal Year 2013 and
are projected to reach $3.6 billion annually by Fiscal Year
2016.
The Committee recognizes that the statutorily mandated
retiree health prefunding payment schedule has been difficult
to meet due to the declining revenues of the Postal Service as
a result of the electronic diversion of the mail and a major
recession that significantly affected mail volume. At the same
time, the Committee is aware that easing or eliminating the
pre-funding obligation could one day either break promises made
to retirees, or leave taxpayers with a significant financial
obligation in the event that the Postal Service becomes unable
to make the payments itself.
In order to provide the Postal Service with financial
relief while maintaining its responsibility for the costs
related to its employees, S. 1486 would make four major reforms
to the Postal Service's current retiree health payment schedule
and structure:
1. It would cancel any outstanding payments owed by
the Postal Service.
2. It would replace the existing payment schedule--
the statutory annual payments and the 40-year
amortization schedule that will start in Fiscal Year
2017--with a new 40-year amortization schedule that
would start in Fiscal Year 2016.
3. It would set the pre-funding goal underlying the
new amortization schedule at 80 percent of the
obligation (rather than the current 100 percent), in
recognition of the fact that the Postal Service, if
necessary, has additional assets it could draw upon to
meet these obligations.
4. It would allow the Postal Service's contribution
towards current retirees' premiums to be paid out of
the Fund in the Treasury in which the Postal Service's
pre-funding payments have been deposited since Fiscal
Year 2007. That Fund currently includes just over $47
billion. (Under current statute, the Postal Service's
contribution to current retirees' premiums may be paid
from the Fund beginning on September 30, 2017.)\19\
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\19\5 U.S.C. Sec. 8906(g)(2)(A).
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3. Postal service health benefits program
In order to ensure the future financial viability of the
Postal Service, the Committee recognizes that the Postal
Service must be able to address its healthcare costs and future
healthcare liabilities. The Postal Service has for a number of
years proposed to provide postal employees and annuitants with
a separate Postal Service administered health care plan that is
fully integrated with Medicare, as a way to reduce health care
costs and reduce their future retiree health care
liability.\20\ While the Committee did not choose to create an
entirely separate health plan run by the Postal Service, S.
1486 does create a new postal-only health program within
Federal Employees Health Benefits Program (FEHBP) for all
postal employees and annuitants that is integrated with
Medicare parts A, B, and D.
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\20\See, e.g., ``Solutions to the Crisis Facing the U.S. Postal
Service,'' hearing Before the Senate Committee on Homeland Security and
Governmental Affairs, 113th Cong. (February 13, 2013) (testimony of
Patrick R. Donahoe, Postmaster General and CEO, U.S. Postal Service)
available at http://www.hsgac.senate.gov/hearings/solutions-to-the-
crisis-facing-the-us-postal-service [hereinafter Donahoe Testimony at
HSGAC Hearing Feb. 13, 2013].
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S. 1486 would authorize OPM to establish the Postal Service
Health Benefits Program (PSHBP) within the FEHBP. OPM would be
required to contract with carriers of current FEHBP plans that
have over 5,000 postal employees and retirees enrolled in its
FEHBP plans for the 2015 contract year, but all FEHBP carriers
would be eligible to bid to participate in the PSHBP. Requiring
plans with more than 5,000 postal enrollees to participate
ensures the participation of at least the insurance carriers
that currently cover over 90 percent of the postal community,
but participation is not limited to only those plans. The bill
would authorize OPM to add, after 2016, to the PSHBP only those
health plans that meet the requirements and criteria to be
offered through the FEHBP and carriers participating in the
FEHBP. However, it is the intent of the Committee that carriers
that are exclusive collective bargaining representatives with
the Postal Service may terminate their participation in the
civil service segment of the FEHBP and still continue to
participate in the PSHBP subject to FEHBP requirements.
One key difference between the current FEHBP and the new
PSHBP is that the PSHBP would require Medicare enrollment for
postal annuitants who are eligible for Medicare parts A, B and
D and provide postal annuitants with prescription drugs through
a Medicare Part D Employee Group Waiver plan. Currently, Postal
Service annuitants, like all other federal annuitants, receive
full FEHBP coverage in retirement. Like all Americans, they
have also paid into and are eligible for Medicare. However,
unlike other businesses that provide health coverage to their
retirees, the Postal Service is unable to require its Medicare-
eligible annuitants to enroll in Medicare. In fact,
approximately 8 percent of Medicare-eligible postal annuitants
do not participate in Medicare part A and approximately 22
percent do not participate in Medicare part B.\21\ In addition,
postal annuitants, like all other federal employees and
annuitants, do not receive prescription drug coverage through
Medicare part D. This results in higher costs for the FEHBP
that translate to higher costs for the Postal Service.
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\21\Government Accountability Office (GAO), U.S. Postal Service:
Proposed Health Plan Could Improve Financial Condition, but Impact on
Medicare and Other Issues Should Be Weighed before Approval, GAO-13-
658, at p. 8 (July 2013).
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S. 1486 would require Medicare-eligible postal annuitants
to enroll in Medicare parts A, B and D as a condition of their
enrollment in the PSHBP. Since the PSHBP would be a separate
risk pool from the rest of the FEHBP, any savings, whether from
higher Medicare enrollment or otherwise, would be seen by the
Postal Service, its employees and its annuitants. This new
program should provide the Postal Service with significant
savings over time and further decrease its future retiree
health care liability, reducing its retiree health prefunding
requirements.
According to data provided to the Committee by the Postal
Service, implementation of this new Postal Service Health
Benefits Program, combined with the restructuring under this
legislation of the Postal Service's obligation to prefund its
retirees healthcare, could substantially reduce or eliminate
the Postal Service's unfunded liability to the Postal Service
Retiree Health Benefits Fund. (See Appendix A of this Report,
which presents financial projections developed by the Postal
Service, showing the impact on the Postal Service's finances if
S. 1486 is enacted. Also included in Appendix A is a letter
from the Postal Service to the Chairman of this Committee,
conveying a memorandum that reconciles the Postal Service's
estimates and CBO's scoring of S. 1486, and restating the
Postal Service's belief that the analysis of the cost savings
associated with the Medicare integration provision of S. 1486
is accurate and correct.).
4. Postal unions and collective bargaining
Postal unions date back to the 19th Century and postal
employees won the right to bargain collectively with the Postal
Service in 1970. Unlike most federal agencies and their
employees, which are governed by government-wide civil service
rules, the Postal Service generally sets compensation and other
terms and conditions of employment for workers represented by
unions through a process of collective bargaining between
postal management and postal unions.\22\ In addition to wages
and working conditions, the Postal Service also establishes
leave and holidays through collective bargaining, as well as
the amounts of the biweekly contribution by the Postal Service
to the cost of employees' health insurance. Postal workers are
forbidden to strike, but instead, if the parties are unable to
reach a timely agreement, the dispute must be resolved by
binding arbitration.\23\
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\22\39 U.S.C. Sec. 1005(f), chapter 12.
\23\39 U.S.C. Sec. 1207.
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Retirement benefits for new employees. Retirement benefits
for postal employees are currently excluded from collective
bargaining and are provided to postal employees under the same
statutes that grant these benefits to federal employees
generally.\24\ S. 1486 would modify that approach prospectively
by allowing unions and management to reconsider the retirement
package for newly hired postal workers.
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\24\39 U.S.C. Sec. 1005(f).
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In testimony before this Committee, Postmaster General
Donahoe proposed that postal employees be removed from coverage
under the retirement program that applies to federal employees
generally, and that instead the Postal Service be authorized to
establish a new retirement program consisting of a defined
contribution retirement system for future postal employees.\25\
He stated that such a retirement system would be preferable for
a number of reasons, including that the FERS system is not
comparable to pension programs in the private sector and is
more costly, and that the emerging workforce is less likely to
stay with one employer for a career and therefore wants a more
flexible and portable program like a defined contribution
system.
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\25\``Outside the Box: Reforming and Renewing the Postal Service,
Part II--Promoting a 21st Century Workforce,'' hearing Before the
Senate Committee on Homeland Security and Governmental Affairs, 113th
Cong. (Sept. 26, 2013) (Statement of Postmaster General Patrick R.
Donahoe).
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The Committee did not decide that the FERS annuity for new
employees should be ended, however, but S. 1486 would, instead,
allow the Postal Service and the postal unions to bargain over
the question of whether new employees will earn credit towards
a FERS annuity, and to bargain over the size of the Postal
Service's financial contribution towards its new employees'
retirement. Specifically, the legislation provides that a
union's collective bargaining agreement may--(1) provide that
some or all new employees represented by the union will not
receive a FERS annuity for their service at the Postal Service;
(2) adjust the amounts that the Postal Service would contribute
to the FERS plan for the employees; (3) offer alternative
retirement benefit plans for new employees represented by the
union; and (4) adjust the amounts that the Postal Service would
contribute towards the new employees' Thrift Savings Plan (TSP)
accounts. It is anticipated that bargaining over the retirement
program would generally take place between the Postal Service
and each union separately, in connection with the general
collective bargaining agreement entered into between the Postal
Service and each union. (With respect to the TSP program, the
bill allows the amount of the Postal Service's contributions to
new employees' accounts to be modified only by a collective
bargaining agreement with all four postal unions.)
The Committee expects the Postal Service to use these
flexibilities prudently, to continue recruiting and maintaining
a high-skill and high-morale workforce.
Binding arbitration in resolution of labor disputes. If a
dispute between postal unions and management cannot be resolved
and is sent to binding arbitration, statute provides that a
three-member arbitration board be convened to give the parties
a full and fair hearing, to provide parties an opportunity to
present evidence in support of their claims, and to render a
conclusive and binding decision.\26\ Postmaster General Donahoe
has requested an amendment to this statute requiring
specifically that the arbitration board must consider the
Postal Service's financial health, explaining: ``While some
interest arbitrators [who resolve bargaining disputes between
the Postal Service and its unions] do consider the Postal
Service's financial condition, there is no legal requirement to
do so.''\27\ The Government Accountability Office (GAO) has
also recommended such a change to statute for similar
reasons.\28\
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\26\39 U.S.C. Sec. 1207(c).
\27\``Outside the Box: Reforming and Renewing the Postal Service,
Part II--Promoting a 21st Century Workforce,'' hearing Before the
Senate Committee on Homeland Security and Governmental Affairs, 113th
Cong. (Sept. 26, 2013) (Statement submitted by Postmaster General
Patrick R. Donahoe).
\28\``Finding Solutions to Challenges Facing the U.S. Postal
Service,'' hearing Before the Subcomm. on Federal Financial Management,
Government Information, Federal Services and International Security of
the Senate Committee on Homeland Security and Governmental Affairs,
111th Cong. (Dec. 2, 2010) (``U.S. Postal Service: Legislation Needed
to Address Key Challenges,'' statement submitted by Phillip Herr,
Director for Physical Infrastructure Issues, Government Accountability
Office, GAO-11-244T, at p.9).
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The Committee believes that in this period when the Postal
Service faces such dire financial difficulties, arbitrators
should consider the financial condition of the Postal Service
and S. 1486 should say so explicitly. The provision in S. 1486
is identical to the provision passed by the Senate as part of
S. 1789 in the 112th Congress.\29\
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\29\S. 1789, 112th Congress, Sec. 106 of the bill as passed by the
Senate.
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5. Other workforce issues
Appeal Rights for Certain Mid-Level Managers. In 1987,
Congress allowed postal supervisors to appeal firings and other
adverse personnel actions to the Merit Systems Protection Board
(MSPB),\30\ which is an independent adjudicatory agency that
generally reviews cases brought by federal employees who claim
that personnel actions being taken against them are not lawful
or that proposed penalties are not appropriate. Meanwhile,
front-line postal workers retained the right to use the
grievance procedures established under their union contracts.
That left approximately 7,500 mid-level postal managers without
any way to appeal ordinary personnel cases outside of the
Postal Service. S. 1486 would fill that gap by allowing these
managers to appeal firings and other adverse personnel actions
to the MSPB.
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\30\Public Law 100-90 (Aug. 18, 1987).
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Managers' Organizations. Current law requires that the
Postal Service provide reasonable differentials in rates of pay
between front-line workers and managers, and that managers'
organizations have an opportunity, on behalf of their members,
to consult with the Postal Service about pay and benefits. S.
1486 would clarify and strengthen this process, in several
ways. Current law requires the Postal Service to provide
reasonable differentials in pay between front-line employees
and managers, and the legislation clarifies that the Postal
Service must take benefits into account as well as salary in
providing the differential. Moreover, the legislation clarifies
that changes to pay and/or benefits, including the termination
of a benefit, for managers cannot occur outside the designated
time period for pay consultation between the managers'
organizations and the Postal Service unless mutually agreed
upon.
FECA Prefunding. For workers' compensation payments to be
paid under the Federal Employees' Compensation Act (FECA) for
on-the-job injuries to postal workers, the Postal Service
carries on its books an unfunded liability in excess of $17
billion. S.1486 would establish a process under which the
Postal Service will begin to pay down this unfunded liability.
And to make sure that this requirement does not create new
financial difficulties for the Postal Service, it would only be
required to make a prefunding payment in any year when the
Postal Service has net income exceeding $1 billion. The
amortization schedule is modeled on the schedule now in the
bill for Retiree Health Benefits: an 80% target and an
amortization period extending 40 years, or a rolling period of
15 years, whichever period ends later. Under this plan, the
Postal Service would keep the first $1 billion of annual net
income, which the Postal Service could use for capital
investment or any other appropriate purposes, but would need to
make any amount above $1 billion available, to the extent
necessary, for making the amortization payment. Also, to foster
greater transparency and accountability, the Postal Service
would be required to report about its unfunded liability for
workers' compensation payment and about its progress in paying
down the liability in the USPS's annual audited Form 10-K
reports.
6. Mail processing facility closures
On July 1, 2012, in order to reduce its costs and respond
to the declining volume of First-Class Mail, the Postal Service
implemented changes to its First-Class Mail delivery standard.
The change in the delivery standard reduced the areas in which
the Postal Service provides overnight delivery of First-Class
Mail and thereby lengthens the delivery window for some First-
Class Mail. At the same time, the Postal Service began the
process of closing or consolidating mail processing facilities;
by reducing overnight delivery service, the Postal Service
reduced its need for processing facilities to support the
delivery times. This first phase of closures has now been
completed, during which the Postal Services consolidated 141
mail processing facilities during 2012 and 2013 and estimates
that it thereby generated annualized cost savings of $865
million thus far as a result.\31\ The Postal Service also
announced on June 30, 2014 that it plans to resume the network
rationalization in 2015, by closing or consolidating up to 82
additional facilities beginning in January and concluding
before the heavy-mailing season in the fall of the year.\32\
The Postal Service expects this second phase of closings to
generate an additional $750 million in annualized savings.\33\
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\31\See U.S. Postal Service, News Link, ``Network Rationalization
Update: USPS to resume efforts early next year.'' June 30, 2014.
https://liteblue.usps.gov/news/link/2014/07jul/news01s1.htm.
\32\Id.
\33\Id.
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While the Postal Service maintains that its new delivery
service standards, together with its greater efficiencies allow
it to continue providing satisfactory service with a smaller
processing network, some have raised concerns about whether the
closure of processing plants has contributed to an excessive
and unanticipated lengthening in delivery times, particularly
in rural areas. There have also been related questions raised
about how the Postal Service calculates delivery time in
determining whether its revised delivery service standards are
being met. To help answer these latter questions, the bill
directs GAO to conduct a study assessing the Postal Service's
method for calculating delivery times.
Notwithstanding the concerns that have been raised, the
Committee recognizes the general need for the Postal Service to
right-size its network, and has chosen not to curtail or
eliminate the Postal Service's existing authority to modify
service standards and, in the process, restructure its
processing footprint. However, the bill does place a temporary
moratorium on additional plant closures or changes in delivery
standards for a period of two years (or until the completion of
the GAO report on delivery times, whichever is later). This is
to allow time to understand the full impact of the closures
that have already occurred, to assess whether additional
closures can be accomplished without harming service, and to
see if alternative measures to decrease costs and increase
revenues may make further closures unnecessary.
The Committee seeks to ensure, moreover, that employees,
customers, and representatives of communities that could be
affected by the closure or consolidation of a mail processing
facility have an adequate opportunity to provide input before
the Postal Service makes a final decision about such a closure
or consolidation. S. 1486 would make the process used for
facility closures or consolidations more transparent and would
ensure interested parties a meaningful role in the decision.
Specifically, section 202 of S. 1486 would mandate that the
Postal Service provide at least 45 days' advance notice before
making a final decision to close or consolidate a facility;
that it provide adequate opportunities for public comment; and
that it conduct an area mail processing study that includes
consideration of a plan to reduce the capacity of the postal
facility rather than close it. Before finalizing a closure, the
Postal Service would have to publish a written justification
for the decision that responds to the public comments and
describes the actions the Postal Service intends to take to
mitigate any significant negative effects from the closure. The
Postal Service would also be required to make reasonable
efforts to provide alternatives for those customers who would
be affected by the closure of the processing facility. Finally,
the bill provides for appeals of plant closures to the Postal
Regulatory Commission (PRC) in the same manner that post office
closings can be appealed.
7. Post offices
In July 2011, the Postal Service announced that it would
conduct studies of approximately 3,700 post offices, retail
annexes, stations, and branches nationwide for possible
closure.\34\ The PRC expressed concerns about this plan,\35\ as
did some Members of Congress. Most importantly, there was
significant community concern about the proposal, particularly
the impact of potential post office closings on small and rural
communities, and questions about whether such impacts were
worth the relatively modest projected savings. In response, the
Postal Service in December 2011 announced that it would delay
the closing or consolidation of post offices and mail
processing facilities until May 15, 2012.\36\
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\34\Press Release, U.S. Postal Service, Postal Service Takes Next
Steps in Optimizing Retail Network (July 26, 2011) available at http://
about.usps.com/news/national-releases/2011/pr11-089.htm.
\35\The PRC issued an advisory opinion on December 23, 2011 stating
that the Postal Service's approach failed to provide adequate retail
access in the event of a post office closure. Postal Regulatory
Commission, Advisory Opinion on Retail Access Optimization Initiative,
Docket No. N2011-1, at p.1 (Dec. 23, 2011).
\36\Press Release, U.S. Postal Service, Statement on Delay of
Closing or Consolidation of Post Offices and Mail Processing Facilities
(December 13, 2011), available at http://about.usps.com/news/national-
releases/2011/pr11_1213closings-v2.pdf.
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In May 2012, the Postal Service announced a new strategy to
reduce costs associated with post offices while at the same
time ensuring that postal customers receive adequate access to
retail services. Under this Post Office Structure (``POSt'')
Plan, the Postal Service conducts meetings in affected
communities and gets community input on providing alternate
means of retail access, such as allowing a private contractor
to establish a so-called ``Village Post Office'' in a local
business or providing retail services through a rural letter
carrier, or keeping the local post office open but operating it
for a reduced number of hours. The Postal Service estimates
that, once fully implemented, the POSt Plan will save
approximately half a billion dollars annually.\37\
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\37\Press Release, U.S. Postal Service, New Strategy to Preserve
the Nation's Smallest Post Offices (May 9, 2012), available at http://
about.usps.com/news/national-releases/2012/pr12_054.htm.
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Current law requires the Postal Service to consider several
factors in determining whether to close a post office, such as
the effect of the closing on the community, the effect on
postal employees, whether the closing would undermine effective
service for rural communities, and the amount of the projected
savings.\38\
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\38\39 U.S.C. Sec. 404(d)(2)(A).
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The Postal Service must notify the affected public of its
intent to close or consolidate a particular post office and
hold a 60-day comment period prior to the proposed date of such
closure or consolidation.\39\ The public may appeal the Postal
Service's decision to the PRC within 30 days after USPS has
made its determination to close such post office. The
Commission then has 120 days to make a determination about
whether proper procedures were followed during the closure
process.
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\39\39 U.S.C. Sec. 404(d)(1).
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Section 203 of S. 1486 builds on these existing legal
protections as well as codifying and enhancing the practices
under the POSt plan, allowing the Postal Service to provide
retail alternatives to dedicated post offices while also
putting in place safeguards against premature or inappropriate
closures. These safeguards are particularly important for
individuals in small towns and rural areas. Among other things,
S. 1486 requires the Postal Service to consider several options
prior to closing a post office, such as consolidating two post
offices within a reasonable distance, reducing the number of
operating hours at a particular post office instead of closing
it, permitting a contractor or rural carrier to provide retail
services in the community served by the post office, or
implementing another alternative that may be proposed by the
community. S. 1486 also requires the Postal Service to consider
certain factors before making a final decision to close a post
office or reduce its hours.
In addition, S. 1486 also includes additional protections
for small, rural post offices, prohibiting the closure of such
post offices for a year after enactment and requiring that,
thereafter, the Postal Service make certain determinations
about the effect of the closing before going ahead.
Finally, S. 1486 requires the Postal Service to establish
minimum standards for retail postal services, to make clear the
level of retail access that customers can expect, whether that
retail access is provided through a traditional post office or
alternative means.
8. Changes to mail delivery schedule
Mail is currently delivered six days a week to most homes
and businesses in the United States, and Congress includes
language in annual appropriation bills intended to preserve
six-day-per-week delivery service.\40\ However, beginning in
1976, there have been a series of proposals to reduce mail
delivery to five days a week as a means of reducing operating
costs and avoiding rate increases.\41\ President Obama proposed
allowing the Postal Service to move to five-day delivery as
part of the Administration's deficit reduction package,\42\ and
has included it in the FY 2015 budget.\43\
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\40\U.S. Congressional Research Service, The U.S. Postal Service
and Six-Day Delivery: History, Issues, and Current Legislation (R40626)
by Wendy Ginsberg, at pp.6-7 (October 17, 2012); see, e.g., P.L. 112-74
(Consolidated Appropriations Act, 2012).
\41\U.S. Congressional Research Service, The U.S. Postal Service
and Six-Day Delivery: History, Issues, and Current Legislation (R40626)
by Wendy Ginsberg, at pp.4-7, 14-20 (October 17, 2012).
\42\Office of Management and Budget, Living Within Our Means and
Investing in the Future: The President's Plan for Economic Growth and
Deficit Reduction, at p.23 (Sept. 2011).
\43\Office of Management and Budget, Budget of the United States
Government, Fiscal Year 2015, Appendix at page 1362.
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Faced with steep declines in mail volume, an increase in
the number of delivery addresses, and difficult financial
circumstances, the Postal Service has argued for some time that
it is essential for it to have the authority to move to a five-
days-per-week delivery schedule for mail.\44\ The Postal
Service has estimated that it will save about $2 billion
dollars annually by switching to five-day delivery\45\--and
notes that this is more than it can save through any other
single operational change.
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\44\The Postal Service proposes that mail be delivered to street
addresses Monday through Friday. Mail addressed to P.O. Boxes would
continue to be delivered on Saturdays, and Post Offices already open on
Saturdays would not be affected by this proposal. In addition, packages
would continue to be delivered six days per week, and Priority Mail
Express, currently delivered seven days per week, would not be
affected. See Statement of Postmaster General and Chief Executive
Officer Patrick R. Donahoe, pages 11-12, at ``Outside the Box:
Reforming and Renewing the Postal Service, Part II--Promoting a 21st
Century Workforce,'' hearing Before the Senate Committee on Homeland
Security and Governmental Affairs, 113th Cong. (Sept. 26, 2013).
\45\See, id.
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It is clear that a shift to five-day mail delivery has the
potential to save the Postal Service a substantial amount of
money (even if there is some dispute about what the precise
cost savings are likely to be). However, because reducing the
days of delivery involves difficult tradeoffs, including the
potential to reduce mail volume further and to diminish an
advantage that the Postal Service has over certain of its
competitors, it is appropriate to be cautious.
S. 1486 therefore takes a careful and balanced approach to
the question of delivery frequency. It provides the Postal
Service with the ultimate authority to establish a nationwide
delivery schedule of five-days per week if it determines that
such a delivery schedule would contribute to the achievement of
the Postal Service's long-term solvency. The bill also,
however, imposes temporary limitations on this authority,
allowing a shift to five-day delivery only when mail volume has
fallen to fewer than 140 billion pieces annually (mail volume
in FY 2013 was approximately 158 billion pieces), evidencing a
continuing decline in mail volume that might necessitate such a
substantial change. And in no event would the Postal Service be
permitted to move to five-day delivery before October 1, 2017.
Together, these restrictions provide some room to see if other
measures the Postal Service is undertaking, on its own or
pursuant to provisions in this bill, to reduce costs and, at
least as importantly, to innovate and increase revenues, might
mitigate the need to reduce delivery frequency.
In addition, if the Postal Service is seeking to switch to
five-day delivery, the bill directs the Comptroller General to
report to Congress on the extent to which a change in delivery
schedule would improve the financial condition of the Postal
Service and assist in the efforts of the Postal Service to
achieve long-term solvency. If the Comptroller General finds
that the proposed change in delivery schedule would not
substantially improve the financial condition of the Postal
Service and assist in the efforts of the Postal Service to
achieve long-term solvency, the Postal Service may still
proceed with its plan, but it is first required to submit a
response to Congress indicating its justification for
proceeding so in light of the Comptroller General's findings,
and then wait 60 days, to allow for Congressional review.
In authorizing five-day mail delivery, the bill does not
affect the days and times that post offices operate, the
frequency of delivery to post office boxes, or the delivery
schedule for competitive (i.e., non-market dominant) products,
such as Priority Mail Express (overnight delivery, formerly
called Express Mail). The bill also provides for six-day
delivery of packages for at least five years after the date of
enactment. Package delivery--a growth area for the Postal
Service--is typically a competitive product and therefore would
be expected to cover its costs.
9. Conversion of door delivery points
The mode of mail delivery plays an important role in the
efficiency and cost of delivery operations. The primary modes
of delivery points for the Postal Service are door, curbside,
and centralized delivery. Door delivery refers to delivering
mail to slots or receptacles at a customer's door. The Postal
Service provides curbside delivery to customers who have
mailboxes at the curb and that mail carriers can service from
their vehicles. Centralized delivery includes cluster boxes and
other mail receptacles in a single location, whether at the
entrance to an apartment building or grouped together at the
end of a block. Door delivery is the most time-consuming, and
therefore the most expensive, form of delivery.\46\
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\46\The Postal Service has estimated, for Fiscal Year 2012, average
annual costs of about $380 per delivery point for door delivery,
compared with about $240 for delivery to the curb, and about $170 for
delivery to a central location. In a recent report, GAO casts doubt on
the accuracy of these figures, noting that they are based on 20-year-
old data. Government Accountability Office, Delivery Mode Conversions
Could Yield Large Savings, but More Current Data Are Needed, GAO-14-
444, (May 12, 2014). Regardless of the specific dollar amounts,
however, it is generally agreed that door delivery is considerably more
expensive than other delivery modes.
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S. 1486 encourages the Postal Service in its efforts to
convert more addresses from door delivery to less expensive
delivery modes. Codifying the Postal Service's existing
practice, section 205 would require that the Postal Service
provide centralized delivery (e.g., cluster boxes) for all new
addresses established after the date of enactment, or, if
centralized delivery is not practicable, curbside delivery. The
Postal Service also would be required to carry out a program to
convert existing business addresses receiving door delivery to
centralized or curbside delivery. The Postal Service would
further be required to seek out opportunities to convert
existing residential addresses, by identifying existing
residences that receive door delivery and that are appropriate
candidates for conversion and beginning implementation of a
program to convert, on a voluntary basis, those addresses to a
more cost-effective method of delivery. Customer resistance can
sometimes be a barrier to such voluntary conversions, but the
Postal Service also reports some success in outreach efforts
that have emphasized the environmental benefits and the
additional security (where packages left in a locked box rather
than on, say, the front steps of a home) that centralized
delivery can provide.
10. Postal rates
Since November 9, 2007, when the postal ratemaking system
required by the Postal Accountability and Enhancement Act
(PAEA) went into effect,\47\ the Postal Service's ability to
raise its prices has been constrained by a rate cap applied at
the class level and based on the Consumer Price Index for All
Urban Consumers (CPI-U).\48\ (The rate cap applies to mail and
other ``market dominant products,'' for which the Postal
Service has significant market power.) For about six years, the
Postal Regulatory Commission has allowed rate increases only
within the inflation-based cap. However, the PAEA also
authorizes the Postal Service to adjust rates in excess of the
rate cap on an expedited basis if justified due to
``extraordinary or exceptional circumstances''\49\--known as an
``exigent'' rate increase. On December 24, 2013, the Commission
granted rate relief based on a conclusion that the mail-volume
losses arising from the Great Recession of 2008-2009 were such
an exigent circumstance.\50\ Specifically, the Commission
allowed a temporary 4.3 percent exigent rate increase above
inflation, which the Postal Service implemented on January 26,
2014, but to be phased out once the revenues lost because of
the Great Recession are recovered.\51\ The Postal Service's
projections indicate that the lost revenues are likely to have
been recovered, and that the exigent rate increase is likely to
end, sometime during 2015.\52\
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\47\Postal Regulatory Commission, Final Rule, ``Administrative
Practice and Procedure, Postal Service,'' 72 Federal Register 217
(November 9, 2007), at pp. 63662-63704.
\48\See 39 U.S.C. Sec. 3622(d)(1), enacted by section 201(a) of the
PEAE, Public Law 109-435 (Dec. 20, 2006). The rate cap went into effect
under a final rule of the Postal Regulatory Commission, 72 Fed.Reg.
63662-63704 (Nov. 9, 2007).
\49\39 U.S.C. Sec. 3622(d)(1)(E).
\50\See Postal Regulatory Commission Press Release, ``PRC Approves
Postal Service Request for Exigent rate Increase; Rejects Permanent
Price Increases'' (December 24, 2013), http://www.prc.gov/prc-docs/
Newsroom/PressReleases/
Exigent%20Rate%20Increase%202%2024%2013%20(2)_3429.pdf; Postal
Regulatory Commission, Order Granting Exigent Price Increase, (Order
no. 1926, Docket No. R2013-11, December 24, 2013), http://www.prc.gov/
Docs/88/88645/Order_1926.pdf.
\51\Id.
\52\See id. at page 181.
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However, given that mail volume has declined over the years
at the same time that Congress has decided not to dramatically
curtail the Postal Service's service obligations, the Committee
is concerned that the rate cap does not and will not provide
the Postal Service with sufficient revenue to fund its capital
needs, maintain statutory service levels, and remain
financially viable.
To give the Postal Service at least some of the revenue it
needs to meet its current and future service and financial
obligations, the Committee considered several options,
including replacing the CPI-U rate cap with a cap based on
another inflation measure, or even eliminating the cap
altogether. However, the Committee ultimately decided, through
the adoption of a Carper-Coburn amendment, to maintain the
existing rate cap, but apply it to a baseline consisting of the
rate now in effect, which includes the 4.3 percent exigent rate
increase above inflation approved by the Commission.\53\ With
that rate increase permanently included in the rate base from
which future inflation-based adjustments will be determined,
the Postal Service would not be forced to decrease prices, and
customers would have the assurance that the prices they pay now
will remain as they are, subject to any increases permitted
under the CPI-U rate cap in future years. The bill would also
apply the rate cap to all market-dominant products considered
together, rather than to each class of mail separately, as is
done under the current statute.\54\
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\53\The bill states that the rate base, which would remain in
effect until adjusted under the rate cap, would be the rates in effect
on the date of enactment. Since the 4.3 percent exigent rate increase
is projected to remain in effect until well into 2014, after the end of
the 113th Congress, enactment of the bill would make the exigent rate
increase permanent.
\54\39 U.S.C. Sec. 3662(d)(2).
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According to data provided by the Postal Service, the
Postal Service would be in significantly worse financial
condition if S. 1486 were enacted without the Carper-Coburn
amendment and the CPI-U rate cap were applied without
accounting for the 4.3 percent exigent rate increase. Chart 1
included in the Appendix to this report assumes enactment of S.
1486 with the Carper-Coburn rates amendment. Chart 2 included
in the Appendix assumes the bill is enacted without the
amendment, meaning the exigent rate increase would expire after
Fiscal Year 2015 and the rate cap would be applied to a lower
baseline. In the first chart, Total Revenue at the Postal
Service would remain above $68 billion and grow to $73 billion
in Fiscal Year 2023, leaving the Postal Service with $7.1
billion in net cash. In the second chart, the non-rate
projections in each category are identical to those on the
first chart but, because rates would go down in Fiscal Year
2016, Total Revenue would decline significantly that year and
only reach $71.4 billion in Fiscal Year 2023. With this lower
level of revenue over time, the Postal Service would have $4.8
billion in debt at the end of the ten-year projection rather
than a positive cash balance.
In addition to establishing the current postal rates
approved by the Commission as the statutory baseline for
calculating future adjustment, S. 1486 would also make two key
changes to the ratemaking process:
1. It would make the ratemaking process less
cumbersome, by not requiring that every Postal Service
rate increase within the CPI-U cap be submitted to the
Postal Regulatory Commission for formal review.
Instead, the Committee believes the Commission should
only be required to review and affirmatively approve
emergency requests to increase rates above the cap,
while maintaining the ability of the Commission to
review and render a decision on other rate increases
pursuant to complaints filed by interested parties or
through the Commission's annual compliance review.\55\
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\55\See 39 U.S.C. Sec. 3662 (authorizing rate and service
complaints to be lodged with the Postal Regulatory Commission); 39
U.S.C. Sec. 3653 (requiring the Commission to make an annual written
assessment of the Postal Service's rates and service and their
compliance with applicable requirements.)
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2. It would give the Postal Service a role in the
review and revision of the ratemaking system. Under
current law, the Postal Regulatory Commission would
conduct this review in 2017 (and as appropriate
thereafter) and may change the ratemaking system by
majority vote of its members.\56\ The Committee is
concerned that this arrangement gives the members of
the Commission too much power over the Postal Service's
business decisions regarding the prices of its products
in the coming years, and therefore gives the Postal
Service too little say. Instead, S. 1486 would
authorize the Postal Service, not earlier than January
1, 2017, to propose revisions to the ratemaking system,
which the Commission would review and could veto and
send back to the Postal Service. The Committee believes
this process has the potential to force the Postal
Service and the Commission to come to consensus on any
new or revised ratemaking system that might need to be
put into place.
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\56\39 U.S.C. Sec. 3662(d)(3).
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11. Postal service innovation
Current law prohibits the Postal Service, with a few narrow
exceptions, from offering anything other than ``postal''
products. This essentially limits it to hard-copy mail and
packages and prohibits it from experimenting in other areas.
The Committee is concerned that this restriction is too
constraining and prevents the Postal Service from better
capitalizing on its assets.\57\
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\57\For example, the USPS Office of Inspector General reported in
July 2012: ``The Postal Service could increase the value of Post Office
retail facilities and address community needs by evaluating and
offering non-postal products and services. New non-postal products are
not currently authorized, but pending legislation could provide
additional opportunities.'' USPS Office of Inspector General, ``21st
Century Post Office: Non-Postal Products and Services,'' Management
Advisory (Report Number DA-MA-12-005, July 16, 2012), https://
www.uspsoig.gov/sites/default/ files/document-library-files/2013/DA-MA-
12-005.pdf. This July 2012 review offered a wide range of non-postal
products and services that the Postal Service might appropriately
offer, to the benefit of the public as well as to add to the Postal
Service's financial viability, and recommended that the Postal Service
develop a strategy to identify, evaluate, and offer the most promising
non-postal products and services ``when legislation permits.'' Id.
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In order to give the Postal Service more authority to make
the best and most lucrative use of its unique retail,
processing, and delivery network, S. 1486 would relax the
restrictions currently placed on the Postal Service while
setting up a number of safeguards intended to protect the
private sector from unfair and unnecessary competition from the
federal government. It would also establish a leadership
structure at the Postal Service intended to drive innovation
initiatives through the creation of a ``Chief Innovation
Officer'' and set up a temporary independent commission that
would examine areas where the Postal Service could find new
sources of revenue.
12. Federal Employees' Compensation Act (FECA)
S. 1486 includes the Worker's Compensation Reform Act of
2014 to update and reform FECA,\58\ which is the statute
governing the worker's compensation program for federal
civilian employees and postal employees. The bill would update
and reform FECA in several respects--the first time this 96-
year-old law\59\ has been substantially updated since 1974.\60\
The provisions of the Worker's Compensation Reform Act that are
incorporated into S. 1486 are essentially identical to those
approved by the Senate on April 25, 2012 as part of S. 1789,
the 21st Century Postal Service Act of 2012, and very similar
to the provisions that this committee had approved and reported
on January 1, 2012, as part of that bill.\61\
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\58\5 U.S.C. Sec. Sec. 8101 et seq.
\59\See Federal Employee Compensation Act of September 7, 1916
\60\See P.L. 93-416.
\61\S.1789, 112th Cong. The only amendment to the Workers'
Compensation Reform Act made by the Senate in 2012 was to add
provisions--(1) providing those injured while deployed in armed combat
additional time to file a claim for FECA benefits; (2) ensuring that
deployed employees injured in a terrorist attack overseas while off-
duty would receive FECA benefits; and (3) creating an exception from
benefit-reduction under the legislation for hardship if someone would
be eligible for food stamps if their benefits are reduced. See
Congressional Record, 112th Cong., at S2690--S2691 (April 25, 2012).
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The most significant FECA reform in the legislation would
make for certain reductions in benefit levels. Under current
statute, the FECA program pays a basic benefit for a total
disability equal to 66\2/3\ of an injured worker's pre-
disability wage if the worker has no dependents; for those with
dependents, the benefit rises to 75 percent (called ``augmented
compensation''). For a partial disability, the benefit is in
proportion to the wage-earning capacity that the worker lost.
These benefits are adjusted for inflation and are tax-free and
continue for as long as the injury or illness renders the
individual unable to work. Because those benefits are now
generally larger than federal retirement benefits, the program
now creates a financial incentive for insured workers to remain
on the FECA rule up to and beyond retirement age. Under this
legislation, injured worker's FECA benefits would be set at 50
percent of lost wages when workers reach Social Security
retirement age. In addition, the augmented compensation under
FECA for workers with dependents is out of line with other
compensation programs and would be eliminated--under the
legislation, injured workers before retirement age who have
dependents would receive the same rate of compensation (i.e.,
66\2/3\ percent of lost wages) as those without dependents.
Other key provisions in the Workers' Compensation Reform
Act of 2014 include--
Strengthened back-to-work programs. In addition to
removing certain financial disincentives to returning to work,
this legislation strengthens several existing programs to help
injured workers get back to work.
Waiting period. Since minor workplace injuries
often heal very quickly, the legislation establishes a uniform
3-day waiting period after injury, before FECA compensation is
paid; except if the period of disability exceeds 14 days, then
the injured worker may receive FECA compensation for those
initial three days. (This 3-day waiting provision currently
applies to injured postal workers only, and S. 1486 would
extend the same provision to all FECA beneficiaries.)
Increased amount of certain statutory benefits.
The legislation would significantly increase the amount of
compensation for severe disfigurement and funeral expenses,
which amounts are fixed in statute and have not been
significantly changed since 1949.
Independent medical examinations. The legislation
would require an independent medical assessment of disability
and potential for return to work for beneficiaries after six
months in the program and on a regularly scheduled basis
thereafter, but no less frequently than every three years.
(This assessment must be conducted by a medical professional
other than the beneficiary's own doctor, who would remain
responsible for treatment and for the initial assessment.)
Program integrity and compliance. The legislation
would require beneficiaries to report any outside income that
they receive, would enable cross-matching of FECA records with
Social Security data, and contains several additional
provisions to strengthen integrity and compliance efforts under
FECA.
In considering the provisions to include in S. 1486 (as in
S. 1789 in the 112th Congress), the Committee found that FECA
reform is necessarily intertwined with the effort to stabilize
the Postal Service's finances. Employees of the Postal Service
represent a disproportionate number of FECA beneficiaries, and
are responsible for a larger share of FECA benefits than are
the employees of any federal department or agency.
Specifically, approximately 41 percent of injuries, illnesses,
and fatalities that resulted in FECA claims during Fiscal Year
2013 involved Postal Service employees.\62\ According to the
Department of Labor (DOL), in Fiscal Year 2013, injuries and
illnesses of USPS employees resulted in 221.5 lost production
days per 100 employees, compared with the rest of the federal
government that lost 74.4 days per 100 employees.\63\ Because
FECA costs are so expensive for the Postal Service, the
Committee determined that cost-cutting FECA reforms must be
included in this legislation to place the Postal Service on a
sound financial footing.
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\62\Department of Labor, Occupational Safety and Health
Administration, Federal Injury and Illness Statistics for Fiscal Year
2013, available at https://www.osha.gov/dep/fap/statistics/
fedprgms_stats13_final.html.
\63\Department of Labor, Office of Workers' Compensation Programs,
Protecting Our Workers and Ensuring Reemployment (POWER) Initiative
statistics, available at http://www.dol.gov/owcp/dfec/power/index.htm.
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Moreover, the Committee determined that applying FECA
reforms only to the Postal Service would cause harmful
fragmentation and confusion within the FECA program, and also
that these reforms would be as valuable and appropriate for
non-postal agencies as they are for the Postal Service.
Accordingly, the provisions in S. 1486 that reform the federal
workers' compensation program apply government-wide.
A more thorough discussion of the need for FECA reform and
the key provisions included in the Workers' Compensation Reform
Act of 2014 can be found in this Committee's report on S. 1789
in the 112th Congress and in Senate debate on that bill.
13. Property management and expedited disposal of real property
The Committee decided to incorporate into S. 1486 the
entire text of the Federal Real Property Asset Management
Reform Act of 2014 (Federal Real Property Act), which the
Committee earlier approved and reported on November 19, 2013 as
S. 1398. The purpose of the Federal Real Property Act is to
improve the efficiency and effectiveness of the federal
government's management of real property.
Effectively and efficiently managing the government's
extensive real property holdings has posed serious and
longstanding challenges for the federal government. Problems
related to real property management include ineffective
management of excess and underutilized property and an
overreliance on costly leasing. Compounding these management
problems is the fact that agencies that no longer need
particular parcels of property face a lengthy and costly
disposal process, often causing agencies to keep unneeded
property, and, as a result, the federal government as a whole
continues to retain more real property than it needs. The
Federal Real Property Act would strengthen the federal
government's management of real property by requiring agencies
to maintain an up-to-date inventory of real property,
establishing an interagency Federal Real Property Council to
develop guidance on real property management and ensure its
implementation, and authorizing a pilot program to expedite the
disposal of surplus real property.
The Postal Service, like many other parts of the federal
government, has a number of underutilized and excess
properties. The Postal Service Inspector General has estimated
that the Postal Service possesses 67 million square feet of
underutilized or excess space that can either be better
utilized for cost savings or sold for revenue.\64\ The Federal
Real Property Act provides that the Postmaster General may
identify a list of postal properties with space available for
use by federal agencies and submit that list to the Federal
Real Property Council established in the legislation. Then
federal agencies must review the list submitted by the
Postmaster General and recommend colocations as appropriate.
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\64\United States Postal Service Office of the Inspector General
(USPS OIG), Nationwide Facility Optimization Audit Report (Report
Number DA-AR-11-09) (August 26, 2011), http://www.uspsoig.gov/sites/
default/ files/document-library-files/2013/DA-AR-11-009.pdf
---------------------------------------------------------------------------
A full explanation of the Federal Real Property Act,
including the weaknesses in the government's management of real
property and the ways in which the legislation would improve
such management, are provided in the Committee's report on S.
1398.\65\
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\65\Federal Real Property Asset Management Reform Act of 2013,
Report of the Senate Committee on Homeland Security and Governmental
Affairs, to accompany S.1398, S. Rep. 113-122, 113th Cong., 1st Sess.
(Nov. 19, 2013), http://www.gpo.gov/fdsys/pkg/CRPT-113srpt122/pdf/CRPT-
113srpt122.pdf
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III. Legislative History
On August 1, 2013, Senators Carper and Coburn introduced S.
1486, which was referred to the Senate Homeland Security and
Governmental Affairs Committee.
Prior to the bill's introduction, the Committee held a
hearing on February 13, 2013, titled ``Solutions to the Crisis
Facing the U.S. Postal Service.'' The purpose of the hearing
was to examine the financial and other challenges facing the
Postal Service, and solutions that had been put forward to
address those challenges, both proposals by Postal Service
management and legislative proposals being considered by
Congress. Representatives Darrell Issa and Elijah Cummings, the
Chairman and Ranking Member, respectively, of the Committee on
Oversight and Government Reform of the House of
Representatives, both testified, as did Patrick Donahoe, the
Postmaster General of the United States, and Eugene Dodaro, the
Comptroller General of the United States. Other witnesses who
appeared before the Committee included the Presidents of the
American Postal Workers Union, the National Rural Letter
Carriers' Association, and the National Association of
Postmasters of the United States; and representatives from the
private sector and academia.
After the bill's introduction, the Committee held two
additional hearings under the heading ``Outside the Box:
Reforming and Renewing the Postal Service.'' Part I of this
series, subtitled ``Maintaining Services, Reducing Costs, and
Increasing Revenue through Innovation and Modernization,'' was
held on September 19, 2013, and focused on postal services,
including delivery schedules, delivery standards, and post
office services; potential changes in the postal ratemaking
system; and innovation, including the potential offering of new
products and services. Postmaster General Donahoe; Ruth
Goldway, the Chairman of the Postal Regulatory Commission
(PRC); and David Williams, the Inspector General of the Postal
Service, appeared as witnesses. The Presidents of the American
Postal Workers Unions and the National Rural Letter Carriers'
Association also testified, as did executives of three private
sector companies and/or associations.
Part II of the series, subtitled ``Promoting a 21st Century
Workforce,'' was held on September 26, 2013, and focused on
issues related to the postal workforce, including matters
related to health care and pensions for postal workers and the
manner in which the Postal Service calculates and funds these
obligations; and the evolving role of postal workers in the
digital age. Postmaster General Donahoe again testified, as did
Jonathan Foley, the Director of Planning and Policy Analysis at
the Office of Personnel Management (OPM), and two
representatives of the Government Accountability Office (GAO),
including the Chief Actuary and a director on GAO's health care
team, the Presidents of the National Association of Letter
Carriers, the National Mail Handlers Union, and National
Association of Postmasters of the United States, as well as two
policy institute leaders.
The Committee considered S. 1486 at a business meeting that
was begun on January 29, 2014 and was continued on February 6,
2014. The legislation was ordered reported favorably by a roll
call vote with several adopted amendments\66\:
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\66\A number of additional amendments were offered but not adopted.
These include a Tester amendment to strike Title V of the bill, dealing
with the Federal Employees' Compensation Act, which was not adopted by
a roll call vote of 6-7; a Tester amendment to limit application of the
bill's changes to the Federal Employees' Compensation Act to Federal
employees hired after the date of enactment of the Postal Reform Act,
which was not adopted by a roll call vote of 7-8; a McCain amendment
that would allow the Postal Service to immediately move to a five-day-
per-week mail delivery schedule, which was not adopted by voice vote;
and a Paul amendment that would prohibit the Postal Service from
entering into collective bargaining agreements or agreeing to no-layoff
clauses in contracts, and allow the Postal Service to file for
bankruptcy, which was not adopted by a roll call vote of 4-11. In
addition, Senator Paul withdrew an amendment that would have allowed
the carrying of firearms into post offices where otherwise permitted by
state or local law after a Carper second degree amendment that would
have first required a joint report and recommendations of relevant
federal agencies was adopted by a roll call vote of 9-6. A subsequent
agreement, entered into by unanimous consent, provided for a vote on an
amendment identical to the amendment originally filed by Senator Paul;
that Paul amendment was not adopted by a roll call vote of 6-9.
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A Carper-Coburn substitute amendment makes a number of
changes to the bill as introduced. These include changes to
provisions about how the Postal Service's Civil Service
Retirement System (CSRS) and Federal Employees Retirement
System (FERS) pension obligations are calculated (to reflect
postal-specific demographic information); how future FERS
surpluses would be handled; negotiations over pension benefits
with respect to TSP; the postal service-only health care
program and its coordination with Medicare; funding of the
Postal Service's liability for workers' compensation payments;
the timing of the moratorium against changes in delivery
service standards; procedural requirements for closing of
processing plants; procedural protections before closing or
reducing the hours for post offices; the circumstances under
which the Postal Service would be permitted to move from six-
day to five-day delivery of mail; the PRC's review of major
service changes; and the Postal Service's authority to modify
the postal rate system. The substitute was adopted by unanimous
consent. Senators Carper, Levin, Pryor, McCaskill, Tester,
Baldwin, Coburn, McCain, Johnson, Paul, Enzi, and Ayotte were
present.
A Levin amendment prohibits the Postal Service from
entering into contracts that restrict Congressional oversight.
The amendment was adopted by voice vote. Senators Carper,
Levin, Pryor, McCaskill, Tester, Baldwin, Coburn, McCain,
Johnson, Paul, Enzi, and Ayotte were present for the vote.
Another Levin amendment, as modified, provides for
notification and local participation in the expedited disposal
process for real property in Title VI of the bill. The
amendment was adopted by voice vote. Senators Carper, Levin,
McCaskill, Begich, Baldwin, Heitkamp, Coburn, Johnson, Enzi,
and Ayotte were present.
A Pryor amendment provides certain postal employees the
right to appeal significant personnel actions to the Merit
Systems Protection Board. The amendment was adopted by voice
vote. Senators Carper, Levin, Pryor, McCaskill, Tester, Begich,
Heitkamp, Johnson, and Ayotte were present.
An additional Pryor amendment clarifies that those who
apply for waivers based on physical hardships in order to
continue to receive door delivery of mail will not be charged
for either the waiver application or the actual waiver. The
amendment was adopted by voice vote. Senators Carper, Levin,
Pryor, McCaskill, Tester, Begich, Baldwin, Coburn, McCain,
Johnson, Paul, Enzi, and Ayotte were present.
A Landrieu amendment requires the Postmaster General to
submit a report on the feasibility of a pilot program to
implement the use of natural gas and propane for its heavy-
duty, over-the-road trucks. The amendment was adopted by voice
vote. Senators Carper, Levin, Pryor, McCaskill, Tester, Begich,
Baldwin, Coburn, McCain, Johnson, Paul, Enzi, and Ayotte were
present.
A McCaskill amendment imposes a one-year moratorium on
closing rural post offices; amends the additional
determinations necessary for closing a rural post office and
makes the requirement for the additional determinations
permanent; and, for 10 years, requires that the Inspector
General of the Postal Service report on the projected and
actual cost savings from closing rural post offices. The
amendment was adopted by voice vote. Senators Carper, Levin,
Pryor, McCaskill, Tester, Begich, Baldwin, Heitkamp, Coburn,
McCain, Johnson, Paul, Enzi, and Ayotte were present.
A Tester amendment conditions the end of the two-year
moratorium on changes in delivery standards on GAO's completion
of the report on delivery times required by section 201(b). The
amendment was adopted by voice vote en bloc. Senators Carper,
Levin, Pryor, McCaskill, Begich, Heitkamp, Coburn, Johnson,
Paul, and Ayotte were present.
Another Tester amendment, as modified, reinstitutes the
delivery service standards for First-Class Mail and periodicals
in effect on June 30, 2012 for routes on which such mail was
transported under Alternate Means of Transportation contracts,
and require that such service standards be maintained for two
years after enactment of this Act. The amendment also puts in
place additional requirements before service under Alternate
Means of Transportation contracts can be discontinued. The
amendment was adopted by a roll call vote of 8-7, with Senators
Levin, Pryor, Landrieu, McCaskill, Tester, Begich, Baldwin, and
Heitkamp recorded as a yes vote, and Senators Carper, Coburn,
McCain, Johnson, Paul, Enzi, and Ayotte recorded as a no vote.
Senators Carper, Levin, Tester, Begich, Heitkamp, Coburn,
Johnson, and Paul were present.
A Begich amendment makes two changes in the rules governing
pay and benefits for managerial and supervisory employees.
First, it clarifies that changes to pay and/or benefits,
including the termination of a benefit, for managers cannot
occur outside the designated time period for pay consultation
between the managers' organizations and the Postal Service
unless mutually agreed upon. Second, it requires that the
mandated differential in rates of pay between craft employees
and managers be calculated based on both pay and benefits. The
amendmentwas adopted by voice vote. Senators Carper, Levin,
McCaskill, Begich, Heitkamp, Coburn, and Johnson were present.
A second Begich amendmentclarifies that shipments of
alcohol, as permitted under section 303, must comply with
state, local and tribal laws.The amendment was adopted by voice
vote. Senators Carper, Levin, McCaskill, Begich, Heitkamp,
Coburn, Johnson and Ayotte were present.
A third Begich amendment requires the PRC to examine how
the recent reclassification of Parcel Post to a competitive
product may affect certain communities that are largely
inaccessible by road and which rely on the Postal Service for
delivery of basic goods, and whether the Postal Service still
exercises monopoly power with respect to these communities. The
amendment was adopted by voice vote. Senators Carper, Levin,
McCaskill, Begich, Baldwin, Heitkamp, Coburn, Johnson, Enzi,
and Ayotte were present.
A fourth Begich amendment permits the carrying or storing
of a firearm in a parking lot of a post office in a manner not
inconsistent with State or local law and not in violation of
any lease terms. The amendment was adopted by a roll call vote
of 15-0, with Senators Carper, Levin, Pryor, Landrieu,
McCaskill, Tester, Begich, Baldwin, Heitkamp, Coburn, McCain,
Johnson, Paul, Enzi and Ayotte recorded as voting in favor.
Senators Carper, Levin, Pryor, McCaskill, Tester, Begich,
Heitkamp, Coburn, Johnson, Paul, and Ayotte were present.
A Baldwin-McCaskill amendment, as modified, was offered and
was amended by a Carper-Coburn second degree amendment, which
fully replaced the text of the underlying amendment.\67\ As
amended by the second degree amendment, the amendment makes
permanent the temporary exigent rate increase approved by the
PRC in December 2013 and permits the Postal Service to raise
rates beyond that baseline up to the amount of any increase in
the Consumer Price Index. It also allows the Postal Service to
propose changes to the postal rate system starting in 2017, but
only with the review and approval of the PRC. The Carper-Coburn
second degree amendment was adopted by a roll call vote of 10-
5, with Senators Carper, Levin, McCaskill, Begich, Heitkamp,
Coburn, McCain, Johnson, Enzi, and Ayotte voting yes, and
Senators Pryor, Landrieu, Tester, Baldwin, and Paul voting no.
The Baldwin-McCaskill amendment, as amended by the second
degree amendment, was adopted by voice vote. Senators Carper,
Levin, Pryor, Tester, Begich, Baldwin, Heitkamp, Coburn,
Johnson, and Paul were present for both votes.
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\67\As modified, the underlying Baldwin-McCaskill amendment would
have kept the exigent rate increase in effect for one year and then
permitted rate increases of up to one percentage point above the
Consumer Price Index until a new rate system was put in place,
scheduled under existing law for 2017.
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A Heitkamp amendment adds the efforts by the Postal Service
to recruit and retain a workforce sufficient to meet the
strategic needs of the Postal Service to the matters the
Strategic Advisory Commission is directed to study and develop
a strategic blueprint to address. The amendment was adopted by
voice vote en bloc. Senators Carper, Levin, Pryor, McCaskill,
Begich, Heitkamp, Coburn, Johnson, Paul and Ayotte were
present.
Another Heitkamp amendment, as modified and as amended by
two second degree amendments offered by Senator Levin, provides
for an appeal process to the PRC in the case of the proposed
closing of a mail processing plant that is the same as the
process used for post office closings. It also directs the
Postal Service to respond to the required GAO report evaluating
whether any proposed change in delivery schedule from six to
five days per week would improve the financial condition of the
Postal Service and assist it in achieving long-term solvency
and prohibits implementation of a proposed change in schedule
until after the Postal Service has submitted its response. The
first Levin second degree amendment prohibits the Postal
Service from adopting a five-day-per-week delivery schedule
before October 1, 2017, and was adopted by voice vote. The
second Levin second degree amendment extends the time during
which the Postal Service must wait to implement a change in
delivery schedule until 60 days after the date on which the
Postal Service responds to the GAO report; it was adopted by
unanimous consent. The Heitkamp amendment, as amended, was
adopted by voice vote. Senators Carper, Levin, Tester, Begich,
Heitkamp, Coburn, Johnson, and Paul were present for all three
votes.
A McCain amendment requires a study on the environmental
impact of moving to five-day-per week mail delivery. The
amendment was adopted by voice vote en bloc. Senators Carper,
Levin, Pryor, McCaskill, Begich, Heitkamp, Coburn, Johnson,
Paul, and Ayotte were present.
A Paul amendment limits the number of post offices that may
be located in the U.S. Capitol Complex to one in the Houseof
Representatives office buildings and one in the Senate office
buildings. The amendment was adopted by voice vote en bloc.
Senators Carper, Levin, Pryor, McCaskill, Begich, Heitkamp,
Coburn, Johnson, Paul, and Ayotte were present.
An Enzi amendment, as modified, requires the Postal
Service, when proposing to discontinue a post office, to
provide affected communities with relevant information on the
costs of operating the post office; to allow local governments
to present alternative proposals for providing postal services
to the community; and to consider whether to implement such an
alternative proposal. The amendment was adopted by voice vote.
Senators Carper, Levin, Pryor, McCaskill, Tester, Begich,
Baldwin, Heitkamp, Coburn, McCain, Johnson, Paul, Enzi, and
Ayotte were present.
The Committee ordered the bill, as amended, favorably
reported by a roll call vote of 9-1. Senators Carper, Levin,
Pryor, McCaskill, Begich, Heitkamp, Coburn, Johnson and Ayotte
voted in favor of the bill, while Senator Tester voted against
the bill. Senators McCain and Enzi asked to be recorded in
favor of the bill by proxy, while Senators Landrieu, Baldwin,
Portman, and Paul asked to be recorded against the bill by
proxy.
IV. Section-by-Section Analysis
Section 1 -- Short title
This section establishes the title of the legislation as
the--Postal Reform Act of 2014.''
Section 2 -- Table of Contents
This section sets forth the table of contents for the Act.
Section 3 -- Definitions
This section provides definitions of terms used in the Act.
TITLE I: POSTAL SERVICE WORKFORCE
Section 101--Annual Federal Employee Retirement System and Civil
Service Retirement System Assessments
This section would require that, in annually calculating
the amounts that the Postal Service must pay to fund postal
workers' annuities under the Federal Employees Retirement
System (FERS) and the Civil Service Retirement System (CSRS),
the Office of Personnel Management (OPM) must use the
demographic and salary-growth characteristics of the Postal
Service's actual workforce, rather than the general
characteristics of both postal and non-postal federal employees
combined, as OPM does today.
Moreover, if OPM finds that the Postal Service has paid
more into the Federal Employees Retirement System (FERS) system
than its employees' annuities under that system will actually
cost, this section provides an orderly process by which the
surplus can be returned for use by the Postal Service. If the
initial calculation shows a surplus as of the end of the fiscal
year ending September 30, 2013, the Postal Service may request
and receive not more than $6 billion of the calculated surplus,
and must use the refund in 2014 to retire its debt obligations.
If the second-year calculation shows a surplus, the Postal
Service could request the return of no more than two-thirds of
the surplus. Then starting with the third year and for each
subsequent year, any overfunding of its FERS account would be
refunded to the Postal Service by a series of annual
installments through 2047. After the first-year refund, the
Postal Service would use these annual refund payments to pay
down unfunded liabilities (for retiree health benefits, CSRS,
or workers' compensation under the Federal Employees'
Compensation Act (FECA)) or to pay off Treasury debt. Once all
of these liabilities and debts are retired, the Postal Service
could use an annual refund for any appropriate other purpose.
Finally, this section modifies the schedule under which the
Postal Service must make up for the amount by which it has paid
less than its employees' annuities under the CSRS system will
actually cost. Under current law, the Postal Service would need
to pay off that CSRS unfunded liability by a series of annual
payments starting on September 30, 2018 and ending on September
30, 2043. This section of the bill requires the Postal Service
to make the series of annual payments starting on September 30,
2015 and ending on September 30, 2054.
Section 102--Postal service authority to negotiate retirement benefit
terms for new employees
This section would allow the Postal Service and each postal
labor union to bargain over the retirement package for newly
hired postal workers represented by the union. Specifically,
the Postal Service and each union would be able to agree to the
following kinds of modifications: (1) whether to cease giving
some or all new employees credit towards an annuity under the
Federal Employee Retirement System (FERS); (2) whether to offer
one or more additional retirement benefit plans, for the
benefit of some or all new employees; (3) whether and how to
adjust the relative amounts that the Postal Service and an
employee would contribute to the FERS annuity plan, for those
new employees who continue to receive credit towards the
annuity; (4) the amounts that an employee and the Postal
Service would contribute for a new employee's participation in
an additional retirement plan established under the agreement;
and (5) whether and how to adjust the amount that the Postal
Service would contribute towards new employees' Thrift Savings
Plan (TSP) accounts. The bargaining would generally take place
between the Postal Service and each union in connection with
the general collective bargaining agreement entered into
between the Postal Service and the union. However, under this
section of the bill, the Postal Service's contribution to new
employees' TSP accounts may be modified only by a collective
bargaining agreement among the Postal Service and all four
unions, and could result in no more than a single Postal-only
alternative to the TSP contribution program that applies under
statute for federal employees generally.
Section 103--restructuring of payments for retiree health benefits
This section would restructure the Postal Service's retiree
health pre-funding schedule. The bill would eliminate the
existing statutory payment schedule, cancel any outstanding
payments owed by the Postal Service, suspend payments until
Fiscal Year 2016, and then begin a new payment schedule
amortized over 40 years. It would also reduce the pre-funding
goal to 80 percent of projected obligations. The bill also
recognizes that the amount of these payments should be reduced
further as a result of the implementation of the Postal Service
Health Benefits Program in section 104.
Section 104--Postal service health benefits program
This section would create a new Postal Service Health
Benefits Program (PSHBP) within the Federal Employees Health
Benefits Program (FEHBP) in which all postal employees and
annuitants would participate. The new program would be
implemented and administered by the Office of Personnel
Management.
The program would require Medicare-eligible postal
annuitants enrolled in the PSHBP to also enroll in Medicare,
including parts A, B and D. Current annuitants who did not
enroll in Medicare when they became eligible would be allowed
to enroll without penalty during a specified period. FEHBP
insurers with more than 5,000 postal enrollees would be
required to participate in this new postal only program by
offering policies that are actuarially equivalent in value to
those policies that they offer for other federal employees who
receive FEHBP coverage.
This section would provide a small number of employees and
annuitants with the option to opt-out the new PSHBP. These opt-
out provisions would apply only to--(a) postal employees who
are enrolled in plans that will not be offered in the new
PSHBP, but at retirement theywould have to switch to a plan in
the PSHBP and enroll in Medicare parts A, B and D; (b) annuitants who
are enrolled in plans that will not be offered in the new PSHBP; and
(c) annuitants for whom plans in the PSHBP are not available due to
their geographic location.
Section 105--Arbitration; labor disputes
This section would require that arbitrators deciding a
contract dispute between the Postal Service and one of its
recognized unions to take into consideration such relevant
factors as the financial condition of the Postal Service, and
would state that nothing in the section may be construed to
limit the relevant factors that the arbitration board may take
into consideration in rendering a decision.
Section 106--Prefunding and financial reporting with respect to
workers' compensation liability
This section would establish a process under which the
Postal Service begins to pay down its unfunded liability for
workers' compensation payments that will be owed in future
years. The amortization schedule would be calculated with a
target of liquidating 80% of the unfunded liability over an
amortization period of 40 years, or a rolling period of 15
years, whichever period ends later. Under this plan, the Postal
Service would not be required to make an amortization payment
in a year when the annual net income does not exceed $1
billion, and even then, the amount of an amortization payment
may not exceed the increment between $1 billion and the total
net income for the year. Also, to foster greater transparency
and accountability, the Postal Service would be required to
report about its unfunded liability for workers' compensation
payment and about its progress in paying down the liability in
the United States Postal Service's (USPS) annual audited Form
10-K reports.
Section 107--Right of appeal to Merit Systems Protection Board
This section would allow certain mid-level managers at the
Postal Service to appeal firings and other adverse personnel
actions to the Merit Systems Protection Board. Supervisors and
management employees at the Postal Service generally have such
appeal rights already, but certain mid-level managers do not,
and this section would fill the gap by extending appeal rights
to them.
Section 108--Supervisory and other managerial organizations
This section clarifies that, when the Postal Service
provides reasonable differentials in compensation between
front-line employees and managers, the Postal Service takes
benefits, as well as salary, into account.
Second, this section clarifies that changes to pay and/or
benefits for managers cannot occur outside the designated time
period for pay consultations between the managers'
organizations and the Postal Service unless mutually agreed
upon.
Third, the law is clarified to say that such consultation
must occur before a benefit program is terminated, just as
consultation must occur before a benefit program is changed.
TITLE II: POSTAL SERVICE OPERATIONS
Section 201--Maintenance of delivery service standards
Subsection (a) of this section would require the Postal
Service to maintain the delivery service standards for First-
Class Mail and periodicals in effect as of October 1, 2013 for
a period of two years from the date of enactment, or until the
Government Accountability Office (GAO) report required by
subsection (b) is submitted, whichever is later.
Subsection (b) would direct GAO to conduct a study about
the how the Postal Service measures delivery times for the
purpose of determining whether service standards have been met
and whether this method of measurement accurately reflects the
total period of time that it takes for a mailed item to travel
from the postal customer to its final destination. The
Comptroller General would be required to submit a report of
GAO's findings and its recommendations no later than one year
after the date of enactment.
Subsection (c) addresses Alternate Means of Transportation
(AMOT) contracts, through which the Postal Service contracts
with private air carriers to provide delivery on certain
routes. After putting into effect revised delivery service
standards in July 2012, which allowed for longer delivery times
in certain cases, the Postal Service reduced or eliminated its
use of AMOT contracts on some routes. This subsection would
reinstitute the delivery service standards for First-Class Mail
and periodicals in effect on June 30, 2012 for routes on which
such mail was transported under AMOT contracts, and require
that such service standards be maintained for two years after
enactment of this Act. This subsection would also put in place
restrictions on discontinuing AMOT contracts, requiring that,
on routes on which mail is transported under AMOT contracts,
that the Postal Service consider specific factors before
deciding to transport mail by other means, including the effect
on the communities and businesses served by the route. A
determination by the Postal Service to discontinue service
under an AMOT contract and transport mail on a previously
served route by other means is required to be in writing,
accompanied by findings on the factors required to be
considered, and made available to the public at least 60 days
before the Postal Service discontinues AMOT service. Finally,
this subsection would require the Postal Service, not later
than 2 years after the date of enactment of this Act to submit
a report on potential cost savings resulting from any decision
made in the 2-year period to transport mail using a means other
than under an AMOT contract.
Section 202--Preserving mail processing capacity
This section would prohibit the Postal Service from closing
or consolidating a mail processing facility that was open on
October 1, 2013 for a period of two years from the date of
enactment, or until the GAO report required by section 201(b)
is submitted, whichever is later. In addition, this section
would specify certain procedural steps the Postal Service must
take and factors it must consider before closing or
consolidating a plant, including codifying the current practice
whereby the Postal Service conducts an Area Mail Processing
study (with the additional requirement that the study look at
the possibility of reducing capacity rather than closing a
plant) and provides notice, a public meeting, and an
opportunity for public comment. Finally, this section provides
an opportunity for those served by a postal facility to appeal
the decision to close or consolidate the facility to the Postal
Regulatory Commission (PRC) in the same manner that post office
closings can currently be appealed.
Section 203--Preserving community post offices
This section establishes procedures that the Postal Service
would be required to follow before deciding whether to
discontinue a post office, including soliciting input from
communities regarding post office operational changes that
could result in financial savings without closings or
consolidations. This section builds on the so-called ``POSt''
plan adopted by the Postal Service in 2012 and that is
currently in effect.
Under these procedures, the Postal Service would be
required to consider alternatives to discontinuing the post
office, including--(1) reducing office hours; (2) contracting
out retail services in the area; (3) co-locating retail
services with a commercial or governmental entity in the area;
(4) providing retail services to affected customers through
letter carriers; or (5) an alternative proposal put forward by
a local government.
In addition, in making a determination whether or not to
discontinue a post office, the Postal Service would be required
to consider a range of factors, such as the effect of
discontinuing the post office on the community, on businesses
in the area, and on postal employees; the proximity and
accessibility of other post offices; and whether the
discontinuance would result in substantial economic savings to
the Postal Service.
This section also requires that the Postal Service make
certain additional determinations before discontinuing rural
post offices. These include that postal customers served by the
post office would continue to receive substantially similar
access to essential items, such as prescription drugs; that
there is unlikely to be undue economic loss to the community as
a result of the closing; that the area served by the post
office has adequate access to broadband Internet service; and
that there is a road with year-round access connecting the
community to another post office that is within a reasonable
distance.
If the Postal Service decides, after making the above
considerations, to discontinue a post office (rural or
otherwise), it would be required to provide a written
determination and findings 60 days before closing the post
office.
This section would also require that the Postal Service
consider certain factors before reducing the number of hours a
day a post office operates, including the effect on the
community, the proximity of other post offices, and the ability
to hire qualified employees, and that it consider which
alternative schedules would most effectively mitigate potential
negative impacts. The Postal Service would be required to make
available a summary of its findings and an explanation of the
change in hours during which the post office would be open.
In addition, for a period of 10 years after enactment, any
time a rural post office is discontinued under this section,
the Inspector General of the Postal Service would be required
to examine the actual cost savings resulting from the
discontinuance and compare that to the cost savings that the
Postal Service had projected would result from the
discontinuance. The section directs the Inspector General to
report on the findings to the PRC, the Postal Board of
Governors, and Congress not later than two years after the date
of the discontinuance of the post office.
Finally, this section requires that the Postal Service
establish minimum standards for retail postal services.
Section 204--Changes to mail delivery schedule
This section would allow the Postal Service to establish a
nationwide delivery schedule of five days per week if the
Postal Service determines that such a delivery schedule would
contribute to the achievement of long-term solvency and if
total mail volume during any period of four consecutive
quarters drops below 140 billion pieces. In no event, however,
may the Postal Service establish a five-day delivery schedule
earlier than October 1, 2017.
If the Postal Service intends to move to 5-day per week
delivery, it is required to identify customers and communities
that might be particularly affected by the scheduled change; to
develop measures intended to ameliorate any disproportionately
negative impacts associated with the change; to implement
measures to increase revenues and reduce costs; and report to
Congress, the PRC and GAO on these efforts not earlier than two
years and not later than six months before the effective date
for the change in delivery service.
The Comptroller General would be required to report to
Congress within three months of receiving a report from the
Postal Service on the extent to which a change in delivery
schedule would improve the financial condition of the Postal
Service and assist in the efforts of the Postal Service to
achieve long-term solvency, as well as on whether the Postal
Service has complied with the measures required of it under
this section. If the Comptroller General finds that the
proposed change in delivery schedule would not substantially
improve the financial condition of the Postal Service and
assist in the efforts of the Postal Service to achieve long-
term solvency or that the Postal Service has not complied with
the relevant statutory requirements, the Postal Service is
required to submit a response to Congress indicating whether it
agrees with the Comptroller General's findings; whether it
intends to reevaluate its decision to establish a change in
delivery schedule; and, if the Postal Service still intends to
establish a change in delivery schedule, the justification for
doing so in light of the Comptroller General's findings. The
Postal Service would be prohibited from implementing a change
in delivery schedule until 60 days after it submits its
response to the GAO report to Congress.
This section also makes clear that it is not intended to
affect the delivery frequency on any route for which the Postal
Service currently delivers less frequently than six days per
week; does not require the Postal Service to deliver mail on
Federal holidays; and does not affect the days and times that
post offices operate, the frequency of delivery to post office
boxes or the delivery schedule for competitive (i.e., non-
market dominant) products, such as Priority Mail Express
(overnight delivery).
In addition, this section would require that, for five
years after the date of enactment, the Postal Service deliver
packages six days per week delivery to areas that received six-
day package delivery, as of October 1, 2013 and optionally
seven days per week where the Postal Service determines it is
economically beneficial to the Postal Service to do so. It also
requires that, if the Postal Service adopts a delivery schedule
of 5 days per week, the Postal Service provide mailers that
currently have access to customers' mailboxes on Sundays with
the same access on all days on which the Postal Service chooses
not to provide mail delivery.
Finally, this section requires that, not later than 180
days after enactment, the Chief Sustainability Officer of the
Postal Service conduct an assessment of the environmental
impact of moving to a 5-day-per-week delivery schedule and
publish the results on the Postal Services website.
Section 205--Delivery point modernization
This section would require that the Postal Service use the
method of delivery that is most cost-effective and in the best
long-term interest of the Postal Service. For all new addresses
established after the date of enactment, the Postal Service
would be required to provide centralized delivery (e.g.,
cluster boxes) or, if centralized delivery is not practicable,
curbside delivery. The Postal Service also would be required to
carry out a program to convert existing business addresses
receiving door delivery to centralized or curbside delivery.
With respect to existing residential addresses, the Postal
Service would be required, within nine months of enactment, to
identify existing residential addresses that receive door
delivery and that are appropriate candidates for conversion and
to begin implementation of a program to convert, on a voluntary
basis, those addresses to a more cost-effective method of
delivery.
In determining the appropriate method of delivery for a new
or existing address, the Postal Service would be allowed to
provide door delivery if a physical barrier precludes the
efficient use of centralized or curbside delivery; if the
address is in a registered historic district; or the Postal
Service determines that the provision of centralized or
curbside delivery would be impractical, not cost effective or
otherwise not in the best long-term interest of the Postal
Service. In addition, the Postal Service would be required to
provide a waiver program for customers for whom door delivery
is necessary due to a physical hardship. The Postal Service
would be prohibited from charging a fee to apply for a physical
hardship waiver or to receive mail through door delivery if a
waiver has been granted.
Section 206--Postal services for market-dominant products
When the Postal Service proposes to change the nature of
postal services relating to market-dominant products, this
section would establish a default timeline of 90 days for the
PRC to issue an advisory opinion on the proposal, unless an
alternative schedule is agreed to between the PRC and the
Postal Service. Before issuing its opinion, the PRC must
provide notice and an opportunity for public comment and may
hold a public hearing on the Postal Service's proposal. The
Postal Service would be required to formally respond to the
advisory opinion, and generally it would not be allowed to act
on its proposed service change until after submitting its
response.
Section 207--Report on pilot program for use of natural gas and propane
for postal trucks
This section would require the Postmaster General, within
180 days after enactment of this Act, to submit a report on the
feasibility of a pilot program to implement the use of natural
gas and propane as fuels for its heavy-duty, over-the-road
trucks, in addition to those natural gas-fueled vehicles
already in the postal fleet, as a fuel cost-saving measure.
Section 208--Capitol complex post offices
This section would limit the number of post offices that
may be located in the U.S. Capitol Complex to one in the House
of Representatives office buildings and one in the Senate
office buildings.
Section 209--Lawful possession of firearms in post office parking lots
This section would permit the carrying or storing of a
firearm in a parking lot of a post office in a manner not
inconsistent with State or local law and not in violation of
any lease terms for the use of the parking lot or the postal
facility that the parking lot serves. It would require the
Postal Service to amend its regulations accordingly and to post
signage in each post office parking lot notifying the public of
this change in law. The section makes clear that it does not
apply to parking lots that also serve other Federal office
buildings or courthouses (e.g., when a post office is located
in a Federal office building) and that it does not limit the
authority of the Postmaster General to establish workplace
rules for Postal Service employees or regulations regarding
nonpublic areas of postal facilities.
TITLE III: POSTAL SERVICE REVENUE
Section 301--Postal rates
Under current law, the Postal Service's pricing authority
is restricted by a Consumer Price Index (CPI) rate cap on each
individual class of mail established in 2006 through the Postal
Accountability and Enhancement Act, or PAEA.\68\ The PAEA also
laid out a set of objectives and factors intended to guide the
creation of the current ratemaking system and Postal Service
pricing decisions. Finally, the PAEA established that,
beginning in 2017, the PRC must review the ratemaking system
and may revise it if it determines that doing so is necessary.
There is no requirement that any revised ratemaking system
include a rate cap or any other restriction on Postal Service
pricing authority.
---------------------------------------------------------------------------
\68\39 U.S.C. Sec. 3622(d)(1), enacted by section 201(a), Public
Law 109-435 (Dec. 20, 2006).
---------------------------------------------------------------------------
This section of the bill would adjust the pricing
limitations by stating that the rates in effect at the time of
enactment, including any exigent rate increase, would become
the new base rate for future rate increases. In fact, on
December 24, 2013, the Postal Regulatory Commission allowed a
temporary 4.3 percent exigent rate increase to make up for the
mail-volume losses arising from the Great Recession,\69\ and,
since the rate increase is projected to end sometime during
2015, the provision will make the 4.3 percent rate increase a
permanent part of the base rate.\70\ In addition, the bill
would apply the rate cap to all market-dominant products
considered in aggregate, rather than each product class
separately.
---------------------------------------------------------------------------
\69\See Postal Regulatory Commission Press Release, ``PRC Approves
Postal Service Request for Exigent rate Increase; Rejects Permanent
Price Increases'' (December 24, 2013), http://www.prc.gov/prc-docs/
Newsroom/PressReleases/
Exigent%20Rate%20Increase%202%2024%2013%20(2)_3429.pdf; Postal
Regulatory Commission, Order Granting Exigent Price Increase, (Order
no. 1926, Docket No. R2013-11, December 24, 2013), http://www.prc.gov/
Docs/88/88645/Order_1926.pdf.
\70\3See id. at page 181.
---------------------------------------------------------------------------
That rate structure would remain in place until at least
the end of 2016. Beginning in 2017, and as appropriate
thereafter, the Postal Service would be permitted, by majority
vote of the Board of Governors, to propose a new or revised
ratemaking system consistent with the objectives and factors
laid out in the provision. Any proposal made by the Board would
be submitted to the PRC, which could either adopt it or reject
it. No new or revised ratemaking system could be implemented
without the approval of the PRC.
Finally, this section would repeal the rate preference that
currently allows political committees to pay lower rates for
mail.
Section 302--Nonpostal Services
Under current law, the Postal Service is generally limited
to offering ``postal'' products. The definition of ``postal''
essentially limits the Postal Service to the processing and
transportation of hard-copy mail. The only exceptions are 27
non-postal products that were offered before the enactment of
the PAEA and its prospective ban on new non-postal products.
This section would modify that ban, giving the Postal Service
limited authority to offer non-postal products again. The
limitations on this new authority would make it clear that any
non-postal products offered by the Postal Service must make use
of the Postal Service's mail processing and distribution
network, must be in the public interest, must demonstrate a
likely public demand, must not create unfair competition with
the private sector; and should be reasonably expected to
improve the Postal Service's net financial condition. Further,
it would make clear that non-postal products are subject to the
same Federal and state laws and regulations as the private
sector. Finally, non-postal products would, like the Postal
Service's competitive products, be required to cover all of
their costs.
This section would also permit the Postal Service to offer
services on behalf of Federal, state, local, and tribal
governmental agencies under appropriate terms, and would
require that the Postal Service report to the Postal Regulatory
Commission on the costs and revenues of such services.
Section 303--Shipping of wine, beer, and distilled spirits
Under current law, private shippers are permitted to ship
alcoholic beverages but the Postal Service is not. This section
would authorize the Postal Service to ship wine, beer, and
distilled spirits when they are mailed in accordance with the
state and local laws that apply to the sender where the product
is mailed and that apply to the recipient where the delivery is
made. The provision also specifically requires that the
recipient be at least 21 years old and present government-
issued proof of identity.
TITLE IV: POSTAL SERVICE GOVERNANCE
Section 401--Board of Governors of the Postal Service
Under current law, the Postal Service is governed by an
eleven-member Board of Governors made up of nine part-time,
Senate-confirmed Governors, the Postmaster General, and the
Deputy Postmaster General. This section would reduce the size
of the Board to nine members and eliminate the Deputy
Postmaster General from the Board. It would retain partisan
balance among the Governors, and would provide for revised
qualifications for Governors. At least one of the Governors who
is appointed to fill a position that is vacant on the date of
enactment would also be required to have a demonstrated ability
to manage and improve financially troubled organizations.
Governors would continue to be limited to two terms, and the
Chairman of the Board would continue to be elected by the
Governors from among the Board members. Individuals currently
serving as Governors would be permitted to serve until the
expiration of their terms.
In addition, this section would give the Board of Governors
the authority to establish an Executive Committee made up of
the elected Chairman of the Board and two additional Governors,
with no more than two members of the Executive Committee being
a member of any one political party. If created, the Executive
Committee would be responsible for developing and overseeing
the long-term financial solvency of the Postal Service,
developing and overseeing the financial plan and budget, and
making recommendations on postal operations.
Section 402--Strategic Advisory Commission on Postal Service solvency
and innovation
This section would establish an independent advisory
commission that would provide guidance to the President,
Congress, and the Postal Service on enhancing the long-term
solvency of the Postal Service and fostering innovative
thinking there. The commission would be made up of seven
prominent individuals, three of them appointed by the President
and one each appointed by each party's leader in the House and
Senate. Commissioners may not be current elected officials or
officers or employees of the federal government.
The Commission would be charged specifically with studying
the current state of the Postal Service; the Postal Service's
governance and its organizational and management structures;
alternative business models for the Postal Service; potential
postal and non-postal products that the Postal Service could
offer; innovations that have been implemented by foreign posts;
and efforts to recruit and retain a workforce capable of
meeting the strategic needs of the Postal Service, including in
rural areas. The Commission would be required to issue a
Strategic Blueprint for Long-Term Solvency. It would also be
required to conduct a study concerning the advisability of the
Postal Service entering into interagency agreements with
Federal, State and local agencies. The Commission would
terminate 60 days after submission of its StrategicBlueprint
and the study on interagency agreements, but in no event later than one
year after enactment.
Section 403--Long term solvency plan; annual financial plan and budget
This section would require that, within 90 days of
enactment, the Postal Service prepare and submit a plan to the
Board of Governors describing the actions the Postal Service
intends to take to achieve long-term solvency. The Board of
Governors is to review it, may request changes, and then is to
submit it within 60 days to Congress. The Postmaster General is
required to submit updated versions of the long-term solvency
plan to the Board of Governors at least annually for five years
after enactment, and the Board is required to review each
updated version and submit it to Congress.
This section would further require that, for each of the
first five fiscal years after enactment, the Postmaster General
submit to the Board a financial plan and budget for the fiscal
year that is consistent with the goal of promoting the long-
term solvency of the Postal Service. The Board is required to
review the plan and budget and either approve the plan and
budget or direct the Postmaster General to make appropriate
revisions, before the budget is submitted to Office of
Management and Budget (OMB) as part of the annual budget
process.
Section 404--Chief innovation officer; innovation strategy
This section would require the Postal Service, within 90
days of enactment, to designate a Chief Innovation Officer.
This individual must have expertise and a record of
accomplishment in certain key areas, such as the shipping
industry, marketing, or new and emerging technology. The Chief
Innovation Officer would be charged with leading the
development at the Postal Service of new postal and non-postal
products and must, within nine months of enactment, publish an
innovation strategy for the Postal Service detailing new
products to be tested and launched. The Chief Innovation
Officer would also be required to submit an annual report on
implementation of the innovation strategy for the subsequent 10
years.
Section 405--Area and district office structure
This section would require the Postal Service to issue a
plan within one year of enactment for reducing the number of
area and district offices.
Section 406--Inspector General of the postal service
This section provides that the Inspector General of the
Postal Service would be appointed by the President subject to
confirmation by the Senate. Under present law, the Inspector
General is appointed by the Postal Board of Governors.
Section 407--Postal regulatory commission
The section would limit members of the Postal Regulatory
Commission to two full terms. In addition, this section would
require that the Commission, by majority vote, adopt policies
that govern the functions of the Commission, including the
finances, operations and administration of the Commission, and
that the Commission is to review and, if necessary, revise
those policies not less than every four years. The section
further provides that the Chairman's day-to-day authority to
direct executive and administrative functions would be subject
to the policies adopted by the Commission.
TITLE V: FEDERAL EMPLOYEES COMPENSATION ACT
Sction 501--Short title; references
This section says that title V of the bill may be cited as
the ``Workers' Compensation Reform Act of 2014.'' The section
also provides that, whenever a provision in title V of the bill
refers to a statutory section being amended, the provision is
in reference to title 5 of the United States Code unless noted
otherwise.
Section 502--Federal workers' compensation reforms for retirement-age
employees
This section would reduce Federal Employees' Compensation
Act (FECA) benefits for totally disabled enrollees to 50
percent of the pre-disability wage upon the enrollee reaching
full retirement age, as defined in the Social Security Act. For
partially disabled enrollees, the benefits would generally be
reduced to 50 percent of the pre-disability wage, multiplied by
the percentage of wage-earning capacity lost due to the injury.
For individuals whose workplace injury occurred before the
date of enactment, section 502 contains provisions that would
delay application of the reduced benefit level and provide full
exemption for those most severely injured and those already
over retirement age. Specifically--
(1) Those who are permanently, totally disabled and
unable to return to work would be exempt from this
section (``grandfathered''), and their benefit rate
would not be reduced to 50 percent. This category of
grandfathered individuals is defined under the
legislation as those who satisfy any one of the
following criteria: (a) lost the use of 2 appendages
(e.g., arms/legs); (b) receiving custodial home nursing
care or full nursing home care for at least 1 year
prior to enactment; or (c) receiving ``total
disability'' wage-loss compensation for at least 3
years prior to enactment or will have done so within
the first 3 years after enactment.
(2) Those who are already at the age of retirement on
the date of enactment are also exempt from this
section.
(3) Those who do not qualify as permanently, totally
disabled (``grandfathered'') and are not already over
the retirement age, the benefit level will be reduced
to 50 percent upon reaching retirement age or 3 years
after the date of enactment, whichever is later.
Section 503--Augmented compensation for dependents
This section would eliminate the additional (``augmented'')
compensation in current law for beneficiaries who have
dependents.
Also, for individuals whose workplace injury occurred
before the date of enactment, section 503 contains provisions
to delay application of the reduced benefit level and to
provide full exemption for those most severely injured.
Specifically--
(1) Those who are permanently, totally disabled and
unable to return to work would be exempt from this
section (``grandfathered''), and they would continue to
receive the additional level of compensation if they
have dependents. This definition of grandfathered
individuals is the same as the definition of those
grandfathered under section 302.
(2) Those who are not permanently, totally disabled
(``grandfathered'') would become ineligible to receive
augmented compensation 3 years after the bill is
enacted.
Section 504--Schedule compensation payments
This section would allow individuals receiving workers'
compensation benefits for total or partial disability to
simultaneously receive schedule compensation payments if their
disability benefits are reduced under sections 502 or 503 of
this bill. Schedule compensation payments are specific payments
authorized under existing law for certain injuries, such as
loss of use of a limb. Under current law, an injured individual
is not eligible to receive a schedule compensation payment for
an injury simultaneously with benefits for total or partial
disability.
Section 505--Vocational rehabilitation
This section includes several provisions to strengthen
existing programs that help injured workers get back to work:
(1) It would extend existing vocational
rehabilitation opportunities, which are now available
under FECA for workers who are totally disabled, to be
available to those who are partially disabled as well.
(2) It would authorize the Department of Labor (DOL)
to pay a federal employer the salary of a beneficiary
for up to 3 years as an incentive to hire workers off
of the FECA program rolls. Current law permits these
payments only to non-federal employers.
(3) It would make compliance with the Return to Work
plan developed between the program and the beneficiary
a condition of receiving continued benefits (except
this condition would not apply to beneficiaries who are
over the age of retirement).
Section 506--Reporting requirements
This section would mandate that beneficiaries report any
outside income they receive to DOL. An employee who fails to
comply will lose the right to receive compensation.
Section 507--Disability management review; independent medical
examinations
This section would require an independent medical
assessment of disability and potential for return to work for
beneficiaries after 6 months in the program and on a regularly
scheduled basis thereafter, but no less frequently than every 3
years. This would not change existing law allowing a FECA
beneficiary to choose to see his or her own doctor for
treatment and initial assessment. In addition, employing
agencies may request that DOL obtain an independent medical
examination at any time, and DOL must grant the agency's
request if DOL has not already conducted such an examination.
Section 508--Waiting period
Because minor workplace injuries often heal quickly, FECA
provides a 3-day waiting period before compensation begins. For
postal employees, FECA's 3-day waiting period comes immediately
after the injury, but for non-postal workers the waiting period
does not come until after the end of the 45-day continuation-
of-pay period.
This section would begin the 3-day waiting period
immediately after a work-related injury for all injured
employees. As under current law, injured employees may
subsequently receive FECA compensation for those 3 days if the
period of disability exceeds 14 days.
Section 509--Election of benefits
If an individual is simultaneously eligible for
compensation benefits both under FECA and under a retirement
system for federal employees (such as FERS or CSRS), the
individual must elect which benefits to receive, and the
election will be irrevocable. This section would prevent an
injured worker from retroactively claiming workers'
compensation benefits after having declined such benefits in
favor of federal retirement benefits. This provision is
intended to prevent a claimant from electing federal retirement
benefits as a means of avoiding required participation in
vocational rehabilitation or acceptance of an offered suitable
job and then later retroactively electing the potentially more
generous workers' compensation benefits.
Section 510--Sanctions for non-cooperation with field nurses
This section would suspend benefits when an injured worker
fails to cooperate with a field nurse. A ``field nurse'' is
defined as a registered nurse who assists DOL in the medical
management of disability claims and assists claimants in
coordinating medical care, and DOL is authorized to use field
nurses to coordinate medical services and vocational
rehabilitation services.
Section 511--Subrogation of continuation of pay
This section would allow the federal government to recover
``continuation of pay'' (e.g., salary that's continued to be
paid to the beneficiary during the 45-day period between the
injury and the initiation of FECA disability benefits) from
third parties that are liable for the beneficiary's work-
related injury.
Section 512--Integrity and compliance
This section includes several provisions to strengthen
integrity and compliance efforts within the FECA program. It
would require that, no later than 270 days after enactment, the
Secretary of Labor must establish an Integrity and Compliance
Program to prevent, identify, and recover improper payments
(including those obtained by fraud) for the FECA program. The
section would also direct the Secretary to cooperate with other
agencies, including the Postal Service, and the agency
inspectors general, to prevent, identify, and recover improper
payments.
The section would also require the Secretary of Health and
Human Services to make the National Directory of New Hires
available to the Secretary of Labor, the Postmaster General,
the DOL Inspector General, the USPS Inspector General, and GAO,
so that they can cross-match that data with claimant data under
the FECA program. The Comptroller General is granted access to
the National Directory of New Hires under this provision for
any audit, evaluation, or investigation, including any audit,
evaluation, or investigation relating to program integrity.
Section 513--Amount of compensation
This section would increase the amount an injured worker
receives for a severe disfigurement of the face, head or neck
from a maximum of $3,500 to a maximum of $50,000. This section
would also increase the amount allowed to reimburse funeral
expenses incurred due to a death from a work-related injury
from $800 to a maximum of $6,000. The limits in the current law
have not been significantly changed since 1949.
Section 514--Terrorism injuries; zones of armed conflict
This section would provide that a disability or death as a
result of ``an attack by a terrorist or terrorist organization,
either known or unknown,'' is ``deemed to have resulted from
personal injury sustained while in the performance of duty,''
under FECA's ``war-risk hazard'' provision. This would also
codify the current Office of Workers' Compensation Programs
(OWCP) practice of covering such disabilities or deaths as
``war-risk hazards.''
This section would also provide continuation of pay for
wage loss due to traumatic injury in performance of duty in a
designated zone of armed conflict for a period not to exceed
135 days, so long as the employee files a claim for such
benefit no longer than 45 days after terminating service in the
zone of armed conflict or the employee's return to the United
States, whichever occurs later.
Section 515--Technical and conforming amendments
This section contains technical and conforming amendments
to the FECA statute in title 5 of the United States Code.
Section 516--Regulations
This section would require the DOL to issue regulations to
carry out this title of the legislation.
Section 517--Effective date
This section would provide that the provisions of this
title are to take effect 60 days after the date of enactment,
except as otherwise provided.
TITLE VI: PROPERTY MANAGEMENT AND EXPEDITED DISPOSAL OF REAL PROPERTY
Section 601--Short title
This section gives the legislation in title VI the short
title of the ``Federal Real Property Asset Management Reform
Act of 2014.''
Section 602--Purpose
This section states that the bill's purpose is to increase
the efficiency and effectiveness of the federal government in
managing its real property by--(1) requiring agencies to
maintain an up-to-date inventory of real property; (2)
establishing a Federal Real Property Council to develop
guidance and ensure the implementation of strategies for better
managing federal real property; and (3) authorizing a pilot
program to expedite the disposal of surplus real property.
Section 603--Property management and expedited disposal of real
property
This section adds a new subchapter VII to Chapter 5 of
subtitle I of title 40, United States Code.
Sec. 621. Definitions, added to title 40, United States
Code, by section 603 of the bill, defines important terms for
the bill, including--
``Council'' means the Federal Real Property Council
established under this legislation.
``Disposal'' means any action that constitutes the removal
of any real property from the federal inventory, including
sale, deed, demolition, or exchange.
``Excess property'' is defined as property under the
control of a federal agency that the head of the agency
determines is not required to meet the agency's needs or
responsibilities. This term does not include postal property.
``Postal property'' means any building owned by the United
States Postal Service.
``Surplus property'' is defined generally to mean excess
property that is not required to meet the needs or
responsibilities of any federal agency. However, the term
surplusproperty does not include--(1) any military
installation; (2) Indian and Native Eskimo property held in trust by
the federal government; (3) real property operated and maintained by
the Tennessee Valley Authority; (4) any real property the Director of
the Office of Management and Budget excludes for reasons of national
security; (5) any public lands administered by the Secretary of
Interior through the Director of the Bureau of Land Management, the
Director of the National Park Service, the Commissioner of Reclamation,
or the Director of the United States Fish and Wildlife Service; (6) any
public lands administered by the Secretary of Agriculture acting
through the Chief of the Forest Service; and (7) any property operated
and maintained by the United States Postal Service.
``Underutilized property'' means an entire or a
portion of a property, including any improvements, that is
used--(1) irregularly or intermittently by the accountable
federal agency for program purposes of that agency, or (2) for
program purposes that can be satisfied only with a portion of
that property.
Sec. 622. Duties of Federal agencies, added to title 40,
United States Code, by section 603 of the bill, details actions
agencies must take in order to improve the management of their
real property. Under this section each agency must conduct an
inventory of real property under its control and provide
detailed information about the inventoried property to the
Administrator of the General Services Administration (GSA
Administrator) and the Federal Real Property Council (the
Council). Additionally, agencies are required to continuously
survey their real property to identify excess and underutilized
property, report any excess or underutilized property to the
GSA Administrator, identify opportunities for colocation with
other federal agencies where appropriate, and establish goals
that will lead to a reduction of the agency's excess and
underutilized real property. Agencies must also provide the
Council and the GSA Administrator information on their real
property assets to be used for the establishment and
maintenance of a government-wide real property database.
Sec. 623. Colocation among United States Postal Service
properties, added to title 40, United States Code, by section
603 of the bill, provides that the Postmaster General may
identify a list of postal properties with space available for
use by federal agencies and submit that list to the Federal
Real Property Council. Under this provision, agencies must
review this list and recommend colocations if appropriate.
Sec. 624. Establishment of a Federal Real Property Council,
added to title 40, United States Code, by section 603 of the
bill, would establish the Federal Real Property Council, to be
comprised of senior real property officers from each of 24
designated federal agencies, the Controller at the Office of
Management and Budget, and the GSA Administrator. The Deputy
Director for Management at OMB would chair the Council and
designate an Executive Director to assist the Council in
carrying out its duties. This provision would require the
Council to establish an annual real property asset management
plan and to include in that plan performance measures that will
enable Congress to track progress in achieving real property
goals government-wide and compare the performance of
landholding agencies against industry and other public sector
agencies. Additionally, this provision would direct the Council
to develop a strategy to reduce federal agencies reliance on
leasing when building ownership would be more cost-effective.
Finally, the Council would be expected to provide guidance to
agencies so that property assessments can be uniform across the
government.
Sec. 625. Federal real property inventory and database,
added to title 40, United States Code, by section 603 of the
bill, would direct the GSA Administrator to establish and
maintain a single, comprehensive, and descriptive database of
all real property under the custody and control of federal
agencies. The database must contain the results of agencies'
inventory of their real property as described in the first part
of this section as well as a list of real property disposals
that have been completed within the past year. The
Administrator would be required to make the database accessible
to the public at no cost within three years of the date of
enactment of this bill.
Sec. 626. Limitation on certain leasing authorities, added
to title 40, United States Code, by section 603 of the bill,
would impose a reporting requirement on agencies with
independent leasing authority, so that the executive branch and
Congress can better monitor whether those agencies' leases
reflect the best use of federal resources. (Although GSA is
responsible for leasing property on behalf of most federal
agencies, certain agencies have independent leasing authority,
under which they may enter into leases on their own.) Agencies
with independent leasing authority would be required to submit
a yearly report to the Council providing detailed information
regarding their leasing activity. This section would not apply
to the United States Postal Service, the Department of Veterans
Affairs, or any property that the President excludes for
reasons of national security.
Sec. 627. Expedited disposal pilot program, added to title
40, United States Code, by section 603 of the bill, would
establish a pilot program to expedite the disposal of surplus
properties. Under this provision, the Director of OMB could
authorize the disposal of up to 200 surplus properties each
year with priority going to those properties that have the
highest fair market value and the greatest potential for
disposal. The OMB Director would have to notify the appropriate
state or local government when a property in its jurisdiction
has been selected for the pilot program. The OMB Director would
also be able to remove a property from the pilot and replace it
with another property at the Director's discretion. Agencies
would be required to make property available for sale within 18
months after receiving a determination from the OMB Director
that the property is surplus and has been selected for the
pilot program. Failure to do so would prevent the agency from
acquiring additional property unless the square footage of the
increase is offset through consolidation, colocation, or
disposal of another building space from the inventory of that
agency.
Under the pilot program, after GSA is reimbursed for the
costs of identifying and preparing property for disposal, any
proceeds would be distributed as follows: 80 percent would be
returned to the Treasury for debt reduction; the lesser of 18
percent or the share of proceeds otherwise authorized to be
retained under law would be retained by the agency that owned
the property; and up to two percent would be used to fund the
homeless assistance grants under Sec. 628. This section would
permit the Secretary of the Department of Housing and Urban
Development to use funds made available through sales proceeds
for grants to eligible private non-profit organizations through
the continuum care program established under title IV of the
McKinney-Vento Homeless Assistance Act (42 U.S.C. Sec. 11381 et
seq.). If a property that has been selected for disposal under
the pilot program has not been disposed of after two years in
the program, it may be conveyed to state and local governments
or non-profit organizations for certain public purposes, unless
the predominant use of the property is not for housing, the
area of the property is not less than 25,000 square feet, or
the appraised fair market value of the property is greater than
$1 million.
Sec. 628. Homeless assistance grants, added to title 40,
United States Code, by section 603 of the bill, would require
the Secretary of Housing and Urban Development, using funds
from the disposal pilot program under Sec. 628, to make grants
to eligible private nonprofit organizations to purchase real
property suitable for use to purchase or rehabilitate real
property to provide housing or temporary shelter to the
homeless. The Secretary would give preference to areas in which
Federal real property is sold under the disposal program under
Sec. 626.
Section 604--Report of the comptroller general
This section would require the Comptroller General of the
United States, within five years of enactment, to submit a
report to Congress on the expedited disposal program
established in this legislation.
Section 605--Technical and conforming amendment
This section contains a technical and conforming amendment
to the table of contents for chapter 5 of subtitle I of Title
40, United States Code.
V. Evaluation of Regulatory Impact
Pursuant to the requirements of paragraph 11(b) of rule
XXVI of the Standing Rules of the Senate, the Committee has
considered the regulatory impact of S. 1789. The Congressional
Budget Office states that the bill contains no
intergovernmental or private-sector mandates as defined in the
Unfunded Mandate Reform Act and would impose no costs on state,
local, or tribal governments, or private entities. The
enactment of this legislation will not have significant
regulatory impact.
VI. Congressional Budget Office Cost Estimate
July 14, 2014.
Hon. Tom Carper, Chairman,
Committee on Homeland Security and Governmental Affairs,
U.S. Senate, Washington, DC.
Dear Mr. Chairman: The Congressional Budget Office has
prepared the enclosed cost estimate for S. 1486, the Postal
Reform Act of 2014.
If you wish further details on this estimate, we will be
pleased to provide them. The CBO staff contact is Mark
Grabowicz.
Sincerely,
Douglas W. Elmendorf.
Enclosure.
S. 1486--Postal Reform Act of 2014
Summary: S. 1486 would change the laws that govern the
operation of the United States Postal Service (USPS). Major
provisions of the bill would:
Extend a rate increase that would expire under
current law;
Permit the Postal Service to reduce mail
delivery from six days per week to five;
Authorize the Postal Service to phase out
delivery of mail directly to customers' doors (for
business addresses only);
Change the payments that the Postal Service is
required to make relating to the Postal Service Retiree
Health Benefits Fund (PSRHBF);
Direct the Postal Service to make payments to
liquidate its liability for workers' compensation
obligations;
Transfer $2.4 billion in surplus retirement
contributions from the Civil Service Retirement and
Disability Fund (CSRDF) to the Postal Service Fund;
Prohibit the Postal Service from closing mail
processing facilities for two years;
Require the use of demographic data specific
to Postal Service employees for the calculation of
certain retirement benefits;
Establish a new health benefits program for
Postal Service employees, annuitants, and their
dependents; and
Reduce payments to most federal workers
receiving benefits under the Federal Employees'
Compensation Act (FECA) and modify the administration
of that act.
In addition, other provisions of S. 1486 would aim to help
the Postal Service reduce its operating costs and increase its
revenues.
Effect on the federal budget: CBO estimates that enacting
the bill would result in off-budget savings of about $36
billion over the 2015-2024 period and on-budget costs of about
$19 billion over the same period. (USPS cash flows are recorded
in the federal budget in the Postal Service Fund and are
classified as off-budget, while the cash flows of the PSRHBF
and the CSRDF are on-budget.)
Combining those effects, CBO estimates that the net
budgetary savings from enacting S. 1486 would be about $17
billion over the 2015-2024 period. All of those effects reflect
changes in direct spending. Enacting S. 1486 would not affect
revenues. Pay-as-you-go procedures apply because enacting the
legislation would increase on-budget direct spending.
Finally, CBO estimates that implementing S. 1486 would have
a discretionary cost of $3.3 billion over the next 10 years,
subject to appropriation of the necessary amounts.
Effects on state, local, and tribal governments, and on the
private sector: By making a temporary rate increase for mail
services permanent and repealing a discount on postal rates for
political committees, S. 1486 would impose intergovernmental
and private sector mandates, as defined in the Unfunded
Mandates Reform Act (UMRA), on entities that send certain mail
through the USPS. The bill also would impose a private-sector
mandate by requiring postal annuitants who receive health
insurance through USPS and are eligible for Medicare to enroll
in that program. CBO estimates that the aggregate annual costs
of complying with the mandates would exceed both the
intergovernmental and private-sector thresholds established in
UMRA ($76 million and $152 million, respectively, in 2014,
adjusted annually for inflation).
Estimated cost to the Federal Government: The estimated
budgetary impact of S. 1486 is shown in Table 1. The costs of
this legislation fall within budget functions 370 (commerce and
housing credit), 550 (health), 570 (Medicare), 600 (income
security), and 800 (general government).
TABLE 1--SUMMARY OF BUDGETARY EFFECTS OF S. 1486, THE POSTAL REFORM ACT OF 2014
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
By fiscal year, in millions of dollars--
-----------------------------------------------------------------------------------------------------------------------------------------------------------
2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2015-2019 2015-2024
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
OFF BUDGET CHANGES IN DIRECT SPENDINGa
Estimated Budget Authority.......... -2,972 -2,504 -2,830 -2,966 -4,037 -4,157 -4,174 -4,139 -4,007 -3,877 -15,309 -35,664
Estimated Outlays................... -2,972 -2,504 -2,830 -2,966 -4,037 -4,157 -4,174 -4,139 -4,007 -3,877 -15,309 -35,664
ON BUDGET CHANGES IN DIRECT SPENDING
Estimated Budget Authority.......... 4,693 2,601 1,585 1,652 1,259 1,307 1,353 1,473 1,461 1,453 11,789 18,836
Estimated Outlays................... 4,693 2,601 1,585 1,652 1,259 1,307 1,353 1,473 1,461 1,453 11,789 18,836
TOTAL CHANGES IN DIRECT SPENDING
Estimated Budget Authority.......... 1,720 96 -1,246 -1,313 -2,778 -2,857 -2,820 -2,667 -2,547 -2,424 -3,521 -16,829
Estimated Outlays................... 1,720 96 -1,246 -1,313 -2,778 -2,857 -2,820 -2,667 -2,547 -2,424 -3,521 -16,829
CHANGES IN SPENDING SUBJECT TO APPROPRIATION
Estimated Authorization Level....... 505 483 352 296 294 281 279 281 271 266 1,930 3,308
Estimated Outlays................... 502 483 354 300 296 285 281 282 274 268 1,935 3,325
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Note: Components may not add to totals because of rounding. Positive numbers indicate increases in costs; negative numbers indicate reductions in costs.
acash flows of the Postal Service are classified as off-budget.
Basis of estimate: For this estimate, CBO assumes that S.
1486 will be enacted near the end of fiscal year 2014. The bill
would affect outlays of the Postal Service Fund, which is off-
budget, and the on-budget PSRHBF and CSRDF. CBO estimates that
the net direct spending savings (combining the off-budget and
on-budget effects) would total $16.8 billion over the 2015-2024
period.
Off-Budget changes in direct spending (Postal Service
Fund): CBO estimates that enacting S. 1486 would reduce net
USPS spending by $35.7 billion over the 2015-2024 period; as
noted above, USPS spending is classified as off-budget. Details
of changes in spending from the Postal Service Fund are
summarized in Table 2 and discussed in the following
subsections.
TABLE 2--DETAILS OF OFF-BUDGET CHANGES IN DIRECT SPENDING UNDER S. 1486
--------------------------------------------------------------------------------------------------------------------------------------------------------
By fiscal year, outlays in millions of dollars--
------------------------------------------------------------------------------------------------------------------------
2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2015-2024
--------------------------------------------------------------------------------------------------------------------------------------------------------
Extend Rate Increase........... 0 -1,900 -1,900 -1,800 -1,800 -1,750 -1,700 -1,650 -1,600 -1,550 -15,650
Reduction in the Frequency of 0 0 0 0 -1,500 -1,500 -1,450 -1,400 -1,350 -1,300 -8,500
Mail Delivery.................
Other Changes in Mail Delivery. -30 -150 -300 -500 -550 -700 -800 -850 -800 -750 -5,430
Changes in USPS Payments for -1,621 -1,720 -252 -254 -255 -256 -258 -260 -261 -263 -5,399
Retiree Health Benefits (See
Memorandum for details.)......
Prefunding for Workers 0 0 0 0 500 500 500 500 500 500 3,000
Compensation Obligations......
Transfer of Surplus Postal -2,400 0 0 0 0 0 0 0 0 0 -2,400
Retirement Contributions......
Prohibition on Closing Mail 600 800 0 0 0 0 0 0 0 0 1,400
Processing Facilities.........
Use of Postal Specific Data for 478 478 -333 -334 -334 -335 -336 -337 -339 -340 -1,731
Retirement Benefits...........
Establish PSHB program for USPS 0 -11 -37 -53 -60 -65 -69 -74 -79 -85 -531
Effect of Changes in Workers' 0 -2 -8 -26 -38 -52 -61 -69 -79 -89 -424
Compensation on USPS..........
------------------------------------------------------------------------------------------------------------------------
Total Off-Budget Changes... -2,972 -2,504 -2,830 -2,966 -4,037 -4,157 -4,174 -4,139 -4,007 -3,877 -35,664
MEMORANDUM: DETAILS OF CHANGES IN USPS PAYMENTS FOR RETIREE HEALTH BENEFITS
Under Current Law:
Estimated Payments to FEHB. 3,241 3,439 0 0 0 0 0 0 0 0 6,680
Specified Payments to 0 0 0 0 0 0 0 0 0 0 0
PSRHBF\a\.................
Estimated Payments for 0 0 2,458 2,574 2,679 2,819 2,991 3,174 3,364 3,566 23,625
Normal Costs\b\\c\........
Estimated Amortization 0 0 3,490 3,490 3,490 3,490 3,490 3,490 3,490 3,490 27,920
Payments\c\...............
------------------------------------------------------------------------------------------------------------------------
Total, Current Law..... 3,241 3,439 5,948 6,064 6,169 6,309 6,481 6,664 6,854 7,056 58,225
Under S. 1486:
Estimated Payments to FEHB. 0 0 0 0 0 0 0 0 0 0 0
Specified Payments to 0 0 0 0 0 0 0 0 0 0 0
PSRHBFa...................
Estimated Payment for 0 0 2,409 2,523 2,625 2,763 2,931 3,111 3,297 3,495 23,153
Normal Costsd.............
Estimated Amortization 0 0 3,034 3,034 3,034 3,034 3,034 3,034 3,034 3,034 24,275
Paymentsd.................
------------------------------------------------------------------------------------------------------------------------
Subtotal............... 0 0 5,443 5,557 5,660 5,797 5,966 6,145 6,331 6,529 47,428
Changes in Other USPS 1,621 1,720 252 254 255 256 258 260 261 263 5,399
Spending..................
------------------------------------------------------------------------------------------------------------------------
Total, S. 1486......... 1,621 1,720 5,696 5,810 5,914 6,053 6,223 6,404 6,593 6,793 52,826
Changes in Payments for Retiree -1,621 -1,720 -252 -254 -255 -256 -258 -260 -261 -263 -5,399
Health Benefits...............
--------------------------------------------------------------------------------------------------------------------------------------------------------
Notes: Components may not add to totals because of rounding; USPS = United States Postal Service; PSHB = Postal Service Health Benefits; FEHB = Federal
Employees Health Benefits; PSRHBF = Postal Service Retiree Health Benefits Fund.
\a\Under current law, the Postal Service is required to pay a total of $11.5 billion to the PSRHBF in 2015 and 2016. However, CBO expects that the
agency will not make any of those payments.
\b\Those payments are equal to the annual increase in retiree health care liabilities attributable to current employees.
\c\Those costs are based on information provided by the Office of Personnel Management.
\d\S. 1486 would require the Postal Service to make normal and amortization payments in 2016, but CBO expects the Postal Service would not make those
payments.
Extend rate increase. In December 2013, the Postal
Regulatory Commission (PRC) approved a 4.3 percent rate hike
for first-class mail and other services, including an increase
in the price of a first-class stamp from $0.47 to $0.49, but
limited the effect of this change to a period of about two
years. S. 1486 would make that increase permanent.
Based on information from the Postal Service, CBO estimates
that extending the recent rate hike would increase USPS net
revenues by $1.9 billion in 2016 and by $15.7 billionover the
2016-2024 period. We expect that annual savings would decline in 2018
and subsequent years because of falling mail volume and because some of
the savings would probably be spent by the Postal Service or returned
to mailers in the form of lower rates rather than accumulated as large
annual surpluses in the Postal Service Fund.
Reduction in the frequency of mail delivery. Beginning in
fiscal year 2018, S. 1486 would permit the Postal Service to
deliver mail five days a week, but only if the total volume of
first-class mail and periodicals falls below 140 billion pieces
over a 12-month period. The aggregate first-class and
periodicals volume was about 147 billion in 2013 and has been
declining for many years. The Postal Service anticipates that
volume will drop below 140 billion pieces sometime in 2018.
Under the bills provisions, the Postal Service expects that
beginning in 2019 it would eliminate most mail delivery on
Saturdays but continue to deliver packages six days a week. The
Postal Service estimates that this reduction in service would
yield net savings of $1.9 billion annually, mostly in personnel
and transportation costs. The agency assumes that most mail
currently delivered on Saturdays could be delivered on Mondays
with minimal increased costs.
The PRC has not prepared an estimate of savings from this
proposal. However, in 2011 the PRC estimated that reducing both
mail and package delivery from six to five days per week would
save $1.7 billion a year--compared to the USPS estimate of $3.1
billion in annual savings for that proposal--largely because it
disagreed with the Postal Service's assumption that Saturday
mail could be delivered on Mondays with minimal increased
costs. In addition, earlier this year an independent firm
estimated savings for ending Saturday delivery of mail (but not
packages) that were roughly 50 percent lower than the USPS
estimate of that proposal.\1\
---------------------------------------------------------------------------
\1\http://www.prc.gov/prc-docs/home/whatsnew/
Swiss%20Economics%20Model%20-
%20Saturday%20delivery%20Final%20Report%20V3_3545.pdf.
---------------------------------------------------------------------------
Based on the current estimates prepared by USPS and
considering the past disparity in estimates made by USPS and
other entities, CBO estimates that reducing mail delivery from
six to five days per week under S. 1486 would save about $1.5
billion (or roughly 80 percent of the USPS estimate) annually
beginning in fiscal year 2019. Beginning in 2021, we expect
that annual savings would gradually decline as some of those
funds would probably be spent by the Postal Service or returned
to mailers in the form of lower rates rather than accumulating
as large annual surpluses in the Postal Service Fund. We
estimate that net annual savings would fall to $1.3 billion by
2024.
Other changes in mail delivery. USPS delivers mail to the
doors of customers, to curbside receptacles, and to centralized
mail receptacles that serve multiple addresses. S. 1486 would
require the Postal Service to convert all business (but not
residential) addresses with door delivery to curbside or
centralized delivery.
In 2013, the Postal Service provided door delivery for
about 6 million business addresses. Upon enactment of S. 1486,
the USPS expects that it would change the means of delivery for
about 500,000 addresses in 2015 and about a million addresses
annually over the 2016-2020 period. We anticipate that nearly
all the conversions would be to centralized delivery for the
affected businesses.
Based on information from the Postal Service about the
savings per business address from implementing curbside and
centralized delivery as compared to door delivery, netted
against costs to install and maintain curbside and centralized
mail receptacles, CBO estimates that annual savings under S.
1486 would grow to about $850 million by 2022 and would total
$5.4 billion over the 2015-2024 period. Beginning in 2023, we
expect that annual savings would gradually decline as some of
those funds would probably be spent by the Postal Service or
returned to mailers in the form of lower rates. This estimate
of savings reflects the assumption that mail would be delivered
five days a week as authorized by the bill.
Changes in USPS payments for retiree health benefits. CBO
estimates that the bill's provisions that would change payments
relating to the PSRHBF would result in off-budget savings of
$5.4 billion over the 2015-2024 period, as discussed below and
shown in detail in the memorandum section of Table 2.
Background on Postal Service Obligations for Retiree Health
Care. The Postal Service is obligated to contribute toward the
health insurance premiums of its retired employees who
participate in the Federal Employees Health Benefits (FEHB)
program. Under current law, CBO expects that the agency will
make direct payments for retirees' premiums to the on-budget
FEHB fund for 2015 and 2016 totaling $6.7 billion. Over the
same period, the Postal Service also is required to make
statutorily specified payments to the on-budget PSRHBF to
prefund future retiree health obligations. Because of the
Postal Service's poor financial condition, however, it has not
made those statutorily specified payments since 2010, and CBO
expects that the agency will not make the remaining specified
payments for 2015 and 2016.
Beginning in 2017, the PSRHBF is expected to start making
payments to the FEHB program for the Postal Service's share of
those premiums. Under current law, the Postal Service is
required to make payments to the PSRHBF, starting in 2017, to
cover the future health care liabilities accruing to current
employees (``normal costs'') and to liquidate the unfunded
liability for retirees' health benefits (``amortization
payments''). CBO estimates that prefunding payments for normal
costs and amortization will sum to $51.5 billion over the 2017-
2024 period.
Changes in USPS Payments for Retiree Health Benefits Under
S. 1486. The bill would make several changes in the timing and
source of funds for payments for retiree health benefits.
In particular, S. 1486 would:
Eliminate the requirement for the USPS to make
direct payments to the FEHB fund in 2015 and 2016 and
would authorize PSRHBF payments for the agency's share
of FEHB retiree premiums in 2015 and 2016 instead;
Eliminate the requirement for the USPS to make
specified payments to the PSRHBF for 2015 and 2016 to
prefund retiree health benefits; and
Require the USPS to begin making annual
payments to the PSRHBF for normal and amortization
costs in 2016 instead of beginning in 2017 (though the
new amortization payments would need to cover just 80
percent of the unfunded liability for retirees' health
benefits).
Because of the Postal Service's poor financial condition,
CBO does not expect that the Postal Service would make the
normal and amortization payments to the PSRHBF required by the
bill in 2016 (though we expect that such payments will occur
under current law and under the bill in subsequent years).
CBO estimates that eliminating the requirement to make
direct payments to FEHB would reduce USPS spending on retiree
health benefits by $6.7 billion over the 2015-092024 period.
As a result of the PSRHBF payments to the FEHB fund in 2015
and 2016, the bill is expected to reduce the PSRHBF balance
relative to current law and to increase the estimated unfunded
liability for USPS retiree health benefits by the end of 2016.
However, that effect would be offset by the bill's requirement
to fund 80 percent rather than 100 percent of the unfunded
liability and by a relatively small decrease in PSRHBF spending
resulting from the new Postal Service Health Benefits (PSHB)
program discussed below. After amortizing the lower unfunded
liability over a 40-year period, we expect that the Postal
Service would be charged lower amortization payments over the
2017 2024 period. In addition, we estimate there would be a
small decrease in normal payments stemming from the new PSHB
program. CBO estimates that USPS costs associated with those
payments would decrease from $51.5 billion to $47.4 billion, or
$4.1 billion less, over the 2017-2024 period.
Changes in Other USPS Spending. CBO expects that lowering
health care expenses for the USPS would lead the agency to
modify its ongoing efforts under current law to reduce
spending. In 2009, the Postal Service began cost-cutting
actions including closing administrative offices, halting
construction of new facilities, and freezing salaries
forcertain employees. More recently, the agency has implemented more-
severe measures such as closing mail processing facilities, making
major reductions in service, and either deferring or failing to make
certain required payments to the Treasury.
CBO expects that enacting legislation to lower health care
expenses for the USPS would lead the agency to alter its cost-
reduction program by cutting spending less aggressively than it
would without the legislation. We estimate that the net
increase in such USPS outlays over the 2015-2024 period would
be about half of the potential gross savings--about $5.4
billion.
Prefunding for workers' compensation obligations. The bill
would require the Postal Service, beginning in fiscal year
2017, to calculate the actuarial liability of its workers'
compensation obligations and to make a series of annual
payments that would liquidate 80 percent of the liability over
a 40-year period. The agency would start making those annual
payments in fiscal year 2018 and subsequent years to a new
fund, known as the Postal Service Workers' Compensation Accrued
Liability Fund, unless its net income for the previous year
(computed on an accrual accounting basis) was less than or
equal to $1 billion. For this estimate, CBO anticipates that
the fund would be classified as on-budget, consistent with past
precedents, and thus that payments from USPS to the fund would
represent off-budget costs and on-budget receipts.
Based on USPS projections of net accrual income under
current law, and considering the total savings to the agency
anticipated from enactment of S. 1486, we expect that the
Postal Service's net accrual income would exceed $1 billion for
each year over the 2019-2024 period. Based on information
provided by the Postal Service on its anticipated liability for
workers' compensation obligations in 2019 and subsequent years,
we estimate that the agency would make amortization payments of
$500 million each year beginning in 2019.
Transfer of surplus postal retirement contributions. S.
1486 would authorize the Postal Service Fund to receive a
transfer of any surplus in the USPS Federal Employees
Retirement System (FERS) account within the CSRDF as of the end
of fiscal year 2013. Any funds transferred would have to be
used to pay off USPS debt to the Treasury. The bill would
require the Office of Personnel Management (OPM) to use
economic and demographic factors (such as salary growth and
retirement rates) specific to Postal Service employees, rather
than government-wide data, to calculate any such surplus.
Using data specific to the Postal Service, OPM estimates
that the USPS surplus for its FERS account in the CSRDF was
$2.4 billion as of September 30, 2013. Under the bill, CBO
estimates that $2.4 billion would be transferred from the CSRDF
to the Postal Service Fund in fiscal year 2015. That
intragovernmental transfer would be classified as a savings of
$2.4 billion in off-budget direct spending for the Postal
Service Fund in 2015. (The transfer also would result in a cost
of $2.4 billion to the on-budget CSRDF as discussed later.)
Prohibition on closing mail processing facilities. S. 1486
would require the Postal Service to maintain the delivery
service standards for first-class mail and periodicals that
were in effect on October 1, 2013, for at least two years after
the bill's enactment. The bill also would block the Postal
Service from closing or consolidating any postal facility that
was open on October 1, 2013, for at least two years after the
bill's enactment. Based on information from the Postal Service,
we estimate that those new requirements would cost $1.4 billion
over the 2015-2016 period by delaying the agency's plans to
close facilities and implement slower mail delivery service.
Use of postal-specific data for retirement benefits. S.
1486 would direct OPM to use economic and demographic factors
specific to Postal Service employees, rather than government-
wide data, to calculate the annual employer contribution that
USPS is required to make to federal retirement accounts under
FERS and the Civil Service Retirement System (CSRS). The bill
also would change the schedule of CSRS amortization payments
currently required of the Postal Service.
For 2013, the Postal Service made nearly $2.9 billion in
contributions to the CSRDF for FERS employees. The agency
currently makes no contributions for CSRS employees; under
current law, beginning in fiscal year 2017, the Postal Service
will make annual payments, amortized over 27 years, to
liquidate any unfunded liability as estimated by OPM for
retirees' CSRS pension benefits. (The unfunded liability is the
total liability accrued to date for retirees' pension benefits
minus the portion of the CSRDF attributable to Postal Service
contributions.) S. 1486 would require the Postal Service to
begin annual payments in 2015, amortized over 40 years, to
liquidate the unfunded liability.
Based on information from OPM, CBO estimates that enacting
S. 1486 would lower the Postal Service's annual employer
contribution to FERS by about $35 million beginning in 2015 and
would lower the amortization payment the agency will make to
the CSRDF beginning in 2017 by $630 million per year (the bill
would lower the anticipated amortization payment from $1.62
billion to $990 million). Those reductions would occur because
Postal Service employees tend to have lower salaries and higher
mortality rates (when retired) compared to the averages for all
federal employees and because the CSRS amortization period
would be longer. In addition, CBO estimates that, under the
bill's provisions, the Postal Service would make annual CSRS
amortization payments of about $990 million in 2015 and 2016,
thus significantly increasing its costs in those years compared
to current law.
Over the 2015-2024 period we estimate this provision would
result in potential savings of $3.4 billion. As with some of
the bill's other provisions, however, we anticipate that
lowering retirement costs would lead the Postal Service to cut
expenses less aggressively than it otherwise would. Thus, we
estimate net savings to the Postal Service of about $1.7
billion over the 2015-2024 period, or about half of the
potential gross savings.
Establish a Postal Service Health Benefits program. Section
104 of S. 1486 would make several changes to the health
insurance program for USPS employees and annuitants. The
legislation would direct OPM to establish a new PSHB program in
2016, under which USPS employees and annuitants could enroll to
receive health insurance from qualifying plans. Premiums in the
PSHB program would be set based on expected health costs of
only the USPS employees, annuitants, and dependents
participating in the program. In addition, the bill would
require all eligible postal annuitants who participate in the
PSHB program to enroll in the Medicare program.
CBO estimates that those changes would reduce USPS spending
for health insurance premiums by $1.1 billion over the 2015-
2024 period. CBO expects that lowering health care expenses for
the USPS would lead the agency to reduce other spending less
aggressively than it would without the legislation. Thus, we
estimate the net reduction in USPS spending over the same
period would be about $0.5 billion, or about half of the
potential gross savings from this policy.
CBO anticipates that savings to USPS under section 104 of
the legislation would result, in part, from shifting the
primary responsibility for certain Medicare-covered services
from the PSHB plans to the Medicare program. In addition, PSHB
plans would be required to participate in Medicare Part D (in
an aspect of the program that other employer sponsored plans
can participate in) and would thereby receive subsidies and
discounts related to prescription drugs. As a result of both
that shift to Medicare and the subsidies and discounts for
prescription drugs, CBO estimates that PSHB premiums for postal
employees and annuitants would be lower than the FEHB premiums
those people would face under current law. (The resulting shift
of such costs to Medicare is discussed below under On-Budget
Changes in Direct Spending.)
Effect of changes in workers' compensation on the USPS. The
bill would make several changes to the Federal Employees
Compensation Act, which provides wage replacement and medical
benefits to federal employees who are injured in the course of
their work. Under FECA, agencies reimburse the Department of
Labor (DOL) for expenses incurred on behalf of their employees.
Based on information from DOL, CBO estimates that the
changes in S. 1486 (which are discussed below in greater detail
in the section on On-Budget Changes in Direct Spending) would
reduce gross outlays under FECA by $1.2 billion over the 2015-
2024 period. Those gross savings would be mostly offset by
reduced reimbursements from federal agencies of $1.1 billion
during that period, for net savings to the FECA account over 10
years of $172 million.
Based on historical spending patterns under FECA, CBO
estimates that about 40 percent of the gross FECA savings (and,
accordingly, the reduced reimbursements) would accrue tothe
USPS. Thus, CBO estimates that, under provisions of S. 1486, the USPS
would pay about $0.4 billion less in reimbursements to the FECA account
over the 10-year period.
On-budget changes in direct spending: CBO estimates that
enacting S. 1486 would increase on-budget direct spending by
$18.8 billion over the 2015-2024 period. Those costs result
mostly from changes in the cash flows of the CSRDF, which
reflects expenditures for civil service retirement benefits,
and the PSRHBF, which reflects expenditures on health care
benefits for USPS retirees, as shown in Table 3 and discussed
below.
Changes in PSRHBF spending. As discussed previously, the
bill would change payments that the Postal Service makes for
retiree health benefits, and CBO estimates that those changes
would increase net on-budget direct spending by about $10.8
billion over the 2015-2024 period. Those costs result from
changes in cash flows of the PSRHBF as displayed in the
memorandum to Table 3.
Under the bill, CBO estimates that the PSRHBF would pay the
FEHB fund $3.2 billion in 2015 and $3.4 billion in 2016 toward
health premiums for postal annuitants enrolled in those years.
CBO does not expect that the Postal Service will make any of
the currently specified payments into the PSRHBF in 2015 or
2016, or that it would begin making payments to cover normal
and amortization costs before 2017. Thus, we estimate that the
bill's provisions to eliminate the specified payments and
require normal and amortization payments in 2016 would have no
effect on the PSRHBF. Beginning in 2017, however, we estimate
that amortization payments to the PSRHBF would decrease by
about $450 million annually--mostly because the bill would
require liquidation of 80 percent of the unfunded liability for
retirees health benefits (rather than 100 percent as required
under current law). Normal payments to the fund also would
decrease as a result of the new Postal Service Health Benefits
program.
TABLE 3--DETAILS OF ON BUDGET CHANGES IN DIRECT SPENDING UNDER S. 1486
--------------------------------------------------------------------------------------------------------------------------------------------------------
By fiscal year, outlays in millions of dollars--
------------------------------------------------------------------------------------------------------------------------
2015-
2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2024
--------------------------------------------------------------------------------------------------------------------------------------------------------
Changes in PSRHBF Spending (See 3,241 3,439 505 507 509 512 515 519 523 527 10,797
Memorandum)...................
Postal Service Health Benefits 0 124 429 516 601 642 683 788 781 764 5,328
Program.......................
Use of Postal-Specific Data for -957 -956 666 667 669 670 672 675 677 680 3,463
Retirement Benefits...........
Prefunding for USPS Workers 0 0 0 0 -500 -500 -500 -500 -500 -500 -3,000
Compensation Obligations
Effect of Changes in Workers 6 -8 -17 -40 -22 -19 -19 -11 -22 -20 -172
Compensation on Non-Postal
Agencies......................
Transfer of Surplus Postal 2,400 0 0 0 0 0 0 0 0 0 2,400
Retirement Contributions......
Federal Property Asset 2 2 2 2 2 2 2 2 2 2 20
Management Reform.............
Total Changes.............. 4,693 2,601 1,585 1,652 1,259 1,307 1,353 1,473 1,461 1,453 18,836
MEMORANDUM: PSRHBF CASH FLOWS
Under Current Law:
Specified Payment from USPS 0 0 0 0 0 0 0 0 0 0 0
a.........................
Normal Payments............ 0 0 -2,458 -2,574 -2,679 -2,819 -2,991 -3,174 -3,364 -3,566 -23,625
Amortization Payments...... 0 0 -3,490 -3,490 -3,490 -3,490 -3,490 -3,490 -3,490 -3,490 -27,920
------------------------------------------------------------------------------------------------------------------------
Total, Current Law..... 0 0 -5,948 -6,064 -6,169 -6,309 -6,481 -6,664 -6,854 -7,056 -51,545
Under S. 1486:
FEHB Payment\b\\d\......... 3,241 3,439 0 0 0 0 0 0 0 0 6,680
Normal Paymentsc........... 0 0 -2,409 -2,523 -2,625 -2,763 -2,931 -3,111 -3,297 -3,495 -23,153
Amortization Paymentsc..... 0 0 -3,034 -3,034 -3,034 -3,034 -3,034 -3,034 -3,034 -3,034 -24,275
Total, S. 1486......... 3,241 3,439 -5,443 -5,557 -5,660 -5,797 -5,966 -6,145 -6,331 -6,529 -40,748
Changes in PSRHBF Spending..... 3,241 3,439 505 507 509 512 515 519 523 527 10,797
--------------------------------------------------------------------------------------------------------------------------------------------------------
Notes: Components may not add to totals because of rounding.
USPS = United States Postal Service; PSRHBF = Postal Service Retiree Health Benefits Fund; FEHB = Federal Employees Health Benefits.
aFor fiscal years 2015 and 2016, the Postal Service is required to pay a total of $11.5 billion to the PSRHBF. However, CBO expects that the agency will
not make any payments.
bUnder current law, the FEHB payment would be made from the PSRHBF beginning in 2017, so S. 1486 would not affect cash flows over the 2017 2024 period.
c 1AS. 1486 would require the Postal Service to make normal and amortization payments in 2016, but CBO expects the agency will not make those payments.
dSection 104 would also reduce payments from the PSRHBF for health premiums for postal annuitants enrolled in the new PSHB program. Those effects are
included in Table 3 under effects from the Postal Service Health Benefits Program.
Postal Service Health Benefits program. CBO estimates that
establishing the new PSHB program, requiring USPS annuitants
who enroll in the PSHB program to participate in Medicare, and
requiring PSHB plans to participate in Medicare Part D would,
on net, increase on-budget direct spending by about $5.3
billion over the 2015-2024 period.
The provisions of S. 1486 that require certain USPS
annuitants to participate in Medicare would increase Medicare
spending by about $7.9 billion over the 2015-2024 period, CBO
estimates. Under the legislation, Medicare would become the
primary payer for Medicare-covered services for USPS annuitants
who enroll in Medicare Part B (medical insurance). However, the
PSHB plans would pay cost-sharing for those beneficiaries
health care services. Additionally, Medicare Part D would make
certain payments to PSHB plans because those plans would be
required to participate in the Employer Group Waiver Program
under Part D.
The effect of the legislation on federal on-budget payments
for health insurance premiums in the FEHB program would
partially offset the increase in Medicare spending. Premiums
charged to non-postal enrollees in the FEHB program would be
based on expected health costs of the employees, annuitants,
and dependents remaining in the FEHB program after the health
care costs of USPS workers, annuitants, and their dependents
are shifted to the PSHB program. Because non-postal enrollees
cost FEHB plans slightly less than postal enrollees, on
average, CBO estimates that premiums in the FEHB program would
be lower than under current law. Thus, the amount the federal
government would contribute toward its share of annuitant
premiums would be lower.
CBO estimates that federal payments for health insurance
premiums for non-postal annuitants enrolled in the FEHB program
would be reduced by about $1.6 billion over the 2015-2024
period. (The government's share of FEHB premiums for annuitants
is classified as direct spending. Federal spending for active
workers participating in the FEHB program is included in the
appropriations for federal agencies and, therefore, is
classified as discretionary.)
In addition, CBO estimates that the bill would reduce
payments from the on-budget PSRHBF for USPS annuitants health
insurance premiums by about $1.0 billion over the 2015-2024
period. That is because CBO expects premiums for USPS
annuitants to be lower under the legislation because of the
requirement that they enroll in Medicare if they enroll in the
PSHB.
Use of postal-specific data for retirement benefits. As
discussed above, S. 1486 would direct OPM to use economic and
demographic factors specific to Postal Service employees,
rather than government-wide data, to calculate the annual
employer contribution that USPS makes to federal retirement
accounts under FERS and CSRS. The bill also would require the
Postal Service to begin making amortization payments to
liquidate any unfunded liability for retirees' CSRS benefits in
2015 rather than in 2017.
Based on information from OPM, CBO estimates that the
Postal Service would make higher payments to the CSRDF in 2015
and 2016 of about $960 million per year, but the lower payments
allowed under the bill from 2017 to 2024 would result in net
costs for the CSRDF of nearly $3.5 billion over the 2015-2024
period as a whole.
Prefunding for USPS workers' compensation obligations: As
discussed above, the bill would require the Postal Service, if
certain financial conditions are met, to make a series of
annual payments designed to liquidate 80 percent of the
estimated liability for its workers compensation obligations
over a 40-year period. We expect the agency would begin making
those payments in 2019 to the Postal Service Workers'
Compensation Accrued Liability Fund. CBO estimates that the new
fund would receive payments from the Postal Service of $3
billion over the 2019-2024 period.
Effect of changes in workers compensation on agencies other
than USPS: The bill would make several changes to the Federal
Employees' Compensation Act, which provides wage replacement
and medical benefits to federal employees who are injured in
the course of their work. The Department of Labor administers
the program, and federal agencies reimburse DOL for expenses
incurred on behalf of their employees.
Under current law, FECA provides compensation of up to 75
percent of a worker's pre-injury salary if that person can no
longer work because of debilitating injuries sustained on the
job. (Injured workers without dependents receive two-thirds of
their salary as a wage-replacement benefit; those with
dependents receive the higher, augmented benefit.) In addition,
the worker may receive medical benefits and certain death
benefits. Most of the expenses incurred on behalf of the worker
are charged back to the employing agency. In 2013, both gross
FECA benefits and reimbursements from agencies totaled about
$3.0 billion, resulting in net FECA outlays that year of only
$20 million.
Enacting the bill would result in a number of changes to
the FECA program; most of those changes would reduce benefits,
though some of the changes would increase them. The changes
include:
Reducing benefits to 50 percent of a
claimant's pre-injury salary when that claimant reaches
full retirement age (as defined by the Social Security
Act);
Eliminating augmented benefits for most
claimants who have dependents (so that claimants below
the retirement age would receive a benefit equal to
two-thirds of their pre-injury salary);
Increasing benefits under the disfigurement
compensation schedule and for funeral expenses;
Establishing a schedule for managing
disability reviews, including requiring periodic
medical exams;
Improving the ability of the government to
recapture compensation costs from responsible parties;
and
Enhancing cross-matching of data to identify
cases where payments are being made inappropriately.
Based on information from DOL, CBO estimates that the
changes in S. 1486 would reduce gross FECA outlays by $1.2
billion over the 2015-2024 period. Those savings would be
partially offset by reduced reimbursements from employing
agencies of about $1.0 billion during that period, resulting in
net savings to the FECA account of $172 million over the 2015-
2024 period.
Transfer of surplus postal retirement contributions: S.
1486 would transfer to the Postal Service Fund any surplus in
the USPS FERS account within the CSRDF as of September 30,
2013. Based on information from OPM, CBO estimates that $2.4
billion would be transferred from the CSRDF to the Postal
Service Fund in fiscal year 2015. That transfer would increase
on-budget direct spending from the CSRDF by $2.4 billion in
2015, but is matched by off-budget savings in the Postal
Service Fund (as discussed above).
Federal property asset management reform. S. 1486 would
amend the Federal Property and Administrative Services Act
(property act) to facilitate the disposal of federal real
property. The legislation would expand the duties and
responsibilities of the Federal Real Property Council, provide
new authorities to the General Services Administration (GSA),
and establish a five-year pilot program with the goal of
expediting the disposal of surplus federal property. CBO
estimates that enacting the bill would increase direct spending
by $20 million over the 2015-2024 period because the
legislation would authorize GSA to spend proceeds from the sale
of federal property that are expected to be collected but not
spent under current law.
Based on information from GAO, the Office of Management and
Budget, GSA, and other landholding agencies, CBO expects that
little additional property would be sold under this program.
That expected result reflects a variety of factors, including:
(1) many of the largest landholding agencies would opt to
continue to use their own enhanced-use authorities, (2) the new
financial incentive provided to non-GSA agencies to sell real
property would not be significant, and (3) since 2010, the
President has directed agencies to dispose of unneeded
property, reduce operating costs, and adopt more efficient real
estate management practices. It is not clear how the new
authorities would accelerate disposal of properties beyond what
would occur under current law.
Other provisions that could affect direct spending: Several
other provisions of S. 1486 could help the Postal Service in
its efforts to lower its net costs; however, CBO has not
estimated additional savings for those provisions because it is
not clear that any savings would exceed what we expect would be
achieved under current law or under other provisions of the
legislation.
S. 1486 would authorize the Postal Service to ship
alcoholic beverages and to establish a program to provide
services for agencies of state, local, or tribal governments
for a fee. Implementing these programs would require the Postal
Service to compete with private businesses that currently ship
alcoholic beverages and to offer cost-effective alternatives
for services to states or localities. Those proposed programs
might increase USPS revenues but also would add to costs. CBO
has no information to predict the cost-effectiveness of such
new ventures that may be undertaken by the Postal Service under
the bill.
The bill also would direct arbitrators involved in future
labor negotiations to consider the financial condition of the
Postal Service when mediating disputes between USPS and its
labor unions and would reform certain Postal Service
contracting practices. Those provisions might reduce USPS
costs, but CBO expects that any net savings probably would be
indistinguishable from savings that would result from the
Postal Service's current efforts to negotiate more favorable
labor contracts and improve procurement practices.
Spending subject to appropriation: CBO estimates that S.
1486 also would affect discretionary spending, which is subject
to future appropriation actions. We estimate that implementing
the bill would have net discretionary costs of about $3.3
billion over the 10-year period, assuming the necessary amounts
are appropriated.
TABLE 4--SPENDING SUBJECT TO APPROPRIATION UNDER S. 1486
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
By fiscal year, outlays in millions of dollars--
----------------------------------------------------------------------------------------------------------------------------------------------
2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2015-2024
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Use of Postal-Specific Data for Retirement
Benefits:
Estimated Authorization Level................ 483 502 524 547 571 596 622 649 677 704 5,875
Estimated Outlays............................ 483 502 524 547 571 596 622 649 677 704 5,875
Postal Service Health Benefits Program:
Estimated Authorization Level................ 0 -38 -177 -229 -242 -256 -272 -289 -308 -327 -2,138
Estimated Outlays............................ 0 -38 -177 -229 -242 -256 -272 -289 -308 -327 -2,138
Effects of Changes in Workers' Compensation on
Non-Postal Agencies:
Estimated Authorization Level................ 19 19 5 -22 -35 -59 -71 -79 -98 -111 -432
Estimated Outlays............................ 16 19 7 -18 -33 -55 -69 -78 -95 -109 -415
New Commission:
Estimated Authorization Level................ 3 0 0 0 0 0 0 0 0 0 3
Estimated Outlays............................ 3 0 0 0 0 0 0 0 0 0 3
Total Change:
Estimated Authorization Level................ 505 485 352 296 294 281 279 281 271 266 3,308
Estimated Outlays............................ 502 483 354 300 296 285 281 282 274 268 3,325
Memorandum:a
Increase in Offsetting Receipts Resulting From -483 -502 -524 -547 -571 -596 -622 -649 -677 -704 -5,875
Higher Employer Contributions...................
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
aEmployer contributions are intragovernmental transactions that do not affect the deficit; negative numbers indicate an increase in such intragovernmental receipts. The receipts shown in the
memorandum result from federal employer contributions financed by future appropriations; such receipts are not considered to be an offset to direct spending because they are contingent on
future appropriation actions.
Use of postal-specific data for retirement benefits. Under
the provisions of S. 1486 that would require the use of postal-
specific economic and demographic factors to calculate the
employer contribution toward retirement that USPS makes on
behalf of its employees, the amount of employer contributions
required from most other federal agencies also would be
adjusted. OPM estimates that the use of economic and
demographic factors that exclude postal workers for calculating
the contributions required of other agencies would raise the
contribution rate paid by other federal agencies by 0.1 percent
to 0.2 percent of salary; CBO projects that such an increase in
contributions would increase spending subject to appropriation
by about $5.9 billion over the 2015-2024 period. However, that
cost would be offset by additional receipts to the Civil
Service Retirement and Disability Trust Fund and thus would
have no net effect on future deficits.
Postal service health benefits program. CBO estimates that
section 104 of the bill would reduce federal outlays for health
insurance premiums for non-postal employees enrolled in the
FEHB program by about $2.1 billion over the 2015-2024 period.
The government's contributions for those premiums for active
employees are subject to appropriation and thus classified as
discretionary spending.
The estimated reduction in costs results from lower federal
payments for the government's share of health insurance
premiums for federal employees not employed by USPS. Currently,
the federal government makes contributions to the premiums of
employees that participate in the FEHB program, and in 2013
those contributions averaged 71 percent of premiums. Under the
bill, as discussed above, premiums charged to non-postal
employees in the FEHB program would reflect the expected health
care costs of non-postal employees, non-postal annuitants, and
their dependents. On a per-enrollee basis, those costs would be
lower than the expected health care costs including postal
beneficiaries. CBO estimates that federal spending to cover the
government's share of premiums would be lower than under
current law.
Effect on changes in workers' compensation on agencies
other than USPS. The changes to FECA in S. 1486 would result in
agencies paying $1.0 billion less in reimbursements to DOL for
expenses incurred on behalf of their employees over the 2015-
2024 period. Based on historical spending patterns, CBO
estimates that about $0.4 billion of the reduction in
reimbursements would be from the USPS. The balance of those
payment reductions--about $0.6 billion--would be from federal
agencies discretionary salaries and expenses accounts.
Those savings would be partially offset by additional
discretionary costs of about $0.2 billion over the same period.
Most of those costs would be incurred by DOL to institute and
manage the disability review process and other administrative
provisions required by the bill.
In addition, provisions in the bill that would extend the
period of time that injured workers in zones of armed conflict
would be in ``continuation of pay'' status would result in
small increases in discretionary costs to agencies that employ
such workers.
New commission. S. 1486 would authorize the appropriation
of $3 million from the Postal Service Fund for fiscal year 2015
to establish a Strategic Advisory Commission on Postal Service
Solvency and Innovation. The commission would offer guidance to
improve USPS finances. CBO estimates that the commission would
spend $3 million in 2015, assuming appropriation of the
authorized amounts.
Pay As-You-Go considerations: The Statutory Pay-As-You-Go
Act of 2010 establishes budget-reporting and enforcement
procedures for legislation affecting direct spending or
revenues. The net changes in outlays that are subject to those
pay-as-you-go procedures are shown in the following table. Only
on-budget changes to outlays or revenues are subject to pay-as-
you-go procedures.
CBO ESTIMATE OF PAY-AS-YOU-GO EFFECTS FOR S. 1486, THE POSTAL REFORM ACT OF 2014, AS ORDERED REPORTED BY THE SENATE COMMITTEE ON HOMELAND SECURITY AND
GOVERNMENTAL AFFAIRS ON FEBRUARY 6, 2014
--------------------------------------------------------------------------------------------------------------------------------------------------------
By fiscal year, in millions of dollars--
-----------------------------------------------------------------------------------------------------------------
2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2014-2019 2014-2024
--------------------------------------------------------------------------------------------------------------------------------------------------------
NET INCREASE IN THE ON-BUDGET DEFICIT
Statutory Pay-As-You-Go Impact........ 0 4,693 2,601 1,585 1,652 1,259 1,307 1,353 1,473 1,461 1,453 11,789 18,836
--------------------------------------------------------------------------------------------------------------------------------------------------------
Intergovernmental and private sector impact: By increasing
postal rates for public and private mailers, S. 1486 would
impose intergovernmental and private-sector mandates, as
defined in UMRA. The bill also would impose mandates on some
postal annuitants by requiring them to enroll in Medicare, if
eligible. CBO estimates that the aggregate annual costs to
comply with the mandates in the bill would exceed both the
intergovernmental and private-sector thresholds established in
UMRA ($76 million and $152 million, respectively, in 2014,
adjusted annually for inflation).
Mandates on public and private mailers
S. 1486 would make permanent an increase in postal rates
for certain products, including those for which the Postal
Service has a statutory monopoly. That increase is set to
expire near the end of 2015. Because the USPS holds a statutory
monopoly on first class mail, standard mail, and periodicals
placed in USPS mail boxes, an increase in postal rates would
constitute a mandate on public and private entities that mail
those items through the USPS. The cost of the mandate would be
the incremental cost of mailing those items. Based on
projections from the USPS of the amount of first class mail,
standard mail, and periodicals that are expected to be sent at
the increased rate, CBO estimates that the additional cost to
public and private entities would amount to about $1.8 billion
in the first year of the extension of the higher rates. (That
figure excludes additional amounts paid for other postal
services and amounts paid by the federal government for postal
services.) Of the $1.8 billion, CBO estimates that the
permanent increase in postal rates would cost state andlocal
governments approximately $200 million in the first year, with slightly
lower costs in subsequent years. Similarly, CBO estimates that the
increase in postal rates would cost private mailers about $1.6 billion
in the first year, with slightly lower costs in later years.
The bill also would impose a private-sector mandate on
national and state political committees by repealing their
current discount on postal rates for third-class letters
(standard mail). Based on information from a political
committee and the USPS, CBO estimates that the cost of the
mandate would average about $4 million annually.
Mandate on postal annuitants: The bill would require all
postal annuitants enrolled in Postal Service health plans to
enroll in Medicare if they are eligible. Those postal
annuitants would be required to pay new premiums associated
with mandatory Medicare enrollment and additional amounts for
health care services. However, Postal Service health plans pay
a share of the cost of annuitants' health care services, and
CBO estimates that the aggregate additional costs for those
annuitants would be offset by those contributions.
Previous CBO estimate: On June 23, 2014, CBO transmitted a
cost estimate for H.R. 2748, the Postal Reform Act of 2013, as
ordered reported by the House Committee on Oversight and
Government Reform on July 24, 2013. Nearly all the off-budget
savings of H.R. 2748 would result from two provisions: reducing
mail delivery to five days per week and phasing out delivery of
mail to customers' doors. In contrast, the largest contributor
to off-budget savings for S. 1486 would be the bill's provision
to permanently extend a 2013 postal rate increase.
Table 5 compares CBO's estimates of the major budgetary
effects of the two bills over the next 10 years, showing that
both bills would have net budgetary savings of about $17
billion over the 2015-2024 period--although the on-budget and
off-budget effects for the two bills would be significantly
different. S. 1486's significantly higher on-budget cost, as
compared to H.R. 2748, primarily reflects the differences in
the two bills' provisions related to health care benefits for
USPS workers and retirees.
TABLE 5--SUMMARY OF CBO COST ESTIMATES FOR S. 1486 AND H.R. 2748
------------------------------------------------------------------------
By fiscal year, in billions of
dollars--
--------------------------------------
Off-Budget On-Budget Total 2015-
2015-2024 2015-2024 2024
------------------------------------------------------------------------
S. 1486.......................... -35.7 18.8 -16.8
H.R. 2748........................ -23.6 6.6 -17.0
------------------------------------------------------------------------
Estimate prepared by: Federal costs: Paul Masi--Health care
provisions; Amber Marcellino--Retirement; Christi Hawley
Anthony--Federal employees compensation; Mark Grabowicz--All
other; Impact on state, local, and tribal governments: Michael
Hirsch; Impact on the private sector: Marin Burnett.
Estimate approved by: Peter H. Fontaine, Assistant Director
for Budget Analysis.
ADDITIONAL VIEWS OF SENATOR JON TESTER
While some of the provisions in this legislation would
meaningfully improve the financial situation of the Postal
Service, we oppose several sections of the bill that are
outlined in the Committee report: Retiree Health Pre-Funding
Payments, Postal Unions and Collective Bargaining, Mail
Processing Facility Closures, and changes to the Federal
Employees' Compensation Act (FECA).
Retiree Health Pre-Funding Payments
While S. 1486 would improve the existing retiree health
pre-funding schedule to make the requirement less onerous on
the U.S. Postal Service, the legislation fails to restructure
the investment of those assets. In order to maximize the
returns on those payments made into the Postal Service Retiree
Health Benefits Fund (PSRHBF), these investments should be made
in a more progressive fashion. Currently, retiree health assets
are invested in Treasury securities that produce low yields.
Investing these assets into low-cost index funds that contain
stocks, bonds, and cash equivalents would lead to higher
returns. These higher returns would lead to greater improvement
in the PSRHBF's funding status, which would ultimately result
in further reduction of pre-funding costs.
Additionally, while this legislation would reduce USPS's
projected pre-funding obligations from 100 percent to 80
percent over 40 years, it would still require USPS to make
annual amortization and normal cost payments into the PSRHBF--
whether or not the 80 percent funding target is met in a given
year. If the funding level of the PSRHBF is over 80 percent,
USPS should not be required to make these payments. USPS should
be obligated to make these payments only when it is necessary
to achieve the 80 percent funding level. By making this change,
USPS would have the flexibility to invest the money that is
saved in new postal vehicles, new post office facilities, and
new technology.
Postal Unions and Collective Bargaining
This legislation would remove the guaranteed right of
participation in the Federal Employee Retirement System (FERS)
and matching Thrift Savings Plan (TSP) for newly hired postal
workers. The Committee recommendation would force new employees
to bargain for these long-held federal employee rights. Under
the current law, postal employees' eligibility for FERS and TSP
contributions is a basic employee benefit, as it is for all
other federal workers. Postal employees would not only have to
bargain for a benefit given to every other federal worker under
this bill, but they would also have to rely on the Postal
Service to use its new ``flexibilities prudently,'' as the S.
1486 Committee report states. This legislation could ultimately
result in new employees being completely excluded from FERS/TSP
eligibility as a result of these new collective bargaining
provisions.
Mail Processing Facility Closures
S. 1486 requires the Postal Service to maintain the service
standards for First Class mail and periodicals that were in
effect on October 1, 2013. A more appropriate date to use would
be July 1, 2012--when new service standards first went into
effect after the original wave of mail processing facility
closures. The postal network was weakened significantly in the
14 months between July 2012 and October 2013, with a lower
volume of mail being delivered overnight. Anecdotally,
businesses and postal labor organizations have reported that,
since October 2013, mail delivery regularly occurs at a far
slower rate than USPS-reported data. By using the October 2013
date, the Committee accepts a service standard that is simply
not as strong as the alternative option. If we are to maintain
our mail processing facilities to the best of our ability, we
must not slow down mail delivery even further.
Federal Employees' Compensation Act
The legislation makes sweeping changes to the Federal
Employee Compensation Act (FECA), which affects all federal
employees, yet it also succeeds in discriminatorily singling
out the Postal Service. By requiring the USPS to mandate a new
pre-funding initiative for projected workers' compensation
liability benefits, the bill creates a burden that is placed on
no other private company or government agency. Similar to the
proposed retiree health pre-funding payments, these
requirements would also force investment in low-yielding
Treasury securities to finance future FECA benefits. A more
appropriate investment mechanism would be in an appropriate mix
of stock and bonds so that sufficient earnings could be created
to cover future costs. Furthermore, these changes were written
into S. 1486 without the Committee having held a single hearing
on the topic in the last five years.
VII. Changes in Existing Law Made by the Bill, as Reported
In compliance with paragraph 12 of rule XXVI of the
Standing Rules of the Senate, changes in existing law made by
S. 54, as reported, are shown as follows (existing law proposed
to be omitted is enclosed in black brackets, new matter is
printed in italic, and existing law in which no change is
proposed is shown in roman):
UNITED STATES CODE
TITLE 5--GOVERNMENT ORGANIZATION AND EMPLOYEES
* * * * * * *
PART III--EMPLOYEES
* * * * * * *
Subpart G--Insurance and Annuities
CHAPTER 81--COMPENSATION FOR WORK INJURIES\71\
---------------------------------------------------------------------------
\71\These amendments to 5 U.S.C. chapter 81 are made by title V of
the bill.
* * * * * * *
---------------------------------------------------------------------------
Sec.
8101. Definitions.
* * * * * * *
8106. Partial disability
8106a. Reporting requirements.
* * * * * * *
[8117. Time of accrual of right.]
[8118. Election to use annual or sick leave.]
8117. Waiting period.
8118. Continuation of pay.
* * * * * * *
8152. Annual report.
8153. Integrity and compliance program.
* * * * * * *
Subchapter I--Generally
* * * * * * *
Sec. 8101. Definitions
For the purpose of this subchapter--
(1) ``employee'' means--
(A) * * *
* * * * * * *
(D) an individual employed by the government
of the District of Columbia for an injury that
occurred before the effective date of section
204(e) of the District of Columbia Self-
Government and Governmental Reorganization Act
(Public Law 93--198; 87 Stat. 783; 5 U.S.C.
8101 note); and
* * * * * * *
(18) ``price index'' means the Consumer Price Index
(all items--United States city average) published
monthly by the Bureau of Labor Statistics; [and]
(19) ``organ'' means a part of the body that performs
a special function, and for purposes of this subchapter
excludes the brain, heart, and back; [and]
(20) ``United States medical officers and hospitals''
includes medical officers and hospitals of the Army,
Navy, Air Forces, Department of Veterans Affairs, and
United States Public Health Service, and any other
medical officer or hospital designated as a United
States medical officer or hospital by the Secretary of
Labor;[.]
(21) ``retirement age'' has the meaning given that
term under section 216(l)(1) of the Social Security Act
(42 U.S.C. 416(l)(1));
(22) ``covered claim for total disability'' means a
claim for a period of total disability that commenced
before the date of enactment of the Workers
Compensation Reform Act of 2014;
(23) ``covered claim for partial disability'' means a
claim for a period of partial disability that commenced
before the date of enactment of the Workers
Compensation Reform Act of 2014; and
(24) ``individual who has an exempt disability
condition'' means an individual--
(A) who--
(i) is eligible to receive continuous
periodic compensation for total
disability under section 8105 on the
date of enactment of the Workers
Compensation Reform Act of 2014; and
(ii) meets the criteria under section
8105(c);
(B) who, on the date of enactment of the
Workers Compensation Reform Act of 2014--
(i) is eligible to receive continuous
periodic compensation for total
disability under section 8105; and
(ii) has sustained a currently
irreversible severe mental or physical
disability for which the Secretary of
Labor has authorized, for at least the
1-year period ending on the date of
enactment of the Workers' Compensation
Reform Act of 2014, constant in-home
care or custodial care, such as
placement in a nursing home; or
(C) who is eligible to receive continuous
periodic compensation for total disability
under section 8105--
(i) for not less than the 3-year
period ending on the date of enactment
of the Workers' Compensation Reform Act
of 2014; or
(ii) if the individual became
eligible to receive continuous periodic
compensation for total disability under
section 8105 during the period
beginning on the date that is 3 years
before the date of enactment of the
Workers' Compensation Reform Act of
2014 and ending on such date of
enactment, for not less than the 3-year
period beginning on the date on which
the individual became eligible.
* * * * * * *
Sec. 8102. Compensation for disability or death of employee
* * * * * * *
(b) Disability or death from a war-risk hazard or during or
as a result of capture, detention, or other restraint by a
hostile force or individual, or from an attack by a terrorist
or terrorist organization, either known or unknown, suffered by
an employee who is employed outside the continental United
States or in Alaska or in the areas and installations in the
Republic of Panama made available to the United States pursuant
to the Panama Canal Treaty of 1977 and related agreements (as
described in section 3(a) of the Panama Canal Act of 1979), is
deemed to have resulted from personal injury sustained while in
the performance of his duty, whether or not the employee was
engaged in the course of employment when the disability or
disability resulting in death occurred or when he was taken by
the hostile force or individual. This subsection does not apply
to an individual--
* * * * * * *
Sec. 8104. Vocational rehabilitation
(a) [The Secretary of Labor may direct a permanently
disabled individual whose disability is compensable under this
subchapter to undergo vocational rehabilitation.] In General._
(1) Direction.--Except as provided in paragraph (2),
not earlier than the date that is 6 months after the
date on which an individual eligible for wage-loss
compensation under section 8105 or 8106 is injured, or
by such other date as the Secretary of Labor determines
it would be reasonable under the circumstances for the
individual to begin vocational rehabilitation, and if
vocational rehabilitation may enable the individual to
become capable of more gainful employment, the
Secretary of Labor shall direct the individual to
participate in developing a comprehensive return to
work plan and to undergo vocational rehabilitation at a
location a reasonable distance from the residence of
the individual. The Secretary shall provide for
furnishing the vocational rehabilitation services. In
providing for these services, the Secretary, insofar as
practicable, shall use the services or facilities of
State agencies and corresponding agencies which
cooperate with the [Secretary of Health, Education, and
Welfare in carrying out the purposes of chapter 4 of
title 29] the Secretary of Education in carrying out
the purposes of the Rehabilitation Act of 1973 (29
U.S.C. 701 et seq.), except to the extent that the
Secretary of Labor provides for furnishing these
services under section 8103 of this title. The cost of
providing these services to individuals undergoing
vocational rehabilitation under this section shall be
paid from the Employees' Compensation Fund. However, in
reimbursing a State or corresponding agency under an
arrangement pursuant to this section the cost to the
agency reimbursable in full [under section 32(b)(1) of
title 29] under section 5 of the Rehabilitation Act of
1973 (29 U.S.C. 704) is excluded.
(2) Exception.--The Secretary of Labor may not direct
an individual who has attained retirement age to
participate in developing a comprehensive return to
work plan or to undergo vocational rehabilitation.
(b) Contents of Return To Work Plan.--A return to work plan
developed under subsection (a)--
(1) shall--
(A) set forth specific measures designed to
increase the wage-earning capacity of an
individual;
(B) take into account the prior training and
education of the individual and the training,
educational, and employment opportunities
reasonably available to the individual; and
(C) provide that any employment undertaken by
the individual under the return to work plan be
at a location a reasonable distance from the
residence of the individual;
(2) may provide that the Secretary will pay out of
amounts in the Employees' Compensation Fund reasonable
expenses of vocational rehabilitation (which may
include tuition, books, training fees, supplies,
equipment, and child or dependent care) during the
course of the plan; and
(3) may not be for a period of more than 2 years,
unless the Secretary finds good cause to grant an
extension, which may be for not more than 2 years.
[(b)](c) Compensation.--Notwithstanding section 8106,
individuals directed to undergo vocational rehabilitation by
the Secretary shall, while undergoing such rehabilitation,
receive compensation at the rate provided in sections 8105 and
8110 of this title, less the amount of any earnings received
from remunerative employment [, other than employment
undertaken pursuant to such rehabilitation].
(d) Assisted Reemployment Agreements.--
(1) In general.--The Secretary may enter into an
assisted reemployment agreement with an agency or
instrumentality of any branch of the Federal Government
or a State or local government or a private employer
that employs an individual eligible for wage-loss
compensation under section 8105 or 8106 to enable the
individual to return to productive employment.
(2) Contents.--An assisted reemployment agreement
under paragraph (1)--
(A) may provide that the Secretary will use
amounts in the Employees' Compensation Fund to
reimburse an employer in an amount equal to not
more than 100 percent of the compensation the
individual would otherwise receive under
section 8105 or 8106; and
(B) may not be for a period of more than 3
years.
(e) List.--To facilitate the hiring of individuals eligible
for wage-loss compensation under section 8105 or 8106, the
Secretary shall provide a list of such individuals to the
Office of Personnel Management, which the Office of Personnel
Management shall provide to all agencies and instrumentalities
of the Federal Government.
* * * * * * *
Sec. 8105. Total Disability
(a) [If] In General.--Subject to subsection (b), if the
disability is total, the United States shall pay the employee
during the disability monthly monetary compensation equal to 66
2/3 percent of his monthly pay, which is known as his basic
compensation for total disability.
(b) Conversion of Entitlement at Retirement Age.--
(1) In general.--Except as provided in paragraph (2),
the basic compensation for total disability for an
employee who has attained retirement age shall be 50
percent of the monthly pay of the employee.
(2) Exceptions.--
(A) Covered recipients who are retirement age
or have an exempt disability condition.--
Paragraph (1) shall not apply to a covered
claim for total disability by an employee if
the employee--
(i) on the date of enactment of the
Workers' Compensation Reform Act of
2014, has attained retirement age; or
(ii) is an individual who has an
exempt disability condition.
(B) Transition period for certain
employees.--For a covered claim for total
disability by an employee who is not an
employee described in subparagraph (A), the
employee shall receive the basic compensation
for total disability provided under subsection
(a) until the later of--
(i) the date on which the employee
attains retirement age; and
(ii) the date that is 3 years after
the date of enactment of the Workers'
Compensation Reform Act of 2014.
[(b)](c) The loss of use of both hands, both arms, both
feet, or both legs, or the loss of sight of both eyes, is prima
facie permanent total disability.
* * * * * * *
Sec. 8106. Partial Disability
(a) [If] In General.--Subject to subsection (b), if the
disability is partial, the United States shall pay the employee
during the disability monthly monetary compensation equal to 66
2/3 percent of the difference between his monthly pay and his
monthly wage-earning capacity after the beginning of the
partial disability, which is known as his basic compensation
for partial disability.
(b) Conversion of Entitlement at Retirement Age.--
(1) In general.--Except as provided in paragraph (2),
the basic compensation for partial disability for an
employee who has attained retirement age shall be 50
percent of the difference between the monthly pay of
the employee and the monthly wage-earning capacity of
the employee after the beginning of the partial
disability.
(2) Exceptions.--
(A) Covered recipients who are retirement
age.--Paragraph (1) shall not apply to a
covered claim for partial disability by an
employee if, on the date of enactment of the
Workers' Compensation Reform Act of 2014, the
employee has attained retirement age.
(B) Transition period for certain
employees.--For a covered claim for partial
disability by an employee who is not an
employee described in subparagraph (A), the
employee shall receive basic compensation for
partial disability in accordance with
subsection (a) until the later of--
(i) the date on which the employee
attains retirement age; and
(ii) the date that is 3 years after
the date of enactment of the Workers'
Compensation Reform Act of 2014.
[(b)](c) The Secretary of Labor may require a partially
disabled employee to report his earnings from employment or
self-employment, by affidavit or otherwise, in the manner and
at the times the Secretary specifies. The employee shall
include in the affidavit or report the value of housing, board,
lodging, and other advantages which are part of his earnings in
employment or self-employment and which can be estimated in
money. An employee who--
* * * * * * *
[(c)](d) A partially disabled employee who--
* * * * * * *
Sec. 8106a. Reporting requirements
(a) Definition.--In this section, the term ``employee
receiving compensation'' means an employee who--
(1) is paid compensation under section 8105 or 8106;
and
(2) has not attained retirement age.
(b) Authority.--The Secretary of Labor shall require an
employee receiving compensation to report the earnings of the
employee receiving compensation from employment or self-
employment, by affidavit or otherwise, in the manner and at the
times the Secretary specifies.
(c) Contents.--An employee receiving compensation shall
include in a report required under subsection (a) the value of
housing, board, lodging, and other advantages which are part of
the earnings of the employee receiving compensation in
employment or self-employment and the value of which can be
estimated.
(d) Failure To Report and False Reports.--
(1) In general.--An employee receiving compensation
who fails to make an affidavit or other report required
under subsection (b) or who knowingly omits or
understates any part of the earnings of the employee in
such an affidavit or other report shall forfeit the
right to compensation with respect to any period for
which the report was required.
(2) Forfeited compensation.--Compensation forfeited
under this subsection, if already paid to the employee
receiving compensation, shall be recovered by a
deduction from the compensation payable to the employee
or otherwise recovered under section 8129, unless
recovery is waived under that section.
* * * * * * *
Sec. 8107. Compensation schedule
(a) If there is permanent disability involving the loss, or
loss of use, of a member or function of the body or involving
disfigurement, the employee is entitled to basic compensation
for the disability, as provided by the schedule in subsection
(c) of this section, [at the rate of 66 2/3 percent of his
monthly pay] at the rate specified under subsection (d). The
basic compensation is--
(1) * * *
(2) payable regardless of whether the disability also
involves another impairment of the body; and
* * * * * * *
(c) The compensation schedule is as follows:
(1) * * *
* * * * * * *
(21) For serious disfigurement of the face, head, or
neck of a character likely to handicap an individual in
securing or maintaining employment, proper and
equitable compensation [not to exceed $3,500] in
proportion to the severity of the disfigurement, not to
exceed $50,000 shall be awarded in addition to any
other compensation payable under this schedule. The
maximum amount of compensation under this paragraph
shall be increased on March 1 of each year by the
amount determined by the Secretary of Labor to
represent the percent change in the price index
published for December of the preceding year over the
price index published for the December of the year
prior to the preceding year, adjusted to the nearest
one-tenth of 1 percent.
* * * * * * *
(d) Rate for Compensation.--
(1) Annual salary.--
(A) In general.--Except as provided in
paragraph (2), the rate under subsection (a)
shall be the rate of 66 \2/3\ percent of the
annual salary level established under
subparagraph (B), in a lump sum equal to the
present value (as calculated under subparagraph
(C)) of the amount of compensation payable
under the schedule.
(B) Establishment.--
(i) In general.--The Secretary of
Labor shall establish an annual salary
for purposes of subparagraph (A) in the
amount the Secretary determines will
result in the aggregate cost of
payments made under this section being
equal to what would have been the
aggregate cost of payments under this
section if the amendments made by
section 304(a) of the Workers'
Compensation Reform Act of 2014 had not
been enacted.
(ii) Cost of living adjustment.--The
annual salary established under clause
(i) shall be increased on March 1 of
each year by the amount determined by
the Secretary of Labor to represent the
percent change in the price index
published for December of the preceding
year over the price index published for
the December of the year prior to the
preceding year, adjusted to the nearest
one-tenth of 1 percent.
(C) Present value.--The Secretary of Labor
shall calculate the present value for purposes
of subparagraph (A) using a rate of interest
equal to the average market yield for
outstanding marketable obligations of the
United States with a maturity of 2 years on the
first business day of the month in which the
compensation is paid or, in the event that such
marketable obligations are not being issued on
such date, at an equivalent rate selected by
the Secretary of Labor, true discount
compounded annually.
(2) Certain injuries.--For an injury that occurred
before the date of enactment of the Workers'
Compensation Reform Act of 2014, the rate under
subsection (a) shall be 66\2/3\ percent of the
employee's monthly pay.
(e) Simultaneous Receipt.--
(1) Total disability.--An employee who receives
compensation for total disability under section 8105
may only receive the lump sum of schedule compensation
under this section in addition to and simultaneously
with the benefits for total disability after the
earlier of--
(A) the date on which the basic compensation
for total disability of the employee becomes 50
percent of the monthly pay of the employee
under section 8105(b); or
(B) the date on which augmented compensation
of the employee terminates under section
8110(b)(2)(A)(ii), if the employee receives
such compensation.
(2) Partial disability.--An employee who receives
benefits for partial disability under section 8106 may
only receive the lump sum of schedule compensation
under this section in addition to and simultaneously
with the benefits for partial disability after the
earlier of--
(A) the date on which the basic compensation
for partial disability of the employee becomes
50 percent of the difference between the
monthly pay of the employee and the monthly
wage-earning capacity of the employee after the
beginning of the partial disability under
section 8106(b); or
(B) the date on which augmented compensation
of the employee terminates under section
8110(b)(2)(B), if the employee receives such
compensation.
* * * * * * *
Sec. 8110. Augmented compensation for dependents
(a) * * *
(b) Termination of Augmented Compensation.--
(1) In general.--Subject to paragraph (2), augmented
compensation for dependants under subsection (c) shall
not be provided.
(2) Exceptions.--
(A) Total disability.--For a covered claim
for total disability by an employee--
(i) the employee shall receive
augmented compensation under subsection
(c) if the employee is an individual
who has an exempt disability condition;
and
(ii) the employee shall receive
augmented compensation under subsection
(c) until the date that is 3 years
after the date of enactment of the
Workers' Compensation Reform Act of
2014 if the employee is not an employee
described in clause (i).
(B) Partial disability.--For a covered claim
for partial disability by an employee, the
employee shall receive augmented compensation
under subsection (c) until the date that is 3
years after the date of enactment of the
Workers' Compensation Reform Act of 2014.
(C) Permanent disability compensated by a
schedule.--For a claim for a permanent
disability described in section 8107(a) by an
employee that commenced before the date of
enactment of the Workers' Compensation Reform
Act of 2014, the employee shall receive
augmented compensation under subsection (c).
[(b)] (c) A disabled employee with one or
more dependents is entitled to have his basic
compensation for disability augmented--
* * * * * * *
Sec. 8112. Maximum and minimum monthly payments
(a) Except as provided by subsections (b) and (c) and
section 8138 of this title, the monthly rate of compensation
for disability, [including augmented compensation under section
8110 of this title but] not including additional compensation
under section 8111 of this title, may not be more than [75
percent] 66\2/3\ percent of the monthly pay of the maximum rate
of basic pay for GS-15, and in case of total disability may not
be less than [75 percent] 66\2/3\ percent of the monthly pay of
the minimum rate of basic pay for GS-2 or the amount of the
monthly pay of the employee, whichever is less.
(b) Exceptions.--
(1) Covered disability condition.--For a covered
claim for total disability by an employee, if the
employee is an individual who has an exempt disability
condition--
(A) the monthly rate of compensation for
disability that is subject to the maximum and
minimum monthly amounts under subsection (a)
shall include any augmented compensation under
section 8110; and
(B) subsection (a) shall be applied by
substituting ``75 percent'' for ``66\2/3\
percent'' each place it appears.
(2) Partial disability.--For a covered claim for
partial disability by an employee, until the date that
is 3 years after the date of enactment of the Workers'
Compensation Reform Act of 2014--
(A) the monthly rate of compensation for
disability that is subject to the maximum and
minimum monthly amounts under subsection (a)
shall include any augmented compensation under
section 8110; and
(B) subsection (a) shall be applied by
substituting ``75 percent'' for ''66\2/3\
percent'' each place it appears.
[(b)] (c) The provisions of [subsection (a)] subsections
(a) and (b) shall not apply to any employee whose disability is
a result of an assault which occurs during an assassination or
attempted assassination of a Federal official described under
section 351(a) or 1751(a) of title 18, and was sustained in the
performance of duty.
* * * * * * *
Sec. 8113. Increase or decrease of basic compensation
(a) * * *
(b) If an individual without good cause fails to apply for
and undergo vocational rehabilitation when so directed under
section 8104 of this title, the Secretary, on review under
section 8128 of this title and after finding that in the
absence of the failure the wage-earning capacity of the
individual would probably have substantially increased, [may
reduce] shall reduce prospectively the monetary compensation of
the individual in accordance with what would probably have been
his wage-earning capacity in the absence of the failure, until
the individual in good faith complies with the direction of the
Secretary. An individual who has attained retirement age may
not be required to undergo vocational rehabilitation.
* * * * * * *
Sec. 8116. Limitations on right to receive compensation
(a) * * *
* * * * * * *
(e) Retirement Benefits.--
(1) In general.--An individual entitled to
compensation benefits payable under this subchapter and
under chapter 83 or 84 or any other retirement system
for employees of the Government, for the same period,
shall elect which benefits the individual will receive.
(2) Election.--
(A) Deadline.--An individual shall make an
election under paragraph (1) in accordance with
such deadlines as the Secretary of Labor shall
establish, which shall be a reasonable period
after the individual has received notice of a
final determination that the individual is
entitled to compensation benefits payable under
this subchapter.
(B) Revocability.--An election under
paragraph (1) shall be revocable,
notwithstanding any other provision of law,
except for any period during which an
individual--
(i) was qualified for benefits
payable under both this subchapter and
under a retirement system described in
paragraph (1); and
(ii) was paid benefits under the
retirement system after having been
notified of eligibility for benefits
under this subchapter.
(3) Informed choice.--The Secretary of Labor shall
provide information, and shall ensure that information
is provided, to an individual described in paragraph
(1) about the benefits available to the individual
under this subchapter or under chapter 83 or 84 or any
other retirement system referred to in paragraph (1)
the individual may elect to receive.
* * * * * * *
Sec. 8117. [Time of accrual of right] Waiting period
(a) [An employee other than a Postal Service employee is
not entitled] In General.--An employee is not entitled to
continuation of pay within the meaning of section 8118 for the
first 3 days of temporary disability or, if section 8118 does
not apply, is not entitled to compensation for the first 3 days
of temporary disability, except--
(1) when the disability exceeds 14 days; or
[(2) when the disability is followed by permanent
disability; or]
[(3)] (2) as provided by sections 8103 and 8104 of
this title.
(b) [A Postal Service employee is not entitled to
compensation or continuation of pay for the first 3 days of
temporary disability, except as provided under paragraph (3) of
subsection (a). A Postal Service] Use of Leave._An employee may
use annual leave, sick leave, or leave without pay during [that
3-day period] the first 3 days of temporary disability, except
that if the disability exceeds 14 days [or is followed by
permanent disability], the employee may have their sick leave
or annual leave reinstated or receive pay for the time spent on
leave without pay under this section.
* * * * * * *
Sec. 8118. Continuation of pay[; election to use annual or sick leave]
(a) * * *
(b) [Continuation] Except as provided under subsection
(d)(2), continuation of pay under this subchapter shall be
furnished--
(1) without a break in time, except as provided under
[section 8117(b)] section 8117, unless controverted
under regulations of the Secretary;
(2) * * *
(3) under accounting procedures and such other
regulations as the Secretary may require.
[(c) An employee may use annual or sick leave to his credit
at the time the disability begins, but his compensation for
disability does not begin, and the time periods specified by
section 8117 of this title do not begin to run, until
termination of pay as set forth in subsections (a) and (b) or
the use of annual or sick leave ends.]
[(d)] (c) If a claim under [subsection (a)] subsection (a)
or (d) is denied by the Secretary, payments under this section
shall, at the option of the employee, be charged to sick or
annual leave or shall be deemed overpayments of pay within the
meaning of section 5584 of title 5, United States Code.
(d) Continuation of Pay in a Zone of Armed Conflict.--
(1) In general.--Notwithstanding subsection (a), the
United States shall authorize the continuation of pay
of an employee described in subparagraph (A), (C), (D),
or (F) of section 8101(1), who--
(A) files a claim for a period of wage loss
due to an injury in performance of duty in a
zone of armed conflict (as determined by the
Secretary of Labor under paragraph (3)); and
(B) files the claim for such wage loss
benefit with the immediate superior of the
employee not later than 45 days after the later
of--
(i) the termination of the assignment
of the employee to the zone of armed
conflict; or
(ii) the return of the employee to
the United States.
(2) Continuation of pay.--Notwithstanding subsection
(b), continuation of pay under this subsection shall be
furnished for a period not to exceed 135 days without
any break in time or waiting period, unless
controverted under regulations prescribed by the
Secretary of Labor.
(3) Determination of zones of armed conflict.--For
purposes of this subsection, the Secretary of Labor, in
consultation with the Secretary of State and the
Secretary of Defense, shall determine whether a foreign
country or other foreign geographic area outside of the
United States (as defined in section 202(a)(7) of the
State Department Basic Authorities Act of 1956 (22
U.S.C. 4302(a)(7)) is a zone of armed conflict based on
whether--
(A) the Armed Forces of the United States are
involved in hostilities in the country or area;
(B) the incidence of civil insurrection,
civil war, terrorism, or wartime conditions
threatens physical harm or imminent danger to
the health or well-being of United States
civilian employees in the country or area;
(C) the country or area has been designated a
combat zone by the President under section
112(c) of the Internal Revenue Code of 1986;
(D) a contingency operation involving combat
operations directly affects civilian employees
in the country or area; or
(E) there exist other relevant conditions and
factors.
* * * * * * *
Sec. 8123. Physical examinations
(a) * * *
* * * * * * *
(e) Disability Management Review.--
(1) Definitions.--In this subsection--
(A) the term ``covered employee'' means an
employee who is in continuous receipt of
compensation for total disability under section
8105 for a period of not less than 6 months;
and
(B) the term ``disability management review
process'' means the disability management
review process established under paragraph
(2)(A).
(2) Establishment.--The Secretary of Labor shall--
(A) establish a disability management review
process for the purpose of certifying and
monitoring the disability status and extent of
injury of each covered employee; and
(B) promulgate regulations for the
administration of the disability management
review process.
(3) Physical examinations required.--Under the disability
management review process, the Secretary of Labor shall
periodically require covered employees to submit to physical
examinations under subsection (a) by physicians selected by the
Secretary. A physician conducting a physical examination of a
covered employee shall submit to the Secretary a report
regarding the nature and extent of the injury to and disability
of the covered employee.
(4) Frequency.--
(A) In general.--The regulations promulgated
under paragraph (2)(B) shall specify the
process and criteria for determining when and
how frequently a physical examination should be
conducted for a covered employee.
(B) Minimum frequency.--
(i) Initial.--An initial physical
examination shall be conducted not more
than a brief period after the date on
which a covered employee has been in
continuous receipt of compensation for
total disability under section 8015 for
6 months.
(ii) Subsequent examinations.--After
the initial physical examination,
physical examinations of a covered
employee shall be conducted not less
than once every 3 years.
(5) Employing agency or instrumentality requests.--
(A) In general.--The agency or
instrumentality employing an employee who has
made a claim for compensation for total
disability under section 8105 may at any time
submit a request for the Secretary of Labor to
promptly require the employee to submit to a
physical examination under this subsection.
(B) Requesting officer.--A request under
subparagraph (A) shall be made on behalf of an
agency or instrumentality by--
(i) the head of the agency or
instrumentality;
(ii) the Chief Human Capital Officer
of the agency or instrumentality; or
(iii) if the agency or
instrumentality does not have a Chief
Human Capital Officer, an officer with
responsibilities similar to those of a
Chief Human Capital Officer designated
by the head of the agency or
instrumentality to make requests under
this paragraph.
(C) Information.--A request under
subparagraph (A) shall be in writing and
accompanied by--
(i) a certification by the officer
making the request that the officer has
reviewed the relevant material in the
employee's file;
(ii) an explanation of why the
officer has determined, based on the
materials in the file and other
information known to the officer, that
requiring a physical examination of the
employee under this subsection is
necessary; and
(iii) copies of the materials relating to the
employee that are relevant to the officer's
determination and request, unless the agency or
instrumentality has a reasonable basis for not
providing the materials.
(D) Examination.--If the Secretary of Labor
receives a request under this paragraph before
an employee has undergone an initial physical
examination under paragraph (4)(B)(i), the
Secretary shall promptly require the physical
examination of the employee. A physical
examination under this subparagraph shall
satisfy the requirement under paragraph
(4)(B)(i) that an initial physical examination
be conducted.
(E) After initial examination.--
(i) In general.--If the Secretary of
Labor receives a request under this
paragraph after an employee has
undergone an initial physical
examination under paragraph (4)(B)(i),
the Secretary shall--
(I) review the request and
the information, explanation,
and other materials submitted
with the request; and
(II) determine whether to
require the physical
examination of the employee who
is the subject of the request.
(ii) Not granted.--If the Secretary
determines not to grant a request
described in clause (i), the Secretary
shall promptly notify the officer who
made the request and provide an
explanation of the reasons why the
request was denied.
(f) Field Nurses.--
(1) Definition.--In this subsection, the term ``field
nurse'' means a registered nurse that assists the
Secretary in the medical management of disability
claims under this subchapter and provides claimants
with assistance in coordinating medical care.
(2) Authorization.--The Secretary may use field
nurses to coordinate medical services and vocational
rehabilitation programs for injured employees under
this subchapter. If an employee refuses to cooperate
with a field nurse or obstructs a field nurse in the
performance of duties under this subchapter, the right
to compensation under this subchapter shall be
suspended until the refusal or obstruction stops.
* * * * * * *
Sec. 8131. Subrogation of the United States
(a) If an injury or death for which continuation of pay or
compensation is payable under this subchapter is caused under
circumstances creating a legal liability on a person other than
the United States to pay damages, the Secretary of Labor may
require the beneficiary to--
* * * * * * *
(b) A beneficiary who refuses to assign or prosecute an
action in his own name when required by the Secretary is not
entitled to continuation of pay or compensation under this
subchapter.
(c) The Secretary may prosecute or compromise a cause of
action assigned to the United States. When the Secretary
realizes on the cause of action, he shall deduct therefrom and
place to the credit of the Employees' Compensation Fund the
amount of continuation of pay or compensation already paid to
the beneficiary and the expense of realization or collection.
Any surplus shall be paid to the beneficiary and credited on
future payments of continuation of pay or compensation payable
for the same injury. However, the beneficiary is entitled to
not less than one-fifth of the net amount of a settlement or
recovery remaining after the expenses thereof have been
deducted.
* * * * * * *
Sec. 8132. Adjustment after recovery from a third person
If an injury or death for which continuation of pay or
compensation is payable under this subchapter is caused under
circumstances creating a legal liability in a person other than
the United States to pay damages, and a beneficiary entitled to
continuation of pay or compensation from the United States for
that injury or death receives money or other property in
satisfaction of that liability as the result of suit or
settlement [by him or in his behalf] by the beneficiary or on
behalf of the beneficiary, the beneficiary, after deducting
therefrom the costs of suit and a reasonable attorney's fee,
shall refund to the United States the amount of continuation of
pay and compensation paid by the United States and credit any
surplus on future payments of [compensation payable to him]
continuation of pay or compensation payable to the beneficiary
for the same injury. No court, insurer, attorney, or other
person shall pay or distribute to the beneficiary or [his
designee] the designee of the beneficiary the proceeds of such
suit or settlement without first satisfying or assuring
satisfaction of the interest of the United States. The amount
refunded to the United States shall be credited to the
Employees' Compensation Fund. [If compensation has not been
paid to the beneficiary, he shall credit the money or property
on compensation payable to him by the United States] If
continuation of pay or compensation has not been paid to the
beneficiary, the money or property shall be credited against
continuation of pay or compensation payable to the beneficiary
by the United States for the same injury. However, the
beneficiary is entitled to retain, as a minimum, at least one-
fifth of the net amount of the money or other property
remaining after the expenses of a suit or settlement have been
deducted; and in addition to this minimum and at the time of
distribution, an amount equivalent to a reasonable attorney's
fee proportionate to the refund to the United States.
* * * * * * *
Sec. 8133. Compensation in case of death
(a) If death results from an injury sustained in the
performance of duty, the United States shall pay a monthly
compensation equal to a percentage of the monthly pay of the
deceased employee in accordance with the following schedule:
(1) * * *
(2) To the widow or widower, if there is a child, 45
percent and in addition 15 percent for each child not
to exceed a total of 66\2/3\ percent (except as
provided in subsection (g)) for the widow or widower
and children.
(3) To the children, if there is no widow or widower,
40 percent for one child and 15 percent additional for
each additional child not to exceed a total of [75
percent] 66\2/3\ percent (except as provided in
subsection (g)), divided among the children share and
share alike.
* * * * * * *
If there is a widow, widower, or child, so much of the
percentages are payable as, when added to the total percentages
payable to the widow, widower, and children, will not exceed a
total of [75 percent] 66\2/3\ percent (except as provided in
subsection (g)).
(5) To the brothers, sisters, grandparents, and
grandchildren, if there is no widow, widower, child, or
dependent parent as follows:
(A) * * *
* * * * * * *
If there is a widow, widower, or child, or
dependent parent, so much of the percentages
are payable as, when added to the total
percentages payable to the widow, widower,
children, and dependent parents, will not
exceed a total of [75 percent] 66\2/3\ percent
(except as provided in subsection (g)).
* * * * * * *
(e) In computing compensation under this section, the
monthly pay is deemed not less than the minimum rate of basic
pay for GS 2. However, the total monthly compensation may not
exceed--
(1) * * *
(2) [75 percent] 66\2/3\ percent (except as provided
in subsection (g)) of the monthly pay of the maximum
rate of basic pay for GS-15.
(f) * * *
(g) If the death occurred before the date of enactment of
the Workers' Compensation Reform Act of 2014, subsections (a)
and (e) shall be applied by substituting ``75 percent'' for
``66\2/3\ percent'' each place it appears.
* * * * * * *
Sec. 8134. Funeral expenses; transportation of body
(a) If death results from an injury sustained in the
performance of duty, the United States shall pay, to the
personal representative of the deceased or otherwise, funeral
and burial expenses not to exceed [$800] $6,000, in the
discretion of the Secretary of Labor. The maximum amount of
compensation under this subsection shall be increased on March
1 of each year by the amount determined by the Secretary of
Labor to represent the percent change in the price index
published for December of the preceding year over the price
index published for the December of the year prior to the
preceding year, adjusted to the nearest one-tenth of 1 percent.
(b) * * *
* * * * * * *
Sec. 8139. Employees of the District of Columbia
Compensation awarded under this subchapter to an employee
of the government of the District of Columbia shall be paid in
the manner provided by statute for the payment of the general
expenses of the government of the District of Columbia.
* * * * * * *
Sec. 8141. Civil Air Patrol volunteers
(a) * * *
(b) In administering this subchapter for a member of the
Civil Air Patrol covered by this section--
(1) * * *
(2) the percentages applicable to payments under
section 8133 of this title are--
(A) * * *
(B) 20 percent for section 8133(a)(3) of this
title for one child and 10 percent additional
for each additional child, but not to exceed a
total of [75 percent] 66\2/3\ percent (except
as provided in subsection (c)), if the member
died fully or currently insured under
subchapter II of chapter 7 of title 42; and
* * * * * * *
(c) If the death occurred before the date of enactment of
the Workers' Compensation Reform Act of 2014, subsection
(b)(2)(B) shall be applied by substituting ``75 percent'' for
``66\2/3\ percent''.
[(c)] (d) The Secretary of Labor or his designee may inform
the Secretary of the Air Force or his designee when a claim is
filed. The Secretary of the Air Force, on request of the
Secretary of Labor, shall advise him of the facts concerning
the injury and whether or not the member was rendering service,
or engaged in travel to or from service, in performance or
support of an operational mission of the Civil Air Patrol at
the time of injury. This subsection does not dispense with the
report of the immediate superior of the member required by
section 8120 of this title, or other reports agreed on under
that section.
* * * * * * *
Sec. 8147. Employees' Compensation Fund
(a) * * *
* * * * * * *
(d) Notwithstanding subsection (b), any benefits or other
payments paid to or on behalf of an employee under this
subchapter or any extension or application thereof for a
recurrence of injury, consequential injury, aggravation of
injury, or increase in percentage of impairment to a member for
which compensation is provided under the schedule under section
8107 suffered in a permanent position with an agency or
instrumentality of the United States while the employment with
the agency or instrumentality is covered under an assisted
reemployment agreement entered into under section 8104(d) shall
not be included in total cost of benefits and other payments in
the statement provided to the agency or instrumentality under
subsection (b) if the injury was originally incurred in a
position not covered by an assisted reemployment agreement.
* * * * * * *
Sec. 8148. Forfeiture of benefits by convicted felons
(a) Any individual convicted of a violation of section 1920
of title 18, or any other Federal or State criminal statute
relating to fraud in the application for or receipt of any
benefit under this subchapter or subchapter III of this
chapter, shall forfeit (as of the date of such conviction) any
entitlement to any benefit such individual would otherwise be
entitled to under this subchapter or subchapter III (5 USCS
Sec. Sec. 8101 et seq. or 8191 et seq.) for any injury
occurring on or before the date of such conviction. Such
forfeiture shall be in addition to any action the Secretary may
take under [section 8106] section 8106a or 8129.
* * * * * * *
Sec. 8153. Integrity and Compliance Program
(a) Definitions.--In this section--
(1) the term ``FECA program'' means the Federal
Employees Compensation Program administered under this
subchapter;
(2) the term ``Integrity and Compliance Program''
means the Integrity and Compliance Program established
under subsection (b);
(3) the term ``provider'' means a provider of medical
or other services under the FECA program; and
(4) the term ``Secretary'' means the Secretary of
Labor.
(b) Integrity and Compliance Program.--Not later than 270
days after the date of enactment of this section, the Secretary
shall establish an Integrity and Compliance Program for the
purpose of preventing, identifying, and recovering improper
payments (including improper payments obtained by fraud) for
the FECA program, which shall include--
(1) procedures for identifying potentially improper
payments (including improper payments obtained by
fraud) before payment is made to claimants and
providers, including, where appropriate, predictive
analytics;
(2) reviews after payment is made to identify
potentially improper payments (including improper
payments obtained by fraud) to claimants and providers;
(3) on-going screening and verification procedures to
ensure the continued eligibility of medical providers
to provide services under the FECA program, including
licensure, Federal disbarment, and the existence of
relevant criminal convictions;
(4) provision of appropriate information, education,
and training to claimants and providers on requirements
to ensure the integrity of the FECA program, including
payments under the FECA program;
(5) appropriate controls and audits to ensure that
providers adopt internal controls and procedures for
compliance with requirements under the FECA program;
(6) procedures to ensure--
(A) initial and continuing eligibility of
claimants for compensation, benefits, or
services under the FECA program; and
(B) ongoing verification of databases of
information relating to claimants to ensure
accuracy and completeness; and
(7) appropriately sharing and accessing data and
information with other agencies and instrumentalities
of the United States, including the United States
Postal Service.
(c) Interagency Cooperation on Anti-fraud Efforts.--
(1) In general.--In administering the FECA program,
including the Integrity and Compliance Program, the
Secretary shall cooperate with other agencies and
instrumentalities of the United States (including the
United States Postal Service) and the Inspectors
General of such agencies and instrumentalities to
prevent, identify, and recover improper payments
(including improper payments obtained by fraud) under
the FECA program.
(2) Task force.--
(A) In general.--There is established a task
force, which shall be known as the FECA
Integrity and Compliance Task Force (in this
paragraph referred to as the ``Task Force'').
(B) Membership.--The members of the Task
Force shall be--
(i) the Secretary, who shall serve as
the Chairperson of the Task Force;
(ii) the Postmaster General, who
shall serve as the Vice Chairperson of
the Task Force;
(iii) the Attorney General;
(iv) the Director of the Office of
Management and Budget;
(v) the Inspector General of the
Department of Labor;
(vi) the Inspector General of the
United States Postal Service;
(vii) the Inspectors General of other
appropriate agencies and
instrumentalities of the United States
that employ a significant number of
individuals receiving compensation,
benefits, or services under the FECA
program, as determined by the
Chairperson and Vice Chairperson of the
Task Force; and
(viii) other appropriate Federal
officials, as determined by the
Chairperson and Vice Chairperson of the
Task Force.
(C) Duties.--The Task Force shall--
(i) set forth, in writing, a
description of the respective roles and
responsibilities in preventing,
identifying, recovering, and
prosecuting fraud under, and otherwise
ensuring integrity and compliance of,
the FECA program of--
(I) the Secretary (including
subordinate officials such as
the Director of the Office of
Workers' Compensation
Programs);
(II) the Inspector General of
the Department of Labor;
(III) the Inspectors General
of agencies and
instrumentalities of the United
States that employ claimants
under the FECA program;
(IV) the Attorney General;
and
(V) any other relevant
officials;
(ii) develop procedures for sharing
information of possible fraud under the
FECA program or other intentional
misstatements by claimants or providers
under the FECA program, including
procedures addressing--
(I) notification of
appropriate officials of the
Department of Labor of
potential fraud or intentional
misstatements, including
provision of supporting
information;
(II ) timely and appropriate
response by officials of the
Department of Labor to
notifications described in
subclause (I);
(III) the inclusion of
information and evidence
relating to fraud and other
intentional misstatements in
criminal, civil, and
administrative proceedings
relating to the provision of
compensation, benefits, or
medical services (including
payments to providers) under
the FECA program;
(IV) the coordination of
criminal investigations with
the administration of the FECA
program; and
(V) the protection of
information relating to an
investigation of possible fraud
under the FECA program from
potential disclosure, including
requirements that enable
investigative files to be
appropriately separated from
case management files;
(iii) not later than 1 year after the
date of enactment of this section,
submit to the Committee on Homeland
Security and Governmental Affairs of
the Senate and the Committee on
Oversight and Government Reform and the
Committee on Education and the
Workforce of the House of
Representatives a report that includes
the description and procedures required
under clauses (i) and (ii).
(d) Improvements To Access of Federal Databases.--
(1) In general.--The Secretary, the Postmaster
General, the Inspector General of the United States
Postal Service, and the Inspector General of the
Department of Labor shall have access to and make use
of the agency databases described in this subsection in
order to improve compliance with the requirements under
and the integrity of the FECA program.
(2) Social security earnings information.--
(A) In general.--Notwithstanding section
552a or any other provision of Federal or State
law, upon written request, the Commissioner of
Social Security shall make available to the
Secretary, the Inspector General of the
Department of Labor, the Postmaster General,
and the Inspector General of the United States
Postal Service the Social Security earnings
information of a living or deceased employee
required by the Secretary to carry out this
subchapter.
(B) Procedures.--The Secretary shall
establish procedures for correlating the
identity and status of recipients of
compensation, benefits, or services under this
subchapter with Social Security earnings
information described in subparagraph (A).
(3) Office of personnel management federal retiree
database.--Notwithstanding section 552a or any other
provision of Federal or State law, upon written
request, the Director of the Office of Personnel
Management shall make available to the Secretary, the
Inspector General of the Department of Labor, the
Postmaster General, and the Inspector General of the
United States Postal Service the information in the
databases of Federal employees and retirees maintained
by the Director.
(4) Department of veterans affairs beneficiaries
database.--Notwithstanding section 552a or any other
provision of Federal or State law, upon written
request, the Secretary of Veterans Affairs shall make
available to the Secretary, the Inspector General of
the Department of Labor, the Postmaster General, and
the Inspector General of the United States Postal
Service the information in the database of disabled
individuals maintained by the Secretary of Veterans
Affairs.
(5) National directory of new hires.--Notwithstanding
section 552a, section 453(j) of the Social Security Act
(42 U.S.C. 653(j)), or any other provision of Federal
or State law, upon written request, the Secretary of
Health and Human Services shall make available to the
Secretary, the Inspector General of the Department of
Labor, the Postmaster General, the Inspector General of
the United States Postal Service, and the Comptroller
General of the United States the information in the
National Directory of New Hires. The Comptroller
General may obtain information from the National
Directory of New Hires under this paragraph for any
audit, evaluation, or investigation, including any
audit, evaluation, or investigation relating to program
integrity.
(6) Provision.--Information requested under this
subsection shall be provided--
(A) in a timely manner;
(B) at a reasonable cost to the Secretary,
the Inspector General of the Department of
Labor, the Postmaster General, the Inspector
General of the United States Postal Service, or
the Comptroller General of the United States;
and
(C) in the manner, frequency, and form
reasonably specified by the officer making the
request, which, upon request, shall include
electronic form.
(7) Assessment of data cost-effectiveness.--
(A) In general.--The Secretary shall consider
and assess procedures for correlating the
identity and status of recipients of
compensation, benefits, or services under this
subchapter with information relating to
employees, retirees, and individuals described
in paragraphs (3), (4), and (5).
(B) Report.--Not later than 1 year after the
date of enactment of this section, the
Secretary shall submit to the Committee on
Homeland Security and Governmental Affairs of
the Senate and the Committee on Oversight and
Government Reform and the Committee on
Education and the Workforce of the House of
Representatives a report on the cost-
effectiveness of the use of the databases
described in paragraphs (3), (4), and (5) for
program compliance and integrity. The report
required under this subparagraph may be
included as part of the report required under
subsection (f).
(8) United states postal service feca enrollee
database.--Not later than 180 days after the date of
enactment of this section, in order to track, verify,
and communicate with the Secretary and other relevant
entities, the Postmaster General shall establish an
electronic database of information relating to
employees of the United States Postal Service who have
applied for or are receiving compensation, benefits, or
services under this subchapter.
(e) General Protocols and Security.--
(1) Establishment.--
(A) In general.--In order to ensure strong
information security and privacy standards, the
Secretary, the Postmaster General, the
Inspector General of the Department of Labor,
and the Inspector General of the United States
Postal Service shall establish protocols for
the secure transfer and storage of any
information provided to an individual or entity
under this section.
(B) Considerations.--In establishing
protocols under subparagraph (A), the
Secretary, the Postmaster General, the
Inspector General of the Department of Labor,
and the Inspector General of the United States
Postal Service shall consider any
recommendations submitted to the Secretary by
the Inspector General of the Department of
Health and Human Services with respect to the
secure transfer and storage of information, and
to comply with privacy laws and best practices.
(C) Fraud case protection.--The Secretary,
the Postmaster General, the Inspector General
of the Department of Labor, and the Inspector
General of the United States Postal Service
shall establish protocols and procedures to
enable information and materials relating to an
active investigation of possible fraud relating
to the FECA program to be appropriately kept
separate from the files for employees relating
to the provision of compensation, benefits, or
services under the FECA program.
(2) Compliance.--The Secretary, the Postmaster
General, the Inspector General of the Department of
Labor, and the Inspector General of the United States
Postal Service shall ensure that any information
provided to an individual or entity under this section
is provided in accordance with protocols established
under paragraph (1).
(f) Report.--Not later than 1 year after the date of
enactment of this section, and annually thereafter for 5 years,
the Secretary shall submit a report on the activities of the
Secretary under this section, including implementation of the
Integrity and Compliance Program, to--
(1) the Committee on Homeland Security and
Governmental Affairs of the Senate; and
(2) the Committee on Oversight and Government Reform
and the Committee on Education and the Workforce of the
House of Representatives.
(g) GAO Review.--The Comptroller General of the United
States shall--
(1) conduct periodic reviews of the Integrity and
Compliance Program; and
(2) submit reports on the results of the reviews
under paragraph (1) to the Committee on Homeland
Security and Governmental Affairs of the Senate and the
Committee on Oversight and Government Reform and the
Committee on Education and the Workforce of the House
of Representatives not later than--
(A) 2 years after the date of enactment of
this section; and
(B) 3 years after submission of the report
under subparagraph (A).
* * * * * * *
CHAPTER 83--RETIREMENT
* * * * * * *
Subchapter III--Civil Service Retirement
* * * * * * *
Sec. 8337. Disability retirement\72\
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\72\ This amendment to 5 U.S.C. 8337 is made by section 509(b) of
the bill.
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(a) * * *
* * * * * * *
(f)(1) * * *
* * * * * * *
(3) [Paragraphs] Except as provided under chapter 81,
paragraphs (1) and (2) do not bar the right of a claimant to
the greater benefit conferred by either this subchapter or
subchapter I of chapter 81.
* * * * * * *
Sec. 8348. Civil Service Retirement and Disability Fund\73\
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\73\ These amendments to 5 U.S.C. 8348 are made by section
101(b)(2)(B) of the bill.
* * * * * * *
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(h)(1) * * *
* * * * * * *
(2)(A) * * *
* * * * * * *
[(B) The Office shall redetermine the Postal surplus or
supplemental liability as of the close of the fiscal year, for
each fiscal year beginning after September 30, 2007, through
the fiscal year ending September 30, 2038. If the result is a
surplus, that amount shall remain in the Fund until
distribution is authorized under subparagraph (C). Beginning
June 15, 2017, if the result is a supplemental liability, the
Office shall establish an amortization schedule, including a
series of annual installments commencing on September 30 of the
subsequent fiscal year, which provides for the liquidation of
such liability by September 30, 2043.]
(B)(i)(I) Not later than the date on which the Office
determines the normal-cost percentage under section 101(a)(2)
of the Postal Reform Act of 2014, the Office shall redetermine
the Postal surplus or supplemental liability as of the close of
the fiscal year ending on September 30, 2013, in accordance
with the requirements under paragraph (4).
(II) If the result of the redetermination under subclause
(I) is a surplus, that amount shall remain in the Fund until
distribution is authorized under subparagraph (C).
(III) If the result of the redetermination under subclause
(I) is a supplemental liability, the Office shall establish an
amortization schedule, including a series of annual
installments commencing on September 30, 2015, which provides
for the liquidation of such liability by September 30, 2054.
(ii)(I) The Office shall redetermine the Postal surplus or
supplemental liability as of the close of each fiscal year
beginning after September 30, 2013, in accordance with the
requirements under paragraph (4).
(II) If the result of the redetermination under subclause
(I) is a surplus, that amount shall remain in the Fund until
distribution is authorized under subparagraph (C).
(III) On and after June 15, 2015, if the result of the
redetermination under subclause (I) is a supplemental
liability, the Office shall establish an amortization schedule,
including a series of annual installments commencing on
September 30 of the subsequent fiscal year, which provides for
the liquidation of such liability by September 30, 2054.
* * * * * * *
(3) * * *
* * * * * * *
(4)(A) For the purpose of carrying out paragraphs (1) and
(2), the Office shall, consistent with section 8423(a)(5)(B),
use--
(i) demographic factors specific to current and
former employees of the United States Postal Service;
and
(ii) appropriate economic assumptions, as determined
by the Office, regarding wage and salary trends
specific to the employees.
(B) The United States Postal Service shall provide any data
or projections the Office requires in order to carry out
paragraphs (1) and (2) consistent with subparagraph (A) of this
paragraph.
* * * * * * *
CHAPTER 84--FEDERAL EMPLOYEES RETIREMENT SYSTEM
* * * * * * *
Sec.
8401. Definitions
* * * * * * *
8425. Mandatory separation.
8426. Postal Service retirement
* * * * * * *
Subchapter II--Basic Annuity
* * * * * * *
Sec. 8423. Government contributions\74\
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\74\These amendments to 5 U.S.C. Sec. 8423 are made by section 101
of the bill.
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(a)(1) Each employing agency other than the United States
Postal Service having any employees or Members subject to
section 8422(a) shall contribute to the Fund an amount equal to
the sum of--
* * * * * * *
(5)(A) The United States Postal Service shall contribute to
the Fund an amount equal to the product of--
(i) the normal-cost percentage, as determined for
employees of the United States Postal Service under
subparagraph (B), multiplied by
(ii) the aggregate amount of basic pay payable by the
United States Postal Service, for the period involved,
to employees of the United States Postal Service.
(B)(i) In determining the normal-cost percentage for
employees of the United States Postal Service, the Office shall
use--
(I) demographic factors specific to the employees;
and
(II) appropriate economic assumptions, as determined
by the Office, regarding wage and salary trends
specific to the employees.
(ii) The United States Postal Service shall provide any
data or projections the Office requires in order to determine
the normal-cost percentage for employees of the United States
Postal Service consistent with clause (i).
(iii) Notwithstanding paragraph (2), in determining the
normal-cost percentage to be applied for employees of the
United States Postal Service, the Office shall take into
account amounts provided under section 8422 and amounts
provided under section 1005(g)(3)(A)(i) of title 39.
(iv) The Office shall review the determination of the
normal-cost percentage for employees of the United States
Postal Service and make such adjustments as the Office
determines are necessary--
(I) upon request of the United States Postal Service,
but no more frequently than once each fiscal year; and
(II) at any additional times, as the Office considers
appropriate.
(b)(1) * * *
* * * * * * *
(5)(A) In this paragraph, the term ``postal funding
surplus'' means the amount by which the amount of supplemental
liability computed under paragraph (1)(B) is less than zero.
(B) After the date on which the Office determines under
paragraph (7)(C) the amount of supplemental liability computed
under paragraph (1)(B) as of the close of the fiscal year
ending on September 30, 2013, not later than the date on which
the Postmaster General makes a request under subparagraph (C)
of this paragraph, and if the amount determined under paragraph
(7)(C) is less than zero, the Postmaster General may request
that some or all of the amount of the postal funding surplus,
not to exceed $6,000,000,000, be returned to the United States
Postal Service, and not later than 10 days after the request,
the Director shall transfer to the United States Postal Service
from the Fund an amount equal to the portion of the postal
funding surplus requested, for use in accordance with
subparagraph (E)(i).
(C)(i) Subject to clause (ii), after the date on which the
Office computes the amount of supplemental liability under
paragraph (1)(B) as of the close of the fiscal year ending on
September 30, 2014, and if such amount is less than zero, the
Postmaster General may request that some of the amount of the
postal funding surplus, not to exceed \2/3\ of the amount, be
returned to the United States Postal Service, and not later
than 10 days after the request, the Director shall transfer to
the United States Postal Service from the Fund an amount equal
to the portion of the postal funding surplus requested, for use
in accordance with subparagraph (E)(ii).
(ii) If any amount requested by the Postmaster General
under subparagraph (B) is not transferred from the Fund as of
the close of the fiscal year ending on September 30, 2014, for
purposes of this subparagraph, the Office shall recompute the
amount of supplemental liability computed under paragraph
(1)(B) as of the close of that fiscal year by subtracting from
the balance of the Fund the amount requested under subparagraph
(B) of this paragraph.
(D) If the amount of supplemental liability computed under
paragraph (1)(B) as of the close of any fiscal year commencing
after September 30, 2014, is less than zero, the Office shall
establish an amortization schedule, including a series of equal
annual installments that--
(i) provide for the liquidation of the postal funding
surplus in 40 years, commencing on September 30 of the
subsequent fiscal year; and
(ii) shall be transferred to the United States Postal
Service from the Fund for use in accordance with
subparagraph (E)(ii).
(E)(i) The United States Postal Service may use an amount
transferred under subparagraph (B) only for the purpose of
repaying any obligation issued under section 2005(a) of title
39.
(ii) The United States Postal Service may use an amount
transferred under subparagraph (C) or (D) only--
(I) by directing that some or all of the amount be
transferred to the Postal Service Retiree Health
Benefits Fund for the purpose of reducing any Postal
Service actuarial liability referred to under section
8909a;
(II) by directing that some or all of the amount be
transferred to the Civil Service Retirement and
Disability Fund for the purpose of reducing any
supplemental liability under section 8348(h);
(III) by directing that some or all of the amount be
transferred to the Civil Service Retirement and
Disability Fund for the purpose of reducing any
supplemental liability under section 8423(b)(1)(B);
(IV) by directing that some or all of the amount be
transferred to the Postal Service Workers Compensation
Accrued Liability Fund for the purpose of reducing any
Postal Service actuarial liability under section 2012
of title 39; or
(V) as described in clause (i), if none of the
liabilities referred to in subclause (I), (II), (III),
or (IV) remain unpaid.
[(5)](6) [For the purpose] Subject to paragraph (7), for
the purpose of carrying out paragraph (1) with respect to any
fiscal year, the Office may--
* * * * * * *
(7)(A) For the purpose of carrying out paragraph (1)(B)
with respect to the fiscal year ending September 30, 2013, and
each fiscal year thereafter, the Office shall, consistent with
subsection (a)(5)(B), use--
(i) demographic factors specific to current and
former employees of the United States Postal Service;
and
(ii) appropriate economic assumptions, as determined
by the Office, regarding wage and salary trends
specific to current employees of the United States
Postal Service.
(B) The United States Postal Service shall provide any data
or projections the Office requires in order to carry out
paragraph (1)(B) consistent with subparagraph (A) of this
paragraph.
(C) Not later than 180 days after the later of the date on
which the Office receives the appropriate data or projections
from the United States Postal Service under subparagraph (B) or
the date of enactment of the Postal Reform Act of 2014, the
Office shall determine or redetermine whether there is a postal
funding surplus (as defined in paragraph (5)) or a supplemental
liability described in paragraph (1)(B) (and the amount
thereof) as of the close of the fiscal year ending on September
30, 2013, in accordance with the requirements under
subparagraph (A) of this paragraph.
* * * * * * *
Sec. 8426. Postal Service retirement\75\
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\75\This new 5 U.S.C. Sec. 8426 is added by section 102 of the
bill.
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(1) The application of sections 8422 and 8423 of
this title and subchapters III and VII of this chapter
with respect to an officer or employee of the Postal
Service may be modified as provided under section
1005(g) of title 39.
Subchapter III--Thrift Savings Plan
* * * * * * *
Sec. 8432. Contributions\76\
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\76\ This amendment to 5 U.S.C. Sec. 8432 is made by section 102 of
the bill.
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(a) * * *
* * * * * * *
(b)(1) * * *
* * * * * * *
(2)(A) * * *
* * * * * * *
(D)(i) Except as provided in [clause (ii)] clauses (ii) and
(iii), for purposes of this paragraph, the term ``eligible
individual'' means any individual who, after any regulations
under subparagraph (A) first take effect, is appointed,
transferred, or reappointed to a position in which that
individual becomes eligible to contribute to the Thrift Savings
Fund.
(ii) Members of the uniformed services shall not be
eligible individuals for purposes of this paragraph.
(iii) An individual for whom a collective bargaining
agreement authorized under section 1005(g)(4) of title 39
establishes whether the Postal Service shall make contributions
to the Thrift Savings Fund for the benefit of the individual
and the amount of the contributions shall not be an eligible
individual for purposes of this paragraph.
* * * * * * *
Subchapter VI --General and Administration Provisions
* * * * * * *
Sec. 8464a. Relationship between annuity and workers compensation\77\
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\77\This amendment to 5 U.S.C. Sec. 8464a is made by section 509(b)
of the bill.
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(a)(1) * * *
* * * * * * *
(3) [Paragraphs] Except as provided under chapter 81,
paragraphs (1) and (2) do not bar the right of a claimant to
the greater benefit conferred by either this chapter or
subchapter I of chapter 81.
* * * * * * *
CHAPTER 89--HEALTH INSURANCE
Sec.
8901. Definitions
* * * * * * *
8903b. Authority to readmit an employee organization plan.
8903c. Postal Service Health Benefits Program.
* * * * * * *
Sec. 8903. Health Benefits Plans\78\
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\78\ This amendment to 5 U.S.C. Sec. 8903 is made by section
104(a)(2)(A) of the bill.
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The Office of Personnel Management may contract for or
approve the following health benefits plans:
(1) Service Benefit Plan.--One Government-wide plan,
which may be underwritten by participating affiliates
licensed in any number of States, offering [two levels
of benefits] 2 levels of benefits for enrollees under
this chapter generally and 2 levels of benefits for
enrollees under the Postal Service Health Benefits
Program established under section 8903c, under which
payment is made by a carrier under contracts with
physicians, hospitals, or other providers of health
services for benefits of the types described by section
8904(1) of this title given to employees, annuitants,
members of their families, former spouses, or persons
having continued coverage under section 8905a of this
title, or, under certain conditions, payment is made by
a carrier to the employee, annuitant, family member,
former spouse, or person having continued coverage
under section 8905a of this title.
* * * * * * *
Sec. 8903c. Postal Service Health Benefits Program\79\
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\79\ This new section 5 U.S.C. Sec. 8903c is added by section
104(a)(1) of the bill.
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(a) Definitions.--In this section--
(1) the term ``initial participating carrier'' means
a carrier that enters into a contract with the Office
to participate in the Postal Service Health Benefits
Program during the contract year beginning in January
2016;
(2) the term ``Medicare eligible individual'' means
an individual who--
(A) is entitled to Medicare part A, but
excluding an individual who is eligible to
enroll under such part under section 1818 of
the Social Security Act (42 U.S.C. 1395i-2);
and
(B) is eligible to enroll in Medicare part B;
(3) the term ``Medicare part A'' means the Medicare
program for hospital insurance benefits under part A of
title XVIII of the Social Security Act (42 U.S.C. 1395c
et seq.);
(4) the term ``Medicare part B'' means the Medicare
program for supplementary medical insurance benefits
under part B of title XVIII of the Social Security Act
(42 U.S.C. 1395j et seq.);
(5) the term ``Medicare part D'' means the Medicare
insurance program established under part D of title
XVIII of the Social Security Act (42 U.S.C. 1395w-101
et seq.);
(6) the term ``Office'' means the Office of Personnel
Management;
(7) the term ``Postal Service'' means the United
States Postal Service;
(8) the term ``Postal Service annuitant'' means an
annuitant enrolled in a health benefits plan under this
chapter whose Government contribution is paid by the
Postal Service or the Postal Service Retiree Health
Benefits Fund under section 8906(g)(2);
(9) the term ``Postal Service employee'' means an
employee of the Postal Service enrolled in a health
benefits plan under this chapter;
(10) the term ``Postal Service Health Benefits
Program'' means the program of health benefits plans
established under subsection (c);
(11) the term ``Postal Service Medicare eligible
annuitant'' means an individual who--
(A) is a Postal Service annuitant; and
(B) is a Medicare eligible individual;
(12) the term ``PSHBP plan'' means a health benefits
plan offered under the Postal Service Health Benefits
Program; and
(13) the term ``qualified carrier'' means a carrier
for which the total enrollment in the plans provided
under this chapter includes, in the contract year
beginning in January 2015, 5,000 or more enrollees who
are--
(A) Postal Service employees; or
(B) Postal Service annuitants.
(b) Application of Section.--The requirements under this
section shall--
(1) apply to the contract year beginning in January
2016, and each contract year thereafter; and
(2) supersede other provisions of this chapter to the
extent of any specific inconsistency, as determined by
the Office.
(c) Establishment of the Postal Service Health Benefits
Program.--
(1) In general.--The Office shall establish the
Postal Service Health Benefits Program, which shall--
(A) consist of health benefit plans offered
under this chapter;
(B) include plans offered by--
(i) each qualified carrier; and
(ii) any other carrier determined
appropriate by the Office;
(C) be available for participation by all
Postal Service employees, in accordance with
subsection (d);
(D) be available for participation by all
Postal Service annuitants, in accordance with
subsection (d);
(E) not be available for participation by an
individual who is not a Postal Service employee
or Postal Service annuitant (except as a family
member of such an employee or annuitant); and
(F) be implemented and administered by the
Office.
(2) Separate postal service risk pool.--The Office
shall ensure that each PSHBP plan includes rates, one
for enrollment as an individual, one for enrollment for
self plus one, and one for enrollment for self and
family within each option in the PSHBP plan, that
reasonably and equitably reflect the cost of benefits
provided to a risk pool consisting solely of Postal
Service employees and Postal Service annuitants (and
family members of such employees and annuitants),
taking into specific account the reduction in benefits
cost for the PSHBP plan due to the Medicare enrollment
requirements under subsection (e) and any savings or
subsidies resulting from subsection (f).
(3) Actuarially equivalent coverage.--The Office
shall ensure that each carrier participating in the
Postal Service Health Benefits Program provides
coverage under the PSHBP plans offered by the carrier
that is actuarially equivalent, as determined by the
Director of the Office, to the coverage that the
carrier provides under the health benefits plans
offered by the carrier under the Federal Employee
Health Benefits Program that are not PSHBP plans.
(d) Election of Coverage.--
(1) In general.--Except as provided in paragraphs (2)
and (3), each Postal Service employee and Postal
Service annuitant who elects to receive health benefits
coverage under this chapter--
(A) shall be subject to the requirements
under this section; and
(B) may only enroll in a PSHBP plan.
(2) Annuitants.--A Postal Service annuitant shall not
be subject to this section if the Postal Service
annuitant--
(A) is enrolled in a health benefits plan
under this chapter for the contract year
beginning in January 2015 that is not a health
benefits plan offered by an initial
participating carrier, unless the Postal
Service annuitant voluntarily enrolls in a
PSHBP plan; or
(B) resides in a geographic area for which
there is not a PSHBP plan in which the Postal
Service annuitant may enroll.
(3) Employees.--A Postal Service employee who is
enrolled in a health benefits plan under this chapter
for the contract year beginning in January 2015 that is
not a health benefits plan offered by an initial
participating carrier shall not be subject to the
requirements under this section, except that--
(A) if the Postal Service employee changes
enrollment to a different health benefits plan
under this chapter after the start of the
contract year beginning in January 2016, the
Postal Service employee may only enroll in a
PSHBP plan; and
(B) upon becoming a Postal Service annuitant,
if the Postal Service employee elects to
continue coverage under this chapter, the
Postal Service employee shall enroll in a PSHBP
plan during the open season that is--
(i) being held when the Postal
Service employee becomes a Postal
Service annuitant; or
(ii) if the date on which the Postal
Service employee becomes a Postal
Service annuitant falls outside of an
open season, the first open season
following that date.
(e) Requirement of Medicare Enrollment.--
(1) Postal service medicare eligible annuitants.--A
Postal Service Medicare eligible annuitant subject to
this section may not continue coverage under the Postal
Service Health Benefits Program unless the Postal
Service Medicare eligible annuitant enrolls in Medicare
part A, Medicare part B, and Medicare part D (as part
of a prescription drug plan described in subsection
(f)).
(2) Medicare eligible family members.--If a family
member of a Postal Service annuitant who is subject to
this section is a Medicare eligible individual, the
family member may not be covered under the Postal
Service Health Benefits Program as a family member of
the Postal Service annuitant unless the family member
enrolls in Medicare part A, Medicare part B, and
Medicare part D (as part of a prescription drug plan
described in subsection (f)).
(f) Medicare Part D Prescription Drug Benefits.--The
Office shall require each PSHBP plan to provide
prescription drug benefits for Postal Service
annuitants and family members who are eligible for
Medicare part D through a prescription drug plan
offered under a waiver under section 1860D--22 of the
Social Security Act (42 U.S.C. 1395w--132).
(g) Postal Service Contribution.--
(1) In general.--Subject to subsection (i), for
purposes of applying section 8906(b) to the Postal
Service, the weighted average shall be calculated in
accordance with paragraph (2).
(2) Weighted average calculation.--Not later than
October 1 of each year, the Office shall determine the
weighted average of the rates established pursuant to
subsection (c)(2) for PSHBP plans that will be in
effect during the following contract year with respect
to--
(A) enrollments for self only;
(B) enrollments for self plus one; and
(C) enrollments for self and family.
(h) Reserves.--
(1) Separate reserves.--
(A) In general.--The Office shall ensure that
each PSHBP plan maintains separate reserves
(including a separate contingency reserve) with
respect to the enrollees in the PSHBP plan in
accordance with section 8909.
(B) References.--For purposes of the Postal
Service Health Benefits Program, each reference
to ''the Government'' in section 8909 shall be
deemed to be a reference to the Postal Service.
(C) Amounts to be credited.--The reserves
(including the separate contingency reserve)
maintained by each PSHBP plan shall be credited
with a proportionate amount of the funds in the
existing reserves for health benefits plans
offered by an initial participating carrier.
(2) Discontinuation of pshbp plan.--In applying
section 8909(e) relating to a PSHBP plan that is
discontinued, the Office shall credit the separate
Postal Service contingency reserve maintained under
paragraph (1) for that plan only to the separate Postal
Service contingency reserves of the PSHBP plans
continuing under this chapter.
(i) No Effect on Existing Law.--Nothing in this section
shall be construed as affecting section 1005(f) of title 39
regarding variations, additions, or substitutions to the
provisions of this chapter.
* * * * * * *
Sec. 8906. Contribution\80\
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\80\ This amendment to 5 U.S.C. Sec. 8906 is made by section 103(a)
of the bill.
---------------------------------------------------------------------------
(a) * * *
* * * * * * *
(g)(1) * * *
(2)(A) The Government contributions authorized by this
section for health benefits for an individual who first becomes
an annuitant by reason of retirement from employment with the
United States Postal Service on or after July 1, 1971, or for a
survivor of such an individual or of an individual who died on
or after July 1, 1971 while employed by the United States
Postal Service, shall [through September 30, 2016, be paid by
the United States Postal Service, and thereafter shall] after
the date of enactment of the Postal Reform Act of 2014 be paid
first from the Postal Service Retiree Health Benefits Fund up
to the amount contained in the Fund, with any remaining amount
paid by the United States Postal Service.
* * * * * * *
Sec. 8909a. Postal Service Retiree Health [Benefit] Benefits
Fund\81\
---------------------------------------------------------------------------
\81\ These amendments to 5 U.S.C. Sec. 8909a are made by section
103(b) and (d) of the bill. 82 These amendments to the Inspector
General Act of 1978 are made by section 406 of the bill.
---------------------------------------------------------------------------
(a) * * *
* * * * * * *
(d)(1) * * *
[(2)(A) Not later than June 30, 2007, the Office shall
compute, and by June 30 of each succeeding year, the Office
shall recompute the difference between--
[(i) the net present value of the excess of future
payments required under section 8906(g)(2)(A) for
current and future United States Postal Service
annuitants as of the end of the fiscal year ending on
September 30 of that year; and
[(ii)(I) the value of the assets of the Postal
Retiree Health Benefits Fund as of the end of the
fiscal year ending on September 30 of that year; and
[(II) the net present value computed under paragraph
(1).
[(B) Not later than June 30, 2017, the Office shall
compute, and by June 30 of each succeeding year shall
recompute, a schedule including a series of annual installments
which provide for the liquidation of any liability or surplus
by September 30, 2056, or within 15 years, whichever is later,
of the net present value determined under subparagraph (A),
including interest at the rate used in that computation.]
(2)(A) Not later than June 30, 2016, the Office shall
compute, and by June 30 of each succeeding year, the Office
shall recompute, a schedule including a series of annual
installments which provide for the liquidation of the amount
described under subparagraph (B) (regardless of whether the
amount is a liability or surplus) by September 30, 2052, or
within 15 years, whichever is later, including interest at the
rate used in the computations under this subsection.
(B) The amount described in this subparagraph is the
amount, as of the date on which the applicable computation or
recomputation under subparagraph (A) is made, that is equal to
the difference between--
(i) 80 percent of the Postal Service actuarial
liability as of September 30 of the most recently ended
fiscal year; and
(ii) the value of the assets of the Postal Retiree
Health Benefits Fund as of September 30 of the most
recently ended fiscal year.
(3)(A) The United States Postal Service shall pay into such
Fund--
(i) * * *
* * * * * * *
(iii) $1,400,000,000, not later than September 30,
2009; and
(iv) $5,500,000,000, not later than September 30,
2010[;].
[(v) $5,500,000,000, not later than October 4, 2011;
[(vi) $5,600,000,000, not later than September 30,
2012;
[(vii) $5,600,000,000, not later than September 30,
2013;
[(viii) $5,700,000,000, not later than September 30,
2014;
[(ix) $5,700,000,000, not later than September 30,
2015; and
[(x) $5,800,000,000, not later than September 30,
2016.
(B) Not later than September 30, [2017] 2016, and by
September 30 of each succeeding year, the United States Postal
Service shall pay into such Fund the sum of--
(i) the net present value computed under paragraph
(1); and
(ii) any annual installment computed under [paragraph
(2)(B).] paragraph (2).
[(4) Computations under this subsection shall be made
consistent with the assumptions and methodology used by the
Office for financial reporting under subchapter II of chapter
35 of title 31.]
(4) Computations under this subsection shall be based on--
(A) economic and actuarial methods and assumptions
consistent with the methods and assumptions used in
determining the Postal surplus or supplemental
liability under section 8348(h); and
(B) any other methods and assumptions, including a
health care cost trend rate, that the Director of the
Office determines to be appropriate.
* * * * * * *
(7) In this subsection, the term ``Postal Service actuarial
liability'' means the difference between--
(A) the net present value of future payments required
under section 8906(g)(2)(A) for current and future
United States Postal Service annuitants; and
(B) the net present value as computed under paragraph
(1) attributable to the future service of United States
Postal Service employees.
(e) Subsections (a) through (d) shall be subject to section
104 of the Postal Reform Act of 2014.
* * * * * * *
----------
INSPECTOR GENERAL ACT OF 1978\82\
---------------------------------------------------------------------------
\82\These amendments to the Inspector General Act of 1978 are made
by section 406 of the bill.
---------------------------------------------------------------------------
(5 U.S.C. App.)
* * * * * * *
Sec. 8G. Requirements for Federal entities and designated Federal
entities
(a) Notwithstanding section 12 of this Act, as used in this
section--
(1) * * *
* * * * * * *
(2) the term ``designated Federal entity'' means
Amtrak, the Appalachian Regional Commission, the Board
of Governors of the Federal Reserve System and the
Bureau of Consumer Financial Protection, the Board for
International Broadcasting, the CommodityFutures
Trading Commission, the Consumer Product Safety Commission, the
Corporation for Public Broadcasting, the Defense Intelligence Agency,
the Denali Commission, the Equal Employment Opportunity Commission, the
Farm Credit Administration, the Federal Communications Commission, the
Federal Election Commission, the Election Assistance Commission, the
Federal Housing Finance Board, the Federal Labor Relations Authority,
the Federal Maritime Commission, the Federal Trade Commission, the
Legal Services Corporation, the National Archives and Records
Administration, the National Credit Union Administration, the National
Endowment for the Arts, the National Endowment for the Humanities, the
National Geospatial-Intelligence Agency, the National Labor Relations
Board, the National Reconnaissance Office, the National Security
Agency, the National Science Foundation, the Panama Canal Commission,
the Peace Corps, the Pension Benefit Guaranty Corporation, the
Securities and Exchange Commission, the Smithsonian Institution, the
United States International Trade Commission, [the Postal Regulatory
Commission, and the United States Postal Service] and the Postal
Regulatory Commission;
(3) the term ``head of the Federal entity'' means any
person or persons designated by statute as the head of
a Federal entity, and if no such designation exists,
the chief policymaking officer or board of a Federal
entity as identified in the list published pursuant to
[subsection (h)(1)] subsection (g)(1) of this section;
(4) the term ``head of the designated Federal
entity'' means the board or commission of the
designated Federal entity, or in the event the
designated Federal entity does not have a board or
commission, any person or persons designated by statute
as the head of a designated Federal entity and if no
such designation exists, the chief policymaking officer
or board of a designated Federal entity as identified
in the list published pursuant to [subsection (h)(1)]
subsection (g)(1) of this section, except that--
(A) * * *
[(B) with respect to the United States Postal
Service, such term means the Governors (within
the meaning ofsection 102(3) of title 39,
United States Code);]
[(C)](B) with respect to the Federal Labor
Relations Authority, such term means the
members of the Authority (described under
section 7104 of title 5, United States Code);
[(D)](C) with respect to the National
Archives and Records Administration, such term
means the Archivist of the United States;
[(E)](D) with respect to the National Credit
Union Administration, such term means the
National Credit Union Administration Board
(described under section 102 of the Federal
Credit Union Act (12 U.S.C. 1752a);
[(F)](E) with respect to the National
Endowment of the Arts, such term means the
National Council on the Arts;
[(G)](F) with respect to the National
Endowment for the Humanities, such term means
the National Council on the Humanities; and
[(H)](G) with respect to the Peace Corps,
such term means the Director of the Peace
Corps;
* * * * * * *
(c) [Except as provided under subsection (f) of this
section, the] The Inspector General shall be appointed by the
head of the designated Federal entity in accordance with the
applicable laws and regulations governing appointments within
the designated Federal entity. Each Inspector General shall be
appointed without regard to political affiliation and solely on
the basis of integrity and demonstrated ability in accounting,
auditing, financial analysis, law, management analysis, public
administration, or investigations. For purposes of implementing
this section, the Chairman of the Board of Governors of the
Federal Reserve System shall appoint the Inspector General of
the Board of Governors of the Federal Reserve System and the
Bureau of Consumer Financial Protection. The Inspector General
of the Board of Governors of the Federal Reserve System and the
Bureau of Consumer Financial Protection shall have all of the
authorities and responsibilities provided by this Act with
respect to the Bureau of Consumer Financial Protection, as if
the Bureau were part of the Board of Governors of the Federal
Reserve System.
* * * * * * *
[(f)(1) For purposes of carrying out subsection (c) with
respect to the United States Postal Service, the appointment
provisions of section 202(e) of title 39, United States Code,
shall be applied.
[(2) In carrying out the duties and responsibilities
specified in this Act, the Inspector General of the United
States Postal Service (hereinafter in this subsection referred
to as the Inspector General'') shall have oversight
responsibility for all activities of the Postal Inspection
Service, including any internal investigation performed by the
Postal Inspection Service. The Chief Postal Inspector shall
promptly report the significant activities being carried out by
the Postal Inspection Service to such Inspector General.
[(3)(A)(i) Notwithstanding subsection (d), the Inspector
General shall be under the authority, direction, and control of
the Governors with respect to audits or investigations, or the
issuance of subpoenas, which require access to sensitive
information concerning--
[(I) ongoing civil or criminal investigations or
proceedings;
[(II) undercover operations;
[(III) the identity of confidential sources, including
protected witnesses;
[(IV) intelligence or counterintelligence matters; or
[(V) other matters the disclosure of which would
constitute a serious threat to national security.
[(ii) With respect to the information described under
clause (i), the Governors may prohibit the Inspector General
from carrying out or completing any audit or investigation, or
from issuing any subpoena, after such Inspector General has
decided to initiate, carry out, or complete such audit or
investigation or to issue such subpoena, if the Governors
determine that such prohibition is necessary to prevent the
disclosure of any information described under clause (i) or to
prevent the significant impairment to the national interests of
the United States.
[(iii) If the Governors exercise any power under clause (i)
or (ii), the Governors shall notify the Inspector General in
writing stating the reasons for such exercise. Within 30 days
after receipt of any such notice, the Inspector General shall
transmit a copy of such notice to the Committee on Governmental
Affairs of the Senate and the Committee on Government Reform
and Oversight of the House of Representatives, and to other
appropriate committees or subcommittees of the Congress.
[(B) In carrying out the duties and responsibilities
specified in this Act, the Inspector General--
[(i) may initiate, conduct and supervise such audits
and investigations in the United States Postal Service
as the Inspector General considers appropriate; and
[(ii) shall give particular regard to the activities
of the Postal Inspection Service with a view toward
avoiding duplication and insuring effective
coordination and cooperation.
[(C) Any report required to be transmitted by the Governors
to the appropriate committees or subcommittees of the Congress
under section 5(d) shall also be transmitted, within the seven-
day period specified under such section, to the Committee on
Governmental Affairs of the Senate and the Committee on
Government Reform and Oversight of the House of
Representatives.
[(4) Nothing in this Act shall restrict, eliminate, or
otherwise adversely affect any of the rights, privileges, or
benefits of either employees of the United States Postal
Service, or labor organizations representing employees of the
United States Postal Service, under chapter 12 of title 39,
United States Code, the National Labor Relations Act, any
handbook or manual affecting employee labor relations with the
United States Postal Service, or any collective bargaining
agreement.
[(5) As used in this subsection, the term Governors'' has
the meaning given such term by section 102(3) of title 39,
United States Code.
[(6) There are authorized to be appropriated, out of the
Postal Service Fund, such sums as may be necessary for the
Office of Inspector General of the United States Postal
Service.]
[g](f)(1) Sections 4, 5, 6 (other than subsections (a)(7)
and (a)(8) thereof), and 7 of this Act shall apply to each
Inspector General and Office of Inspector General of a
designated Federal entity and such sections shall be applied to
each designated Federal entity and head of the designated
Federal entity (as defined under subsection (a)) by
substituting--
* * * * * * *
[h](g)(1) No later than April 30, 1989, and annually
thereafter, the Director of the Office of Management and
Budget, after consultation with the Comptroller General of the
United States, shall publish in the Federal Register a list of
the Federal entities and designated Federal entities and if the
designated Federal entity is not a board or commission, include
the head of each such entity (as defined under subsection (a)
of this section).
* * * * * * *
Sec. 8N. Special Provisions Concerning The Inspector General of the
United States Postal Service
(a) In this section--
(1) the term ``Governors'' has the meaning given that
term in section 102(3) of title 39, United States Code;
and
(2) the term ``Inspector General'' means the
Inspector General of the United States Postal Service.
(b) In carrying out the duties and responsibilities
specified in this Act, the Inspector General shall have
oversight responsibility for all activities of the Postal
Inspection Service, including any internal investigation
performed by the Postal Inspection Service. The Chief Postal
Inspector shall promptly report the significant activities
being carried out by the Postal Inspection Service to the
Inspector General.
(c)(1)(A) The Inspector General shall be under the
authority, direction, and control of the Governors with respect
to audits or investigations, or the issuance of subpoenas,
which require access to sensitive information concerning--
(i) ongoing civil or criminal investigations or
proceedings;
(ii) undercover operations;
(iii) the identity of confidential sources, including
protected witnesses;
(iv) intelligence or counterintelligence matters; or
(v) other matters the disclosure of which would
constitute a serious threat to national security.
(B) With respect to the information described under
subparagraph (A), the Governors may prohibit the Inspector
General from carrying out or completing any audit or
investigation, or from issuing any subpoena, after the
Inspector General has decided to initiate, carry out, or
complete such audit or investigation or to issue such subpoena,
if the Governors determine that such prohibition is necessary
to prevent the disclosure of any information described under
subparagraph (A) or to prevent the significant impairment to
the national interests of the United States.
(C) If the Governors exercise any power under subparagraph
(A) or (B), the Governors shall notify the Inspector General in
writing of the reasons for the exercise of such power. Not
later than 30 days after receipt of any such notice, the
Inspector General shall transmit a copy of the notice to the
Committee on Homeland Security and Governmental Affairs of the
Senate and the Committee on Oversight and Government Reform of
the House of Representatives, and to other appropriate
committees or subcommittees of the Congress.
(2) In carrying out the duties and responsibilities
specified in this Act, the Inspector General--
(A) may initiate, conduct, and supervise such audits
and investigations of the United States Postal Service
as the Inspector General considers appropriate; and
(B) shall give particular regard to the activities of
the Postal Inspection Service with a view toward
avoiding duplication and ensuring effective
coordination and cooperation.
(3) Any report required to be transmitted by the Governors
to the appropriate committees or subcommittees of the Congress
under section 5(d) shall also be transmitted, within the 7-day
period specified under that section, to the Committee on
Homeland Security and Governmental Affairs of the Senate and
the Committee on Oversight and Government Reform of the House
of Representatives.
(d) Nothing in this Act shall restrict, eliminate, or
otherwise adversely affect any of the rights, privileges, or
benefits of either employees of the United States Postal
Service, or labor organizations representing employees of the
United States Postal Service, under chapter 12 of title 39,
United States Code, the National Labor Relations Act (29 U.S.C.
151 et seq.), any handbook or manual affecting employee labor
relations with the United States Postal Service, or any
collective bargaining agreement.
(e) There are authorized to be appropriated, out of the
Postal Service Fund, such sums as may be necessary for the
Office of Inspector General of the United States Postal
Service.'';
* * * * * * *
Sec. 12. Definitions
As used in this Act--
(1) the term ``head of the establishment'' means the
Secretary of Agriculture, Commerce, Defense, Education,
Energy, Health and Human Services, Housing and Urban
Development, the Interior, Labor, State,
Transportation, Homeland Security, or the Treasury; the
Attorney General; the Administrator of the Agency for
International Development, Environmental Protection,
General Services, National Aeronautics and Space, Small
Business, or Veterans' Affairs; the Administrator of
the Federal Emergency Management Agency, or the Office
of Personnel Management; the Chairman of the Nuclear
Regulatory Commission or the Railroad Retirement Board;
the Chairperson of the Thrift Depositor Protection
Oversight Board; the Chief Executive Officer of the
Corporation for National and Community Service; the
Administrator of the Community Development Financial
Institutions Fund; the chief executive officer of the
Resolution Trust Corporation; the Chairperson of the
Federal Deposit Insurance Corporation; the Commissioner
of Social Security, Social Security Administration; the
Director of the Federal Housing Finance Agency; the
Board of Directors of the Tennessee Valley Authority;
the President of the Export-Import Bank; [or the
Federal Cochairpersons of the Commissions established
under section 15301 of title 40, United States Code]
the Federal Cochairpersons of the Commissions
established under section 15301 of title 40, United
States Code; or the Board of Governors of the United
States Postal Service; as the case may be;
(2) the term ``establishment'' means the Department
of Agriculture, Commerce, Defense, Education, Energy,
Health and Human Services, Housing and Urban
Development, the Interior, Justice, Labor, State,
Transportation, Homeland Security, or the Treasury; the
Agency for International Development, the Community
Development Financial Institutions Fund, the
Environmental Protection Agency, the Federal Emergency
Management Agency, the General Services Administration,
the National Aeronautics and Space Administration, the
Nuclear Regulatory Commission, the Office of Personnel
Management, the Railroad Retirement Board, the
Resolution Trust Corporation, the Federal Deposit
Insurance Corporation, the Small Business
Administration, the Corporation for National and
Community Service, the Veterans' Administration, the
Social Security Administration, the Federal Housing
Finance Agency, the Tennessee Valley Authority, the
Export-Import Bank, [or the Commissions established
under section 15301 of title 40, United States Code]
the Commissions established under section 15301 of
title 40, United States Code, or the United States
Postal Service, as the case may be;
* * * * * * *
----------
TITLE 18--CRIMES AND CRIMINAL PROCEDURE\83\
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\83\These amendments to title 18, United States Code, are made by
section 303(a) of the bill.
* * * * * * *
* * * * * * *
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PART I--CRIMES
* * * * * * *
CHAPTER 53--INDIANS
* * * * * * *
Sec. 1161. Application of Indian liquor laws
The provisions of sections 1154, 1156, 3113, 3488, and
3669, of this title, shall not apply within any area that is
not Indian country, nor to any act or transaction within any
area of Indian country provided such act or transaction is in
conformity both with the laws of the State in which such act or
transaction occurs and with an ordinance duly adopted by the
tribe having jurisdiction over such area of Indian country,
certified by the Secretary of the Interior, and published in
the Federal Register, and, with respect to the mailing of
distilled spirits, wine, or malt beverages (as those terms are
defined in section 117 of the Federal Alcohol Administration
Act (27 U.S.C. 211)), is in conformity with section 3001(p) of
title 39.
* * * * * * *
CHAPTER 83--POSTAL SERVICE
* * * * * * *
Sec. 1716. Injurious articles as nonmailable
(a) * * *
* * * * * * *
(f) All spirituous, vinous, malted, fermented, or other
intoxicating liquors of any kind are nonmailable and shall not
be deposited in or carried through the [mails] mails, except to
the extent that the mailing is allowable under section 3001(p)
of title 39.
* * * * * * *
----------
TITLE 31--MONEY AND FINANCE
* * * * * * *
Subtitle II--The Budget Process
* * * * * * *
CHAPTER 15--APPROPRIATION ACCOUNTING
* * * * * * *
Sec.
1501. Documentary evidence requirement for Government obligations.
* * * * * * *
1537. Services between the United States Government and the District of
Columbia government.
1538. Authorization for assisted reemployment.
* * * * * * *
Subchapter III--Transfers and Reimbursements
* * * * * * *
Sec. 1538. Authorization for assisted reemployment\84\
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\84\This new section 31 U.S.C. Sec. 1538 is added by section 505(e)
of the bill.
---------------------------------------------------------------------------
Funds may be transferred from the Employees' Compensation
Fund established under section 8147 of title 5 to the
applicable appropriations account for an agency or
instrumentality of any branch of the Federal Government for the
purposes of reimbursing the agency or instrumentality in
accordance with an assisted reemployment agreement entered into
under section 8104 of title 5.
* * * * * * *
----------
TITLE 39--POSTAL SERVICE
* * * * * * *
PART I--GENERAL
* * * * * * *
CHAPTER 1--POSTAL POLICY AND DEFINITIONS
* * * * * * *
Sec. 102. Definitions\85\
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\85\In 39 U.S.C. Sec. 102, the amendment to paragraph (3) is made
by section 401(d) of the bill, and the amendment to paragraph (4) is
made by section 406(b)(1) of the bill.
---------------------------------------------------------------------------
As used in this title--
(1) * * *
* * * * * * *
(3) ``Governors'' means the [9] 8 members of the
Board of Governors appointed by the President, by and
with the advice and consent of the Senate, under
section [202(a)] 202(b)(1)(C) of this title.
(4) ``Inspector General'' means the Inspector General
appointed under [section 202(e) of this title] section
3 of the Inspector General Act of 1978 (5 U.S.C. App.);
* * * * * * *
CHAPTER 2--ORGANIZATION
Sec.
201. United States Postal Service
* * * * * * *
208. Reservation of powers.
209. Chief Innovation Officer
* * * * * * *
[Sec. 202. Board of Governors\86\
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\86\This amendment to 39 U.S.C. Sec. 202 is made by section 401(a)
of the bill.
---------------------------------------------------------------------------
[(a)(1) The exercise of the power of the Postal Service
shall be directed by a Board of Governors composed of 11
members appointed in accordance with this section. Nine of the
members, to be known as Governors, shall be appointed by the
President, by and with the advice and consent of the Senate,
not more than 5 of whom may be adherents of the same political
party. The Governors shall elect a Chairman from among the
members of the Board. The Governors shall represent the public
interest generally, and shall be chosen solely on the basis of
their experience in the field of public service, law or
accounting or on their demonstrated ability in managing
organizations or corporations (in either the public or private
sector) of substantial size; except that at least 4 of the
Governors shall be chosen solely on the basis of their
demonstrated ability in managing organizations or corporations
(in either the public or private sector) that employ at least
50,000 employees. The Governors shall not be representatives of
specific interests using the Postal Service, and may be removed
only for cause. Each Governor shall receive a salary of $30,000
a year plus $300 a day for not more than 42 days of meetings
each year and shall be reimbursed for travel and reasonable
expenses incurred in attending meetings of the Board. Nothing
in the preceding sentence shall be construed to limit the
number of days of meetings each year to 42 days.
[(2) In selecting the individuals described in paragraph
(1) for nomination for appointment to the position of Governor,
the President should consult with the Speaker of the House of
Representatives, the minority leader of the House of
Representatives, the majority leader of the Senate, and the
minority leader of the Senate.
[(b)(1) The terms of the 9 Governors shall be 7 years,
except that the terms of the 9 Governors first taking office
shall expire as designated by the President at the time of
appointment, 1 at the end of 1 year, 1 at the end of 2 years, 1
at the end of 3 years, 1 at the end of 4 years, 1 at the end of
5 years, 1 at the end of 6 years, 1 at the end of 7 years, 1 at
the end of 8 years, and 1 at the end of 9 years, following the
appointment of the first of them. Any Governor appointed to
fill a vacancy before the expiration of the term for which his
predecessor was appointed shall serve for the remainder of such
term. A Governor may continue to serve after the expiration of
his term until his successor has qualified, but not to exceed
one year.
[(2) No person may serve more than 2 terms as a Governor.
[(c) The Governors shall appoint and shall have the power
to remove the Postmaster General, who shall be a voting member
of the Board. His pay and term of service shall be fixed by the
Governors.
[(d) The Governors and the Postmaster General shall appoint
and shall have the power to remove the Deputy Postmaster
General, who shall be a voting member of the Board. His term of
service shall be fixed by the Governors and the Postmaster
General and his pay by the Governors.
[(e)(1) The Governors shall appoint and shall have the
power to remove the Inspector General.
[(2) The Inspector General shall be appointed--
[(A) for a term of 7 years;
[(B) without regard to political affiliation; and
[(C) solely on the basis of integrity and
demonstrated ability in accounting, auditing, financial
analysis, law, management analysis, public
administration, or investigations.
[(3) The Inspector General may at any time be removed upon
the written concurrence of at least 7 Governors, but only for
cause. Nothing in this subsection shall be considered to exempt
the Governors from the requirements of section 8G(e) of the
Inspector General Act of 1978.]
Sec. 202. Board of Governors
(a) In General.--The exercise of the power of the Postal
Service shall be directed by a Board of Governors composed of 9
members appointed in accordance with this section, each of whom
shall be a voting member of the Board.
(b) Membership.--
(1) Composition.--The Board shall be composed of--
(A) the Postmaster General; and
(B) 8 members, to be known as Governors, who
shall be appointed by the President, by and
with the advice and consent of the Senate.
(2) Affiliation.--Not more than 4 of the Governors
may be members of any 1 political party.
(3) Chairperson.--The Governors shall elect a
Chairperson from among the members of the Board.
(c) Qualifications.--
(1) In general.--The Governors shall represent the
public interest generally, and shall be chosen solely
on the basis of experience in public service, law, or
accounting, or on a demonstrated ability to manage
organizations or corporations (in either the public or
private sector) of substantial size.
(2) No specific interest.--A Governor may not be a
representative of a specific interest using the Postal
Service.
(3) Initial appointments.--At least 1 of the
Governors who is appointed to fill a position that is
vacant on the date of enactment of the Postal Reform
Act of 2014 shall, in addition to the qualifications
set forth in paragraph (1), be appointed based on the
demonstrated ability of that individual to manage and
improve financially troubled organizations.
(d) Removal.--A Governor may be removed only for cause.
(e) Compensation.--
(1) Salary.--Each Governor shall receive a salary of
$30,000 each year, plus $300 for each day, for not more
than 42 days, on which the Governor attends a meeting
of the Board. Nothing in this paragraph shall be
construed to limit the number of days of meetings each
year to 42 days.
(2) Reimbursement for meetings.--Each Governor shall
be reimbursed for travel and reasonable expenses
incurred in attending meetings of the Board.
(f) Terms.--
(1) In general.--Each Governor shall serve for a term
of 7 years.
(2) Vacancies.--A Governor appointed to fill a
vacancy occurring before the expiration of the term to
which the predecessor of that Governor was appointed
shall serve for the remainder of that term.
(3) Continuation of service.--A Governor may continue
to serve after the expiration of the term of that
Governor until a successor has been appointed, except
that a Governor may not continue to serve for more than
1 year after the date on which the term of that
Governor would have otherwise expired.
(4) Limit.--A Governor may serve for not more than 2
terms.
(g) Postmaster General.--
(1) Appointment and removal.--The Governors shall
appoint and shall have the power to remove the
Postmaster General.
(2) Pay and term of service.--The pay and term of
service of the Postmaster General shall be determined
by the Governors.
(h) Deputy Postmaster General.--
(1) Appointment and removal.--The Governors and the
Postmaster General shall appoint and shall have the
power to remove the Deputy Postmaster General.
(2) Pay.--The pay of the Deputy Postmaster General
shall be determined by the Governors.
(3) Term of service.--The term of service of the
Deputy Postmaster General shall be determined by the
Governors and the Postmaster General.
(i) Executive Committee.--
``(1) Authority to establish.--The Board, by a vote
of a majority of its members, may establish an
Executive Committee of the Board, consistent with
paragraph (2).
``(2) Board membership and responsibilities.--If
established by the Board, the Executive Committee
shall--
(A) be composed of the Chairperson of the
Board and 2 additional Governors designated by
the Board, except that not more than 2 members
of the Executive Committee may be members of
any 1 political party;
(B) develop and oversee implementation of
strategies and measures to ensure the long-term
financial solvency of the Postal Service;
(C) develop and oversee the implementation of
the financial plan and budget required under
section 403 of the Postal Reform Act of 2014
and updates to the financial plan and budget;
(D) make recommendations to the Board
regarding aspects of postal operations; and
(E) assume such other responsibilities as the
Board determines appropriate.
(3) Quorum.--2 members of the Executive Committee
shall constitute a quorum for the transaction of
business by the Executive Committee.
(4) Termination.--The Executive Committee may be
terminated by a vote of the majority of the members of
the Board.
* * * * * * *
Sec. 203. Postmaster General; Deputy Postmaster General\87\
---------------------------------------------------------------------------
\87\This amendment to 39 U.S.C. Sec. 203 is made by section
401(d)(2) of the bill.
---------------------------------------------------------------------------
The chief executive officer of the Postal Service is the
Postmaster General appointed under section [202(c)] 202(g) of
this title. The alternate chief executive officer of the Postal
Service is the Deputy Postmaster General appointed under
section [202(d)] 202(h) of this title.
* * * * * * *
Sec. 205. Procedures of the Board of Governors\88\
---------------------------------------------------------------------------
\88\This amendment to 39 U.S.C. Sec. 205 is made by section 401(b)
of the bill.
---------------------------------------------------------------------------
(a) * * *
* * * * * * *
(c) The Board shall act upon majority vote of those members
who are present, and any [6 members] 5 members present shall
constitute a quorum for the transaction of business by the
Board, except--
* * * * * * *
Sec. 209. Chief innovation officer\89\
---------------------------------------------------------------------------
\89\This new 39 U.S.C. Sec. 209 is added by section 404(a) of the
bill.
---------------------------------------------------------------------------
(a) Establishment.--There shall be in the Postal Service a
Chief Innovation Officer appointed by the Postmaster General.
(b) Qualifications.--The Chief Innovation Officer shall
have proven expertise and a record of accomplishment in areas
such as--
(1) the postal and shipping industry;
(2) innovative product research and development;
(3) brand marketing strategy;
(4) new and emerging technology, including
communications technology; or
(5) business process management.
(c) Duties.--The Chief Innovation Officer shall lead the
development and implementation of--
(1) innovative postal products and services,
particularly products and services that use new and
emerging technology, including communications
technology, to improve the net financial position of
the Postal Service; and
(2) nonpostal services authorized under section
404(a)(6) that have the potential to improve the net
financial position of the Postal Service.
(d) Deadline.--The Postmaster General shall appoint a Chief
Innovation Officer not later than 90 days after the date of
enactment of the Postal Reform Act of 2014.
* * * * * * *
CHAPTER 4--GENERAL AUTHORITY
Sec.
401. General powers of the Postal Service.
* * * * * * *
416. Authority to issue semipostals.
417. Postal Service contracts and congressional oversight authority.
* * * * * * *
Sec. 404. Specific powers\90\
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\90\In 39 U.S.C. Sec. 404, the amendments to subsection (a) are
made by section 302(a)(1)(A) of the bill, the amendments to subsection
(d) are made by section 203 of the bill, the amendments to subsection
(e) are made by sections 302(a)(1)(B) and (c)(1) of the bill, the new
subsection (f) is added by section 202(b) of the bill, the new
subsections (g) and (h) are added by section 302(1)(c) of the bill, and
the new subsection (i) is added by section 201(c)(2) of the bill.
---------------------------------------------------------------------------
(a) * * *
(1) * * *
* * * * * * *
(6) on and after the date of enactment of the Postal
Reform Act of 2014, except as provided in subsection
(e) and subject to subsection (h)--
(A) to provide other services that are not
postal services, if the provision of such
services--
(i) uses the processing,
transportation, delivery, retail
network, or technology of the Postal
Service;
(ii) is consistent with the public
interest and demonstrated likely public
demand for--
(I) the Postal Service,
rather than another entity, to
provide the services; or
(II) the Postal Service, in
addition to or in partnership
with another entity, to provide
the services;
(iii) would not create unfair
competition with the private sector,
taking into consideration the extent to
which the Postal Service will not,
either by legal obligation or
voluntarily, comply with any State or
local laws or requirements generally
applicable to the provision of such
services;
(iv) does not unreasonably interfere
with or detract from the value of
postal services, including--
(I) the cost and efficiency
of postal services; and
(II) access to postal retail
service;
(v) will be undertaken in accordance
with all Federal laws and regulations
applicable to the provision of such
services; and
(vi) is reasonably expected to
improve the net financial position of
the Postal Service, based on a market
analysis conducted by or on behalf of
the Postal Service; and
(B) to classify a service provided under
subparagraph (A) as an experimental product
subject to section 3641;
[(6)](7) to investigate postal offenses and civil
matters relating to the Postal Service;
[(7)](8) to offer and pay rewards for information and
services in connection with violation of the postal
laws, and, unless a different disposal is expressly
prescribed, to pay one-half of all penalties and
forfeitures imposed for violations of law affecting the
Postal Service, its revenues, or property, to the
person informing for the same, and to pay the other
one-half into the Postal Service Fund; and
[(8)](9) to authorize the issuance of a substitute
check for a lost, stolen, or destroyed check of the
Postal Service.
* * * * * * *
[(d)(1) The Postal Service, prior to making a determination
under subsection (a)(3) of this section as to the necessity for
the closing or consolidation of any post office, shall provide
adequate notice of its intention to close or consolidate such
post office at least 60 days prior to the proposed date of such
closing or consolidation to persons served by such post office
to ensure that such persons will have an opportunity to present
their views.
[(2) The Postal Service, in making a determination whether
or not to close or consolidate a post office--
[(A) shall consider--
[(i) the effect of such closing or
consolidation on the community served by such
post office;
[(ii) the effect of such closing or
consolidation on employees of the Postal
Service employed at such office;
[(iii) whether such closing or consolidation
is consistent with the policy of the
Government, as stated in section 101(b) of this
title, that the Postal Service shall provide a
maximum degree of effective and regular postal
services to rural areas, communities, and small
towns where post offices are not self-
sustaining;
[(iv) the economic savings to the Postal
Service resulting from such closing or
consolidation; and
[(v) such other factors as the Postal Service
determines are necessary; and
[(B) may not consider compliance with any provision
of the Occupational Safety and Health Act of 1970 (29
U.S.C. 651 et seq.).
[(3) Any determination of the Postal Service to close or
consolidate a post office shall be in writing and shall include
the findings of the Postal Service with respect to the
considerations required to be made under paragraph (2) of this
subsection. Such determination and findings shall be made
available to persons served by such post office.
[(4) The Postal Service shall take no action to close or
consolidate a post office until 60 days after its written
determination is made available to persons served by such post
office.]
(d) Discontinuance of Post Offices.--
(1) Definitions.--In this subsection--
(A) the term ``discontinuance'' has the
meaning given the term in section 241.3 of
title 39, Code of Federal Regulations, as in
effect on November 1, 2013;
(B) the term ``local government'' means--
(i) a county, municipality, city,
town, township, local public authority,
special district, intrastate district,
council of government, or regional or
interstate government entity;
(ii) an agency or instrumentality of
an entity described in clause (i); or
(iii) a rural community, an
unincorporated town or village, or an
instrumentality of a rural community or
an unincorporated town or village;
(C) the term ``post office'' means a post
office, post office branch, post office
classified station, or other facility that is
operated by the Postal Service, the primary
function of which is to provide retail postal
services; and
(D) the term ``rural post office'' means a
post office that is--
(i) in a rural area, as defined by
the Census Bureau; and
(ii) within the K or L cost
ascertainment grouping, as classified
by the Postal Service.
(2) Preliminary considerations.--The Postal Service,
prior to making a determination under subsection (a)(3)
of this section as to the necessity for the
discontinuance of any post office, and, with respect to
a determination to discontinue a rural post office,
prior to making the determinations required under
paragraph (5), shall--
(A) consider whether--
(i) to discontinue the post office
and combine it with another post office
located within a reasonable distance;
(ii) instead of discontinuing the
post office--
(I) to reduce the number of
hours a day that the post
office operates; or
(II) to continue operating
the post office for the same
number of hours a day;
(iii) to procure a contract providing
full, or less than full, retail postal
services in the community served by the
post office; or
(iv) to provide postal services to
the community served by the post
office--
(I) through a letter carrier
or by Alternate Means of
Transportation delivery
contract;
(II) by colocating postal
services at a commercial or
government entity; or
(III) by implementing an
alternative proposal made by a
local government under
subparagraph (B)(iii);
(B) provide--
(i) relevant information on financial
costs associated with the operations of
the post office to postal customers and
local governments served by the post
office;
(ii) postal customers served by the
post office an opportunity to present
their views, which may be by nonbinding
survey conducted by mail; and
(iii) local governments served by the
post office an opportunity to present
alternative proposals for providing
postal services to the community; and
(C) if the Postal Service determines to
discontinue the post office, provide adequate
public notice of its intention to discontinue
the post office at least 60 days prior to the
proposed date of the discontinuance to persons
and local governments served by the post
office.
(3) Considerations.--The Postal Service, in making a
determination whether or not to discontinue a post
office--
(A) shall consider--
(i) the effect of the discontinuance
on the community served by the post
office;
(ii) the effect of the discontinuance
on businesses, including small
businesses, in the area;
(iii) the effect of the
discontinuance on employees of the
Postal Service employed at the post
office;
(iv) whether the discontinuance would
have a significant adverse effect on
regular postal services to rural areas,
communities, and small towns where post
offices are not self-sustaining;
(v) the extent to which the community
served by the post office lacks access
to Internet, broadband, or cellular
telephone service;
(vi) the extent to which postal
customers served by the post office
would continue after the discontinuance
to receive substantially similar access
to essential items, such as
prescription drugs and time-sensitive
communications;
(vii) the proximity and accessibility
of other post offices;
(viii) whether substantial economic
savings to the Postal Service would
result from the discontinuance; and
(ix) any other factors that the
Postal Service determines are
necessary; and
(B) may not consider compliance with any
provision of the Occupational Safety and Health
Act of 1970 (29 U.S.C. 651 et seq.).
(4) Written determination and findings.--
(A) In general.--Any determination of the
Postal Service to discontinue a post office
shall--
(i) be in writing;
(ii) include the findings of the
Postal Service with respect to the
considerations required to be made
under paragraph (3); and
(iii) with respect to a determination
to discontinue a rural post office,
include a summary of the determinations
required under paragraph (5).
(B) Availability of findings.--The Postal
Service shall make available, to persons served
by a post office that the Postal Service
determines to discontinue, any determination
and findings under subparagraph (A) with
respect to that post office.
(C) Notice before discontinuance.--The Postal
Service may not take any action to discontinue
a post office until 60 days after the date on
which the Postal Service makes available, to
persons served by the post office, the written
determination and findings with respect to the
post office as required under subparagraph (B).
(5) Rural post offices.--
(A) Moratorium on discontinuance of rural
post offices.--The Postal Service may not
discontinue a rural post office during the 1-
year period beginning on the date of enactment
of the Postal Reform Act of 2014.
(B) Requirements for discontinuance of rural
post offices.--The Postal Service may not make
a determination under subsection (a)(3) to
discontinue a rural post office unless the
Postal Service--
(i)(I) determines that postal
customers served by the post office
would continue after the discontinuance
to receive substantially similar access
to essential items, such as
prescription medications and time-
sensitive communications, that are sent
through the mails; or
(II) takes action to substantially
ameliorate any projected reduction in
access to essential items described in
subclause (I); and
(ii) determines that--
(I) there is unlikely to be
substantial economic loss to
the community served by the
post office as a result of the
discontinuance;
(II) the area served by the
post office has adequate access
to broadband Internet service,
as identified on the National
Broadband Map of the National
Telecommunications and
Information Administration; and
(III) there is a road with
year-round access connecting
the community to another post
office that is within 10 miles
from the post office proposed
to be discontinued.
(C) Study and report.--
(i) Study.--The Inspector General
shall conduct a study after the
discontinuance of a rural post office
under this section, which shall
include--
(I) the actual cost savings
resulting from the
discontinuance; and
(II) a comparison between the
findings described in subclause
(I) and the cost savings that
the Postal Service predicted
would result from the
discontinuance.
(ii) Report.--Not later than 2 years
after the date of the discontinuance of
a rural post office under this section,
the Inspector General shall submit a
report on the findings of the study
conducted under clause (i) with respect
to the rural post office to--
``(I) the Postal Regulatory
Commission;
``(II) the Board of
Governors;
``(III) the Committee on
Homeland Security and
Governmental Affairs of the
Senate;
``(IV) the Committee on
Oversight and Government Reform
of the House of
Representatives;
``(V) the Member of the House
of Representatives in whose
district the rural post office
was located; and
``(VI) the Senators in whose
State the rural post office was
located.
``(iii) Sunset.--This subparagraph is
repealed effective 10 years after the
date of enactment of the Postal Reform
Act of 2014.
(6) Reductions in hours of operation.--
(A) Considerations.--The Postal Service,
prior to making a determination under paragraph
(2)(A)(ii)(I) to reduce the number of hours per
day that a post office operates, shall
consider--
(i) the impact of the proposed
reduction in hours on local businesses;
(ii) the effect of the proposed
reduction in hours on the community
served by the post office;
(iii) the ability of the Postal
Service to hire qualified employees to
operate the post office during the
reduced hours;
(iv) the proximity and accessibility
of other post offices within 15 miles
of the post office, and the hours those
post offices are open;
(v) the impact of the proposed
reduction in hours on the elderly and
other vulnerable populations; and
(vi) the impact of alternative
schedules on the community served by
the post office, including
consideration of which schedules would
most effectively mitigate any negative
impacts identified under clauses (i)
through (v).
(B) Findings.--If the Postal Service
determines, after considering the factors under
subparagraph (A), to reduce the number of hours
per day that a post office operates, the Postal
Service shall make available to persons served
by the post office--
(i) a summary of the findings of the
Postal Service under subparagraph (A);
(ii) the hours during which the post
office will be open; and
(iii) an explanation of the change in
hours referred to in clause (ii).
[(5) A determination]
(7) Appeals._A determination of the Postal Service to
[close or consolidate] discontinue any post office may
be appealed by any person served by such office to the
Postal Regulatory Commission within 30 days after such
determination is made available to such person [under
paragraph (3)] under paragraph (4). The Commission
shall review such determination on the basis of the
record before the Postal Service in the making of such
determination. The Commission shall make a
determination based upon such review no later than 120
days after receiving any appeal under this paragraph.
The Commission shall set aside any determination,
findings, and conclusions found to be--
[(A) * * *
[(B) * * *
[(C) * * *]
(A) * * *
(B) * * *
(C) * * *
[The * * *]
The * * *
[(6) For purposes of paragraph (5)]
(8) Date of receipt of appeals._For purposes of
paragraph (7), any appeal received by the Commission
shall--
[(A) * * *
[(B) * * *]
(A) * * *
(B) * * *
(9) Minimum retail standards._The Postal Service
shall establish minimum standards for retail postal
services.
[(e)(1) In this] (e) Previously Offered Nonpostal
Services.--
(1) Definition._In this subsection, the term
``nonpostal service'' means any service that is not a
postal service defined under section 102(5) and that
was offered by the Postal Service on the date of
enactment of the Postal Reform Act of 2014.
[(2) Nothing]
(2) Eligible nonpostal services._Nothing in this
section shall be considered to permit or require that
the Postal Service provide any nonpostal service,
except that the Postal Service may provide nonpostal
services which were offered as of January 1, 2006, as
provided under this subsection.
[(3) Not]
(3) Review of nonpostal services._Not later than 2
years after the date of enactment of the Postal
Accountability and Enhancement Act, the Postal
Regulatory Commission shall review each nonpostal
service offered by the Postal Service on the date of
enactment of that Act and determine whether that
nonpostal service shall continue, taking into account--
[(A) * * *
[(B) * * *]
(A) * * *
(B) * * *
[(4) Any]
(4) Termination._Any nonpostal service not determined
to be continued by the Postal Regulatory Commission
under paragraph (3) shall terminate.
[(5) If the Postal Regulatory Commission authorizes the
Postal Service to continue a nonpostal service under this
subsection, the Postal Regulatory Commission shall designate
whether the service shall be regulated under this title as a
market dominant product, a competitive product, or an
experimental product.]
(5) Designation.--Each nonpostal service authorized
under this subsection shall be designated as market-
dominant or competitive based on the designation of the
nonpostal service in the Mail Classification Schedule
as in effect on the date of enactment of the Postal
Reform Act of 2014.
(6) Rule of construction.--Nothing in this subsection
shall be construed to prevent the Postal Service from
providing nonpostal services under subsection (a)(6).
(f) Closing or Consolidation of Certain Postal
Facilities.--
(1) Definition.--In this subsection, the term
``postal facility'' means a processing and distribution
center, processing and distribution facility, network
distribution center, or other facility that is operated
by the Postal Service, the primary function of which is
to sort and process mail.
(2) Area mail processing studies.--
(A) Applicability.--In this paragraph--
(i) the term ``area mail processing
study'' means an area mail processing
feasibility study described in section
2-1 of Handbook PO-408 of the Postal
Service, entitled ``Area Mail
Processing Guidelines'', as in effect
on October 1, 2013;
(ii) the term ``closing'', with
respect to a covered postal facility,
means the transfer of all incoming and
outgoing mail sortation and processing
operations of the covered postal
facility to a different covered postal
facility;
(iii) the term ``consolidate'', with
respect to a covered postal facility,
means the transfer of either all
incoming or all outgoing mail sortation
and processing operations of the
covered postal facility to a different
covered postal facility; and
(iv) the term ``covered postal
facility'' means a postal facility, the
primary function of which is to sort
and process first-class mail
originating or designating within a
defined geographic area.
(B) New area mail processing studies.--Before
making a determination under subsection (a)(3)
as to the necessity for the closing or
consolidation of a covered postal facility, the
Postal Service shall--
(i) conduct an area mail processing
study relating to the covered postal
facility that includes consideration of
a plan to reduce the capacity of the
covered postal facility without closing
the covered postal facility; and
(ii) upon completing the study under
clause (i)--
(I) publish the results of
the study on the website of the
Postal Service; and
(II) publish a notice that
the study is complete and the
results of the study are
available to the public,
including on the website of the
Postal Service.
(C) Completed or ongoing area mail processing
studies.--
(i) In general.--In the case of a
covered postal facility described in
clause (ii), the Postal Service shall--
(I) consider a plan to reduce
the capacity of the covered
postal facility without closing
the covered postal facility;
and
(II) publish the results of
the consideration under
subclause (I) with or as an
amendment to the area mail
processing study relating to
the covered postal facility.
(ii) Postal facilities.--A covered
postal facility described in this
clause is a covered postal facility--
(I) for which, as of the date
of enactment of this
subsection, an area mail
processing study--
(aa) has been
completed but does not
include a plan to
reduce the capacity of
the covered postal
facility without
closing the covered
postal facility; or
(bb) is in progress;
and
(II) which, as of the date of
enactment of this subsection,
has not been closed or
consolidated.
(3) Notice, public comment, and public hearing.--If
the Postal Service makes a determination under
subsection (a)(3) to close or consolidate a postal
facility, the Postal Service shall--
(A) provide notice of the determination to--
(i) Congress; and
(ii) the Postal Regulatory
Commission;
(B) provide adequate public notice of the
intention of the Postal Service to close or
consolidate the postal facility;
(C) ensure that interested persons have an
opportunity to submit public comments during a
45-day period after the Postal Service provides
the notice of intention under subparagraph (B);
(D) before the 45-day period described in
subparagraph (C), provide public notice of the
opportunity under subparagraph (C) to submit
public comments during that period by--
(i) publication on the website of the
Postal Service;
(ii) posting at the affected postal
facility; and
(iii) publicizing the date and
location of the public community
meeting under subparagraph (E); and
(E) during the 45-day period described in
subparagraph (C), conduct a public meeting that
provides an opportunity for comments to be
submitted verbally or in writing.
(4) Further considerations.--The Postal Service, in
making a determination under subsection (a)(3) to close
or consolidate a postal facility, shall consider--
(A) the views presented by interested persons
under paragraph (3);
(B) the effect of the closing or
consolidation on the affected community,
including the impact the closing or
consolidation may have on a State, region, or
locality;
(C) the effect of the closing or
consolidation on the travel times and distances
for affected customers to access services under
the proposed closing or consolidation;
(D) the effect of the closing or
consolidation on delivery times for all classes
of mail and packages;
(E) any characteristics of certain
geographical areas, such as remoteness,
broadband internet availability with a lower
rates of access than the average rate of access
in other geographical areas of the United
States, and weather-related obstacles, that may
result in the closing or consolidation having a
unique effect;
(F) the effect of the closing or
consolidation on small businesses in the area,
including shipping and communications with
customers and suppliers and the corresponding
impact on revenues, operations, and growth;
(G) the extent to which significant changes
in delivery service resulting from the closure
or consolidation of the postal facility would
affect the ability of individuals and
businesses in the region served by the postal
facility to participate in the national
economy;
(H) the ability of the Postal Service to
maintain a safe working environment at each
postal facility that, as a result of the
closing or consolidation, would process the
mail that had been processed by the closed or
consolidated postal facility, including by
examining--
(i) the capacity of each affected
postal facility to process a greater
volume of mail;
(ii) the ability of the workforce at
each affected postal facility to handle
a larger workload; and
(iii) whether the Postal Service
would need to hire additional employees
at affected postal facilities to
process the increased volume of mail;
(I) the extent to which the Postal Service
can take action to mitigate significant
negative impacts identified through the
considerations under this paragraph; and
(J) any other factor the Postal Service
determines is necessary.
(5) Notice of final determination; justification
statement.--If the Postal Service determines to close
or consolidate a postal facility, the Postal Service
shall post on the website of the Postal Service--
(A) notice of the final determination to
close or consolidate the postal facility; and
(B) a closing or consolidation justification
statement that includes--
(i) a response to the public comments
received with respect to the
considerations described under
paragraph (4);
(ii) a description of the
considerations made by the Postal
Service under paragraph (4); and
(iii) the actions that the Postal
Service will take to mitigate any
significant negative effects identified
under paragraph (4).
(6) Closing or consolidation of postal facilities.--
(A) In general.--Not earlier than 15 days
after the date on which the Postal Service
posts notice of a final determination and a
justification statement under paragraph (5)
with respect to a postal facility, the Postal
Service may close or consolidate the postal
facility.
(B) Alternative intake of mail.--If the
Postal Service closes or consolidates a postal
facility under subparagraph (A), the Postal
Service shall make reasonable efforts to ensure
continued mail receipt from customers of the
closed or consolidated postal facility at the
same location or at another appropriate
location in close geographic proximity to the
closed or consolidated postal facility.
(7) Protection of certain information.--Nothing in
this subsection shall be construed to require the
Postal Service to disclose any--
(A) proprietary data;
(B) information relating to the security of a
postal facility; or
(C) information that is exempt from
disclosure under section 552 of title 5.
(8) Postal regulatory commission appeals.--
(A) Right to appeal.--A determination of the
Postal Service to close or consolidate any
postal facility may be appealed by any person
served by the postal facility to the Postal
Regulatory Commission not later than 30 days
after the date on which the determination is
posted on the Postal Service website under
paragraph (5).
(B) Review based on record.--The Commission
shall review a determination appealed under
this paragraph on the basis of the record
before the Postal Service in the making of the
determination.
(C) Deadline for commission determination.--
The Commission shall make a determination based
upon a review conducted under subparagraph (B)
not later than 90 days after the date on which
the Commission receives the appeal of the
determination under subparagraph (A).
(D) Bases for setting aside postal service
determinations.--In making a determination
under subparagraph (C), the Commission shall
set aside any determination, finding, or
conclusion of the Postal Service that the
Commission determines--
(i) is arbitrary, capricious, an
abuse of discretion, or otherwise not
in accordance with the law;
(ii) is without observance of the
procedures required under this
subsection or any other applicable law;
or
(iii) is unsupported by substantial
evidence on the record.
(E) Option to affirm or remand.--The
Commission--
(i) may affirm a determination of the
Postal Service appealed under this
paragraph or order that the entire
matter be returned for further
consideration; and
(ii) may not modify the determination
of the Postal Service.
(F) Temporary suspension.--The Commission may
suspend the effectiveness of a determination of
the Postal Service appealed under this
paragraph until the final disposition of the
appeal.
(G) Applicability of other laws.--The
provisions of section 556, section 557, and
chapter 7 of title 5 shall not apply to any
review carried out by the Commission under this
paragraph.
(H) Date of receipt of appeal.--For purposes
of subparagraph (A), any appeal received by the
Commission shall--
(i) if sent to the Commission through
the mails, be considered to have been
received on the date of the Postal
Service postmark on the envelope or
other cover in which the appeal is
mailed; or
(ii) if otherwise lawfully delivered
to the Commission, be considered to
have been received on the date
determined based on any appropriate
documentation or other indicia (as
determined under regulations of the
Commission).
(g) Treatment of New Nonpostal Services.--For purposes of
chapters 20 and 36 of this title, nonpostal services provided
under subsection (a)(6) shall be treated as competitive
products.
(h) Federal Regulation of New Nonpostal Services.--The
Postal Service shall ensure that any nonpostal service provided
under subsection (a)(6) that is otherwise subject to the
jurisdiction and regulation of a Federal regulatory agency
remains subject to the jurisdiction and regulation of the
Federal regulatory agency notwithstanding the fact that the
nonpostal service is provided by the Postal Service.
(i) Alternative Means of Transportation Contracts.--
(1) Definition.--In this subsection, the term
``covered route'' means a route on which first-class
mail and periodicals are transported under an Alternate
Means of Transportation contract.
(2) Requirements before changing to other means of
transportation. The Postal Service, prior to making a
determination under subsection (a)(1) to transport
first-class mail or periodicals on a covered route
using a means other than under an Alternate Means of
Transportation contract, shall consider--
(A) the effect of the change on--
(i) each community served by the
covered route;
(ii) businesses, including small
businesses, in the area served by the
covered route; and
(iii) employees of the Postal Service
involved in transportation on the
covered route;
(B) whether the change is consistent with the
policy of the Government, as stated in section
101(b), that the Postal Service shall provide a
maximum degree of effective and regular postal
services to rural areas, communities, and small
towns where post offices are not self-
sustaining;
(C) the extent to which each community served
by the covered route lacks access to Internet
service;
(D) the extent to which postal customers
served by the covered route would continue
after the change to receive substantially
similar access to essential items and time-
sensitive communications;
(E) whether substantial economic savings to
the Postal Service would result from the
change;
(F) the average daily volume of mail
transported on the covered route;
(G) any change in the volume of mail
transported on the covered route during the
preceding 12 months;
(H) the capacity of available transportation
service providers to meet the volume needs of
the Postal Service on the covered route;
(I) the ability of the Postal Service to
procure and access additional transportation
capacity to meet the volume needs of the Postal
Service on the covered route;
(J) the impact of the change on postal
facilities (as that term is defined in
subsection (f)) that use the covered route;
(K) the ability of postal facilities
described in subparagraph (J) to continue to
provide service that complies with applicable
service standards after the change; and
(L) any other factors that the Postal Service
determines are necessary.
(3) Determinations.--Any determination of the Postal
Service to transport first-class mail or periodicals on
a covered route using a means other than under an
Alternate Means of Transportation contract shall--
(A) be in writing;
(B) include the findings of the Postal
Service with respect to the considerations
required to be made under paragraph (2); and
(C) be made available by public notice to
persons served by the covered route.
(4) Advance notice of determinations.--The Postal
Service shall take no action to transport first-class
mail or periodicals on a covered route using a means
other than under an Alternate Means of Transportation
contract until 60 days after the date on which the
Postal Service makes available to persons served by the
covered route a written determination under paragraph
(3).
Sec. 411. Cooperation with other Government agencies\91\
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\91\These amendments to 39 U.S.C. Sec. 411 are made by section
302(b) of the bill.
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[Executive agencies] (a) Federal Government.--Executive
agencies within the meaning of section 105 of title 5,and the
Government Printing Office are authorized to furnish property,
both real and personal, and personal and nonpersonal services
to the Postal Service, and the Postal Service is authorized to
furnish property and services to them. The furnishing of
property and services under [this section] this subsection
shall be under such terms and conditions, including
reimbursability, as the Postal Service and the head of the
agency concerned shall deem appropriate.
(b) State, Local, and Tribal Governments.--
(1) Authority of postal service.--The Postal Service
is authorized to furnish property and services to
States, local governments, and tribal governments,
under such terms and conditions, including the
possibility for reimbursement, as the Postal Service
and the applicable State, local government, or tribal
government shall determine appropriate.
(2) Definitions.--For purposes of this subsection--
(A) the term ``local government'' means--
(i) a county, municipality, city,
town, township, local public authority,
school district, special district,
intrastate district, council of
governments, or regional or interstate
government entity;
(ii) an agency or instrumentality of
an entity described in clause (i); or
(iii) a rural community, an
unincorporated town or village, or an
instrumentality of a rural community or
an unincorporated town or village;
(B) the term ``State'' includes the District
of Columbia, the Commonwealth of Puerto Rico,
the United States Virgin Islands, Guam,
American Samoa, the Commonwealth of the
Northern Mariana Islands, and any other
territory or possession of the United States;
and
(C) the term ``tribal government'' means the
government of an Indian tribe, as that term is
defined in section 4(e) of the Indian Self-
Determination Act (25 U.S.C. 450b(e)).
(c) Report.--The Postal Service shall submit to the Postal
Regulatory Commission, together with the report required under
section 3652, a report that details the costs and revenues of
the property and services furnished by the Postal Service under
this section during the period covered by the report required
under section 3652.
(d) Reimbursement Determination.--In determining the
possibility for reimbursement under subsections (a) and (b),
the Postal Service shall ensure that each property or service
furnished under such subsections covers its costs attributable,
as that term is defined in section 3631(b).
* * * * * * *
Sec. 417. Postal Service contracts and congressional oversight
authority\92\
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\92\This new section 39 U.S.C. 417 is added by section 407 of the
bill.
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The Postal Service may not enter into any contract that
restricts the ability of Congress to exercise oversight
authority.
* * * * * * *
CHAPTER 5--POSTAL REGULATORY COMMISSION\93\
---------------------------------------------------------------------------
\93\These amendments to 39 U.S.C. chapter 5 are made by section
303(a) of the bill.
* * * * * * *
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Sec. 502. Commissioners
(a) * * *
* * * * * * *
(c) A Commissioner may continue to serve after the
expiration of his term until his successor has qualified,
except that a Commissioner may not so continue to serve for
more than 1 year after the date upon which his term otherwise
would expire under [subsection (f)] subsections (f) and (g).
* * * * * * *
(g) The Commissioners may serve for not more than 2 full
terms.
* * * * * * *
Sec. 504. Administration
(a) The Chairman of the Postal Regulatory Commission shall
be the principal executive officer of the Commission. [The
Chairman] Subject to the policies adopted under subsection (b),
the Chairman shall exercise or direct the exercise of [all the
executive] the day-to-day executive and administrative
functions of the Commission, including functions of the
Commission with respect to (1) the appointment of personnel
employed under the Commission, except that the appointment of
heads of major administrative units under the Commission shall
require the approval of a majority of the members of the
Commission, (2) the supervision of the personnel employed under
the Commission and the distribution of business among them and
among the Commissioners, and (3) the use and expenditure of
funds.
[(b) In carrying out any of his functions under this
section, the Chairman shall be governed by the general policies
of the Commission.]
(b)(1) The Chairman shall be governed by the policies
adopted by the Commission under paragraph (2)(A) in carrying
out any of the functions under this section.
(2) The Commission shall adopt, by a vote of the majority
of the members of the Commission, policies that shall govern
all functions of the Commission, including the finances,
operations, and administration of the Commission.
(3) The Commission shall review and, if necessary, revise
the policies adopted under paragraph (2) not less frequently
than every 4 years. Adoption of revised policies, or re-
adoption of existing policies, shall be by a vote of the
majority of the members of the Commission.
(c) [The Chairman] Subject to the policies adopted under
subsection (b), the Chairman may obtain such facilities and
supplies as may be necessary to permit the Commission to carry
out its functions. Any officer or employee appointed under this
section shall be paid at rates of compensation and shall be
entitled to programs offering employee benefits established
under chapter 10 or chapter 12 of this title, as appropriate.
* * * * * * *
PART II--PERSONNEL
* * * * * * *
CHAPTER 10--EMPLOYMENT WITHIN THE POSTAL SERVICE
* * * * * * *
Sec. 1001. Appointment and status\94\
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\94\This amendment to 39 U.S.C. Sec. 1001 is made by section
406(b)(2) of the bill.
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(a) * * *
(b) Officers and employees of the Postal Service (other
than those individuals appointed under sections 202, 204, and
1001(c) of this title, and section 3 of the Inspector General
Act of 1978 (5 U.S.C. App.)) shall be in the postal career
service, which shall be a part of the civil service. Such
appointments and promotions shall be in accordance with the
procedures established by the Postal Service. The Postal
Service shall establish procedures, in accordance with this
title, to assure its officers and employees meaningful
opportunities for promotion and career development and to
assure its officers and employees full protection of their
employment rights by guaranteeing them an opportunity for a
fair hearing on adverse actions, with representatives of their
own choosing.
* * * * * * *
Sec. 1004. Supervisory and other managerial
organizations\95\
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\95\These amendment to 39 U.S.C. Sec. 1004 are made by section 108
of the bill.
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(a) It shall be the policy of the Postal Service to provide
compensation, working conditions, and career opportunities that
will assure the attraction and retention of qualified and
capable supervisory and other managerial personnel; to provide
adequate and reasonable differentials in rates of pay and
fringe benefits between employees in the clerk and carrier
grades in the line work force and supervisory and other
managerial personnel; to establish and maintain continuously a
program for all such personnel that reflects the essential
importance of a well-trained and well-motivated force to
improve the effectiveness of postal operations; and to promote
the leadership status of such personnel with respect to rank-
and-file employees, recognizing that the role of such personnel
in primary level management is particularly vital to the
process of converting general postal policies into successful
postal operations.
b) The Postal Service shall provide a program for
consultation with recognized organizations of supervisory and
other managerial personnel who are not subject to collective-
bargaining agreements under chapter 12 of this title. Upon
presentation of evidence satisfactory to the Postal Service
that a supervisory organization represents a majority of
supervisors, that an organization (other than an organization
representing supervisors) represents at least 20 percent of
postmasters, or that a managerial organization (other than an
organization representing supervisors or postmasters)
represents a substantial percentage of managerial employees,
such organization or organizations shall be entitled to
participate directly in the planning and development of pay
policies and schedules, fringe benefit programs, and other
programs relating to supervisory and other managerial employees
as provided under subsection (d) and any changes in, or
termination of, pay policies and schedules and fringe benefit
programs for members of the supervisors' organization as
provided under subsection (e). Such pay policies and fringe
benefit programs shall reflect adequate differentials in rates
of pay and fringe benefits as provided under subsection (a).
* * * * * * *
(e)(1) The Postal Service shall, within 45 days of each
date on which an agreement is reached on a collective
bargaining agreement between the Postal Service and the
bargaining representative recognized under section 1203 of this
title which represents the largest number of employees, make a
proposal for any changes in, or termination of, pay policies
and schedules and fringe benefit programs for members of the
supervisors' organization which are to be in effect during the
same period as covered by such agreement.
* * * * * * *
Sec. 1005. Applicability of laws relating to Federal
employees\96\
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\96\In 39 U.S.C. 1005, the amendment to subsection (a)(3) is made
by section 406(b)(3)) of the bill, the amendment to subsection (a)(4)
is made by section 107 of the bill, and the amendments to subsections
(d) and (f) and the addition of new subsection (g) are made by section
102 of the bill.
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(a)(1) * * *
* * * * * * *
(3) The provisions of this subsection shall not apply to
those individuals appointed under sections 202, 204, and
1001(c) of this title, and section 3 of the Inspector General
Act of 1978 (5 U.S.C. App.).
(4)(A) Subchapter II of chapter 75 of title 5 shall apply--
(i) * * *
(ii) to any other individual who--
[(I) is in the position of a supervisor or a
management employee in the Postal Service, or
is an employee of the Postal Service engaged in
personnel work in other than a purely
nonconfidential clerical capacity; and]
(I) is an officer or employee of the Postal
Service who--
(aa) is not represented by a
bargaining representative recognized
under section 1203; and
(bb) is in a supervisory,
professional, technical, clerical,
administrative, or managerial position
covered by the Executive and
Administrative Schedule; and
* * * * * * *
(d)(1) [Officers] Except as provided in subsection (g),
officers and employees of the Postal Service (other than the
Governors) shall be covered by chapters 83 and 84 of title 5.
The Postal Service shall withhold from pay and shall pay into
the Civil Service Retirement and Disability Fund the amounts
specified in or determined under such chapter 83 and subchapter
II of such chapter 84, respectively. The Postal Service shall
pay into the Federal Retirement Thrift Savings Fund the amounts
specified in or determined under subchapters III and VII of
such chapter 84.
* * * * * * *
(f) Compensation, benefits, and other terms and conditions
of employment in effect immediately prior to the effective date
of this section, whether provided by statute or by rules and
regulations of the former Post Office Department or the
executive branch of the Government of the United States, shall
continue to apply to officers and employees of the Postal
Service, until changed by the Postal Service in accordance with
this chapter and chapter 12 of this title. Subject to the
provisions of this chapter and chapter 12 of this title, the
provisions of subchapter I of chapter 85 and chapters 84, 87,
89, 89A, and 89B of title 5 shall apply to officers and
employees of the Postal Service, unless varied, added to, or
substituted for, under [this subsection.] this subsection or
subsection (g). No variation, addition, or substitution with
respect to fringe benefits shall result in a program of fringe
benefits which on the whole is less favorable to the officers
and employees than fringe benefits in effect on the effective
date of this section, and as to officers and employees for whom
there is a collective-bargaining representative, no such
variation, addition, or substitution shall be made except by
agreement between the collective-bargaining representative and
the Postal Service.
(g)(1) In this subsection--
(A) the term ``collective bargaining agreement''
means a collective bargaining agreement between the
Postal Service and a bargaining representative
recognized under section 1203 entered into after the
date of enactment of the Postal Reform Act of 2014;
(B) the term ``new employee'' means an individual who
becomes an officer or employee of the Postal Service
after the date of enactment of the Postal Reform Act of
2014; and
(C) the term ``not eligible to receive FERS service
credit'', with respect to an officer or employee of the
Postal Service, means that service by the officer or
employee of the Postal Service as an officer or
employee of the Postal Service shall not be creditable
service for purposes of chapter 84 of title 5.
(2)(A) A collective bargaining agreement may provide,
notwithstanding chapter 84 of title 5, that some or all new
employees covered under the collective bargaining agreement
shall be not eligible to receive FERS service credit for
service performed during any pay period beginning after the
effective date of the provision.
(B) If a new employee is not eligible to receive FERS
credit pursuant to a collective bargaining agreement, any
subsequent service by the new employee as an officer or
employee of the Postal Service shall not be creditable service
for purposes of chapter 84 of title 5.
(C) Subject to the requirements under this subsection, a
collective bargaining agreement may include 1 or more
additional retirement benefit plans for the benefit of some or
all new employees covered under the collective bargaining
agreement.
(3)(A) A collective bargaining agreement may establish,
with respect to some or all new employees covered under the
collective bargaining agreement--
(i) without regard to section 8422 of title 5--
(I) the amounts to be deducted and withheld
from the pay of the new employees for deposit
in the Treasury of the United States to the
credit of the Civil Service Retirement and
Disability Fund; and
(II) the corresponding adjustment under
section 8423(a)(5)(B)(iii) of title 5 to the
amount of the contributions to be made by the
Postal Service to the Fund; and
(ii) for any retirement benefit plan established
under the collective bargaining agreement, the amounts
to be deducted and withheld from the pay of the new
employees under the retirement benefit plan for the
benefit of the new employees.
(B) Except as provided in paragraph (2)(B), a collective
bargaining agreement may establish the amounts described in
subparagraph (A)(i) with respect to some or all new employees
who were covered under a previous collective bargaining
agreement.
(4)(A) A collective bargaining agreement among the Postal
Service and all bargaining representatives recognized under
section 1203 may establish, without regard to section 8432 of
title 5, with respect to some or all new employees covered
under the collective bargaining agreement, whether the Postal
Service shall make contributions to the Thrift Savings Fund for
the benefit of the new employees, and, if the Postal Service
shall make such contributions, the amounts that the Postal
Service shall contribute.
(B) A collective bargaining agreement described in
subparagraph (A) may not establish more than 1 option regarding
the contributions by the Postal Service to the Thrift Savings
Fund that will apply to some or all new employees covered under
the agreement.
(C) If a collective bargaining agreement described in
subparagraph (A) is not in effect, and if the Postal Service or
a bargaining representative requests that the Postal Service
and all bargaining representatives commence collective
bargaining to seek such an agreement, the procedures under
section 1207(d) shall apply.
(D) Except as provided in subparagraph (A), nothing in this
subsection or in a provision of a collective bargaining
agreement entered under this subsection shall affect the
coverage of an officer or employee of the Postal Service under
subchapter III of chapter 84 of title 5.
* * * * * * *
CHAPTER 12--EMPLOYEE-MANAGEMENT AGREEMENTS
* * * * * * *
Sec. 1207. Labor disputes\97\
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\97\These amendment to 39 U.S.C. Sec. 1207 are made by section 105
of the bill.
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(a) * * *
* * * * * * *
(c)(1) * * *
* * * * * * *
(2)(A) The arbitration board shall give the parties a full
and fair hearing, including an opportunity to present evidence
in support of their claims, and an opportunity to present their
case in person, by counsel or by other representative as they
may elect. Decisions of the arbitration board shall be
conclusive and binding upon the parties. [The arbitration board
shall render its decision within 45 days after its
appointment.] The arbitration board shall render a decision not
later than 45 days after the date of its appointment.
(B) In rendering a decision under this paragraph, the
arbitration board shall consider such relevant factors as the
financial condition of the Postal Service.
* * * * * * *
(4) Nothing in this section may be construed to limit the
relevant factors that the arbitration board may take into
consideration in rendering a decision under paragraph (2).
* * * * * * *
PART III--MODERNIZATION AND FISCAL ADMINISTRATION
* * * * * * *
CHAPTER 20--FINANCE
Sec.
2001. Definitions.
2011. Provisions relating to competitive products.
2012. Provisions relating to workers' compensation prefunding.
* * * * * * *
Sec. 2003. The Postal Service Fund\98\
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\98\These amendment to 39 U.S.C. Sec. 2003 are made by section
302(c)(3) of the bill.
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(a) * * *
(b) Except as otherwise provided in section 2011, there
shall be deposited in the Fund, subject to withdrawal by check
by the Postal Service--
(1) revenues from [postal and nonpostal services]
postal services, nonpostal services authorized under
section 404(3), and property and services authorized
under section 411, rendered by the Postal Service;
* * * * * * *
2012. Provisions relating to workers' compensation prefunding\99\
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\99\This new section 39 U.S.C. Sec. 2012 is added by section 106(a)
of the bill.
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(a) Definitions.--
(1) In general.--In this section--
(A) the term ``adjusted net income'', except
as provided in paragraph (2), means the net
income (or loss) reported by the Postal Service
in the statement of operations included in the
annual report required under section
3654(a)(1)(B);
(B) the term ``Fund'' means the Postal
Service Workers' Compensation Accrued Liability
Fund established under subsection (b); and
(C) the term ``Postal Service actuarial
liability'' means, as of September 30 of a
fiscal year, the net present value of projected
future payments required to be made by the
Postal Service under section 8147 of title 5
(including any payments required to be made
from the Fund under subsection (f) of this
section) on account of injuries or deaths that
occurred during that fiscal year or any
preceding fiscal year.
(2) Calculation of adjusted net income.--In
calculating adjusted net income for a fiscal year--
(A) any payment made under subsection (e)
shall not be taken into account; and
(B) any change in the net present value of
projected future payments required to be made
by the Postal Service under section 8147 of
title 5 shall not be taken into account.
(b) Establishment.--There is established in the Treasury of
the United States a revolving fund, to be called the Postal
Service Workers' Compensation Accrued Liability Fund.
(c) Availability.--The Fund shall be available without
fiscal year limitation for payments required under subsection
(f).
(d) Investment.--
(1) In general.--The Secretary of the Treasury shall
immediately invest, in interest-bearing securities of
the United States, such currently available portions of
the Fund as are not immediately required for payments
from the Fund.
(2) Manner of investments.--Investments under
paragraph (1) shall be made in the same manner as
investments for the Civil Service Retirement and
Disability Fund under section 8348 of title 5.
(e) Payments to Fund.--
(1) Cost attributable to 1 year of employees'
service.--Not later than June 30, 2017, and not later
than June 30 of each year thereafter, the Postal
Service shall compute--
(A) with respect to each of the 3 preceding
fiscal years, the net present value, as of
September 30 of the fiscal year, of projected
future payments required to be paid by the
Postal Service under section 8147 of title 5 on
account of injuries or deaths that occurred
during the fiscal year;
(B) for each of the 3 amounts computed under
subparagraph (A), the sum of--
(i) the amount; and
(ii) accrued interest on the amount
through September 30 of the preceding
fiscal year; and
(C) the average of the 3 sums computed under
subparagraph (B).
(2) Liquidation schedule.--
(A) Computation; recomputation.--Not later
than June 30, 2017, the Postal Service shall
compute, and not later than June 30 of each
year thereafter the Postal Service shall
recompute, a schedule including a series of
annual installments that provide for the
liquidation of the amount described in
subparagraph (B) (regardless of whether the
amount is a liability or surplus), including
interest at the rate used in the computations
under paragraph (1), by the later of--
(i) September 30, 2057; or
(ii) September 30 of the fiscal year
that is 15 years after the fiscal year
in which the computation or
recomputation is made.
(B) Amount to be liquidated.--The amount
described in this subparagraph is the
difference between--
(i) the difference between--
(I) 80 percent of the Postal
Service actuarial liability as
of September 30 of the
preceding fiscal year; and
(II) 80 percent of the amount
computed under paragraph (1)(C)
as of September 30 of the
preceding fiscal year; and
(ii) the value of the assets of the
Fund as of September 30 of the
preceding fiscal year.
(3) Liquidation of liability.--
(A) In general.--Subject to subparagraph (B),
not later than September 30, 2018, and not
later than September 30 of each year
thereafter, the Postal Service shall pay into
the Fund the lesser of--
(i) the sum of--
(I) 80 percent of the amount
computed under paragraph (1)(C)
during the fiscal year; and
(II) any annual installment
computed under paragraph
(2)(A); and
``(ii) the amount by which--
(I) the amount of adjusted
net income earned by the Postal
Service during the fiscal year
that ended 1 year before the
date by which a payment is
required to be made under this
subparagraph; exceeds
(II) $1,000,000,000.
(B) Exception.--If the amount of adjusted net
income earned by the Postal Service during a
fiscal year does not exceed $1,000,000,000, the
Postal Service shall not be required to make a
payment under this paragraph during the
subsequent fiscal year.
(f) Payments From Fund.--
(1) In general.--Beginning with the fiscal year
ending on September 30, 2018, for each payment that the
Postal Service is required to make under section 8147
of title 5 during the fiscal year--
(A) a fraction of the amount of the payment
shall be paid from the Fund in accordance with
paragraph (2) of this subsection; and
(B) the remaining amount of the payment shall
be paid by the Postal Service.
(2) Fraction.--The fraction to be paid from the Fund,
as required under paragraph (1), is, with respect to
the fiscal year during which the payment is required to
be made, the quotient of--
(A) the value of the assets of the Fund as of
September 30 of the preceding fiscal year; and
(B) the sum of--
(i) the Postal Service actuarial
liability as of the end of the fiscal
year before the preceding fiscal year,
plus interest accrued on that amount
through the end of the preceding fiscal
year; and
(ii) the amount calculated under
subsection (e)(1)(C) as of the end of
the fiscal year before the preceding
fiscal year, plus interest accrued on
that amount through the end of the
preceding fiscal year.
(g) Assumptions and Methodology.--The assumptions and
methodology used in the computations under this section shall
be consistent, insofar as reasonable and appropriate, with the
assumptions and methodology used by the Postal Service in
making computations of its assets and liabilities for the
financial reporting required under section 3654.
* * * * * * *
PART IV--MAIL MATTER
* * * * * * *
CHAPTER 30--NONMAILABLE MATTER
* * * * * * *
Sec. 3001. Nonmailable Matter\100\
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\100\This amendment to 39 U.S.C. Sec. 3001 is made by section
303(b) of the bill.
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(a) * * *
* * * * * * *
(p)(1) In this subsection, the terms ``distilled spirits'',
``wine'', and ``malt beverage'' have the same meanings as in
section 117 of the Federal Alcohol Administration Act (27
U.S.C. 211).
(2) Distilled spirits, wine, or malt beverages shall be
considered mailable if mailed--
(A) in accordance with the laws and regulations of--
(i) the State, territory, or district of the
United States where the sender or duly
authorized agent initiates the mailing; and
(ii) the State, territory, or district of the
United States where the addressee or duly
authorized agent takes delivery; and
(B) to an addressee who is at least 21 years of age--
(i) who provides a signature and presents a
valid, government-issued photo identification
upon delivery; or
(ii) the duly authorized agent of whom--
(I) is at least 21 years of age; and
(II) provides a signature and
presents a valid, government-issued
photo identification upon delivery.
(3) The Postal Service shall prescribe such regulations as
may be necessary to carry out this subsection.
* * * * * * *
CHAPTER 36--POSTAL RATES, CLASSES, AND SERVICES
* * * * * * *
Sec.
3621. Applicability; definitions.
* * * * * * *
[3622. Modern rate regulation.]
3622. Modern rate system.
* * * * * * *
[3661. Postal Services.]
3661. Postal services for market--dominant products.
* * * * * * *
3691. Establishment of modern service standards.
3692. Delivery point modernization.
* * * * * * *
Subchapter I--Provisions Relating to Market Dominant Products
* * * * * * *
[Sec. 3622. Modern rate regulation\101\
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\101\This amendment to 39 U.S.C. Sec. 3622 is made by section 301
of the bill.
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[(a) Authority Generally.-- The Postal Regulatory
Commission shall, within 18 months after the date of enactment
of this section, by regulation establish (and may from time to
time thereafter by regulation revise) a modern system for
regulating rates and classes for market-dominant products.
[(b) Objectives.-- Such system shall be designed to achieve
the following objectives, each of which shall be applied in
conjunction with the others:
[(1) To maximize incentives to reduce costs and
increase efficiency.
[(2) To create predictability and stability in rates.
[(3) To maintain high quality service standards
established under section 3691.
[(4) To allow the Postal Service pricing flexibility.
[(5) To assure adequate revenues, including retained
earnings, to maintain financial stability.
[(6) To reduce the administrative burden and increase
the transparency of the ratemaking process.
[(7) To enhance mail security and deter terrorism.
[(8) To establish and maintain a just and reasonable
schedule for rates and classifications, however the
objective under this paragraph shall not be construed
to prohibit the Postal Service from making changes of
unequal magnitude within, between, or among classes of
mail.
[(9) To allocate the total institutional costs of the
Postal Service appropriately between market-dominant
and competitive products.
[(c) Factors.-- In establishing or revising such system,
the Postal Regulatory Commission shall take into account--
[(1) the value of the mail service actually provided
each class or type of mail service to both the sender
and the recipient, including but not limited to the
collection, mode of transportation, and priority of
delivery;
[(2) the requirement that each class of mail or type
of mail service bear the direct and indirect postal
costs attributable to each class or type of mail
service through reliably identified causal
relationships plus that portion of all other costs of
the Postal Service reasonably assignable to such class
or type;
[(3) the effect of rate increases upon the general
public, business mail users, and enterprises in the
private sector of the economy engaged in the delivery
of mail matter other than letters;
[(4) the available alternative means of sending and
receiving letters and other mail matter at reasonable
costs;
[(5) the degree of preparation of mail for delivery
into the postal system performed by the mailer and its
effect upon reducing costs to the Postal Service;
[(6) simplicity of structure for the entire schedule
and simple, identifiable relationships between the
rates or fees charged the various classes of mail for
postal services;
[(7) the importance of pricing flexibility to
encourage increased mail volume and operational
efficiency;
[(8) the relative value to the people of the kinds of
mail matter entered into the postal system and the
desirability and justification for special
classifications and services of mail;
[(9) the importance of providing classifications with
extremely high degrees of reliability and speed of
delivery and of providing those that do not require
high degrees of reliability and speed of delivery;
[(10) the desirability of special classifications for
both postal users and the Postal Service in accordance
with the policies of this title, including agreements
between the Postal Service and postal users, when
available on public and reasonable terms to similarly
situated mailers, that--
[(A) either--
[(i) improve the net financial
position of the Postal Service through
reducing Postal Service costs or
increasing the overall contribution to
the institutional costs of the Postal
Service; or
[(ii) enhance the performance of mail
preparation, processing,
transportation, or other functions; and
[(B) do not cause unreasonable harm to the
marketplace.
[(11) the educational, cultural, scientific, and
informational value to the recipient of mail matter;
[(12) the need for the Postal Service to increase its
efficiency and reduce its costs, including
infrastructure costs, to help maintain high quality,
affordable postal services;
[(13) the value to the Postal Service and postal
users of promoting intelligent mail and of secure,
sender-identified mail; and
[(14) the policies of this title as well as such
other factors as the Commission determines appropriate.
[(d) Requirements.--
[(1) In general.-- The system for regulating rates
and classes for market-dominant products shall--
[(A) include an annual limitation on the
percentage changes in rates to be set by the
Postal Regulatory Commission that will be equal
to the change in the Consumer Price Index for
All Urban Consumers unadjusted for seasonal
variation over the most recent available 12-
month period preceding the date the Postal
Service files notice of itsintention to
increase rates;
[(B) establish a schedule whereby rates, when
necessary and appropriate, would change at
regular intervals by predictable amounts;
[(C) not later than 45 days before the
implementation of any adjustment in rates under
this section, including adjustments made under
subsection (c)(10)--
[(i) require the Postal Service to
provide public notice of the
adjustment;
[(ii) provide an opportunity for
review by the Postal Regulatory
Commission;
[(iii) provide for the Postal
Regulatory Commission to notify the
Postal Service of any noncompliance of
the adjustment with the limitation
under subparagraph (A); and
[(iv) require the Postal Service to
respond to the notice provided under
clause (iii) and describe the actions
to be taken to comply with the
limitation under subparagraph (A);
[(D) establish procedures whereby the Postal
Service may adjust rates not in excess of the
annual limitations under subparagraph (A); and
[(E) notwithstanding any limitation set under
subparagraphs (A) and (C), and provided there
is not sufficient unused rate authority under
paragraph (2)(C), establish procedures whereby
rates may be adjusted on an expedited basis due
to either extraordinary or exceptional
circumstances, provided that the Commission
determines, after notice and opportunity for a
public hearing and comment, and within 90 days
after any request by the Postal Service, that
such adjustment is reasonable and equitable and
necessary to enable the Postal Service, under
best practices of honest, efficient, and
economical management, to maintain and continue
the development of postal services of the kind
and quality adapted to the needs of the United
States.
[(2) Limitations.--
[(A) Classes of mail.--Except as provided
under subparagraph (C), the annual limitations
under paragraph (1)(A) shall apply to a class
of mail, as defined in the Domestic Mail
Classification Schedule as in effect on the
date of enactment of the Postal Accountability
and Enhancement Act.
[(B) Rounding of rates and fees.--Nothing in
this subsection shall preclude the Postal
Service from rounding rates and fees to the
nearest whole integer, if the effect of such
rounding does not cause the overall rate
increase for any class to exceed the Consumer
Price Index for All Urban Consumers.
[(C) Use of unused rate authority.--
[(i) Definition.--In this
subparagraph, the term ``unused rate
adjustment authority'' means the
difference between--
[(I) the maximum amount of a
rate adjustment that the Postal
Service is authorized to make
in any year subject to the
annual limitation under
paragraph (1); and
[(II) the amount of the rate
adjustment the Postal Service
actually makes in that year.
[(ii) Authority.--Subject to clause
(iii), the Postal Service may use any
unused rate adjustment authority for
any of the 5 years following the year
such authority occurred.
[(iii) Limitations.--In exercising
the authority under clause (ii) in any
year, the Postal Service--
[(I) may use unused rate
adjustment authority from more
than 1 year;
[(II) may use any part of the
unused rate adjustment
authority from any year;
[(III) shall use the unused
rate adjustment authority from
the earliest year such
authority first occurred and
then each following year; and
[(IV) for any class or
service, may not exceed the
annual limitation under
paragraph (1) by more than 2
percentage points.
[(3) Review.--Ten years after the date of enactment
of the Postal Accountability and Enhancement Act and as
appropriate thereafter, the Commission shall review the
system for regulating rates and classes for market-
dominant products established under this section to
determine if the system is achieving the objectives in
subsection (b), taking into account the factors in
subsection (c). If the Commission determines, after
notice and opportunity for public comment, that the
system is not achieving the objectives in subsection
(b), taking into account the factors in subsection (c),
the Commission may, by regulation, make such
modification or adopt such alternative system for
regulating rates and classes for market-dominant
products as necessary to achieve the objectives.
[(e) Workshare Discounts.--
[(1) Definition.--In this subsection, the term
``workshare discount'' refers to rate discounts
provided to mailers for the presorting, prebarcoding,
handling, or transportation of mail, as further defined
by the Postal Regulatory Commission under subsection
(a).
[(2) Scope.--The Postal Regulatory Commission shall
ensure that such discounts do not exceed the cost that
the Postal Service avoids as a result of workshare
activity, unless--
[(A) the discount is--
[(i) associated with a new postal
service, a change to an existing postal
service, or with a new work share
initiative related to an existing
postal service; and
[(ii) necessary to induce mailer
behavior that furthers the economically
efficient operation of the Postal
Service and the portion of the discount
in excess of the cost that the Postal
Service avoids as a result of the
workshare activity will be phased out
over a limited period of time;
[(B) the amount of the discount above costs
avoided--
[(i) is necessary to mitigate rate
shock; and
[(ii) will be phased out over time;
[(C) the discount is provided in connection
with subclasses of mail consisting exclusively
of mail matter of educational, cultural,
scientific, or informational value; or
[(D) reduction or elimination of the discount
would impede the efficient operation of the
Postal Service.
[(3) Limitation.--Nothing in this subsection shall
require that a work share discount be reduced or
eliminated if the reduction or elimination of the
discount would--
[(A) lead to a loss of volume in the affected
category or subclass of mail and reduce the
aggregate contribution to the institutional
costs of the Postal Service from the category
or subclass subject to the discount below what
it otherwise would have been if the discount
had not been reduced or eliminated; or
[(B) result in a further increase in the
rates paid by mailers not able to take
advantage of the discount.
[(4) Report.--Whenever the Postal Service establishes
a workshare discount rate, the Postal Service shall, at
the time it publishes the workshare discount rate,
submit to the Postal Regulatory Commission a detailed
report that--
[(A) explains the Postal Service's reasons
for establishing the rate;
[(B) sets forth the data, economic analyses,
and other information relied on by the Postal
Service to justify the rate; and
[(C) certifies that the discount will not
adversely affect rates or services provided to
users of postal services who do not take
advantage of the discount rate.
[(f) Transition Rule.--For the 1-year period beginning on
the date of enactment of this section, rates and classes for
market-dominant products shall remain subject to modification
in accordance with the provisions of this chapter and section
407, as such provisions were last in effect before the date of
enactment of this section. Proceedings initiated to consider a
request for a recommended decision filed by the Postal Service
during that 1-year period shall be completed in accordance with
subchapter II of chapter 36 of this title and implementing
regulations, as in effect before the date of enactment of this
section.]
Sec. 3622. Modern rate system
(a) Authority Generally.--
(1) Board of governors.--The Board may, acting in
accordance with this section, establish, and from time
to time thereafter revise, a system of rates and
classes for market-dominant products (referred to in
this section as the ``system''), consistent with the
requirements under this section.
(2) No delegation.--The authority under this section
may not be delegated to the Postmaster General or to
any other individual or entity.
(b) Objectives.--The system shall be designed to achieve
the following objectives, each of which shall be applied in
conjunction with the others:
(1) To maximize incentives for the Postal Service to
reduce costs and increase efficiency.
(2) To create predictability and stability in rates.
(3) To maintain high quality service standards
established under section 3691.
(4) To assure adequate revenues and maintain the
financial stability of the Postal Service.
(5) To establish and maintain a just and reasonable
schedule for rates and classifications, however the
objective under this paragraph shall not be construed
to prohibit the Postal Service from making changes of
unequal magnitude within, between, or among classes of
mail.
(6) To allocate the total institutional costs of the
Postal Service appropriately between market-dominant
and competitive products, in accordance with
regulations promulgated by the Postal Regulatory
Commission (referred to in this section as the
``Commission'') under section 3633.
(c) Factors.--In establishing or revising the system, the
Board and the Commission shall take into account--
(1) the value of the mail service provided through
each class or type of mail service to both the sender
and the recipient, including the educational, cultural,
scientific, and informational value;
(2) the direct and indirect postal costs attributable
to each class or type of mail service;
(3) the effect of rate increases upon Postal Service
customers;
(4) the available alternative means of sending and
receiving letters and other mail matter;
(5) the simplicity of structure for the entire
schedule and simple, identifiable relationships between
the rates or fees charged the various classes of mail
for postal services; and
(6) the policies of this title as well as such other
factors as the Board or the Commission determines
appropriate.
(d) Adjustments Consistent With System.--
(1) Notice.--The Board shall provide notice of any
adjustment in rates or classes proposed to be made
under this section that is consistent with the system
then in effect--
(A) not later than--
(i) 90 days before the implementation
of any rate or class adjustment that
affects all or substantially all
market-dominant products; and
(ii) 45 days before the
implementation of any other rate or
class adjustment; and
(B) to--
(i) the public, including by--
(I) publication in the
Federal Register; and
(II) posting on the website
of the Postal Service; and
(ii) the Commission.
(2) Public comment.--The Board shall solicit and
receive public comments on any proposed rate or class
adjustment, and shall take such comments into account
in making its final determination as to a rate or class
adjustment.
(3) Final decision.--Not later than 10 days before
the implementation of a rate or class adjustment, the
Board shall issue a final decision on the adjustment
which shall--
(A) be published in the Federal Register and
posted on the website of the Postal Service;
and
(B) include an explanation responding to all
relevant comments received.
(4) Commission review.--
(A) In general.--Any adjustment made by the
Board under this section shall be subject to
review by the Commission under section 3662.
(B) Application of section 3662.--In a review
described in subparagraph (A), section 3662
shall be applied by substituting ``Board of
Governors'' for ``Postal Service'' where
applicable.
(e) Rate Base.--The rates for market-dominant products in
effect on the date of enactment of the Postal Reform Act of
2014, including any rates adjusted under this section on an
expedited basis due to either extraordinary or exceptional
circumstances, shall remain in effect unless adjusted in
accordance with this section.
(f) Limitations on Rate Adjustments.--
(1) Applicability of limitations.--The limitations
under this subsection shall remain in effect unless
revised or eliminated under subsection (g).
(2) Annual limitation.--There shall be an annual
limitation on the percentage changes in rates for
market-dominant products as a whole under this section
that shall be equal to the percentage change in the
Consumer Price Index for All Urban Consumers unadjusted
for seasonal variation over the most recent available
12-month period preceding the date the Board provides
notice of its intention to increase rates.
(3) Conditions.--
(A) Classes of mail.--The Board shall ensure
that the annual percentage change in rates
under this section for a class of mail, as
defined in the Domestic Mail Classification
Schedule (as in effect on the date of enactment
of the Postal Accountability and Enhancement
Act), does not exceed the annual limitation
under paragraph (2) by more than 2 percentage
points.
(B) Use of unused rate adjustment
authority.--
(i) Definition.--In this
subparagraph, the term ``unused rate
adjustment authority'' means the
difference between--
(I) the maximum amount of a
rate adjustment that the Board
is authorized to make in any
year subject to the annual
limitation under paragraph (2);
and
(II) the amount of the rate
adjustment the Board actually
makes in that year.
(ii) Authority.--Subject to clause
(iii), the Board may use any unused
rate adjustment authority for any of
the 5 years following the year the
authority occurred.
(iii) Limitations.--In exercising the
authority under clause (ii) in any
year, the Governors--
(I) may use unused rate
adjustment authority from more
than 1 year;
(II) may use any part of the
unused rate adjustment
authority from any year; and
(III) may not exceed the
annual limitation under
paragraph (2) by more than 2
percentage points.
(4) Exception to annual limitation.--Notwithstanding
the annual limitation under paragraph (2), and provided
there is not sufficient unused rate adjustment
authority under paragraph (3)(B), rates may be adjusted
on an expedited basis due to either extraordinary or
exceptional circumstances, provided that the Commission
determines, after notice and opportunity for public
comment, and within 90 days after any request by the
Board, that such adjustment is reasonable and equitable
and necessary to enable the Postal Service, under best
practices of honest, efficient, and economical
management, to maintain and continue the development of
postal services of the kind and quality adapted to the
needs of the United States.
(g) Adoption of Revisions to System or New System.--
(1) Board proposal.--Not earlier than January 1,
2017, and as appropriate thereafter, the Board may,
after notice and opportunity for public comment, submit
to the Commission a proposal for revisions to the
system or a new system, consistent with the objectives
under subsection (b), taking into account the factors
under subsection (c), and which may include revision or
elimination of the limitations established under
subsection (f).
(2) Final commission action.--The Commission--
(A) shall consider a proposal submitted by
the Board under paragraph (1); and
(B) may--
(i) adopt the proposal, without
modification; or
(ii) reject the proposal.
(h) Workshare Discounts.--
(1) Definition.--In this subsection, the term
``workshare discount'' refers to rate discounts
provided to mailers for the presorting, prebarcoding,
handling, or transportation of mail, as further defined
by the Board in accordance with subsection (a).
(2) Scope.--The Board shall ensure that such
discounts do not exceed the cost that the Postal
Service avoids as a result of workshare activity,
unless--
(A) the discount is--
(i) associated with a new postal
service, a change to an existing postal
service, or with a new work share
initiative related to an existing
postal service; and
(ii) necessary to induce mailer
behavior that furthers the economically
efficient operation of the Postal
Service and the portion of the discount
in excess of the cost that the Postal
Service avoids as a result of the
workshare activity will be phased out
over a limited period of time;
(B) the amount of the discount above costs
avoided--
(i) is necessary to mitigate rate
shock; and
(ii) will be phased out over time;
(C) the discount is provided in connection
with a category of mail consisting exclusively
of mail matter of educational, cultural,
scientific, or informational value; or
(D) reduction or elimination of the discount
would--
(i) impede the efficient operation of
the Postal Service;
(ii) lead to a loss of volume in the
affected category of mail and reduce
the aggregate contribution to the
institutional costs of the Postal
Service from the category subject to
the discount below what it otherwise
would have been if the discount had not
been reduced or eliminated; or
(iii) result in a further increase in
the rates paid by mailers not able to
take advantage of the discount.
(3) Notice.--Whenever a workshare discount is
established, the Board shall ensure that the notice
provided under subsection (d)(1) includes--
(A) the reasons for establishing the
discount;
(B) the data, economic analyses, and other
information relied on by the Board to justify
the rate; and
(C) a certification that the discount will
not adversely affect rates or services provided
to users of postal services who do not take
advantage of the discount rate.
(i) Negotiated Service Agreements.--The Board shall ensure
that any agreement between the Postal Service and a mailer that
adjusts rates or classes in a manner that is specific to the
mailer--
(1) is available on public and reasonable terms to
similarly situated mailers;
(2) either--
(A) improves the net financial position of
the Postal Service through reducing Postal
Service costs or increasing the overall
contribution to the institutional costs of the
Postal Service taking into account changes in
volume and revenues from mailers ineligible for
the agreement; or
(B) enhances the performance of mail
preparation, processing, transportation, or
other functions; and
(3) does not cause--
(A) unfair competitive advantage for the
Postal Service or mailers eligible for the
agreement; or
(B) unreasonable disruption to the volume or
revenues of other mailers ineligible for the
agreement.
(j) Consideration of Prior Commission Decisions.--In making
any determination under this section, including the
construction and interpretation of the terms used in this
section, the Board shall give consideration to decisions of the
Commission made prior to the date of enactment of the Postal
Reform Act of 2014, and shall include an explanation of any
deviation from such decisions in the notice required under
subsection (d)(1).
* * * * * * *
Sec. 3626. Reduced Rates\102\
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\102\These amendments to 39 U.S.C. Sec. 3626 are made by section
301(b) of the bill.
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(a) * * *
* * * * * * *
[(e)(1) In the administration of this section, the rates
for third-class mail matter mailed by a qualified political
committee shall be the rates currently in effect under former
section 4452 of this title for third-class mail matter mailed
by a qualified nonprofit organization.
[(2) For purposes of this subsection--
[(A) the term ``qualified political committee'' means
a national or State committee of a political party, the
Republican and Democratic Senatorial Campaign
Committees, the Democratic National Congressional
Committee, and the National Republican Congressional
Committee;
[(B) the term ``national committee'' means the
organization which, by virtue of the bylaws of a
political party, is responsible for the day-to-day
operation of such political party at the national
level; and
[(C) the term ``State committee'' means the
organization which, by virtue of the bylaws of a
political party, is responsible for the day-to-day
operation of such political party at the State level.]
[(f)](e) In the administration of this chapter, the rates
for mail under former section 4358(g) of this title shall be
established without regard to either the provisions of such
former section 4358(g) or the provisions of this section.
[(g)](f)(1) In the administration of this section, the
rates for mail under subsections (a), (b), and (c) of former
section 4358 of this title shall not apply to an issue of a
publication if the number of copies of such issue distributed
within the county of publication is less than the number equal
to the sum of 50 percent of the total paid circulation of such
issue plus one.
* * * * * * *
[(h)](g) In the administration of this section, the number
of copies of a subscription publication mailed to
nonsubscribers during a calendar year at rates under
subsections (a), (b), and (c) of former section 4358 of this
title may not exceed 10 percent of the number of copies of such
publication mailed at such rates to subscribers.
* * * * * * *
[(j)](h)(1) In the administration of this section, the
rates for mail under former section 4452(b) or 4452(c) of this
title shall not apply to mail which advertises, promotes,
offers, or, for a fee or consideration, recommends, describes,
or announces the availability of--
* * * * * * *
[(k)](i)(1) No person or organization shall mail, or cause
to be mailed by contractual agreement or otherwise, at the
rates for mail under former section 4452(b) or 4452(c) of this
title, any matter to which those rates do not apply.
* * * * * * *
[(l)](j) In the administration of this section, the term
``advertising'', as used in former section 4358(j)(2) of this
title, does not include the publisher's own advertising in a
publication published by the official highway or development
agency of a State.
[(m)](k)(1) In the administration of this section, the
rates for mail under former section 4452(b) or 4452(c) of this
title shall not apply to mail consisting of products, unless
such products--
* * * * * * *
[(n)](l) In the administration of this section, matter that
satisfies the circulation standards for requester publications
shall not be excluded from being mailed at the rates for mail
under former section 4358 solely because such matter is
designed primarily for free circulation or for circulation at
nominal rates, or fails to meet the requirements of former
section 4354(a)(5).
* * * * * * *
Subchapter III--Provisions Relating to Experimental and New Products
* * * * * * *
Sec. 3641. Market Tests of Experimental Products\103\
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\103\These amendment to 39 U.S.C. Sec. 3641 are made by section
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(a) * * *
(b) Conditions.-- A product may not be tested under this
section unless it satisfies each of the following:
(1) Significantly different product.-- The product
is, from the viewpoint of the mail users (or the
appropriate consumers in the case of nonpostal
services), significantly different from all products
offered by the Postal Service within the 2-year period
preceding the start of the test.
(2) * * *
(3) Correct categorization.-- The Postal Service
identifies the product, for the purpose of a test under
this section, as either market-dominant or competitive,
consistent with the criteria under [section 3642(b)(1)]
sections 404(g) and 3642(b)(1). Costs and revenues
attributable to a product identified as competitive
shall be included in any determinationunder [section
3633(3)] section 3633(a)(3) (relating to provisions applicable to
competitive products collectively). Any test that solely affects
products currently classified as competitive, or which provides
services ancillary to only competitive products, shall be presumed to
be in the competitive product category without regard to whether a
similar ancillary product exists for market-dominant products.
* * * * * * *
(e) Dollar-Amount Limitation.--
(1) In general.-- A product may only be tested under
this section if the total revenues that are
anticipated, or in fact received, by the Postal Service
from such product do not exceed [$10,000,000]
$50,000,000 in any year, subject to paragraph (2) and
subsection (g). In carrying out the preceding sentence,
the Postal Regulatory Commission may limit the amount
of revenues the Postal Service may obtain from any
particular geographic market as necessary to prevent
market disruption (as defined under subsection (b)(2)).
(2) Exemption authority.-- The Postal Regulatory
Commission may, upon written application of the Postal
Service, exempt the market test from the limit in
paragraph (1) if the total revenues that are
anticipated, or in fact received, by the Postal Service
from such product do not exceed [$50,000,000]
$100,000,000 in any year, subject to subsection (g). In
reviewing an application under this paragraph, the
Postal Regulatory Commission shall approve such
application if it determines that--
* * * * * * *
Subchapter IV--Reporting Requirements and Related Provisions
* * * * * * *
Sec. 3654. Additional financial reporting\104\
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\104\ This amendment to 39 U.S.C. Sec. 3654 is made by section 106
of the bill.
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(a) * * *
(b) Financial reporting.
(1) * * *
* * * * * * *
(4)(A) Each report required by subsection (a)(1)(B)
shall include, with respect to the workers'
compensation obligations of the Postal Service--
(i) as of the last day of the fiscal year to
which the report applies, the amount of the
Postal Service actuarial liability;
(ii) the value of the assets in the Fund, and
the difference between that amount and the
amount of the Postal Service actuarial
liability;
(iii) the amounts calculated under paragraphs
(1) and (2) of section 2012(e);
(iv) significant methods and assumptions
underlying the relevant actuarial valuations;
(v) any payments to the Fund and from the
Fund for the fiscal year to which the report
applies; and
(vi) the assumed rate of return on balances
of the Fund and the actual rate of return for
the fiscal year to which the report applies.
(B) In this paragraph, the terms ``Fund'' and
``Postal Service actuarial liability'' have the meaning
given those terms in section 2012(a).
* * * * * * *
Subchapter V--Postal Services, Complaints, and Judicial Review
[Sec. 3661. Postal Services\105\
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\105\ This amendment to 39 U.S.C. Sec. 3661 is made by section 206
of the bill.
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[(a) The Postal Service shall develop and promote adequate
and efficient postal services.
[(b) When the Postal Service determines that there should
be a change in the nature of postal services which will
generally affect service on a nationwide or substantially
nationwide basis, it shall submit a proposal, within a
reasonable time prior to the effective date of such proposal,
to the Postal Regulatory Commission requesting an advisory
opinion on the change.
[(c) The Commission shall not issue its opinion on any
proposal until an opportunity for hearing on the record under
sections 556 and 557 of title 5 has been accorded to the Postal
Service, users of the mail, and an officer of the Commission
who shall be required to represent the interests of the general
public. The opinion shall be in writing and shall include a
certification by each Commissioner agreeing with the opinion
that in his judgment the opinion conforms to the policies
established under this title.]
Sec. 3661. Postal services for market-dominant products
(a) General Obligation.--The Postal Service shall develop
and promote adequate and efficient postal services with respect
to its market-dominant products.
(b) Proposed Changes for Market-dominant Products.--
(1) Submission of proposal.--If the Postal Service
determines that there should be a change in the nature
of postal services relating to market-dominant products
that will generally affect service on a nationwide or
substantially nationwide basis, the Postal Service
shall submit a proposal to the Postal Regulatory
Commission requesting an advisory opinion on the
change.
(2) Advisory opinion.--Upon receipt of a proposal
under paragraph (1), the Postal Regulatory Commission
shall--
(A) provide notice and an opportunity for
public comment and a public hearing on the
proposal; and
(B) issue an advisory opinion not later
than--
(i) 90 days after the date on which
the Postal Regulatory Commission
receives the proposal; or
(ii) a date that the Postal
Regulatory Commission and the Postal
Service may determine jointly.
(3) Response to opinion.--The Postal Service shall
submit to the President and to Congress a response to
an advisory opinion issued under paragraph (2) that
includes--
(A) a statement of whether the Postal Service
plans to modify the proposal to address any
concerns or implement any recommendations made
by the Commission; and
(B) for any matter that the Postal Service
determines not to address and any
recommendation that the Postal Service
determines not to implement, the reasons for
the determination.
(4) Action of proposal.--The Postal Service may take
action regarding a proposal submitted under paragraph
(1)--
(A) on or after the date on which the Postal
Service submits the response required under
paragraph (3);
(B) on or after a date that the Postal
Regulatory Commission and the Postal Service
may determine jointly; or
(C) after the date described in paragraph
(2)(B), if--
(i) the Postal Regulatory Commission
fails to issue an advisory opinion on
or before the date described in
paragraph (2)(B); and
(ii) the action is not otherwise
prohibited under Federal law.
(5) Modification of timeline.--At any time, the
Postal Service and the Postal Regulatory Commission may
jointly redetermine a date determined under paragraph
(2)(B)(ii) or (4)(B).
(c) Limitation.--
(1) No changes for competitive products.--Nothing in
this section shall be construed as authorizing the
making of changes under this section to the nature of
service provided for competitive products.
(2) Hybrid changes.--For a change that affects the
nature of service provided for both market-dominant
products and competitive products, only the effect on
market-dominant products shall be subject to this
section.
Sec. 3662. Rate and Service Complaints\106\
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\106\This amendment to 39 U.S.C. Sec. 3662 is made by section
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(a) In General.--Any interested person (including an
officer of the Postal Regulatory Commission representing the
interests of the general public) who believes the Postal
Service is not operating in conformance with the requirements
of the provisions of sections 101(d), 401(2), 403(c),
404(a)(6), 404a, or 601, or this chapter (or regulations
promulgated under any of those provisions) may lodge a
complaint with the Postal Regulatory Commission in such form
and manner as the Commission may prescribe.
* * * * * * *
Subchapter VII--Modern Service Standards
* * * * * * *
Sec. 3692. Delivery point modernization\107\
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\107\This new 39 U.S.C. Sec. 3692 is added by section 205 of the
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(a) Definitions.--In this section, the following
definitions shall apply:
(1) Centralized delivery.--The term ``centralized
delivery'' means a primary mode of mail delivery
whereby mail is delivered to a group or cluster of mail
receptacles at a single location.
(2) Curbside delivery.--The term ``curbside
delivery'' means a primary mode of mail delivery
whereby mail is delivered to a mail receptacle that is
situated at the edge of a public sidewalk abutting a
road or curb, at a road, or at a curb.
(3) Delivery point.--The term ``delivery point''
means a mailbox or other receptacle to which mail is
delivered.
(4) District office.--The term ``district office''
means the central office of an administrative field
unit with responsibility for postal operations in a
designated geographic area (as defined under
regulations, directives, or other guidance of the
Postal Service).
(5) Door delivery.--The term ``door delivery''--
(A) means a primary mode of mail delivery
whereby mail is--
(i) delivered to a mail receptacle at
or near a postal customer's door; or
(ii) hand-delivered to a postal
customer; and
(B) does not include curbside or centralized
delivery.
(6) Primary mode of mail delivery.--The term
``primary mode of mail delivery'' means the typical
method by which the Postal Service delivers mail to the
delivery point of a postal customer.
(b) Policy.--Except as otherwise provided in this section,
including paragraphs (4) and (5) of subsection (c), it shall be
the policy of the Postal Service to use the primary mode of
mail delivery that is most cost effective and is in the best
long-term interest of the Postal Service.
(c) Conversion to Other Delivery Modes.--
(1) New addresses.--Except as provided in paragraphs
(4) and (5), the Postal Service shall provide
centralized delivery to new addresses established after
the date of enactment of the Postal Reform Act of 2014,
or if centralized delivery is not practicable shall
provide curbside delivery.
(2) Business address conversion.--The Postal Service
shall carry out a program to convert business addresses
with door delivery on the date of enactment of the
Postal Reform Act of 2014 to centralized delivery or to
curbside delivery.
(3) Residential address conversion.--
(A) Identification.--Not later than 9 months
after the date of enactment of the Postal
Reform Act of 2014, the head of each district
office of the Postal Service shall identify
residential addresses within the service area
of the district office that are appropriate
candidates for conversion from door delivery to
a more cost-effective primary mode of delivery,
in accordance with standards established by the
Postal Service.
(B) Voluntary conversion.--Not later than 1
year after the date of enactment of the Postal
Reform Act of 2014, and consistent with
subsection (b) and paragraph (4), the Postal
Service shall begin implementation of a program
to convert, on a voluntary basis, the addresses
identified under subparagraph (A) from door
delivery to a more cost-effective primary mode
of delivery.
(C) Procedures.--In pursuing conversion under
subparagraph (B), the Postal Service shall
establish procedures to--
(i) solicit and consider input from
postal customers, State and local
governments, local associations, and
property owners; and
(ii) place centralized delivery
points in locations that maximize
delivery efficiency, ease of use for
postal customers, and respect for
private property rights.
(4) Exceptions.--In establishing a primary mode of
mail delivery for new addresses under paragraph (1) or
converting the primary mode of mail delivery for an
address under paragraph (2) or (3), the Postal Service
may provide door delivery if--
(A) a physical barrier precludes the
efficient provision of centralized delivery or
curbside delivery;
(B) the address is located in a registered
historic district, as that term is defined in
section 47(c)(3)(B) of the Internal Revenue
Code of 1986; or
(C) the Postal Service determines that the
provision of centralized delivery or curbside
delivery would be impractical, would not be
cost effective, or would not be in the best
long-term interest of the Postal Service.
(5) Waiver for physical hardship.--
(A) In general.--The Postal Service shall
establish and maintain a waiver program under
which, upon the application of a postal
customer, door delivery may be continued or
provided to a delivery point if--
(i) centralized delivery or curbside
delivery would, but for this paragraph,
be the primary mode of mail delivery
for the delivery point; and
(ii) a physical hardship prevents the
postal customer from receiving his or
her mail through any other form of mail
delivery.
(B) Publicity; simplicity.--In establishing
and maintaining the waiver program under
subparagraph (A), the Postal Service shall--
(i) publicize the waiver program; and
(ii) provide a simple application
process for participation in the waiver
program.
(C) Postal service discretion.--Nothing in
this paragraph shall be construed to--
(i) prohibit the Postal Service from
requiring evidence of a physical
hardship in an appropriate case; or
(ii) require the Postal Service to
require evidence of a physical hardship
in any case.
(D) No fees for application or door
delivery.--In establishing and maintaining the
waiver program under subparagraph (A), the
Postal Service may not charge a postal customer
any fee to--
(i) apply for a waiver; or
(ii) upon the granting of a waiver by
the Postal Service, receive mail
through door delivery.
* * * * * * *
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TITLE 40--PUBLIC BUILDINGS, PROPERTY, AND WORKS
* * * * * * *
Subtitle I--Federal Property and Administrative Services
* * * * * * *
CHAPTER 5--PROPERTY MANAGEMENT\108\
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\108\These amendments to 40 U.S.C. chapter 5 are made by section
603 of the bill.
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Sec.
501. Services for executive agencies.
* * * * * * *
SUBCHAPTER VII--PROPERTY MANAGEMENT AND EXPEDITED DISPOSAL OF REAL
PROPERTY
621. Definitions.
622. Duties of Federal agencies.
623. Colocation among United States Postal Service properties.
624. Establishment of a Federal Real Property Council.
625. Federal real property inventory and database.
626. Limitation on certain leasing authorities.
627. Expedited disposal pilot program.
628. Homeless assistance grants.
* * * * * * *
Subchapter VII--Property Management and Expedited Disposal of Real
Property
621. DEFINITIONS
In this subchapter:
(1) Administrator.--The term ``Administrator'' means
the Administrator of General Services.
(2) Council.--The term ``Council'' means the Federal
Real Property Council established by section 624(a).
(3) Director.--The term ``Director'' means the
Director of the Office of Management and Budget.
(4) Disposal.--The term ``disposal'' means any action
that constitutes the removal of any real property from
the Federal inventory, including sale, deed,
demolition, or exchange.
(5) Excess property.--The term ``excess property''
means any real property under the control of a Federal
agency that the head of the Federal agency determines
is not required to meet the needs or responsibilities
of the Federal agency.
(6) Federal agency.--The term ``Federal agency''
means--
(A) an executive department or independent
establishment in the executive branch of the
Government; or
(B) a wholly owned Government corporation.
(7) Field office.--The term ``field office'' means
any office of a Federal agency that is not the
headquarters office location for the Federal agency.
(8) Postal property.--The term ``postal property''
means any building owned by the United States Postal
Service.
(9) Surplus property.--
(A) In general.--The term ``surplus
property'' means excess real property that is
not required to meet the needs or
responsibilities of any Federal agency.
(B) Exclusions.--The term ``surplus
property'' does not include--
(i) any military installation (as
defined in section 2910 of the Defense
Base Closure and Realignment Act of
1990 (10 U.S.C. 2687 note; Public Law
101--510));
(ii) any property that is excepted
from the definition of the term
``property'' under section 102;
(iii) Indian and native Eskimo
property held in trust by the Federal
Government as described in section
3301(a)(5)(C)(iii);
(iv) real property operated and
maintained by the Tennessee Valley
Authority pursuant to the Tennessee
Valley Authority Act of 1933 (16 U.S.C.
831 et seq.);
(v) any real property the Director
excludes for reasons of national
security;
(vi) any public lands (as defined in
section 203 of the Public Lands Corps
Act of 1993 (16 U.S.C. 1722))
administered by--
(I) the Secretary of the
Interior, acting through--
(aa) the Director of
the Bureau of Land
Management;
(bb) the Director of
the National Park
Service;
(cc) the Commissioner
of Reclamation; or
(dd) the Director of
the United States Fish
and Wildlife Service;
or
(II) the Secretary of
Agriculture, acting through the
Chief of the Forest Service; or
(vii) any property operated and
maintained by the United States Postal
Service.
(10) Underutilized property.--The term
``underutilized property'' means a portion or the
entirety of any real property, including any
improvements, that is used--
(A) irregularly or intermittently by the
accountable Federal agency for program purposes
of the Federal agency; or
(B) for program purposes that can be
satisfied with only a portion of the property.
622. Duties of Federal agencies
Each Federal agency shall--
(1) maintain adequate inventory controls and
accountability systems for real property under the
control of the Federal agency;
(2) develop current and future workforce projections
so as to have the capacity to assess the needs of the
Federal workforce regarding the use of real property;
(3) continuously survey real property under the
control of the Federal agency to identify excess
property, underutilized property, and other real
property suitable to be used for--
(A) colocation with other Federal agencies;
or
(B) consolidation with other facilities;
(4) promptly report excess property and underutilized
property to the Administrator;
(5) establish goals that will lead the Federal agency
to reduce excess property and underutilized property in
the inventory of the Federal agency;
(6) submit to the Council a report on all excess
property and underutilized property in the inventory of
the Federal agency, including--
(A) whether underutilized property can be
better utilized; and
(B) the extent to which the Federal agency
believes that the underutilized property serves
the needs of the Federal agency to retain
underutilized property;
(7) adopt workplace practices, configurations, and
management techniques that can achieve increased levels
of productivity and decrease the need for real property
assets;
(8) assess leased space to identify space that is not
fully used or occupied;
(9) on an annual basis and subject to the guidance of
the Council--
(A) conduct an inventory of real property
under control of the Federal agency; and
(B) make an assessment of each real property,
which shall include--
(i) the age and condition of the
property;
(ii) the size of the property in
square footage and acreage;
(iii) the geographical location of
the property, including an address and
description;
(iv) the extent to which the property
is being utilized;
(v) the actual annual operating costs
associated with the property;
(vi) the total cost of capital
expenditures associated with the
property;
(vii) sustainability metrics
associated with the property;
(viii) the number of Federal
employees and functions housed at the
property;
(ix) the extent to which the mission
of the Federal agency is dependent on
the property;
(x) the estimated amount of capital
expenditures projected to maintain and
operate the property over each of the
next 5 years after the date of
enactment of this subchapter; and
(xi) any additional information
required by the Administrator to carry
out section 625; and
(10) provide to the Council and the Administrator the
information described in paragraph (9)(B) to be used
for the establishment and maintenance of the database
described in section 625.
623. Colocation among United States Postal Service properties
(a) Identification of Postal Property.--Each year, the
Postmaster General may--
(1) identify a list of postal properties with space
available for use by Federal agencies; and
(2) submit the list to the Council.
(b) Submission of List of Postal Properties to Federal
Agencies.--
(1) In general.--Not later than 30 days after the
completion of a list under subsection (a), the Council
shall provide the list to each Federal agency.
(2) Review by federal agencies.--Not later than 90
days after the receipt of the list submitted under
paragraph (1), each Federal agency shall--
(A) review the list;
(B) identify real property assets under the
control of the Federal agency; and
(C) recommend colocations if appropriate.
(c) Terms of Colocation.--On approval of the
recommendations under subsection (b) by the Postmaster General
and the applicable agency head, the Federal agency or
appropriate landholding entity may work with the Postmaster
General to establish appropriate terms of a lease for each
postal property.
624. Establishment of a Federal Real Property Council
(a) Establishment.--There is established a Federal Real
Property Council.
(b) Purpose.--The purpose of the Council shall be to--
(1) develop guidance and ensure implementation of an
efficient and effective real property management
strategy;
(2) identify opportunities for the Federal Government
to better manage real property assets; and
(3) reduce the costs of managing real property,
including operations, maintenance, and security.
(c) Composition.--
(1) In general.--The Council shall be composed
exclusively of--
(A) the senior real property officers of each
Federal agency;
(B) the Deputy Director for Management of the
Office of Management and Budget;
(C) the Controller of the Office of
Management and Budget;
(D) the Administrator; and
(E) any other full-time or permanent part-
time Federal officials or employees, as the
Chairperson determines to be necessary.
(2) Chairperson.--The Deputy Director for Management
of the Office of Management and Budget shall serve as
Chairperson of the Council.
(3) Executive director.--
(A) In general.--The Chairperson shall
designate an Executive Director to assist in
carrying out the duties of the Council.
(B) Qualifications; full-time.--The Executive
Director shall--
(i) be appointed from among
individuals who have substantial
experience in the areas of commercial
real estate and development, real
property management, and Federal
operations and management; and
(ii) serve full time.
(d) Meetings.--
(1) In general.--The Council shall meet subject to
the call of the Chairperson.
(2) Minimum.--The Council shall meet not fewer than 4
times each year.
(e) Duties.--The Council, in consultation with the Director
and the Administrator, shall--
(1) not later than 1 year after the date of enactment
of this subchapter, establish a real property
management plan template, to be updated annually, which
shall include performance measures, specific
milestones, measurable savings, strategies, and
Government-wide goals based on the goals established
under section 622(5) to reduce surplus property or to
achieve better utilization of underutilized property,
and evaluationcriteria to determine the effectiveness
of real property management that are designed to--
(A) enable Congress and heads of Federal
agencies to track progress in the achievement
of real property management objectives on a
Government-wide basis;
(B) improve the management of real property;
and
(C) allow for comparison of the performance
of Federal agencies against industry and other
public sector agencies in terms of performance;
(2) develop standard use rates consistent throughout
each category of space and with nongovernmental space
use rates;
(3) develop a strategy to reduce the reliance of
Federal agencies on leased space for long-term needs if
ownership would be less costly;
(4) provide guidance on eliminating inefficiencies in
the Federal leasing process;
(5) compile a list of real property assets that are
field offices that are suitable for colocation with
other real property assets; and
(6) not later than 1 year after the date of enactment
of this subchapter and annually during the 4-year
period beginning on the date that is 1 year after the
date of enactment of this subchapter and ending on the
date that is 5 years after the date of enactment of
this subchapter, the Council shall submit to the
Director a report that contains--
(A) a list of the remaining excess, surplus,
and underutilized properties of each Federal
agency;
(B) the progress of the Council toward
developing guidance for Federal agencies to
ensure that the assessment required under
section 622(9)(B) is carried out in a uniform
manner; and
(C) the progress of Federal agencies toward
achieving the goals established under section
622(5).
(f) Consultation.--In carrying out the duties described in
subsection (e), the Council shall also consult with
representatives of--
(1) State, local, tribal authorities, and affected
communities; and
(2) appropriate private sector entities and
nongovernmental organizations that have expertise in
areas of--
(A) commercial real estate and development;
(B) government management and operations;
(C) space planning;
(D) community development, including
transportation and planning; and
(E) historic preservation.
(g) Council Resources.--The Director and the Administrator
shall provide staffing, and administrative support for the
Council, as appropriate.
625. Federal real property inventory and database
(a) In General.--Not later than 1 year after the date of
enactment of this subchapter, the Administrator shall establish
and maintain a single, comprehensive, and descriptive database
of all real property under the custody and control of all
Federal agencies.
(b) Contents.--The database shall include--
(1) information provided to the Administrator under
section 622(10); and
(2) a list of real property disposals completed,
including--
(A) the date and disposal method used for
each real property;
(B) the proceeds obtained from the disposal
of each real property;
(C) the amount of time required to dispose of
the real property, including the date on which
the real property is designated as excess
property;
(D) the date on which the property is
designated as surplus property and the date on
which the property is disposed; and
(E) all costs associated with the disposal.
(c) Accessibility.--
(1) Committees.--The database established under
subsection (a) shall be made available on request to
the Committee on Homeland Security and Governmental
Affairs and the Committee on Environment and Public
Works of the Senate and the Committee on Oversight and
Government Reform and the Committee on Transportation
and Infrastructure of the House of Representatives.
(2) General public.--Not later than 3 years after the
date of enactment of this subchapter and to the extent
consistent with national security, the Administrator
shall make the database established under subsection
(a) accessible to the public at no cost through the
website of the General Services Administration.
626. Limitation on certain leasing authorities
(a) In General.--Except as provided in subsection (b), not
later than December 31 of each year following the date of
enactment of this subchapter, a Federal agency with independent
leasing authority shall submit to the Council a list of all
leases, including operating leases, in effect on the date of
enactment of this subchapter that includes--
(1) the date on which each lease was executed;
(2) the date on which each lease will expire;
(3) a description of the size of the space;
(4) the location of the property;
(5) the tenant agency;
(6) the total annual rental rate; and
(7) the amount of the net present value of the total
estimated legal obligations of the Federal Government
over the life of the contract.
(b) Exception.--Subsection (a) shall not apply to--
(1) the United States Postal Service;
(2) the Department of Veterans Affairs; or
(3) any other property the President excludes from
subsection (a) for reasons of national security.
627. Expedited disposal pilot program
(a) Establishment.--The Director shall establish a pilot
program for disposal of any surplus property by sale, transfer,
or other means.
(1) Properties for expedited disposal.--
(A) In general.--On an annual basis, the
Director may authorize the expedited disposal
of not more than 200 surplus properties.
(B) Priority.--In determining which
properties to dispose of, the Director shall
give priority to surplus properties that have
the highest fair market value and the greatest
potential for disposal.
(C) Costs associated with disposal.--
(i) In general.--The Administrator
may obligate an amount to pay any
direct and indirect costs under section
572 related to identifying and
preparing properties to be reported as
excess property by a Federal agency.
(ii) Reimbursement.--An amount
obligated under clause (i) shall be
paid from the proceeds of any sale of
real property under this subsection.
(iii) Net proceeds.--Net proceeds
shall be distributed under subsection
(b).
(D) Maximum net proceeds.--Any real property
authorized for disposal by sale under
subparagraph (A) shall be disposed of in a
manner that, as determined by the Administrator
in consultation with the head of the applicable
Federal agency, is structured and marketed to
maximize the value to the Federal Government.
(E) Monetary proceeds requirement.--Surplus
property may be disposed of under this section
only if disposal of the property will generate
monetary proceeds to the Federal Government
that--
(i) exceed the costs of disposal of
the property; and
(ii) are not less than 90 percent of
fair market value.
(F) Local government notification.--
(i) Notification.--Not later than 30
days after the date on which the
Director makes the authorization under
subparagraph (A), the Director shall
submit in writing to the appropriate
local government unit in which the
property is located a notification that
includes a list of each applicable
property authorized to be disposed of
under subparagraph (A).
(ii) Removal from pilot program.--
(I) In general.--The
Director, at the discretion of
the Director, may remove a
property for which notification
has been provided under clause
(i) from the pilot program
established under subparagraph
(A).
(II) Replacement.--For each
property removed from the pilot
program under subclause (I),
the Director may authorize the
expedited disposal of 1
property not originally
authorized under subparagraph
(A).
(2) Applicability of certain law.--Any expedited
disposal of real property conducted under this section
shall not be subject to--
(A) any section of An Act Authorizing the
Transfer of Certain Real Property for Wildlife,
or Other Purposes (16
U.S.C. 667b);
(B) sections 107 and 317 of title 23;
(C) sections 545(b)(8), 550, 553, 554, and
1304(b) of this title;
(D) section 501 of the McKinney-Vento
Homeless Assistance Act (42 U.S.C. 11411);
(E) section 47151 of title 49; or
(F) section 13(d) of the Surplus Property Act
of 1944 (50 U.S.C. App. 1622(d)).
(3) Effect.--Except as provided in paragraph (2),
nothing in this subchapter terminates or in any way
limits the authority of any Federal agency under any
other provision of law to dispose of real property.
(b) Use of Proceeds.--
(1) In general.--Of the proceeds received from the
disposal of any real property under this subchapter--
(A) not less than 80 percent shall be
returned to the general fund of the Treasury
for debt reduction;
(B) the lesser of 18 percent or the share of
proceeds otherwise authorized to be retained
under law shall be retained by the Federal
agency that has custody and is accountable for
the real property, subject to paragraph (2);
(C) not greater than 2 percent shall be made
available to carry out section 628, subject to
annual appropriations; and
(D) any remaining share of the proceeds shall
be returned to the general fund of the Treasury
for Federal budget deficit reduction.
(2) Limitation on use of proceeds.--Any proceeds
retained by Federal agencies under this section shall
be--
(A) deposited into the appropriate real
property account of the Federal agency that had
custody and accountability for the real
property, with the funds expended only as
authorized in annual appropriations Acts;
(B) used--
(i) by not later than 2 years after
the date of disposal of the real
property; and
(ii) only for activities relating to
Federal real property asset management
and disposal; and
(C) if not used by the date described in
subparagraph (B)(i), shall be deposited in the
Treasury and used for Federal budget deficit
reduction.
(c) Public Benefit.--
(1) Conveyance.--Except as provided in paragraph (2),
if a real property authorized to be disposed of under
subsection (a) has not been disposed of by the date
that is 2 years after the date the property is listed
for sale, the Director, in consultation with the
Administrator and the Secretary of Housing and Urban
Development, may consider a request from the disposing
Federal agency that the real property be conveyed to
State and local governments or nonprofit organizations
for various public purposes or uses as permitted by
applicable law.
(2) Predominant use and size standards.--
(A) In general.--Any real property authorized
to be disposed of under subsection (a) shall
not be conveyed under paragraph (1) if--
(i) the predominant use of
the property is not for
housing; and
(ii)(I) the area of the
property is not less than
25,000 square feet; or
(II) the appraised fair
market value of the property is
greater than $1,000,000.
(B) Appraised fair market value.--The
appraised fair market value described in
subparagraph (A)(ii)(II) shall be determined by
the Federal agency with custody or control of
the property, in consultation with the
Administrator and standard appraisal practice.
(d) Enforcement.--
(1) Increase in size of inventory.--Except as
provided in paragraph (2), if a Federal agency fails to
make available for public sale the real property
authorized for disposal under subsection (a) by the
date that is 18 months after the date on which the
authorization is made, that Federal agency, except for
specific exceptions promulgated by the Director, shall
not increase the size of the civilian real property
inventory, unless the square footage of the increase is
offset, within an appropriate time as determined by the
Director, through consolidation, colocation, or
disposal of another building space from the inventory
of that Federal agency.
(2) Exception.--Paragraph (1) shall not apply to a
Federal agency that acquires any real property not
under the administrative jurisdiction of the Federal
Government, by sale or lease, until the Director
submits a certification to Congress of the disposal of
all of those surplus properties.
(e) Termination of Authority.--The authority provided by
this section terminates on the date that is 5 years after the
date of enactment of this subchapter.
628. Homeless assistance grants
(a) Definitions.--In this section:
(1) Eligible nonprofit organization.--The term
``eligible nonprofit organization'' means a nonprofit
organization that is a representative of the homeless.
(2) Homeless.--The term ``homeless'' has the meaning
given the term in section 103 of the McKinney-Vento
Homeless Assistance Act (42 U.S.C. 11302), except that
subsection (c) of that section shall not apply.
(3) Permanent housing.--The term ``permanent
housing'' has the meaning given the term in section 401
of the McKinney-Vento Homeless Assistance Act (42
U.S.C. 11360).
(4) Private nonprofit organization.--The term
``private nonprofit organization'' has the meaning
given the term in section 401 of the McKinney-Vento
Homeless Assistance Act (42 U.S.C. 11360).
(5) Representative of the homeless.--The term
``representative of the homeless'' has the meaning
given the term in section 501(i) of the McKinney-Vento
Homeless Assistance Act (42 U.S.C. 11411(i)).
(6) Secretary.--The term ``Secretary'' means the
Secretary of Housing and Urban Development.
(7) Transitional housing.--The term ``transitional
housing'' has the meaning given the term in section 401
of the McKinney-Vento Homeless Assistance Act (42
U.S.C. 11360).
(b) Grant Authority.--
(1) In general.--To the extent amounts are made
available under section 627(b)(1)(C) for use under this
section, the Secretary shall make grants to eligible
private nonprofit organizations through the continuum
of care program established under subtitle C of title
IV of the McKinney-Vento Homeless Assistance Act (42
U.S.C. 11381 et se.), to purchase real property
suitable for use to assist the homeless in accordance
with subsection (c).
(2) Terms and conditions.--Except as otherwise
provided in this section, a grant under this section
shall be subject to the same terms and conditions as a
grant under the continuum of care program established
under subtitle C of title IV of the McKinney-Vento
Homeless Assistance Act (42 U.S.C. 11381 et se.).
(c) Use of Properties for Housing or Shelter for the
Homeless.--
(1) Eligible uses.--An eligible private nonprofit
organization that receives a grant under subsection (b)
shall use the amounts received only to purchase or
rehabilitate real property to provide permanent
housing, transitional housing, or temporary shelter to
the homeless.
(2) Term of use.--The Secretary may not make a grant
under subsection (b) to an eligible private nonprofit
organization unless the eligible private nonprofit
organization provides to the Secretary such assurances
as the Secretary determines necessary to ensure that
any real property purchased or rehabilitated using
amounts received under the grant is used only for the
purposes described in paragraph (1) for a period of not
less than 15 years.
(d) Preference.--In awarding grants under subsection (b),
the Secretary shall give preference to eligible private
nonprofit organizations that operate within areas in which
Federal real property is being sold under the disposal program
authorized under section 627.
(e) Regulations.--The Secretary may promulgate such
regulations as are necessary to carry out this section.
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TITLE 42--THE PUBLIC HEALTH AND WELFARE
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CHAPTER 7--SOCIAL SECURITY
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Subchapter XVIII--Health Insurance for Aged and Disabled
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PART B--SUPPLEMENTARY MEDICAL INSURANCE BENEFITS FOR AGED AND
DISABLED\109\
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\109\These amendments to the Social Security Act are made by
section 104(b) of the bill.
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Sec. 1395p. Enrollment periods
(a) * * *
* * * * * * *
(m)(1)(A) In the case of any individual who is subject to
the enrollment requirement of section 8903c(e) of title 5,
United States Code, who has elected not to enroll (or to be
deemed enrolled) during the individual's initial enrollment
period, there shall be a special enrollment period described in
subparagraph (B).
(B) The special enrollment period described in this
subparagraph is the 6-month period, beginning on August 1, 2015
and ending on January 31, 2016.
(2)(A) In the case of any individual who--
(i) was initially not subject to the enrollment
requirement of section 8903c(e) of title 5, United
States Code;
(ii) is eligible to enroll in a plan under chapter 89
of title 5, United States Code, because of an
involuntary loss of health care coverage;
(iii) upon the involuntary loss of health care
coverage, becomes subject to the enrollment requirement
of section 8903c(e) of title 5, United States Code,
because of enrollment in a PSHBP plan; and
(iv) has elected not to enroll (or to be deemed
enrolled) during the individual's initial enrollment
period, there shall be a special enrollment period
described in subparagraph (B).
(B) The special enrollment period described in this
subparagraph is the period of time equivalent to the period of
time in which the individual has the ability to enroll in a
PSHBP plan due to the involuntary loss of health care coverage,
pursuant to chapter 89 of title 5, United States Code, and its
implementing regulations.
(C) For purposes of this subsection, the term ``PSHBP
plan'' has the meaning under section 8903c(a) of title 5,
United States Code.
(3) In the case of an individual who enrolls during the
special enrollment period provided under paragraphs (1) and
(2), the coverage period under this part shall begin on the
first day of the month in which the individual enrolls.
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Sec. 1395r. Amount of premiums for individuals enrolled under this part
(a) * * *
* * * * * * *
(b) Increase in Monthly Premium--
In the case of an individual whose coverage period began
pursuant to an enrollment after his initial enrollment period
(determined pursuant to subsection (c) or (d) of section 1395p
of this title) and not pursuant to a special enrollment period
under subsection [(i)(4) or (l)] (i)(4), (l), or (m) of section
1395p of this title, the monthly premium determined under
subsection (a) of this section (without regard to any
adjustment under subsection (i) of this section) shall be
increased by 10 percent of the monthly premium so determined
for each full 12 months (in the same continuous period of
eligibility) in which he could have been but was not enrolled.
For purposes of the preceding sentence, there shall be taken
into account (1) the months which elapsed between the close of
his initial enrollment period and the close of the enrollment
period in which he enrolled, plus (in the case of an individual
who reenrolls) (2) the months which elapsed between the date of
termination of a previous coverage period and the close of the
enrollment period in which he reenrolled, but there shall not
be taken into account months for which the individual can
demonstrate that the individual was enrolled in a group health
plan described in section 1395y(b)(1)(A)(v) of this title by
reason of the individual's (or the individual's spouse's)
current employment status or months during which the individual
has not attained the age of 65 and for which the individual can
demonstrate that the individual was enrolled in a large group
health plan (as that term is defined in section
1395y(b)(1)(B)(iii) of this title) by reason of the
individual's current employment status (or the current
employment status of a family member of the individual) or
months for which the individual can demonstrate that the
individual was an individual described in section 1395p(k)(3)
of this title. Any increase in an individual's monthly premium
under the first sentence of this subsection with respect to a
particular continuous period of eligibility shall not be
applicable with respect to any other continuous period of
eligibility which such individual may have. No increase in the
premium shall be effected for a month in the case of an
individual who enrolls under this part during 2001, 2002, 2003,
or 2004 and who demonstrates to the Secretary before December
31, 2004, that the individual is a covered beneficiary (as
defined in section 1072(5) of title 10). The Secretary of
Health and Human Services shall consult with the Secretary of
Defense in identifying individuals described in the previous
sentence.
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[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]