Congressional Research Service ˜ The Library of Congress

CRS Report for CongressReceived through the CRS Web

Order Code RL32903

Postal Reform Bills: A Side-by-Side Comparison

of H.R. 22 and S. 662

Updated August 4, 2005

Kevin R. KosarAnalyst in American National Government

Government and Finance Division

Postal Reform Bills: A Side-by-Side Comparison of H.R. 22 and S. 662

Summary

The 109th Congress is considering two bipartisan bills that would reform theU.S. Postal Service (USPS) — H.R. 22 and S. 662. H.R. 22 was introduced andreferred to the House Government Reform Committee on the first day of the 109th

Congress (January 4, 2005). On April 14, the Government Reform Committeemarked up H.R. 22 and approved it by a vote of 39-0. Thereafter, H.R. 22 wasreferred to the House Committee on the Judiciary on April 28, discharged therefromMay 27, and placed on Union Calendar No. 55 that same day. The House passedH.R. 22 on July 26, 2005, by a vote of 420 to 10 and it was placed on the SenateLegislative Calendar (Calendar No. 176). S. 662 was introduced into the Senate onMarch 17, 2005, and referred to the Committee on Homeland Security andGovernmental Affairs. On June 22, S. 662 was amended and reported by a vote of15-1.

H.R. 22 and S. 662 are similar to two bills from the 108th Congress — H.R.4341 and S. 2468 — which cleared committee by unanimous votes but were notbrought to the floor. Like these previous bills, H.R. 22 and S. 662 would attempt tomake the Postal Service focus on its core mission (universal delivery of the mail) bydefining the term “postal services.” The bills would define the categories of postalservices and products as “competitive” or “market-dominant” and prohibit the PostalService from subsidizing competitive products with revenues from market-dominantproducts.

H.R. 22 and S. 662 are more alike than H.R. 4341 and S. 2468. For example,previously the House and Senate differed over USPS’s right to invest excess moniesfrom the Competitive Products Fund in private sector securities and obligations.H.R. 22 and S. 662 both propose limiting USPS purchases to U.S. Treasuryinvestments. The bills have also reconciled formerly divergent approaches to limitson “worksharing” discounts for barcoding and mail sorting.

That said, H.R. 22 and S. 662 possess significant differences. These include:

— the definition of “market-dominant” postal products and services; — the components and goals of the new ratemaking system for

market-dominant products and services; — disability payments and retirement; — retiree health benefits funding; — the establishment of “modern service standards”; and — the governance of the Postal Service.

This report will be updated to reflect significant legislative developments.

Contents

Overview . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

Side-by-Side Comparison of H.R. 22 and S. 662 . . . . . . . . . . . . . . . . . . . . . . . . . 4Title I — Definitions, Postal Services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5Title II — Modern Rate Regulation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6Title III — Provisions Relating to Fair Competition . . . . . . . . . . . . . . . . . . 22Title IV — General Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29Title V — Enhanced Regulatory Commission . . . . . . . . . . . . . . . . . . . . . . 35Title VI — Inspectors General . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37Title VII — Evaluations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37Title VIII — Miscellaneous, Technical and Conforming Amendments . . . 44Title IX — Postal Pension Funding Reform Amendments . . . . . . . . . . . . . 47

1 For a similar comparison of postal reform legislation in the 108th Congress, see CRSReport RL32402, Postal Reform Bills: A Side-by-Side Comparison of H.R. 4341 and S.2468, by Kevin R. Kosar.

Postal Reform Bills: A Side-by-SideComparison of H.R. 22 and S. 662

Overview

The 109th Congress is considering two bipartisan bills that would reform theU.S. Postal Service (USPS) — H.R. 22 and S. 662. Both bills were sponsored by thechairpersons and ranking minority members of the committees of jurisdiction. H.R.22 was introduced and referred to the House Government Reform Committee on thefirst day of the 109th Congress (January 4, 2005). On April 14, the GovernmentReform Committee marked up H.R. 22 and approved it by a vote of 39-0. Thereafter,H.R. 22 was referred to the House Committee on the Judiciary on April 28,discharged therefrom May 27, and placed on Union Calendar No. 55 that same day.S. 662 was introduced into the Senate on March 17, 2005, and referred to theCommittee on Homeland Security and Governmental Affairs. On June 22, S. 662was amended and reported by a vote of 15-1. (This report draws upon the manager’samendment version of S. 662; the bill as reported was unavailable at the time ofpublication of this report.)

H.R. 22 and S. 662 share many features — more so than the postal reform billsof the 108th Congress.1 To take three prominent examples, both bills would requireincreased financial transparency at USPS by requiring USPS to prepare quarterly andannual reports that contain the same information that publicly traded corporations filewith the Securities and Exchange Commission. H.R. 22 and S. 662 also now shareidentical language regulating USPS discretion to enter into work-sharing agreementswith the private sector, a matter of concern to large mailers and postal employeeunions. Finally, the bills share identical language on the operation of the proposedPostal Service Competitive Products Fund. Previously, the House and Senatediffered over USPS’s right to invest excess funds in private sector securities andobligations. Now, H.R. 22 and S. 662 agree that any excess funds may be investedonly in U.S. Treasury investments, a concession to the Treasury Department.

Both bills propose changes that would have significant effects on the financialcondition of the Postal Service. H.R. 22 and S. 662 would transfer back to theTreasury the responsibility to fund pension benefits arising from former militaryservice of postal workers. This would reverse a provision of the Postal Civil ServiceRetirement System Reform Act of 2003 (P.L. 108-18) that could cost USPS (and its

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2 On pension and escrow issues, see CRS Report RL32346, Pension Issues Cloud PostalReform Debate, by Nye Stevens.

customers) $27 billion. H.R. 22 and S. 662 would abolish the escrow accountprovided for in P.L. 108-18.2

H.R. 22 and S. 662 also propose incremental reforms that would attempt tomake the Postal Service operate more openly and predictably. Both bills wouldrequire USPS to focus on its core mission (the delivery of mail) by defining the term“postal services.” H.R. 22 and S. 662 also would define various postal products andservices as “competitive” or “market-dominant” and prohibit USPS from subsidizingcompetitive products with revenues from market-dominant products. Additionally,the bills would transform the Postal Rate Commission into a broader regulatory bodywith subpoena powers (the new Postal Regulatory Commission, hereafter PRC).H.R. 22 and S. 662 would also replace the present adversarial postage ratemakingprocess, which typically takes 10 to 14 months, with a rate-cap system that wouldpermit USPS to raise postage rates on market-dominant products at the rate ofinflation. The Board of Governors (BOG) of USPS would establish rates and classesfor competitive products.

While very similar, H.R. 22 and S. 662 do possess substantive differences,which are described below.

The Definition of Market-Dominant Postal Products and Services.H.R. 22 and S. 662 differ over the definition of market-dominant products. Bothbills would include first class, library, and media mail, as well as postcards, in theirdefinitions. However, H.R. 22, Section 201, would include single piece first-classletters and cards while S. 662, Section 201, would include first-class letters andcards. S. 662 would include sealed parcels and single piece parcel post; H.R. 22would not. The inclusion or non-inclusion of a product in this classification is ofconcern to mailers and competitors of the Postal Service (such as UPS and FedEx)because of the possible effects on product prices. Critics have long complained thatUSPS keeps the prices for some products (such as parcels) artificially low, therebygarnering a larger market share. USPS is accused of doing this by failing to attributethe full cost of providing such a product; these products are said to be “cross-subsidized” by the large earnings USPS earns on first-class mail. Under both H.R.22 and S. 662, products that are not defined as market-dominant would fall into the“competitive products” category and would have to fully attribute the costs ofproviding them. Some believe that including, for example, parcels in the competitiveproducts category would lead to increased prices for parcel delivery service (whichcompetitors would likely favor and large mailers would likely disfavor).

The Components and Goals of the New Ratemaking System forMarket-Dominant Products and Services. While H.R. 22, Section 201, andS. 662, Section 201, are similar on the components and goals of the new ratemakingsystem, significant differences remain. Both would require USPS to cap the pricesof market-dominant products at the Consumer Price Index for All Urban Consumers,but S. 662 would require the new ratemaking system to permit USPS to exceed therate cap under “extraordinary” circumstances and allow USPS to raise rates for a

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3 Testimony of John E. Potter, Postmaster General/CEO, United States Postal Service,before U.S. Senate, Committee on Homeland Security and Governmental Affairs, U.S.Postal Service: What is Needed to Ensure its Future Viability?, hearings, 109th Cong., 1st

sess., Apr. 14, 2005, available at [http://hsgac.senate.gov/_files/PMGTESTIMONYFINAL412.pdf], pp. 15-17.

class or service above the CPI by the amount that rate increases in the previous yearwere less than the CPI. (This provision was added June 22, 2005.) H.R. 22 wouldallow USPS to exceed the rate cap if PRC held a public hearing and determined thatbreaking the rate cap “is reasonable and equitable and necessary.” (The PostalService would like to have this rate-cap escape clause because it believes that stayingbelow the CPI will be “extremely challenging” due to falling revenues, the growingnumber of delivery points, and USPS’s limited control over its costs.)3 H.R. 22would prohibit USPS from raising the postage rate of any subclass of mail more thanthe CPI with permission from PRC. S. 662 would apply this restriction at the classlevel — a provision the Postal Service prefers because it gives USPS greaterflexibility to adjust rates. Finally, H.R. 22 would require the new ratemaking systemto establish a “fair and equitable” schedule for rates and the classification system; S.662 would not, and instead would require that the new system “allocate the totalinstitutional costs of the Postal Service equitably between market-dominant andcompetitive products.”

Disability Payments and Retirement. S. 662, Section 902, wouldencourage injured workers of retirement age to retire rather than go on disabilityleave. Under current law, an employee suffering total disability from a workplaceinjury is entitled to compensation of 66b% of monthly pay. S. 662 would reducethis to 50%. H.R. 22 does not carry this provision, and is favored by USPS unions.

Retiree Health Benefits Funding. Both H.R. 22, Secs. 901-904, and S.662, Secs. 802-804, would return the obligation for postal worker benefitsattributable to military service to the Treasury and establish a Postal Service RetireeHealth Benefits Fund for the purpose of pre-funding retiree health benefits. The twobills, however, have different approaches to the unfunded retiree health benefitsliability. H.R. 22 would require USPS to make annual payments into the fundconsisting of a contribution to cover predicted retirement health care costs of currentpostal workers and interest on the contribution owed for both current and futureannuitants. The House bill also would require that two-thirds of the annual escrow“savings” be devoted to the fund. S. 662 would also require an annual contributionto the fund, but it would consist of a contribution to cover predicted retirement healthcare costs of current postal workers and an installment payment on an amortizationschedule to reduce the unfunded liability. The Postal Service has expressed apreference for S. 662 because it does not include the two-thirds provision (whichlimits USPS discretion). USPS also has said that having a predictable annualamortization payment would make operating under a rate cap easier.

The Establishment of Modern Service Standards. S. 662, Title III,would require USPS and PRC to establish service standards designed to achieve fourobjectives (provided they are consistent with USPS’s universal service obligation):

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! Enhance the value of the Postal Service to both senders andrecipients;

! Preserve regular and effective access to postal services in allcommunities, including those in rural areas or where post offices arenot self-sustaining;

! Reasonably assure USPS customers delivery reliability, speed, andfrequency consistent with reasonable rates and best businesspractices; and

! Provide a system of objective external performance measurementsfor each market-dominant product as a basis for measurement ofUSPS performance.

The Postal Service would be required to prepare a report each year that details itsprogress in achieving objectives. The USPS Inspector General would be required toexamine this report and issue an assessment of its own on USPS compliance with thelaw. Both reports would be submitted to Congress. H.R. 22 excludes this titlealtogether. Instead, Section 204 of H.R. 22 would require USPS to develop its ownservice standards and PRC to monitor its achievement of them.

Governance of the U.S. Postal Service. Both bills would amend presentlaw so that members of the Board of Governors would be chosen “solely on the basisof their demonstrated ability in managing organizations or corporations (in either thepublic or private sector) of substantial size.” H.R. 22, Section 401, would define theterm “substantial size” to mean 50,000; S. 662, Section 501, would not define thisterm. S. 662 would reduce the term of a governor from nine to five years; H.R. 22would not. H.R. 22 would require that an early vacancy on the Board of Governorsbe filled by a person nominated with the concurrence of labor unions; S. 662 wouldnot.

Side-by-Side Comparison of H.R. 22 and S. 662

This side-by-side comparison uses H.R. 22 from the 109th Congress as reportedby the House Government Reform Committee on April 14, 2005, as its base. Theleft-hand column provides digests of the sections of H.R. 22; the right-hand columnholds digests of the sections of S. 662 — as amended June 22, 2005 — from the 109th

Congress. As the reader will see, the titles and sections of the two bills are notalways the same. For example, S. 662 carries a title on “Modern Service Standards;”H.R. 22 does not. H.R. 22 carries a section (601) that would create an InspectorGeneral of the Postal Regulatory Commission; S. 662 does not. In some cases, thebills carry similar provisions but place them in different titles. For example, Section407 of H.R. 22 proposes reforms to the structure of the collective bargaining process;so does S. 662, but at Section 505. In such cases, the columns cross-reference oneanother, directing the reader to the comparable provisions of the bills.

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Side-by-Side Comparison of House and Senate Postal Reform Bills (109th Congress)

H.R. 22 S. 662

Title I — Definitions, Postal Services Title I — Definitions, Postal Services

Sec. 101. Definitions.

Would amend 39 U.S.C. 102 to define the followingterms: product, rates, market-dominant product,competitive product, consumer price index, and year.

Sec. 101. Definitions.

Identical.

Would amend 39 U.S.C. 10 to define “postal service” as“the carriage of letters, printed matter, or mailablepackages, including acceptance, processing, delivery, orother services supportive or ancillary thereto.”

Would define “postal service” as “the physical deliveryof letters, printed matter, or packages weighing up to 70pounds, including physical acceptance, collection,sorting, transportation, or other functions ancillarythereto.”

Would define “consumer price index” to mean the“monthly Consumer Price Index for All UrbanConsumers.”

Equivalent provision at Sec. 201 (see below).

Sec. 102. PostalServices.

Would provide that “[n]othing in this title shall beconsidered to permit or require that the Postal Serviceprovide any special nonpostal or similar services, exceptthat nothing in this subsection shall prevent the PostalService from providing any special nonpostal or similarservices provided by the Postal Service as of January 4,2005.”

Sec. 102. PostalServices.

Would provide that “[e]xcept as provided in section411, nothing in this title shall be considered to permitor require that the Postal Service provide any specialnonpostal or similar services.”

Not included. Would also include a conforming amendment to 39U.S.C. 2003(b)(1) by striking “and nonpostal,” aprovision that USPS has used to justify enteringbusinesses outside its core mission.

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H.R. 22 S. 662

Sec. 103. Financial Trans-parency.

Would amend 39 U.S.C. 101 and 39 U.S.C. 5001 torequire the USPS to “be subject to a high degree offinancial transparency, including its finances andoperations, to ensure fair treatment of customers of thePostal Service’s market-dominant products andcompanies competing with the Postal Service’scompetitive products.”

Equivalent provision at Sec. 605.

Title II — Modern Rate Regulation Title II — Modern Rate Regulation

Sec. 201. ProvisionsRelating toMarket-DominantProducts.

H.R. 22 would define market-dominant products toinclude:

Sec. 201. ProvisionsRelating toMarket-DominantProducts.

S. 662 would define market-dominant products as:

— single piece first-class letters (both domestic andinternational); — all first-class mail; — single piece first-class cards; — media mail; — library mail; — special services; — periodicals; — standard mail; — bound printed matter. — Not included.

— first-class letters and sealed parcels; — single piece international mail; — Not included. — first-class cards; — Identical. — Identical. — Identical. — Identical. — Identical. — Identical. — single-piece parcel post;

Would amend 39 U.S.C. 3621 and 3622 to require thenew Postal Regulatory Commission (see Sec. 501 below)to establish a “modern system for regulating rates andclasses for market-dominant products within 24 months.”

Identical except that PRC would be required toestablish the new rate regulation system within 12months of enactment.

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H.R. 22 S. 662

The proposed “modern rate regulation system” would berequired to:

Similar provision but would require new rate regulationsystem to:

— Reduce the administrative burden of theratemaking process;

— Reduce the administrative burden and increasethe transparency of the ratemaking process whileaffording reasonable opportunities for interestedparties to participate in that process;

— Create predictability and stability in rates; — Identical;

— Maximize incentives to reduce costs and increaseefficiency,

— Identical;

— Allow USPS flexibility in pricing, assure adequaterevenues (including retained earnings)

— Allow the Postal Service pricing flexibility,including the ability to use pricing to promoteintelligent mail and encourage increased mailvolume during nonpeak periods;

— Assure adequate revenues — including retainedearnings — to maintain financial stability; and tomaintain high quality service standards;

— Assure adequate revenues, including retainedearnings, to maintain financial stability and meet theservice standards established (see below);

— Establish and maintain a fair and equitableschedule for rates and the classification system;

— Would include this provision as a factor not agoal of the rate system (see below at p. 8).

— Not included. — Enhance mail security and deter terrorism bypromoting secure, sender-identified mail;

— Not included. — Allocate the total institutional costs of USPSequitably between market-dominant and competitiveproducts.

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H.R. 22 S. 662

In crafting this system, PRC would be required to takeinto account:

In crafting this system, PRC would be required to takeinto account:

— “The value of the mail service actually providedeach class or type of mail service to both the senderand the recipient, including, but not limited to thecollection, mode of transportation, and priority ofdelivery;

Identical;

— “The direct and indirect postal costs attributable toeach class or type of mail service plus that portion ofall other costs of the Postal Service reasonablyassignable to such class or type;

— “The requirement that each class of mail or typeof mail service bear the direct and indirect postalcosts attributable to each class or type of mailservice through reliably identified causalrelationships plus that portion of all other costs ofthe Postal Service reasonably assignable to suchclass or type;”

— “The effect of rate increases upon the generalpublic, business mail users, and enterprises in theprivate sector of the economy engaged in the deliveryof mail matter other than letters;

— Identical;

— “The available alternative means of sending andreceiving letters and other mail matter at reasonablecosts;

— Identical;

— “The degree of preparation of mail for deliveryinto the postal system performed by the mailer and itseffect upon reducing costs to the Postal Service;

— Identical;

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H.R. 22 S. 662

— “Simplicity of structure for the entire schedule andsimple, identifiable relationships between the rates orfees charged the various classes of mail for postalservices;

— Identical;

— “The relative value to the people of the kinds ofmail matter entered into the postal system and thedesirability and justification for special classificationsand services of mail;

— Identical;

— “The importance of providing classifications withextremely high degrees of reliability and speed ofdelivery and of providing those that do not requirehigh degrees of reliability and speed of delivery;

— Identical;

— “The desirability of special classifications from thepoint of view of both the user and of the PostalService;

— Identical;

— “The educational, cultural, scientific, andinformational value to the recipient of mail matter; and

— Identical;

— “The policies of this title as well as such otherfactors as the Commission deems appropriate.”

— Identical;

— Not included. — The need for the Postal Service to increase itsefficiency and reduce its costs to help maintain highquality, affordable, universal postal service;

— Not included. — The establishment and maintenance of a fair andequitable schedule for rates and classificationsystem;

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H.R. 22 S. 662

— Not included. — The importance of pricing flexibility toencourage increased mail volume and operationalefficiency. (This provision was added June 22,2005.)

Would permit the rates and classes regulation system formarket-dominant products to include one or more of thefollowing characteristics:

Would require the new rate system to:

— price caps, revenue targets, or other forms ofincentive regulation;

— “include an annual limitation on the percentagechanges in rates ... that will be equal to the change inthe Consumer Price Index for All UrbanConsumers...”

— cost-of-service regulation; — Not included.

— such other forms of regulation as the Commissionconsiders appropriate to achieve.”

— Not included.

Not included. Would require the ratemaking system to include“procedures whereby rates may be adjusted on anexpedited basis due to unexpected and extraordinarycircumstances.”

Not included. Would allow USPS to “bank” unused pricing authorityfor any class or service. Thus, USPS could exceed CPIfor a class or service by the amount that rate increasesfor that class or service in the previous year were lessthan the CPI. (This provision was added June 22, 2005.)

See Sec. 206 below on workshare discounts. Would define and establish rules on worksharediscounts (identical to H.R. 22, Sec. 206).

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H.R. 22 S. 662

Sec. 202. ProvisionsRelating toCompetitiveProducts.

Would amend 39 U.S.C. 3631 to list the following ascompetitive products:

Sec. 202.ProvisionsRelated toCompetitiveProducts.

Similar provision but would define “competitiveproducts” as:

— priority mail; — expedited mail; — mailgrams; — international mail; and — parcel post.

— Identical; — Identical; — Identical; — bulk international mail; and — bulk parcel post.

The Board of Governors (BOG) of USPS would establishrates and classes for these products. BOG would berequired to publish these decisions in the FederalRegister at least 30 days before the effective date of anynew rates or classes.

Similar provision but would require “the writtenconcurrence of a majority of all of the Governors thenholding office” to establish rates and classes in thecompetitive category.

These rates would be in accordance with PRC regulationsthat “prohibit the subsidization of competitive productsby market-dominant products ... [and] ensure that eachcompetitive product overs its costs attributable ... andensure that all competitive products collectively make areasonable contribution to the institutional costs of thePostal Service.”

Identical provision.

Would differentiate between changes to rates and classesof “general applicability” in the nation as a whole or asubstantial region thereof and changes not of generalapplicability. For the former, BOG would need toprovide 30 days notice in the Federal Register before theeffective date of such changes; for the latter, BOG wouldbe required to file records of their decision with PRC atleast 15 days before the effective date.

Would require 30 days public notice of any changes torates or classes and review by PRC to ascertain whetherthe proposed changes are in compliance with PRCregulations prohibiting cross-subsidization andrequiring accurate cost attribution and appropriateinstitutional cost contribution.

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H.R. 22 S. 662

Not included. Would also require PRC to conduct a review todetermine whether the institutional costs contributionrequirement for competitive products should beretained in its current form, modified, or eliminated. The first review would have to be five years afterenactment of this bill, with periodic reviews comingevery five years thereafter.

Sec. 203.ProvisionsRelating toExperimentaland NewProducts.

Would amend 39 U.S.C. 3641, which provides fortemporary changes in postal rates and classes, to create aprocess for testing new postal products.

Sec. 203.ProvisionsRelating toExperimentaland NewProducts.

Identical.

In order to test a new product, USPS would be required tofile a request with the Postal Regulatory Commission andpublish a notice in the Federal Register. PRC would have the power to approve or disapprove ofany new product. A product would qualify for testingonly if it was a “significantly different product” andwould not create a market disruption or unfaircompetitive advantage for the USPS. Applications forcompetitive products would be required to include costsand revenues attributable (PRC, though, would retainultimate power to determine whether a new productshould be classified as a market dominant or competitiveproduct).

Identical.

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H.R. 22 S. 662

Would prohibit market tests for new products fromexceeding 24 months; although upon written request ofUSPS, PRC could extend the trial period 12 months forthe sake of determining the feasibility or desirability of aproduct being tested.

Nearly identical provision, except that S. 662 wouldrequire”[a]ny test that solely affects products currentlyclassified as competitive, or which provides servicesancillary to only competitive products, shall bepresumed to be in the competitive product categorywithout regard to whether a similar ancillary productexists for market-dominant products.”

Would permit a product to be tested only if the totalrevenue anticipated or received does not exceed $10million per year nationwide.

Nearly identical, though Senate bill does not include theterm “nationwide.”

Would empower PRC to “limit the amount of revenuesthe Postal Service may obtain from any particulargeographic market as necessary to prevent marketdisruption.” PRC may waive the requirement that atested product’s revenues not exceed $10 million if:

S. 662 would not empower PRC to “limit the amount ofrevenues the Postal Service may obtain from anyparticular geographic market as necessary to preventmarket disruption.”

(1) Total anticipated or actual revenues do not exceed$50 million per year;(2) The PRC determines that the product is likely tobenefit the public and meet an expected demand; theproduct is likely to contribute to the financial stabilityof the Postal Service; and the product is not likely toresult in unfair competition.

Would permit PRC to move products not under the PostalExpress Statutes (18 U.S.C. 1696) between the market-dominant and competitive products categories.

Identical.

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H.R. 22 S. 662

Sec. 204. ReportingRequirementsand RelatedProvisions.

Would amend 39 U.S.C. 36 to require PRC to provide toCongress and the President an annual report “concerningthe operations of the Commission under this title,including the extent to which regulations are achievingthe objectives of the regulation of the prices of market-dominant products.

Sec. 204. ReportingRequirementsand RelatedProvisions.

Identical.

Would also require an estimate of the costs incurred bythe Postal Service in providing —

Not included here but Sec. 702 would require auniversal service study.

(1) postal services to areas of the nation where thePostal Service either would not provide services at allor would not provide such services in accordance withthe requirements of this title if it were not required todo so; (2) free or reduced rates for postal services as requiredby this title; and (3) other public services or activities which, in thejudgment of PRC, would not otherwise have beenprovided by USPS but for the requirements of law.

Would require USPS to prepare and submit to PRC areport including analysis of the costs, revenues, rates,service quality, timeliness, and reliability of products nolater than 90 days after the end of each year. Wouldrequire the analysis in the report to conform tomethodological specifications prescribed by PRC. Wouldrequire the USPS Inspector General to audit “the datacollection systems and procedures utilized in collectinginformation and preparing [this] report” and submit thefindings to PRC.

Similar provision except that S. 662 would notempower PRC to prescribe the methodology and S. 662would have the USPS Inspector General audit the reportitself — not the data collection systems and proceduresemployed to produce it.

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H.R. 22 S. 662

This report must include information on market-dominantproducts for which workshare discounts were in effectduring the time covered, including the per-item costavoided by the Postal Service by virtue of such discount,the percentage of such per-item cost avoided that the per-item workshare discount represents, and the per-itemcontribution made to institutional costs.”

Identical.

H.R. 22 would define “workshare discount” as“presorting, barcoding, dropshipping, and other similardiscounts, as further defined under regulations which thePostal Regulatory commission shall prescribe.”(See Sec. 206 below for further language on workshare discounts.)

Identical.

Would also empower PRC to require USPS to provide“summary data on the costs, revenues, and quality ofservice” on experimental competitive products.

Identical provision but also would empower PRC todemand such data on negotiated service agreements.

Would empower PRC to prescribe the form and contentof all reports. Would require PRC to take the followinginto consideration in crafting its reporting prescriptions:

Identical except S. 662 would also require theinformation to be timely;

— providing the public with adequate information toassess the lawfulness of rates charged;

Identical.

— avoiding inflicting unnecessary or unwarrantedadministrative effort and expense on USPS; and

Identical.

— protecting the confidentiality of commerciallysensitive information.

Identical.

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H.R. 22 S. 662

Would require the Postal Service to submit to PRC itscomprehensive statement, performance plan, and programperformance reports. Would permit USPS to petitionPRC to be permitted to not disclose publicly anyinformation that falls within the exceptions to theFreedom of Information Act as outlined at outlined in 5U.S.C. 552(b).

Similar provisions but also would require USPS tosubmit its strategic plan.

Similar provision.

Would require PRC to take comments of the public andinterested parties on the various reports, statements, andplans submitted each year and would require PRC toassess USPS compliance with laws and rules regardingrates and whether USPS performance goals and market-dominant product service standards were met. Wouldalso empower PRC to require USPS to correctnoncompliant behavior.

Similar provision, but would not require PRC to assessif market-dominant products met service standards. H.R. 22 would have USPS devise its own servicestandards for market-dominant products; S. 662 wouldhave PRC design them (see Title III below.)

Would provide for significant reforms in USPS financialreporting. Would require USPS to file with the PRCreports containing the same information as the quarterlyForm 10-Q, annual Form 10-K, and periodic Form 8-Kreports that publicly-traded corporations must file withthe Securities and Exchange Commission. USPS reportswould have to include information on the USPS’sfinancial obligations to retirees. USPS would be requiredto obtain the opinion of an independent auditor on theinformation on its reporting on these obligations. Wouldalso require USPS to comply with the financial reportingrules “prescribed by the Securities and ExchangeCommission implementing section 404 of theSarbanes-Oxley Act of 2002 (15 U.S.C. 7262; P.L.107-204) beginning with FY2007 and in each fiscal yearthereafter.”

Similar provision at Sec. 605 (see above).

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Sec. 205. Complaints;AppellateReview andEnforcement.

Would amend 39 U.S.C. 3662 and 3663 to permit“interested persons” to lodge a complaint with the PRCshould they believe USPS is not operating inconformance with the requirements of Chapters 1, 4, 6 of39 U.S.C. 36, regarding rates, classifications, andproducts. The PRC would have to begin proceedings onor dismiss such cases within 90 days of receipt thereof.

Sec. 205. Complaints;AppellateReview andEnforcement.

Identical except for clerical differences.

If the complaint is ruled justified, the PRC may requireUSPS to remedy the effects of noncompliance. To thisend, PRC is authorized to delay implementation of ratesor classifications and fine USPS. Any person dissatisfiedwith a PRC decision (including USPS) may appealadverse decisions to the United States Court of Appealsfor the District of Columbia. Would allow PRC tosuspend “implementation of rates or classifications ... fora limited period of time pending expedited proceedingsunder this section.”

Similar provision but omits provision providing PRCwith rate suspension authority.

Would empower PRC to impose fines for deliberatenoncompliance with the requirements of this title.

Identical.

Sec. 206. WorkshareDiscounts.

Would allow PRC to permit USPS to enter workshareagreements that give greater discounts than costs avoidedby the USPS under the following conditions:

Similar provision at Sec. 201.

“(1) the discount is —

“(A) associated with a new postal service, a changeto an existing product or service, or a new work-share initiative related to an existing postal service;

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“(B) necessary to induce mailer behavior thatfurthers the economically efficient operation of thePostal Service and the portion of the discount inexcess of the cost that the Postal Service avoids as aresult of the workshare activity will be phased outover a limited period of time;

“(2) a reduction in the discount would —

“(A) lead to a loss of volume in the affectedcategory or subclass of mail and reduce theaggregate contribution to the institutional costs ofthe Postal Service from the category or subclasssubject to the discount below what it otherwisewould have been if the discount had not beenreduced to costs avoided;

“(B) result in a further increase in the rates paid bymailers not able to take advantage of the discount;or

“(C) impede the efficient operation of the PostalService;

“(3) the amount of the discount above costs avoided—

“(A) is necessary to mitigate rate shock; and

“(B) will be phased out over time; or

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“(4) the discount is provided in connection withsubclasses of mail consisting exclusively of mailmatter of educational, cultural, scientific, orinformational value.”

Would require USPS to provide a report to PRC thatexplains reasons and analyses supporting USPS decisionto enter into any negotiated service agreements.

Sec. 207. ClericalAmendment.

Would amend heading and strike analysis for 39 U.S.C.36, which presently sets forth the Chapter 36 sections on“Postal Rate, Classes and Service,” which Title IIproposes to amend.

Sec. 206. ClericalAmendment.

Similar provision.

Similar provision. Title III — Modern Service Standards

Not included. See Sec. 204 above for the brief H.R. 22proposal for USPS-crafted service standards.

Sec. 301. Establishment ofModern ServiceStandards.

Would amend 39 U.S.C. 36 to require USPS and PRCto establish modern service standards for market-dominant products within 12 months of enactment ofthis section.

Would require the modern standards to be designed toachieve the following objectives (provided they areconsistent with USPS’s universal service obligation):

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— Enhance the value of the postal service to bothsenders and recipients; — Preserve regular and effective access to postalservices in all communities, including those in ruralareas or where post offices are not self-sustaining; — Reasonably assure Postal Service customersdelivery reliability, speed, and frequency consistentwith reasonable rates and best business practices;and — Provide a system of objective externalperformance measurements for each market-dominant product as a basis for measurement ofPostal Service performance.

In establishing the standards to achieve the objectives,PRC is to take eight factors into consideration:

— the actual service levels that customers receivefrom USPS; — present customer satisfaction with USPS; — the needs of customers, including those withphysical impairments; — mail volume and revenues projected for futureyears; — projected growth in addresses to be served; — present and future costs of serving customers; — the effect of technological innovation anddemographics on the efficient, reliable operation ofthe postal delivery system; and — the policies of this title as well as other factorsPRC deems appropriate.

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Not included. Sec 302. PostalService Plan.

Would require the Postal Service — in consultationwith PRC — to create and submit to Congress a planfor achieving these standards. The plan is to is duewithin six months of establishment of the standards andmust include:

— establish performance goals and describe anychanges needed to the Postal Service’s network tomeet the goals; — a facilities plan that provides a description of thelong-term USPS vision to rationalize its facilitiesand workforce and plans for achieving this vision, adiscussion of the impacts of such changes, USPSneeds for flexibility to make workforce changes, andanticipated costs and benefits.

Would require USPS to provide an annual report thatdetails how postal decisions have affected or will affectrationalization plans and estimates of how other factors(e.g., automation initiatives, worksharing) may affectrationalization plans. Also would require the report toinclude information on USPS plans for and actions toreduce its facilities network, statutory or regulatoryimpediments to network reduction, plans to expandalternative retail outlets, and plans for reemploymentassistance and early retirement benefits for displacedpostal employees.

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Would require USPS to submit the report the InspectorGeneral of the U.S. Postal Service, who would preparea report detailing USPS compliance with the law andthe new service standards. Would require the InspectorGeneral to submit both reports to Congress.

Title III — Provisions Relating to Fair Competition Title IV — Provisions Relating to Fair Competition

Sec. 301. PostalServiceCompetitiveProducts Fund.

Would amend 39 U.S.C. 20 to establish a Postal ServiceCompetitive Products Fund, “which shall be available tothe Postal Service ... for the payment of — (1) costs attributable to competitive products; and(2) all other costs incurred by the Postal Service, to theextent allocable to the competitive products.” [Thisincludes any competitive products judgments againstUSPS.]

Sec. 401. PostalServiceCompetitiveProducts Fund.

Identical.

Deposits to the Competitive Product Fund would include:(1) revenues from competitive products; (2) amounts received from obligations issued by thePostal Service; (3) interest and dividends earned on investments of theCompetitive Products Fund; and (4) any other receipts of the Postal Service (includingfrom the sale of assets), to the extent allocable tocompetitive products.

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Should the funds be in excess of current needs, USPSwould be permitted to invest those funds in obligationsof, or guaranteed by, the U.S. Government or inaccordance with the advice of the Secretary of theTreasury.

Similar provision.

USPS may deposit excess funds in a Federal Reservebank or a depository for public funds with the approval ofthe Secretary of the Treasury.

Identical.

USPS would be authorized to “borrow money and toissue and sell such obligations as it determines necessaryto provide for competitive products and deposit suchamounts in the Competitive Products Fund.”

Similar provision.

Would compute the total assets of the CompetitiveProducts Fund as the greater of the assets related to theprovision of competitive products or the percentage oftotal USPS revenues and receipts from competitiveproducts multiplied by USPS total assets.

Would compute the total assets of the CompetitiveProducts Fund by multiplying the quotient resultingfrom the total revenues of the Competitive ProductsFund divided by the total USPS revenue and total USPSassets.

Would permit the federal government to purchase USPSissued debt and would provide USPS clear discretion overthe denomination, time of issuance, maturity dates,prices, and rates of USPS debt issued.

Identical.

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Obligations would not be exempt from taxation by anystate or locality nor would they be obligations of theGovernment of the United States.

Identical.

Would require USPS to provide an annual report to theSecretary of the Treasury on the operation and conditionof the Competitive Products Fund.

Identical.

Would have the Secretary of the Treasury, in consultationwith USPS, an independent accounting firm, and suchother advisers as the Secretary deems appropriate,develop recommendations regarding:“(1) the accounting practices and principles that should befollowed by USPS with the objectives of (A) identifyingand valuing USPS assets and liabilities associated withproviding competitive products — including the capitaland operating costs incurred in providing suchcompetitive products; and (B) preventing thesubsidization of such products by market-dominantproducts; and(2) the substantive and procedural rules that should befollowed in determining the assumed Federal income taxon competitive products income of the Postal Service forany year.”These proposals would then be submitted to PRC, whichwould accept comments by USPS, the public, andinterested parties, and then issue final accounting rulesfor USPS.

Identical.

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Sec. 302. Assumed FederalIncome Tax onCompetitiveProductsIncome.

Would define “assumed Federal income tax” to mean thenet income tax that would be imposed by chapter 1 of theInternal Revenue Code of 1986 on the Postal Service’sassumed taxable income from competitive products forthe year.”

Sec. 402. Assumed FederalIncome Tax onCompetitiveProductsIncome.

Identical.

Would require USPS to compute its assumed federalincome tax each year and transfer this amount to thePostal Service Fund.

Sec. 303. UnfairCompetitionProhibited.

Would amend 39 U.S.C. 4 by adding a provision thatprohibits USPS from establishing “any rule or regulation”or “term of competition”unless USPS demonstrates thatthe rule, regulation, or term “does not create an unfaircompetitive advantage for itself or any federally fundedentity.”

Sec. 403. UnfairCompetitionProhibited.

Identical.

Would prohibit USPS from “compel[ling]the disclosure,transfer, or licensing of intellectual property to any thirdparty” or “obtain[ing] information from a person thatprovides (or seeks to provide) any product, and then offerany product or service that uses such information, withoutthe consent of the person providing the information...”

S. 662 is worded nearly identically except that it refersto “any postal service” instead of “any product orservice.”

Would require PRC to prescribe regulations to carry outthis section.

Identical.

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Sec. 304. SuitsBy and Againstthe PostalService.

Would amend 39 U.S.C. 409 so that USPS, with regard toactivities involved in providing competitive products,would be considered a person — as used in the provisionsof law involved — and would not be immune under thedoctrine of sovereign immunity. Persons could bringfederal suits against USPS for violations of theTrademark Act of 1946 (15 U.S.C. 1051) and Section 5 ofthe Federal Trade Commission Act (on unfair ordeceptive acts and practices). Would deny USPS legalrepresentation by the Department of Justice in theseinstances.

Sec. 404. SuitsBy and Againstthe PostalService.

Similar provision except that S. 662 also would declarethat to the “extent that the Postal Service engages inconduct with respect to the provision of competitiveproducts, it shall be considered a person for thepurposes of the Federal bankruptcy laws.”

Also would require USPS, when building new buildingsor altering existent ones to comply with “one of thenationally recognized model building codes” and to do soonly after “considering all requirements of zoning laws,land use laws, and applicable environmental laws of aState or subdivision of a State...”

Similar provision but would also require USPS shouldto “the extent practicable, model building codes shouldmeet the voluntary consensus criteria established forcodes and standards as required in the NationalTechnology Transfer and Advancement Act of 1995 asdefined in Office of Management and Budget CircularA1190. For purposes of life safety, the Postal Serviceshall continue to comply with the most current editionof the Life Safety Code of the National Fire ProtectionAssociation (NFPA 101).”

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Sec. 305. InternationalPostalArrangements.

Would declare United States policy to be to: Sec. 405. InternationalPostalArrangements.

Identical except as below noted.

— “promote and encourage communications betweenpeoples by efficient operation of international postalservices and other international delivery services forcultural, social, and economic purposes;

— “promote and encourage unrestricted andundistorted competition in the provision ofinternational postal services and other internationaldelivery services...;

— “to promote and encourage a clear distinctionbetween governmental and operational responsibilitieswith respect to the provision of international postalservices and other international delivery services bythe Government of the United States and byintergovernmental organizations of which the UnitedStates is a member; and

— Would not include “and other international deliveryservices by the Government of the United States and byintergovernmental organizations of which the UnitedStates is a member.”

— “to participate in multilateral and bilateralagreements with other countries to accomplish theseobjectives.”

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Would amend 39 U.S.C. 407 to give the Secretary ofState responsibility for the “formulation, coordination,and oversight of foreign policy related to internationalpostal services and other international delivery services,and shall have the power to conclude treaties,conventions and amendments related to internationalpostal services and other international deliveryservices...”. Would prohibit the Secretary of State fromconcluding a treaty, convention, or agreement that would,with respect to any competitive product, give an undue orunreasonable preference to USPS or any private providerof postal or delivery services.

Identical except that S. 662 does not empower theSecretary of State with oversight of operations of “otherinternational delivery services.”

Before concluding any treaty, convention, or amendmentestablishing international postage rates or classifications,would require the Secretary of State to request a PRCdecision on whether such rate or classification isconsistent with the standards and criteria established bythe Commission under section 3622.

Similar provision, but would require Secretary of Stateto request from PRC “its views.”

Would require the Secretary of State to ensure that eachtreaty, convention, or amendment ... is consistent withPRC decisions “except if, or to the extent, the Secretarydetermines, by written order, that considerations offoreign policy or national security require modification ofthe Commission’s decision.”

Similar but would not permit exceptions andmodifications due to considerations of foreign policy ornational security by Secretary of State.

Would define a private company as a company that is“substantially owned or controlled by persons who arecitizens of the United States.”

Not included.

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With respect to competitive products, would require the“Bureau of Customs and Border Protection of theDepartment of Homeland Security and other appropriateFederal agencies shall apply the customs laws of theUnited States and all other laws relating to theimportation or exportation of such shipments in the samemanner to both shipments by the Postal Service andsimilar shipments by private companies.”

Similar provision but refers to “the Customs Service”instead of the “Bureau of Customs and BorderProtection of the Department of Homeland Security.”

Sec. 306.Redesignation.

39 U.S.C. 36 would be amended to include “ SubchapterVI — General.”

Not included.

Title IV — General Provisions Title V — General Provisions

Sec. 401. QualificationRequirementsfor Governors.

Would amend 39 U.S.C. 202(a) to require that at leastfour of the Governors of USPS be selected solely on thebasis of their demonstrated ability in managingorganizations or corporations of “substantial size”(defined as possessing 50,000 or more employees). Governors may “not be representatives of specificinterests using the Postal Service” and may be removedonly for cause.

Sec. 501. QualificationRequirementsfor Governors.

Similar provision but would not stipulate that “at leastfour of the Governors” be selected based on theirexperience managing entities of a “substantial size.”Would not define “substantial size.” Would alsorequire that “[e]xperience in the fields of law andaccounting shall be considered in making appointmentsof Governors.”

Further amends 39 U.S.C. 202(a) to require the Presidentto consult with the Speaker of the House ofRepresentatives, the minority leader of the House ofRepresentatives, the majority leader of the Senate, and theminority leader of the Senate regarding nominees foropen Governor seats.

Identical.

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Would require that the passage of this act not “affect theappointment or tenure of any person serving as aGovernor of the United States Postal Service under anappointment made before the date of enactment of thisAct.”

Identical.

Not included. Would reduce terms of governors from nine to fiveyears and procedures for replacement of sittinggovernors with nine-year terms in the event of death orremoval for cause.

Would require that an early vacancy on the Board ofGovernors be filled by a person nominated with theconcurrence of the major postal labor unions. Thisperson would serve a three-year term instead of a nine-year term.

Not included.

Sec. 402. Obligations.

Would amend 39 U.S.C. 2005 to limit USPS newobligations for capital improvements and defrayingoperating expenses to $3 billion per annum.

Not included.

Forbids pledging assets related to the provision ofcompetitive products.

Identical.

Sec. 403. PrivateCarriage ofLetters.

Would amend 39 U.S.C. 601 to permit the privatecarriage of letters if:

Sec. 503. PrivateCarriage ofLetters.

Similar provision.

— the amount paid for private carriage is equal to atleast 6 times the rate then currently charged for the 1st

ounce of a single-piece first class letter;

— the letter weighs at least 12 ½ ounces; or

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— such carriage is within the scope of servicesdescribed by regulations of the United States PostalService (as in effect on July 1, 2004) that purport topermit private carriage by suspension of this section(as then in effect).

PRC would be empowered to craft any regulationsnecessary to carry out this section.

Sec. 404. RulemakingAuthority.

Would modify USPS’s rulemaking authority under 39U.S.C. 401 to include the power “to adopt, amend, andrepeal such rules and regulations, not inconsistent withthis title, as may be necessary in the execution of itsfunctions under this title and such other functions as maybe assigned to the Postal Service under any provisions oflaw outside this title.”

Sec. 504. RulemakingAuthority.

Identical.

Sec. 405. NoninterferenceWith CollectiveBargainingAgreements.

Would declare that present employee and labororganization privileges, rights, and benefits under 39U.S.C. 12 are not restricted or expanded, except asprovided in Sec. 407 below.

Sec. 505. NoninterferenceWith CollectiveBargainingAgreements.

Similar declaration made although S. 662 would amend39 U.S.C. 1207 regarding labor disputes.

Would continue free mailing privileges afforded to postalunions.

Identical provision.

Identical provision at H.R. 22 Sec. 407 (see below). Would change the collective bargaining arbitrationprocess (details below at H.R. 22 Sec. 407).

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Sec. 406. BonusandCompensationAuthority.

Would amend 39 U.S.C. 36 to permit USPS to create oneor more programs to provide employee bonuses or otherrewards.

Sec. 506. BonusAuthority.

Identical.

Would limit annual executive compensation with bonusesto no more than the “total annual compensation” of theVice President of the United States ($208,100 in 2005).

Identical.

Would require any bonus program to be approved by theUSPS Board of Governors, which also would beempowered to revoke or suspend the Postal Service’sbonus-granting authority under any program if shouldfind that the bonus program is fails to based on relativeperformances among employees.

Identical.

Would require USPS to report any bonuses or rewardsgiven in its annual comprehensive statement, includingthe names of persons receiving a bonus, the amount ofthese bonuses, and the amount by which these bonusesexceeded employees’ permissible compensation.

Not included.

Sec. 407. Mediation inCollective-BargainingDisputes.

Would amend 39 U.S.C. 1207(b) to require that in theevent of a labor dispute the Director of the FederalMediation and Conciliation Service “shall within 10 daysappoint a mediator of nationwide reputation andprofessional standing ... who is also a member of theNational Academy of Arbitrators” instead of a factfindingpanel.

Identical provision found at Sec. 505.

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Would amend 39 U.S.C. 1207(c) to reduce from 90 to 60days the period after the expiration of a bargainingagreement that may pass before the parties would berequired to go through arbitration.

Would amend 39 U.S.C. 1207(d) to require theappointment of a mediator instead of a fact-findingpanel when a bargaining units is without an agreementwith USPS.

Thus, the labor dispute resolution process would includethe following steps:

1. A bargaining unit with an agreement with the USPSthat desires modification or termination of anagreement must serve notice to that effect to the otherparty no less than 90 days before the expiration of theagreement;

2. Within 45 days of providing notice, the partyserving notice must notify the Director of the FederalMediation and Conciliation Service (FMCS);

3. If parties fail to resolve their differences (or providefor a process for resolving their differences) before theexpiration of the agreement, then the Director ofFMCS must appoint a mediator within 10 days. Bothparties must work with the mediator and negotiate ingood faith;

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4. If no resolution has been reached 60 days afterappointment of the mediator, then a three-personarbitration board must be appointed. Each disputantchooses one member and the two members chosenchoose the third member. The arbitration board is togive both sides a full and fair hearing and render adecision within 45 days of its appointment. If eitherparty fails to select a member or the two partiesdisagree on the third member, then a list of ninearbitrators will be provided and the parties must agreeto select from it. It is unclear what would happen ifthe parties failed to do this. Under current law, theDirector would have the power to select members.

A similar procedure is created for bargaining units whoserecognized bargaining representative does not have anagreement with the USPS.

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Title V — Enhanced Regulatory Commission Title VI — Enhanced Regulatory Commission

Sec. 501. Reorganizationand Modificationof CertainProvisionsRelating to thePostalRegulatoryCommission.

Would amend 39 U.S.C. to include a chapter 5 whichreplaces the Postal Rate Commission with the new PostalRegulatory Commission (PRC). PRC would have fivecommissioners, appointed by the President with theadvice and consent of the Senate. Commissioners are tobe chosen solely on the basis of their “technicalqualifications, professional standing, and demonstratedexpertise in economics, accounting, law, or publicadministration, and may be removed by the Presidentonly for cause.” Not more than three members may beadherents of the same political party; commissioners areto serve six year terms.

Sec. 601. Reorganizationand Modificationof CertainProvisionsRelating to thePostalRegulatoryCommission.

Similar provisions but also would require that “[n]oCommissioner shall be financially interested in anyenterprise in the private sector of the economy engagedin the delivery of mail matter.”

Identical provision at H.R. 22 Sec. 505. S. 662 also would require PRC to “designate an officerof the Postal Regulatory Commission in all publicproceedings who shall represent the interests of thegeneral public.”

Sec. 502. Authority forPostalRegulatoryCommission toIssue Subpoenas.

Would empower “the Chairman of the Commission, anyCommissioner designated by the Chairman, and anyadministrative law judge appointed by the Commission”to issue subpoenas (provided a majority of PRC concurs). Any person failing to obey a subpoena may be punishedfor contempt of court by the district court of the U.S. inthe district in which the person subpoenaed resides or isserved. In cases involving documents exempt frompublic disclosure, USPS may respond to the subpoenawith written notification that explains the reasons forkeeping such documents from public view. PRC would

Sec. 602. Authority forPostalRegulatoryCommission toIssue Subpoenas.

Similar provision.

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be empowered to render final decision over the publicdisclosure or nondisclosure of such documents.

Sec. 503. Appropriationsfor the PostalRegulatoryCommission.

Would amend 39 U.S.C. 504(d) to authorizeappropriations for PRC out of the Postal Service Fund. Each fiscal year, PRC would be required to submit abudget of expenses to Congress in order to receive anappropriation. Would have amendments in this section“apply with respect to fiscal years beginning on or afterOctober 1, 2005.”

Sec. 603. Appropriationsfor the PostalRegulatoryCommission.

Identical except that Sec. 603 reads “[t]he amendmentsmade by this section shall apply with respect to fiscalyears beginning on or after October 1, 2002.”

Sec. 504. Redesignation ofthe Postal RateCommission.

Would replace the words “Postal Rate Commission” with“Postal Regulatory Commission” in Titles 39, 5, and 44of U.S.C.

Sec. 604. Redesignation ofthe Postal RateCommission.

Identical.

Sec. 505. Officerof the PostalRegulatoryCommissionRepresenting theGeneral Public.

Would require PRC to designate “an officer of the PostalRegulatory Commission in all public proceedings (suchas developing rules, regulations, and procedures) whoshall represent the interests of the general public.”

Identical provision at Sec. 601 above.

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Title VI — Inspectors General Not included

Sec. 601. InspectorGeneral of thePostalRegulatoryCommission.

Would amend the Inspector General Act of 1978 (5U.S.C. Appendix) and 39 U.S.C. 504 to establish theOffice of Inspector General (OIG) of the PostalRegulatory Commission. The first PRC InspectorGeneral is to be appointed no later than 180 days fromenactment of this act. H.R. 22 would not enumerateadditional duties of the PRC IG beyond those carried inpresent law.

Not included.

Sec. 602.InspectorGeneral of theUnited StatesPostal Service tobe Appointed bythe President.

Would amend the Inspector General Act of 1978 (5U.S.C. Appendix) to require presidential appointment ofthe Inspector General of the U.S. Postal Service. Wouldempower the IG to have oversight responsibility for allactivities of the Postal Inspection service. Appropriationsfor the Office of the Inspector General would be availablebeginning October 1, 2005.

Not included. Sec. 1003 would require GAO to“review the functions, responsibilities, and areas ofpossible duplication of the United States PostalInspection Service and the Office of the InspectorGeneral of the United States Postal Service and submita report on the review to the Committee on HomelandSecurity and Governmental Affairs of the Senate.” Also would require the report to include legislativerecommendations.

Sec. 605.FinancialTransparency.

Equivalent provision at H.R. 22, Sec.204.

Title VII — Evaluations Title VII — Evaluations

Sec. 701. Universal PostalService Study.

Would require the Postal Service to submit to Congress,the President, and PRC, a written report on universalpostal service (within 12 months of enactment of thisact). The report must include a history of universalservice and how it has evolved, USPS recommendations

Sec. 702. Universal PostalService Studyand the PostalMonopoly.

Similar provision but PRC would be charged withpreparing the report and would also need to provide anassessment of the postal monopoly (on the delivery ofmail and access to mailboxes) and provide anyproposed changes to either universal service or the

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on universal service, along with descriptions of the scopeand standards of universal service under present law; anygeographic areas, populations, communities,organizations, or other groups not covered by universalservice at present; and the scope and standards ofuniversal service likely to be required in the future.Would further require PRC to prepare an analysis of theUSPS report on universal service, including estimates ofthe costs of providing universal service under present andprior law, and send it to the President within 12 months. In preparing these reports, both USPS and PRC areobliged to consult with governmental andnongovernmental stakeholders.

monopoly. PRC would have 24 months after enactmentto submit this report.

Sec. 702. Assessments ofRatemaking,Classification,and OtherProvisions.

Would require PRC to provide, at least every 5 years, areport to the President and Congress concerning theoperation of this act’s amendments to the law and anyrecommendations to improve the efficiency of the postallaws. USPS, after considering this report, would berequired to submit its comments, which would beattached to this report. The report would be required toinclude specific information on “cost-coverage relating tocompetitive products collectively” and the operations ofthe Competitive Products Fund and the assumed federalincome tax thereon.

Sec. 701. Assessments ofRatemaking,Classification,and OtherProvisions.

Similar provision with differences noted below.

Would not include the requirement that the reportprovide information on cost coverage on competitiveproducts, the Competitive Products Fund, or theassumed federal income tax.

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Sec. 703. Studyon EqualApplication ofthe Laws toCompetitiveProduct

Within one year of the enactment of this act, the FederalTrade Commission (FTC) would be required to prepareand submit to the President, Congress, and PRC a reportthat “identifying Federal and State laws that applydifferently to the United States Postal Service withrespect to the competitive category of mail ... and privatecompanies providing similar products.”

The study should include appropriate recommendationsfor bringing “such legal differences” to an end.

Similar provisions but uses the phrase “such legaldiscrimination.”

In preparing the report, the FTC shall consult withgovernmental and nongovernmental stakeholders.

Identical.

PRC is to take into account the recommendations of thestudy and “subsequent events that affect the continuingvalidity of the estimate of the net economic effect ... inpromulgating or revising the regulations” required by 39U.S.C. 3633.

Would not require PRC to take into account“subsequent events that affect the continuing validity ofthe estimate of the net economic effect.”

Sec. 704. GreaterDiversity inPostal ServiceExecutive andAdministrativeScheduleManagementPositions.

Would require the BOG to “study and, within 1 year afterthe date of the enactment of this act, submit to thePresident and Congress a report concerning the extent towhich women and minorities are represented insupervisory and management positions within the UnitedStates Postal Service.” Would require data included inthe report to be “presented in the aggregate and by paylevel.”

Not included.

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Also would require USPS to “take such measures as maybe necessary to ensure that, for purposes of conductingperformance appraisals of supervisory or managerialemployees, appropriate consideration shall be given tomeeting affirmative action goals, achieving equalemployment opportunity requirements, andimplementation of plans designed to achieve greaterdiversity in the workforce.”

Sec. 705. Planfor AssistingDisplacedWorkers.

Would require USPS within one year to prepare andsubmit to Congress and the Board of Governors a reportand a plan on assisting workers displaced as a result ofautomation or privatization of postal functions.

Included at Sec. 302 above.

Sec. 706.Contracts withWomen,Minorities, andSmall Businesses.

Would require BOG to “study and, within 1 year after thedate of the enactment of this Act, submit to the Presidentand Congress a report concerning the number and valueof contracts and subcontracts the Postal Service hasentered into with women, minorities, and smallbusinesses.”

Not included.

Sec. 707. Ratesfor Periodicals.

USPS and PRC would be required to collaborate on astudy concerning “the quality, accuracy, andcompleteness of the information used by the PostalService in determining the direct and indirect postal costsattributable to periodicals ... and any opportunities thatmight exist for improving” efficiencies in the collection,handling, transportation, or delivery of periodicals by thePostal Service — including any pricing incentives formailers that might be appropriate. Would require copiesof the study to be submitted to the President andCongress.

Not included.

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Sec. 708. Assessment ofCertain RateDeficiencies.

Would direct the OIG of USPS, within 12 months ofenactment of this act, to submit to the President,Congress, and USPS a study concerning theadministration of 39 U.S.C. 3626(k), often referred to asthe “cooperative mailing provision.” This section of thelaw, and 39 U.S.C. 3626 generally, permit certain typesof mail materials sent by nonprofit groups andorganizations to qualify for reduced postal rates. Thestudy is to address “the adequacy and fairness of theprocess by which assessments under 39 U.S.C. 3626(k)are determined and appealable” and to consider whetherPRC or some other body ought to be assigned a role inthis administrative process. The study should furtherconsider “whether a statute of limitations should beestablished for the commencement of proceedings by thePostal Service thereunder.” For further language onnonprofit mailing rates, see Sec.808 below.

Not included.

Sec. 709. NetworkOptimization.

Would require USPS to submit to PRC, Congress, and theBoard of Governors a written report on the postalprocessing and distribution network. The report shouldprovide account of efforts taken to improve mailprocessing,transportation, and distribution network andactions taken to identify excess capacity. The reportshould also identify any statutory or regulatory obstaclesto facility realignment or consolidation. USPS would berequired to treat optimization as a GovernmentPerformance and Results Act (31 U.S.C. 1115 note)performance goal.

Not included. Sec. 302 above, which describes“modern service standards,” would require USPS todevelop a plan that includes a description of “thelong-term vision of the Postal Service for rationalizingits infrastructure and workforce.”

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Sec. 710. Assessment ofFuture BusinessModel of thePostal Service.

Would empower Comptroller General to appoint anindependent research organization to prepare a reportassessing the best business model for promoting ‘anefficient, reliable, innovative, and viable Postal Service.” Would require the report to consider the costs, benefits,and feasible options associated with maintaining USPS inits current form and transforming it into a corporationwholly or partially owned by the government. Wouldrequire the report to be submitted to Congress and thePresident within 27 months of enactment of this act.

Not included.

Sec. 711. Studyon CertainProposedAmendments.

Would require GAO to prepare a report on the costs andbenefits of increasing USPS’s discretion to permit foreignair carriers to transport mail.

Not included.

Not included. Sec. 704. Reporton PostalWorkplaceSafety andWorkplace-Related Injuries

Would require the IG of USPS to submit a report toCongress and the Postal Service — no later than sixmonths after enactment of this bill — that would:

— discuss any injury reduction goals established bythe Postal Service; — describe the actions that the Postal Service hastaken to improve workplace safety and reduceworkplace-related injuries; — assess how successful the Postal Service hasbeen in meeting its injury reduction goal and, — identify failure to achieve these goals andopportunities for making further progress in meetingthese goals.

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Would require USPS to submit a report to Congress — not later than 6 months after receiving the USPS IGreport — that details how USPS plans to improveworkplace safety and reduce workplace-related injuriesnationwide, including goals and metrics. These plansshould be “developed in consultation with the InspectorGeneral and employee representatives, includingrepresentatives of each postal labor union andmanagement association...”

Not included. Sec. 705. Studyon RecycledPaper.

Would require the (GAO) to study and submit to theCongress, the Board of Governors of the Postal Service,and to the Postal Regulatory Commission a reportconcerning —

— the economic and environmental efficacy ofestablishing rate incentives for mailers linked to theuse of recycled paper; — a description of the accomplishments of thePostal Service in each of the preceding five yearsinvolving recycling activities...; and — additional opportunities that may be available forthe United States Postal Service to engage inrecycling initiatives and the projected costs andrevenues of undertaking such opportunities.

Would also require the report to includerecommendations for any administrative or legislativeactions that may be appropriate.

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Title VIII — Miscellaneous, Technical and Conforming Amendments Somewhat similar title at Title X (see below)

Sec. 801.Employment ofPostal PoliceOfficers.

Would amend 18 U.S.C. 3061 to permit USPS to “employpolice officers for duty in connection with the protectionof property owned or occupied by the Postal Service orunder the charge and control of the Postal Service.”

Similar provision at Sec. 1001 but would amend 39U.S.C. 404 to permit USPS to “employ guards for allbuildings and areas owned or occupied by the PostalService or under the charge and control of the PostalService, and may give such guards, with respect to suchproperty, any of the powers of special policemen”provided under 40 U.S.C. 1315.

Sec. 802. Date ofPostmark to beTreated as theDate of Appealin Connectionwith the Closingor Consolidationof Post Offices.

Would amend 39 U.S.C. 404(b) so that any appeals to theclosure of post offices mailed or otherwise deliveredwould be considered received based upon the postmarkdate or, if delivered by other means, by paperworkindicating the date contracted for delivery. This would beeffective three months after enactment of this act.

Not included.

Sec. 803. ProvisionsRelating toBenefits UnderChapter 81 oftitle 5, UnitedStates Code, forOfficers andEmployees of theFormer PostOfficeDepartment.

Would amend 39 U.S.C. 1001 note so that USPS wouldhave the same “authorities and responsibilities” withrespect to any individual receiving benefits under theformer Post Office Department as it has to any officer oremployee of USPS receiving such benefits.

Not included.

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Sec. 804. ObsoleteProvisions.

Would repeal 39 U.S.C. 52 on the transportation of mailby a surface carrier.

Identical provision at Sec. 1002, which was added June22, 2005.

Would amend 39 U.S.C. 5005(b)(1), 5402(d), and 5605 toeliminate restrictions on lengths of contracts.

Sec. 805. Investments.

Would amend 39 U.S.C. 2003 to prohibit USPS frominvesting monies from the Postal Fund in any obligationsor securities of a commercial entity.

Not included.

Sec. 806. Reduced Rates.

Would require USPS to permit a publication with a totalpaid circulation of less than 5000 to be treated, for thepurpose of postal rates, as in-county mail even whenissues of said publication are mailed to locations outsideof the county in which it is produced.

Identical provision at Sec. 1002, which was added June22, 2005.

Sec. 807. HazardousMatter.

Would amend 36 U.S.C. 3001 to empower the Secretaryof Transportation to define hazardous materials and toenumerate the prohibitions against the mailing ofhazardous materials and provide criminal and civilpenalties for violation of these prohibitions.

Not included.

Sec. 808. ProvisionsRelating toCooperativeMailings.

Requires USPS to examine section E670.5.3 of theDomestic Mail Manual to determine whether it containsadequate safeguards against the abuse of rates fornonprofit mail and the deception of customers.

Not included.

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Sec. 809. Technical andConformingAmendments.

Would amend 39 U.S.C. 3681 so that USPS may“establish size and weight limitations for mail matter inthe market-dominant category of mail consistent withregulations the Postal Regulatory Commission mayprescribe under section 3622. The Postal Service mayestablish size and weight limitations for mail matter inthe competitive category of mail consistent with itsauthority under section 3632.”

Not included.

In addition to conforming amendments regarding revenueforgone and appropriations and reporting requirements,the act would amend 39 U.S.C. 404 to allow the Board ofGovernors to establish “reasonable and equitable” classesof mail and rates of postage. “Postal rates and fees shallbe reasonable and equitable and sufficient to enable thePostal Service, under best practices of honest, efficient,and economical management, to maintain and continuethe development of postal services of the kind and qualityadapted to the needs of the United States.” Also wouldrequire USPS to maintain one or more classes of mail fortransmission of letters that would be sealed againstinspection.

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Title IX — Postal Pension Funding Reform Amendments Title VIII — Postal Service Retirement and Health Benefit Funding

Sec. 901. CivilServiceRetirementSystem.

Would amend 5 U.S.C. 83 to alter USPS’s contributionsto the Civil Service Retirement System (CSRS). Wouldshift responsibility for pension payments related toemployee military service to the Department of theTreasury.

Similar provision at Sec. 802 except for below noteddifferences.

Would require an annual determination of USPS pensionpayment surplus or supplemental liability by the Office ofPersonnel Management. Any USPS surplus would betransferred into the Postal Service Retiree Health BenefitsFund, which would pre-fund retiree health benefits. Would require the creation of amortization scheduleshould a supplemental liability be found. Would permitthe cancellation of any existent supplemental liabilityamortization schedule “to the extent of any amounts firstcoming due after the close of the fiscal year to whichsuch determination relates” if OPM should find no CSRSliability.

Would require that any determination or redeterminationmade by OPM under this section shall, upon request ofthe United States Postal Service, be subject to review byPRC, which shall submit a report containing the results ofits review to USPS, OPM, and Congress. OPM thenwould reconsider its determination or redetermination inlight of such report, and make any appropriateadjustments. OPM would then be required to submit areport containing the results of its reconsideration toPRC, USPS, and Congress.

Similar provision added June 22, 2005 except thatreview would be performed by an outside actuary, onewith membership in the American Academy ofActuaries.

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Sec. 902. HealthInsurance.

Would establish the Postal Service Retiree HealthBenefits Fund, which would be administered by theOffice of Personnel Management (OPM).

Similar provision at Sec. 803 except for differencesnoted here.

Would establish the Postal Service Retiree HealthBenefits Fund, which would be administered by theOffice of Personnel Management (OPM).

Identical.

Beginning September 30, 2006, USPS would be requiredto pay into the Retiree Health Benefits Fund each year:

Beginning September 30, 2006, USPS would berequired to pay into the Retiree Health Benefits Fundeach year:

(A) the portion of the net present value for current andfuture USPS annuitants that is attributable to thecurrent year’s service of Postal Service employees;

(A) the net present value of the future payments thatis attributable to the service of Postal Serviceemployees during the most recently ended fiscalyear; and

(B) interest on the net present value for that fiscal yearat the interest rate used to compute that net presentvalue.

(B) an annual installment computed as the differencebetween the net present value of the excess of futurepayments for current and future Postal Serviceannuitants as of the fiscal year ending on September30 of that year; and the value of the assets of thePostal Service Retiree Health Benefits Fund as ofthe fiscal year ending on September 30 of that yearand the net present value of the future payments thatis attributable to the service of Postal Serviceemployees during the most recently ended fiscalyear. This amount is to be amortized to create aseries of annual installments that provide for theliquidation of the liability by September 30, 2045, orwithin 15 years, whichever is later.

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Would allow the USPS contribution to the Postal ServiceRetiree Health Benefits Fund in 2006 to be reduced byany USPS contributions attributable to FY2006.

Similar provision.

Would require that any computation or regulation byOPM “under this subsection shall, upon request of thePostal Service, be subject to review by the PostalRegulatory Commission. The Commission shall submit areport containing the results of any such review to thePostal Service, the Office of Personnel Management, andthe Congress .... Upon receiving the report of the PostalRegulatory Commission, the Office of PersonnelManagement shall reconsider its computation or otherdetermination in light of such report, and shall make anyappropriate adjustments. The Office shall submit a reportcontaining the results of its reconsideration to theCommission, the Postal Service, and the Congress.”

Similar provision added June 22, 2005 except thatreview would be performed by an outside actuary, onewith membership in the American Academy ofActuaries.

Sec. 903. Repealed.

Would repeal Sec. 3 of P.L. 108-18, which required thatsavings resulting from the Postal Civil ServiceRetirement System Funding Reform Act of 2003 be usedto reduce the debt of the Postal Service (in 2003 and2004) and placed in escrow thereafter.

Similar provision at Sec. 804.

Sec. 904. EnsuringAppropriate Useof Escrow andMilitary Savings.

Would require OPM to calculate the per annum “totalsavings” each year (2006-2015). If the amount USPS haspaid into the Postal Service Retiree Health Benefits Fundthat year is equal to or greater than two-thirds of the totalsavings for that year, USPS need take no further action; ifthe payments are less than two-thirds, USPS must payinto the Postal Service Retiree Health Benefits Fund an

Not included.

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amount equal to the difference. The Postal Service couldavoid paying the difference only in the instance of a fiscalyear underpayment being negated by an aggregateoverpayment over previous fiscal years (beginning 2006). OPM would be required to report its calculations of totalsavings to USPS, PRC, and Congress.

Sec. 905. Effective Dates.

Makes the changes of this title effective October 1, 2005and requires changes to government contributions to thecivil service retirement system begin on the first day ofthe first pay period of October 1, 2005.

Identical provision at Sec. 805.

Not included Title IX — Compensation for Work Injuries

Not included. Sec. 901. TemporaryDisability;Continuation ofPay.

Senate bill would also amend 5 U.S.C. 8117 so that aUSPS employee would not be entitled to compensationor continuation of pay for the first three days oftemporary disability. During this time, a USPSemployee would be permitted to use annual leave, sickleave, or leave without pay.

Not included. Sec. 902. DisabilityRetirement forPostalEmployees.

In order to reduce Postal Service expenses, thisprovision would encourage Postal Service employees ofretirement age who are injured on the job to retirerather than to draw disability compensation. To thisend, it would amend 5 U.S.C. 8105 and 8106 to reducecompensation for work injuries for a postal workerwhose injuries occur after enactment of S. 662. Ifenacted —

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An employee suffering total disability from aworkplace injury would be entitled to compensation of50 percent (currently 66 2/3 percent) of his monthly payon the later date of:

(1) the date on which the injured worker reachesretirement; or(2) one year after the employee begins receivingcompensation.

An employee suffering partial disability would beentitled to 50 percent (currently 66 2/3 percent) of thedifference between his monthly pay and his monthlywage earning capacity after the beginning of his partialdisability on the later date of:

(1) the date on which the injured employee reachesretirement age; or

(2) one year after the employee begins receivingcompensation.

Not included Title X — Miscellaneous

See Sec. 801 above. Sec. 1001. Employment ofPostal PoliceOfficers.

Similar provision in H.R. 22 Sec. 801.

See Sec. 804 above. Sec. 1002. ObsoleteProvisions.

Similar provision at Sec. 804.

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See Sec. 808 above. Sec. 1003. Reduced Rates.

Identical to H.R. 22, Sec. 808.

Not included. Sec. 1004. Senseof CongressRegarding PostalServicePurchasingReform.

Would declare that “the Postal Service should —

“(1) ensure the fair and consistent treatment ofsuppliers and contractors in its current purchasingpolicies...; and

“(2) implement commercial best practices in PostalService purchasing policies to achieve greaterefficiency and cost savings as recommended in July2003 by the President’s Commission on the UnitedStates Postal Service.”