A TITLE I - DEFINITIONS; POSTAL SERVICES Section 101 -Definitions

Section 101 proposes, for the first time, a clear definition of "postal
services." A "postal service" is defined as "the physical delivery of letters,
printed matter, or packages weighing up to 70 pounds, including physical
acceptance, collection, sorting, transportation, and other services ancillary
thereto." The definition of "postal service" is used to clarify the jurisdiction
of the Postal Rate Commission (renamed the "Postal Regulatory Commission") and
the scope of commercial activities that the Postal Service is authorized to
pursue.

Section 101 also defines the term "product" to mean "any postal service with a
distinct cost or market characteristic." The term "product" thus encompasses all
classes, subclasses, and rate categories that comprise the mail classification
system.

Section 101 further defines "market-dominant product" to refer to "a product
subject to subchapter I of chapter 36" and "competitive product" to refer to "a
product subject to subchapter II of chapter 36."

Section 102 - Postal Services

Section 102 limits the Postal Service to offering "postal services." If the
Postal Service unlawfully offers a non-postal service or product, the Postal
Regulatory Commission may order that the Postal Service cease providing the
product under the complaint procedures outlined in section 202 of the bill.

TITLE II - MODERN RATE REGULATION

In the new regulatory regime proposed in the bill, the classes of mail and
services are classified as either Market Dominant or Competitive products. In
general, Title II requires the Postal Regulatory Commission to design, within 24
months, a new system of rate regulation for Market Dominant. With respect to
Competitive products, the Postal Service is given pricing flexibility comparable
to that exercised by private competitors. To prevent abuse, the new regulatory
regime proposed in the bill substantially enhances the authority of the
Regulatory Commission to define, audit, and remedy cross subsidization of
Competitive products from revenues earned from Market Dominant products.

Section 201 - Provisions relating to Market Dominant products

Section 201 of the bill establishes a new, modem system for regulation of Market
Dominant products, which account for about 85 percent of current Postal Service
revenues. In the current title 39, chapter 36 deals with regulation of postal
rates. The bill re-designates subchapter I of chapter 36 (establishing the
Postal Rate Commission) as chapter 5 (see section 501, below). Section 201
revises subchapter II, which currently sets out the process of rate regulation,
and re-designates it as subchapter 1. As amended, subchapter I relates only to
the regulation of Market Dominant products. Section 201 adds three new
provisions to title 39, sections 3621, 3622 and 3623, as follows.

Section 3621 - Applicability; definitions

Section 3621 lists the postal products to be regulated as Market Dominant
products immediately after enactment: First-Class mail, Periodical mail,
Standard mail except for bulk Parcel Post, media mail, library mail, and bound
printed matter. This list includes "individual consumer" mail, that is, domestic
and international single piece First-Class letters and cards and domestic and
international single piece parcels. Special services such as post office boxes
are also considered Market Dominant products. After enactment, the Commission
may revise the list of Market Dominant Products under new section 3642 set out
in section 203 of the bill.

Section 3622 - Modern rate regulation

Subsection 3622(a) requires the Commission to design, within 24 months, a new
system for regulating postage rates for Market Dominant products. Subsection
3622(b) provides that the objectives of the new system shall be: (1) t o
maximize incentives to reduce costs and increase efficiency; (2) to allow the
Postal Service pricing flexibility; (3) to reduce the administrative burden of
the ratemaking process; (4) to create predictability and stability in rates; and
(5) to assure adequate revenues, including retained earnings, to maintain
financial stability and maintain the service standards the Regulatory Commission
will establish under section 301 of the bill.

Subsection 3622 (c) requires that the Commission take into consideration the
rate and classification factors found in sections 3622 and 3623 of current law
while developing the new system. Subsection 3622(d) declares that the new system
may include price caps, revenue targets, cost-of-service regulation, or such
other forms of regulation as the Commission considers appropriate. Subsection
3622 (e) requires that the new system include a "phased rate" schedule whereby
rates would increase, when necessary, at regular intervals by predictable
amount. It also requires that the new system establish procedures whereby rates
may be increased on an expedited basis when unexpected declines in revenue or
increases in costs threaten the Postal Service's ability to meet the service
standards established by the Commission under section 301 of the bill.

Section 3623 - Service Agreements for Market Dominant products

Section 3623 specifically authorizes the Postal Service to negotiate service
agreements with individual mailers of Market Dominant products. The Postal
Service has negotiated two service agreements in recent months and submitted
them to the Postal Rate Commission for approval but it is unclear to date
whether they are legal under title 39 as it is currently written. Even if the
two agreements are ultimately approved, the current procedures for negotiating
and considering them are lengthy and burdensome. Service agreements authorized
under this section 3623 could involve the contracting mailer performing
additional functions, such as the preparation, processing, and transportation of
the mail, that reduce costs to the Postal Service. The agreements could also
involve the Postal Service taking on additional work not normally offered to
mailers. Service agreement could only be entered into if the revenue generated
from them covers all costs attributable to the Postal Service and results in a
greater contribution to the Postal Service's institutional costs. The agreements
cannot result in higher rates for other mailers and cannot preclude the Postal
Service from offering similar agreements to other mailers. No service agreements
could last for more than three years.

After negotiating a service agreement with a mailer, the Postal Service would
notify the Commission at least 30 days prior to its taking effect and publish
the terms of the agreement in the Federal Register. The Commission can then
prevent it from going into effect or, later, suspend or cancel it if they find
it does not meet the requirements in this section.

Any individual who believes that a service agreement does meet the requirements
of section 3623 or who believes that they have been harmed by a decision of the
Postal Service not to enter into an agreement with them can file a complaint
with the Commission.

Section 202 - Provisions relating to Competitive products

Section 202 of the bill adds a new subchapter II to chapter 36 of title 39.
Subchapter II establishes a flexible system for regulation of Competitive
products, which currently account for about 15 percent of current Postal Service
revenues. Section 202 adds three new sections to title 39, as follows.

Section 3621 - Applicability; definitions and updates

Section 3621 lists the postal products to be regulated as Market Dominant
products immediately after enactment: Priority mail, Express mail, mailgrams,
international mail, and parcel post. After enactment, the Regulatory Commission
may revise the list of Competitive Products under new section 3642 set out in
section 203 of the bill.

Section 3622 - Action of the Governors

Section 3622 provides that the Governors of the Postal Service may establish
rates and classes for all products in the Competitive category of mail after
giving notice in the Federal Register. The Governors' new pricing authority for
competitive products does not take effect until the Commission promulgates
regulations under section 3633.

Section 3633 - Provisions applicable to rates for competitive products

Section 3633 requires the Commission to promulgate regulations within 180 days
of enactment prohibiting subsidization of Competitive products by Market
Dominant products. The regulations will ensure that each competitive product
covers its attributable costs, and that competitive products collectively pay
their share of the institutional costs of the Postal Service.

Section 203 - Provisions relating to experimental and new products

Section 203 of the bill adds a new subchapter III to chapter 36 of title 39.
Subchapter III provides rules for market tests of experimental products and for
shifting products between the Market Dominant and Competitive categories. The
new subchapter III replaces, and thus repeals, the current subchapter III
dealing with temporary rates and classes. Section 203 adds two new provisions to
title 39 as follows.

Section 3641 - Market tests of experimental products

Section 3641 authorizes the Postal Service to conduct limited market tests that
are exempt from most specific pricing requirements. Market tests under this
section can last no longer than two years and must earn less than $10 million
annually. The Commission can allow for an extra year and raise the earnings
limit to $50 million if the Postal Service requests.

Regardless of duration or size, a market test must involve a "significantly
different product" and may not be conducted under this section if it will
"create an unfair or otherwise inappropriate competitive advantage for the
Postal Service or any mailer, particularly in regard to small business
concerns." Under this section, the Regulatory Commission retains substantial
oversight authority over market tests. Under section 3652, the Postal Service is
obliged to provide summary information on market tests in annual reports to the
Postal Regulatory Commission.

Section 3642 - New products and transfers of products between the Market
Dominant and Competitive categories of mail

Section 3642 authorizes the Regulatory Commission to classify new products as
either Market Dominant or Competitive and, at the Postal Service's request, to
transfer existing products between the two categories. Subsection 3642(b) adopts
criteria for the two categories that reflect the Federal Communications
Commission's (FCC) approach to defining "dominant" carriers for the purpose of
regulation. Paragraph 3642(b)(1) provides that: "The market-dominant category of
products shall consist of each product in the sale of which the Postal Service
exercises sufficient market power that it can effectively set the price of such
product substantially above costs, raise prices significantly, decrease quality,
or decrease output without risk of losing business to other firms offering
similar products. The competitive category of products shall embrace all postal
products not in the market-dominant category." Products covered by the postal
monopoly may not be transferred to the Competitive category.

Subsection 3642(d) requires that any change in the lists of products in the
Market Dominant and Competitive categories requested by the Postal Service be
published in theFederal Register. Subsection 3642(e) prohibits the Postal
Service from offering any product involving the physical delivery of letters,
printed matter, or packages until it is categorized as either Market Dominant or
Competitive.

Section 204 - Reporting requirements and related provisions

Section 204 of the bill adds a new subchapter IV to chapter 36 of title 39. In
general, subchapter IV provides for annual audits of Postal Service operations
by the Commission to ensure compliance with the ratemaking criteria of the act.
Section 203 adds three new provisions to title 39 as follows. 

Section 3651 - Annual reports from the commission

Section 3651 requires the Commission to submit a report to the President and
Congress each year detailing its activities and the extent to which regulations
are achieving the objectives set forth for the new rate and classification
system to be established under section 201 and the service standards to be
established under section 301. Section 3651 further requires that the Postal
Service provide the Commission any information that the Commission, in its
judgment, believes it needs to prepare its report.

Section 3652 - Annual reports to the commission

Subsection 3652(a) requires that the Postal Service submit information to the
Commission no later than three months after the last day of each fiscal year,
which demonstrates that the rates in effect for all products during the year are
in compliance with the requirements of this title and that service standards are
being met. The report will include information on mail volume, service quality
and customer satisfaction. Subsection 3652(b) requires annual reporting on the
extent of cost savings reflected in worksharing discounts. Subsection 3652(c)
further requires that the Postal Service provide in its annual report such data
as the Commission requires on service agreements and large-scale market tests.
The Postal Service Inspector General is required to audit the Postal Service's
report before it is submitted to the Commission.

Subsection 3652(d) requires that the Commission have access to all the working
papers and supporting materials of the Postal Service and the Inspector General
in connection with the required reports. Subsection 3652(e) requires that the
Commission, in developing regulations prescribing the content and form of the
required annual reports, consider the need to provide the public with adequate
information to justify the lawfulness of rates charged, the need to avoid
unnecessary or unwarranted administrative effort or expense on the part of the
Postal Service and the need to protect the confidentiality of commercially
sensitive information. As a result, the section authorizes the Commission to
specify what information will be provided as either public reports or in order
to accommodate the confidentiality protections in subsection 3652 (f), which
allows the Postal Service to obtain confidential treatment for commercially
sensitive information that is protected from disclosure under current law, in
accordance with provisions outlined in sections 502 and 504 of the bill.
Subsection (d) also allows the Commission, on its own motion or at the request
of an interested party, to initiate a proceeding to improve the quality,
accuracy, or completeness of Postal Service data.

Subsection 3652(g) requires the Postal Service to provide the Commission, as
part of the information to be examined in the annual audit, specific reports
that are submitted to Congress, including the comprehensive statement required
under section 2401 and the performance plan and program reports required under
the Government Performance and Results Act. The Postal Service is also required
to provide reports detailing the operations of the Competitive Products Fund
created in section 301 of the bill.

Section 3653 - Annual determination of compliance

Section 3653 requires the Commission to provide an opportunity for public
comment after receiving annual reports from the Postal Service. The Commission
will then, within 90 days, make a written determination as to whether any rates
or fees were not in compliance with the law or whether any service standards
were not met. If noncompliance is found, the Commission is required to take
appropriate action under the revised complaint procedure in the new section 3662
laid out in section 205 of the bill. A determination of compliance creates a
rebuttable presumption of compliance in any complaint proceeding.

Section 205 - Rate and service complaints

Section 205 of the bill revises the complaint and appellate review provisions
set out in subchapter V of chapter 36, title 39 (as re-designated by the bill).
In general, the bill strengthens the authority of the Regulatory Commission to
act on a complaint in lieu of the current reliance on Regulatory Commission
review of postage rates prior to implementation. Section 205 repeals current
sections 3662 (rate and service complaints) and 3663 (annual report on
international services) and adds three sections to title 39 as follows. Section
3662 - Rate and service complaints

Section 3662 provides the Regulatory Commission with enhanced authority to
respond to complaints of pricing, service, or other actions by the Postal
Service in violation of law. As revised, this section requires the Commission to
investigate or dismiss complaints within 90 days. Subsection 3662(c) gives the
Commission broad authority to correct violations by ordering the Postal Service
to take whatever steps the Commission considers appropriate. For instance, the
Regulatory Commission may order the Postal Service to adjust the rates of
Competitive products to lawful levels if they are set below attributable costs.
The Commission, operating now as the Rate Commission, has no such authority
under current law. In cases of deliberate noncompliance with the law, the
Commission is authorized to levy fines based on the seriousness of the
noncompliance. Fines resulting from unlawful provision of Competitive products
must be paid out of the Competitive Products Fund. All fines will be paid into
the general Treasury fund. 

Section 3663 - Appellate review

Section 3663 provides for appeals of any order or decision by the Commission to
the United States Court of Appeals for the District of Columbia Circuit in
accordance with chapter 706 of title 5 and chapter 158 of title 28.

Section 3664 - Enforcement of orders

Section 3664 gives any United States District Court the authority to enforce
orders from the Commission.

Section 206 - Clerical amendment

Section 206 of the bill revises the analysis of chapter 36, title 39, in
accordance with the changes made by the bill.

TITLE III - MODERN SERVICE STANDARDS

Title II of the bill requires the Postal Regulatory Commission to design, within
24 months, a new system of rate regulation for Market Dominant products. Title
III requires the Commission to design, at the same time, a new set of service
standards for Market Dominant products. The Postal Service currently sets its
own service standards.

Title III further requires the Postal Service to submit a plan for how it will
meet the new standards established by the Commission. The Postal Service's plan
will include a list of facilities that can be closed and consolidated without
hindering their ability to meet the new service standards. The facilities list
will be submitted to the new Postal Network Modernization Commission, modeled
after the Base Closing and Realignment Commission that has been used to
streamline the Defense Department's base infrastructure. Nothing in Title III
changes the study and community notice requirements for post office closings
contained in section 403(b) of title 39.

The intent of Title III is not to erode the service currently enjoyed by Postal
Service customers or to downsize the Postal Service itself. The intent of Title
III is to improve service and "right-size " the Postal Service so that it is
capable of meeting the service standards set by the Postal Regulatory
Commission, which are meant to improve the value of the Postal Service's Market
Dominant products.

Section 301 - Establishment of modern service standards

Section 301 creates a new section 3691 in title 39. Section 3691 requires the
Regulatory Commission to design, within 24 months, a new set of service
standards for Market Dominant products. The new standards shall be consistent
with the requirements in sections 101(a), 101(b) and 403(a) of title 39
requiring that the Postal Service "bind the Nation together through the mail"
and serve all parts of the country in a nondiscriminatory fashion. Subsection
3691(b) provides that the objectives of the new system shall be: (1) to increase
the value of postal services to both senders and recipients; (2) to provide a
benchmark for Postal Service performance goals; and (3) to guarantee Postal
Service customers delivery speed and frequency consistent with reasonable rates.

Subsection 3691(c) requires that, as they develop the new service standards, the
Commission take into consideration: any service standards previously established
by the Postal Service; the actual level of service Postal Service customers
receive; customer satisfaction with Postal Service performance; mail volume and
revenues projected in future years; the projected growth in the number of
addresses the Postal Service will be required to serve in future years; and the
current and projected future cost of serving Postal Service customers.

Section 302 - Postal Service plan

Section 302 requires the Postal Service to submit, within 12 months of the
establishment of the new service standards for Market Dominant products, a plan
for meeting the new standards. The Postal Service will develop the plan in
consultation with the Regulatory Commission. The plan will: (1) establish
performance goals; (2) describe any changes to the Postal Service's processing,
transportation, delivery and retail networks necessary to allow the Postal
Service to meet the new performance goals; and (3) describe any changes to
planning and performance documents previously submitted to Congress to reflect
the new performance goals.

The Postal Service's plan will also be required to include a list of facilities
that can be closed and consolidated without hindering their ability to meet the
new service standards. In addition, it will include plans to provide retail
postal services by other means, including vending machines, the Internet and
retail facilities in which overhead costs can be shared with private businesses
and other government agencies, and plans to provide reemployment assistance or
early retirement benefits to employees displaced as a result of automation or
the closing and consolidation of facilities. The list of recommended facility
closings and consolidations will be submitted for study to the Network
Modernization Commission. The Postal Service Inspector General will study the
plan before it is submitted and submit a report to the Commission at the same
time as the Postal Service's plan.

Section 303 - Postal Network Modernization Commission

Section 303 establishes the Postal Network Modernization Commission, modeled
after the Base Closing and Realignment Commission used in the past to streamline
the Defense Department's base infrastructure. Subsection 303(c) provides that
the Commission will be made up of eight members appointed by the President with
the advice and consent of the Senate. No more than four members at any time will
be from the same political party. One member will be chosen from among persons
unanimously nominated by all labor unions recognized by law as
collective-bargaining representatives for employees of the Postal Service in one
or more bargaining units. One member of the Commission will be designated by the
President as Chairman. Subsection 303(d) requires that each meeting of the
Commission be open to the public. Any proceedings, information and deliberations
will be open to any member of the Senate Governmental Affairs Committee, the
House Government Reform Committee or the Senate and House Transportation,
Treasury and General Government Appropriations Subcommittees.

Subsection 303(f) provides for Commission members' pay. Each member other than
the Chairman will be paid at a rate equal to the daily equivalent of the maximum
annual rate of pay payable for level IV of the Executive Schedule for each day,
including travel time, spent performing duties vested in the Commission. The
Chairman will be paid at a rate equal to the daily equivalent of the maximum
annual rate of pay payable for level III of the Executive Schedule for each day,
including travel time, spent performing duties vested in the Commission.
Commission members will be eligible for travel expenses and per diem in
accordance with sections 5702 and 5703 of title 5.

Subsection 303(g) allows the appointment by the Commission of a Commission Staff
Director to be paid at the rate of basic pay payable for level III of the
Executive Schedule. Subsection 303(h) places conditions on the hiring of
additional Commission staff. The Commission may have no more than 15 staff at
any one time. The General Accounting Office and any federal agency requested is
required to detail staff to the Commission at the Commission's request. Staff
will be hired and paid without regard to the provisions in title 5 dealing with
appointments in the competitive service, classification, or General Schedule pay
rates. The staff will be paid no more than the highest rate of basic pay payable
for a position classified at above GS-15 of the General Schedule. No more than
one-third of any staff or analysts employed by or detailed to the Commission may
be from the Postal Service. In addition, none of the Postal Service employees
involved in preparing the Postal Service's list of recommended facility closings
and consolidations can be employed by or detailed to the Commission.

Subsection 303(j) authorizes such funds as are necessary for the Commission to
carry out its duties. The subsection also allows the Commission to lease space,
acquire property and procure the services of contractors subject to the
availability of funds.

Subsection 303(k) provides for the Commission's review of the Postal Service's
list of recommended facility closings and consolidations. After receiving the
Postal Service's recommendations, the Commission will conduct public hearings
and take testimony from Postal Service customers and employees as well as
community leaders and government officials in the communities affected by the
recommended closings and consolidations. No later than one year after receiving
the Postal Service's recommendations, the Commission will then submit a report
to the President containing its findings and conclusions together with its
recommendations for closings and consolidations.

Subsection 303(1) provides for the President's consideration of the Commission's
recommendations. No later than 14 days after receiving the Commission's
recommendations, the President can approve them and send them to Congress or
disapprove them and send them back to the Commission for revision. Any revised
set of recommendations will be handled in the same fashion.

Section 304 - Closure and consolidation of facilities

Section 304 requires the Postal Service to carry out the closures and
consolidations included in the recommendations from the Commission that have
been approved by the President. Subsection 304(a) requires that the closures and
consolidations be initiated within 12 months of the President's approval of the
Commission's recommendations. Subsection 304(b) allows the Congress to stop the
closures and consolidations from being carried out by disapproving of the
recommendations through a joint resolution passed within 45 days of receiving
them from the President. Section 305 of the bill details how a joint resolution
would be considered in the House and the Senate.

Section 305 - Congressional consideration of Commission report

Section 305 provides for the expedited consideration in the House and the Senate
of any joint resolution introduced under Section 304 of the bill. Subsection
305(a) requires that the resolution be introduced in each house within 10 days
of the President's transmittal of the Commission's recommendations to Congress
and describes how it must be worded. Subsection 305(b) states that any
resolution introduced would be referred to the Government Reform Committee in
the House and the Governmental Affairs Committee in the Senate. Subsection
305(c) requires that any resolution referred to Government Reform or
Governmental Affairs be discharged from committee within 20 days of the
President's transmittal if it has not yet been reported out.

Subsection 305(d) provides for how any resolution reported out of or discharged
from Government Reform or Governmental Affairs would be considered on the floor
of the House or Senate. It would be in order in either house for any member to
move to proceed to the resolution on or after the third day after it has been
reported out of or discharged from committee. There would be no debate on the
motion and all points of order would be waived. If the motion were approved, the
respective house would proceed directly to consideration of the resolution.
Debate would be limited to two hours equally divided with a vote on final
passage to follow immediately after the conclusion of debate.

Section 306 - Nonappealability to the Postal Regulatory Commission

Section 306 states that the closing or consolidation of any postal facility
under Title III cannot be appealed to the Postal Regulatory Commission.


TITLE IV - PROVISIONS RELATED TO FAIR COMPETITION Section 401 - Postal Service
Competitive Products Fund Section 401 adds a new section 2011 to title 39.
Section 2011 establishes an off-budget fund within the Treasury for revenues and
expenditures associated with competitive products. The "Competitive Products
Fund" is in addition to the current Postal Service Fund. The intent of this
section is to level the playing field for the Postal Service and its competitors
in the Competitive product market by requiring the Postal Service to keep
separate financial accounts for Market Dominant and Competitive products.
Separation of accounts also protects taxpayers and the interests of postal
consumers in the Market Dominant category.

Section 2011 essentially permits the Postal Service to manage the Competitive
Products Fund at its discretion. The Postal Service may invest money from the
new fund in accordance with rules that the Secretary of Treasury shall prescribe
within 18 months after the date of enactment. The Postal Service must regularly
report to the Secretary of the Treasury and the Postal Regulatory Commission on
the operation of the Fund.

Section 402 - Assumed federal income tax on competitive products

Section 402 adds a new section 3634 to title 39. Section 3634 requires the
Postal Service to compute an assumed Federal income tax on income from
Competitive products each year and to transfer from the Competitive Products
Fund to the Postal Service Fund the amount of that assumed tax.

Section 403 - Unfair competition prohibited

Section 403 adds a new section 404(a) to title 39. The new section 404(a)
prohibits the Postal Service from: (1) establishing rules or regulations which
preclude competition or give the Postal Service an unfair competitive advantage;
(2) compelling disclosure, transfer, or licensing of intellectual property; or
(3) offering any product or service that makes use of information obtained from
a person that provides or seeks to provide a product to the Postal Service
unless the person has consented to such use. The Regulatory Commission is
required to prescribe regulations to carry out the purposes of this section, and
the prohibitions will be enforced through the Commission's strengthened
complaint process and remedies, which include ordering rescission of any
regulation.

Section 404 - Suits by and against the Postal Service

Section 404 amends section 409 of title 39 to make the Postal Service more
amenable to other laws regulating the conduct of commercial activities. First,
the amendment subjects all Postal Service activities to federal laws prohibiting
the conduct of business in a fraudulent manner. Second, the amendment subjects
all Postal Service activities outside the postal monopoly to federal antitrust
laws and unfair competition prohibitions and eliminates sovereign immunity
protection from suits in Federal Court for violations of Federal law. Third, the
amendment makes the Postal Service's Competitive Products Fund a "person" for
purposes of federal bankruptcy laws. Fourth, the amendment requires the Postal
Service to consider local zoning, planning, or land use regulations and building
codes when constructing new buildings. Section 409 as amended further requires
the Postal Service to represent itself in most legal proceedings permitted by
the amendment as well as in cases involving administrative subpoenas issued by
the Regulatory Commission and appeals of decisions by the Commission or the
Governors. The amendment requires that judgments arising out of violations of
law involving competitive products be paid out of revenues earned from
competitive products.

Section 405 - International postal arrangements

Section 405 replaces section 407 of title 39. The new Section 407 establishes a
policy framework for future international postal agreements that stresses
separation of regulatory and operational functions.

Subsection 407(b) vests the Secretary of State with authority to lead U.S.
delegations in intergovernmental meetings devoted to postal matters. The
Secretary is barred from concluding agreements that give preference to any
entity, either public or private. The subsection requires that the Secretary, in
carrying out his responsibilities under in international postal negotiations,
shall maintain appropriate liaison with other federal agencies, with the Postal
Service, and with affected members of the public. The subsection further
requires that the Secretary of State establish an advisory committee, under the
Federal Advisory Committee Act, to help perform the necessary coordination and
liaison with entities in the public and private sectors as it develops U.S.
foreign policy related to international postal services.

Subsection 407(c) provides that, before concluding an international agreement
that establishes a rate or classification, the Secretary shall request a
decision from the Regulatory Commission to determine whether the proposed rate
or classification is consistent with the Commission's regulations regulating
Market Dominant products. The Secretary must ensure that international
agreements are consistent with the Commission's decision except to the extent
that modification may be required by considerations of foreign policy or
national security.

Subsection 407(d) authorizes the Postal Service to enter into agreements or
contracts as it deems appropriate for international postal services without the
consent of the Secretary as long as any agreements with agencies or subsidiaries
of foreign governments are contractual in nature and do not purport to be
international law. The Postal Service must notify the Secretary and the
Regulatory Commission of agreements with agencies or subsidiaries of foreign
governments.

In light of studies conducted by the General Accounting Office and the U.S.
Customs Service, subsection 407(e) requires the Customs Service to afford
non-discriminatory access to U.S. customs procedures for both the Postal
Service's Competitive products and similar products provided by U.S.-owned
private carriers. Since some foreign governments currently limit access to
simplified customs procedures to government post offices-thus discriminating
between the Postal Service and U.S. private carriers-the subsection requires the
Secretary of State "to the maximum practicable extent" to negotiate with other
countries to make available customs procedures that do not discriminate between
the Postal Service and U.S. private carriers while fully meeting the needs of
all types of American shippers.

Section 406 - Change-of-address order involving a commercial mail receiving
agency

Section 406 adds a new section 3686 to title 39. The new section 3686 requires
the Postal Service to forward the mail of addressees who have entered into
agreements with Commercial Mail Receiving Agencies (CMRAs) to accept mail on
their behalf of the addressee in the same manner that they forward mail sent to
all other postal customers. Presently, CMRAs must add postage to an item that
requires forwarding and resubmit it to the Postal Service for further
processing.

Section 407 - Exception for competitive products

Section 407 amends section 403(c), title 39 to require that, for Competitive
products only, the Postal Service may provide discounts without obligation for
equal access by similar mailers. The amendment reflects the view that, in
pricing Competitive products, the Postal Service should be able to use the same
pricing strategies widely used by its competitors in the marketplace. Unlike
private competitors, however, the Postal Service can in no case violate the cost
coverage requirements established by the Postal Regulatory Commission for
competitive products individually and collectively. 

TITLE V - GENERAL PROVISIONS

Section 501 - Qualification requirements for Governors

Section 501 amends section 202 of title 39. The new Section 202 establishes the
Board of Governors and provides that the nine Governors shall represent the
public interest generally. The amendment also adds a requirement that at least
four Governors shall be selected by the President based solely on their
demonstrated ability in managing organizations or corporations, in either the
public or the private sector, of substantial size (employing at least 50,000
employees). The amendment requires the President to consult with the Speaker and
minority leader of the House and the majority and minority leaders of the Senate
in selecting individuals to nominate to the Board. The amendment also requires
that one of the nine Governors be chosen from among persons unanimously
nominated by all labor unions recognized by law as collective bargaining
representatives for employees of the Postal Service in one or more bargaining
units. The term of office subsection requires the Secretary of State "to the
maximum practicable extent" to negotiate with other countries to make available
customs procedures that do not discriminate between the Postal Service and U.S.
private carriers while fully meeting the needs of all types of American
shippers.

Section 406 - Change-of-address order involving a commercial mail receiving
agency

Section 406 adds a new section 3686 to title 39. The new section 3686 requires
the Postal Service to forward the mail of addressees who have entered into
agreements with Commercial Mail Receiving Agencies (CMRAs) to accept mail on
their behalf of the addressee in the same manner that they forward mail sent to
all other postal customers. Presently, CMRAs must add postage to an item that
requires forwarding and resubmit it to the Postal Service for further
processing.

Section 407 - Exception for competitive products

Section 407 amends section 403(c), title 39 to require that, for Competitive
products only, the Postal Service may provide discounts without obligation for
equal access by similar mailers. The amendment reflects the view that, in
pricing Competitive products, the Postal Service should be able to use the same
pricing strategies widely used by its competitors in the marketplace. Unlike
private competitors, however, the Postal Service can in no case violate the cost
coverage requirements established by the Postal Regulatory Commission for
competitive products individually and collectively. TITLE V - GENERAL PROVISIONS
Section 501 - Qualification requirements for Governors

Section 501 amends section 202 of title 39. The new Section 202 establishes the
Board of Governors and provides that the nine Governors shall represent the
public interest generally. The amendment also adds a requirement that at least
four Governors shall be selected by the President based solely on their
demonstrated ability in managing organizations or corporations, in either the
public or the private sector, of substantial size (employing at least 50,000
employees). The amendment requires the President to consult with the Speaker and
minority leader of the House and the majority and minority leaders of the Senate
in selecting individuals to nominate to the Board. The amendment also requires
that one of the nine Governors be chosen from among persons unanimously
nominated by all labor unions recognized by law as collective bargaining
representatives for employees of the Postal Service in one or more bargaining
units. 

The term of office Section 601 as amended also statutorily codifies
certain exemptions to the postal monopoly that have been administratively
adopted by the Postal Service and widely used by private carriers and the public
even though they are based on a questionable interpretation of current law.
Entities in both the government and the private sector have testified that the
Postal Service has misinterpreted the suspension power found in section 601(b)
of current law. 

Since 1974, the Postal Service has, under color of section
601(b), issued regulations that, in effect, suspend the postal monopoly.
Subsection 601(b), however, is derived from section 7 of an 1864 postal act.
This provision was originally intended to authorize the Postmaster General to
suspend the exception to the postal monopoly now found in section 601(a), which
allows private carriage of letters if postage is paid by applying and canceling
postage stamps. 

There is no evidence that Congress intended to grant the Postal
Service authority to suspend the postal monopoly itself. The proposed amendment
would repeal the Postal Service's authority to suspend the postal monopoly
exception for stamped letters - an antiquated and never used authority - and to
codify the exemptions to the postal monopoly that the Postal Service has adopted
to date in apparent misinterpretation of the suspension provision. 

The intent of this provision to continue to allow private carriage under those
circumstances in which private carriage is purportedly permitted by current
Postal Service "suspensions" of the monopoly but not to continue provisions in
the Postal Service regulations that purport to condition or limit use of such
"suspensions, " e.g., a requirement that customers of private carriers must
permit otherwise unauthorized inspections by postal inspectors.

The Regulatory Commission is authorized to adopt regulations necessary to carry
out the exceptions to the postal monopoly set out in section 601 as amended.
This amendment does not take effect until the Postal Regulatory Commission
promulgates regulations for the competitive pricing system under section 3633.

Section 504 - Rulemaking authority

Section 504 amends section 401(2) of title 39 to clarify the rulemaking function
of the Postal Service. The new section 401(2) authorizes the Postal Service "to
adopt, amend, and repeal such rules and regulations, not inconsistent with this
title, as may be necessary in the execution of its functions under this title
and such other functions as may be assigned to the Postal Service under any
provisions of law outside of this title." This amendment is intended to make
clear that the Postal Service is not empowered to adopt regulations implementing
other parts of the U.S. code unless explicitly authorized to do so by Congress.
This amendment is modeled on the Federal Communications Commission's rulemaking
authority in 47 USC 154(i). The amendment recognizes that the rulemaking
authority of the Postal Service is affected by its obligations under title 5 and
certain other limited provisions of law outside title 39.

Section 505 - Noninterference with collective bargaining agreements, etc.

Section 505 addresses two specific issues. First, subsection 505(a) states that
nothing in the bill, or amendments made by the bill to current law, can affect
any of the rights, privileges, or benefits of postal employees or the labor
organizations representing them. Second, subsection 505(b) clarifies that
nothing in the bill will affect free mail as currently provided by law for: (1)
correspondence of members of the diplomatic corps and consuls of the countries
of the Postal Union of Americas and Spain; (2) the blind and the disabled; and
(3) mailing of balloting materials under the Uniformed and Overseas Citizens
Absentee Voting Act.

Section 506 - Bonus Authority

Section 506 adds a new section 3687 to title 39. Section 3687 authorizes the
Postal Service to establish one or more bonus programs in furtherance of the
objectives of chapter 36. The Regulatory Commission must review any such program
prior to implementation and approve any program that it finds "likely to achieve
the objectives of this chapter." The section states that bonus payments may
exceed the salary cap for postal employees established in section 1003(a) of
title 39. For each employee whose compensation exceeds the salary cap by virtue
of a bonus awarded under this section, the Postal Service is required to list in
its annual comprehensive report the name of the employee, the amount of the
bonus, the limitation of the salary cap, and amount by which the cap was
exceeded. 

TITLE VI - ENHANCED REGULATORY COMMISSION

Section 601 - Reorganization and modernization of certain provisions relating to
the Postal Regulatory Commission.

Section 601 creates a new chapter 5 in title 39 to establish the Postal
Regulatory Commission. In sum, it recognizes the Regulatory Commission's
enhanced responsibilities by establishing it in provisions set out in a chapter
located in part I of title 39, dealing with general matters, rather than, as in
current law, provisions set out in a subchapter of chapter 36, dealing with rate
regulation.

Section 602 - Authority of the Postal Regulatory Commission to issue subpoenas

Section 602 amends section 504 of title 39, i.e., section 3604 of current law as
redesignated by section 501 of the bill. Section 504, as amended, provides that
Commissioners, any law judge appointed by the Commission, and any designated
employee of the Commission may administer oaths, examine witnesses, take
depositions, and receive evidence. In addition, the Chairman of the Commission,
any Commissioner designated by the Chairman, and any law judge appointed by the
Commission may subpoena officers, employees, and agents of the Postal Service to
require attendance, presentation of testimony, production of documents or to
order depositions and responses to written interrogatories. Any subpoena
requires the written concurrence of a majority of Commissioners then holding
office in advance of its issuance. Failure to obey a subpoena may be referred to
the U.S. district court. Failure to obey the court is punishable as a contempt
of court.

The amendment also provides for the handling of proprietary information
requested from the Postal Service by the Commission. Section 504, as amended,
provides that, if the Postal Service determines requested information is
proprietary and so notifies the Commission in writing, the Commission may use
the information only for the purpose supplied and must restrict access to the
information to Commission officials. The amendment further provides for the
possibility of discovery of such information by private parties in proceedings
under sections 556 and 557 of title 5 and requires the Commission to adopt rules
to protect the confidentiality of such information similar to the rules that
govern protective orders issued by the federal courts under the Federal Rules of
Civil Procedure.

Section 603 - Appropriations for the Postal Regulatory Commission

Section 503 further amends section 504 of title 39 to ensure the financial
independence of the Postal Regulatory Commission. Under the amendment, funding
for the Commission will be paid out of the Postal Service Fund, as under current
law, but the budget of the Commission will no longer be subject to disapproval
by the Governors.

Section 604 - Redesignation of the Postal Regulatory Commission

Section 504 changes the name of the "Postal Rate Commission" to the "Postal
Regulatory Commission" in various statutes.

TITLE VII - INSPECTORS GENERAL Section 701 - Inspector General of the Postal
Regulatory Commission

Section 701 amends the Inspector General Act of 1978 to provide for an Inspector
General for the Postal Regulatory Commission.

Section 702 - Inspector General of the United States Postal Service to be
appointed by the President

Section 702 amends the Inspector General Act of 1978 to require appointment of
the Postal Service's Inspector General by the President with Senate confirmation
in the same manner as the 27 other presidentially appointed Inspectors General
at major federal departments and agencies. The current Inspector General would
be grandfathered for the remainder of her term.

In addition, this amendment authorizes the Postal Service's Inspector General to
audit or oversee the audit of the Postal Service's financial statements in order
to bring the Postal Service in line with the Inspector General Act and meet
accountability standards required of other federal agencies, as well as to
implement the annual audit reports required under chapter 36 as amended. The
independence and objectivity of the Inspector General will reinforce the
independence of the Postal Service's outside accountants.

TITLE VIII - EVALUATIONS

Section 801 - Assessments of ratemaking, classification and other provisions

Section 801 requires the Regulatory Commission to report to the President and
the Congress at least every 5 years, in conjunction with the Postal Service, on
the operation of the amendments made by this bill, with recommendations for any
legislative or other measures necessary to improve the effectiveness or
efficiency of the nation's postal laws.


Section 802 - Study on equal application of laws to competitive products

Section 802 requires the Federal Trade Commission to prepare a study detailing
how federal and state laws apply differently to the Postal Service's competitive
products and similar products provided by private companies. .

Section 803 - Greater diversity in Postal Service executive and administrative
schedule management positions

Section 803 requires the Board of Governors to study and report to the President
and Congress on the representation by women and minorities in supervisory and
management positions within the Postal Service. In addition, the Postal Service
is required to consider meeting of affirmative action goals, achieving equal
employment opportunity requirements, and implementing plans to achieve greater
workforce diversity as part of its performance evaluations of supervisory and
management employees.

Section 804 - Contracts with women, minorities and small business

Section 804 requires the Board of Governors, within one year, to study and
report to the President and Congress on the number and value of contracts and
subcontracts entered into with women, minorities, and small business.

Section 805 - Rates for periodicals

Section 805 requires the Postal Service, acting jointly with the Regulatory
Commission and the General Accounting Office, to study and submit to the
President and Congress a report concerning: (1) the quality, accuracy, and
completeness of the information used by the Postal Service in determining the
direct and indirect postal costs attributable to periodicals; and (2) any
opportunities that might exist for improving efficiencies in the collection,
handling, transportation, or delivery of periodicals by the Postal Service,
including any pricing incentives for mailers that might be appropriate. The
report shall include recommendations for any administrative action or
legislation that might be appropriate.

Section 806 - Assessment of certain rate deficiencies

Section 806 requires the Office of Inspector General of the Postal Service to
study and submit to the President, Congress, and the Postal Service a report
concerning the Postal Service's administration of the reduced rate provisions of
section 3626(k) of title 39. The study must specifically address the adequacy
and fairness of the process by which assessments are determined and appealable,
including whether the Regulatory Commission or any other body outside the Postal
Service should be assigned a role, and whether a statute of limitations should
be established for the commencement of proceedings by the Service.

Section 807 - Definition

Section 807 declares that the term "Board of Governors" as used in this title
shall have the same meaning as given in section 102 of title 39.


Title IX - MISCELLANEOUS; TECHNICAL AND CONFORMING AMENDMENTS

Section 901 - Employment of Postal Police Officers

Section 901 further amends section 404 of title 39 to provide permanent
authority for employment of Postal Service police officers. This section
remedies an oversight in the Postal Reorganization Act of 1970 that has required
Congress to enact temporary authority each fiscal year via the appropriations
process authorizing the police officers. The Postal Service currently employs
more than one thousand police officers to serve as guards and security personnel
throughout its facilities.

Section 902 - Date of postmark to be treated as date of appeal in connection
with the closing or consolidation of post offices

Section 902 further amends section 404 of title 39 to provide that the appeal to
the Regulatory Commission of a post office closing by any person shall be
considered timely if it is postmarked within 30 days of notification of the
closure to the appellant. The Commission has testified in the past that current
law, which requires the appeal to be received by the Commission within 30 days,
precludes adequate consideration of certain post office closings. report
concerning: (1) the quality, accuracy, and completeness of the information used
by the Postal Service in determining the direct and indirect postal costs
attributable to periodicals; and (2) any opportunities that might exist for
improving efficiencies in the collection, handling, transportation, or delivery
of periodicals by the Postal Service, including any pricing incentives for
mailers that might be appropriate. The report shall include recommendations for
any administrative action or legislation that might be appropriate.

Section 806 - Assessment of certain rate deficiencies

Section 806 requires the Office of Inspector General of the Postal Service to
study and submit to the President, Congress, and the Postal Service a report
concerning the Postal Service's administration of the reduced rate provisions of
section 3626(k) of title 39. The study must specifically address the adequacy
and fairness of the process by which assessments are determined and appealable,
including whether the Regulatory Commission or any other body outside the Postal
Service should be assigned a role, and whether a statute of limitations should
be established for the commencement of proceedings by the Service.

Section 807 - Definition

Section 807 declares that the term "Board of Governors" as used in this title
shall have the same meaning as given in section 102 of title 39.


Title IX - MISCELLANEOUS; TECHNICAL AND CONFORMING AMENDMENTS

Section 901 - Employment of Postal Police Officers

Section 901 further amends section 404 of title 39 to provide permanent
authority for employment of Postal Service police officers. This section
remedies an oversight in the Postal Reorganization Act of 1970 that has required
Congress to enact temporary authority each fiscal year via the appropriations
process authorizing the police officers. The Postal Service currently employs
more than one thousand police officers to serve as guards and security personnel
throughout its facilities.

Section 902 - Date of postmark to be treated as date of appeal in connection
with the closing or consolidation of post offices

Section 902 further amends section 404 of title 39 to provide that the appeal to
the Regulatory Commission of a post office closing by any person shall be
considered timely if it is postmarked within 30 days of notification of the
closure to the appellant. The Commission has testified in the past that current
law, which requires the appeal to be received by the Commission within 30 days,
precludes adequate consideration of certain post office closings. report
concerning: (1) the quality, accuracy, and completeness of the information used
by the Postal Service in determining the direct and indirect postal costs
attributable to periodicals; and (2) any opportunities that might exist for
improving efficiencies in the collection, handling, transportation, or delivery
of periodicals by the Postal Service, including any pricing incentives for
mailers that might be appropriate. The report shall include recommendations for
any administrative action or legislation that might be appropriate.

Section 806 - Assessment of certain rate deficiencies

Section 806 requires the Office of Inspector General of the Postal Service to
study and submit to the President, Congress, and the Postal Service a report
concerning the Postal Service's administration of the reduced rate provisions of
section 3626(k) of title 39. The study must specifically address the adequacy
and fairness of the process by which assessments are determined and appealable,
including whether the Regulatory Commission or any other body outside the Postal
Service should be assigned a role, and whether a statute of limitations should
be established for the commencement of proceedings by the Service.

Section 807 - Definition

Section 807 declares that the term "Board of Governors" as used in this title
shall have the same meaning as given in section 102 of title 39.


Title IX - MISCELLANEOUS; TECHNICAL AND CONFORMING AMENDMENTS

Section 901 - Employment of Postal Police Officers

Section 901 further amends section 404 of title 39 to provide permanent
authority for employment of Postal Service police officers. This section
remedies an oversight in the Postal Reorganization Act of 1970 that has required
Congress to enact temporary authority each fiscal year via the appropriations
process authorizing the police officers. The Postal Service currently employs
more than one thousand police officers to serve as guards and security personnel
throughout its facilities.

Section 902 - Date of postmark to be treated as date of appeal in connection
with the closing or consolidation of post offices

Section 902 further amends section 404 of title 39 to provide that the appeal to
the Regulatory Commission of a post office closing by any person shall be
considered timely if it is postmarked within 30 days of notification of the
closure to the appellant. The Commission has testified in the past that current
law, which requires the appeal to be received by the Commission within 30 days,
precludes adequate consideration of certain post office closings.