HR 22 IH

To modernize the postal laws of the United States.

January 6, 1999

Mr. MCHUGH (for himself and Mr. BURTON of Indiana) introduced the following bill; which was referred to the Committee on Government Reform, and in addition to the Committee on the Judiciary, for a period to be subsequently determined by the Speaker, in each case for consideration of such provisions as fall within the jurisdiction of the committee concerned

To modernize the postal laws of the United States.

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

SECTION 1. SHORT TITLE; TABLE OF CONTENTS.

(a) SHORT TITLE- This Act may be cited as the `Postal Modernization Act of 1999'.

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

Sec. 1. Short title; table of contents.

TITLE I--REDESIGNATION OF THE BOARD OF GOVERNORS, THE POSTMASTER GENERAL, AND THE POSTAL RATE COMMISSION

Sec. 101. Redesignation of the Board of Governors.

Sec. 102. Redesignation of the Postmaster General.

Sec. 103. Redesignation of the Postal Rate Commission.

Sec. 104. Other references.

TITLE II--NEW SYSTEM RELATING TO POSTAL RATES, CLASSES, AND SERVICES

Subtitle A--In General

Sec. 201. Establishment.

Sec. 202. Amendments to chapter 36.

Sec. 203. Postal Service Competitive Products Fund.

Sec. 204. USPS Corporation.

Sec. 205. Postal and nonpostal products.

Subtitle B--Related Provisions

Sec. 211. Authority for Postal Regulatory Commission to issue subpoenas.

Sec. 212. Qualification requirements for Commissioners and Directors.

Sec. 213. Appropriations for the Commission.

Sec. 214. Change-of-address order involving a commercial mail receiving agency.

Sec. 215. Rates for mail under former section 4358.

TITLE III--GENERAL AUTHORITY

Sec. 301. Rulemaking authority.

Sec. 302. General duties.

Sec. 303. Employment of postal police officers.

Sec. 304. Date of postmark to be treated as date of appeal in connection with the closing or consolidation of post offices.

Sec. 305. Unfair competition prohibited.

Sec. 306. International postal arrangements.

Sec. 307. Suits by and against the Postal Service.

TITLE IV--MISCELLANEOUS PROVISIONS RELATING TO THE BUDGET AND APPROPRIATIONS PROCESS

Sec. 401. Provisions relating to benefits under chapter 81 of title 5, United States Code, for officers and employees of the former Post Office Department.

Sec. 402. Technical and conforming amendments.

TITLE V--PROVISIONS RELATING TO TRANSPORTATION, CARRIAGE, OR DELIVERY OF MAIL

Sec. 501. Obsolete provisions.

Sec. 502. Expanded contracting authority.

Sec. 503. Private carriage of letters.

Sec. 504. Repeal of section 5403.

TITLE VI--STUDIES

Sec. 601. Employee-management relations.

Sec. 602. Recommendations on universal postal services.

Sec. 603. Study on equal application of laws to competitive products.

Sec. 604. Greater diversity in Postal Service executive and administrative schedule management positions.

Sec. 605. Plan for assisting displaced workers.

Sec. 606. Contracts with women, minorities, and small businesses.

TITLE VII--INSPECTORS GENERAL

Sec. 701. Inspector General of the Postal Regulatory Commission.

Sec. 702. Inspector General of the United States Postal Service to be appointed by the President.

TITLE VIII--LAW ENFORCEMENT

Subtitle A--Amendments to Title 39, United States Code

Sec. 801. Make Federal assault statutes applicable to postal contract employees.

Sec. 802. Sexually oriented advertising.

Sec. 803. Allow Postal Service to retain asset forfeiture recoveries.

Sec. 804. Hazardous matter.

Subtitle B--Other Provisions

Sec. 811. Stalking Federal officers and employees.

Sec. 812. Nonmailability of controlled substances.

Sec. 813. Enhanced penalties.

Sec. 814. Postal burglary provisions.

Sec. 815. Mail, money, or other property of the United States.

TITLE I--REDESIGNATION OF THE BOARD OF GOVERNORS, THE POSTMASTER GENERAL, AND THE POSTAL RATE COMMISSION

SEC. 101. REDESIGNATION OF THE BOARD OF GOVERNORS.

(a) AMENDMENTS TO TITLE 39, UNITED STATES CODE- Title 39, United States Code, is amended--

(1) in sections 102, 202, 204, 205, 402, 414, 1005, 3604, 3621, 3623, 3624, 3625, 3628, 3641, and 3684, in the analysis for chapter 2 (in the items relating to sections 202 and 205, respectively), and in the analysis for chapter 36 (in the item relating to section 3625) by striking `Governors' each place it appears and inserting `Directors'; and

(2) in sections 202, 205, and 1002 by striking `Governor' each place it appears and inserting `Director'.

(b) AMENDMENT TO THE FEDERAL SALARY ACT OF 1967- Section 225(f)(E) of the Federal Salary Act of 1967 (2 U.S.C. 356(E)) is amended by striking `Governors of the Board of Governors of the United States Postal Service' and inserting `Directors of the Board of Directors of the United States Postal Service'.

(c) AMENDMENTS TO TITLE 5, UNITED STATES CODE- Title 5, United States Code, is amended in sections 8344(e) and 8468(c) by striking `Governor of the Board of Governors of the United States Postal Service' and inserting `Director of the Board of Directors of the United States Postal Service'.

(d) AMENDMENTS TO THE ETHICS IN GOVERNMENT ACT OF 1978- The Ethics in Government Act of 1978 (5 U.S.C. App.) is amended--

(1) in section 101(f)(6) by striking `Governor of the Board of Governors of the United States Postal Service' and inserting `Director of the Board of Directors of the United States Postal Service'; and

(2) in sections 103(c) and 106(b)(6) by striking `Governors of the Board of Governors of the United States Postal Service' and inserting `Directors of the Board of Directors of the United States Postal Service'.

(e) AMENDMENTS TO TITLE 18, UNITED STATES CODE- Title 18, United States Code, is amended in sections 1735 and 3061 by striking `Governors' each place it appears and inserting `Directors'.

SEC. 102. REDESIGNATION OF THE POSTMASTER GENERAL.

(a) AMENDMENTS TO TITLE 39, UNITED STATES CODE- Section 102 of title 39, United States Code, is amended by striking `and' at the end of paragraph (3), by striking the period at the end of paragraph (4) and inserting `; and', and by adding at the end the following:

`(5) `Postmaster General' means the Postmaster General and Chief Executive Officer of the United States Postal Service appointed under section 202(a) of this title.'.

(b) AMENDMENTS TO THE ETHICS IN GOVERNMENT ACT OF 1978- The Ethics in Government Act of 1978 (5 U.S.C. App.) is amended in sections 101(f)(6), 103(c), and 106(b)(6) by striking `Postmaster General' and inserting `Postmaster General and Chief Executive Officer of the United States Postal Service'.

(c) AMENDMENTS TO TITLE 18, UNITED STATES CODE- Title 18, United States Code, is amended in sections 501, 1703, 1704, and 1709 by striking `Postmaster General' each place it appears and inserting `Postmaster General and Chief Executive Officer of the United States Postal Service'.

SEC. 103. REDESIGNATION OF THE POSTAL RATE COMMISSION.

(a) AMENDMENTS TO TITLE 39, UNITED STATES CODE- Title 39, United States Code, is amended in sections 404, 1001, 1002, 2003, 3601, 3602, 3603, 3604, 3622, 3623, 3624, 3625, 3628, 3641, and 3661, in the analysis for chapter 36 (in the item relating to subchapter I), and in the heading for subchapter I of chapter 36 by striking `Postal Rate Commission' each place it appears and inserting `Postal Regulatory Commission'.

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

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

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

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

SEC. 104. OTHER REFERENCES.

(a) BOARD OF GOVERNORS, ETC- Whenever reference is made in any provision of law (other than this Act or a provision of law amended by this Act), regulation, rule, document, or other record of the United States to the Board of Governors of the United States Postal Service (or any Governor or Governors thereof), such reference shall be considered a reference to the Board of Directors of the United States Postal Service (or any Director or Directors thereof, as appropriate).

(b) POSTMASTER GENERAL- Whenever reference is made in any provision of law (other than this Act or a provision of law amended by this Act), regulation, rule, document, or other record of the United States to the Postmaster General, such reference shall be considered a reference to the Postmaster General and Chief Executive Officer of the United States Postal Service.

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

TITLE II--NEW SYSTEM RELATING TO POSTAL RATES, CLASSES, AND SERVICES

Subtitle A--In General

SEC. 201. ESTABLISHMENT.

(a) IN GENERAL- Title 39, United States Code, is amended by adding after chapter 36 the following:

`CHAPTER 37--NEW SYSTEM FOR ESTABLISHING POSTAL RATES, CLASSES, AND SERVICES

`SUBCHAPTER I--DEFINITIONS

`Sec.

`3701. Definitions.

`3702. Free mailing privileges unaffected.

`SUBCHAPTER II--BASELINE RATES

`3721. Determination of baseline rates.

`3722. Provisions relating to reduced-rate categories of mail.

`3723. Automatic termination of any rate case that may be pending.

`SUBCHAPTER III--RATES FOR PRODUCTS IN THE NONCOMPETITIVE CATEGORY OF MAIL

`3731. Applicability; definitions.

`3732. Limitations on rates.

`3733. Adjustment factor.

`3734. Action of the Board.

`SUBCHAPTER IV--RATES FOR PRODUCTS IN THE COMPETITIVE CATEGORY OF MAIL

`3741. Applicability; definition.

`3742. Action of the Board.

`3743. Provisions applicable to competitive products individually.

`3744. Provisions applicable to competitive products collectively.

`SUBCHAPTER V--MARKET TESTS OF EXPERIMENTAL PRODUCTS

`3751. Market tests of experimental noncompetitive products.

`3752. Market tests of experimental competitive products.

`3753. Large-scale market tests.

`3754. Adjustment for inflation.

`3755. Conversion to permanence.

`3756. Effective date.

`SUBCHAPTER VI--PROVISIONS RELATING TO THE INTRODUCTION AND CATEGORIZATION OF PRODUCTS

`3761. Criteria for the identification of noncompetitive and competitive products.

`3762. New noncompetitive products.

`3763. New competitive products.

`3764. Transfers of products between categories of mail.

`3765. Transition provisions for new or transferred noncompetitive products.

`SUBCHAPTER VII--REPORTING REQUIREMENTS AND RELATED PROVISIONS

`3771. Annual reports by the Commission.

`3772. Annual reports to the Commission.

`3773. Annual determination of compliance.

`3774. Other reports.

`SUBCHAPTER I--DEFINITIONS

`Sec. 3701. Definitions

`For purposes of this chapter:

`(1) PRODUCT- The term `product' means a class of mail or type of postal service, including--

`(A) a subclass or other similar subordinate unit thereof; and

`(B) the next level of subordinate units thereof (below the first level of subordinate units, as referred to in subparagraph (A)).

`(2) RATE- The term `rate', as used with respect to any products, includes fees for postal services.

`(3) PRODUCT IN THE NONCOMPETITIVE CATEGORY OF MAIL- The term `product in the noncompetitive category of mail' or `noncompetitive product' means a product subject to subchapter III.

`(4) PRODUCT IN THE COMPETITIVE CATEGORY OF MAIL- The term `product in the competitive category of mail' or `competitive product' means a product subject to subchapter IV.

`(5) CONSUMER PRICE INDEX- The term `Consumer Price Index' means the Consumer Price Index for All Urban Consumers published monthly by the Bureau of Labor Statistics of the Department of Labor.

`(6) YEAR- The term `year' means a fiscal year.

`Sec. 3702. Free mailing privileges unaffected

`Nothing in this chapter shall be considered to affect any free mailing privileges accorded under any of sections 3217 or 3403 through 3406.

`SUBCHAPTER II--BASELINE RATES

`Sec. 3721. Determination of baseline rates

`(a) REQUIREMENT THAT A RATEMAKING REQUEST BE MADE- The Postal Service shall, during the 18-month period beginning on the date of enactment of this chapter, submit a request under section 3622 for a recommended decision by the Postal Regulatory Commission on rates for all products in the noncompetitive category of mail and all products in the competitive category of mail.

`(b) POLICIES AND CRITERIA- The request under subsection (a) shall be made in accordance with the same policies and criteria as would otherwise apply in the case of a request made under section 3622, except that--

`(1) in applying section 3621, any determination of total estimated costs of the Postal Service shall be made without including any provision for contingencies; and

`(2) to the extent that any class of mail or kind of mailer under section 3626(a) is involved, such request shall be made in conformance with the requirements of section 3722.

`(c) PROCEDURES FOR CONSIDERATION-

`(1) IN GENERAL- Except as otherwise provided in subsection (b) or any other provision of this subchapter, the request made under subsection (a) shall be considered and acted on in the same way as any other request made under section 3622.

`(2) ADDITIONAL AUTHORITY- For purposes of the request made under subsection (a), section 3622(b) shall be applied as if it had been amended by inserting after `the policies of this title' the following: `(including the second sentence of section 3621)'.

`(d) EFFECTIVE DATE OF ANY RATES ESTABLISHED PURSUANT TO REQUEST- All rates established pursuant to the request made under subsection (a) shall take effect as of the same date, determined in accordance with applicable provisions of chapter 36, but in no event later than the last day of the 18-month period beginning on the date on which such request is made.

`(e) DEFINITION OF BASELINE RATES-

`(1) IN GENERAL- Subject to section 3722(c), for purposes of this title, the baseline rate for each product shall be the rate in effect for such product as of the applicable date under paragraph (2), irrespective of whether--

`(A) any rate change is in fact requested for such product under subsection (a);

`(B) ratemaking proceedings are in fact completed by such date; or

`(C) the rate in effect for such product as of such date is a permanent or temporary one.

`(2) DATE AS OF WHICH BASELINE RATES ARE TO BE DETERMINED- The applicable date under this paragraph shall be--

`(A) the date as of which any baseline rates, established pursuant to the request made under subsection (a), are to take effect in accordance with subsection (d); or

`(B) if subparagraph (A) does not apply (whether because proceedings under chapter 36 are not completed before the deadline under subsection (d) or otherwise), the last day of the 18-month period referred to in subsection (d).

`Sec. 3722. Provisions relating to reduced-rate categories of mail

`(a) DEFINITIONS- For purposes of this section, the terms `costs attributable' and `regular-rate category' have the same meanings as are given them by section 3626(a).

`(b) REQUIREMENT-

`(1) IN GENERAL- Notwithstanding any other provision of this title (but subject to paragraph (3)), the rate established under this chapter for a product within a reduced-rate category of mail (as referred to in section 3721(b)(2)), including the baseline rate therefor (if applicable), may not exceed--

`(A) in the case of a competitive product, the rate described in paragraph (2); or

`(B) in the case of a noncompetitive product, the lesser of--

`(i) the rate described in paragraph (2); or

`(ii) the highest rate allowable for such product under subsection (c) or (d) of section 3732, whichever is less.

`(2) RATE DESCRIBED- The rate described in this paragraph is, with respect to any product, the rate that would then be in effect for such product if established under section 3626(a) in conformance with the requirement that--

`(A) the estimated costs attributable (expressed on a per-unit basis) used in establishing such rate, not exceed

`(B) the estimated costs attributable (similarly expressed) used in establishing the rate that is to be concurrently in effect for the same product within the most closely corresponding regular-rate category.

`(3) NONCOMPETITIVE PRODUCT MINIMUM- Nothing in this subsection shall be considered to waive the limitation set forth in section 3732(b) (relating to the minimum rate required for a noncompetitive product).

`(c) SELF-EXECUTING CORRECTION MECHANISM- If the baseline rate for a product would not otherwise be in compliance with subsection (b), such rate shall be reduced by the minimum amount necessary in order to achieve compliance.

`Sec. 3723. Automatic termination of any rate case that may be pending

`To the extent that any proceedings relating to a request made under section 3622 before the date of enactment of this chapter remain pending as of such date of enactment, any further action taken in connection with such request shall be null and void.

`SUBCHAPTER III--RATES FOR PRODUCTS IN THE NONCOMPETITIVE CATEGORY OF MAIL

`Sec. 3731. Applicability; definitions

`(a) APPLICABILITY- This subchapter applies with respect to the products in the first, second, third, and fourth baskets of products, respectively.

`(b) DEFINITIONS- For purposes of this subchapter:

`(1) FIRST BASKET OF PRODUCTS- The term `first basket of products' means--

`(A) single-piece first-class letters (both domestic and international);

`(B) single-piece first-class cards (both domestic and international);

`(C) single-piece parcels (both domestic and international); and

`(D) special services.

`(2) SECOND BASKET OF PRODUCTS- The term `second basket of products' means all first-class mail not in the first basket of products.

`(3) THIRD BASKET OF PRODUCTS- The term `third basket of products' means periodicals.

`(4) FOURTH BASKET OF PRODUCTS- The term `fourth basket of products' means standard mail (except for parcel post).

`(c) RULE OF CONSTRUCTION-

`(1) IN GENERAL- Except as provided in paragraph (2), mail matter referred to in paragraphs (1) through (4) of subsection (b) shall, for purposes of such paragraphs, be considered to have the respective meanings given them under the mail classification schedule (as defined by section 3623) as of the effective date of this chapter.

`(2) UPDATES- The Postal Regulatory Commission shall, whenever any relevant change occurs (whether pursuant to a product transfer under section 3764, the reclassification of a product under section 3623, or the introduction of a new noncompetitive product under section 3762), prescribe new lists of products within the respective baskets described in subsection (b). The revised lists shall indicate how and when any previous lists (including under subsection (b)) are superseded, and shall be published in the Federal Register.

`Sec. 3732. Limitations on rates

`(a) IN GENERAL- Except as otherwise provided in this subchapter, the rate in effect for a noncompetitive product may not, during any year in a ratemaking cycle (as defined in section 3733(a))--

`(1) be less than the minimum rate required for such product in such year, as determined under subsection (b);

`(2) be greater than the maximum rate allowable for such product in such year, as determined under subsection (c); or

`(3) be changed by a percentage that would cause such rate to fall outside of the range allowable for such product in such year, as determined under subsection (d).

Nothing in paragraph (3) shall be considered to authorize the establishment of any rate less than the minimum rate required under paragraph (1) or greater than the maximum rate allowable under paragraph (2).

`(b) MINIMUM RATE REQUIRED- For purposes of this section, the minimum rate required for a product in a year is the minimum rate which, if kept in effect for such product throughout the year (or, if implemented after the start of the year, throughout the remainder of the year, but taking into account all revenues from such product that are attributable to earlier periods in the same year) will be sufficient to ensure that such product will bear the direct and indirect postal costs attributable to such product for such year.

`(c) MAXIMUM RATE ALLOWABLE-

`(1) IN GENERAL- For purposes of this section, the maximum rate allowable for a product in a year shall be equal to the rate determined by increasing or decreasing (as applicable)--

`(A) the maximum rate allowable for such product under this subsection in the year preceding the year for which the maximum rate allowable is being determined (disregarding any rounding rules), by

`(B) the percentage adjustment applicable for the year for which the maximum rate allowable is being determined, as determined under paragraph (2).

`(2) PERCENTAGE ADJUSTMENT APPLICABLE- For purposes of this section, the percentage adjustment applicable shall, for any year, be equal to--

`(A) the change in the Consumer Price Index for such year, adjusted by

`(B) the adjustment factor for such year.

`(3) DEFINITIONS- For purposes of this section:

`(A) CHANGE IN THE CONSUMER PRICE INDEX- The change in the Consumer Price Index for a year shall be equal to the percentage (expressed as a positive value, a negative value, or zero, as the case may be) by which the Consumer Price Index for the preceding year differs from the Consumer Price Index for the second preceding year.

`(B) CONSUMER PRICE INDEX FOR A YEAR- The Consumer Price Index for a year is

the average of the Consumer Price Index for the 12-month period ending on June 30th of such year.

`(C) ADJUSTMENT FACTOR- The adjustment factor for any year shall be determined in accordance with section 3733.

`(4) SPECIAL RULE- For purposes of determining the maximum rate allowable for any particular product during the first year of the first ratemaking cycle, paragraph (1)(A) shall be applied by substituting `the baseline rate for such product' for `the maximum rate allowable for such product under this subsection in the year preceding the year for which the maximum rate allowable is being determined (disregarding any rounding rules)'.

`(5) ROUNDING RULE- The maximum rate allowable for a product within the first basket of products shall be equal to the rate determined for such product under this subsection (disregarding this paragraph), rounded to the nearest cent (rounding 1/2 of a cent to the next higher cent).

`(d) RANGE ALLOWABLE- For purposes of this section, the range allowable for a product in any year is the range delimited by--

`(1) a maximum rate equal to the rate determined by increasing or decreasing (as applicable)--

`(A) the rate last in effect for such product before the start of such year, by

`(B) the percentage equal to the percentage adjustment applicable with respect to such product for such year, plus 2 percent; and

`(2) a minimum rate equal to the rate determined by increasing or decreasing (as applicable)--

`(A) the rate last in effect for such product before the start of such year, by

`(B) the percentage equal to the percentage adjustment applicable with respect to such product for such year, minus 2 percent.

For purposes of applying paragraphs (1)(B) and (2)(B) in any year, the Board of Directors may, in a manner consistent with the policies of this title and the requirements of this subchapter, establish a single percentage which shall be lower than, and which shall be substituted for, the percentage adjustment applicable that would otherwise be applied under both of those paragraphs in such year. Such single percentage shall be the same for every product in the noncompetitive category.

`Sec. 3733. Adjustment factor

`(a) DEFINITION OF RATEMAKING CYCLE-

`(1) IN GENERAL- For purposes of this title, the term `ratemaking cycle' means--

`(A) the 5-year period beginning on the first day of the second year beginning after the date as of which the baseline rates are determined under section 3721(e)(2); and

`(B) each 5-year period beginning on the day after the last day of the immediately preceding 5-year period under this subsection.

`(2) EARLIER COMMENCEMENT DATE- The Postal Regulatory Commission may advance the commencement date of the first ratemaking cycle to the date which occurs 1 year earlier than the date that would otherwise apply under subparagraph (1)(A), but only if that earlier date does not precede the date as of which all requirements of this section have been completed with respect to such cycle.

`(b) PROCEDURES FOR DETERMINING ADJUSTMENT FACTOR-

`(1) COMMENCEMENT OF PROCEEDINGS-

`(A) IN GENERAL- Except as provided in subparagraph (B), the Postal Regulatory Commission shall, beginning in September of the second year before the start of each ratemaking cycle, provide the opportunity for a hearing on the record under sections 556 and 557 of title 5 to the Postal Service, users of the mails, and an officer of the Commission who shall be required to represent the interests of the general public, with respect to the adjustment factor to be established for the upcoming ratemaking cycle.

`(B) EXCEPTION- For purposes of the first hearing under this subsection, proceedings shall be commenced during the second month beginning on or after the date as of which the baseline rates are determined under section 3721(e)(2).

`(2) RULES OF PROCEEDINGS- In order to conduct its proceedings with utmost expedition consistent with procedural fairness to the parties, the Commission may (without limitation) adopt rules which provide for--

`(A) the advance submission of written direct testimony;

`(B) the conduct of prehearing conferences to define issues, and for other purposes to insure orderly and expeditious proceedings;

`(C) discovery both from the Postal Service and the parties to the proceedings;

`(D) limitation of testimony; and

`(E) the conduct of the entire proceedings off the record with the consent of the parties.

`(3) PRINTING AND NOTICE REQUIREMENTS- The Commission's decision and the record of the Commission's hearings shall be made generally available at the time the decision is issued and shall be printed and made available for sale by the Public Printer within 10 days following the day the decision is issued.

`(4) TIMING-

`(A) IN GENERAL- Except as provided in subparagraph (B), all actions required of the Commission under this section, including those required under paragraph (3), shall be completed by the end of the year preceding the commencement of the ratemaking cycle to which the decision relates.

`(B) EXCEPTION- In any case in which the Commission determines that the Postal Service has unreasonably delayed any proceedings under this section by failing to respond within a reasonable time to any lawful order of the Commission, the Commission may extend the deadline described in subparagraph (A) by one day for each day of such delay.

`(C) EFFECT OF DELAY ON RATEMAKING AUTHORITY- No rate change for any noncompetitive product may take effect during any period of delay. For purposes of the preceding sentence, the term `period of delay' means, in the circumstance described in subparagraph (B), the period beginning on the day following the original deadline (as described in subparagraph (A)) and ending on the date of the new deadline (as determined under subparagraph (B)).

`(c) REQUIREMENTS RELATING TO THE ESTABLISHMENT OF ADJUSTMENT FACTOR-

`(1) IN GENERAL- An adjustment factor shall be established in accordance with--

`(A) the policies of this title; and

`(B) the best evidence of likely Postal Service productivity, and of specific sources of cost savings to the Postal Service, during the ratemaking cycle to which an adjustment factor is to apply.

`(2) REQUIREMENT THAT ADJUSTMENT FACTOR BE A NEGATIVE VALUE OR ZERO-

`(A) IN GENERAL- Except as provided in subparagraph (B), an adjustment factor may be no greater than zero.

`(B) EXCEPTIONS- A positive adjustment factor may be established only upon a written determination by the Postal Regulatory Commission that an exception to subparagraph (A) is necessary--

`(i) because of any new and significant statutorily imposed funding obligations not fully funded through appropriations; or

`(ii) because postal revenues during the upcoming ratemaking cycle would otherwise be insufficient 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.

A determination under clause (ii) shall take into account costs anticipated by the Postal Service for the period of time involved, such as wages, benefits, and transportation costs, consistent with the provisions of subsection (g).

`(d) SAME ADJUSTMENT FACTOR TO BE UNIFORMLY APPLIED TO ALL PRODUCTS- For purposes of each year in a ratemaking cycle, the same adjustment factor shall apply--

`(1) to all baskets under section 3731; and

`(2) to all products within each such basket.

`(e) HOW AN ADJUSTMENT FACTOR IS TO BE EXPRESSED AND APPLIED-

`(1) HOW AN ADJUSTMENT FACTOR IS TO BE EXPRESSED- An adjustment factor established under this section shall be expressed as a percentage.

`(2) HOW AN ADJUSTMENT FACTOR IS TO BE APPLIED- To adjust a change in the Consumer Price Index by an adjustment factor, the magnitude of the adjustment factor shall--

`(A) if the adjustment factor is a positive value, be added to the change in the Consumer Price Index; or

`(B) if the adjustment factor is a negative value, be subtracted from the change in the Consumer Price Index.

`(f) EXIGENT CIRCUMSTANCES-

`(1) IN GENERAL- Notwithstanding subsection (d), upon a majority vote of the members of the

Board of Directors then holding office, the Postal Service may request the Postal Regulatory Commission to render a decision on changing the adjustment factor to be applied during the then current ratemaking cycle (after having previously been established under this section for such cycle).

`(2) CONDITIONS- A request made under paragraph (1) may be granted only upon a written determination by the Commission that the change requested is justified by one or more of the same reasons as would justify the establishment of a positive adjustment factor (as set forth in subsection (c)(2)(B)).

`(3) EFFECT; DURATION- A change granted under this subsection--

`(A) shall supersede the adjustment factor that would otherwise apply under this section (with appropriate changes to the respective limitations under paragraphs (2) and (3) of section 3732(a)); and

`(B) shall remain in effect for the rest of the ratemaking cycle involved, subject to paragraph (5).

`(4) EXPEDITED CONSIDERATION- A request made under paragraph (1) shall be acted on under this section in the same manner as if initiated under subsection (b)(1), except that a decision on any such request shall be rendered not later than 6 months after the date on which the request is made.

`(5) FREQUENCY- Nothing in this section shall be considered to limit the number of times this subsection may be invoked during a ratemaking cycle.

`(g) POSTAL REGULATORY COMMISSION NOT TO INTERFERE WITH COLLECTIVE BARGAINING- It is the sense of the Congress that nothing in this section should restrict, expand, or otherwise 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 this title, the National Labor Relations Act, any handbook or manual affecting employee labor relations within the United States Postal Service, or any collective bargaining agreement.

`Sec. 3734. Action of the Board

`(a) AUTHORITY TO ESTABLISH RATES- The Board of Directors, with the written concurrence of a majority of all of the members of the Board then holding office, shall establish rates for products in the noncompetitive category of mail in accordance with the requirements of this subchapter and the policies of this title.

`(b) PROCEDURES-

`(1) IN GENERAL- Rates shall be established in writing, complete with a statement of explanation and justification.

`(2) PUBLICATION- The Board shall cause each such decision (complete with the accompanying statement) and the record of the Board's proceedings to be published in the Federal Register at least 45 days before the rate or rates to which they pertain are to take effect.

`(c) LIMITATIONS ON AUTHORITY-

`(1) IN GENERAL- Except as provided in paragraph (2)--

`(A) FREQUENCY- Ratemaking authority under this section may not be exercised more than once for purposes of any year.

`(B) UNIFORM EFFECTIVE DATE- All changes in rates pursuant to this section in a year shall take effect on the same date.

`(2) EXCEPTION FOR CHANGE DUE TO EXIGENT CIRCUMSTANCES-

`(A) IN GENERAL- If the maximum rate allowable for a product in a year changes pursuant to a request granted under section 3733(f), then, in the event that ratemaking authority under this section was previously exercised with respect to such product for such year, such rate may be modified, not more than once more in such year, based on the change in the maximum rate allowable (and the corresponding change in the range allowable).

`(B) UNIFORM EFFECTIVE DATE- All changes in rates pursuant to this paragraph shall, to the extent based on the same set of changes (as referred to in subparagraph (A)), take effect beginning on the same date.

`SUBCHAPTER IV--RATES FOR PRODUCTS IN THE COMPETITIVE CATEGORY OF MAIL

`Sec. 3741. Applicability; definition

`(a) APPLICABILITY- This subchapter applies with respect to--

`(1) priority mail;

`(2) expedited mail;

`(3) mailgrams;

`(4) international mail; and

`(5) parcel post;

except that this subchapter does not apply with respect to any product then currently in the noncompetitive category of mail.

`(b) DEFINITION- For purposes of this subchapter, the term `costs attributable', as used with respect to a product, means the direct and indirect postal costs attributable to such product.

`(c) RULE OF CONSTRUCTION-

`(1) IN GENERAL- Except as provided in paragraph (2), mail matter referred to in paragraphs (1) through (5) of subsection (a) shall, for purposes of such paragraphs, be considered to have the respective meanings given them under the mail classification schedule (as defined by section 3623) as of the effective date of this chapter.

`(2) UPDATES- The Postal Regulatory Commission shall, whenever any relevant change occurs (whether pursuant to a product transfer under section 3764 or an action taken under section 3763), prescribe new lists of the products to which this subchapter applies. The revised lists shall indicate how and when any previous lists (including under subsection (a)) are superseded, and shall be published in the Federal Register.

`Sec. 3742. Action of the Board

`(a) AUTHORITY TO ESTABLISH RATES- The Board of Directors, with the written concurrence of a majority of all of the members of the Board then holding office, shall establish rates for products in the competitive category of mail in accordance with the requirements of this subchapter and the policies of this title.

`(b) PROCEDURES- Section 3734(b) shall apply with respect to rates and decisions under this section, except that for purposes of this section, section 3734(b) shall be applied by substituting `by such date before the effective date of any new rates as the Board considers appropriate' for `at least 45 days before the rate or rates to which they pertain are to take effect'.

`(c) EFFECTIVE DATE-

`(1) IN GENERAL- Except as provided in paragraph (2), the ratemaking provisions of this subchapter shall be effective beginning with the rates to be established for the first year beginning on or after the date as of which the baseline rates are determined under section 3721(e)(2).

`(2) EXCEPTION- The ratemaking provisions of this subchapter shall, with respect to all international mail as to which this subchapter applies, be effective beginning on the date as of which the baseline rates are determined under section 3721(e)(2), subject (until the entirety of this subchapter becomes effective in accordance with paragraph (1)) only to the requirement under section 3743(a).

`Sec. 3743. Provisions applicable to competitive products individually

`(a) IN GENERAL- Rates for products in the competitive category of mail shall be established in a manner such that each such product shall bear the costs attributable to such product in such year.

`(b) TREATMENT OF SHORTFALLS- If revenues derived from a competitive product in any year are not sufficient to meet the costs attributable to such product for such year, the shortfall shall be made up in accordance with section 3744(c)(1).

`(c) MANDATORY DISCONTINUANCE OF LOSS-MAKING PRODUCTS-

`(1) IN GENERAL- If a competitive product persistently fails to cover the costs attributable to such product, the Postal Regulatory Commission may, in accordance with procedures which the Commission shall prescribe and after considering all relevant circumstances, order the Postal Service to discontinue such product permanently.

`(2) PROCEDURES- The procedures prescribed to carry out this subsection--

`(A) shall provide the opportunity for a hearing on the record under sections 556 and 557 of title 5 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;

`(B) may include rules of proceedings that provide for any procedure or other matter listed under section 3733(b)(2); and

`(C) shall require that any final decision be accompanied by a statement setting forth the reasons therefor.

`Sec. 3744. Provisions applicable to competitive products collectively

`(a) COST-COVERAGE REQUIREMENT-

`(1) IN GENERAL- Rates for competitive products shall be established in a manner such that the cost-coverage ratio for all competitive products (collectively) shall, for each year to which this subchapter applies (as referred to in section 3742(c)), be at least equal to the cost-coverage ratio for such year for all competitive and noncompetitive products (collectively).

`(2) COST-COVERAGE RATIO- For purposes of this section, the term `cost-coverage ratio' means, for the products and year involved, the ratio that--

`(A) total revenues from those products in such year, bears to

`(B) total costs attributable to those products in such year.

`(b) ADJUSTMENT FOR SPECIAL CIRCUMSTANCES- The Postal Regulatory Commission may, by rule, and in order to ensure that ratios under this section appropriately compensate for any significant and objective differences in the nature and composition of costs attributable to competitive and noncompetitive products, respectively, provide for the exclusion of such costs attributable as the Commission considers to be uniquely or disproportionately associated with either category of products.

`(c) SPECIAL RULES TO MAKE UP FOR CERTAIN SHORTFALLS-

`(1) SUBTRACTION TO MAKE UP FOR ANY SHORTFALL DESCRIBED IN SECTION 3743(b)- In any year in which a shortfall described in section 3743(b) occurs in the case of any competitive product, an amount equal to the amount of such shortfall shall, for purposes of determining whether the requirement under subsection (a) has been satisfied in such year, be subtracted from total revenues derived from all competitive products (collectively) in such year. Nothing in the preceding sentence shall be considered to permit or require that the same amount be concurrently subtracted from total revenues derived from competitive and noncompetitive products (collectively).

`(2) SUBTRACTION TO MAKE UP FOR ANY SHORTFALL IN CONTRIBUTIONS TOWARD INSTITUTIONAL COSTS IN A PREVIOUS YEAR- If, in any year, the requirement under subsection (a) is not met (determined applying the provisions of subsection (b), paragraph (1), and this paragraph based on any failure to satisfy subsection (a) in the previous year), the difference between the total revenues considered to have been derived from competitive products in the year involved (determined applying such provisions), and the minimum amount of total revenues from competitive products which would have been required in order to satisfy subsection (a) (determined applying such provisions), shall, for purposes of determining whether the requirement under subsection (a) is met in the following year, be subtracted from total revenues derived from competitive products (collectively) in such following year. Nothing in the preceding sentence shall be considered to permit or require that the same amount be concurrently subtracted from total revenues derived from competitive and noncompetitive products (collectively).

`(d) PHASEIN AUTHORITY- If necessary in order to afford the Postal Service an opportunity to increase efficiency to competitive market levels, the Postal Regulatory Commission may, by written determination made as part of its first adjustment factor case under section 3733, provide for the phasein of subsection (a) over the course of the first ratemaking cycle. If the Commission grants relief under this subsection, it shall review the continuing need for and the extent of such relief annually.

`SUBCHAPTER V--MARKET TESTS OF EXPERIMENTAL PRODUCTS

`Sec. 3751. Market tests of experimental noncompetitive products

`(a) AUTHORITY-

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

`(2) PROVISIONS WAIVED- A product shall not, while it is being tested under this section, be subject to the requirements of section 3623 (relating to mail classification), section 3732 (relating to limitations on rates), or section 3762 (relating to new noncompetitive products).

`(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 mail users, significantly different from all products offered by the Postal Service within the 2-year period preceding the start of the test.

`(2) DOLLAR-AMOUNT LIMITATION- The total revenues that are anticipated, or in fact received, by the Postal Service from such product do not exceed $10,000,000 in any year, subject to section 3754.

`(3) MARKET DISRUPTION- The introduction or continued offering of the product will not cause unreasonable market disruption (either for competitive or noncompetitive products).

`(4) CORRECT CATEGORIZATION- The testing of the product under this section is consistent with the criteria under section 3761(b)(2).

`(c) NOTICE- At least 30 days before initiating a market test under this section, the Postal Service shall file with the Postal Regulatory Commission and publish in the Federal Register a notice setting out the basis for the Postal Service's determination that the market test is covered by this section and describing the nature and scope of the market test.

`(d) DURATION-

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

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

`(e) CANCELLATION- If the Postal Regulatory Commission at any time determines that a market test under this section fails, with respect to any particular product, to meet one or more of the conditions set forth in subsection (b), it may issue any order that would be allowable under section 3662(c)(6). A determination under this subsection shall be made in accordance with such procedures as the Commission shall by regulation prescribe.

`Sec. 3752. Market tests of experimental competitive products

`(a) AUTHORITY-

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

`(2) PROVISIONS WAIVED- Any noncompliance with section 3743(a) (relating to costs-attributable requirement) on the part of a product shall not, if it occurs while such product is being tested under this section, be taken into account for purposes of any sanction or other action that might otherwise be permitted or required under any of the following:

`(A) Section 3662(c)(3) (relating to ordering the adjustment of rates to lawful levels pursuant to a rate complaint).

`(B) Section 3743(c) (relating to mandatory discontinuance of loss-making products).

`(C) Section 3773(e) (relating to use of profits).

`(3) PROVISIONS NOT WAIVED- Nothing in this section shall be considered to permit or require the exclusion of any costs or revenues that are attributable to a product that is being tested under this section from any determination under section 3744 (relating to provisions applicable to competitive products collectively).

`(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 mail users, significantly different from all products offered by the Postal Service within the 2-year period preceding the start of the test.

`(2) DOLLAR-AMOUNT LIMITATION- The total revenues that are anticipated, or in fact received, by the Postal Service from such product do not exceed $10,000,000 in any year, subject to section 3754.

`(3) MARKET DISRUPTION- The introduction or continued offering of the product will not cause unreasonable market disruption (either for competitive or noncompetitive products).

`(4) CORRECT CATEGORIZATION- The testing of the product under this section is consistent with the criteria under section 3761(b)(2).

`(c) NOTICE-

`(1) IN GENERAL- At least 30 days before initiating a market test under this section, the Postal Service shall file with the Postal Regulatory Commission and publish in the Federal Register a notice setting out the basis for the Postal Service's determination that the market test is covered by this section and describing the nature and scope of the market test.

`(2) SAFEGUARDS- The provisions of section 3604(g) shall be available with respect to any information required to be filed under paragraph (1) to the same extent and in the same manner as in the case of any matter described in section 3604(g)(1). Nothing in paragraph (1) shall be considered to permit or require the publication of any information as to which confidential treatment is accorded under the preceding sentence (subject to the same exception as set forth in section 3604(g)(3)).

`(d) DURATION-

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

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

`(e) CANCELLATION- If the Postal Regulatory Commission at any time determines that a market test under this section fails, with respect to any particular product, to meet one or more of the conditions set forth in subsection (b), it may issue any order that would be allowable under section 3662(c)(6). A determination under this subsection shall be made in accordance with such procedures as the Commission shall by regulation prescribe.

`Sec. 3753. Large-scale market tests

`(a) AUTHORITY- The Postal Service may, in accordance with this section, conduct--

`(1) market tests involving any experimental noncompetitive product that would be allowable under section 3751 but for subsection (b)(2) thereof; and

`(2) market tests involving any experimental competitive product that would be allowable under section 3752 but for subsection (b)(2) thereof.

`(b) CONDITION- Notwithstanding any other provision of this section, a product may not be tested under this section unless the total revenues that are anticipated, or in fact received, by the Postal Service from such product do not exceed $100,000,000 in any year, subject to section 3754.

`(c) PROVISIONS WAIVED- Section 3751(a)(2) shall apply with respect to an experimental noncompetitive product being tested under this section, and section 3752(a)(2) shall apply with respect to an experimental competitive product being tested under this section, as if such test were instead being conducted section 3751 or 3752, as the case may be.

`(d) REGULATIONS- The Postal Regulatory Commission shall by regulation establish rules for the conduct of market tests under this section, including rules for the termination of any such test. In adopting rules under this subsection, the Commission shall consider such matters as--

`(1) the Postal Service's interest in the development and testing of new products with a minimum of regulatory impediments; and

`(2) the public interest in preventing unfair or disruptive competition.

`(e) DURATION-

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

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

`Sec. 3754. Adjustment for inflation

`In the case of a year following the first year in which any testing under this subchapter is permitted, the dollar amount contained in sections 3751(b)(2), 3752(b)(2), and 3753(b), respectively, shall be adjusted at the same time and by the same percentage adjustment as the maximum rates allowable for noncompetitive products are adjusted pursuant to 3732(c) (but deeming the adjustment factor under paragraph (2)(B) thereof to be zero for purposes of this section).

`Sec. 3755. Conversion to permanence

`A request to have an experimental product under this chapter converted to a permanent one--

`(1) shall be made and acted on in conformance with applicable provisions of subchapter VI; and

`(2) shall be made by the Postal Service.

`Sec. 3756. Effective date

`Market tests under this subchapter may be conducted in any year beginning with the first year beginning on or after the date as of which the baseline rates are determined under section 3721(e)(2).

`SUBCHAPTER VI--PROVISIONS RELATING TO THE INTRODUCTION AND CATEGORIZATION OF PRODUCTS

`Sec. 3761. Criteria for the identification of noncompetitive and competitive products

`(a) IN GENERAL- Except as provided in subchapter V, no product may be offered until such product has been assigned to the noncompetitive or competitive category of mail, whichever is appropriate (and, if a noncompetitive product, its proper basket).

`(b) CRITERIA-

`(1) IN GENERAL- Determinations as to the category of mail to which any particular product should be assigned (whether in connection with a new product under section 3762 or 3763, the proposed transfer of a product under section 3764, or the proposed reclassification of an existing product under subchapter II of chapter 36) shall be made in conformance with paragraph (2).

`(2) CHARACTERISTICS BY CATEGORY- The noncompetitive category of products shall embrace all products in the sale of which the Postal Service exercises sufficient market power that it can effectively set the price of such product substantially above costs or raise prices significantly without risk of losing business to other firms offering similar products, or that it can effectively set the price below competitive costs to forestall entry by new competitors or to eliminate existing competitors. The competitive category of products shall embrace all other products.

`(c) INITIAL AND UPDATED LISTS- The respective products which, as of any particular date, are within the noncompetitive or competitive category of mail (and any particular basket, if applicable) shall be as identified under sections 3731 and 3741.

`Sec. 3762. New noncompetitive products

`(a) REQUEST- The Postal Service--

`(1) may from time to time request that the Postal Regulatory Commission submit a recommended decision on the classification for a new noncompetitive product; and

`(2) shall, as part of any request made under paragraph (1) (other than in the case of a transferred product), also request a recommended decision on the baseline rate for such product for purposes of section 3765.

`(b) HEARINGS- In response to any request made by the Postal Service under this section, the Postal Regulatory Commission shall promptly initiate a proceeding in accordance with the procedures set out in section 3624.

`(c) FACTORS AND RECOMMENDED DECISION- The Postal Regulatory Commission shall make a recommended decision on (1) the baseline rate for the new product based on the factors set out in section 3622(b), and (2) the classification for the new product based on the factors and requirements under section 3623(b). Such recommended decision shall be submitted to the Directors for action in accordance with section 3625, and subject to review in accordance with section 3628(a).

`Sec. 3763. New competitive products

`(a) AUTHORITY- The Postal Service may, in accordance with this section, offer a new competitive product and, with respect to competitive products only, otherwise make changes in the mail classification schedule.

`(b) CONDITIONS- An action under this section may not be taken unless it satisfies each of the following:

`(1) CRITERIA- To the extent that the classification of a product is involved, the action would be consistent with the criteria under section 3761(b)(2).

`(2) COSTS ATTRIBUTABLE- To the extent that the establishment of a rate for a competitive product is involved, the requirement under section 3743(a) would be met.

`(c) NOTICE-

`(1) IN GENERAL- At least 30 days before it offers a new competitive product or otherwise makes any change in the mail classification schedule under this section, the Postal Service shall file with the Postal Regulatory Commission and publish in the Federal Register a notice setting out the basis for the Postal Service's determination that the product satisfies each of the conditions under subsection (b).

`(2) SAFEGUARDS- The provisions of section 3604(g) shall be available with respect to any information required to be filed under paragraph (1) to the same extent and in the same manner as in the case of any matter described in section 3604(g)(1). Nothing in paragraph (1) shall be considered to permit or require the publication of any information as to which confidential treatment is accorded under the preceding sentence (subject to the same exception as set forth in section 3604(g)(3)).

`(d) CANCELLATION- If the Postal Regulatory Commission determines that an action proposed to be taken under this section fails to meet either of the conditions set forth in subsection (b), the Commission shall, before the proposed action is scheduled to be taken or to commence (as applicable), order that the proposed action be canceled. A determination under this subsection shall be made in accordance with such procedures as the Commission shall by regulation prescribe.

`Sec. 3764. Transfers of products between categories of mail

`(a) IN GENERAL- Upon request of the Postal Service or users of the mails, or upon its own initiative, the Postal Regulatory Commission may, after proceedings conducted in conformity with subsection (d), transfer 1 or more products--

`(1) from the noncompetitive category of mail to the competitive category of mail; or

`(2) from the competitive category of mail to the noncompetitive category of mail.

`(b) CRITERIA-

`(1) IN GENERAL- A decision under this section shall be made in accordance with the policies of this title and the criteria set forth in section 3761(b)(2).

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

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

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

`(B) the views of those who use the product involved on the appropriateness of the proposed action.

`(c) TRANSFERS OF SUBCLASSES AND OTHER SUBORDINATE OR FURTHER SUBORDINATE UNITS ALLOWABLE- Nothing in this title shall be considered to prevent transfers under this section from being made by reason of the fact that they would involve only some (but not all) of the subclasses or other subordinate or further subordinate units of the class of mail or type of postal service involved.

`(d) REQUIREMENTS- Proceedings required to be conducted in accordance with this subsection--

`(1) shall provide the opportunity for a hearing on the record under sections 556 and 557 of title 5 to the Postal Service, users of the mail, and an officer of the Postal Regulatory Commission who shall be required to represent the interests of the general public;

`(2) may include rules of proceedings that provide for any procedure or other matter listed under section 3733(b)(2); and

`(3) shall require that any final decision be accompanied by a statement setting forth the reasons therefor.

Paragraph (3) of section 3733(b) (relating to printing and notice requirements) shall apply with respect to each Commission decision and related record of Commission hearings under this section.

`Sec. 3765. Transition provisions for new or transferred noncompetitive products

`(a) IN GENERAL- In the case of a product that becomes assigned to the noncompetitive category of mail under section 3762 or that is transferred from the competitive to the noncompetitive category of mail under section 3764--

`(1) the maximum rate initially allowable for such product after that assignment or transfer shall be determined in accordance with subsection (b); and

`(2) the initial range allowable for such product after that assignment or transfer shall be determined in accordance with subsection (c).

`(b) MAXIMUM RATE INITIALLY ALLOWABLE- The maximum rate allowable during the first year in which a product subject to this subsection is offered shall be determined in a manner similar to the special rule under section 3732(c)(4), subject to the following:

`(1) TRANSFERRED PRODUCTS- In the case of any product that becomes a noncompetitive product pursuant to a transfer under section 3764, the rate last in effect for such product (before the effective date of its transfer) shall be treated as its `baseline rate'.

`(2) OTHER PRODUCTS- In the case of any product assigned to the noncompetitive category of mail pursuant to section 3762, the `baseline rate' for such product shall be determined under subchapter

II of chapter 36 pursuant to the request made under section 3762(a)(2) with respect thereto.

(c) RANGE INITIALLY ALLOWABLE- The range allowable during the first year in which a product subject to this subsection is offered shall be determined in accordance with section 3732(d), deeming the rate determined for such product under subsection (b) of this section to be the rate specified by paragraphs (1)(A) and (2)(A) of section 3732(d).

`SUBCHAPTER VII--REPORTING REQUIREMENTS AND RELATED PROVISIONS

`Sec. 3771. Annual reports by the Commission

`(a) IN GENERAL- The Postal Regulatory Commission shall render an annual report to the President and the Congress concerning the operations of the Commission under this title.

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

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

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

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

The Commission shall detail the bases for its estimates and the statutory requirements giving rise to the costs identified in each report under this section.

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

`Sec. 3772. Annual reports to the Commission

`(a) COSTS, REVENUES, AND RATES-

`(1) IN GENERAL- Except as provided in subsection (c), the Postal Service shall, no later than 90 days after the end of each year, prepare and submit to the Postal Regulatory Commission a report (together with such nonpublic annex thereto as the Commission may require under subsection (e)) analyzing costs, revenues, and rates in sufficient detail to demonstrate that the rates in effect for all products during such year (including, for purposes of section 3744, rates for all competitive products collectively) complied with all applicable requirements of this title.

`(2) AUDITING REQUIREMENT- Before submitting a report (and any annex thereto) under paragraph (1), the Postal Service shall have the information contained in such report (and annex) audited by the Inspector General. The results of any such audit shall be submitted along with the report to which it pertains.

`(b) QUALITY OF SERVICES- Except as provided in subsection (c), the Postal Service shall, no later than 90 days after the end of each year, prepare and submit to the Postal Regulatory Commission a report (together with such nonpublic annex thereto as the Commission may require under subsection (e)) which shall, for each noncompetitive product provided in such year, provide--

`(1) market information, including mail volumes; and

`(2) measures of the speed and reliability of postal service, including--

`(A) the service standard applicable to such product;

`(B) the actual level of service (described in terms of speed of delivery and reliability) provided; and

`(C) the degree of customer satisfaction with the service provided.

`(c) MARKET TESTS- In carrying out subsections (a) and (b) with respect to experimental products offered through market tests under subchapter V in a year--

`(1) the Postal Service may, to the extent that a test under section 3751 or 3752 is involved, report summary data on the costs, revenues, and quality of service by market test; and

`(2) the Postal Service shall, to the extent that a test under section 3753 is involved, report such data as the Postal Regulatory Commission requires.

`(d) SUPPORTING MATTER- The Postal Regulatory Commission shall have access, in accordance with such regulations as the Commission shall prescribe, to the working papers and any other supporting matter of the Postal Service and the Inspector General in connection with any information submitted under this section.

`(e) CONTENT AND FORM OF REPORTS-

`(1) IN GENERAL- The Postal Regulatory Commission shall, by regulation, prescribe the content and form of the public reports (and any nonpublic annex and supporting matter relating thereto) to be provided by the Postal Service under this section. In carrying out this subsection, the Commission shall give due consideration to--

`(A) providing the public with adequate information to assess the lawfulness of rates charged;

`(B) avoiding unnecessary or unwarranted administrative effort and expense on the part of the Postal Service; and

`(C) protecting the confidentiality of commercially sensitive information.

`(2) REVISED REQUIREMENTS- The Commission may, on its own motion or on request of an interested party, initiate proceedings (to be conducted in accordance with regulations that the Commission shall prescribe) to improve the quality, accuracy, or completeness of postal service data required by the Commission under this subsection whenever it shall appear that--

`(A) the attribution of costs or revenues to postal products has become significantly inaccurate or can be significantly improved;

`(B) the quality of service data has become significantly inaccurate or can be significantly improved; or

`(C) such revisions are, in the judgment of the Commission, otherwise necessitated by the public interest.

`(f) CONFIDENTIAL INFORMATION-

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

`(2) TREATMENT- Any information or other matter described in paragraph (1) to which the Commission gains access under this section shall be subject to paragraphs (2) and (3) of section 3604(g) in the same way as if the Commission had received notification with respect to such matter under section 3604(g)(1).

`(g) OTHER REPORTS- The Postal Service shall submit to the Postal Regulatory Commission, together with any other submission that it is required to make under this section in a year, copies of its then most recent--

`(1) comprehensive statement under section 2401(e);

`(2) performance plan under section 2803; and

`(3) program performance reports under section 2804.

`Sec. 3773. Annual determination of compliance

`(a) PROFITS DEFINED- For purposes of this section, the term `profits', with respect to a year, means the amount by which--

`(1) total revenues of the Postal Service attributable to such year, exceeds

`(2) total costs of the Postal Service (including institutional costs) attributable to such year,

as determined based on the report under section 3772(a) for such year.

`(b) OPPORTUNITY FOR PUBLIC COMMENT- After receiving the reports required under section 3772 for any year, the Postal Regulatory Commission shall promptly provide an opportunity for comment on such reports by users of the mails, affected parties, and an officer of the Commission who shall be required to represent the interests of the general public.

`(c) DETERMINATION OF COMPLIANCE- Not later than 90 days after receiving the submissions required under section 3772 with respect to a year, the Postal Regulatory Commission shall make a written determination as to whether--

`(1) any rates or fees in effect during such year (for products individually or collectively) were not in compliance with applicable provisions of this title;

`(2) any performance goals established under section 2803 or 2804 for such year were not met; and

`(3) any noncompetitive product failed to meet any service standard during such year.

`(d) IF NO NONCOMPLIANCE IS FOUND- If, for a year, no instance of noncompliance is determined under subsection (c) (or no determination under subsection (c) is timely made), then, up to 100 percent of the profits attributable to such year (if any) may be used by the Postal Service for the purposes described in subsection (f).

`(e) IF ANY NONCOMPLIANCE IS FOUND- If, for a year, a timely determination of noncompliance is made under subsection (c)--

`(1)(A) the Postal Regulatory Commission may order, based on the nature, circumstances, extent, and seriousness of the noncompliance, that a specific percentage (not to exceed 50 percent) of the profits attributable to such year (if any) be set aside for the purposes described in subsection (g); and

`(B) the remainder (or any portion) of those profits may be used by the Postal Service for the purposes described in subsection (f); and

`(2) the Commission may, in the case of any violation as to which a remedy could be ordered by the Commission under section 3662(c), order any such remedy under this section.

`(f) BONUSES-

`(1) IN GENERAL- The Postal Service shall establish a program under which cash bonuses may be paid to officers and employees of the Postal Service out of any profits which are available for that purpose.

`(2) REQUIREMENTS- Under the program--

`(A) bonuses may be paid to officers and employees of the Postal Service under criteria which shall be fair and equitable;

`(B) the sole source of funding shall be any profits from any year, subject to the application of subsection (e)(1) with respect to such year; and

`(C) bonuses shall not be precluded (in whole or in part) by the limitation on compensation under the last sentence of section 1003(a) in a year, if--

`(i) total profits attributable to the preceding year, exceed

`(ii) the amount equal to 1 percent of total revenues of the Postal Service attributable to such preceding year.

`(3) DISCRETIONARY NATURE OF PROGRAM- Nothing in this section shall be considered to create any entitlement to receive bonuses or to require that any portion of the profits from any year be used for bonuses in excess of whatever amount the Postal Service, in its sole discretion, considers appropriate.

`(4) CONSIDERATIONS RELATING TO THE PORTION OF PROFITS TO BE AVAILABLE FOR BONUSES- In any decision relating to what portion of the available profits from any year shall be made available or used for bonuses under this subsection, there shall be taken into consideration--

`(A) the obligation on the part of the Postal Service to provide efficient and economical postal services in accordance with this title; and

`(B) the question of what portion of those profits (if any) should be used--

`(i) to retire debts or other obligations of the Postal Service;

`(ii) to limit future increases in postal rates or fees for products in the noncompetitive category of mail; or

`(iii) to carry out any other purpose.

`(g) DEDICATION OF FUNDS TOWARD REDUCING RATES AND FEES-

`(1) IN GENERAL- Any amounts ordered to be set aside under subsection (e)(1)(A) may not be used for any purpose other than to defray increases in future rates and fees for products in the noncompetitive category of mail or to reduce the rates and fees already in effect for such products.

`(2) COMPLIANCE- Whenever an order under paragraph (1)(A) or (2) of subsection (e) is issued, the Postal Service shall include in its next comprehensive statement under section 2401(e) (and each subsequent statement thereunder until such order has been fully complied with) a statement as to--

`(A) what measures have been or will be implemented in order to comply with the order, including the schedule in accordance with which any amounts set aside pursuant to an order issued under subsection (e)(1)(A) shall be used or made available for the purposes described in paragraph (1); and

`(B) if (or to the extent that) an order under subsection (e)(1)(A) is involved--

`(i) the amount of savings actually passed on to mailers during the reporting period (whether through reduced rates and fees or otherwise), as compared to the amount of savings scheduled to have been passed on to mailers during such period; and

`(ii) to the extent that the amount of savings actually passed on to mailers is less than the amount scheduled to have been passed on to mailers during a reporting period, what measures (if any) have been or will be implemented to reconcile the difference.

`(3) NONREDUNDANT INFORMATION- Nothing in paragraph (2) shall be considered to require that the same information be reported if included in a previous report under this subsection.

`(h) REPORTING REQUIREMENT RELATING TO BONUSES- Included in its comprehensive statement under section 2401(e) for any period shall be--

`(1) the name of each person receiving a bonus during such period which would not have been allowable but for the provisions of subsection (f)(2)(C);

`(2) the amount of the bonus; and

`(3) the amount by which the limitation referred to in subsection (f)(2)(C) was exceeded as a result of such bonus.

`Sec. 3774. Other reports

`The Postal Regulatory Commission shall, at least every 6 years, render a report to the President and the Congress concerning--

`(1) the operation of the system consisting of chapter 36 and this chapter; and

`(2) recommendations for any legislation or other measures necessary to improve the effectiveness or efficiency of that system.'.

(b) CLERICAL AMENDMENT- The table of chapters for part IV of title 39, United States Code, is amended by adding at the end the following:

3701'.

SEC. 202. AMENDMENTS TO CHAPTER 36.

(a) AUTHORITY TO FIX RATES AND CLASSES- Section 3621 of title 39, United States Code, is amended--

(1) in the first sentence by striking `this chapter' and inserting `this chapter and chapter 37'; and

(2) by repealing the last 2 sentences.

(b) RATES AND FEES-

(1) IN GENERAL- The first sentence of section 3622(a) of title 39, United States Code, is amended to read as follows: `Whenever necessary in order to provide for the establishment of any baseline rate needed for purposes of section 3762(a) (relating to certain new noncompetitive products), the Postal Service shall request the Postal Regulatory Commission to submit a recommended decision on changes in a rate or rates of postage or in a fee or fees for postal services in accordance with the policies of this title and applicable provisions of chapter 37.'.

(2) CONFORMING AMENDMENTS- Such section 3622(a) is further amended--

(A) by striking `(a)' and inserting `(a)(1)'; and

(B) by adding at the end the following:

`(2) A request under this subsection may not be submitted except in the circumstance described in paragraph (1).'.

(c) MAIL CLASSIFICATION-

(1) REPEAL- Section 3623 of title 39, United States Code, is amended by striking subsection (a) and by redesignating subsections (b) through (d) as subsections (a) through (c), respectively.

(2) MODIFIED AUTHORITY- Subsection (a) of section 3623 of title 39, United States Code, as so redesignated by paragraph (1), is amended to read as follows:

`(a) The Postal Service may from time to time request that the Postal Regulatory Commission submit, or the Commission may submit to the Directors on its own initiative, a recommended decision on changes in the mail classification schedule for noncompetitive products (within the meaning of subchapter III of chapter 37).'.

(d) RECOMMENDED DECISIONS OF COMMISSION- Subsection (c) of section 3624 of title 39, United States Code, is amended--

(1) in paragraph (1) by striking `a request under section 3622 of this title for a recommended decision by the Commission on changes in a rate or rates of postage or in a fee or fees for postal services' and inserting `a request under section 3623 for a recommended decision by the Commission on changes in the mail classification schedule or a request under section 3762 for a recommended decision by the Commission on the baseline rate and classification for a new noncompetitive product,'; and

(2) in paragraph (2) by striking `3622' and inserting `3623 or 3762 (as applicable)'.

(e) APPELLATE REVIEW-

(1) APPEALABILITY OF ADJUSTMENT FACTOR AND PRODUCT TRANSFER DECISIONS- The first sentence of section 3628 of title 39, United States Code, is amended--

(A) by striking `A decision' and inserting `(a) A decision';

(B) by inserting before `may be appealed' the following: `on a request made under section 3623 or 3762, and any final decision by the Commission under section 3733 or 3764,'; and

(C) by striking `3624(a) of this title' and inserting `3624(a), 3733(b), 3762(b), or 3764(d) (as the case may be)'.

(2) APPEALS FROM ALL OTHER FINAL ORDERS OF THE COMMISSION-

(A) TITLE 39 AMENDMENT- Section 3628 of title 39, United States Code, is amended by adding at the end the following:

`(b) Any proceeding to enjoin, set aside, annul, or suspend any order of the Postal Regulatory Commission (except any order appealable under subsection (a)) shall be brought as provided by and in the manner prescribed in chapter 158 of title 28.'.

(B) TITLE 28 AMENDMENTS-

(i) DEFINITIONS- Subparagraph (A) of section 2341(3) of title 28, United States Code, is amended by inserting `the Postal Regulatory Commission,' after `the Federal Maritime Commission,'.

(ii) ORDERS APPEALABLE- Section 2342 of title 28, United States Code, is amended by striking `and' at the end of paragraph (6), by striking the period at the

end of paragraph (7) and inserting `; and', and by adding at the end the following:

`(8) all final orders of the Postal Regulatory Commission made reviewable by section 3628(b) of title 39.'.

(3) CONFORMING AMENDMENTS- Sections 3625 and 3681 of title 39, United States Code, are amended by striking `3628' each place it appears and inserting `3628(a)'.

(f) TEMPORARY RATES AND CLASSES-

(1) NEGOTIATED SERVICE AGREEMENTS- Section 3641 of title 39, United States Code, is amended to read as follows:

`Sec. 3641. Negotiated service agreements

`(a) The Postal Service may enter into negotiated service agreements with users of postal services in accordance with this section. A negotiated service agreement under this section shall--

`(1) pertain exclusively to products in the noncompetitive category of mail (within the meaning of subchapter III of chapter 37);

`(2) require that the contracting mail user perform mail preparation, processing, transportation, administration, or other functions that are in addition to or greater than those required of mailers under provisions of the mail classification schedule established pursuant to section 3623(b);

`(3) provide for the payment by the contracting mail user of liquidated damages to the Postal Service for nonperformance or breach of any of the material terms of the agreement, including any minimum volume commitments; the amount of such liquidated damages shall not be less than the difference between postage and fees paid by such mail user pursuant to the agreement and the amounts such user would have paid under the otherwise applicable schedule of rates and fees;

`(4) be for a term of not to exceed 3 years; and

`(5) provide that such agreement, and any amendment or renewal thereof, shall not become effective until approved by the Postal Regulatory Commission, and is subject to the cancellation authority of the Commission under section 3662(c).

`(b) Within 1 year after this subsection takes effect, the Postal Regulatory Commission shall adopt rules for the consideration of negotiated service agreements between the Postal Service and users of postal services, which meet the requirements of subsections (c) and (d).

`(c) Upon receipt of a proposed negotiated service agreement entered into by the Postal Service under subsection (a), or any amendment or renewal thereof, the Postal Regulatory Commission shall render a decision upon review of the agreement, after notice and opportunity for comment by interested parties in accordance with section 553 of title 5, pursuant to the regulations adopted by the Commission under subsection (b). The Commission shall approve and recommend implementation of a proposed negotiated service agreement (or any amendment or renewal thereof) unless, on the basis of the written data, views, and arguments received, it finds, within 90 days after receipt of the proposed agreement, amendment, or renewal (subject to the same type of day-for-day extension as set forth in section 3733(b)(4)(B) for failure by the Postal Service to respond to any lawful order of the Commission), that--

`(1) the proposed agreement (or amendment or renewal, as applicable)--

`(A) does not satisfy the conditions and requirements of subsection (a);

`(B) precludes or materially hinders similarly situated mail users from entering into agreements with the Postal Service on the same, or substantially the same, terms and conditions; or

`(C) cannot reasonably be expected to result in net benefits to the operation of a nationwide postal system;

`(2) the Postal Service is unwilling or unable to enter into such negotiated service agreements with other similarly situated mail users; or

`(3) rates and fees payable during the term of the proposed negotiated service agreement are not reasonably calculated to yield to the Postal Service total revenues that equal or exceed the sum of--

`(A) the direct and indirect postal costs attributable to services performed by the Postal Service under the agreement; and

`(B) a portion of all other costs of the Postal Service that are equal, on an average unit basis, to the portion of such costs reasonably assignable to the classification or classifications of mail service most similar to the services performed under the agreement.

`(d) Whenever it disapproves a proposed negotiated service agreement, the Postal Regulatory Commission shall provide written notice to that effect, together with the reasons therefor.

`(e) Any decision to approve or disapprove a proposed negotiated service agreement (or amendment or renewal, as applicable) shall be subject to judicial review in accordance with section 3628(b).

`(f) Nothing in subsections (a) through (e) shall be considered to limit or otherwise affect any authority available to the Postal Service under section 3763.'.

(2) CONFORMING AMENDMENT- The table of sections at the beginning of chapter 36 of title 39, United States Code, is amended by striking the item relating to section 3641 and inserting the following:

`3641. Negotiated service agreements.'.

(g) RATE AND SERVICE COMPLAINTS- Section 3662 of title 39, United States Code, is amended to read as follows:

`Sec. 3662. Rate and service complaints

`(a) Interested parties (including an officer of the Postal Regulatory Commission representing the interests of the general public) who believe the Postal Service is charging rates which do not conform to the policies set out in this title, who believe that the Postal Service is not providing postal service in accordance with the policies of this title, or who believe that the Postal Service is otherwise not acting in conformance with the policies of this title, may lodge a complaint with the Postal Regulatory Commission in such form and in such manner as it may prescribe.

`(b)(1) The Postal Regulatory Commission shall, within 90 days after receiving a complaint under subsection (a), either--

`(A) begin proceedings on such complaint in conformity with section 3764(d)(1); or

`(B) issue an order dismissing the complaint (together with a statement of the reasons therefor).

`(2) For purposes of section 3628(b), any complaint under subsection (a) on which the Commission fails to act in the time and manner required by paragraph (1) shall be treated in the same way as if it had been dismissed pursuant to an order issued by the Commission on the last day allowable for the issuance of such order under paragraph (1).

`(c) If the Postal Regulatory Commission finds the complaint to be justified, it shall--

`(1) in a classification matter covered by section 3623 or 3762, after proceedings in conformity with section 3624, issue a recommended decision which shall be acted upon in accordance with the provisions of section 3625;

`(2) in a matter involving a violation of any limitation under section 3732 (relating to limitations on rates for noncompetitive products), order the unlawful rates to be adjusted to lawful levels and the taking of such other action as it deems appropriate;

`(3) in a matter involving a violation of section 3743(a) (relating to costs-attributable requirement for competitive products) or section 3763(b) (relating to conditions to be met by new competitive products), order the unlawful rates to be adjusted to lawful levels and the taking of such other action as it deems appropriate;

`(4) in a matter involving a violation of section 3641, order the payment of liquidated damages in accordance with the provisions included in the agreement involved pursuant to the requirements of section 3641(a)(3) or the cancellation of such agreement;

`(5) in a matter involving a violation of section 403(c), order the taking of such action as it deems appropriate;

`(6) in a matter involving a violation of any provision of subchapter V of chapter 37 (relating to market tests of experimental products), order the cancellation of the testing involved or the taking of such other action as it deems appropriate;

`(7) in a matter involving a violation of section 404a, order the rescission of any regulation involved or the taking of such action as it deems appropriate;

`(8) in a matter involving a violation of section 2012(f) (relating to the minimum amount to be charged by the Postal Service for goods or services provided to any corporation established under section 2012), order that the Postal Service increase its prices to at least the minimum levels required;

`(9) in a matter involving the Postal Service's providing a nonpostal product that is not permitted under paragraph (6) of section 404(a), order that the Postal Service cease providing such product; and

`(10) in a matter not otherwise covered by any of the preceding provisions of this subsection, render a public report thereon.

`(d) In addition, in cases of deliberate noncompliance with the requirements of this title, the Postal Regulatory Commission may order, based on the nature, circumstances, extent, and seriousness of the noncompliance, a fine (in the amount specified by the Commission in its order) for each incidence of noncompliance. Fines resulting from the provision of competitive products (within the meaning of subchapter IV of chapter 37) shall be paid out of the Competitive Products Fund established in section 2011. All receipts from fines imposed under this subsection shall be deposited in the general fund of the Treasury of the United States.'.

(h) LIMITATIONS- Section 3684 of title 39, United States Code, is amended--

(1) by inserting `and no provision of chapter 37' after `no provision of this chapter'; and

(2) by striking `any provision of section 3682 or 3683 or chapter 30, 32, or 34 of this title.' and inserting `any provision of this title.'.

(i) REDUCED RATES- Effective as of the date of enactment of this Act, subclause (VI) of section 3626(a)(3)(B)(ii) of title 39, United States Code, is amended to read as follows:

`(VI) one-half (or less, as the Postal Service may prescribe), for any fiscal year after fiscal year 1998.'.

(j) REGULATIONS OF THE COMMISSION- Effective as of the date of enactment of this Act, section 3603 of title 39, United States Code, is amended by striking `this chapter.' and inserting `this title.'.

(k) EFFECTIVE DATE- Except as provided in subsection (i) or (j), this section and the amendments made by this section shall become effective on the date as of which the baseline rates are determined under section

3721(e)(2) of title 39, United States Code (as amended by section 201).

SEC. 203. POSTAL SERVICE COMPETITIVE PRODUCTS FUND.

(a) ESTABLISHMENT-

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

`Sec. 2011. Postal Service Competitive Products Fund

`(a) There is established in the Treasury of the United States a revolving fund to be called the Postal Service Competitive Products Fund which shall be available to the Postal Service without fiscal-year limitation for the payment of all attributable costs, institutional costs, and other expenses incurred by the Postal Service in providing competitive products.

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

`(1) revenues from competitive products;

`(2) amounts received from obligations issued by the Postal Service under this section;

`(3) interest which may be earned on investments of the Postal Service Competitive Products Fund; and

`(4) any amounts transferred from the Postal Service Fund under subsection (j).

`(c) The receipts and disbursements of the Postal Service Competitive Products Fund shall be accorded the same budgetary treatment as is accorded to receipts and disbursements of the Postal Service Fund under section 2009a.

`(d)(1) If the Postal Service determines that the moneys of the Postal Service Competitive Products Fund are in excess of current needs, it may invest such amounts as it deems advisable in any of the following:

`(A) A corporation established under section 2012.

`(B) Such other investments as it considers appropriate.

`(2)(A) Nothing in paragraph (1)(B) shall be considered to constitute authority for the Postal Service to invest in the obligations or securities of, or to make any other investment with respect to, a commercial entity.

`(B) For purposes of this paragraph, the term `commercial entity' means any corporation, company, association, partnership, joint stock company, firm, society, or other similar entity, as further defined under regulations prescribed by the Postal Regulatory Commission.

`(e) The Postal Service, in its sole discretion, may provide that amounts which would otherwise be deposited in the Postal Service Competitive Products Fund shall instead be directly deposited in a Federal Reserve bank or a depository for public funds selected by the Postal Service, and may provide for transfers of amounts under this subsection between or among such accounts and the Postal Service Competitive Products Fund.

`(f) A judgment against the Postal Service or the Government of the United States arising out of activities of the Postal Service in the provision of competitive products (as determined under regulations which the Postal Regulatory Commission shall prescribe, in consultation with the Postal Service) shall be paid out of the Postal Service Competitive Products Fund.

`(g)(1) Subject to the limitations specified in section 2005(a) (applied in accordance with paragraph (2)), the Postal Service is authorized to borrow money and to issue and sell such obligations as it determines necessary to provide for competitive products and deposit such amounts in the Postal Service Competitive Products Fund, except that the Postal Service may pledge only the assets of the Postal Service Competitive Products Fund and pledge and use its revenues and receipts for the payment of the principal of or interest on such obligations, for the purchase

or redemption thereof, and for other purposes incidental thereto, including creation of reserve, sinking, and other funds which may be similarly pledged and used, to such extent and in such manner as it deems necessary or desirable.

`(2) For purposes of applying any limitation under section 2005(a), the aggregate amount of obligations issued by the Postal Service which are outstanding at any given time, and the net increase in the amount of obligations outstanding issued by the Postal Service for the purpose of capital improvements or for the purpose of defraying operating expenses of the Postal Service in any fiscal year, shall be determined by aggregating all outstanding obligations so issued by the Postal Service under section 2005 with all outstanding obligations so issued by the Postal Service under this section.

`(h) The Postal Service may enter into binding covenants with the holders of such obligations, and with the trustee, if any, under any agreement entered into in connection with the issuance thereof with respect to the establishment of reserve, sinking, and other funds, application and use of revenues and receipts of the Postal Service Competitive Products Fund, stipulations concerning the subsequent issuance of obligations or the execution of leases or lease purchases relating to properties of the Postal Service and such other matters as the Postal Service deems necessary or desirable to enhance the marketability of such obligations.

`(i) Obligations issued by the Postal Service under this section shall--

`(1) not be purchased by the Secretary of the Treasury;

`(2) not be exempt either as to principal or interest from any taxation now or hereafter imposed by any State or local taxing authority;

`(3) not be obligations of, nor shall payment of the principal thereof or interest thereon be guaranteed by, the Government of the United States, and the obligations shall so plainly state; and

`(4) notwithstanding the provisions of the Federal Financing Bank Act of 1973 or any other provision of law (except as may be specifically provided by reference to this paragraph in any Act enacted after this paragraph takes effect), not be eligible for purchase by, or commitment to purchase by, or sale or issuance to, the Federal Financing Bank.

`(j) The Postal Service shall, on the first day of the first year beginning on or after the date as of which the baseline rates are determined under section 3721(e)(2), transfer from the Postal Service Fund to the Postal Service Competitive Products Fund an amount that, as determined by the Postal Regulatory Commission (after notice and opportunity for comment by interested parties in accordance with section 553 of title 5), fairly reflects the net value of assets and liabilities which may be attributed wholly or primarily to competitive products.

`(k) The Postal Service shall render an annual report to the Secretary of the Treasury concerning the operation of the Postal Service Competitive Products Fund, in which it shall address such matters as risk limitations, reserve balances, allocation or distribution of moneys, liquidity requirements, and measures to safeguard against losses. A copy of its then most recent report under this subsection shall be included together with any other submission that it is required to make to the Postal Regulatory Commission under section 3772(g).

`(l) For purposes of this section, the term `competitive product' has the meaning given such term by section 3701.'.

(2) CLERICAL AMENDMENT- The table of sections at the beginning of chapter 20 of title 39, United States Code, is amended by adding after the item relating to section 2010 the following:

`2011. Postal Service Competitive Products Fund.'.

(b) TECHNICAL AND CONFORMING AMENDMENTS-

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

(2) POSTAL SERVICE FUND-

(A) PURPOSES FOR WHICH AVAILABLE-

(i) IN GENERAL- Section 2003(a) of title 39, United States Code, is amended by striking `title.' and inserting `title (other than any of the purposes, functions, or powers for which the Postal Service Competitive Products Fund is available).'.

(ii) CONFORMING AMENDMENT- Section 2003(e)(1) of title 39, United States Code, is amended by inserting after `as provided by law' the following: `(subject to the same limitation as set forth in the parenthetical matter under subsection (a))'.

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

(3) INVESTMENTS- Subsection (c) of section 2003 of title 39, United States Code, is amended--

(A) by striking `(c) If' and inserting `(c)(1) Except as provided in paragraph (2), if'; and

(B) by adding at the end the following:

`(2) Nothing in this subsection shall be considered to authorize any investment in any obligations or securities of a commercial entity (as defined by section 2011(d)(2)(B)), including any corporation established under section 2012.'.

(4) OBLIGATIONS-

(A) PURPOSES FOR WHICH ISSUANCE IS ALLOWED- The first sentence of section 2005(a)(1) of title 39, United States Code, is amended by striking `title.' and inserting `title (other than any of the purposes for which the corresponding authority is available to the Postal Service under section 2011).'.

(B) SPECIAL RULE FOR APPLYING LIMITATIONS- Paragraph (1) of section 2005(a) of title 39, United States Code, is amended by adding at the end the following: `The limitations under the second and third sentences of this subsection shall be applied in accordance with section 2011(g)(2).'.

(5) RELATIONSHIP BETWEEN THE TREASURY AND THE POSTAL SERVICE- Section 2006(c) of title 39, United States Code, is amended by inserting `under section 2005' before `shall be obligations'.

SEC. 204. USPS CORPORATION.

(a) ESTABLISHMENT- Chapter 20 of title 39, United States Code, is amended by adding after section 2011 (as added by section 203) the following:

`Sec. 2012. USPS Corporation

`(a) The Board of Directors may establish a private for-profit corporation under the laws of a State to be known as the USPS Corporation or such other corporate name as may be duly adopted by the Corporation. The Board of Directors may serve as incorporators of the Corporation and take all steps necessary to establish the Corporation, including the filing of articles of incorporation consistent with the provisions of this section.

`(b)(1) The Corporation shall not be an agency, instrumentality, or establishment of the United States, a Government corporation, or a Government-controlled corporation. Except as provided in this section, the Corporation shall not be considered part of the Postal Service. Financial obligations of the Corporation shall not be obligations of, or guaranteed as to principal or interest by, the Postal Service or the United States, and the obligations shall so plainly state. No action shall be allowable against the United States based on actions of the Corporation.

`(2) The receipts and disbursements of the Corporation shall be accorded the same budgetary treatment as is accorded to receipts and disbursements of the Postal Service Fund under section 2009a.

`(c) The Corporation is authorized to issue and have outstanding, in such amounts as it shall determine, shares of capital stock, without par value, which shall carry voting rights and be eligible for dividends. Such shares may be purchased only by the Postal Service Competitive Products Fund, in such amounts as the Board of Directors of the Postal Service may deem appropriate.

`(d) Notwithstanding any provision of State law, the articles of incorporation and bylaws of the Corporation shall provide that its board of directors shall be named by the Board of Directors of the Postal Service. The restrictions on postgovernment employment set out in section 207 of title 18 shall not apply to the acts of an individual taken in carrying out official duties as a director, officer, or employee of the Corporation if the individual was an officer or employee of the Postal Service (including a Director) continuously for a period of 12 months or longer during the 24 months prior to employment with the Corporation.

`(e) The Corporation shall have all of the powers conferred upon it under the laws of the State or States in which it is incorporated. The Corporation is specifically authorized--

`(1) to offer any postal or nonpostal product (other than a product covered by the postal monopoly, as defined in section 3764(b)(2));

`(2) acquire shares of individual private companies; and

`(3) participate in joint ventures with individual private companies.

`(f) The Corporation may purchase goods and services from the Postal Service, except that the Corporation must pay the Postal Service the same amount for such goods or services as would be paid by similarly situated mailers or, if the goods or services are not offered to the public by the Postal Service, amounts which represent fair market value.

`(g)(1) Insofar as the Corporation offers postal products which depend in substantial part on the services of the Postal Service, the Postal Service shall, to the extent deemed appropriate by the Postal Regulatory Commission (and subject to such requirements as the Commission may

specify as to form and content), include details of the activities of the Corporation (including sufficient information to demonstrate that the requirements of subsection (f) are being complied with) in the annual reports to the Commission required by section 3772.

`(2) In the event that, based on its review of the information submitted to it by the Postal Service under paragraph (1), the Commission determines that the requirements of subsection (f) are not being complied with, the Commission may issue any order allowable under subsection (c)(8) or (d) of section 3662.

`(h) As used in this section, the term `State' includes the District of Columbia.'.

(b) CLERICAL AMENDMENT- The table of sections at the beginning of chapter 20 of title 39, United States Code, is amended by adding after the item relating to section 2011 (as added by section 203) the following:

`2012. USPS Corporation.'.

(c) EFFECTIVE DATE- No authority under section 2012 of title 39, United States Code (as amended by this section) shall be available until the first day of the first year beginning on or after the date as of which the baseline rates are determined under section 3721(e)(2).

SEC. 205. POSTAL AND NONPOSTAL PRODUCTS.

(a) IN GENERAL- Section 102 of title 39, United States Code, as amended by section 102(a) of this Act, is amended by striking `and' at the end of paragraph (4), by striking the period at the end of paragraph (5) and inserting a semicolon, and by adding at the end the following:

`(6) `postal product' refers to any service that provides for the physical delivery of letters, printed matter, or packages weighing up to 70 pounds, including physical acceptance, collection, sorting, or transportation services ancillary thereto; and

`(7) `nonpostal product' means any product or service offered by the Postal Service (or that could have been offered by the Postal Service under section 404(a)(6), as last in effect before the date of enactment of the Postal Modernization Act of 1999) that is not a postal product.'.

(b) SPECIFIC POWERS-

(1) IN GENERAL- Paragraph (6) of section 404(a) of title 39, United States Code, is amended to read as follows:

`(6)(A) to continue providing or to abolish any nonpostal product first offered by the Postal Service to the general public before January 1, 1994 (with any nonpostal products not offered by the Postal Service to the general public before January 1, 1994, to be provided by means of a private corporation organized under section 2012, if at all, instead of the Postal Service); and

`(B) with respect to any nonpostal products first offered by the Postal Service to the general public during the period beginning on January 1, 1994, and ending on the date of enactment of the Postal Modernization Act of 1999, to continue to offer such products, but only--

`(i) subject to clause (ii), until such products are transferred to the private postal corporation (referred to in subparagraph (A)) in accordance with such schedule and procedures as the Postal Regulatory Commission shall by regulation prescribe; or

`(ii) until the first day of the first year of the first ratemaking cycle (within the meaning of section 3733(a)), if the transfer described in clause (i) has not been completed by such date.'.

(2) DEADLINE- The regulations required under section 404(a)(6)(B) of title 39, United States Code, as amended by this subsection, shall be prescribed in time to become effective by the commencement of the first proceedings under section 3733 of title 39, United States Code (relating to adjustment factors), as added by section 201.

Subtitle B--Related Provisions

SEC. 211. AUTHORITY FOR POSTAL REGULATORY COMMISSION TO ISSUE SUBPOENAS.

Section 3604 of title 39, United States Code, is amended by adding at the end the following:

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

`(2) The Chairman of the Commission, any Commissioner designated by the Chairman, and any administrative law judge appointed by the Commission under section 3105 of title 5 may, with respect to any proceeding conducted by the Commission under this title--

`(A) issue subpoenas requiring the attendance and presentation of testimony of any individual, and the production of documentary or other evidence, from any place in the United States, any territory or possession of the United States, the Commonwealth of Puerto Rico, or the District of Columbia; and

`(B) order the taking of depositions and responses to written interrogatories.

The written concurrence of a majority of the Commissioners then holding office shall, with respect to each subpoena under subparagraph (A), be required in advance of its issuance.

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

`(g)(1) If the Postal Service determines that any document or other matter it provides to the Postal Regulatory Commission pursuant to a subpoena issued under subsection (f), or otherwise at the request of the Commission in connection with any proceeding or other purpose under this chapter or chapter 37, contains information which is described in section 410(c) of this title, or exempt from public disclosure under section 552(b) of title 5, the Postal Service shall, at the time of providing such matter to the Commission, notify the Commission, in writing, of its determination (and the reasons therefor).

`(2) No officer or employee of the Commission may, with respect to any information as to which the Commission has been notified under paragraph (1)--

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

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

`(3) Paragraph (2) shall not prevent information from being furnished under any process of discovery established under this title in connection with a proceeding under this chapter or chapter 37 which is conducted in accordance with sections 556 and 557 of title 5. The Commission shall, by regulations based on rule 26(c) of the Federal Rules of Civil Procedure, establish procedures for ensuring appropriate confidentiality for any information furnished under the preceding sentence.'.

SEC. 212. QUALIFICATION REQUIREMENTS FOR COMMISSIONERS AND DIRECTORS.

(a) COMMISSIONERS- Section 3601(a) of title 39, United States Code, is amended by striking the third sentence and inserting the following: `The Commissioners shall be chosen solely on the basis of their technical qualifications, professional standing, and demonstrated expertise in economics, accounting, law, or public administration, and may be removed by the President only for cause.'.

(b) DIRECTORS-

(1) IN GENERAL- Section 202(a) of title 39, United States Code, is amended by striking `(a)' and inserting `(a)(1)' and by striking the fourth sentence and inserting the following: `The Directors shall represent the public interest generally, and shall be chosen solely on the basis of their demonstrated ability in managing organizations or corporations, in either the public or the private sector, similar in size or scope to the Postal Service. The Directors shall not be representatives of specific interests using the Postal Service, and may be removed only for cause.'.

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

`(2) In selecting the individuals described in paragraph (1) for nomination for appointment to the position of Director, 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.'.

(3) RESTRICTION- Subsection (b) of section 202 of title 39, United States Code, is amended by striking `(b)' and inserting `(b)(1)', and by adding at the end the following:

`(2)(A) Notwithstanding any other provision of this section, in the case of the office of the Director the term of which is the first one scheduled to expire at least 4 months after the date of enactment of this paragraph--

`(i) such office may not, in the case of any person commencing service after that expiration date, be filled by any person other than an individual chosen from among persons nominated for such office with the unanimous concurrence of all labor organizations described in section 206(a)(1); and

`(ii) instead of the term that would otherwise apply under the first sentence of paragraph (1), the term of any person so appointed to such office shall be 3 years.

`(B) Except as provided in subparagraph (A), an appointment under this paragraph shall be made in conformance with all provisions of this section that would otherwise apply.'.

(c) APPLICABILITY- Nothing in this section shall affect the tenure of any individual serving as a Commissioner on the Postal Regulatory Commission or a Director of the Board of Directors of the United States Postal Service pursuant to an appointment made before the date of enactment of this Act, or, except as provided in the amendment made by subsection (b)(3), any nomination made before such date of enactment.

SEC. 213. APPROPRIATIONS FOR THE COMMISSION.

(a) AUTHORIZATION OF APPROPRIATIONS- Subsection (d) of section 3604 of title 39, United States Code, is amended to read as follows:

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

(b) BUDGET PROGRAM-

(1) IN GENERAL- The next to last sentence of section 2009 of title 39, United States Code, is amended to read as follows: `The budget program shall also include separate statements of the amounts which (1) the Postal Service requests to be appropriated under subsections (b) and (c) of section 2401, (2) the Office of Inspector General of the United States Postal Service requests to be appropriated, out of the Postal Service Fund, under section 8G(f) of the Inspector General Act of 1978, and (3) the Postal Regulatory Commission requests to be appropriated, out of the Postal Service Fund, under section 3604(d) of this title.'.

(2) CONFORMING AMENDMENT- Section 2003(e)(1) of title 39, United States Code, is amended by striking the matter before the second sentence and inserting the following:

`(e)(1) The Fund shall be available for the payment of all expenses incurred by the Postal Service in carrying out its functions as provided by law and--

`(A) subject to the availability of amounts appropriated pursuant to section 3604(d), all of the expenses of the Postal Regulatory Commission; and

`(B) subject to the availability of amounts appropriated pursuant to section 8G(f) of the Inspector General Act of 1978, all of the expenses of the Office of Inspector General.'.

(c) EFFECTIVE DATE-

(1) IN GENERAL- The amendments made by this section shall apply with respect to fiscal years beginning on or after October 1, 1999.

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

SEC. 214. CHANGE-OF-ADDRESS ORDER INVOLVING A COMMERCIAL MAIL RECEIVING AGENCY.

(a) IN GENERAL- Subchapter V of chapter 36 of title 39, United States Code, is amended by adding at the end the following:

`Sec. 3686. Change-of-address order involving a commercial mail receiving agency

`(a) For the purpose of this section, the term `commercial mail receiving agency' or `CMRA' means a private business that acts as the mail receiving agent for specific clients.

`(b) Upon termination of an agency relationship between an addressee and a commercial mail receiving agency--

`(1) the addressee or, if authorized to do so, the CMRA may file a change-of-address order with the Postal Service with respect to such addressee;

`(2) a change-of-address order so filed shall, to the extent practicable, be given full force and effect; and

`(3) any mail for the addressee that is delivered to the CMRA after the filing of an appropriate order under this subsection shall be subject to subsection (c).

`(c) Mail described in subsection (b)(3) shall, if marked for forwarding and remailed by the CMRA, be forwarded by the Postal Service in the same manner as, and subject to the same terms and conditions (including limitations on the period of time for which a change-of-address order shall be given effect) as apply to, mail forwarded directly by the Postal Service to the addressee.'.

(b) CLERICAL AMENDMENT- The table of sections at the beginning of chapter 36 of title 39, United States Code, is amended by adding after the item relating to section 3685 the following:

`3686. Change-of-address order involving a commercial mail receiving agency.'.

SEC. 215. RATES FOR MAIL UNDER FORMER SECTION 4358.

Section 3626 of title 39, United States Code, is amended by adding at the end the following:

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

TITLE III--GENERAL AUTHORITY

SEC. 301. RULEMAKING AUTHORITY.

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

`(2) to adopt, amend, and repeal such rules and regulations, not inconsistent with this title, as may be necessary in the execution of its functions under this title;'.

SEC. 302. GENERAL DUTIES.

Section 403(c) of title 39, United States Code, is amended--

(1) by inserting `domestic or international' after `users of the'; and

(2) by striking `user.' and inserting `user, except that this subsection shall not apply to competitive products (as defined in chapter 37).'.

SEC. 303. EMPLOYMENT OF POSTAL POLICE OFFICERS.

Section 404 of title 39, United States Code, is amended by adding at the end the following:

`(c)(1) The Postal Service may employ guards for all buildings and areas owned or occupied by the Postal Service or under the charge and control of the Postal Service, and such guards shall have, with respect to such property, the powers of special policemen provided by the first section of the Act cited in paragraph (2), and, as to such property, the Postmaster General (or his designee) may take any action that the Administrator of General Services (or his designee) may take under section 2 or 3 of such Act, attaching thereto penalties under the authority and within the limits provided in section 4 of such Act.

`(2) The Act cited in this paragraph is the Act of June 1, 1948 (62 Stat. 281), commonly known as the Protection of Public Property Act.'.

SEC. 304. DATE OF POSTMARK TO BE TREATED AS DATE OF APPEAL IN CONNECTION WITH THE CLOSING OR CONSOLIDATION OF POST OFFICES.

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

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

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

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

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

SEC. 305. UNFAIR COMPETITION PROHIBITED.

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

`Sec. 404a. Specific limitations

`(a) In providing products and services and in establishing classifications, rates, and fees under this title, the Postal Service, any corporation established under section 2012, and any other entity funded, in whole or in part, by the Postal Service, shall not, directly or indirectly, except as specifically authorized by law--

`(1) provide any postal or nonpostal product or service, with respect to which the Postal Service or any such corporation or entity (as the case may be), precludes competition or otherwise establishes the terms of competition through regulation (including standard-setting), licensing, or policy-setting;

`(2)(A) establish any regulation (including any standard) the effect of which is (or would be) to create a monopoly or any competitive advantage for itself, any such corporation or entity, or any other person; or

`(B) enter into any agreement, establish any policy, or take any other action (not covered by subparagraph (A)), the effect of which is (or would be) to create a monopoly or any other unlawful competitive advantage for itself, any such corporation or entity, or any other person;

`(3) regulate competition or engage in any regulatory or enforcement activity with respect to actions or practices that are subject to the antitrust laws;

`(4) obtain information from a person that provides, or seeks to provide, a postal or nonpostal product or service, and subsequently disclose that information, or offer any product or service that uses or is based in whole or in part on that information, without the consent of the person providing that information, unless substantially the same information is obtained from an independent source or is otherwise obtained by the Postal Service, corporation, or other entity (as the case may be) in a manner not inconsistent with this paragraph; or

`(5) compel the disclosure, transfer, or licensing of intellectual property (such as patents, copyrights, trademarks, trade secrets, and proprietary information).

`(b)(1) For purposes of this section, the term `antitrust laws' has the meaning given such term in subsection (a) of the first section of the Clayton Act (15 U.S.C. 12(a)), but includes section 5 of the Federal Trade Commission Act (15 U.S.C. 45) to the extent that such section 5 applies to unfair methods of competition.

`(2) Nothing in this section shall be construed as limiting the scope or effect of intellectual property rights recognized under the laws of the United States.

`(c) The Postal Regulatory Commission shall prescribe regulations to carry out the purposes of this section.'.

(b) CLERICAL AMENDMENT- The table of sections at the beginning of chapter 4 of title 39, United States Code, is amended by adding at the end the following:

`404a. Specific limitations.'.

SEC. 306. INTERNATIONAL POSTAL ARRANGEMENTS.

(a) INTERNATIONAL POSTAL ARRANGEMENTS-

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

`Sec. 407. International postal arrangements

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

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

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

`(3) to promote and encourage a clear distinction between governmental and operational responsibilities with respect to the provision of international postal services and other international delivery services by the Government of the United States and by intergovernmental organizations of which the United States is a member; and

`(4) to participate in multilateral and bilateral agreements with other countries to accomplish these objectives.

`(b)(1) The Secretary of State shall be responsible for formulation, coordination, and oversight of foreign policy related to international postal services and other international delivery services, except that the Secretary may not negotiate or conclude any treaty, convention, or other international agreement (including those regulating international postal services) if such treaty, convention, or agreement would, with respect to any competitive product (as that term is defined in chapter 37), grant an undue or unreasonable preference to the Postal Service, a private provider of international postal or delivery services, or any other person.

`(2) In carrying out the responsibilities specified in paragraph (1), the Secretary of State shall--

`(A) exercise primary authority for the conduct of foreign policy with respect to international postal services and international delivery services, including the determination of United States positions and the conduct of United States participation in negotiations with foreign governments and international bodies; in exercising this responsibility, the Secretary shall coordinate with other agencies as appropriate, and in particular, shall give full consideration to the authority vested by law or Executive order in the Postal Regulatory Commission, the Department of Commerce, the Department of Transportation, and the Office of the United States Trade Representative in this area;

`(B) maintain continuing liaison with other executive branch agencies concerned with postal and delivery services;

`(C) maintain continuing liaison with the Committee on Government Reform and Oversight of the House of Representatives and the Committee on Governmental Affairs of the Senate;

`(D) maintain appropriate liaison with representatives of the Postal Service to keep informed of its interests and problems, and to provide such assistance as may be needed to ensure that matters of concern to the Postal Service are promptly considered by the Department of State or (if applicable, and to the extent practicable) other executive branch agencies;

`(E) maintain appropriate liaison with representatives of users and private providers of international postal services and other international delivery services to keep informed of their interests and problems, and to provide such assistance as may be needed to ensure that matters of concern are promptly considered by the Department of State or (if applicable, and to the extent practicable) other executive branch agencies; and

`(F) assist in arranging meetings of such public sector advisory groups as may be established to advise the Department of State and other executive branch agencies in connection with international postal services and international delivery services.

`(c) Nothing in this section shall be considered to prevent the Postal Service from entering into such commercial or operational contracts related to providing international postal services and other international delivery services as it deems appropriate, except that--

`(1) any such contract made with an agency of a foreign government (whether under authority of this subsection or otherwise) must be solely contractual in nature and may not purport to be international law; and

`(2) a copy of each such contract between the Postal Service and an agency of a foreign government shall be transmitted to the Secretary of State

and the Postal Regulatory Commission not later than the effective date of such contract.

`(d)(1) With respect to shipments of international mail within the meaning of section 3741 that are exported or imported by the Postal Service--

`(A) the Postal Service shall not tender exported shipments to governmental authorities of any other country for clearance and importation except in accordance with procedures and laws which are equally applicable to similar shipments transmitted by private companies; and

`(B)(i) subject to clause (ii), the Customs Service and other appropriate Federal agencies shall apply the customs laws of the United States and all other laws relating to the importation or exportation of such shipments in the same manner to both shipments by the Postal Service and similar shipments by private companies; and

`(ii) the Customs Service and other Federal agencies shall deny shipments imported by the Postal Service from a foreign country access to special customs procedures established in accordance with international postal or customs agreements for shipments by postal authorities of other countries unless that foreign country makes available such special customs procedures both to shipments to such country from the United States by the Postal Service and similar shipments to such country from the United States by private companies.

`(2)(A) The provisions of paragraph (1)(B)(i) shall take effect beginning on the date of enactment of this subsection.

`(B) The provisions of subparagraphs (A) and (B)(ii) of paragraph (1) shall take effect beginning 5 years after the date of enactment of this subsection.

`(C) The Secretary of State shall, to the maximum extent practicable, take such measures as are within the control of the Secretary--

`(i) to complete the renegotiation of any treaties, conventions, or other international agreements (including those regulating international postal services), and

`(ii) to encourage the governments of other countries to make any changes in their laws (consistent with the policies carried out by the provisions referred to in subparagraph (B)),

which may be necessary in order to facilitate the timely implementation of the provisions that are subject to subparagraph (B). The Secretary of State shall consult with the United States Trade Representative and the Commissioner of Customs in carrying out this subparagraph.

`(3) For purposes of this subsection, the term `private company' means a private company substantially owned or controlled by persons who are citizens of the United States.'.

(2) EFFECTIVE DATE- Notwithstanding paragraph (1), the authority of the United States Postal Service to establish the rates of postage or other charges on mail matter conveyed between the United States and other countries shall remain available to the Postal Service until the date as of which the baseline rates are determined under section 3721(e)(2) of title 39, United States Code (as amended by section 201).

(b) TRADE-IN-SERVICES PROGRAM- The second sentence of paragraph (5) of section 306(a) of the Trade and Tariff Act of 1984 (19 U.S.C. 2114b(5)) is amended by inserting `postal and delivery services,' after `transportation,'.

SEC. 307. SUITS BY AND AGAINST THE POSTAL SERVICE.

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

`(c) For purposes of the Act of July 5, 1946 (commonly referred to as the `Trademark Act of 1946' (15 U.S.C. 1051 and following)), the Postal Service shall be considered to be a `person', as used in that Act, and shall not be immune under any other doctrine of sovereign immunity from suit in Federal court by any person for any violation of that Act by any officer or employee of the Postal Service.

`(d)(1) To the extent that the Postal Service, or other Federal agency acting on behalf of or in concert with the Postal Service, engages in conduct with respect to any service which is not reserved to the United States under section 1696 of title 18, the Postal Service or other Federal agency--

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

`(B) shall not be considered a `Federal agency' for purposes of section 1346(b) and chapter 171 of title 28, and shall be liable for actions in tort in the same manner as a private company; and

`(C) shall be considered to be a person (as defined in subsection (a) of the first section of the Clayton Act (15 U.S.C. 12(a)) for purposes of--

`(i) the antitrust laws (as defined in subsection (a) of the first section of the Clayton Act (15 U.S.C. 12(a)); and

`(ii) section 5 of the Federal Trade Commission Act (15 U.S.C. 45) to the extent that such section 5 applies to unfair methods of competition.

For purposes of the preceding sentence, any private carriage of mail allowable by virtue of section 601 shall not be considered a service reserved to the United States under section 1696 of title 18.

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

`(e)(1) Motor vehicles owned or leased by the Postal Service that are primarily and regularly used for the transport or delivery of products in the competitive category of mail shall be subject to Federal and State laws and regulations associated with the parking and operation of such motor vehicles, to the same extent and in the same manner as if they were owned or leased by a private company.

`(2) Any motor vehicle owned or leased by the Postal Service that is primarily and regularly used for the transport or delivery of products in the competitive category of mail shall be clearly identified as such by appropriate symbol or other marking.

`(3) This subsection shall become effective on the first day of the first ratemaking cycle.

`(4) For purposes of this subsection--

`(A) the terms `product in the competitive category of mail' and `ratemaking cycle' have the meanings given them by chapter 37; and

`(B) the term `State' includes the District of Columbia, the Commonwealth of Puerto Rico, and a territory or possession of the United States.

`(f)(1) The Postal Service shall comply with--

`(A) any zoning, planning, and land use regulations applicable to State or local public entities; and

`(B) any building codes applicable to State or local public entities.

`(2) For purposes of this subsection, the term `State' has the meaning given such term by subsection (e).

`(g)(1) The Postal Service shall employ attorneys by contract or otherwise to conduct litigation on its behalf in any litigation arising, in whole or in part, under any of the following:

`(A) Subsection (c), (d), or (e) of section 409 (relating to application of certain laws to the Postal Service).

`(B) Subsection (f) or (g) of section 3604 (relating to administrative subpoenas by the Postal Regulatory Commission).

`(C) Subsection (a) or (b) of section 3628 (relating to appeals from decisions of the Commission and the Directors).

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

`(h) A judgment against the Government of the United States arising out of activities of the Postal Service shall be paid by the Postal Service out of any funds available to the Postal Service, subject to the restriction specified in section 2011(f).'.

(b) TECHNICAL AMENDMENT- Section 409(a) of title 39, United States Code, is amended by striking `Except as provided in section 3628 of this title,' and inserting `Except as otherwise provided in this title,'.

TITLE IV--MISCELLANEOUS PROVISIONS RELATING TO THE BUDGET AND APPROPRIATIONS PROCESS

SEC. 401. PROVISIONS RELATING TO BENEFITS UNDER CHAPTER 81 OF TITLE 5, UNITED STATES CODE, FOR OFFICERS AND EMPLOYEES OF THE FORMER POST OFFICE DEPARTMENT.

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

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

(b) EFFECTIVE DATE- This section and the amendments made by this section shall take effect on October 1, 1998.

SEC. 402. TECHNICAL AND CONFORMING AMENDMENTS.

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

(1) by striking `Committee on Post Office and Civil Service' each place it appears and inserting `Committee on Government Reform and Oversight';

(2) by striking `and the Committees on Appropriations of the Senate and the House of Representatives'; and

(3) by striking `Not later than March 15 of each year,' and inserting `Each year,'.

(b) TECHNICAL CORRECTION- Sections 2803(a) and 2804(a) of title 39, United States Code, are amended by striking `2401(g)' and inserting `2401(e)'.

TITLE V--PROVISIONS RELATING TO TRANSPORTATION, CARRIAGE, OR DELIVERY OF MAIL

SEC. 501. OBSOLETE PROVISIONS.

(a) REPEAL- Chapter 52 of title 39, United States Code, is repealed.

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

(1) by repealing paragraph (1); and

(2) in paragraph (4) by striking `(as defined in section 5201(6) of this title)'.

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

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

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

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

SEC. 502. EXPANDED CONTRACTING AUTHORITY.

Subsection (d) of section 5402 of title 39, United States Code, is amended to read as follows:

`(d) Notwithstanding the provisions of subsections (a) through (c), the Postal Service may contract for the transportation of mail by aircraft, except as provided in subsections (f) and (g).'.

SEC. 503. PRIVATE CARRIAGE OF LETTERS.

(a) REPEAL OF SUSPENSION AUTHORITY- Subsection (b) of section 601 of title 39, United States Code, is repealed.

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

`(a) A letter may be carried out of the mails when--

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

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

`(3) such carriage is within the scope of services described by regulations of the United States Postal Service (as in effect on July 1, 1998) that purport to permit private carriage by suspension of the operation of this subsection (as then in effect); or

`(4) the requirements of subsection (b) are met.

`(b) A letter shall be considered to satisfy the requirements of this subsection if--

`(1) it is enclosed in an envelope;

`(2) the amount of postage which would have been charged on the letter if it had been sent by mail is paid by stamps, or postage meter stamps, on the envelope;

`(3) the envelope is properly addressed;

`(4) the envelope is so sealed that the letter cannot be taken from it without defacing the envelope;

`(5) any stamps on the envelope are canceled in ink by the sender; and

`(6) the date of the letter, of its transmission or receipt by the carrier is endorsed on the envelope in ink.'.

(c) EFFECTIVE DATE- This section shall take effect as of the first day of the first year beginning on or after the date as of which the baseline rates are determined under section 3721(e)(2).

SEC. 504. REPEAL OF SECTION 5403.

(a) IN GENERAL- Section 5403 of title 39, United States Code, is repealed.

(b) CLERICAL AMENDMENT- The table of sections for chapter 54 of title 39, United States Code, is amended by repealing the item relating to section 5403.

TITLE VI--STUDIES

SEC. 601. EMPLOYEE-MANAGEMENT RELATIONS.

(a) INDEPENDENT STUDY REQUIRED- The Board of Directors shall, by contract, provide for the National Academy of Public Administration to conduct an independent study as to how employee-management relations within the United States Postal Service may be improved.

(b) SPECIFIC REQUIREMENTS- Under the contract, the Academy shall be required--

(1) to involve the labor, supervisory, and managerial organizations of the Postal Service in developing the design and specific objectives of the study;

(2) to consult periodically with representatives of the Postal Service, and of those labor, supervisory, and managerial organizations, on the progress of the study; and

(3) to provide opportunity for those labor, supervisory, and managerial organizations to review and submit written comments on the final report.

(c) FINAL REPORT-

(1) IN GENERAL- The Academy shall, not later than 12 months after the date on which the contract for the study under this section is entered into, submit its final report to the President, the Congress, the Postal Service, and the labor, supervisory, and managerial organizations of the Postal Service.

(2) CONTENTS- The report shall contain the findings, conclusions, and recommendations of the Academy on all matters required to be addressed by the study, and shall also include all written comments submitted to the Academy under subsection (b)(3).

(d) COOPERATION- The Board of Directors shall take appropriate measures to ensure that all components of the Postal Service cooperate fully with the Academy in the conduct of its study under this section.

(e) DEFINITION- For purposes of this section, the term `Board of Directors' has the meaning given such term by section 102 of title 39, United States Code (as amended by section 101 of this Act).

SEC. 602. RECOMMENDATIONS ON UNIVERSAL POSTAL SERVICES.

(a) IN GENERAL- Chapter 28 of title 39, United States Code, is amended by adding at the end the following:

`Sec. 2806. Universal postal services

`(a)(1) Within 1 month after the date of enactment of this section, the Postal Service shall begin conducting a study the purpose of which shall be to develop recommendations as to the appropriate scope and standards for universal postal services to be assured by the Government of the United States consistent with its obligations under sections 101 and 403.

`(2) The Postal Service shall, within 18 months thereafter, complete its study and submit a written report to the President, the Congress, and the Postal Regulatory Commission setting forth its recommendations under this section and the reasons therefor.

`(3) The Postal Service shall solicit and include as part of its report the written views and suggestions of any persons who may be affected by or interested in any matter as to which the study pertains.

`(4) The conduct of the study and the drafting of the report required under this section shall, consistent with section 2805 (relating to inherently Governmental functions), be performed only by employees of the Postal Service.

`(b)(1) The recommendations submitted by the Postal Service under this section shall include recommendations concerning a universal service definition for each class of delivery services the continuous provision of which must, in the view of the Postal Service, be assured in order to fulfill the obligations set out in sections 101 and 403.

`(2) In developing its recommendations under this subsection with respect to any given class of delivery services, the Postal Service shall take into consideration the development of new technologies and the evolution of alternative means of meeting the public interest objectives set out in this title.

`(c) Each universal service definition recommended by the Postal Service under this section shall include the specification of minimum standards of service to be attained, consistent with the following:

`(1) Standards of reliability, speed, frequency, and quality of service shall be established so as to meet the needs of users and consumers of universal services generally.

`(2) Universal services should be available at just, reasonable, and affordable rates sufficient to enable universal services to be provided under best practices of honest, efficient, and economical management.

`(3) Persons in all regions of the Nation, including low-income persons and those located in rural, insular, and high-cost areas, should have access to universal postal services that are reasonably comparable to those provided in urban areas and that are available at appropriate rates. As provided in section 101(b), no small post office of the Postal Service shall be closed solely by reason of operating at a deficit.

`(4) In providing universal services, the Postal Service shall not, except as specifically authorized in this title, make any undue or unreasonable discrimination among users, including other providers of postal services.

`(5) Universal services shall be maintained without interruption and without abrupt and substantial changes in rates or quality of service.

`(6) Standards for universal service should avoid distortions in the competition between postal operators and between commercial purchasers of postal services to the extent consistent with fulfilling the obligations set out in sections 101 and 403.

`(7) Universal service definitions for the State of Alaska shall take into account the special conditions and needs of that State.

`(8) Universal services shall be provided consistent with such other principles as the Postal Service determines are necessary and appropriate for the protection of the public interest, convenience, and necessity, and the requirements of this title.

`(d) In addition to the principles set out in subsection (c), the Postal Service shall take into account special requirements for certain classes of postal services under this title, including requirements for uniform, reduced, or free rates.'.

(b) CLERICAL AMENDMENT- The table of sections for chapter 28 of title 39, United States Code, is amended by adding at the end the following:

`2806. Universal postal services.'.

SEC. 603. STUDY ON EQUAL APPLICATION OF LAWS TO COMPETITIVE PRODUCTS.

(a) IN GENERAL- The Department of Justice shall prepare and submit to the President and Congress, within 1 year after the date of enactment of this Act, a comprehensive report identifying Federal and State laws that apply differently to products of the United States Postal Service in the competitive category of mail (as that term is defined in chapter 37 of title 39, United States Code, as amended by this Act) and similar products provided by private companies.

(b) RECOMMENDATIONS- The Department of Justice shall include such recommendations as it considers appropriate for bringing such legal discrimination to an end.

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

SEC. 604. GREATER DIVERSITY IN POSTAL SERVICE EXECUTIVE AND ADMINISTRATIVE SCHEDULE MANAGEMENT POSITIONS.

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

(b) PERFORMANCE EVALUATIONS- The United States Postal Service shall, as soon as practicable, take such measures as may be necessary to ensure that, for purposes of conducting performance appraisals of supervisory or managerial employees, appropriate consideration shall be given to meeting affirmative action goals, achieving equal employment opportunity requirements, and implementation of plans designed to achieve greater diversity in the workforce.

(c) DEFINITION- For purposes of this section, the term `Board of Directors' has the meaning given such term by section 102 of title 39, United States Code (as amended by section 101 of this Act).

SEC. 605. PLAN FOR ASSISTING DISPLACED WORKERS.

(a) PLAN- The United States Postal Service shall, before the deadline specified in subsection (b), develop and be prepared to implement, whenever necessary, a comprehensive plan under which reemployment assistance shall be afforded to employees displaced as a result of the automation or privatization of any of its functions.

(b) REPORT- Not later than 1 year after the date of enactment of this Act, the United States Postal Service shall submit to its Board of Directors (within the meaning of section 102 of title 39, United States Code, as amended by section 101 of this Act) and Congress a written report describing its plan under this section.

SEC. 606. CONTRACTS WITH WOMEN, MINORITIES, AND SMALL BUSINESSES.

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

TITLE VII--INSPECTORS GENERAL

SEC. 701. INSPECTOR GENERAL OF THE POSTAL REGULATORY COMMISSION.

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

(b) ADMINISTRATION- Section 3604 of title 39, United States Code, is amended by adding after subsection (g) (as added by section 211) the following:

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

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

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

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

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

SEC. 702. INSPECTOR GENERAL OF THE UNITED STATES POSTAL SERVICE TO BE APPOINTED BY THE PRESIDENT.

(a) DEFINITIONAL AMENDMENTS TO THE INSPECTOR GENERAL ACT OF 1978- Section 11 of the Inspector General Act of 1978 is amended--

(1) in paragraph (1)--

(A) by striking `and' before `the chief executive officer of the Resolution Trust Corporation';

(B) by striking `and' before `the Chairperson of the Federal Deposit Insurance Corporation';

(C) by striking `or' before `the Commissioner of Social Security, Social Security Administration'; and

(D) by inserting `or the Postmaster General and Chief Executive Officer of the United States Postal Service;' after `Social Security Administration;'; and

(2) in paragraph (2)--

(A) by striking `or' before `the Veterans' Administration';

(B) by striking `or' before `the Social Security Administration'; and

(C) by inserting `or the United States Postal Service;' after `Social Security Administration;'.

(b) SPECIAL PROVISIONS CONCERNING THE UNITED STATES POSTAL SERVICE-

(1) IN GENERAL- The Inspector General Act of 1978 is amended--

(A) by redesignating sections 8G (as amended by section 701(a)) and 8H as sections 8H and 8I, respectively; and

(B) by inserting after section 8F the following:

`SPECIAL PROVISIONS CONCERNING THE UNITED STATES POSTAL SERVICE

`SEC. 8G. (a) Notwithstanding the last two sentences of section 3(a), the Inspector General of the United States Postal Service shall report to and be under the general supervision of the Postmaster General, but shall not report to, or be subject to supervision by, any other officer or employee of the United States Postal Service or its Board of Directors. No such officer or employee (including the Postmaster General) or member of such Board shall prevent or prohibit the Inspector General from initiating, carrying out, or completing any audit or investigation, or from issuing any subpoena during the course of any audit or investigation.

`(b) In carrying out the duties and responsibilities specified in this Act, the Inspector General of the United States Postal Service 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.

`(c) Any report required to be transmitted by the Postmaster General to the appropriate committees or subcommittees of the Congress under section 5(d) shall also be transmitted, within the 7-day period specified under such section, to the Committee on Government Reform and Oversight of the House of Representatives and the Committee on Governmental Affairs of the Senate.

`(d) Notwithstanding any provision of paragraph (7) or (8) of section 6(a), the Inspector General of the United States Postal Service may select, appoint, and employ such officers and employees as may be necessary for carrying out the functions, powers and duties of the Office of Inspector General and to obtain the temporary or intermittent services of experts or consultants or an organization of experts or consultants, subject to the applicable laws and regulations that govern such selections, appointments, and employment, and the obtaining of such services, within the United States Postal Service.

`(e) Nothing in this Act shall restrict, eliminate, or otherwise adversely affect any of the rights, privileges, or benefits of 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.

`(f) 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) As used in this section, `Postmaster General', `Board of Directors', and `Board' each has the meaning given it by section 102 of title 39, United States Code.'.

(2) RELATED PROVISIONS-

(c) AUDITS OF THE POSTAL SERVICE-

(1) AUDITS- Subsection (e) of section 2008 of title 39, United States Code, is amended to read as follows:

`(e)(1) At least once each year beginning with the fiscal year commencing after the date of enactment of the Postal Modernization Act of 1999, the financial statements of the Postal Service (including those used in determining and establishing postal rates) shall be audited by the Inspector General or by an independent external auditor selected by the Inspector General.

`(2) Audits under this section shall be conducted in accordance with applicable generally accepted government auditing standards.

`(3) Upon completion of the audit required by this subsection, the person who audits the statement shall submit a report on the audit to the Postmaster General.'.

(2) RESULTS OF INSPECTOR GENERAL'S AUDIT TO BE INCLUDED IN ANNUAL REPORT- Section 2402 of title 39, United States Code, is amended by inserting after the first sentence the following: `Each report under this section shall include, for the most recent fiscal year for which a report under section 2008(e) is available (unless previously transmitted under the following sentence), a copy of such report.'.

(3) COORDINATION PROVISIONS- Subsection (d) of section 2008 of title 39, United States Code, is amended--

(A) by striking `(d) Nothing' and inserting `(d)(1) Except as provided in paragraph (2), nothing'; and

(B) by adding at the end the following:

`(2) An audit or report under paragraph (1) may not be obtained without the prior written approval of the Inspector General.'.

(4) SAVINGS PROVISION- For purposes of any fiscal year preceding the first fiscal year commencing after the date of enactment of this Act, the provisions of title 39, United States Code, shall be applied as if the amendments made by this subsection had never been enacted.

(d) REPORTS-

(1) IN GENERAL- Section 3013 of title 39, United States Code, is amended--

(A) in the first sentence by striking `Postmaster General' and inserting `Chief Postal Inspector';

(B) by striking `Board' each place it appears and inserting `Inspector General';

(C) in the third sentence by striking `Each such report shall be submitted within sixty days after the close of the reporting period involved' and inserting `Each such report shall be submitted within 1 month (or such shorter length of time as the Inspector General may specify) after the close of the reporting period involved'; and

(D) by striking the last sentence and inserting the following:

`The information in a report submitted under this section to the Inspector General with respect to a reporting period shall be included as part of the semiannual report prepared by the Inspector General under section 5 of the Inspector General Act of 1978 for the same reporting period. Nothing in this section shall be considered to permit or require that any report by the Chief Postal Inspector under this section include any information relating to activities of the Inspector General.'.

(2) EFFECTIVE DATE- This subsection shall take effect on the first day of the first semiannual reporting period beginning on or after the date of enactment of this Act and shall apply with respect to semiannual reporting periods beginning on or after the effective date of this subsection.

(3) SAVINGS PROVISION- For purposes of any semiannual reporting period preceding the first semiannual reporting period referred to in paragraph (2), the provisions of title 39, United States Code, shall continue to apply as if the amendments made by this subsection had not been enacted.

(e) TECHNICAL AND CONFORMING AMENDMENTS-

(1) RELATING TO THE INSPECTOR GENERAL ACT OF 1978- (A) Subsection (a) of section 8H of the Inspector General Act of 1978 (as amended by section 701 and redesignated by subsection (b) of this section) is further amended--

(i) in paragraph (2) by striking `the Postal Regulatory Commission, and the United States Postal Service;' and inserting `and the Postal Regulatory Commission;' and

(ii) in paragraph (4) by striking `except that' and all that follows through `Code);' and inserting `except that, with respect to the National Science Foundation, such term means the National Science Board;'.

(B)(i) Subsection (f) of section 8H of such Act (as so redesignated) is repealed.

(ii) Subsection (c) of section 8H of such Act (as so redesignated) is amended by striking `Except as provided under subsection (f) of this section, the' and inserting `The'.

(2) RELATING TO TITLE 39, UNITED STATES CODE- (A) Subsection (e) of section 202 of title 39, United States Code, is repealed.

(B) Paragraph (4) of section 102 of such title 39, as amended by sections 102(a) and 205(a) of this Act, is amended to read as follows:

`(4) `Inspector General' means the Inspector General of the United States Postal Service, appointed under section 3(a) of the Inspector General Act of 1978;'.

(C) The first sentence of section 1003(a) of such title 39 is amended by striking `chapters 2 and 12 of this title, section 8G of the Inspector General Act of 1978, or other provision of law,' and inserting `chapter 2 or 12 of this title, subsection (b) or (c) of section 1003 of this title, or any other provision of law,'.

(D) Subsection (b) of section 1003 of such title 39 is amended by striking `respective' and inserting `other'.

(E) Subsection (c) of section 1003 of such title 39 is amended by striking `included' and inserting `includes'.

(f) EFFECTIVE DATE; ELIGIBILITY OF PRIOR INSPECTOR GENERAL-

(1) EFFECTIVE DATE-

(A) IN GENERAL- Except as provided in subparagraph (B) or in subsection (c) or (d), this section and the amendments made by this section shall take effect on the date of enactment of this Act.

(B) SPECIAL RULES-

(i) IN GENERAL- Except as provided in clause (ii), if the position of Inspector General of the United States Postal Service is occupied on the date of enactment of this Act (other than by an individual serving due to a vacancy arising in that position before the expiration of his or her predecessor's term), then, until January 5, 2004, or, if earlier, the date on which such individual ceases to serve in that position, title 39, United States Code, shall be applied as if the amendments made by this section had not been enacted.

(ii) AUTHORIZATION OF APPROPRIATIONS-

(I) IN GENERAL- Notwithstanding any other provision of this paragraph, subsection (f) of section 8G of the Inspector General Act of 1978 (as amended by this section) shall be effective for purposes of fiscal years beginning on or after October 1, 1999.

(II) SAVINGS PROVISION- For purposes of the fiscal year ending on September 30, 1999, funding for the Office of Inspector General of the United States Postal Service shall be made available in the same manner as if this Act had never been enacted.

(2) ELIGIBILITY OF PRIOR INSPECTOR GENERAL- Nothing in this Act shall prevent any individual who has served as Inspector General of the United States Postal Service at any time before the date of enactment of this Act from being appointed to that position pursuant to the amendments made by this section.

TITLE VIII--LAW ENFORCEMENT

Subtitle A--Amendments to

Title 39, United States Code

SEC. 801. MAKE FEDERAL ASSAULT STATUTES APPLICABLE TO POSTAL CONTRACT EMPLOYEES.

Section 1008 of title 39, United States Code, is amended--

(1) in subsection (a) by inserting `or entrusted with mail under contract with the Postal Service' after `mail'; and

(2) in subsection (b) by inserting `an employee of the Postal Service for the purposes of sections 111 and 1114 of title 18, and' after `deemed'.

SEC. 802. SEXUALLY ORIENTED ADVERTISING.

(a) CIVIL PENALTY- Section 3011 of title 39, United States Code, is amended--

(1) by redesignating subsections (b) through (e) as subsections (c) through (f), respectively; and

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

`(b)(1) Upon a finding by the court that a sexually oriented advertisement has been mailed in violation of section 3010(b), the court may assess, on whoever made the mailing or caused it to be made, a civil penalty of not less than $500 and not more than $1,500 for each violation. Each piece of mail sent in violation of section 3010(b) shall constitute a separate violation.

`(2) For purposes of this subsection--

`(A) receipt of a sexually oriented advertisement after the recipient's name and address have been listed (as described in section 3010(b)) for at least 60 days shall create a rebuttable presumption that such advertisement was mailed more than 30 days after that individual's name and address became so listed; and

`(B) receipt in the mail of a sexually oriented advertisement addressed to `Occupant' or `Resident' (or any other term permitted by Postal Service standards on simplified addressing) at the recipient's address, or which is specifically addressed to the recipient, but with an inconsequential error or variation in the recipient's name or address, shall, for purposes of applying the mailing prohibition of section 3010(b), create a rebuttable presumption that such advertisement was mailed to such recipient.

`(3) Any penalty assessed under paragraph (1) shall be paid to the Postal Service for deposit in the Postal Service Fund established by section 2003.'.

(b) REPEAL-

(1) IN GENERAL- Section 3008 of title 39, United States Code, and the item relating to such section in the table of sections at the beginning of chapter 30 of such title, are repealed.

(2) CONFORMING AMENDMENTS- (A) Subsection (f) of section 3011 of such title 39 (as so redesignated by subsection (a)) is amended by striking

`section 3006, 3007, or 3008' and inserting `section 3006 or 3007'.

(B) Section 1737 of title 18, United States Code, is amended--

(i) in subsection (a) by striking `3008 or'; and

(ii) in subsection (b) by striking `3008(a) or'.

(c) EFFECTIVE DATE- This section and the amendments made by this section shall take effect 90 days after the date of the enactment of this Act. The amendments made by this section shall be treated as if they had never been enacted for purposes of any mailing made or caused to be made before this section takes effect.

SEC. 803. ALLOW POSTAL SERVICE TO RETAIN ASSET FORFEITURE RECOVERIES.

Paragraph (7) of section 2003(b) of title 39, United States Code, is amended to read as follows:

`(7) amounts (including proceeds from the sale of forfeited items) from any civil forfeiture conducted by the Postal Service and from any forfeiture resulting from an investigation in which the Postal Service has primary responsibility, except that nothing in this paragraph shall preclude the Postal Service, on such terms as it may determine, from sharing such amounts with any Federal, State, or local law enforcement agency which participated in any of the acts which led to the seizure or forfeiture of the property; and'.

SEC. 804. HAZARDOUS MATTER.

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

`Sec. 3016. Civil penalty for prohibited mailing and deficient packaging of hazardous matter

`(a) For the purposes of this section--

`(1) the term `parcel' includes any kind of package, envelope, container, or other piece of mail;

`(2) the term `manner' includes the preparation and packaging of a piece of mail;

`(3) a person shall be considered to have acted knowingly if--

`(A) such person had actual knowledge of the facts giving rise to the violation; or

`(B) a reasonable person acting in the same circumstances and exercising due care would have had such knowledge; and

`(4) the term `hazardous matter' has the meaning given such term by section 1716 of title 18.

`(b) Any person--

`(1) who knowingly mails or causes to be mailed any parcel, the contents of which constitute or include any hazardous matter which has been declared by statute or Postal Service regulation to be nonmailable under any circumstances;

`(2) who knowingly mails or causes to be mailed a parcel in violation of any statute or Postal Service regulation restricting the time, place, or

manner in which hazardous matter may be mailed; or

`(3) who knowingly manufactures, distributes, or sells any container, packaging kit, or similar device that--

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

`(B) fails to conform with any statute or Postal Service regulation setting forth standards for containers, packaging kits, or similar devices used for the mailing of hazardous matter;

shall be liable to the Postal Service for a civil penalty in an amount not to exceed $25,000 per violation.

`(c) The Postal Service may enforce this section by commencing a civil action in accordance with section 409(d). The action may be brought in the district court of the United States for the district in which the defendant resides or any district in which the defendant conducts business or in which a violation of this section was discovered.

`(d) In determining the amount of any civil penalty to be assessed under this section, the district court--

`(1) shall treat as a separate violation--

`(A) each parcel mailed or caused to be mailed as described in paragraph (1) or (2) of subsection (b); and

`(B) each container, packaging kit, or similar device manufactured, distributed, or sold as described in subsection (b)(3); and

`(2) shall take into account--

`(A) the nature, circumstances, extent, and gravity of each violation committed; and

`(B) with respect to the person found to have committed such violation, the degree of culpability, any history of prior offenses, ability to pay, effect on ability to continue to do business, and such other matters as justice may require.

`(e) All penalties collected under authority of this section shall be paid into the Postal Service Fund established by section 2003.'.

(b) CLERICAL AMENDMENT- The table of sections at the beginning of chapter 30 of title 39, United States Code, is amended by adding at the end the following:

`3016. Civil penalty for prohibited mailing and deficient packaging of hazardous matter.'.

Subtitle B--Other Provisions

SEC. 811. STALKING FEDERAL OFFICERS AND EMPLOYEES.

(a) IN GENERAL- Chapter 41 of title 18, United States Code, is amended by adding at the end the following:

`Sec. 881. Stalking Federal and postal officers and employees

`(a) Whoever--

`(1) repeatedly engages in conduct (including maintaining a visual or physical proximity or communicating a verbal or written threat) directed at another person who is or was an officer or employee--

`(A) in the executive, legislative, or judicial branch of the Federal Government; or

`(B) in the United States Postal Service;

while such other person is engaged in official duties or on account of such duties;

`(2) knows that such conduct is likely to place that other person in reasonable fear of sexual battery, bodily injury, or death; and

`(3) thereby induces such fear in that other person;

shall be punished as provided in subsection (b) of this section.

`(b)(1) The punishment for an offense under subsection (a) is--

`(A) in the case of a first conviction under such subsection--

`(i) if, during the commission of the offense, the offender uses a deadly or dangerous weapon, a fine under this title or imprisonment for not more than 10 years, or both;

`(ii) if the offense violates a protective order, a fine under this title or imprisonment for not more than 5 years, or both; and

`(iii) in any other case, a fine under this title or imprisonment for not more than 3 years, or both; and

`(B) in the case of a second or subsequent conviction under such subsection, a fine under this title or imprisonment for not more than 15 years, or both.

`(2) If a sentence of probation is imposed for an offense under this section, the court shall require the defendant to undergo appropriate psychiatric, psychological, or social counselling.

`(c)(1) Whoever is aggrieved by a violation of this section may, in a civil action, obtain appropriate relief from the person engaging in that violation. Such relief may include compensatory and punitive damages, and injunctive or declaratory relief, and shall include reasonable attorney's fees.

`(2) If--

`(A) the court issues an injunction under this subsection;

`(B) the person against whom the injunction is issued is an officer or employee in the executive branch of the Federal Government or in the United States Postal Service; and

`(C) there is a nexus between the enjoined conduct and such person's office or employment;

the court may order that the person be suspended or summarily discharged from such office or employment.

`(d) As used in this section, the term `protective order' means any court order that requires an individual--

`(1) to refrain from behavior prohibited by subsection (a); or

`(2) to refrain from contact with the person who subsequently is a victim of the offense under such subsection that is committed by that individual.'.

(b) CLERICAL AMENDMENT- The table of sections at the beginning of chapter 41 of title 18, United States Code, is amended by adding at the end the following:

`881. Stalking Federal and postal officers and employees.'.

SEC. 812. NONMAILABILITY OF CONTROLLED SUBSTANCES.

Section 1716 of title 18, United States Code, is amended by adding at the end the following:

`Whoever knowingly deposits for mailing or delivery, or knowingly causes to be delivered by mail, according to the direction thereon, or at any place at which it is directed to be delivered by the person to whom it is addressed, unless in accordance with the rules and regulations authorized to be prescribed by the Postal Service, any controlled substance, as that term is defined for the purposes of the Controlled Substances Act, shall, if the distribution of a like amount of such substance is a felony under such Act, be fined under this title or imprisoned not more than 5 years, or both.'.

SEC. 813. ENHANCED PENALTIES.

Pursuant to its authority under section 994 of title 28, United States Code, the United States Sentencing Commission shall amend its sentencing guidelines to--

(1) appropriately enhance penalties in cases in which a defendant is convicted of stealing or destroying a quantity of undelivered United States mail, in violation of sections 1702, 1703, 1708, 1709, 2114, or 2115 of title 18, United States Code; and

(2) establish that the intended loss in a theft of an access device as defined in section 1029(e)(1) of title 18, United States Code, shall be based on the credit line of the access device or the actual unauthorized charges, whichever amount is greater.

SEC. 814. POSTAL BURGLARY PROVISIONS.

(a) LARCENY INVOLVING POST OFFICE BOXES AND POSTAL STAMP VENDING MACHINES- Section 2115 of title 18, United States Code, is amended--

(1) by striking `or' before `any building';

(2) by inserting `or any post office box or postal products vending machine,' after `used in whole or in part as a post office,'; and

(3) by inserting `or in such box or machine,' after `so used'.

(b) RECEIPT, POSSESSION, CONCEALMENT, OR DISPOSITION OF PROPERTY- Section 2115 of title 18, United States Code, is amended--

(1) by inserting `(a)' before `Whoever'; and

(2) by adding at the end the following:

`(b) Whoever receives, possesses, conceals, or disposes of any mail matter, money, or other property of the United States, that has been obtained in violation of this section, knowing the same to have been unlawfully obtained, shall be fined under this title or imprisoned not more than 5 years, or both.'.

SEC. 815. MAIL, MONEY, OR OTHER PROPERTY OF THE UNITED STATES.

(a) ENHANCED PENALTY FOR ROBBERY- Subsection (a) of section 2114 of title 18, United States Code, is amended to read as follows:

`(a) ASSAULT- Whoever assaults any person having lawful charge, control, or custody of any mail matter or of any money or other property of the United States, with intent to rob, steal, or purloin such mail matter, money, or other property of the United States, or robs or attempts to rob any such person of mail matter, or of any money, or other property of the United States, shall, for the first offense, be imprisoned not more than 10 years or fined under this title, or both. If, in effecting or attempting to effect such robbery the defendant wounds the person having custody of such mail, money, or other property of the United States, or puts that person's life in jeopardy by the use of a dangerous weapon, or the offense is a subsequent offense under this subsection, the defendant shall be imprisoned not more than 25 years or fined under this title, or both. If the death of any person results from the offense under this subsection, the defendant shall be punished by death or life imprisonment.'.

(b) ATTEMPT OFFENSES-

(1) The second paragraph of section 501 of title 18, United States Code, is amended by striking `uses or sells,' and inserting `uses or sells or attempts to use or sell,'.

(2) Section 1711 of title 18, United States Code, is amended by inserting `attempts to loan, use, pledge, hypothecate, or convert to this own use,' after `converts to his own use,'.

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